HomeMy WebLinkAboutFY16 Comprehensive Annual Financial Report, City of Bozeman
CITY OF BOZEMAN, MONTANA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2016
Prepared by the City of Bozeman Finance Department
CITY OF BOZEMAN, MONTANA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
JUNE 30, 2016
TABLE OF CONTENTS
I. INTRODUCTORY SECTION
Letter of Transmittal ..................................................................................................................................................................................... 1-12 Government Financial Officers Association Certificate of Achievement ....................................................................................................... 13
Organizational Chart ....................................................................................................................................................................................... 14
City Elected Officials and Officers ............................................................................................................................................................ 15-16
II. FINANCIAL SECTION
INDEPENDENT AUDITOR’S REPORT ................................................................................................................................................. 17-19
A. MANAGEMENT’S DISCUSSION AND ANALYSIS ............................................................................................................................. 20-36
B. BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Statement of Net Position .................................................................................................................................................................... 37-38 Statement of Activities .............................................................................................................................................................................. 39
Fund Financial Statements
Governmental Fund Financial Statements
Balance Sheet – Governmental Funds ............................................................................................................................................ 40-41
Reconciliation of the Balance Sheet to the Statement of Net Position – Governmental Funds .......................................................... 42 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds ........................................................ 43
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to
The Statement of Activities – Governmental Funds ........................................................................................................................... 44
Proprietary Fund Financial Statements
Statement of Net Position – Proprietary Funds .............................................................................................................................. 45-46 Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds ....................................................................... 47
Statement of Cash Flows – Proprietary Funds ............................................................................................................................... 48-49
Fiduciary Fund Financial Statements
Statement of Fiduciary Net Position – Fiduciary Funds ..................................................................................................................... 50
Notes to Financial Statements ............................................................................................................................................................ 51-121
CITY OF BOZEMAN, MONTANA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
JUNE 30, 2016
TABLE OF CONTENTS (CONTINUED)
C. REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION AND ANALYSIS
Schedule of Funding Progress – Other Post-Employment Healthcare Benefits ........................................................................................... 122
Schedule of Proportionate Share of Net Pension Liability and Schedule of Contributions ................................................................... 123-125
Notes to Required Supplementary Information - Pension Plan Changes ............................................................................................... 126-128 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual – General Fund ................................................. 129
Schedule of Revenues, Expenditures, and Changes in fund Balances – Budget to Actual – Other Major Funds
Street Impact Fees Special Revenue ........................................................................................................................................................ 130
Street Maintenance Special Revenue ...................................................................................................................................................... 131
Building Inspection Special Revenue ...................................................................................................................................................... 132 Notes to Required Supplementary Information- Budgetary Information ................................................................................................ 133
D. SUPPLEMENTAL INFORMATION
Combining and Individual Fund Statements and Schedules – Nonmajor Funds
Combining Balance Sheet – Nonmajor Governmental Funds ......................................................................................................... 134-140 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance – Nonmajor Governmental Funds .................. 141-147
Budget-to-Actual Schedules – Other Major Funds
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual - Other Major Funds
SID Sinking Fund .............................................................................................................................................................................. 148
Note to Budget-to-Actual Statements – Other Major Funds ............................................................................................................. 149
Budget-to-Actual Statements- Nonmajor Funds Schedules of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual –
Nonmajor Governmental Funds ................................................................................................................................................... 150-165
Combining Nonmajor Proprietary Funds
Combining Statement of Net Position .............................................................................................................................................. 166-167 Combining Statement of Revenues, Expenses, and Changes in Net Position ......................................................................................... 168 Combining Statement of Cash Flows ............................................................................................................................................... 169-170
Internal Service Funds Statements
Combining Statement of Net Position ..................................................................................................................................................... 171
Combining Statement of Revenues, Expenses, and Changes in Fund Net Position ............................................................................... 172 Combining Statement of Cash Flows ............................................................................................................................................... 173-174
CITY OF BOZEMAN, MONTANA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
JUNE 30, 2016
TABLE OF CONTENTS (CONTINUED)
D. SUPPLEMENTAL INFORMATION (CONTINUED)
Agency Funds
Combining Statements of Fiduciary Net Position ................................................................................................................................... 175
Combining Statement of Changes in Assets and Liabilities ................................................................................................................... 176
III. STATISTICAL SECTION
Financial Trends Section
Net Position by Component ..................................................................................................................................................................... 177
Changes in Net Position ................................................................................................................................................................... 178-179
Fund Balances – Governmental Funds .................................................................................................................................................... 180
Changes in Fund Balances – Governmental Funds ................................................................................................................................. 181
Revenue Capacity Section
Assessed value of Taxable Property ........................................................................................................................................................ 182
City Taxable Market and Taxable Values ............................................................................................................................................... 183
Tax Increment District Taxable Valuation Detail ................................................................................................................................... 184
Downtown Bozeman Improvement District & Comparison to City Taxable Value ............................................................................... 185
Property Tax Levies in the Downtown Bozeman Improvement District ................................................................................................ 186
Direct and Overlapping Property Tax Rates ........................................................................................................................................... 187
Principal Property Tax Payers ................................................................................................................................................................. 188
Principal Property Tax Payers in Downtown Bozeman Improvement District ...................................................................................... 189
Property Tax Levies and Collections ...................................................................................................................................................... 190
Water Sold by Type of Customer ............................................................................................................................................................ 191
Water and Sewer Rates ............................................................................................................................................................................ 192
CITY OF BOZEMAN, MONTANA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
JUNE 30, 2016
TABLE OF CONTENTS (CONTINUED)
Debt Capacity Section
Ratios of Outstanding Debt by Type ....................................................................................................................................................... 193
Ratios of General Bonded Debt Outstanding .......................................................................................................................................... 194
Direct and Overlapping Governmental Activities Debt .......................................................................................................................... 195
Legal Debt Margin Information .............................................................................................................................................................. 196
Pledged Revenue Coverage ..................................................................................................................................................................... 197
Debt Service Requirements and Coverage for Downtown Tax Increment District ................................................................................ 198
Summary of Outstanding SIDs ................................................................................................................................................................ 199
Revolving Fund Balance and Bond Secured Thereby ............................................................................................................................. 200
Special Improvement District Assessment Billing and Collections ........................................................................................................ 201
Demographics and Economic Section
Demographic and Economic Statistics .................................................................................................................................................... 202
Principal Employers for Gallatin County ................................................................................................................................................ 203
Operating Information
Full-time Equivalent City Government Employees by Function/Program ............................................................................................. 204
Operating Indicators by Function/Program ............................................................................................................................................. 205
Capital Asset Statistics by Function/Program..........................................................................................................................................206
IV. REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS
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 ......................................... 207-208
PART I
INTRODUCTORY SECTION
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CITY OF BOZEMAN, MONTANA
December 22, 2016
To the Citizens of the
City of Bozeman, Montana
The Comprehensive Annual Financial Report of the CITY OF BOZEMAN, MONTANA for the fiscal year ended JUNE 30, 2016, is hereby
submitted. Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests
with the City. To the best of our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a manner designed
to present fairly the financial position and results of operations of the various funds of the City. All disclosures necessary to enable the reader to
gain an understanding of the City's financial activities have been included.
Management’s Discussion and Analysis (MD&A) is a narrative introduction, overview and analysis written to accompany the basic financial
statements and should be read in conjunction with the transmittal letter.
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CITY OF BOZEMAN, MONTANA
CITY OF BOZEMAN PROFILE
The City of Bozeman was incorporated in April of 1883 with a city council form of government, and later in January 1922 transitioned to its
current city manager/city commission form of government. Bozeman encompasses an area over 18 square miles and is located on the eastern slope
of the Rocky Mountains. The 2012 census put Bozeman's population at 38,695, which is a total increase of 37.90% from 2000 to 2012 and making
it the fourth largest city in the state. Bozeman is at the county seat of Gallatin County and is the home to Montana State University – Bozeman,
and the fighting Bobcats.
The government provides a full range of services. These services include police and fire protection; sanitation services; water, waste water, &
stormwater utilities; the construction and maintenance of streets and infrastructure; recreational activities; cultural events; planning and zoning;
and general administrative services. The City, as a primary government, is supported or works closely with certain entities to provide these services
to the citizens of the City of Bozeman. The Bozeman Public Library Board of Trustees, Senior Advisory Council, and the Parking Commission
are excluded from presentation in these financial statements, since their relationship with the City is strictly advisory in nature at this time.
BUDGET DEVELOPMENT PROCESS
The City of Bozeman budget serves several purposes. For the citizens of the City of Bozeman, it presents a picture of the city government
operations and intentions for the year. For the City Commission, it serves as a policy tool and as an expression of goals and objectives. For City
Management, it is used as an operating guide and a control mechanism.
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CITY OF BOZEMAN, MONTANA
The City Manager’s Recommended Budget is created and
submitted to the City Commission. Public work sessions are
then held by the Commissioners at which time the City
Manager, Administrative Services Director, and department
staff explain the budget recommendations and underlying
justification for the requests. The Commission also reviews
departmental requests that could not be funded, as an indication
of unmet needs. During (or following) the work sessions, the
Commissioners may make adjustments to the proposed budget.
Following any adjustments to the City Manager's budget
recommendation, a tentative appropriation ordinance is
prepared and a public hearing is held. The Commission may again make adjustments to the budget following the public hearing, after which time,
the Commission passes the appropriation ordinance in final form.
Fiscal Year 2016 marked the fourth year in a row where the final budget was adopted before start of the year. It was completed in late April and
presented in early May with an adoption of a final budget before June 30th. This revised budget calendar was developed in Fiscal Year 2013 in an
effort to improve understandability of our financial plans and to improve staff and commission efficiency. The overall goal of the City’s financial
policies is to establish and maintain effective management of the City’s financial resources.
ECONOMIC CONDITION AND OUTLOOK
The charts contained on this page were developed from information obtained by using the Economic Profile System (EPS), for the City of Bozeman,
made available from Headwaters Economics, an independent, nonprofit research group. The statistics are from multiple federal sources – Bureau
of Economic Analysis and Bureau of the Census, U.S. Department of Commerce, and Bureau of Labor Statistics, as well as the U.S. Department
0.0%5.0%10.0%15.0%20.0%25.0%30.0%
Bozeman Employment by Industry, 2014
Ag, forestry, fishing and hunting, mining
Construction
Manufacturing
Wholesale trade
Retail trade
Transportation, warehousing, and utilities
Information
Finance and insurance, and real estate
Prof, scientific, mgmt, admin, & waste mgmt
Education, health care, & social assistance
Arts, entertainment, recr, accomodations, &…
Other services, except public administration
Public administration
Bozeman Employment by Industry, 2014
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CITY OF BOZEMAN, MONTANA
of Labor. The other source of this information is the Bureau of Business and Economic Research (BBER) a research and public service branch of
the University of Montana’s School of Business Administration. The Bureau is regularly involved in a wide variety of activities, including
economic analysis and forecasting.
Regionally, Bozeman is located in southwestern MT in Gallatin County. This area is “one of the fastest growing economic areas in the
northern Rocky Mountains. It has a varied economic base, an educated workforce, thriving technology and manufacturing industries, a major
research university, abundant cultural and outdoor recreation opportunities, and a scenic natural landscape at the doorstep of Yellowstone National
Park” as cited by Prospera Business Network, 2014 Economic Profile of Gallatin and Park Counties, Montana. Gallatin County continues to pace
the state economically and remains the fastest growing urban area of Montana.
BBER reports that growth in wages in Gallatin County topped all other MT counties in 2015 at 10.5%. A recovering construction industry,
continued expansion of high tech industry, growing finance and business services, as well as strong retail and health care sectors are driving
Gallatin County’s wage growth. Associated is the fact that Montana State University is the largest basic industry in Gallatin County, accounting
for approximately 28 percent of total basic earnings. The projections for long-term continued
growth in enrollment suggest that in addition to the significant contribution to Gallatin County’s
economic base in the form of wages and salaries, there are and will be additional positive
influences on the local economy that are not reflected in the earnings data. BBER forecasts
growth in nonfarm earnings between 4.6% and 5.0% in Gallatin County between 2016 and 2019
as compared to 2% overall Montana. While Bozeman experienced recent job growth of 4.57%,
the number of jobs is projected to grow 46% over the next 10 years according to Sperling’s Best
Places. Home affordability and labor availability are emerging as challenges of the future.
Unemployment remains low in Gallatin County at 3.1% compared to 6.3% nationally.
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
Population % change 2000-2014
Percent Change in Population,
2000-2014
Bozeman US
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CITY OF BOZEMAN, MONTANA
FOR THE YEAR
Significant Developments during the year include:
Continued Growth in Construction Sector:
The City’s Building Inspection division continued to
experience strong permit issuance in the past 36
months. For the current fiscal year to date (July-
March), the total value of Building Permits for New
Construction is 15% less of the same time frame
during the previous year, but still 24% higher than
the 5-year average value, and three-fold what they
were in 2010. Numerous positions were added to the
Building Inspection division last year in FY15. The
department continues to operate with those same
staffing levels.
Creation of Arterial & Collector Assessment District: In August 2015, the City Commission created a new assessment district to fund
reconstruction and maintenance of the City’s backbone street network – the arterial and collector streets. The District issued its first assessment
in October. The intent is to build the assessment of up to $2 Million/year over a three-year period. This is a critical funding portion of our Street
Maintenance program and capital improvement plan.
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CITY OF BOZEMAN, MONTANA
Implementation of Impervious Area charges and credits in the Stormwater Utility: This past December marked the last of numerous changes
in the structure of our Stormwater Utility rates. Initially the structure was established with a flat rate based on the size of a property’s water meter.
Now the rate system includes system base charges, credits for properties that have on-site or related stormwater systems, and charges for the
amount of impervious area contained on a lot. This new rate structure is a better match between “cost-causer” and “cost-payer,” in recognition of
the city’s long-standing fiscal policies.
FOR THE FUTURE
Water & Sewer Systems: As a result of the newly adopted Wastewater Collection System master plan document updates, two critical projects
for FY16 were included in the Capital Improvement Plan.
• South University District Wastewater
• Bridger Drive Extension Wastewater Project
Both of these projects were necessary to serve existing and growing development around town, and were funded by a combination of Wastewater
utility and impact fee funds. Water and Sewer rates were increased in the Water Fund (2.5% in FY16 and 2.5% in FY17), and in the Sewer Fund
(3% in FY16 and 3% in FY17). The intent of the rate increases was to help keep utility operations and capital projects moving forward, with the
required reserves and cash flow for borrowing, as necessary. Construction of a 5.3
million-gallon water storage reservoir will necessitate borrowing $6.6 Million.
Water rates will be pledged to repay this loan. This added water storage is a
capacity-expanding project that is necessary for continued development in the city.
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CITY OF BOZEMAN, MONTANA
Joint Law & Justice Center: During the summer of 2016 the City Commission partnered to place this shared item on the November 2016 ballot.
On November 8th, 2016, City of Bozeman and Gallatin County residents will be asked to vote on the proposed Law and Justice Center. In an effort
to provide the community with information about the proposed project, the City and County have held a number of meetings for the community
and various organizations to provide them with information on the project and why this need exists. The Bozeman City Commission and
administration have spent considerable time educating the
community on the effects of the ballot election.
Transportation System Improvements: The City is moving
forward with planned increases in Street Maintenance and Arterial
& Collector District assessments, which provide dollars for street
expansions, reconstruction, and maintenance. Transportation items
were cited as the number one concern by citizens responding to last
year’s Online City Hall budget priorities question.
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CITY OF BOZEMAN, MONTANA
Unified Development Code Design: The Unified Development ordinance was
last adopted on November 24, 2003. The Ordinance adopted a new Unified
Development Code, which replaced existing zoning and subdivision regulations
that govern the use and development of land. In recent months, the Community
Development department has updated planning fees and reorganized its
divisions in order to better assist the City of Bozeman residents. Along with
these changes, new revisions to the Unified Development Code are needed to
better address modern development within our rapidly growing city.
Broadband for growing local businesses: The Bozeman Fiber Initiative is
moving forward. The nonprofit was created in May of 2016 and will secure the
private funding needed for system build-out. A number of the City’s Tax Increment Financing (TIF) Districts adopted work plans that play a role
in funding infrastructure within their boundaries. The Commission incorporated those work plans into the Approved Budget for the upcoming
fiscal year.
Other
• Water Pipe Replacement Program – approximately $1M every year for the construction of necessary water system replacement work.
• Waste Water Pipe Replacement Program – approximately $1M every year for the construction of necessary sewer system replacement work.
• Intersection Control - approximately $750,000 every year for improved traffic flow and safety at various intersections.
• Continue implementation of financial plans and asset management systems to properly maintain and replace the City’s infrastructure and
facilities.
• Vision & Strategic Plan: The project is currently underway and is scheduled to be completed during the upcoming fiscal year. This project
will identify the community’s preferred long-range future vision, and create a living, breathing Strategic Plan to help the City support it.
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CITY OF BOZEMAN, MONTANA
FINANCIAL POLICIES
The overall goal of the City's financial policies is to establish and maintain effective management of the city's financial resources. Formal policy
statements and major objectives provide the foundation for achieving this goal.
The City avoids budgetary practices that balance current expenditures at the expense of meeting future years' expenses and seeks to maintain a
diversified and stable revenue base that is estimated in a realistic and conservative manner. For one-time revenues, highest priority is given to the
funding of capital assets or other non-recurring expenditures.
On-going expenditures are limited to levels that can be supported by current revenues. Construction projects and capital purchases of $10,000 or
more are included in the Capital Improvement Plan (CIP). Minor capital outlays of less than $10,000 are included in the regular operating budget.
Spending of resources happen in the following order (they are categorized according to Generally Accepted Accounting Principles (GAAP) for
state and local governments, with the following general definitions):
• Restricted – Amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government)
through constitutional provisions or by enabling legislation.
• Committed – Amounts constrained to specific purposes by the City Commission; to be reported as committed, amounts cannot be used for
any other purpose unless the City Commission takes action to remove or change the constraint.
• Assigned – Amounts the City intends to use for a specific purpose; intent can be expressed by the Commission or by an official or body to
which the Commission delegates the authority. The City Commission delegates this authority to the City Manager.
• Unassigned – Amounts that are available for any purpose; these amounts are reported only in the General Fund.
Long-term debt is limited to capital improvements that cannot be financed from current revenues and repays borrowed funds within a period that
does not exceed the expected useful life of the project. The City does not use long-term debt for financing current operations and adheres to a
policy of full public disclosure with regard to the issuance of debt.
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CITY OF BOZEMAN, MONTANA
A minimum level of general fund reserve equal to 2 months of annual revenues, or 16.67%, is maintained. This reserve is committed to be used
for: cash flow purposes, accrued employee payroll benefits, which are not shown as a liability, unanticipated equipment acquisition and
replacement, and to enable the city to meet unexpected expenditure demands or revenue shortfalls.
The City manages and accounts for its financial activity in accordance with Generally Accepted Accounting Principles (GAAP), as set forth by
the Governmental Accounting Standards Board (GASB).
The city maintains its accounting records for general governmental operations on a modified accrual basis, with revenues recorded when available
and measurable, and expenditures recorded when services or goods are received and liabilities incurred. Accounting records for proprietary fund
types and similar trust funds are maintained on an accrual basis, with all revenues recorded when earned and expenses recorded at the time liabilities
are incurred, without regard to receipt or payment of cash.
Internal Controls
Internal accounting controls are designed to provide reasonable (but not absolute) assurance of the safeguarding of assets against loss, theft or
misuse. They are also designed to aid in the reliability of financial records. The concept of reasonable assurance recognizes that the cost of a
control should not exceed the benefits likely to be derived and that the evaluation of costs and benefits requires estimates and judgments by
management.
In developing and evaluating the City’s accounting system, great consideration is given to the adequacy of internal accounting controls. We
believe that the City of Bozeman’s internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording
of financial transactions.
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CITY OF BOZEMAN, MONTANA
OTHER INFORMATION
Independent Audit
The State of Montana requires a biannual audit of the books of accounts, financial records, and transactions of all administrative departments of
the City by independent certified accountants selected by the City Commission. It is the belief of the City Commission and Executive staff that
an annual audit assures a higher level of financial management and fiscal responsibility. This policy, along with the legal requirements, has been
complied with and the auditors' opinion of Anderson ZurMuehlen & Co. P.C., has been included in this report.
Awards
The Government Finance Officers' Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City
of Bozeman for its comprehensive annual financial report for the fiscal year ended June 30, 2015. This was the 32nd consecutive year that the City
has received this prestigious award. In order to be awarded a Certificate of Achievement, the City published an easily readable and efficiently
organized comprehensive annual financial report. This report satisfied both generally accepted accounting principles and applicable legal
requirements.
A Certificate of Achievement is valid for a period of one year only. We believe our current comprehensive annual financial report continues to
meet the Certificate of Achievement Program's requirement, and we are submitting it to the GFOA to determine its eligibility for another certificate.
Acknowledgements
The preparation of the Comprehensive Annual Financial Report on a timely basis was made possible by the dedicated service of the entire staff of
the Finance Department, with special appreciation extended to Assistant Controller Lisa Duetsch. Each member of the department has our sincere
appreciation for the contributions made in the preparation of this report.
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CITY OF BOZEMAN, MONTANA
GOVERNMENT FINANCE OFFICERS ASSOCIATION CERTIFICATE
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CITY OF BOZEMAN, MONTANA
ORGANIZATIONAL CHART Fiscal Year 2016
CITY CLERK
Robin Crough
CITY COMMISSION PARKING
COMMISSION
MUNICIPAL
JUDGES
Karl Seel &
Colleen Herrington
LIBRARY BOARD OF
TRUSTEES
LIBRARY
DIRECTOR Susan Gregory CITY MANAGER Chris Kukulski
ECONOMIC
DEVELOPMENT
Brit Fontenot
PARKING
MANAGER
ASSISTANT CITY
MANAGER
Chuck Winn
FACILITIES
Mike Gray
FIRE
DEPARTMENT
Josh Waldo
PUBLIC
SERVICE
Craig Woolard
PARKS &
RECREATION
Mitch Overton
PLANNING &
COMMUNITY
DEVELOPMENT Wendy Thomas
LEGAL
Greg Sullivan
ADMINISTRATIV
E SERVICES
Anna Rosenberry
POLICE
DEPARTMENT
Steve Crawford
Appointment & Budgetary Control Appointment & Budgetary Control
CITIZENS OF BOZEMAN
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CITY OF BOZEMAN, MONTANA
CITY ELECTED OFFICIALS AND OFFICERS Fiscal Year 2016
ELECTED OFFICIALS
Legislative
Jeffrey Krauss Mayor
Carson Taylor Deputy Mayor
Cynthia Andrus Commissioner
Christopher Mehl Commissioner I-Ho Pomeroy Commissioner
Judicial
Karl Seel
Colleen Herrington
Municipal Judge
Municipal Judge
OFFICERS
Executive
Chris Kukulski
Chuck Winn
Robin Crough
City Manager
Assistant City Manager
City Clerk
Department of Law
Gregory Sullivan City Attorney
Timothy A. Cooper Assistant City Attorney
Kyla Murray Anna Saverud
Karen Stambaugh
Bekki Mclean
Ed Hirsch
Assistant City Attorney Assistant City Attorney
Assistant City Attorney
Assistant City Attorney
Assistant City Attorney
Department of Administrative Services
Anna Rosenberry, CPA Director of Administrative Services
Brian LaMeres, CPA Controller
Laurae Clark Treasurer
Scott McMahan Information Technology Manager Bethany Jorgenson Human Resources Manager
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CITY OF BOZEMAN, MONTANA
CITY ELECTED OFFICIALS AND OFFICERS (CONTINUED) Fiscal Year 2016
Department of Economic Development
Brit Fontenot Department of Public Safety
Director of Economic Development
Steve Crawford Chief of Police
Richard McLane Deputy Chief of Police
Josh Waldo Fire Chief Greg Megaard Deputy Fire Chief of Operations
Department of Public Service
Craig Woolard Director of Public Service
Rick Hixson City Engineer John Alston Superintendent of Water and Waste Water
Operations
John Van Delinder Superintendent of Street Operations
Kevin Handelin Superintendent of Sanitation Operations
Eric Campbell Superintendent of Water Treatment Plant Herb Bartle Superintendent of Water Reclamation Facility
Mike Gray Superintendent of Facilities
Department of Public Welfare
Mitch Overton Thomas White
Jamie Saitta
Elizabeth Hill
Director of Parks & Recreation Superintendent of Parks & Cemetery
Recreation Program Manager
Aquatics Manager
Susan Gregory Director of Bozeman Public Library
Department of Planning and Community Development
Wendy Thomas
Chris Saunders
Brian Krueger
Director of Planning and Community Development
Community Development Manager
Development Review Manager
PART II FINANCIAL SECTION
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ANDERSON ZURMUEHLEN & CO., P.C. • CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS
MEMBER: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITOR’S REPORT
Honorable Mayor, City Commissioners, and City Manager of the City of Bozeman, Montana
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Bozeman, Montana (the City), as of and for the year ended June 30, 2016 and related notes to
the financial statements which collectively comprise the City’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
ANDERSON ZURMUEHLEN & CO., P.C
CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS
18
Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the
governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Bozeman,
Montana, as of June 30, 2016 and the respective changes in financial position, and, where applicable, cash flows, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information – General Fund and Special Revenue Major Funds, Schedule of Funding Progress - Other Postemployment Benefits
(OPEB), and Schedule of Proportionate Share of Net Pension Liability and Schedule of Contributions be presented to supplement the basic
financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting
Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the
methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or
provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise City of Bozeman’s basic
financial statements. The introductory section, supplemental information, and statistical section, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The other supplemental information, as listed in the table of contents, are the responsibility of management and were derived from and relate
directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the
basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United
States of America. In our opinion, the other supplemental information, as listed in the table of contents, are fairly stated in all material respects
in relation to the basic financial statements as a whole.
ANDERSON ZURMUEHLEN & CO., P.C
CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS
19
The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial
statements and, accordingly, we do not express an opinion or provide any assurance on them.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 29, 2016, on our consideration of the
City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and
grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting
and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.
Bozeman, Montana
December 29, 2016
A. MANAGEMENT’S DISCUSSION AND ANALYSIS
20
CITY OF BOZEMAN, MONTANA
MANAGEMENT’S DISCUSSION AND ANALYSIS
June 30, 2016
Our discussion and analysis of the City of Bozeman’s financial performance provides an overview of the City’s financial activities for the fiscal
year ended June 30, 2016. Please read it in conjunction with the transmittal letter on page 1 and the City’s financial statements, which begin on
page 37.
USING THIS ANNUAL REPORT
This annual report consists of a series of financial statements. The Statement of Net Position and the Statement of Activities (on pages 37 – 39) provide information about the activities of the City as a whole and present a longer-term view of the City’s finances. Fund financial statements start on page 40. For governmental activities, these statements tell how these services were financed in the short-term as well as what remains for future
spending. Fund financial statements also report the City’s operations in more detail than the government-wide statements by providing information
about the City’s most significant funds. The remaining statements provide financial information about activities for which the City acts solely as a
trustee or agent for the benefit of those outside of the government.
Reporting the City as a Whole
The Statement of Net Position and the Statement of Activities Our analysis of the City as a whole begins on page 22. One of the most important questions asked about the City’s finances is, “Is the City as a whole better off or worse off as a result of the year’s activities?” The Statement of Net Position and the Statement of Activities report information
about the City as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using
the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year’s revenues and
expenses are taken into account regardless of when cash is received or paid. These two statements report the City’s net position and changes in net position. You can think of the City’s net position, the difference between
assets, what the citizens own, and liabilities, what the citizens owe, as one way to measure the City’s financial health, or financial position. Over
time, increases or decreases in the City’s net position are one indicator of whether its financial health is improving or deteriorating. You will need
to consider other nonfinancial factors, however, such as changes in the City’s property tax base, income tax base, and the condition of the City’s capital assets (roads, buildings, water, and sewer lines) to assess the overall health of the City.
In the Statement of Net Position and the Statement of Activities, we divide the City into two kinds of activities:
• Governmental activities – Most of the City’s basic services are reported here, including police, fire, public works, parks, and general administration. Property taxes, charges for services, state shared revenues, court fines, and recreation fees finance most of these activities.
• Business-type activities – The City charges a fee to customers to help it cover all or most of the cost of certain services it provides. The
City’s water, waste water, stormwater, solid waste, and parking systems are reported here.
21
CITY OF BOZEMAN, MONTANA
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
June 30, 2016
Reporting the City’s Most Significant Funds
Fund Financial Statements Our analysis of the City’s funds begins on page 28. The fund financial statements begin on page 40 and provide detailed information about the most
significant funds, not the City as a whole. Some funds are required to be established by State law and by bond covenants. However, the City
Commission establishes many other funds to help it control and manage money for particular purposes (like Street Maintenance District Funds) or
to show that it is meeting legal responsibilities for using certain taxes, grants, and other money (like grants received from the Office of Violence
Against Women). The City’s two kinds of funds, governmental and proprietary, use different accounting approaches.
Governmental funds--Most of the City’s basic services are reported in governmental funds, which focus on how money flows into and out of those
funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual
accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a
detailed short-term view of the City’s general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the City’s programs. We describe the
relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and
governmental funds in reconciliations on pages 42 and 44 of the fund financial statements.
Proprietary funds--When the City charges customers for the services it provides, whether to outside customers or to other units of the City, these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement
of Net Position and the Statement of Activities. In fact, the City’s enterprise funds (a component of the proprietary funds) are the same as the
business-type activities we report in the government-wide statements but provide more detail and additional information, such as cash flows, for
proprietary funds. We use internal service funds (the other component of proprietary funds) to report activities that provide supplies and services
for the City’s other programs and activities, such as the Vehicle Maintenance Fund and Health Insurance Fund. Internal service fund activity is reported as governmental activity in the government-wide statements since this activity, the financing of goods and services for other funds of the
government, is more governmental than business-type in nature.
22
CITY OF BOZEMAN, MONTANA
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
June 30, 2016
The City as Trustee
Reporting the City’s Fiduciary Responsibilities
The City is the trustee, or fiduciary, for other funds, including the Municipal Court Fund, the Montana Arts Council Fund (Montana Ballet, Bozeman
Symphony Orchestra, and Big Sky Association for the Arts), and the CMC Bozeman Asbestos Site Remediation Fund. It is also responsible for
other assets that, because of a trust arrangement, can be used only for the trust beneficiaries. The guidelines for the administration of these funds
are contained in applicable financial agreements and/or City ordinances. These documents contain the rules governing the receipt, expenditure, and
management of the City’s fiduciary funds. All of the City’s fiduciary activities are reported in the Statement of Fiduciary Net Position on page 50 and in the Combining Schedule of Changes in Assets and Liabilities-Agency Funds on page 172. As the statement and schedule reflect, the financial
activity during the year for these funds is nominal. We exclude these activities from the City’s other financial statements because the City cannot
use these assets to finance its operations. The City is responsible for ensuring that the assets reported in these funds are used for their intended
purposes.
THE CITY AS A WHOLE
The City’s combined net position increased by $27 million this year as compared to a $1.6 million decrease last year due to a prior period adjustment
booked for the first time in that year to implement GASB Statement 68 “Accounting and Financial Reporting for Pensions.” The primary reason for this year’s $27 million increase in the City’s net position this year is simply that the increase in City revenues significantly exceeded the increase
in City expenses. Increases in Charges for Services and Restricted Capital Grants & Contributions (mainly road infrastructure provided by private
developers) were the primary drivers of the increase in revenues. The specific contributing factors are outlined in the following discussion. Our
analysis focuses on the net position (Table 1) and changes in net position (Table 2) of the City’s governmental and business-type activities.
23
CITY OF BOZEMAN, MONTANA
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
June 30, 2016
The net position of the City’s governmental activities
increased by 10.1% ($143.2 million this year compared to $130.1 million last year). Unrestricted net position for
governmental activities, the part of net position that can
be used to finance day-to-day operations without
constraints established by debt covenants, enabling
legislation or other legal requirements increased by $1.2 million, or 142%, from negative ($5.1) million to
negative ($3.9) million. The reason for this unrestricted
net position being negative is the aforementioned
implementation of GASB 68, which required the City to
record its share of employee retirement for the first time.
The net position of the City’s business-type activities
increased by $14 million, or 6.3%, from $223 million to
$237 million due primarily to an increase in charges for
services and an increase in Restricted Capital Grants & Contribution (mainly water and wastewater infra-
structure provided by private developers). Accordingly,
unrestricted net position also increased by $4 million, or
60.6%, from $6.6 million to $10.6 million. This net
position cannot be used to make up for deficits reported by governmental activities in the event any such deficits
were reported. The City generally can only use the net
position of business-type activities to finance the
continuing operations of the water, wastewater, solid
waste, stormwater, and parking operations.
2016 2015 2016 2015 2016 2015
Current and Other Assets 63.7$ 61.1$ 29.8$ 25.0$ 93.6$ 86.1$
Capital Assets 126.1 116.5 257.2 249.1 383.4 365.6
Total Assets 189.9$ 177.5$ 287.1$ 274.1$ 476.9$ 451.7$
Deferred Outlflows of Resources 2.2 1.7 0.6 0.4 2.7 2.1
Long-term Debt Outstanding (41.8) (39.4) (47.7) (46.9) (89.5) (86.3)
Other Liabilities (5.8) (6.6) (2.0) (3.5) (7.7) (10.2)
Total Liabilities (47.6)$ (46.0)$ (49.7)$ (50.4)$ (97.2)$ (96.5)$
Deferred Inflows of Resources (1.2) (3.2) (0.4) (1.1) (1.7) (4.3)
Net Position:
Invested in Capital Assets,
net of related debt 104.1$ 93.4$ 221.4$ 211.4$ 325.5$ 304.8
Restricted for parking capital projects - - 0.3 0.3 0.3 0.3
Restricted for general government 1.4 0.5 - 1.4 0.5
Restricted for Public Safety 3.4 2.4 - - 3.4 2.4
Restricted for Public Service 16.1 15.3 - - 16.1 15.3
Restricted for Public Welfare 5.5 6.4 - - 5.5 6.4
Restricted for capital projects 9.2 10.0 1.6 1.6 10.8 11.6
Restricted for debt service 7.2 7.2 3.1 3.1 10.3 10.3
Unrestricted (3.7) (5.1) 10.6 6.6 6.9 1.5
Total Net Position 143.2$ 130.0$ 237.0$ 223.0$ 380.2$ 353.0$
Activities Activities Primary Government
Tabl e 1
Net Position
(in Millions)
Governmental Business-type Total
24
CITY OF BOZEMAN, MONTANA
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
June 30, 2016
The City’s total revenues (excluding special items) increased by 18.2% ($14.2 million)
from $78.3 million to $92.5 million, driven
primarily by a $6.8 million increase in
Restricted Capital Grants & Contributions
(again, mainly infrastructure provided by developers) and a $5.6 million increase in
Charges for Services, which will be
discussed in more detail.
The total cost of all programs and services increased by $7.1 million, or 12.1%, from
$58.6 million last year to $65.7 million this
year. This $7.1 million increase was spread
relatively evenly across the various City
programs, with Public Safety (Police, Fire, Building Inspection), Water and
Wastewater each reporting increases of just
under $1.5 million. There was also a
significant increase in expenses reported for
Nonmajor Business-Type activities due to a $1.1 million Solid Waste expense recorded
to update the Story Mill Landfill post-
closure liability.
Our analysis on the following pages separately considers the operations of
governmental and business-type activities.
2016 2015 2016 2015 2016 2015
Revenues
Program revenues:
Charges for Services 16.4$ 15.0$ 25.8$ 22.8$ 42.2$ 37.9$
Restricted Operating Grants & Contributions 2.5 2.2 0.1 0.1 2.6 2.3
Restricted Capital Grants & Contributions 5.0 3.0 11.3 6.4 16.3 9.3
General Revenues -
Property Taxes 21.2 20.2 - - 21.2 20.2
Unrestricted Operating Grants & Contributions 8.0 7.8 - - 8.0 7.8
Unrestricted Capital Grants & Contributions - - - - - -
Other General Revenues 1.1 0.8 - - 1.1 0.8
Total Revenues 54.2 48.9 37.2 29.3 91.4 78.3
Program Expenses
General Government 8.1 7.4 - - 8.1 7.4
Public Safety 18.4 17.0 - - 18.4 17.0
Public Service 6.9 6.5 - - 6.9 6.5
Public Welfare 8.0 7.6 - - 8.0 7.6
Interest and Fiscal Fees 0.9 0.8 - - 0.9 0.8
Water - - 9.3 8.0 9.3 8.0
Waste Water - - 8.2 6.9 8.2 6.9
Non-major activities - - 0.5 4.4 0.5 4.4
Total Expenses 42.2 39.3 17.9 19.3 60.1 58.6
Excess (deficiency) before
special items and transfers 12.0 9.6 19.3 10.0 31.3 19.6
Extraordinary items - - - - - -
Sale of Capital Assets - - - - - -
Transfers of capital assets - - - - -
Transfers 1.2 (0.4) (1.2) 0.4 - (0.0)
Increase (decrease) in net position 13.2$ 9.2$ 18.1$ 10.4$ 31.3$ 19.6$
Net position - beginning, as originally reported 130.0 137.0 223.0 217.6 353.0 354.6
Prior period adjustment -16.2 -4.9 0.0 -21.2
Net position - beginning, as restated 130.0 120.8 223.0 212.6 353.0 333.5
Net position - ending 143.2$ 130.0$ 241.1$ 223.0$ 384.3$ 353.2$
Activities Activities Primary Government
Tabl e 2
Changes in Net Position
(in Millions)
Governmental Business-type Total
25
CITY OF BOZEMAN, MONTANA
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
June 30, 2016
Governmental Activities
Revenues for the year from governmental activities increased by 10.6%, or $5.2 million, from $49 million to $54.2 million, while total expenses increased by 7.6%, or $3 million, from $39.3 million to $42.3 million. Property Tax revenues increased by $1 million, or 4.5%, from $20.2 million
to $21.2 million. Charges for services, which include Fire and Street Impact Fees, realized a net increase of $1.4 million, or 9.3%, from $15
million to $16.4 million. Restricted Capital Grants and Contributions (developer-provided infrastructure reported under Program Revenues)
increased by $2 million, or 67%, from $3.0 million to $5.0 million. These and the other contributing factors listed below are primarily responsible
for this year’s change in net position:
Charges for services increased by $1.4 million, or 9.3%, from $15 million last year to $16.4 million this year. Street Impact Fees did increase by
over $117,500, but the largest single factor was over $565,000 in revenue from the newly-created Arterial and Collector Streets Special District.
Standard Street Assessments also increased significantly by $446,000, or 12.9%, from $3.46 million to $3.9 million due to an increase in the
customer base and due to the continued increase in Street Maintenance Assessment rates in response to the City Commission’s policy direction to address deferred street infrastructure maintenance and to build a reserve for curb and sidewalk replacement. Fire impact fee revenues actually
decreased by 25.3%, or $85,728, from $424,190 to $338,500.
Property Tax collections increased by $1 million, or 4.95%, from $20.2 million last year to $21.2 million this year due mainly to an increase in the
number of property tax mills levied for the general functions of the City and to service the debt on the issuance of the remaining Trail & Open Space (TOP) Bonds. This 12.4% increase in the amount of mills levied (188.76 to 210.16) also was needed to offset the decrease in the mill values,
which dropped 1.5% from $87,894 to $86,564 after the latest property reappraisal conducted by the Montana Department of Revenue as it changed
its appraisal cycle from every 6 years to every 2 years.
Property Tax revenues actually decreased in some of the Tax Increment Financing (TIF) Districts, with revenues in the North 7th/Midtown decreasing by 12.6%, or $86,700, from $772,700 to $686,000 and revenues in the Downtown TID decreasing by 5.4%, or $53,570, from $1,039,000
to $985,500 due to the property reappraisal and resulting shift in tax burden from commercial to residential property owners. While property tax
revenues did increase City-wide, it is important to note that this year’s tax levy was still 4.2 mills, or approximately $363,000, below the statutory
maximum allowable tax rate.
Restricted Capital Grants and Contributions (reported under Program Revenues) increased by $2 million, or 67%, from $3.0 million to $5.0 million,
mainly due to transportation/road infrastructure provided by developers, which increased by 70%, or $1.7 million, from $2.5 million to $4.2
million. City park assets contributed by developers were also a factor for the year, including $513,000 in developer-provided parkland and $10,000
in park improvements. Private parties also provided a little over $38,000 in donated capital for public safety, including an ambulance for the Fire Department.
26
CITY OF BOZEMAN, MONTANA
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
June 30, 2016
Program Expenses increased by 7.6%, or $3 million, from $39.3 million to $42.3 million. Significant contributors included personnel costs for
Public Safety due to increased staffing, with Police increasing 6.8%, or $470,500, from $6.97 million to $7.43 million and Building Inspection increasing 23.2%, or $247,400, from $1.07 million to $1.3 million. However, personnel costs in the Fire Department only increased 1.6%, or
$80,500, from $5.08 million to $5.16 million. Non-personnel operating costs in Public Safety also increased significantly by 25.4%, or $635,000,
from $2.5 million to $3.1 million, with nearly $631,000 being spent on the design of a new joint City-Gallatin County Law & Justice Center.
The cost of all governmental activities this year was $42.3 million compared to $39.3 million last year. However, as shown in the Statement of Activities on page 39 under Net (Expense) Revenue for Total governmental activities, the amount that our taxpayers ultimately financed for these
activities through City taxes and other general revenues was only $18,285,579 because some of the cost was paid by those who directly benefited
from the programs ($16,402,006 in Charges for Services) or by other governments and organizations that subsidized certain programs with
operating and capital grants and contributions ($2,494,244 plus $5,018,559 = $7,512,803).
Table 3 presents the cost of each of the City’s six largest programs—Police, Fire, Public Service, Library, Parks, and Recreation—as well as each
program’s net cost (total cost less revenues generated by the activities). The net cost shows the financial burden that was placed on the City’s
taxpayers by each of these functions.
Business-type Activities Total revenues of the City’s business-type activities (see
Table 2) increased substantially by $9.0 million, or 30.8%
($38.3 million this year compared to $29.3 million last year)
while expenses increased $4.1 million, or 21.2% ($23.4
million compared to $19.3 million last year). The increase in revenues was driven by a $4.2 million overall increase in
charges for services and a $4.8 million increase in Restricted
Capital Grants & Contributions, which consisted primarily
of privately-constructed water, wastewater, and stormwater
infrastructure that was contributed to the City by developers. The increase in expenses this year was due to a
$1.3 increase in spending in both the Water and
Wastewater operations and, due to the aforementioned
expense, reported in Solid Waste (reported under Nonmajor activities) to account for the increase in the Landfill post-closure liability. Specific factors driving these and other regular operating results include:
2016 2015 2016 2015
Police 9.4$ 8.2$ 7.8$ 6.7$
Fire 6.0 6.0 5.0 5.0
Public Service 8.7 6.5 (1.9) (3.3)
Library 2.3 2.1 1.5 1.4
Parks 1.7 1.6 1.6 1.6
Recreation 1.4 1.3 0.9 0.9
All Others 12.9 13.6 3.4 6.8
Totals 42.2$ 39.3$ 18.3$ 19.1$
Tabl e 3
Governmental Activities
(in Millions)
Total Cost Net Costof Services of Services
27
CITY OF BOZEMAN, MONTANA
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
June 30, 2016
Water – The City’s water system operating revenue (charges for services) have steadily increased over the past decade as a result of both an
increase in the customer base in past years and as a result of regular rate changes, although the Commission voted to hold water rates steady two years ago followed by a 2.5% rate increase this year. Beginning last year, the Public Works Department budget was charged to the Water Fund
instead of the General Fund, and this department’s administrative overhead is charged out to the departments that use their services, which resulted
in $887,000 in revenue being recorded as part of the $1,074,008 reported under “Other income”. The City’s customer‐base growth grew by 337
customers, 2.9%, from 11,646 average active customer accounts to 11,983. This level of growth rate is trending more closely to the 5% growth
experienced between 2005‐2008. In updating the rate study for slower customer growth in recent years, decreased Water Impact Fee collections
and new estimates of Water Plant costs, the City implemented water rate increases of 4.5% each year in fiscal years 2011, 2012, and 2013 in order
to fund plant construction and other scheduled operations and maintenance costs. As a result, the City was able to revitalize its water distribution pipe replacement program and replace or rehabilitate aging infrastructure every year instead of every two years. After no rate increase last year, in light of the other tax and rate increases imposed upon City residents, the City Commission voted this year to increase rates by 2.5%.
Because of the increase in the water rate and in the utility customer base, combined with a $106,300 increase in cash-in-lieu-of-water-rights,
operating revenues increased notably by $665,957, or 8.6% from $7.7 million to $8.4 million. Water impact fee revenues increased significantly by $707,000, or 36.7% due to an increase in new and other impact-fee qualifying construction. The $106,300 increase in cash-in-lieu of water rights revenue was a 31% increase to $446,150 from last year’s $339,851. Contributions of infrastructure by private developers increased
$873,000, or 20.3%, from $4,305,327 to $5,178,425 this year due to a continued upturn in construction and development.
Operating expenses increased by $1.3 million, or 17.4%, from $7,457,485 last year to $8,758,385 this year mainly due to increased Salaries and benefits costs (up $385,000) and a $768,000 increase in Other expenses, including $332,900 spent on the Water Facility Plan update and $103,800 spent on Groundwater Investigation.
Other major accomplishments and projects completed during the year include: $673,300 spent on increased replacement of water distribution
system pipes (recorded as a Capital Addition as opposed to an expense), $305,000 in finishing touches to the new Water Plant, $206,300 towards a new $5.3 million gallon concrete water storage reservoir at Sourdough, and continued use of six fixed-base water meter receivers at Kenyon Dr. Water Tank, City Shops, 911 center, Laurel Glen Annex, Solid Waste office, and Nelson Story Tower at MSU, which greatly improves the
efficiency of the monthly water meter reading process.
28
CITY OF BOZEMAN, MONTANA
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
June 30, 2016
Wastewater – Revenues in the Wastewater Fund have generally been increasing over the past 10 years and are estimated at $8.4 million for the
upcoming year. Five years ago the City borrowed significantly to construct the new Water Reclamation Facility. This debt is being repaid by system users over the next 20 years. Accordingly, the City Commission adopted a two-year rate resolution of a 6% increase for fiscal years 2012
and 2013 and 3% for fiscal years 2014 through next fiscal year 2017. As a result of the rate increase, combined with the same customer growth
experienced in the water system of 337 customers, operating revenues for the year increased by $296,575 or 3.9% from $7,631,117 last year to
$7,927,692 this year.
Wastewater operating expenses increased by $1.3 million, or 20.6%, from $6,308,846 to $7,611,043 driven by mainly by the fact that there was
an unusual negative $1.1 million adjustment (based on updated information from legal counsel following the most recent engineering update) to
operating expenses last year to adjust the Bozeman Solvent Site liability (which was favorable because it actually decreased the amount of the
overall liability) but no such negative adjustment occurred this year, so actual expenses recorded are back to normal. Personnel costs charged to
Wastewater actually decreased this year by 2.5%, or ($54,680), from $2.17 million to $2.11 million, while Repair and Maintenance increased by $118,900, or 43.9%, from $271,127 to $390,034 with $47,900 being paid out to Columbine Control Company and $47,480 to Williams Plumbing
& Heating throughout the year.
Major projects during the year also included $225,700 contributed to the North Wallace Avenue reconstruction project and $138,400 spent on
updating the Wastewater Facility Plan.
THE CITY’S FUNDS
As the City completed the year, its governmental funds (as presented in the balance sheet on pages 40 - 41) reported a combined fund balance of $53,151,127. Included in this year’s total change in fund balance is a positive General Fund balance of $6,521,099, up $459,134, or 7.6%, from
$6,061,965. The following five separate categories of fund balance are recognized, based on the extent to which the government is bound to honor
constraints on the specific purposes for which amounts can be spent: nonspendable fund balance, restricted fund balance, committed fund balance,
assigned fund balance, and unassigned fund balance. The total of the last three categories, which include only resources without a constraint on
spending or for which the constraint on spending is imposed by the government itself, is termed unrestricted fund balance. The Government Finance Officers Association’s recommends maintaining an unrestricted general fund balance of no less than two months of regular general fund
operating revenues, or $4,561,352 for this year. The City’s ending general fund balance of $6,521,099 exceeds this recommendation by
$1,959,747. The minimum reserve and the other assignments are detailed below, leaving an Unassigned General Fund Balance of $979,258. The
contributing factors to this year’s ending General Fund balance are explained after the table below, followed by an analysis of each of the City’s other Major Funds.
29
CITY OF BOZEMAN, MONTANA
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
June 30, 2016
The general fund balance of $6,521,099 has been assigned as shown:
General fund – The City’s general fund balance increased by $459,134, or 7.6%, from $6,061,965 last year to $6,521,099. The City had budgeted
for fund balance to actually end up being lower, at $5.3 million, but actual revenues ended up exceeding budgeted expectations, and not as much spending occurred during the year as expected, as indicated by the TOTAL CIP / CAPITAL CARRY-OVER ITEMS in the preceding table. Other
savings were realized through careful and cautious budgetary management practices implemented throughout all City departments.
Property tax revenues increased modestly in the General Fund by $391,560, or 2.7%, from $14,512,683 to $14,904,243 mainly due to an increase
in the number of general fund property tax mills levied (from 144.77 to 155.78) in order to balance this year’s budget. Factoring into the need to levy more mills was a mill value that actually declined this year, dropping 1.5% from $87,894 to $86,564 after the latest property reappraisal
conducted by the Montana Department of Revenue as it changed its appraisal cycle from every 6 years to every 2 years. In the prior year, the City
realized a 2.6% increase in the value of the property tax mill value (from $85,637 to $87,894).
FY16 ENDING GENERAL FUND BALANCE - TOTAL:6,521,099$
ASSIGNMENTS:
1 CIP / CAPITAL CARRY-OVER BUDGETED IN FY16 BUT NOT TO BE SPENT UNTIL FY17:
POLICE DEPT: CIP GF050 POLICE & COURT FACILITY -$
STRATEGIC PLAN 53,472$
WEBSITE UPGRADE/REPLACEMENT 48,052$
RECREATION DEPT: CIP GF056 POOL DESIGN 308,373$
PARKS DEPT: CIP GF207 CITYWORKS HARDWARE -$
FACILITIES MGMT: VARIOUS FACILITIES MANAGEMENT CIP PROJECTS 30,591$
TOTAL CIP / CAPITAL-CARRY OVER ITEMS:440,489$
2 16.67% MINIMUM RESERVE LEVEL REQUIRED BY CITY CHARTER (2 MONTHS OF REVENUES):4,561,352$
3 FY17 BUDGET: FY16 YEAR-END FUND BALANCE NEEDED TO BALANCE FY17 BUDGET:540,000$
TOTAL GENERAL FUND ASSIGNMENTS:5,541,840$
UNASSIGNED GENERAL FUND BALANCE - FY16:979,258$
30
CITY OF BOZEMAN, MONTANA
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
June 30, 2016
Intergovernmental revenues increased by $248,711, or 3.7%, from $6,807,755 last year to $7,056,466. Entitlement Share revenue accounted for
$125,852 of this increase. Montana State Entitlement Share began in 2001 as a replacement to the City’s dedicated revenue sources from personal property tax reimbursements and taxes on motor vehicles, gaming, alcohol, and banking, among others. After several stagnant years of minimal
or no change, Entitlement Share has increased over each of the past three years, this year increasing $125,852, or 3.1%, from $4 million to $4.13
million.
The State of Montana’s share of City employee retirement also showed a marginal increase of $70,929, or 3.2%, from $2,209,341 last year to $2,280,269. This revenue amount is a noncash book-entry only on the City’s general accounting ledger, and is offset by an expenditure in the
exact same amount (most of which is reported under Public Safety for the police and fire employees), so it increases revenues and expenditures by
the same amount, resulting in no change to ending fund balance.
Total general fund expenditures increased by $85,153, only .3%, from $26,815,329 to $26,900,482. Payroll expenditures across all functions (General government, Public safety, Public service, Public welfare) increased by just over $1 million, or 5.5% from $18,918,290 to $19,950,607.
Salary expenditures increased as positions continued to be filled pursuant to the public safety mill levy beginning in 2009. As the department
moved closer to being fully staffed, police personnel costs (net of State Share of Retirement) increased by $405,038, or 7.3%, from $5,543,476
last year to $5,948,514. Fire Department personnel costs (net of State Share of Retirement) increased by $138,245, or 3.5%, from $3,983,096 last
year to $4,121,341.
However, this increase in personnel costs was more than offset by the decrease in capital outlay expenditures, which decreased by $1,187,166, or
68.3%, from $1,738,493 to $551,327. Last year’s much higher expenditure level was due to $1,259,545 spent that year on the acquisition and
design of the Rouse Avenue property proposed as the location for a City of Bozeman Rouse Justice Center. Notable expenditures in the general
fund for the year included $630,944 spent on the design of a new City-Gallatin County shared Law & Justice Center collocated at the current South 16th Avenue location, $174,407 spent to purchase and equip new Police vehicles, and $146,564 in support of the Streamline Bus System (which
was an additional $60,000 higher this year on top of one mill) and $53,128 spent on lawn mowers for the Parks Department. The largest general
fund expenditures continued to be in Public safety (Police and Fire).
Also contributing to the strength and relative stability of the General Fund balance is the utilization of conservative budgetary practices. Conservative, yet realistic, revenue estimates, combined with departments operating within their original budgets, naturally has a favorable effect
on the bottom line. Maintaining adequate reserves has several internal and external benefits. Internally, reserves can provide for cash flow needs until
property tax revenues are received, reducing or eliminating the need for cash flow borrowing; provide funds to leverage state or federal grants; and
provide for the unexpected. Externally, reserves tend to be viewed favorably by investors, rating agencies, and local banks with which we do business, thus benefiting rating and the potential need for lines of credit.
31
CITY OF BOZEMAN, MONTANA
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
June 30, 2016
The City’s General Fund balance was a primary focus of a recent upgrade in the City’s General Obligation Bond rating to Aa2 by Moody’s Investor
Services. Previously Moody’s had assigned a debt rating of Aa3 in November of 2013 and a rating of Aa3 “Positive Outlook” in November of 2015 for the two issuances of Trails, Open Space, and Parks general obligation bonds. This affirmed Moody’s rating assigned in May, 2012 of Aa3 to the
City’s General Obligation Refunding Bonds, Series 2012, issued in the amount of $3.1 million. At the same time, Moody's also affirmed the Aa3 rating
on the City's rated outstanding general obligation debt not being refunded by this issue, which included $.6 million outstanding for the 2003 refinancing
of the City’s General Obligation Transportation Bonds and the remaining bonds issued in 2003 for the new Library. In each instance bond analysts
looked favorably on the amount and trend of the General Fund balance in determining the City’s bond rating. The recent Moody’s upgrade is discussed further in the Debt section on page 34.
As shown on page 125, variances in the General Fund between the original budget of $27,184,041 and the final budgeted total charges to
appropriations of $28,018,209 amounted to $834,168. $2.6 million of this was for the Public safety budget (from $11,706,232 to $14,329,732),
with $608,000 being for the shared City-County Law & Justice Center. The remaining $2 million increase to the Public safety budget and the $2.06 million decrease to Other both relate to opposite sides of the same budget amendment made for the State of Montana’s share of Police officer
and Firefighter retirement. This book-only/noncash expenditure is offset (“reimbursed”) by intergovernmental revenue booked in the same amount.
By design, the original $2 million of appropriation authority was initially budgeted under Other to avoid confusion throughout the year, and at
year-end the $2 million is shifted to the Public Safety budget to cover the increase in reported expenditures required by this book-entry. Other
General Fund budget amendments include $234,350 to Transfers to other funds, of which $231,500 was for a transfer to the Health Insurance Internal Service Fund of the cash returned by the Montana Municipal Interlocal Authority (MMIA) to the City of Bozeman, which the City had
provided to MMIA as “seed money” for the statewide insurance pool.
Street Impact Fees Special Revenue – Fund balance decreased by $237,792, or 1.8%, from $12,885,310 to $12,647,518 this year due to a significant
increase in total expenditures compared to last year. Total expenditures were $925,641 last year compared to $4,452,729 this year, which included $2 million spent on improving Cottonwood Road between Fallon Street and Alpha Drive, $1.45 million spent to install a traffic signal at Durston and
Cottonwood, and $469,823 spent on right-of-way land acquisition and design work to improve the intersection at Baxter and Davis Lane. Revenues
increased by $259,282, or 6.6%, from $3,937,241 to $4,196,523 due to a continuing trend in increased construction and development. Construction
activity for the year which required the payment of impact fees included: $325,536 for a new dorm on the campus of Montana State University,
$189,380 for the SpringHill Suites Hotel on Baxter Lane, $184,124 for the Talbach House Condos on Enterprise Boulevard, $183,481 for the Stadium View Apartments near MSU campus, $133,200 for the Stoneridge Apartments on Tschache Lane, and $91,739 for the 5 West Mendhenhall project.
32
CITY OF BOZEMAN, MONTANA
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
June 30, 2016
Street Maintenance Special Revenue – Fund balance decreased by $816,045, or 51.3%, from $1,590,993 last year to $774,948 this year due to
expenditures and transfers-out exceeding revenues for the year. Revenues did increase by $435,241, or 12.3%, from $3,533,515 last year to $3,968,756 this year, driven by a 10% increase in the street assessment rate targeted mostly at pavement maintenance. Another significant
contributing factor was the continued expansion of the City’s Street Maintenance Assessment program to include major street reconstruction
projects; the first being the reconstruction of South 8th Avenue two years ago, followed by Story Street and North Wallace Avenue this year. With
the Commission’s focused goal of addressing deferred street and curb maintenance, Street Maintenance Assessment rates were increased five years
ago by 18%, with the 18% allocated as follows: Continued increase to Curb Replacement Fund (2%); Debt Service Payments for the Reconstruction of South 8th Avenue (7%); Establishment of a Street Reconstruction Fund (6%); and Increase in Operating Budget (3%). Continuing the City
Commission’s goal of addressing deferred street maintenance, this year rates were increased 10% this year for a general revenue increase of
approximately $340,000, including adding $200,000/year for pavement maintenance (chip seals, overlay, patching) with the overall goal of adding
$1 million over three years for additional construction projects.
As stated, the decrease in fund balance was driven primarily by expenditures and transfers-out, which combined together increased this year by
$632,493, or 14.9%, from $4,233,573 to $4,866,066. Major expenditures during the year included $372,564 for a new asphalt milling machine,
$151,825 in McKinistry energy upgrades, including LED streetlights, and $101,455 paid to provide street construction updates to the public. Major
transfers-out to other funds included $1.1 million for the reconstruction of North Wallace Avenue and $113,792 for Story Street reconstruction.
Building Inspection Special Revenue – Fueled by continued growth in the construction sector, the City’s Building Inspection division again
experienced strong permit issuance over the past year. While never completely stopping, building construction significantly slowed during the
recession. For the current fiscal year, the total value of building permits for new construction is 15% less than the same time frame during the
previous year, but still 24% higher than the 5-year average value, and three-fold what the value reported in 2010. Indeed, revenues increased
substantially this year by $303,584, or 19.7%, from $1,539,622 to $1,843,206. The increase in expenditures was less significant, with a 12.3% increase of $179,394 over last year from $1,460,835 to $1,640,229. Driving this increase were personnel costs, as the numerous positions that
were added mid-year in FY15 became full-time positions this year. This additional staff included 2.0 FTE Building Inspectors, 1.0 FTE Permit
Technician and a 1.0 FTE Senior Plans Examiner, with all of these positions being funded with building permit revenues. As a result of revenues
increasing at a higher level than expenditures, fund balance increased by $202,977, or 13.8%, from $1,473,337 last year to $1,676,314 this year.
SID Sinking Debt Service – Fund balance increased by 52.7%, or $252,097, from $478,181 to $730,278 due to increased revenues and a decreased
level of expenditures and Transfers out. Revenues from Special Improvement District (SID) assessment collections, along with fund interest
income and other income, amounted to $716,195, which was $120,685 or 20.3% higher than last year’s revenues of $595,510. The increase was
due to a $119,400 early interest-free payoff by the Northeast Urban Renewal Tax Increment Financing (TIF) District board of the entire amount of the North Wallace Avenue Reconstruction special improvement district (SID) assessments billed to property owners within that TIF District.
33
CITY OF BOZEMAN, MONTANA
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
June 30, 2016
Expenditures, however, decreased by $77,727, or 22.5%, from $345,070 to $267,343 mainly because fewer SID bonds were called and paid this
year compared to last. For example, last year $140,000 worth of SID bonds for the West Babcock SID were called and paid while this year that amount was $70,000. These amounts can vary based on how much cash is accumulated within each district by the time the bond payments are
due. Last year there had been an accumulation of cash in this district due to early payoffs of the entire SID amount owed, which can happen when
a piece of property within the district changes ownership.
Transfers out in the SID Sinking Debt Service fund continue to be related to the City’s policy of internally financing smaller street SID’s instead of issuing bonds. The amounts are borrowed from the SID Revolving Fund, reported on page 142, by the SID Sinking Debt Service fund, and
then the amount is transferred to the appropriate SID construction fund. Going forward the SID Sinking Debt Service fund collects assessments
from the property owners and subsequently repays the SID Revolving Fund instead of repaying external bond holders. This year’s Transfer out of
$196,755 was for the North Wallace Avenue Reconstruction SID, which, as stated, saw $119,400 of that debt immediately paid off.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets – As shown in Table 4, at the end of 2016 the City had $383.2 million invested in a broad range of capital assets, including police
and fire equipment, buildings, park facilities, roads, and water and sewer lines. This amount represents a net increase (including additions and deductions) of roughly $17.9 million, or 4.9% over last year. Refer to capital assets disclosure Note 7 beginning on page 65 for more information.
2016 2015 2016 2015 2016 2015
Land 17.6$ 16.9$ 4.9$ 4.9$ 22.5$ 21.8$
Water Rights - - 2.1 2.1 2.1 2.1
Buildings 32.6 32.4 113.0 112.4 145.6 144.8
Other Structures and Improvements 1.1 1.1 30.8 30.8 31.9 31.9
Machinery & Equipment 11.7 11.3 8.1 7.6 19.8 18.8
Property under Capital Lease 0.4 0.4 0.5 0.5 0.9 0.9
Vehicle 3.5 3.2 2.0 1.9 5.5 5.1
Infrastructure 158.9 146.9 280.4 268.0 439.3 414.9
Subtotal 225.8 212.1 441.7 428.1 667.6 640.3
Accumulated Depreciation (99.9) (95.8) (184.6) (179.2) (284.5) (275.0)
Total Capital Assets 125.9$ 116.3$ 257.1$ 249.0$ 383.2$ 365.3$
Activities Activities Totals
Tabl e 4
Capital Assets at Year-end
(in Millions)
Governmental Business-type
34
CITY OF BOZEMAN, MONTANA
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
June 30, 2016
Major additions and capital projects underway include the following expenditures made during this year:
Debt – At year-end, the City had $59.2 million in bonds and notes outstanding versus $61.2 million last year—a decrease of $2 million, or 3.2%,
as shown in Table 5.
This decrease was due to debt repayment ($3.3 million) exceeding new debt issued ($1.3 million) during the year. Debt repayment included $1.8
million for the Water Reclamation Facility; $798,000 for the new Water Plant; $142,000 for the Stormwater-backed landfill mitigation system loan; $245,000 for the refinanced transportation General Obligation (GO) Bonds; $505,000 for the TOP GO Bonds; $195,000 for the Downtown
TIF District Bonds to finance the Parking Facility; and $228,000 in SID debt. New debt included an additional $1.28 million drawdown of the
Stormwater-backed landfill mitigation system loan and $47,406 from the MT Board of Investments for the McKinstry LED design/retrofit energy
upgrades.
General obligation debt still outstanding, which is reported under Governmental Activities, consists of $14.27 million for the TOP Bonds along
with $1.3 million in Series 2012 Refunding Bonds issued to refinance both the Series 2003A Transportation Refunding bonds and the Series 2001A
and Series 2003B Library Construction Project bonds. Debt reported under Business-Type Activities includes $16.6 million of water revenue
bonds and $18.9 million of wastewater revenue bonds issued to finance construction of the new Water Treatment and Wastewater Reclamation
Facilities.
Cottonwood Road Widening: Fallon Street to Alpha Drive 2,017,492$
Traffic Signal: Durston and Cottonwood Road 1,452,014$
Water Line Replacement and Rehabilitation - annual distribution pipe replacement program 733,406$
Midtown Tax Increment Financing District (N. 7th TIF) Street Lighting 722,906$
Story Street Reconstruction Special Improvement District 593,443$
Front Load Garbage Truck Replacement (2)525,223$
Trail and Open Space Bond: Trail to the M Project 519,788$
Baxter and Davis Lane Intersection: Right-of-Way land acquisition and design work 470,657$
Trail and Open Space Bond: Bozeman Ponds Project 464,093$
North Wallace Avenue Reconstruction Special Improvement District 430,787$
Midtown Tax Increment Financing District (N. 7th TIF) Broadband Conduit 390,053$
Street Asphalt Milling Machine 372,564$
Water Plant Construction - final payments: state of the art membrane filtration system 305,452$
Professional Building Reconfiguration / Remodeling 235,097$
Trail and Open Space Bond: Sports Complex 231,278$
Street Improvements - Gas Tax 224,573$
35
CITY OF BOZEMAN, MONTANA
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
June 30, 2016
Moody’s Investor Services assigned a debt rating of Aa3 in November of 2013 for the first issuance of TOP general obligation bonds. Moody’s views
the City’s financial operations as sound, noting in their report that City officials have delivered operating surpluses in four of the last five audited financial years and that the City has a moderately-sized tax base that did not decline during the recession, in addition to a low-debt burden. This
affirmed the rating assigned by Moody’s in May, 2012 of Aa3 to the City’s General Obligation Refunding Bonds, Series 2012, issued in the amount of
$3.1 million. Most recently, Moody’s upgraded this rating to Aa2 from Aa3, stating in their Credit Opinion, “The Aa2 rating reflects the city's fairly
large, growing tax base anchored by Montana State University (Aa3/Stable), improved wealth measures, a trend of sound financial operations and
healthy reserve levels, and a limited debt burden that is expected to remain at similar levels in the near-term”.
As expressed in the fiscal year 2017 Approved Budget, City officials expect to end next fiscal year with general fund reserves totaling $4.7 million,
or 16.67% of operating revenues. This budget meets the minimum level of 16 2/3% required by City Charter, which in May of 2011 was amended
to include adoption of GFOA’s Best Practice for Unreserved General Fund Balance into the City’s Budget Administration Ordinance.
Property taxes are the City's primary general revenue source (70.1%), followed by unrestricted grants and contributions (26.4%), and investment
earnings (1.7%). Additionally, Moody's expects the City to maintain a moderate debt position given current limited debt burden, above average
principal payout, and expected tax base growth. More detailed information about the City’s long-term liabilities is presented in Note 9 to the
financial statements.
2016 2015 2016 2015 2016 2015
General obligation
bonds (backed by the City)15.6$ 16.3$ -$ -$ 15.6$ 16.3$
Tax Increment Financing
District (TIFD) bonds 4.6 4.8 - - 4.6 4.8
Special Improvement
District Debt 0.7 0.9 - - 0.7 0.9
Notes Payable 0.9 1.0 - - 0.9 1.0
Lease Payable 0.2 0.3 - - 0.2 0.3
Water Revenue Bonds
(backed by specific fee revenues)- - 16.6 17.4 16.6 17.4
Wastewater Revenue Bonds
(backed by specific fee revenues)- - 18.9 20.0 18.9 20.0
Stormwater Revenue Bonds
(backed by specific fee revenues)- - 1.4 0.2 1.4 0.2
Stormwater Lease Payable
(backed by specific fee revenues)- - 0.4 0.4 0.4 0.4
Totals 22.0$ 23.3$ 37.3$ 37.9$ 59.2$ 61.2$
Activities Activities Total s
Tabl e 5
Outstanding Debt, at Year-end
(in Millions)
Governmental Business-type
36
CITY OF BOZEMAN, MONTANA
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
June 30, 2016
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The City’s elected and appointed officials considered many factors when adopting the 2016-2017 budget for next fiscal year’s tax rates and for
fees that will be charged for the business-type activities. Some of these factors include: capital improvements identified in the City’s Capital
Improvement Program; inflation rates, the City’s collective bargaining units, the local economy, and the citizen’s ability to pay. For the year,
inflation rates continued to remain at relatively low yet increasing levels. The Bureau of Labor Statistics of the U.S. Department of Labor reported
the Consumer Price Index-Unadjusted for All Items at .7% for the last calendar year and at 1.6% over the last 12 months (as of this report date and before seasonal adjustment), with the energy index rising 3.5%, its largest advance since February of 2013. Inflation rates have historically had a
significant impact on the cost of City capital projects.
CONTACTING THE CITY’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s
finances and to show the City’s accountability for the money it receives. If you have questions about this report or need additional information,
contact the City’s Administrative Services Director, Controller, or Assistant Controller at the City of Bozeman, 121 North Rouse Avenue,
Bozeman, Montana 59715.
B. BASIC FINANCIAL STATEMENTS
GOVERNMENT-WIDE FINANCIAL STATEMENTS
37
CITY OF BOZEMAN, MONTANA
STATEMENT OF NET POSITION June 30, 2016
The Notes to Financial Statements are an integral part of this statement.
Governmental Business-type
Activities Activities Total
ASSETS
Cash and investments 39,932,277$ 19,441,277$ 59,373,554$
Restricted cash and investments 15,543,924 7,909,758 23,453,682
Accrued interest 54,084 33,107 87,191
Receivables, net 6,879,736 1,847,872 8,727,608
Notes receivable 591,916 10,830 602,746
Prepaid expenses 733,166 - 733,166
Capital assets:
Non-depreciable land and water rights 17,632,907 7,062,681 24,695,588
Other capital assets, net of depreciation 108,511,533 250,177,850 358,689,383
Total capital assets 126,144,440 257,240,531 383,384,971
Total assets 189,879,543 286,483,375 476,362,918
Deferred outflows of resources:
Pension plan contributions 2,158,415 586,193 2,744,608
Total assets and deferred outflows of resources 192,037,958$ 287,069,568$ 479,107,526$
(continued)
38
CITY OF BOZEMAN, MONTANA
STATEMENT OF NET POSITION (CONTINUED) June 30, 2016
The Notes to Financial Statements are an integral part of this statement.
Governmental Business-type
Activities Activities Total
LIABILITIES
Accounts payable and accrued expenses 5,713,714$ 1,935,716$ 7,649,430$
Unearned revenue 56,343 - 56,343
Current portion of long-term liabilities:
Compensated absences payable 1,266,700 401,000 1,667,700
Capital leases 54,905 79,438 134,343
Closure and post-closure care costs - 360,000 360,000
Bonds and notes 1,233,971 1,969,000 3,202,971
Long-term liabilities, due in more than one year:
Compensated absences 487,029 198,960 685,989
Capital leases 194,596 284,311 478,907
Closure and post-closure care costs - 2,679,671 2,679,671
Pollution remediation obligations 16,874 1,531,101 1,547,975
Other post-employment health benefits - implicit rate subsidy 1,782,516 450,064 2,232,580
Bonds and notes 20,762,340 34,968,995 55,731,335
Net pension liability 15,993,057 4,819,918 20,812,975
Total liabilities 47,562,045 49,678,174 97,240,219
DEFERRED INFLOWS OF RESOURCES
Pension deferrals 1,227,868 432,696 1,660,564
Total deferred inflows of resources 1,227,868 432,696 1,660,564
NET POSITION
Net investment in capital assets 104,093,224 221,385,655 325,478,879
Restricted:
Restricted for parking capital projects - 295,545 295,545
Restricted for general government 1,395,422 - 1,395,422
Restricted for public safety 3,435,423 - 3,435,423
Restricted for public service 16,081,238 - 16,081,238
Restricted for public welfare 5,503,168 - 5,503,168
Restricted for capital projects 9,230,464 1,592,613 10,823,077
Restricted for debt service 7,183,605 3,102,477 10,286,082
Unrestricted (3,674,499) 10,582,408 6,907,909
Total net position 143,248,045$ 236,958,698$ 380,206,743$
39
CITY OF BOZEMAN, MONTANA
STATEMENT OF ACTIVITIES Year Ended June 30, 2016
The Notes to Financial Statements are an integral part of this statement.
Net (Expense) Revenue and Changes in Net Position
Operating Capital
Charges for Grants and Grants and Governmental Business-type
Functions/Programs Expenses Services Contributions Contributions Activities Activities Total
Primary Government
Governmental activities:
General government 8,058,925$ 2,530,474$ 117,587$ -$ (5,410,864)$ (5,410,864)$
Public safety 18,391,357 3,347,859 2,011,025 54,297 (12,978,176) (12,978,176)
Public service 6,861,939 9,310,147 143,736 4,874,956 7,466,900 7,466,900
Public welfare 7,994,697 1,213,526 221,896 89,306 (6,469,969) (6,469,969)
Interest and fiscal fees 893,470 - - - (893,470) (893,470)
Total governmental activities 42,200,388 16,402,006 2,494,244 5,018,559 (18,285,579) (18,285,579)
Business-type activities:
Water 9,273,395 11,751,233 54,110 5,178,425 7,710,373 7,710,373
Waste water 8,163,312 9,217,121 50,952 5,997,522 7,102,283 7,102,283
Solid waste 4,570,884 3,207,605 20,958 - (1,342,321) (1,342,321)
Parking 830,869 642,250 4,770 - (183,849) (183,849)
Stormwater 469,743 943,621 4,156 111,707 589,741 589,741
Total business-type activities 23,308,203 25,761,830 134,946 11,287,654 13,876,227 13,876,227
Total primary government 65,508,591$ 42,163,836$ 2,629,190$ 16,306,213$ (18,285,579) 13,876,227 (4,409,352)
General revenues
Property taxes 21,234,288 - 21,234,288
Unrestricted grants and contributions 7,992,180 - 7,992,180
Investment earnings 519,637 241,699 761,336
Miscellaneous 418,215 1,033,340 1,451,555
Gain on sale of assets 123,934 6,595 130,529
Transfers 1,218,036 (1,218,036) -
Total general revenues and transfers 31,506,290 63,598 31,569,888
Change in net position 13,220,711 13,939,825 27,160,536
Net position, beginning of the year 130,027,334 223,018,873 353,046,207
Net position, end of the year 143,248,045$ 236,958,698$ 380,206,743$
Primary Government
Program Revenues
FUND FINANCIAL STATEMENTS
GOVERNMENTAL FUND FINANCIAL STATEMENTS
MAJOR GOVERNMENTAL FUNDS
General Fund – This fund accounts for the financial operations of the City, which are not accounted for in any other Fund. Principal sources of revenue are property taxes, state and local shared revenues, licenses and permits, and charges for services provided to other Funds. Principal
expenditures in the general fund are made for police and fire protection, public works, and general government.
Street Impact Fees Special Revenue Fund – This special revenue fund accounts for the collection and expenditures associated with the street impact
fees.
Street Maintenance – This special revenue fund accounts for special assessment revenues levied, received, and expended for street maintenance
provided to specific property owners.
Building Inspection – This special revenue fund was established to account for all activity of enforcing the building regulation adopted by the City. It includes all the money and staff associated with executing any aspect of the code enforcement program. Section 50-60-101 MCA established
the code enforcement program requirement.
SID Sinking Debt Service Fund – This debt service fund accounts for the accumulation of resources and payment of special assessment bond
principal and interest related to general improvement, sidewalk, and curb construction projects.
40
CITY OF BOZEMAN, MONTANA
BALANCE SHEET GOVERNMENTAL FUNDS
June 30, 2016
The Notes to Financial Statements are an integral part of this statement.
Street Street Building SID Other Total
General Impact Fees Maintenance Inspection Sinking Governmental Governmental
Fund Special Revenue Special Revenue Special Revenue Debt Service Funds Funds
ASSETS
Cash and investments 7,976,924$ -$ 887,659$ 1,752,709$ 1,178,269$ 28,069,841$ 39,865,402$
Receivables:
Property taxes 1,069,513 - - - - 388,318 1,457,831
Accrued interest 6,086 17,028 - 2,529 - 28,441 54,084
Customers, net 1,554,073 6,500 87,182 - - 516,683 2,164,438
Special assessments - - 140,060 - 2,943,579 40,551 3,124,190
Other governments 6,040 6,330 - - - 73,626 85,996
Due from other city funds 11,274 - - - - - 11,274
Advances to other city funds - - - - - 458,208 458,208
Prepaid expenditures - - - - - 350,625 350,625
Notes receivable - - - - - 591,916 591,916
Restricted cash and investments - 12,747,392 - - - 2,796,532 15,543,924
Total assets 10,623,910$ 12,777,250$ 1,114,901$ 1,755,238$ 4,121,848$ 33,314,741$ 63,707,888$
(continued)
41
CITY OF BOZEMAN, MONTANA
BALANCE SHEET (CONTINUED) GOVERNMENTAL FUNDS
June 30, 2016
The Notes to Financial Statements are an integral part of this statement.
Street Street Building SID Other Total
General Impact Fees Maintenance Inspection Sinking Governmental Governmental
Fund Special Revenue Special Revenue Special Revenue Debt Service Funds Funds
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable 2,670,065$ 129,732$ 243,606$ 78,312$ (306)$ 2,467,252$ 5,588,661$
Escheat property payable 55,493 - - - - 20,052 75,545
Accrued employee benefits 8,800 - 708 612 - 670 10,790
Advanced from other city funds - - - - 458,208 - 458,208
Total liabilities 2,734,358 129,732 244,314 78,924 457,902 2,487,974 6,133,204
Deferred inflows of resources
Unavailable revenue-property taxes 47,017 - - - - 16,697 63,714
Unavailable revenue-special assessments - - 95,639 - 2,933,668 9,100 3,038,407
Unavailable revenue-court fines 1,321,436 - - - - - 1,321,436
Total deferred inflows of resources 1,368,453 - 95,639 - 2,933,668 25,797 4,423,557
Fund balances
Nonspendable - - - - - 1,426,575 1,426,575
Restricted - 12,647,518 774,948 1,676,314 730,278 24,027,298 39,856,356
Committed - - - - - 3,528,263 3,528,263
Assigned 5,541,841 - - - - 1,883,557 7,425,398
Unassigned 979,258 - - - - (64,723) 914,535
Total fund balances 6,521,099 12,647,518 774,948 1,676,314 730,278 30,800,970 53,151,127
Total liabilities, deferred inflows,
and fund balances 10,623,910$ 12,777,250$ 1,114,901$ 1,755,238$ 4,121,848$ 33,314,741$ 63,707,888$
42
CITY OF BOZEMAN, MONTANA
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION
June 30, 2016
The Notes to Financial Statements are an integral part of this statement.
Amounts reported for governmental activities in the statement of net position are different because:
Fund balances - total governmental funds 53,151,127$
Capital assets used in governmental activities are not financial resources, and
therefore, are not reported in the governmental funds.
Governmental capital assets 226,017,916$
Less: accumulated depreciation (99,873,476) 126,144,440
Internal service funds are used by management to charge the costs of certain activities to individual
funds. The assets and liabilities of the internal service funds are included in governmental activities
in the statement of net position.
Net position 1,243,815
Less: capital assets included in governmental activities (1,637,788)
Plus: accumulated depreciation included in governmental activities 488,667
Plus: compensated absences included in governmental activities 50,523
Plus: net pension liability and related deferred outflows and inflows included in governmental activities 301,488 446,705
Deferred inflows of resources are not available to pay for current period expenditures and,
therefore, are deferred in the funds.4,423,557
Bond premiums are other financing source revenue in the governmental funds. They are a liability
for the government-wide financial statements and amortized over the life of the issuance.
Bond premium (269,154)
Less: amortization 20,187 (248,967)
Impact fee credits do not affect current financial resources and therefore are not reported
in the governmental funds.(56,343)
Long-term liabilities are not due and payable in the current period and therefore are not reported
in the governmental funds.
Bonds and notes payable (21,747,344)
Net pension liability (15,062,510)
Capital lease obligations (249,501)
Pollution remediation obligations (16,874)
Post-employment health benefits (1,782,516)
Compensated absences (1,753,729) (40,612,474)
Net position of governmental activities 143,248,045$
43
CITY OF BOZEMAN, MONTANA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS
Year Ended June 30, 2016
The Notes to Financial Statements are an integral part of this statement.
Street Street Building SID Other Total
Impact Fees Maintenance Inspection Sinking Governmental Governmental
General Special Revenue Special Revenue Special Revenue Debt Service Funds Funds
REVENUES
Taxes 14,904,243$ -$ -$ -$ -$ 6,398,831$ 21,303,074$
Special assessments 24 - 30,474 - 705,143 530,313 1,265,954
Licenses and permits 326,627 - 8,282 1,777,181 - - 2,112,090
Intergovernmental 7,056,466 112,897 974 49,761 - 1,700,326 8,920,424
Charges for services 2,165,642 3,967,203 3,908,030 1,778 1,953 2,239,077 12,283,683
Fines and forfeitures 1,131,577 - - - 122,128 1,253,705
Interest on investments 41,217 115,283 10,105 17,100 8,886 287,108 479,699
Interest on loans receivable - - - - - 38,552 38,552
Other 81,257 1,140 10,891 (2,614) 213 324,759 415,646
Total revenues 25,707,053 4,196,523 3,968,756 1,843,206 716,195 11,641,094 48,072,827
EXPENDITURES
Current
General government 6,219,840 - - - - 1,098,699 7,318,539
Public safety 14,329,580 - - 1,630,541 - 525,428 16,485,549
Public service 146,564 321,312 2,767,265 - - 605,264 3,840,405
Public welfare 5,315,448 - - - - 1,929,977 7,245,425
Other 333,963 - - - - 84,468 418,431
Capital outlay 551,327 4,131,417 668,428 9,688 - 3,976,610 9,337,470
Debt service
Principal payments 3,760 - 168,490 - 228,000 945,000 1,345,250
Interest and fiscal fees - - 20,398 - 39,343 833,729 893,470
Total expenditures 26,900,482 4,452,729 3,624,581 1,640,229 267,343 9,999,175 46,884,539
Revenues over (under) expenditures (1,193,429) (256,206) 344,175 202,977 448,852 1,641,919 1,188,288
OTHER FINANCING SOURCES (USES)
Transfers in 2,122,260 18,414 31,900 - - 4,310,839 6,483,413
Transfers out (528,172) - (1,241,485) - (196,755) (3,530,080) (5,496,492)
Proceeds from long term debt - - 47,406 - - - 47,406
Sale of capital assets 58,475 - 1,959 - - 167,550 227,984
Total other financing sources (uses)1,652,563 18,414 (1,160,220) - (196,755) 948,309 1,262,311
Net change in fund balances 459,134 (237,792) (816,045) 202,977 252,097 2,590,228 2,450,599
FUND BALANCE, beginning of year 6,061,965 12,885,310 1,590,993 1,473,337 478,181 28,210,742 50,700,528
FUND BALANCE, end of year 6,521,099$ 12,647,518$ 774,948$ 1,676,314$ 730,278$ 30,800,970$ 53,151,127$
44
CITY OF BOZEMAN, MONTANA
RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
Year Ended June 30, 2016
The Notes to Financial Statements are an integral part of this statement.
Amounts reported for governmental activities in the statement of activities are different because:
Net change in fund balances - total governmental funds 2,450,599$
Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost
of these assets is allocated over their estimated useful lives and reported as depreciation expense. This is
the amount by which depreciation expense exceeded capital outlays in the current period.
Expenditures for capital assets 9,337,470$
Donated infrastructure 4,758,546
Less: current year depreciation (4,332,569) 9,763,447
Governmental funds report asset disposals as sale of capital assets for the cash received. In the statement of
activities, those gains and losses must be adjusted by the assets basis, net of any depreciation.(105,437)
The issuance of long-term debt (e.g. bonds, leases) provides current financial resources to governmental funds,
while the repayment of the principal of long-term debt consumes the current financial resources of
governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds
these amounts report the effect of premiums, discounts, and similar items when debt is first issued, whereas
are deferred and amortized in the statement of activities, unless immaterial. This amount is the net effect of these
differences in the treatment of long-term debt and related items.1,311,299
Some revenues reported in the statement of activities do not require the use of current financial resources and,
therefore, are not reported as revenues in governmental funds.(582,212)
Governmental funds do not report a liability for compensated absences. The change in the liability is a current
period expense.(83,040)
Governmental funds do not report a liability for other post-employment health benefits.(110,027)
Contributions to the pension plans in the current fiscal year are deferred outflows in the Statement of Net Position 565,043
Governmental funds do not report impact fee credits. The change in these credits during the year are charged
to the statement of activities.3,546
Internal service funds are used by management to charge the costs of certain activities to individual funds.
The net revenue of the internal service funds is reported in the governmental activities.7,493
Change in net position of governmental activities 13,220,711$
PROPRIETARY FUND FINANCIAL STATEMENTS
MAJOR PROPRIETARY FUNDS
These funds are used to account for the financing, acquisition, operation and maintenance of water, sewer, and solid waste facilities, which are
supported by user charges.
Major Enterprise Funds –
Water Fund – Accounts for the City’s water utility operations and to collect and administer water impact fees.
Waste Water Fund – Accounts for the City’s sewer utility operations and to collect and administer waste water impact fees.
Internal Service Funds – used to account for the goods and services provided by one department to other departments of the City on a cost-
reimbursement basis.
45
CITY OF BOZEMAN, MONTANA
STATEMENT OF NET POSITION PROPRIETARY FUNDS
June 30, 2016
The Notes to Financial Statements are an integral part of this statement.
Governmental
Activities
Waste Nonmajor Internal
Water Fund Water Fund Enterprise Funds Total Service Funds
ASSETS
Current assets
Cash and investments 13,454,758$ 4,441,839$ 1,544,680$ 19,441,277$ 66,875$
Receivables:
Accrued interest 22,391 10,716 - 33,107 -
Customers, net 641,535 640,086 566,251 1,847,872 47,281
Prepaid expenses - - - - 382,541
Total current assets 14,118,684 5,092,641 2,110,931 21,322,256 496,697
Non-current assets
Other assets:
Notes receivable - - 10,830 10,830 -
Restricted cash and investments 4,252,597 3,306,285 350,876 7,909,758 -
Total other assets 4,252,597 3,306,285 361,706 7,920,588 -
Property, plant and equipment
Nondepreciable:
Land 162,518 693,026 4,086,995 4,942,539 -
Water rights 2,120,142 - - 2,120,142 -
Depreciable:
Buildings 40,488,294 59,831,980 11,793,708 112,113,982 1,401,417
Other structures and improvements 13,907,432 14,745,402 877,710 29,530,544 -
Machinery and equipment 1,547,213 2,783,019 2,331,179 6,661,411 166,059
Vehicles 581,347 694,758 3,816,325 5,092,430 70,312
Infrastructure 170,538,774 109,515,501 740,186 280,794,461 -
Property under capital lease - - 598,474 598,474 -
Accumulated depreciation and amortization (102,272,457) (72,752,227) (9,588,768) (184,613,452) (488,667)
Net property, plant and equipment 127,073,263 115,511,459 14,655,809 257,240,531 1,149,121
Total non-current assets 131,325,860 118,817,744 15,017,515 265,161,119 1,149,121
Deferred outflows of resources
Pension plan contributions 236,761 199,091 150,341 586,193 37,271
Total assets 145,681,305$ 124,109,476$ 17,278,787$ 287,069,568$ 1,683,089$
continued
Enterprise Funds
Business-type Activities
46
CITY OF BOZEMAN, MONTANA
STATEMENT OF NET POSITION (CONTINUED) PROPRIETARY FUNDS
June 30, 2016
The Notes to Financial Statements are an integral part of this statement.
Governmental
Activities
Waste Nonmajor Internal
Water Fund Water Fund Enterprise Funds Total Service Funds
LIABILITIES
Current liabilities
Accounts payable and accrued expenses 489,558$ 646,448$ 799,710$ 1,935,716$ 38,718$
Compensated absences payable 120,971 169,927 110,102 401,000 50,523
Due to other city funds - - - - 11,274
Capital lease obligations due in one year - - 79,438 79,438 -
Closure and post-closure care costs, current portion - - 360,000 360,000 -
Bonds, notes, and loans payable 822,000 1,074,000 73,000 1,969,000 -
Total current liabilities 1,432,529 1,890,375 1,422,250 4,745,154 100,515
Noncurrent liabilities
Closure and post-closure care costs - - 2,679,671 2,679,671 -
Revenue bonds due after one year 15,745,000 17,856,565 1,367,430 34,968,995 -
Compensated absences payable 141,984 43,001 13,975 198,960 -
Capital lease obligations - - 284,311 284,311 -
Other post-employment health benefits 190,781 130,026 129,257 450,064 -
Solvent site remediation liability - 1,531,101 - 1,531,101 -
Net pension liability 1,899,127 1,656,389 1,264,402 4,819,918 309,188
Total noncurrent liabilities 17,976,892 21,217,082 5,739,046 44,933,020 309,188
Total liabilities 19,409,421 23,107,457 7,161,296 49,678,174 409,703
Deferred inflows of resources
Pension deferrals 138,748 161,619 132,329 432,696 29,571
NET POSITION
Net investment in capital assets 110,506,263 96,580,894 14,298,498 221,385,655 1,149,121
Restricted for impact capital projects 1,225,684 366,929 - 1,592,613 -
Restricted for parking capital projects - - 295,545 295,545 -
Restricted for debt service 1,313,885 1,788,592 - 3,102,477 -
Unrestricted 13,087,304 2,103,985 (4,608,881) 10,582,408 94,694
Total net position 126,133,136 100,840,400 9,985,162 236,958,698 1,243,815
Total liabilities, deferred inflows of resources, and net position 145,681,305$ 124,109,476$ 17,278,787$ 287,069,568$ 1,683,089$
Enterprise Funds
Business-type Activities
47
CITY OF BOZEMAN, MONTANA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS
Year Ended June 30, 2016
The Notes to Financial Statements are an integral part of this statement.
Governmental
Activities
Waste Nonmajor Internal
Water Fund Water Fund Enterprise Funds Totals Service Funds
OPERATING REVENUES 8,414,870$ 7,927,692$ 4,748,464$ 21,091,026$ 5,416,182$
OPERATING EXPENSES
Salaries and benefits 2,827,544 2,116,434 1,621,326 6,565,304 389,302
Materials and supplies 915,149 419,347 384,060 1,718,556 523,753
Repairs and maintenance 76,444 390,034 290,042 756,520 8,042
Utilities 249,083 548,868 483,725 1,281,676 4,827
Administrative charges 458,402 951,258 540,286 1,949,946 147,601
Insurance claims - - - - 4,458,971
Other expenses 1,650,130 713,088 803,423 3,166,641 115,413
Depreciation and amortization 2,581,633 2,472,014 608,423 5,662,070 54,519
Changes in estimated closure and
post-closure care costs - - 1,118,864 1,118,864 -
Total operating expenses 8,758,385 7,611,043 5,850,149 22,219,577 5,702,428
Operating income (loss)(343,515) 316,649 (1,101,685) (1,128,551) (286,246)
NON-OPERATING REVENUES (EXPENSES)
Interest income 162,813 66,479 12,407 241,699 1,386
Interest expense (515,010) (552,269) (21,347) (1,088,626) (431)
Other income 1,074,008 64,338 1,078,352 2,216,698 2,569
Intergovernmental income 54,110 50,952 29,884 134,946 7,735
Impact fees 2,262,355 1,225,091 - 3,487,446 -
Gain (loss) on disposal of assets 20,970 - (14,375) 6,595 1,387
Total non-operating revenues (expenses)3,059,246 854,591 1,084,921 4,998,758 12,646
Income (loss) before contributions and transfers 2,715,731 1,171,240 (16,764) 3,870,207 (273,600)
Contributions of infrastructure - developers 5,178,425 5,997,522 111,707 11,287,654 -
Transfers in - - 1,410,275 1,410,275 231,115
Transfers out (1,002,583) (295,114) (1,330,614) (2,628,311) -
Change in net position 6,891,573 6,873,648 174,604 13,939,825 (42,485)
NET POSITION, beginning of year 119,241,563 93,966,752 9,810,558 223,018,873 1,286,300
NET POSITION, end of year 126,133,136$ 100,840,400$ 9,985,162$ 236,958,698$ 1,243,815$
Enterprise Funds
Business-type Activities
48
CITY OF BOZEMAN, MONTANA
STATEMENT OF CASH FLOWS PROPRIETARY FUNDS
Year Ended June 30, 2016
The Notes to Financial Statements are an integral part of this statement.
Governmental
Activities
Waste Nonmajor Internal
Water Fund Water Fund Funds Total Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 8,420,240$ 7,954,877$ 4,628,319$ 21,003,436$ 5,030,773$
Receipts from others 1,074,008 64,338 1,078,351 2,216,697 10,304
Operating loans from other City funds - - - - 11,274
Payments to suppliers (2,905,999) (2,582,469) (3,403,325) (8,891,793) (687,036)
Payments to employees (2,844,653) (2,126,172) (1,627,856) (6,598,681) (4,845,619)
Payments to internal service funds and administrative fees (458,402) (951,258) (540,286) (1,949,946) (147,601)
Net cash flows from operating activities 3,285,194 2,359,316 135,203 5,779,713 (627,905)
CASH FLOWS FROM NON-CAPITAL
FINANCING ACTIVITIES
Transfers in - - 1,410,275 1,410,275 231,115
Transfers out (1,002,583) (295,114) (1,330,614) (2,628,311) -
Receipts from grants and intergovernmental sources 75,080 50,952 29,884 155,916 -
Net cash flows from non-capital financing activities (927,503) (244,162) 109,545 (1,062,120) 231,115
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition of capital assets (1,546,209) (195,241) (811,868) (2,553,318) (22,914)
Principal paid on bonds, interfund loans, loans and leases (798,000) (1,042,000) (70,849) (1,910,849) -
Interest paid on bonds, interfund loans, loans and leases (515,010) (552,269) (21,347) (1,088,626) (431)
Proceeds from issuance of long-term debt - - 1,210,680 1,210,680 -
Impact fees received 2,262,355 1,225,091 - 3,487,446 -
Proceeds from sale of property, plant and equipment - - 30,936 30,936 1,387
Net cash flows from capital and
related financing activities (596,864) (564,419) 337,552 (823,731) (21,958)
CASH FLOWS FROM INVESTING ACTIVITIES
Collections on notes - - 2,650 2,650 -
Interest on investments 162,339 66,000 12,407 240,746 1,386
Net cash flows from investing activities 162,339 66,000 15,057 243,396 1,386
Net change in cash and investments 1,923,166 1,616,735 597,357 4,137,258 (417,362)
Cash and investments, beginning of year 15,784,189 6,131,389 1,298,199 23,213,777 484,237
Cash and investments, end of year 17,707,355$ 7,748,124$ 1,895,556$ 27,351,035$ 66,875$
Classified as:
Cash and investments 13,454,758$ 4,441,839$ 1,544,680$ 19,441,277$ 66,875$
Restricted cash and investments 4,252,597 3,306,285 350,876 7,909,758 -
Totals 17,707,355$ 7,748,124$ 1,895,556$ 27,351,035$ 66,875$
continued
Business-type Activities
Enterprise Funds
49
CITY OF BOZEMAN, MONTANA
STATEMENT OF CASH FLOWS (CONTINUED) PROPRIETARY FUNDS
Year Ended June 30, 2016
The Notes to Financial Statements are an integral part of this statement.
Governmental
Activities
Waste Nonmajor Internal
Water Fund Water Fund Funds Total Service Funds
RECONCILIATION OF OPERATING INCOME (LOSS)
TO NET CASH FROM OPERATING ACTIVITIES
Operating income (loss)(343,515)$ 316,649$ (1,101,685)$ (1,128,551)$ (286,246)$
Adjustments to reconcile operating income (loss)
to net cash flows from operating activities
Depreciation and amortization 2,581,633 2,472,014 608,423 5,662,070 54,519
Change in estimated closure and
post-closure care costs - - (687,040) (687,040) -
Change in solvent site remediation obligation - (314,494) - (314,494) -
Other income 1,074,008 64,338 1,078,352 2,216,698 10,304
Change in assets and liabilities:
(Increase) Decrease in:
Accounts receivable 5,370 27,185 (120,146) (87,591) (2,868)
Prepaid expenses - - - - (382,541)
Increase (Decrease) in:
Accounts payable (15,193) (196,638) 363,829 151,998 (27,819)
Due from other city funds - - - - 11,274
Accrued employee benefits payable 33,136 28,289 21,222 82,647 2,654
Net pension (50,245) (38,027) (27,752) (116,024) (7,182)
Total adjustments 3,628,709 2,042,667 1,236,888 6,908,264 (341,659)
Net cash flows from operating activities 3,285,194$ 2,359,316$ 135,203$ 5,779,713$ (627,905)$
SUPPLEMENTAL CASH FLOW INFORMATION
Noncash transactions:
Donated infrastructure 5,178,425$ 5,997,522$ 111,707$ 11,287,654$ -$
Enterprise Funds
Business-type Activities
FIDUCIARY FUND FINANCIAL STATEMENTS
FIDUCIARY FUNDS
AGENCY FUNDS
Agency Funds are used to account for assets held by the City as an agent for individuals, private organizations, other governments, and/or other
funds.
Municipal Court – Accounts for monies held for appearance bonds and restitution.
CMC Bozeman Site Remediation – Accounts for pass-through monies provided by the State of Montana Department of Environmental
Quality to Olive & Wallace, LLC, to reimburse the cost of work performed as part of the Voluntary Cleanup Plan of the CMC Asbestos
Bozeman Facility.
Tourism Business Improvement District – Accounts for amounts collected from hotels on behalf of the District, a special-purpose
government, whose purpose is to enhance the economic vitality of Bozeman by promoting tourism through sales and marketing strategies.
50
CITY OF BOZEMAN, MONTANA
STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS
June 30, 2016
The Notes to Financial Statements are an integral part of this statement.
Agency
Funds
ASSETS
Cash and cash equivalents 821,788$
Customer receivables 785
Total assets 822,573$
LIABILITIES
Accounts payable 822,573$
Total liabilities 822,573$
NOTES TO FINANCIAL STATEMENTS
51
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS June 30, 2016
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
The City of Bozeman of Gallatin County, Montana (the City) was incorporated as a municipal corporation in 1883. The present City Code of
Ordinances was adopted October 3, 2011. Under the charter, the City is governed by a mayor and commission members who comprise the City Commission. The day-to-day affairs of the City are conducted under the supervision of the City Manager, who is appointed by and serves at the pleasure of a majority of the City Commission.
The accompanying financial statements of the City have been prepared in conformity with generally accepted accounting principles (GAAP) as
prescribed by the Governmental Accounting Standards Board (GASB), the accepted standard-setting body for establishing governmental accounting and financial reporting principles. In June 1999 the GASB issued Statement 34 Basic Financial Statements-and Management’s Discussion and Analysis-for State and Local Governments (GASB 34). This Statement establishes new financial reporting requirements for state
and local governments throughout the United States. It requires new information and restructures much of the information that governments have
presented in the past. Comparability with reports issued in prior years is affected.
The accompanying financial statements present the financial position of the City and the various funds and fund types, the results of operations of the City and the various funds and fund types, and the cash flows of the proprietary funds. The financial statements are presented as of June 30,
2016, and for the year then ended. The more significant accounting policies of the City are described below.
New Accounting Pronouncements The City implemented the provisions of the following GASB pronouncements for the year ended June 30, 2016:
• Statement No. 72, Fair Value Measurement and Application. This Statement addresses accounting and financial reporting issues related to
fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. This Statement provides guidance for determining a fair value measurement for financial reporting purposes. This Statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. This Statement is effective for fiscal years beginning after June 15, 2015.
• Statement No. 82, Pension Issues, an amendment of GASB No. 67, 68, and 73. The objective of this Statement is to address certain issues
that have been raised with respect to Statements No. 67, Financial Reporting for Pension Plans, No. 68, Accounting and Financial Reporting for Pensions, and No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. Specifically, this Statement addresses
issues regarding (1) the presentation of payroll-related measures in required supplementary information, (2) the selection of assumptions
and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes, and (3) the
classification of payments made by employers to satisfy employee (plan member) contribution requirements. This Statement is effective for fiscal years beginning after June 15, 2016, with early application encouraged.
52
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Reporting Entity
The City has considered all potential component units for which it is financially accountable and other organizations for which the nature and
significance of their relationship with the City are such that exclusion would cause the City’s financial statements to be misleading or incomplete. The Governmental Accounting Standards Board has set forth criteria to be considered in determining financial accountability in Statement 14 The
Financial Reporting Entity and Statement 61, The Financial Reporting Entity: Omnibus – an Amendment of GASB Statements No. 14 and No. 34.
These criteria include appointing a voting majority of an organization's governing body and (1) the ability of the City to impose its will on that
organization or (2) the potential for the organization to provide specific financial benefits to, or impose specific financial burdens on the City.
Although the following entities meet the requirements of Statement 61, they are strictly advisory in nature. Therefore, the government-wide financial
statements do not include the financial information of the following entities and their omission does not cause the City’s financial statements to be
misleading or incomplete. Should there develop a financial element at some point in the future, the City shall include these entities on its
government-wide financial statements.
Senior Center Advisory Council – This council is advisory in nature on senior issues and on how to run the City-owned Senior Center building. The City is responsible for the maintenance and operation of the building.
Parking Commission – The City Commission appoints the governing board of the Parking Commission, which was created by ordinance. The
City owns the parking lots, collects the rents, and assigns the lots to the individuals.
City Planning Board – The agreement forming the City Planning Board holds that it will submit its budget to the City Commission for approval,
and the City provides all accounting functions and is responsible for the issuance of debt. It is presented with the Special Revenue Funds.
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CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basis of Accounting/Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund
are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures, or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they
are to be spent and the means by which spending activities are controlled.
Government-Wide Financial Statements
The Government-Wide Financial Statements (the Statement of Net Position and the Statement of Activities) present information of all the non-
fiduciary activities of the primary government and its component units. These statements present summaries of Governmental and Business-Type Activities for the City accompanied by a total column.
These statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s
assets and liabilities, including capital assets and long-term liabilities, are included in the accompanying Statement of Net Position. The City has
retroactively included infrastructure in its assets.
The Statement of Activities presents changes in Net Position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. The types of transactions reported as program revenues
for the City are reported in three categories: 1) charges for services, 2) operating grants and contributions, and 3) capital grants and contributions.
Certain eliminations have been made as prescribed by GASB 34 in regards to inter-fund activities, payables, and receivables. All internal balances
in the Statement of Net Position have been eliminated, except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities,
internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not
been eliminated.
The City applies all applicable GASB pronouncements (including all National Council on Governmental Accounting Statements and Interpretations currently in effect) as well as the following pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or
contradict GASB pronouncements: Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board
(APB) Opinions, and Accounting Research Bulletins (ARB) of the Committee on Accounting Procedure.
54
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basis of Accounting/Measurement Focus (Continued)
Governmental Fund Financial Statements
Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures, and Changes in Fund Balances for
all major governmental funds and nonmajor funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in fund balances and changes in fund balances as presented in these statements to the net position and changes in net position presented in the
Government-Wide Financial Statements. The City has presented all major funds that met those qualifications.
All governmental funds are accounted for on a spending or “current financial resources” measurement focus and the modified accrual basis of
accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheets. The Statement of Revenues, Expenditures,
and Changes in Fund Balances present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current position. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both
measurable and available to finance expenditures of the current period. Accordingly, revenues are recorded when received in cash, except that
revenues subject to accrual (generally 60 days after year-end) are recognized when due. The primary revenue sources which have been treated as
susceptible to accrual by the City are property taxes, intergovernmental revenues, and other taxes.
Expenditures are recorded in the accounting period in which the related fund liability is incurred. The City has elected to apply the early recognition option of recognizing debt services expenditures provided by GASB Interpretation No. 6, Recognition and Measurement of Certain Liabilities and
Expenditures in Governmental Fund Financial Statements. Under this option, an expenditure and a liability are recorded in debt service funds in
the current year for amounts due early in the following year, for which resources have been provided during the current year.
Proprietary Fund Financial Statements
Proprietary Fund Financial Statements include a Statement of Net Position, a Statement of Revenues, Expenses, and Changes in Net Position, and a Statement of Cash Flows for each major proprietary fund. A column representing internal service funds is also presented with the Proprietary
Fund Financial Statements. Internal service balances and activities, however, have been combined with the governmental activities in the
Government-Wide Financial Statements.
Proprietary funds are accounted for using the “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all assets
and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses, and Changes
in Net Position present increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are
recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-
operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported
as non-operating expenses.
55
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basis of Accounting/Measurement Focus (Continued)
Fiduciary Fund Financial Statements
Fiduciary Fund Financial Statements include a Statement of Net Position. The City’s Fiduciary Funds represent Agency Funds, which are custodial
in nature (assets equal liabilities) and do not involve measurement of results of operations. Therefore, Agency Funds do not have a measurement
focus. These funds are accounted for using the accrual basis of accounting. The following Agency Funds are included in the Fiduciary Fund
financial statements:
Municipal Court – Accounts for monies held for appearance bonds and restitution related to criminal arrests and reimbursement for damage
caused.
CMC Bozeman Site Remediation Fund – Accounts for pass-through monies provided by the State of Montana Department of Environmental
Quality to Olive & Wallace, LLC, to reimburse the cost of work performed as part of the Voluntary Cleanup Plan of the CMC Asbestos
Bozeman Facility.
Tourism Business Improvement District – Accounts for amounts collected from hotels on behalf of the District, a special-purpose government,
whose purpose is to enhance the economic vitality of Bozeman by promoting tourism through sales and marketing strategies.
Internal Service Funds
Internal Service Funds are used to account for goods and services provided by one department to other departments of the City on a cost-reimbursement basis. These direct costs and certain indirect costs are included as part of the program expense reported for the individual functions
and activities of these other departments. The following Internal Service Funds are included in the Proprietary Fund Financial Statements:
Vehicle Maintenance Shop – Accounts for the maintenance and repair of vehicles used in the operation of City services.
Medical Health Insurance – Accounts for insurance premium revenues received from the various City departments and retirees, and the related
costs of health, vision, and dental insurance premiums incurred by City employees and retirees.
56
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Funds
As mentioned, the Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures, and Changes in
Fund Balances for all major governmental funds and nonmajor funds aggregated. The following major funds are presented in separate columns on the Governmental Funds Financial Statements, and the Proprietary Funds Financial Statements, respectively:
Governmental Funds
General Fund – this fund accounts for the financial operations of the City, which are not accounted for in any other fund. Principal sources of
revenue are property taxes, state and local shared revenues, licenses and permits, and charges for services provided to other funds. Principal
expenditures in the General Fund are made for police and fire protection, public welfare, and general government.
Street Impact Fees Special Revenue Fund – on January 22, 1996, the City Commission adopted fire, street, water, and waste impact fees in
Ordinance Number 1414. This fund accounts for the collection and expenditures associated with the street impact fees.
Street Maintenance Special Revenue Fund – Accounts for special assessment revenues levied, received, and expended for street maintenance
provided to specific property owners.
Building Inspection Special Revenue Fund – This fund was established to account for all activity of enforcing the building regulations adopted by the City. It includes all the money and staff associated with executing any aspect of the code enforcement program. Section 50-60-101
MCA established the code enforcement program requirement.
SID Sinking Debt Service Fund – Accounts for the accumulation of resources and payment of special assessment debt principal and interest
related to general improvement, sidewalk, and curb construction projects.
Proprietary Funds
Water Fund – Accounts for the City's water utility operations and to collect and administer water impact fees.
Waste Water Fund – Accounts for the City's sewer utility operations and to collect and administer waste water impact fees.
Use of Restricted/Unrestricted Net Position
When an expense is incurred for purposes for which both restricted and unrestricted net position are available, the City’s policy is to apply restricted net position first.
57
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Cash and Investments
Cash and investments are under the management of the City's Treasurer and consist primarily of demand deposits and investments in U.S.
Government Bonds. Interest income earned as a result of pooling of City deposits is distributed to the appropriate funds utilizing a formula based on the average balance of cash and investments of each fund.
Montana State statutes authorize the City to invest in interest-bearing savings accounts, certificates of deposits, and time deposits insured up to
$250,000 by the Federal Deposit Insurance Corporation or fully collateralized, U.S. government and U.S. agency obligations and repurchase
agreements where there is a master repurchase agreement and collateral held by a third party. Restricted Cash and Investments Certain proceeds of enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the
Balance Sheet because their use is limited by applicable bond covenants. Impact fees collected and line-oversizing fees are restricted for applicable
use. Payments in lieu of parking are restricted by code for future parking related capital projects. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Investments Fair Value The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The
hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical
assets (these investments are valued using prices quoted in active markets); Level 2 inputs are significant other observable inputs (these investments
are valued using matrix pricing); Level 3 inputs are significant unobservable inputs (these investments are valued using consensus pricing). Eliminations and Reclassifications In the process of aggregating data for the Statement of Net Position and the Statement of Activities, some amounts reported as inter-fund activity
and balances in the funds have been eliminated or reclassified. Internal service fund activity has also been eliminated in the Statement of Activities
to remove the “doubling-up” effect.
58
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Capital Assets
The City’s assets are capitalized at historical cost or estimated historical cost. City policy has set the capitalization threshold for reporting capital
assets at $5,000. Gifts or contributions of capital assets are recorded at fair market value when received. Depreciable capital assets are reported on the Statement of Net Position, net of applicable accumulated depreciation. Capital assets, which are not depreciable such as land, and construction
in progress are reported separately. Depreciation expense is reported in the Statement of Activities and is calculated using the straight-line method
based on the assets estimated useful life.
Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows:
Vehicles 5 to 10 years
Machinery and equipment 5 to 30 years
Buildings 20 to 80 years
Other structures and improvements 10 to 100 years
Infrastructure 25 to 100 years
In accordance with GASB 34, the City has recorded infrastructure assets prospectively from 2005, the date of implementation, and has included infrastructure acquired prior to implementation within the four-year required period. The City defines infrastructure as the basic physical assets that allow the City to function. These assets include the street system, comprised of roads, sidewalks, curbs, and street lights; the water purification and
distribution system; the sewer collection and treatment system; park and recreation lands and related improvements; stormwater conveyance system;
and buildings and site amenities, including parking and landscaped areas.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related capital assets, as applicable.
Compensated Absences Payable
Earned but unpaid vacation and sick pay is included as a liability in the proprietary fund types and Government-Wide Financial Statements. The portion relating to the governmental fund types not expected to be paid with expendable, and available resources is not reported in the governmental fund statements unless the liability has matured (i.e., unused reimbursable leave still outstanding following an employee's resignation or retirement).
59
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Inter-fund Receivables and Payables
During the course of operations, numerous transactions occur between individual funds that may result in amounts owed between funds. Those
short-term loans related to goods- and services-type transactions are classified as “due to and from other funds”. Long-term inter-fund loans (noncurrent portion) are reported as “advances to and from other funds”. Inter-fund receivables and payables between funds are eliminated in the
Statement of Net Position.
On-Behalf Payments for Fringe Benefits
On-behalf payments for fringe benefits are direct payments made by one entity to a third-party recipient for the employees of another legally separate entity. On-behalf payments include pension plan contributions. The State's pension contribution is recorded as intergovernmental revenue with an
offsetting public safety or general government expenditure in the Pension Special Revenue Fund. (See Note 14)
Budgets
Each year, the City Manager must submit to the City Commission a proposed operating budget for all budget units within the City for the fiscal year commencing July 1. This operating budget includes proposed expenditures and the means of financing them. Public hearings are conducted to
obtain citizen comments on the proposed budget. The budget is then legally adopted through passage of the appropriation resolution by the City
Commission.
The City adopts a final budget each June and amends the budget in August if the initial taxable value estimates were significantly different from the final Certified Values received from the State.
Budgets are legally required for all governmental fund types. These budgets are prepared on the same basis and using the same accounting practices
as are used to account and prepare financial reports for the funds. Budgets presented in this report for comparison to actual amounts are presented
in accordance with GAAP. Annual appropriated budgets are adopted for all funds and all appropriations lapse at year-end. The level of budgetary control (that is the level at which expenditures cannot legally exceed the appropriated amount) is established at the fund level.
The City Commission may amend the budget during the course of the fiscal year. Montana state statute provides a number of different ways to
amend the budget. The first involves a reallocation of existing appropriations among the line items within a specific fund. The second defines a
series of scenarios where the governing body has authority to amend the budget without a hearing for donations, land sales, and fee‐based budgets.
All other increases in appropriation authority that are not specifically permitted by statute must be approved through a public hearing process.
60
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Budgets (Continued)
Any accruing revenue of the municipality not appropriated and any balance at any time remaining after the purpose of an appropriation has been
satisfied or abandoned, may from time to time be appropriated to other uses that do not conflict with any uses for which specifically the revenue was accrued. A public hearing is required for an overall increase in appropriation authority, except in the case of an emergency.
In its annual appropriation resolution, the City Commission delegated budget amendment authority to the City Manager for the expenditure of funds
from any or all of the following: debt service funds, enterprise funds, internal service funds, trust funds, federal and state grants accepted and
approved by the governing body, special assessments, and donations. In all other funds, the City Manager may, without approval from the City Commission, make budget amendments as long as the total appropriation for the department is not exceeded.
Spending control is established by the total amount of expenditures budgeted for the fund, but management may exercise control at budgetary line
items.
Fund Balance In accordance with GASB Statement 54, the City reports fund balance for governmental funds in two general classifications, nonspendable and
spendable.
Nonspendable represents the portion of fund balance that is not in spendable form, such as inventories, and, in the general fund, long-term notes and loans receivable. Spendable fund balance is further categorized as restricted, committed, assigned, and unassigned.
The restricted fund balance category contains balances that can be spent only for the specific purposes stipulated by external parties or through
enabling legislation. External parties include grantors, debt covenants, votes, and laws and regulations of other governments.
The committed fund balance category includes amounts that can be used only for the specific purposes determined by a formal action of the government’s highest level of decision-making authority, the City Commission. The City Commission needs to formally adopt a Resolution in
order to establish, modify, or rescind a fund balance commitment.
Amounts in the assigned fund balance classification are intended to be used by the government for specific purposes but do not meet the criteria to be classified as restricted or committed. The City’s policy to authorize the assignment of fund balance is as follows: Assigned Fund Balance can be expressed and authorized directly by the City Commission or by an official to whom the Commission delegates the authority. The City
Commission delegates this authority to the City Manager.
61
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fund Balance (Continued)
On December 12, 2016, the Audit Committee accepted and approved the City Manager’s recommendation for the amount of General Fund balance
presented on page 29 to be assigned this fiscal year for the specific purposes listed on page 23. Included in the assigned fund balance for the general fund are assignments for the portion of the current general fund balance that is projected to be used to fund expenditures and other cash outflows in
excess of the expected revenues and other cash inflows projected for the next fiscal year.
Similarly the City Manager exercised his delegated authority to assign the major Capital Projects Fund balances presented on pages 29 and 143 for
the specific purposes listed on page 126.
Unassigned fund balance is the residual classification for the government’s general fund and includes all spendable amounts not contained in the
other classifications. In other funds, the unassigned classification should be used only to report a deficit balance resulting from overspending for
specific purposes for which amounts had been restricted, committed, or assigned.
When both restricted and unrestricted resources are available, spending will occur in the following order, for the identified fund types:
General Fund: Restricted, Committed, Assigned, Unassigned
Special Revenue Funds: Restricted, Committed, Assigned
Debt Service Funds: Assigned, Committed, Restricted
Capital Projects Funds: Restricted, Committed, Assigned
Minimum General Fund – Fund Balance The City does not maintain a stabilization fund. However, the City’s Charter requires an established minimum level of “General Fund Unreserved
Fund Balance”, in accordance with the Government Finance Officers’ Association (GFOA) Best Practices. The GFOA significantly changed their
Best Practice Recommendation in October 2009. As a result, in May 2010, the Commission increased the required minimum from 12% to 16 2/3%, or 2 months’ worth of revenues.
Net Position
In funds other than governmental, net position represent the difference between assets and liabilities. Net investment in capital assets consists of
capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used for the acquisition, construction, or improvement of those assets. Net position is reported as restricted when there are limitations imposed on its use either through enabling legislation
or through external restrictions imposed by creditors, grantors, or laws and regulations of other governments.
62
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 2. CASH AND INVESTMENTS
At June 30, 2016, the carrying amount of the City's deposits in local banks and investments is $83,649,024. Interest bearing account balances are
covered by the Federal Depository Insurance Corporation (FDIC) up to $250,000 per bank, per depositor. In additional, all noninterest bearing
transaction account balances are fully insured by FDIC coverage. The remaining balances are covered by collateral held by the pledging bank's agent in the City's name.
The City’s cash and investments are reported as follows:
Unrestricted Restricted Total
Governmental activities 39,932,277$ 15,543,924$ 55,476,201$
Business-type activities 19,441,277 7,909,758 27,351,035
Fiduciary funds 821,788 - 821,788
60,195,342$ 23,453,682$ 83,649,024$
Custodial credit risk for deposits is the risk that in the event of a financial institution failure, the City’s deposits may not be returned or the City will
not be able to recover the collateral securities in the possession of the outside party. The City minimizes custodial credit risk by restrictions set forth
in City policy and state law. The City’s policy requires deposits to be 104 percent secured by collateral valued at market value. The City Treasurer maintains a listing of financial institutions, which are approved for investment purposes. Types of securities that may be pledged as collateral are
detailed in Section 17-6-103 of the Montana Code Annotated (MCA). City policy requires that specific safeguards against risk of loss be evidenced
when the City does not physically hold the securities.
On June 30, 2016, the following interest rate risks and valuation inputs were associated with the City’s deposits and investments.
Credit Risk
Investment Maturities Rating Fair Value Valuation Inputs
Certificates of deposit
August 2016-
April 2018 NA 9,143,719$ Level 2
U.S. Government bonds November 2016-
June 2021 S&P AA+46,699,500 Level 2
U.S. Bank Municipal Investor Account N/A N/A 12,536,040 Level 2
State of Montana Short Term Investment Pool Account N/A N/A 11,500,000
Demand deposits N/A N/A 3,764,798
Petty cash N/A N/A 4,967
83,649,024$
63
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 2. CASH AND INVESTMENTS (CONTINUED)
Credit risk is defined as the risk that an issuer or other counterpart to an investments will not fulfill its obligation. The above credit risk rating
indicates the probability that the issuer may default in making timely principal and interest payments. The credit ratings presented in the previous
tables are provided by Standard and Poor’s Corporation (S&P). The City’s investment policy is to hold investments to maturity with the contractual understanding that these investments are low risk, locked in to a guaranteed rate of return, and are, therefore, not impacted significantly by changes
in short term interest rates. The City has no formal policy relating to interest risk and no formal policy relating to credit risk.
The City voluntarily participates in the STIP (Short Term Investment Pool) administered by the Montana Board of Investments. (MBOI). A local
government’s STIP ownership is represented by shares, the prices of which are fixed at $1.00 per share, and participants may buy or sell shares with one business days’ notice. STIP administrative expenses are charged daily against the STIP income, which is distributed on the first calendar day of
each month. Shareholders have the option to automatically reinvest their distribution income in additional shares. STIP is not registered with the
Securities and Exchange Commission. STIP is not FDIC insured or otherwise insured or guaranteed by the federal government, the State of Montana,
the Montana Board of Investments or any other entity against investment losses and there is no guaranteed rate of return on funds invested in STIP
shares. The Montana Board of Investments maintains a reserve fund to offset possible losses and limit fluctuations in STIP’s valuation. The STIP investment portfolio consists of securities with maximum maturity of 2 years. Information on investments held in the STIP can be found in the
Annual Report on the Montana Board of Investments website at http://investment.com/AnnualReportsAudits.
NOTE 3. PROPERTY TAX AND SPECIAL ASSESSMENTS REVENUE AND RECEIVABLES
Property Taxes
Real property taxes are assessed and collected each fiscal year according to the following property tax calendar:
Lien Date: December 1 for the 1st installment and June 1 for the 2nd installment
Levy Date: November 1
Due Dates: November 30th for the 1st installment and May 31 for the 2nd installment
Personal property taxes are assessed on January 1 of each year and billed in May, with payment due within thirty days.
Gallatin County collects all property taxes on behalf of the City and remits collections, including penalties and interest, on a monthly basis. The
County assesses a delinquency penalty of 2%. If taxes become delinquent, the County tax collector may sell the property to collect taxes due plus 0.83% per month interest.
64
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 3. PROPERTY TAX AND SPECIAL ASSESSMENTS REVENUE AND RECEIVABLES (CONTINUED)
Property Taxes (continued)
In the fund financial statements, the City accrues as receivable all property taxes received during the first sixty (60) days of the new fiscal year from
Gallatin County, in accordance with the modified accrual basis. In the government-wide financial statements, all taxes billed, but not yet collected
are accrued in accordance with the full accrual basis of accounting, as described in Note 1. Special Assessments
Special assessments receivable represent the uncollected amounts levied against benefited property for the cost of local improvements. Assessments
are payable over a period of 18 to 20 years and bear interest of 2.5% to 5.75% per annum. Recognition of the revenues from these assessments has
been deferred until both measurable and available in governmental funds. In the Government-Wide Financial Statements, however, these amounts are reported as revenues in the period they are levied. Once received, the monies will be used to meet the annual debt service requirements on related bonds and notes payable.
NOTE 4. DEFERRED INFLOWS AND OUTFLOWS OF RESOURCES
Deferred inflows of resources in the General Fund represent outstanding general property taxes at June 30, 2016. These amounts are reported as
revenue in the Government-Wide Financial Statements in the period in which they are levied. Deferred inflows in Special Revenue Funds represent
either revenues received but not considered earned or amounts to be received in the future that are recorded as receivables but not yet earned. The
deferred inflows in Debt Service Funds represent future assessments to be received to meet the related debt obligation. Deferred inflows and outflows in the Government-Wide Financial Statements relate to payments made on pension plans after the measurement date for the calculated
pension obligations.
NOTE 5. PREPAID RENT (OPERATING LEASE)
On October 22, 1992, the City signed a memorandum of understanding with Gallatin County, Montana, in which the City agreed to lease space from
the County's Law and Justice Center for the City Police Department and Municipal Court. The City paid to the County $765,000 during the
renovation of the building, which started 1993. The $765,000 constitutes rent for four rental terms of ten years each. During the term of the lease
and renewal of the lease, the principal balance of $765,000 will be decreased by equal annual rental payments in the amount of $19,125. If the City and County mutually agree to terminate the lease after the second ten-year term, the County will refund $369,750, to the City for the unused portion
of the rent. The lease began when renovations were complete on November 1, 1994. For the year ended June 30, 2016, rent expenditure was
$19,125 regarding this lease.
65
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 6. NOTES RECEIVABLE The City had the following notes receivable:
Special Revenue Funds
Economic Development Loan Fund 506,249$
Community Housing Fund 78,739
Housing Revolving Loan Fund 6,928
Enterprise Funds
Parking Fund 10,830
NOTE 7. CAPITAL ASSETS
In accordance with GASB 34, the City has reported all capital assets, with the exception of pre-July 1, 2001, infrastructure in the Government-Wide Statement of Net Position. For the year ended June 30, 2016, depreciation expense on capital assets was charged to the functions and programs as
follows:
Governmental Activities:
General Government 286,345$
Public Safety 559,680
Public Services 2,781,335
Public Welfare 705,209
Total depreciation expense - governmental activities 4,332,569$
Business-type Activities:
Parking 290,091$
Storm Water 81,149
Water 2,581,633
Waste Water 2,472,014
Solid Waste 237,183
Total depreciation expense - business-type activities 5,662,070$
66
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 7. CAPITAL ASSETS (CONTINUED)
All capital assets of the City are depreciable with the exception of land, and construction in process, when applicable. Capital assets activity of the
City for the year ended June 30, 2016, consisted of the following:
June 30, 2015 Additions Disposals Transfers June 30, 2016
GOVERNMENTAL ACTIVITIES
Non-depreciable:
Land 16,887,829$ 844,189$ (99,111)$ -$ 17,632,907$
Depreciable:
Buildings 32,410,407 158,251 - - 32,568,658
Other structures and improvements 1,148,427 - - - 1,148,427
Machinery and equipment 11,322,575 710,262 (287,043) - 11,745,794
Property under capital lease 435,737 - - - 435,737
Vehicles 3,188,785 370,742 (20,400) (754) 3,538,373
Infrastructure 146,912,547 12,035,473 - - 158,948,020
Total 212,306,307 14,118,917 (406,554) (754) 226,017,916
Accumulated depreciation (95,842,778) (4,332,569) 301,117 754 (99,873,476)
Total governmental activities 116,463,529$ 9,786,348$ (105,437)$ -$ 126,144,440$
BUSINESS-TYPE ACTIVITIES
Non-depreciable:
Land 4,873,558$ 94,749$ (25,768)$ -$ 4,942,539$
Water rights 2,120,142 - - - 2,120,142
Depreciable:
Buildings 112,431,720 559,976 - - 112,991,696
Other structures and improvements 30,808,133 - - - 30,808,133
Machinery and equipment 7,646,509 664,912 (185,922) - 8,125,499
Property under capital lease 519,943 - - - 519,943
Vehicles 1,915,373 123,918 (47,573) 754 1,992,472
Infrastructure 267,975,681 12,377,876 - - 280,353,557
Total 428,291,059 13,821,431 (259,263) 754 441,853,981
Accumulated depreciation (179,184,119) (5,662,070) 233,493 (754) (184,613,450)
Total business-type activities 249,106,940$ 8,159,361$ (25,770)$ -$ 257,240,531$
Total capital assets 365,570,469$ 17,945,709$ (131,207)$ -$ 383,384,971$
67
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 7. CAPITAL ASSETS (CONTINUED) Changes in accumulated depreciation are as follows for the year ended June 30, 2016:
June 30, 2015 Additions Disposals Transfers June 30, 2016
GOVERNMENTAL ACTIVITIES
Buildings (14,301,481)$ (832,742)$ -$ -$ (15,134,223)$
Other structures and improvements (1,023,265) (22,238) - - (1,045,503)
Machinery and equipment (8,018,483) (544,189) 286,582 - (8,276,090)
Property under capital lease (52,660) (31,106) - - (83,766)
Vehicles (2,523,344) (220,329) 14,535 754 (2,728,384)
Infrastructure (69,923,545) (2,681,965) - - (72,605,510)
Total governmental activities (95,842,778)$ (4,332,569)$ 301,117$ 754$ (99,873,476)$
BUSINESS-TYPE ACTIVITIES
Buildings (11,828,972)$ (2,347,945)$ -$ -$ (14,176,917)$
Other structures and improvements (27,321,150) (451,909) - - (27,773,059)
Machinery and equipment (5,879,493) (431,617) 185,920 - (6,125,190)
Property under capital lease (25,997) (25,679) 47,573 - (4,103)
Vehicles (1,822,227) (51,994) - (754) (1,874,975)
Infrastructure (132,306,280) (2,352,926) - - (134,659,206)
Total business-type activities (179,184,119) (5,662,070) 233,493 (754) (184,613,450)
Total accumulated depreciation (275,026,897)$ (9,994,639)$ 534,610$ -$ (284,486,926)$
NOTE 8. COMPENSATED ABSENCES The City’s policy relating to compensated absences is described in Note 1. The current portion is that which is expected to be paid within one year.
This amount is estimated based on past trends and expected upcoming events. Actual amounts could differ. Historically, compensated absences
have been liquidated primarily by the general fund and the proprietary funds.
68
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 8. COMPENSATED ABSENCES (CONTINUED)
Balance Balance
June 30, 2015 Incurred Satisfied June 30, 2016
Compensated absences:
Governmental activities 1,670,689$ 1,349,782$ (1,266,742)$ 1,753,729$
Business-type activities 550,966 450,041 (401,047) 599,960
Total compensated absences 2,221,655$ 1,799,823$ (1,667,789)$ 2,353,689$
Due within Due after
one year one year Total
Compensated absences:
Governmental activities 1,266,700$ 487,029$ 1,753,729$
Business-type activities 401,000 198,960 599,960
Total compensated absences 1,667,700$ 685,989$ 2,353,689$
NOTE 9. LONG-TERM DEBT
Governmental Activities Long-Term Debt The following is a summary of long-term debt transactions of the City’s governmental activities for the year ended June 30, 2016:
Balance Issuances and Repayments Balance
June 30, 2015 Additions and Deletions June 30, 2016
General obligation bonds 16,320,000$ -$ (750,000)$ 15,570,000$
Tax increment financing bonds 4,825,000 - (195,000) 4,630,000
Special assessment debt 890,500 - (228,000) 662,500
Intercap notes payable 963,274 47,409 (125,839) 884,844
Subtotal bonds and notes 22,998,774 47,409 (1,298,839) 21,747,344
Bond premiums 262,425 (13,458) 248,967
Compensated absences 1,670,689 1,349,782 (1,266,742) 1,753,729
Other post employment benefits liability 1,672,489 110,027 - 1,782,516
Net pension liability 14,414,020 1,579,037 - 15,993,057
Totals 41,018,397$ 3,086,255$ (2,579,039)$ 41,525,613$
69
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 9. LONG-TERM DEBT (CONTINUED)
Governmental Activities Long-Term Debt (Continued)
The above long-term debt of the City’s governmental activities is presented in the accompanying Statement of Net Position as follows:
Long-term
Current Portion Portion
(due within (due after Total
one year)one year)Long-Term Debt
General obligation bonds 860,000$ 14,710,000$ 15,570,000$
Tax increment financing bonds 205,000 4,425,000 4,630,000
Special assessment debt 27,000 635,500 662,500
Intercap notes payable 128,513 756,331 884,844
Bond premiums 13,458 235,509 248,967
Subtotal bonds and notes 1,233,971 20,762,340 21,996,311
Compensated absences 1,266,700 487,029 1,753,729
Other post employment benefits liability - 1,782,516 1,782,516
Net pension liability - 15,993,057 15,993,057
Totals 2,500,671$ 39,024,942$ 41,525,613$
General Obligation Bonds - The City issues general obligation bonds to provide funds for the acquisition and construction of major capital assets.
General obligation bonds are direct obligations of the City and are backed by the full faith and credit of the City. General obligation bonds currently
outstanding are as follows:
Due within
Interest Rate Amount one year
General Obligation Refunding Bonds, series 2012
serial maturities through 2021 1.50%1,300,000$ 250,000$
General Obligation TOP Bonds, Series 2013
serial maturities through 2034 2.00%9,280,000 405,000
General Obligation TOP Bonds, Series 2014
serial maturities through 2035 1.00%4,990,000 205,000
Total general obligations bonds 15,570,000$ 860,000$
70
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 9. LONG-TERM DEBT (CONTINUED)
Governmental Activities Long-Term Debt (Continued)
Annual debt service requirements to maturity for general obligation bonds are as follows:
Principal Interest Total
Year ending June 30,
2017 860,000$ 498,738$ 1,358,738$
2018 875,000 481,538 1,356,538
2019 895,000 464,038 1,359,038
2020 910,000 446,138 1,356,138
2021 925,000 426,863 1,351,863
2022-2026 3,565,000 1,842,138 5,407,138
2027-2031 4,225,000 1,182,100 5,407,100
2032-2036 3,315,000 296,600 3,611,600
15,570,000$ 5,638,153$ 21,208,153$
Tax Increment Financing Bonds - Tax Increment Financing (TIF) Bonds are not general obligations, but are special limited obligations of the City. The Series 2007 Bonds, the premium, and the interest thereon are not a charge against the general credit or taxing powers of the City. The bonds
are payable solely, and equally and ratably from the tax increment revenues received by the City from its Downtown Bozeman Improvement District.
If the incremental revenues are insufficient to pay the principal and interest due on the TIF bonds when due, such payment shortfall shall not
constitute a default under the TIF agreement. If and when the incremental revenues are sufficient, the City shall pay the amount of any shortfall to
the paying agent and registrar without any penalty interest or premium thereon. Due to the uncertainty of the future tax increment receipts, future payments on the TIF bonds may vary from the summary of debt service requirements. Annual debt services requirements to maturity for the TIF
bonds are as follows:
Principal Interest Total
Year ending June 30,
2017 205,000$ 220,488$ 425,488$
2018 210,000 212,288 422,288
2019 220,000 203,573 423,573
2020 230,000 194,222 424,222
2021 240,000 184,103 424,103
2022-2026 1,375,000 743,098 2,118,098
2027-2031 1,745,000 371,263 2,116,263
2032 405,000 20,250 425,250
4,630,000$ 2,149,285$ 6,779,285$
71
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 9. LONG-TERM DEBT (CONTINUED)
Governmental Activities Long-Term Debt (Continued)
Special Assessment Debt - Special assessment bonds are payable from the collection of special assessments levied against benefited property owners
within each special improvement district. To the extent that such special assessment collections are not sufficient to make the required debt service payments, the City is obligated to levy and collect a general property tax on all taxable property in the City to provide additional funding for the debt service payments. The cash balance in the SID Revolving Fund must equal at least 5% of the principal amount of bonds outstanding. If the
cash balance is less than 5%, a levy is required to bring the cash balance to the required minimum.
The City has issued various special assessment bonds with various maturities through 2025 at interest rates ranging from 2.5% to 5.75%. In addition, the City has issued two notes payable to finance special assessment projects. The following is a schedule of changes in special assessment debt:
Balance Balance
June 30, 2015 Issuances Repayments June 30, 2016
Special assessment bonds 605,000$ -$ (200,000)$ 405,000$
Note Payable to Department of Natural
Resources and Conservation, #WRF-05067 54,500 - - 54,500
Note Payable to Department of Natural
Resources and Conservation, #SRF-05132 231,000 - (28,000) 203,000
890,500$ -$ (228,000)$ 662,500$
Annual debt service requirements to maturity for special assessment notes payable are as follows:
Notes Payable
Principal Interest Total
Year ending June 30,
2017 26,500$ 5,020$ 31,520$
2018 30,000 4,470 34,470
2019 29,500 3,875 33,375
2020 32,000 3,270 35,270
2021 32,000 2,630 34,630
2022-2023 107,500 3,865 111,365
257,500$ 23,130$ 280,630$
72
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 9. LONG-TERM DEBT (CONTINUED)
Governmental Activities Long-Term Debt (Continued)
Annual debt service requirements to maturity for special assessment bonds are as follows:
Special
Assessment
Bonds
Year ending June 30,
2017 -$
2018 -
2019 65,000
2020 65,000
2021 65,000
2022-2026 210,000
405,000$
Substantially all special assessment bonds mature 18 to 20 years after the date of issuance but are redeemable at the option of the City whenever cash is available in the respective funds for each issue. The City follows the policy of early redemption on these bonds. Accordingly, a schedule
of future interest payments through maturity of the bonds is deemed to be not meaningful and has been excluded.
The net revenues of the water fund have been pledged as collateral to secure the debt service related to SID 665. This collateral is subordinate to
commitments made prior to July 12, 1993, to pledge this collateral as a guarantee of the payment of other debt. In the event that the resources available to service debt related to SID 665 are insufficient, the City shall transfer amounts from the water fund to satisfy this obligation. The
District will be under no obligation to reimburse the water fund for any such transfer. At this time, the City does not anticipate the need to make
any such transfers.
Intercap Loans – The City entered in a loan agreement with the Montana Board of Investments to partially finance the reconstruction of South Eight Avenue. This intercap loan payable had a balance outstanding at June 30, 2016, as follows:
Due within Due after
one year one year Total
Note payable to Montana Board of Investments in uneven semi-annual
installments including interest at variable rates, as set by MBOI, up to 1.5%
through August 2022 128,513$ 756,328$ 884,841$
73
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 9. LONG-TERM DEBT (CONTINUED)
Governmental Activities Long-Term Debt (Continued)
The debt service requirements for the intercap loan at June 30, 2016, are as follows:
Principal Interest Total
Year ending June 30,
2017 128,513$ 24,228$ 152,741$
2018 129,809 20,450 150,259
2019 131,118 16,635 147,753
2020 132,440 12,781 145,221
2021 133,774 8,889 142,663
2022-2026 214,071 5,950 220,021
2027 15,116 - 15,116
884,841$ 88,933$ 973,774$ Business-type Activities Long-Term Debt Revenue Bonds - The City also issues bonds where the City pledges income derived from the acquired or constructed assets to pay debt service.
Water Revenue Bonds
Water revenue bonds outstanding at June 30, 2016, are as follows:
Balance Repayments Balance Long-Term
June 30, 2015 Issuances and Settlements
June 30, 2015 Due in One Year Portion
State Revolving Fund Revenue Bond - 12247
Series 2011A, serial maturities through 2032, 3% interest rate $ 8,698,000 $ - $ (415,000) $ 8,283,000 $ 427,000 7,856,000$
State Revolving Fund Revenue Bond - 13291
Series 2011B, serial maturities through 2032, 3% interest rate 8,667,000 - (383,000) 8,284,000 395,000 7,889,000
17,365,000$ -$ (798,000)$ 16,567,000$ 822,000$ 15,745,000$ The revenue bond ordinances specifies that the City shall establish various restricted asset accounts and distribute the net revenues for the water fund to the restricted asset accounts and set user rates at levels which will generate minimum net revenues, as defined. The revenue bond ordinances
specify that City management and/or the City Commission shall take corrective actions to bring the City into compliance with the revenue bond
ordinances, if necessary, and that bondholders shall have the right to institute proceedings, judicial or otherwise, to enforce the covenants of the
revenue bond ordinances. The City is in compliance with applicable covenants as of June 30, 2016.
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CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 9. LONG-TERM DEBT (CONTINUED)
Business-type Activities Long-Term Debt (Continued)
Water revenue bond debt service requirements to maturity are as follows:
Principal Interest Total
Year ending June 30,
2017 822,000$ 327,260$ 1,149,260$
2018 847,000 310,700 1,157,700
2019 872,000 293,630 1,165,630
2020 898,000 276,060 1,174,060
2021 926,000 257,960 1,183,960
2022-2026 5,065,000 998,490 6,063,490
2027-2031 5,877,000 456,420 6,333,420
2032 1,260,000 21,970 1,281,970
16,567,000$ 2,942,490$ 19,509,490$
Due within one year $ 822,000
Due after one year 15,745,000
16,567,000$
The revenue bond ordinance specifies that the City shall establish various restricted asset accounts and distribute the net revenues for the water fund
to the restricted asset accounts and set user rates at levels that will generate minimum net revenues, as defined. The revenue bond ordinances specify
that City management and/or the City Commission shall take corrective actions to bring the City into compliance with the revenue bond ordinances,
if necessary, and that bondholder shall have the right to institute proceedings, judicial or otherwise, to enforce the covenants of the revenue bond ordinances. The City is in compliance with applicable covenants as of June 30, 2016.
75
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 9. LONG-TERM DEBT (CONTINUED)
Business-type Activities Long-Term Debt (Continued)
Waste Water Revenue Bonds
Waste Water revenue bonds outstanding at June 30, 2016, are as follows:
Balance Repayments Balance Long-Term
Interest Rate June 30, 2015 and Settlements June 30, 2016 Due in One Year Portion
Waste Water State Revolving -10252
Series 2010B, serial maturities through 2030 1.75% $ 272,000 $ (16,000) $ 256,000 17,000$ 239,000$
Waste Water Reclamation Facility Revenue Bonds - 10230,
Series 2010D, serial maturities through 2030 3.00% 7,506,000 (420,000) 7,086,000 433,000 6,653,000
Waste Water Reclamation Facility Revenue Bonds - 10262,
Series 2010F, serial maturities through 2030 3.00% 661,000 (36,000) 625,000 36,000 589,000
Waste Water Reclamation Facility Revenue Bonds ARRA A- 10261,
Series 2010E, serial maturities through 2030 0.00% 384,000 - 384,000 - 384,000
Waste Water Reclamation Facility Revenue Bonds - 11291,
Series 2010C, serial maturities through 2031 3.00% 807,000 (42,000) 765,000 43,000 722,000
Waste Water Reclamation Facility Revenue Bonds - 11292,
Series 2010G, serial maturities through 2031 3.00% 2,430,565 (121,000) 2,309,565 125,000 2,184,565
Waste Water Reclamation Facility Revenue Bonds - 11281
Series 2010H, serial maturities through 2031 3.00%7,912,000 (407,000) 7,505,000 420,000 7,085,000
19,972,565$ (1,042,000)$ 18,930,565$ 1,074,000$ 17,856,565$
76
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 9. LONG-TERM DEBT (CONTINUED)
Business-type Activities Long-Term Debt (Continued)
Waste Water Revenue Bonds (Continued)
Waste water revenue bond debt service requirements to maturity are as follows:
Principal Interest Total
Year ending June 30,
2017 1,074,000$ 380,600$ 1,454,600$
2018 1,109,000 358,184 1,467,184
2019 1,141,000 335,059 1,476,059
2020 1,175,000 311,224 1,486,224
2021 1,211,000 286,669 1,497,669
2022-2026 6,648,000 1,037,058 7,685,058
2027-2031 6,572,565 279,201 6,851,766
18,930,565$ 2,987,995$ 21,918,560$
Due within one year $ 1,074,000
Due after one year 17,856,565
18,930,565$
Stormwater Revenue Bonds
Waste Water revenue bonds outstanding at June 30, 2016, are as follows. No debt service schedule has been established, as there has only been one draw-down from the total approved amount of $1,815,000.
Balance Repayments Balance Long-Term
Interest Rate June 30, 2015 Issuances and Settlements June 30, 2016 Due in One Year Portion
Stormwater System Revenue Bond, Series 2015 2.00% $ 229,750 $ 1,281,680 $ (71,000) $ 1,440,430 73,000$ 1,367,430$
77
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 9. LONG-TERM DEBT (CONTINUED)
Industrial Revenue and Private Activity Bonds
The City issues tax exempt industrial revenue and private activity bonds to finance construction of facilities within the City, which it sells on
installment contracts to the facilities' users. The bonds and the interest payable thereon are not obligations of the City and do not constitute or give rise to a pecuniary liability or contingent liability of the City or a charge against the general credit or taxing power of the City. The bonds are issued
under and collateralized by the indentures and are payable solely from the payments to be made pursuant to the loan agreements between the City
and the facilities users. The bonds are not a lien on any of the City’s properties or revenues, other than the facilities for which they were issued.
To provide financial assistance for the acquisition and improvements of the building occupied by a private elementary school, the City has issued a Private Activity Revenue Bond. This bond is secured by the property financed and is payable solely from payments received on the underlying
mortgage loan. Upon repayment of the bond, ownership of the acquired facility transfers to the private-sector entity served by the bond issuance.
Neither the City nor any political subdivision thereof is obligated in any manner for repayment of the bond. Accordingly, the bond is not reported
as a liability in the accompanying financial statements. As of June 30, 2016, the Revenue Bond outstanding had an aggregate principal amount
payable of $270,149.
NOTE 10. CAPITAL LEASE OBLIGATIONS
On April 30, 2012, the City entered into a lease for an Elgin street sweeper. The lease term is five years payable in annual installments of $33,495 at 3.3%. The total amount capitalized of $185,530 represents the present value of the future lease payments. The payments for this obligation are
being recorded in the street maintenance fund.
In 2014, the City entered into a lease for a motor grader with Caterpillar. The lease term is 6 years payable in annual installments of $27,500 at
3.25%. The total amount capitalized of $234,300 represents the present value of the future lease payments. The payments for this obligation are being recorded in the street maintenance fund.
In 2015, the City entered into a lease for a copier. The lease term is 5 years payable in monthly installments of $300. The total amount capitalized
of $15,907 represents the present value of the future lease payments. The payments for this obligation are being recorded in the general fund.
78
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 10. CAPITAL LEASE OBLIGATIONS (CONTINUED)
In 2015, the City entered into a lease for an Elgin street sweeper. The lease term is five years payable in annual installments of $27,525 at 3.25%.
The total amount capitalized of $152,570 represents the present value of the future lease payments. The payments for this obligation are being
recorded in the stormwater fund.
In 2015, the City entered into a lease for a Vactor vacuum truck. The lease term is six years payable in annual installments of $57,810 at 3.30%.
The total amount capitalized of $367,373 represents the present value of the future lease payments. The payments for this obligation are being
recorded in the stormwater fund.
The capital lease balance outstanding at June 30, 2016, is as follows:
Balance Balance
June 30, 2015 Issuances Repayments June 30, 2016
Governmental Activities:
2012 Street Sweeper $ 63,802 -$ $ (31,381) $ 32,421
Caterpillar 2014 216,651 - (12,233) 204,418
Savin Copier 2015 15,459 - (2,797) 12,662
$ 295,912 -$ $ (46,411) $ 249,501
Business-Type Activities:
2015 Street Sweeper $ 125,035 -$ $ (23,411) $ 101,624
2015 Vactor Vacuum Truck 309,563 - (47,438) 262,125
$ 434,598 -$ $ (70,849) $ 363,749
79
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 10. CAPITAL LEASE OBLIGATIONS (CONTINUED)
The following is a schedule, by year, of future minimum lease payments under capital leases, together with the present value of minimum lease
payments at June 30, 2016:
Governmental Business-Type
Activities Activities
Year ending June 30,
2017 $ 54,905 $ 85,345
2018 21,410 85,345
2019 21,411 85,345
2020 173,132 85,345
2021 - 57,812
Less amount representing interest (21,357) (35,443)
Present value of future minimum lease payments 249,501$ 363,749$ The property under capital lease and the corresponding accumulated depreciation at June 30, 2016, is as follows:
Governmental Business-Type
Activities Activities
Machinery and equipment 435,737$ 519,943$
Less: accumulated depreciation (83,766) (77,991)
351,971$ 441,952$ NOTE 11. CLASSIFICATION OF NET POSITION
In the Government-Wide Financial Statements, net position are classified in the following categories:
Net Investment in Capital Assets – This category groups all capital assets, including infrastructure in future years, into one component
of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction, or
improvement of these assets reduce this category.
Restricted Net Position – This category represents external restrictions imposed by creditors, grantors, contributors, or laws or
regulations of other governments, and restrictions imposed by law through constitutional provision or enabling legislation. Net Position is presented as restricted by major purpose.
Unrestricted Net Position – This category represents the net position of the City that are not restricted for any project or other purpose.
80
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 11. CLASSIFICATION OF NET POSITION (CONTINUED)
In the Fund Financial Statements, commitments and assignments segregate portions of fund balance that are either not available or have been
earmarked for specific purposes. The various commitments and assignments are established by actions of the City Commission and
Management and can be increased, reduced, or eliminated by similar actions. Refer to Note 25 for a further disclosure related to net position classifications.
NOTE 12. DEFICIT FUND BALANCES
At June 30, 2016, the following fund had a deficit fund balance: Stormwater fund ($513,605).
The deficit fund balance in the Stormwater fund is due to a transfer out of $1,234,760 to the Solid Waste fund of the proceeds of a partial
drawdown of a $2.135 million loan from the State of Montana Revolving Loan fund in order to identify and put in place a system to limit the
migration of volatile organic compounds from the landfill (refer to Note 20). The Loan is secured by the Stormwater fund but will be repaid through a property tax levy deduction, so this deficit will be eliminated by transfers in from the General fund of this property tax revenue. Additionally, budgeted revenues in the Stormwater fund are estimated to exceed budgeted expenses in the upcoming year, so the budget surplus
will also serve to eliminate this deficit. As of the report date, the deficit in the Stormwater fund has been reduced to ($222,613).
NOTE 13. DEFERRED COMPENSATION PLAN
The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available
to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees
until termination, retirement, death, or unforeseeable emergency. In accordance with GASB Statement No. 32, the City does not report any balances related to the deferred compensation plan, as these amounts
represent neither assets nor liabilities to the City, and the plan is administered by an independent third party.
81
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS
Plan Description and Provisions
All City of Bozeman full-time employees participate in one of three statewide, cost-sharing, multiple-employer, retirement benefit plans administered
by the Public Employees Retirement Division (PERD). Contributions to the three plans are as required by State statute. Fiscal years 2016 and 2015 total payroll and covered payroll for all retirement plans were $20,234,004 and $21,311,975, respectively. Financial information for all three plans
is reported in the Public Employees' Retirement Board's published Comprehensive Annual Financial Report for the fiscal year-end. It is available
from the PERD at 100 North Park Avenue, Suite 220, P.O. Box 200131, Helena, MT 59620-0131. The authority to establish, amend, and provide
cost of living adjustments to all three plans is assigned to the State legislature. The authority to establish and amend contribution rates to all three
plans is also assigned to the State legislature. Public Employees' Retirement System (PERS) Plan Description
The PERS-Defined Benefit Retirement Plan (DBRP), administered by the Montana Public Employee Retirement Administration (MPERA), is a
multiple-employer, cost-sharing plan established July 1, 1945, and governed by Title 19, chapters 2 & 3, Montana Code Annotated (MCA). This plan covers the State, local governments, certain employees of the Montana University System, and school districts.
All new members are initially members of the PERS-DBRP and have a 12-month window during which they may choose to remain in the PERS-
DBRP or join the PERS-DCRP by filing an irrevocable election. Members may not be members of both the defined contribution and defined benefit
retirement plans. All new members from the universities also have a third option to join the university system’s Montana University System Retirement Program (MUS-RP).
The PERS-DBRP provides retirement, disability, and death benefits to plan members and their beneficiaries. Benefits are established by state law
and can only be amended by the Legislature.
82
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Public Employees' Retirement System (PERS)
Summary of Benefits
Eligibility for benefit Service retirement: Hired prior to July 1, 2011: Age 60, 5 years of membership service;
Age 65, regardless of membership service; or
Any age, 30 years of membership service.
Hired on or after July 1, 2011: Age 65, 5 years of membership services; Age 70, regardless of membership service.
Early retirement, actuarially reduced:
Hired prior to July 1, 2011: Age 50, 5 years of membership service; or
Any age, 25 years of membership service.
Hired on or after July 1, 2011: Age 55, 5 years of membership service. Vesting 5 years of membership service
Member’s highest average compensation (HAC)
Hired prior to July 1, 2011 – highest average compensation during any consecutive 36 months;
Hired on or after July 1, 2011 – highest average compensation during any consecutive 60 months;
Monthly benefit formula Members hired prior to July 1, 2011:
• Less than 25 years of membership service: 1.785% of HAC per year of service credit;
• 25 years of membership service or more: 2% of HAC per year of service credit.
Members hired on or after July 1, 2011:
• Less than 10 years of membership service: 1.5% of HAC per year of service credit;
• 10 years or more, but less than 30 years of membership service: 1.785% of HAC per year of service credit;
• 30 years or more of membership service: 2% of HAC per year of service credit.
83
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED)
Public Employees' Retirement System (PERS) (Continued)
Summary of Benefits (Continued)
Guaranteed Annual Benefit Adjustment (GABA)* After the member has completed 12 full months of retirement, the member's benefit increases by the applicable percentage (provided below)
each January, inclusive of other adjustments to the member's benefit.
• 3% for members hired prior to July 1, 2007
• 1.5% for members hired on or after July 1, 2007
• Members hired on or after July 1, 2013: (a) 1.5 for each year PERS is funded at or above 90%; (b) 1.5% is reduced by 0.1% for each
2% PERS is funded below 90%; and (c) 0% whenever the amortization period for PERS is 40 years or more.
Overview of Contributions Rates are specified by state law for periodic member and employer contributions and are a percentage of the member’s compensation. Contributions
are deducted from each member’s salary and remitted by participating employers. The State legislature has the authority to establish and amend
contribution rates to the plan. Member and employer contribution rates are shown in the table below.
1. Member contributions to the system of 7.90% of member’s compensation are temporary and will be decreased to 6.9% on January 1 following
actuary valuation results that show the amortization period has dropped below 25 years and would remain below 25 years following the reduction of both the additional employer and additional member contribution rates.
2. Employer contributions to the system:
a. Effective July 1, 2014, following the 2013 Legislative Session, PERS-employer contributions increase an additional 0.1% a year and
will continue over 10 years through 2024. The additional employer contributions including the 0.27% added in 2007 and 2009, will
terminate on January 1 following an actuary valuation that shows the amortization period of the PERS-DBRP has dropped below 25 years and remains below the 25 years following the reduction of both the additional employer and member contributions rates. State and
University System employers are required to contribute 8.27% of members’ compensation.
b. Effective July 1, 2013, employers are required to make contributions on working retirees’ compensation. Member contributions for
working retirees are not required.
c. The portion of employer contributions allocated to the PCR are included in the employers reporting. The PCR was paid off effective March 2016 and the contributions previously directed to the PCR are now directed to member accounts
84
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Public Employees' Retirement System (PERS) (Continued)
Overview of Contributions (Continued)
3. Non Employer Contributions a. Special Funding i. The State contributes 0.1% of members’ compensation on behalf of local government entities.
ii. The State contributes 0.37% of members’ compensation on behalf of school district entities.
b. Not Special Funding
i. The State contributes a portion of Coal Severance Tax income and earnings from the Coal Trust Permanent Trust Fund
Stand-Alone Statements
The PERS financial information is reported in the Public Employees’ Retirement Board’s Comprehensive Annual Financial Report for the fiscal
year ended. It is available from the PERB at 100 North Park, PO Box 200131, Helena, MT 59620-0131, 406-444-3154. CAFR information including stand-alone financial statements can be found at http://mpera.mt.gov/annualreports.shtml. The latest actuarial valuation and experience study can be found at http://mpera.mt.gov/actuarialvaluations.shtml.
State &
Fiscal Universities
Year Employer Employer State Employer State
Hired Hired
<7/01/11 >7/01/11
2016 7.9%7.9%8.370%8.270%0.10%8.00%0.370%
2015 7.9%7.9%8.270%8.170%0.10%7.90%0.370%
2014 7.9%7.9%8.170%8.070%0.10%7.80%0.370%
2012-2013 6.9%7.9%7.170%7.070%0.10%6.80%0.370%
2010-2011 6.9%7.170%7.070%0.10%6.80%0.370%
2008-2009 6.9%7.035%6.935%0.10%6.80%0.235%
2000-2007 6.9%6.900%6.800%0.10%6.80%0.100%
School DistrictsLocal Government
Member
85
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED)
Public Employees' Retirement System (PERS) (Continued)
Actuarial Assumptions
The total pension liability (TPL) was determined by an actuarial valuation date of June 30, 2014, with update procedures to roll forward the TPL to
June 30, 2015. There were several significant assumptions and other inputs used to measure the total pension liability. The actuarial assumptions used in the June 30, 2014, valuation were based on the results of the last actuarial experience study, dated May 2010, for the six-year period July 1, 2003 to June 30, 2009. Among those assumptions were the following:
• Investment Return 7.75%
• Admin expense as a % of payroll 0.27%
• General Wage Growth* 4.00%
• *includes Inflation at 3.00%
• Merit Increases 0% to 6%
• Postretirement Benefit Increases
Guaranteed annual Benefit Adjustment (GABA). After the member has completed 12 full months of retirement, the member’s benefit increases
by the applicable percentage each January, inclusive of other adjustments to the members’ benefit.
° 3% for members hired prior to July 1, 2007
° 1.5% for members hired between July 1, 2007 and June 30, 2013
° Members hired on or after July 1, 2013: a) 1.5% for each year PERS is funded at or above 90%;
b) 1.5% is reduced by 0.1% for each 2% PERS is funded below 90%; and
c) 0% whenever the amortization period for PERS is 40 years or more.
86
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED)
Public Employees' Retirement System (PERS) (Continued)
Actuarial Assumptions (Continued)
• Mortality assumptions among contributing members, terminated vested members, service retired members and beneficiaries are based on RP 2000 Combined Employee and Annuitant Mortality Tables projected to 2015 with scale AA/
• Mortality assumptions among Disabled Retirees are based on RP 2000 Combined Employee and Annuitant Mortality Tables with no
projections. No future mortality improvement is assumed.
Discount Rate The discount rate used to measure the TPL was 7.75%. The projection of cash flows used to determine the discount rate assumed that contributions
from participating plan members, employers, and non- employer contributing entities will be made based on the Board’s funding policy, which
establishes the contractually required rates under Montana Code Annotated. The State contributes 0.1% of salaries for local governments and
0.37% for school districts. In addition, the State contributes coal severance tax and interest money from the general fund. The interest is contributed monthly and the severance tax is contributed quarterly. Based on those assumptions, the System’s fiduciary net position was projected to be adequate to make all the projected future benefit payments of current plan members through the year 2123. Therefore, the long-term expected rate
of return on pension plan investments was applied to all periods of projected benefit payments to determine the TPL. A municipal bond rate was
not incorporated in the discount rate.
87
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED)
Public Employees' Retirement System (PERS) (Continued)
Target Allocations
The long-term expected return on pension plan assets is reviewed as part of the regular experience study prepared for the System. The most recent analysis, performed for the period of fiscal years 2003 through 2009, is outlined in a report dated June 2010 and is located on the MPERA
website. Several factors are considered in evaluating the long-term rate of return assumption. These factors include rates of return adopted by
similar public sector systems, as well as the utilization of a building block method in which best-estimate ranges of expected future real rates
of return (expected returns, net of pension plan investment expense and inflation) are developed by an investment consultant for each major
asset class. These ranges were combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and then adding expected inflation. The assumption is intended to be a long-term assumption and is
not expected to change absent a significant change in the asset allocation, a change in the inflation assumption, or a fundamental change in the
market that alters expected returns in future years. Summarized in the table below are best estimates of the arithmetic real rates of return for
each major asset class included in the System’s target asset allocation as of June 30, 2015.
Sensitivity Analysis
1.0% Decrease Current Discount 1.0% Increase
at 6.75%Rate at 8.75%
City of Bozeman's proportion $20,664,965 $13,403,285 $7,270,964
The above table presents the net pension liability (NPL) calculated using the discount rate of 7.75%, as well as what the NPL would be if it were
calculated using a discount rate that is 1.00% lower (6.75%) or 1.00% higher (8.75%) than the current rate.
Asset Class
Target Asset
Allocation
Long-Term Expected Real
Rate of Return
Cash Equivalents 2.00%-0.25%
Real Estate 8.00%4.25%
Fixed Income 24.00%1.25%
Private Equity 12.00%8.00%
Domestic Equity 36.00%4.55%
Foreign Equity 18.00%6.10%
88
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED)
Public Employees' Retirement System (PERS) (Continued)
Summary of Significant Accounting Policies
The Montana Public Employee Retirement Administration (MPERA) prepares its financial statements using the accrual basis of accounting. For
the purposes of measuring the NPL; deferred inflows of resources and deferred outflows of resources related to pensions; pension expense; information about the fiduciary net position; and, additions to/deductions from fiduciary net position have been determined on the same accrual basis as they are reported by MPERA. For this purpose, member contributions are recognized in the period in which contributions are due. Employer
contributions are recognized when due and the employer has made a formal commitment to provide the contributions. Revenues are recognized in
the accounting period they are earned and become measurable. Benefit payments and refunds are recognized in the accounting period when due
and payable in accordance with the benefit terms. Expenses are recognized in the period incurred. Investments are reported at fair value. MPERA adheres to all applicable Governmental Accounting Standards Board (GASB) statements. Pension Amounts
GASB Statement 68, Paragraph 74 requires that when employees are provided benefits through more than one pension system, whether provided through cost-sharing, single-employer, or agent pension plans, the employer must combine the amounts reported as a total or aggregate for all
pensions.
Net Pension Liability In accordance with GASB Statement 68, Accounting and Financial Reporting for Pensions, employers and the non-employer contributing entity are
required to recognize and report certain amounts associated with their participation in the Public Employees’ Retirement System (PERS). Statement
68, which became effective June 30, 2015, includes requirements for employers to record and report their proportionate share of the collective NPL,
pension expense, and deferred inflows and deferred outflows of resources associated with pensions.
PERS has a special funding situation in which the State of Montana is legally responsible for making contributions directly to PERS on behalf of
the employers. Due to the existence of this special funding situation, the State is required to report a proportionate share of a local government or school district’s collective NPL that is associated with the non-State employer.
The State of Montana also has a funding situation that is not special funding whereby the State general fund provides contributions from the coal
tax severance fund. All employers are required to report the portion of coal tax severance income and earnings attributable to the employer.
The TPL used to calculate the NPL was determined by an actuarial valuation as of June 30, 2014, with update procedures to roll forward the
TPL to the measurement date of June 30, 2015. For most employers, their June 30, 2016, reporting will use the 2016 reporting values presented in these notes.
89
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED)
Public Employees' Retirement System (PERS) (Continued)
Net Pension Liability (Continued)
Net Pension Liability as of
6/30/16
Net Pension Liability as of
6/30/15
Percent of Collective NPL as
of 6/30/16
Percent of Collective NPL as
of 6/30/15
Change in Percent of
Collective NPL
City of Bozeman Proportionate Share $ 13,403,285 $ 11,401,613 0.9588350%0.9150490%0.0437860%
State of Montana Proportionate Share associated 164,637$ 139,231$ 0.0117780%0.0111740%0.0006040%
Total 13,567,922$ 11,540,844$ 0.9706130%0.9262230%0.0443900% The table above displays the employer proportionate share of the NPL and the employer’s proportion of NPL for June 30, 2015 and 2016. The
employer’s proportion of the NPL was based on the employer’s contributions received by PERS during the measurement period July 1, 2014,
through June 30, 2015, relative to the total employer contributions received from all PERS’ participating employers. As of the employer's reporting
date the employer recorded a liability of $ 13,403,285 and the employer's proportionate share was 0.958835%. Changes in actuarial assumptions and methods: There were no changes in assumptions or other inputs that affected the measurement of the TPL.
Changes in benefit terms: There have been no changes in benefit terms since the previous measurement date.
Changes in proportionate share: Between the measurement date of the collective NPL and the employer’s reporting date, there were no significant changes in proportion that had an effect on the employer’s proportionate share of the collective NPL.
Pension Expense
At June 30, 2016, the employer recognized a pension expense of $1,063,870 for its proportionate share of the PERS’ pension expense. The employer also recognized grant revenue of $10,230 for the support provided by the State of Montana for its proportionate share of the pension expense that is associated with the employer and grant revenue of $321,664 from the coal tax fund.
90
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED)
Public Employees' Retirement System (PERS) (Continued)
Recognition of Deferred Inflows and Outflows
At June 30, 2016, the employer reported its proportionate share of PERS’ deferred outflows of resources and deferred inflows of resources related
to PERS from the following sources:
Deferred Outflows of
Resources
Deferred Inflows of
Resources
Differences between actual and expected
experience -$ 81,091$
Changes in assumptions -$ -$
Difference between projected and actual
investment earnings -$ 1,134,731$
Changes in proportion differences between
employer contributions and proportionate share
of contributions 528,216$ -$
Employer contributions subsequent to the
measurement date 1,052,437$ -$
Total 1,580,653$ 1,215,822$
Amounts reported as deferred outflows of resources related to pensions resulting from the employer's contributions subsequent to the measurement date will be recognized as a reduction of the NPL beginning in the year ended June 30, 2017.
Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in Pension Expense as follows:
Year ended June 30:
Amount of deferred
outflows and deferred
inflows recognized in future
years as an increase or
(decrease) to pension
expense
2017 (325,970)$
2018 (325,970)$
2019 (330,787)$
2020 295,122$
2021 -$
Thereafter -$
91
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED)
Firefighters’ Unified Retirement System (FURS)
Plan Description
The Firefighters’ Unified Retirement System (FURS), administered by the Montana Public Employee Retirement Administration (MPERA), is a multiple-employer, cost-sharing defined benefit plan established in 1981, and governed by Title 19, chapters 2 & 13, MCA. This plan provides
retirement benefits to firefighters employed by first- and second-class cities, other cities and rural fire district departments that adopt the plan, and
to firefighters hired by the Montana Air National Guard on or after October 1, 2001. Benefits are established by state law and can only be amended
by the Legislature. The FURS provides retirement, disability, and death benefits to plan members and their beneficiaries. Summary of Benefits
Eligibility for benefit 20 years of membership service, regardless of age. At Age 50, 5 years of membership service.
Vesting Death and disability rights are vested immediately
5 years of membership service for all other rights
Member’s highest average compensation (HAC)
Hired prior to July 1, 1981 and not electing GABA - highest monthly compensation (HMC) Hired on or after June 30, 1981 and those electing GABA – highest average compensation (HAC) during any consecutive 36 months.
Compensation Cap
Hired on or after July 1, 2013 – 110% annual cap on compensation considered as part of a member’s highest average compensation.
Monthly benefit formula 1. Members hired prior to July 1, 1981 and not electing GABA are entitled to the greater of: 2.5% of HMC per year of service, or
a. If less than 20 years of service: 2% of HMC for each year of service;
b. If more than 20 years of service: 50% of the member’s HMC plus 2% of the member’s HMC for each year of service over 20
years 2. Members hired on or after July 1, 1981 and those electing GABA: 2.5% of HAC per year of membership service
92
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Firefighters' Unified Retirement System (FURS) (Continued)
Guaranteed Annual Benefit Adjustment (GABA)
Hired on or after July 1, 1997, or those electing GABA - after the member has completed 12 full months of retirement, the member’s benefit increases by a maximum of 3% each January, inclusive of all other adjustments to the member’s benefit
Minimum Benefit Adjustment (non-GABA)
If hired before July 1, 1997 and member did not elect GABA - the monthly retirement, disability or survivor’s benefit may not be less than
½ the compensation of a newly confirmed firefighter employed by the city that last employed the member (provided the member has at least 10 years of membership service). Overview of Contributions
Rates are specified by state law for periodic member and employer contributions and are a percentage of the member’s compensation. Contributions
are deducted from each member’s salary and remitted by participating employers. The State legislature has the authority to establish and amend contribution rates to the plan. Member and employer contribution rates are shown in the table below.
Non-GABAGABA Employer State
9.50%10.70%14.36%32.61%
7.80%14.36%32.61%
Member
Fiscal Year
1998 - 2016
1997 Stand-Alone Statements The FURS financial information is reported in the Public Employees’ Retirement Board’s Comprehensive Annual Financial Report for the fiscal
year ended. It is available from the PERB at 100 North Park, PO Box 200131, Helena MT 59620-0131, (406) 444-3154. CAFR information including
our stand alone financial statements can be found on our web site at http://mpera.mt.gov/annualReports.shtml. The latest actuarial valuation and
experience study can be found on our website at http://mpera.mt.gov/actuarialvaluations.shtml.
93
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Firefighters' Unified Retirement System (FURS) (Continued)
Actuarial Assumptions The TPL used to calculate the NPL was determined by an actuarial valuation as of June 30, 2014, with update procedures to roll forward the TPL to June 30, 2015. There were several significant assumptions and other inputs used to measure the TPL. The actuarial assumptions used in the June
30, 2015 valuation were based on the results of the last actuarial experience study, dated June 2010 for the six year period July 1, 2003 to June 30,
2009. Among those assumptions were the following:
• Investment Return 7.75%
• Admin expense as a % of payroll 0.19%
• General Wage Growth* 4.00%
• *includes Inflation at 3.00%
• Merit Increases 0% to 7.3%
Guaranteed Annual Benefit Adjustment (GABA)
Members hired on or after July 1, 1997, or those electing GABA - after the member has completed 12 full months of retirement, the member’s benefit increases by a maximum of 3% each January, inclusive of all other adjustments to the member’s benefit. Minimum Benefit Adjustment (non-GABA)
Members hired before July 1, 1997 and member did not elect GABA - the monthly retirement, disability or survivor’s benefit may not be less than
½ the compensation of a newly confirmed firefighter employed by the city that last employed the member (provided the member has at least 10 years of membership service).
• Mortality assumptions among contributing members, terminated vested members, service retired members and beneficiaries are based
on RP 2000 Combined Employee and Annuitant Mortality Tables projected to 2015 with scale AA
• Mortality assumptions among Disabled Retirees are based on RP 2000 Combined Employee and Annuitant Mortality Tables with no projections. No future mortality improvement is assumed.
94
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Firefighters' Unified Retirement System (FURS) (Continued)
Discount Rate
The discount rate used to measure the TPL was 7.75%. The projection of cash flows used to determine the discount rate assumed that contributions from participating plan members, employers, and non-employer contributing entities will be made based on the Board’s funding policy, which establishes the contractually required rates under the Montana Code Annotated. The State contributes 32.61% of salaries paid by employers. Based
on those assumptions, the System’s fiduciary net position was projected to be adequate to make all the projected future benefit payments of current
plan members through the year 2123. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of
projected benefit payments to determine the TPL. A municipal bond rate was not incorporated in the discount rate.
Target Allocations
Target Asset Long-Term Expected
Asset Class Allocation Real Rate of Return
Cash Equivalents 2.00%-0.25%
Domestic Equity 36.00%4.55%
Foreign Equity 18.00%6.10%
Fixed Income 24.00%1.25%
Private Equity 12.00%8.00%
Real Estate 8.00%4.25%
The long-term expected return on pension plan assets is reviewed as part of the regular experience study prepared for the System. The most recent
analysis, performed for the period of fiscal years 2003 through 2009, is outlined in a report dated June 2010 and is located on the MPERA website.
Several factors are considered in evaluating the long-term rate of return assumption. These factors include rates of return adopted by similar public
sector systems, as well as the utilization of a building block method in which best-estimate ranges of expected future real rates of return (expected
returns, net of pension plan investment expense and inflation) are developed by an investment consultant for each major asset class. These ranges were combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation
percentage and then adding expected inflation. The assumption is intended to be a long-term assumption and is not expected to change absent a
significant change in the asset allocation, a change in the inflation assumption, or a fundamental change in the market that alters expected returns in
future years. Summarized in the table above are best estimates of the arithmetic real rates of return for each major asset class included in the
System’s target asset allocation as of June 30, 2015.
95
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED)
Firefighters' Unified Retirement System (FURS) (Continued)
Sensitivity Analysis
1.0% Decrease 1.0% Increase
to 6.75%Current Discount Rate to8.75%
City's proportion $4,015,455 $2,489,054 $1,245,152
The above table presents the NPL calculated using the discount rate of 7.75%, as well as what the NPL would be if it were calculated using a
discount rate that is 1.00% lower (6.75%) or 1.00% higher (8.75%) than the current rate.
Summary of Significant Accounting Policies The Montana Public Employee Retirement Administration (MPERA) prepares its financial statements using the accrual basis of accounting. For
the purposes of measuring the NPL; deferred inflows of resources and deferred outflows of resources related to pensions; Pension Expense;
information about the fiduciary net position; and, additions to/deductions from fiduciary net position have been determined on the same accrual
basis as they are reported by MPERA. For this purpose, member contributions are recognized in the period in which contributions are due. Employer contributions are recognized when due and the employer has made a formal commitment to provide the contributions. Revenues are recognized in
the accounting period they are earned and become measurable. Benefit payments and refunds are recognized in the accounting period when due and
payable in accordance with the benefit terms. Expenses are recognized in the period incurred. Investments are reported at fair value. MPERA adheres
to all applicable Governmental Accounting Standards Board (GASB) statements.
Pension Amount Totals GASB Statement 68, Paragraph 74 requires that when employees are provided benefits through more than one pension system, whether provided
through cost-sharing, single-employer or agent pension plans, the employer must combine the amounts reported as a total or aggregate for all
pensions.
Net Pension Liability In accordance with GASB Statement 68, Accounting and Financial Reporting for Pensions, employers are required to recognize and report certain
amounts associated with their participation in the Firefighters’ Unified Retirement System (FURS). Statement 68, which became effective June 30,
2015, includes requirements for employers to record and report their proportionate share of the collective Net Pension Liability (NPL), Pension
Expense, and Deferred Inflows and Deferred Outflows of resources associated with pensions.
96
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Firefighters' Unified Retirement System (FURS) (Continued)
Net Pension Liability (Continued)
FURS has a special funding situation in which the State of Montana is legally responsible for making contributions directly to FURS on behalf of the employers. Due to the existence of this special funding situation, the State is required to report a proportionate share of a local government’s collective NPL that is associated with the non-State employer.
The total pension liability (TPL) used to calculate the NPL was determined by an actuarial valuation as of June 30, 2014, with update procedures to
roll forward the TPL to the measurement date of June 30, 2015. For most employers, their June 30, 2016, reporting will use the 2016 reporting values presented in these notes.
NPL as of 6/30/16 NPL as of 6/30/15
Percent of Collective NPL
as of 6/30/16
Percent of Collective NPL
as of 6/30/16
Change in Percent of
Collective NPL
City Proportionate Share $ 2,489,054 $ 2,361,551 2.4336400%2.4192110%0.0144290%
State of Montana Proportionate
Share associated with Employer 5,543,784$ 5,327,544$ 5.4203640%5.4576220%-0.0372580%Total 8,032,838$ 7,689,095$ 7.8540040%7.8768330%-0.0228290%
The Table above displays the employer proportionate share of the NPL and the employer’s proportion of NPL for June 30, 2015 and 2016. The
employer’s proportion of the NPL was based on the employer’s contributions received by FURS during the measurement period July 1, 2014,
through June 30, 2015, relative to the total employer contributions received from all FURS’ participating employers. As of the employer’s reporting date, the employer recorded a liability of $2,489,054, and the employer’s proportionate share was 2.43364%.
Changes in actuarial assumptions and methods: There were no changes in assumptions or other inputs that affected the measurement of the TPL.
Changes in benefit terms: There have been no changes in benefit terms since the previous measurement date.
Changes in proportionate share: Between the measurement date of the collective NPL and the employer’s reporting date there were no significant
changes in proportion that had an effect on the employer’s proportionate share of the collective NPL.
97
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED)
Firefighters' Unified Retirement System (FURS) (Continued)
Pension Expense
Pension Expense as of 6/30/16 Pension Expense as of 6/30/15
City’s Proportionate Share 276,847$ 262,159$
State of Montana Proportionate Share associated with the Employer 600,192$ 591,417$
Total 877,039$ 853,576$ At June 30, 2016, the employer recognized its proportionate share of the FURS’ pension expense of $877,039. The employer also recognized grant
revenue of $600,192 for the support provided by the State of Montana for the proportionate share of the pension expense that is associated with the employer.
Recognition of Deferred Inflows and Outflows At June 30, 2016, the employer reported its proportionate share of FURS' deferred outflows of resources and deferred inflows of resources related
to FURS from the following sources:
Deferred Outflows of Resources Deferred Inflows of Resources
Differences between actual and expected experience -$ 3,243$
Changes in assumptions -$ -$
Difference between projected and actual earnings on pension plan
investments -$ 150,454$
Changes in proportion differences between employer contributions
and proportionate share of contributions 14,069$ -$
Difference between actual and expected contributions -$ -$
Contributions paid to PERS subsequent to the measurement date 477,250$ -$
Total 491,319$ 153,697$ Amounts reported as deferred outflows of resources related to pensions resulting from the employer's contributions subsequent to the measurement date will be recognized as a reduction of the NPL beginning in the year ended June 30, 2017. Other amounts reported as deferred outflows and
inflows of resources related to pensions will be recognized in Pension Expense as follows:
Year ended June 30:
Amount recognized in Pension
Expense as an increase or (decrease)
to Pension Expense
2017 (64,939)$
2018 (64,939)$
2019 (64,939)$
2020 53,025$
2021 2,165$
Thereafter -$
98
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Municipal Police Officers’ Retirement System (MPORS)
Plan Description
The Municipal Police Officers’ Retirement System (MPORS), administered by the Montana Public Employee Retirement Administration (MPERA), is a multiple-employer, cost-sharing defined benefit plan established in 1974 and governed by Title 19, chapters 2 & 9, MCA. This plan provides retirement benefits to all municipal police officers employed by first- and second-class cities and other cities that adopt the plan. Benefits are
established by state law and can only be amended by the Legislature. The MPORS provides retirement, disability, and death benefits to plan members
and their beneficiaries.
Deferred Retirement Option Plan (DROP): Beginning July 2002, eligible members of MPORS can participate in the DROP by filing a one-time irrevocable election with the Board. The DROP is governed by Title 19, Chapter 9, Part 12, MCA. A member must have completed at least twenty
years of membership service to be eligible. They may elect to participate in the DROP for a minimum of one month and a maximum of 60 months
and may only participate in the DROP once. A participant remains a member of the MPORS, but will not receive membership service or service
credit in the system for the duration of the member’s DROP period. During participation in the DROP, all mandatory contributions continue to the retirement system. A monthly benefit is calculated based on salary and years of service to date as of the beginning of the DROP period. The monthly benefit is paid into the member’s DROP account until the end of the DROP period. At the end of the DROP period, the participant may receive the
balance of the DROP account in a lump-sum payment or in a direct rollover to another eligible plan, as allowed by the IRS. If the participant
continues employment after the DROP period ends, they will again accrue membership service and service credit. The DROP account cannot be
distributed until employment is formally terminated. The balance held by MPERA for MPORS DROP participants as of June 30, 2016 was approximately 7 million.
Municipal Police Officers' Retirement System (MPORS) (Continued)
Summary of Benefits
Eligibility for benefit 20 years of membership service, regardless of age Age 50, 5 years of membership service.
Vesting
Death and disability rights are vested immediately
5 years of membership service for all other rights
99
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED)
Firefighters' Unified Retirement System (FURS) (Continued)
Municipal Police Officers' Retirement System (MPORS) (Continued)
Member’s highest average compensation (HAC)
Hired prior to July 1, 1977 - average monthly compensation of final year of service; Hired on or after July 1, 1977 – final average compensation (FAC) for last consecutive 36 months.
Compensation Cap Hired on or after July 1, 2013 – 110% annual cap on compensation considered as part of a member’s highest average compensation.
Monthly benefit formula
2.5% of FAC per year of service credit.
Guaranteed Annual Benefit Adjustment (GABA) Hired on or after July 1, 1997, or those electing GABA - after the member has completed 12 full months of retirement, the member’s benefit
increases by a maximum of 3% each January, inclusive of all other adjustments to the member’s benefit.
Minimum Benefit Adjustment (non-GABA)
If hired before July 1, 1997 and member did not elect GABA - the monthly retirement, disability or survivor’s benefit may not be less than ½ the compensation of a newly confirmed officer in the city that the member was last employed.
• Mortality assumptions among contributing members, terminated vested members, service retired members and beneficiaries are based on
RP 2000 Combined Employee and Annuitant Mortality Tables projected to 2015 with scale AA
• Mortality assumptions among Disabled Retirees are based on RP 2000 Combined Employee and Annuitant Mortality Tables with no projections. No future mortality improvement is assumed.
Discount Rate
The discount rate used to measure the TPL was 7.75%. The projection of cash flows used to determine the discount rate assumed that contributions from participating plan members, employers, and non-employer contributing entities will be made based on the Board’s funding policy, which establishes the contractually required rates under the Montana Code Annotated. The State contributes 29.37% of salaries paid by employers. Based
on those assumptions, the System’s fiduciary net position was projected to be adequate to make all the projected future benefit payments of current
plan members through the year 2123. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of
projected benefit payments to determine the TPL. A municipal bond rate was not incorporated in the discount rate.
100
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED)
Municipal Police Officers' Retirement System (MPORS) (Continued)
Target Allocations
Target Asset Long-Term Expected
Asset Class Allocation Real Rate of Return
Cash Equivalents 2.00%-0.25%
Domestic Equity 36.00%4.55%
Foreign Equity 18.00%6.10%
Fixed Income 24.00%1.25%
Private Equity 12.00%8.00%
Real Estate 8.00%4.25% The long-term expected return on pension plan assets is reviewed as part of the regular experience study prepared for the System. The most recent
analysis, performed for the period of fiscal years 2003 through 2009, is outlined in a report dated June 2010 and is located on the MPERA website.
Several factors are considered in evaluating the long-term rate of return assumption. These factors include rates of return adopted by similar public
sector systems, as well as the utilization of a building block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed by an investment consultant for each major asset class. These ranges were combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation
percentage and then adding expected inflation. The assumption is intended to be a long term assumption and is not expected to change absent a
significant change in the asset allocation, a change in the inflation assumption, or a fundamental change in the market that alters expected returns in
future years.
Summarized in the table above are best estimates of the arithmetic real rates of return for each major asset class included in the System’s target asset
allocation as of June 30, 2015.
Sensitivity Analysis
1.0% Decrease 1.0% Increase
to 6.75%Current Discount Rate to 8.75%
City's proportion $6,947,191 $4,920,638 $3,121,565
The above table presents the NPL calculated using the discount rate of 7.75% as well as what the NPL would be if it were calculated using a discount
rate that is 1.00% lower (6.75%) or 1.00% higher (8.75%) than the current rate.
101
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED)
Municipal Police Officers' Retirement System (MPORS) (Continued)
Summary of Significant Accounting Policies
The Montana Public Employee Retirement Administration (MPERA) prepares its financial statements using the accrual basis of accounting. For the purposes of measuring the NPL; deferred inflows of resources and deferred outflows of resources related to pensions; Pension Expense;
information about the fiduciary net position; and, additions to/deductions from fiduciary net position have been determined on the same accrual
basis as they are reported by MPERA. For this purpose, member contributions are recognized in the period in which contributions are due. Employer
contributions are recognized when due and the employer has made a formal commitment to provide the contributions. Revenues are recognized in
the accounting period they are earned and become measurable. Benefit payments and refunds are recognized in the accounting period when due and payable in accordance with the benefit terms. Expenses are recognized in the period incurred. Investments are reported at fair value. MPERA adheres
to all applicable Governmental Accounting Standards Board (GASB) statements.
Pension Amount Totals
GASB Statement 68, Paragraph 74 requires that when employees are provided benefits through more than one pension system, whether provided through cost-sharing, single-employer or agent pension plans, the employer must combine the amounts reported as a total or aggregate for all
pensions.
Net Pension Liability
In accordance with GASB Statement 68, Accounting and Financial Reporting for Pensions, employers are required to recognize and report certain amounts associated with their participation in the Municipal Police Officers’ Retirement System (MPORS). GASB Statement 68, which became
effective June 30, 2015, includes requirements for employers to record and report their proportionate share of the collective Net Pension Liability
(NPL), Pension Expense, and Deferred Inflows and Deferred Outflows of resources associated with pensions. MPORS has a special funding
situation in which the State of Montana is legally responsible for making contributions directly to MPORS on behalf of the employers. Due to the
existence of this special funding situation, the State is required to report a proportionate share of a local government’ collective NPL that is associated with the non-State employer. The Total Pension Liability (TPL) used to calculate the NPL was determined by an actuarial valuation as of June 30,
2014, with update procedures to roll forward the TPL to the measurement date of June 30, 2015. For most employers, their June 30, 2016 reporting
will use the 2016 reporting values presented in these notes.
102
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED)
Municipal Police Officers' Retirement System (MPORS) (Continued)
Net Pension Liability (Continued)
NPL as of 6/30/2016 NPL as of 6/30/2015
Percent of Collective
NPL as of 6/30/2016
Percent of Collective
NPL as of 6/30/2015
Change in Percent of
Collective NPL
City Proportionate Share 4,920,638.02$ 4,746,932.65$ 2.974620%3.020909%-0.046289%
State of Montana Proportionate
Share associated with Employer 9,969,680.40$ 9,589,371.45$ 6.026863%6.102597%-0.075734%
Total 14,890,318.42$ 14,336,304.10$ 9.001483%9.123506%-0.122023%
The Table above displays the employer proportionate share of the NPL and the employer’s proportion of NPL for June 30, 2015 and 2016. The employer’s proportion of the NPL was based on the employer’s contributions received by MPORS during the measurement period July 1, 2014, through June 30, 2015, relative to the total employer contributions received from all MPORS’ participating employers. As of the employer’s
reporting date the employer recorded a liability of $4,920,638, and the employer’s proportionate share was 2.97462%.
Changes in actuarial assumptions and methods: There were no changes in assumptions or other inputs that affected the measurement of the TPL. Changes in benefit terms: There have been no changes in benefit terms since the previous measurement date.
Changes in proportionate share: Between the measurement date of the collective NPL and the employer’s reporting date there were no significant
changes in proportion that had an effect on the employer’s proportionate share of the collective NPL. Pension Expense
Pension Expense as of 6/30/16 Pension Expense as of 6/30/15
City's Proportionate Share 478,745$ 510,604$
State of Montana Proportionate Share associated with the City 1,013,945$ 1,031,481$
Total 1,492,690$ 1,542,086$
At June 30, 2016, the employer recognized its proportionate share of the MPORS’ Pension Expense of $1,492,690. The employer also recognized grant revenue of $1,013,945 for the support provided by the State of Montana for the proportionate share of the pension expense that is associated
with the employer.
103
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED)
Municipal Police Officers' Retirement System (MPORS) (Continued)
Recognition of Deferred Inflows and Outflows
At June 30, 2016, the employer reported its proportionate share of MPORS' deferred outflows of resources and deferred inflows of resources related to MPORS from the following sources:
Deferred Outflows of Resources Deferred Inflows of Resources
Differences between actual and expected experience -$ 44,939$
Changes in assumptions -$ -$
Difference between projected and actual earnings on pension plan
investments -$ 184,858$
Changes in proportion differences between employer contributions
and proportionate share of contributions -$ 61,250$
Contributions paid to PERS subsequent to the measurement date 638,568$
Total 638,568$ 291,047$
Amounts reported as deferred outflows of resources related to pensions resulting from the employer's contributions subsequent to the measurement date will be recognized as a reduction of the NPL beginning in the year ended June 30, 2017.
Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in Pension Expense as follows:
Year ended June 30:
Amount recognized in Pension
Expense as an increase or (decrease)
to Pension Expense
2017 (117,477)$
2018 (117,477)$
2019 (117,477)$
2020 61,386$
2021 -$
Thereafter -$
104
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 15. POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS
In addition to providing a deferred compensation plan, the City provides other post-employment benefits (OPEB) allowing its retired employees
to continue their medical, dental, and vision care coverage through the City's group health plan until death (Retiree Health Plan). The plan allows
retirees to participate, as a group, at a rate that does not cover all of the related costs. This results in the reporting of an implied rate subsidy in the
financial statements and footnotes. The City's contract with Allegiance Benefits details the plan eligibility. MMIA is the administrator of the benefit plan, which covers both active and retired members. In accordance with MCA 2-18-704, the City’s retirees may continue coverage for
themselves and their covered eligible dependents, if they are eligible for public employees' retirement by virtue of their employment with the City
of Bozeman. The City's current labor contracts do not include any obligations for payments to retirees. The City also allows terminated employees
to continue their health care coverage for 18 months past the date of termination as required by the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).
OPEB is recorded on an accrual basis for all enterprise and internal service funds. OPEB is recorded on a modified accrual basis for the
governmental funds. Plan contributions are recognized in the period in which the contributions are made. Benefits and refunds are recognized
when due and payable in accordance with the terms of the plan.
Funding Policy. The plan is unfunded by the City and plan members receiving benefits contribute 100 percent of their cost of the benefits on a
pay-as-you-go basis. The City plan’s administratively established retiree medical, dental, and vision premiums vary between $37 and $912 per
month depending on the medical plan selected, family coverage, and Medicare eligibility. The plan provides different coinsurance amounts
depending on whether members use preferred, non-preferred, or other hospitals. For a single individual, after an annual deductible of $300 for most non-Medicare-eligible retirees, the plan reimburses 70% for the first $500 medical claims and 100% thereafter. For a family, after an annual
deductible of $600 for most non-Medicare-eligible retirees, the plan reimburses 70% for the first $1,000 medical claims and 100% thereafter. For
fiscal year ended June 30, 2016, the City has 35 retired members receiving benefits.
Annual OPEB Cost and Net OPEB Obligation. The City’s annual other post-employment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC). The ARC represents a level of funding that, if paid on an ongoing basis, is projected to
cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a closed amortization period not to exceed
thirty years.
105
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 15. POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
The following table shows the components of the City’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes
in the City’s net OPEB obligation to the Retiree Health Plan:
Annual required contribution 330,107$
Interest on net OPEB obligation 83,556
Adjustment to annual required contribution (120,801)
Annual OPEB cost (expense)292,862
Contributions made (149,183)
Increase in net OPEB obligation 143,679
Net OPEB obligation - beginning of year 2,088,900
Net OPEB obligation - end of year 2,232,579$
The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation for fiscal year ended June 30, 2016, and the five preceding fiscal years were as follows:
Percentage of
Fiscal Year Annual Annual OPEB Cost Net OPEB
Ended OPEB Cost Contributed Obligation
June 30, 2012 234,397$ 48.33%1,729,462$
June 30, 2013 221,212 49.14%1,841,971
June 30, 2014 219,207 59.81%1,930,074
June 30, 2015 295,694 46.29%2,088,900
June 30, 2016 292,862 50.94%2,232,579
106
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 15. POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
The June 30, 2016, year-end OPEB cost is reported in the City’s funds as follows:
Functions/Programs Expenses
PRIMARY GOVERNMENT
Governmental activities:
General government 23,325$
Public safety 46,504
Public service 8,391
Public welfare 31,807
Total governmental activities 110,027
Business-type activities:
Water 13,582
Waste water 10,054
Solid waste 5,996
Parking 2,194
Storm water 1,826
Total business-type activities 33,652
Total primary government 143,679$
Funded Status and Funding Progress. The projection of future benefit payments for an ongoing plan involves estimates of the value of reported
amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment,
mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear
trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities
for benefits. The City has elected not to fund this liability.
107
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 15. POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
SCHEDULE OF FUNDING PROGRESS
UAAL as a
Actuarial Actuarial Actuarial Unfunded Funded Covered Percentage of
Valuation Value of Accrued Liability AAL (UAAL)Ratio Payroll Covered Payroll
Date Assets (a)(AAL) (b)(b-a)(a/b)(c) (b-a)/c)
7/1/2010 -$ 2,203,253$ 2,203,253$ 0.0%22,051,261$ 9.99%
7/1/2012 - 2,002,345 2,002,345 0.0%23,885,569 8.38%
7/1/2014 - 2,675,667 2,675,667 0.0%26,884,822 9.95% Actuarial Methods and Assumptions. The City’s actuarial valuation is completed on a biennial frequency, provided no significant events have
occurred warranting new measurement. The City completed the valuation for fiscal year 2014, with an estimate provided for fiscal year 2016. For
fiscal year 2016, an estimated valuation was derived based on the 2014 actual costs and participants. As a result of this biennial valuation, we have
marked the fields as “n/a” where actual financial data was not used to generate the estimate. As of July 1, 2014, the most recent valuation date, the City’s actuarially accrued liability (AAL) for benefits was $2,675,667. The AAL by status breakdown is shown below:
Fiscal Fiscal Fiscal
2013 2014 2015
Actives 1,223,031$ N/A 1,679,064$
Retirees, Dependents and Surviving Spouses 779,314 N/A 996,603
Total AAL 2,002,345$ N/A 2,675,667$
Normal Cost 131,013$ N/A 168,628$
Impact on Statement of Activities
Annual OPEB Cost 221,212$ 219,207$ 295,694$
Impact on Statement of Net Position
Assumed Contributions 108,703$ 131,104$ 136,871$
Net OPEB Obligation at June 30 1,841,971$ 1,930,074$ 2,088,897$
Participant Information
Actives 309 N/A 358
Retirees, Dependents and Surviving Spouses 73 N/A 68
Total 382 N/A 426
108
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 15. POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
The following key assumptions were chosen by the City:
1. Discount Rate: 4.0%
2. Inflation Rate: 2.5%
3. Expected Long-Term Rate of Return on Assets: NA
4. Health Care Claim and Contribution Trend Rates: 7% in fiscal year 2016, decreasing annually, to 4% in fiscal year 2035.
5. Average Salary Increase: 4.0%
6. Retirement Rates: Based upon the separate rates used to value the pension obligations for Police Officers, Firefighters, and all other employees, respectively.
7. Retiree Participation Rate: 30%
8. Marital Assumption: For future retirees, 60% of participants are assumed to be married, with husbands 3 years older than wives.
The Projected Unit Credit Actuarial Cost Method was used to determine the annual required contribution. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Examples, as detailed above, include assumptions about future employment, mortality, and the healthcare cost trend. Actuarially determined amounts are subject to continual
revisions as actual results are compared with past expectations, and new estimates are made about the future. Actuarial calculations reflect a long-
term perspective. The Schedule of Funding Progress, presented as required supplementary information following the notes to the financial
statements, is designed to present multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial liabilities for benefits. Historically, the net other post-employment benefit obligation has been liquidated primarily by the general fund and the proprietary funds.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members)
and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.
This report constitutes the only analysis and presentation of the City’s post-employment benefit plan. There is no separate, audited GAAP-basis
post-employment benefit plan report.
109
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 16. JOINT VENTURE AGREEMENTS
Joint ventures are legal entities or other organizations that result in a contractual arrangement and that are owned, operated, or governed by two or
more participants. Each participant retains both an ongoing financial interest and an ongoing financial responsibility. Joint ventures are legal entities or other organizations that result in a contractual arrangement and that are owned, operated, or governed by two or
more participants. Each participant retains both an ongoing financial interest and an ongoing financial responsibility. As of June 30, 2016, the
City has entered into joint venture contractual arrangements, as described below.
911 Communication Center The City and Gallatin County, Montana (the County) have entered into an inter-local agreement for the purposes of establishment of the operation
and financing of a 911 communication services division (the Division) for dispatch and records services, to define the relationship of the
Administrative Board with the City and County, and to establish the line of authority for personnel furnishing the communication services to the
City and County and others who may contract for the services. Though the City has no equity interest in the Division, the City has indirect access to the joint venture’s resources, as the Division’s purpose is of
direct interest to the City, and the City has the ability to influence the management of the Division. In addition, the City and County have agreed
to pay 45% and 55% of the Division expenditures, respectively. The agreement expired December 19, 2005, and automatically renewed until
terminated by either party. Financial information regarding the Division can be obtained by contacting Shelley Vance, Gallatin County, Clerk and Records Office, 311 West Main, Bozeman, MT 59715. City-County Drug Forfeitures
The City and County have entered into an inter-local agreement for the purposes of establishment of a joint drug forfeiture account funded from
drug related forfeitures, seizures, and prosecutions of City and County law enforcement cases and to establish an equitable means of distributing those funds to continue drug interdiction activities. The goal of the agreement is to make the City and County Drug Enforcement operations less
reliant on the general and public safety fund monies of the City and County. The original term of the agreement was for a period of one year,
beginning September 20, 2004 and automatically renews for a period of one year until terminated by either party with written notice of intent to
terminate. Financial information regarding the joint drug forfeiture account can be obtained by contacting the City of Bozeman Department of
Finance, 411 East Main Street, Bozeman, MT 59715.
110
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 16. JOINT VENTURE AGREEMENTS (CONTINUED)
Montana Municipal Interlocal Authority
The City and Montana Municipal Interlocal Authority (MMIA) have entered into a 20-year agreement in December 2012 to share up to $1 million in profits from the sale of city-owned property known as the Mandeville Farm. The agreement came about as part of a settlement on legal claims from the City of Bozeman vs. MMIA litigation. A “profit” shall occur only when the City has recovered its total investment in the property, which
includes the original purchase price together with all “costs of development” as defined in the settlement agreement.
NOTE 17. RESTRICTED NET POSITION
At June 30, 2016, the balances of restricted net position for business-type activities are as follows:
Waste Water Solid Waste Nonmajor
Water Fund Fund
Fund Enterprise Total
Restricted by revenue bond covenants:
For bond reserve 1,313,885$ 1,788,592$ -$ -$ 3,102,477$
Restricted by ordinance:
Cash in lieu of parking - - - 295,545 295,545
Impact fees 1,462,948 1,392,561 - - 2,855,509
2,776,833$ 3,181,153$ -$ 295,545$ 6,253,531$
Business-Type Activities
NOTE 18. INTERFUND TRANSFERS AND ASSETS/LIABILITIES
A summary of interfund transfers reported in the fund financial statements for the year ended June 30, 2016, follows:
Transfers are used to (1) move revenues from the fund that statute or budgets requires to collect them to the fund that statute or budgets require to
expend them, (2) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance
with budgetary authorizations, and (3) to transfer non-restricted interest income from the permanent fund to the general fund.
111
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 18. INTERFUND TRANSFERS AND ASSETS/LIABILITIES
Street SID Debt Nonmajor
General Fund Maintenance Service Governmental Water Waste Water Storm Water Total
General Fund -$ -$ -$ 2,122,260$ -$ -$ -$ 2,122,260$
Street Impact Fees - 18,414 - - - - - 18,414
Street Maintenance - - - 31,900 - - - 31,900
Non-major Governmental 157,057 1,223,071 196,755 1,340,405 1,002,583 295,114 95,854 4,310,839
Solid Waste Enterprise - - - - 1,234,760 1,234,760
Parking Enterprise - - - 30,000 - - - 30,000
Stormwater Enterprise 140,000 5,515 145,515
Health Insurance Internal Service 231,115 - 231,115
Total 528,172$ 1,241,485$ 196,755$ 3,530,080$ 1,002,583$ 295,114$ 1,330,614$ 8,124,803$
Governmental Funds
Transfers From
Tr
a
n
s
f
e
r
s
T
o
Proprietary Fund
A summary of advances and due from/to other funds at June 30, 2016, is as follows:
Advances to Advances from
other City funds other City funds
Major Funds:
SID Sinking Debt Service -$ 458,208$
Non-major Governmental Funds:
SID Revolving Debt Service 458,208 -
458,208$ 458,208$
Due from Due to
other City funds other City funds
Major Funds:
General fund 11,274$ -$
Internal Service Funds
Medical Health Insurance - 11,274
11,274$ 11,274$
Interfund balances reported as due from or due to other funds are usually a result of transfers for reporting purposes to cover negative cash balances
within a fund. These transfers are reversed as cash becomes available in a fund where cash previously had been in a deficit.
112
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 19. RISK MANAGEMENT
The City faces a considerable number of risks of loss, including a) damage to and loss of property and contents, b) employee torts, c) professional
liability (i.e. errors and omissions), d) environmental damage, e) workers' compensation (i.e. employee injuries), and f) medical insurance cost of employees. A variety of methods are used to provide insurance for these risks. Commercial policies, transferring all risks of loss except for small deductible amounts, are purchased for property and content damage and professional liabilities. The City participates in two state-wide public risk
pools operated by the Montana Municipal Interlocal Authority, for workers' compensation and for tort liability. Employee medical insurance is
provided through a privately-administered, partially self-insured plan. Given the lack of coverage available, the City has no coverage for potential
losses from environmental damages. Commercial Policies Coverage limits and the deductibles on the commercial policies have stayed relatively constant for the last several years. The premiums for the
policies are allocated between the City's Enterprise Funds and the General Fund. Premiums are subsidized through a special purpose property tax
levy, based on total appropriations. Settled claims resulting from these risks did not exceed commercial insurance coverage during the three years ended June 30, 2016, 2015, and 2014.
Public Entity Risk Pools
In 1986, the City joined together with other Montana cities to form the Montana Municipal Interlocal Authority, which established a workers'
compensation plan and a tort liability plan. Both public entity risk pools currently operate as common risk management and insurance programs for the member governments.
The liability limits for damages in tort action are $750,000 per claim and $1.5 million per occurrence, and $12.5 million per occurrence for any
claim that is not subject to the limitations on governmental liability, as described in Montana Code Annotated Section 2-9-108 (the Statute) or any
successor statute, either as matter of law, by operation of the Statute, or by a judicial determination that the Statute is inapplicable or is otherwise invalid, with $11,250 deductible per occurrence. State tort law limits the City's liability to $1.5 million. The City pays premiums for its employee
injury insurance coverage, which is allocated to the employer funds based on total salaries and wages. The agreements for formation of the pools
provide that they will be self-sustaining through member premiums. The tort liability plan and workers' compensation program issued debt of
$4.41 million and $6.155 million, respectively, to immediately finance the necessary insurance reserves. All members signed a contingent note
for a pro rata share of this liability in case operating revenues were insufficient to cover the debt service; the debt was retired in 2011.
The City also owns a policy with MMIA for loss or damage to property. This is an all-risk policy, essentially all property owned by the City being
insured for 100% of replacement cost, subject to a $5,000 deductible per occurrence. MMIA reinsures their property insurance with a national
municipal pool, Public Entities’ Property Insurance.
113
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 20. CONTINGENCIES
Story Mill Landfill Claims
In 2014, the City was named in three lawsuits by residential property owners located on or near the now closed Story Mill landfill. All three cases related to presence and claimed effects of volatile organic compounds (VOCs) in the soil and groundwater outside the boundaries of the landfill.
Last year the City obtained approval from the Montana Department of Environmental Quality for a corrective measures assessment and
comprehensive remediation system.
The three lawsuits themselves all asserted claims for “restoration damages,” referring to restoring the property to its pre-contamination state to the greatest degree possible, diminution in value or stigma damages, property damage, physical injuries, and emotional distress including fear of future
injury. All three cases were filed in Gallatin County.
These three lawsuits were settled in the summer of 2016. The City’s contribution to the settlement will be $750,000 ($300,000 of which is in the
form of a foregone liability program credit). As such, the City’s required cash contribution to settlement will be $450,000. Payment by all defendants to the three plaintiff groups in sum totals $7,500,000 with $2,500,000 to be provided by the other defendants (exclusive of Gallatin
County and the State of Montana) and $5,000,000 (inclusive of the City’s share) to be provided through settlement of the insurance coverage
dispute in MMIA v. City of Bozeman.
At the time of this settlement, however, it was known that there were potential additional claimants who could assert the same types of claims as were made in the three settled cases. Additional claims have now been recently asserted and presently there are three active claims asserted by
individual property owners. The claims asserted relate to presence and claimed effects of VOC’s in the soil and groundwater outside the boundaries
of the landfill. The claims are principally for diminution in value or stigma damages and property damage. This City does not believe there will
be an unfavorable outcome and intends to vigorously resolve these cases. It is not possible presently to state any estimated range of loss.
The City is involved with several other lawsuits, which arise out of the normal course of operations by the City. Management of the City intends
to vigorously defend each claim and believes no material losses will be incurred on such claims.
114
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 21. SOLID WASTE LANDFILL CLOSURE AND POST-CLOSURE CARE COSTS
The City has a municipal solid waste landfill. State and Federal laws and regulations require the City to place a final cover on its landfill site when
it stops accepting waste and to perform certain maintenance and monitoring functions at the site for 30 years after final closure. The City stopped accepting waste effective June 30, 2008. The final capping of the cells is still pending. The City has accrued a liability for $3,039,671, which is its estimate of future landfill closure and post-closure care costs as of June 30, 2016. This amount is based on a Corrective Measures Assessment
completed in September 2014 by a third party engineering firm, from which a remediation plan has been adopted by the City and has been approved
the Montana Department of Environmental Quality. The cost of post closure care is an estimate and is subject to changes resulting from inflation,
deflation, technology, or changes in applicable laws or regulations. The Solid Waste Fund accounts for the City’s solid waste collection, recycling, and disposal utility operation – including assets, liabilities, and
post-closure costs associated with the closed Story Mill landfill. Segment information for the landfill is as follows:
Condensed Statement of Net Position
Restricted cash and cash equivalents (92,880)$
Capital assets, net of depreciation 4,501,902
Total assets 4,409,022$
Current liabilities 488,224$
Closure and post-closure care cost 3,039,671
Total liabilities 3,527,895
Restricted for debt service 881,127
Total net position 881,127
Total liabilities and net position 4,409,022$
115
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 21. SOLID WASTE LANDFILL CLOSURE AND POST-CLOSURE CARE COSTS (CONTINUED)
Condensed Statement of Revenues, Expenses and Changes in Net Position
Operating revenues and expenses:
Operating revenues -$
Operating expenses
Depreciation 46,063
Change in post closure cost estimate 1,118,864
Other operating 307,706
Total operating expenses 1,472,633
Operating loss (1,472,633)
Non-operating revenues (expenses):
Interest expense (7,595)
Other income 1,016,820
Transfers 1,234,760
Total non-operating revenues 2,243,985
Change in net position 771,352
Net position, beginning of year 109,775
Net position, end of year 881,127$
116
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 22. SEGMENT INFORMATION FOR WATER ENTERPRISE FUND
The City’s Water Fund accounts for the City’s water utility operations and collection and administration of water impact fees. Segment information
for the utility operations, excluding impact fees, is as follows:
Condensed Statement of Net Position
Current assets 16,908,333$
Capital assets 126,311,367
Other assets 236,761
Total assets 143,456,461$
Current liabilities 1,338,814$
Non-current liabilities 18,089,033
Total liabilities 19,427,847
Net investment in capital assets 109,744,367
Restricted for debt service 1,313,885
Unrestricted 12,970,362
Total net position 124,028,614
Total liabilities and net position 143,456,461$
117
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 22. SEGMENT INFORMATION FOR WATER ENTERPRISE FUND (CONTINUED)
Condensed Statement of Revenues, Expenses, and Changes in Net Position
Operating revenues and expenses:
Operating revenues 8,414,870$
Operating expenses:
Depreciation 2,534,184
Other operating 5,793,961
Total operating expenses 8,328,145
Operating loss 86,725
Non-operating revenues (expenses)
Interest income 157,013
Interest expense (515,010)
Grant income 54,110
Gain on sale of assets 20,970
Contributions of infrastructure 5,178,425
Other income 1,074,008
Transfers 730,167
Total non-operating revenues 6,699,683
Change in net position 6,786,408
Net position, beginning of year 117,242,206
Net position, end of year 124,028,614$
Condensed Statement of Cash Flows
Net cash provided by operating activities 3,646,797$
Net cash flows from capital and related financing activities 730,167
Net cash flows from noncapital and financing activities (2,848,075)
Net cash flows from investing activities 157,013
Net change in cash flows 1,685,902
Beginning cash and equivalents 14,558,505
Ending cash and equivalents 16,244,407$
118
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 23. IMPACT FEES
On January 22, 1996, the City Commission adopted fire, water, waste water and street impact fees in Ordinance number 1414. The impact fees
were first effective on March 23, 1996. Impact fees were set at a percentage of the cost of the impact, as follows:
Original, as of Change as of Change as of Change as of Change as of Change as of
March 23, 1996 May 10, 1998 January 15, 1999 July 15, 1999 January 1, 2013 March 30, 2013
Fire impact fee 90%90%90%90%100%100%
Water impact fee 35%50%90%90%100%100%
Waste water impact fee 35%50%90%90%100%100%
Street impact fee 10%10%75%90%90%100%
An applicant may obtain an Impact Fee Credit by dedication of non-site-related land or construction of non-site-related improvements. Credits
must be made before the beginning of improvement construction, must comply with the City’s Capital Improvements Program, and must be approved by the City Commission. Credits may be used only for like-type impact fees. The full provisions for impact fee credits are contained in Chapter 3.24 of the Bozeman Municipal Code. For proprietary type funds, the City records a liability for the impact fee credit and capitalizes the
underlying asset. For governmental-type funds, the credits are only disclosed in the footnotes. For government-wide financial reporting, the
outstanding credits are reported as unearned revenue. The Water Impact Fee Fund, Street Impact Fee Fund, and Waste water Impact Fee Fund
have recorded impact fee credits amounting to $33,232, $59,890, and $129,042, respectively, as of June 30, 2016. The Fire Impact Fee Fund does not have any outstanding credits. The following impact fee revenues were collected and expensed/expended during fiscal year 2016:
Expenses,
Beginning Expenditures,
Balances Impact Fees Other Income and Transfers Ending Balances
Fire 892,205$ 338,461$ 9,787$ (2,965)$ 1,237,488$
Water 1,999,359 2,262,355 5,799 (2,162,988) 2,104,525
Waste water 599,357 1,225,091 7,798 (64,785) 1,767,461
Streets 12,885,310 3,967,203 229,320 (4,452,728) 12,629,105
Total 16,376,231$ 7,793,110$ 252,704$ (6,683,466)$ 17,738,579$
119
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 24. POLLUTION REMEDIATION OBLIGATIONS
Jewel v. City of Bozeman / State of Montana v. City of Bozeman
This action was filed in the United States District Court for the District of Montana. The multi-count complaint reduced itself to a cost recovery action under the Federal Superfund (CERCLA) and State Superfund (CECRA). On July 8, 1999, the City, Jewel Food Stores, Inc. and the other parties reached a final settlement agreement in this action. The settlement, in part, required Jewel Food Stores, Inc. to pay the City of Bozeman
$1,200,000, the City and Jewel to extend alternative water supply to businesses and residents in the North 19th Avenue area of the City; and Jewel
and the City to share specified remediation costs on an equal basis (50% each) up to a cumulative amount of $4,000,000, and for eligible costs in
excess of that amount, to be shared 70% by Jewel and 30% by the City. The City is reimbursed by insurers for 23% of the City’s expenditures for these purposes.
The Montana Department of Environmental Quality (MDEQ) issued the Record of Decision (ROD) for the Bozeman Solvent Site (BSS) in August
2011. The Administrative Order of Consent (AOC) was finalized in January 2012. The ROD and AOC specifically delineate the remediation to
be completed for the BSS. The AOC serves as the legal mechanism for the implementation of the selected remedies identified in the ROD. Though remediation may be completed relatively quickly, monitoring of the site will continue for a period of up to 30 years. ATC and Associates, Inc. serves as the Project Engineer for the potentially liable parties (the City of Bozeman and CVS Pharmacy, Inc.). Based on the selected remedies
identified in the ROD, ATC has completed a long-term cost projection for the project. The long-term cost projection for the City is $2,355,974 in
remediation costs. Reduced by its insurer’s reimbursement, the amount is $1,531,101. This liability is recorded in the Waste Water Fund, is an
estimate, and is subject to changes resulting from inflation, deflation, technology, or changes in applicable laws or regulations CMC Asbestos Bozeman CECRA Facility In 2001, the City purchased property located within the CMC Asbestos Bozeman Facility (the “Facility”), a former asbestos ore storage and
processing, recycling/salvage yard. In 2002, contractors for the City, under the Montana Voluntary Cleanup and Redevelopment Act (VCRA),
submitted a Voluntary Cleanup Plan (VCP), which was approved by the Department of Environmental Quality (DEQ). Remediation work on City-owned property was completed in October 2003. On December 21, 2006, the City agreed to complete remedial actions at the remainder of the
Facility, which included adjacent, private properties. The City submitted an Addendum to its original VCP, and cleanup work under the approved
Addendum was completed in June 2009.
On October 20, 2010, the City received notice from the DEQ stating that no further action is required at the facility and that the DEQ proposes removing the Facility from the CECRA priority list. Pursuant to an August 2007 Stipulated Agreement between the City and all other involved
parties, additional cleanup after issuance of the DEQ’s closure letter may be required by DEQ based upon property use changes, modification of
structures, or other factors. The City has an ongoing claim against the State orphan share for the orphan share funds’ proportional share of these
post-closure clean-up costs. In addition, all other parties are still liable for their proportional share of the clean-up. The result is that should
additional work be required at the Facility, the City will only be liable for 1% of the total post-closure clean-up costs.
120
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 25. NET POSITION COMPOSITION
The table presented below displays the City’s fund balances by major purpose as displayed on page 41 of the governmental funds balance sheet.
Street Street Building Nonmajor Total
General Impact Fees Maintenance Inspection SID Sinking Governmental Governmental
Fund Special Revenue Special Revenue Special Revenue Debt Service Funds Funds
Nonspendable
Prepaids -$ -$ -$ -$ -$ 350,625$ 350,625$
Cemetery perpetual care - - - - - 1,075,950 1,075,950
Total nonspendable - - - - - 1,426,575 1,426,575
Restricted
General government-Planning - - - - - 1,067,197 1,067,197
General government-Health Insurance - - - - - 328,120 328,120
General government-other - - - - - 105 105
Public safety - Building Inspection - - - 1,676,314 - - 1,676,314
Public safety-Fire Impact - - - - - 1,237,487 1,237,487
Public safety-Victim Witness - - - - - 377,255 377,255
Public safety-other - - - - - 144,367 144,367
Public service - 12,647,518 774,948 - - 1,008,036 14,430,502
Public service - Gas Tax - - - - - 957,235 957,235
Public service - Community Transportation - - - - - 66,564 66,564
Public service - Lighting Districts - - - - - 587,641 587,641
Public welfare - Tax Increment Districts - - - - - 3,896,766 3,896,766
Public welfare - Econ Develop Loan Fund - - - - - 857,430 857,430
Public welfare - Tree Maint. District - - - - - 243,495 243,495
Public welfare - other - - - - - 505,477 505,477
Capital projects-Trail Open Space Parks - - - - - 9,230,464 9,230,464
Debt service-SID Sinking - - - - 730,278 - 730,278
Debt service-SID Revolving Fund - - - - - 3,386,700 3,386,700
Debt service-GO Bonds - - - - - 132,959 132,959
Total restricted - 12,647,518 774,948 1,676,314 730,278 24,027,298 39,856,356
Committed
General government - - - - - 1,280,674 1,280,674
Public safety - - - - - 1,099,940 1,099,940
Public service - - - - - 23,062 23,062
Public welfare - - - - - 865,745 865,745
Capital projects - - - - - 258,842 258,842
Debt service - - - - - - -
Total committed - - - - - 3,528,263 3,528,263
Assigned
General government 540,000 - - - - - 540,000
Capital projects 440,489 - - - - 1,883,557 2,324,046
Debt service - - - - - - -
Budget ordinance minimum 16.67%4,561,352 - - - - - 4,561,352
Total assigned 5,541,841 - - - - 1,883,557 7,425,398
Unassigned 979,258 - - - - (64,723) 914,535
Total net position 6,521,099$ 12,647,518$ 774,948$ 1,676,314$ 730,278$ 30,800,970$ 53,151,127$
121
CITY OF BOZEMAN, MONTANA
NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016
NOTE 26. SUBSEQUENT EVENTS
Subsequent to year end, the City settled the lawsuits related to the Story Mill Landfill claims, as described in Note 20.
In August of 2016, the City sold the 85 acre North Park property, with a cost basis of $3.8 million, for gross proceeds of $1.6 million to a local
development company.
C. REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION AND ANALYSIS
122
CITY OF BOZEMAN, MONTANA
SCHEDULE OF FUNDING PROGRESS – OTHER POST-EMPLOYMENT HEALTHCARE BENEFITS Year Ended June 30, 2016
The annual OPEB costs, the percentage of OPEB cost contibuted to the plan, and the net OPEB obligation for June 30, 2016, for the Retiree
Health Plan are as follows:
Net OPEB Obligation
1,930,074$
2,232,579$
2,232,579$
Year Ended
6/30/2014
Annual OPEB Cost
219,207$
Percentage of OPEB Cost
59.81%
ANNUAL OPEB COST
Retiree Health Plan
6/30/2016 292,862$ 50.39%
6/30/2015 295,694$ 46.29%
The funded status of the plan was as follows:
2,675,667$
-
2,675,667$
0.0%
26,884,822$
9.95%
Actuarial
Valuation Date
Actuarial
Value of
Assets (a)
Actuarial Accrued
Liability (AAL)
(b)
Unfunded AAL
(UAAL)
(b-a)
Funded Ratio
(a/b)
Covered Payroll
(c)
UAAL as a Percentage of
Covered Payroll
((b - a) / c)
7/1/2010 -$ 2,203,253$ 2,203,253$ 0%22,051,261$ 9.99%
7/1/2012 -$ 2,002,345$ 2,002,345$ 0%23,885,569$ 8.38%
7/1/2014 -$ 2,675,667$ 2,675,667$ 0%26,884,822$ 9.95%
Retiree Medical Plan
(c) Covered payroll
FUNDED STATUS
Unfunded actuarial accrued liability (funding excess) as a percentage of covered payroll
({(a) - (b)} / (c))
(a) Actuarial accrued liability (AAL)
(b) Actuarial value of plan assets (UAAL)
Unfunded actuarial accrued liability (funding excess) [(a) - (b)]
Funded ratio (b) / (a)
SCHEDULE OF FUNDING PROGRESS
123
CITY OF BOZEMAN, MONTANA
SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY AND SCHEDULE OF CONTRIBUTIONS
Year Ended June 30, 2016
Schedule of Proportionate Share of the Net Pension Liability:PERS
2016 2015
Employer's proportion of the net pension liability $ 13,403,285 $ 11,401,613
Employer's proportionate share of the net pension liability associated with the Employer
(as a percentage)9.58835%0.91505%
State of MT proportionate share of the net pension liability associated with the Employer $ 164,637 $ 139,231
Total $ 13,567,922 $ 11,540,844
Employer's covered-employee payroll $ 11,189,797 $ 10,358,342
Employer's proportionate share of the net pension liability as of its covered-employee
payroll (as a percentage)119.7810%110.0720%
Plan fiduciary net position the total pension liability (as a percentage)78.4000%79.9000%
Schedule of Contributions:PERS
2016 2015
Contractually required contributions $ 1,052,437 $ 904,184
Contributions in relation to the contractually required contributions $ 1,052,437 $ 904,184
Contribution deficiency (excess) $ - $ -
Employer's covered-employee payroll $ 12,238,920 $ 10,358,342
Contributions of covered-employee payroll (as a percentage)8.5990%8.7290%
124
CITY OF BOZEMAN, MONTANA
SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY AND SCHEDULE OF CONTRIBUTIONS (CONTINUED)
Year Ended June 30, 2016
Schedule of Proportionate Share of the Net Pension Liability:FURS
2016 2015
Employer's proportion of the net pension liability $ 2,489,054 $ 2,361,550
Employer's proportionate share of the net pension liability associated with the Employer
(as a percentage)2.42336%2.41921%
State of MT proportionate share of the net pension liability associated with the Employer $ 5,543,784 $ 5,327,544
Total $ 8,032,838 $ 7,689,094
Employer's covered-employee payroll $ 3,270,451 $ 3,142,481
Employer's proportionate share of the net pension liability as of its covered-employee
payroll (as a percentage)76.1070%75.1490%
Plan fiduciary net position the total pension liability (as a percentage)76.9000%76.7000%
Schedule of Contributions:FURS
2016 2015
Contractually required contributions $ 477,250 $ 478,776
Contributions in relation to the contractually required contributions $ 477,250 $ 478,776
Contribution deficiency (excess) $ - $ -
Employer's covered-employee payroll $ 3,338,041 $ 3,270,451
Contributions of covered-employee payroll (as a percentage)14.0290%14.6390%
125
CITY OF BOZEMAN, MONTANA
SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY AND SCHEDULE OF CONTRIBUTIONS (CONTINUED)
Year Ended June 30, 2016
Schedule of Proportionate Share of the Net Pension Liability:MPORS
2016 2015
Employer's proportion of the net pension liability $ 4,920,638 $ 4,746,933
Employer's proportionate share of the net pension liability associated with the Employer
(as a percentage)2.97462%3.02091%
State of MT proportionate share of the net pension liability associated with the Employer $ 9,969,680 $ 9,589,371
Total $ 14,890,318 $ 14,336,304
Employer's covered-employee payroll $ 4,116,930 $ 4,053,265
Employer's proportionate share of the net pension liability as of its covered-employee
payroll (as a percentage)119.5220%117.1140%
Plan fiduciary net position the total pension liability (as a percentage)66.9000%67.0000%
Schedule of Contributions:MPORS
2016 2015
Contractually required contributions $ 638,568 $ 596,791
Contributions in relation to the contractually required contributions $ 638,568 $ 596,791
Contribution deficiency (excess) $ - $ -
Employer's covered-employee payroll $ 4,353,897 $ 4,116,930
Contributions of covered-employee payroll (as a percentage)14.6670%14.5397%
126
CITY OF BOZEMAN, MONTANA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION - PENSION PLAN CHANGES Year Ended June 30, 2016
CHANGE OF BENEFIT TERMS The following changes to the PERS, FURS, and MPORS plan provisions were made as identified:
2013 Legislative Changes: Working Retirees – House Bill – PERS, SRS, and FURS, effective July 1, 2013
• The law requires employer contributions on working retiree compensation.
• Member contributions are not required.
• Working retiree limitations are not impacted. PERS working retirees may still work up to 960 hours a year, without impacting benefits.
Highest Average Compensation (HAC) Cap – House Bill 97, effective July 1, 2013
All PERS, FURS, and MPORS members hired on or after July 1, 2013 are subject to 110% annual cap on compensation considered as part of a member’s highest or final average compensation.
All bonuses paid to PERS, FURS and MPORS members on or after July 1, 2013 will not be treated as compensation for retirement
purposes.
House Bill 454 – Permanent Injunction Limits Application of the GABA Reduction passed under HB 454
PERS Guaranteed Annual Benefit Adjustment (GABA)
After the member has completed 12 full months of retirement, the member’s benefit increases by the applicable percentage (provided
below) each January, inclusive of all other adjustments to the member’s benefit.
• 3% for members hired prior to July 1, 2007
• 1.5% for members hired on or after July 1, 2007 and before July 1, 2013
• Members hired on or after July 1, 2013 a. 1.5% each year PERS is funded at or above 90%
b. 1.5% is reduced by 0.1% for each 2% PERS is funded below 90%; and,
c. 0% whenever the amortization period for PERS is 40 years or more.
127
CITY OF BOZEMAN, MONTANA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION - PENSION PLAN CHANGES Year Ended June 30, 2016
CHANGE OF BENEFIT TERMS (CONTINUED)
2015 Legislative Changes – PERS:
General Revisions – House Bill 101, effective January 1, 2016: >PERS Second Retirement Benefit
1) Applies to PERS members who return to active service on or after January 1, 2016. Members who retire before January 1, 2016, return to PERS-
covered employment, and accumulate less than 2 years of service credit before retiring again:
• Refund of each member’s contributions from second employment plus regular interest (currently 0.25%);
• No service credit for second employment;
• Start same benefit amount the month following termination; and
• GABA starts again in the January immediately following second retirement. 2) For members who retire before January 1, 2016, return to PERS-covered employment and accumulate two or more years of service credit before retiring again:
• Member receives a recalculated retirement benefit based on laws in effect at second retirement; and,
• GABA stars in the January after receiving recalculated benefit for 12 months.
3) For members who retire on or after January 1, 2016 return to PERS-covered employment and accumulate less than 5 years of sercvice3 credit before retiring again:
• Refund of member’s contributions from second employment plus regular interest (currently 0.25%0;
• No service credit for second employment;
• Start same benefit amount the month following termination; and,
• GABA starts again in the January immediately following second retirement.
4) For members who retire on or after January 1, 2016, return to PERS-covered employment and accumulate five or more years of service credit before retiring again:
• Member receives same retirement benefit as prior to return to service;
• Member receives second retirement benefit for second period of service base on laws in effect at second retirement; and,
• GABA starts on both benefits in January after member receives original and new benefit for 12 months.
Revise DC Funding Laws – House Bill 107, effective July 1, 2015
Employer Contributions and the Defined Contribution Plan – for PERS and MUS-RP The PCR was paid off effective March 2016 and the contributions of 2.37% , 0.47%, and the 1.0% increase previously directed to the
PCR are now directed to the Defined Contribution or MUS-RP member’s account.
2015 Legislative Changes - FURS: none
128
CITY OF BOZEMAN, MONTANA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION - PENSION PLAN CHANGES Year Ended June 30, 2016
CHANGE OF BENEFIT TERMS (CONTINUED)
2015 Legislative Changes - MPORS:
• General Revisions – House Bill 101, effective January 1, 2016: >MPORS DROP Survivor Benefits
Allow statutory beneficiary (spouse or dependent child) of a deceased DROP participant to receive a DROP benefit and a
survivorship benefit rather than accumulated contributions or a lump sum payment. 19-9-1206(1), MCA.
CHANGES IN ACTUARIAL ASSUMPTIONS AND METHODS
Method and assumptions used in calculations of actuarially determined contributions
The following addition to the actuarial assumptions was adopted in 2014 based upon implementation of GASB Statement 68:
PERS FURS MPORS
Admin Expense as a % of Payroll 0.27% 0.19% 0.20%
The following changes were adopted in 2013 based on the 2013 Economic Experience study:
PERS, FURS, MPORS
General Wage Growth* 4.00%
*Includes inflation at 3.00%
Investment rate of return 7.75%, net of pension plan investment expense, and including inflation
The following Actuarial Assumptions are from the June 2010 Experience Study:
PERS FURS and MPORS
General Wage Growth* 4.25% 4.25%
*Includes inflation at 3.00% 3.00%
Merit increase Not applicable 0% to 7.3%
Investment rate of return 8.00%, net of pension plan investment expense,
and including inflation
8.00%, net of pension plan investment expense,
and including inflation
Asset valuation method 4-year smoothed market 4-year smoothed market
Actuarial cost method Entry age Entry age
Amortization method Level percentage of pay, open Level percentage of pay, open
129
CITY OF BOZEMAN, MONTANA
SCHEDULE OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET TO ACTUAL – GENERAL FUND
Year Ended June 30, 2016
Variance with
Actual Final Budget
Original Final Amounts Positive (Negative)
Budgetary fund balance, July 1 6,061,967$ 6,061,967$ 6,061,967$ -$
Resources (inflows):
Taxes 14,628,972 14,628,972 14,904,243 275,271
Special assessments - - 24 24
Licenses and permits 309,859 309,859 326,627 16,768
Intergovernmental 6,845,679 6,845,679 7,056,466 210,787
Charges for services 1,994,995 1,994,995 2,165,642 170,647
Fines and forfeitures 1,203,500 1,203,500 1,131,577 (71,923)
Sale of assets - - 58,475 58,475
Interest on investments 45,000 45,000 41,217 (3,783)
Transfers from other funds 2,272,004 2,272,004 2,122,260 (149,744)
Other 68,100 68,100 81,257 13,157
Amounts available for appropriation 33,430,076 33,430,076 33,949,755 519,679
Charges to appropriations (outflows):
Current
General government 6,341,341 6,376,909 6,219,840 157,069
Public safety 11,706,232 14,329,732 14,329,580 152
Public service 140,331 146,831 146,564 267
Public welfare 5,481,847 5,478,997 5,315,448 163,549
Other 2,548,040 481,140 333,963 147,177
Capital outlay 672,000 672,000 551,327 120,673
Debt service - 4,000 3,760 240
Transfers to other funds 294,250 528,600 528,172 428
Total charges to appropriations 27,184,041 28,018,209 27,428,654 589,555
Budgetary fund balance, June 30 6,246,035$ 5,411,867$ 6,521,101$ 1,109,234$
Budgeted Amounts
130
CITY OF BOZEMAN, MONTANA
SCHEDULE OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET TO ACTUAL OTHER MAJOR FUNDS – STREET IMPACT FEES SPECIAL REVENUE
Year Ended June 30, 2016
Variance with
Actual Amounts Final Budget
Original Final Budgetary Basis Positive (Negative)
Budgetary fund balance, July 1 12,885,310$ 12,885,310$ 12,885,310$ -$
Resources (inflows):
Taxes - - - -
Special assessments - - - -
Licenses and permits - - - -
Intergovernmental - - 112,897 112,897
Charges for services 2,236,375 2,236,375 3,967,203 1,730,828
Fines and forfeitures - - - -
Interest on investments 94,500 94,500 115,283 20,783
Transfers from other funds - - 18,414 18,414
Proceeds from long-term debt - - - -
Premium on bonds issued - - - -
Proceeds from the sale of capital assets - - - -
Other - - 1,140 1,140
Amounts available for appropriation 15,216,185 15,216,185 17,100,247 1,884,062
Charges to appropriations (outflows):
Current
General government - - - -
Public safety - - - -
Public service 224,000 321,500 321,312 188
Public welfare - - - -
Capital outlay 8,825,640 8,728,140 4,131,417 4,596,723
Debt service - - - -
Transfers to other funds - - - -
Total charges to appropriations 9,049,640 9,049,640 4,452,729 4,596,911
Budgetary fund balance, June 30 6,166,545$ 6,166,545$ 12,647,518$ 6,480,973$
Budgeted Amounts
131
CITY OF BOZEMAN, MONTANA
SCHEDULE OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET TO ACTUAL OTHER MAJOR FUNDS – STREET MAINTENANCE SPECIAL REVENUE
Year Ended June 30, 2016
Variance with
Actual Amounts Final Budget
Original Final Budgetary Basis Positive (Negative)
Budgetary fund balance, July 1 1,590,993$ 1,590,993$ 1,590,993$ -$
Resources (inflows):
Taxes - - - -
Special assessments 21,950 21,950 30,474 8,524
Licenses and permits 17,600 17,600 8,282 (9,318)
Intergovernmental - - 974 974
Charges for services 4,082,124 4,082,124 3,908,030 (174,094)
Fines and forfeitures - - - -
Interest on investments 17,450 17,450 10,105 (7,345)
Transfers from other funds 31,900 31,900 31,900 -
Proceeds from long-term debt - - 47,406 47,406
Premium on bonds issued - - - -
Proceeds from the sale of capital assets - - 1,959 1,959
Other - - 10,891 10,891
Amounts available for appropriation 5,762,017 5,762,017 5,641,014 (121,003)
Charges to appropriations (outflows):
Current
General government - - - -
Public safety - - - -
Public service 2,710,413 2,767,913 2,767,265 648
Public welfare - - - -
Capital outlay 1,426,498 767,898 668,428 99,470
Debt service 184,822 188,922 188,888 34
Transfers to other funds 626,500 1,242,000 1,241,485 515
Total charges to appropriations 4,948,233 4,966,733 4,866,066 100,667
Budgetary fund balance, June 30 813,784$ 795,284$ 774,948$ (20,336)$
Budgeted Amounts
132
CITY OF BOZEMAN, MONTANA
SCHEDULE OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET TO ACTUAL OTHER MAJOR FUNDS – BUILDING INSPECTION SPECIAL REVENUE
Year Ended June 30, 2016
Variance with
Actual Amounts Final Budget
Original Final Budgetary Basis Positive (Negative)
Budgetary fund balance, July 1 1,473,337$ 1,473,337$ 1,473,337$ -$
Resources (inflows):
Taxes - - - -
Special assessments - - - -
Licenses and permits 1,599,402 1,599,402 1,777,181 177,779
Intergovernmental - - 49,761 49,761
Charges for services 6,050 6,050 1,778 (4,272)
Fines and forfeitures - - - -
Interest on investments 13,000 13,000 17,100 4,100
Transfers from other funds - - - -
Proceeds from long- term debt - - - -
Premium on bonds issued - - - -
Proceeds from the sale of capital assets - - - -
Other - - (2,614) (2,614)
Amounts available for appropriation 3,091,789 3,091,789 3,316,543 224,754
Charges to appropriations (outflows):
Current
General government - - - -
Public safety 1,930,496 1,929,496 1,630,541 298,955
Public service - - - -
Public welfare - - - -
Capital outlay - 10,000 9,688 312
Debt service - - - -
Transfers to other funds - - - -
Total charges to appropriations 1,930,496 1,939,496 1,640,229 299,267
Budgetary fund balance, June 30 1,161,293$ 1,152,293$ 1,676,314$ 524,021$
Budgeted Amounts
133
CITY OF BOZEMAN, MONTANA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION – BUDGETARY INFORMATION Year Ended June 30, 2016
Street
General Impact Street Building
Fund Fees Maintenance Inspection
Sources/inflows of resources
Actual amounts (budgetary basis) "available for appropriation"
from the budgetary comparison schedule 33,949,755$ 17,100,247$ 5,641,014$ 3,316,543$
Differences - budget to GAAP:
The fund balance at the beginning of the year is a budgetary resource
but is not a current-year revenue for financial reporting purposes.(6,061,967) (12,885,310) (1,590,993) (1,473,337)
Transfers from other funds are inflows of budgetary resources but
are not revenues for financial reporting purposes (2,122,260) (18,414) (31,900) -
The proceeds from the issuance of long-term debt are a
budgetary resource but are a other financing source for
financial reporting purposes - - (47,406) -
The proceeds from the sale of assets are budgetary resources
but are regarded as a special item, rather than revenue, for
financial reporting purposes (58,475) - (1,959) -
Total revenues as reported on the statement of revenues,
expenditures, and changes in fund balances -
governmental funds 25,707,053$ 4,196,523$ 3,968,756$ 1,843,206$
Uses/outflows of resources
Actual amounts (budgetary basis) "total charges to appropriations"
from the budgetary comparison schedule 27,428,654$ 4,452,729$ 4,866,066$ 1,640,229$
Differences - budget to GAAP:
Transfers to other funds are outflows of budgetary resources
but are not expenditures for financial reporting purposes.(528,172) - (1,241,485) -
Total expenditures as reported on the statement of revenues,
expenditures, and changes in fund balances -
governmental funds 26,900,482$ 4,452,729$ 3,624,581$ 1,640,229$
D. SUPPLEMENTAL INFORMATION
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES
NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
Departmental Special Revenues – Accounts for monies received and expended for projects relating to various City departments.
Fire Impact Fees Special Revenues – Accounts for the collection and expenditures associated with the fire impact fees.
City Planning Board – Accounts for monies received from various sources including property taxes, fees, and County revenues. Expenditures are
for short-term and long-term planning of City and adjacent County zones. Section 76-1-102 MCA provides that the purpose of City planning is to encourage local governments to improve the present health, safety, convenience, and welfare of the citizens.
Health-Medical Insurance – Accounts for property tax revenues received and transferred to the general fund for premiums and deductibles on group
insurance coverage for City employees.
Gas Tax Apportionment – Accounts for revenues from State gasoline taxes apportioned from the State of Montana Department of Highways.
Drug Forfeitures – Accounts for monies received from fines and forfeitures of drug-related criminal prosecution, to be expended on drug law enforcement and education.
City-County Drug Forfeitures – Accounts for monies received from fines and forfeitures of drug-related criminal prosecution, from an inter-local
agreement with the County, to be expended on drug law enforcement and education.
Victim/Witness Advocate – Accounts for monies collected through the Court system to assist with Victim and Witness Advocate Program.
Tree Maintenance – Accounts for special assessment revenues levied, received, and expended for tree maintenance provided to specific property
owners.
Law and Justice Center – Accounts for the receipt and expenditure of monies earmarked by the City Commission for the City’s share of the Law
and Justice Center renovation.
Community Transportation – Accounts for federal funding for highways, mass transit, and alternative transportation programs as defined by the Intermodal Surface Transportation Efficiency Act (ISTEA). Money is distributed on a per-capita basis.
Fire Department Equipment– Accounts for Public Safety mill levy tax revenues for fire department capital and equipment.
Economic Development Revolving Loan Fund – Accounts for revenues received and expended relative to loans made in accordance with the
Community Development Block Grant Program, for economic development purposes.
Housing Revolving Loan Fund – Accounts for revenues received and expended relative to loans made in accordance with the Community Development Block Grant Program, for housing development purposes.
Community Housing – Accounts for money set aside by the City Commission and related expenditure for the establishment of safe, decent, and
affordable housing for low and moderate-income citizens.
Downtown Improvement District – In November 1995, the City adopted an Urban Renewal Plan for the downtown area. This fund accounts for the
revenue and expenditures associated with the district.
Street Lighting – Accounts for special assessment revenues levied, received, and expended for street and public highway lighting provided to specific
property owners.
Park Land – Accounts for monies donated for the purpose of acquiring and developing City Parks.
Municipal Court Restitution – Accounts for checks that were canceled on the restitution checking account, per MCA 46-18-250.
TIF N.E. Urban Renewal – In August of 2005, the City created an Urban Renewal Plan for the Northeast Urban section of Bozeman. This fund
accounts for the revenue and expenditures associated with the district.
TIF N 7th Corridor - In August of 2005, the City created a Renewal Plan for the North 7th Avenue business district. This fund accounts for the
revenue and expenditures associated with the district.
DEBT SERVICE FUNDS
Special Improvement District (SID) Revolving – Accounts for property tax revenues received and expended for the payment of special improvement district bond principal and interest.
General Obligation Bonds Debt Service Fund – Accounts for the debt service payments associated with the Library and Transportation general
obligation bonds.
Tax Increment Financing Bonds Debt Service Fund – Accounts for the debt service payments associated with the Tax Increment Urban Renewal
Revenue Bonds issued as partial funding for the construction of a Downtown Intermodal Parking Facility.
CAPITAL IMPROVEMENT FUNDS
General Improvements Capital Projects Fund – Accounts for the construction of general improvement projects financed by special assessments other
than those financed by proprietary funds.
PERMANENT FUNDS
Perpetual Cemetery Care – Accounts for 15% maintenance fee received from the sale of City cemetery plots, which is to be used for perpetual care.
The interest income from the trust is transferred to the general fund for use in maintaining the City’s cemetery.
134
CITY OF BOZEMAN, MONTANA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS June 30, 2016
City
Planning Health-Medical Community
Departmental Board Insurance Transportation
ASSETS
Cash and cash equivalents 2,018,924$ 633,909$ 218,580$ 1,617$
Receivables:
Property taxes 4,366 8,751 117,801 -
Accrued interest - - - -
Customers, net 4,968 - - 108,185
Special assessments - - - -
Other governments 73,626 - - -
Others - - - -
Advances to other city funds - - - -
Prepaid expenditures - - - -
Notes receivable - - - -
Restricted cash and cash equivalents 25,000 457,039 - -
Total assets 2,126,884$ 1,099,699$ 336,381$ 109,802$
LIABILITIES
Accounts payable 133,620$ 31,490$ -$ 43,238$
Escheat property payable - - - -
Accrued employee benefits payable 16 346 - -
Total liabilities 133,636 31,836 - 43,238
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue-property taxes 327 666 8,261 -
Unavailable revenue-special assessments - - - -
Total deferred inflows of resources 327 666 8,261 -
FUND BALANCES
Nonspendable - - - -
Restricted 182,226 1,067,197 328,120 66,564
Committed 1,875,418 - - -
Assigned - - - -
Unassigned (64,723) - - -
Total fund balances 1,992,921 1,067,197 328,120 66,564
Total liabilities, deferred inflows
of resources, and fund balances 2,126,884$ 1,099,699$ 336,381$ 109,802$
(continued)
Special Revenue Funds
135
CITY OF BOZEMAN, MONTANA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2016
Special Revenue Funds
Downtown
Gas Tax Tree Fire Improvement
Apportionment Maintenance Impact Fees District
ASSETS
Cash and cash equivalents 954,601$ 261,719$ -$ 2,570,451$
Receivables:
Property taxes - - - 121,383
Accrued interest - - - 2,502
Customers, net 2,634 - - -
Special assessments - 13,615 - 3,651
Other governments - - - -
Others - - - -
Advances to other city funds - - - -
Prepaid expenditures - - - -
Notes receivable - - - -
Restricted cash and cash equivalents - - 1,238,167 -
Total assets 957,235$ 275,334$ 1,238,167$ 2,697,987$
LIABILITIES
Accounts payable -$ 22,534$ 680$ 1,018,622$
Escheat property payable - - - -
Accrued employee benefits payable - 205 - -
Total liabilities - 22,739 680 1,018,622
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue-property taxes - - - -
Unavailable revenue-special assessments - 9,100 - -
Total deferred inflows of resources - 9,100 - -
FUND BALANCES
Nonspendable - - - -
Restricted 957,235 243,495 1,237,487 1,679,365
Committed - - - -
Assigned - - - -
Unassigned - - - -
Total fund balances 957,235 243,495 1,237,487 1,679,365
Total liabilities, deferred inflows
of resources, and fund balances 957,235$ 275,334$ 1,238,167$ 2,697,987$
(continued)
136
CITY OF BOZEMAN, MONTANA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2016
Special Revenue Funds
Economic Housing City-County
Development Community Revolving Drug Drug
Revolving Loan Housing Loan Fund Forfeitures Forfeitures
ASSETS
Cash and cash equivalents -$ 492,717$ 1,319$ 35,991$ 157,075$
Receivables:
Property taxes - 12,602 - - -
Accrued interest - - -
Customers, net 351,181 - - 3,840 -
Special assessments - - - - -
Other governments - - - - -
Others - - - - -
Advances to other city funds - - - - -
Prepaid expenditures - - - - -
Notes receivable 506,249 78,739 6,928 - -
Restricted cash and cash equivalents - - - - -
Total assets 857,430$ 584,058$ 8,247$ 39,831$ 157,075$
LIABILITIES
Accounts payable -$ -$ -$ 5,226$ 28,667$
Escheat property payable - - - - -
Accrued employee benefits payable - - - 103 -
Total liabilities - - - 5,329 28,667
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue-property taxes - 515 - - -
Unavailable revenue-special assessments - - - - -
Total deferred inflows of resources - 515 - - -
FUND BALANCES
Nonspendable - - - - -
Restricted 857,430 - 8,247 34,502 -
Committed - 583,543 - - 128,408
Assigned - - - - -
Unassigned - - - - -
Total fund balances 857,430 583,543 8,247 34,502 128,408
Total liabilities, deferred inflows
of resources, and fund balances 857,430$ 584,058$ 8,247$ 39,831$ 157,075$
(continued)
137
CITY OF BOZEMAN, MONTANA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2016
Special Revenue Funds
Law and Street Arterial
Justice and Collector TIF TIF N.E.Victim/Witness Fire Department
Center District N 7th Corridor Urban Renewal Advocate Equipment
ASSETS
Cash and cash equivalents -$ 995,022$ 2,028,639$ 530,849$ 403,375$ 666,680$
Receivables:
Property taxes - - 27,345 11,213 - 17,450
Accrued interest - - 2,424 - - -
Customers, net - - - - 4,907 -
Special assessments - 13,150 - - - -
Other governments - - - - - -
Others - - - - - -
Advances to other city funds - - - - - -
Prepaid expenditures 350,625 - - - - -
Notes receivable - - - - - -
Restricted cash and cash equivalents - - - - - -
Total assets 350,625$ 1,008,172$ 2,058,408$ 542,062$ 408,282$ 684,130$
LIABILITIES
Accounts payable -$ 137$ 221,147$ 160,472$ 31,027$ 788$
Escheat property payable - - - - - -
Accrued employee benefits payable - - - - - -
Total liabilities - 137 221,147 160,472 31,027 788
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue-property taxes - - 1,450 - - 1,290
Unavailable revenue-special assessments - - - - - -
Total deferred inflows of resources - - 1,450 - - 1,290
FUND BALANCES
Nonspendable 350,625 - - - - -
Restricted - 1,008,035 1,835,811 381,590 377,255 -
Committed - - - - - 682,052
Assigned - - - - - -
Unassigned - - - - - -
Total fund balances 350,625 1,008,035 1,835,811 381,590 377,255 682,052
Total liabilities, deferred inflows
of resources, and fund balances 350,625$ 1,008,172$ 2,058,408$ 542,062$ 408,282$ 684,130$
(continued)
138
CITY OF BOZEMAN, MONTANA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2016
Special Revenue Funds
Street Park Municipal Court
Lighting Land Restitution Total
ASSETS
Cash and cash equivalents 605,685$ 424,870$ 21,157$ 13,023,180$
Receivables:
Property taxes - - - 320,911
Accrued interest - - - 4,926
Customers, net - - - 475,715
Special assessments 10,135 - - 40,551
Other governments - - - 73,626
Others - - -
Advances to other city funds - - - -
Prepaid expenditures - - - 350,625
Notes receivable - - - 591,916
Restricted cash and cash equivalents - - - 1,720,206
Total assets 615,820$ 424,870$ 21,157$ 16,601,656$
LIABILITIES
Accounts payable 28,179$ -$ 1,000$ 1,726,827$
Escheat property payable - - 20,052 20,052
Accrued employee benefits payable - - - 670
Total liabilities 28,179 - 21,052 1,747,549
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue-property taxes - - - 12,509
Unavailable revenue-special assessments - - - 9,100
Total deferred inflows of resources - - - 21,609
FUND BALANCES
Nonspendable - - - 350,625
Restricted 587,641 424,870 105 11,277,175
Committed - - - 3,269,421
Assigned - - -
Unassigned - - - (64,723)
Total fund balances 587,641 424,870 105 14,832,498
Total liabilities, deferred inflows
of resources, and fund balances 615,820$ 424,870$ 21,157$ 16,601,656$
(continued)
139
CITY OF BOZEMAN, MONTANA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2016
SID G.O.TIF
Revolving Bonds Bonds Total
ASSETS
Cash and cash equivalents 2,924,604$ 70,240$ -$ 2,994,844$
Receivables:
Property taxes - 67,407 - 67,407
Accrued interest 3,888 - - 3,888
Customers, net - - - -
Special assessments - - - -
Other governments - - - -
Others - - - -
Advances to other city funds 458,208 - - 458,208
Prepaid expenditures - - - -
Notes receivable - - - -
Restricted cash and cash equivalents - - - -
Total assets 3,386,700$ 137,647$ -$ 3,524,347$
LIABILITIES
Accounts payable -$ 500$ -$ 500$
Escheat property payable - - - -
Accrued employee benefits payable - - - -
Total liabilities - 500 - 500
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue-property taxes - 4,188 - 4,188
Unavailable revenue-special assessments - - - -
Total deferred inflows of resources - 4,188 - 4,188
FUND BALANCES
Nonspendable - - - -
Restricted 3,386,700 132,959 - 3,519,659
Committed - - - -
Assigned - - - -
Unassigned - - - -
Total fund balances 3,386,700 132,959 - 3,519,659
Total liabilities, deferred inflows
of resources, and fund balances 3,386,700$ 137,647$ -$ 3,524,347$
(continued)
Debt Service Funds
140
CITY OF BOZEMAN, MONTANA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2016
Capital Permanent Total
Projects Fund Nonmajor
Perpetual Governmental
Construction Cemetery Care Funds
ASSETS
Cash and cash equivalents 12,051,817$ -$ 28,069,841$
Receivables:
Property taxes - - 388,318
Accrued interest 19,627 - 28,441
Customers, net 39,223 1,745 516,683
Special assessments - - 40,551
Other governments - - 73,626
Others - - -
Advances to other city funds - - 458,208
Prepaid expenditures - - 350,625
Notes receivable - - 591,916
Restricted cash and cash equivalents - 1,076,326 2,796,532
Total assets 12,110,667$ 1,078,071$ 33,314,741$
LIABILITIES
Accounts payable 737,804$ 2,121$ 2,467,252$
Escheat property payable - - 20,052
Accrued employee benefits payable - - 670
Total liabilities 737,804 2,121 2,487,974
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue-property taxes - - 16,697
Unavailable revenue-special assessments - - 9,100
Total deferred inflows of resources - - 25,797
FUND BALANCES
Nonspendable - 1,075,950 1,426,575
Restricted 9,230,464 - 24,027,298
Committed 258,842 - 3,528,263
Assigned 1,883,557 - 1,883,557
Unassigned - - (64,723)
Total fund balances 11,372,863 1,075,950 30,800,970
Total liabilities, deferred inflows
of resources, and fund balances 12,110,667$ 1,078,071$ 33,314,741$
141
CITY OF BOZEMAN, MONTANA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS Year ended June 30, 2016
Special Revenue Funds
City
Planning Health-Medical Community
Departmental Board Insurance Transportation
REVENUES
Taxes 124,100$ 172,383$ 2,334,153$ -$
Special assessments - - - -
Licenses and permits - - - -
Intergovernmental 464,457 145,697 - 116,410
Charges for services 31,850 774,337 - -
Fines and forfeitures - - - -
Interest on investments 17,807 6,774 - 4,788
Interest on loans receivable - - - -
Other 198,548 54,549 - -
Total revenues 836,762 1,153,740 2,334,153 121,198
EXPENDITURES
Current:
General government - 1,017,254 - -
Public safety 230,794 - - -
Public service - - - -
Public welfare 333,820 - - -
Other 82,662 - 1,806 -
Capital outlay 117,933 - - 154,630
Debt service:
Principal - - - -
Interest and fiscal fees - - - -
Total expenditures 765,209 1,017,254 1,806 154,630
Revenues over (under) expenditures 71,553 136,486 2,332,347 (33,432)
OTHER FINANCING SOURCES (USES)
Transfers in - 152,471 - -
Transfers out - - (2,185,079) (439,470)
Sale of capital assets - - - 107,300
Total other financing sources (uses)- 152,471 (2,185,079) (332,170)
Net change in fund balance 71,553 288,957 147,268 (365,602)
FUND BALANCES, beginning of year 1,921,368 778,240 180,852 432,166
FUND BALANCES, end of year 1,992,921$ 1,067,197$ 328,120$ 66,564$
(continued)
142
CITY OF BOZEMAN, MONTANA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Special Revenue Funds
Downtown
Gas Tax Tree Fire Improvement
Apportionment Maintenance Impact Fees District
REVENUES
Taxes -$ -$ -$ 985,532$
Special assessments - 1,093 - 120,508
Licenses and permits - - -
Intergovernmental 676,439 988 - 56,050
Charges for services - 453,313 338,461 -
Fines and forfeitures - - - -
Interest on investments 6,844 1,876 9,787 16,927
Interest on loans receivable - - - -
Other - 1,735 - 1,500
Total revenues 683,283 459,005 348,248 1,180,517
EXPENDITURES
Current:
General government - - - -
Public safety - - 2,966 -
Public service 197,366 - - -
Public welfare - 433,107 - 576,077
Other - - - -
Capital outlay 224,573 - - -
Debt service:
Principal - - - -
Interest and fiscal fees - - - -
Total expenditures 421,939 433,107 2,966 576,077
Revenues over (under) expenditures 261,344 25,898 345,282 604,440
OTHER FINANCING SOURCES (USES)
Transfers in - - - -
Transfers out - - - (797,116)
Sale of capital assets - - - -
Total other financing sources (uses)- - - (797,116)
Net change in fund balance 261,344 25,898 345,282 (192,676)
FUND BALANCES, beginning of year 695,891 217,597 892,205 1,872,041
FUND BALANCES, end of year 957,235$ 243,495$ 1,237,487$ 1,679,365$
(continued)
143
CITY OF BOZEMAN, MONTANA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Special Revenue Funds
Economic Housing City-County
Development Community Revolving Drug Drug
Revolving Loan Housing Loan Fund Forfeitures Forfeitures
REVENUES
Taxes -$ 257,191$ -$ -$ -$
Special assessments - - - - -
Licenses and permits - - - - -
Intergovernmental - - - 111,699 -
Charges for services - - - - -
Fines and forfeitures - - - 55,879 1,830
Interest on investments 360 3,452 - 202 1,379
Interest on loans receivable 33,991 600 247 - -
Other - 10,030 - - -
Total revenues 34,351 271,273 247 167,780 3,209
EXPENDITURES
Current:
General government - - - - -
Public safety - - - 243,876 28,667
Public service - - - - -
Public welfare 32,000 101,225 - - -
Other - - - - -
Capital outlay - - - - -
Debt service:
Principal - - - - -
Interest and fiscal fees - - - - -
Total expenditures 32,000 101,225 - 243,876 28,667
Revenues over (under) expenditures 2,351 170,048 247 (76,096) (25,458)
OTHER FINANCING SOURCES (USES)
Transfers in - - - 110,598 -
Transfers out - - - - -
Sale of capital assets - - - - -
Total other financing sources (uses)- - - 110,598 -
Net change in fund balance 2,351 170,048 247 34,502 (25,458)
FUND BALANCES, beginning of year 855,079 413,495 8,000 - 153,866
FUND BALANCES, end of year 857,430$ 583,543$ 8,247$ 34,502$ 128,408$
(continued)
144
CITY OF BOZEMAN, MONTANA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Special Revenue Funds
Law and Street Arterial
Justice and Collector TIF TIF N.E.Victim/Witness Fire Department
Center District N 7th Corridor Urban Renewal Advocate Equipment
REVENUES
Taxes -$ -$ 686,023$ 148,335$ -$ 344,501$
Special assessments - 915 - - - -
Licenses and permits - - - - - -
Intergovernmental - - 37,926 1,353 - -
Charges for services - 565,286 - - - -
Fines and forfeitures - - - - 64,419 -
Interest on investments - 2,759 16,392 3,999 3,670 4,471
Interest on loans receivable - - - - - -
Other - - - - - -
Total revenues - 568,960 740,341 153,687 68,089 348,972
EXPENDITURES
Current:
General government - - - - 81,445 -
Public safety 19,125 - - - - -
Public service - 395 - - - -
Public welfare - - 197,665 151,634 - -
Other - - .- - -
Capital outlay - - 1,112,959 20,000 - 39,355
Debt service:
Principal - - - - - -
Interest and fiscal fees - - - - - -
Total expenditures 19,125 395 1,310,624 171,634 81,445 39,355
Revenues over (under) expenditures (19,125) 568,565 (570,283) (17,947) (13,356) 309,617
OTHER FINANCING SOURCES (USES)
Transfers in - 439,470 343,479 - - -
Transfers out - - (41,515) (35,000) - -
Sale of capital assets - - - - - -
Total other financing sources (uses)- 439,470 301,964 (35,000) - -
Net change in fund balance (19,125) 1,008,035 (268,319) (52,947) (13,356) 309,617
FUND BALANCES, beginning of year 369,750 - 2,104,130 434,537 390,611 372,435
FUND BALANCES, end of year 350,625$ 1,008,035$ 1,835,811$ 381,590$ 377,255$ 682,052$
(continued)
145
CITY OF BOZEMAN, MONTANA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Special Revenue Funds
Tourism Municipal
Business Street Park Court
Improvement Lighting Land Restitution Totals
REVENUES
Taxes -$ -$ -$ -$ 5,052,218$
Special assessments 407,797 - - 530,313
Licenses and permits - - - - -
Intergovernmental - - - - 1,611,019
Charges for services - - - - 2,163,247
Fines and forfeitures - - - - 122,128
Interest on investments - 5,274 3,626 - 110,387
Interest on loans receivable - - - - 34,838
Other - - 43,197 - 309,559
Total revenues - 413,071 46,823 - 9,933,709
EXPENDITURES
Current:
General government - - - - 1,098,699
Public safety - - - - 525,428
Public service - 407,503 - - 605,264
Public welfare 27,981 - - - 1,853,509
Other - - - - 84,468
Capital outlay - - - - 1,669,450
Debt service:
Principal - - - - -
Interest and fiscal fees - - - - -
Total expenditures 27,981 407,503 - - 5,836,818
Revenues over (under) expenditures (27,981) 5,568 46,823 - 4,096,891
OTHER FINANCING SOURCES (USES)
Transfers in - - - 1,046,018
Transfers out - (31,900) - - (3,530,080)
Sale of capital assets - - - - 107,300
Total other financing sources (uses)- (31,900) - - (2,376,762)
Net change in fund balance (27,981) (26,332) 46,823 - 1,720,129
FUND BALANCES, beginning of year 27,981 613,973 378,047 105 13,112,369
FUND BALANCES, end of year -$ 587,641$ 424,870$ 105$ 14,832,498$
(continued)
146
CITY OF BOZEMAN, MONTANA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
SID G.O.TIF
Revolving Bonds Bonds Totals
REVENUES
Taxes -$ 1,346,613$ -$ 1,346,613$
Special assessments - - - -
Licenses and permits - - - -
Intergovernmental - - - -
Charges for services - - - -
Fines and forfeitures - - - -
Interest on investments 26,315 929 - 27,244
Interest on loans receivable 3,714 - - 3,714
Other - - - -
Total revenues 30,029 1,347,542 - 1,377,571
EXPENDITURES
Current:
General government - - - -
Public safety - - - -
Public service - - - -
Public welfare - - - -
Other - - -
Capital outlay - - - -
Debt service:-
Principal - 750,000 195,000 945,000
Interest and fiscal fees - 605,091 228,638 833,729
Total expenditures - 1,355,091 423,638 1,778,729
Revenues over (under) expenditures 30,029 (7,549) (423,638) (401,158)
OTHER FINANCING SOURCES (USES)
Transfers in - 423,638 423,638
Transfers out - - - -
Sale of capital assets - - - -
Total other financing sources (uses)- - 423,638 423,638
Net change in fund balance 30,029 (7,549) - 22,480
FUND BALANCES, beginning of year 3,356,671 140,508 - 3,497,179
FUND BALANCES, end of year 3,386,700$ 132,959$ -$ 3,519,659$
(continued)
Debt Service Funds
147
CITY OF BOZEMAN, MONTANA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Capital Permanent Total
Projects Fund Nonmajor
Cemetery Governmental
Construction Perpetual Care Funds
REVENUES
Taxes -$ -$ 6,398,831$
Special assessments - - 530,313
Licenses and permits - - -
Intergovernmental 89,307 - 1,700,326
Charges for services - 75,830 2,239,077
Fines and forfeitures - - 122,128
Interest on investments 140,297 9,180 287,108
Interest on loans receivable - - 38,552
Other 15,200 - 324,759
Total revenues 244,804 85,010 11,641,094
EXPENDITURES
Current:
General government - - 1,098,699
Public safety - - 525,428
Public service - - 605,264
Public welfare 76,468 - 1,929,977
Other - - 84,468
Capital outlay 2,307,160 - 3,976,610
Debt service:-
Principal - - 945,000
Interest and fiscal fees - - 833,729
Total expenditures 2,383,628 - 9,999,175
Revenues over (under) expenditures (2,138,824) 85,010 1,641,919
OTHER FINANCING SOURCES (USES)
Transfers in 2,841,183 - 4,310,839
Transfers out - - (3,530,080)
Sale of capital assets 60,250 - 167,550
Total other financing sources (uses)2,901,433 - 948,309
Net change in fund balance 762,609 85,010 2,590,228
FUND BALANCES, beginning of year 10,610,254 990,940 28,210,742
FUND BALANCES, end of year 11,372,863$ 1,075,950$ 30,800,970$
BUDGET TO ACTUAL SCHEDULES OTHER MAJOR FUNDS
148
CITY OF BOZEMAN, MONTANA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL
OTHER MAJOR FUNDS – SID SINKING FUND Year Ended June 30, 2016
Variance with
Actual Amounts Final Budget
Original Final Budgetary Basis Positive (Negative)
Budgetary fund balance, July 1 478,181$ 478,181$ 478,181$ -$
Resources (inflows):
Taxes - - - -
Special assessments 616,449 616,449 705,143 88,694
Licenses and permits - - - -
Intergovernmental - - - -
Charges for services - - 1,953 1,953
Fines and forfeitures - - - -
Interest on investments 9,940 9,940 8,886 (1,054)
Transfers from other funds - - - -
Proceeds from long-term debt - - - -
Premium on bonds issued - - - -
Proceeds from the sale of capital assets - - -
Other - - 213 213
Amounts available for appropriation 1,104,570 1,104,570 1,194,376 89,806
Charges to appropriations (outflows):
Current:
General government - - - -
Public safety - - - -
Public service - - - -
Public welfare - - - -
Capital outlay - - - -
Debt service 379,800 379,800 267,343 112,457
Transfers to other funds 10,700 197,700 196,755 945
Total charges to appropriations 390,500 577,500 464,098 113,402
Budgetary fund balance, June 30 714,070$ 527,070$ 730,278$ 203,208$
Budgeted Amounts
149
CITY OF BOZEMAN, MONTANA
NOTE TO BUDGET TO ACTUAL STATEMENT - OTHER MAJOR FUNDS
Year Ended June 30, 2016
SID Sinking
Fund
Sources/inflows of resources
Actual amounts (budgetary basis) "available for appropriation" from
the budgetary comparison schedule 1,194,376$
Differences - budget to GAAP:
The fund balance at the beginning of the year is a budgetary resource but is
not a current-year revenue for financial reporting purposes.(478,181)
Transfers from other funds are inflows of budgetary resources but are not
revenues for financial reporting purposes.-
The proceeds from the issuance of long-term debt are a budgetary resource
but are a other financing source for financial reporting purposes -
The proceeds from the sale of assets are budgetary resources but are regarded
as a special item, rather than revenue, for financial reporting purposes -
Total revenues as reported on the statement of revenues, expenditures,
and changes in fund balances - governmental funds 716,195$
Uses/outflows of resources
Actual amounts (budgetary basis) "total charges to appropriations" from
the budgetary comparison schedule 464,098$
Differences - budget to GAAP:
Transfers to other funds are outflows of budgetary resources but are not
expenditures for financial reporting purposes.(196,755)
Total expenditures as reported on the statement of revenues, expenditures,
and changes in fund balances - governmental funds 267,343$
BUDGET TO ACTUAL SCHEDULES – NONMAJOR FUNDS
150
CITY OF BOZEMAN, MONTANA
SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL
NONMAJOR GOVERNMENTAL FUNDS Year Ended June 30, 2016
Special Revenue Funds
Variance Variance
Positive Positive
Budget Actual (Negative)Budget Actual (Negative)
REVENUES
Taxes 116,428$ 124,100$ 7,672$ 178,125$ 172,383$ (5,742)$
Special assessments - - - - - -
Licenses and permits - - - - - -
Intergovernmental 346,133 464,457 118,324 109,225 145,697 36,472
Charges for services 27,500 31,850 4,350 461,150 774,337 313,187
Fines and forfeitures - - - - - -
Interest on investments 1,230 17,807 16,577 3,000 6,774 3,774
Loan repayment - - - - - -
Other 59,150 198,548 139,398 13,000 54,549 41,549
Total revenues 550,441 836,762 286,321 764,500 1,153,740 389,240
EXPENDITURES - BUDGET UNIT 798,569 765,209 33,360 1,215,809 1,017,254 198,555
Revenues over (under) expenditures (248,128) 71,553 319,681 (451,309) 136,486 587,795
OTHER FINANCING SOURCES (USES)
Transfers in - - - 164,228 152,471 (11,757)
Transfers out - - - - - -
Long-term debt issued - - - - - -
Sale of capital assets - - - - - -
Total other financing sources (uses)- - - 164,228 152,471 (11,757)
Revenues and other sources over
(under) expenditures (248,128)$ 71,553 319,681$ (287,081)$ 288,957 576,038$
FUND BALANCES, beginning of year 1,921,368 778,240
FUND BALANCES, end of year 1,992,921$ 1,067,197$
(continued)
Departmental Special Revenues City Planning Board
151
CITY OF BOZEMAN, MONTANA
SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Special Revenue Funds
Variance Variance
Positive Positive
Budget Actual (Negative)Budget Actual (Negative)
REVENUES
Taxes 2,346,544$ 2,334,153$ (12,391)$ -$ -$ -$
Special assessments - - - - - -
Licenses and permits - - - - - -
Intergovernmental - - - 239,548 116,410 (123,138)
Charges for services - - - - - -
Fines and forfeitures - - - - - -
Interest on investments - - - - 4,788 4,788
Loan repayment - - - - - -
Other - - - - - -
Total revenues 2,346,544 2,334,153 (12,391) 239,548 121,198 (118,350)
EXPENDITURES - BUDGET UNIT 1,850 1,806 44 239,548 154,630 84,918
Revenues over (under) expenditures 2,344,694 2,332,347 (12,347) - (33,432) (33,432)
OTHER FINANCING SOURCES (USES)
Transfers in - - - - - -
Transfers out (2,344,694) (2,185,079) 159,615 (439,500) (439,470) 30
Long-term debt issued - - - - - -
Sale of capital assets - - - - 107,300 107,300
Total other financing sources (uses)(2,344,694) (2,185,079) 159,615 (439,500) (332,170) 107,330
Revenues and other sources over
(under) expenditures -$ 147,268 147,268$ (439,500)$ (365,602) 73,898$
FUND BALANCES, beginning of year 180,852 432,166 FUND BALANCES, end of year 328,120$ 66,564$
(continued)
Health-Medical Insurance Community Transportation
152
CITY OF BOZEMAN, MONTANA
SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Variance Variance
Positive Positive
Budget Actual (Negative)Budget Actual (Negative)
REVENUES
Taxes -$ -$ -$ -$ -$ -$
Special assessments - - - 1,350 1,093 (257)
Licenses and permits - - - - - -
Intergovernmental 658,500 676,439 17,939 250 988 738
Charges for services - - - 451,496 453,313 1,817
Fines and forfeitures - - - - - -
Interest on investments 3,900 6,844 2,944 1,600 1,876 276
Loan repayment - - - - - -
Other - - - 6,000 1,735 (4,265)
Total revenues 662,400 683,283 20,883 460,696 459,005 (1,691)
EXPENDITURES - BUDGET UNIT 1,121,500 421,939 699,561 473,051 433,107 39,944
Revenues over (under) expenditures (459,100) 261,344 720,444 (12,355) 25,898 38,253
OTHER FINANCING SOURCES (USES)
Transfers in - - - - - -
Transfers out - - - - - -
Long-term debt issued - - - - - -
Sale of capital assets - - - - - -
Total other financing sources (uses)- - - - - -
Revenues and other sources over
(under) expenditures (459,100)$ 261,344 720,444$ (12,355)$ 25,898 38,253$
FUND BALANCES, beginning of year 695,891 217,597
FUND BALANCES, end of year 957,235$ 243,495$
(continued)
Tree Maintenance
Special Revenue Funds
Gas Tax Apportionment
153
CITY OF BOZEMAN, MONTANA
SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Special Revenue Funds
Fire Impact Fees Special Revenue
Variance Variance
Positive Positive
Budget Actual (Negative)Budget Actual (Negative)
REVENUES
Taxes -$ -$ - 762,113$ 985,532$ 223,419$
Special assessments - - - 132,200 120,508 (11,692)
Licenses and permits - - - - - -
Intergovernmental - - - 45,436 56,050 10,614
Charges for services 265,000 338,461 73,461 - - -
Fines and forfeitures - - - - - -
Interest on investments - 9,787 9,787 11,000 16,927 5,927
Loan repayment - - - - - -
Other - - - 14,500 1,500 (13,000)
Total revenues 265,000 348,248 83,248 965,249 1,180,517 215,268
EXPENDITURES - BUDGET UNIT 3,000 2,966 34 1,263,100 576,077 687,023
Revenues over (under) expenditures 262,000 345,282 83,282 (297,851) 604,440 902,291
OTHER FINANCING SOURCES (USES)
Transfers in - - - - - -
Transfers out - - - (797,200) (797,116) 84
Long-term debt issued - - - - - -
Sale of capital assets - - - - - -
Total other financing sources (uses)- - - (797,200) (797,116) 84
Revenues and other sources over
(under) expenditures 262,000$ 345,282 83,282$ (1,095,051)$ (192,676) 902,375$
FUND BALANCES, beginning of year 892,205 1,872,041
FUND BALANCES, end of year 1,237,487$ 1,679,365$
(continued)
Downtown Improvement District
154
CITY OF BOZEMAN, MONTANA
SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Special Revenue Funds
Variance Variance
Positive Positive
Budget Actual (Negative)Budget Actual (Negative)
REVENUES
Taxes -$ -$ -$ 241,158$ 257,191$ 16,033$
Special assessments - - - - - -
Licenses and permits - - - - - -
Intergovernmental - - - - - -
Charges for services - - - - - -
Fines and forfeitures - - - - - -
Interest on investments - 360 360 2,850 3,452 602
Loan repayment 48,500 33,991 (14,509) 9,500 600 (8,900)
Other - - - - 10,030 10,030
Total revenues 48,500 34,351 (14,149) 253,508 271,273 17,765
EXPENDITURES - BUDGET UNIT 32,000 32,000 - 101,400 101,225 175
Revenues over (under) expenditures 16,500 2,351 (14,149) 152,108 170,048 17,940
OTHER FINANCING SOURCES (USES)
Transfers in - - - - - -
Transfers out - - - - - -
Long-term debt issued - - - - - -
Sale of capital assets - - - - - -
Total other financing sources (uses)- - - - - -
Revenues and other sources over
(under) expenditures 16,500$ 2,351 (14,149)$ 152,108$ 170,048 17,940$
FUND BALANCES, beginning of year 855,079 413,495
FUND BALANCES, end of year 857,430$ 583,543$
(continued)
Economic Development Revolving Loan Fund Community Housing
155
CITY OF BOZEMAN, MONTANA
SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Variance Variance
Positive Positive
Budget Actual (Negative)Budget Actual (Negative)
REVENUES
Taxes -$ -$ -$ -$ -$ -$
Special assessments - - - - - -
Licenses and permits - - - - - -
Intergovernmental - - - 54,000 111,699 57,699
Charges for services - - - - - -
Fines and forfeitures - - - 73,000 55,879 (17,121)
Interest on investments 50 - (50) - 202 202
Loan repayment 5,275 247 (5,028) - - -
Other - - - - - -
Total revenues 5,325 247 (5,078) 127,000 167,780 40,780
EXPENDITURES - BUDGET UNIT - - - 244,039 243,876 163
Revenues over (under) expenditures 5,325 247 (5,078) (117,039) (76,096) 40,943
OTHER FINANCING SOURCES
Transfers in - - - 110,562 110,598 36
Transfers out - - - - - -
Long-term debt issued - - - - - -
Sale of capital assets - - - - - -
Total other financing sources (uses)- - - 110,562 110,598 36
Revenues and other sources over
(under) expenditures 5,325$ 247 (5,078)$ (6,477)$ 34,502 40,979$
FUND BALANCES, beginning of year 8,000 -
FUND BALANCES, end of year 8,247$ 34,502$
(continued)
Housing Revolving Loan Fund Drug Forfeitures
Special Revenue Funds
156
CITY OF BOZEMAN, MONTANA
SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Variance Variance
Positive Positive
Budget Actual (Negative)Budget Actual (Negative)
REVENUES
Taxes -$ -$ -$ -$ -$ -$
Special assessments - - - - - -
Licenses and permits - - - - - -
Intergovernmental - - - - - -
Charges for services - - - - - -
Fines and forfeitures - 1,830 1,830 - - -
Interest on investments - 1,379 1,379 - - -
Loan repayment - - - - - -
Other - - - - - -
Total revenues - 3,209 3,209 - - -
EXPENDITURES - BUDGET UNIT 29,000 28,667 333 19,125 19,125 -
Revenues over (under) expenditures (29,000) (25,458) 3,542 (19,125) (19,125) -
OTHER FINANCING SOURCES
Transfers in - - - - - -
Transfers out - - - - - -
Long-term debt issued - - - - - -
Sale of capital assets - - - - - -
Total other financing sources (uses)- - - - - -
Revenues and other sources over
(under) expenditures (29,000)$ (25,458) 3,542$ (19,125)$ (19,125) -$
FUND BALANCES, beginning of year 153,866 369,750
FUND BALANCES, end of year 128,408$ 350,625$
(continued)
City-County Drug Forfeitures Law and Justice Center
Special Revenue Funds
157
CITY OF BOZEMAN, MONTANA
SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Variance Variance
Positive Positive
Budget Actual (Negative)Budget Actual (Negative)
REVENUES
Taxes -$ -$ -$ 719,213$ 686,023$ (33,190)$
Special assessments 575,996 915 (575,081) - - -
Licenses and permits - - - - - -
Intergovernmental - - - - 37,926 37,926
Charges for services - 565,286 565,286 - - -
Fines and forfeitures - - - - - -
Interest on investments - 2,759 2,759 8,800 16,392 7,592
Loan repayment - - - - - -
Other - - - - - -
Total revenues 575,996 568,960 (7,036) 728,013 740,341 12,328
EXPENDITURES - BUDGET UNIT 1,000,496 395 1,000,101 1,310,980 1,310,624 356
Revenues over (under) expenditures (424,500) 568,565 993,065 (582,967) (570,283) 12,684
OTHER FINANCING SOURCES
Transfers in - 439,470 439,470 - 343,479 343,479
Transfers out - - - (41,600) (41,515) 85
Long-term debt issued - - - - - -
Sale of capital assets - - - - - -
Total other financing sources (uses)- 439,470 439,470 (41,600) 301,964 343,564
Revenues and other sources over
(under) expenditures (424,500)$ 1,008,035 1,432,535$ (624,567)$ (268,319) 356,248$
FUND BALANCES, beginning of year - 2,104,130
FUND BALANCES, end of year 1,008,035$ 1,835,811$
(continued)
Street Arterial and Collector District TIF N 7th Corridor
Special Revenue Funds
158
CITY OF BOZEMAN, MONTANA
SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Variance Variance
Positive Positive
Budget Actual (Negative)Budget Actual (Negative)
REVENUES
Taxes 85,000$ 148,335$ 63,335$ -$ -$ -$
Special assessments - - - - - -
Licenses and permits - - - - - -
Intergovernmental - 1,353 1,353 - - -
Charges for services - - - - - -
Fines and forfeitures - - - 76,800 64,419 (12,381)
Interest on investments 1,800 3,999 2,199 3,000 3,670 670
Loan repayment - - - - - -
Other - - - - - -
Total revenues 86,800 153,687 66,887 79,800 68,089 (11,711)
EXPENDITURES - BUDGET UNIT 386,002 171,634 214,368 140,000 81,445 58,555
Revenues over (under) expenditures (299,202) (17,947) 281,255 (60,200) (13,356) 46,844
OTHER FINANCING SOURCES
Transfers in - - - - - -
Transfers out (35,000) (35,000) - - - -
Long-term debt issued - - - - - -
Sale of capital assets - - - - - -
Total other financing sources (uses)(35,000) (35,000) - - - -
Revenues and other sources over
(under) expenditures (334,202)$ (52,947) 281,255$ (60,200)$ (13,356) 46,844$
FUND BALANCES, beginning of year 434,537 390,611
FUND BALANCES, end of year 381,590$ 377,255$
(continued)
Victim/Witness Advocate
Special Revenue Funds
TIF N.E. Urban Renewal
159
CITY OF BOZEMAN, MONTANA
SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Variance Variance
Positive Positive
Budget Actual (Negative)Budget Actual (Negative)
REVENUES
Taxes 321,324$ 344,501$ 23,177$ -$ -$ -$
Special assessments - - - 368,160 407,797 39,637
Licenses and permits - - - - - -
Intergovernmental - - - - - -
Charges for services - - - - - -
Fines and forfeitures - - - - - -
Interest on investments 600 4,471 3,871 - 5,274 5,274
Loan repayment - - - - - -
Other - - - - - -
Total revenues 321,924 348,972 27,048 368,160 413,071 44,911
EXPENDITURES - BUDGET UNIT 40,000 39,355 645 418,205 407,503 10,702
Revenues over (under) expenditures 281,924 309,617 27,693 (50,045) 5,568 55,613
OTHER FINANCING SOURCES
Transfers in - - - - - -
Transfers out - - - (31,900) (31,900) -
Long-term debt issued - - - - - -
Sale of capital assets - - - - - -
Total other financing sources (uses)- - - (31,900) (31,900) -
Revenues and other sources over
(under) expenditures 281,924$ 309,617 27,693$ (81,945)$ (26,332) 55,613$
FUND BALANCES, beginning of year 372,435 613,973
FUND BALANCES, end of year 682,052$ 587,641$
(continued)
Street LightingFire Department Equipment
160
CITY OF BOZEMAN, MONTANA
SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Variance Variance
Positive Positive
Budget Actual (Negative)Budget Actual (Negative)
REVENUES
Taxes -$ -$ -$ -$ -$ -$
Special assessments - - - - - -
Licenses and permits - - - - - -
Intergovernmental - - - - - -
Charges for services - - - - - -
Fines and forfeitures - - - - - -
Interest on investments - 3,626 3,626 - - -
Loan repayment - - - - - -
Other - 43,197 43,197 - - -
Total revenues - 46,823 46,823 - - -
EXPENDITURES - BUDGET UNIT - - - - - -
Revenues over (under) expenditures - 46,823 46,823 - - -
OTHER FINANCING SOURCES
Transfers in - - - - - -
Transfers out - - - - - -
Long-term debt issued - - - - - -
Sale of capital assets - - - - - -
Total other financing sources (uses)- - - - - -
Revenues and other sources over
(under) expenditures -$ 46,823 46,823$ -$ - -$
FUND BALANCES, beginning of year 378,047 105
FUND BALANCES, end of year 424,870$ 105$
(continued)
Special Revenue Funds
Park Land Municipal Court Restitution
161
CITY OF BOZEMAN, MONTANA
SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Variance
Positive
Budget Actual (Negative)
REVENUES
Taxes 4,769,905$ 5,052,218$ 282,313$
Special assessments 1,077,706 530,313 (547,393)
Licenses and permits - - -
Intergovernmental 1,453,092 1,611,019 157,927
Charges for services 1,205,146 2,163,247 958,101
Fines and forfeitures 149,800 122,128 (27,672)
Interest on investments 37,830 110,387 72,557
Loan repayment 63,275 34,838 (28,437)
Other 92,650 309,559 216,909
Total revenues 8,849,404 9,933,709 1,084,305
EXPENDITURES - BUDGET UNIT 8,837,674 5,808,837 3,028,837
Revenues over (under) expenditures 11,730 4,124,872 4,113,142
OTHER FINANCING SOURCES
Transfers in 274,790 1,046,018 771,228
Transfers out (3,689,894) (3,530,080) 159,814
Long-term debt issued - - -
Sale of capital assets - 107,300 107,300
Total other financing sources (uses)(3,415,104) (2,376,762) 1,038,342
Revenues and other sources over
(under) expenditures (3,403,374)$ 1,748,110 5,151,484$
FUND BALANCES, beginning of year 13,084,388
FUND BALANCES, end of year 14,832,498$
(continued)
Special Revenue Funds
Total
162
CITY OF BOZEMAN, MONTANA
SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Debt Service Funds
Variance Variance
Positive Positive
Budget Actual (Negative)Budget Actual (Negative)
REVENUES
Taxes -$ -$ -$ 1,353,891$ 1,346,613$ (7,278)$
Special assessments - - - - - -
Intergovernmental - - - - - -
Charges for services - - - - - -
Interest on investments 19,000 26,315 7,315 - 929 929
Loan repayment - 3,714 3,714 - - -
Other - - - - - -
Total revenue 19,000 30,029 11,029 1,353,891 1,347,542 (6,349)
EXPENDITURES
Other - - - - - -
Debt service:
Principal - - - 750,000 750,000 -
Interest and fiscal fees - - - 605,091 605,091 -
Total expenditures - - - 1,355,091 1,355,091 -
Revenues over (under) expenditures 19,000 30,029 11,029 (1,200) (7,549) (6,349)
OTHER FINANCING SOURCES (USES)
Transfers in 18,235 - (18,235) - - -
Transfers out (626,500) - 626,500 - - -
Total other financing sources (uses)(608,265) - 608,265 - - -
Revenues and other sources over (under) expenditures (589,265)$ 30,029 619,294$ (1,200)$ (7,549) (6,349)$
FUND BALANCES, beginning of year 3,356,671 140,508
FUND BALANCES, end of year 3,386,700$ 132,959$
(continued)
G.O. BondsSID Revolving
163
CITY OF BOZEMAN, MONTANA
SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Variance Variance
Favorable Positive
Budget Actual (Unfavorable)Budget Actual (Negative)
REVENUES
Taxes -$ -$ -$ 1,353,891$ 1,346,613$ (7,278)$
Special assessments - -$ - - - -
Intergovernmental - - - - - -
Charges for services - - - - - -
Interest on investments - - - 19,000 27,244 8,244
Loan repayment - - - - 3,714 3,714
Other - - - - - -
Total revenue - - - 1,372,891 1,377,571 4,680
EXPENDITURES
Other - - - - - -
Debt service:
Principal 195,000 195,000 - 945,000 945,000 -
Interest and fiscal fees 228,638 228,638 - 833,729 833,729 -
Total expenditures 423,638 423,638 - 1,778,729 1,778,729 -
Revenues over (under) expenditures (423,638) (423,638) - (405,838) (401,158) 4,680
OTHER FINANCING SOURCES (USES)
Transfers in 422,088 423,638 1,550 440,323 423,638 (16,685)
Transfers out - - - (626,500) - 626,500
Total other financing sources (uses)422,088 423,638 1,550 (186,177) 423,638 609,815
Revenues and other sources over (under) expenditures (1,550)$ - 1,550$ (592,015)$ 22,480 614,495$
FUND BALANCES, beginning of year - 3,497,179
FUND BALANCES, end of year -$ 3,519,659$
continued
TIF Bonds Total
Debt Service Funds
164
CITY OF BOZEMAN, MONTANA
SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Variance
Favorable
Budget Actual (Unfavorable)
REVENUES
Taxes -$ -$ -$
Special assessments - - -
Intergovernmental - 89,307 89,307
Charges for services - - -
Interest on investments - 140,297 140,297
Loan repayment - - -
Other - 15,200 15,200
Total revenue - 244,804 244,804
EXPENDITURES
Other 77,000 76,468 532
Capital outlay 8,112,250 2,307,160 5,805,090
Total expenditures 8,189,250 2,383,628 5,805,622
Revenues over (under) expenditures (8,189,250) (2,138,824) 6,050,426
OTHER FINANCING SOURCES (USES)
Transfers in 1,253,000 2,841,183 1,588,183
Transfers out - - -
Long term debt issuance 4,900,000 - (4,900,000)
Sale of capital assets - 60,250 60,250
Total other financing sources (uses)6,153,000 2,901,433 (3,251,567)
Revenues and other sources over (under) expenditures (2,036,250)$ 762,609 2,798,859$
FUND BALANCES, beginning of year 10,610,254
FUND BALANCES, end of year 11,372,863$
(continued)
Construction
Capital Projects Funds
165
CITY OF BOZEMAN, MONTANA
SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL
NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2016
Variance
Positive
Budget Actual (Negative)
REVENUES
Intergovernmental -$ -$ -$
Charges for services 100,000 75,830 (24,170)
Interest on investments 6,000 9,180 3,180
Total revenues 106,000 85,010 (20,990)
EXPENDITURES - BUDGET UNIT - - -
Revenues over (under) expenditures 106,000 85,010 (20,990)
OTHER FINANCING SOURCES (USES)- - -
Revenues and other sources over
(under) expenditures 106,000$ 85,010 (20,990)$
FUND BALANCES, beginning of year 990,940
FUND BALANCES, end of year 1,075,950$
Cemetery Perpetual Care
Permanent Fund
COMBINING NONMAJOR PROPRIETARY FUNDS
NONMAJOR PROPRIETARY FUNDS
Solid Waste Fund – Accounts for the City’s garbage collection service and recycling operations.
Parking Fund – Accounts for the City’s parking enforcement and facilities operations.
Stormwater Fund – Accounts for the City’s stormwater management and mitigation operations.
166
CITY OF BOZEMAN, MONTANA
COMBINING STATEMENT OF NET POSITION
NONMAJOR PROPRIETARY FUNDS June 30, 2016
Business-type Activities
Enterprise Funds
Parking Stormwater Solid
Fund Fund Waste Fund Total
ASSETS
Current assets
Cash and investments 261,842$ 546,900$ 735,938$ 1,544,680$
Receivables:
Customers, net 128,040 121,039 317,172 566,251
Total current assets 389,882 667,939 1,053,110 2,110,931
Non-current assets
Other assets:
Notes receivable 10,830 - - 10,830
Restricted cash and investments 295,545 55,331 - 350,876
Total other assets 306,375 55,331 - 361,706
Property, plant and equipment, net
Nondepreciable:
Land 303,436 - 3,783,559 4,086,995
Depreciable:
Buildings 11,793,708 - - 11,793,708
Other structures and improvements - - 877,710 877,710
Machinery and equipment 27,974 147,905 2,155,300 2,331,179
Vehicles 86,057 110,874 3,619,394 3,816,325
Infrastructure 47,058 173,692 519,436 740,186
Property under capital lease - 519,943 78,531 598,474
Accumulated depreciation and amortization (3,543,204) (282,777) (5,762,787) (9,588,768)
Net property, plant and equipment 8,715,029 669,637 5,271,143 14,655,809
Total non current assets 9,021,404 724,968 5,271,143 15,017,515
Deferred outflows of resources
Pension plan contributions 23,707 12,634 114,000 150,341
Total assets 9,434,993$ 1,405,541$ 6,438,253$ 17,278,787$
continued
167
CITY OF BOZEMAN, MONTANA
COMBINING STATEMENT OF NET POSITION
NONMAJOR PROPRIETARY FUNDS (CONTINUED) June 30, 2016
Business-type Activities
Enterprise Funds
Parking Stormwater Solid
Fund Fund Waste Fund Total
LIABILITIES
Current liabilities
Accounts payable and accrued expenses 159,418$ 9,339$ 630,953$ 799,710$
Compensated absences payable 9,570 12,572 87,960 110,102
Capital lease obligations payable in one year - 79,438 - 79,438
Closure and post-closure care costs, current portion - - 360,000 360,000
Bonds and leases payable in one year - 73,000 - 73,000
Total current liabilities 168,988 174,349 1,078,913 1,422,250
Noncurrent liabilities
Closure and post-closure care costs - - 2,679,671 2,679,671
Capital lease obligations - 284,311 - 284,311
Revenue bonds due after one year - 1,367,430 - 1,367,430
Compensated absences payable 299 4,669 9,007 13,975
Other post-employment health benefits 30,740 4,888 93,629 129,257
Net pension liability 198,630 84,772 981,000 1,264,402
Total noncurrent liabilities 229,669 1,746,070 3,763,307 5,739,046
Total liabilities 398,657 1,920,419 4,842,220 7,161,296
Deferred inflows of resources
Pension deferrals 20,299 (5,132) 117,162 132,329
NET POSITION
Net Investment in capital assets 8,715,029 312,326 5,271,143 14,298,498
Restricted for impact capital projects - - - -
Restricted for parking capital projects 295,545 - - 295,545
Restricted for debt service - - - -
Unrestricted 5,463 (822,072) (3,792,272) (4,608,881)
Total net position 9,016,037 (509,746) 1,478,871 9,985,162
Total liabilities and net position 9,434,993$ 1,405,541$ 6,438,253$ 17,278,787$
168
CITY OF BOZEMAN, MONTANA
COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION -
NONMAJOR PROPRIETARY FUNDS Year Ended June 30, 2016
Parking Stormwater Solid
Fund Fund Waste Fund Totals
OPERATING REVENUES 597,238$ 943,621$ 3,207,605$ 4,748,464$
OPERATING EXPENSES
Salaries and benefits 270,783 225,803 1,124,740 1,621,326
Materials and supplies 21,442 26,301 336,317 384,060
Repairs and maintenance 34,490 383 255,169 290,042
Utilities 24,086 1,487 458,152 483,725
Administrative charges 58,491 21,597 460,198 540,286
Other expenses 131,486 91,676 580,261 803,423
Depreciation and amortization 290,091 81,149 237,183 608,423
Changes in estimated closure and post--
closure care costs - - 1,118,864 1,118,864
Total operating expenses 830,869 448,396 4,570,884 5,850,149
Operating income (loss)(233,631) 495,225 (1,363,279) (1,101,685)
NON-OPERATING REVENUES (EXPENSES)
Interest income 5,271 5,996 1,140 12,407
Interest expense - (21,347) - (21,347)
Other income 45,012 - 1,033,340 1,078,352
Intergovernmental income 4,770 4,156 20,958 29,884
Gain (loss) on sale of assets - (19,543) 5,168 (14,375)
Total non-operating revenues (expenses)55,053 (30,738) 1,060,606 1,084,921
Income (loss) before contributions and transfers (178,578) 464,487 (302,673) (16,764)
Contributions of infrastructure - developers - 111,707 - 111,707
Transfers in 30,000 145,515 1,234,760 1,410,275
Transfers out - (1,330,614) - (1,330,614)
Change in net position (148,578) (608,905) 932,087 174,604
NET POSITION, beginning of year 9,164,615 99,159 546,784 9,810,558
NET POSITION, end of year 9,016,037$ (509,746)$ 1,478,871$ 9,985,162$
Enterprise Funds
169
CITY OF BOZEMAN, MONTANA
COMBINING STATEMENT OF CASH FLOWS -
NONMAJOR PROPRIETARY FUNDS Year Ended June 30, 2016
Parking Stormwater Solid Waste
Fund Fund Fund Total
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 583,285$ 865,176$ 3,179,858$ 4,628,319$
Receipts from others 45,011 - 1,033,340 1,078,351
Payments to suppliers (112,942) (123,756) (3,166,627) (3,403,325)
Payments to employees (270,039) (223,710) (1,134,107) (1,627,856)
Payments to internal service funds and administrative fees (58,491) (21,597) (460,198) (540,286)
Net cash flows from operating activities 186,824 496,113 (547,734) 135,203
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Transfers in 30,000 145,515 1,234,760 1,410,275
Transfers out - (1,330,614) - (1,330,614)
Receipts from grants and intergovernmental sources 4,770 4,156 20,958 29,884
Net cash flows from non-capital financing activities 34,770 (1,180,943) 1,255,718 109,545
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition of capital assets (24,037) (80,034) (707,797) (811,868)
Principal paid on bonds, interfund loans, loans and leases - (70,849) - (70,849)
Interest paid on bonds, interfund loans, loans and leases - (21,347) - (21,347)
Proceeds from issuance of long-term debt - 1,210,680 - 1,210,680
Proceeds from sale of property, plant and equipment - - 30,936 30,936
Net cash flows from capital and related financing activities (24,037) 1,038,450 (676,861) 337,552
CASH FLOWS FROM INVESTING ACTIVITIES
Collections on notes 2,650 - - 2,650
Interest on investments 5,271 5,996 1,140 12,407
Net cash flows from investing activities 7,921 5,996 1,140 15,057
Net change in cash and investments 205,478 359,616 32,263 597,357
Cash and investments, beginning of year 351,909 242,615 703,675 1,298,199
Cash and investments, end of year 557,387$ 602,231$ 735,938$ 1,895,556$
continued
170
CITY OF BOZEMAN, MONTANA
COMBINING STATEMENT OF CASH FLOWS -
NONMAJOR PROPRIETARY FUNDS (CONTINUED) Year Ended June 30, 2016
Parking Stormwater Solid Waste
Fund Fund Fund Total
Cash and investments classified as:
Cash and investments 261,842$ 546,900$ 735,938$ 1,544,680$
Restricted cash and investments 295,545 55,331 - 350,876
Totals 557,387$ 602,231$ 735,938$ 1,895,556$
Noncash transactions: donated infrastructure -$ 111,707$ -$ 111,707$
RECONCILIATION OF OPERATING LOSS
TO NET CASH FROM OPERATING ACTIVITIES:
Operating income (loss)(233,631)$ 495,225$ (1,363,279)$ (1,101,685)$
Adjustments to reconcile operating loss
to net cash from operating activities:
Depreciation and amortization 290,091 81,149 237,183 608,423
Change in estimated closure costs - - (687,040) (687,040)
Other income 45,012 - 1,033,340 1,078,352
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable (13,954) (78,445) (27,747) (120,146)
Increase (decrease) in:
Accounts payable 98,562 (3,909) 269,176 363,829
Accrued employee benefits payable 5,174 5,954 10,094 21,222
Net pension liabilities (4,430) (3,861) (19,461) (27,752)
Total adjustments 420,455 888 815,545 1,236,888
Net cash from operating activities 186,824$ 496,113$ (547,734)$ 135,203$
INTERNAL SERVICE FUND STATEMENTS
INTERNAL SERVICE FUNDS
Internal Service Funds are used to account for the goods or services provided by one department to other departments of the City on a cost-reimbursement basis.
Vehicle Maintenance Shop – Accounts for the maintenance and repair of vehicles used in operation of City services.
Medical Health Insurance – Accounts for insurance premiums received from the various City departments and retirees, and the related costs of health and dental premiums paid to the City’s insurance provider.
171
CITY OF BOZEMAN, MONTANA
COMBINING STATEMENT OF NET POSITION
INTERNAL SERVICE FUNDS June 30, 2016
Vehicle Medical
Maintenance Health
Shop Insurance Total
ASSETS
Current assets
Cash and equivalents 66,875$ -$ 66,875$
Customer receivables, net 21 47,260 47,281
Prepaid expenses - 382,541 382,541
Total current assets 66,896 429,801 496,697
Property, plant, and equipment
Machinery and equipment 166,059 - 166,059
Vehicles 70,312 - 70,312
Buildings 1,401,417 - 1,401,417
Less: accumulated depreciation (488,667) - (488,667)
Net property, plant, and equipment 1,149,121 - 1,149,121
Deferred outflows of resources
Pension plan contributions 37,271 - 37,271
Total assets and deferred outflows of resources 1,253,288$ 429,801$ 1,683,089$
LIABILITIES
Current liabilities
Accounts payable 37,599$ 1,119$ 38,718$
Compensated absences payable 50,523 - 50,523
Due to other city funds - 11,274 11,274
Total current liabilities 88,122 12,393 100,515
Non-current liabilities
Net pension liability 309,188 - 309,188
Total liabilities 397,310 12,393 409,703
Deferred inflows of resources
Pension deferrals 29,571 - 29,571
NET POSITION
Net investment in capital assets 1,149,121 - 1,149,121
Unrestricted (322,714) 417,408 94,694
826,407 417,408 1,243,815
1,253,288$ 429,801$ 1,683,089$
172
CITY OF BOZEMAN, MONTANA
COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION -
INTERNAL SERVICE FUNDS Year Ended June 30, 2016
Vehicle Medical
Maintenance Health
Shop Insurance Total
OPERATING REVENUES 869,879$ 4,546,303$ 5,416,182$
OPERATING EXPENSES
Salaries and benefits 389,302 - 389,302
Materials and supplies 523,753 - 523,753
Repairs and maintenance 8,042 - 8,042
Utilities 4,827 - 4,827
Administrative charges 147,601 - 147,601
Insurance claims - 4,458,971 4,458,971
Other expenses 22,525 92,888 115,413
Depreciation 54,519 - 54,519
Total operating expenses 1,150,569 4,551,859 5,702,428
Operating income (loss)(280,690) (5,556) (286,246)
NON-OPERATING REVENUES (EXPENSES)
Interest income 1,386 - 1,386
Interest expense - (431) (431)
Other income 129 2,440 2,569
Intergovernmental income 7,735 - 7,735
Sale of assets 1,387 - 1,387
Total non-operating revenue (expenses)10,637 2,009 12,646
Income before transfers (270,053) (3,547) (273,600)
Transfers in - 231,115 231,115
Change in net position (270,053) 227,568 (42,485)
NET POSITION, beginning of year 1,096,460 189,840 1,286,300
NET POSITION, end of year 826,407$ 417,408$ 1,243,815$
173
CITY OF BOZEMAN, MONTANA
COMBINING STATEMENT OF CASH FLOWS -
INTERNAL SERVICE FUNDS Year Ended June 30, 2016
Vehicle Medical
Maintenance Health
Shop Insurance Total
CASH FLOWS FROM OPERATIONS
Receipts from customers 869,858$ 4,160,915$ 5,030,773$
Receipts from others 7,864 2,440 10,304
Operating loans from other City funds - 11,274 11,274
Payments to suppliers (595,108) (91,928) (687,036)
Payments to employees (386,648) (4,458,971) (4,845,619)
Payments to Internal Service Funds and administrative fees (147,601) - (147,601)
Net cash flows from operating activities (251,635) (376,270) (627,905)
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Additions to property, plant and equipment (22,914) - (22,914)
Proceeds from sale of capital assets 1,387 - 1,387
Interest paid on bonds, interfund loans, loans and leases - (431) (431)
Net cash flows from capital and related financing activities (21,527) (431) (21,958)
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Transfers in - 231,115 231,115
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments 1,386 - 1,386
Net increase (decrease) in cash and cash equivalents (271,776) (145,586) (417,362)
CASH AND EQUIVALENTS, beginning of year 338,651 145,586 484,237
CASH AND EQUIVALENTS, end of year 66,875$ -$ 66,875$
(continued)
174
CITY OF BOZEMAN, MONTANA
COMBINING STATEMENT OF CASH FLOWS -
INTERNAL SERVICE FUNDS (CONTINUED) Year Ended June 30, 2016
Vehicle Medical
Maintenance Health
Shop Insurance Total
RECONCILIATION OF OPERATING INCOME (LOSS) TO
NET CASH FROM OPERATING ACTIVITIES
Operating income (loss) (280,690)$ (5,556)$ (286,246)$
Adjustments to reconcile operating income (loss)
to net cash from operating activities:
Depreciation 54,519 - 54,519
Other income 7,864 2,440 10,304
Changes in assets and liabilities:
(Increase) decrease in:
Customer receivables (21) (2,847) (2,868)
Prepaid expenses - (382,541) (382,541)
Increase (decrease) in:
Accounts payable (28,779) 960 (27,819)
Due to other city funds - 11,274 11,274
Compensated absences payable 2,654 - 2,654
Net pension (7,182) - (7,182)
Total adjustments 29,055 (370,714) (341,659)
Net cash from operating activities (251,635)$ (376,270)$ (627,905)$
AGENCY FUNDS STATEMENTS
AGENCY FUNDS
Agency Funds are used to account for assets held by the City as an agent for individuals, private organizations, or other governments.
Municipal Court – Accounts for monies held for appearance bonds and restitution related to criminal arrests and reimbursement for damage
caused.
CMC Bozeman Site Remediation Fund – Accounts for pass-through monies provided by the State of Montana Department of Environmental Quality to Olive & Wallace, LLC, to reimburse the cost of work performed as part of the Voluntary Cleanup Plan of the CMC Asbestos
Bozeman Facility.
Tourism Business Improvement District – Accounts for amounts collected from hotels on behalf of the District, a special-purpose
government, whose purpose is to enhance the economic vitality of Bozeman by promoting tourism through sales and marketing strategies.
175
CITY OF BOZEMAN, MONTANA
COMBINING STATEMENT OF FIDUCIARY NET POSITION –
AGENCY FUNDS June 30, 2016
CMC Tourism Total
Municipal Bozeman Site Business Agency
Court Remediation Improvement Funds
ASSETS
Cash and cash equivalents 353,598$ -$ 468,190$ 821,788$
Customer receivables 785 - - 785
Total assets 354,383$ -$ 468,190$ 822,573$
LIABILITIES
Accounts payable 354,383$ -$ 468,190$ 822,573$
Total liabilities 354,383$ -$ 468,190$ 822,573$
176
CITY OF BOZEMAN, MONTANA
COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES –
AGENCY FUNDS Year Ended June 30, 2016
Balance Balance
June 30, 2015 Additions Deletions June 30, 2016
ASSETS
Cash and cash equivalents 343,108$ 10,490$ -$ 353,598$
Customer receivables - 785 785
Interfund receivable - - - -
Total assets 343,108$ 11,275$ -$ 354,383$
LIABILITIES
Accounts payable 343,108$ 11,275$ -$ 354,383$
Total liabilities 343,108$ 11,275$ -$ 354,383$
Court
Municipal
Balance Balance
June 30, 2015 Additions Deletions June 30, 2016
ASSETS
Cash and cash equivalents 30,920$ (30,920)$ -$ -$
Customer receivables - - - -
Total assets 30,920$ (30,920)$ -$ -$
LIABILITIES
Accounts payable 30,920$ (30,920)$ -$ -$
Total liabilities 30,920$ (30,920)$ -$ -$
Site Remediation
CMC Bozeman
Balance Balance
June 30, 2015 Additions Deletions June 30, 2016
ASSETS
Cash and cash equivalents -$ 468,190$ -$ 468,190$
Customer receivables - - - -
Total assets -$ 468,190$ -$ 468,190$
LIABILITIES
Accounts payable -$ 468,190$ -$ 468,190$
Total liabilities -$ 468,190$ -$ 468,190$
Site Remediation
Tourism Business Improvement District
PART III
STATISTICAL SECTION
Statistical Section
This part of the City of Bozeman'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 government's overall financial health.
Contents
Financial Trends
These schedules contain trend information to help the reader understand how the government's financial performance and
well-being have changed over time.
Revenue Capacity
These schedules contain information to help the reader assess the government's most significant local revenue source,
the property tax.
Debt Capacity
These schedules present information to help the reader assess the affordability of the government's current levels of outstanding
debt and the government's ability to issue additional debt in the future.
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand the environment within which the
government's financial activities take place.
Operating Information
These schedules contain service and infrastructure data to help the reader understand how the information in the government's
financial report relates to the services the government provides and the activities it performs.
Sources: Unless otherwise noted, the information in these schedules is derived from the City of Bozeman comprehensive annual
financial reports for the relevant year.
FINANCIAL TRENDS SECTION
177
CITY OF BOZEMAN, MONTANA
NET POSITION BY COMPONENT
Past Ten Fiscal Years
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Governmental activities
Net investment in capital assets 77,734,584$ 80,873,924$ 83,707,824$ 84,113,904$ 88,844,404$ 88,500,437$ 89,081,484$ 89,267,076$ 93,409,850$ 104,342,191$
Restricted 546,916 9,254,307 7,699,511 8,082,181 20,962,038 20,797,365 27,255,029 35,621,803 41,755,126 42,829,320
Unrestricted 28,481,673 23,443,921 20,871,106 25,076,908 16,049,044 15,470,543 11,521,053 12,127,224 (5,137,642) (3,923,466)
Total governmental activities 106,763,173$ 113,572,152$ 112,278,441$ 117,272,993$ 125,855,486$ 124,768,345$ 127,857,566$ 137,016,103$ 130,027,334$ 143,248,045$
Business-type activities
Net investment in capital assets 154,227,534$ 177,379,168$ 188,077,778$ 189,965,189$ 188,180,889$ 192,485,459$ 199,394,551$ 205,501,357$ 211,419,777$ 221,385,655$
Restricted 17,099,866 18,322,089 19,775,588 9,044,280 12,660,466 11,446,886 3,098,125 3,372,927 4,977,984 4,990,635
Unrestricted 16,550,235 17,547,218 11,936,119 16,069,597 12,382,018 2,809,558 10,643,337 8,723,353 6,619,399 10,582,408
Total business-type activities 187,877,635$ 213,248,475$ 219,789,485$ 215,079,066$ 213,223,373$ 206,741,903$ 213,136,013$ 217,597,637$ 223,017,160$ 236,958,698$
Primary government
Net investment in capital assets 231,962,118$ 258,253,092$ 271,785,602$ 274,079,093$ 277,025,293$ 280,985,896$ 288,476,035$ 294,768,433$ 304,829,627$ 325,727,846$
Restricted 17,646,782 27,576,396 27,475,099 17,126,461 33,622,504 32,244,251 30,353,154 38,994,730 46,733,110 47,819,955
Unrestricted 45,031,908 40,991,139 32,807,225 41,146,505 28,431,062 18,280,101 22,164,390 20,850,577 1,481,757 6,658,942
Total primary government net position 294,640,808$ 326,820,627$ 332,067,926$ 332,352,059$ 339,078,859$ 331,510,248$ 340,993,579$ 354,613,740$ 353,044,494$ 380,206,743$
Fiscal Year
178
CITY OF BOZEMAN, MONTANA
CHANGES IN NET POSITION
Past Ten Fiscal Years (accrual basis of accounting)
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Expenses
Governmental Activities:
General Government 5,733,371$ 6,969,181$ 6,629,783$ 6,299,831$ 6,122,190$ 8,706,665$ 7,373,368$ 6,989,830$ 7,417,644$ 8,058,925$
Public Safety 10,488,873 11,183,637 11,556,016 12,382,157 12,859,702 13,215,680 14,340,301 15,297,088 17,023,578 18,391,357
Public Service 8,511,308 8,979,085 10,130,184 9,703,594 9,190,515 8,174,461 3,939,061 6,031,768 6,458,930 6,861,939
Public Welfare 5,536,741 5,412,192 6,465,940 6,915,557 7,500,727 7,249,008 6,518,822 7,417,158 7,579,653 7,994,697
Interest and Fiscal Fees 549,667 649,226 737,762 714,714 679,652 636,478 433,766 179,280 824,266 893,470
Total Governmental
Activities Expenses 30,819,960 33,193,321 35,519,685 36,015,853 36,352,786 37,982,292 32,605,318 35,915,124 39,304,071 42,200,388
Business-Type Activities:
Water 10,490,811 11,150,266 11,872,984 12,016,149 11,649,639 11,674,222 6,154,746 6,869,870 7,995,910 9,273,395
Waste Water 7,376,348 8,061,412 10,293,894 9,143,077 10,128,397 10,203,165 6,121,663 8,955,592 6,940,983 8,163,312
Nonmajor Activities 3,283,135 2,574,651 3,454,044 3,528,201 3,569,821 3,575,128 3,328,241 7,924,663 4,407,212 5,871,496
Total Business-Type
Activities Expenses 21,150,294 21,786,329 25,620,922 24,687,427 25,347,857 25,452,515 15,604,650 23,750,125 19,344,105 23,308,203
Total Primary Government Expenses 51,970,254$ 54,979,650 61,140,607 60,703,280 61,700,643 63,434,807 48,209,968 59,665,249 58,648,176 65,508,591
Program Revenues
Governmental Activities:
Charges for Services:
General Government 2,023,362$ 2,237,962$ 1,795,469$ 2,774,869$ 2,870,443$ 1,949,125$ 1,966,966$ 2,453,015$ 1,947,445$ 2,530,474$
Public Safety 3,712,280 3,575,133 3,500,929 2,414,893 2,684,724 2,638,811 3,219,231 3,290,573 3,211,911 3,347,859
Public Service 5,361,852 4,858,444 4,790,460 3,742,856 4,454,492 4,983,420 6,655,604 7,623,178 8,784,447 9,310,147
Public Welfare 704,790 713,342 779,841 399,280 451,960 1,102,896 1,593,212 613,322 1,097,845 1,213,526
Operating Grants and Contributions 409,263 502,863 439,131 693,342 1,114,835 566,586 406,239 457,354 2,254,052 2,494,244
Capital Grants and Contributions 18,694,375 7,153,103 8,219,791 5,307,118 7,867,093 635,758 844,935 4,762,416 2,960,051 5,018,559
Total Governmental Activities
Program Revenues 30,905,922 19,040,847 19,525,621 15,332,358 19,443,547 11,876,596 14,686,187 19,199,858 20,255,751 23,914,809
Business-Type Activities
Charges for Services:
Water 8,604,498 8,222,724 7,221,378 6,986,247 7,064,571 7,921,483 9,585,939 9,842,699 9,969,058 11,935,016
Waste Water 7,052,987 6,918,132 6,052,668 6,505,119 6,930,036 7,488,473 8,560,438 8,852,738 9,008,247 9,283,600
Non-Major Activities 2,428,230 2,608,662 2,859,248 3,043,801 2,986,721 2,953,612 3,177,348 3,597,790 3,844,793 5,824,848
Operating Grants and Contributions - - - - - - - 9,596 123,439 134,946
Capital Grants and Contributions:26,464,222 29,405,599 6,465,230 3,621,051 6,589,612 566,138 156,123 5,898,923 6,385,418 11,287,654
Total Business-Type
Activities Program Revenues 44,549,937 47,155,117 22,598,524 20,156,218 23,570,940 18,929,706 21,479,848 28,201,746 29,330,955 38,466,064
Total Primary Government
Program Revenues 75,455,859$ 66,195,964 42,124,145 35,488,576 43,014,487 30,806,302 36,166,035 47,401,604 49,586,706 62,380,873
continued
Fiscal Year
179
CITY OF BOZEMAN, MONTANA
CHANGES IN NET POSITION (CONTINUED)
Past Ten Fiscal Years (accrual basis of accounting)
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Net (Expense) / Revenue
Governmental Activities 85,962$ (14,152,474)$ (15,994,064)$ (20,683,495)$ (16,909,239)$ (26,105,696)$ (17,919,131)$ (16,715,266)$ (19,048,320)$ (18,285,579)$
Business-Type Activities 23,399,643 25,368,788 (3,022,398) (4,531,209) (1,776,917) (6,522,809) 5,875,198 4,060,921 9,986,850 15,157,861
Total Primary Government Net Expense 23,485,605$ 11,216,314$ (19,016,462)$ (25,214,704)$ (18,686,156)$ (32,628,505)$ (12,043,933)$ (12,654,345)$ (9,061,470)$ (3,127,718)$
General Revenues and Other Changes in Net Position
Governmental Activities:
Taxes
Property Taxes 11,836,748$ 12,070,765$ 14,629,230$ 15,501,316$ 16,342,053$ 15,716,055$ 16,429,959$ 17,561,022$ 20,203,718$ 21,234,288$
Unrestricted Grants and Contributions 5,375,807 5,617,243 6,125,789 6,284,467 6,782,383 6,898,717 6,342,884 7,436,419 7,699,711 7,992,180
Investment Earnings 1,093,115 1,362,790 671,859 352,378 301,424 283,090 243,744 355,790 403,151 519,637
Miscellaneous 1,940,156 1,859,313 2,766,671 2,256,071 1,556,790 155,484 - 293,884 374,966 418,215
Sale of Capital Assets 490,637 51,342 68,057 761,952 (8,168) 4,414 1,765 236,688 - 123,934
Transfers of Capital Assets - - (6,311,324) - - (2,088) - - - -
Transfers 489,780 - (3,249,929) 521,863 517,250 (37,136) (10,000) (10,000) (410,016) 1,218,036
Extraordinary Items - - - - - - - - - -
Total Governmental Activities 21,226,243 20,961,453 14,700,353 25,678,047 25,491,732 23,018,536 23,008,352 25,873,803 28,271,530 31,506,290
Business-Type Activities:
Unrestricted Grants and Contributions 3,182 2,052 2,155 342,653 438,475 2,115 508,912 - - -
Transfers of Capital Assets - - 6,311,324 - - 2,088 - - - -
ARRA Debt Forgiveness - - - - - - - 390,700 - -
Transfers (489,780) - 3,249,929 (521,863) (517,251) 37,136 10,000 10,000 380,347 (1,218,036)
Extraordinary Items - - - - - - - - - -
Total Business-Type Activities (486,598) 2,052 9,563,408 (179,210) (78,776) 41,339 518,912 400,700 380,347 (1,218,036)
Total Primary Government 20,739,645$ 20,963,505 24,263,761 25,498,837 25,412,956 23,059,875 23,527,264 26,274,503 28,651,877 30,288,254
Change in Net Position
Governmental Activities 21,312,205$ 6,808,979$ (1,293,711)$ 4,994,552$ 8,582,493$ (3,087,160)$ 5,089,221$ 9,158,537$ 9,223,211$ 13,220,711$
Business-Type Activities 22,913,045 25,370,840 6,541,010 (4,710,419) (1,855,693) (6,481,470) 6,394,110 4,461,621 10,367,197 13,939,825
Total Primary Government 44,225,250$ 32,179,819$ 5,247,299$ 284,133$ 6,726,800$ (9,568,630)$ 11,483,331$ 13,620,158$ 19,590,408$ 27,160,536$
Fiscal Year
180
CITY OF BOZEMAN, MONTANA
FUND BALANCE - GOVERNMENT FUNDS
Past Ten Fiscal Years (modified accrual basis of accounting)
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
General Fund:
Reserved 3,000$ 3,000$ 63,000$ -$ -$ -$ -$ -$ -$ -$
Unreserved 4,367,538 4,516,814 5,301,397 5,119,400
Nonspendable
Restricted
Committed
Assigned 5,991,388 7,062,964 7,327,375 6,420,760 4,887,652 5,541,841
Unassigned 905,862 264,091 - 193,534 1,174,313 979,258
Total general fund 4,370,538$ 4,519,814$ 5,364,397$ 5,119,400$ 6,897,250$ 7,327,055$ 7,327,375$ 6,614,294$ 6,061,965$ 6,521,099$
All Other Governmental:
Reserved 2,996,832$ 3,045,231$ 2,660,918$ 6,597,569$ -$ -$ -$ -$ -$ -$
Unreserved, reported in:
Special revenue funds 13,205,328 13,723,846 12,516,240 14,916,152
Capital projects funds - 2,884,553 - 1,793,287
Debt service funds - - - -
Nonspendable 999,464 1,113,484 1,193,530 1,269,557 1,360,690 1,426,575
Restricted 19,962,574 19,683,881 26,061,499 19,927,526 12,546,935 39,856,356
Committed 3,278,422 3,463,714 851,322 3,075,505 3,088,936 3,528,263
Assigned 58,419 - - 229,602 - 7,425,398
Unassigned - (51,586) 456,669 (184,101) (97,173) 914,535
Total all other governmental funds 16,202,160$ 19,653,630$ 15,177,158$ 23,307,008$ 24,298,879$ 24,209,493$ 28,563,020$ 24,318,089$ 16,899,388$ 53,151,127$
Note: The City of Bozeman implemented the new standards for reporting fund balance GASB Statement 54 in fiscal year 2011
Fiscal Year
181
CITY OF BOZEMAN, MONTANA
CHANGES IN FUND BALANCES - GOVERNMENT FUNDS
Past Ten Fiscal Years (modified accrual basis of accounting)
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Revenues
Taxes 11,853,872$ 12,004,946$ 14,451,954$ 15,055,844$ 16,634,924$ 16,057,318$ 16,540,972$ 17,385,371$ 20,404,236$ 21,303,074$
Special assessments 1,866,717 1,793,813 1,633,896 1,643,500 1,866,272 1,898,007 1,752,615 2,011,944 1,578,855 1,265,954
Licenses and permits 1,762,086 1,351,887 1,140,831 958,590 1,308,378 1,214,705 1,629,744 1,784,282 1,827,842 2,112,090
Intergovernmental 6,115,697 9,642,918 7,102,049 7,900,176 8,299,803 7,697,637 7,586,007 8,208,770 8,562,937 8,920,424
Charges for service 7,403,739 6,748,891 6,468,006 5,790,382 6,629,507 6,891,594 8,806,969 9,656,123 10,629,791 12,283,683
Fines and forfeitures 1,746,213 1,644,767 1,597,236 1,518,481 1,441,383 1,364,617 1,394,652 1,411,162 1,305,166 1,253,705
Interest on investments 1,068,802 1,360,914 671,859 352,378 300,516 281,239 239,778 329,086 370,305 479,699
Loan repayment 10,193 19,849 9,985 10,401 193,302 306,385 157,069 63,980 29,929 38,552
Other 1,940,156 1,859,313 2,766,671 2,256,071 1,556,790 155,484 394,677 287,089 363,274 415,646
Total revenues 33,767,475 36,427,298 35,842,487 35,485,823 38,230,875 35,866,986 38,502,483 41,137,807 45,072,335 48,072,827
Expenditures
General government 5,577,810 6,153,838 5,946,355 5,690,488 5,939,771 6,266,566 7,276,839 6,138,575 6,594,474 7,318,539
Public safety 10,160,291 10,778,917 11,056,742 11,709,170 12,137,616 12,513,270 13,822,691 14,637,886 15,086,695 16,485,549
Public service 3,060,672 3,020,855 2,976,711 2,702,510 3,002,021 2,738,066 2,805,612 3,498,770 3,786,283 3,840,405
Public welfare 4,315,086 4,819,758 5,161,997 4,916,828 6,435,916 6,184,073 6,216,387 6,678,347 6,927,365 7,245,425
Other - - - - - - 15,776 1,046,712 1,113,340 418,431
Capital outlay 11,397,365 12,205,040 9,380,742 4,248,758 3,299,017 3,881,388 2,782,435 8,053,456 9,905,333 9,337,470
Debt service:
Principal 833,158 2,013,232 1,138,051 1,194,819 1,611,087 3,235,664 1,826,126 1,482,142 1,121,593 1,345,250
Interest & Fiscal Fees 549,667 649,662 738,198 715,150 680,088 666,082 445,736 380,950 824,266 893,470
Total expenditures 35,894,049 39,641,302 36,398,796 31,177,723 33,105,516 35,485,109 35,191,602 41,916,838 45,359,349 46,884,539
Excess of revenues
over (under) expenditures (2,126,574) (3,214,004) (556,309) 4,308,100 5,125,359 381,877 3,310,881 (779,031) (287,014) 1,188,288
Other Financing Sources (Uses)
Proceeds from borrowing - - - - - - - - - -
Transfers in 4,565,896 4,604,100 8,394,126 10,857,332 6,985,734 3,482,550 4,291,417 3,103,787 4,816,671 6,483,413
Transfers out (4,076,116) (4,604,100) (11,733,378) (11,033,925) (7,255,505) (3,821,010) (4,454,505) (3,113,787) (5,197,018) (5,496,492)
Issuance of debt - 6,554,166 177,346 890,000 - 3,357,798 1,203,279 10,012,647 5,619,361 47,406
Premium on Bonds Issued - 10,896 - - - - - - - -
Payments to Refunded Bond Escrow Agent - - - - - (3,120,000) - - - -
Sales of capital assets 490,637 249,688 86,326 766,922 10,555 59,204 2,775 243,092 64,855 227,984
Total other financing sources (uses)980,417 6,814,750 (3,075,580) 1,480,329 (259,216) (41,458) 1,042,966 10,245,739 5,303,869 1,262,311
Extraordinary items
Net change in fund balances (1,146,157)$ 3,600,746$ (3,631,889)$ 5,788,429$ 4,866,143$ 340,419$ 4,353,847$ 9,466,708$ 5,016,855$ 2,450,599$
Debt service as a percentage of
noncapital expenditures 5.6%9.7%6.9%7.1%7.7%12.3%7.0%5.5%5.5%6.0%
Fiscal Year
REVENUE CAPACITY SECTION
182
CITY OF BOZEMENA, MONTANA
ASSESSED VALUE OF TAXABLE PROPERTY
Past Ten Fiscal Years
Fiscal Total Total Assessed Taxable
Year Commercial & Taxable Direct Total Value ** as a
Ended Residential Industrial Other Assessed Tax Market Percentage of
June 30,Property Property Property Value **Rate Value *Total Market Value
2007 35,419,440$ 24,034,620$ 3,794,940$ 63,249,000$ 163.42 1,959,659,877$ 3.228%
2008 38,629,360 26,212,780 4,138,860 68,981,000 154.18 2,192,163,035 3.147%
2009 41,539,680 28,187,640 4,450,680 74,178,000 171.16 2,407,420,224 3.081%
2010 43,842,400 29,750,200 4,697,400 78,290,000 170.19 2,655,766,251 2.948%
2011 45,023,440 30,551,620 4,823,940 80,399,000 168.75 2,827,548,097 2.843%
2012 45,954,720 31,183,560 4,923,720 82,062,000 166.75 2,994,740,226 2.740%
2013 46,606,560 31,625,880 4,993,560 83,226,000 166.75 3,176,282,865 2.620%
2014 47,956,720 32,542,060 5,138,220 85,637,000 173.08 3,386,295,608 2.529%
2015 50,978,520 31,641,840 5,273,640 87,894,000 188.76 3,598,269,877 2.443%
2016 50,207,224 31,163,105 5,193,851 86,564,180 210.16 5,698,588,679 1.519%
Source: Based on information provided by Gallatin County and Montana Department of Revenue
Note: Property in Gallatin County is reassessed by the State Department of Revenue every six years.
* Sales price of property is not public record in the State of Montana, so the Total Market Value was used instead
** Includes tax-exempt property
183
CITY OF BOZEMENA, MONTANA
CITY TAXABLE MARKET AND TAXABLE VALUES
Past Nine Fiscal Years
Fiscal Net Taxable Value
Year Incremental Value (excludes Tax Taxable Value
Ended Taxable Full for All Tax Increment Districts for Open Space
June 30,Market Value Taxable Value Increment Districts Incremental Values)Purposes
2007 1,959,659,877$ 64,133,892$ 884,321$ 63,249,571$ n/a *
2008 2,192,163,035 70,016,605 1,035,352 68,981,253 n/a *
2009 2,407,420,224 75,458,468 1,280,371 74,178,097 n/a *
2010 2,655,766,251 80,850,582 2,560,601 78,289,981 n/a *
2011 2,827,058,097 83,309,165 2,910,650 80,398,515 n/a *
2012 2,994,740,226 85,345,227 3,282,766 82,062,461 n/a *
2013 3,176,282,865 86,934,533 3,708,138 83,226,395 n/a *
2014 3,386,295,608 89,650,917 4,013,561 85,637,356 85,615,328
2015 3,598,269,877 92,081,322 4,186,781 87,894,541 90,735,030
2016 5,698,588,679 90,787,797 4,223,617 86,564,180 234,985,893
Source: Based on information provided by Gallatin County and Montana Department of Revenue
Note: Property is assessed by the State Department of Revenue every six years.
* No certified value available, first certification available for FY2014
184
CITY OF BOZEMENA, MONTANA
TAX INCREMENT DISTRICT TAXABLE VALUATION DETAIL
Past Nine Fiscal Years
Fiscal
Year
Ended Base Incremental Total Base Incremental Total Base Incremental Total
June 30,Taxable Taxable Taxable Taxable Taxable Taxable Taxable Taxable Taxable
2007 1,833,875 884,321 2,718,196 - - - - - -
2008 1,858,491 931,030 2,789,521 423,054 48,790 471,844 2,886,997 55,532 2,942,529
2009 1,858,491 1,115,768 2,974,259 423,054 71,287 494,341 2,886,997 93,316 2,980,313
2010 1,328,695 1,947,249 3,275,944 423,054 104,987 528,041 2,886,997 450,625 3,337,622
2011 1,328,695 2,060,807 3,389,502 423,054 135,162 558,216 2,886,997 664,127 3,551,124
2012 1,328,695 2,251,286 3,579,981 423,054 133,197 556,251 2,886,997 840,137 3,727,134
2013 1,328,695 2,396,293 3,724,988 423,054 150,217 573,271 2,886,997 1,084,216 3,971,213
2014 1,328,695 2,586,963 3,915,658 423,054 172,608 595,662 2,886,997 1,193,297 4,080,294
2015 1,328,695 2,718,220 4,046,915 423,054 190,579 613,633 2,886,997 1,225,604 4,112,601
2016 1,328,695 2,898,551 4,227,246 423,054 214,470 637,524 2,886,997 1,055,385 3,942,382
Fiscal
Year
Ended Base Incremental Total Base Incremental Total Base Incremental Total
June 30,Taxable Taxable Taxable Taxable Taxable Taxable Taxable Taxable Taxable
2007 - - - - - - 1,833,875 884,321 2,718,196
2008 - - - - - - 5,168,542 1,035,352 6,203,894
2009 - - - - - - 5,168,542 1,280,371 6,448,913
2010 12,059 57,740 69,799 - - - 4,650,805 2,560,601 7,211,406
2011 12,059 50,554 62,613 - - - 4,650,805 2,910,650 7,561,455
2012 12,059 58,146 70,205 - - - 4,650,805 3,282,766 7,933,571
2013 12,059 77,412 89,471 - - - 4,650,805 3,708,138 8,358,943
2014 12,059 60,693 72,752 417 - 417 4,651,222 4,013,561 8,664,783
2015 12,059 52,376 64,435 417 3 420 4,651,222 4,186,782 8,838,004
2016 12,059 55,211 67,270 417 - 417 4,651,222 4,223,617 8,874,839
Source: Based on information provided by Gallatin County and Montana Department of Revenue
Note: Property is assessed by the State Department of Revenue every six years.
MANDEVILLE FARM INDUSTRIAL BOZEMAN TECHNOLOGY TOTAL
BOZEMAN DOWNTOWN NORTHEAST URBAN RENEWAL DISTRICT NORTH 7TH CORRIDOR
185
CITY OF BOZEMENA, MONTANA
DOWNTOWN BOZEMAN IMPROVEMENT DISTRICT &
COMPARISON TO CITY TAXABLE VALUE Past Nine Fiscal Years
Fiscal Taxable City Taxable Value The District's
Year Market Value Taxable Value of Incremental (Excluding ALL tax Incremental Taxable
Ended of Property in Property in the Taxable increment district Value as Percentage of
June 30,the District District Value valuations)City's Taxable Value
2007 88,480,413$ 2,718,196$ 884,321$ 63,249,571$ 1.40%
2008 94,996,536 2,789,521 931,030 68,981,253 1.35%
2009 98,234,423 2,974,259 1,115,768 74,178,097 1.50%
2010 110,487,369 3,275,944 1,947,249 78,289,981 2.49%
2011 119,431,550 3,389,502 2,060,807 80,398,515 2.56%
2012 129,285,686 3,579,981 2,251,286 82,062,461 2.74%
2013 142,099,662 3,724,988 2,396,293 83,226,395 2.88%
2014 153,063,721 3,915,658 2,586,963 85,367,356 3.03%
2015 190,128,511 4,046,915 2,718,220 87,894,541 3.09%
2016 259,138,001 4,227,246 2,898,551 86,564,180 3.35%
Source: Based on information provided by Gallatin County and Montana Department of Revenue
Note: Property is assessed by the State Department of Revenue every six years.
Downtown Bozeman Improvement District
186
CITY OF BOZEMENA, MONTANA
PROPERTY TAX LEVIES IN THE DOWNTOWN BOZEMAN IMPROVEMENT DISTRICT
Past Eight Fiscal Years
2009 2010 2011 2012 2013 2014 2015 2016Taxing Entity
Statewide School Equalization 40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00
Gallatin County Operating and Bond 79.78 85.19 89.94 88.69 87.40 88.38 89.55 99.77
Open Space Bond 4.63 5.81 6.14 5.99 4.89 4.90 4.95 5.03
County-Wide School 100.26 94.02 95.74 95.61 96.47 101.28 99.94 106.85
Bozeman High School District 71.40 69.05 75.34 73.48 71.81 73.16 72.97 76.76
Bozeman Elementary School District 141.13 130.49 121.55 123.38 131.45 145.25 143.70 151.15
City of Bozeman 171.16 170.19 168.75 166.75 166.75 173.08 188.76 210.16
Total Taxing Entity 608.36 594.75 597.46 593.90 598.77 626.05 639.87 689.72
Exempt from Tax Increment
University Millage 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
Gallatin Conservation District 1.04 1.01 0.99 1.00 0.98 0.97 0.95 1.05
County-Wide Planning 2.58 2.50 2.40 2.40 2.39 2.39 2.35 2.39
Source: Based on information provided by Gallatin County and Montana Department of Revenue
Note: Property is assessed by the State Department of Revenue every six years.
Fiscal Year
187
CITY OF BOZEMENA, MONTANA
DIRECT AND OVERLAPPING PROPERTY TAX RATES
Past Ten Fiscal Years (rate per $1,000 of assessed value)
Fiscal General Total
Year Obligation Direct Bozeman
Ended Basic Debt Tax School Gallatin State of
June 30,Rate Service Rate District County Montana
2007 152.07 11.35 163.42 182.74 197.36 46.00
2008 142.98 11.20 154.18 183.85 205.40 46.00
2009 160.59 10.57 171.16 212.53 210.14 46.00
2010 160.18 10.01 170.19 199.54 210.25 46.00
2011 158.96 9.79 168.75 196.89 217.21 46.00
2012 157.19 9.56 166.75 196.86 215.77 46.00
2013 158.38 8.37 166.75 203.26 215.10 46.00
2014 164.83 8.25 173.08 218.41 221.00 46.00
2015 177.52 11.24 188.76 216.67 215.78 46.00
2016 194.51 15.65 210.16 227.91 241.69 46.00
Source: Based on information provided by Gallatin County and Department of Revenue
188
CITY OF BOZEMENA, MONTANA
PRINCIPAL PROPERTY TAX PAYERS
Current Year and Ten Years Ago
Percentage Percentage
of Total City of Total City
Taxable Taxable Total Taxable
Assessed Assessed Assessed Assessed
Taxpayer Value Rank Value Value Rank Value
Northwestern Energy - Transmission & Distribution 4,203,090$ 1 4.86%3,291,272$ 1 5.20%
Centurylink, Inc. (Qwest)736,068 2 0.85%1,462,577 2 2.31%
Bresnan Communications 708,027 3 0.82%
Verizon Wireless 495,140 6 0.57%
Harry Daum - Gallatin Mall 444,051 4 0.51%518,025 3 0.82%
Stone Ridge Partners LLC 417,262 5 0.48%
Mitchell Development & Investment 390,752 9 0.45%
First Security Bank 362,625 7 0.42%
J & D Family Limited Partnership 349,579 8 0.40%
Bridger Peaks Holding LLC 348,926 10 0.40%275,786 9 0.44%
Bozeman Deaconess Foundation 422,509 4 0.67%
Wal-Mart Stores Inc 389,417 5 0.62%
Highgate Bozeman LLC 317,174 6 0.50%
Montana Rail Link 304,394 10 0.48%
Bomont LLC 294,798 7 0.47%
Costco Wholesale 283,730 8 0.45%
Total 8,455,520$ 9.77%7,559,682$ 11.95%
Total City Taxable Assessed Value 86,564,180$ 63,249,000$
Source: Gallatin County Treasurer
2016 2007
189
CITY OF BOZEMENA, MONTANA
PRINCIPAL PROPERTY TAX PAYERS IN
DOWNTOWN BOZEMAN IMPROVEMENT DISTRICT Current Year and Prior Year
Percentage Percentage
of Total City of Total City
Total Taxable Taxable Taxable
Assessed Assessed Assessed Assessed
Taxpayer Business Value Rank Value Value Rank Value
First Security Bank Bank 228,171$ 1 5.40%301,257$ 1 7.44%
F&H, LLC Property Investor/Developer 128,240 2 3.03%124,572 3 3.08%
Moose Point LP Commercial Property Developer 110,531 3 2.61%128,407 2 3.17%
777 Building Multi Tennant Office Retail Building 107,477 4 2.54%111,161 5 2.75%
Atlantic Financial Group Ltd.Bank 89,991 5 2.13%88,937 6 2.20%
Downtowner Group LLC Business Support Services 89,618 6 2.12%88,531 7 2.19%
M & J Cowdrey LLC Property Investor/Developer 88,667 7 2.10%114,091 4 2.82%
777 LLC & UND 50%Property Investor/Developer 71,497 8 1.69%
First Security Bank of Bozeman Bank 69,695 9 1.65%
Baxter Main LLC Commercial 62,268 10 1.47%
American Bank of MT Wells Fargo Bank Bank 87,555 8 2.16%
Callender Street LLP Design-Construction Oversight 72,769 9 1.80%
Martel Plaza Ltd.Multi Story Office Building 0.00%66,691 10 1.65%
Total 1,046,155$ 24.75%1,183,971$ 29.26%
Total Downtown BID Taxable Assessed Value 4,227,246$ 4,046,915$
Source: Gallatin County Treasurer
20152016
190
CITY OF BOZEMENA, MONTANA
PROPERTY TAX LEVIES AND COLLECTIONS
Past Ten Fiscal Years
Fiscal
Year Taxes Levied Collections
Ended for the Percentage in Subsequent Percentage
June 30,Fiscal Year Amount of Levy Years Amount of Levy
2007 10,336,467$ 10,227,386$ 98.94%106,611$ 10,333,998$ 99.98%
2008 10,635,491 10,324,653 97.08%239,140 10,563,793 99.33%
2009 12,696,306 12,493,145 98.40%149,497 12,642,642 99.58%
2010 13,324,175 12,415,922 93.18%887,241 13,303,163 99.84%
2011 13,567,611 13,001,537 95.83%492,141 13,493,678 99.46%
2012 13,683,839 13,108,003 95.79%238,749 13,346,752 97.54%
2013 13,878,293 13,633,347 98.24%61,554 13,694,901 98.68%
2014 14,821,724 14,482,502 97.71%- 14,482,502 97.71%
2015 16,590,871 15,795,913 95.21%155,126 15,951,039 96.14%
2016 18,191,892 18,009,556 99.00%- 18,009,556 99.00%
Source:Gallatin County
City Manager's Final Adopted Budget
Collected within the
Fiscal Year of the Levy Total Collections to Date
191
CITY OF BOZEMENA, MONTANA
WATER SOLD BY TYPE OF CUSTOMER
Past Ten Fiscal Years (in hundreds of cubic feet “HCF”)
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Type of Customer
Residential 1,437,114$ 1,379,115$ 1,516,359$ 1,224,164$ 1,181,195$ 1,323,816$ 1,513,986$ 1,433,833$ 1,385,140$ 1,493,192$
Government 62,913 49,623 66,253 51,168 48,228 49,349 59,589 52,448 53,165 51,923
MSU 298,352 260,232 254,891 228,789 227,019 235,965 233,484 213,698 210,107 208,618
Commercial 659,831 626,846 670,961 571,223 568,474 602,352 638,337 607,444 599,193 610,741
Total 2,458,209$ 2,315,816$ 2,508,464$ 2,075,343$ 2,024,916$ 2,211,481$ 2,445,396$ 2,307,423$ 2,247,605$ 2,364,474$
Total direct rate 2,190.03$ 2,478.36$ 2,495.43$ 2,679.44$ 2,787.06$ 2,887.40$ 2,955.66$ 3,053.40$ 3,105.14$ 2,951.66$
per 1,000 HCF
Source: City of Bozeman Finance Department
Fiscal Year
192
CITY OF BOZEMENA, MONTANA
WATER AND SEWER RATES
Past Ten Fiscal Years
Fiscal
Year Monthly Rate per Monthly Rate per
Ended Base 1,000 Base 1,000
June 30,Rate Gallons Rate Gallons
2007 12.60$ 19.74$ 10.87$ 18.00$
2008 12.60$ 19.74$ 11.17$ 18.50$
2009 12.60$ 19.74$ 12.13$ 20.10$
2010 13.00$ 20.37$ 13.37$ 22.15$
2011 13.42$ 21.02$ 14.73$ 24.41$
2012 14.02$ 21.96$ 15.61$ 25.87$
2013 14.65$ 22.95$ 16.55$ 27.42$
2014 14.65$ 22.95$ 17.56$ 29.10$
2015 14.65$ 22.95$ 17.56$ 29.10$
2016 15.39$ 24.11$ 18.63$ 30.87$
* For Residential Customers, using 5/8 inch meter size.
Sources:City of Bozeman, Montana Commission Resolution 3804
City of Bozeman, Montana Commission Resolution 3805
City of Bozeman, Montana Commission Resolution 3929
City of Bozeman, Montana Commission Resolution 3930
City of Bozeman, Montana Commission Resolution 4042
City of Bozeman, Montana Commission Resolution 4043
City of Bozeman, Montana Commission Resolution 4184
City of Bozeman, Montana Commission Resolution 4185
City of Bozeman, Montana Commission Resolution 4327
City of Bozeman, Montana Commission Resolution 4328
City of Bozeman, Montana Commission Resolution 4454
Water Sewer
DEBT CAPACITY
193
CITY OF BOZEMAN, MONTANA
RATIO OF OUTSTANDING DEBT BY TYPE
Past Ten Fiscal Years
Fiscal
Year General Special Tax Increment Water Wastewater Total Percentage
Ended Obligation Notes Assessment Financing Revenue State of MT Primary of Personal Per
June 30,Bonds Payable Bonds Bonds Bonds RLF Loans Government Income Capita
2007 5,840,000$ 79,198$ 6,736,700$ -$ 226,460$ -$ 12,882,358$ 2.00%369.84$
2008 5,340,000 - 5,601,000 6,000,000 143,729 - 17,084,729 2.43%475.32$
2009 4,815,000 - 5,211,000 5,850,000 56,615 - 15,932,615 1.97%431.39$
2010 4,275,000 851,071 4,819,000 5,695,000 28,992 7,902,127 23,571,191 2.72%632.27$
2011 3,710,000 509,705 4,351,500 5,535,000 - 24,017,080 38,123,285 4.65%1,021.69$
2012 3,080,000 306,727 2,269,500 5,370,000 182,577 23,853,427 35,062,231 4.36%919.88$
2013 2,445,000 1,198,823 1,659,500 5,195,000 13,751,878 22,501,119 46,751,320 5.54%1,206.39$
2014 11,685,000 1,086,396 1,185,500 5,015,000 18,140,000 21,025,565 58,137,461 6.82%1,496.07$
2015 16,320,000 963,274 890,500 4,825,000 17,365,000 19,972,565 60,336,339 7.11%1,448.30$
2016 15,570,000 884,841 662,500 4,630,000 16,567,000 18,930,565 57,244,906 6.74%1,318.86$
Sources:City Manager's Final Adopted Budget
City of Bozeman Finance Department
Business-Type ActivitiesGovernmental Activities
194
CITY OF BOZEMAN, MONTANA
RATIO OF GENERAL BONDED DEBT OUTSTANDING
Past Ten Fiscal Years
Percentage of
Fiscal Actual
Year General Tax Increment Taxable
Ended Obligation Financing District Value of Per
June 30,Bonds Bonds Total Property Capita
2007 5,840,000$ -$ 12,576,700$ 19.9%361.07$
2008 5,340,000 6,000,000 11,340,000 16.4%315.49$
2009 4,815,000 5,850,000 10,665,000 14.4%288.77$
2010 4,275,000 5,695,000 9,970,000 12.7%267.44$
2011 3,710,000 5,535,000 9,245,000 11.5%247.76$
2012 3,080,000 5,370,000 8,450,000 10.3%221.69$
2013 2,445,000 5,195,000 7,640,000 9.2%197.15$
2014 11,685,000 5,015,000 16,700,000 19.5%429.75$
2015 16,320,000 4,825,000 21,145,000 24.1%507.56$
2016 15,570,000 4,630,000 20,200,000 23.3%465.38$
Source:City Manager's Final Adopted Budget
General Bonded Debt Outstanding
195
CITY OF BOZEMAN, MONTANA
DIRECT & OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
Debt Estimated
Outstanding Estimated Share of
as of Percentage Overlapping
June 30, 2016 Applicable (1)Debt
Overlapping Bonded Indebtedness
Gallatin County:
Various issues outstanding 48,637,635$ 36%17,426,572$
Bozeman School District #7:
Various issues outstanding 99,605,844 31%30,769,973
Subtotal overlapping debt 48,196,545
City of Bozeman, Montana
Direct Debt 15,570,000$ 100%15,570,000
Total Direct & Overlapping Debt 63,766,545$
Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This
schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and
businesses of Bozeman. This process recognizes that, when considering the City's ability to issue and repay long-term debt,
the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply
that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government.
(1) The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages
were estimated by determining the portion of another governmental unit's taxable assessed value that is within the City's
boundaries and dividing it by each entity's total taxable assessed value.
Sources:
City of Bozeman Finance Department
Gallatin County Assessor's Office
Bozeman School District #7
196
CITY OF BOZEMAN, MONTANA
LEGAL DEBT MARGIN INFORMATION
Past Ten Fiscal Years
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Debt limit*34,755,653$ 54,804,000$ 60,185,000$ 66,375,000$ 70,688,000$ 74,875,000$ 76,450,000$ 84,657,000$ 84,500,000$ 142,464,717$
Total net debt applicable to limit (5,595,558) (5,423,128) (4,842,905) (4,295,240) (3,638,239) (3,386,727) (3,643,823) (12,771,396) (15,356,726) (16,454,841)
Legal debt margin 29,160,095$ 49,380,872$ 55,342,095$ 62,079,760$ 67,049,761$ 71,488,273$ 72,806,177$ 71,885,604$ 69,143,274$ 126,009,876$
Total net debt applicable to the limit 16.1%9.9%8.0%6.5%5.1%4.5%4.8%15.1%18.2%11.6%
as a percentage of debt limit
*2.5% of total market value of taxable property of $3.38 Billion
Source: City Manager's Final Adopted Budget
Fiscal Year
197
CITY OF BOZEMAN, MONTANA
PLEDGED REVENUE COVERAGE
Past Ten Fiscal Years
Fiscal
Year Utility Less:Special
Ended Service Operating Assessment
June 30,Charges Expenses Principal Interest Coverage Collections Principal Interest Coverage
2007 6,124,533 (3,114,053) (473,952) (23,391) 2,513,137 1,428,084 (268,069) (309,119) 850,896
2008 6,163,883 (3,769,941) (82,731) (10,231) 2,300,981 1,178,846 (1,135,700) (278,393) (235,247)
2009 5,938,745 (3,770,800) (87,009) (5,978) 2,074,958 1,022,641 (390,000) (241,395) 391,246
2010 5,860,144 (3,950,566) (27,622) (2,440) 1,879,516 989,977 (392,000) (223,763) 374,214
2011 6,013,211 (3,869,048) (28,992) (1,070) 2,114,101 1,134,049 (467,500) (211,204) 455,345
2012 6,814,990 (4,063,529) (159,000) (6,405) 2,586,056 858,699 (2,082,000) (192,320) (1,415,621)
2013 7,806,922 (4,364,506) (502,000) (163,250) 2,777,166 820,090 (650,975) (103,198) 65,917
2014 7,871,386 (4,405,464) (751,000) (429,438) 2,285,484 1,054,483 (474,000) (73,760) 506,723
2015 7,748,913 (4,973,926) (775,000) (538,425) 1,461,562 586,116 (295,000) (50,070) 241,046
2016 8,414,870 (6,176,752) (798,000) (515,010) 925,108 705,143 (228,000) (39,343) 437,800
Fiscal
Year Utility Less:
Ended Service Operating
June 30,Charges Expenses Principal Interest Coverage
2007 4,262,052 (2,792,274) - - 1,469,778
2008 4,739,702 (2,981,164) - - 1,758,538
2009 4,905,772 (4,843,180) - - 62,592
2010 5,389,070 (3,468,705) (166,300) (69,470) 1,684,594
2011 5,939,996 (4,183,596) (606,000) (494,298) 656,102
2012 6,385,404 (3,784,420) (883,000) (857,842) 860,141
2013 6,916,226 (3,947,821) (1,465,227) (847,778) 655,400
2014 7,204,486 (5,895,751) (1,084,854) (660,771) (436,891)
2015 7,631,117 (3,914,454) (1,053,000) (632,268) 2,031,395
2016 7,927,692 (5,139,029) (1,042,000) (552,269) 1,194,394
Waste Water Revenue Bonds
Debt Service
Water Revenue Bonds Special Assessment Bonds
Debt Service Debt Service
198
CITY OF BOZEMAN, MONTANA
DEBT SERVICE REQUIREMENTS AND COVERAGE
FOR DOWNTOWN TAX INCREMENT DISTRICT Past Eight Fiscal Years
Fiscal
Year Revenues Annual
Ended Available Debt Service
June 30,for Debt Service Payment Coverage
2008 585,839$ 416,223$ 1.41
2009 742,192 425,288 1.75
2010 1,209,378 424,288 2.85
2011 1,135,166 423,088 2.68
2012 1,266,104 421,688 3.00
2013 1,497,572 425,088 3.52
2014 1,644,960 423,088 3.89
2015 1,853,725 425,888 4.35
2016 2,066,749 423,288 4.88
199
CITY OF BOZEMAN, MONTANA
SUMMARY OF OUTSTANDING SIDs
Current Fiscal Year
Bond Original Maturity Bonds Cash Assessments Delinquent
Issue Amount Date Outstanding Balance Outstanding Assessments
SID 669 1,160,000$ 7/1/2020 255,000$ 65,975$ 250,503$ 5,544$
SID 683 1,372,000 7/1/2024 280,000 13,809 515,402 6,967
SID 684 1,376,869 7/1/2025 70,000 56,903 568,709 1,321
TOTAL 3,908,869$ 605,000$ 136,687$ 1,334,614$ 13,832$
As of June 30, 2016
200
CITY OF BOZEMAN, MONTANA
REVOLVING FUND BALANCE AND BOND SECURED THEREBY
Past Nine Fiscal Years
Fiscal
Year
Ended Revolving Fund Principal
June 30,Cash Balance Amount of Bonds
2007 569,446$ 6,271,200$
2008 629,510 5,155,000
2009 647,235 4,785,000
2010 1,228,197 4,415,000
2011 3,160,685 3,970,000
2012 3,190,244 1,910,000
2013 2,443,769 1,468,529
2014 2,474,971 1,006,726
2015 2,948,129 1,009,724
2016 2,924,604 863,208
201
CITY OF BOZEMAN, MONTANA
SPECIAL IMPROVEMENT DISTRICT ASSESSMENT BILLING AND COLLECTIONS
Past Nine Fiscal Years
Fiscal Assessment Total Annual
Year Billing Collections
2007 1,040,977$ 1,428,085$
2008 1,074,991 1,178,846
2009 951,885 1,022,641
2010 915,398 989,977
2011 871,180 1,134,049
2012 750,418 858,699
2013 741,886 820,090
2014 676,613 1,054,484
2015 538,697 586,116
2016 543,351 705,143
DEMOGRAPHIC AND ECONOMIC INFORMATION
202
CITY OF BOZEMAN, MONTANA
DEMOGRAPHIC AND ECONOMIC STATISTICS
Past Ten Fiscal Years
Fiscal Estimated Per Residents
Year Annual %Capita Median with Bachelors K-12
Ended Change in Personal Personal Age Degree or School Unemployment
June 30,Population Population Income Income (years)Higher Schooling Enrollment Rate
2007 34,832 4.5%643,862,953$ 21,581$ 26.5 49.5%5,356 2.2%
2008 35,944 3.1%703,013,220 23,387 27.2 53.7%5,432 2.7%
2009 36,933 2.7%808,624,803 26,313 27.0 52.7%5,463 4.6%
2010 37,280 0.9%866,396,960 25,909 26.0 50.6%5,509 5.8%
2011 37,314 0.1%819,014,169 25,611 27.2 50.1%5,679 5.6%
2012 38,116 2.1%803,487,262 24,709 27.2 53.9%5,810 5.2%
2013 38,753 1.6%843,399,480 25,608 27.1 55.4%5,994 4.3%
2014 38,860 0.3%852,165,042 26,427 26.8 53.3%6,216 3.5%
2015 41,660 6.7%849,198,410 26,335 27.3 53.6%6,294 2.9%
2016 43,405 4.0%849,682,100 26,350 27.5 54.4%6,533 2.8%
Sources:
Bozeman Public Schools
U.S. Bureau of Labor Statistics
U.S. Census Bureau
203
CITY OF BOZEMAN, MONTANA
PRINCIPAL EMPLOYERS FOR GALLATIN COUNTY
Current Year and Ten Years Ago
Private Employer Private Employer
Employers Class Employers Class
By Class Size By Class Size
Bozeman Deaconess Hospital 9 Bozeman Deaconess Hospital 8
Oracle America 7 Home Care Services 8
Town Pump Convenience Stores 7 Kenyon Noble Lumber & Hardware 7
Wal Mart 7 Right Now Technologies 7
Albertson's 6 Wal-Mart 7
Barnard Construction 6 Albertsons 6
Best Western Gran Tree Inn 6 Bozeman Daily Chronicle 6
Bridger Bowl 6 Community Food Coop 6
Community Food Co-Op 6 Costco 6
Costco 6 First Security Bank 6
First Student 6 JTL group Inc - Belgrade 6
JC Billion 6 Laidlaw Transit 6
Kenyon Noble Lumber & Hardware 6 Martel Construction 6
Korman Marketing Group 6 Murdoch's Ranch & Home Supply 6
Martel Construction 6 Ressler Motor Co 6
McDonalds 6 Simkins Hallin Lumber 6
Murdoch's Ranch & Home Supply 6 Town and Country Foods 6
Ressler Motor 6 Williams Plumbing and Heating 6
Rosauers Super Markets 6 Zoot Enterprises 6
Target 6
Town & Country Foods 6
Zoot Enterprises 6
Public Employer Public Employer
Employers Class Employers Class
By Class Size By Class Size
Montana State University 9 Montana State University 9
School District #7 9 Bozeman School District 8
Belgrade School District 8 City of Bozeman 7
City of Bozeman 7 Gallatin County 7
Department of Agriculture 7
Gallatin County 7
Class 6 - 100 to 249 Employees
Class 7 - 250 to 499 Employees
Class 8 - 500 to 999 Employees
Class 9 - 1,000+ Employees Source: Montana Department of Labor & Industry
2016 2007
June June
OPERATING INFORMATION
204
CITY OF BOZEMAN, MONTANA
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES
BY FUNCTION / PROGRAM Past Ten Fiscal Years
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
General GovernmentCity Commission 2.10 2.10 2.10 2.10 2.10 2.10 2.10 2.10 2.10 2.10
City Manager *9.50 10.50 10.50 11.50 11.50 8.00 8.00 5.00 5.00 6.00
Municipal Court 6.00 7.00 7.00 7.50 8.50 8.50 8.50 8.50 9.00 8.50
City Attorney 6.00 7.00 6.00 11.50 7.00 7.00 7.00 7.00 9.00 10.20
Administrative Services - - - - - - - 19.00 21.00 21.50
Finance *16.00 10.00 10.00 8.75 8.75 10.00 11.00 - - -
Information Technology *- 6.00 6.00 5.88 5.88 6.00 6.00 - - - Community Development 12.70 15.20 13.70 12.20 12.20 8.75 9.00 8.00 12.60 11.60
Building Maintenance 2.55 3.05 3.55 3.55 3.55 3.00 3.50 3.50 3.50 3.50
Total General Government 54.85 60.85 58.85 62.98 59.48 53.35 55.10 53.10 62.20 63.40
Public Safety
Police Department 54.75 57.75 62.75 71.75 71.75 71.25 72.75 72.75 72.25 71.70
Fire Department 31.25 34.25 45.25 41.75 41.75 41.75 43.75 45.75 45.00 46.00
Building Inspection 15.55 16.55 13.55 9.55 10.55 10.55 10.55 12.55 14.00 18.50
Parking 3.75 3.75 4.75 4.75 4.75 4.50 4.50 5.50 6.00 6.00
Total Public Safety 105.30 112.30 126.30 127.80 128.80 128.05 131.55 136.55 137.25 142.20
Public Services
Public Services Administration / Engineering 7.15 8.15 8.15 8.15 8.15 10.00 10.00 12.00 6.58 10.25 Streets 15.62 15.62 17.62 17.62 17.62 17.62 17.62 18.62 16.20 18.85
Storm Water - - - - - - 1.00 1.00 4.00 6.25
Water Treatment Plant 9.27 9.27 9.27 9.27 9.27 9.77 9.77 11.27 12.75 10.50
Water Operations 14.62 15.62 16.62 15.62 15.62 15.62 15.62 15.62 17.33 14.45
Wastewater Operations 9.25 10.25 11.25 10.25 10.25 10.25 10.25 11.25 13.09 13.30
Wastewater Plant 14.87 14.87 15.87 15.87 15.87 15.87 16.37 17.47 15.50 14.75
Solid Waste Collection/Recycling 12.74 15.74 15.74 15.74 15.74 15.74 15.74 15.74 15.90 15.15 Solid Waste Disposal 7.66 2.00 - - - - - - - -
Vehicle Maintenance 4.00 3.00 4.00 5.00 5.00 5.00 5.00 5.00 5.00 6.50
Total Public Services 95.18 94.52 98.52 97.52 97.52 99.87 101.37 107.97 106.35 110.00
Public Welfare
Cemetery (numerous short terms)5.25 5.75 5.75 5.75 5.75 3.33 3.33 3.33 4.90 5.04
Parks (numerous short terms)12.95 13.45 13.45 13.45 13.45 11.77 11.77 11.77 15.40 14.51
Forestry 4.60 4.60 4.60 4.60 4.60 4.60 4.60 4.60 5.95 5.65
Library 19.66 20.66 21.66 21.66 21.66 21.66 21.56 23.11 23.41 26.02
Recreation (numerous short terms)14.65 14.90 15.00 15.00 15.00 15.83 15.83 16.83 16.83 23.55 Community Services 1.00 2.00 1.00 2.00 2.00 2.00 2.00 4.00 3.50 3.50
Total Public Welfare 58.11 61.36 61.46 62.46 62.46 59.19 59.09 63.64 69.99 78.27
Total of all Funds 313.44 329.03 345.13 350.76 348.26 340.46 347.11 361.26 375.79 393.87
Source: City Manager's Final Adopted Budget
* Administrative Services was created in fiscal year 2014 and consists of Finance, Information Technology and Human Resources
Fiscal Year Ended June 30,
205
CITY OF BOZEMAN, MONTANA
OPERATING INDICATORS BY FUNCTION / PROGRAM
Past Ten Fiscal Years
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Finance
SID Statements 11,086 14,919 15,000 15,816 16,000 16,000 16,200 16,424 16,506 16,893
Utility Bills 112,775 134,460 134,000 135,000 135,000 135,000 138,000 155,000 162,000 166,000 Accounts Payable Checks Processed 11,387 13,301 12,218 12,076 12,122 11,962 12,519 10,453 11,098 11,000
Business Licenses 3,711 3,825 3,836 3,789 3,986 3,886 3,831 3,779 4,164 4,200 PoliceNumber of Officers 45 51 52 55 56 60 63 63 61 60 Calls for Service 40,758 42,728 45,145 43,385 45,131 45,358 47,361 48,542 46,290 47,400 Arrests 2,524 2,581 2,853 2,338 2,325 2,152 2,096 2,165 2,195 2,078 Misdemeanor Citations Issued - includes traffic **n/a n/a n/a 3,311 4,504 5,234 5,205 6,045 6,169 6,390 Traffic Stops **n/a n/a n/a 10,702 10,036 9,358 10,629 8,210 7,757 7,482 Traffic Crashes 1,780 1,519 1,302 1,194 1,486 1,264 1,320 1,469 1,601 1,792 Fire
Fires, Hazardous Conditions & Rupture/Explosions 242 230 248 248 278 278 309 340 296 349 Emergency Medical Services/Rescue 1,454 1,658 1,441 1,441 1,483 1,483 1,941 2,051 2,032 2,424 Service Calls 118 148 145 145 187 187 145 212 202 244 Building Inspection
Commercial Permits: Number 1,015 972 1,047 961 1,535 1,420 1,305 1,165 1,560 1,200 Value (Millions)140.95 151.50 140.50 70.41 106.90 95.03 69.64 90.27 $98.02 $65.00Residential Permits: Number 1,775 1,710 1,571 1,543 3,613 2,421 2,338 2,911 2,836 3,500 Value (Millions)181.89 141.22 79.67 67.02 72.57 89.74 146.32 130.68 $191.97 $130WaterNew Service Main Taps 79 15 39 16 3 20 41 57 70 60Meter Replacement/Repair 663 878 368 650 467 279 113 479 1006 1500
Water Main Breaks/Repairs 8 5 6 4 1 6 4 7 5 6WastewaterMain Line Flushing (in Miles)95 110 90 81 78.26 90 47 30 90 60New Infrastructure TV (in Miles)19 4.8 1 1 1 1 2.6 2 8 11New Service Taps 37 22 15 5 4 4 17 37 44 45Solid Waste Collection & RecyclingResidential Accounts 6,608 6,779 6,957 7,130 7,092 7,240 7,470 7,869 8,369 8,878 Commercial Customers 239 254 262 268 271 281 265 258 265 270 Recycling Customers - 484 881 965 970 1,000 1,135 1,601 2,100 2,663 Annual Tonnage Collected: Collections Program 11,953 11,879 10,397 10,657 10,920 11,248 10,695 10,960 11,457 11,691 Vehicle MaintenanceWork Orders Processed 1,070 974 870 1,005 1,435 1,473 1,646 1,717 1,549 1,453 Gallons of Oil Disposed 10,000 9,350 9,350 9,175 9,445 8,751 8,640 8,740 8,969 7,395 ParksPark Reservations 340 360 221 280 319 320 350 400 400 400
Sources: City Manager's Final Adopted Budget City of Bozeman Finance Department
** Not used as an operating indicator until 2010
Fiscal Year Ended June 30,
206
CITY OF BOZEMAN, MONTANA
CAPITAL ASSET STATISTICS BY FUNCTION / PROGRAM
Past Ten Fiscal Years
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Police
Stations 1 1 1 1 1 1 1 1 1 1
Patrol Units (Cars)17 18 19 20 20 20 20 20 22 21
Patrol Units (Motorcycles)4 4 4 4 4 4 4 4 2 3
Fire
Stations 2 2 3 3 3 3 3 3 3 3
Fire Trucks 5 5 5 6 6 6 6 7 7 7
Streets
Street & Alley Mileage 229.905 234.736 242.650 246.951 254.565 254.957 255.769 252 253 254
Lane Miles Painted 40.0 42.0 34.8 40.0 40.3 41.0 37.0 34.6 49.2 50.0
Number of Signs Installed/Repaired 652 652 732 750 722 1120 669 798 600 600
Water
Water Mains (Miles)247.23 250.16 253.73 256.32 257.51 261.33 264.61 267.28 268.57 274.89
Fire Hydrants 2,206 2,238 2,274 2,308 2,324 2,351 2,388 2,406 2,419 2,511
Wastewater
Sanitary Sewers (Miles)198.17 200.01 201.37 205.00 205.00 207.56 210.22 211.51 212.53 219.14
Number of Manholes 3,888 3,946 3,988 4,034 4,080 4,084 4,154 4,185 4,219 4,360
Solid Waste
Number of Collection Vehicles 8 7 8 8 8 8 8 8 8 8
Number of Roll-off Trucks 2 3 4 4 4 4 4 4 4 4
Number of Recycling Trucks 0 0 1 1 1 1 1 2 2 2
Number of Compost Collection Trucks 2 2 2 2 2 2 2 2 2 2
Parks
Formal Turf Acres 258 265 120 120 125 125 125 125 126 140
Natural Parkland Acres 110 115 205 205 210 220 220 220 220 220
Miles of Trails 45 50 50 54 55 55 55 61 63 63
Sources: City Manager's Final Adopted Budget
City of Bozeman Finance Department
City of Bozeman GIS Department
City of Bozeman Police Department
Fiscal Year Ended June 30,
PART IV REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS – GOVERNMENT AUDITING STANDARDS
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ANDERSON ZURMUEHLEN & CO., P.C. • CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS
MEMBER: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
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
Honorable Mayor, City Commissioners, and City Manager of the
City of Bozeman, Montana
We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to
financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements
of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Bozeman,
Montana (the City), as of and for the year ended June 30, 2016, which collectively comprise the City’s basic financial statements and have
issued our report thereon, dated December 29, 2016.
Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City of Bozeman’s internal control over financial reporting
(internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of City of Bozeman’s internal control. Accordingly,
we do not express an opinion on the effectiveness of City of Bozeman’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course
of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s
financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination
of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with
governance.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all
deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did
not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have
not been identified.
208
Compliance and Other Matters As part of obtaining reasonable assurance about whether City of Bozeman’s financial statements are free of material misstatement, we
performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which
could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed
no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance, and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this
communication is not suitable for any other purpose.
Bozeman, Montana
December 29, 2016