HomeMy WebLinkAbout12-16-19 City Commission Packet Materials - A2. Presentation of the CAFR and Results of the Financial Audit for FY19
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Brian LaMeres, City Controller
Kristin Donald, Finance Director
(to be presented by Bill Mills, CPA, and Jessica Van Voast, CPA, of Anderson
ZurMuehlen & Co., P.C.)
SUBJECT: Comprehensive Annual Financial Report (CAFR) for Fiscal Year 2019
MEETING DATE: December 16, 2019
RECOMMENDED MOTION: “I move to accept the Fiscal Year 2019 Comprehensive Annual
Financial Report and the accompanying Letter to Governance”.
BACKGROUND: Section 2-7-503 MCA requires that a financial report be prepared for every fiscal
year. This statute also requires a biannual audit of this report – including the accounts, financial records,
and transactions of all administrative departments of the City – by independent certified public accountants
selected by the City Commission. The City Commission and City Administration have historically believed
that an annual audit provides a higher level of financial assurance and fiscal integrity than a biannual audit,
and this intention is expressed in Section 5.09 of the City Charter. This policy, along with the State legal
reporting requirement, has been followed for fiscal year 2019, and the clean unmodified opinion expressed
by the audit firm of Anderson ZurMuehlen & Co., P.C, has been included in the accompanying CAFR
report. At its meeting on December 2, 2019, the City’s Audit Committee reviewed and voted unanimously
to accept the CAFR and the accompanying Letter to Governance. Additionally, the Audit Committee
approved the General Fund Balance Assignments presented on page 31 of the CAFR.
FISCAL EFFECTS: A clean unmodified audit opinion on the City’s financial statements is
viewed favorably by investment analysts and strengthens the City’s ability
to issue bonds or other debt at a lower interest cost. ALTERNATIVES: The CAFR is being presented in DRAFT form in case the Commission
desires any changes to be made before the final publishing.
Attachments: 1. Auditor’s Letter to Governance
2. CAFR Comprehensive Annual Financial Report Report compiled on December 5, 2019
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1019 E MAIN ST • SUITE 201 • BOZEMAN, MONTANA 59715TEL: 406.556.6160 • FAX: 406.586.8719 • WEB: www.azworld.comANDERSON ZURMUEHLEN & CO., P.C. • CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS
MEMBER: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
To the Board of City Commissioners
Bozeman, Montana
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of
Bozeman (the City) for the year ended June 30, 2019. Professional standards require that we
provide you with information about our responsibilities under generally accepted auditing
standards and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated July 23, 2019. Professional standards also require that we communicate to
you the following information related to our audit.
Significant Audit Matters
Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The
significant accounting policies used by the City are described in Note 1 to the financial
statements. During 2019, the City adopted the following new accounting standards:
GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct
Borrowing and Direct Placements.
The application of existing policies was not changed during 2019. We noted no transactions
entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by
management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of
the possibility that future events affecting them may differ significantly from those expected.
The most sensitive estimates affecting the financial statements were:
(i) valuation of the solvent site remediation liability in the waste water fund, which is based on an engineer’s projection of the long term costs; (ii) valuation of post-closure costs for the
landfill, which is based on an engineer’s estimate of landfill post-closure care costs; (iii)
depreciation expense, which is based on management’s estimate of useful lives of fixed
assets; (iv) the liability for the other post-employment benefits which is based on an actuarial study; and (v) the liability for net pension costs which is based on actuarial studies of the respective plans. We evaluated the key factors and assumptions used to develop these
estimates in determining that they are reasonable in relation to the financial statements taken
as a whole.
220
ANDERSON ZURMUEHLEN & CO., P.C
CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS
- 2 -
Certain financial statement disclosures are particularly sensitive because of their
significance to financial statement users. The most sensitive disclosures affecting the
financial statements were the disclosure of Pension in Note 14 to the financial statements
and the disclosure of Other Post Employment Benefit in Note 15 to the financial statements. The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements
identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or
in the aggregate, to each opinion unit’s financial statements taken as a whole.
Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be
significant to the financial statements or the auditor’s report. We are pleased to report that
no such disagreements arose during the course of our audit.
Management Representations We have requested certain representations from management that are included in the
management representation letter dated DATE, 2019.
Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a “second opinion” on certain situations. If a
consultation involves application of an accounting principle to the City’s financial
statements or a determination of the type of auditor’s opinion that may be expressed on
those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were
no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors.
However, these discussions occurred in the normal course of our professional relationship
and our responses were not a condition to our retention.
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Other Matters
We applied certain limited procedures to the management’s discussion and analysis, the
budgetary comparison – General Fund and Special Revenue Major Funds, Schedule of Funding Progress – Other Postemployment Benefits, and the Schedule of Proportionate Share of Net Pension Liability and Schedule of Contributions, and the related notes, which are required
supplementary information (RSI) that supplements the basic financial statements. Our
procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide
any assurance on the RSI.
We were engaged to report on the combining fund statements and other budgetary comparison reports, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form,
content, and methods of preparing the information to determine that the information complies
with accounting principles generally accepted in the United States of America, the method of
preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial
statements or to the financial statements themselves.
We were not engaged to report on the introductory or statistical sections, which accompany the financial statements but are not RSI. Such information has 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 it.
Restriction on Use This information is intended solely for the use of the Board of City Commissioners and
management of the City and is not intended to be, and should not be, used by anyone other than
these specified parties.
Very truly yours,
Anderson ZurMuehlen & Co.
Bozeman, Montana
DATE, 2019
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City of Bozeman Schedule of Audit Adjustments June 30, 2019
3824
010-1110-401.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 1,075.19
010-1210-402.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 10,394.47
010-1220-402.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 1,973.98
010-1260-402.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 877.99
010-1310-403.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 9,872.40
010-1410-404.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 15,177.15
010-1510-405.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 3,183.79
010-1520-405.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 4,475.27
010-1530-405.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 2,937.08
010-1810-413.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 4,351.32
010-1910-414.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 8,497.89
010-2010-415.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 4,202.38
010-3010-421.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 4,856.08
010-3020-421.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 1,801.81
010-3070-421.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 1,375.62
010-3110-422.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 828.86
010-7210-452.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 4,156.39
010-7610-453.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 11,587.99
010-7810-455.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 2,600.26
010-7820-455.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 3,998.08
010-7830-455.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 5,191.06
010-7840-455.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 2,604.64
010-7850-455.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 5,659.16
010-8010-456.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 9,400.11
010-8240-459.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 3,053.18
010-8250-459.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 1,739.43
100-1610-411.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 1,758.45
100-1620-411.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 7,005.54
100-1630-411.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 4,227.85
111-4110-433.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 16,691.63
111-4171-433.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 4,093.81
112-7710-454.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 6,783.35
115-3210-423.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 14,775.14
120-8230-459.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 623.63
178-1310-403.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 523.94
600-4610-441.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 11,106.34
600-4640-441.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 1,626.86
600-5010-442.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 8,098.67
600-5060-442.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 3,325.46
620-5210-444.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 11,095.33
620-5610-445.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 9,334.19
620-5620-445.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 5,817.99
640-5810-447.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 16,670.46
640-5820-447.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 1,150.39
650-3310-424.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 1,179.42
650-3320-424.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 2,673.90
650-3330-424.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 572.02
670-4510-435.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 2,672.85
670-4520-435.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 3,509.49
710-6010-449.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 6,208.53
750-4010-431.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 3,801.24
750-4020-431.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 11,774.53
750-4025-431.19-01 OTHER PERSONAL SERVICES / PENSION GASB68 NON-CASH 6,383.41
010-0000-333.50-00 STATE SHARED / OTHER STATE REVENUE 125,871.58
100-0000-333.50-00 STATE SHARED / OTHER STATE REVENUE 12,991.84
111-0000-333.50-00 STATE SHARED / OTHER STATE REVENUE 20,785.44
112-0000-333.50-00 STATE SHARED / OTHER STATE REVENUE 6,783.35
115-0000-333.50-00 STATE SHARED / OTHER STATE REVENUE 14,775.14
120-0000-333.50-00 STATE SHARED / OTHER STATE REVENUE 623.63
178-0000-333.50-00 STATE SHARED / OTHER STATE REVENUE 523.94
600-0000-333.50-00 STATE SHARED / OTHER STATE REVENUE 24,157.33
620-0000-333.50-00 STATE SHARED / OTHER STATE REVENUE 26,247.51
640-0000-333.50-00 STATE SHARED / OTHER STATE REVENUE 17,820.85
650-0000-333.50-00 STATE SHARED / OTHER STATE REVENUE 4,425.34
670-0000-333.50-00 STATE SHARED / OTHER STATE REVENUE 6,182.34
710-0000-333.50-00 STATE SHARED / OTHER STATE REVENUE 6,208.53
750-0000-333.50-00 STATE SHARED / OTHER STATE REVENUE 21,959.18
Total 289,356.00 289,356.00
Adjusting Journal Entries JE # 26
To record on-behalf revenue for state apportionment for pension for PERS.
223
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2019 Prepared by the City of Bozeman Finance Department DRAFT224
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2019 TABLE OF CONTENTS I. INTRODUCTORY SECTION Letter of Transmittal ..................................................................................................................................................................................... 1-12 Governmental Financial Officers’ Association Certificate of Achievement .................................................................................................. 13 Organizational Chart ....................................................................................................................................................................................... 14 City Elected Officials and Officers ............................................................................................................................................................ 15-17 II. FINANCIAL SECTION INDEPENDENT AUDITOR’S REPORT ................................................................................................................................................. 19-21 A. MANAGEMENT’S DISCUSSION AND ANALYSIS ............................................................................................................................. 23-38 B. BASIC FINANCIAL STATEMENTS Government Wide Financial Statements Statement of Net Position ..................................................................................................................................................................... 41-42 Statement of Activities .............................................................................................................................................................................. 43 Fund Financial Statements Governmental Fund Financial Statements Balance Sheet – Governmental Funds ............................................................................................................................................ 47-48 Reconciliation of the Balance Sheet to the Statement of Net Position – Governmental Funds .......................................................... 49 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds ........................................................ 50 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to The Statement of Activities – Governmental Funds ........................................................................................................................... 51 Proprietary Fund Financial Statements Statement of Net Position – Proprietary Funds .............................................................................................................................. 54-55 Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Funds .............................................................. 56 Statement of Cash Flows – Proprietary Funds ............................................................................................................................... 57-58 Fiduciary Fund Financial Statements Statement of Fiduciary Net Position – Fiduciary Funds ..................................................................................................................... 61 Notes to Financial Statements .................................................................................................................................................................. 63-144 DRAFT225
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2019 TABLE OF CONTENTS (CONTINUED) C. REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION AND ANALYSIS Schedule of Changes in Total OPEB Liability & Related Ratios ................................................................................................................. 146 Schedule of Proportionate Share of Net Pension Liability and Schedule of Contributions ................................................................... 147-149 Notes to Required Supplementary Information – Pension Plan Changes .............................................................................................. 150-155 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual – General Fund ................................................ 156 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual – Other Major Funds Street Maintenance Special Revenue Fund ............................................................................................................................................. 157 Construction Capital Projects Fund ......................................................................................................................................................... 158 Notes to Required Supplementary Information – Budgetary Information .............................................................................................. 159 D. SUPPLEMENTAL INFORMATION Combining and Individual Fund Statements – Nonmajor Funds Combining Balance Sheet – Nonmajor Governmental Funds ......................................................................................................... 165-173 Combining Statement of Revenue, Expenditures, and Changes in Fund Balance – Nonmajor Governmental Funds .................... 174-180 Budget-to-Actual Statements – Nonmajor Funds Schedules of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Nonmajor Governmental Funds ................................................................................................................................................. 182-199 Combining Nonmajor Proprietary Funds Combining Statements of Net Position ............................................................................................................................................ 202-203 Combining Statements of Revenues, Expenses, and Changes in Net Position ....................................................................................... 204 Combining Statements of Cash Flows ............................................................................................................................................. 205-206 Internal Service Funds Statements Combining Statement of Net Position ..................................................................................................................................................... 209 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position ............................................................................... 210 Combining Statements of Cash Flows ............................................................................................................................................. 211-212 DRAFT226
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2019 TABLE OF CONTENTS (CONTINUED) D. SUPPLEMENTAL INFORMATION (CONTINUED) Agency Funds Combining Statements of Fiduciary Net Position ................................................................................................................................... 215 Combining Statement of Changes in Assets and Liabilities ................................................................................................................... 216 III. STATISTICAL SECTION Financial Trends Section Net Position by Component ..................................................................................................................................................................... 220 Changes in Net Position ................................................................................................................................................................... 221-222 Fund Balances of Governmental Funds .................................................................................................................................................. 223 Changes in Fund Balances, Governmental Funds ................................................................................................................................... 224 Revenue Capacity Section Assessed value of Taxable Property ........................................................................................................................................................ 226 City Taxable Market and Taxable Values ............................................................................................................................................... 227 Tax Increment District Taxable Valuation Detail ................................................................................................................................... 228 Downtown Bozeman Improvement District & Comparison to City Taxable Value ............................................................................... 229 Property Tax Levies in the Downtown Bozeman Improvement District ................................................................................................ 230 Direct and Overlapping Property Tax Rates ........................................................................................................................................... 231 Principal Property Tax Payers ................................................................................................................................................................. 232 Principal Property Tax Payers in Downtown Bozeman Improvement District ...................................................................................... 233 Property Tax Levies and Collections ...................................................................................................................................................... 234 Water Sold by Type of Customer ............................................................................................................................................................ 235 Water and Sewer Rates ............................................................................................................................................................................ 236 Debt Capacity Section Ratios of Outstanding Debt by Type ....................................................................................................................................................... 238 Ratios of General Bonded Debt Outstanding .......................................................................................................................................... 239 Direct and Overlapping Governmental Activities Debt .......................................................................................................................... 240 Legal Debt Margin Information .............................................................................................................................................................. 241 Pledged Revenue Coverage ..................................................................................................................................................................... 242 Debt Service Requirements and Coverage for Downtown Tax Increment District ................................................................................ 243 Summary of Outstanding SIDs ................................................................................................................................................................ 244 Revolving Fund Balance and Bond Secured Thereby ............................................................................................................................. 245 DRAFT227
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2019 Special Improvement District Assessment Billing and Collections ........................................................................................................ 246 TABLE OF CONTENTS (CONTINUED) Demographics and Economic Section Demographic and Economic Statistics .................................................................................................................................................... 248 Principal Employers for Gallatin County ................................................................................................................................................ 249 Operating Information Full-time Equivalent City Government Employees by Function/Program ............................................................................................. 251 Operating Indicators by Function/Program ............................................................................................................................................. 252 Capital Asset Statistics by Function/Program ......................................................................................................................................... 253 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 Finance Statements Performed in Accordance with Government Auditing Standards………………………………………………...255-256 DRAFT228
PART I INTRODUCTORY SECTION DRAFT229
1 CITY OF BOZEMAN, MONTANA December 16, 2019 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, 2019 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. DRAFT231
2 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 19 square miles and is located on the eastern slope of the Rocky Mountains. The population of Bozeman in 2018 was estimated to be 48,532 – which is a total increase of 30% from April 2010 – which continues Bozeman’s standing as the fourth largest city in the state. Bozeman is 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 & storm water 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. 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, Finance Director, and department staff explain the budget recommendations and underlying justification for the requests. The Commission also reviews departmental requests which 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. DRAFT232
3 CITY OF BOZEMAN, MONTANA Fiscal Year 2019 marked the seventh year in a row where the final budget was adopted before start of the year. It was completed in late April and presented in mid-May with an adoption of a final budget on June 24th. 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 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. % 0 % 5 10 % % 15 20 % 25 % 30 % Ag, forestry, fishing & hunting, mining Construction Manufacturing Wholesale trade Retail trade Transport, warehousing, and utilities Information Finance and ins, and real estate Prof, mgmt, admin, & waste mgmt Edu, health care, & social assistance Arts, entertain, rec, accomod, & food Other services, except public admin Public administration Bozeman Employment by Industry, 2017 DRAFT233
4 CITY OF BOZEMAN, MONTANA Regionally, Bozeman is located in southwestern MT in Gallatin County. “Bozeman’s overall cost of living was 1.8 percent above the national average as of August 2018, compared to 259 other urban areas in the U.S. As seen in the following figure, in the second quarter of 2018 the housing index score was 108.2, meaning that area housing was 8.2 percent above the national average for the quarter. The average price of a new 2,400 square foot home on an 8,000 square foot lot that met the index collection specifications was $373,872. The average monthly rental rate for a 950 square foot apartment in the Bozeman area that met the index collection specifications was $1,121. Mortgage rates are also taken into consideration when computing the housing index score. For Bozeman residents, all expense categories except for utilities and transportation came in above national averages for the second quarter of 2018. To put Bozeman’s index scores in perspective, the table to the right includes the cities with the most expensive and least expensive composite scores for the quarter—Manhattan, NY and Harlingen, TX respectively. The table also includes the comparable cities to Bozeman in the Western region that participate in the index, as well as Prospera’s calculation of how much expensive each city is in comparison to Bozeman.” -As cited by Prospera Business Network, 2019 Economic Profile of Gallatin and Park Counties, Montana. DRAFT234
5 CITY OF BOZEMAN, MONTANA FOR THE YEAR Significant Developments during the year include: Continued Growth: Continued Growth – Bozeman’s most recent evidence of continued growth includes the US Census data showing an estimated population increase of 4.2% this year, on top of the 3.0% increase for last year. The City has experienced strong building permit activity and increased traffic counts and congestion on City streets. Much of this year’s budget was adopted in response to the prolonged growth that Bozeman continues to experience. Passage of Bond Resolution for the Bozeman Public Safety Center: On the November 11th, 2018 ballot, the citizens of Bozeman voted to issue $36,965,000 in General Obligation bonds to fund the building of the Bozeman Public Safety Center, which is to house the Police, City Attorneys, Municipal Court, one Fire Station and public use spaces. Construction efforts began in early 2019, and are estimated to be completed in 2021. The bonds were successfully sold in September of 2019 and will be repaid using the City’s taxing authority. Parks and Trails Maintenance District: In July of 2018, the City Commission voted to adopt the silver level of service for the Staffing and Implementation plan for the Park & Trail District. In March of 2019, the City Commission voted to use a five year startup period for the district. The ‐ 10,000 20,000 30,000 40,000 50,000 60,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Bozeman Population, Est. US Census Bureau DRAFT235
6 CITY OF BOZEMAN, MONTANA challenges of the implementation include an increase in the number of parks that staff needs to maintain, an increase in the level of basic services provided by the City’s parks, and an increase in the amount of repair/replacement projects that are undertaken each year. The creation of the district will go on a future ballot to be voted on by the citizens of Bozeman. FOR THE FUTURE Fiscal Year 2020 Strategic Plan Priorities: The Bozeman City Commission review the seven priorities from FY19 and removed the Bozeman Public Safety Center, which was supported by City voters. They also removed Partnerships for Education and Learning because in FY19 great strides were made with Montana State University and the Bozeman School District that are continuing in FY20. The remaining five became the priories for FY20 and the budget. The “Big 5” are: Community Outreach, Affordable Housing, Planning & Land Use Initiatives, Annexation Analysis & Study, and the Parks Maintenance District. In addition to these top five priorities, five new projects are included in the FY20 efforts: 1% for Art Program Establishment, Intersection Level of Service Communication, Sewer Capacity Communication, Street Light Study, and the Vendor Gender Pay project. Parks & Trails Maintenance District: The Parks & Trails Maintenance District will be placed on a ballot to be voted on by the citizens of Bozeman. After initially selecting a protest out method, it was decided to bring the creation to a vote. If the Parks & Trails Maintenance district ballot item passes, the City would be looking to create the district in FY21. This district would remove the parks, recreation and aquatics expenditures out of the general fund, and would levy a special assessment to pay for the personnel, operating and capital expenditures in the future. DRAFT236
7 CITY OF BOZEMAN, MONTANA Planning Processes: The City plans for the long-term needs of our community through a number of efforts and studies. These documents are usually developed by consultants and staff, with numerous public hearings and advisory board meetings held prior to their formal adoption by the Commission. Once adopted, City staff works diligently to implement the recommendations and changes outlined in the plans. The primary planning documents are: City Strategic Plan: • Adopted April, 2018 Plans for Service Provision, Facility Expansion & Maintenance: • Bozeman Community Plan—Adopted 2010. • Bozeman Area Transportation Plan—Adopted 2017. • Police Services Facility & Staffing Plan—Adopted 2007. Currently being updated. • Fire Services Master Plan— Adopted 2017. • Wastewater Facility Plan—Adopted 2015. • Water Facility Plan—Adopted 2017. • Stormwater Facility Plan—Presented February 2008. • Parks, Recreation, Open Space, and Trails Plan—Adopted 2007. • Municipal Climate Action Plan—Adopted 2008. • Community Climate Action Plan – Adopted 2011. • Economic Development Plan—Adopted 2017. • Downtown Improvement Plan—Adopted 2010. Plans for Facility Maintenance: • Downtown Improvement Plan—Adopted 2010. Currently being updated • Aquatics Facility Survey for Swim Center & Bogert Park Pool—July 2008. • City-Owned Facility Assessments—2008, with updates ongoing. Financial Plans: • Downtown Improvement Plan—Adopted 2010. • Annual Budget—Adopted each June. • Capital Improvements Plan - Updated & adopted each year; recently for FY20-FY24. DRAFT237
8 CITY OF BOZEMAN, MONTANA • Water Rate Study (5 Years) – Updated for FY19-FY23. • Wastewater Rate Study (5 Years) – Updated for FY19-FY23. • Impact Fee Studies (Water, Sewer, Streets, Fire) – Updated in FY18 Strategic Plan With the adoption of the Strategic plan, the FY19 budget incorporated efforts to implement each of the vision statements. The highlights of the impact on the budget include: 1. Engaged Community – The City’s first Communications Coordinator position, initially funded in FY18, played a key role in our community engagement efforts in FY19. This position significantly advances our work to foster a culture of civic engagement by creating a detailed communication plan for the organization, expand outreach to the community, and oversee a citizen engagement process. Communication and outreach is one of the seven priorities for this fiscal year. 2. Innovative Economy – Several Strategic Plan action items, which can also be found in the 2016 Economic Development Strategy, will be implemented through the ongoing work of the Economic Development Department this year. 3. Safe, Welcoming Community – The Bozeman Public Safety Facility construction began in FY19 after a voter approved ballot measure to issue bonds to cover the construction costs. The facility is slated to be in use in 2021. DRAFT238
9 CITY OF BOZEMAN, MONTANA 4. Well Planned City – To consistently improve our community’s quality of life as it grows, the priorities of Planning and Land Use Initiatives and Annexation Analysis and Study are included in FY19’s efforts and continued into FY20. Work continues on the Parks & Trails Maintenance District with the City Commission adopting a “silver” level of service and a five year implementation plan. The creation of the district will go on the ballot to vote in the near future. 5. Creative, Learning Culture – We partnered with MSU, utilizing their student and faculty population to accomplish some strategic plan action items through college-level class assignments. This was a new partnership for education and learning between the City and the University that has not existed in the past. 6. Sustainable Environment – In FY19, the City presented the Climate Action & Resiliency Plan to help guide the City in its sustainability efforts. In September 2019, the Bozeman Climate Team was created to assist with the development of the Bozeman climate plan. The City also established a Drought Reserve and corresponding utility fee for excess water usage to fund the drought reserve in FY20. 7. High Performance Organization – Maintaining the City’s current levels of service and implementing action items in the Strategic Plan requires the additional staff that has been included in the FY20 budget. FY20 focuses on Public Safety, and includes the addition of 3 new Firefighting positions. A total of 15.85 full time equivalents (FTE) were added in the FY20 budget to meet the needs of the growing City. DRAFT239
10 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 which can be supported by current revenues. Construction projects and capital purchases of $25,000 or more are included in the Capital Improvement Plan (CIP), with all capital purchases of $5,000 or more reported as capital outlays in the financial statements. Minor capital outlays of less than $5,000 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. DRAFT240
11 CITY OF BOZEMAN, MONTANA • 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 which 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. 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. DRAFT241
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13 CITY OF BOZEMAN, MONTANA GOVERNMENT FINANCE OFFICERS’ ASSOCIATION CERTIFICATE DRAFT243
14 CITY OF BOZEMAN, MONTANA ORGANIZATIONAL CHART Fiscal Year 2019 DRAFT244
15 CITY OF BOZEMAN, MONTANA CITY ELECTED OFFICIALS AND OFFICERS Fiscal Year 2019 ELECTED OFFICIALS Legislative Cynthia Andrus Mayor Christopher Mehl Deputy Mayor Jeffrey Krauss Commissioner I-Ho Pomeroy Commissioner Terence Cunningham Commissioner Judicial Karl Seel Colleen Herrington Municipal Judge Municipal Judge OFFICERS Executive Andrea Surratt City Manager Chuck Winn Assistant City Manager Anna Rosenberry Assistant City Manager Robin Crough City Clerk Department of Law Gregory Sullivan City Attorney Bekki Mclean Chief Prosecutor Timothy A. Cooper Assistant City Attorney Karen Stambaugh Assistant City Attorney Kyla Murray City Attorney/Prosecutor Samantha Niesen City Attorney/Prosecutor Ed Hirsch City Attorney/Prosecutor Department of Finance Kristin Donald, MBA Finance Director Brian LaMeres, CPA Controller Laurae Clark Treasurer DRAFT245
16 CITY OF BOZEMAN, MONTANA CITY ELECTED OFFICIALS AND OFFICERS Fiscal Year 2019 Department of Economic Development Brit Fontenot Department of Information Technology Scott McMahan Department of Human Resources James Henderson Department of Public Safety Director of Economic Development Information Technology Director Human Resources Director Steve Crawford Chief of Police James Veltkamp Deputy Chief of Police Josh Waldo Michael Maltaverne Fire Chief Deputy Fire Chief of Operations Scott Mueller Deputy Fire Chief – Fire Marshal Department of Public Service Vacant (filled 7/15/19) Director of Public Service Shawn Kohtz City Engineer Jon Henderson Director of Strategic Services 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 Thomas Radcliffe 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 DRAFT246
17 CITY OF BOZEMAN, MONTANA CITY ELECTED OFFICIALS AND OFFICERS Fiscal Year 2019 Department of Planning and Community Development Martin Matsen Chris Saunders Brian Krueger Director of Planning and Community Development Community Development Manager Development Review Manager DRAFT247
PART II FINANCIAL SECTIONDRAFT248
19 1019 E MAIN ST • SUITE 201 • BOZEMAN, MONTANA 59715 TEL: 406.556.6160 • FAX: 406.586.8719 • WEB: www.azworld.com ANDERSON ZURMUEHLEN & CO., P.C. • CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORSMEMBER: 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, 2019, 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. DRAFT249
20 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, 2019, and the respective changes in financial position, and, where applicable, cash flows, thereof for the year then ended in accordance 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. 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. DRAFT250
21 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 16, 2019, 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 solely 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 the effectiveness of the City’s 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 DATE, 2019DRAFT251
A. MANAGEMENT’S DISCUSSION AND ANALYSISDRAFT252
23 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) June 30, 2019 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, 2019. Please read it in conjunction with the transmittal letter on page 1 and the City’s financial statements, which begin on page 41. 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 41 and 42) 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 47. 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 25. 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, deferred outflows, liabilities, and deferred inflows 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 and deferred outflows, what the citizens own, and liabilities and deferred inflows, 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, storm water, solid waste, and parking systems are reported here. DRAFT253
24 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) June 30, 2019 Reporting the City’s Most Significant Funds Fund Financial Statements Our analysis of the City’s funds begins on page 31. The fund financial statements begin on page 47 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 reconciliation on pages 49 and 51 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. 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 61 and in the Combining Statement of Changes in Assets and Liabilities-Agency Funds on page 216. As the statements 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. DRAFT254
25 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) June 30, 2019 THE CITY AS A WHOLE The City’s combined net position increased by $26.7 million this year as compared to a $34.2 million increase last year. The smaller increase this year was mainly due to expenses increasing more than revenues compared to last year. Total revenues this year decreased by $3.4 million while total expenses increased by $4.1 million. The decrease in total revenues was primarily due to a $2 million decrease in Charges for Services and a $2.5 million decrease in Restricted Capital Grants & Contributions, which mainly consists of street, water, wastewater, and stormwater infrastructure provided by private developers. These decreases were partially offset by a $1.3 million increase in Property Tax revenue. 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. The net position of the City’s governmental activities increased by $14.2 million, or 8.5%, from $166.9 million last year compared to $181.1 million this year due to revenues exceeding expenses, the details of which are discussed below. 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 $11.5 million, or 171.7%, from negative ($6.7) million to a positive $4.8 million. The reason for this unrestricted net position being negative in prior years was the implementation of GASB Statement 68 “Accounting and Financial Reporting for Pensions”, 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 $12.5 million, or 4.7%, from $266.4 million to $278.9 million, due primarily to a continuing trend of revenues provided by charges for services exceeding total expenses. This operating surplus combined with a decrease in long-term debt outstanding caused Unrestricted Net Position to increase by $6.6 million, or 45.3%, from $14.5 to $21.1 million. This net position cannot be used to make up for deficits reported by governmental activities in the event any such deficits were reported. The City generally can only use the net position of business-type activities to finance the continuing operations of the water, wastewater, solid waste, stormwater, and parking operations. 201920182019201820192018Current and Other Assets58.0$ 61.6$ 44.8$ 40.7$ 102.8$ 102.4$ Capital Assets177.1 157.4 283.1 274.9 460.3 432.3 Total Assets235.2$ 219.0$ 327.9$ 315.7$ 563.1$ 534.7$ Deferred Outlflows of Resources 3.0 6.5 0.8 1.8 3.8 8.3 Long-term Debt Outstanding (43.9) (46.7) (43.8) (48.9) (87.7) (95.6) Other Liabilities(10.1) (9.7) (5.2) (3.1) (15.3) (12.8) Total Liabilities(54.0)$ (56.4)$ (49.0)$ (52.0)$ (103.0)$ (108.4)$ Deferred Inflows of Resources (2.9) (0.8) (0.8) (0.3) (3.8) (1.1) Net Position:Net investment in capital assets 155.2$ 137.1$ 245.2$ 239.3$ 400.4$ 376.4$ Restricted for parking capital projects- - 0.1 0.3 0.1 0.3 Restricted for general government2.5 1.9 - - 2.5 1.9 Restricted for Public Safety4.9 4.4 - - 4.9 4.4 Restricted for Public Service3.2 13.6 - - 3.2 13.6 Restricted for Public Welfare6.6 5.9 - - 6.6 5.9 Restricted for capital projects0.7 3.7 9.7 9.3 10.4 13.0 Restricted for debt service3.3 7.0 2.8 3.1 6.2 10.1 Unrestricted4.8 (6.7) 21.1 14.5 25.9 7.7 Total Net Position 181.2$ 166.9$ 278.9$ 266.4$ 460.1$ 433.38$ Activities Activities Primary GovernmentTabl e 1Net Position(in Millions)Governmental Business-type TotalDRAFT255
26 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) June 30, 2019 The City’s total revenues (excluding special items) decreased by 3.2%, or $3.4 million, from $106.5 million to $103 million, driven primarily by a $2 million decrease in Charges for Services, (Utility Charges and Street/Tree/Arterial Collector District Assessments) and a $2.4 million decreased in Restricted Capital Grants & Contributions (which includes water, wastewater, stormwater, road, and park infrastructure provided by private developers). Property Taxes under General Revenues increased by $1.3 million, while Unrestricted Operating Grants & Contributions and Other General Revenues decreased by $1.5 and $1 million respectively. These will be discussed later in more detail. The total cost of all programs and services increased by $4.1 million, or 6%, from $72.3 million last year to $76.4 million this year. Public Safety (Police, Fire, and Building Inspection) and Public Service (mainly Street Maintenance) saw increases of $1.1 and $1.3 million respectively while General Government increased $400,000 and Waste water increased $800,000. Our analysis on the following pages separately considers the operations of governmental and business-type activities. 201920182019201820192018RevenuesProgram revenues:Charges for Services21.8$ 22.5$ 28.4$ 29.8$ 50.3$ 52.3$ Restricted Operating Grants & Contributions5.4 3.0 0.1 0.1 5.5 3.2 Restricted Capital Grants & Contributions6.6 7.7 8.3 9.7 14.9 17.4 General RevenuesProperty Taxes23.8 22.5 - - 23.8 22.5 Unrestricted Operating Grants & Contributions4.7 6.2 - - 4.7 6.2 Other General Revenues2.5 2.4 1.4 2.5 3.9 4.9 Total Revenues 64.8 64.3 38.2 42.1 103.1 106.5 Program ExpensesGeneral Government 10.3 9.9 - - 10.3 9.9 Public Safety 19.7 18.6 - - 19.7 18.6 Public Service 9.9 8.6 - - 9.9 8.6 Public Welfare 9.7 9.5 - - 9.7 9.5 Interest and Fiscal Fees 0.8 0.8 - - 0.8 0.8 Water - - 10.0 9.8 10.0 9.8 Waste Water - - 9.3 8.5 9.3 8.5 Solid waste - - 4.7 4.5 4.7 4.5 Non-major activities - - 2.0 2.0 2.0 2.0 Total Expenses 50.4 47.4 26.1 24.8 76.4 72.2 Excess (deficiency) beforespecial items and transfers 14.4 16.9 12.1 17.3 26.8 34.3 Sale of Capital Assets 0.2 0.0 (0.2) - (0.0) 0.0 Transfers (0.5) (0.7) 0.5 0.7 - - Increase (decrease) in net position14.1$ 16.2$ 12.4$ 18.0$ 26.6$ 34.2$ Net position - beginning 166.9 150.7 266.5 248.5 433.3 399.2 Net position - ending181.0$ 166.9$ 278.9$ 266.5$ 460.0$ 433.4$ Activities Activities Primary GovernmentTabl e 2Changes in Net Position(in Millions)Governmental Business-type TotalDRAFT256
27 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) June 30, 2019 Governmental Activities Revenues for the year from governmental activities increased by .9%, or $500,000, from $64.3 million to $64.8 million, while total expenses increased by 6.1%, or $2.9 million, from $47.4 million to $50.3 million. Property Tax revenues increased by $1.3 million, or 5.7%, from $22.5 million to $23.8 million. Charges for services, which include Street Assessments and Fire and Street Impact Fees, realized a net decrease of $700,000, or 2.9%, from $22.5 million to $21.8 million. Restricted Capital Grants and Contributions (developer-provided infrastructure reported under Program Revenues) decreased by 1.1 million, or 14%, from $7.7 million to $6.6 million. These and the other contributing factors listed below are primarily responsible for this year’s change in net position. Charges for services decreased by $600,000, or 2.9%, from $22.5 million last year to $21.8 million this year. Street Impact Fees decreased by $1.2 million, or 22%, from $5.5 million last year to $4.3 million due to a decrease in development requiring expansion of the City’s transportation system. Street Maintenance District assessment revenue increased by 5% by $252,362 from $5.46 to $5.7 million due to rate increases approved by the City Commission pursuant to policy adopted to address deferred street infrastructure maintenance and to build a reserve for curb and sidewalk replacement. However, Arterial & Collector District assessment revenue decreased by 28%, or $506,876, from $1.8 to $1.3 million due to a planned reduction in assessments which was offset by an increase in intergovernmental Gas Tax revenue. Fire impact fee revenues also decreased this year, falling 12.3%, or $73,536, from $600,000 to $525,828. Property Tax collections increased by nearly $1.3 million, or 5.7%, from $22.5 million last year to $23.8 million this year. The number of total property tax mills levied increased by 3.91 mills from 187.33 to 191.24, or 2.1%. The mill value also increased by 3.1%, or $3,126, from $89,325 to $101,195. These two factors combined with new construction and continued growth in the number of taxpayers fueled this year’s increase in property tax revenue. Property Tax revenues in each of the City’s Tax Increment Financing (TIF) Districts also increased moderately this year, with the exception of the North Park Urban Renewal District where revenues decreased by $41,922, or 74.8%, from $56,062 last year to $14,140 as the result of the latest property reappraisal continued to take effect after the Montana Department of Revenue changed its appraisal cycle from every 6 years to every 2 years, which also had the effect of shifting the 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 15.89 mills, or approximately $1,657,661, below the statutory maximum allowable tax rate. Restricted Capital Grants and Contributions (reported under Program Revenues) decreased by $1.1 million, or 14%, from $7.7 million to $6.6 million, due to the dollar amount of general infrastructure provided by developers being lower this year than last. Contributed road/transportation infrastructure did increase by $857,223, or 21.7%, from $3.9 million last year to $4.8 million this year. However, contributed parkland and infrastructure declined by 47.9%, or $1.2 million, from $2.6 million last year to $1.4 million this year, and there was no contributed recreation capital this year compared to the $1 million Boys & Girls Club building at the Story Mill Community Park which was reported last year. DRAFT257
28 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) June 30, 2019 Program Expenses increased by 6.1%, or $2.9 million, from $47.4 million to $50.3 million with Public Safety and Public Service being the primary drivers of the increase at $1.1 and 1.2 million respectively. Personnel costs for Public Safety accounted for $723,000 of this increase due to departments being closer to fully-staffed than in previous years, with Police, Fire and Building Inspection increasing 4%, 3%, and 14% respectively. Additional information about Police and Fire is available in the later discussion of the General Fund. Supplies and Contracted Service expenses charged to the Police Department increased by 13%, or $83,592, from $660,293 last year to $743,885 this year due to new mobile computers and accessories in addition to new contracted services this year with Rocky Mountain Security amounting to $31,257. Public Service expenses reported under Governmental Activities consist mainly of street maintenance and reconstruction activities. Personnel costs remained fairly steady, so significant increases this year were due to non-personnel operational costs, including supplies and materials and non-construction contracted maintenance services such as seal-coating and pavement marking, which increased by $862,951, or 26%, from $3.3 million to $4.1 million. The cost of all governmental activities this year was $50.3 million compared to $47.4 million last year. However, as shown in the Statement of Activities on page 43 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 $16,434,863 because some of the cost was paid by those who directly benefited from the programs ($21,849,866 in Charges for Services) or by other governments, organizations, or developers that subsidized certain programs with operating and capital grants and contributions ($5,419,750 plus $6,593,221 = $12,013,092). 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) decreased by $4 million, or 9.4% ($38.2 million this year compared to $42.2 million last year) while expenses increased by $1.2 million, or 4.7% ($26.1 million compared to $24.9 million last year). The decrease in revenues was due in part to a $1.4 million decrease in Restricted Capital Grants & Contributions, which consisted primarily of privately constructed water, wastewater, and stormwater infrastructure that was contributed to the City by developers. Charges for Services also decreased by $1.4 million and Other General Revenues decreased by $1.2 million. The details are explained in the following section. 2019201820192018Police9.6$ 9.1$ 8.2$ 7.8$ Fire6.9 6.9 5.5 5.6 Public Service9.9 11.3 (3.7) (3.4) Library2.6 2.5 1.8 1.7 Parks2.0 2.0 1.7 1.7 Recreation1.8 1.6 1.2 1.1 All Others17.5 14.0 1.6 (0.2) Totals 50.3$ 47.4$ 16.3$ 14.3$ of Services of ServicesTabl e 3Governmental Activities(in Millions)Total Cost Net CostDRAFT258
29 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) June 30, 2019 The increase in expenses this year was due to overall increased non-personnel operating costs of $1.4 million including a $177,459 expense recorded in Solid Waste to account for the updated estimate of the Story Mill Landfill post-closure liability. Specific factors driving these and other regular operating results include: 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 and due to regular rate increases. However, the City Commission voted to hold water rates steady in fiscal years 2014 and 2015 followed by 2.5% rate increases in each of fiscal years 2016 and 2017 and a 2% increase last year. This year’s water rate increase amounted to a 3% increase to flat monthly charges and a 5% increase on actual water usage. These rate increases have allowed the City to continue its water distribution pipe replacement program and replace or rehabilitate aging infrastructure every year instead of every two years. The City’s customer‐base growth grew by 410 customers, or 3.2%, from 12,852 average active customer accounts last year to 13,262 this year. This level of growth rate is trending more closely to the 5% growth experienced between 2005‐2008. Four years ago the cost of Public Works Administration was reported in the Water Fund instead of the General Fund as in the past, and the Water Fund’s administrative overhead was in turn charged out to the various departments which benefit from Public Works Administration. This resulted in $1,011,644 of administration reimbursement revenue being recorded as part of the $1,086,293 reported under “Other income” last year. This year a new Internal Service Fund was created to record and report the cost of Public Works Administration, which decreased the amount of “Other income” reported in the Water Fund for this year by 86.9%, or $944,086, to $142,207. Despite the increase in the water rate and in the number of utility customers, total water operating revenues decreased by $761,717 or 7.5% from $10.2 million to $9.4 million. This is because last year was an exceptionally busy year for development for development requiring the provision of water rights, resulting in higher-than-normal revenues related to construction, such as cash-in-lieu of water right revenue. Contributing projects last year included the South University District mixed-use residential/commercial complex, Bozeman High School stadium improvements, and The Springs Assisted Living Facility. This year saw a sharp decline compared to last year’s spike, with revenues decreasing $766,586, or 65%, decrease in cash-in-lieu-of-water-right revenue from $1,180,122 to $413,536. Additionally, the amount of infrastructure contributed by private developers decreased this year. This amount, reported under Restricted Capital Grants and Contributions, decreased by $495,000, or 10.2%, from $4.9 million to $4.4 million this year. Water impact fee revenues also decreased by $715,241, or 25.9%, from $2,757,566 to $2,042,324 due to a decrease in impact-fee qualifying construction during the year. Major collections included $280,532 for the Icon Apartments at Ferguson Farm, $110,883 for the One 11 Lofts downtown residential project, $147,698 for improvements to the stadium at Bozeman High School Total operating expenses increased moderately this year by $166,557, 1.8%, from $9,237,639 to $9,404,196. Amounts spent on major projects undertaken during the year include: $2.7 million on the Sourdough Storage Reservoir, $232,341 Pear Street Booster Station, $265,873 South Tracy Avenue Reconstruction, $160,339 for the Lyman Creek supply system, and $110,588 for the lead service water line replacement program. DRAFT259
30 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) June 30, 2019 Wastewater Revenues in the Wastewater Fund have generally been increasing over the past 10 years and are estimated at just over $10 million for the upcoming year. Eight years ago the City borrowed significantly to construct the new Water Reclamation Facility. This debt is being repaid by system users over the subsequent 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 fiscal year 2017, a 2% increase last year. This year’s water rate increase amounted to a 3% increase to flat monthly charges and a 4% increase on actual wastewater consumption. Despite the rate increase, combined with the same customer growth experienced in the water system of 410 customers, operating revenues for the year actually decreased by $459,990, or 4.9%, from $8,876,017 to $9,336,007 this year. This is mainly due to last year being an exceptionally busy year with several major projects occurring simultaneously, including the same projects listed under the Water Fund: The South University District, Bozeman High School, and The Springs Assisted Living Facility. Wastewater impact fee revenues decreased by $701,309, or 38.7%, from $1.8 million last year to $1.1 million this year. Again, the reason for the decrease this year compared to last is mainly because last year was an exceptionally high-volume year. Major wastewater impact fee collections this year included $109,125 for the Icon Apartments at Ferguson Farm, $64,865 for the One 11 Lofts downtown residential project, $43,510 for improvements to the stadium at Bozeman High School. Wastewater operating expenses increased by $852,926, or 10.7%, from $7,958,309 last year to $8,811,235 driven mainly by a $181,000 increase in personnel costs and a $279,300 increase in depreciation expense due to recently-constructed or acquired assets being depreciated for the first time after their first full year of service. Spending on major projects during the year included: $185,000 for the Peach Street project in the Northeast Urban Renewal Tax Increment Financing District, $184,000 in planned annual wastewater pipe replacement, $167,500 for the wastewater infrastructure component of the East Olive Street reconstruction, and $547,000 in various ongoing “small works” projects to repair and replace equipment at the Water Reclamation Facility in an effort to prevent failure in an emergency situation. Solid Waste Operating revenues in the Solid Waste fund increased by $301,978, or 7.7%, from $3,926,123 to $4,228,101, due mainly to an increase in the customer base because rates for both for both garbage and recycling did not change for this year. The number of garbage collection customers increased by 560, or 5.4%, from 10,308 last year to 10,868 this year. The number of recycling customers increased by 543, or 15.4%, from 3,513 last year to 4,056 this year. Operating expenses increased by $203,846, or 4.5%, from $4.54 million to $4.74 million driven mainly by a 34.2% increase in non-personnel operating costs, including $45,075 for a Solid Waste Rate Study, and a $95,000 increase, or 150% from $63,402 to $158,408, in the amount paid to Four Corners Recycling for processing charges. The expense recorded this year for the change in estimated post-closure costs of the city landfill was $177,459 compared to a $256,903 adjustment last year. Additional information is available in Note 21 on page 137 and in Note 12 on page 96. Spending on other major projects during the year included $40,000 tank hook system for solid waste collection. DRAFT260
31 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) June 30, 2019 THE CITY’S FUNDS As the City completed the year, its governmental funds (as presented in the balance sheet on pages 47-48) reported a combined fund balance of $46,908,475. Included in this year’s total change in fund balance is a positive General Fund balance of $7,739,584, up 3.7% or $274,816 from $7,464,768. 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 $5,509,530 for the end of this year. The City’s ending general fund balance of $7,739,584 exceeds this recommendation by $2,230,054. However, there are other significant assignments detailed below, and these other assignments combined with the minimum reserve requirement leave an Unassigned General Fund Balance of $0. 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. The general fund balance of $7,739,584 has been assigned as shown: FY19 ENDING GENERAL FUND BALANCE ‐ TOTAL: 7,739,584$ ASSIGNMENTS:1CIP / CAPITAL CARRY‐OVER BUDGETED IN FY19 BUT NOT TO BE SPENT UNTIL FY20:Cemetery: GF231 Cemetery Irrigation Project195,196$ Cemetery: GF268 Southwest Montana Veteran's Cemetery86,084$ Cemetery: GF116 Cemetery Vehicle Replacements50,000$ Facilities: GF199 Professional Building Remodel37,031$ Facilities: GF241 City Hall Air Handler Unit Replacement50,000$ Facilities: GF244 Fiscal Year 2017 Library Site Drainage11,000$ Facilities: GF258 Library Exterior Door ADA Operator Replacement12,000$ Facilities: GF274 City Hall ‐ Bozeman Creek Improvements16,500$ Human Resources: Office Equipment & Furniture5,000$ Information Technology: GF199 Professional Building Remodel136,186$ Parks: GF115 Park Vehicle Replacements50,000$ Police: GF053 Patrol Vehicle Replacement56,974$ Recreation: GF297 Swim Center Roor Replacement26,000$ Sustainability: Climate Action & Resilience Plan83,957$ TOTAL CIP / CAPITAL‐CARRY OVER ITEMS:815,928$ 2 16.67% MINIMUM RESERVE LEVEL REQUIRED BY CITY CHARTER (2 MONTHS OF REVENUES):5,509,530$ 3FY20 BUDGET: FY19 YEAR‐END FUND BALANCE NEEDED TO BALANCE FY20 BUDGET:1,414,126$ TOTAL GENERAL FUND ASSIGNMENTS:7,739,584$ UNASSIGNED GENERAL FUND BALANCE ‐ FY19:0$ DRAFT261
32 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) June 30, 2019 General fund The City’s general fund balance increased by $274,816, or 3.7%, from $7,464,768 last year to $7,739,584 this year. The City had budgeted for ending fund balance to actually decrease by $2.1 million, but actual revenues and other financing sources ended up exceeding budgeted expectations by $251,000 while actual expenditures and other financing uses were under budget by $2.2 million. Some of this budget savings is reflected in the unspent TOTAL CIP / CAPITAL CARRY-OVER ITEMS listed in the preceding table while other savings were realized through careful and conservative budgetary management practices implemented throughout all City departments. Property tax revenues increased in the General Fund by $971,146 or 6.2%, from $15,689,264 to $16,660,410, and the number of total property tax mills levied increased by 5.3 mills, or 3.9%, from 134.39 to 139.69. This increase in the number of mills levied and the increase in the value of one mill of $3,126, or 3.1%, from $101,195 to $104,321 drove the increase in General Fund property tax revenues, which was also fueled by continued growth in the number of City taxpayers. This year’s results continue the trend reported two years ago, which saw a 3.2% increase in mill value, compared to a 13.3% spike last year due to the timing and nature of the property appraisal cycle change by the State. In 2017, the Montana Department of Revenue accelerated its appraisal cycle from every 6 years to every 2 years. Intergovernmental revenues increased by $226,192, or 2.9%, from $7,686,022 last year to $7,912,214, compared to a $292,320, or 4%, increase reported last year. Montana State Entitlement Share revenue accounted for $91,505, or 40%, of this increase. 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 increased steadily over each of the past five years including a 4% increase two years ago. This year’s increase from $4,324,831 to $4,416,336 amounted to 2.1%, up from only a .01% increase last year. The State of Montana’s share of City employee retirement (recorded as a revenue) increased modestly by $10,994, or .4%, from $2,646,501 to $2,657,495 compared to a 4% increase last year when this intergovernmental revenue increased by $246,153 from $2,400,348 to $2,646,501. The primary reason for the increase last year and the stabilizing trend this year is due to a new revenue source, Coal Severance Tax contributions, to the State of Montana the Public Employee Retirement System (PERS only). It is important to note that this revenue and all other amounts reported as regular on-behalf State share of retirement contributions are non-cash book-entries made only in the City’s accounting ledger (mostly in Public Safety for Police and Fire employees), which are offset by an equivalent expenditure, resulting in no change to ending fund balance reported in the General Fund. Total general fund expenditures increased by $1,785,134, or 6.5%, from $29,503,543 to $31,414,549. The largest general fund expenditures continued to be in Public safety, with $9.5 million (30%) spent on Police and $6.5 million (21%) spent on Fire. Payroll expenditures across all functions (General government, Public safety, Public service, Public welfare) increased by $842,013, or 3.7% from $22,531,001 to $23,373,014. This increase was due in part to positions continuing 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 $307,350 or 4.8%, from $6,342,270 to $6,649,620. Fire Department personnel costs (net of State Share of Retirement) increased by $177,904, or 3.8%, from $4,685,654 to $4,863,558. Other factors contributing to increased expenditures in the General Fund include Public Welfare expenditures (Cemetery, Parks, Recreation, and Library) which increased 227,093, or 3.7% from 6,170,061 to $6,397,154 and Capital Outlays, which increased by $750,260 or 107%, from $704,076 to $1,454,336. However, DRAFT262
33 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) June 30, 2019 while the spending in these categories did increase over last year, expenditures were still under budget. Significant budgeted expenditures which remained unspent at year-end are listed on the previous page under ASSIGNMENTS: CIP / CAPITAL CARRY-OVER. Notable expenditures in the general fund for the year included a $546,697 payment to Gallatin County 9-1-1 for the police department’s share of the new Motorola radio system, $168,321 granted to the local Streamline bus system, and a one-time transfer of $166,188 to the Community Housing Special Revenue Fund. 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. The City’s General Fund balance was a primary focus of a recent upgrade in the City’s General Obligation Bond rating to from Aa2 to Aa1 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 Credit Rating Action upgrading the City’s General Obligation Bond rating to Aa1 is discussed further in the Debt section on page 36. As shown on page 156, variances in the General Fund between the original budget of $34,077,187 and the final budget of $31,086,187 netted to an overall increase of $9,000, with some functions reporting increases while others reported decreases to their original budget. Most of this was intentional and done in order to avoid confusing the public safety departments during the year by giving the impression that they had excess budget to spend, and it relates to the State’s Share of Retirement entry that is booked annually at fiscal year-end. The $1.9 million increase to the Public safety budget (from $13,494,338 to $15,385,838) and $1.9 million of the $2.1 million decrease to Other (from $3,356,214 to $1,182,714) both relate to opposite sides of the same budget amendment made for the State of Montana’s share of Police officer and Firefighter retirement. By design, the $1.9 million of appropriation authority ultimately needed for Public Safety was initially budgeted under Other to avoid confusion throughout the year, and at year-end this amount was shifted to the Public Safety budget to cover the increase in reported expenditures required by this book entry. It is important to note that the entire amount of the State Share of Retirement book entry only/non-cash expenditure is offset (“reimbursed”) by intergovernmental revenue booked in the same amount. Street Maintenance Special Revenue Continuing to rebound from the $335,227 decrease reported two years ago followed by a $89,039 increase last year, fund balance increased this year by $110,191 or 20.8%, from $528,761 last year to $638,951 this year, once again due to due to actual revenues exceeding budgeted revenues and actual expenditures being less than budgeted. DRAFT263
34 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) June 30, 2019 Total revenues increased by $252,590, or 4.4%, from $5,757,906 last year to $6,010,497 this year driven primarily by a 5% increase in street maintenance assessment rates combined with a $219,861 federal air quality grant for a new street sweeper. Actual street maintenance charges for services increased by $252,361, or 5%, from $5,460,337 to $5,712,698 due to this year’s rate increase. The customer base increased by 584 parcels this year, or 584, from 17,774 last year to 18,358. Street maintenance revenues would have actually increased by 5.6% due to this if not for a $52,300 adjustment made for an overbilled account that was billed on its entire square footage instead of being capped at 15,000 square feet as per City Commission Resolution. Factors driving this year’s rate increase include the continued expansion of the City’s Street Maintenance Assessment program to include major street reconstruction projects. The first of these was the reconstruction of South 8th Avenue four years ago, followed by Story Street and North Wallace Avenue three years ago, East Olive Street two years ago, and South Tracy Avenue which began last year and continues through this year. Transfers out of the Street Maintenance fund totaled $695,478 transferred to the Capital Projects Fund to finance the capital expenditures related to the South Tracy Avenue reconstruction project. Debt service payments totaled $269,723 including $146,595 for repayment of the State of Montana Intercap loan for the reconstruction of South 8th Avenue. These projects demonstrate the City Commission’s continued commitment to addressing deferred street and curb maintenance. Other major expenditures during the year included $647,258 spent on general street, curb, and sidewalk improvements, $223,395 booked for a new grader lease, $177,687 for a new tandem axle dump truck, $153,045 for a new dump truck with plow and sander, $122,517 on sidewalk pedestrian ramps, and $96,189 spent on advertising street construction updates to the public. As the very minor $768 variance of budgeted to actual expenditures indicates, most of the budget was spent this year and there were no significant projects budgeted for but not started by the end of the fiscal year. Capital Projects Fund Fund balance decreased by $3,493,898, or 59.6%, from $5,863,108 last year to $2,369,210 due to significant spending this year of revenues accumulated in prior years from the issuance of $15 million in Trails and Open Space (TOP) General Obligation Bonds. Interest income, mainly on the unspent portion of these bond proceeds, totaled $427,900 this year. Intergovernmental revenue of $186,670 included a $125,000 federal grant for the restroom at the TOP Sports Complex and $61,670 from the federal highway administration to reimburse right-of-way acquisition costs for the TOP Trail to the M project. Other revenue included a $25,000 donation from the Kiwanis Club for the pavilion at the TOP Sports Park and $64,100 for cash-in-lieu of required infrastructure payments made by private developers during the year. Transfers-in from other funds totaled $1,037,050 and consisted mainly of $695,478 from the Street Maintenance special revenue fund as the city-wide (non-local) share of the South Tracy Avenue reconstruction project in addition to $229,900 transferred from the Northeast Urban tax increment financing district special revenue fund to cover the deficit in that district’s capital projects budget. Debt issuance proceeds amounted to $2,283,000 and included $583,000 as the final draw of a $1.4 million tax increment financing bond issued for the Northeast Urban Renewal District (NEURD) to finance various street and infrastructure projects. The remaining $1.7 million of long-term debt issuance was a loan for the TOP Sports Park project to finance sports field and infrastructure construction and maintenance. The debt will be repaid by fees assessed to the users of the fields. Major expenditures for the year included $3.98 million spent on the TOP Sports Park, $1.27 million spent on the TOP Story Mill Community Park, and $930,129 spent on the NEURD projects, mostly on reconstruction of Tamarack and Peach Streets. DRAFT264
35 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) June 30, 2019 CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets As shown in Table 4, at the end of 2019 the City had $460.3 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 $28 million, or 6.5% over last year. Refer to capital assets disclosure Note 7 beginning on page 59 for more information. 201920182019201820192018Land23.9$ 22.5$ 2.2$ 2.2$ 26.2$ 24.7$ Water Rights - - 2.1 2.1 2.1 2.1 Buildings 34.4 34.1 113.6 113.5 148.0 147.6 Other Structures and Improvements1.1 1.1 30.5 30.5 31.7 31.6 Machinery & Equipment15.6 13.3 10.3 10.2 26.0 23.5 Property under Capital Lease0.8 0.8 0.5 0.5 1.3 1.3 Vehicle3.9 3.8 2.2 2.2 6.1 6.0 Infrastructure211.1 190.3 324.5 310.0 535.7 500.3 Subtotal 290.8 265.9 485.9 471.2 777.1 737.1 Accumulated Depreciation (113.9) (108.5) (202.8) (196.3) (316.7) (304.8) Total Capital Assets 176.9$ 157.4$ 283.1$ 274.9$ 460.4$ 432.3$ Activities Activities TotalsTabl e 4Capital Assets at Year-end(in Millions)Governmental Business-typeDRAFT265
36 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) June 30, 2019 Major additions and capital projects underway include the following expenditures made during this year: Debt At year-end, the City had $59.6 million in bonds and notes outstanding versus $57.5 million last year – an increase of $2.1 million, or 3.7%, as shown in Table 5. This increase was due to new debt issuances ($6.2 million) exceeding debt repayment for the year ($4.1 million) during the year. New debt included additional draws amounting to $3.1 million for the 5.3 million gallon Sourdough water storage tank, a $1.7 million loan for additional turf fields at the TOP Sports Park Complex, $583,000 for the Northeast Urban Renewal Tax Increment Financing District project improvements, and a $344,167 Intercap loan for improvements to the Story Mill Park Center and to Bronken Park. Debt repayment included $1.1 million for the Water Reclamation Facility; $872,000 for the new Water Plant; $154,173 for the Stormwater-backed landfill mitigation system loan; $260,000 for the refinanced transportation General Obligation (GO) Bonds; $635,000 for the TOP GO Bonds; $220,000 for the Downtown TIF District Bonds to finance the Parking Facility; and $234,500 in Special Improvement District debt. General obligation debt still outstanding, which is reported under Governmental Activities, consists of $12.4 million for the TOP Bonds along with $535,000 million in Series 2012 Refunding Bonds issued to refinance both the Series 2003A Transportation Refunding bonds and the Series 2001A / Series 2003B Library Construction Project bonds. Debt reported under Business-Type Activities includes $21 million of water revenue bonds and $15.2 million of wastewater revenue bonds issued to finance construction of the new Water Treatment Plant, Water Storage Tank, and Wastewater Reclamation Facility. Trail and Open Space Bond: Sports Complex3,981,753$ Sourdough Water Storage Reservoir2,746,989$ Baxter Lane improvements: 7th to 19th Avenue2,239,342$ Baxter and Davis Lane Intersection2,117,348$ Baxter Lane improvements: 19th Avenue to Davis1,436,649$ Trail and Open Space Bond: Story Mill Park1,271,281$ South Tracy Avenue Reconstruction Special Improvement District1,263,549$ Public Safety 9-1-1 Radios: Police & Fire1,009,999$ Northeast Urban Renewal District TIF Improvements: Tamarack Street919,356$ Front Street Interceptor Wastewater Pipeline667,765$ Street Improvements - Gas Tax: Chip Seal628,775$ Baxter Lane construction: Ferguson Avenue to Cottonwood Street531,996$ Street Improvements - Gas Tax: Mill & Overlay524,741$ South University District / Cattail Creek Basin wastewater line extension492,210$ (2) Street Sweepers: Street Maintenance District sweeper replacement program476,322$ DRAFT266
37 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) June 30, 2019 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 $3.1 million. In October of 2016, Moody’s upgraded this rating to Aa2 from Aa3, stating in their Credit Opinion “The Aa2 rating reflects the city's fairly large, growing tax base anchored by Montana State University (Aa3/Stable), improved wealth measures, a trend of sound financial operations and healthy reserve levels, and a limited debt burden that is expected to remain at similar levels in the near-term”. Most recently Moody’s upgrade the City’s bond rating to Aa1. Per Moody’s, the upgrade reflects the considerable growth and development in the city's tax base and local economy that is expected to continue. Strong financial management will ensure maintenance of the city's healthy reserves and positive operations going forward. In their Summary Rating Rationale, Moody’s goes on to say “The city has considerable operating flexibility with substantial 201920182019201820192018General obligationbonds (backed by the City) 12.9$ 13.8$ -$ -$ 12.9$ 13.8$ Tax Increment FinancingDistrict (TIFD) bonds 5.3 5.0 - - 5.3 5.0 Special ImprovementDistrict Debt 0.2 0.4 - - 0.2 0.4 Notes Payable 2.6 0.8 - - 2.6 0.8 Lease Payable 0.6 0.5 - - 0.6 0.5 Water Revenue Bonds(backed by specific fee revenues) - - 21.0 19.1 21.0 19.1 Wastewater Revenue Bonds(backed by specific fee revenues) - - 15.2 16.4 15.2 16.4 Stormwater Revenue Bonds(backed by specific fee revenues) - - 1.5 1.3 1.5 1.3 Stormwater Lease Payable(backed by specific fee revenues) - - 0.1 0.2 0.1 0.2 Total s21.6$ 20.5$ 37.8$ 37.0$ 59.4$ 57.5$ Activities Activities TotalsTabl e 5Outstanding Debt, at Year-end(in Millions)Governmental Business-typeDRAFT267
38 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) June 30, 2019 capacity and authority to increase taxes, as well as additional funds outside of the general fund that can be used for operations. The Aa1 also takes into consideration the stabilizing presence of Montana State University. Resident wealth measures are improving, but lag Aa1 medians. Pension liabilities and costs are rising, but manageable given modest debt burden and operating flexibility”. More detailed information about the City’s long-term liabilities is presented in Note 9 to the financial statements. As expressed in the fiscal year 2020 Approved Budget, City officials expect to end next fiscal year with a general fund balance totaling $5.6 million, which meets the required minimum reserve. This budget adheres to the minimum level of 16 2/3% of operating revenues 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 continue to be the City's primary general revenue source (73.6%), followed by unrestricted grants and contributions (14.4%), and investment earnings (7.7%). ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES The City’s elected and appointed officials considered many factors when adopting the 2019-2020 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 1.9% for the last calendar year and over the last 12 months the all items index rose 1.8% (as of this report date and before seasonal adjustment), with the energy index actually declining 4.2% over that same time period although increasing again as of the report date. 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 Controller, Assistant Controller, or Finance Director at the City of Bozeman, 121 North Rouse Avenue, Bozeman, Montana 59715DRAFT268
B. BASIC FINANCIAL STATEMENTS DRAFT270
GOVERNMENT-WIDE FINANCIAL STATEMENTSDRAFT272
41 CITY OF BOZEMAN, MONTANA STATEMENT OF NET POSITION June 30, 2019 The Notes to Financial Statements are an integral part of this statement. Governmental Business-type Activities Activities TotalASSETSCash and investments 35,254,582$ 25,716,577$ 60,971,159$ Restricted cash and investments 15,105,705 16,933,873 32,039,578 Accrued interest 89,969 87,030 176,999 Receivables, net 6,719,086 2,032,875 8,751,961 Notes receivable 556,447 - 556,447 Prepaid expenses 293,250 - 293,250 58,019,039 44,770,355 102,789,394 Capital assets:Non-depreciable land and water rights 23,946,240 4,325,355 28,271,595 Other capital assets, net of depreciation 153,193,037 278,816,847 432,009,884 Total capital assets 177,139,277 283,142,202 460,281,479 Total assets 235,158,316 327,912,557 563,070,873 Deferred outflows of resources:Other post-employment benefits 158,456 34,723 193,179 Pension plan contributions 2,860,689 763,564 3,624,253 Total deferred outflows of resources 3,019,145 798,287 3,817,432 Total assets and deferred outflows of resources 238,177,461$ 328,710,844$ 566,888,305$ (Continued) DRAFT274
42 CITY OF BOZEMAN, MONTANA STATEMENT OF NET POSITION (CONTINUED) June 30, 2019 The Notes to Financial Statements are an integral part of this statement. Governmental Business-type Activities Activities TotalLIABILITIESAccounts payable and accrued expenses 6,837,189$ 1,965,615$ 8,802,804$ Unearned revenue 56,343 - 56,343 Current portion of long-term liabilities:Compensated absences payable 1,589,571 264,262 1,853,833 Capital leases 254,236 130,541 384,777 Closure and post-closure care costs - 362,000 362,000 Bonds and notes 1,378,324 2,460,000 3,838,324 Long-term liabilities, due in more than one year:Compensated absences 1,059,462 250,315 1,309,777 Capital leases 397,217 71,075 468,292 Closure and post-closure care costs - 1,745,351 1,745,351 Pollution remediation obligations - 1,265,323 1,265,323 Other post-employment health benefits - implicit rate subsidy 2,150,377 417,452 2,567,829 Due to other governments and other liabilities - 702 702 Bonds and notes 19,917,589 35,290,000 55,207,589 Net pension liability 20,406,405 4,740,330 25,146,735 Total liabilities 54,046,713 48,962,966 103,009,679 DEFERRED INFLOWS OF RESOURCESOther post-employment health benefits - implicit rate subsidy 809,667 163,733 973,400 Pension deferrals 2,120,208 668,105 2,788,313 Total deferred inflows of resources 2,929,875 831,838 3,761,713 NET POSITIONNet investment in capital assets 155,191,911 245,190,586 400,382,497 Restricted:Restricted for parking capital projects - 130,316 130,316 Restricted for general government 2,477,876 - 2,477,876 Restricted for public safety 4,925,354 - 4,925,354 Restricted for public service 3,154,745 - 3,154,745 Restricted for public welfare 6,634,127 - 6,634,127 Restricted for capital projects 671,195 9,713,282 10,384,477 Restricted for debt service 3,338,753 2,828,333 6,167,086 Unrestricted 4,806,912 21,053,523 25,860,435 Total net position181,200,873$ 278,916,040$ 460,116,913$ DRAFT275
43 CITY OF BOZEMAN, MONTANA STATEMENT OF ACTIVITIES Year Ended June 30, 2019 The Notes to Financial Statements are an integral part of this statement. Net (Expense) Revenue and Changes in Net PositionOperating CapitalCharges for Grants and Grants and Governmental Business-typeFunctions/Programs Expenses Services Contributions Contributions Activities Activities TotalPrimary GovernmentGovernmental activities:General government 10,310,075$ 3,777,184$ 151,095$ -$ (6,381,796)$ (6,381,796)$ Public safety 19,691,891 4,158,560 2,832,547 - (12,700,784) (12,700,784) Public service 9,850,802 12,189,258 1,319,108 6,372,195 10,029,759 10,029,759 Public welfare 9,658,817 1,724,864 1,117,121 221,026 (6,595,806) (6,595,806) Interest and fiscal fees 786,236 - - - (786,236) (786,236) Total governmental activities 50,297,821 21,849,866 5,419,871 6,593,221 (16,434,863) (16,434,863) Business-type activities:Water 9,984,114 11,438,495 25,515 4,379,785 5,859,681 5,859,681 Waste water 9,291,509 10,445,185 27,723 2,795,394 3,976,793 3,976,793 Solid waste 4,739,710 4,228,099 18,822 - (492,789) (492,789) Parking 1,119,466 958,504 4,674 - (156,288) (156,288) Stormwater 924,282 1,349,678 6,530 1,149,581 1,581,507 1,581,507 Total business-type activities 26,059,081 28,419,961 83,264 8,324,760 10,768,904 10,768,904 Total primary government 76,356,902$ 50,269,827$ 5,503,135$ 14,917,981$ (16,434,863) 10,768,904 (5,665,959) General revenuesProperty taxes 23,823,994 - 23,823,994 Unrestricted grants and contributions4,658,177 - 4,658,177 Investment earnings1,490,286 1,010,849 2,501,135 Miscellaneous1,009,437 362,631 1,372,068 Gain on sale of assets167,291 (172,428) (5,137) Transfers(475,000) 475,000 - Total general revenues and transfers30,674,185 1,676,052 32,350,237 Change in net position14,239,322 12,444,956 26,684,278 Net position, beginning of the year168,066,231 265,248,223 433,314,454 Restatement, other post-employment health benefits and pension (1,104,680) 1,222,861 118,181 Net position, beginning of the year as restated166,961,551 266,471,084 433,432,635 Net position, end of the year181,200,873$ 278,916,040$ 460,116,913$ Primary GovernmentProgram Revenues DRAFT276
FUND FINANCIAL STATEMENTS DRAFT278
GOVERNMENTAL FUND FINANCIAL STATEMENTS DRAFT280
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 Maintenance – This special revenue fund accounts for special assessment revenues levied, received, and expended for street maintenance provided to specific property owners. General Improvements Capital Projects Fund – Accounts for the construction of general improvement projects financed by special assessments other than those financed by proprietary funds. DRAFT281
47 CITY OF BOZEMAN, MONTANA BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2019 The Notes to Financial Statements are an integral part of this statement. StreetOtherTotalGeneral Maintenance Construction Governmental GovernmentalFund Special Revenue Capital Projects FundsFundsASSETSCash and investments7,990,114$ 788,787$ 1,761,670 23,691,693$ 34,232,264$ Receivables:Property taxes1,176,560 - - 505,649 1,682,209 Accrued interest10,549 - 43,082 36,338 89,969 Customers, net2,299,090 2,796 39,223 322,097 2,663,206 Special assessments120 109,195 - 1,999,318 2,108,633 Other governments137,458 - - 95,092 232,550 Due from other city funds144,193 - - - 144,193 Advances to other city funds- - - 472,483 472,483 Prepaid expenditures- - - 293,250 293,250 Notes receivable- - - 556,447 556,447 Restricted cash and investments- - 1,215,739 13,889,965 15,105,704 Total assets11,758,084$ 900,778$ 3,059,714$ 41,862,332$ 57,580,908$ (continued) DRAFT282
48 CITY OF BOZEMAN, MONTANA BALANCE SHEET (CONTINUED) GOVERNMENTAL FUNDS June 30, 2019 The Notes to Financial Statements are an integral part of this statement. StreetOtherTotalGeneral Maintenance Construction Governmental GovernmentalFund Special Revenue Capital Projects FundsFundsLIABILITIES AND FUND BALANCESLiabilitiesAccounts payable2,493,698$ 180,769$ 412,509$ 2,980,994$ 6,067,970$ Escheat property payable80,174678 - 20,048 100,900 Accrued employee benefits - - - - - Appearance bonds and other liabilities- - 277,995 217,455 495,450 Advanced from other city funds- - - 480,109 480,109 Total liabilities2,573,872 181,447 690,504 3,698,606 7,144,429 Deferred inflows of resourcesUnavailable revenue-property taxes61,922 - - 42,665 104,587 Unavailable revenue-special assessments- 80,381- 1,960,328 2,040,709 Unavailable revenue-court fines1,382,708- - - 1,382,708 Total deferred inflows of resources 1,444,630 80,381 - 2,002,993 3,528,004 Fund balancesNonspendable- - - 1,735,591 1,735,591 Restricted- 638,950 671,195 21,819,096 23,129,241 Committed- - 405,810 3,873,281 4,279,091 Assigned7,739,582 - 1,292,205 1,231 9,033,018 Unassigned- - - 8,731,534 8,731,534 Total fund balances7,739,582 638,950 2,369,210 36,160,733 46,908,475 Total liabilities, deferred inflows, and fund balances11,758,084$ 900,778$ 3,059,714$ 41,862,332$ 57,580,908$ DRAFT283
49 CITY OF BOZEMAN, MONTANA RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION June 30, 2019 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 funds46,908,475$ Capital assets used in governmental activities are not financial resources and, therefore, are not reported in thegovernmental fundsGovernmental capital assets290,990,411$ Less: accumulated depreciation(113,851,134) 177,139,277 Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets andliabilities of the internal service funds are included in governmental activities in the statement of net position.Net position79,328 Less: capital assets included in governmental activities (2,098,582) Plus: accumulated depreciation included in governmental activities 832,752 Plus: compensated absences included in governmental activities 123,514 Plus: capital lease obligations included in governmental activities 27,488 Plus: other post-employment health benefits and related deferred outflows and inflows included in governmental activities 179,755 Plus: net pension liability and related deferred outflows and inflows included in governmental activities 1,601,111 745,366 Deferred inflows of resources are not available to pay for current period expenditures and, therefore, are deferred in the funds. 3,528,004 Deferred outflows of resources relating to pensions and other liabilities are not payable in the current period and, therefore,are not reported in the governmental funds.3,019,145 Pension plan deferrals are deferred inflows of resources on the Statement of Net Position. (2,120,208) (809,667) Bond premiums are other financing source revenue in the governmental funds. They are a liability for the statement of netposition and amortized over the life of the issuance.Bond premium(269,154) Less: amortization60,561 (208,593) 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 reportedin the governmental funds.Bonds and notes payable, net of bond premium (21,087,315) Net pension liability(20,406,405) Capital lease obligations(651,453) Post-employment health benefits(2,150,377) Compensated absences(2,649,033) (46,944,583) Net position of governmental activities181,200,873$ The assumption change gain in the total other post-employment benefits liability (TOL) is a deferred inflow of resources and is amortized over the expected future service life; therefore, the balance is deferred and not reported in governmental funds. DRAFT284
50 CITY OF BOZEMAN, MONTANA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS Year Ended June 30, 2019 The Notes to Financial Statements are an integral part of this statement. StreetOtherTotalMaintenance Construction Governmental GovernmentalGeneral Special Revenue Capital Projects Funds FundsREVENUESTaxes16,660,409$ -$ -$ 7,127,609$ 23,788,018$ Special assessments372 29,796 - 1,086,757 1,116,925 Licenses and permits383,320 20,311 - 1,988,450 2,392,081 Intergovernmental7,912,214 241,814 186,670 2,147,964 10,488,662 Charges for services3,182,506 5,712,696- 8,092,420 16,987,622 Fines and forfeitures1,099,673 - - 134,651 1,234,324 Interest on investments128,671 17,414 427,900 865,758 1,439,743 Interest on loans receivable- - - 31,695 31,695 Other189,769 9,250 125,227 671,307 995,553 Total revenues29,556,934 6,031,281 739,797 22,146,611 58,474,623 EXPENDITURESGeneral government7,322,843 - 5,487 1,453,748 8,782,078 Public safety15,385,416 - 216 2,620,312 18,005,944 Public service168,321 3,623,015 305,788 1,677,659 5,774,783 Public welfare6,447,144 - 21,821 1,870,920 8,339,885 Other623,028 - - 105,614 728,642 Capital outlay1,454,336 1,625,341 7,211,411 8,815,022 19,106,110 Debt servicePrincipal payments12,437 230,312- 1,392,620 1,635,369 Interest and fiscal fees1,024 39,4119,022 736,781 786,238 Total expenditures31,414,549 5,518,079 7,553,745 18,672,676 63,159,049 Revenues over (under) expenditures (1,857,615) 513,202 (6,813,948) 3,473,935 (4,684,426) OTHER FINANCING SOURCES (USES)Transfers in2,385,362 31,900 1,037,050 748,513 4,202,825 Transfers out(602,863) (695,478) - (3,379,484) (4,677,825) Issuance of long term debt344,167 232,431 2,283,000 - 2,859,598 Sale of capital assets5,763 28,135 - - 33,898 Total other financing sources (uses)2,132,429 (403,012) 3,320,050 (2,630,971) 2,418,496 Net change in fund balances274,814 110,190 (3,493,898) 842,964 (2,265,930) FUND BALANCE, beginning of year7,464,768 528,760 5,863,108 35,317,769 49,174,405 FUND BALANCE, end of year7,739,582$ 638,950$ 2,369,210$ 36,160,733$ 46,908,475$ DRAFT285
51 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, 2019 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(2,265,930)$ Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costof these assets is allocated over their estimated useful lives and reported as depreciation expense. This isthe amount by which capital outlays and donated infrastructure exceeded depreciation expense in the current period.Expenditures for capital assets19,106,110$ Donated infrastructure6,152,334 Less: current year depreciation(5,648,555) 19,609,889 Governmental funds report asset disposals as sale of capital assets for the cash received. In the statement ofactivities, those gains and losses must be adjusted by the assets basis, net of any depreciation.(33,672) 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 ofgovernmental funds. Neither transaction, however, has any effect on net position. Also, governmental fundsreport the effect of premiums, discounts, and similar items when debt is first issued, whereas these amountsare deferred and amortized in the statement of activities, unless immaterial. This amount is the net effect of thesedifferences in the treatment of long-term debt and related items.(1,210,772) 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. The change in deferred inflows of resources is presentedin the statement of activities.46,027 Governmental funds do not report a liability for compensated absences. The change in the liability is presented in the statement of activities.(15,428) Governmental funds do not report a liability for other post-employment health benefits. The change in the liability ispresented in the statement of activities.(132,315) Contributions to the pension plans in the current fiscal year are deferred outflows in the Statement of Net PositionThe change in the deferred outflows for pension plan contributions presented in the statement of activities.(2,084,415) Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue (expense) of the internal service funds is reported in the governmental activities.325,938 Change in net position of governmental activities14,239,322$ DRAFT286
PROPRIETARY FUND FINANCIAL STATEMENTSDRAFT288
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. Solid Waste Fund - Accounts for the City’s garbage collection service and recycling operations. 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. DRAFT289
54 CITY OF BOZEMAN, MONTANA STATEMENT OF NET POSITION PROPRIETARY FUNDS June 30, 2019 The Notes to Financial Statements are an integral part of this statement. GovernmentalActivitiesWaste Solid Nonmajor InternalWater Fund Water Fund Waste Fund Enterprise Funds Total Service FundsASSETSCurrent assetsCash and investments17,975,538$ 5,638,008$ 288,593$ 1,814,438$ 25,716,577$ 1,022,315$ Receivables:Accrued interest63,985 23,045 - - 87,030 - Customers, net664,326 751,626 375,922 240,344 2,032,218 32,487 Special assessments32- 324 301 657 - Prepaid expenses- - - - - - Total current assets18,703,881 6,412,679 664,839 2,055,083 27,836,482 1,054,802 Non-current assetsOther assets:Notes receivable- - - - - - Restricted cash and investments10,913,034 5,483,54335,367 501,929 16,933,873 - Total other assets10,913,034 5,483,543 35,367 501,929 16,933,873 - Property, plant and equipmentNondepreciable:Land573,847 1,099,257 228,673 303,436 2,205,213 - Water rights2,120,142 - - - 2,120,142 - Depreciable:Buildings40,566,823 60,358,823 746,509 11,877,855 113,550,010 1,441,395 Other structures and improvements13,646,910 14,745,401 2,155,300 - 30,547,611 - Machinery and equipment1,493,708 3,040,201 5,213,924 587,719 10,335,552 459,831 Vehicles570,775 755,997 592,580 248,145 2,167,497 197,356 Infrastructure194,005,185 126,418,555 118,081 4,004,170 324,545,991 - Property under capital lease- - - 519,943 519,943 - Accumulated depreciation and amortization(109,941,793) (81,132,392) (6,755,723) (5,019,849) (202,849,757) (832,752) Net property, plant and equipment143,035,597 125,285,842 2,299,344 12,521,419 283,142,202 1,265,830 Total non-current assets153,948,631 130,769,385 2,334,711 13,023,348 300,076,075 1,265,830 Deferred outflows of resourcesOther post-employment benefits10,3979,4809,0335,813 34,723 11,068 Pension plan contributions233,983 254,228 172,609 102,744 763,564 256,050 Total deferred outflows of resources244,380 263,708 181,642 108,557 798,287 267,118Total assets and deferred outflows of resources 172,896,892$ 137,445,772$ 3,181,192$ 15,186,988$ 328,710,844$ 2,587,750$ Enterprise FundsBusiness-type Activities DRAFT290
55 CITY OF BOZEMAN, MONTANA STATEMENT OF NET POSITION (CONTINUED) PROPRIETARY FUNDS June 30, 2019 The Notes to Financial Statements are an integral part of this statement. GovernmentalActivitiesWaste Solid Nonmajor InternalWater Fund Water Fund Waste Fund Enterprise Funds Total Service FundsLIABILITIESCurrent liabilitiesAccounts payable and accrued expenses 860,499$ 620,937$ 355,906$ 128,273$ 1,965,615$ 172,869$ Compensated absences payable 10,691 156,014 62,689 34,868 264,262 123,514 Due to other city funds - - - - - 136,567 Capital lease obligations due in one year 4,248 - - 126,293 130,541 6,023 Closure and post-closure care costs, current portion - - 362,000 - 362,000 - Bonds, notes, and loans payable 1,210,000 1,172,000 - 78,000 2,460,000 - Total current liabilities 2,085,438 1,948,951 780,595 367,434 5,182,418 438,973 Noncurrent liabilitiesClosure and post-closure care costs - - 1,745,351 - 1,745,351 - Revenue bonds due after one year 19,791,000 14,057,000 - 1,442,000 35,290,000 - Compensated absences payable 185,522 - 64,793 - 250,315 - Capital lease obligations 15,140 - - 55,935 71,075 21,465 Other post-employment health benefits implicit rate subsidy 115,408 149,233 108,016 44,795 417,452 137,553 Appearance bond and other liabilities - - - 702 702 - Solvent site remediation liability - 1,265,323 - - 1,265,323 - Net pension liability 1,452,605 1,578,289 1,071,585 637,851 4,740,330 1,616,913 Total noncurrent liabilities 21,559,675 17,049,845 2,989,745 2,181,283 43,780,548 1,775,931 Total liabilities23,645,113 18,998,796 3,770,340 2,548,717 48,962,966 2,214,904 Deferred inflows of resourcesOther post-employment benefits46,91452,995 42,55021,274 163,733 53,270 Pension deferrals204,731 222,445 151,03089,899 668,105 240,248 Total deferred inflows of resources251,645 275,440 193,580 111,173 831,838 293,518 NET POSITIONNet investment in capital assets122,015,209 110,056,842 2,299,344 10,819,191 245,190,586 1,238,342 Restricted for impact capital projects6,166,158 3,547,124- - 9,713,282 - Restricted for infrastructure capital projects59,830 - - - 59,830 - Restricted for parking capital projects- - - 130,316 130,316 - Restricted for debt service898,929 1,811,286 - 58,288 2,768,503 - Unrestricted19,860,008 2,756,284 (3,082,072) 1,519,303 21,053,523 (1,159,014) Total net position149,000,134 118,171,536 (782,728) 12,527,098 278,916,040 79,328 Total liabilities, deferred inflows of resources, and net position 172,896,892$ 137,445,772$ 3,181,192$ 15,186,988$ 328,710,844$ 2,587,750$ Enterprise FundsBusiness-type Activities DRAFT291
56 CITY OF BOZEMAN, MONTANA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS Year Ended June 30, 2019 The Notes to Financial Statements are an integral part of this statement. GovernmentalActivitiesWaste Solid Nonmajor InternalWater Fund Water Fund Waste Fund Enterprise Funds Totals Service FundsOPERATING REVENUES 9,396,171$ 9,336,005$ 4,228,099$ 2,308,182$ 25,268,457$ 8,813,996$ OPERATING EXPENSESSalaries and benefits 2,144,077 2,168,558 1,511,044 941,088 6,764,767 2,248,918 Materials and supplies 811,019 343,650 419,966 48,849 1,623,484 797,952 Repairs and maintenance 83,962 129,997 284,928 25,895 524,782 11,895 Utilities 265,656 666,614 598,917 36,412 1,567,599 28,027 Administrative charges 1,710,461 1,432,081 712,434 186,678 4,041,654 159,167 Insurance claims - - - - - 4,857,152 Other expenses 1,595,039 1,004,207 646,716 271,653 3,517,615 494,267 Depreciation and amortization 2,793,982 3,066,128 388,246 492,611 6,740,967 106,765 Changes in estimated closure and post-closure care costs - - 177,459 - 177,459 - Total operating expenses 9,404,196 8,811,235 4,739,710 2,003,186 24,958,327 8,704,143 Operating income (loss) (8,025) 524,770 (511,611) 304,996 310,130 109,853 NON-OPERATING REVENUES (EXPENSES)Interest income 649,263 298,822 3,352 59,412 1,010,849 7,686 Interest expense (579,918) (480,274) - (40,562) (1,100,754) (2,299) Other income 142,207 165,966 29,513 24,945 362,631 13,883 Intergovernmental income 25,515 27,723 18,822 11,204 83,264 29,750 Impact fees 2,042,324 1,109,180 - - 3,151,504 - Gain (loss) on disposal of assets(173,743) (35) - 1,350 (172,428) 167,065 Total non-operating revenues (expenses)2,105,648 1,121,382 51,687 56,349 3,335,066 216,085 Income (loss) before contributions and transfers2,097,623 1,646,152 (459,924) 361,345 3,645,196 325,938 Contributions of infrastructure - developers4,379,785 2,795,394- 1,149,581 8,324,760 - Transfers in600,000 - 250,000 225,000 1,075,000 - Transfers out(600,000) - - - (600,000) - Change in net position6,477,408 4,441,546 (209,924) 1,735,926 12,444,956 325,938 NET POSITION, beginning of year141,314,745 113,724,190 (578,328) 10,787,616 265,248,223 948,240 Restatement, other post-employment benefits and pension 1,207,981 5,800 5,524 3,556 1,222,861 (1,194,850) NET POSITION, beginning of year, restated142,522,726 113,729,990 (572,804) 10,791,172 266,471,084 (246,610) NET POSITION, end of year149,000,134$ 118,171,536$ (782,728)$ 12,527,098$ 278,916,040$ 79,328$ Enterprise FundsBusiness-type ActivitiesDRAFT292
57 CITY OF BOZEMAN, MONTANA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS Year Ended June 30, 2019 The Notes to Financial Statements are an integral part of this statement. GovernmentalActivitiesWasteSolid Nonmajor InternalWater Fund Water Fund Waste Fund FundsTotal Service FundsCASH FLOWS FROM OPERATING ACTIVITIESReceipts from customers9,410,943$ 9,759,691$ 4,183,197$ 2,304,516$ 25,658,347$ 8,792,709$ Receipts from others142,207 165,966 29,513 24,945 362,631 43,633 Operating loans from other City funds- - - - - 68,484 Payments to suppliers(3,202,274) (2,367,211) (2,847,797) (557,004) (8,974,286) 33,160 Payments to employees(2,023,292) (1,981,076) (1,408,528) (868,998) (6,281,894) (8,054,936) Payments to internal service funds and administrative fees (1,710,461) (1,432,081) (712,434) (186,678) (4,041,654) (159,167) Net cash flows from operating activities2,617,123 4,145,289 (756,049) 716,781 6,723,144 723,883 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIESTransfers in600,000 - 250,000 225,000 1,075,000 - Transfers out(600,000) - - - (600,000) - Receipts from grants and intergovernmental sources25,515 27,688 18,822 11,204 83,229 - Net cash flows from non-capital financing activities25,515 27,688 268,822 236,204 558,229 - CASH FLOWS FROM CAPITAL AND RELATEDFINANCING ACTIVITIESAcquisition of capital assets(3,548,958) (2,499,155) (51,663) (690,378) (6,790,154) (129,979) Principal paid on bonds, interfund loans, loans and leases (1,179,640) (1,139,000) - (154,173) (2,472,813) (5,162) Interest paid on bonds, interfund loans, loans and leases(579,918) (480,274) - (40,562) (1,100,754) (2,299) Proceeds from issuance of long-term debt3,092,531 - - 349,084 3,441,615 32,649 Impact fees received2,042,324 1,109,180 - - 3,151,504 - Proceeds from sale of property, plant and equipment2,620 - - 1,350 3,970 (19) Net cash flows from capital andrelated financing activities(171,041) (3,009,249) (51,663) (534,679) (3,766,632) (104,810) CASH FLOWS FROM INVESTING ACTIVITIESCollections on notes- - - 9,442 9,442 - Interest on investments668,958 322,118 3,352 59,412 1,053,840 7,686 Net cash flows from investing activities668,958 322,118 3,352 68,854 1,063,282 7,686 Net change in cash and investments3,140,555 1,485,846 (535,538) 487,160 4,578,023 626,759 Cash and investments, beginning of year25,748,017 9,635,705 859,498 1,829,207 38,072,427 395,556 Cash and investments, end of year28,888,572$ 11,121,551$ 323,960$ 2,316,367$ 42,650,450$ 1,022,315$ Classified as:Cash and investments17,975,538$ 5,638,008$ 288,593$ 1,814,438$ 25,716,577$ 1,022,315$ Restricted cash and investments10,913,034 5,483,543 35,367 501,929 16,933,873 - Totals28,888,572$ 11,121,551$ 323,960$ 2,316,367$ 42,650,450$ 1,022,315$ (continued)Business-type ActivitiesEnterprise Funds DRAFT293
58 CITY OF BOZEMAN, MONTANA STATEMENT OF CASH FLOWS (CONTINUED) PROPRIETARY FUNDS Year Ended June 30, 2019 The Notes to Financial Statements are an integral part of this statement. GovernmentalActivitiesWaste Solid Nonmajor InternalWater Fund Water Fund Waste Fund Funds Total Service FundsRECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FROM OPERATING ACTIVITIESOperating income (loss) (8,025)$ 524,770$ (511,611)$ 304,996$ 310,130$ 109,853$ Adjustments to reconcile operating income (loss)to net cash flows from operating activitiesDepreciation and amortization 2,793,982 3,066,128 388,247 492,611 6,740,968 106,765 Change in estimated closure and post-closure care costs - - (184,902) - (184,902) - Change in solvent site remediation obligation - (302,678) - - (302,678) - Other income 142,207 165,966 29,513 24,945 362,631 43,633 Change in assets and liabilities:(Increase) Decrease in:Accounts receivable 67,570 476,484 (44,903) (3,666) 495,485 (21,287) Prepaid expenses - - - - - - Increase (Decrease) in:Accounts payable (446,598) 79,935 (534,909) (174,195) (1,075,767) 128,197 Due from other city funds - - - - - 68,484 Accrued employee benefits payable 987,632 102,556 23,377 13,790 1,127,355 247,758 Deferred inflows - unavailable revenue (52,798) (52,798) - - (105,596) - Net pension (866,847) 84,926 79,139 58,300 (644,482) 40,480 Total adjustments 2,625,148 3,620,519 (244,438) 411,785 6,413,014 614,030 Net cash flows from operating activities2,617,123$ 4,145,289$ (756,049)$ 716,781$ 6,723,144$ 723,883$ SUPPLEMENTAL CASH FLOW INFORMATIONNoncash transactions: Transferred Fixed Assets(173,743)$ -$ -$ -$ -$ 167,065$ Donated infrastructure4,379,785 2,795,394 - 1,149,581 8,324,760 - Total noncash transactions4,206,042$ 2,795,394$ -$ 1,149,581$ 8,324,760$ 167,065$ Enterprise FundsBusiness-type Activities DRAFT294
FIDUCIARY FUND FINANCIAL STATEMENTSDRAFT296
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. DRAFT297
61 CITY OF BOZEMAN, MONTANA STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS June 30, 2019 The Notes to Financial Statements are an integral part of this statement. AgencyFundsASSETSCash and cash equivalents 506,142$ Customer receivables 2,524 Special assessments 19,497 Total assets 528,163$ LIABILITIESAccounts payable 528,163$ Total liabilities 528,163$ DRAFT298
NOTES TO FINANCIAL STATEMENTSDRAFT300
63 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS June 30, 2019 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 financial reporting requirements for state and local governments throughout the United States. 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, 2019, and for the year then ended. The more significant accounting policies of the City are described below. New Accounting Pronouncement The City implemented the provisions of the following GASB pronouncements for the year ended June 30, 2019: Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowing and Direct Placements. The primary objective of this Statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. This Statement is effective for fiscal years beginning after June 15, 2018. Implementing the pronouncement has no effect on the net position as of June 30, 2019. Restatement The restatement to the beginning net position of the governmental activities, business-type activities, proprietary funds and internal service funds is a result of the following: Other Post-Employment Benefits (OPEB) The net restatement of beginning net position of $118,184 is the benefit payment/contribution for the 2018 measurement year which is the expected employer benefit payment in relation to the actuarially determined contribution. No actual benefit payments are made by the City since the retirees are paying 100% of the premium; regardless, the $118,184 still includes implicit rate subsidy (an inherent subsidy of retiree healthcare costs by active employee healthcare costs when healthcare premiums paid by retirees and actives are the same; in other words, accounting for the active employee premiums subsidizing the retiree premiums which are greater on a stand-alone basis). DRAFT302
64 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Restatement (continued) Therefore, this prior year amount was recorded as a restatement to beginning net position. New internal service fund In 2019, a new internal service fund, the Public Works Administration fund, was created. As a result of the new fund, the beginning net position of the Public Works Administration fund and the Water fund were restated to reflect the OPEB and pension liability related to employees who were transferred from the Water fund to the new internal service fund. The following is a schedule of restatements: Fund StatementsOPEBOPEBPensionTotal Water6,360 135,399 1,066,220 1,207,979 Waste Water5,800 - - 5,800 Solid Waste5,526 - - 5,526 Parking1,641 - - 1,641 Storm Water1,915 - - 1,915 Total proprietary funds21,242 135,399 1,066,220 1,222,861 Vehicle Maintenance1,776 - - 1,776 Public Works Administration 4,993 (135,399) (1,066,220) (1,196,626) Total internal service funds 6,769 (135,399) (1,066,220) (1,194,850) Government-Wide StatementsGovernmental activities96,939 (135,399) (1,066,220) (1,104,680) Business-type activities21,242 135,399 1,066,220 1,222,861 Total restatement118,181 - - 118,181 Fund transfer DRAFT303
65 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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. DRAFT304
66 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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. DRAFT305
67 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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. DRAFT306
68 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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. Public Works Administration - Accounts for the professional level management, engineering, and GIS technical support provided to other Public Works divisions, including water, wastewater, solid waste, stormwater, in addition to support provided to other City departments. DRAFT307
69 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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 Maintenance Special Revenue Fund – Accounts for special assessment revenues levied, received, and expended for street maintenance provided to specific property owners. General Improvements Capital Projects Fund – Accounts for the construction of general improvement projects financed by special assessments other than those financed by proprietary funds. 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. Solid Waste Fund – Accounts for the City’s garbage collection service and recycling operations. 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. 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. DRAFT308
70 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. 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. Donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement are reported at acquisition value. 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. DRAFT309
71 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Capital Assets (Continued) Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows: Vehicles5 to 10 yearsMachinery and equipment5 to 30 yearsBuildings20 to 80 yearsOther structures and improvements10 to 100 yearsInfrastructure25 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). 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. DRAFT310
72 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. 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. DRAFT311
73 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Budgets (Continued) 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. On December 2, 2019, the Audit Committee accepted and approved the City Manager’s recommendation for the amount of General Fund balance presented on page 31 to be assigned this fiscal year for the specific purposes listed on page 31. 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. DRAFT312
74 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Balance (Continued) Similarly, the City Manager exercised her delegated authority to assign the major Capital Projects Fund balances presented on pages 36 and 48 for the specific purposes listed on page 144. 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 represents 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. DRAFT313
75 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 2. CASH AND INVESTMENTS At June 30, 2019, the carrying amount of the City's deposits in local banks and investments is $93,516,875. Interest bearing account balances are covered by the Federal Depository Insurance Corporation (FDIC) up to $250,000 per bank, per depositor. In addition, all noninterest bearing transaction account balances are fully insured by FDIC coverage. The remaining balances are covered by collateral held by the pledging bank's agent in the City's name. The City’s cash and investments are reported as follows: UnrestrictedRestrictedTotalGovernmental activities35,254,579$ 15,105,704$ 50,360,283$ Business-type activities25,716,577 16,933,873 42,650,450 Fiduciary funds506,142 - 506,142 61,477,298$ 32,039,577$ 93,516,875$ 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, 2019, the following interest rate risks and valuation inputs were associated with the City’s deposits and investments. Credit RiskInvestmentMaturities RatingFair Value Valuation InputsCertificates of depositDecember 2019-April 2021NA3,101,238$ Level 2U.S. Government bondsSeptember 2018 -June 2022S&P AA+60,547,584 Level 2U.S. Bank Municipal Investment AccountN/AN/A3,274,667 Level 2State of Montana Short Term Investment Pool AccountN/AN/A25,000,000 Demand depositsN/AN/A1,588,023 Petty cashN/AN/A5,363 93,516,875$ DRAFT314
76 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 2. CASH AND INVESTMENTS (CONTINUED) Credit risk is defined as the risk that an issuer or other counterpart to an investment that 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 1st for the 1st installment and June 1st for the 2nd installment Levy Date: November 1st 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. DRAFT315
77 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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, 2019. 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. Deferred inflows and outflows in the Government-Wide Financial Statements also relate to the implicit rate subsidy of post-employment benefits. 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, 2019, rent expenditure was $19,125 regarding this lease. DRAFT316
78 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 6. NOTES RECEIVABLE The City had the following notes receivable: Special Revenue FundsEconomic Development Loan Fund507,020$ Community Housing Fund49,427 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, 2019, depreciation expense on capital assets was charged to the functions and programs as follows: Governmental Activities:General Government 293,533$ Public Safety 634,320Public Services 3,834,880Public Welfare 992,587Total depreciation expense - governmental activities 5,755,320$ Business-type Activities:Parking 352,684$ Storm Water 139,927Water 2,793,982Waste Water 3,066,128Solid Waste 388,246Total depreciation expense - business-type activities 6,740,967$ DRAFT317
79 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 7. CAPITAL ASSETS (CONTINUED) All capital assets of the City are depreciable with the exception of land, water rights, and construction in process, when applicable. Capital assets activity of the City for the year ended June 30, 2019, consisted of the following: June 30, 2018 Additions Disposals Transfers June 30, 2019GOVERNMENTAL ACTIVITIESNon-depreciable:Land 22,452,729$ 1,493,511$ -$ -$ 23,946,240$ Depreciable:Buildings 34,078,624 348,932 - 17,180 34,444,736 Other structures and improvements 1,145,214 - - - 1,145,214 Machinery and equipment 13,261,998 2,671,830 (556,570) 237,680 15,614,938 Property under capital lease 771,151 - - - 771,151 Vehicles 3,782,437 110,898 (63,544) 94,090 3,923,881 Infrastructure 190,380,999 20,763,252 - - 211,144,251 Total 265,873,152 25,388,423 (620,114) 348,950 290,990,411 Accumulated depreciation(108,500,388) (5,755,320) 585,557 (180,983) (113,851,134) Total governmental activities157,372,764$ 19,633,103$ (34,557)$ 167,967$ 177,139,277$ BUSINESS-TYPE ACTIVITIESNon-depreciable:Land 2,203,903$ 1,310$ -$ -$ 2,205,213$ Water rights2,120,142 - - - 2,120,142 Depreciable:Buildings113,501,605 65,585 - (17,180) 113,550,010 Other structures and improvements30,547,611 - - - 30,547,611 Machinery and equipment10,240,680 376,114 (43,562) (237,680) 10,335,552 Property under capital lease519,943 - - - 519,943 Vehicles2,171,865 112,016 (22,294) (94,090) 2,167,497 Infrastructure309,986,102 14,559,889 - - 324,545,991 Total471,291,851 15,114,914 (65,856) (348,950) 485,991,959 Accumulated depreciation(196,347,229) (6,740,967) 57,456 180,983 (202,849,757) Total business-type activities274,944,622$ 8,373,947$ (8,400)$ (167,967)$ 283,142,202$ Total capital assets432,317,386$ 28,007,050$ (42,957)$ -$ 460,281,479$ DRAFT318
80 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 7. CAPITAL ASSETS (CONTINUED) Changes in accumulated depreciation are as follows for the year ended June 30, 2019: June 30, 2018 Additions Disposals Transfers June 30, 2019GOVERNMENTAL ACTIVITIESBuildings (16,828,397)$ (862,461)$ -$ (644)$ (17,691,502)$ Other structures and improvements (1,086,767) (22,238) - - (1,109,005) Machinery and equipment (8,833,782) (878,256) 522,013 (108,470) (9,298,495) Property under capital lease (174,545) (67,520) - - (242,065) Vehicles (2,830,901) (245,552) 63,544 (71,869) (3,084,778) Infrastructure (78,745,996) (3,679,293) - - (82,425,289) Total governmental activities(108,500,388)$ (5,755,320)$ 585,557$ (180,983)$ (113,851,134)$ BUSINESS-TYPE ACTIVITIESBuildings (19,002,101)$ (2,676,210)$ -$ 644$ (21,677,667)$ Other structures and improvements (28,416,356) (451,910) - - (28,868,266) Machinery and equipment (7,199,409) (594,420) 35,162 108,470 (7,650,197) Property under capital lease (181,979) (51,994) - - (233,973) Vehicles (1,738,113) (61,018) 22,294 71,869 (1,704,968) Infrastructure (139,809,271) (2,905,415) - - (142,714,686) Total business-type activities (196,347,229) (6,740,967) 57,456 180,983 (202,849,757) Total accumulated depreciation(304,847,617)$ (12,496,287)$ 643,013$ -$ (316,700,891)$ 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 and pension liabilities have been liquidated primarily by the general fund and the proprietary funds. DRAFT319
81 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 8. COMPENSATED ABSENCES (CONTINUED) Balance Balance June 30, 2018 Incurred Satisfied June 30, 2019Compensated absences:Governmental activities 2,510,091$ 1,801,412$ (1,662,470)$ 2,649,033$ Business-type activities 590,409 218,960 (294,792) 514,577 Total compensated absences 3,100,500$ 2,020,372$ (1,957,262)$ 3,163,610$ Due within Due after one year one year TotalCompensated absences:Governmental activities 1,589,571$ 1,059,462$ 2,649,033$ Business-type activities 264,262 250,315 514,577 Total compensated absences 1,853,833$ 1,309,777$ 3,163,610$ 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, 2019: BalanceIssuances and Repayments BalanceJune 30, 2018 Restatement Additions and Deletions June 30, 2019General obligation bonds13,835,000$ -$ -$ (895,000)$ 12,940,000$ Tax increment financing bonds5,018,931 - 583,000 (263,120) 5,338,811 Special assessment debt406,000 - - (234,500) 171,500 Note payable- - 1,700,000 - 1,700,000 Intercap notes payable763,588 - 314,560 (141,139) 937,009 Subtotal bonds and notes20,023,519 - 2,597,560 (1,533,759) 21,087,320 Bond premiums222,051 - - (13,458) 208,593 Compensated absences2,510,091 - 1,801,412 (1,662,470) 2,649,033 Other post employment benefits liability2,143,141 111,102 (103,865) - 2,150,378 Net pension liability21,421,471 1,429,018 - (2,444,084) 20,406,405 Totals46,320,273$ 1,540,120$ 4,295,107$ (5,653,771)$ 46,501,729$ DRAFT320
82 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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-termCurrent Portion Portion(due within (due after Total one year) one year) Long-Term DebtGeneral obligation bonds 910,000$ 12,030,000$ 12,940,000$ Tax increment financing bonds 266,936 5,071,875 5,338,811 Special assessment debt 32,000 139,500 171,500 Note payable - 1,700,000 1,700,000 Intercap notes payable 155,930 781,079 937,009 Bond premiums 13,458 195,135 208,593 Subtotal bonds and notes 1,378,324 19,917,589 21,295,913 Compensated absences 1,589,571 1,059,462 2,649,033 Other post employment benefits liability - 2,150,378 2,150,378 Net pension liability - 20,406,405 20,406,405 Totals2,967,895$ 43,533,834$ 46,501,729$ 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 withinInterest Rate Amount one yearGeneral Obligation Refunding Bonds, series 2012serial maturities through 2021 1.50% 535,000$ 265,000$ General Obligation TOP Bonds, Series 2013serial maturities through 2034 2.00% 8,045,000 430,000 General Obligation TOP Bonds, Series 2014serial maturities through 2035 1.00% 4,360,000 215,000 Total general obligations bonds 12,940,000$ 910,000$ DRAFT321
83 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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 TotalYear ending June 30,2020910,000 446,138 1,356,138 2021925,000 426,863 1,351,863 2022675,000 406,188 1,081,188 2023690,000 388,750 1,078,750 2024710,000 369,200 1,079,200 2025-20293,925,000 1,486,700 5,411,700 2030-20344,750,000 655,800 5,405,800 2035355,000 14,200 369,200 12,940,000$ 4,193,839$ 17,133,839$ 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 TotalYear ending June 30,2020266,936 249,287 516,223 2021278,616 237,486 516,102 2022290,140 225,162 515,302 2023301,803 212,000 513,803 2024318,468 198,114 516,582 2025-20291,831,320 746,102 2,577,422 2030-20341,456,660 275,840 1,732,500 2035-2039369,529 90,471 460,000 2040-2042225,339 15,490 240,829 5,338,811$ 2,249,952$ 7,588,763$ DRAFT322
84 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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: BalanceBalanceJune 30, 2018 Issuances Repayments June 30, 2019Special assessment bonds205,000$ -$ (205,000)$ -$ Note Payable to Department of Natural Resources and Conservation, #WRF-0506748,500 - (5,500) 43,000 Note Payable to Department of Natural Resources and Conservation, #SRF-05132152,500 - (24,000) 128,500 406,000$ -$ (234,500)$ 171,500$ Annual debt service requirements to maturity for special assessment bonds are as follows: Note PayablesYear ending June 30,202032,000$ 202132,000 202234,000 202335,000 202438,500 171,500$ DRAFT323
85 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 9. LONG-TERM DEBT (CONTINUED) Governmental Activities Long-Term Debt (Continued) 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. Intercap Loans – The City entered in a loan agreement with the Montana Board of Investments to partially finance the reconstruction of South Eighth Avenue. This intercap loan payable had a balance outstanding at June 30, 2019, as follows: Due within Due after one year one year TotalNotes payable to Montana Board of Investments in uneven semi-annual installments including interest at variable rates, currently at 3.370%:South 8th Reconstruction, matures in 2022 $ 129,418 $ 328,902 $ 458,320 Upgrade Street Lighting, matures in 2030 13,198 150,932 164,130 Sports Park-Bronken Park improvement, matures in 202913,314 301,245 314,559 155,930$ 781,079$ 937,009$ The debt service requirements for the intercap loan at June 30, 2019, are as follows: Principal InterestTotalYear ending June 30,2020155,930$ 27,522$ 183,452$ 2021171,502 - 171,502 2022173,945 - 173,945 2023109,245 - 109,245 202444,284 - 44,284 2025-2029240,760 - 240,760 2030-203141,343 - 41,343 937,009$ 27,522$ 964,531$ Sports Complex Loan - The City entered in a loan agreement with First Security Bank on July 1, 2018 for $1,700,000 for continued improvements to the Bozeman Sports Park, one of the projects identified for funding by the Trail and Open Space General Obligation Bond. The general terms of the loan include a 3.74% interest rate, 20-year term maturing on June 30, 2039, no origination fee, semi-annual payments of $62,911, and interest only payments until June of 2020. DRAFT324
86 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 9. LONG-TERM DEBT (CONTINUED) Governmental Activities Long-Term Debt (Continued) The Sports Park Foundation will provide the funding for the payments through their management of the Sports Park and debt agreements with the City. The City’s General Fund will take on this debt and make payments. The revenue generated at the Sports Park Foundation will offset the payment. In the event that the Foundation cannot make the debt payment, the City’s General Fund will cover the payment. The outstanding balance and debt service requirements for the sports complex loan at June 30, 2019, are as follows: Due within Due after one year one year Total-$ 1,700,000$ 1,700,000$ Note payable to First Security Bank in semi-annual installments including interest at 3.74% through June of 2039 Principal InterestTotalYear ending June 30,2020-$ 63,494$ 63,494$ 202162,883 62,912 125,795 202265,167 60,628 125,795 202367,627 58,168 125,795 202470,104 55,691 125,795 2025-2029392,767 236,208 628,975 2030-2034472,625 156,349 628,974 2035-2039568,827 60,148 628,975 1,700,000$ 753,598$ 2,453,598$ DRAFT325
87 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 9. LONG-TERM DEBT (CONTINUED) 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, 2019, are as follows: Balance Repayments Balance Long-TermJune 30, 2018 Issuances and Settlements June 30, 2019 Due in One Year PortionState Revolving Fund Revenue Bond - 12247Series 2011A, serial maturities through 2032, 3% interest rate $ 7,416,000 $ - $ (453,000) $ 6,963,000 $ 467,000 6,496,000$ State Revolving Fund Revenue Bond - 13291Series 2011B, serial maturities through 2033, 3% interest rate 7,482,000 - (419,000) 7,063,000 431,000 6,632,000 State Revolving Fund Revenue Bond - 17386Series 2017, serial maturities through 2037, 2.5% interest rate 4,209,497 3,069,503 (304,000) 6,975,000 312,000 6,663,000 19,107,497$ 3,069,503$ (1,176,000)$ 21,001,000$ 1,210,000$ 19,791,000$ The revenue bond ordinances specify 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, 2019. DRAFT326
88 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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 TotalYear ending June 30,20201,210,000$ 414,010$ 1,624,010$ 20211,244,000 389,640 1,633,640 20221,280,000 364,590 1,644,590 20231,318,000 338,800 1,656,800 20241,356,000 312,250 1,668,250 2025-20297,390,000 1,135,430 8,525,430 2030-20345,814,000 390,690 6,204,690 2035-20371,389,000 49,140 1,438,140 21,001,000$ 3,394,550$ 24,395,550$ Due within one year $ 1,210,000 Due after one year19,791,000 21,001,000$ 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, 2019. DRAFT327
89 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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, 2019, are as follows: Balance Repayments Balance Long-TermInterest RateJune 30, 2018 and Settlements June 30, 2019Due in One Year PortionWaste Water State Revolving -10252 Series 2010B, serial maturities through 20301.75% $ 221,000 $ (18,000) $ 203,000 18,000185,000$ Waste Water Reclamation Facility Revenue Bonds - 10230,Series 2010D, serial maturities through 20303.00% 6,207,000 (459,000) 5,748,000 473,0005,275,000 Waste Water Reclamation Facility Revenue Bonds - 10262,Series 2010F, serial maturities through 20303.00% 551,000 (39,000) 512,000 40,000472,000 Waste Water Reclamation Facility Revenue Bonds - 11291,Series 2010C, serial maturities through 20313.00% 678,000 (46,000) 632,000 47,000585,000 Waste Water Reclamation Facility Revenue Bonds - 11292,Series 2010G, serial maturities through 20313.00% 2,059,000 (131,000) 1,928,000 135,0001,793,000 Waste Water Reclamation Facility Revenue Bonds - 11281Series 2010H, serial maturities through 20313.00%6,652,000 (446,000) 6,206,000 459,000 5,747,000 16,368,000$ (1,139,000)$ 15,229,000$ 1,172,000$ 14,057,000$ DRAFT328
90 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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: Waste WaterPrincipal Interest TotalYear ending June 30,20201,172,000$ 298,264$ 1,470,264$ 20211,209,000 274,689 1,483,689 20221,246,000 250,374 1,496,374 20231,285,000 225,309 1,510,309 20241,329,000 199,445 1,528,445 2025-20297,278,000 579,425 7,857,425 2030-20311,710,000 30,766 1,740,766 15,229,000$ 1,858,272$ 17,087,272$ Due within one year $ 1,172,000 Due after one year14,057,000 15,229,000$ Stormwater Revenue Bonds Waste Water revenue bonds outstanding at June 30, 2019, 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-TermInterest RateJune 30, 2018 Issuances and Settlements June 30, 2019Due in One Year PortionStormwater System Revenue Bond, Series 20152.00% $ 1,292,430 $ 303,570 $ (76,000) $ 1,520,000 78,000$ 1,442,000$ DRAFT329
91 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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, 2019, the Revenue Bond outstanding had an aggregate principal amount payable of $187,596 . NOTE 10. CAPITAL LEASE OBLIGATIONS In 2014, the City entered into a lease for a motor grader with Caterpillar. The lease term is six 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 five 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. 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. DRAFT330
92 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 10. CAPITAL LEASE OBLIGATIONS (CONTINUED) 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. In 2016, the City entered into a lease for a RPMTECH Snow Blower with Caterpillar. The lease term is six years payable in six annual installments of $13,933 and one payment of $6,640 at 3.20%. The total amount capitalized of $82,877 represents the present value of the future lease payments. The payments for this obligation are being recorded in the street maintenance fund. In 2018, the City entered into a lease for a 12M3AWD Motor Grader with Caterpillar. The lease term is six years payable in five annual payments of $31,023 and one payment of $127,840 at 4.55%. The total amount capitalized of $244,531 represents the present value of the future lease payments. The payments for this obligation are being recorded in the street maintenance fund. In 2018, the City entered into a lease for a printer. The lease term is five years payable in monthly installments of $157. The total amount capitalized of $8,006 represents the present value of future lease payments. The payments for this obligation are being recorded in the general fund. In 2018, the City entered into a lease for a 2018 Toyota Prius Prime vehicle. The lease term is five years payable in monthly installments of $430.49 at 7.04%. The total amount capitalized of $16,066.95 represents the present value of the future lease payments. The payments for this obligation are being recorded in the general fund. In 2018, the City entered into a lease for a 2018 Toyota Highlander. The lease term is three years payable in monthly installments of $338.61 at 7.04%. The total amount capitalized of $13,541.35 represents the present value of the future lease payments. The payments for this obligation are being recorded in the general fund. In 2018, the City entered into a lease for a used 2015 Toyota Prius vehicle. The lease term is five years payable in monthly installments of $301.21 at 7.04%. The total amount capitalized of $15,197.50 represents the present value of the future lease payments. Half of the payments for this obligation are being recorded in the water fund and half are being recorded in the street maintenance special revenue fund. In 2018, the City entered into a lease for a used 2015 Toyota Prius vehicle. The lease term is five years payable in monthly installments of $305.82 at 7.04%. The total amount capitalized of $15,430 represents the present value of the future lease payments. The payments for this obligation are being recorded in the water fund. DRAFT331
93 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 10. CAPITAL LEASE OBLIGATIONS (CONTINUED) In 2018, the City entered into a lease for a used 2015 Toyota Prius vehicle. The lease term is five years payable in monthly installments of $345.90 at 7.04%. The total amount capitalized of $20,753.40 represents the present value of the future lease payments. The payments for this obligation are being recorded in the public administration internal service fund. In 2018, the City entered into a lease for a used 2015 Toyota Prius vehicle. The lease term is five years payable in monthly installments of $301.21 at 7.04%. The total amount capitalized of $18,072.00 represents the present value of the future lease payments. The payments for this obligation are being recorded in the public administration internal service fund In 2019, the City entered into a lease for three used 2015 Toyota Prius vehicle. The lease term is five years payable in monthly installments of $1,083.68 at 7.04%. The total amount capitalized of $45,514.41 represents the present value of the future lease payments. The payments for this obligation are being recorded in the parking fund. In 2019, the City entered into a lease for a 2019 Elgin Broom Bear Street Sweeper Grader with Merchants Bank. The lease term is six years payable in five annual payments of $41,387.85 at 4.35%. The total amount capitalized of $223,395 represents the present value of the future lease payments. The payments for this obligation are being recorded in the street maintenance fund. DRAFT332
94 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 10. CAPITAL LEASE OBLIGATIONS (CONTINUED) The capital lease balance outstanding at June 30, 2019, is as follows: Balance Balance June 30, 2018 Issuances Repayments June 30, 2019Governmental Activities:Caterpillar 2014 $ 179,027 $ - $ (13,173) $ 165,854 Savin Copier 2015 6,466 - (3,427) 3,039 Snow Blower 2016 57,217 - (12,102) 45,115 Caterpillar 2018 213,508 - (21,309) 192,199 Canon Printer 2018 7,318 - (1,445) 5,873 Elgin Broom Sweeper - 223,395 (38,268) 185,127 Highlander - 11,993 (3,253) 8,740 Prius Sustainability - 15,935 (4,311) 11,624 Prius Streets - 7,596 (1,201) 6,395 Prius Engineering - 15,197 (2,403) 12,794 Prius Engineering 2 - 17,452 (2,759) 14,693 $ 463,536 $ 291,568 $ (103,651) $ 651,453 Business-Type Activities:2015 Street Sweeper $ 52,460 -$ $ (25,805) $ 26,655 2015 Vactor Vacuum Truck 162,427 - (52,368) 110,059 Prius Water - 7,601 (1,201) 6,400 Prius Water Conservation - 15,428 (2,439) 12,989 Prius Parking 2318 - 15,171 15,171 Prius Parking 1569 - 15,171 15,171 Prius Parking 5748 - 15,171 15,171 $ 214,887 $ 68,542 $ (81,813) $ 201,616 DRAFT333
95 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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, 2019: Governmental Business-Type Activities ActivitiesYear ending June 30,2020 $ 279,122 $ 136,335 2021 106,425 63,594 2022 100,223 5,477 2023 191,120 5,477 2024 42,185 150 Less amount representing interest(67,622) (9,417) Present value of future minimum lease payments651,453$ 201,616$ The property under capital lease and the corresponding accumulated depreciation at June 30, 2019, is as follows: Governmental Business-TypeActivities ActivitiesMachinery and equipment 880,308$ 605,279$ Less: accumulated depreciation (136,206) (239,019) 744,102$ 366,260$ 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. DRAFT334
96 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 11. CLASSIFICATION OF NET POSITION (CONTINUED) Unrestricted Net Position – This category represents the net position of the City that are not restricted for any project or other purpose. 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, 2019, the following funds had a deficit fund balances: Solid Waste fund ($782,728), TIFD South Bozeman Technology fund ($7,611), and the Public Works Administration fund ($699,712). The deficit fund balance in the Solid Waste fund is due to the sale of city-owned property known as the Mandeville Farm for a $2,042,391 loss in fiscal year 2017. Additionally, in fiscal year 2019, there was an unanticipated expense of $177,459 to adjust the estimate for landfill post-closure costs. The deficit fund balance in the TIFD South Bozeman Technology fund is due to legal counsel costs incurred in the creation of this Tax Increment Financing District in fiscal year 2014. To-date the amount of property tax increment revenue has not been sufficient to eliminate this deficit, but increment revenue is expected to increase in future years. The deficit fund balance in the Public Works Administration fund is due to the cumulative effect of the prior period adjustments to net position for both the Pension and the Other Post-Employment Benefit liabilities. Prior to the creation of the Public Works Administration fund this year, these liabilities were reported in the Water fund. Upon creation of this fund, the balances and employee costs were transferred to this fund, and the result was a deficit fund balance, which is expected to be eliminated over time with a financial model designed to recoup all costs through internal user charges. DRAFT335
97 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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. 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 2019 and 2018 total payroll and covered payroll for all retirement plans were $24,693,753 and $23,497,688, 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) 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 participation in the Public Employees’ Retirement System Defined Benefit Retirement Plan (the Plan). This includes the proportionate share of the collective Net Pension Liability; Pension Expense; and Deferred Outflows and Deferred Inflows of Resources associated with pensions. Employers are provided guidance in GASB Statement 68, paragraph 74, where pension amounts must be combined as a total or aggregate for reporting, whether provided through cost-sharing, single-employer, or agent plans. These disclosures provide information for employers who are using a June 30, 2018 measurement date for the 2019 reporting. DRAFT336
98 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Public Employees' Retirement System (PERS) Summary of Significant Accounting Policies The Montana Public Employee Retirement Administration (MPERA) prepares its financial statements using the accrual basis of accounting. The same accrual basis was used by MPERA for the purposes of determining the Net Pension Liability (NPL); Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions; Pension Expense; the Fiduciary Net Position; and, Additions to or Deductions from Fiduciary Net Position. 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 in which they are due and payable in accordance with the benefit terms. Expenses are recognized in the period incurred. Investments are reported at fair value. MPERA adhered to all accounting principles generally accepted by the United States of America. MPERA applied all applicable pronouncements of the Governmental Accounting Standards Board (GASB). General Information about the Pension Plan 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 provides retirement benefits to covered employees of the State, and local governments, and certain employees of the Montana University System, and school districts. Benefits are established by state law and can only be amended by the Legislature. 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 participants of both the defined benefit and defined contribution 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). Benefits provided The PERS-DBRP provides retirement, disability, and death benefits to plan members and their beneficiaries. Benefits are based on eligibility, years of service, and highest average compensation (HAC). Member rights are vested after five years of service. DRAFT337
99 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Public Employees' Retirement System (PERS) (Continued) Benefits Provided (Continued) 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 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. Second Retirement (requires returning to PERS-covered employer or PERS service): 1. Retire before January 1, 2016 and accumulate less than 2 years additional service credit or retire on or after January 1, 2016 and accumulate less than 5 years additional service credit: a) A refund of member’s contributions plus return interest (currently 0.77% effective July 1, 2017); b) No service credit for second employment; c) Start the same benefit amount the month following termination; and d) Guaranteed Annual Benefit Adjustment (GABA) starts again in the January immediately following the second retirement. 2. Retire before January 1, 2016 and accumulate at least 2 years of additional service credit; a) A recalculated retirement benefit based on provisions in effect after the initial retirement; and b) GABA starts on the recalculated benefit in the January after receiving the new benefit for 12 months. 3. Retire on or after January 1, 2016 and accumulate 5 or more years of service credit; c) The same retirement as prior to the return to service; d) A second retirement benefit as prior to the second of service based on laws in effect upon the rehire date; and e) GABA starts on both benefits in January after receiving the original and new benefit for 12 months. DRAFT338
100 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Public Employees' Retirement System (PERS) (Continued) Benefits Provided (Continued) 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; Compensation Cap Hired on or after July 1, 2013 – 110% annual cap on compensation considered as a part of member’s highest average compensation. 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. 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. DRAFT339
101 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Public Employees' Retirement System (PERS) (Continued) Overview of Contributions The state Legislature has the authority to establish and amend contribution rates. Member and employer contribution rates are specified by Montana Statute and are a percentage of the member’s compensation. Contributions are deducted from each member’s salary and remitted by participating employers. Special Funding: The State of Montana, as the non-employer contributing entity, paid to the Plan, additional contributions that qualify as special funding. Those employers who received special funding are all participating employers. Not Special Funding: Per Montana law, state agencies and universities paid their own additional contributions. The employer paid contributions are not accounted for as special funding for state agencies and universities but are reported as employer contributions. Member and employer contribution rates are shown in the table below. State & UniversitiesFiscal Year Employer Employer State Employer StateHired<07/01/11Hired>07/01/112019 7.900% 7.900% 8.670% 8.570% 0.100% 8.300% 0.370%2018 7.900% 7.900% 8.570% 8.470% 0.100% 8.200% 0.370%2017 7.900% 7.900% 8.470% 8.370% 0.100% 8.100% 0.370%2016 7.900% 7.900% 8.370% 8.270% 0.100% 8.000% 0.370%2015 7.900% 7.900% 8.270% 8.170% 0.100% 7.900% 0.370%2014 7.900% 7.900% 8.170% 8.070% 0.100% 7.800% 0.370%2012-2013 6.900% 7.900% 7.170% 7.070% 0.100% 6.800% 0.370%2010-2011 6.900% 7.170% 7.070% 0.100% 6.800% 0.370%2008-2009 6.900% 7.035% 6.935% 0.100% 6.800% 0.235%MemberSchool DistrictsLocal Government DRAFT340
102 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Public Employees' Retirement System (PERS) (Continued) Overview of Contributions (Continued) 1. Member contributions to the system of 7.9% 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. 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. 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. iii. The state contributed a Statutory Appropriation from the General Fund of $33,454,182. DRAFT341
103 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Public Employees' Retirement System (PERS) (Continued) Actuarial Assumptions The total pension liability (TPL) in the June 30, 2018 actuarial valuation was determined using the following actuarial assumptions. Investment Return (net of admin expense) 7.65% Admin expense as a % of payroll 0.26% General Wage Growth* 3.50% *includes Inflation at 2.75% Merit Increases 0% to 6.30% Postretirement Benefit Increases Guaranteed annual Benefit Adjustment (GABA) each January. 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 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. Mortality assumptions among contributing members, service retired members and beneficiaries are based on RP 2000 Combined Employee and Annuitant Mortality Tables projected to 2020 with scale BB, males set back 1 year. Mortality assumptions among disabled members are based on RP 2000 Mortality Tables with no projections. The most recent experience study, performed for the period covering fiscal years 2011 through 2016, is outlined in a report dated May 5, 2017 and can be located on the MPERA website. The long-term expected return on pension plan assets is reviewed as part of the regular experience studies prepared for the Plan. Several factors are considered in evaluating the long-term rate of return assumption including historical rates of return, rate of return assumptions adopted by similar public-sector systems, and by using 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 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 by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the target asset allocation as of June 30, 2018, are summarized in the table on the top of the next page. DRAFT342
104 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Public Employees' Retirement System (PERS) (Continued) Actuarial Assumptions (Continued) Long-Term Expected Target Asset Real Rate of ReturnAsset Class Allocation Arithmetic BasisCash Equivalents2.60% 4.00%Domestic Equity36.00% 4.55%Foreign Equity18.00% 6.35%Fixed Income23.40% 1.00%Private Equity12.00% 7.75%Real Estate8.00% 4.00%Total100.00% Discount Rate The discount rate used to measure the TPL was 7.65%. The projection of cash flows used to determine the discount rate assumed that contributions from participating plan members, employers, and non-employer contributing entities would be made based on the Board’s funding policy, which established the contractually required rates under the Montana Code Annotated. The state contributed 0.10% of the salaries paid by local governments and 0.37% paid by school districts. In addition, the state contributed a statutory appropriation from the general fund. Based on those assumptions, the Plan’s fiduciary net position was projected to be adequate to make all the projected future benefit payments of current plan members through the year 2121. 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. DRAFT343
105 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Public Employees' Retirement System (PERS) (Continued) Sensitivity of the proportionate share of the net pension liability to changes in the discount rate – The following presents the employer’s sensitivity of the NPL to the discount rate in the table below. A small change in the discount rate can create a significant change in the liability. The NPL was calculated using the discount rate of 7.65%, as well as what the NPL would be if it were calculated using a discount rate 1.00% lower or 1.00% higher than the current rate. As of 1.0% Decrease Current Discount1.0% IncreaseReporting Dateat 6.65%Rate at 8.65%City of Bozeman Net Pension Liability$25,163,366$17,399,265$11,023,700 Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions GASB Statement 68 allows a measurement date of up to 12 months before the employer’s fiscal year-end can be utilized to determine the Plan’s TPL. The basis for the TPL as of June 30, 2019, was determined by taking the results of the June 30, 2018, actuarial valuation and applying standard roll forward procedures. The roll forward procedure uses a calculation that adds the annual normal cost (also called the service cost), subtracts the actual benefit payments and refunds for the plan year, and then applies the expected investment rate of return for the year. The roll forward procedure will include the effects of any assumption changes and legislative changes. The update procedures are in conformity with Actuarial Standards of Practice issued by the Actuarial Standards Board. The Total Pension Liability (TPL) minus the Fiduciary Net Position equals the Net Pension Liability (NPL). The proportionate shares of the employer’s and the state of Montana’s NPL for June 30, 2019, and 2018, are displayed below. The employer’s proportionate share equals the ratio of the employer’s contributions to the sum of all employer and non-employer contributions during the measurement period. The state’s proportionate share for a particular employer equals the ratio of the contributions for the particular employer to the total state contributions paid. The employer recorded a liability of $17,399,265 and the employer’s proportionate share was 0.8336 percent. DRAFT344
106 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Public Employees' Retirement System (PERS) (Continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) As of Reporting DateNet Pension Liability as of 6/30/19Net Pension Liability as of 6/30/18Percent of Collective NPL as of 6/30/19Percent of Collective NPL as of 6/30/18Change in Percent of Collective NPLCity of Bozeman Proportionate Share $ 17,399,265 $ 20,291,988 0.8336% 1.0419% -0.2083%State of Montana Proportionate Share associated with the City 5,822,595 266,967 1.1196% 1.3606% -0.2410%Total23,221,860$ 20,558,955$ 1.9532% 2.4025% -0.4493% 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: There were no changes between the measurement date of the collective NPL and the employer’s reporting date that are expected to have a significant effect on the employer’s proportionate share of the collective NPL. Pension Expense At June 30, 2019, the employer recognized $1,909,093 for its proportionate share of the Plan’s pension expense and recognized grant revenue of $388,594 for the state of Montana proportionate share of the pension expense associated with the employer. Additionally, the employer recognized grant revenue of $0 from the State Statutory Appropriation from the General Fund. As of reporting datePension Expense as of 6/30/19Pension Expense as of 6/30/18City’s Proportionate Share 1,909,093$ 2,719,887$ Employer Grant Revenue - State of Montana 388,594 14,233 State of Montana Coal Tax for employer - 290,280 Total2,297,687$ 3,024,400$ DRAFT345
107 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Public Employees' Retirement System (PERS) (Continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) Recognition of Deferred Inflows and Outflows At June 30, 2019, the employer reported its proportionate share of PERS’ deferred outflows of resources and deferred inflows of resources related to PERS from the following sources: As of Reporting DateDeferred Outflows of ResourcesDeferred Inflows of ResourcesExpected v. actual experience 1,323,097$ -$ Projected investment earnings v. actual investment earnings - 270,210 Changes in assumptions 1,479,546 - Changes in proportion and differences between employer contributions and proportionate share of contributions - 2,182,056 Employer contributions subsequent to the measurement date 1,218,871 - Total4,021,514$ 2,452,266$ Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in the employer’s pension expense as follows: For the Reporting Year ended June 30:Recognition of deferred outflows and deferred inflows in future years as an increase or (decrease) to pension expense2020971,387$ 2021450,261$ 2022(960,243)$ 2023(111,028)$ 2024-$ Thereafter-$ DRAFT346
108 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Public Employees' Retirement System (PERS) (Continued) PERS Disclosure for the Defined Contribution Plan The City contributed to the state of Montana Public Employee Retirement System Defined Contribution Retirement Plan (PERS-DCRP) for employees that have elected the DCRP. The PERS-DCRP is administered by the PERB and is reported as a multiple employer plan established July 1, 2002, and governed by Title 19, chapters 2 & 3, MCA. All new PERS 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 participants of both the defined benefit and defined contribution retirement plans. Member and employer contribution rates are specified by state law 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. Benefits are dependent upon eligibility and individual account balances. Participants are vested immediately in their own contributions and attributable income. Participants are vested after 5 years of membership service for the employer’s contributions to individual accounts and the attributable income. Non-vested contributions are forfeited upon termination of employment per 19-3-2117(5), MCA. Such forfeitures are used to cover the administrative expenses of the PERS-DCRP. At the plan level for the reporting period ended June 30, 2019, the PERS-DCRP employer did not recognize any net pension liability or pension expense for the defined contribution plan. Plan level non-vested forfeitures for the 316 employers that have participants in the PERS-DCRP totaled $746,144. Pension plan fiduciary net position: The stand-alone financial statements of the Montana Public Employees Retirement Board (PERB) Comprehensive Annual Financial Report (CAFR) and the GASB 68 Report disclose the Plan’s fiduciary net position. The reports are available from the PERB at PO Box 200131, Helena MT 59620-0131, (406) 444-3154 or both are available on the MPERA website at http://mpera.mt.gov/index.shtml DRAFT347
109 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Firefighters’ Unified Retirement System (FURS) 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 participation in the Firefighters’ Unified Retirement System (the Plan). This includes the proportionate share of the collective Net Pension Liability; Pension Expense; and Deferred Outflows and Deferred Inflows of Resources associated with pensions. Employers are provided guidance in GASB Statement 68, paragraph 74, where pension amounts must be combined as a total or aggregate for reporting, whether provided through cost-sharing, single-employer, or agent pension plans. These disclosures provide information for employers who are using a June 30, 2018 measurement date for the 2019 reporting. Summary of Significant Accounting Policies MPERA prepared financial statements using the accrual basis of accounting. The same accrual basis was used by MPERA for the purposes of determining the Net Pension Liability (NPL); Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions; Pension Expense; the Fiduciary Net Position; and, Additions to or Deductions from Fiduciary Net Position. 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 in which they are due and payable in accordance with the benefit terms. Expenses are recognized in the period incurred. Investments are reported at fair value. MPERA adhered to all accounting principles generally accepted by the United States of America. MPERA applied all applicable pronouncements of the Governmental Accounting Standards Board (GASB). General Information about the Pension Plan 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, Montana Code Annotated (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. DRAFT348
110 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Firefighters’ Unified Retirement System (FURS) (Continued) Benefits provided The FURS provides retirement, disability, and death benefits to plan members and their beneficiaries. Benefits are based on eligibility, years of service, and highest average compensation (HAC). Member rights are vested after five years of service. Service Retirement and monthly benefit formula Hired on or after July 1, 1981, or has elected to be covered by GABA: o 20 years of membership service o 2.5% of HAC x years of service credit Hired prior to July 1, 1981, and who had not elected to be covered by GABA, the greater of above, or: o If membership service is less than 20 years: 2% of the highest monthly compensation (HMC) x years of service credit and o If membership service is greater or equal to 20 years: 50% of HMC + 2% of HMC x years of service credit in excess of 20 Early retirement: Age 50 with 5 years of membership service – Normal retirement benefit calculated using HAC and service credit. Second retirement: Applies to retirement system members re-employed in a FURS position on or after July 1, 2017: If the member works more than 480 hours in a calendar year and accumulates less than 5 years of service credit before terminating again, the member: o is not awarded service credit for the period of reemployment; o is refunded the accumulated contributions associated with the period of reemployment; o starting the first month following termination of service, receives the same retirement benefit previously paid to the member; and o does not accrue post-retirement benefit adjustments during the term of reemployment but receives a Guaranteed Annual Benefit Adjustment (GABA) in January immediately following second retirement. If the member works more than 480 hours in a calendar year and accumulates at least 5 years of service credit before terminating again, the member: o Is awarded service credit for the period of reemployment; o Starting the first month following termination services, receives: The same retirement benefit previously paid to the member; and DRAFT349
111 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Firefighters’ Unified Retirement System (FURS) Benefits provided (Continued) A second retirement benefit for the period of reemployment calculated based on the laws in effect as of the members’ rehire date, and o Does not accrue post-retirement benefit adjustments during the term of reemployment but receives a GABA; On the initial retirement benefit in January immediately following second retirement, and On the second retirement benefit starting in January after receiving that benefit for at least 12 months. o A member who returns to covered service is not eligible for a disability benefit. Member’s Compensation Period used in Benefit Calculation Hired prior to July 1, 1981 and not electing GABA - highest monthly compensation (HMC) Hired after June 30, 1981 and those electing GABA – highest average compensation (HAC) during any consecutive 36 months (or shorter period of total service). Part-time firefighter: 15% of regular compensation of a newly confirmed full-time firefighter. Compensation Cap Hired on or after July 1, 2013 – 110% annual cap on compensation considered as part of a member’s highest average compensation. Guaranteed Annual Benefit Adjustment (GABA) Hired on or after July 1, 1997, or those electing GABA, and has been retired for at least 12 months – the member’s benefit increases by 3.0% each January. Minimum Benefit Adjustment (non-GABA) A member with 10 or more years of membership service who has not elected to be covered under GABA - the minimum benefit provided may not be less than 50% of the monthly compensation paid to a newly confirmed active firefighter of the employer that last employed the member as a firefighter in the current fiscal year. DRAFT350
112 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Firefighters’ Unified Retirement System (FURS) (Continued) Contributions The State Legislature has the authority to establish and amend contribution rates to the plan. Member and employer contribution rates are specified by Montana Statute and are a percentage of the member’s compensation. Contributions are deducted from each member’s salary and remitted by participating employers. Special Funding MCA 19-13-604 requires the State of Montana to contribute a percentage of total compensation directly to the Plan annually after the end of each fiscal year. Member, Employer and State contribution rates are shown in the table below. Non-GABA GABA Employer State9.50% 10.70% 14.36% 32.61%7.80% 14.36% 32.61%MemberFiscal Year1998 - 20191997 Actuarial Assumptions The total pension liability in the June 30, 2018 actuarial valuation was determined using the following actuarial assumptions: Investment Return 7.65% Admin expense as a % of payroll 0.23% General Wage Growth* 3.50% *includes Inflation at 2.75% Merit Increases 0% to 6.30% Postretirement Benefit Increases o Guaranteed Annual Benefit Adjustment (GABA) each January Members hired on or after July 1, 1997, or those electing GABA, and has been retired for at least 12 months, the member’s benefit increases by a maximum of 3% each January. o Minimum Benefit Adjustment (non-GABA) A member with 10 or more years of membership service who has not elected to be covered under GABA - the minimum benefit provided may not be less than 50% of the monthly compensation paid to a newly confirmed active firefighter of the employer that last employed the member as a firefighter in the current fiscal year. DRAFT351
113 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Firefighters’ Unified Retirement System (FURS) (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 2020 using Scale BB, males set back 1 year. Mortality assumptions among disabled members are based on RP 2000 Combined Mortality Tables. The most recent experience study, performed for the period covering fiscal years 2011 through 2016, is outlined in a report dated May 5, 2017 and can be located on the MPERA website. The long-term expected return on pension plan assets is reviewed as part of the regular experience studies prepared for the Plan. Several factors are considered in evaluating the long-term rate of return assumption including historical rates of return, rate of return assumptions adopted by similar public-sector systems, and by using 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 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 by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the target asset allocation as of June 30, 2019, are summarized below. Long-Term Expected Target AssetReal Rate of ReturnAsset ClassAllocationArithmetic BasisCash Equivalents2.60%4.00%Domestic Equity36.00%4.55%Foreign Equity18.00%6.35%Fixed Income23.40%1.00%Private Equity12.00%7.75%Real Estate8.00%4.00%Total100.00% DRAFT352
114 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Firefighters' Unified Retirement System (FURS) (Continued) Discount Rate The discount rate used to measure the TPL was 7.65%. The projection of cash flows used to determine the discount rate assumed that contributions from participating plan members, employers, and non-employer contributing entities would be made based on the Board’s funding policy, which established the contractually required rates under the Montana Code Annotated. The state contributed 32.61% of the salaries paid by employers. Based on those assumptions, the Plan’s fiduciary net position was projected to be adequate to make all the projected future benefit payments of current plan members through the year 2134. 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. Sensitivity of the proportionate share of the net pension liability to changes in the discount rate The following presents the employer’s sensitivity of the NPL to the discount rate in the table below. A small change in the discount rate can create a significant change the liability. The NPL was calculated using the discount rate of 7.65%, as well as what the NPL would be if it were calculated using a discount rate 1.00% lower or 1.00% higher than the current rate. As of 1.0% DecreaseCurrent 1.0% IncreaseReporting Date(6.65%)Discount Rate(8.65%)City of Bozeman's Net Pension Liability$4,670,984$2,725,281$1,157,981 Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions GASB Statement 68 allows a measurement date of up to 12 months before the employer’s fiscal year-end can be utilized to determine the Plan’s TPL. The basis for the TPL as of June 30, 2019, was determined by taking the results of the June 30, 2018, actuarial valuation and applying standard roll forward procedures. The roll forward procedure uses a calculation that adds the annual normal cost (also called the service cost), subtracts the actual benefit payments and refunds for the plan year, and then applies the expected investment rate of return for the year. The roll forward procedure will include the effects of any assumption changes and legislative changes. The update procedures are in conformity with Actuarial Standards of Practice issued by the Actuarial Standards Board. DRAFT353
115 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Firefighters' Unified Retirement System (FURS) (Continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) The Total Pension Liability (TPL) minus the Fiduciary Net Position equals the Net Pension Liability (NPL). The proportionate shares of the employer’s and the State of Montana’s NPL for June 30, 2019 and 2018, are displayed below. The employer’s proportionate share equals the ratio of the employer’s contributions to the sum of all employer and non-employer contributions during the measurement period. Due to the existence of the 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 state’s proportionate share for a particular employer equals the ratio of the contributions for the particular employer to the total state contributions paid. The employer recorded a liability of $2,725,281 and the employer’s proportionate share was 2.3663 percent. As of Reporting Date NPL as of 6/30/19 NPL as of 6/30/18Percent of Collective NPL as of 6/30/19Percent of Collective NPL as of 6/30/18Change in Percent of Collective NPLCity Proportionate Share $ 2,725,281 $ 2,655,380 2.3663% 2.3492% 0.0171%State of Montana Proportionate Share associated with Employer 6,231,502 6,030,078 7.9601% 7.8595% 0.1006%Total8,956,783$ 8,685,458$ 10.3264% 10.2087% 0.1177% 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: There were no changes between the measurement date of the collective NPL and the employer’s reporting date that are expected to have a significant effect on the employer’s proportionate share of the collective NPL. DRAFT354
116 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Firefighters' Unified Retirement System (FURS) (Continued) Pension Expense At June 30, 2019 reporting date, the employer recognized its proportionate share of the FURS’ pension expense of $398,316. The employer also recognized grant revenue of $1,254,217 for the support provided by the State of Montana for the proportionate share of the pension expense that is associated with the employer. As of reporting datePension Expense as of 6/30/19 Pension Expense as of 6/30/18City’s Proportionate Share398,316$ 388,062$ Employer Grant Revenue - State of Montana Proportionate Share for Employer1,254,217 1,145,218 Total1,652,533$ 1,533,280$ Recognition of Deferred Inflows and Outflows At June 30, 2019, the employer reported its proportionate share of the Plan’s deferred outflows of resources and deferred inflows of resources from the following sources: Deferred Outflows of Resources Deferred Inflows of ResourcesExpected v. actual experience 305,912$ 15,013$ Projected investment earnings v. actual investment earnings -$ 33,056$ Changes in assumptions266,846$ -$ Changes in proportion and differences between employer contributions and proportionate share of contributions-$ 28,318$ Employer contributions subsequent to the measurement date546,707$ -$ Total1,119,465$ 76,387$ DRAFT355
117 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Firefighters' Unified Retirement System (FURS) (Continued) Recognition of Deferred Inflows and Outflows (Continued) Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in Pension Expense as follows: For the Reporting Year ended June 30:Recognition of deferred outflows and deferred inflows in future years as an increase or (decrease) to pension expense2020172,534$ 2021123,082$ 202229,904$ 2023109,667$ Thereafter61,184$ Pension plan fiduciary net position: The stand-alone financial statements of the Montana Public Employees Retirement Board (PERB) Comprehensive Annual Financial Report (CAFR) and the GASB 68 Report disclose the Plan’s fiduciary net position. The reports are available from the PERB at PO Box 200131, Helena MT 59620-0131, (406) 444-3154 or both are available on the MPERA website at http://mpera.mt.gov/index.shtml DRAFT356
118 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Municipal Police Officers’ Retirement System (MPORS) 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 participation in the Municipal Police Officers’ Retirement System (the Plan). This includes the proportionate share of the collective Net Pension Liability; Pension Expense; and Deferred Outflows and Deferred Inflows of Resources associated with pensions. Employers are provided guidance in GASB Statement 68, paragraph 74, where pension amounts must be combined as a total or aggregate for reporting. Whether provided through cost-sharing, single-employer, or agent plans. This report provides information for employers who are using a June 30, 2018 measurement date for the 2019 reporting. Summary of Significant Accounting Policies MPERA prepared financial statements using the accrual basis of accounting. The same accrual basis was used by MPERA for the purposes of determining the Net Pension Liability (NPL); Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions; Pension Expense; the Fiduciary Net Position; and, Additions to or Deductions from Fiduciary Net Position. 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 in which they are due and payable in accordance with the benefit terms. Expenses are recognized in the period incurred. Investments are reported at fair value. MPERA adhered to all accounting principles generally accepted by the United States of America. MPERA applied all applicable pronouncements of the Governmental Accounting Standards Board (GASB). General Information about the Pension Plan 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, Montana Code Annotated (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. DRAFT357
119 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Municipal Police Officers’ Retirement System (MPORS) (Continued) General Information about the Pension Plan (Continued) 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. Benefits provided MPORS provides retirement, disability, and death benefits to plan members and their beneficiaries. Benefits are based on eligibility, years of service, and compensation. Member rights are vested after five years of service. Service Retirement and monthly benefit formula: 20 years of membership service, regardless of age Age 50 with 5 years of membership service (Early Retirement) 2.5% of FAC x years of service credit DRAFT358
120 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Municipal Police Officers’ Retirement System (MPORS) (Continued) Benefits provided (continued) Second Retirement: Re-calculated using specific criteria for members who return to covered MPORS employment prior to July 1, 2017: • Less than 20 years of membership service, upon re-employment, repay benefits and subsequent retirement is based on total MPORS service. • More than 20 years of membership service, upon re-employment, receives initial benefit and a new retirement benefit based on additional service credit and FAC after re-employment. Applies to retirement system members re-employed in a MPORS position on or after July 1, 2017: 1) If the member works more than 480 hours in a calendar year and accumulates less than 5 years of service credit before terminating again, the member: a. Is not awarded service credit for the period of reemployment; b. Is refunded the accumulated contributions associated with the period of reemployment; Starting the first month following termination of service, receives the same retirement benefit previously paid to the member; and c. Does not accrue post-retirement benefit adjustments during the term of reemployment but receives a Guaranteed Annual Benefit Adjustment (GABA) in January immediately following second retirement. 2) If the member works more than 480 hours in a calendar year and accumulates at least 5 years of service credit before terminating again, the member: a. Is awarded service credit for the period of reemployment; b. Starting the first month following termination of service, receives: i. The same retirement benefit previously paid to the member, and ii. A second retirement benefit for the period of reemployment calculated based on the laws in effect as of the member’s rehire date; and c. Does not accrue post-retirement benefit adjustments during the term of reemployment but receives a GABA: i. On the initial retirement benefit in January immediately following second retirement, and ii. On the second retirement benefit starting in January after receiving that benefit for at least 12 months. 3) A member who returns to covered service is not eligible for a disability benefit. DRAFT359
121 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Municipal Police Officers' Retirement System (MPORS) (Continued) Benefits provided (continued) Member’s final average compensation (FAC) 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 FAC. Guaranteed Annual Benefit Adjustment (GABA) Hired on or after July 1, 1997, or those electing GABA, and has been retired for at least 12 months, a GABA will be made each year in January equal to 3.0%. Minimum Benefit Adjustment (non-GABA) The minimum benefit provided may not be less than 50% of the compensation paid to a newly confirmed police officer of the employer that last employed the member as a police officer in the current fiscal year. Contributions The State Legislature has the authority to establish and amend contribution rates to the plan. Member and employer contribution rates are specified by Montana Statute and are a percentage of the member’s compensation. Contributions are deducted from each member’s salary and remitted by participating employers. Special Funding MCA 19-9-702 requires the State of Montana to contribute a percentage of total compensation directly to the Plan annually after the end of each fiscal year. Member, Employer and State contribution rates are shown in the table below. DRAFT360
122 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Municipal Police Officers' Retirement System (MPORS) (Continued) Fiscal Year Hired <7/1/75 Hired >6/30/75 Hired >6/30/79Hired >6/30/97 GABA Employer State2000-2019 5.800% 7.000% 8.500% 9.000% 14.410% 29.370%1998-1999 7.800% 9.000% 10.500% 11.000% 14.410% 29.370%1997 7.800% 9.000% 10.500%14.360% 29.370%Member Actuarial Assumptions The total pension liability in the June 30, 2018 actuarial valuation was determined using the following actuarial assumptions. Investment Return (net of admin expense) 7.65% Admin Expense as % of Payroll 0.24% General Wage Growth* 3.50% *includes Inflation at 2.75% Merit Increases 0% to 6.60% Postretirement Benefit Increases i. Guaranteed Annual Benefit Adjustment (GABA) each January Hired on or after July 1, 1997, or those electing GABA, and has been retired for at least 12 months, a GABA will be made each year in January equal to 3%. ii. Minimum benefit adjustment (non-GABA) The minimum benefit provided may not be less than 50% of the compensation paid to a newly confirmed police officer of the employer that last employed the member as a police officer in the current fiscal year. Mortality assumptions among contributing members, service retired members and beneficiaries were based on RP 2000 Combined Employee and Annuitant Mortality Tables projected to 2020 using scale BB, set back one year for males. Mortality assumptions among Disabled Retirees were based on RP 2000 Combined Mortality Tables. DRAFT361
123 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Municipal Police Officers' Retirement System (MPORS) (Continued) Actuarial Assumptions (Continued) The most recent experience study, performed for the period covering fiscal years 2011 through 2016, is outlined in a report dated May 5, 2017 and can be located on the MPERA website. The long-term expected return on pension plan assets is reviewed as part of the regular experience studies prepared for the Plan. Several factors are considered in evaluating the long-term rate of return assumption including historical rates of return, rate of return assumptions adopted by similar public-sector systems, and by using 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 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 by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the target asset allocation as of June 30, 2019, are summarized below. Long-Term Expected Target Asset Real Rate of ReturnAsset Class Allocation Arithmetic BasisCash Equivalents2.60% 4.00%Domestic Equity36.00% 4.55%Foreign Equity18.00% 6.35%Fixed Income23.40% 1.00%Private Equity12.00% 7.75%Real Estate8.00% 4.00%Total100.00% Discount Rate The discount rate used to measure the TPL was 7.65%. The projection of cash flows used to determine the discount rate assumed that contributions from participating plan members, employers, and non-employer contributing entities would be made based on the Board’s funding policy, which established the contractually required rates under the Montana Code Annotated. The state contributed 29.37% of the salaries paid by employers. Based on those assumptions, the Plan’s fiduciary net position was projected to be adequate to make all the projected future benefit payments of current plan members through the year 2132. 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. DRAFT362
124 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Municipal Police Officers' Retirement System (MPORS) (Continued) Sensitivity of the proportionate share of the net pension liability to changes in the discount rate The following presents the employer’s sensitivity of the NPL to the discount rate in the table below. A small change in the discount rate can create a significant change in the liability. The NPL was calculated using the discount rate of 7.65%, as well as what the NPL would be if it were calculated using a discount rate 1.00% lower or 1.00% higher than the current rate. As of 1.0% DecreaseCurrent 1.0% IncreaseReporting Date(6.65%)Discount Rate(8.65%)City of Bozeman's Net Pension Liability$7,626,984$5,022,189$2,939,047 Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions GASB Statement 68 allows a measurement date of up to 12 months before the employer’s fiscal year-end can be utilized to determine the Plan’s TPL. The basis for the TPL as of June 30, 2019, was determined by taking the results of the June 30, 2018, actuarial valuation and applying standard roll forward procedures. The roll forward procedure uses a calculation that adds the annual normal cost (also called the service cost), subtracts the actual benefit payments and refunds for the plan year, and then applies the expected investment rate of return for the year. The roll forward procedure will include the effects of any assumption changes and legislative changes. The update procedures are in conformity with Actuarial Standards of Practice issued by the Actuarial Standards Board. The Total Pension Liability (TPL) minus the Fiduciary Net Position equals the Net Pension Liability (NPL). The proportionate shares of the employer’s and the State of Montana’s NPL for June 30, 2018, and 2017, are displayed below. The employer’s proportionate share equals the ratio of the employer’s contributions to the sum of all employer and non-employer contributions during the measurement period. Due to the existence of the 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 state’s proportionate share for a particular employer equals the ratio of the contributions for the particular employer to the total state contributions paid. The employer recorded a liability of $5,022,189 and the employer’s proportionate share was 2.9325 percent. DRAFT363
125 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Municipal Police Officers' Retirement System (MPORS) (Continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) As of Reporting Date NPL as of 6/30/2019 NPL as of 6/30/2018Percent of Collective NPL as of 6/30/2019Percent of Collective NPL as of 6/30/2018Change in Percent of Collective NPLCity Proportionate Share 5,022,189$ 5,408,979$ 2.9325% 3.0402% -0.1077%State of Montana Proportionate Share associated with Employer 10,266,345$ 11,024,418$ 8.9307% 9.2367% -0.3060%Total15,288,534$ 16,433,397$ 11.8632% 12.2769% -0.4137% 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 There were no changes between the measurement date of the collective NPL and the employer’s reporting date that are expected to have a significant effect on the employer’s proportionate share of the collective NPL. Pension Expense At June 30, 2019 reporting date, the employer recognized its proportionate share of the Plan’s pension expense of $526,857. The employer also recognized grant revenue of $1,415,234 for the support provided by the State of Montana for the proportionate share of the pension expense that is associated with the employer. As of reporting datePension Expense as of 6/30/19Pension Expense as of 6/30/18City's Proportionate Share 526,857$ 657,460$ State of Montana Proportionate Share associated with the City 1,415,234 1,335,293 Total1,942,091$ 1,992,753$ DRAFT364
126 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Municipal Police Officers' Retirement System (MPORS) (Continued) Recognition of Deferred Inflows and Outflows At June 30, 2019, the employer reported its proportionate share of MPORS' deferred outflows of resources and deferred inflows of resources related to MPORS from the following sources: As of reporting dateDeferred Outflows of ResourcesDeferred Inflows of ResourcesExpected v. actual experience 14,078$ 100,166$ Projected investment earnings v. actual investment earnings - 38,081 Changes in assumptions 234,774 - Changes in proportion and differences between employer contributions and proportionate share of contributions - 128,899 Employer contributions subsequent to the measurement date 681,583 - Total930,435$ 267,146$ Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in Pension Expense as follows: For the Reporting Year ended June 30:Recognition of deferred outflows and deferred inflows in future years as an increase or (decrease) to pension expense2020 113,443$ 2021 31,490$ 2022 (140,833)$ 2023 (22,394)$ 2024 -$ Thereafter -$ Pension plan fiduciary net position The stand-alone financial statements (76d) of the Montana Public Employees Retirement Board (PERB) Comprehensive Annual Financial Report (CAFR) and the GASB 68 Report disclose the Plan’s fiduciary net position. The reports are available from the PERB at PO Box 200131, Helena MT 59620-0131, (406) 444-3154 or both are available on the MPERA website at http://mpera.mt.gov/index.shtml DRAFT365
127 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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 single-employer defined benefit post-employment health care 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 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. No assets are accumulated in a trust that meets the criteria in paragraph 4 of Statement 75. 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 $41 and $2131 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. Depending on the plan, for a single individual, after an annual deductible of $500 to $2,700 for non-Medicare-eligible retirees, the plan reimburses 60% to 80% of allowed charges after deductible and up to the out-of-pocket maximum, and then 100%. Depending on the plan, for a family, after an annual deductible of $1,000 to $5,400 for non-Medicare-eligible retirees, the plan reimburses 60% to 80% of allowed charges after deductible and up to the out-of-pocket maximum, and then 100%. Employees Covered by Benefit Terms At June 30, 2019, the following employees were covered by the benefit terms: Category Count Active employees 459 Inactive employees or beneficiaries currently receiving benefit payments 32 Total 491 DRAFT366
128 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 15. POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED) Contributions Benefit contributions are paid by the City as they come due. Total OPEB Liability (TOL) The City’s total OPEB liability of $2,567,830 was measured as of June 30, 2018, and was determined by an actuarial valuation as of July 1, 2017. Changes in the TOL for the year ended June 30, 2019 are as follows: Service cost180,183$ Interest on OPEB obligation88,126 Difference between expected & actual expense(502,125) Benefits paid(118,184) Changes in assumptions225,375 Changes in OPEB obligation(126,625) OPEB obligation - beginning of year2,694,455 OPEB obligation - end of year2,567,830$ There is sensitivity of the TOL to changes in the discount rate. The TOL of the City as well as what the City’s TOL would be if it were calculated using a discount rate that is one percentage point lower (2.87%) or one percentage point higher (4.87%) follows: 1% Decrease Discount Rate 1% Increase(2.87%) (3.87%) (4.87%)Total OPEB liability 2,856,628$ 2,567,830$ 2,312,972$ There is also sensitivity of the TOL to changes in the healthcare cost rates. The TOL of the City as well as what the City’s TOL would be if it were recalculated using healthcare cost trend rates that are one percentage point lower (6.5%) or one percentage point higher (8.5%) than the current healthcare cost trend rate follows: 1% Decrease Discount Rate 1% Increase(6.5%) (7.5%) (8.5%)Total OPEB liability 2,242,584$ 2,567,830$ 2,961,993$ DRAFT367
129 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 15. POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED) For the year ended June 30, 2019, the City recognized an OPEB expense of $126,625. At June 30 2019, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred DeferredOutflows of Inflows ofResources ResourcesChanges of assumptions 193,179$ (973,400)$ Total 193,179$ (973,400)$ Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: 2020(94,888)$ 2021(94,888) 2022(94,888) 2023(94,888) 2024(94,888) Thereafter(305,781) Total(780,221)$ Year Ended June 30: DRAFT368
130 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 15. POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED) The June 30, 2019, year-end OPEB cost is reported in the City’s funds as follows: Functions/ProgramsExpensesPRIMARY GOVERNMENTGovernmental activities:General government(21,324)$ Public safety(39,863) Public service(14,831) Public welfare(27,846) Total governmental activities(103,864) Business-type activities:Water(6,815) Waste water(6,214) Solid waste(5,921) Parking(1,759) Storm water(2,052) Total business-type activities(22,761) Total primary government(126,625)$ 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 2018, with an estimate provided for fiscal year 2019. For fiscal year 2019, an estimated valuation was derived based on the 2018 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, 2018, the most recent valuation date, the City’s total OPEB liability was determined using the following actuarial assumptions: The following key assumptions were chosen by the City: 1. Discount Rate: 3.87% for determining fiscal 2019 disclosure and estimated fiscal 2019 expense; 3.13% for determining fiscal 2018 liability and fiscal 2018 expense. 2. Inflation Rate: 2.5% long-term 3. Expected Real Rate of Return on Assets: N/A DRAFT369
131 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 15. POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED) Actuarial Methods and Assumptions (Continued) 4. Health Care Claim and Contribution Trend Rates: Updated from 7.5% initial in fiscal 2019 and 4.5% ultimate in fiscal 2039. 5. Average Salary Increase: 3.00% 6. Retirement Rates: Based on actuarial valuation for statewide retirement systems as of June 30, 2018 7. Retiree Participation Rate: 35% 8. Lapse Rate: 25% per year 9. Marriage Assumption: For future retirees, 60% of participants are assumed to be married, with husbands 3 years older than wives. 10. ACA Excise Tax: Results include an estimate of future ACA Excise Tax costs based on upon loading health care trend rates by 5.8% in fiscal years 2046 and beyond. For purposes of the estimated Excise Tax, the tax payer (i.e., health plan) is assumed to be non-taxable. The discount rate was based on a yield or index rate for a 20-year, tax-exempt, general obligation municipal bond with an average rating of AA/Aa or higher. Rates were taken from the S&P municipal bond 20-year high rate index as of the measurement date. Mortality rates are based on the RP-2014 Blue Collar Healthy mortality table backed off to 2006 and projected generationally with Scale MP-2018 for MPORS and FURS (Police and Fire, respectively) and RP-2014 Combined Healthy mortality table backed off to 2006 and projected generationally with Scale MP-2018 for PERS (All other employees). Projections of the sharing of benefit-related costs for financial reporting purposes are based on an established pattern of practice. 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. DRAFT370
132 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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. As of June 30, 2019, 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. The City has also entered into an inter-local agreement for the purpose of procuring equipment to upgrade the aforementioned 911 radio system. Under this agreement, the County has entered into a lease-purchase agreement for the system. The inter-local agreement requires the City to make two payments on November 30, 2018 and November 30, 2019 in the amount of $504,999, plus 2.99% interest from December 31, 2018 through December 31, 2019. The payments have been accrued as a liability and expense in the fund statements as of June 30, 2019. 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. The County and City have entered into various other joint venture contractual arrangements, memorandums of understanding and inter-local agreements to support the following programs and/or operations: Victim Witness, Hazardous Materials, Solid Waste (Disposal and Convenient Site), Fire Warden/Chief, Evidence Technician, Library Services, Board of Health, and rental of the Law and Justice Center. The financial interests are not material. DRAFT371
133 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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 $1 million in profits from the sale of city-owned property known as the Mandeville Farm. The agreement came about as part of a settlement on legal claims from the City of Bozeman vs. MMIA litigation. A “profit” shall occur only when the City has recovered its total investment in the property, which includes the original purchase price together with all “costs of development” as defined in the settlement agreement. NOTE 17. RESTRICTED NET POSITION At June 30, 2019, the balances of restricted net position for business-type activities are as follows: Waste Water Solid Waste Nonmajor Water Fund Fund Fund Enterprise TotalRestricted by revenue bond covenants:For bond reserve 898,929$ 1,811,286$ -$ 58,288$ 2,768,503$ Restricted by ordinance:Cash in lieu of parking - - - 130,316 130,316 Cash in lieu of infrastructure 59,830 - - - 59,830 Impact fees 6,166,158 3,547,124 - - 9,713,282 7,124,917$ 5,358,410$ -$ 188,604$ 12,671,931$ Business-Type Activities DRAFT372
134 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 18. INTERFUND TRANSFERS AND ASSETS/LIABILITIES A summary of interfund transfers reported in the fund financial statements for the year ended June 30, 2019, follows: Street Capital NonmajorNonmajorGeneral Fund Maintenance Projects Governmental Water Solid Waste Waste Water Enterprise TotalGeneral Fund-$ -$ -$ 2,385,362$ -$ -$ -$ -$ 2,385,362$ Street Maintenance- - - 31,900 - - - - 31,900 Capital projects111,675 695,478 - 229,897 - - - - 1,037,050 Nonmajor Governmental 166,188 - - 582,325 - - - - 748,513 Water Enterprise- - - - 600,000 - - - 600,000 Solid Waste Enterprise250,000 - - - - - - 250,000 Nonmajor Enterprise75,000 - - 150,000 - - - - 225,000 Stormwater Enterprise- - - - - - - - Nonmajor Enterprise- - - - - - - - Total602,863$ 695,478$ -$ 3,379,484$ 600,000$ -$ -$ -$ 5,277,825$ Governmental FundsTransfers From Proprietary Funds 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. DRAFT373
135 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 18. INTERFUND TRANSFERS AND ASSETS/LIABILITIES (CONTINUED) A summary of advances and due from/to other funds at June 30, 2019, is as follows: Advances to Advances from other City funds other City fundsNon-major Governmental Funds:SID Sinking Debt Service -$ 472,483$ SID Revolving Debt Service 472,483 - 472,483$ 472,483$ Due from Due to other City funds other City fundsMajor Funds:General fund 144,193$ -$ Non-major Governmental Fund:TIFD South Bozeman Technology - 7,626 Internal Service Fund:Vehicle Maintenance - 136,567 144,193$ 144,193$ 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. 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 (MMIA), for workers' compensation and for tort liability. Employee medical insurance is provided through a cost-sharing multiple-employer defined benefit plan administered by MMIA. The plan offers health, dental and vision benefits and flexible spending and health savings accounts. Given the lack of coverage available, the City has no coverage for potential losses from environmental damages. DRAFT374
136 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 19. RISK MANAGEMENT (CONTINUED) 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, 2019, 2018, and 2017. 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. NOTE 20. CONTINGENCIES The City is involved with several 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. DRAFT375
137 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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 $2,107,351, which is its estimate of future landfill closure and post-closure care costs as of June 30, 2019. This amount is based on a Corrective Measures Assessment completed in September 2014 by a third party engineering firm, from which a remediation plan has been adopted by the City and has been approved the Montana Department of Environmental Quality. The cost of post closure care is an estimate and is subject to changes resulting from inflation, deflation, technology, or changes in applicable laws or regulations. The Solid Waste Fund accounts for the City’s solid waste collection, recycling, and disposal utility operation – including assets, liabilities, and post-closure costs associated with the closed Story Mill landfill. Segment information for the landfill is as follows: Condensed Statement of Net PositionRestricted cash and cash equivalents35,367$ Capital assets, net of depreciation870,316 Total assets905,683$ Current liabilities28,373$ Closure and post-closure care cost2,107,351 Total liabilities2,135,724 Restricted for debt service(1,230,040) Total net position(1,230,040) Total liabilities and net position905,684$ DRAFT376
138 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 21. SOLID WASTE LANDFILL CLOSURE AND POST-CLOSURE CARE COSTS (CONTINUED) Condensed Statement of Revenues, Expenses and Changes in Net PositionOperating revenues and expenses:Operating revenues -$ Operating expensesDepreciation 63,520 Change in post closure cost estimate 177,459 Other operating 22,688 Total operating expenses 263,667 Operating loss (263,667) Non-operating revenues (expenses):Interest income 1,699 Transfers 250,000 Total non-operating revenues 251,699 Change in net position (11,968) Net position, beginning of year (1,218,072) Net position, end of year (1,230,040)$ DRAFT377
139 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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 PositionCurrent assets18,689,615$ Capital assets141,766,244 Other assets4,991,256 Total assets165,447,115$ Current liabilities1,813,080$ Non-current liabilities22,019,125 Total liabilities23,832,205 Net investment in capital assets120,745,856 Restricted for debt service898,929 Unrestricted19,970,125 Total net position141,614,910 Total liabilities and net position165,447,115$ DRAFT378
140 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 22. SEGMENT INFORMATION FOR WATER ENTERPRISE FUND (CONTINUED) Condensed Statement of Revenues, Expenses, and Changes in Net PositionOperating revenues and expenses:Operating revenues 9,396,171$ Operating expenses:Depreciation 2,710,049 Other operating 5,959,759 Total operating expenses 8,669,808 Operating loss 726,363 Non-operating revenues (expenses)Interest income 522,327 Interest expense (579,918) Grant income 25,515 Gain on sale of assets (173,743) Contributions of infrastructure 4,379,785 Other income 47,581 Transfers 600,000 Total non-operating revenues 4,821,547 Change in net position 5,547,910 Net position, beginning of year 134,859,019 Restatement 1,207,981 Net position, end of year 141,614,910$ Condensed Statement of Cash FlowsNet cash provided by operating activities3,254,809$ Net cash flows from capital and related financing activities(2,089,208) Net cash flows from noncapital and financing activities600,000 Net cash flows from investing activities522,327 Net change in cash flows2,287,928 Beginning cash and equivalents20,434,486 Ending cash and equivalents22,722,414$ DRAFT379
141 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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 ofMarch 23, 1996 May 10, 1998 January 15, 1999 July 15, 1999 January 1, 2013 March 30, 2013Fire 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, $56,343, and $129,042, respectively, as of June 30, 2019. The Fire Impact Fee Fund does not have any outstanding credits. The following impact fee revenues were collected and expensed/expended during fiscal year 2019: Expenses,Beginning Expenditures, Balances Impact Fees Other Income and Transfers Ending BalancesFire 2,105,132$ 525,828$ 121,141$ (39,279)$ 2,712,822$ Water 6,455,725 2,042,324 221,563 (1,334,388) 7,385,224 Waste water 4,571,290 1,109,180 192,239 (294,208) 5,578,501 Streets 9,349,247 4,291,396 354,844 (5,216,653) 8,778,834 Total 22,481,394$ 7,968,728$ 889,787$ (6,884,528)$ 24,455,381$ DRAFT380
142 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 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 is currently underway and may be completed relatively quickly, monitoring of the site will continue for a period of up to 30 years. Tasman Geosciences, Inc. serves as the contractor for the potentially liable parties (the City of Bozeman and CVS Pharmacy, Inc.). Based on the selected remedies identified in the ROD, Tasman has completed a long-term cost projection for the project in February 2016. The long-term cost projection was reviewed in September 2017 and, at that time, it was determined it was still an accurate projection. This cost projection includes all remediation and monitoring cost, as well as, the MDEQ cost recovery associated with the BSS. The long-term cost projection for the City is $2,089,997 in remediation costs. Reduced by its insurer’s reimbursement, the amount is $1,700,183. 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. DRAFT381
143 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 24. POLLUTION REMEDIATION OBLIGATIONS (CONTINUED) CMC Asbestos Bozeman CECRA Facility (Continued) 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. DRAFT382
144 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2019 NOTE 25. NET POSITION COMPOSITION The table presented below displays the City’s fund balances by major purpose as displayed on page 42 of the governmental funds balance sheet. StreetNonmajor TotalGeneral Maintenance Construction Governmental GovernmentalFund Special Revenue Capital Projects Funds FundsNonspendablePrepaids-$ -$ -$ 293,250$ 293,250$ Cemetery perpetual care- - - 1,442,341 1,442,341 Total nonspendable- - - 1,735,591 1,735,591 RestrictedGeneral government-Planning- - - 1,874,998 1,874,998 General government-Health Insurance- - - 602,773 602,773 General government-other- - - 105 105 Public safety - Building Inspection- - - 1,737,908 1,737,908 Public safety-Fire Impact- - - 2,712,822 2,712,822 Public safety-Victim Witness- - - 426,598 426,598 Public safety-other- - - 48,026 48,026 Public service- 638,950 - 184,212 823,162 Public service - Gas Tax - - - 1,783,072 1,783,072 Public service - Community Transportation- - - 20,893 20,893 Public service - Lighting Districts- - - 503,581 503,581 Public welfare - Tax Increment Districts- - - 159,688 159,688 Public welfare - Econ Develop Loan Fund- - - 804,034 804,034 Public welfare - Tree Maint. District- - - 416,700 416,700 Public welfare - other- - - 5,253,705 5,253,705 Capital projects- - 671,195 - 671,195 Debt service-SID Sinking- - - 1,700,294 1,700,294 Debt service-SID Revolving Fund- - - 3,499,932 3,499,932 Debt service-GO Bonds- - - 89,755 89,755 Total restricted- 638,950 671,195 21,819,096 23,129,241 CommittedPublic safety- - - 835,379 835,379 Public welfare- - - 3,037,902 3,037,902 Capital projects- - 405,810 - 405,810 Total committed- - 405,810 3,873,281 4,279,091 AssignedGeneral government1,414,124 - - - 1,414,124 Public welfare- - - 1,231 1,231 Capital projects815,928 - 1,292,205 - 2,108,133 Budget ordinance minimum 16.67%5,509,530 - - - 5,509,530 Total assigned7,739,582 - 1,292,205 1,231 9,033,018 Unassigned- - - 8,731,534 8,731,534 Total net position7,739,582$ 638,950$ 2,369,210$ 36,160,733$ 46,908,475$ DRAFT383
C. REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION AND ANALYSIS DRAFT385
146 CITY OF BOZEMAN, MONTANA SCHEDULE OF CHANGES IN TOTAL OPEB LIABILITY & RELATED RATIOS Year Ended June 30, 2019 GASB Statement No. 75 was implemented beginning in fiscal year 2018. This Statement requires supplementary information for 10-year schedules containing service cost, changes of benefit terms, if any, differences between expected and actual experience, changes of actuarial assumptions or other inputs, and benefit payments, as applicable to the Local Government’s OPEB plan and method of calculating OPEB liability. Assets are not accumulated in a trust that meets the criteria in GASB Statement No. 75, paragrpah 4 to pay related benefits. The total OPEB liability and ratio of OPEB liability as a percentage of covered-employee payroll as of June 30, 2019 is determined as follows: Total OPEB Liability2019 2018Service cost 180,183$ 250,168$ Interest88,126 88,342 Assumption changes225,374 (653,711) Difference between expected and actual experience(502,125) - Benefit payments(118,184) - Net change in total OPEB liability (126,626) (315,201) Total OPEB liability - beginning of year 2,694,455 3,009,656 Total OPEB liability - ending of year 2,567,829$ 2,694,455$ Covered-employee payroll23,503,572$ 45,345,305$ Total OPEB liability as a percentage ofcovered-employee payroll10.93%5.94% * Schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Assumption changes. Changes of assumptions reflect the effects of changes in the discount rate used each period. The following are the discount rates used for each period presented: 6/30/2019 3.87%6/30/2018 3.13% DRAFT386
147 CITY OF BOZEMAN, MONTANA SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY AND SCHEDULE OF CONTRIBUTIONS Year Ended June 30, 2019 Schedule of Proportionate Share of the Net Pension Liability:As of Reporting Date 2019 2018 2017 2016 2015Employer's proportion of the net pension liability (percentage) 0.8336% 1.0419% 1.0218% 0.9588% 0.91505%Employer's net pension liability (amount) $ 17,399,265 $ 20,291,988 $ 17,404,143 $ 13,403,285 $ 11,401,613 State's net pension liability (amount) $ 5,822,595 $ 266,967 $ 212,659 $ 164,637 $ 139,231 Total $ 23,221,860 $ 20,558,955 $ 17,616,802 $ 13,567,922 $ 11,540,844 Employer's covered payroll $ 13,764,340 $ 12,924,792 $ 12,238,920 $ 11,189,797 $ 10,479,122 Employer's proportionate share as a percent of covered payroll 126.41% 157.00% 142.20% 119.78% 111.22%Plan fiduciary net position as a percent of total pension liability 73.47% 73.75% 74.71% 78.40% 79.9000%Schedule of Contributions:As of Reporting Date 2019 2018 2017 2016 2015Contractually required DB contributions $ 1,218,871 $ 1,161,210 $ 1,081,810 $ 1,022,996 $ 922,084 Plan choice rate required contributions $ - $ - $ - $ 28,892 $ 52,151 Contributions in relation to the contractually required contributions $ 1,218,871 $ 1,161,210 $ 1,081,810 $ 1,051,888 $ 974,235 Contribution deficiency (excess) $ - $ - $ - $ - $ - Employer's covered payroll $ 14,222,530 $ 13,764,340 $ 12,924,792 $ 12,238,920 $ 11,189,797 Contributions as a percent of covered payroll 8.57% 8.44% 8.37% 8.59% 8.71%PERSPERS*The amounts presented for each fiscal year were determined as of June 30. Schedule is intended to show information for 10 years. Additional years will be displayed as they become available. *The amounts presented for each fiscal year were determined as of June 30. Schedule is intended to show information for 10 years. Additional years will be displayed as they become available. DRAFT387
148 CITY OF BOZEMAN, MONTANA SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY AND SCHEDULE OF CONTRIBUTIONS (CONTINUED) Year Ended June 30, 2019 Schedule of Proportionate Share of the Net Pension Liability:As of Reporting Date 2019 2018 2017 2016 2015Employer's proportion of the net pension liability (percentage) 2.3663% 2.3492% 2.3705% 2.4336% 2.4192%Employer's net pension liability (amount) $ 2,725,281 $ 2,655,380 $ 2,707,390 $ 2,489,054 $ 2,361,551 State's net pension liability (amount) $ 6,231,502 $ 6,030,078 $ 6,134,093 $ 5,543,784 $ 5,327,544 Total $ 8,956,783 $ 8,685,458 $ 8,841,483 $ 8,032,838 $ 7,689,095 Employer's covered payroll $ 3,726,746 $ 3,511,860 $ 3,338,041 $ 3,270,451 $ 3,142,481 Employer's proportionate share as a percent of covered payroll 73.13% 75.61% 81.11% 76.11% 75.15%Plan fiduciary net position as a percent of total pension liability 79.03% 77.77% 75.48% 76.90% 76.70%Schedule of Contributions:As of Reporting Date 2019 2018 2017 2016 2015Contractually required contributions $ 546,707 $ 548,518 $ 504,303 $ 477,250 $ 478,776 Contributions in relation to the contractually required contributions $ 546,707 $ 548,518 $ 504,303 $ 477,250 $ 478,776 Contribution deficiency (excess) $ - $ - $ - $ - $ - Employer's covered payroll $ 3,807,151 $ 3,726,746 $ 3,511,860 $ 3,338,041 $ 3,270,451 Contributions as a percent of covered payroll 14.36% 14.72% 14.36% 14.03% 14.64%FURS*The amounts presented for each fiscal year were determined as of June 30. Schedule is intended to show information for 10 years. Additional years will be displayed as they become available. FURS*The amounts presented for each fiscal year were determined as of June 30. Schedule is intended to show information for 10 years. Additional years will be displayed as they become available. DRAFT388
149 CITY OF BOZEMAN, MONTANA SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY AND SCHEDULE OF CONTRIBUTIONS (CONTINUED) Year Ended June 30, 2019 Schedule of Proportionate Share of the Net Pension Liability:2019 2018 2017 2016 2015Employer's proportion of the net pension liability (percentage) 2.9325% 3.0402% 3.0842% 2.9746% 3.0209%Employer's net pension liability (amount) $ 5,022,189 $ 5,408,979 $ 5,552,007 $ 4,920,638 $ 4,746,933 State's net pension liability (amount) $ 10,266,345 $ 11,024,418 $ 11,020,975 $ 9,969,680 $ 9,589,371 Total $ 15,288,534 $ 16,433,397 $ 16,572,982 $ 14,890,318 $ 14,336,304 Employer's covered payroll $ 4,628,804 $ 4,555,121 $ 4,353,897 $ 4,116,930 $ 4,053,265 Employer's proportionate share as a percent of covered payroll 108.50% 118.75% 127.52% 119.52% 117.11%Plan fiduciary net position as a percent of total pension liability 70.95% 68.34% 65.62% 66.90% 67.01%Schedule of Contributions:2019 2018 2017 2016 2015Contractually required contributions $ 681,583 $ 692,318 $ 655,143 $ 637,789 $ 596,791 Contributions in relation to the contractually required contributions $ 681,583 $ 692,318 $ 655,143 $ 637,789 $ 596,791 Contribution deficiency (excess) $ - $ - $ - $ - $ - Employer's covered payroll $ 4,729,931 $ 4,628,804 $ 4,555,121 $ 4,353,897 $ 4,116,930 Contributions as a percent of covered payroll 14.41% 14.96% 14.38% 14.65% 14.50%MPORS*The amounts presented for each fiscal year were determined as of June 30. Schedule is intended to show information for 10 years. Additional years will be displayed as they become available. MPORS*The amounts presented for each fiscal year were determined as of June 30. Schedule is intended to show information for 10 years. Additional years will be displayed as they become available. DRAFT389
150 CITY OF BOZEMAN, MONTANA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION - PENSION PLAN CHANGES Year Ended June 30, 2019 CHANGE OF BENEFIT TERMS The following changes to the PERS, FURS, and MPORS plan provisions were made as identified: 2017 Legislative Changes – PERS: Working Retiree Limitations – for PERS Effective July 1, 2017, if a PERS retiree returns as an independent contractor to what would otherwise be PERS-covered employment, general contractor overhead costs are excluded from PERS working retiree limitations. Refunds 1) Terminating members eligible to retire may, in lieu of receiving a monthly retirement benefit, refund their accumulated contributions in a lump sum. 2) Terminating members with accumulated contributions between $200 and $1,000 who wish to rollover their refund must do so within 90 days of termination of service. 3) Trusts, estates, and charitable organizations listed as beneficiaries are entitled to receive only a lump-sum payment. Interest credited to member accounts – Effective July 1, 2017, the interest rate credited to member accounts increased from 0.25% to 0.77%. Lump-sum payouts Effective July 1, 2017, lump-sum payouts in all systems are limited to the member’s accumulated contributions rate than the present value of the member’s benefit. Disabled PERS Defined Contribution (DC) Members PERS members hired after July 1, 2011 have a normal retirement age of 65. PERS DC members hired after July 1, 2011 who became disabled were previously only eligible for a disability benefit until age 65. Effective July 1, 2017, these individuals will be eligible for a disability benefit until they reach 70, thus ensuring the same 5-year time period available to PERS DC disabled members hired prior to July 1, 2011 who have a normal retirement age of 60 and are eligible for a disability benefit until age 65. DRAFT390
151 CITY OF BOZEMAN, MONTANA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION - PENSION PLAN CHANGES Year Ended June 30, 2019 CHANGE OF BENEFIT TERMS (CONTINUED) 2017 Legislative Changes – FURS: Working Retiree Limitations – for FURS Applies to retirement system members who return on or after July 1, 2017 to covered employment in the system from which they retired. a. Members who return for less than 480 hours in a calendar year: i. May not become an active member in the system; and ii. Are subject to a $1 reduction in their retirement benefit for each $3 earned in excess of $5,000 in the calendar year. b. Members who return for 480 or more hours in a calendar year: i. Must become an active member of the system; ii. Will stop receiving a retirement benefit from the system; and iii. Will be eligible for a second retirement benefit if they earn 5 or more years of service credit through their second employment. c. Employee, employer and state contributions, if any, apply as follows: i. Employer contributions and state contributions (if any) must be paid on all working retirees; ii. Employee contributions must be paid on working retirees who return to covered employment for 480 or more hours in a calendar year. Second Retirement Benefit – for FURS Applies to retirement system members who return on or after July 1, 2017 to active service covered by the system from which they retired. a. If the member works more than 480 hours in a calendar year and accumulates less than 5 years of service credit before terminating again, the member: i. Is not awarded service credit for the period of reemployment; ii. Is refunded the accumulated contributions associated with the period of reemployment; iii. Starting the first month following termination of service, receives the same retirement benefit previously paid to the member; and iv. Does not accrue post-retirement benefit adjustments during the term of reemployment but receives a Guaranteed Annual Benefit Adjustment (GABA) in January immediately following second retirement. DRAFT391
152 CITY OF BOZEMAN, MONTANA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION - PENSION PLAN CHANGES Year Ended June 30, 2019 CHANGE OF BENEFIT TERMS (CONTINUED) 2017 Legislative Changes – FURS (Continued): Working Retiree Limitations – for FURS (Continued) Second Retirement Benefit – for FURS (Continued) Applies to retirement system members who return on or after July 1, 2017 to active service covered by the system from which they retired. b. If the member works more than 480 hours in a calendar year and accumulates at least 5 years of service credit before terminating again, the member: i. Is awarded service credit for the period of reemployment; ii. Starting the first month following termination of service, receives: 1. The same retirement benefit previously paid to the member, and 2. A second retirement benefit for the period of reemployment calculated based on the laws in effect as of the member’s rehire date; and iii. Does not accrue post-retirement benefit adjustments during the term of reemployment but receives a GABA: 1. On the initial retirement benefit in January immediately following second retirement, and 2. On the second retirement benefit starting in January after receiving that benefit for at least 12 months. c. A member who returns to covered service is not eligible for a disability benefit Refunds Terminating members eligible to retire may, in lieu of receiving a monthly retirement benefit, refund their accumulated contributions in a lump sum. Terminating members with accumulated contributions between $200 and $1,000 who wish to rollover their refund must do so within 90 days of termination of service. Trusts, estates, and charitable organizations listed as beneficiaries are entitled to receive only a lump-sum payment. Interest credited to member accounts Effective July 1, 2017, the interest rate credited to member accounts increased from 0.25% to 0.77% Lump-sum payouts Effective July 1, 2017, lump-sum payouts in all systems are limited to the member’s accumulated contributions rate than the present value of the member’s benefit. DRAFT392
153 CITY OF BOZEMAN, MONTANA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION - PENSION PLAN CHANGES Year Ended June 30, 2019 CHANGE OF BENEFIT TERMS (CONTINUED) 2017 Legislative Changes – MPORS: Working Retiree Limitations – for MPORS Applies to retirement system members who return on or after July 1, 2017 to covered employment in the system from which they retired. Members who return for less than 480 hours in a calendar year: a. May not become an active member in the system; and b. Are subject to a $1 reduction in their retirement benefit for each $3 earned in excess of $5,000 in the calendar year. Members who return for 480 or more hours in a calendar year: a. Must become an active member of the system; b. Will stop receiving a retirement benefit from the system; and c. Will be eligible for a second retirement benefit if they earn 5 or more years of service credit through their second employment. Employee, employer and state contributions, if any, apply as follows: a. Employer contributions and state contributions (if any) must be paid on all working retirees; b. Employee contributions must be paid on working retirees who return to covered employment for 480 or more hours in a calendar year. Second Retirement Benefit – for MPORS Applies to retirement system members who return on or after July 1, 2017 to active service covered by the system from which they retired. If the member works more than 480 hours in a calendar year and accumulates less than 5 years of service credit before terminating again, the member: a. Is not awarded service credit for the period of reemployment; b. Is refunded the accumulated contributions associated with the period of reemployment; c. Starting the first month following termination of service, receives the same retirement benefit previously paid to the member; and d. Does not accrue post-retirement benefit adjustments during the term of reemployment but receives a Guaranteed Annual Benefit Adjustment (GABA) in January immediately following second retirement. 2017 Legislative Changes: If the member works more than 480 hours in a calendar year and accumulates at least 5 years of service credit before terminating again, the member: a. Is awarded service credit for the period of reemployment; b. Starting the first month following termination of service, receives: DRAFT393
154 CITY OF BOZEMAN, MONTANA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION - PENSION PLAN CHANGES Year Ended June 30, 2019 CHANGE OF BENEFIT TERMS (CONTINUED) 2017 Legislative Changes – MPORS (Continued): Second Retirement Benefit – for MPORS (Continued) i. The same retirement benefit previously paid to the member, and ii. A second retirement benefit for the period of reemployment calculated based on the laws in effect as of the member’s rehire date; and c. Does not accrue post-retirement benefit adjustments during the term of reemployment but receives a GABA: i. On the initial retirement benefit in January immediately following second retirement, and ii. On the second retirement benefit starting in January after receiving that benefit for at least 12 months. A member who returns to covered service is not eligible for a disability benefit. Refunds Terminating members eligible to retire may, in lieu of receiving a monthly retirement benefit, refund their accumulated contributions in a lump sum. Terminating members with accumulated contributions between $200 and $1,000 who wish to rollover their refund must do so within 90 days of termination of service. Trusts, estates, and charitable organizations listed as beneficiaries are entitled to receive only a lump-sum payment. Interest credited to member accounts Effective July 1, 2017, the interest rate credited to member accounts increased from 0.25% to 0.77% Lump-sum payouts Effective July 1, 2017, lump-sum payouts in all systems are limited to the member’s accumulated contributions rate than the present value of the member’s benefit. DRAFT394
155 CITY OF BOZEMAN, MONTANA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION - PENSION PLAN CHANGES Year Ended June 30, 2019 CHANGES IN ACTUARIAL ASSUMPTIONS AND METHODS Method and Assumptions used in Calculations of Actuarially Determined Contributions The following Actuarial Assumptions were adopted from the June 30, 2017 actuarial valuation: PERS FURS MPORS General Wage Growth* 3.50% 3.50% 3.50% Investment Rate of Return* 7.65% 7.65% 7.65% *Includes inflation at 2.75% 2.75% 2.75% Merit increase 0% to 6.30% 0% to 6.30% 0% to 6.60% Asset valuation method 4-year smoothed market 4-year smoothed market 4-year smoothed market Actuarial cost method Entry age normal Entry age normal Entry age normal Amortization method Level percentage of pay, open Level percentage of pay, open Level percentage of pay, open Mortality (Healthy members) For Males & Females: RP 2000 Combined Employee and Annuitant Mortality Table projected to 2020 using Scale BB, males set back 1 year For Males & Females: RP 2000 Combined Employee and Annuitant Mortality Table projected to 2020 using Scale BB, males set back 1 year For Males & Females: RP 2000 Combined Employee and Annuitant Mortality Table projected to 2020 using Scale BB, males set back 1 year Mortality (Disabled members) For Males & Females: RP 2000 Combined Mortality Table For Males & Females: RP 2000 Combined Mortality Table For Males & Females: RP 2000 Combined Mortality Table Admin Expense as a % of Payroll 0.26% 0.23% 0.24% Administrative expenses are recognized by an additional amount added to the normal cost contribution rate for the System. This amount varies from year to year based on the prior year’s actual administrative expenses. DRAFT395
156 CITY OF BOZEMAN, MONTANA SCHEDULE OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET TO ACTUAL – GENERAL FUND Year Ended June 30, 2019 Variance withActual Final BudgetOriginal Final Amounts Positive (Negative)Budgetary fund balance, July 1 4,787,641$ 4,787,641$ 4,787,641$ -$ Resources (inflows):Taxes 16,621,534 16,621,534 16,660,409 38,875 Special assessments - - 372 372 Licenses and permits 409,475 409,475 383,320 (26,155) Intergovernmental 7,642,511 7,642,511 7,912,214 269,703 Charges for services 2,940,941 2,940,941 3,182,506 241,565 Fines and forfeitures 1,131,000 1,131,000 1,099,673 (31,327) Sale of assets 20,000 20,000 5,763 (14,237) Interest on investments 75,000 75,000 128,671 53,671 Transfers from other funds 2,560,119 2,560,119 2,385,362 (174,757) Proceeds of long-term debt 431,500 431,500 344,167 (87,333) Other 83,450 83,450 189,769 106,319 Amounts available for appropriation 36,703,171 36,703,171 37,079,867 376,696 Charges to appropriations (outflows):CurrentGeneral government 7,783,130 7,783,130 7,322,843 460,287 Public safety 13,494,338 15,385,838 15,385,416 422 Public service - 169,000 168,321 679 Public welfare 7,115,950 7,115,950 6,447,144 668,806 Other 3,356,214 1,182,714 623,028 559,686 Capital outlay 1,832,717 1,832,717 1,454,336 378,381 Debt service3,650 13,650 13,461 189 Transfers to other funds491,188 603,188 602,863 325 Total charges to appropriations34,077,187 34,086,187 32,017,412 2,068,775 Budgetary fund balance, June 302,625,984$ 2,616,984$ 5,062,455$ 2,445,471$ Budgeted Amounts DRAFT396
157 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, 2019 Variance withActual Amounts Final BudgetOriginal Final Budgetary Basis Positive (Negative)Budgetary fund balance, July 1 (368,771)$ (1,517,193)$ 528,760$ 2,045,953$ Resources (inflows):Taxes - - - - Special assessments 55,200 55,200 29,796 (25,404) Licenses and permits 18,000 18,000 20,311 2,311 Intergovernmental - - 241,814 241,814 Charges for services 5,730,198 5,730,198 5,712,696 (17,502) Fines and forfeitures - - - - Interest on investments 10,400 10,400 17,414 7,014 Transfers from other funds - - 31,900 31,900 Proceeds from long-term debt - - 232,431 232,431 Premium on bonds issued - - - - Proceeds from the sale of capital assets - - 28,135 28,135 Other 10,000 10,000 9,250 (750) Amounts available for appropriation 5,455,027 4,306,605 6,852,507 2,545,902 Charges to appropriations (outflows):CurrentGeneral government - - - - Public safety - - - - Public service 3,649,140 3,623,140 3,623,015 125 Public welfare - - - - Capital outlay 1,314,500 1,625,500 1,625,341 159 Debt service315,207 270,207 269,723 484 Transfers to other funds695,478 695,478 695,478 - Total charges to appropriations5,974,325 6,214,325 6,213,557 768 Budgetary fund balance, June 30(519,298)$ (1,907,720)$ 638,950$ 2,546,670$ Budgeted Amounts DRAFT397
158 CITY OF BOZEMAN, MONTANA SCHEDULE OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET TO ACTUAL OTHER MAJOR FUNDS – CONSTRUCTION CAPITAL PROJECTS Year Ended June 30, 2019 Variance withActual Amounts Final BudgetOriginal Final Budgetary Basis Positive (Negative)Budgetary fund balance, July 1 -$ -$ 5,863,108$ 5,863,108$ Resources (inflows):Taxes - - - - Special assessments - - - - Licenses and permits - - - - Intergovernmental - - 186,670 186,670 Charges for services - - - - Fines and forfeitures - - - - Interest on investments - - 427,900 427,900 Transfers from other funds 284,011 284,011 1,037,050 753,039 Proceeds from long-term debt - - 2,283,000 2,283,000 Premium on bonds issued - - - - Proceeds from the sale of capital assets - - - - Other - - 125,227 125,227 Amounts available for appropriation 284,011 284,011 9,922,955 9,638,944 Charges to appropriations (outflows):CurrentGeneral government - 5,500 5,487 13 Public safety - 500 216 284 Public service - 306,000 305,788 212 Public welfare 32,000 32,000 21,821 10,179 Capital outlay 987,011 7,211,911 7,211,411 500 Debt service- 9,100 9,022 78 Transfers to other funds- - - - Total charges to appropriations1,019,011 7,565,011 7,553,745 11,266 Budgetary fund balance, June 30(735,000)$ (7,281,000)$ 2,369,210$ 9,650,210$ Budgeted Amounts DRAFT398
159 CITY OF BOZEMAN, MONTANA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION – BUDGETARY INFORMATION Year Ended June 30, 2019 General Street Capital Fund Maintenance ProjectsSources/inflows of resourcesActual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule 37,079,867$ 6,852,507$ 9,922,955$ 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. (4,787,641) (528,760) (5,863,108) Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes (2,385,362) (31,900) (1,037,050) The proceeds from the issuance of long-term debt are a budgetary resource but are a other financing source for financial reporting purposes (344,167) (232,431) (2,283,000) The proceeds from the sale of assets are budgetary resources but are regarded as a special item, rather than revenue, for financial reporting purposes (5,763) (28,135) - Total revenues as reported on the statement of revenues, expenditures, and changes in fund balances - governmental funds 29,556,934$ 6,031,281$ 739,797$ Uses/outflows of resourcesActual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule 32,017,412$ 6,213,557$ 7,553,745$ Differences - budget to GAAP:Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. (602,863) (695,478) - Total expenditures as reported on the statement of revenues, expenditures, and changes in fund balances - governmental funds 31,414,549$ 5,518,079$ 7,553,745$ DRAFT399
D. SUPPLEMENTAL INFORMATION DRAFT401
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES DRAFT403
NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Departmental Special Revenues – Accounts for monies received and expended for projects relating to various City departments. Street Impact Fees Special Revenue Fund – This special revenue fund accounts for the collection and expenditures associated with the street impact fees. 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. DRAFT404
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. TIF 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 this tax increment financing district and associated business improvement district. Building Inspection Fund – Accounts for all activity related to 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. Street Arterial & Collector District – Accounts for special assessment revenues levied, received, and expended for necessary transportation infrastructure. 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. TIF Mandeville/Wheat Dr. – In December 2006, the City created a tax increment financing district to encourage the attraction and retention of value-adding farming industries. This fund accounts for the revenue and expenditures associated with the district. TIF South Bozeman Technology – In December 2012, the City created a tax increment financing district to improve existing infrastructure deficiencies on property adjacent to Montana State University and the Innovation Campus. 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. Special Improvement District (SID) Sinking – Accounts for the accumulation of resources and payment of special assessment bond principal and interest related to general improvement, sidewalk, and curb construction projects. General Obligation Bonds Debt Service Fund – Accounts for the debt service payments associated with the Library and Transportation general obligation bonds. DRAFT405
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. 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. DRAFT406
165 CITY OF BOZEMAN, MONTANA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS June 30, 2019 CityStreet Planning Health-Medical CommunityImpact Fees Departmental Board Insurance TransportationASSETSCash and cash equivalents -$ 1,954,854$ 1,673,924$ 488,424$ 61,487$ Receivables: Property taxes - 4,975 9,867 125,322 - Accrued interest 22,125 - - - - Customers, net - 10,000 10 - - Special assessments - - - - - Other governments - 87,822 - - - Others- - - - Advances to other city funds - - - - - Prepaid expenditures - - - - - Notes receivable - - - - - Restricted cash and cash equivalents 9,380,533 25,000 233,547 - - Total assets 9,402,658$ 2,082,651$ 1,917,348$ 613,746$ 61,487$ LIABILITIESAccounts payable 491,583$ 130,414$ 41,482$ -$ 40,594$ Appearance bonds and other liabilities 132,241 - - - - Escheat property payable - - - - - Accrued employee benefits payable - - - - - Due to other funds- - - - - Total liabilities623,824 130,414 41,482 - 40,594 DEFERRED INFLOWS OF RESOURCESUnavailable revenue-property taxes- 436 868 10,973 - Unavailable revenue-special assessments- - - - - Total deferred inflows of resources- 436 868 10,973 - FUND BALANCESNonspendable- - - - - Restricted- 159,688 1,874,998 602,773 20,893Committed- 1,839,413 - - - Assigned- - - - - Unassigned8,778,834 (47,300) - - - Total fund balances8,778,834 1,951,801 1,874,998 602,773 20,893 Total liabilities, deferred inflows of resources, and fund balances9,402,658$ 2,082,651$ 1,917,348$ 613,746$ 61,487$ (continued)Special Revenue Funds DRAFT408
166 CITY OF BOZEMAN, MONTANA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2019 Downtown Building Gas Tax Tree Fire Improvement Inspection Apportionment Maintenance Impact Fees District FundASSETSCash and cash equivalents 1,784,061$ 432,157$ -$ 3,553,066$ 1,860,983$ Receivables:Property taxes - - - 203,767 - Accrued interest - - - 7,080 - Customers, net - 48 - - - Special assessments - 12,061 - 1,830 - Other governments - - - - - Others - - - - - Advances to other city funds - - - - - Prepaid expenditures - - - - - Notes receivable - - - - - Restricted cash and cash equivalents - - 2,714,383 - - Total assets 1,784,061$ 444,266$ 2,714,383$ 3,765,743$ 1,860,983$ LIABILITIESAccounts payable 989$ 18,466$ 1,561$ 1,599,195$ 123,075$ Appearance bonds and other liabilities - - - - - Escheat property payable - - - - - Accrued employee benefits payable - - - - - Due to other funds - - - - - Total liabilities989 18,466 1,561 1,599,195 123,075 DEFERRED INFLOWS OF RESOURCESUnavailable revenue-property taxes- - - - - Unavailable revenue-special assessments- 9,100- - - Total deferred inflows of resources- 9,100 - - - FUND BALANCESNonspendable- - - - - Restricted1,783,072 416,700 2,712,822 2,166,548 1,737,908Committed- - - - - Assigned- - - - - Unassigned- - - - - Total fund balances1,783,072 416,700 2,712,822 2,166,548 1,737,908 Total liabilities, deferred inflows of resources, and fund balances1,784,061$ 444,266$ 2,714,383$ 3,765,743$ 1,860,983$ (continued)Special Revenue Funds DRAFT409
167 CITY OF BOZEMAN, MONTANA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2019 Downtown Building Gas Tax Tree Fire Improvement Inspection Apportionment Maintenance Impact Fees District FundASSETSCash and cash equivalents 1,784,061$ 432,157$ -$ 3,553,066$ 1,860,983$ Receivables:Property taxes - - - 203,767 - Accrued interest - - - 7,080 - Customers, net - 48 - - - Special assessments - 12,061 - 1,830 - Other governments - - - - - Others - - - - - Advances to other city funds - - - - - Prepaid expenditures - - - - - Notes receivable - - - - - Restricted cash and cash equivalents - - 2,714,383 - - Total assets 1,784,061$ 444,266$ 2,714,383$ 3,765,743$ 1,860,983$ LIABILITIESAccounts payable 989$ 18,466$ 1,561$ 1,599,195$ 123,075$ Appearance bonds and other liabilities - - - - - Escheat property payable - - - - - Accrued employee benefits payable - - - - - Due to other funds - - - - - Total liabilities989 18,466 1,561 1,599,195 123,075 DEFERRED INFLOWS OF RESOURCESUnavailable revenue-property taxes- - - - - Unavailable revenue-special assessments- 9,100- - - Total deferred inflows of resources- 9,100 - - - FUND BALANCESNonspendable- - - - - Restricted1,783,072 416,700 2,712,822 2,166,548 1,737,908Committed- - - - - Assigned- - - - - Unassigned- - - - - Total fund balances1,783,072 416,700 2,712,822 2,166,548 1,737,908 Total liabilities, deferred inflows of resources, and fund balances1,784,061$ 444,266$ 2,714,383$ 3,765,743$ 1,860,983$ (continued)Special Revenue FundsDRAFT410
168 CITY OF BOZEMAN, MONTANA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2019 Special Revenue FundsEconomic Housing City-CountyDevelopment Community Revolving Drug Drug Revolving Loan Housing Loan Fund Forfeitures ForfeituresASSETSCash and cash equivalents -$ 1,160,797$ 1,231$ 43,444$ 133,278$ Receivables:Property taxes - 14,710 - - - Accrued interest - - - - - Customers, net 297,014 417 - 4,629 - Special assessments - - - - - Other governments - - - 7,270 - Others - - - - - Advances to other city funds - - - - - Prepaid expenditures - - - - - Notes receivable507,020 49,427 - - - Restricted cash and cash equivalents - - - - - Total assets 804,034$ 1,225,351$ 1,231$ 55,343$ 133,278$ LIABILITIESAccounts payable -$ 25,690$ -$ 7,317$ -$ Appearance bonds and other liabilities - - - - - Escheat property payable - - - - - Accrued employee benefits payable - - - - - Due to other funds - 0 - - - Total liabilities- 25,690 - 7,317 - DEFERRED INFLOWS OF RESOURCESUnavailable revenue-property taxes- 1,172 - - - Unavailable revenue-special assessments- - - - - Total deferred inflows of resources- 1,172 - - - FUND BALANCESNonspendable- - - - - Restricted804,034 - - 48,026 - Committed- 1,198,489 - - 133,278 Assigned- - 1,231 - - Unassigned- - - - - Total fund balances804,034 1,198,489 1,231 48,026 133,278 Total liabilities, deferred inflows of resources, and fund balances804,034$ 1,225,351$ 1,231$ 55,343$ 133,278$ (continued)DRAFT411
169 CITY OF BOZEMAN, MONTANA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2019 Special Revenue FundsEconomic Housing City-CountyDevelopment Community Revolving Drug Drug Revolving Loan Housing Loan Fund Forfeitures ForfeituresASSETSCash and cash equivalents -$ 1,160,797$ 1,231$ 43,444$ 133,278$ Receivables:Property taxes - 14,710 - - - Accrued interest - - - - - Customers, net 297,014 417 - 4,629 - Special assessments - - - - - Other governments - - - 7,270 - Others - - - - - Advances to other city funds - - - - - Prepaid expenditures - - - - - Notes receivable507,020 49,427 - - - Restricted cash and cash equivalents - - - - - Total assets 804,034$ 1,225,351$ 1,231$ 55,343$ 133,278$ LIABILITIESAccounts payable -$ 25,690$ -$ 7,317$ -$ Appearance bonds and other liabilities - - - - - Escheat property payable - - - - - Accrued employee benefits payable - - - - - Due to other funds - 0 - - - Total liabilities- 25,690 - 7,317 - DEFERRED INFLOWS OF RESOURCESUnavailable revenue-property taxes- 1,172 - - - Unavailable revenue-special assessments- - - - - Total deferred inflows of resources- 1,172 - - - FUND BALANCESNonspendable- - - - - Restricted804,034 - - 48,026 - Committed- 1,198,489 - - 133,278 Assigned- - 1,231 - - Unassigned- - - - - Total fund balances804,034 1,198,489 1,231 48,026 133,278 Total liabilities, deferred inflows of resources, and fund balances804,034$ 1,225,351$ 1,231$ 55,343$ 133,278$ (continued) DRAFT412
170 CITY OF BOZEMAN, MONTANA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2019 Special Revenue FundsLaw and Street ArterialJustice and Collector TIF TIF N.E. TIF Mandeville/ TIFD South BozCenter District N 7th Corridor Urban Renewal Wheat Dr. TechnologyASSETSCash and cash equivalents -$ 389,757$ 1,964,536$ 126,073$ 65,680$ 15$ Receivables:Property taxes - - 50,842 12,170 - - Accrued interest - - - - - - Customers, net - - - - - - Special assessments - 22,159 - - - - Other governments - - - - - - Others - - - - - - Advances to other city funds - - - - - - Prepaid expenditures 293,250 - - - - - Notes receivable - - - - - - Restricted cash and cash equivalents - - - 92,000 - - Total assets 293,250$ 411,916$ 2,015,378$ 230,243$ 65,680$ 15$ LIABILITIESAccounts payable -$ 142,490$ 36,214$ 766$ -$ -$ Appearance bonds and other liabilities - 85,214 - - - - Escheat property payable - - - - - - Accrued employee benefits payable- - - - - - Due to other funds- 00- - 7,626 Total liabilities- 227,704 36,214 766 - 7,626 DEFERRED INFLOWS OF RESOURCESUnavailable revenue-property taxes- - 21,854 - - - Unavailable revenue-special assessments- - - - - - Total deferred inflows of resources- - 21,854 - - - FUND BALANCESNonspendable293,250 - - - - - Restricted- 184,212 1,957,310 229,477 65,680 (7,611) Committed- - - - - - Assigned- - - - - - Unassigned- - - - - - Total fund balances293,250 184,212 1,957,310 229,477 65,680 (7,611) Total liabilities, deferred inflows of resources, and fund balances293,250$ 411,916$ 2,015,378$ 230,243$ 65,680$ 15$ (continued)DRAFT413
171 CITY OF BOZEMAN, MONTANA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2019 Victim/Witness Fire Department StreetPark Municipal CourtAdvocate Equipment Lighting Land Restitution TotalASSETSCash and cash equivalents432,101$ 947,840$ 532,990$ 842,301$ 21,153$ 18,470,152$ Receivables:Property taxes- 19,695 - - - 441,348 Accrued interest- - - - - 29,205 Customers, net3,982 - - - - 316,100 Special assessments- - 8,643 - - 44,693 Other governments- - - - - 95,092 Others- - - - - - Advances to other city funds- - - - - - Prepaid expenditures- - - - - 293,250 Notes receivable- - - - - 556,447 Restricted cash and cash equivalents- - - - - 12,445,463 Total assets436,083$ 967,535$ 541,633$ 842,301$ 21,153$ 32,691,750$ LIABILITIESAccounts payable9,485$ 263,705$ 38,052$ -$ 1,000$ 2,972,078$ Appearance bonds and other liabilities- - - - - 217,455 Escheat property payable- - - - 20,048 20,048 Accrued employee benefits payable- - - - - - Due to other funds- 0- 0- 7,626 Total liabilities9,485 263,705 38,052 - 21,048 3,217,207 DEFERRED INFLOWS OF RESOURCESUnavailable revenue-property taxes- 1,729 - - - 37,032 Unavailable revenue-special assessments- - - - - 9,100 Total deferred inflows of resources- 1,729 - - - 46,132 FUND BALANCESNonspendable- - - - - 293,250 Restricted426,598 - 503,581 842,301 105 16,529,115 Committed- 702,101 - - - 3,873,281 Assigned- - - - 1,231 Unassigned- - - - - 8,731,534 Total fund balances426,598 702,101 503,581 842,301 105 29,428,411 Total liabilities, deferred inflows of resources, and fund balances436,083$ 967,535$ 541,633$ 842,301$ 21,153$ 32,691,750$ (continued)Special Revenue Funds DRAFT414
172 CITY OF BOZEMAN, MONTANA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2019 Victim/Witness Fire Department StreetPark Municipal CourtAdvocate Equipment Lighting Land Restitution TotalASSETSCash and cash equivalents432,101$ 947,840$ 532,990$ 842,301$ 21,153$ 18,470,152$ Receivables:Property taxes- 19,695 - - - 441,348 Accrued interest- - - - - 29,205 Customers, net3,982 - - - - 316,100 Special assessments- - 8,643 - - 44,693 Other governments- - - - - 95,092 Others- - - - - - Advances to other city funds- - - - - - Prepaid expenditures- - - - - 293,250 Notes receivable- - - - - 556,447 Restricted cash and cash equivalents- - - - - 12,445,463 Total assets436,083$ 967,535$ 541,633$ 842,301$ 21,153$ 32,691,750$ LIABILITIESAccounts payable9,485$ 263,705$ 38,052$ -$ 1,000$ 2,972,078$ Appearance bonds and other liabilities- - - - - 217,455 Escheat property payable- - - - 20,048 20,048 Accrued employee benefits payable- - - - - - Due to other funds- 0- 0- 7,626 Total liabilities9,485 263,705 38,052 - 21,048 3,217,207 DEFERRED INFLOWS OF RESOURCESUnavailable revenue-property taxes- 1,729 - - - 37,032 Unavailable revenue-special assessments- - - - - 9,100 Total deferred inflows of resources- 1,729 - - - 46,132 FUND BALANCESNonspendable- - - - - 293,250 Restricted426,598 - 503,581 842,301 105 16,529,115 Committed- 702,101 - - - 3,873,281 Assigned- - - - 1,231 Unassigned- - - - - 8,731,534 Total fund balances426,598 702,101 503,581 842,301 105 29,428,411 Total liabilities, deferred inflows of resources, and fund balances436,083$ 967,535$ 541,633$ 842,301$ 21,153$ 32,691,750$ (continued)Special Revenue Funds DRAFT415
173 CITY OF BOZEMAN, MONTANA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2019 Permanent TotalFund NonmajorPerpetual GovernmentalCemetery Care FundsASSETSCash and cash equivalents -$ 23,691,693$ Receivables:Property taxes - 505,649 Accrued interest - 36,338 Customers, net 5,997 322,097 Special assessments - 1,999,318 Other governments - 95,092 Others - - Advances to other city funds - 472,483 Prepaid expenditures - 293,250 Notes receivable - 556,447 Restricted cash and cash equivalents 1,444,502 13,889,965 Total assets 1,450,499$ 41,862,332$ LIABILITIESAccounts payable 8,158$ 2,980,994$ Appearance bonds and other liabilities - 217,455 Escheat property payable - 20,048 Accrued employee benefits payable - - Due to other funds - 480,109 Total liabilities 8,158 3,698,606 DEFERRED INFLOWS OF RESOURCESUnavailable revenue-property taxes - 42,665 Unavailable revenue-special assessments - 1,960,328 Total deferred inflows of resources - 2,002,993 FUND BALANCESNonspendable 1,442,341 1,735,591 Restricted - 21,819,096 Committed - 3,873,281 Assigned - 1,231 Unassigned 8,731,534 Total fund balances 1,442,341 36,160,733 Total liabilities, deferred inflows of resources, and fund balances 1,450,499$ 41,862,332$ DRAFT416
174 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS Year ended June 30, 2019 CityStreet Planning Health-Medical CommunityImpact Fees Departmental Board Insurance TransportationREVENUESTaxes -$ 104,720$ 212,953$ 2,652,758$ -$ Special assessments - - - - - Licenses and permits - - - - - Intergovernmental - 377,167 137,423 - - Charges for services 4,291,395 33,035 1,118,765 - - Fines and forfeitures - 580 - - - Interest on investments 238,874 49,517 38,517 - 1,120 Interest on loans receivable - - - - - Other 115,969 70,929 89,569 - - Total revenues 4,646,238 635,948 1,597,227 2,652,758 1,120 EXPENDITURESCurrent:General government - 82,665 1,338,493 - - Public safety - 92,968 - - - Public service 290,687 - - - 5,312 Public welfare - 298,044 - - - Other - 104,703 - - - Capital outlay 4,925,965 38,718 14,995 - 33,340 Debt service:Principal- - - - - Interest and fiscal fees- - - - - Total expenditures5,216,652 617,098 1,353,488 - 38,652 Revenues over (under) expenditures(570,414) 18,850 243,739 2,652,758 (37,532) OTHER FINANCING SOURCES (USES)Transfers in- - 115,529 - - Transfers out- - - (2,461,824) - Sale of capital assets- - - - - Issuance of long term debt- - - - - Total other financing sources (uses)- - 115,529 (2,461,824) - Net change in fund balance(570,414) 18,850 359,268 190,934 (37,532) FUND BALANCES, beginning of year9,349,248 1,932,951 1,515,730 411,839 58,425FUND BALANCES, end of year8,778,834$ 1,951,801$ 1,874,998$ 602,773$ 20,893$ (continued)Special Revenue FundsDRAFT417
175 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 Downtown Building Gas Tax Tree Fire Improvement Inspection Apportionment Maintenance Impact Fees District FundREVENUESTaxes -$ -$ -$ 1,270,887$ -$ Special assessments - 2,038 - 126,358 - Licenses and permits - - - 2,750 1,985,700 Intergovernmental 1,297,155 12,183 - 56,050 92,684 Charges for services - 718,527 525,827 - 487 Fines and forfeitures - - - - - Interest on investments 34,209 5,108 58,971 61,155 49,736 Interest on loans receivable - - - - - Other - 19,483 62,170 - 101 Total revenues 1,331,364 757,339 646,968 1,517,200 2,128,708 EXPENDITURESCurrent:General government - - - - - Public safety - - 39,279 - 2,165,569 Public service 887,733 - - - - Public welfare - 625,701 - 472,459 - Other - - - - - Capital outlay - 60,522 - 132,504 8,000 Debt service:Principal- - - - - Interest and fiscal fees- - - - - Total expenditures887,733 686,223 39,279 604,963 2,173,569 Revenues over (under) expenditures443,631 71,116 607,689 912,237 (44,861) OTHER FINANCING SOURCES (USES)Transfers in- - - - - Transfers out- - - (597,863) - Sale of capital assets- - - - - Issuance of long term debt- - - - - Total other financing sources (uses)- - - (597,863) - Net change in fund balance443,631 71,116 607,689 314,374 (44,861) FUND BALANCES, beginning of year1,339,441 345,584 2,105,133 1,852,174 1,782,769FUND BALANCES, end of year1,783,072$ 416,700$ 2,712,822$ 2,166,548$ 1,737,908$ (continued)Special Revenue Funds DRAFT418
176 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 Special Revenue FundsEconomic Housing City-CountyDevelopment Community Revolving Drug Drug Revolving Loan Housing Loan Fund Forfeitures ForfeituresREVENUESTaxes -$ 314,064$ -$ -$ -$ Special assessments- - - - - Licenses and permits- - - - - Intergovernmental- 20,659 - 115,364 - Charges for services- - - - - Fines and forfeitures- - - 64,350 - Interest on investments1,503 23,572 31 852 1,893 Interest on loans receivable26,377 299 - - - Other- 127,467 - 8,332 - Total revenues27,880 486,061 31 188,898 1,893 EXPENDITURESCurrent:General government- - - - - Public safety- - - 270,652 - Public service- - - - - Public welfare34,600 214,971 - - - Other- - - - - Capital outlay- - - - - Debt service:Principal- - - - - Interest and fiscal fees- - - - - Total expenditures34,600 214,971 - 270,652 - Revenues over (under) expenditures(6,720) 271,090 31 (81,754) 1,893 OTHER FINANCING SOURCES (USES)Transfers in- 166,188 - 22,933 - Transfers out- - - - - Sale of capital assets- - - - - Issuance of long term debt- - - - - Total other financing sources (uses)- 166,188 - 22,933 - Net change in fund balance(6,720) 437,278 31 (58,821) 1,893 FUND BALANCES, beginning of year810,754 761,2111,200 106,847 131,385FUND BALANCES, end of year804,034$ 1,198,489$ 1,231$ 48,026$ 133,278$ (continued) DRAFT419
177 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 Special Revenue FundsLaw and Street ArterialJustice and Collector TIF TIF N.E. TIF Mandeville/ TIFD South BozCenter District N 7th Corridor Urban Renewal Wheat Dr. TechnologyREVENUESTaxes -$ -$ 621,223$ 158,998$ 14,141$ 15$ Special assessments - 3,910 - - - - Licenses and permits - - - - - - Intergovernmental - - 37,926 1,353 - - Charges for services - 1,314,801 - - - - Fines and forfeitures - - - - - - Interest on investments - 34,844 48,224 3,900 795 - Interest on loans receivable - - - - - - Other - - - - - - Total revenues - 1,353,555 707,373 164,251 14,936 15 EXPENDITURESCurrent:General government - - - - - - Public safety 19,125 - - - - - Public service - 53,560 - - - - Public welfare - - 213,651 11,494 - - Other- - - - - - Capital outlay- 2,897,746 80,811 - - - Debt service:Principal- - - 43,120 - - Interest and fiscal fees- - - 48,880- - Total expenditures19,125 2,951,306 294,462 103,494 - - Revenues over (under) expenditures(19,125) (1,597,751) 412,911 60,757 14,936 15 OTHER FINANCING SOURCES (USES)Transfers in- - 19,940 - - - Transfers out- - (40,000) (243,897) (4,000) - Sale of capital assets- - - - - - Issuance of long term debt- - - - - - Total other financing sources (uses)- - (20,060) (243,897) (4,000) - Net change in fund balance(19,125) (1,597,751) 392,851 (183,140) 10,936 15 FUND BALANCES, beginning of year312,375 1,781,963 1,564,459 412,617 54,744(7,626) FUND BALANCES, end of year293,250$ 184,212$ 1,957,310$ 229,477$ 65,680$ (7,611)$ (continued) DRAFT420
178 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 MunicipalVictim/Witness Fire Department Street Park CourtAdvocate Equipment Lighting Land Restitution TotalsREVENUESTaxes -$ 416,794$ -$ -$ -$ 5,766,553$ Special assessments - - 436,099 - - 568,405 Licenses and permits - - - - - 1,988,450 Intergovernmental - - - - - 2,147,964 Charges for services - - - - - 8,002,837 Fines and forfeitures 69,721 - - - - 134,651 Interest on investments 5,921 26,337 7,681 22,714 - 715,474 Interest on loans receivable - - - - - 26,676 Other - - - 177,287 - 671,307 Total revenues 75,642 443,131 443,780 200,001 - 20,022,317 EXPENDITURESCurrent:General government 32,590 - - - - 1,453,748 Public safety - 32,719 - - - 2,620,312 Public service - - 440,367 - - 1,677,659 Public welfare - - - - - 1,870,920 Other- - - - - 104,703 Capital outlay- 547,735 - 74,686 - 8,815,022 Debt service:0Principal- - - - - 43,120 Interest and fiscal fees- - - - - 48,880 Total expenditures32,590 580,454 440,367 74,686 - 16,634,364 Revenues over (under) expenditures43,052 (137,323) 3,413 125,315 - 3,387,953 OTHER FINANCING SOURCES (USES)Transfers in- - - - - 324,590 Transfers out- - (31,900) - - (3,379,484) Sale of capital assets- - - - - - Issuance of long term debt- - - - - - Total other financing sources (uses)- - (31,900) - - (3,054,894) Net change in fund balance43,052 (137,323) (28,487) 125,315 - 333,059 FUND BALANCES, beginning of year383,546 839,424 532,068 716,986105 29,095,352 FUND BALANCES, end of year426,598$ 702,101$ 503,581$ 842,301$ 105$ 29,428,411$ (continued)Special Revenue Funds DRAFT421
179 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 SIDG.O.TIFSIDRevolving Bonds Bonds Debt Service TotalsREVENUESTaxes-$ 1,361,056$ -$ -$ 1,361,056$ Special assessments- - - 518,352 518,352 Licenses and permits- - - - - Intergovernmental- - - - - Charges for services- - - - - Fines and forfeitures- - - - - Interest on investments72,143 1,089 - 35,736 108,968 Interest on loans receivable5,019 - - - 5,019 Other- - - - - Total revenues77,162 1,362,145 - 554,088 1,993,395 EXPENDITURESCurrent:General government- - - - - Public safety- - - - - Public service- - - - - Public welfare- - - - - Other911- - - 911 Capital outlay- - - - - Debt service:Principal- 895,000 220,000 234,500 1,349,500 Interest and fiscal fees- 465,238 203,923 18,740 687,901 Total expenditures911 1,360,238 423,923 253,240 2,038,312 Revenues over (under) expenditures76,251 1,907 (423,923) 300,848 (44,917) OTHER FINANCING SOURCES (USES)Transfers in- - 423,923 - 423,923 Transfers out- - - - - Sale of capital assets- - - - - Issuance of long term debt- - - - - Total other financing sources (uses)- - 423,923 - 423,923 Net change in fund balance76,251 1,907 - 300,848 379,006 FUND BALANCES, beginning of year3,423,681 87,848- 1,399,446 4,910,975 FUND BALANCES, end of year3,499,932$ 89,755$ -$ 1,700,294$ 5,289,981$ (continued)Debt Service Funds DRAFT422
180 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 Permanent Total FundNonmajorCemetery Governmental Perpetual Care FundsREVENUESTaxes-$ 7,127,609$ Special assessments- 1,086,757 Licenses and permits- 1,988,450 Intergovernmental- 2,147,964 Charges for services89,583 8,092,420 Fines and forfeitures- 134,651 Interest on investments41,316 865,758 Interest on loans receivable- 31,695 Other- 671,307 Total revenues130,899 22,146,611 EXPENDITURESCurrent:General government- 1,453,748 Public safety- 2,620,312 Public service- 1,677,659 Public welfare- 1,870,920 Other- 105,614 Capital outlay- 8,815,022 Debt service:Principal- 1,392,620 Interest and fiscal fees- 736,781 Total expenditures- 18,672,676 Revenues over (under) expenditures130,899 3,473,935 OTHER FINANCING SOURCES (USES)Transfers in- 748,513 Transfers out- (3,379,484) Sale of capital assets- - Issuance of long term debt- - Total other financing sources (uses)- (2,630,971) Net change in fund balance130,899 842,964 FUND BALANCES, beginning of year1,311,442 35,317,769 FUND BALANCES, end of year1,442,341$ 36,160,733$ DRAFT423
BUDGET TO ACTUAL SCHEDULES – NONMAJOR FUNDS DRAFT425
182 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS Year Ended June 30, 2019 VarianceVariancePositivePositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes-$ -$ -$ 105,244$ 104,720$ (524)$ Special assessments- - - 2,334 - 2,334 Licenses and permits- - - - - - Intergovernmental- - - 328,000 377,167 49,167 Charges for services4,226,250 4,291,395 65,145 22,000 33,035 11,035 Fines and forfeitures- - - 7,000 580 (6,420) Interest on investments115,000 238,874 123,874 37,568 49,517 11,949 Loan repayment- - - - - - Other1,000 115,969 114,969 479,888 70,929 (408,959) Total revenues4,342,250 4,646,238 303,988 982,034 635,948 (346,086) EXPENDITURES - BUDGET UNIT6,418,000 5,216,652 1,201,348 652,502 617,098 35,404 Revenues over (under) expenditures(2,075,750) (570,414) (897,360) 329,532 18,850 (310,682) 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(2,075,750)$ (570,414) (897,360)$ 329,532$ 18,850 (310,682)$ FUND BALANCES, beginning of year9,349,248 1,932,951 FUND BALANCES, end of year8,778,834$ 1,951,801$ (continued)Special Revenue FundsStreet Impact FeesDepartmental Special Revenues DRAFT427
183 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 VarianceVariancePositivePositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes210,488$ 212,953$ 2,465$ 2,654,566$ 2,652,758$ (1,808)$ Special assessments- - - - - - Licenses and permits- - - - - - Intergovernmental110,733 137,423 26,690 - - - Charges for services785,500 1,118,765 333,265 - - - Fines and forfeitures- - - - - - Interest on investments6,500 38,517 32,017 - - - Loan repayment- - - - - - Other53,400 89,569 36,169 - - - Total revenues1,166,621 1,597,227 430,606 2,654,566 2,652,758 (1,808) EXPENDITURES - BUDGET UNIT1,661,194 1,353,488 307,706 - - - Revenues over (under) expenditures(494,573) 243,739 738,312 2,654,566 2,652,758 (1,808) OTHER FINANCING SOURCES (USES)Transfers in127,575 115,529 (12,046) - - - Transfers out- - - (2,654,566) (2,461,824) 192,742 Long-term debt issued- - - - - - Sale of capital assets- - - - - - Total other financing sources (uses)127,575 115,529 (12,046) (2,654,566) (2,461,824) 192,742 Revenues and other sources over(under) expenditures(366,998)$ 359,268 726,266$ -$ 190,934 190,934$ FUND BALANCES, beginning of year1,515,730 411,839 FUND BALANCES, end of year1,874,998$ 602,773$ (continued)City Planning BoardHealth-Medical InsuranceSpecial Revenue Funds DRAFT428
184 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 VarianceVariancePositivePositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes-$ -$ -$ -$ -$ -$ Special assessments- - - - - - Licenses and permits- - - - - - Intergovernmental- - - 1,402,031 1,297,155 (104,876) Charges for services- - - - - - Fines and forfeitures- - - - - - Interest on investments1,2001,120 (80) 9,000 34,209 25,209 Loan repayment- - - - - - Other- - - - - - Total revenues1,200 1,120 (80) 1,411,031 1,331,364 (79,667) EXPENDITURES - BUDGET UNIT39,000 38,652 348 1,171,500 887,733 283,767 Revenues over (under) expenditures(37,800) (37,532) 268 239,531 443,631 204,100 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(37,800)$ (37,532) 268$ 239,531$ 443,631 204,100$ FUND BALANCES, beginning of year58,425 1,339,441 FUND BALANCES, end of year20,893$ 1,783,072$ (continued)Gas Tax ApportionmentCommunity TransportationSpecial Revenue Funds DRAFT429
185 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 Fire Impact Fees Special RevenueVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ -$ -$ -$ -$ - Special assessments 1,200 2,038 838 - - - Licenses and permits - - - - - - Intergovernmental - 12,183 12,183 - - - Charges for services 730,821 718,527 (12,294) 380,363 525,827 145,464 Fines and forfeitures - - - - - - Interest on investments 2,200 5,108 2,908 12,000 58,971 46,971 Loan repayment - - - - - - Other 3,000 19,483 16,483 - 62,170 62,170 Total revenues 737,221 757,339 20,118 392,363 646,968 254,605 EXPENDITURES - BUDGET UNIT 825,577 686,223 139,354 39,500 39,279 221 Revenues over (under) expenditures (88,356) 71,116 159,472 352,863 607,689 254,826 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(88,356)$ 71,116 159,472$ 352,863$ 607,689 254,826$ FUND BALANCES, beginning of year345,584 2,105,133 FUND BALANCES, end of year416,700$ 2,712,822$ (continued)Special Revenue FundsTree Maintenance DRAFT430
186 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 VarianceVariancePositivePositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes1,820,000$ 1,270,887$ (549,113)$ -$ -$ -$ Special assessments143,200 126,358 (16,842) - - - Licenses and permits- 2,750 2,750 1,783,700 1,985,700 202,000 Intergovernmental45,000 56,050 11,050 - 92,684 92,684 Charges for services- - - 1,500487 (1,013) Fines and forfeitures- - - - - - Interest on investments10,000 61,155 51,155 15,000 49,736 34,736 Loan repayment- - - - - - Other19,500 - (19,500) - 101 101 Total revenues2,037,700 1,517,200 (520,500) 1,800,200 2,128,708 328,508 EXPENDITURES - BUDGET UNIT1,616,675 604,963 1,011,712 2,660,416 2,173,569 486,847 Revenues over (under) expenditures421,025 912,237 491,212 (860,216) (44,861) 815,355 OTHER FINANCING SOURCES (USES)Transfers in - - - - - - Transfers out (598,000) (597,863) 137 - - - Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources (uses) (598,000) (597,863) 137 - - - Revenues and other sources over(under) expenditures (176,975)$ 314,374 491,349$ (860,216)$ (44,861) 815,355$ FUND BALANCES, beginning of year 1,852,174 1,782,769 FUND BALANCES, end of year 2,166,548$ 1,737,908$ (continued)Building Inspection FundDowntown Improvement DistrictSpecial Revenue Funds DRAFT431
187 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 VarianceVariancePositivePositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes-$ -$ -$ 315,732 314,064$ (1,668)$ Special assessments- - - - - - Licenses and permits- - - - - - Intergovernmental- - - - 20,659 20,659 Charges for services- - - - - - Fines and forfeitures- - - - - - Interest on investments- 1,503 1,503 4,000 23,572 19,572 Loan repayment50,000 26,377 (23,623) 9,500299 (9,201) Other- - - - 127,467 127,467 Total revenues50,000 27,880 (22,120) 329,232 486,061 156,829 EXPENDITURES - BUDGET UNIT35,000 34,600 400 371,858 214,971 156,887 Revenues over (under) expenditures15,000 (6,720) (21,720) (42,626) 271,090 313,716 OTHER FINANCING SOURCES (USES)Transfers in- - - 166,188 166,188 - Transfers out- - - - - - Long-term debt issued- - - - - - Sale of capital assets- - - - - - Total other financing sources (uses)- - - 166,188 166,188 - Revenues and other sources over(under) expenditures15,000$ (6,720) (21,720)$ 123,562$ 437,278 313,716$ FUND BALANCES, beginning of year810,754 761,211 FUND BALANCES, end of year804,034$ 1,198,489$ (continued)Special Revenue FundsCommunity HousingEconomic Development Revolving Loan FundDRAFT432
188 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 VarianceVariancePositivePositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes-$ -$ -$ -$ -$ -$ Special assessments- - - - - - Licenses and permits- - - - - - Intergovernmental- - - 75,000 115,364 40,364 Charges for services- - - - - - Fines and forfeitures- - - 54,000 64,350 10,350 Interest on investments10 31 21 70852 782 Loan repayment1,275 - (1,275) - - - Other- - - - 8,332 8,332 Total revenues1,285 31 (1,254) 129,070 188,898 59,828 EXPENDITURES - BUDGET UNIT- - - 271,210 270,652 558 Revenues over (under) expenditures1,285 31 (1,254) (142,140) (81,754) 60,386 OTHER FINANCING SOURCESTransfers in- - - 28,872 22,933 (5,939) Transfers out- - - - - - Long-term debt issued- - - - - - Sale of capital assets- - - - - - Total other financing sources (uses)- - - 28,872 22,933 (5,939) Revenues and other sources over(under) expenditures1,285$ 31 (1,254)$ (113,268)$ (58,821) 54,447$ FUND BALANCES, beginning of year1,200 106,847 FUND BALANCES, end of year1,231$ 48,026$ (continued)Housing Revolving Loan FundDrug ForfeituresSpecial Revenue FundsDRAFT433
189 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 VarianceVariancePositivePositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes-$ -$ -$ -$ -$ -$ Special assessments- - - - - - Licenses and permits- - - - - - Intergovernmental- - - - - - Charges for services- - - - - - Fines and forfeitures500 - (500) - - - Interest on investments1,100 1,893 793 - - - Loan repayment- - - - - - Other- - - - - - Total revenues1,600 1,893 293 - - - EXPENDITURES - BUDGET UNIT0- - 19,125 19,125 - Revenues over (under) expenditures1,600 1,893 293 (19,125) (19,125) - OTHER FINANCING SOURCESTransfers in- - - - - - Transfers out- - - - - - Long-term debt issued- - - - - - Sale of capital assets- - - - - - Total other financing sources (uses)- - - - - - Revenues and other sources over(under) expenditures1,600$ 1,893 293$ (19,125)$ (19,125) -$ FUND BALANCES, beginning of year131,385 312,375 FUND BALANCES, end of year133,278$ 293,250$ (continued)City-County Drug ForfeituresLaw and Justice CenterSpecial Revenue FundsDRAFT434
190 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 VarianceVariancePositivePositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes-$ -$ -$ 651,949$ 621,223$ (30,726)$ Special assessments2,334 3,910 1,576 - - - Licenses and permits- - - - - - Intergovernmental- - - - 37,926 37,926 Charges for services1,333,854 1,314,801 (19,053) - - - Fines and forfeitures- - - - - - Interest on investments20,031 34,844 14,813 9,500 48,224 38,724 Loan repayment- - - - - - Other378,688 - (378,688) - - - Total revenues1,734,907 1,353,555 (381,352) 661,449 707,373 45,924 EXPENDITURES - BUDGET UNIT3,568,000 2,951,306 616,694 1,491,900 294,462 1,197,438 Revenues over (under) expenditures(1,833,093) (1,597,751) 235,342 (830,451) 412,911 1,243,362 OTHER FINANCING SOURCESTransfers in- - - - 19,940 19,940 Transfers out- - - (40,000) (40,000) - Long-term debt issued- - - - - - Sale of capital assets- - - - - - Total other financing sources (uses)- - - (40,000) (20,060) 19,940 Revenues and other sources over(under) expenditures(1,833,093)$ (1,597,751) 235,342$ (870,451)$ 392,851 1,263,302$ FUND BALANCES, beginning of year1,781,963 1,564,459 FUND BALANCES, end of year184,212$ 1,957,310$ (continued)Street Arterial and Collector DistrictTIF N 7th CorridorSpecial Revenue Funds DRAFT435
191 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 VarianceVariancePositivePositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes139,500$ 158,998$ 19,498$ 25,000$ 14,141$ (10,859)$ Special assessments- - - - - - Licenses and permits- - - - - - Intergovernmental- 1,353 1,353 - - - Charges for services- - - - - - Fines and forfeitures- - - - - - Interest on investments1,500 3,900 2,400 - 795 795 Loan repayment- - - - - - Other- - - - - - Total revenues141,000 164,251 23,251 25,000 14,936 (10,064) EXPENDITURES - BUDGET UNIT190,100 103,494 86,606 - - - Revenues over (under) expenditures(49,100) 60,757 109,857 25,000 14,936 (10,064) OTHER FINANCING SOURCESTransfers in- - - - - - Transfers out(244,000) (243,897) 103 (4,000) (4,000) - Long-term debt issued- - - - - - Sale of capital assets- - - - - - Total other financing sources (uses)(244,000) (243,897) 103 (4,000) (4,000) - Revenues and other sources over(under) expenditures(293,100)$ (183,140) 109,960$ 21,000$ 10,936 (10,064)$ FUND BALANCES, beginning of year412,617 54,744 FUND BALANCES, end of year229,477$ 65,680$ (continued)TIF Mandeville/Wheat Dr.Special Revenue FundsTIF N.E. Urban RenewalDRAFT436
192 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 VarianceVariancePositivePositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes-$ 15$ 15$ -$ -$ -$ Special assessments- - - - - - Licenses and permits- - - - - - Intergovernmental- - - - - - Charges for services- - - - - - Fines and forfeitures- - - 63,000 69,721 6,721 Interest on investments- - - 3,100 5,921 2,821 Loan repayment- - - - - - Other- - - - - - Total revenues- 15 15 66,100 75,642 9,542 EXPENDITURES - BUDGET UNIT- - - 150,000 32,590 117,410 Revenues over (under) expenditures- 15 15 (83,900) 43,052 126,952 OTHER FINANCING SOURCESTransfers in- - - - - - Transfers out- - - - - Long-term debt issued- - - - - - Sale of capital assets- - - - - - Total other financing sources (uses)- - - - - - Revenues and other sources over(under) expenditures-$ 15 15$ (83,900)$ 43,052 126,952$ FUND BALANCES, beginning of year(7,626) 383,546 FUND BALANCES, end of year(7,611)$ 426,598$ (continued)TIFD South Boz TechnologyVictim/Witness AdvocateSpecial Revenue FundsDRAFT437
193 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 VarianceVariancePositivePositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes420,976 416,794$ (4,182)$ -$ -$ -$ Special assessments- - - 426,675 436,099 9,424 Licenses and permits- - - - - - Intergovernmental- - - - - - Charges for services- - - - - - Fines and forfeitures- - - - - - Interest on investments2,500 26,337 23,837 4,925 7,681 2,756 Loan repayment- - - - - - Other- - - - - - Total revenues423,476 443,131 19,655 431,600 443,780 12,180 EXPENDITURES - BUDGET UNIT606,000 580,454 25,546 440,617 440,367 250 Revenues over (under) expenditures(182,524) (137,323) 45,201 (9,017) 3,413 12,430 OTHER FINANCING SOURCESTransfers 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(182,524)$ (137,323) 45,201$ (40,917)$ (28,487) 12,430$ FUND BALANCES, beginning of year839,424 532,068 FUND BALANCES, end of year702,101$ 503,581$ (continued)Special Revenue FundsStreet LightingFire Department EquipmentDRAFT438
194 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 VarianceVariancePositivePositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes-$ -$ -$ -$ -$ -$ Special assessments- - - - - - Licenses and permits- - - - - - Intergovernmental- - - - - - Charges for services- - - - - - Fines and forfeitures- - - - - - Interest on investments4,500 22,714 18,214 - - - Loan repayment- - - - - - Other- 177,287 177,287 - - - Total revenues4,500 200,001 195,501 - - - EXPENDITURES - BUDGET UNIT75,000 74,686 314 - - - Revenues over (under) expenditures(70,500) 125,315 195,815 - - - OTHER FINANCING SOURCESTransfers in- - - - - - Transfers out- - - - - - Long-term debt issued- - - - - - Sale of capital assets- - - - - - Total other financing sources (uses)- - - - - - Revenues and other sources over(under) expenditures(70,500)$ 125,315 195,815$ -$ - -$ FUND BALANCES, beginning of year716,986 105 FUND BALANCES, end of year842,301$ 105$ (continued)Special Revenue FundsPark LandMunicipal Court Restitution DRAFT439
195 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 VariancePositiveBudget Actual (Negative)REVENUESTaxes 6,343,455$ 5,766,553$ (576,902)$ Special assessments 575,743 568,405 (7,338) Licenses and permits 1,783,700 1,988,450 204,750 Intergovernmental 1,960,764 2,147,964 187,200 Charges for services 7,480,288 8,002,837 522,549 Fines and forfeitures 124,500 134,651 10,151 Interest on investments 383,578 715,474 331,896 Loan repayment 60,775 26,676 (34,099) Other 935,476 671,307 (264,169) Total revenues 19,648,279 20,022,317 374,038 EXPENDITURES - BUDGET UNIT 22,303,174 16,634,364 5,668,810 Revenues over (under) expenditures (2,654,895) 3,387,953 6,042,848 OTHER FINANCING SOURCESTransfers in 322,635 324,590 1,955 Transfers out (3,572,466) (3,379,484) 192,982 Long-term debt issued - - - Sale of capital assets - - - Total other financing sources (uses) (3,249,831) (3,054,894) 194,937 Revenues and other sources over(under) expenditures (5,904,726)$ 333,059 6,237,785$ FUND BALANCES, beginning of year 29,095,352 FUND BALANCES, end of year 29,428,411$ (continued)Special Revenue FundsTotalDRAFT440
196 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 Debt Service FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ -$ -$ 1,359,036 1,361,056$ 2,020$ Special assessments- - - - - - Intergovernmental- - - - - - Charges for services- - - - - - Interest on investments 26,500 72,143 45,643 - 1,089 1,089 Loan repayment 3,500 5,019 1,519 - - - Other - - - - - - Total revenue 30,000 77,162 47,162 1,359,036 1,362,145 3,109 EXPENDITURESOther 1,000 911 89 - - - Debt service:Principal - - - 895,000 895,000 - Interest and fiscal fees - - - 470,038 465,238 4,800 Total expenditures 1,000 911 89 1,365,038 1,360,238 4,800 Revenues over (under) expenditures 29,000 76,251 47,251 (6,002) 1,907 7,909 OTHER FINANCING SOURCES (USES)Transfers in- - - - - - Transfers out(223,011) - 223,011 - - - Total other financing sources (uses)(223,011) - 223,011 - - - Revenues and other sources over (under) expenditures (194,011)$ 76,251 270,262$ (6,002)$ 1,907 7,909$ FUND BALANCES, beginning of year3,423,681 87,848 FUND BALANCES, end of year3,499,932$ 89,755$ (continued)G.O. BondsSID Revolving DRAFT441
197 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 VarianceVarianceFavorablePositiveBudget Actual (Unfavorable) Budget Actual (Negative)REVENUESTaxes-$ -$ -$ -$ -$ -$ Special assessments- - - 579,974 518,352 (61,622) Intergovernmental- - - - - - Charges for services- - - - - - Interest on investments- - - 13,340 35,736 22,396 Loan repayment- - - - - - Other - - - - - - Total revenue- - - 593,314 554,088 (39,226) EXPENDITURESOther- - - - - - Debt service:Principal220,000 220,000 - 276,000 234,500 41,500 Interest and fiscal fees203,923 203,923 - 109,800 18,740 91,060 Total expenditures423,923 423,923 - 385,800 253,240 132,560 Revenues over (under) expenditures(423,923) (423,923) - 207,514 300,848 93,334 OTHER FINANCING SOURCES (USES)Transfers in423,673 423,923 250 0- - Transfers out- - - - - - Total other financing sources (uses)423,673 423,923 250 - - - Revenues and other sources over (under) expenditures(250)$ - 250$ 207,514$ 300,848 93,334$ FUND BALANCES, beginning of year- 1,399,446 FUND BALANCES, end of year-$ 1,700,294$ (continued)TIF BondsSID Debt ServiceDebt Service Funds DRAFT442
198 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 VariancePositiveBudget Actual (Negative)REVENUESTaxes 1,359,036$ 1,361,056$ 2,020$ Special assessments 579,974 518,352 (61,622) Intergovernmental - - - Charges for services - - - Interest on investments 39,840 108,968 69,128 Loan repayment 3,500 5,019 1,519 Other - - - Total revenue 1,982,350 1,993,395 11,045 EXPENDITURESOther 1,000 911 89 Debt service:Principal 1,391,000 1,349,500 41,500 Interest and fiscal fees 783,761 687,901 95,860 Total expenditures 2,175,761 2,038,312 137,449 Revenues over (under) expenditures (193,411) (44,917) 148,494 OTHER FINANCING SOURCES (USES)Transfers in 423,673 423,923 250 Transfers out (223,011) - 223,011 Total other financing sources (uses) 200,662 423,923 223,261 Revenues and other sources over (under) expenditures 7,251$ 379,006 371,755$ FUND BALANCES, beginning of year4,910,975 FUND BALANCES, end of year 5,289,981$ (continued)TotalDebt Service FundsDRAFT443
199 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2019 VariancePositiveBudget Actual (Negative)REVENUESIntergovernmental -$ -$ -$ Charges for services 75,000 89,583 14,583 Interest on investments 13,500 41,316 27,816 Total revenues 88,500 130,899 42,399 EXPENDITURES - BUDGET UNIT - - - Revenues over (under) expenditures 88,500 130,899 42,399 OTHER FINANCING SOURCES (USES) - - - Revenues and other sources over(under) expenditures 88,500$ 130,899 42,399$ FUND BALANCES, beginning of year 1,311,442 FUND BALANCES, end of year 1,442,341$ Cemetery Perpetual CarePermanent Fund DRAFT444
COMBINING NONMAJOR PROPRIETARY FUNDS DRAFT445
NONMAJOR PROPRIETARY FUNDS Parking Fund – Accounts for the City’s parking enforcement and facilities operations. Stormwater Fund – Accounts for the City’s stormwater management and mitigation operations.DRAFT446
202 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF NET POSITION NONMAJOR PROPRIETARY FUNDS June 30, 2019 Business-type ActivitiesEnterprise FundsParking StormwaterFund Fund TotalASSETSCurrent assetsCash and investments 1,070,213$ 744,225$ 1,814,438$ Receivables:Customers, net 112,877 127,467 240,344 Special assessments - 301 301 Total current assets 1,183,090 871,993 2,055,083 Non-current assetsOther assets:Notes receivable - - - Restricted cash and investments 443,641 58,288 501,929 Total other assets 443,641 58,288 501,929 Property, plant and equipment, netNondepreciable:Land 303,436 - 303,436 Depreciable:Buildings 11,877,855 - 11,877,855 Other structures and improvements - - - Machinery and equipment 356,088 231,631 587,719 Vehicles 66,205 181,940 248,145 Infrastructure 47,058 3,957,112 4,004,170 Property under capital lease - 519,943 519,943 Accumulated depreciation and amortization (4,395,486) (624,363) (5,019,849) Net property, plant and equipment 8,255,156 4,266,263 12,521,419 Total non current assets 8,698,797 4,324,551 13,023,348 Deferred outflows of resourcesOther post-employment benefits 2,683 3,130 5,813 Pension plan contributions 42,863 59,881 102,744 Total deferred outflows of resources 45,546 63,011 108,557 Total assets 9,927,433$ 5,259,555$ 15,186,988$ (continued) DRAFT447
203 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF NET POSITION NONMAJOR PROPRIETARY FUNDS (CONTINUED) June 30, 2019 Business-type ActivitiesEnterprise FundsParking StormwaterFund Fund TotalLIABILITIESCurrent liabilitiesAccounts payable and accrued expenses 40,135$ 88,138$ 128,273$ Compensated absences payable 14,356 20,512 34,868 Due to other city funds - - - Capital lease obligations payable in one year 45,514 80,779 126,293 Closure and post-closure care costs, current portion - - - Bonds and leases payable in one year - 78,000 78,000 Total current liabilities 100,005 267,429 367,434 Noncurrent liabilitiesCapital lease obligations - 55,935 55,935 Revenue bonds due after one year - 1,442,000 1,442,000 Other post-employment health benefits 35,288 9,507 44,795 Appearance bond and other liabilities - 702 702 Net pension liability 266,101 371,750 637,851 Total noncurrent liabilities 301,389 1,879,894 2,181,283 Total liabilities 401,394 2,147,323 2,548,717 Deferred inflows of resourcesOther post-employment benefits 13,446 7,828 21,274 Pension deferrals 37,504 52,395 89,899 Total deferred inflows of resources 50,950 60,223 111,173 NET POSITIONNet Investment in capital assets 8,209,642 2,609,549 10,819,191 Restricted for impact capital projects - - - Restricted for parking capital projects 130,316 - 130,316 Restricted for debt service - 58,288 58,288 Unrestricted 1,135,131 384,172 1,519,303 Total net position 9,475,089 3,052,009 12,527,098 Total liabilities, deferred inflows and net position 9,927,433$ 5,259,555$ 15,186,988$ DRAFT448
204 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION NONMAJOR PROPRIETARY FUNDS Year Ended June 30, 2019 Parking StormwaterFundFund TotalsOPERATING REVENUES 958,504$ 1,349,678$ 2,308,182$ OPERATING EXPENSESSalaries and benefits404,707 536,381 941,088 Materials and supplies28,883 19,966 48,849 Repairs and maintenance14,628 11,267 25,895 Utilities31,259 5,153 36,412 Administrative charges69,978 116,700 186,678 Other expenses217,327 54,326 271,653 Depreciation and amortization352,684 139,927 492,611 Changes in estimated closure and post-closure care costs- - - Total operating expenses1,119,466 883,720 2,003,186 Operating income (loss)(160,962) 465,958 304,996 NON-OPERATING REVENUES (EXPENSES)Interest income42,409 17,003 59,412 Interest expense- (40,562) (40,562) Other income24,945 - 24,945 Intergovernmental income4,674 6,530 11,204 Gain (loss) on sale of assets1,350- 1,350 Total non-operating revenues (expenses)73,378 (17,029) 56,349 Income (loss) before contributions and transfers(87,584) 448,929 361,345 Contributions of infrastructure - developers- 1,149,581 1,149,581 Transfers in150,000 75,000 225,000 Transfers out- - - Change in net position62,416 1,673,510 1,735,926 NET POSITION, beginning of year9,411,032 1,376,584 10,787,616 Restatement1,641 1,915 3,556 NET POSITION, beginning of year, restated9,412,673 1,378,499 10,791,172 NET POSITION, end of year9,475,089$ 3,052,009$ 12,527,098$ Business-type ActivitiesEnterprise Funds DRAFT449
205 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF CASH FLOWS - NONMAJOR PROPRIETARY FUNDS Year Ended June 30, 2019 Parking StormwaterFund Fund TotalCASH FLOWS FROM OPERATING ACTIVITIESReceipts from customers 959,411$ 1,345,105$ 2,304,516$ Receipts from others 24,945 - 24,945 Payments to suppliers (335,581) (221,423) (557,004) Payments to employees (373,951) (495,047) (868,998) Payments to internal service funds and administrative fees (69,978) (116,700) (186,678) Net cash flows from operating activities 204,846 511,935 716,781 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIESTransfers in150,000 75,000 225,000 Receipts from grants and intergovernmental sources4,674 6,530 11,204 Net cash flows from non-capital financing activities154,674 81,530 236,204 CASH FLOWS FROM CAPITAL AND RELATEDFINANCING ACTIVITIESAcquisition of capital assets(324,448) (365,930) (690,378) Principal paid on bonds, interfund loans, loans and leases- (154,173) (154,173) Interest paid on bonds, interfund loans, loans and leases- (40,562) (40,562) Proceeds from issuance of long-term debt45,514 303,570 349,084 Proceeds from sale of property, plant and equipment1,350 - 1,350 Net cash flows from capital and related financing activities(277,584) (257,095) (534,679) CASH FLOWS FROM INVESTING ACTIVITIESCollections on notes9,442 - 9,442 Interest on investments42,409 17,003 59,412 Net cash flows from investing activities51,851 17,003 68,854 Net change in cash and investments133,787 353,373 487,160 Cash and investments, beginning of year1,380,067 449,140 1,829,207 Cash and investments, end of year1,513,854$ 802,513$ 2,316,367$ (continued) DRAFT450
206 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF CASH FLOWS - NONMAJOR PROPRIETARY FUNDS (CONTINUED) Year Ended June 30, 2019 Parking StormwaterFund Fund TotalCash and investments classified as:Cash and investments 1,070,213$ 744,225$ 1,814,438$ Restricted cash and investments 443,641 58,288 501,929 Totals 1,513,854$ 802,513$ 2,316,367$ Noncash transactions: donated infrastructure -$ 1,149,581$ 1,149,581$ RECONCILIATION OF OPERATING LOSSTO NET CASH FROM OPERATING ACTIVITIES:Operating income (loss) (160,962)$ 465,958$ 304,996$ Adjustments to reconcile operating lossto net cash from operating activities:Depreciation and amortization 352,684 139,927 492,611 Change in estimated closure costs - - - Other income 24,945 - 24,945 Change in assets and liabilities: (Increase) decrease in:Accounts receivable 907 (4,573) (3,666) Increase (decrease) in:Accounts payable (43,484) (130,711) (174,195) Accrued employee benefits payable 12,301 1,489 13,790 Net pension liabilities 18,455 39,845 58,300 Total adjustments 365,808 45,977 411,785 Net cash from operating activities 204,846$ 511,935$ 716,781$ DRAFT451
INTERNAL SERVICE FUND STATEMENTSDRAFT453
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. Public Works Administration – Accounts for the professional level management, engineering, and GIS technical support provided to other Public Works divisions, including water, wastewater, solid waste, stormwater, in addition to support provided to other City departments. DRAFT454
209 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF NET POSITION - INTERNAL SERVICE FUNDS Year Ended June 30, 2019 Vehicle Medical Public Maintenance Health WorksShop Insurance Administration Total ASSETSCurrent assetsCash and equivalents -$ 389,027$ 633,288$ 1,022,315$ Customer receivables, net 1,836 30,651 - 32,487 Prepaid expenses - - - - Total current assets 1,836 419,678 633,288 1,054,802 Property, plant, and equipmentMachinery and equipment 179,994 - 279,837 459,831 Vehicles 85,283 - 112,073 197,356 Buildings 1,424,215 - 17,180 1,441,395 Less: accumulated depreciation (670,701) - (162,051) (832,752) Net property, plant, and equipment 1,018,791 - 247,039 1,265,830 Deferred outflows of resourcesOther post-employment benefits 2,907 - 8,161 11,068 Pension plan contributions 69,012 - 187,038 256,050 Total deferred outflows of resources 71,919 - 195,199 267,118 Total assets and deferred outflows of resources 1,092,546$ 419,678$ 1,075,526$ 2,587,750$ LIABILITIESCurrent liabilitiesAccounts payable 69,168$ 399$ 103,302$ 172,869$ Compensated absences payable 17,270 - 106,244 123,514 Current portion of capital lease obligations - - 6,023 6,023 Due to other city funds 136,567 - - 136,567 Total current liabilities223,005 399 215,569 438,973 Non-current liabilitiesOther post-employment health benefits 31,802- 105,751 137,553 Capital lease obligations- - 21,465 21,465 Net pension liability409,778 - 1,207,135 1,616,913 Total non-current liabilities441,580 - 1,334,351 1,775,931 Total liabilities664,585 399 1,549,920 2,214,904 Deferred inflows of resourcesOther post-employment health benefits 13,129- 40,141 53,270 Pension deferrals55,071 - 185,177 240,248 Total deferred inflows of resources68,200 - 225,318 293,518 NET POSITIONNet investment in capital assets1,018,791 - 219,551 1,238,342 Unrestricted(659,030) 419,279 (919,263) (1,159,014) Total net position359,761 419,279 (699,712) 79,328 Total liabilities, deferred inflows of resources and net position 1,092,546$ 419,678$ 1,075,526$ 2,587,750$ DRAFT455
210 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - INTERNAL SERVICE FUNDS Year Ended June 30, 2019 Vehicle Medical Public Maintenance Health WorksShop Insurance Administration TotalOPERATING REVENUES 1,354,012$ 4,945,714$ 2,514,270$ 8,813,996$ OPERATING EXPENSESSalaries and benefits 507,716 - 1,741,202 2,248,918 Materials and supplies 756,015 - 41,937 797,952 Repairs and maintenance 8,661 - 3,234 11,895 Utilities 24,656 - 3,371 28,027 Administrative charges 156,271 - 2,896 159,167 Insurance claims - 4,857,152 - 4,857,152 Other expenses 36,539 92,088 365,640 494,267 Depreciation 56,743 - 50,022 106,765 Total operating expenses 1,546,601 4,949,240 2,208,302 8,704,143 Operating income (loss) (192,589) (3,526) 305,968 109,853 NON-OPERATING REVENUES (EXPENSES)Interest income - 5,122 2,564 7,686Interest expense (343) - (1,956) (2,299) Other income 1,428 12,393 62 13,883Intergovernmental income 6,557 - 23,193 29,750 Gain (Loss) on sale of assets (19) - 167,084 167,065 Total non-operating revenue (expenses) 7,623 17,515 190,947 216,085 Income before transfers (184,966) 13,989 496,915 325,938 Transfers in - - - - Change in net position (184,966) 13,989 496,915 325,938 NET POSITION, beginning of year 542,950 405,290 - 948,240Restatement, other post-employement benefits and pension 1,777 - (1,196,627) (1,194,850) NET POSITION, beginning of year, restated544,727 405,290 (1,196,627) (246,610) NET POSITION, end of year359,761$ 419,279$ (699,712)$ 79,328$ DRAFT456
211 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF CASH FLOWS - INTERNAL SERVICE FUNDS Year Ended June 30, 2019 Vehicle MedicalPublic Maintenance HealthWorksShop InsuranceAdministrationTotalCASH FLOWS FROM OPERATIONSReceipts from customers 1,352,267$ 4,926,172$ 2,514,270$ 8,792,709$ Receipts from others 7,985 12,393 23,255 43,633 Operating loans from other City funds 68,484 - - 68,484 Payments to suppliers (768,170) (93,064) 894,394 33,160 Payments to employees (503,933) (4,857,152) (2,693,851) (8,054,936) Payments to Internal Service Funds and administrative fees (156,271) - (2,896) (159,167) Net cash flows from operating activities 362 (11,651) 735,172 723,883 CASH FLOWS FROM CAPITAL ANDRELATED FINANCING ACTIVITIESAdditions to property, plant and equipment - - (129,979) (129,979) Proceeds from sale of capital assets (19) - - (19) Proceeds from issuance of long-term debt- - 32,649 32,649 Principal paid on bonds, interfund loans, loans and leases- - (5,162) (5,162) Interest paid on bonds, interfund loans, loans and leases (343) - (1,956) (2,299) Net cash flows from capital and related financing activities (362) - (104,448) (104,810) CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIESTransfers in- - - - CASH FLOWS FROM INVESTING ACTIVITIESInterest on investments - 5,122 2,564 7,686 Net increase (decrease) in cash and cash equivalents - (6,529) 633,288 626,759 CASH AND EQUIVALENTS, beginning of year - 395,556 - 395,556 CASH AND EQUIVALENTS, end of year -$ 389,027$ 633,288$ 1,022,315$ (continued)DRAFT457
212 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF CASH FLOWS - INTERNAL SERVICE FUNDS (CONTINUED) Year Ended June 30, 2019 Vehicle MedicalPublic Maintenance HealthWorksShop InsuranceAdministrationTotalRECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FROM OPERATING ACTIVITIESOperating income (loss)(192,589)$ (3,526)$ 305,968$ 109,853$ Adjustments to reconcile operating income (loss)to net cash from operating activities:Depreciation56,743 - 50,022 106,765 Other income7,985 12,393 23,255 43,633 Changes in assets and liabilities:(Increase) decrease in:Customer receivables(1,745) (19,542) - (21,287) Increase (decrease) in:Accounts payable25,871 (976) 103,302 128,197 Due to other city funds68,484 - - 68,484 Compensated absences payable(6,311) - 106,244 99,933 Other post-employment health benefits 10,094 - 137,731 147,825 Net pension31,830 - 8,650 40,480 Total adjustments192,951 (8,125) 429,204 614,030 Net cash from operating activities362$ (11,651)$ 735,172$ 723,883$ DRAFT458
AGENCY FUNDS STATEMENTSDRAFT459
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. DRAFT460
215 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF FIDUCIARY NET POSITION – AGENCY FUNDS June 30, 2019 CMC Tourism TotalMunicipal Bozeman Site Business AgencyCourt Remediation Improvement FundsASSETSCash and cash equivalents 506,142$ -$ -$ 506,142$ Customer receivables2,524- - 2,524 Special assessments- - 19,497 19,497 Total assets508,666$ -$ 19,497$ 528,163$ LIABILITIESAccounts payable508,666$ -$ 19,497$ 528,163$ Total liabilities508,666$ -$ 19,497$ 528,163$ DRAFT461
216 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES – AGENCY FUNDS Year Ended June 30, 2019 Balance Balance June 30, 2018 Additions Deletions June 30, 2019ASSETSCash and cash equivalents 413,967$ 92,175$ -$ 506,142$ Customer receivables 1,253 1,271 - 2,524 Interfund receivable - - - - Total assets 415,220$ 93,446$ -$ 508,666$ LIABILITIESAccounts payable 415,220 93,446$ -$ 508,666$ Total liabilities 415,220$ 93,446$ -$ 508,666$ Court Balance BalanceJune 30, 2018 Additions Deletions June 30, 2019ASSETSCash and cash equivalents -$ -$ -$ -$ Customer receivables - - - - Total assets -$ -$ -$ -$ LIABILITIESAccounts payable -$ -$ -$ -$ Total liabilities -$ -$ -$ -$ Site RemediationCMC Bozeman Balance BalanceJune 30, 2018 Additions Deletions June 30, 2019ASSETSCash and cash equivalents 476,697$ -$ (476,697)$ -$ Special Assessments 9,541 1,087,916 (1,077,960) 19,497 Total assets 486,238$ 1,087,916$ (1,554,657)$ 19,497$ LIABILITIESAccounts payable 486,238$ 1,087,916$ (1,554,657)$ 19,497$ Total liabilities 486,238$ 1,087,916$ (1,554,657)$ 19,497$ Tourism Business Improvement District DRAFT462
PART III STATISTICAL SECTION DRAFT464
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 ad required supplementary information says about the government’s overall financial health. Contents Page 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. 220 Revenue Capacity These schedules contain information to help the reader assess the government’s most significant local revenue source, the property tax. 226 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. 238 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. 248 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. 251 Sources: Unless otherwise notes, the information in these schedules is derived from the City of Bozeman comprehensive annual financial reports for the relevant year. DRAFT465
FINANCIAL TRENDS SECTION DRAFT466
220 CITY OF BOZEMAN, MONTANA NET POSITION BY COMPONENT Past Ten Fiscal Years 2010201120122013201420152016201720182019Governmental activitiesNet investment in capital assets 84,113,904 88,844,404 88,500,437 89,081,484 89,267,076 93,409,850 104,342,191 115,696,956.00 137,058,945.00 155,191,911.00 Restricted8,082,181 20,962,038 20,797,365 27,255,029 35,621,803 41,755,126 42,829,320 41,583,992.00 36,522,195.00 21,202,050.00 Unrestricted25,076,908 16,049,044 15,470,543 11,521,053 12,127,224 (5,137,642) (3,923,466) (4,839,467.00) (5,514,909.00) 4,806,912.00 Total governmental activities117,272,993$ 125,855,486$ 124,768,345$ 127,857,566$ 137,016,103$ 130,027,334$ 143,248,045$ 152,441,481$ 168,066,231$ 181,200,873$ Business-type activitiesNet investment in capital assets 189,965,189 188,180,889 192,485,459 199,394,551 205,501,357 211,419,777 221,385,655 229,372,281.00 239,254,236.00 245,190,586.00 Restricted9,044,280 12,660,466 11,446,886 3,098,125 3,372,927 4,977,984 4,990,635 8,866,951.00 13,070,517.00 12,671,931.00 Unrestricted16,069,597 12,382,018 2,809,558 10,643,337 8,723,353 6,619,399 10,582,408 9,154,014.00 12,923,470.00 21,053,523.00 Total business-type activities215,079,066$ 213,223,373$ 206,741,903$ 213,136,013$ 217,597,637$ 223,017,160$ 236,958,698$ 247,393,246$ 265,248,223$ 278,916,040$ Primary governmentNet investment in capital assets 274,079,093 277,025,293 280,985,896 288,476,035 294,768,433 304,829,627 325,727,846 345,069,237.00 376,313,181.00 400,382,497.00 Restricted17,126,461 33,622,504 32,244,251 30,353,154 38,994,730 46,733,110 47,819,955 50,450,943.00 49,592,712.00 33,873,981.00 Unrestricted41,146,505 28,431,062 18,280,101 22,164,390 20,850,577 1,481,757 6,658,942 4,314,547.00 7,408,561.00 25,860,435.00 Total primary government net position 332,352,059$ 339,078,859$ 331,510,248$ 340,993,579$ 354,613,740$ 353,044,494$ 380,206,743$ 399,834,727$ 433,314,454$ 460,116,913$ Fiscal Years DRAFT468
221 CITY OF BOZEMAN, MONTANA CHANGES IN NET POSITION Past Ten Fiscal Years (accrual basis of accounting) 2010201120122013201420152016201720182019ExpensesGovernmental Activities:General Government 6,299,831 6,122,190 8,706,665 7,373,368 6,989,830 7,417,644 8,058,925 9,415,702 9,896,366 10,310,075 Public Safety 12,382,157 12,859,702 13,215,680 14,340,301 15,297,088 17,023,578 18,391,357 17,689,004 18,637,422 19,691,891 Public Service 9,703,594 9,190,515 8,174,461 3,939,061 6,031,768 6,458,930 6,861,939 7,857,917 8,615,272 9,850,802 Public Welfare 6,915,557 7,500,727 7,249,008 6,518,822 7,417,158 7,579,653 7,994,697 9,210,264 9,476,010 9,658,817 Other - - - - - - Interest and Fiscal Fees 714,714 679,652 636,478 433,766 179,280 824,266 893,470 771,714 781,255 786,236 Total Governmental Activities Expenses 36,015,853$ 36,352,786$ 37,982,292$ 32,605,318$ 35,915,124$ 39,304,071$ 42,200,388$ 44,944,601$ 47,406,325$ 50,297,821$ Business-Type Activities:Water 12,016,149 11,649,639 11,674,222 6,154,746 6,869,870 7,995,910 9,273,395 9,740,629 9,832,508 9,984,114 Waste Water 9,143,077 10,128,397 10,203,165 6,121,663 8,955,592 6,940,983 8,163,312 8,590,477 8,548,138 9,291,509 Solid Waste 2,561,124 2,578,109 2,584,899 2,475,680 6,958,209 3,308,441 4,570,884 4,262,650 4,535,865 4,739,710 Non-Major Activities967,077 991,712 990,229 852,561 966,454 1,098,771 1,300,612 1,827,722 2,011,950 2,043,748 Total Business-Type Activities Expenses24,687,427 25,347,857 25,452,515 15,604,650 23,750,125 19,344,105 23,308,203 24,421,478 24,928,461 26,059,081 Total Primary Government Expenses60,703,280 61,700,643 63,434,807 48,209,968 59,665,249 58,648,176 65,508,591 69,366,079 72,334,786 76,356,902 Program RevenuesGovernmental Activities: Charges for Services:General Government2,774,869 2,870,443 1,949,125 1,966,966 2,453,015 1,947,445 2,530,474 2,683,016 3,139,427 3,777,184 Public Safety2,414,893 2,684,724 2,638,811 3,219,231 3,290,573 3,211,911 3,347,859 3,175,257 2,234,994 4,158,560 Public Service3,742,856 4,454,492 4,983,420 6,655,604 7,623,178 8,784,447 9,310,147 10,342,921 15,531,304 12,189,258 Public Welfare399,280 451,960 1,102,896 1,593,212 613,322 1,097,845 1,213,526 1,414,394 1,593,025 1,724,864 Operating Grants and Contributions693,342 1,114,835 566,586 406,239 457,354 2,254,052 2,494,244 2,715,986 3,021,400 5,419,871 Capital Grants and Contributions5,307,118 7,867,093 635,758 844,935 4,762,416 2,960,051 5,018,559 2,667,352 7,651,008 6,593,221 Total Governmental Activities Program Revenues 15,332,358$ 19,443,547$ 11,876,596$ 14,686,187$ 19,199,858$ 20,255,751$ 23,914,809$ 22,998,926$ 33,171,158$ 33,862,958$ Business-Type Activities Charges for Services:Water6,986,247 7,064,571 7,921,483 9,585,939 9,842,699 9,969,058 11,935,016 11,166,944 12,915,454 11,438,495 Waste Water6,505,119 6,930,036 7,488,473 8,560,438 8,852,738 9,008,247 9,283,600 9,668,524 10,686,506 10,445,185 Solid Waste2,716,981 2,569,607 2,570,644 2,532,676 2,725,465 2,953,414 2,617,243 3,613,721 3,926,123 4,228,099 Non-Major Activities326,820 417,114 382,968 644,672 872,325 891,379 3,207,605 2,172,399 2,282,839 2,308,182 Operating Grants and Contributions- - - - 9,596 123,439 134,946 169,509 134,523 83,264 Capital Grants and Contributions:3,621,051 6,589,612 566,138 156,123 5,898,923 6,385,418 11,287,654 7,774,707 9,944,719 8,324,760 Total Business-Type Activities Program Revenues 20,156,218 23,570,940 18,929,706 21,479,848 28,201,746 29,330,955 38,466,064 34,565,804 39,890,164 36,827,985 Total Primary Government Program Revenues35,488,576 43,014,487 30,806,302 36,166,035 47,401,604 49,586,706 62,380,873 57,564,730 73,061,322 70,690,943 Fiscal Year DRAFT469
222 CITY OF BOZEMAN, MONTANA CHANGES IN NET POSITION (CONTINUED) Past Ten Fiscal Years (accrual basis of accounting) 2010201120122013201420152016201720182019Net (Expense) / RevenueGovernmental Activities(20,683,495) (16,909,239) (26,105,696) (17,919,131) (16,715,266) (19,048,320) (18,285,579) (21,945,675) (14,235,167) (16,434,863) Business-Type Activities(4,531,209) (1,776,917) (6,522,809) 5,875,198 4,060,921 9,986,850 15,157,861 10,144,326 14,961,703 10,768,904 Total Primary Government Net Expense(25,214,704)$ (18,686,156)$ (32,628,505)$ (12,043,933)$ (12,654,345)$ (9,061,470)$ (3,127,718)$ (11,801,349)$ 726,536$ (5,665,959)$ General Revenues and Other Changes in Net PositionGovernmental Activities: TaxesProperty Taxes15,501,316 16,342,053 15,716,055 16,429,959 17,561,022 20,203,718 21,234,288 21,708,812 22,532,724 23,823,994 Unrestricted Grants and Contributions6,284,467 6,782,383 6,898,717 6,342,884 7,436,419 7,699,711 7,992,180 8,372,625 6,171,297 4,658,177 Investment Earnings352,378 301,424 283,090 243,744 355,790 403,152 519,637 554,870 64,058 1,490,286 Miscellaneous2,256,071 1,556,790 155,484 - 293,884 374,966 418,215 1,317,137 2,320,536 1,009,437 Sale of Capital Assets761,952 (8,168) 4,414 1,765 236,688 - 123,934 (71,335) 28,861 167,291 Transfers of Capital Assets- - (2,088) - - - - - Transfers521,863 517,250 (37,136) (10,000) (10,000) (410,016) 1,218,036 (742,999) (758,084) (475,000) Extraordinary Items- - - - - - - Total Governmental Activities25,678,047$ 25,491,732$ 23,018,536$ 23,008,352$ 25,873,803$ 28,271,531$ 31,506,290$ 31,139,110$ 30,359,392$ 30,674,185$ Business-Type Activities: Unrestricted Grants and Contributions342,653 438,475 2,115 508,912 - - - - - - Investment Earnings304,231 3,389 1,010,849 Transfers of Capital Assets- - 2,088 - - - - Miscellaneous1,256,284 2,529,824 362,631 ARRA Debt Forgiveness- - - - 390,700 - - Loss on sale of assets(2,013,292) 10,005 (172,428) Transfers(521,863) (517,251) 37,136 10,000 10,000 380,347 (1,218,036) 742,999 758,084 475,000 Total Business-Type Activities(179,210) (78,776) 41,339 518,912 400,700 380,347 (1,218,036) 290,222 3,301,302 1,676,052 Total Primary Government25,498,837 25,412,956 23,059,875 23,527,264 26,274,503 28,651,878 30,288,254 31,429,332 33,660,694 32,350,237 Restatement of Beginning Net PositionGovernmental Activities(1,104,680) Business-Type Activities1,222,861 Total Primary Government118,181 Change in Net PositionGovernmental Activities4,994,552 8,582,493 (3,087,160) 5,089,221 9,158,537 9,223,211 13,220,711 9,193,435 16,124,225 13,134,642 Business-Type Activities(4,710,419) (1,855,693) (6,481,470) 6,394,110 4,461,621 10,367,197 13,939,825 10,434,548 18,263,005 13,667,817 Total Primary Government284,133$ 6,726,800$ (9,568,630)$ 11,483,331$ 13,620,158$ 19,590,408$ 27,160,536$ 19,627,983$ 34,387,230$ 26,802,459$ Fiscal Year DRAFT470
223 CITY OF BOZEMAN, MONTANA FUND BALANCE - GOVERNMENT FUNDS Past Ten Fiscal Years (modified accrual basis of accounting) 2010201120122013201420152016201720182019General FundReserved- - Unreserved5,119,400 Nonspendable- - - - - - Restricted- - - - - - Committed- - - - - - Assigned5,991,388 7,062,964 7,327,375 6,420,760 6,061,965 5,541,841 6,402,882$ 7,739,020$ 7,739,582$ Unassigned905,862 264,091 - 193,534 - 979,258 87,274$ (274,252)$ Total general fund5,119,400 6,897,250 7,327,055 7,327,375 6,614,294 6,061,965 6,521,099 6,490,156 7,464,768 7,739,582 All Other Governmental Reserved6,597,569 - Unreserved, reported in:Special revenue funds 14,916,152 Capital projects funds 1,793,287 Debt service funds- Nonspendable999,464 1,113,484 1,193,530 1,269,557 2,061,790 1,426,575 1,533,338 1,623,816 1,735,591 Restricted19,962,574 19,683,881 26,061,499 19,927,526 12,546,935 39,856,356 38,938,127 34,403,744 23,129,241 Committed3,278,422 3,463,714 851,322 3,075,505 3,088,936 3,528,263 3,901,694 3,856,238 4,279,091 Assigned58,419 - - 229,602 - 7,425,398 7,259,749 1,868,485 1,293,436 Unassigned- (51,586) 456,669 (184,101) (97,173) 914,535 107,103 (42,648) 8,731,534 Total all other governmental funds 23,307,008 24,298,879 24,209,493 28,563,020 24,318,089 17,600,488 53,151,127 51,740,011 41,709,635 39,168,893 Fiscal Year DRAFT471
224 CITY OF BOZEMAN, MONTANA CHANGES IN FUND BALANCES - GOVERNMENT FUNDS Past Ten Fiscal Years (modified accrual basis of accounting) 2010201120122013201420152016201720182019RevenuesTaxes15,055,844 16,634,924 16,057,318 16,540,972 17,385,371 20,404,236 21,303,074 21,682,667$ 22,553,972$ 23,788,018$ Special assessments1,643,500 1,866,272 1,898,007 1,752,615 2,011,944 1,578,855 1,265,954 1,163,275$ 1,137,103$ 1,116,925$ Licenses and permits958,590 1,308,378 1,214,705 1,629,744 1,784,282 1,827,842 2,112,090 2,092,673$ 2,541,727$ 2,392,081$ Intergovernmental7,900,176 8,299,803 7,697,637 7,586,007 8,208,770 8,562,937 8,920,424 8,956,044$ 9,419,104$ 10,488,662$ Charges for service5,790,382 6,629,507 6,891,594 8,806,969 9,656,123 10,629,791 12,283,683 13,743,830$ 17,885,529$ 16,987,622$ Fines and forfeitures1,518,481 1,441,383 1,364,617 1,394,652 1,411,162 1,305,166 1,253,705 1,256,525$ 1,240,154$ 1,234,324$ Interest on investments352,378 300,516 281,239 239,778 329,086 370,305 479,699 520,690$ 34,709$ 1,439,743$ Loan repayment10,401 193,302 306,385 157,069 63,980 94,989 38,552 31,837$ 25,827$ 31,695$ Other2,256,071 1,556,790 155,484 394,677 287,089 363,274 415,646 1,307,668$ 2,313,097$ 995,553$ Total revenues35,485,823 38,230,875 35,866,986 38,502,483 41,137,807 45,137,395 48,072,827 50,755,209 57,151,222 58,474,623 ExpendituresGeneral government5,690,488 5,939,771 6,266,566 7,276,839 6,138,575 6,594,474 7,318,539 7,643,886 8,268,285 8,782,078 Public safety11,709,170 12,137,616 12,513,270 13,822,691 14,637,886 15,086,695 16,485,549 16,812,131 17,602,966 18,005,944 Public service2,702,510 3,002,021 2,738,066 2,805,612 3,498,770 3,786,283 3,840,405 4,422,771 4,955,559 5,774,783 Public welfare4,916,828 6,435,916 6,184,073 6,216,387 6,678,347 7,366,955 7,245,425 7,654,059 7,975,354 8,339,885 Other- - - 15,776 1,046,712 1,113,340 418,431 506,169 655,532 728,642 Capital outlay4,248,758 3,299,017 3,881,388 2,782,435 8,053,456 9,905,333 9,337,470 12,468,020 18,420,501 19,106,110 Debt service- Principal1,194,819 1,611,087 3,235,664 1,826,126 1,482,142 1,121,593 1,345,250 1,422,555 1,500,687 1,635,369 Interest & Fiscal Fees715,150 680,088 666,082 445,736 380,950 824,266 893,470 771,714 718,597 786,238 Total expenditures31,177,723 33,105,516 35,485,109 35,191,602 41,916,838 45,798,939 46,884,539 51,701,305 60,097,481 63,159,049 Excess of revenuesover (under) expenditures4,308,100 5,125,359 381,877 3,310,881 (779,031) (661,544) 1,188,288 (946,096) (2,946,259) (4,684,426) Other Financing Sources (Uses)Proceeds from borrowing- - - - - - - Transfers in10,857,332 6,985,734 3,482,550 4,291,417 3,103,787 4,816,671 6,483,413 3,950,059 4,394,277 4,202,825 Transfers out(11,033,925) (7,255,505) (3,821,010) (4,454,505) (3,113,787) (5,197,018) (5,496,492) (4,693,058) (5,152,361) (4,677,825) Issuance of debt890,000 - 3,357,798 1,203,279 10,012,647 5,619,361 47,406 234,702 1,103,586 2,859,598 Premium on Bonds Issued- - - - - - - - - - Payments to Refunded Bond Escrow Agent(3,120,000) - - - - - - - Sales of capital assets766,922 10,555 59,204 2,775 243,092 64,855 227,984 43,277 35,144 33,898 Total other financing sources (uses)1,480,329 (259,216) (41,458) 1,042,966 10,245,739 5,303,869 1,262,311 (465,020) 380,646 2,418,496 Extraordinary itemsNet change in fund balances5,788,429$ 4,866,143$ 340,419$ 4,353,847$ 9,466,708$ 4,642,325$ 2,450,599$ (1,411,116)$ (2,565,613)$ (2,265,930)$ Debt service as a percentage of 7.1% 7.7% 12.3% 7.0% 5.5% 5.4% 6.0% 5.6% 5.3% 5.5%noncapital expendituresFiscal Year DRAFT472
REVENUE CAPACITY SECTION DRAFT474
226 CITY OF BOZEMAN, MONTANA ASSESSED VALUE OF TAXABLE PROPERTY Past Ten Fiscal Years FiscalTotalTotalAssessed TaxableYearTaxableDirectTotal Value ** as a Ended Residential Commercial & OtherAssessedTaxMarket Percentage ofJune 30,PropertyIndustrial PropertyPropertyValue **RateValue *Total Market Value2010 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 50,899,738 29,864,642 5,799,800 86,564,180 210.16 5,698,588,679 1.519%2017 52,777,954 30,966,657 6,013,815 89,758,426 205.30 5,870,738,906 1.529%2018 56,952,419 37,199,199 7,043,156 101,194,775 187.33 6,745,351,312 1.500%2019 58,712,093 38,348,553 7,260,771 104,321,416 191.24 6,981,943,409 1.494%Source: Based on information provided by Gallatin County and Montana Department of RevenueNote: Property in Gallatin County is reassessed by the State Department of Revenue every two 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 DRAFT476
227 CITY OF BOZEMAN, MONTANA CITY TAXABLE MARKET AND TAXABLE VALUES Past Ten Fiscal Years FiscalNet Taxable ValueYearIncremental Value(excludes Tax Taxable Value Ended TaxableFullfor All TaxIncrement Districtsfor Open Space June 30,Market ValueTaxable ValueIncrement DistrictsIncremental Values)Purposes2010 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 91,973,923 2017 5,870,738,906 94,102,761 4,344,335 89,758,426 93,212,816 2018 6,745,351,312 106,224,806 5,030,031 101,194,775 105,727,520 2019 6,981,943,409 109,713,782 5,392,366 104,321,416 105,727,520 Source: Based on information provided by Gallatin County and Montana Department of RevenueNote: Property is assessed by the State Department of Revenue every two years.* No certified value available, first certification available for FY2014 DRAFT477
228 CITY OF BOZEMAN, MONTANA TAX INCREMENT DISTRICT TAXABLE VALUATION DETAIL Past Ten Fiscal Years FiscalYearEnded Base Incremental TotalBase Incremental TotalBase Incremental TotalJune 30,TaxableTaxableTaxableTaxableTaxableTaxableTaxableTaxableTaxable2010 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 2017 1,328,695 3,068,902 4,397,597 423,054 193,281 616,335 3,473,127 1,003,546 4,476,673 2018 1,328,695 3,769,917 5,098,612 423,054 223,765 646,819 3,507,723 948,746 4,456,469 2019 1,328,695 4,159,996 5,488,691 423,054 229,047 652,101 3,507,723 982,574 4,490,297 FiscalYearEnded Base Incremental TotalBase Incremental TotalBase Incremental TotalJune 30,TaxableTaxableTaxableTaxableTaxableTaxableTaxableTaxableTaxable201012,059 57,740 69,799 - - - 4,650,805 2,560,601 7,211,406 201112,059 50,554 62,613 - - - 4,650,805 2,910,650 7,561,455 201212,059 58,146 70,205 - - - 4,650,805 3,282,766 7,933,571 201312,059 77,412 89,471 - - - 4,650,805 3,708,138 8,358,943 201412,059 60,693 72,752 417 - 417 4,651,222 4,013,561 8,664,783 201512,059 52,376 64,435 417 3 420 4,651,222 4,186,782 8,838,004 201612,059 55,211 67,270 417 - 417 4,651,222 4,223,617 8,874,839 201712,059 78,606 90,665 417 - 283 5,237,352 4,344,335 9,581,687 201812,059 87,633 99,692 417 - 305 5,271,948 5,030,061 10,302,009 2019244,332 20,749 265,081 417 - 305 5,504,221 5,392,366 10,896,587 Source: Based on information provided by Gallatin County and Montana Department of RevenueNote: Property is assessed by the State Department of Revenue every two years.*Previously North 7th Corridor**Previously Mandeville Farm Industrial with different taxable baseNORTH PARK URBAN RENEWAL**BOZEMAN TECHNOLOGYTOTALBOZEMAN DOWNTOWNNORTHEAST URBAN RENEWAL DISTRICTBOZEMAN MIDTOWN* DRAFT478
229 CITY OF BOZEMAN, MONTANA DOWNTOWN BOZEMAN IMPROVEMENT DISTRICT & COMPARISON TO CITY TAXABLE VALUE Past Ten Fiscal Years Fiscal TaxableCity Taxable Value The District's Year Market Value Taxable Value of Incremental(Excluding ALL taxIncremental TaxableEnded of Property in Property in the Taxableincrement districtValue as Percentage ofJune 30,the DistrictDistrictValuevaluations)City's Taxable Value2010 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%2017 265,793,431 4,397,597 3,068,902 89,758,426 3.42%2018 297,005,720 5,098,612 3,769,917 101,194,775 3.73%2019 297,005,720 5,488,691 4,159,996 104,321,416 3.99%Source: Based on information provided by Gallatin County and Montana Department of RevenueNote: Property is assessed by the State Department of Revenue every two years.Downtown Bozeman Improvement District DRAFT479
230 CITY OF BOZEMAN, MONTANA PROPERTY TAX LEVIES IN THE DOWNTOWN BOZEMAN IMPROVEMENT DISTRICT Past Ten Fiscal Years Taxing Entity2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Statewide School Equalization40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00 Gallatin County Operating and Bond 85.19 89.94 88.69 87.40 88.38 89.55 99.77 100.41 91.23 98.87 Open Space Bond5.81 6.14 5.99 4.89 4.90 4.95 5.03 5.85 5.13 4.69 County-Wide School94.02 95.74 95.61 96.47 101.28 99.94 106.85 105.39 99.67 102.44 Bozeman High School District 69.05 75.34 73.48 71.81 73.16 72.97 76.76 77.25 73.10 108.95 Bozeman Elementary School District 130.49 121.55 123.38 131.45 145.25 143.70 151.15 154.81 146.92 142.63 City of Bozeman170.19 168.75 166.75 166.75 173.08 188.76 210.16 205.30 187.33 191.24 TOTAL594.75 597.46 593.90 598.77 626.05 639.87 689.72 689.01 643.38 688.82 Exempt from Tax IncrementUniversity Millage6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 Gallatin Conservation District1.01 0.99 1.00 0.98 0.97 0.95 1.05 1.01 0.89 0.91 County-Wide Planning2.50 2.40 2.40 2.39 2.39 2.35 2.39 2.39 2.48 2.50 Source: Based on information provided by Gallatin County and Montana Department of RevenueNote: Property is assessed by the State Department of Revenue every six years and beginning in 2017 every two years.Fiscal Year DRAFT480
231 CITY OF BOZEMAN, MONTANA DIRECT AND OVERLAPPING PROPERTY TAX RATES Past Ten Fiscal Years (rate per $1,000 of assessed value) FiscalGeneralTotalYearObligation DirectBozemanEnded BasicDebtTaxSchoolGallatinState ofJune 30,RateServiceRateDistrictCountyMontana2010160.18 10.01 170.19 199.54 210.25 46.00 2011158.96 9.79 168.75 196.89 217.21 46.00 2012157.19 9.56 166.75 196.86 215.77 46.00 2013158.38 8.37 166.75 203.26 215.10 46.00 2014164.83 8.25 173.08 218.41 221.00 46.00 2015177.52 11.24 188.76 216.67 215.78 46.00 2016194.51 15.65 210.16 227.91 241.69 46.00 2017190.17 15.13 205.30 232.06 241.69 46.00 2018173.92 13.41 187.33 220.02 223.33 46.00 2019178.22 13.02 191.24 251.58 206.00 46.00 Source: Based on information provided by Gallatin County and Department of RevenueInstructionsGeneral Obligation Debt Service & Total Direct Tax Rate - Final mill levy passed by CommissionBasic Rate auto calculatesBozeman School District & Gallatin County, Use cells in Prop Tax Levies in BID DRAFT481
232 CITY OF BOZEMAN, MONTANA PRINCIPAL PROPERTY TAX PAYERS Current Year and Ten Years Ago PercentagePercentageof Total Cityof Total CityTaxableTaxableTotalTaxableAssessedAssessedAssessedAssessedTaxpayerValueRankValueValueRankValueNorthwestern Energy - Transmission & Distribution 5,379,804 15.32%3,126,536 14.21%Verizon Wireless583,961 20.58%Centurylink, Inc. (Qwest)524,350 30.52%1,138,418 21.53%Charter Communications Inc498,174 40.49%NB Stadium View Distrcit460,554 50.46%Harry Daum - Gallatin Mall446,722 60.44%533,461 30.72%Stone Ridge Partners LLC423,820 70.42%357,325 70.48%Mitchell Development & Investment LLC376,921 80.37%326,043 100.44%Bridger Peaks Holding LLC375,052 90.37%First Security Bank352,421 100.35%Bozeman Deaconness Foundation504,584 40.68%BVI/HJSI Bozeman LLC402,806 50.54%Wal-Mart Stores377,391 60.51%Celloco Partnership344,823 80.46%Lowes HIW Inc.340,678 90.46%Total9,421,779$ 9.31%7,452,065$ 10.05%Total City Taxable Assessed Value101,194,775$ 74,178,000$ Source: Gallatin County Treasurer20182009 DRAFT482
233 CITY OF BOZEMAN, MONTANA PRINCIPAL PROPERTY TAX PAYERS IN DOWNTOWN BOZEMAN IMPROVEMENT DISTRICT Current Year and Prior Year PercentagePercentageof Total Cityof Total CityTotalTaxableTotalTaxableAssessedAssessedAssessedAssessedTaxpayerBusinessValueRankValueValueRankValueG25 HOLDINGS LLC Property Investor/Developer278,567 25.46%209,245 24.95%First Security Bank Bank220,843 14.33%296,961 17.02%5 West LLCMulti Tennant Commercial/Residential Buildling 132,329 32.60%N/AN/AF&H, LLCProperty Investor/Developer126,764 42.49%119,590 32.83%Moose Point LPCommercial Property Developer124,225 52.44%113,996 42.70%777 BuildingMulti Tennant Office Retail Building115,658 62.27%104,808 52.48%Downtowner Group LLC Business Support Services96,034 71.88%89,618 62.12%Atlantic Financial Group Ltd. Bank92,786 81.82%79,733 71.89%M & J Cowdrey LLC Property Investor/Developer83,944 91.65%71,265 101.69%702 LLCProperty Investor/Developer80,750 101.58%71,497 91.69%Total1,351,900$ 26.52%1,156,713$ 27.36%Total Downtown BID Taxable Assessed Value5,098,612$ 4,227,246$ Source: Gallatin County Treasurer20172018 DRAFT483
234 CITY OF BOZEMAN, MONTANA PROPERTY TAX LEVIES AND COLLECTIONS Past Ten Fiscal Years FiscalYear Taxes Levied CollectionsEnded for thePercentagein SubsequentPercentageJune 30,Fiscal YearAmountof LevyYearsAmountof Levy2010 13,324,175 12,415,922 93.18% 898,596 13,314,518 99.93%2011 13,567,611 13,001,537 95.83% 530,923 13,532,460 99.74%2012 13,683,839 13,108,003 95.79% 413,436 13,521,439 98.81%2013 13,878,293 13,633,347 98.24% 186,641 13,819,988 99.58%2014 14,821,724 14,482,502 97.71% 183,330 14,665,832 98.95%2015 16,590,871 16,559,270 99.81% 31,601 16,590,871 100.00%2016 18,191,892 18,009,556 99.00% 28,972 18,038,528 99.16%2017 18,338,501 18,069,230 98.53% 49,084 18,118,314 98.80%2018 18,956,357 18,791,653 99.13% 21,722 18,813,376 99.25%2019 19,950,675 19,940,784 99.95% - 19,940,784 99.95%Source: Gallatin CountyCity Manager's Final Adopted BudgetCollected within the Fiscal Year of the LevyTotal Collections to Date DRAFT484
235 CITY OF BOZEMAN, MONTANA WATER SOLD BY TYPE OF CUSTOMER Past Ten Fiscal Years (in hundreds of cubic feet “HCF”) 2010201120122013201420152016201720182019Type of CustomerResidential 1,224,164 1,181,195 1,323,816 1,513,986 1,433,833 1,385,140 1,493,192 1,601,439 1,623,881 1,556,249 Government51,168 48,228 49,349 59,589 52,448 53,165 51,923 56,956 75,001 54,270 MSU228,789 227,019 235,965 233,484 213,698 210,107 208,618 225,394 217,967 238,968 Commercial571,223 568,474 602,352 638,337 607,444 599,193 610,741 620,761 618,398 627,116 Total2,075,343 2,024,916 2,211,481 2,445,396 2,307,423 2,247,605 2,364,473 2,504,550 2,535,247 2,476,603Total direct rate 2,679.44$ 2,787.06$ 2,887.40$ 2,955.66$ 3,053.40$ 3,105.14$ 3,175.41$ 3,256.72$ 3,337.92$ 3,508.94$ per 1,000 HCFSource: City of Bozeman Finance DepartmentFiscal Year DRAFT485
236 CITY OF BOZEMAN, MONTANA WATER AND SEWER RATES Past Ten Fiscal Years FiscalYear Monthly Rate per Monthly Rate perEnded Base 1,000 Base 1,000June 30,RateGallonsRateGallons201013.00$ 20.37$ 13.37$ 22.15$ 201113.42$ 21.02$ 14.73$ 24.41$ 201214.02$ 21.96$ 15.61$ 25.87$ 201314.65$ 22.95$ 16.55$ 27.42$ 201414.65$ 22.95$ 17.56$ 29.10$ 201514.65$ 22.95$ 17.56$ 29.10$ 201615.02$ 23.53$ 18.09$ 29.98$ 201715.39$ 24.11$ 18.63$ 30.87$ 201815.70$ 24.60$ 19.01$ 31.50$ 201916.17$ 25.33$ 19.58$ 32.45$ * For Residential Customers, using 5/8 inch meter size.Sources: City of Bozeman, Montana Commission Resolution 4327City of Bozeman, Montana Commission Resolution 4328City of Bozeman, Montana Commission Resolution 4454City of Bozeman, Montana Commission Resolution 4626 & 4627City of Bozeman, Montana Commission Resolution 4819 & 4820City of Bozeman, Montana Commission Resolution 4927 & 4928WaterSewer DRAFT486
DEBT CAPACITYDRAFT488
238 CITY OF BOZEMAN, MONTANA RATIO OF OUTSTANDING DEBT BY TYPE Past Ten Fiscal Years FiscalYear General Sports Special Tax Increment Water Wastewater Stormwater Total PercentageEnded Obligation Bond Notes Capital Park Assessment Financing Revenue State of MT Revenue Capital Primary of Personal PerJune 30,BondsPremiumsPayableLeasesLoan PayableBondsBondsBondsRLF LoansBondLeasesGovernmentIncomeCapita2010 4,275,000 851,071 291,237 4,819,000 5,695,000 28,992 7,902,127 - - 23,862,428 2.75% 640.09$ 2011 3,710,000 509,705 214,016 4,351,500 5,535,000 - 24,017,080 - - 38,337,301 4.68% 1,027.42$ 2012 3,080,000 306,727 203,860 2,269,500 5,370,000 182,577 23,853,427 - - 35,266,091 4.39% 925.23$ 2013 2,445,000 1,198,823 149,892 1,659,500 5,195,000 13,751,878 22,501,119 - - 46,901,212 5.56% 1,210.26$ 2014 11,685,000 1,086,396 94,176 1,185,500 5,015,000 18,140,000 21,025,565 - - 58,231,637 6.83% 1,498.50$ 2015 16,320,000 262,425 963,274 295,912 890,500 4,825,000 17,365,000 19,972,565 229,750 434,598 61,559,024 7.25% 1,477.65$ 2016 15,570,000 248,967 884,844 249,501 662,500 4,630,000 16,567,000 18,930,565 1,440,430 363,749 59,547,556 7.01% 1,371.91$ 2017 14,710,000 235,509 902,500 270,492 501,000 4,425,000 15,760,000 17,856,000 1,367,430 290,538 56,318,469 6.13% 1,244.61$ 2018 13,835,000 222,051 763,588 463,535 406,000 5,018,931 19,107,497 16,368,000 1,292,430 214,887 57,691,920 5.80% 1,238.13$ 2019 12,940,000 208,593 937,009 620,846 1,700,000 171,500 5,338,811 21,001,000 15,229,000 1,520,000 183,591 59,850,350 5.71% 1,233.21$ Sources: City Manager's Final Adopted BudgetCity of Bozeman Finance DepartmentGovernmental ActivitiesBusiness-Type Activities DRAFT490
239 CITY OF BOZEMAN, MONTANA RATIO OF GENERAL BONDED DEBT OUTSTANDING Past Ten Fiscal Years Percentage ofFiscalActual Year General Tax Increment TaxableEnded Obligation Bond Financing District Value of PerJune 30, Bonds Premiums Bonds Total Property Capita2010 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 16,320,000 262,425 4,825,000 21,407,425 24.4% 513.86$ 2016 15,570,000 248,967 4,630,000 20,448,967 23.6% 471.12$ 2017 14,710,000 235,509 4,425,000 19,370,509 21.6% 428.08$ 2018 13,835,000 222,051 4,926,931 18,983,982 18.8% 407.42$ 2019 12,940,000 208,593 5,338,811 18,487,404 17.7% 380.93$ Source: City Manager's Final Adopted BudgetDebt Outstanding is reduced by cash held for bond reserves for the purposes of this tableGeneral Bonded Debt Outstanding DRAFT491
240 CITY OF BOZEMAN, MONTANA DIRECT & OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT Debt Estimated Outstanding Estimated Share ofas of Percentage Overlapping June 30, 2019 Applicable (1) DebtOverlapping Bonded IndebtednessGallatin County:Various issues outstanding $33,270,000 36% 11,920,441$ Bozeman School District #7:Various issues outstanding 185,828,020$ 31% 57,405,499$ Subtotal overlapping debt 69,325,940$ City of Bozeman, MontanaDirect Debt21,564,153$ 100%21,564,153$ Total Direct & Overlapping Debt90,890,093 Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. Thisschedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents andbusinesses 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 implythat 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 percentageswere estimated by determining the portion of another governmental unit's taxable assessed value that is within the City'sboundaries and dividing it by each entity's total taxable assessed value. Sources:City of Bozeman Finance DepartmentGallatin County Assessor's OfficeBozeman School District #7DRAFT492
241 CITY OF BOZEMAN, MONTANA LEGAL DEBT MARGIN INFORMATION Past Ten Fiscal Years 2010201120122013201420152016201720182019Debt limit*66,375,000 70,688,000 74,875,000 76,450,000 84,657,000 84,500,000 142,464,717 147,500,000 168,633,783 174,548,585 Total net debt applicable to limit (4,295,240)$ (3,638,239)$ (3,386,727)$ (3,643,823)$ (12,771,396)$ (15,356,726)$ (16,454,841)$ (18,613,264)$ (14,598,588)$ (21,564,153)$ Legal debt margin62,079,760$ 67,049,761$ 71,488,273$ 72,806,177$ 71,885,604$ 69,143,274$ 126,009,876$ 128,886,736$ 154,035,195$ 152,984,432$ Total net debt applicable to the limit 6.5% 5.1% 4.5% 4.8% 15.1% 18.2% 11.6% 12.6% 8.7% 12.4% as a percentage of debt limit*2.5% of total market value of taxable property of $6.7 BillionSource: City Manager's Final Adopted BudgetFiscal Years DRAFT493
242 CITY OF BOZEMAN, MONTANA PLEDGED REVENUE COVERAGE Past Ten Fiscal Years FiscalYear Utility Less: SpecialEnded Service Operating AssessmentJune 30,Charges Expenses Principal Interest CoverageCollections Principal Interest Coverage- 20105,860,144 (3,950,566) (27,622) (2,440) 1,879,516 989,977 (392,000) (223,763) 374,214 20116,013,211 (3,869,048) (28,992) (1,070) 2,114,101 1,134,049 (467,500) (211,204) 455,345 20126,814,990 (4,063,529) (159,000) (6,405) 2,586,056 858,699 (2,082,000) (192,320) (1,415,621) 20137,806,922 (4,364,506) (502,000) (163,250) 2,777,166 820,090 (650,975) (103,198) 65,917 20147,871,386 (4,405,464) (751,000) (429,438) 2,285,484 1,054,483 (474,000) (73,760) 506,723 20157,748,913 (4,973,926) (775,000) (538,425) 1,461,562 586,116 (295,000) (50,070) 241,046 20168,414,870 (6,176,752) (798,000) (515,010) 925,108 705,143 (228,000) (39,343) 437,800 20179,281,821 (6,589,396) (822,000) (490,890) 1,379,535 558,988 (161,500) (30,335) 367,153 2018 10,157,888 (6,494,121) (1,141,000) (530,881) 1,991,886 506,819 (95,000) (23,221) 388,598 20199,396,171 (6,610,215) (1,176,000) (578,954) 1,031,002 518,351 (234,500) (19,536) 264,315 FiscalYear UtilityLess:Ended Service OperatingJune 30,Charges Expenses Principal Interest Coverage2010 5,389,070 (3,468,705) (166,300) (69,470) 1,684,594 20115,939,996 (4,183,596) (606,000) (494,298) 656,102 20126,385,404 (3,784,420) (883,000) (857,842) 860,141 20136,916,226 (3,947,821) (1,465,227) (847,778) 655,400 20147,204,486 (5,895,751) (1,084,854) (660,771) (436,891) 20157,631,117 (3,914,454) (1,053,000) (632,268) 2,031,395 20167,927,692 (5,139,029) (1,042,000) (552,269) 1,194,394 20178,566,893 (5,496,164) (1,074,565) (545,267) 1,450,897 20188,876,017 (5,158,989) (1,104,000) (513,009) 2,100,019 20199,336,007 (5,745,107) (1,139,000) (479,859) 1,972,041 Waste Water Revenue BondsDebt ServiceWater Revenue BondsSpecial Assessment BondsDebt ServiceDebt Service DRAFT494
243 CITY OF BOZEMAN, MONTANA DEBT SERVICE REQUIREMENTS AND COVERAGE FOR TAX INCREMENT DISTRICTS Past Ten Fiscal Years FiscalYear Revenues Annual Revenues Annual Ended Available Debt Service Available Debt ServiceJune 30,for Debt Service Payment Coveragefor Debt Service Payment Coverage20101,209,378 424,288 2.85 - - - 20111,135,166 423,088 2.68 - - - 20121,266,104 421,688 3.00 - - - 20131,497,572 425,088 3.52 - - - 20141,644,960 423,088 3.89 - - - 20151,853,725 425,888 4.35 - - - 20162,066,749 423,288 4.88 - - - 20172,160,187 425,488 5.08 - - - 20182,430,377 422,288 5.76 149,580 92,000 1.63 20192,150,531 423,573 5.08 164,252 95,000 1.73 **$863,000 Bond issuance for the Northeast Urban Renewal District on 7/20/2017DOWNTOWN IMPROVEMENT DISTRICTNORTHEAST URBAN RENEWAL DISTRICT DRAFT495
244 CITY OF BOZEMAN, MONTANA SUMMARY OF OUTSTANDING SIDs Current Fiscal Year BondOriginal Maturity BondsCash Assessments DelinquentIssueAmount Date Outstanding Balance Outstanding AssessmentsSID 6691,160,000$ 7/1/2020- 41,174 47,843 924 SID 674494,000$ 7/1/2024 171,500 40,422 121,531 SID 6831,372,000.00$ 7/1/2024- 102,869 271,164 729 TOTAL3,026,000$ 171,500$ 184,465$ 440,538$ 1,653$ As of June 30, 2019 DRAFT496
245 CITY OF BOZEMAN, MONTANA REVOLVING FUND BALANCE AND BOND SECURED THEREBY Past Ten Fiscal Years FiscalYearEnded Revolving Fund PrincipalJune 30,Cash Balance Amount of Debt2010 1,228,197 4,819,000 2011 3,160,685 4,351,500 2012 3,190,244 2,269,500 2013 2,443,769 1,803,029 2014 2,474,971 1,317,226 2015 2,948,129 1,295,224 2016 2,924,604 1,120,708 2017 2,874,013 1,040,533 2018 2,903,817 916,503 2019 3,020,315 643,983 DRAFT497
246 CITY OF BOZEMAN, MONTANA SPECIAL IMPROVEMENT DISTRICT ASSESSMENT BILLING AND COLLECTIONS Past Ten Fiscal Years Fiscal AssessmentTotal AnnualYearBillingCollections2010915,398 989,977 2011871,180 1,134,049 2012750,418 858,699 2013741,886 820,090 2014676,613 1,054,484 2015538,697 586,116 2016543,351 705,143 2017528,622 558,988 2018505,481 506,819 2019476,212 518,351 DRAFT498
DEMOGRAPHIC AND ECONOMIC INFORMATION DRAFT500
248 CITY OF BOZEMAN, MONTANA DEMOGRAPHIC AND ECONOMIC STATISTICS Past Ten Fiscal Years FiscalEstimatedPerResidentsYearAnnual %Capita Median with Bachelors K-12EndedChange in Personal Personal Age Degree or School UnemploymentJune 30,Population Population IncomeIncome (years) Higher Schooling Enrollment Rate201037,280 0.9% 866,396,960$ 25,909$ 26.050.6%5,509 5.8%201137,314 0.1% 819,014,169$ 25,611$ 27.250.1%5,679 5.6%201238,116 2.1% 803,487,262$ 24,709$ 27.253.9%5,810 5.2%201338,753 1.6% 843,399,480$ 25,608$ 27.155.4%5,994 4.3%201438,860 0.3% 852,165,042$ 26,427$ 26.853.3%6,216 3.5%201541,660 6.7% 849,198,410$ 26,335$ 27.353.6%6,294 2.9%201643,405 4.0% 849,682,100$ 26,350$ 27.554.4%6,533 2.8%201745,250 4.1% 918,565,430$ 26,506$ 27.756.5%6,770 2.8%201846,596 2.9% 993,940,022$ 28,748$ 27.9 55.6% 6,908 2.8%201948,532 4.0% 1,047,804,618$ 29,097$ 28 56.9% 7,015 3.8%Sources: Bozeman Public Schools U.S. Bureau of Labor Statistics U.S. Census Bureau DRAFT502
249 CITY OF BOZEMAN, MONTANA PRINCIPAL EMPLOYERS FOR GALLATIN COUNTY Current Year and Ten Years Ago PrivateEmployerPrivateEmployerEmployersClassEmployersClassBy ClassSizeBy ClassSizeBozeman Deaconess Hospital9Bozeman Deaconess Hospital9Oracle America8Right Now Technologies7Kenyon Noble Lumber & Hardware7Wal-Mart7Town Pump Convenience Stores7Albertsons6Wal Mart7Bozeman Daily Chronicle6Zoot Enterprises7Community Food Coop6Albertson's6Costco6Target6First Security Bank6Bridger Bowl6First Student Management6Community Food Co-Op6Grantree Inn6Costco6JTL Group6First Security Bank6Kenyon Noble Lumber & Hardware6First Student6Korman Marketing Group6Reach Inc.6Lowes6McDonalds6McDonald's6Murdoch's Ranch & Home Supply6Murdoch's Ranch & Home Supply6Ressler Motor6Ressler Chevrolet Cadillac & Toyota6Simms Fishing Products6Town & Country Foods6Town & Country Foods6Town Pump6Williams Plumbing & Heating6Zoot Enterprises6PublicEmployerPublicEmployerEmployersClassEmployersClassBy ClassSizeBy ClassSizeMontana State University9Montana State University9Belgrade School District8Bozeman School District8Bozeman School District8City of Bozeman7Gallatin County8Gallatin County7City of Bozeman7Class 6 - 100 to 249 EmployeesClass 7 - 250 to 499 EmployeesClass 8 - 500 to 999 EmployeesClass 9 - 1,000+ EmployeesSource: Montana Department of Labor & Industry2019 2010June June DRAFT503
OPERATING INFORMATION DRAFT504
251 CITY OF BOZEMAN, MONTANA FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION / PROGRAM Past Ten Fiscal Years 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019General GovernmentCity Commission 2.10 2.10 2.10 2.10 2.10 2.10 2.10 2.10 0.10 2.10 City Manager 11.50 11.50 8.00 8.00 5.00 5.00 6.00 6.00 9.00 12.50 Municipal Court 7.50 8.50 8.50 8.50 8.50 9.00 8.50 8.50 9.50 9.50 City Attorney 11.50 7.00 7.00 7.00 7.00 9.00 10.20 10.20 10.70 12.00 Administrative Services - - - - 19.00 21.00 21.50 23.50 - - Human Resources4.00 5.00 Finance *8.75 8.75 10.00 11.00 - - - - 14.00 14.00 Information Technology * 5.88 5.88 6.00 6.00 - - - - 8.00 8.00 Community Development 12.20 12.20 8.75 9.00 8.00 12.60 11.60 13.00 13.00 17.00 Building Maintenance 3.55 3.55 3.00 3.50 3.50 3.50 3.50 3.50 4.50 5.00 Total General Government62.98 59.48 53.35 55.10 53.10 62.20 63.40 66.80 72.80 85.10 Public SafetyPolice Department 71.75 71.75 71.25 72.75 72.75 72.25 71.70 72.70 72.70 76.25 Fire Department41.75 41.75 41.75 43.75 45.75 45.00 46.00 46.00 46.00 50.00 Building Inspection 9.55 10.55 10.55 10.55 12.55 14.00 18.50 18.50 19.50 17.00 Parking 4.75 4.75 4.50 4.50 5.50 6.00 6.00 6.00 6.00 5.00 Total Public Safety 127.80 128.80 128.05 131.55 136.55 137.25 142.20 143.20 144.20 148.25 Public ServicesPublic Services Administration / Engineering 8.15 8.15 10.00 10.00 12.00 6.58 10.25 11.50 11.50 13.00 Streets 17.62 17.62 17.62 17.62 18.62 16.20 18.85 19.85 21.85 26.75 Storm Water- - - 1.00 1.00 4.00 6.25 6.50 7.50 4.00 Water Conservation2.25 Water Treatment Plant 9.27 9.27 9.77 9.77 11.27 12.75 10.50 10.50 10.00 10.00 Water Operations 15.62 15.62 15.62 15.62 15.62 17.33 14.45 14.45 12.00 12.50 Wastewater Operations 10.25 10.25 10.25 10.25 11.25 13.09 13.30 14.05 12.00 12.50 Wastewater Plant 15.87 15.87 15.87 16.37 17.47 15.50 14.75 14.75 15.00 15.00 Solid Waste Collection/Recycling 15.74 15.74 15.74 15.74 15.74 15.90 15.15 16.15 17.15 19.00 Vehicle Maintenance 5.00 5.00 5.00 5.00 5.00 5.00 6.50 6.50 7.50 8.00 Total Public Services 97.52 97.52 99.87 101.37 107.97 106.35 110.00 114.25 114.50 123.00 Public WelfareCemetery (numerous short terms) 5.75 5.75 3.33 3.33 3.33 4.90 5.04 5.04 4.75 4.25 Parks (numerous short terms)13.45 13.45 11.77 11.77 11.77 15.40 14.51 14.51 14.90 18.00 Forestry 4.60 4.60 4.60 4.60 4.60 5.95 5.65 6.65 5.20 6.00 Library 21.66 21.66 21.66 21.56 23.11 23.41 26.02 28.02 28.02 24.75 Recreation (numerous short terms) 15.00 15.00 15.83 15.83 16.83 16.83 23.55 24.26 23.41 24.80 Community Services 2.00 2.00 2.00 2.00 4.00 3.50 3.50 3.50 2.00 2.00 Total Public Welfare 62.46 62.46 59.19 59.09 63.64 69.99 78.27 81.98 78.28 79.80 Total of all Funds350.76 348.26 340.46 347.11 361.26 375.79 393.87 406.23 409.78 436.15 Source: City Manager's Final Adopted Budget* Administrative Services was created in fiscal year 2014 and consists of Finance, Information Technology and Human ResourcesFiscal Years DRAFT506
252 CITY OF BOZEMAN, MONTANA OPERATING INDICATORS BY FUNCTION / PROGRAM Past Ten Fiscal Years 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019FinanceSID Statements 15,816 16,000 16,000 16,200 16,424 16,506 16,893 17,200 17,463 18,185 Utility Bills 135,000 135,000 135,000 138,000 155,000 162,000 166,000 169,000 172,000 168,280 Accounts Payable Checks Processed12,076 12,122 11,962 12,519 10,453 11,098 11,000 11,800 12,350 11,762 Police*Number of Officers 55 56 60 63 63 61 60 61 60 60 Calls for Service43,385 45,131 45,358 47,361 48,542 46,290 47,400 48,200 47,136 50,548 Arrests2,338 2,325 2,152 2,096 2,165 2,195 2,078 2,427 2,314 2,618 Misdemeanor Citations Issued - includes traffic 3,311 4,504 5,234 5,205 6,045 6,169 6,390 5,886 4,940 5,430 Traffic Stops10,702 10,036 9,358 10,629 8,210 7,757 7,482 7,900 7,675 9,600 Traffic Crashes1,194 1,486 1,264 1,320 1,469 1,601 1,792 1,850 1,958 1,840 FireFires, Hazardous Conditions & Rupture/Explosions 248 278 278 309 340 296 349 445 564 522 Emergency Medical Services/Rescue1,441 1,483 1,483 1,941 2,051 2,032 2,424 3,062 3,320 3,073 Service Calls145 187 187 145 212 202 244 334 438 406 Building InspectionCommercial Permits: Number961 1,535 1,420 1,305 1,165 1,560 1,628 1,731 883 768 Value (Millions) 70.41 106.90 95.03 69.64 $44.50 $98.02 $164.47 $65 $216 $249Residential Permits: Number1,543 3,613 2,421 2,338 2,911 2,836 3,937 3,905 3,222 2,307 Value (Millions) 67.02 72.57 89.74 146.32 $130.68 $191.97 $200 $130 $340 $311WaterNew Service Main Taps16 320415770607265101Meter Replacement/Repair650 467 279 113 479 1006 978 1500 994 1042Water Main Breaks/Repairs 4164757675WastewaterMain Line Flushing (in Miles)81 78.26 90 47 30 90 50 30.9 50 37.5New Infrastructure TV (in Miles)1 1 1 2.6 2 8 2.6 9.9 7 2.8New Service Taps5 4 4 17 37 44 20 30 30 56Solid Waste Collection & RecyclingResidential Accounts7,130 7,092 7,240 7,470 7,869 8,369 8,878 9,378 9,843 10,372 Commercial Customers268 271 281 265 258 265 461 516 506 551 Recycling Customers965 970 1,000 1,135 1,601 2,100 2,663 3,300 3,700 4,164 Annual Tonnage Collected: Collections Program10,657 10,920 11,248 10,695 10,960 11,457 11,691 12,490 13,600 19,122 Vehicle MaintenanceWork Orders Processed1,005 1,435 1,473 1,646 1,717 1,549 1,453 1,509 2,592 2,392 Gallons of Oil Disposed 9,175 9,445 8,751 8,640 8,740 8,969 7,395 6,475 5,007 5,522 ParksPark Reservations 280 319 320 350 400 400 400 400 425 493 Sources: City Manager's Final Adopted Budget City of Bozeman Finance Department*Police statistics are based on calendar yearFiscal Year Ended June 30,DRAFT507
253 CITY OF BOZEMAN, MONTANA CAPITAL ASSET STATISTICS BY FUNCTION / PROGRAM Past Ten Fiscal Years 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019PoliceStations 1 1 1 1 1 1 1 1 1 1 Patrol Units (Cars) 20 20 20 20 20 22 21 21 22 21 Patrol Units (Motorcycles) 4 4 4 4 4 2 3 3 3 3 FireStations 3 3 3 3 3 3 3 3 3 3 Fire Trucks 6 6 6 6 7 7 7 7 7 7 StreetsStreet & Alley Mileage 246.951 254.565 254.957 255.769 252 253 254 274 280 284Lane Miles Painted 40.0 40.3 41.0 37.0 34.6 49.2 50.0 50.0 52.0 48.0 Number of Signs Installed/Repaired 750 722 1120 669 798 600 600 600 708 394WaterWater Mains (Miles) 256.32 257.51 261.33 264.61 267.28 268.57 274.89 276.92 283.95 286.68Fire Hydrants 2,308 2,324 2,351 2,388 2,406 2,419 2,511 2,573 2,618 2,668 WastewaterSanitary Sewers (Miles) 205.00 205.00 207.56 210.22 211.51 212.53 219.14 224.28 234.64 236.04Number of Manholes 4,034 4,080 4,084 4,154 4,185 4,219 4,360 4,492 4,614 4,677 Solid WasteNumber of Collection Vehicles 8 8 8 8888888Number of Roll-off Trucks 4 4 4 4444455Number of Recycling Trucks 1 1 1 1222222Number of Compost Collection Trucks2 2 2 2222211ParksFormal Turf Acres120 125 125 125 125 126 140 140 172 192Natural Parkland Acres205 210 220 220 220 220 220 220 323 343Miles of Trails54 55 55 55 61 63 63 63 63 65Sources: City Manager's Final Adopted Budget City of Bozeman Finance Department City of Bozeman GIS Department City of Bozeman Police DepartmentFiscal Year Ended June 30, DRAFT508
PART IV REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS – GOVERNMENT AUDITING STANDARDS DRAFT510
255 1019 E MAIN ST • SUITE 201 • BOZEMAN, MONTANA 59715 TEL: 406.556.6160 • FAX: 406.586.8719 • WEB: www.azworld.com 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, 2019, which collectively comprise the City’s basic financial statements and have issued our report thereon, dated . 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 first paragraph of this section 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. DRAFT512
ANDERSON ZURMUEHLEN & CO., P.C CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS 256 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 DRAFT513