HomeMy WebLinkAboutComprehensive Annual Financial Report (CAFR) for Fiscal Year 2011-2012
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Brian LaMeres, City Controller
Anna Rosenberry, Director of Administrative Services
Chris Kukulski, City Manager
(to be presented by Merrilee Glover of J.C.C.S.)
SUBJECT: Comprehensive Annual Financial Report (CAFR) for Fiscal Year 2011-2012
MEETING DATE: December 28, 2012
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 2012, and the clean
unqualified opinion expressed by the audit firm of Junkermeir, Clark, Campanella & Stevens, PC
(J.C.C.S.) has been included in the accompanying CAFR report. The City’s Audit Committee has
reviewed and accepted the CAFR and the accompanying letter to management.
RECOMMENDATION: The City Commission accepts the CAFR and accompanying reports.
FISCAL EFFECTS: A clean unqualified 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: As suggested by the City Commission.
Attachments: 1. CAFR Comprehensive Annual Financial Report - also posted
online at: http://www.bozeman.net/Business/Budgets-and-Financials 2. Auditor’s Letter to Management
3. Building Inspection Codes Agreed-Upon Procedures Report
Report compiled on December 19, 2012 112
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2012 Prepared by the City of Bozeman Finance Department 113
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2012 TABLE OF CONTENTS I. INTRODUCTORY SECTION Letter of Transmittal ........................................................................................................................................................................................................ 1-14 Governmental Financial Officers’ Association Certificate of Achievement ...................................................................................................................... 15 Organizational Chart ........................................................................................................................................................................................................... 16 City Elected Officials and Officers ................................................................................................................................................................................ 17-18 II. FINANCIAL SECTION INDEPENDENT AUDITOR’S REPORT ..................................................................................................................................................................... 19-20 A. MANAGEMENT’S DISCUSSION AND ANALYSIS ................................................................................................................................................ 21-32 B. BASIC FINANCIAL STATEMENTS Government Wide Financial Statements Statement of Net Assets ............................................................................................................................................................................................... 33 Statement of Activities ................................................................................................................................................................................................. 34 Fund Financial Statements Governmental Fund Financial Statements Balance Sheet – Governmental Funds .............................................................................................................................................................. 35-36 Reconciliation of the Balance Sheet to the Statement of Net Assets – Governmental Funds ............................................................................... 37 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds ........................................................................... 38 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to The Statement of Activities – Governmental Funds .............................................................................................................................................. 39 Proprietary Fund Financial Statements Statement of Net Assets – Proprietary Funds ................................................................................................................................................... 40-41 Statement of Revenues, Expenses, and Changes in Fund Net Assets – Proprietary Funds ................................................................................... 42 Statement of Cash Flows – Proprietary Funds .................................................................................................................................................. 43-44 Fiduciary Fund Financial Statements Statement of Fiduciary Net Assets – Fiduciary Funds ........................................................................................................................................... 45 Notes to Financial Statements ........................................................................................................................................................................................ 46-91 114
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2012 TABLE OF CONTENTS (CONTINUED) C. REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION AND ANALYSIS Schedule of Funding Progress – Other Post-Employment Health Care Benefits ............................................................................................................... 92 Statements of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual – General and Special Revenue Major Funds General Fund ................................................................................................................................................................................................................ 93 Street and Fire Impact Fees Fund ................................................................................................................................................................................. 94 Street Maintenance Special Revenue Fund .................................................................................................................................................................. 95 Building Inspection Special Revenue Fund ................................................................................................................................................................. 96 Notes to Required Supplementary Information Other Than Management Discussion and Analysis .......................................................................... 97 D. SUPPLEMENTAL INFORMATION Combining and Individual Fund Statements and Schedules Combining Balance Sheet – Non-Major Governmental Funds ............................................................................................................................. 98-104 Combining Statement of Revenue, Expenditures, and Changes in Fund Balance – Nonmajor Governmental Funds ....................................... 105-110 Budget-to-Actual Statements – Other Major Funds Statements of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual - Other Major Funds SID Sinking Fund ....................................................................................................................................................................................................... 111 Note to Budget-to-Actual Statements – Other Major Funds ...................................................................................................................................... 112 Budget-to-Actual Statements- Nonmajor Funds Statements of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual – Nonmajor Governmental Funds Non-Major Governmental Funds ........................................................................................................................................................................ 113-126 Internal Service Funds Statements Combining Statements of Net Assets – Internal Service Funds ................................................................................................................................. 127 Combining Statements of Revenues, Expenses, and Changes in Fund Net Assets – Internal Service Funds ............................................................ 128 Combining Statements of Cash Flows ................................................................................................................................................................ 129-130 Agency Funds Combining Statements of Fiduciary Net Assets ......................................................................................................................................................... 131 Combining Schedules of Changes in Assets and Liabilities – Agency Funds ........................................................................................................... 132 115
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2012 TABLE OF CONTENTS (CONTINUED) III. STATISTICAL SECTION Financial Trends Section Net Assets by Component .......................................................................................................................................................................................... 133 Changes in Net Assets ........................................................................................................................................................................................... 34-135 Fund Balances of Governmental Funds ..................................................................................................................................................................... 136 Changes in Fund Balances, Governmental Funds ...................................................................................................................................................... 137 Revenue Capacity Section Assessed value of Taxable Property ........................................................................................................................................................................... 138 Direct and Overlapping Property Tax Rates .............................................................................................................................................................. 139 Principal Property Tax Payers .................................................................................................................................................................................... 140 Property Tax Levies and Collections ......................................................................................................................................................................... 141 Water Sold by Type of Customer ............................................................................................................................................................................... 142 Water and Sewer Rates ............................................................................................................................................................................................... 143 Debt Capacity Section Ratios of Outstanding Debt by Type .......................................................................................................................................................................... 144 Ratios of General Bonded Debt Outstanding ............................................................................................................................................................. 145 Direct and Overlapping General Bonded Debt Outstanding ...................................................................................................................................... 146 Legal Debt Margin Information ................................................................................................................................................................................. 147 Pledged Revenue Coverage ........................................................................................................................................................................................ 148 Demographics and Economic Section Demographic and Economic Statistics ....................................................................................................................................................................... 149 Principal Employers ................................................................................................................................................................................................... 150 Operating Section Full-time Equivalent City Government Employees by Function/Program ................................................................................................................ 151 Operating Indicators by Function/Program ................................................................................................................................................................ 152 Capital Assets Statistics by Function/Program ................................................................................................................................................................. 153116
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2012 TABLE OF CONTENTS (CONTINUED) IV. REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS AND SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AS REQUIRED BY OMB CIRCULAR A-133 Schedule of Expenditures of Federal Awards ................................................................................................................................................................... 154 Notes to Schedule of Expenditures of Federal Awards .................................................................................................................................................... 155 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 ......................................................................................................................................................................... 156-157 Independent Auditor’s Report on Compliance with Requirements Applicable to Each Major Program and Internal Control over Compliance in Accordance with OMB Circular A-133........................................................................................................................................................................................... 158-159 Schedule of Findings and Questioned Costs ..................................................................................................................................................................... 160 Current Status of Prior Year Recommendations ............................................................................................................................................................... 161 117
PART I INTRODUCTORY SECTION 118
1 CITY OF BOZEMAN, MONTANA December 17, 2012 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, 2012 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. The City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1984 and the Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Information related to the single audit, including the Schedule of Expenditures of Federal Awards and the Auditor’s Reports on Basic Financial Statements and Supplementary Schedule of Expenditures of Federal Awards, Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards, and Compliance with Requirements Applicable to Each Major Program and Internal Control over Compliance in Accordance with OMB Circular A-133, are included in the single audit section of this report. 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. 119
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 18 square miles and is located on the eastern slope of the Rocky Mountains. The 2010 census put Bozeman's population at 37,280 making it 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. Bozeman was elected an All-America City in 2001 by the National Civic League. The government provides a full range of services. These services include police and fire protection; sanitation services; water and waste 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. Of these entities, Bozeman Public Library Foundation, Inc. is considered a component unit subject to the requirements for inclusion as a discretely presented component unit. The City Planning Board is presented as a blended component unit. The 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 serves as the preliminary budget and is normally adopted as such in June following six months of development and analysis by staff and the City Commission. After submitting the City Manager's Recommended Budget to the City Commission, public work sessions may be 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. The overall goal of the City’s financial policies is to establish and maintain effective management of the City’s financial resources. 120
3 CITY OF BOZEMAN, MONTANA ECONOMIC CONDITION AND OUTLOOK The Bureau of Business and Economic Research (BBER) is the 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. Excerpts from the Bureau’s forecasts contained in the spring 2012 issue of the Montana Business Quarterly relating to Gallatin County and City of Bozeman are stated below. The Great Recession hit the Gallatin County economy hard, but none of the basic industries were permanently scarred. The recession impacts were concentrated in the home building, construction, and nonresident travel industries. The Gallatin County construction industry bore much of the brunt of the recession. Overall construction activity declined by roughly 37 percent during the 2007 to 2009 period, and the median price of homes in Gallatin County decreased by 32 percent. Single family housing starts dropped from a peak of 1,269 in 2004 to 337 in 2010, a decrease of 73 percent. Nonresident travel accounts for about 11 percent of Gallatin County’s economic base and includes the firms serving tourists and recreationists in Big Sky, West Yellowstone, and the Bozeman area. Spending by nonresidents declined significantly during both 2008 and 2009, in the midst of the Great Recession, and then recovered slightly during 2010 and 2011, but has not regained its pre-recession levels. Montana State University-Bozeman and other state offices are the largest component of the local economic base, representing about 31 percent of the labor income earned in basic industries. On one hand, these state government jobs are noncyclical and provide an economic buffer during downturns in the business cycle. On the other hand, state employees are now in the third year of a scheduled four-year wage freeze, and this sector contributes little to local economic growth. Gallatin County is the state’s center for high tech. These companies include manufactures such as Lattice Materials and Wavelength and software producers such as RightNow Technologies. Manufacturing, which also includes non-high-tech companies, accounts for about 18 percent of the economic base. Selected services, such as software production, represent about 17 percent. The sale of RightNow Technologies to Oracle (a multinational computer technology corporation) has recently been announced, and some concerns about the future of the company’s Montana operations have been expressed. But there are recent examples of sales that have benefited Montana-based companies such as the purchase of Kalispell-based Semitool by Applied Materials, another multinational corporation in Silicon Valley. 121
4 CITY OF BOZEMAN, MONTANA For the Year Changes, Initiatives & Priorities ongoing, undertaken or completed during the year include: Street Maintenance Funds Reserved for Reconstruction Projects: With the increase in Street Maintenance Assessments last July, the Commission made two important financial steps to address the deferred maintenance of our street network. First, this year they dedicated $228,709 to a reserve for Curb Reconstruction and $159,952 to a reserve for Street Reconstruction. The plan is to add an additional 6% of street maintenance assessments to this reserve over an additional two years (6% in FY13 and another 6% in FY14). This will accumulate roughly $500,000 each year to reconstruct streets in town. Last fall, a 5-Year Capital Improvement Plan was established for this money, with future projects identified. Second, they borrowed approximately $1.5 Million (repaid over the next 10 years) to reconstruct South 8th Street, with the debt repaid by another 7% increase in Street Maintenance Assessments. The South 8th Street reconstruction began in May and should be a significant improvement to property values and the functioning of our street system. General Fund Budget Savings Reserved for Capital Improvement Plan items: In order to address our lack of maintenance of capital facilities, the Commission also dedicated a large portion of FY12’s budget savings (revenues in excess of expenditures) to a reserve assigned for capital improvement projects. This budget strategy allowed us to being the design work for the Police & Municipal Court facility roughly a year earlier than expected, and left a source for us to draw on to make important heater repairs at the Swim Center. We believe this use of budget savings is a great model; it rewards staff with the benefits of prudent spending by helping address the lack of funding for capital, and has true dividends for the citizens who rely on our facilities. Refinance of General Obligation Bonds: This year, we refinanced all ($3.1 Million) of existing General Obligation debt related to the Library and Transportation Bonds. With the final underwriting, taxpayers will see a net savings of roughly $370,000 over the remaining life of the debt, and approximately 1 mill, or roughly $83,000, in interest costs this year alone. Changes in Vehicle Replacement Policy: During the development of our Capital Improvement Plan in the fall of 2011, the Commission expressed concern that the City’s mileage limits for replacement of light vehicles was out-of-line with current automobile life-spans and potentially resulting in the replacement of vehicles too soon. In February, the City Manager revised the Policy so that vehicles are now considered for replacement every 20 years or at/near 150,000 miles. Previously they were considered for replacement every 15 years or at 100,000 miles. Police patrol cars are now to be replaced after 5 years of service or at the discretion of the Chief. Specialized equipment in patrol cars will be evaluated for re-use. As a result of this change, two light vehicles that had been scheduled for replacement are not included in the FY13 Budget. 122
5 CITY OF BOZEMAN, MONTANA State Entitlement Share Frozen: During the 2011 State Legislative session, the State eliminated the statutory growth factor for our Entitlement Share dollars for FY12. Under the prior statute, the City would have seen approximately $150,000 in increased revenue in the General Fund in FY12 and further increases in FY13. Instead, both FY12 and FY13 will see ZERO growth in Entitlement Share over FY11’s amounts in the general fund, and a 10% decrease (-$3,100) for the Downtown Tax Increment District. Solvent Site Active Remediation: After a decades-long effort, the Montana Department of Environmental Quality entered a Record of Decision regarding the clean-up of the Bozeman Solvent Site. This budget contains approximately $660,000 in planned expenditures in the Wastewater Fund for active remediation of the Site. This multi-year remediation project is being undertaken with CVS Pharmacy. Water Plant Construction: Construction has been underway, and expected to span 3 fiscal years, for this critical public works project. This budget includes $18.6M in construction spending on the project, and $19.5M in borrowing. The new Water Treatment Plant will require substantial borrowing through completion (estimated $20M total). Loan documents were completed in FY12 and borrowing began at the very end of FY12. This borrowing is secured by water-system ratepayers, and is part of the need for rate increases over the coming years. For the Future South 8th Avenue Re-Construction: In April 2012, the City of Bozeman awarded a $1.39M contract to Knife River for the reconstruction of South 8th Avenue between Main Street and Harrison Street. The entire street, from the gravel base layers to the pavement markings will be replaced. When the funding option was established, the project cost was roughly estimated at $1.5 million, with $29,400 coming from street impact fees for the bike lanes, $184,500 coming from a Special Improvement District, and $1,300,000 to be borrowed from INTERCAP. Police & Municipal Court Facility: The City recently participated in the 2011 Campus Master Plan for the Gallatin County Law and Justice Center site. This study reviewed and validated the prior estimated space needs for the City and County’s criminal justice functions and specifically the facility needs of the Bozeman Police Department and Municipal Courts to 2020 and 2025. We are currently negotiating a memorandum of understanding with the County that will identify a City Hall Fall Leaves 123
6 CITY OF BOZEMAN, MONTANA construction site, agree to a mutually beneficial ownership model, and allow us to proceed with the design of a municipal courts and police facility, either with or without the county. It is anticipated that total estimated costs will be around $19M which will be largely funded by voter-approved 20 year General Obligations Bonds. Parks & Trails: On Tuesday, November 6, 2012 the City of Bozeman voters overwhelmingly passed a $15 Million bond for parks, trails, natural areas, stream corridors and athletic fields. It will be financed with 20-year general obligation bonds that will cost the average household $44 per year. The Bozeman City Commission will have final authority in reviewing and approving projects and determining how to best spend these funds. For more information, please visit the website http://bozemanparksandtrails.com Other Reconstruct College Street from Main Street (Huffine Lane) to 19th Avenue to a principal arterial standard as shown in the Transportation Plan. Completion of N. 27th Street Connector (Oat Street to Tschache Street) Water Pipe Replacement Program: Mendenhall Street (North 8th Avenue to North Broadway Avenue) for FY13 - approximately $1M every year for the construction of necessary water system replacement work. Waste Water Pipe Replacement Program – approximately $1M every year for the construction of necessary sewer system replacement work. Develop a long term plan for the Streamline bus system. Reconstruct Kagy Boulevard (South 19th to Willson Avenue): upgrade to urban arterials using gas tax money. Explore sources of funding for Park Maintenance and operations. Bozeman Creek 124
7 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. Accordingly, this section outlines the policies used in guiding the preparation and management of the city's overall budget and the major objectives to be accomplished. In addition, the rationale which led to the establishment of the fiscal policy statements is also identified. Budget Development & Administration 1. A comprehensive annual budget will be prepared for all funds expended by the city. State law provides that "no money shall be drawn from the treasury of the municipality nor shall any obligation for the expenditure of money be incurred except pursuant to the appropriation made by the commission." Inclusion of all funds in the budget enables the commission, the administration, and the public to consider all financial aspects of city government when preparing, modifying, and monitoring the budget, rather than deal with the city's finances on a "piece meal" basis. 2. The budget will be prepared in such a manner as to facilitate its understanding by citizens and elected officials. One of the stated purposes of the budget is to present a picture of the city government operations and intentions for the year to the citizens of Bozeman. Presenting a budget document that is understandable to the citizens furthers the goal of effectively communicating local government finance issues to both elected officials and the public. 3. Budgetary emphasis will focus on providing those basic municipal services which provide the maximum level of services, to the most citizens, in the most cost effective manner, with due consideration being given to all costs--economic, fiscal, and social. Adherence to this basic philosophy provides the citizens of Bozeman assurance that its government and elected officials are responsive to the basic needs of the citizens and that its government is operated in an economical and efficient manner. 4. The budget will provide for adequate maintenance of capital, plant, and equipment and for their orderly replacement. All governments experience prosperous times as well as periods of economic decline. In periods of economic decline, proper maintenance and replacement of capital, plant, and equipment is generally postponed or eliminated as a first means of balancing the budget. Recognition of the need for adequate maintenance and replacement of capital, plant, and equipment, regardless of the economic conditions, will assist in maintaining the government's equipment and infrastructure in good operating condition. 5. The city will avoid budgetary practices that balance current expenditures at the expense of meeting future years' expenses. Budgetary practices such as postponing capital expenditures, accruing future years' revenues, or rolling over short-term debt are budgetary practices which can solve short-term financial problems; however, they can create much larger financial problems for future administrations and commissions. Avoidance of these budgetary practices will assure citizens that current problems are not simply being delayed to a future year. 125
8 CITY OF BOZEMAN, MONTANA 6. The city will give highest priority in the use of one-time revenues to the funding of capital assets or other non-recurring expenditures. Utilizing one-time revenues to fund on-going expenditures results in incurring annual expenditure obligations which may be unfunded in future years. Using one-time revenues to fund capital assets or other non-recurring expenditures better enables future administrations and commissions to cope with the financial problems when these revenue sources are discontinued, since these types of expenditures can more easily be eliminated. 7. The city will maintain a budgetary control system to help it adhere to the established budget. The budget passed by the commission establishes the legal spending limits for the city. A budgetary control system is essential in order to insure legal compliance with the city's budget. 8. The City will exercise budgetary control (maximum spending authority) through City Commission approval of appropriation authority for each appropriated budget unit. Exercising budgetary control for each appropriated budget unit satisfies requirements of state law. It also assists the commission in monitoring current year operations and acts as an early warning mechanism when departments deviate in any substantive way from the original budget. 9. Reports comparing actual revenues and expenditures to budgeted amounts will be prepared monthly. The city's budget is ineffective without a system to regularly monitor actual spending and revenue collections with those anticipated at the beginning of the year. Monthly reports comparing actual revenues and expenditures to budget amounts provide the mechanism for the Commission and the administration to regularly monitor compliance with the adopted budget. Revenue Collection 1. The city will seek to maintain a diversified and stable revenue base. A city dependent upon a few volatile revenue sources is frequently forced to suddenly adjust tax rates or alter expenditure levels to coincide with revenue collections. Establishment of a diversified and stable revenue base, however, serves to protect the city from short-term fluctuations in any one major revenue source. 2. The city will estimate revenues in a realistic and conservative manner. Aggressive revenue estimates significantly increase the chances of budgetary shortfalls occurring during the year--resulting in either deficit spending or required spending reductions. Realistic and conservative revenue estimates, on the other hand, will serve to minimize the adverse impact of revenue shortfalls and will also reduce the need for mid-year spending reductions. 3. The city will pursue an aggressive policy of collecting revenues. An aggressive policy of collecting revenues will help to insure the city's revenue estimates are met, all taxpayers are treated fairly and consistently, and delinquencies are kept to a minimum. 126
9 CITY OF BOZEMAN, MONTANA 4. The city will aggressively pursue opportunities for Federal or State grant funding. An aggressive policy of pursuing opportunities for Federal or State grant funding provides citizens assurance that the city is striving to obtain all state and federal funds to which it is entitled--thereby reducing dependence upon local taxpayers for the support of local public services. 5. User fees and charges will be used, as opposed to general taxes, when distinct beneficiary populations or interest groups can be identified. User fees and charges are preferable to general taxes because user charges can provide clear demand signals which assist in determining what services to offer, their quantity, and their quality. User charges are also more equitable, since only those who use the service must pay--thereby eliminating the subsidy provided by nonusers to users, which is inherent in general tax financing. 6. User fees will be collected only if it is cost-effective and administratively feasible to do so. User fees are often times costly to administer. Prior to establishing user fees, the costs to establish and administer the fees will be considered in order to provide assurance that the city's collection mechanisms are being operated in an efficient manner. Expenditures and Payments 1. On-going expenditures will be limited to levels which can be supported by current revenues. Utilization of reserves to fund on-going expenditures will produce a balanced budget; however, this practice will eventually cause severe financial problems. Once reserve levels are depleted, the city would face elimination of on-going costs in order to balance the budget. Therefore, the funding of on-going expenditures will be limited to current revenues. 2. Minor capital projects or recurring capital projects, which primarily benefit current residents, will be financed from current revenues. Minor capital projects or recurring capital projects represent relatively small costs of an on-going nature, and therefore, should be financed with current revenues rather than utilizing debt financing. This policy also reflects the view that those who benefit from a capital project should pay for the project. 3. Major capital projects, which benefit future as well as current residents, will be financed with current revenues as well as other financing sources (e.g. debt financing). This policy reflects the view that those who benefit from a capital project should pay for the project. 4. Major capital projects, which benefit future residents, will be financed with other financing sources (e.g. debt financing). Major capital projects represent large expenditures of a non-recurring nature which primarily benefit future residents. Debt financing provides a means of generating sufficient funds to pay for the costs of major projects. Debt financing also enables the costs of the project to be supported by those who benefit from the project, since debt service payments will be funded through charges to future residents. 127
10 CITY OF BOZEMAN, MONTANA 5. Construction projects and capital purchases of $10,000 or more will be included in the Capital Improvement Plan (CIP); minor capital outlays of less than $10,000 will be included in the regular operating budget. The Capital Improvement Plan (CIP) differentiates the financing of high cost long-lived physical improvements from low cost "consumable" equipment items contained in the operating budget. CIP items may be funded through debt financing or current revenues while operating budget items are annual or routine in nature and should only be financed from current revenues. 6. Spending Policy: The City will spend its resources in the following order. Resources will be categorized according to Generally Accepted Accounting Principles (GAAP) for state and local governments, with the following general definitions: Restricted -- Amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government) through constitutional provisions or by enabling legislation. Committed -- Amounts constrained to specific purposes by the City Commission; to be reported as committed, amounts cannot be used for any other purpose unless the City Commission takes action to remove or change the constraint. Assigned -- Amounts the City intends to use for a specific purpose; intent can be expressed by the Commission or by an official or body to which the Commission delegates the authority. The City Commission delegates this authority to the City Manager. Unassigned -- Amounts that are available for any purpose; these amounts are reported only in the General Fund. When both restricted and unrestricted resources are available, spending will occur in the following order for the identified fund types: Fund Type Order of Spending General Fund 1. Restricted 2. Committed 3. Assigned 4. Unassigned The City Commission and the City Manager, individually, have the authority to express assignments in the General Fund. Special Revenue Funds 1. Restricted 2. Committed 3. Assigned The City Commission and the City Manager, individually, have the authority to express assignments in Special Revenue Funds. Debt Service Funds 1. Assigned 2. Committed 3. Restricted 128
11 CITY OF BOZEMAN, MONTANA The City Commission and the City Manager, individually, have the authority to express assignments in Debt Service Funds. Capital Project Funds 1. Restricted 2. Committed 3. Assigned The City Commission and the City Manager, individually, have the authority to express assignments in Capital Project Funds. Debt Administration 1. The City will limit long-term debt to capital improvements which cannot be financed from current revenues. Incurring long-term debt serves to obligate future taxpayers. Excess reliance on long-term debt can cause debt levels to reach or exceed the government's ability to pay. Therefore, conscientious use of long-term debt will provide assurance that future residents will be able service the debt obligations left by former residents. 2. The city will repay borrowed funds, used for capital projects, within a period not to exceed the expected useful life of the project. This policy reflects the view that those residents who benefit from a project should pay for the project. Adherence to this policy will also help prevent the government from over-extending itself with regard to the incurrence of future debt. 3. The city will not use long-term debt for financing current operations. This policy reflects the view that those residents who benefit from a service should pay for the service. Utilization of long-term debt to support current operations would result in future residents supporting services provided to current residents. 4. The City of Bozeman will adhere to a policy of full public disclosure with regard to the issuance of debt. Full public disclosure with regard to the issuance of debt provides assurance that the incurrence of debt, for which the public is responsible, is based upon a genuine need and is consistent with underwriter’s guidelines. Reserves and Fund Balances 1. Reserves and Fund Balances will be properly designated into the following categories: Nonspendable fund balance -- Amounts that are not in a spendable form (such as inventory) or are required to be maintained intact (such as the corpus of an endowment fund). Restricted fund balance -- Amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government) through constitutional provisions or by enabling legislation. Committed fund balance -- 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. 129
12 CITY OF BOZEMAN, MONTANA Assigned fund balance -- 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. Unassigned fund balance -- Amounts that are available for any purpose; these amounts are reported only in the General Fund. 2 . A minimum level of general fund reserve equal to 16.67% of annual revenues will be maintained by the city. 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. Property taxes represent the city's primary source of general fund revenue. Property taxes are collected in November and May of each fiscal year. Since the City's fiscal year begins on July 1st, the city must maintain an adequate cash balance in order to meet its expenditure obligations between July 1st and the commencement of the collection of property taxes in November. Accrued employee payroll benefits represent a bona fide obligation of the city. The city will maintain sufficient reserves to meet its annual expenditure obligations. The city recognizes the need to maintain adequate equipment in order to carry out required public services. Equipment acquisition and replacement represent on-going costs of a relatively minor nature, as compared to major capital purchases. We plan for equipment replacement within our Capital Improvement Program. However, unforeseen equipment problems will arise. The reserve will provide resources for the immediate, unanticipated replacement of critical equipment. The city is subject to revenue shortfalls and unexpected expenditure demands during the fiscal year. An undesignated general fund reserve will be maintained to be able to offset these revenue shortfalls or meet unexpected demands occurring during the year, without suddenly adjusting tax rates or reducing expenditures. Financial Reporting & Accounting 1. The City will manage and account for its financial activity in accordance with Generally Accepted Accounting Principles (GAAP), as set forth by the Governmental Accounting Standards Board (GASB). GASB is recognized as the authority with respect to governmental accounting. Managing the city's finances in accordance with GAAP and in accordance with the rules set forth by GASB provides the Bozeman citizens assurance that their public funds are being accounted for in a proper manner. 2. The city will maintain 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 will be 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. Adherence to this policy will enable the city to prepare its financial statements in accordance with Generally Accepted Accounting Principles as set forth by the Governmental Accounting Standards Board. 130
13 CITY OF BOZEMAN, MONTANA 3. The City of Bozeman will prepare a Comprehensive Annual Financial Report (CAFR) in conformity with Generally Accepted Accounting Principles (GAAP). The report will be made available to the general public. The CAFR shall be prepared in accordance with the standards established by the GFOA for the Certificate of Achievement for Excellence in Financial Reporting Program The Certificate of Achievement represents a significant accomplishment for a government and its financial management. The program encourages governments to prepare and publish an easily readable and understandable comprehensive annual financial report covering all funds and financial transactions of the government during the year. The CAFR provides users with a wide variety of information useful in evaluating the financial condition of a government. The program also encourages continued improvement in the city's financial reporting practices. 4. The city will ensure the conduct of timely, effective, and annual audit coverage of all financial records in compliance the Local, State, and Federal law. Audits of the city's financial records provide the public assurance that its funds are being expended in accordance with Local, State, and Federal law and in accordance with Generally Accepted Accounting Principles. Audits also provide management and the Commission with suggestions for improvement in its financial operations from independent experts in the accounting field. 5. The City of Bozeman will maintain a policy of full and open public disclosure of all financial activity. Full and open public disclosure of all financial activity provides the public with assurance that its elected officials and administrators communicate fully all financial matters affecting the public. 6. The modified accrual basis of accounting and budgeting is used for the Governmental Funds. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual, i.e., both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Expenditures are recorded when the related liability is incurred. Employee compensated absences and principal and interest on long-term debt expenditures are recorded when due in the current period. The accrual basis of accounting is used for Proprietary Funds. Under this method, revenues are recorded when earned and expenses are recorded when the related liability is incurred. For Budget preparation and presentation, the Proprietary Funds’ expenses are converted to expenditures and follow the same budget format as the Government Fund types. Capital outlays in the Enterprise Funds are presented as expenses for budget basis, but are recorded as assets along with associated depreciation expense on the GAAP basis. Debt service principal payments in the Enterprise Funds are accounted for as expenses for budget purposes, but are reported as reduction of long-term debt liability on the GAAP basis. Recording capital outlays as expenditures and principal payments on long-term debt for budget purposes, presents a clearer picture of the city’s financial operations, is easier to administer for cash flow purposes, and is easier for the lay person to understand. 131
132
15 CITY OF BOZEMAN, MONTANA GOVERNMENT FINANCE OFFICERS’ ASSOCIATION CERTIFICATE 133
16 CITY OF BOZEMAN, MONTANA ORGANIZATIONAL CHART CITY CLERK Stacy Ulmen CITY COMMISSION PARKING COMMISSION MUNICIPAL JUDGES Karl Seel & Colleen Herrington LIBRARY BOARD OF TRUSTEES LIBRARY DIRECTOR Susan Gregory CITY MANAGER Chris Kukulski ECONOMIC DEVELOPMENT Brit Fontenot PARKING MANAGER Scott Lee ASSISTANT CITY MANAGER Chuck Winn FACILITIES James Goehrung FIRE DEPARTMENT Jason Shrauger PUBLIC SERVICE Debbie Arkell PARKS & RECREATION Ron Dingman HUMAN RESOURCES Vacant PLANNING & COMMUNITY DEVELOPMENT Tim McHarg LEGAL Greg Sullivan FINANCE Anna Rosenberry INFORMATION TECHNOLOGY Vacant POLICE DEPARTMENT Ron Price CITIZENS OF BOZEMAN 134
17 CITY OF BOZEMAN, MONTANA CITY ELECTED OFFICIALS AND OFFICERS ELECTED OFFICIALS Legislative Sean Becker Mayor Jeffrey Krauss Deputy Mayor Cynthia Andrus Commissioner Christopher Mehl Commissioner Carson Taylor Commissioner Judicial Karl Seel Colleen Herrington Municipal Judge Municipal Judge OFFICERS Executive Chris Kukulski Chuck Winn Stacy Ulmen City Manager Assistant City Manager City Clerk Department of Law Gregory Sullivan City Attorney Susan Wordal Assistant City Attorney Timothy A. Cooper Assistant City Attorney Kyla Murray Anna Saverud Ryan McCarty Assistant City Attorney Assistant City Attorney Assistant City Attorney Department of Finance Anna Rosenberry, CPA Director of Finance Brian LaMeres, CPA Controller Laurae Clark Treasurer 135
18 CITY OF BOZEMAN, MONTANA CITY ELECTED OFFICIALS AND OFFICERS (CONTINUED) OFFICERS (CONTINUED) Department of Economic Development Brit Fontenot Department of Public Safety Director of Economic Development Ronald Price Chief of Police Richard McLane Deputy Chief of Police Jason Shrauger Fire Chief Greg Megaard Deputy Fire Chief – Operations Department of Public Service Debra H. Arkell Director of Public Service Rick Hixson City Engineer John Alston Superintendent of Water and Waste Water Operations John Van Delinder Superintendent of Street Operations Kevin Handelin Superintendent of Sanitation Operations Rick Moroney Superintendent of Water Treatment Plant Thomas Adams Superintendent of Water Reclamation Facility James Goehrung Superintendent of Facilities Department of Public Welfare Ron Dingman Thomas White Vacant Director of Parks & Recreation Superintendent of Parks & Cemetery Superintendent of Recreation Operations Timothy McHarg Director of Planning & Community Development Susan Gregory Director of Library 136
PART II FINANCIAL SECTION 137
INDEPENDENT AUDITORS’ REPORT Honorable Mayor, City Commissioners, and City Manager of the City of Bozeman, Montana: 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 the City of Bozeman, Montana (the City), as of and for the year ended June 30, 2012, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Bozeman's management. 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our 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 the City of Bozeman, Montana, as of June 30, 2012, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 17, 2012 on our consideration of the City of Bozeman's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Audit Standards and should be considered in assessing the results of our audit. 138
20 Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, Actuarial Valuation of Post-Employment Benefits, and Budgetary Comparison Information, as listed on the table of contents, 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Bozeman, Montana’s basic financial statements. The combining and individual non-major fund financial statements and other schedules, listed in the table of contents as supplementary information, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the U.S. Office of Management and Budget Circular A-133, Audit of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements. The combining and individual non-major fund financial statements and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections 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. Junkermier Clark Campanella & Stevens P.C. Bozeman, Montana December 17, 2012 139
A. MANAGEMENT’S DISCUSSION AND ANALYSIS 140
21 MANAGEMENT’S DISCUSSION AND ANALYSIS 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, 2012. Please read it in conjunction with the transmittal letter on page 1 and the City’s financial statements, which begin on page 31. USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. The Statement of Net Assets and the Statement of Activities (on pages 31 and 32) 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 33. 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 Assets and the Statement of Activities Our analysis of the City as a whole begins on page 23. 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 Assets and the Statement of Activities report information about the City as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year’s revenues and expenses are taken into account regardless of when cash is received or paid. These two statements report the City’s net assets and changes in them. You can think of the City’s net assets, the difference between assets, what the citizens own, and liabilities, what the citizens owe, as one way to measure the City’s financial health, or financial position. Over time, increases or decreases in the City’s net assets 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 Assets 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, 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, sewer, solid waste, and parking systems are reported here. 141
22 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) Reporting the City’s Most Significant Funds Fund Financial Statements Our analysis of the City’s funds begins on page 27. The fund financial statements begin on page 33 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 Environmental Protection Agency). 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 Assets and the Statement of Activities) and governmental funds in reconciliation on pages 35 and 37 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 Assets 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 and the Montana Arts Council funds for the Montana Ballet, the Bozeman Symphony Orchestra and the Big Sky Association for the Arts. 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 Assets on page 43 and in the Combining Statement of Changes in Assets and Liabilities-Agency Funds on page 128. 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. 142
23 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) THE CITY AS A WHOLE The City’s combined net assets decreased by $9.6 million this year as compared to a $6.7 million increase last year. The primary reason for this is a $2 million litigation settlement combined with a substantial decrease in revenues, yet no significant change in expenses. The specific contributing factors are outlined in the following discussion. Our analysis focuses on the net assets (Table 1) and changes in net assets (Table 2) of the City’s governmental and business-type activities. Net assets of the City’s governmental activities decreased by 2.4% ($122.8 million this year compared to $125.8 million last year). Unrestricted net assets of governmental activities, the part of net assets that can be used to finance day-to-day operations without constraints established by debt covenants, enabling legislation or other legal requirements, decreased to $13.5 million. The net assets of the City’s business-type activities decreased by 3.1% ($206.7 million compared to $213.3 million in 2011). These net assets cannot be used to make up for deficits reported by governmental activities in the event any such deficits were reported. The City generally can only use the net assets of business-type activities to finance the continuing operations of the water, sewer solid waste, and parking operations. 201220112012201120122011Current and Other Assets 46.0$ 42.6$ 25.1$ 31.5$ 71.1$ 74.1$ Capital Assets 99.8 103.2 216.5 212.2 316.3 315.4 Total Assets 145.8$ 145.8$ 241.6$ 243.7$ 387.4$ 389.5$ Long-term Debt Outstanding (13.5) (14.8)$ (27.2) (27.5)$ (40.7) (42.3) Other Liabilities (9.6) (5.1) (7.7) (3.0) (17.2) (8.1) Total Liabilities (23.1)$ (19.9)$ (34.9)$ (30.5)$ (58.0)$ (50.4)$ Net Assets:Invested in Capital Assets, net of related debt 88.5$ 88.8$ 192.5$ 188.2$ 281.0$ 277.0 Restricted for impact capital projects - - 9.5 10.9 9.5 10.9 Restricted for debt service 4.1 5.4 1.8 1.7 5.9 7.2 Restricted for capital projects - 0.3 0.1 0.1 0.1 0.4 Restricted for general government 0.9 0.4 - 0.4 Restricted for Public Safety 1.4 0.4 - - 1.4 0.4 Restricted for Public Service 10.2 12.5 - - 10.2 12.5 Restricted for Public Welfare 3.1 1.0 - - 3.1 1.0 Restricted for other purposes - - - - 0.0 - Nonspendable 1.1 1.0 Unrestricted 13.5 16.0 2.8 12.4 16.3 28.4 Total Net Assets 122.8$ 125.9$ 206.7$ 213.3$ 329.5$ 339.2$ Activities Activities Primary GovernmentTable 1Net Assets(in Millions)Governmental Business-type Total 143
24 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) The City’s total revenues (excluding special items) decreased by 21.2% ($14.5 million), driven primarily by a significant decrease in developer-contributed infrastructure, which is reported as revenue. The total cost of all programs and services increased by $1.8 million, or 2.9%. Although expenses increased and revenues decreased for both governmental activities and business-type activities, the City was able to cover this deficit by using accumulated resources from prior years’ surplus revenues. Our analysis below separately considers the operations of governmental and business-type activities. 201220112012201120122011RevenuesProgram revenues:Charges for Services 10.7$ 10.5$ 18.4$ 17.0$ 29.0$ 27.4$ Restricted Grants & Contributions 1.2 9.0 0.6 6.6 1.8 15.6 General RevenuesProperty Taxes 15.7 16.3 - - 15.7 16.3 Unrestricted Grants & Contributions 6.9 6.8 0.0 0.4 6.9 7.2 Other General Revenues 0.4 1.9 - - 0.4 1.9 Total Revenues 34.9 44.4 18.9 24.0 53.9 68.4 Program ExpensesGeneral Government 8.7 6.1 - - 8.7 6.1 Public Safety 13.2 12.9 - - 13.2 12.9 Public Service 8.2 9.2 - - 8.2 9.2 Public Welfare 7.2 7.5 - - 7.2 7.5 Interest and Fiscal Fees 0.7 0.7 - - 0.7 0.7 Water - - 11.7 11.6 11.7 11.6 Waste Water - - 10.2 10.1 10.2 10.1 Solid Waste - - 2.6 2.6 2.6 2.6 Parking - - 1.0 1.0 1.0 1.0 Total Expenses 38.0 36.4 25.5 25.3 63.5 61.7 Excess (deficiency) beforespecial items and transfers (3.1) 8.1 (6.5) (1.3) (9.6) 6.7 Extraordinary items - - - - - - Sale of Capital Assets 0.0 - - - 0.0 - Transfers of capital assets (0.0) - 0.0 Transfers (0.0) 0.5 0.0 (0.5) - - Increase (decrease) in net assets(3.1)$ 8.6$ (6.5)$ (1.9)$ (9.6)$ 6.7$ Activities Activities Primary GovernmentTable 2Changes in Net Assets(in Millions)Governmental Business-type Total 144
25 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) Governmental Activities Revenues for the year from governmental activities decreased by 21.4% ($9.5 million) to $34.9 million while total expenses increased by $1.6 million to $38 million. This excess of expenses over revenues resulted in a $3.1 decrease in the total net assets for governmental activities. While taxes did decrease somewhat, the primary driver for this significant decrease in revenues was not a big decrease in taxes or charges for services, but instead developer-provided street infrastructure. This and the other contributing revenue categories listed below are primarily responsible for this decrease in net assets: Restricted Operating & Capital Grants and Contributions decreased substantially by $7.8 million, or 87%, from $9 million last year to $1.2 million this year. This was primarily due to developer-contributed street infrastructure - recorded as Public Service Capital Grants and Contributions revenue – which decreased by $6.9 million, or 95%, from $7.3 million last year to $392,000 this year. Property Tax collections also decreased by $625,998, or 3.8%, from $16,342,053 last year to $15,716,055 this year because this year the City chose not to levy taxes for the SAFER Firefighter Federal Grant and Battalion Fire Chief positions, 911-related mills, and also cut an additional $684,976 (8.34 mills.) This resulting tax levy of 166.75 mills was 29.87 mills ($2.5 Million) lower than the City’s statutory limit. Instead of increased taxes, this year’s budget continued to utilize one-time cash (vacancy savings and grant revenue) to lower the property tax levy. While this is often a very prudent use of resources, it is important to note that it is not expected to be available to lower the levy in future years. This fiscal year marks the fourth year of the City’s belt-tightening efforts, which started in March of 2008 (FY09 budget development) and carried through this year. Over this time period, property owners in the City have benefitted by over $4.6 Million in reduced property tax levies related to operating budget and grant savings. Unrestricted Grants and Contributions increased by $116,334 (or 1.7%), from $6,782,383 last year to $6,898,717 this year due to Montana State Entitlement Share revenue increasing by $131,659 from $3,529,124 to $3,660,683. State Entitlement Share was indeed frozen in 2011 when the State Legislature eliminated the statutory growth factor for the City’s Entitlement Share dollars for this fiscal year. Under the prior statute, the City would have seen approximately $150,000 in increased revenue in the General Fund this year and further increases next year. Instead, both years will see zero growth in Entitlement Share. However, the 2011 Legislature also passed Senate Bill 372, which lowered Class 8 Property Tax rates on business equipment for many Montana businesses. The city received a $116,400 reimbursement from the Montana Department of Revenue as a one-time backfill payment caused by the tax rate reduction and the timing of when certain Class 8 property pays their property taxes. This reduction in business equipment tax was returned to the City’s general fund with instructions to record it as Entitlement Share. Interest on Investments continued to decline, with this year’s revenue decreasing by $18,334, or 6%, from $301,424 last year to $283,090 this year. This represents a 58% decrease from the $671,859 reported three years ago. This sustained decrease is attributable to low, stagnant interest rates; interest rates on investment income have declined from 4.1% four years ago to .92% by the end of this year. The cost of all governmental activities this year was $38 million compared to $36.4 million last year. However, as shown in the Statement of Activities on page 32, the amount that our taxpayers ultimately financed for these activities through City taxes was only $26,105,677 because some of the cost was paid by those who directly benefited from the programs ($10,674,272) or by other governments and organizations that subsidized certain programs with operating and capital grants and contributions ($566,586 + $635,758 = $1,202,164). Overall, the City’s revenues from governmental activities – including intergovernmental revenues and charges for services – decreased this year from $44.4 to $34.9 million. Charges for services increased by $212,653, or 2%, from $10,461,619 to $10,674,272 because Street Maintenance Assessments increased by $483,000, there were decreases such as street impact fee revenues (down $117,420 from $1,208,135 to $1,090,715), court fines (down $76,765 from $1,441,383 to $1,364,618), billings to other departments (down $149,724 from $1,624,456 to $1,474,732) and licenses and permits (down $93,673 from $1,308,378 to $1,214,705). 145
26 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) Overall expenses increased by $1,629,507 to $38 million this year. The primary driver here was a $2 million litigation settlement charged to General Government. To help offset the effect of this, Public Service expenses decreased by $1,016,054 from $9,190,515 to $8,174,461 due primarily to a large class of assets being in their final useful life of depreciation last year. These assets – older street infrastructure – are still in service, but were fully depreciated this year and therefore no depreciation expense was recorded. General government expenses increased by 42.2%, or $2,585,000, due mainly to the $2 million litigation settlement combined with increased spending of $264,580 on Facilities Maintenance, $88,400 on Municipal Court operations, and a $47,000 increase in the comprehensive liability and property insurance premium. Public safety expenses increased by 3%, or $356,000 due primarily to a $170,000 increase in payroll costs for additional Police officers with some increases in payroll costs of the Fire and Building Inspection Departments, but more notably an increase of $107,000 in Fire Department operational costs driven primarily by increased hydrant water utility costs and fire supplies. Table 3 presents the cost of each of the City’s six largest programs—Police, Fire, Public Service, Library, Parks and Recreation—as well as each program’s net cost (total cost less revenues generated by the activities). The net cost shows the financial burden that was placed on the City’s taxpayers by each of these functions. 2012201120122011Police 7.1$ 6.9$ 5.5$ 5.3$ Fire 5.1 5.7 4.3 4.5 Public Service 8.2 9.2 3.0 4.2 Library 1.4 1.4 0.8 0.8 Parks 1.1 1.2 1.1 1.2 Recreation 1.3 1.3 0.8 0.9 All Others 14.0 10.7 10.6 0.0 Totals 38.0$ 36.4$ 26.1$ 16.9$ Table 3Governmental Activities(in Millions)Total Cost Net Costof Services of Services Business-type Activities Total revenues of the City’s business-type activities (see Table 2) decreased by 21% ($18.9 million in 2012 compared to $24 million in 2011) while expenses increased slightly by .17% ($25.5 million in 2012 compared to $25.3 million in 2011). The major decline in revenues was due to a substantial decrease in developer-contributed infrastructure. Last year saw contributions of $3 million for water and $3.6 million for wastewater, and this year there was $.5 million for water and zero for wastewater contributed infrastructure. Specific factors driving the 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 in past years and as a result of regular rate changes. Due to declining construction activity around the City, customer‐base growth was only 245 customers, or 2%, for this year. This rate is markedly lower than the 5% trend of 2005‐2008. In updating the rate study for slower customer growth in recent years, decreased Water Impact Fee collections and new estimates of Water Plant costs, the City estimated needing water rate increases this year and next year in order to fund plant construction and other scheduled operations and maintenance costs. Accordingly, the City Commission adopted a two-year rate resolution of 4.5% increase this year and a 4.5% increase for next year. As a result, the City was able to continue funding a concerted improvement in its water distribution pipe replacement program, replacing rehabilitation projects “every-two-years” with an annual program (doubling our efforts). 146
27 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) Despite the minimal growth in customer base, operating revenues this year increased significantly by 13.3% from $6,013,211 last year to $6,814,993 this year due to a 9.3% increase in consumption coupled with the 4.5% rate increase. Water impact fee revenues increased by $267,708, or 37.5%, while cash-in-lieu of water rights revenue increase by $71,853. Operating expenses held steady this year and only increased $19,249 from $11,648,569 last year to $11,667,818 this year. Major projects undertaken during the year include $9,090,753 spent on continued design and construction of the new Water Treatment Plant and $904,820 spent on the afore-mentioned water distribution pipe replacement and rehabilitation program. Wastewater Revenues in the Wastewater system have, in general, been increasing over the past 10 years, and are estimated at $6.8 million for upcoming year. Two years ago the City borrowed significantly to construct the new Water Reclamation Facility. This debt is being repaid by system users over the next 20 years. As with the Water system, estimated growth in customer-base is expected to be minimal in the upcoming year, down from 5% in recent years. An update of the existing rate study has been done, suggesting a 6% increase in each of the next 5 years. Accordingly, the City Commission adopted a two-year rate resolution of a 6% increase this year followed by another 6% increase next year. As a result of the rate increase combined with the same increase seen in the water system of 245 customers, operating revenues for the year increased by 6.83% from $5,939,996 last year to $6,345,403 this year. Wastewater operating expenses decreased by 1.5% from $9,488,693 last year to $9,345,324 this year. The higher number reported last year was due in large part to a $557,000 expense recorded based on an updated analysis of the Solvent Site remediation liability. The amount of the adjustment this year was only $31,000. Major projects during the year included construction costs of $7.4 million spent towards the nearly-completed conversion of the existing Wastewater Treatment Plant into a state-of-the-art Water Reclamation Facility, and $105,000 spent to refurbish the department’s existing 2007 sewer line television inspection van. Solid Waste The City’s solid waste collection and disposal system revenues had been declining steadily over the past few years due to the closure of the landfill in 2008. During fiscal year 2006, the Commission discussed how the City would continue solid waste disposal services as our landfill was nearing its capacity. In a measure to reserve the remaining cell space for residential use only, the Commission closed the landfill to tipping by commercial customers and non-city residents and to any construction and demolition waste. The Landfill officially closed in June 2008. The Solid Waste Collection Division continues to operate residential and commercial collection, and in FY09 the Division began to provide curb-side recycling collection services. Last year garbage rates were increased 5%, to cover fuel costs, employee salary and benefit increases, and the assumption of costs that were once shared with the Disposal division. The slowdown in local construction activity has continued to decrease demand for “roll-off” containers and the associated hauling and tipping services. Operating revenues continued to decline this year, from $2,530,562 last year to $2,515,857 this year. However, this represents a decrease of only $14,705, or .6%, compared to last year’s decline of $131,000, or 5.2%, from two years ago. Operating expenses increased slightly by $6,790, or .3% from $2,578,109 last year to $2,584,899 this year. Parking The City’s parking revenues for the year decreased notably by $46,808 from $410,799 last year to $363,991 this year due to a combination of revenue changes. Parking Permit revenues increased by $4,000 due mainly to increased usage of the Bridger Park Downtown Parking Garage. Parking Ticket Fines decreased by $20,000 because in January 2011 (halfway through last fiscal year), the Parking Commission opted for a courtesy ticket policy, where first-time downtown violators of the overtime ordinance are given a courtesy ticket. In calendar year 2011, 2,526 courtesy tickets were written in the downtown core. This has been very well received by the downtown businesses but, as expected, has led to a decline in citations issued and revenue. The last factor contributing to the $46,808 decrease in operating revenues is a $30,700 decrease in Municipal Infraction Fines and Collection Fee revenue from delinquent parking tickets. This is due to more accurate reporting of these relatively new fines now that more historical data has allowed for better estimates of collectability. Operating expenses continued to hold steady, decreasing slightly by $1,047, or .1%, from $991,276 this year to $990,229 this year. 147
28 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) THE CITY’S FUNDS As the City completed the year, its governmental funds (as presented in the balance sheet on pages 33-34) reported a combined fund balance of $31,536,548. Included in this year’s total change in fund balance is a positive General Fund balance of $7,327,055. This represents 34.1% of total General Fund revenues of $21,467,764 and therefore fully complies with the City’s Financial Policy and with the Government Finance Officers’ Association’s recommended level of minimum fund balance. The primary reasons for the General Fund’s surplus are highlighted below, along with an analysis of each major fund. The general fund balance of $7,327,055 has been assigned as shown: GENERAL FUND BALANCE - TOTAL 7,327,055$ ASSIGNMENTSCity Building Facility Condition Assessment 11,000$ Cemetery Columbarium and Scattering Garden 27,160 Recreation Feasibility Study 30,000 Lindley Recreation Center Deck 34,000 Senior Center Mechanical Improvements and Flooring 55,000 Fire Station #1 Condensing Unit Air Conditioner 75,000 Police Vacancy Savings Dedicated to Future Tax Cuts 427,370 Police and Court Facility 500,000 Litigation Settlement 2,000,000 16.67% Minimum Reserve Level Required by City Charter 3,903,435 TOTAL ASSIGNMENTS 7,062,965 UNASSIGNED 264,090$ General fund The City’s general fund balance increased by $429,805, or 6.2%, from $6,897,250 in FY11 to $7,327,055 this year. However, this was not due to increased property tax revenues, which actually decreased by $228,675, or 1.9%, from $11,764,146 last year to $11,535,471 for the current year, because this year we reduced the adopted tax levy for the SAFER Federal Grant and Battalion Chief positions, 911 related mills, and an additional $684,976 (8.34 mills.) This resulting tax levy of 166.75 mills was 29.87 mills ($2.5 Million) lower than the City’s statutory limit. Also contributing to the increased 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 the recent bond rating in May, 2012 by Moody's Investors Service who assigned an Aa3 rating 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 of these instances, bond analysts looked favorably on the amount and trend of the City's General Fund balance in determining the City’s bond rating. 148
29 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) As shown on page 93, variances in the General Fund between the original budget and the final budget appropriations totaled $462,715, which increased the original appropriation budget of $23,846,453 up to $24,309,168. This amendment was primarily the net additional appropriation authority needed for the Public Safety budget in order to report the State’s share of Police and Firefighter retirement. By design, most of this authority is budgeted under General Government initially and then moved to the Public Safety budget at year-end, at which time any additional amount necessary to cover Police and Firefighter retirement is added as an amendment. The $1.5 million decrease in the General Government appropriation budget was able to offset the $1.9 million increase in the Public Safety budget so that, overall, only $.4 million in additional appropriation authority was needed. Similarly, the decrease of $333,477 in the Public Welfare budget was primarily just shifting budget authority to Capital Outlay, for Recreation projects, and to Transfers to other funds, for the transfer of the remaining Library budget surplus at year-end into the Library Depreciation Reserve Fund, which is reported on page 103 under Capital Projects Fund. Street and Fire Impact Fees Special Revenue Fund balance decreased $130,202, or 1.65%, from $8,049,347 last year to $7,919,145 this year. This decrease was due in part to declining total revenues – down $98,347, or 6.6%, from $1,497,744 last year to $1,399,397 this year – but was mainly caused by a substantial increase in expenditures. Total expenditures increased $692,241, or 105%, from $657,988 last year to $1,350,199 this year. The primary driver were capital outlay expenditures, including $586,170 spent on the College Street & South 11th Avenue intersection roundabout and $505,300 spent on the widening of Cottonwood Road (impact fee credits paid out in cash to the developer). Street Maintenance Special Revenue Fund balance increased significantly by $344,224, or 57.4%, from $600,049 last year to $944,273 this year. Total expenditures did decline slightly by $18,441, or .7%, from $2,677,382 last year to $2,658,941 this year. However the major driver for this increase in fund balance was a substantial increase in revenues. Beginning this year, the City expanded the Street Maintenance Assessment program to include major street reconstruction projects; the first being the reconstruction of South 8th Avenue. With the Commission’s focused goal of addressing deferred street and curb maintenance, Street Maintenance Assessment rates were increased by 18% this year, with the 18% allocated as follows: Continued increase to Curb Replacement Fund (2%); Debt Service Payments for the Reconstruction of South 8th Avenue (7%); Establishment of a Street Reconstruction Fund (6%); and Increase in Operating Budget (3%). The current fund balance of $944,273 is accordingly allocated as follows: $510,449 for Street Maintenance; $228,709 for Curb Reconstruction; $159,952 for Street Reconstruction; $39,412 for Durston Road; and $5,751 for West Babcock Street. Building Inspection Special Revenue Fund balance increased by $190,503, or 23.4%, from $814,982 last year to $1,005,485 this year. Expenditures did increase this year by $40,076, or 5.4%, from $747,826 last year to $787,901 this year, and revenues did decrease this year by $41,313, or 4.1%, from $1,019,717 last year, to $978,404 this year. However, revenues of $978,404 still exceeded expenditures of $787,901, so fund balance increased by $190,503. The slowdown in local building activity has had many impacts on the operations and finances of the City, including the workload and revenues in the Building Inspection Division. However, the trend seems to be reversing. Total new construction is up 35%, and plan check revenue – historically the best indicator of future construction – is up 48%. SID Sinking Debt Service Fund balance decreased substantially by $1.4 million, or 63.4%, because roughly $2.3 million in principal and interest was paid this year as part of retiring over $2 million in outstanding Special Improvement District Bonds, which were called and paid early to avoid future interest costs. This was funded primarily from accumulated excess capital project residual funds, which were transferred from Capital Projects into the SID Sinking Debt Service Fund last year, in addition to existing resources in the SID Sinking funds. Special Assessment revenues paid back into the fund this year amounted to $858,699 this year, down $275,350, or 32%, from last year’s revenues of $1,134,049. This has been the expected trend in recent years, as the number of new Special Improvement Districts has declined, and older SID balances have been completely paid off. This year, however, saw the creation of a new SID for South 8th Reconstruction, and other similar older road/curb/sidewalk reconstruction SID’s may follow. 149
30 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets As shown in Table 4, at the end of 2012 the City had $316.3 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 $.9 million, or .3% over last year. Refer to capital assets disclosure Note 7 beginning on page 56 for more information. 201220112012201120122011Land 10.5$ 10.5$ 4.9$ 4.9$ 15.4$ 15.4$ Water Rights - - 2.1 2.1 2.1 2.1 Buildings 31.0 30.5 87.3 70.8 118.4 101.3 Other Structures and Improvements 1.2 1.2 31.6 31.7 32.8 32.9 Machinery & Equipment 9.3 9.2 5.9 6.2 15.3 15.4 Property under Capital Lease 0.3 0.6 - - 0.3 0.6 Vehicle 3.1 3.2 1.7 1.8 4.8 5.0 Infrastructure 130.2 127.2 251.6 250.0 381.8 377.2 Subtotal 185.7 182.4 385.1 367.3 570.8 549.9 Accumulated Depreciation (85.9) (79.2) (168.6) (155.3) (254.5) (234.5) Total Capital Assets 99.8$ 103.2$ 216.5$ 212.0$ 316.3$ 315.4$ Activities Activities TotalsTable 4Capital Assets at Year-end(in Millions)Governmental Business-type 150
31 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) This year’s major additions and projects underway include: Water Plant Design and Construction 9,090,753$ Water Reclamation Facility Construction: General 6,648,779 Water Line Replacement and Rehabilitation 904,820 Water Reclamation Facility Construction: Digester #3 600,782 Roundabout at College Street and South 11th Avenue 586,172 Cottonwood Road Widening 505,291 South 8th Avenue Reconstruction 477,763 Street Improvements - Gas Tax 424,018 Public Works Shops Facility Expansion 305,415 College St - Huffine Lane Pathway: CTEP Community Transportation Enhancement Proje222,493 Street Sweeper - 2012 Elgin Broombear 185,530 Police Patrol Car Fleet Renewal: 3 patrol cars and 1 Chevy Tahoe 174,933 Dump Truck: 2012 Freightliner Tandem Axle with sander and plow - Street Department 158,347 Water Reclamation Facility Construction: Administration Lab 149,135 Downtown Streetscape and Alley Iimprovements; HUD EDI Blast Site Rehabilitation Gran132,363 Dump Truck: 2006 Freightliner with sander, box and hoist - Street Department 120,743 Wastewater TV Van: refurbish existing 2007 TV van to video inspect sewer lines 104,644 Bogert Swimming Pool Filter Replacement 98,800 20,890,781$ Debt At year-end, the City had $35.1 million in bonds and notes outstanding versus $38.3 million last year – a decrease of 8.5% – as shown in Table 5. This decrease was due primarily to over $2 million in outstanding Special Improvement District Bonds being called and paid early to avoid future interest costs, as discussed on page 29. General obligation debt, which is reported under Governmental Activities, consists of $3,080,000 in Series 2012 Refunding Bonds issued to refinance the Series 2003A Transportation Refunding bonds and the Series 2001A and Series 2003B Library Construction Project bonds. Debt reported under Business-Type Activities includes $23,853,427 of wastewater revenue bonds issued to finance construction of the Wastewater Reclamation Facility. In May of this year, Moody's Investors Service assigned an Aa3 rating to the City’s General Obligation Refunding Bonds, Series 2012. At that time, Moody's also affirmed the Aa3 rating on the city's existing rated outstanding general obligation debt. 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. Moody’s expects the City to maintain a healthy financial position, given the City's historical performance and management's commitment to maintaining satisfactory reserve levels. As expressed in the fiscal year 2013 Approved Budget, City officials expect to end next fiscal year with general fund reserves totaling $4.3 million, or 18.6% of operating revenues. This exceeds the minimum level of 16 2/3% required by City Charter, which in May of 2011 was amended to include adoption of GFOA’s Best Practice for Unreserved Fund Balance in the General Fund into the City’s Budget Administration Ordinance. 151
32 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) Property taxes are the City's primary general revenue source (68.2%), followed by unrestricted grants and contributions (29.9%), and investment earnings (1.2%) Moody's expects the City to maintain a moderate debt position given current moderate debt burdens, above average principal payout, and expected tax base growth. More detailed information about the City’s long-term liabilities is presented in Note 9 to the financial statements. 201220112012201120122011General obligationbonds (backed by the City) 3.1$ 3.7$ -$ -$ 3.1$ 3.7$ Tax Increment FinancingDistrict (TIFD) bonds 5.4 5.5 - - 5.4 5.5 Special ImprovementDistrict Debt 2.3 4.4 - - 2.3 4.4 Notes Payable 0.3 0.5 - - 0.3 0.5 Lease Payable 0.2 0.2 - - 0.2 0.2 Wastewater Revenue Bonds(backed by specific fee revenues) - - 23.9 24.0 23.9 24.0 Totals11.2$ 14.3$ 23.9$ 24.0$ 35.1$ 38.3$ Activities Activities TotalsTable 5Outstanding Debt, at Year-end(in Millions)Governmental Business-type ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES The City’s elected and appointed officials considered many factors when setting the fiscal year 2012-2013 budget, tax rates, and fees that will be charged for the business-type activities. Some of these factors includes: 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 that over the year, the index for all items less food and energy increased 2.0 percent. This continuing trend could adversely impact the cost of future 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 Finance Director, Controller, or Assistant Controller at the City of Bozeman, 121 North Rouse Avenue, Bozeman, Montana 59715. 152
B. BASIC FINANCIAL STATEMENTS153
GOVERNMENT - WIDE FINANCIAL STATEMENTS 154
33Governmental Activities Business-type Activities TotalASSETSCash and investments 23,462,654$ 11,603,149$ 35,065,803$ Restricted cash and investments 11,987,765 12,188,192 24,175,957 Accrued interest 33,839 67,641 101,480 Receivables, net 9,596,552 1,238,114 10,834,666 Notes receivable 324,754 20,489 345,243 Prepaid expenses 427,125 - 427,125 Deferred charges 167,996 - 167,996 Capital assetsNon-depreciable land 10,483,143 4,934,574 15,417,717 Other capital assets, net of depreciation 89,348,365 211,586,889 300,935,254 Total capital assets 99,831,508 216,521,463 316,352,971 Total assets 145,832,193$ 241,639,048$ 387,471,241$ LIABILITIESAccounts payable and accrued expenses 6,191,286$ 6,124,694$ 12,315,980$ Unearned revenue 641,086 - 641,086 Current portion of long-term liabilitiesCompensated absences payable 1,135,700 330,500 1,466,200 Capital leases 61,395 - 61,395 Closure and post-closure care costs - 100,000 100,000 Litigation settlement payable 666,666 - 666,666 Bonds and notes 867,466 1,113,577 1,981,043 Long-term liabilities, due in more than one yearCompensated absences 356,025 445,728 801,753 Capital leases 142,465 - 142,465 Closure and post-closure care costs - 1,463,356 1,463,356 Pollution remediation obligations 16,874 2,373,873 2,390,747 Other post-employment health benefits - implicit rate subsidy 1,391,806 22,990 1,414,796 Litigation settlement payable 1,333,334 - 1,333,334 Bonds and notes 10,259,745 22,922,427 33,182,172 Total liabilities 23,063,848$ 34,897,145$ 57,960,993$ NET ASSETSInvested in capital assets, net of related debt 88,500,437$ 192,485,459$ 280,985,896$ Restricted:Restricted for water and waste water impact capital projects - 9,502,199 9,502,199 Restricted for debt service 4,133,315 1,805,418 5,938,733 Restricted for parking capital projects - 139,269 139,269 Restricted for general government 872,617 - 872,617 Restricted for public safety 1,373,688 - 1,373,688 Restricted for public service 10,216,234 - 10,216,234 Restricted for public welfare 3,088,027 - 3,088,027 Nonspendable 1,113,484 - 1,113,484 Unrestricted 13,470,543 2,809,558 16,280,101 Total net assets 122,768,345$ 206,741,903$ 329,510,248$ CITY OF BOZEMAN, MONTANASTATEMENT OF NET ASSETSJune 30, 2012The Notes to Financial Statements are an integral part of the financial statements.155
34Net (Expense) Revenue and Changes in Net AssetsOperating CapitalCharges for Grants and Grants and Governmental Business-typeExpenses Services Contributions Contributions Activities Activities TotalPrimary Government:Governmental activities:General government 8,706,665$ 1,949,145$ -$ -$ (6,757,520)$ (6,757,520)$ Public safety 13,215,680 2,638,811 292,245 75,957 (10,208,667) (10,208,667) Public service 8,174,461 4,983,420 - 559,801 (2,631,240) (2,631,240) Public welfare 7,249,008 1,102,896 274,341 - (5,871,771) (5,871,771) Interest and fiscal fees 636,478 - - - (636,478) (636,478) Total governmental activities 37,982,293 10,674,272 566,586 635,758 (26,105,677) (26,105,677) Business-type activities:Water 11,674,222 7,921,483 - 565,975 (3,186,764)$ (3,186,764) Waste water 10,203,165 7,488,473 - - (2,714,692) (2,714,692) Solid waste 2,584,899 2,570,644 - - (14,255) (14,255) 990,229 385,056 - 163 (605,010) (605,010) Total business-type activities 25,452,515 18,365,656 - 566,138 (6,520,721) (6,520,721) Total primary government 63,434,808$ 29,039,928$ 566,586$ 1,201,896$ (26,105,677) (6,520,721) (32,626,398) General revenues:Property taxes 15,716,055 - 15,716,055 Unrestricted grants and contributions 6,898,717 2,115 6,900,832 Investment earnings 283,090 - 283,090 Miscellaneous 155,484 - 155,484 Sale of capital assets 2,326 - 2,326 Transfers (37,136) 37,136 - Total general revenues and transfers 23,018,536 39,251 23,057,787 Change in net assets (3,087,141) (6,481,470) (9,568,611) Net assets, beginning of the year 125,855,486 213,223,373 339,078,859 Net assets, end of the year 122,768,345$ 206,741,903$ 329,510,248$ ParkingCITY OF BOZEMAN, MONTANASTATEMENT OF ACTIVITIESYear Ended June 30, 2012Functions/ProgramsPrimary GovernmentProgram RevenuesThe Notes to Financial Statements are an integral part of the financial statements.156
FUND FINANCIAL STATEMENTS 157
GOVERNMENTAL FUND FINANCIAL STATEMENTS 158
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 and Fire Impact Fees Special Revenue Fund – this fund accounts for the collection and expenditures associated with the fire and street impact fees. Street Maintenance – Accounts for special assessment revenues levied, received, and expended for street maintenance provided to specific property owners. Building Inspection – This fund was established to account for all activity of enforcing the building regulations adopted by the City. It includes all the money and staff associated with executing any aspect of the code enforcement program. Section 50-60-101 MCA established the code enforcement program requirement. SID Sinking Debt Service Fund – this fund accounts for the accumulation of resources and payment of special assessment bond principal and interest related to general improvement, sidewalk, and curb construction projects. 159
35GOVERNMENTAL FUNDSStreet and Fire Street Building SID Other TotalGeneral Impact Fees Maintenance Inspection Sinking Governmental GovernmentalFund Special Revenue Special Revenue Special Revenue Debt Service Funds FundsASSETSCash and investments 6,888,488$ -$ 1,155,669$ 1,016,749$ 787,746$ 12,841,432$ 22,690,084$ Receivables:Property taxes 1,178,339 - - - - 315,670 1,494,009 Accrued interest 10,750 11,373 - 1,908 - 9,808 33,839 Customers, net 1,908,113 - 450 518 - 718 1,909,799 Special assessments 5,315 - 295,225 - 4,638,676 104,854 5,044,070 Other governments 187,236 - - - - 240,885 428,121 Others - - - 706,198 706,198 Prepaid expenditures - - - - - 427,125 427,125 Due from other City funds 461,553 - - - - - 461,553 Notes receivable - - - - - 324,754 324,754 Restricted cash and investments - 7,934,229 59 - - 4,053,477 11,987,765 Total assets 10,639,794$ 7,945,602$ 1,451,403$ 1,019,175$ 5,426,422$ 19,024,921$ 45,507,317$ (continued)CITY OF BOZEMAN, MONTANABALANCE SHEETJune 30, 2012The Notes to Financial Statements are an integral part of the financial statements.160
36CITY OF BOZEMAN, MONTANABALANCE SHEETGOVERNMENTAL FUNDS (CONTINUED)June 30, 2012Street and Fire Street Building SID Other TotalGeneral Impact Fees Maintenance Inspection Sinking Governmental GovernmentalFund Special Revenue Special Revenue Special Revenue Debt Service Funds FundsLIABILITIES AND FUND BALANCESLiabilities:Accounts payable 975,322$ 26,457$ 247,311$ 4,915$ 27,942$ 4,527,284$ 5,809,231$ Accrued employee benefits 220,832 - 14,608 8,775 - 16,576 260,791 Deferred revenue 2,081,527 - 245,211 - 4,594,915 439,816 7,361,469 Escheat property payable 35,058 - - - - 42,667 77,725 Due to other City funds - - - - - 461,553 461,553 Total liabilities 3,312,739 26,457 507,130 13,690 4,622,857 5,487,896 13,970,769 Fund balances:Nonspendable - - - - - 1,113,484 1,113,484 Restricted - 7,919,145 944,273 1,005,485 803,565 9,011,413 19,683,881 Committed - - - - - 3,463,714 3,463,714 Assigned 7,062,964 - - - - - 7,062,964 Unassigned 264,091 - - - - (51,586) 212,505 Total fund balances 7,327,055 7,919,145 944,273 1,005,485 803,565 13,537,025 31,536,548 Total liabilities andfund balances 10,639,794$ 7,945,602$ 1,451,403$ 1,019,175$ 5,426,422$ 19,024,921$ 45,507,317$ The Notes to Financial Statements are an integral part of the financial statements.161
37CITY OF BOZEMAN, MONTANARECONCILIATION OF THE BALANCE SHEETTO THE STATEMENT OF NET ASSETS - GOVERNMENTAL FUNDSAs of June 30, 2012Fund balances - total governmental funds31,536,548$ Amounts reported for governmental activities in the statement of net assets are different because:Capital assets used in governmental activities are not financial resources and therefore are not reportedin the governmental funds.Governmental capital assets185,768,517$ Less: accumulated depreciation(85,937,009) 99,831,508 Internal service funds are used by management to charge the costs of certain activities to individualfunds.The assets and liabilities of the internal service funds that are reported in thegovernmental activities:Net assets2,009,537 Less: capital assets included in governmental activities (1,594,061) Plus: accumulated depreciation included in governmental activities 294,766 Plus: other post-employment benefits included in governmental activities 21,093 Plus: compensated absences included in governmental activities 12,051 743,386 Deferred revenue in the governmental funds are reported on the full accrual method in the government-wide financial statements.6,957,070 Bond issuance costs are expensed in the governmental funds. They are deferred charges for thegovernment-wide financial statements and amortized over the life of the issuance.Bond issuance costs248,482 Less: amortization(80,486) 167,996 Bond premiums are other financing source revenue in the governmental funds. They are a liabilityfor the government-wide financial statements and amortized over the life of the issuance.Bond premium(102,728) Less: amortization1,744 (100,984) Impact fee credits do not affect current financial resources and therefore are not reported in thegovernmental funds.(236,687) Capital lease obligations not recorded in the governmental funds are reported in the entity-wide (203,860) statements.Long-term liabilities, are not due and payable in the current period and therefore are not reportedin the governmental funds.Bonds and notes payable(11,026,227) Pollution remediation obligations(16,874) Post-employment health benefits(1,391,806) Legal settlement(2,000,000) Compensated absences(1,491,725) (15,926,632) Net assets of governmental activities122,768,345$ The Notes to Financial Statements are an integral part of the financial statements.162
38Street and FireStreet BuildingSIDOther TotalImpact FeesMaintenance InspectionSinkingGovernmental GovernmentalGeneralSpecial RevenueSpecial Revenue Special Revenue Debt ServiceFunds FundsREVENUESTaxes 11,535,471$ -$ -$ -$ -$ 4,521,847$ 16,057,318$ Special assessments 9,257 - 73,096 - 858,699 956,955 1,898,007 Licenses and permits 294,411 - 4,750 915,544 - - 1,214,705 Intergovernmental 6,139,548 - 974 9,063 - 1,548,052 7,697,637 Charges for services 2,166,750 1,335,965 2,692,020 983 - 695,876 6,891,594 Fines and forfeitures 1,241,798 - - - - 122,819 1,364,617 Interest on investments 55,104 63,432 7,316 10,373 22,356 122,658 281,239 Loan repayment - - - - - 306,385 306,385 Other 25,425 - 2,275 30 - 127,754 155,484 Total revenues 21,467,764 1,399,397 2,780,431 935,993 881,055 8,402,346 35,866,986 EXPENDITURESCurrentGeneral government 5,529,823 - - - - 736,743 6,266,566 Public safety 11,180,578 36,978 - 787,901 - 507,813 12,513,270 Public service 125,634 69,055 1,993,081 - - 550,296 2,738,066 Public welfare 4,292,126 - - - - 1,891,947 6,184,073 Capital outlay 771,296 1,244,166 460,687 - - 1,405,239 3,881,388 Debt servicePrincipal payments 202,979 - 195,685 - 2,082,000 755,000 3,235,664 Interest and fiscal fees 9,792 - 9,488 - 192,320 454,482 666,082 Total expenditures 22,112,228 1,350,199 2,658,941 787,901 2,274,320 6,301,520 35,485,109 Revenues over (under) expenditures (644,464) 49,198 121,490 148,092 (1,393,265) 2,100,826 381,877 OTHER FINANCING SOURCES (USES)Transfers in 1,952,844 - 48,055 42,411 - 1,439,240 3,482,550 Transfers out (878,575) (179,400) (18,440) - - (2,744,595) (3,821,010) Long-term debt issued - - 185,530 - - 3,172,268 3,357,798 Payments to refunded bond escrow agent - - - - - (3,120,000) (3,120,000) Sale of capital assets - - 7,589 - - 51,615 59,204 Total other financing sources (uses) 1,074,269 (179,400) 222,734 42,411 - (1,201,472) (41,458) Net change in fund balances 429,805 (130,202) 344,224 190,503 (1,393,265) 899,354 340,419 FUND BALANCE, beginning of year 6,897,250 8,049,347 600,049 814,982 2,196,830 12,637,671 31,196,129 FUND BALANCE, end of year 7,327,055$ 7,919,145$ 944,273$ 1,005,485$ 803,565$ 13,537,025$ 31,536,548$ CITY OF BOZEMAN, MONTANASTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESGOVERNMENTAL FUNDSFor the Year Ended June 30, 2012The Notes to Financial Statements are an integral part of the financial statements.163
39CITY OF BOZEMAN, MONTANARECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES - GOVERNMENTAL FUNDSYear Ended June 30, 2012Net change in fund balances - total governmental funds340,419$ Amounts reported for governmental activitiesin the statement of activities are different becauseGovernmental funds report capital outlays as expenditures. In the statement of activities, the cost othese assets is depreciated over the assets' useful livesExpenditures for capital assets3,881,388$ Capital assets transferred to enterprise funds(2,088) Less: current year depreciation(7,631,745) (3,752,445) Governmental funds report asset disposals as sale of fixed assets for the cash received. In the statemenof activities, those gains and losses must be adjusted by the assets basis, net of any depreciation(54,790) Bond proceeds provide current financial resources in the governmental funds, but issuing debt increaselong-term liabilities in the statement of net assets. Repayment of principal is an expenditure in thgovernmental funds, but this repayment reduces long-term liabilities in the statement of activitiesAmortization of bond issuance costs(11,313) Payments for new bond issuance costs29,168 Premium on bond issuance(92,268) Amortization of bond premium436 Proceeds of long term debt(3,080,000) Principal payments on bonds and notes6,159,978 Principal payments on capital leases195,686 3,201,687 Some capital additions were financed through capital leases. In governmental funds, a capital leasearrangement is considered a source of financing, but in the statement of net assets, the lease obligationis reported as a liability.(185,530) Deferred revenue in the governmental funds are reported on the full accrual method in the governmentwide financial statements.Property taxes(341,263) Notes receivable(306,385) Special assessments(706,813) Fines 12,161 (1,342,300) Governmental funds do not report a liability for compensated absences. The change in the liability is current period expense.(59,477) Governmental funds do not report a liability for other post-employment health benefits(98,138) Governmental funds do not recognize a liability for long-term legal settlement(2,000,000) Governmental funds do not report an expenditure for making loans35,981 Governmental funds do not report impact fee credits. The change in these credits during the year archarged to the statement of activities.68,512 Governmental funds do not report donated assets which are reported as assets and revenue in thestatements of activities and net assets.392,000 Internal service funds are used by management to charge the costs of certain activities to individual fundsThe net revenue (expense) of the internal service funds is reported in the governmental activitiesNet revenue 277,572 Current year depreciation expense included in governmental activitie 79,193 Change in post-employment benefits included in governmental activitie 10,978 Change in compensated absences included in governmental activities(803) 366,940 Change in net assets of governmental activities(3,087,141)$ The Notes to Financial Statements are an integral part of the financial statements.164
PROPRIETARY FUND FINANCIAL STATEMENTS165
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. 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 service operations. Parking Fund – Accounts for the City’s parking garage and services. 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. 166
40GovernmentalActivitiesWaste Solid Parking InternalWater Fund Water Fund Waste Fund Fund Total Service FundsASSETS Current assetsCash and investments 7,371,463$ 1,496,429$ 2,727,673$ 7,584$ 11,603,149$ 772,570$ ReceivablesAccrued interest 40,381 23,068 4,192 - 67,641 - Customers, net 492,179 493,422 221,557 28,475 1,235,633 14,355 Special assessments 658 546 1,277 - 2,481 - Total current assets 7,904,681 2,013,465 2,954,699 36,059 12,908,904 786,925 Non current assetsOther assetsNotes receivable - - - 20,489 20,489 - Restricted cash and investments 10,143,507 1,905,416 - 139,269 12,188,192 - Total other assets 10,143,507 1,905,416 - 159,758 12,208,681 - Property, plant and equipment Nondepreciable:Land 162,518 754,043 3,714,577 303,436 4,934,574 - Depreciable:Water rights 2,065,142 - - - 2,065,142 - Buildings 16,021,999 58,684,997 868,302 11,742,190 87,317,488 - Other structures and improvements 14,679,273 14,745,401 2,155,300 - 31,579,974 1,388,583 Machinery and equipment 1,059,520 2,165,911 2,620,020 98,918 5,944,369 135,166 Vehicles 404,070 682,283 529,231 59,812 1,675,396 70,312 Infrastructure 154,546,544 96,969,800 78,531 - 251,594,875 - Accumulated depreciation and amortization (97,245,512) (63,687,604) (5,221,698) (2,435,541) (168,590,355) (294,766) Net property, plant and equipment 91,693,554 110,314,831 4,744,263 9,768,815 216,521,463 1,299,295 Total non current assets 101,837,061 112,220,247 4,744,263 9,928,573 228,730,144 1,299,295 Total assets 109,741,742$ 114,233,712$ 7,698,962$ 9,964,632$ 241,639,048$ 2,086,220$ Business-type ActivitiesEnterprise FundsCITY OF BOZEMAN, MONTANASTATEMENT OF NET ASSETSPROPRIETARY FUNDSJune 30, 2012The Notes to Financial Statements are an integral part of the financial statements. (continued)167
41GovernmentalActivitiesWaste Solid Parking InternalWater Fund Water Fund Waste Fund Fund Total Service FundsLIABILITIESCurrent liabilities:Accounts payable and accrued expenses 4,143,719$ 1,866,895$ 93,120$ 20,960$ 6,124,694$ 43,539$ Compensated absences payable 147,000 98,000 72,000 13,500 330,500 12,051 Closure and post-closure care costs, current portion - - 100,000 - 100,000 - Bonds, notes, and loans payable 182,577 931,000 - - 1,113,577 - Total current liabilities 4,473,296 2,895,895 265,120 34,460 7,668,771 55,590 Noncurrent liabilitiesClosure and post-closure care costs - - 1,463,356 - 1,463,356 - Revenue bonds due after one year - 22,922,427 - - 22,922,427 - Compensated absences payable 198,013 133,146 97,902 16,667 445,728 - Other post-employment health benefits - implicit rate subsidy 9,951 6,176 5,147 1,716 22,990 21,093 Solvent site remediation liability - 2,373,873 - - 2,373,873 - Total noncurrent liabilities 207,964 25,435,622 1,566,405 18,383 27,228,374 21,093 Total liabilities 4,681,260 28,331,517 1,831,525 52,843 34,897,145 76,683 NET ASSETSInvested in capital assets, net of related debt 91,510,977 86,461,404 4,744,263 9,768,815 192,485,459 1,299,295 Restricted for impact capital projects 9,502,199 - - - 9,502,199 - Restricted for parking capital projects - - - 139,269 139,269 - Restricted for debt service 25,135 1,780,283 - - 1,805,418 - Unrestricted 4,022,171 (2,339,492) 1,123,174 3,705 2,809,558 710,242 Total net assets 105,060,482 85,902,195 5,867,437 9,911,789 206,741,903 2,009,537 Total liabilities and net assets 109,741,742$ 114,233,712$ 7,698,962$ 9,964,632$ 241,639,048$ 2,086,220$ Enterprise FundsBusiness-type ActivitiesCITY OF BOZEMAN, MONTANASTATEMENT OF NET ASSETS (CONTINUED)PROPRIETARY FUNDSJune 30, 2012The Notes to Financial Statements are an integral part of the financial statements.168
42GovernmentalActivitiesWaste Solid Parking InternalWater Fund Water Fund Waste Fund Fund Totals Service FundsOPERATING REVENUES Charges for services 6,814,993$ 6,385,403$ 2,515,857$ 363,991$ 16,080,244$ 4,447,502$ OPERATING EXPENSESSalaries and benefits 1,992,966 1,626,708 1,043,872 199,610 4,863,156 267,252 Materials and supplies 615,448 239,096 258,549 12,684 1,125,777 377,237 Repairs and maintenance 74,798 190,101 132,430 10,452 407,781 2,611 Utilities 153,111 472,271 369,822 32,065 1,027,269 4,961 Administrative charges 698,738 521,923 249,549 52,465 1,522,675 38,344 Insurance claims - - - - - 3,628,512 Other expenses 528,468 734,321 231,296 84,299 1,578,384 85,974 Depreciation and amortization 7,604,289 5,560,904 299,381 598,654 14,063,228 79,193 Total operating expenses 11,667,818 9,345,324 2,584,899 990,229 24,588,270 4,484,084 Operating income (loss) (4,852,825) (2,959,921) (69,042) (626,238) (8,508,026) (36,582) NONOPERATING REVENUES (EXPENSES)Interest income 170,306 35,670 24,422 206 230,604 1,851 Interest expense (6,404) (857,841) - - (864,245) (446) Other income 71,693 80,366 31,339 20,859 204,257 11,425 Intergovernmental income 1,571 1,321 794 163 3,849 - Impact fees 981,096 986,905 - - 1,968,001 - Gain (loss) on disposal of assets (116,605) 129 (974) - (117,450) - Total nonoperating revenues (expenses) 1,101,657 246,550 55,581 21,228 1,425,016 12,830 Income (loss) before contributions and transfers (3,751,168) (2,713,371) (13,461) (605,010) (7,083,010) (23,752) Contributions of infrastructure - developers 564,404 - - - 564,404 - Transfers in 14,942 11,214 282 10,698 37,136 301,324 Transfers out - - - - - - Change in net assets (3,171,822) (2,702,157) (13,179) (594,312) (6,481,470) 277,572 NET ASSETS, beginning of year 108,232,304 88,604,352 5,880,616 10,506,101 213,223,373 1,731,965 NET ASSETS, end of year 105,060,482$ 85,902,195$ 5,867,437$ 9,911,789$ 206,741,903$ 2,009,537$ Enterprise FundsBusiness-type ActivitiesCITY OF BOZEMAN, MONTANASTATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - PROPRIETARY FUNDSYear Ended June 30, 2012The Notes to Financial Statements are an integral part of the financial statements.169
43GovernmentalActivitiesWaste Solid Parking InternalWater Fund Water Fund Waste Fund Fund Total Service FundsCash Flows from Operating ActivitiesReceipts from customers 6,774,191$ 6,391,859$ 2,512,502$ 373,778$ 16,052,330$ 4,447,507$ Receipts from others 71,693 80,366 31,339 18,771 202,169 11,425 Operating loans from other funds - - - - - 301,324 Payments to suppliers 2,559,359 (861,831) (1,130,653) (145,283) 421,592 (451,443) Payments to employees (1,966,227) (1,608,976) (1,029,313) (195,349) (4,799,865) (3,885,589) Payments to internal service funds and administrative fees (698,738) (521,923) (249,549) (52,465) (1,522,675) (38,344) Net Cash Flows From Operating Activities 6,740,278 3,479,495 134,326 (548) 10,353,551 384,880 Cash Flows from Noncapital Financing Activities:Transfers in 14,942 11,214 282 10,698 37,136 - Transfers out- - - - - - Net Cash Flows from Noncapital Financing Activities 14,942 11,214 282 10,698 37,136 - Cash Flows from Capital and Related Financing ActivitiesAcquisition of capital assets (10,491,602) (7,709,995) (63,077) - (18,264,674) (72,966) Principal paid on bonds, interfund loans, loans and leases (159,000) (883,000) - - (1,042,000) - Receipts from grants and intergovernmental sources 1,571 1,321 794 163 3,849 - Interest paid on bonds, interfund loans, loans and leases (6,404) (857,841) - - (864,245) (446) Proceeds from issuance of long-term debt 341,577 719,347 - - 1,060,924 - Impact fees received 981,096 986,905 - - 1,968,001 - Proceeds from sale of property, plant and equipment 122,149 129 1,462 - 123,740 - Net Cash Flows from Capital and Related Financing Activities (9,210,613) (7,743,134) (60,821) 163 (17,014,405) (73,412) Cash Flows from Investing ActivitiesCollections on notes - - - 47,393 47,393 - Interest on investments 181,246 49,907 26,624 206 257,983 1,851 Net Cash Flows from Investing Activities 181,246 49,907 26,624 47,599 305,376 1,851 Net Increase (Decrease) in Cash and investments (2,274,147) (4,202,518) 100,411 57,912 (6,318,342) 313,319 Cash and investments, beginning of year 19,789,117 7,604,363 2,627,262 88,941 30,109,683 459,251 Cash and investments, end of year 17,514,970$ 3,401,845$ 2,727,673$ 146,853$ 23,791,341$ 772,570$ Classified as:Cash and investments 7,371,463$ 1,496,429$ 2,727,673$ 7,584$ 11,603,149$ 772,570$ Restricted cash and investments 10,143,507 1,905,416 - 139,269 12,188,192 - Totals 17,514,970$ 3,401,845$ 2,727,673$ 146,853$ 23,791,341$ 772,570$ Noncash transactions: donated infrastructure 564,404$ -$ -$ -$ 564,404$ CITY OF BOZEMAN, MONTANASTATEMENT OF CASH FLOWS - PROPRIETARY FUNDSYear Ended June 30, 2012Enterprise FundsBusiness-type ActivitiesThe Notes to Financial Statements are an integral part of the financial statements.170
44GovernmentalActivitiesWaste Solid Parking InternalWater Fund Water Fund Waste Fund Fund Total Service FundsOperating income (loss) (4,852,825)$ (2,959,921)$ (69,042)$ (626,238)$ (8,508,026)$ (36,582)$ Adjustments to reconcile operating income (loss)to net cash provided (used) by operating activitiesDepreciation and amortization 7,604,289 5,560,904 299,381 598,654 14,063,228 79,193 Change in estimated closureand post-closure care costs - - (97,521) - (97,521) - Change in solvent site remediation obligation- 30,829 - - 30,829 - Other income 71,693 80,366 31,339 18,771 202,169 11,425 Change in Assets and Liabilities: (Increase) Decrease in:Accounts receivable (40,802) 6,456 (3,355) 9,787 (27,914) 5 Other governments receivable - - - - - - Other City funds - - - - - - Increase (Decrease) in:Accounts payable 3,931,184 743,129 (41,035) (5,783) 4,627,495 19,340 Accrued employee benefits payable 26,739 17,732 14,559 4,261 63,291 10,175 Total adjustments 11,593,103 6,439,416 203,368 625,690 18,861,577 421,462 Net cash provided (used) byoperating activities 6,740,278$ 3,479,495$ 134,326$ (548)$ 10,353,551$ 384,880$ Enterprise FundsBusiness-type ActivitiesCITY OF BOZEMAN, MONTANASTATEMENT OF CASH FLOWS - PROPRIETARY FUNDS (CONTINUED)Year Ended June 30, 2012The Notes to Financial Statements are an integral part of the financial statements.171
FIDUCIARY FUND FINANCIAL STATEMENTS 172
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. Montana Arts Council – Accounts for pass-through grant monies given for use by the Montana Arts Council for various programs. Municipal Court – Accounts for monies held for appearance bonds and restitution. 173
45AgencyFundsASSETSCash and cash equivalents 111,575$ Customer receivables 560 Total assets 112,135$ LIABILITIESAccounts payable 112,135$ Total liabilities 112,135$ CITY OF BOZEMAN, MONTANASTATEMENT OF FIDUCIARY NET ASSETSFIDUCIARY FUNDSJune 30, 2012The Notes to Financial Statements are an integral part of the financial statements.174
NOTES TO FINANCIAL STATEMENTS 175
46 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2012 NOTE 1. SUMMARY OF 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 November 22, 1982. Under the charter, the City is governed by a mayor and commission members who comprise the City Commission. The day-to-day affairs of the City are conducted under the supervision of the City Manager, who is appointed by and serves at the pleasure of a majority of the City Commission. The accompanying financial statements of the City have been prepared in conformity with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB), the accepted standard-setting body for establishing governmental accounting and financial reporting principles. In June 1999 the GASB issued Statement 34 Basic Financial Statements-and Management’s Discussion and Analysis-for State and Local Governments (GASB 34). This Statement establishes new financial reporting requirements for state and local governments throughout the United States. It requires new information and restructures much of the information that governments have presented in the past. Comparability with reports issued in prior years is affected. The City adopted the provisions of GASB 34 for its fiscal year ended June 30, 2002. With the implementation of GASB 34, the City has prepared required supplementary information titled Management’s Discussion and Analysis which precedes the basic financial statements. Other GASB statements are required to be implemented in conjunction with GASB Statement 34. Therefore, the City implemented the following GASB statements in the year ended June 30, 2002: Statement 33 Accounting and Financial Reporting for Nonexchange Transactions, Statement 36 Recipient Reporting for Certain Shared Nonexchange Revenues, Statement 37 Basic Financials Statements-and Management’s Discussion and Analysis-for State and Local Governments: Omnibus, and Statement 38 Certain Financial Statement Note Disclosures. The City adopted the provisions of GASB Statement 45 Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions for its fiscal year ended June 30, 2009. In addition to pensions, many state and local governmental employers provide other postemployment benefits (OPEB) as part of the total compensation offered to attract and retain the services of qualified employees. This Statement establishes standards for the measurement, recognition, and display of OPEB expense/expenditures and related liabilities (assets), note disclosures, and, if applicable, required supplementary information (RSI) in the financial reports of state and local governmental employers. The City adopted the provisions of GASB Statement 49 Accounting and Financial Reporting for Pollution Remediation Obligations for its fiscal year ended June 30, 2009. This Statement will enhance comparability of financial statements among governments by requiring all governments to account for pollution remediation obligations in the same manner, including required reporting of pollution remediation obligations that previously may not have been reported. The GASB has issued Statement 51 Accounting and Financial Reporting for Intangible Assets effective for periods beginning after June 15, 2009. This Statement establishes accounting and financial reporting requirements for intangible assets including easements, water rights, timber rights, patents, trademarks, and computer software. The GASB has issued Statement No 53 Accounting and Financial Reporting for Derivative Instruments effective for periods beginning after June 15, 2009. This Statement establishes accounting and financial reporting requirements for derivative instruments entered into by state and local governments. This statement did not have a material impact on the City’s financial statements. 176
47 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) For the year ended June 30, 2011, the City implemented the provisions GASB Statement 54 Fund Balance Reporting and Governmental Fund Type Definitions. The objective of Statement 54 is to enhance the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying the existing governmental fund type definitions. This Statement establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is found to observe constraints imposed upon the use of resources reported in governmental funds. The clarifications of the governmental fund type definitions should reduce uncertainty about which resources can or should be reported in the respective fund types. These new classifications include nonspendable and spendable, which is further reported as restricted, committed, assigned and unassigned. The new fund balance classifications and the minimum fund balance disclosure provided in Statement 54 are discussed in further detail later in Note 1. 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, 2012, and for the year then ended. The more significant accounting policies of the City are described below. 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 39, Determining Whether Certain Organizations are Component Units, an amendment to Statement 14. 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 14 and Statement 39, 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. Blended Component Units The following have been presented as blended component units since their governing bodies are substantially the same as the primary government’s government body and because their services are provided entirely or almost entirely to the primary government. 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. 177
48 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Reporting Entity (Continued) 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. 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 Assets 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 Assets. The City has retroactively included infrastructure in its assets. The Statement of Activities presents changes in net assets. 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 Assets 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. In addition, the City applies all applicable FASB Statements and Interpretations issued after November 30, 1989, except those that conflict with or contradict GASB pronouncements to its business-type activities. 178
49 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 1. SUMMARY OF 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 assets and changes in net assets 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 assets. 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 Assets, a Statement of Revenues, Expenses and Changes in Net Assets, and a Statement of Cash Flows for each major proprietary fund. The City has no nonmajor proprietary funds. 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 Assets. The Statement of Revenues, Expenses and Changes in Net Assets present increases (revenues) and decreases (expenses) in total net assets. 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. 179
50 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Accounting/Measurement Focus (Continued) Fiduciary Fund Financial Statements Fiduciary Fund Financial Statements include a Statement of Net Assets. 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: Montana Arts Council – Accounts for pass-through monies received from the State of Montana to fund local chapters of cultural enhancement activities such as the Bozeman Symphony Orchestra, Montana Ballet, Mandolin Society, Intermountain Opera Association, and the Emerson Cultural Center. Municipal Court – Accounts for monies held for appearance bonds and restitution related to criminal arrests and reimbursement for damage caused. 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 claims incurred by City employees and retirees which are in-turn paid to the City’s insurance program coordinator. 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 works, and general government. Street and Fire Impact Fees Special Revenue Fund – on January 22, 1996, the City Commission adopted fire, street, water, and waste impact fees in Ordinance Number 1414. This fund accounts for the collection and expenditures associated with the fire and street impact fees. Street Maintenance Special Revenue Fund – Accounts for special assessment revenues levied, received, and expended for street maintenance provided to specific property owners. Building Inspection Special Revenue Fund – This fund was established to account for all activity of enforcing the building regulations adopted by the City. It includes all the money and staff associated with executing any aspect of the code enforcement program. Section 50-60-101 MCA established the code enforcement program requirement. 180
51 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Funds (Continued) Governmental Funds (continued) SID Sinking Debt Service Fund – Accounts for the accumulation of resources and payment of special assessment bond principal and interest related to general improvement, sidewalk, and curb construction projects. 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 service operations. Parking Fund - Accounts for the City's parking garage and services. Use of Restricted/Unrestricted Net Assets When an expense is incurred for purposes for which both restricted and unrestricted net assets are available, the City’s policy is to apply restricted net assets first. Cash and Investments Cash and investments are under the management of the City's Treasurer and consist primarily of 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. For the year ended June 30, 2005, the City implemented a new accounting standard issued by GASB, Statement No. 40, Deposit and Investment Risk Disclosures. Statement No. 40 amends Statement No. 3, Deposits with Financial Institutions, Investments (including Repurchase Agreements), and Reverse Repurchase Agreements. Statement No. 40 revises the existing requirements regarding disclosure regarding credit risk, concentration of credit risk, interest rate risk, and foreign currency risk. 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. 181
52 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. Eliminations and Reclassifications In the process of aggregating data for the Statement of Net Assets 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. Gifts or contributions of capital assets are recorded at fair market value when received. Depreciable capital assets are reported on the Statement of Net Assets, 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 Statement of Activities and is calculated using the straight-line method based on the assets estimated useful life. Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows: Vehicles 5 yearsMachinery and equipment 5 to 30 yearsBuildings 20 to 50 yearsOther structures and improvements 10 to 25 yearsInfrastructure 25 to 50 years In June 1999, GASB issued Statement No. 34 (GASB 34) which requires the inclusion of infrastructure capital assets in local governments’ basic financial statements. According to GASB 34, the City must record infrastructure assets prospectively from 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. The assets to be recorded will include the street system, water purification and distribution system, sewer collection treatment system; park and recreation lands and improvement system, storm water conveyance system, and buildings combined with the site amenities such as parking and landscaped areas; and streets, sidewalks, curbs, and street lights. 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. 182
53 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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 Assets. 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 expenditures 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, but not before the second Monday in August. 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 generally accepted accounting principles. 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 type level. The City Commission may amend the budget during the course of the fiscal year, within each fund type. 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. The City Commission delegated in its annual appropriation resolution, 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 fund group is not exceeded. 183
54 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Budgets (Continued) Spending control is established by the total amount of expenditures budgeted for the fund type, but management may exercise control at budgetary line items. Fund Balance As discussed above in Note 1, the City has implemented Governmental Accounting Standards Board Statement 54. As a result, the classifications for fund balance now used for governmental fund are reported 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. Assignments of fund balance are created by an official who the governing body has delegated the authority to assign amounts to be used for specific purposes. The City Commission and the City Manager individually have the authority to express assignments. In governmental funds other than the general fund, assigned fund balance also represents the remaining amount that is not restricted or committed. Also 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 b e used to fund expenditures and other cash outflows in excess of the expected revenues and other cash inflows in the next fiscal year. 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 184
55 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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%. Net Assets In funds other than governmental, net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt, 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 assets are reported as restricted when there are limitations imposed on their use either through enabling legislation or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. NOTE 2. CASH AND INVESTMENTS At June 30, 2012, the carrying amount of the City's deposits in local banks and investments is $59,353,335 and the bank balance is $59,773,234. Interest bearing account balances are covered by the Federal Depository Insurance Corporation (FDIC) up to $250,000 per bank, per depositor. In additional, all noninterest bearing transaction account balances are fully insured by FDIC coverage. The remaining balances are covered by collateral held by the pledging bank's agent in the City's name. The City’s cash and investments are reported as follows: UnrestrictedRestrictedTotalGovernmental activities 23,462,654$ 11,987,765$ 35,450,419$ Business-type activities 11,603,149 12,188,192 23,791,341 Fiduciary funds 111,575 - 111,575 35,177,378$ 24,175,957$ 59,353,335$ 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. 185
56 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 2. CASH AND INVESTMENTS (Continued) On June 30, 2012, the book value approximated the fair value of the investments, therefore no unrealized gain or loss was recorded for the year. The following table provides information about the interest rate risks associated with the City’s deposits and investments. InvestmentMaturitiesCredit Risk RatingFair ValueU.S. Government bonds Jul 2012 - Jun 2013 S&P AA+ 2,086,688$ U.S. Government bonds Jul 2013 - Jun 2014 S&P AA+ 5,149,759 U.S. Government bonds Jul 2016 - Jun 2017 S&P AA+ 40,500,000 U.S. Bank Municipal Investor Account N/A N/A 6,651,888 Cash with fiscal agent N/A N/A 3,193,081 Demand deposits N/A N/A 1,766,022 Petty cash N/A N/A 5,897 59,353,335$ Credit risk is defined as the risk that an issuer or other counterpart to an investments will not fulfill its obligation. The above credit risk rating indicates the probability that the issuer may default in making timely principal and interest payments. The credit ratings presented in the previous tables are provided by Standard and Poor’s Corporation (S&P). The City’s investment policy is to hold investments to maturity with the contractual understanding that these investments are low risk, locked in to a guaranteed rate of return, 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. NOTE 3. PROPERTY TAX CALENDAR Real property taxes are assessed and collected each fiscal year according to the following property tax calendar: Lien Date December 1 for the 1st installment and June 1 for the 2nd installment Levy Date November 1 Due Dates November 30 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 and November, 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 .83% per month interest. 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. 186
57 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 4. SPECIAL ASSESSMENTS RECEIVABLE/DEFERRED REVENUES 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. Deferred revenues in the General Fund represent outstanding general property taxes at June 30, 2012. Again, these amounts are reported as revenue in the Government-Wide Financial Statements in the period in which they are levied. Deferred revenues 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 revenues in Debt Service Funds represent future assessments to be received to meet the related debt obligation. 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 $382,500, 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, 2012, rent expenditure was $19,125 regarding this lease. NOTE 6. NOTES RECEIVABLE The City had the following loans in funds: Special Revenue Funds:Housing Revolving Loan Fund 26,143$ Economic Development Loan Fund 182,116$ Community Housing Fund 72,499$ Enterprise FundsParking Fund 20,489$ 187
58 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 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 Assets. The assets are reported whereby accumulated depreciation and depreciation expense have been recorded. For the year ended June 30, 2011, depreciation expense on capital assets was charged to the functions and programs as follows: Governmental Activities:General Government 377,676$ Public Safety 653,904 Public Services 5,538,633 Public Welfare 1,061,532 Total depreciation expense - governmental activities 7,631,745$ Business-type Activities:Water 7,604,289$ Waste Water 5,560,904 Solid Waste 299,381 Parking 598,654 Total depreciation expense - business-type activities 14,063,228$ 188
59 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 7. CAPITAL ASSETS (Continued) All capital assets of the City are depreciable with the exception of land. Capital assets activity of the City for the year ended June 30, 2012, consisted of the following: June 30, 2011 Additions Disposals Transfers June 30, 2012Governmental Activities: Non-depreciableLand 10,489,902$ -$ (6,759)$ -$ 10,483,143$ DepreciableBuildings 30,465,462 574,337 (66,476) 59,239 31,032,562 Other structures and improvements 1,230,912 - (20,186) - 1,210,726 Machinery and equipment 9,204,447 319,875 (674,286) 471,930 9,321,966 Property under capital lease 616,504 185,530 - (472,599) 329,435 Vehicles 3,164,520 220,895 (290,686) 18,717 3,113,446 Infrastructure 127,231,522 3,045,717 - - 130,277,239 Total 182,403,269 4,346,354 (1,058,393) 77,287 185,768,517 Accumulated depreciation (79,229,492) (7,631,745) 1,001,515 (77,287) (85,937,009) Total governmental activities 103,173,777$ (3,285,391)$ (56,878)$ -$ 99,831,508$ Business-type Activities: Non-depreciableLand 4,934,794$ -$ (220)$ -$ 4,934,574$ Water rights 2,065,142 - - - 2,065,142 DepreciableBuildings 70,828,197 16,691,717 (202,426) - 87,317,488 Other structures and improvements 31,698,157 471 (118,654) - 31,579,974 Machinery and equipment 6,150,266 166,519 (313,846) (58,570) 5,944,369 Vehicles 1,827,041 48,593 (181,521) (18,717) 1,675,396 Infrastructure 249,985,284 1,609,591 - - 251,594,875 Total 367,488,881 18,516,891 (816,667) (77,287) 385,111,818 Accumulated depreciation (155,290,912) (14,063,228) 686,498 77,287 (168,590,355) Total business-type activities 212,197,969$ 4,453,663$ (130,169)$ -$ 216,521,463$ Total capital assets 315,371,746$ 1,168,272$ (187,047)$ -$ 316,352,971$ 189
60 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 7. CAPITAL ASSETS (Continued) Changes in accumulated depreciation are as follows for the year ended June 30, 2012: June 30, 2011 Additions Disposals Transfers June 30, 2012Governmental Activities:Buildings (10,608,827)$ (1,286,096)$ 66,476$ (22,392)$ (11,850,839)$ Other structures and improvements (961,611) (28,829) 15,268 - (975,172) Machinery and equipment (6,780,724) (823,654) 636,002 (424,662) (7,393,038) Property under capital lease (444,495) (44,723) - 388,484 (100,734) Vehicles (2,878,547) (142,361) 283,769 (18,717) (2,755,856) Infrastructure (57,555,288) (5,306,082) - - (62,861,370) Total governmental activities (79,229,492) (7,631,745) 1,001,515 (77,287) (85,937,009) Business-type Activities:Buildings (8,330,473) (1,134,189) 129,426 - (9,335,236) Other structures and improvements (26,094,995) (537,676) 60,911 - (26,571,760) Machinery and equipment (5,236,047) (411,205) 314,639 58,570 (5,274,043) Vehicles (1,612,611) (122,773) 181,522 18,717 (1,535,145) Infrastructure (114,016,786) (11,857,385) - - (125,874,171) Total business-type activities (155,290,912) (14,063,228) 686,498 77,287 (168,590,355) Total accumulated depreciation (234,520,404)$ (21,694,973)$ 1,688,013$ -$ (254,527,364)$ 190
61 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 8. COMPENSATED ABSENCES The City’s policy relating to compensated absences is described in Note 1. As shown in the table below, the long-term portion of the debt, amounting to $356,025 for governmental activities and $131,059 for business-type activities at June 30, 2012, is expected to be paid in future years from future resources. Historically, compensated absences have been liquidated primarily by the general fund and the proprietary funds. The total amounts outstanding at June 30, 2012, were $1,491,725 for governmental activities and $461,559 for business-type activities. Balance June 30, 2011 Incurred SatisfiedBalance June 30, 2012Compensated absencesGovernmental Activities$ 1,432,248 $ 1,195,166 $ (1,135,689)$ 1,491,725 Business-type Activities 421,257 370,756 (330,454) 461,559 Total compensated absences 1,853,505$ 1,565,922$ (1,466,143)$ 1,953,284$ Due within one yearDue after one year TotalCompensated absencesGovernmental Activities$ 1,135,700 $ 356,025 $ 1,491,725 Business-type Activities 330,500 131,059 461,559 Total compensated absences 1,466,200$ 487,084$ 1,953,284$ 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, 2012: Balance June 30, 2011 Issuances RepaymentsBalance June 30, 2012General obligation bonds$ 3,710,000 $ 3,080,000 $ (3,710,000)$ 3,080,000 Tax increment financing bonds 5,535,000 - (165,000)5,370,000 Special assessment debt 4,351,500 - (2,082,000) 2,269,500 Intercap notes payable 509,705 - (202,978) 306,727 Totals 14,106,205$ 3,080,000$ (6,159,978)$ 11,026,227$ 191
62 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 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 Assets as follows: Current Portion (Due within one year)Long-term Portion (Due after one year)Total Long Term DebtGeneral obligation bonds$ 635,000 $ 2,445,000 $ 3,080,000 Tax increment financing bonds 175,000 5,195,000 5,370,000 Special assessment debt 22,000 2,247,500 2,269,500 Intercap notes payable 35,466 271,261 306,727 867,466$ 10,158,761$ 11,026,227$ The long-term portion on page 31 Statement of Net Assets includes $100,984 unamortized bond premium. General Obligation Bonds - The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds are direct obligations of the City and are backed by the full faith and credit of the City. General obligation bonds currently outstanding are as follows: Interest Rate AmountDue within one yearGeneral Obligation Refunding Bonds, series 2012serial maturities through 2021 2.00% 3,080,000$ 635,000$ The City issued $3,080,000 of General Obligation Refunding Bonds for an advance refunding of $810,000 of General Obligation Bonds – Transportation, Series 2003b, $1,320,000 General Obligation Bonds – Library, Series 2002, and $990,000 of General Obligation Bonds, Series 2003a. The refunding was undertaken to reduce total future debt service payments. The transaction resulted in an economic gain of $370,321 and a reduction of $394,636 in future debt service payments. 192
63 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 9. LONG-TERM DEBT (Continued) Governmental Activities Long Term Debt (Continued) Annual debt service requirements to maturity for general obligation bonds are as follows: Principal Interest TotalYear ending June 30,2013$ 635,000 $ 61,969 $ 696,969 2014 660,000 46,475 706,475 2015 240,000 33,275 273,275 2016 245,000 29,675 274,675 2017 250,000 26,000 276,000 2018-2022 1,050,000 53,000 1,103,000 3,080,000$ 250,394$ 3,330,394$ 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 with additional bonds if and when issued from the tax increment 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 30,2013$ 175,000 $ 250,088 $ 425,088 2014 180,000 243,088 423,088 2015 190,000 235,088 425,088 2016 195,000 228,288 423,288 2017 205,000 220,488 425,488 2018-2022 1,150,000 967,486 2,117,486 2023-2027 1,440,000 676,972 2,116,972 2028-2032 1,835,000 284,334 2,119,334 Thereafter - - - 5,370,000$ 3,105,832$ 8,475,832$ 193
64 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 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 the 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 three notes payable to finance special assessment projects. The following is a schedule of changes in special assessment debt: Balance June 30, 2011 Issuances RepaymentsBalance June 30, 2012Special assessment bonds 3,970,000$ -$ (2,060,000)$ 1,910,000$ Note Payable to Department of Natural Resources and Conservation, #WRF-05067 72,500 - (4,000) 68,500 Note Payable to Department of Natural Resources and Conservation, #SRF-05132 309,000 - (18,000) 291,000 4,351,500$ -$ (2,082,000)$ 2,269,500$ Annual debt service requirements to maturity for special assessment notes payable are as follows: Notes PayableYear ending June 30, PrincipalInterestTotal2013 25,000$ 13,246$ 38,246$ 2014 24,000 12,319 36,319 2015 25,000 11,400 36,400 2016 28,000 10,444 38,444 2017 26,500 9,412 35,912 2018-2022 157,500 30,420 187,920 2023-2027 73,500 3,534 77,034 359,500$ 90,775$ 450,275$ 194
65 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 9. LONG-TERM DEBT (Continued) Governmental Activities Long Term Debt (Continued) Annual debt service requirements to maturity for special assessment bonds are as follows: Year ending June 30, Bonds2013 -$ 2014 - 2015 60,000 2016 60,000 2017 135,000 2018-2022 995,000 2023-2027 660,000 1,910,000$ Substantially all special assessment bonds mature eighteen to twenty years after the date of issuance but are redeemable at the option of the City whenever cash is available in the respective funds for each issue. The City follows the policy of early redemption on these bonds. Accordingly, a schedule of future interest payments through maturity of the bonds is deemed to be not meaningful and has been excluded. The net revenues of the water fund have been pledged as collateral to secure the debt service related to SID 665. This collateral is subordinate to commitments made prior to July 12, 1993 to pledge this collateral as a guarantee of the payment of other debt. In the event that the resources available to service debt related to SID 665 are insufficient, the City shall transfer amounts from the water fund to satisfy this obligation. The District will be under no obligation to reimburse the water fund for any such transfer. At this time, the City does not anticipate the need to make any such transfers. Intercap Loans – The City entered in a loan agreement with the Montana Board of Investments to finance the construction of a new fire station. The intercap loans payable had a balance outstanding at June 30, 2012 as follows: Due within one yearDue after one year TotalNote payable to Montana Board of Investments in uneven semi-annual installments including interest at variable ratesthrough July 2019 35,466$ 271,261$ 306,727$ 195
66 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 9. LONG-TERM DEBT (Continued) Governmental Activities Long Term Debt (Continued) The debt service requirements for the fire station intercap loan at June 30, 2012 are as follows: Principal Interest TotalYear ending June 30,2013 35,466$ 3,480$ 38,946$ 2014 40,312 3,274 43,586 2015 40,819 2,767 43,586 2016 41,332 2,254 43,586 2017 41,852 1,734 43,586 2018-2022 106,946 2,019 108,965 $ 306,727 $ 15,528 $ 322,255 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 outstanding at June 30, 2012 are as follows: Balance June 30, 2011 Issuances RepaymentsBalance June 30, 2012Due in One YearState Revolving Fund - 12247 2011-A $ - $ 341,577 $ (159,000) $ 182,577 182,577$ The revenue bond ordinances specifies that the City shall establish various restricted asset accounts and distribute the net revenues for the water fund to the restricted asset accounts and set user rates at levels which will generate minimum net revenues, as defined. The revenue bond ordinances specify that City management and/or the City Commission shall take corrective actions to bring the City into compliance with the revenue bond ordinances, if necessary, and that bondholders shall have the right to institute proceedings, judicial or otherwise, to enforce the covenants of the revenue bond ordinances. The City is in compliance with applicable covenants as of June 30, 2012. 196
67 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 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 30,2013 182,577$ 4,785$ 187,362$ Water revenue bonds consist of the following as of June 30, 2012: Interest Rate AmountWaste Water Reclamation Facility Revenue Bonds - 12247Series 2011A, serial maturities through 2032 3.75% 182,577$ Water revenue bond debt service requirements to maturity are as follows: Revenue bonds due within one year 182,577$ Waste Water revenue bonds outstanding at June 30, 2012 are as follows: Balance June 30, 2011 Issuances RepaymentsBalance June 30, 2012Due in One YearState Revolving Fund - 10252 2010-B EPA $ 336,000 $ - $ (16,000) $ 320,000 16,000$ State Revolving Fund - 10230 9,011,000 - (345,000) 8,666,000 358,000 State Revolving Fund - 10262 2010-F EPA 788,000 - (29,000) 759,000 30,000 State Revolving Fund - 10251 2010-A ARRA A 390,700 - - 390,700 - State Revolving Fund - 10261 2010-E ARRA A 384,000 - - 384,000 - State Revolving Fund - 11291 859,162 - (43,000) 816,162 44,000 State Revolving Fund - 11292 2010-G 2,820,218 719,347 (137,000) 3,402,565 142,000 State Revolving Fund - 11281 2010-H 9,428,000 (313,000) 9,115,000 341,000 $ 24,017,080 $ 719,347 $ (883,000) $ 23,853,427 $ 931,000 197
68 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 9. LONG-TERM DEBT (Continued) Business-type Activities Long Term Debt (continued) Waste water revenue bond debt service requirements to maturity are as follows: Principal Interest TotalYear ending June 30,2013 931,000$ 874,407$ 1,805,407$ 2014 967,000 839,269 1,806,269 2015 1,003,000 803,311 1,806,311 2016 1,040,000 765,458 1,805,458 2017 1,081,000 726,603 1,807,603 2018-2022 6,024,000 2,994,532 9,018,532 2023-2027 7,195,162 1,774,160 8,969,322 2028-2032 5,612,265 663,363 6,275,628 $ 23,853,427 $ 9,441,103 $ 33,294,530 Waste Water revenue bonds consist of the following as of June 30, 2012: Interest Rate AmountWaste Water State Revolving -10252 ARRA BSeries 2010B, serial maturities through 2030 1.75% 320,000$ Waste Water Reclamation Facility Revenue Bonds - 10230,Series 2010D, serial maturities through 2030 3.75% 8,666,000 Waste Water Reclamation Facility Revenue Bonds - 10262,Series 2010F, serial maturities through 2030 3.75% 759,000 Waste Water Reclamation Facility Revenue Bonds - 10251,Series 2010A, serial maturities through 2030 0.00% 390,700 Waste Water Reclamation Facility Revenue Bonds - 10261,Series 2010E, serial maturities through 2030 0.00% 384,000 Waste Water Reclamation Facility Revenue Bonds - 11291,Series 2010C, serial maturities through 2031 3.75% 816,162 Waste Water Reclamation Facility Revenue Bonds - 11292,Series 2010G, serial maturities through 2031 3.75% 3,402,565 Waste Water Reclamation Facility Revenue Bonds - 11281Series 2010H, serial maturities through 2031 3.75% 9,115,000 Total revenue bonds 23,853,427$ 198
69 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 9. LONG-TERM DEBT (Continued) Business-type Activities Long Term Debt (continued) Waste water revenue bond debt service requirements to maturity are as follows: Shown on the accompanying financial statements as:Revenue bonds due within one year 931,000$ Revenue bonds due after one year 22,922,427 23,853,427$ 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 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, 2012. 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 transfer 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, 2012, the Revenue Bond outstanding had an aggregate principal amount payable of $338,570. 199
70 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 10. CAPITAL LEASE OBLIGATIONS On November 14, 2007, the City entered into a lease for a Volvo Grader. The lease term is four years payable in annual installments of $24,999 with a balloon payment of $100,811 at maturity including interest at 4.715%. The total amount capitalized of $198,078 represents the present value of the future lease payments. The payments of this obligation are being recorded in the street maintenance fund. On May 6, 2008, the City entered into a lease for a Caterpillar Grader. The lease term is four years payable in monthly installments of $1,984 at 5.25%. The total amount capitalized of $86,088 represents the present value of the future lease payments. The payments for this obligation are being recorded in the street maintenance fund. On February 24, 2009, the City entered into a lease for an Elgin Street Sweeper. The lease term is five years payable in annual installments of $27,900 at 6.3%. The total amount capitalized of $143,905 represents the present value of the future lease payments. The payments for this obligation are being recorded in the street maintenance fund. On April 30, 2012, the City entered into a lease for an Elgin Street Sweeper. The lease term is five years payable in annual installments of $33,495 at 3.3%. The total amount capitalized of $185,530 represents the present value of the future lease payments. The payments for this obligation are being recorded in the street maintenance fund. The capital lease balance outstanding for governmental activities at June 30, 2012 is as follows: Balance June 30, 2011 Issuances RepaymentsBalance June 30, 2012Caterpillar Grader $ 17,119 - $ (17,119) $ - Volvo Grader 121,093 - (121,093) - Street Sweeper 75,804 - (23,979) 51,825 2012 Street Sweeper - 185,530 (33,495) 152,035 $ 214,016 185,530 $ (195,686) $ 203,860 200
71 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 10. CAPITAL LEASE OBLIGATIONS (Continued) The following is a schedule, by year, of future minimum lease payments under capital lease, together with the present value of minimum lease payments at June 30, 2012: Governmental ActivitiesYear ending June 30,2013 $ 61,395 2014 61,395 2015 33,495 2016 33,495 2017 33,495 Less amount representing interest (19,415) Present value of future minimum lease payments 203,860$ The property under capital lease for governmental activities and the corresponding accumulated depreciation at June 30, 2012, is as follows: Governmental ActvitiesMachinery and equipment 329,435$ Less: accumulated depreciation (100,734) 228,701$ 201
72 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 11. CLASSIFICATION OF NET ASSETS In the Government-Wide Financial Statements, net assets are classified in the following categories: Invested in Capital Assets, Net of Related Debt – This category groups all capital assets, including infrastructure in future years, into one component of net assets. 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 Assets – 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 assets are presented restricted bymajor purpose. Unrestricted Net Assets – This category represents the net assets of the City which 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. NOTE 12. DEFICIT FUND BALANCES At June 30, 2012, the following funds had deficit fund balances: Capital Projects Fund (51,386)$ The deficit balances do not represent any type of legal violation, and it is the City management's opinion that the deficits will be eliminated by additional grant funding, collection of long-term receivables, or transfers from other funds. 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 Governmental Accounting Standards Board Statements No. 32, the City has removed the balances related to the deferred compensation plan as of June 30, 1998, as these amounts represent neither assets nor liabilities to the City, and the plan is administered by an independent third party. 202
73 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 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 2012 and 2011 total payroll and covered payroll for all retirement plans were $17,417,713 and $17,419,875, respectively. Financial information for all three plans is reported in the Public Employees' Retirement Board's published Comprehensive Annual Financial Report for the fiscal year end. It is available from the PERD at 100 North Park Avenue, Suite 220, P.O. Box 200131, Helena, MT 59620-0131. The authority to establish, amend and provide cost of living adjustments to all three plans is assigned to the State legislature. The authority to establish and amend contribution rates to all three plans is also assigned to the State legislature. In accordance with GASB Statement 24, on-behalf payments of fringe benefits and salaries for the City of Bozeman are recognized as revenues and expenditures in the fund financial statements during the period. Public Employees' Retirement System (PERS) All City employees, except firefighters and police officers, are provided pension benefits by this multi-employer plan. Funding is provided by participating units of government and their covered employees. Plan members are required to contribute 7.9% of their compensation (6.9% if hired prior to July 1, 2011). The City contributes 7.07% and the State of Montana contributes 0.1% (on behalf of the City), of members’ compensation. One hundred percent of required contributions were made for all three years. Total covered payroll for the City and total contributions to the plan by the employees and by the City for the year ended June 30, 2012 and the two previous years is presented in the following table: Year Ended Covered Employee Employer StateJune 30 Payroll Contributions Contributions Contributions2012 11,066,629$ 768,957$ 782,411$ 11,067$ 2011 11,003,546 759,245 777,951 11,004 2010 11,435,097 789,022 808,792 11,435 Defined Benefit Retirement Plan (DBRP) - Participants become eligible for benefits after age 60 and 5 years of service, after age 65 regardless of service, or 30 years of service regardless of age. The benefit is 1/56 of the final compensation for each year of credited service, paid as a modified cash refund annuity. A participant is eligible for early retirement benefits after age 50 and 5 years of service or after 25 years of service regardless of age. Rights become vested after 5 years of service. Defined Contribution Retirement Plan (DCRP) – Participants may elect the defined contribution plan, in which the contributions into the plan are known, but the benefit is not. The retirement benefit received is based upon account balance, which is determined by contributions made plus investment earnings, or losses, less administrative costs. The total number of participating employees in both the defined benefit and defined contribution plans at the City at June 30, 2012 is 229. 203
74 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 14. EMPLOYEE BENEFIT PLANS Firefighters' Unified Retirement System (FURS) Funding is provided by units of local government, their covered employees and the State of Montana. Plan members are required to contribute 10.7% of monthly compensation, since all employees have elected to be covered under the guaranteed annual benefit adjustment (GABA). The City contributes 14.36% and the State of Montana contributes 32.61% of members' compensation. One hundred percent of required contributions were made for all three years. Total covered payroll for the City and total contributions to the plan by the employees and by the City for the year ended June 30, 2012 and the two previous years is presented in the following table: Year Ended Covered Employee Employer StateJune 30 Payroll Contributions Contributions Contributions2012 2,876,756$ 307,596$ 413,102$ 938,110$ 2011 2,884,700 308,663 414,243 940,701 2010 2,747,949 294,031 394,606 896,106 Participants are eligible for benefits after 5 years of service and age 50. The benefit for participants hired prior to July 1, 1981 who have attained 50 years of age and 20 years of service is 50% of the monthly salary last received by the participant. Also, an additional 1% for each year of service in excess of 20 years, not to exceed a maximum of 60% of the recipient's latest monthly salary. A participant hired on or after July 1, 1981, or who retires prior to completion of 20 years of service, receives a benefit equal to 2.5% of average salary for each year of service, not to exceed 60%. Salary is averaged over the last 36 months for those hired on or after July 1, 1981. Rights become vested after 5 years of service. The total number of participating employees at the City of Bozeman at June 30, 2012 is 41. Municipal Police Officers' Retirement System (MPORS) Funding is provided by local units of government, their covered employees, and the State of Montana. Plan members are required to contribute 9% of their compensation. The City contributes 14.41% and the State of Montana contributes 29.37% of members' compensation. One hundred percent of required contributions were made for all three years. Total covered payroll for the City and total contributions to the plan by the employees and by the City for the year ended June 30, 2012 and the two previous years is presented in the following table: Year Ended Covered Employee Employer StateJune 30 Payroll Contributions Contributions Contributions2012 3,474,328$ 312,047$ 500,651$ 1,020,410$ 2011 3,531,629 317,847 777,951 1,037,239 2010 3,122,526 281,027 808,792 917,086 Participants are eligible for retirement benefits after 20 years of service and age 50. The minimum age requirement does not apply to participants first employed prior to July 1, 1975. The benefit is 1/2 of average monthly salary during the highest 36 consecutive months of earnings plus 1% of average monthly salary for each additional year of service in excess of 20 years, to a maximum of 60%. Benefits are paid as a modified cash refund annuity. Rights become vested after 5 years of service. The total number of participating employees at the City at June 30, 2012 is 60. 204
75 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 15. POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS In addition to providing a deferred compensation plan, the City provides other post-employment benefits (OPEB) allowing its retired employees to continue their medical, dental and vision care coverage through the City's group health plan until death (Retiree Health Plan). The plan allows retirees to participate, as a group, at a rate that does not cover all of the related costs. This results in the reporting of an implied rate subsidy in the financial statements and footnotes. The City's contract with Allegiance Benefits details the plan eligibility. MMIA is the administrator of the benefit plan which covers both active and retired members. In accordance with MCA 2-18-704, the City’s retirees may continue coverage for themselves and their covered eligible dependents if they are eligible for public employees' retirement by virtue of their employment with the City of Bozeman. The City's current labor contracts do not include any obligations for payments to retirees. The City also allows terminated employees to continue their health care coverage for 18 months past the date of termination as required by the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). OPEB is recorded on an accrual basis for all enterprise and internal service funds. OPEB is recorded on a modified accrual basis for the governmental funds. Plan contributions are recognized in the period in which the contributions are made. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. Funding Policy. The plan is unfunded by the City and plan members receiving benefits contribute 100 percent of their cost of the benefits on a pay-as-you-go basis. The City plan’s administratively established retiree medical, dental and vision premiums vary between $37 and $912 per month depending on the medical plan selected, family coverage, and Medicare eligibility. The plan provides different coinsurance amounts depending on whether members use preferred, non-preferred, or other hospitals. For a single individual, after an annual deductible of $300 for most non-Medicare-eligible retirees, the plan reimburses 70% for the first $500 medical claims and 100% thereafter. For a family, after an annual deductible of $600 for most non-Medicare-eligible retirees, the plan reimburses 70% for the first $1,000 medical claims and 100% thereafter. For fiscal year ended June 30, 2012, the City has 30 retired members receiving benefits. Annual OPEB Cost and Net OPEB Obligation. The City’s annual other post-employment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC). The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a closed amortization period not to exceed thirty years. The following table shows the components of the City’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City’s net OPEB obligation to the Retiree Health Plan: Annual required contribution 263,074$ Interest on net OPEB obligation 64,334 Adjustment to annual required contribution (93,011) Annual OPEB cost (expense) 234,397 Contributions made (113,273) Increase in net OPEB obligation121,124 Net OPEB obligation - beginning of year 1,608,338 Net OPEB obligation - end of year1,729,462$ 205
76 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 15. POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS (Continued) The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation for fiscal year ended June 30, 2012 and the two preceding fiscal years were as follows: Percentage ofFiscal Year Annual Annual OPEB Cost Net OPEB Ended OPEB Cost Contributed ObligationJune 30, 2010 794,598$ 10.01% 1,472,055$ June 30, 2011 236,826$ 42.45% 1,608,338$ June 30, 2012 234,397$ 48.33% 1,729,462$ The June 30, 2012 year end OPEB obligation is reported in the City’s funds as follows: ExpensesPrimary Government:Governmental activities:General government 19,215$ Public safety 39,460 Public service 10,637 Public welfare 28,823 Total governmental activities 98,135 Business-type activities:Water 9,951 Waste water 6,176 Solid waste 5,147 1,716 Total business-type activities 22,990 Total primary government 121,125$ Functions/ProgramsParking Funded Status and Funding Progress. The projection of future benefit payments for an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. The City has elected not to fund this liability. 206
77 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 15. POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS (Continued) SCHEDULE OF FUNDING PROGRESS Actuarial Valuation Date Actuarial Value of Assets (a) Actuarial Accrued Liability (AAL) (b) Unfunded AAL (UAAL) (b-a) Funded Ratio (a/b) Covered Payroll (c) UAAL as a Percentage of Covered Payroll ((b - a) / c) 7/1/2008 $ - $ 4,899,179 $ 4,899,179 0% Not available Not available 7/1/2010 $ - $ 2,203,253 $ 2,203,253 0% $ 12,788,780 17.2% Actuarial Methods and Assumptions. As of July 1, 2010, the most recent valuation date, the City’s actuarially accrued liability (AAL) for benefits was $2,203,253. The AAL by status breakdown is shown below: Fiscal Fiscal 2011 2012Actives 1,459,180$ N/ARetirees, Dependents and Surviving Spouses 744,073 N/ATotal AAL 2,203,253$ N/ANormal Cost 130,444$ N/AImpact on Statement of Activities Annual OPEB Cost 236,826$ 234,397$ Impact on Statement of Net Assets Assumed Contributions 100,543$ 113,273$ Net OPEB Obligation at June 30 1,608,338$ 1,729,462$ Participant Information Actives 266 N/A Retirees, Dependents and Surviving Spouses 68 N/A Total 334 N/A 207
78 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 15. POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS (Continued) The following key assumptions were chosen by the City: 1. Discount Rate: 4.0% 2. Inflation Rate: 3.0% 3. Expected Long Term Rate of Return on Assets: 4.0% 4. Healthcare Cost Increases: 8.5% for 2012, 8.0% for 2013, 7.5% for 2014, 7.0% for 2015, 6.5% for 2016, 6.0% for 2017, 5.5% for 2018, 5.0% for 2019 and thereafter. 5. Average Salary Increase: 4.0% 6. Retirement Rates: Based upon the separate rates used to value the pension obligations for Police Officers, Firefighters, and all other employees, respectively. 7. Retiree Participation Rate: 30% 8. Marital Assumption: For future retirees, 60% of participants are assumed to be married, with husbands 3 years older than wives. The Projected Unit Credit Actuarial Cost Method was used to determine the annual required contribution. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Examples, as detailed above, include assumptions about future employment, mortality, and the healthcare cost trend. Actuarially determined amounts are subject to continual revisions as actual results are compared with past expectations, and new estimates are made about the future. Actuarial calculations reflect a long-term perspective. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, is designed to present multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial liabilities for benefits. Historically, the net other post employment benefit obligation have been liquidated primarily by the general fund and the proprietary funds. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. This report constitutes the only analysis and presentation of the City’s post-employment benefit plan. There is no separate, audited GAAP-basis post-employment benefit plan report. 208
79 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 16. JOINT VENTURE AGREEMENTS Joint ventures are legal entities or other organizations that result in a contractual arrangement, and that are owned, operated, or governed by two or more participants. Each participant retains both an ongoing financial interest and an ongoing financial responsibility. Joint ventures are legal entities or other organizations that result in a contractual arrangement, and that are owned, operated, or governed by two or more participants. Each participant retains both an ongoing financial interest and an ongoing financial responsibility. As of June 30, 2012, the City has entered into joint venture contractual arrangements, as described below. 911 Communication Center The City and Gallatin County, Montana (the County) have entered into an inter-local agreement for the purposes of establishment of the operation and financing of a 911 communication services division (the Division) for dispatch and records services, to define the relationship of the Administrative Board with the City and County, and to establish the line of authority for personnel furnishing the communication services to the City and County and others who may contract for the services. Though the City has no equity interest in the Division, the City has indirect access to the joint venture’s resources, as the Division’s purpose is of direct interest to the City, and the City has the ability to influence the management of the Division. In addition, the City and County have agreed to pay 45% and 55% of the Division expenditures, respectively. The agreement expired December 19, 2005, and automatically renewed until terminated by either party. Financial information regarding the Division can be obtained by contacting Shelley Vance, Gallatin County, Clerk and Records Office, 311 West Main, Bozeman, MT 59715. City-County Drug Forfeitures The City and Gallatin County, Montana (the 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. 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 $1 million in profits from the sale of city-owned property known as the Mandeville Farm. The agreement came about as part of a settlement on legal claims from the City of Bozeman vs. MMIA litigation. A “profit” shall occur only when the City has recovered its total investment in the property, which includes the original purchase price together with all “costs of development” as defined in the settlement agreement. 209
80 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 17. RESTRICTED ASSETS At June 30, 2012, the balances of restricted asset accounts for business-type activities are as follows: Water FundWaste Water FundSolid WasteFund Parking Fund TotalRestricted by revenue bond covenantsFor debt service -$ -$ -$ -$ -$ For bond reserve 25,135 1,780,283 - - 1,805,418 For operations - - - - - Restricted by ordinanceCash in lieu of parking - - - 139,269 139,269 Impact fees 9,502,199 - - - 9,502,199 9,527,334$ 1,780,283$ -$ 139,269$ 11,446,886$ Business-Type Activities NOTE 18. INTERFUND TRANSFERS AND ASSETS/LIABILITIES A summary of interfund transfers reported in the fund financial statements for the year ended June 30, 2012 follows: General Fund Impact Fees Street Maintenance Nonmajor Governmental Water Waste Water Total General Fund -$ 150,000$ -$ 1,802,844$ -$ -$ 1,952,844$ Impact Fees - - - - - - - Building Inspection - - - 42,411 - - 42,411 Street Maintenance - 29,400 - 33,506 - - 62,906 Nonmajor Governmental 878,575 - 18,440 527,374 - - 1,424,389 Water Enterprise - - - 14,942 - - 14,942 Wastewater Enterprise - - - 11,214 - - 11,214 Solid Waste Enterprise - - 282 - - 282 Parking Enterprise - - - 10,698 - - 10,698 Vehicle Internal Service - - - 301,324 - - 301,324 Health Insurance Internal Service - - - - - - - Total 878,575$ 179,400$ 18,440$ 2,744,595$ -$ -$ 3,821,010$ Governmental Funds Proprietary FundsTransfers ToTransfers From 210
81 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 18. INTERFUND TRANSFERS AND ASSETS/LIABILITIES (Continued) 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. A summary of due from/to other funds at June 30, 2012, is as follows: Due From Due ToMajor Funds:General Fund 461,553$ -$ Nonmajor Funds:Special Revenue FundsDepartmental Special Revenues - 461,553 461,553$ 461,553$ Interfund balances reported as due from or due to other funds are 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. 211
82 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 19. RISK MANAGEMENT The City faces a considerable number of risks of loss, including a) damage to and loss of property and contents, b) employee torts, c) professional liability (i.e. errors and omissions), d) environmental damage, e) workers' compensation (i.e. employee injuries), and f) medical insurance cost of employees. A variety of methods are used to provide insurance for these risks. Commercial policies, transferring all risks of loss except for small deductible amounts, are purchased for property and content damage and professional liabilities. The City participates in two state-wide public risk pools operated by the Montana Municipal Interlocal Authority, for workers' compensation and for tort liability. Employee medical insurance is provided through a privately-administered, partially self-insured plan. Given the lack of coverage available, the City has no coverage for potential losses from environmental damages. Commercial Policies Coverage limits and the deductibles on the commercial policies have stayed relatively constant for the last several years. The premiums for the policies are allocated between the City's Enterprise Funds and the General Fund. Premiums are subsidized through a special purpose property tax levy, based on total appropriations. Settled claims resulting from these risks did not exceed commercial insurance coverage during the three years ended June 30, 2012, 2011, and 2010. 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. 212
83 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 19. RISK MANAGEMENT (Continued) Self- Insurance Starting in 1992, the City has provided medical insurance coverage for its employees via a partially self-insured plan administered by Blue Cross/Blue Shield. It provides medical, dental, and vision benefits and is operated as an Internal Service Fund. Rates are determined in consultation with Blue Cross/Blue Shield based on past claim experience for the coming year plus an administrative fee. The rates include a premium for a commercial "stop-loss" policy for when individual claim exceeds $75,000 in covered charges during a year. A reconciliation of claims payable follows: June 30, 2012 June 30, 2011Claims payable, beginning of year 55$ -$ Claims incurred during year 3,628,512 3,133,905 Claims paid during year (3,628,099) (3,133,850) Claims payable, end of year 468$ 55$ On July 1, 2006 the City began purchasing employee health insurance from the Montana Municipal Interlocal Authority’s Employee Health Benefits program; as of that date the City was no longer self-funded for health insurance claims. The fiscal year ending June 30, 2006 was the last year that the City was self-funded for employee health insurance claims. Over the course of the next months, the City paid claims that had been incurred but not reported as of June 30, 2006. On May 22, 2007, the City’s self-funded program administrator informed the City that they were closing out administration of Bozeman’s FY06 Self-Insured Health Benefits fund. The fund was closed because all incurred claims under the self-funded plan had been reported and paid. Going forward, as a purchaser of health insurance coverage, the City will have not “incurred but not reported” liabilities. 213
84 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 20. CONTINGENCIES (Continued) City of Bozeman v. Montana Municipal Interlocal Authority This litigation was a civil claim asserted by the City of Bozeman for the purposes of determining insurance coverage for a $3 million judgment in Delaney v. City of Bozeman. This case was settled in December 2012 (see Note 26). Apollo Inc. v. City of Bozeman Apollo, Inc. is the general contactor on the Hyalite/Sourdough Water Treatment Plant Replacement Project. Knife River is one of their subcontractors. Construction commenced in the fall of 2011. In March 2012, Gallatin County observed damage to Nash Road resulting from heavy truck traffic and ordered it repaired. On March 13, 2012, the County imposed load limits/weight restrictions on Nash Road effectively proscribing hauling of construction loads. The City asserted the damage was caused by Knife River and ordered the repair. The general contractor disputed responsibility. Eventually the road was repaired and the County lifted its load limits. The contractor asserted a claim for the costs of repair and a delay claim seeking additional days to complete the contract and an adjustment in the contract price. The City’s consulting engineer granted additional days but denied an adjustment in price. The City Manager agreed to provide Apollo additional days to complete the contract but did not agree to an adjustment of the contract price. In September 2012, the contractor requested a formal dispute resolution with a mediator. The City Manager, in consultation with the City Attorney’s office, declined the offer based on the initial agreement to conduct discussions without involvement of an independent mediator, as allowed by the contract. There has been no further communication from the contractor regarding their claims. They may still exercise such rights or remedies they may otherwise have under the contract in respect of the dispute that was not agreed upon during the information mediation. As of the date of the financial statements, the City believes it is not possible to determine whether there exists the potential for an unfavorable outcome or to estimate the potential range of loss. Southwest Montana Building Industry Association, et al v. City of Bozeman Presently before the Court is a motion of the City of Bozeman requesting that the remaining undistributed settlement funds be turned over to the City of Bozeman. The City would then hold these funds and annually advertise or publish a notice that the unclaimed funds area available to members of the Class who have yet to receive settlement funds. Upon submission of a claim, the City may use these funds to pay the claim. If any funds remain unpaid after three (3) years, the City of Bozeman proposes to deliver the funds to the Montana Department of Revenue pursuant to the Uniform Unclaimed Property Act. The City is involved with numerous other lawsuits which arise out of the normal course of operations by the City. Management of the City intends to vigorously defend each claim and believes no material losses will be incurred on such claims. The following is list of pending litigation where an unfavorable outcome is possible but not likely: Possible Adverse Verdict Verdi v. City of Bozeman $100,000 - $150,000 214
85 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 21. SOLID WASTE LANDFILL CLOSURE AND POST-CLOSURE CARE COSTS 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 $1,563,356 reported as landfill closure and post-closure care liability at June 30, 2012, represents the cumulative amount reported to date based on the use of 95% of the total capacity of the landfill. This amount represents a $97,521 decrease from the $1,660,877 liability reported in 2011 due to actual closure and post-closure costs incurred during the year. The City stopped accepting waste effective June 30, 2008. The final capping of the cells is still pending. In 2012, the City budgeted for, and funded, landfill closure and post-closure care liability through normal operations and is in compliance with EPA requirements. NOTE 22. SEGMENT INFORMATION FOR WATER ENTERPRISE FUND The City’s Water Fund accounts for the City’s water utility operations and collection and administration of water impact fees. Segment information for the utility operations, excluding impact fees, is as follows: Condensed Statement of Net AssetsCurrent assets 17,252,689$ Capital assets 78,136,719 Other assets - Total assets 95,389,408$ Current liabilities 594,992$ Noncurrent liabilities - Total liabilities 594,992 Invested in capital assets, net of related debt 78,136,719 Restricted for debt service - Unrestricted 16,657,697 Total net assets 94,794,416 Total liabilities and net assets 95,389,408$ 215
86 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 22. SEGMENT INFORMATION FOR ENTERPRISE FUND (Continued) Condensed Statement of Revenues, Expenses and Changes in Net AssetsOPERATING REVENUES AND EXPENSESOperating revenues 6,814,990$ Operating expensesDepreciation 7,509,452 Other operating 3,972,562 Total operating expenses 11,482,014 Operating loss(4,667,024) NONOPERATING REVENUES (EXPENSES)Interest income 142,888 Interest expense - Grant income 1,571 Gain on sale of assets (116,605) Contributions of infrastructure 564,404 Other income 71,693 Transfers 101,532 Total nonoperating revenues 765,483 Change in net assets (3,901,541) NET ASSETS, beginning of year 98,695,957 NET ASSETS, end of year 94,794,416$ Condensed Statement of Cash FlowsNet cash provided by operating activities 2,461,119$ Net cash flows from capital and related financing activities - Net cash flows from noncapital and financing activities 174,796 Net cash flows from investing activities 2,917,005 Net increase (decrease) in cash flows 5,552,920 Beginning cash and equivalents 11,180,657 Ending cash and equivalents 16,733,577$ 216
87 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 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 March 23, 1996Change as of May 10, 1998Change as of January 15, 1999Change as of July 15, 1999Fire impact fee 90% 90% 90% 90%Water impact fee 35% 50% 90% 90%Waste water impact fee 35% 50% 90% 90%Street impact fee 10% 10% 75% 90% 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 Wastewater Impact Fee Fund have recorded impact fee credits amounting to $33,232, $236,687, and $199,615, respectively, as of June 30, 2012. The Fire Impact Fee Fund does not have any outstanding credits. The following impact fee revenues were collected and expensed/expended during fiscal year 2012: Beginning balances Impact fees Other incomeExpenses, expenditures and transfers Ending balancesFire 146,088$ 245,250$ 1,589$ (186,978)$ 205,949$ Water 9,460,982 981,096 76,700 (148,350) 10,370,428 Waste water 930,959 986,905 3,041 (1,691,806) 229,099 Streets 7,903,258 1,090,715 61,841 (1,342,621) 7,713,193 Total 18,441,287$ 3,303,966$ 143,171$ (3,369,755)$ 18,518,669$ 217
88 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 24. POLLUTION REMEDIATION OBLIGATIONS Jewel v. City of Bozeman / State of Montana v. City of Bozeman This action was filed in the United States District Court for the District of Montana. The multi-count complaint reduced itself to a cost recovery action under the Federal Superfund (CERCLA) and State Superfund (CECRA). On July 8, 1999, the City, Jewel Food Stores, Inc. and the other parties reached a final settlement agreement in this action. The settlement, in part, required Jewel Food Stores, Inc. to pay the City of Bozeman $1,200,000, the City and Jewel to extend alternative water supply to businesses and residents in the North 19th Avenue area of the City; and Jewel and the City to share specified remediation costs on an equal basis (50% each) up to a cumulative amount of $4,000,000, and for eligible costs in excess of that amount, to be shared 70% by Jewel and 30% by the City. The City is reimbursed by insurers for 23% of the City’s expenditures for these purposes. The Montana Department of Environmental Quality (MDEQ) issued the Record of Decision (ROD) for the Bozeman Solvent Site (BSS) in August 2011. The Administrative Order of Consent (AOC) was finalized in January 2012. The ROD and AOC specifically delineate the remediation to be completed for the BSS. The AOC serves as the legal mechanism for the implementation of the selected remedies identified in the ROD. Though remediation may be completed relatively quickly, monitoring of the site will continue for a period of up to 30 years. ATC and Associates, Inc. serves as the Project Engineer for the potentially liable parties (the City of Bozeman and CVS Pharmacy, Inc.). Based on the selected remedies identified in the ROD, ATC has completed a long-term cost projection for the project. The long-term cost projection for the City is $3,082,952. Reduced by its insurer’s reimbursement, the amount is $2,373,873. This liability is recorded in the Waste Water Fund. CMC Asbestos Bozeman CECRA Facility In 2001, the City purchased the former CMC Heartland Partners property, the main portion of the CMC Asbestos Bozeman CECRA Facility (“Facility”), in order to build a new public library. The City submitted a Voluntary Cleanup Plan (“VCP”) pursuant to Montana statutes, to the Department of Environmental Quality (“DEQ”) in order to remediate contamination within the Facility. The DEQ approved the City’s VCP on December 20, 2002. The City implemented the VCP and its addendums and submitted a Voluntary Cleanup Completion Report for the CMC East Main Depot Site in August 2004. In 2003, at the commencement of the remedial activity, the City of Bozeman petitioned the DEQ for an allocation of liability at the facility. Montana statutes provide a voluntary process (CALA) that allows potentially liable parties to petition for an allocation of liability as an alternative to the strict, joint and several liability scheme included in state law. CALA involves negotiations designed to allocate liability among persons involved at the facility, including bankrupt or defunct persons, referred to as the “orphan shares.” CALA also provides the funding for the orphan share of the cost of remediation. An agreement was reached that allocates 79% liability to the orphan shares. The allocation agreement requires the City to complete remedial actions at the facility. The City retained the services of an environmental engineering firm, Tetra Tech, to prepare a Supplemental Investigation (SI) Work Plan. The plan was approved by the DEQ and implemented from December 2007 through June 2008. Tetra Tech’s Final SI Report was submitted to DEQ on June 20, 2008. This report describes the contaminated soils remaining at the Facility and provides recommendations for corrective actions. The recommendation for corrective action involves a DEQ-approved Addendum to the City’s original Voluntary Cleanup Plan. 218
89 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 24. POLLUTION REMEDIATION OBLIGATIONS (Continued) CMC Asbestos Bozeman CECRA Facility (Continued) At the City’s request, the DEQ made a hardship determination for the City on August 8, 2007, pursuant to state statute. This hardship determination means that the City is eligible to have all of its ongoing actual documented remedial action costs reimbursed, subject to eligibility, as soon as the City expends the money. In the first phase of remediation the City spent approximately $2.4 million. State statute limits reimbursement from the orphan share fund to “eligible” remedial action costs incurred after the date of the CALA petition. DEQ determined that $2.1 million of the City’s costs were eligible. The 79% proportional share that the City may be reimbursed is approximately $1,663,718. The statute also provides that costs may not be reimbursed until all remedial actions are complete. However, DEQ agreed to reimburse a portion of the past cleanup costs in recognition of the City’s commitment and good faith efforts to keep moving forward with completion of the cleanup. Last year the DEQ paid the City $831,859. The City submitted its construction completion report/petition for closure in September 2009. DEQ is reviewing the report and will provide comments The DEQ is still reviewing various invoices and the documentation of certain remaining costs. The remaining reimbursement amount owed by DEQ to the City can be estimated by determining the appropriate allocation of that total amount to the orphan share. By the end of the cleanup project, the City expects to receive 79% of the estimated total eligible costs of $4,449,092, which amounts to $3,514,782. To date, all payments from DEQ have been received, leaving no estimated remaining reimbursement amount. As of June 30, 2012, the City has accrued $16,874 on the entity-wide financials for governmental activities, which is the potential remediation liability net of projected recoveries. 219
90 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 25. MAJOR PURPOSE PRESENTATION The table presented below displays the City’s fund balances by major purpose as displayed on page 34 of the governmental funds balance sheet. Statement 54 requires the disclosure of the purpose of each Major Fund. Street andFire Impact Street Building Nonmajor TotalGeneral Fees Maintenance Inspection SID Sinking Governmental GovernmentalFund Special Revenue Special Revenue Special Revenue Debt Service Funds FundsNonspendablePrepaids -$ -$ -$ -$ -$ 427,125$ 427,125$ Cemetery perpetual care - - - - - 686,359 686,359 Total nonspendable - - - - - 1,113,484 1,113,484 RestrictedGeneral government - - - - - 872,617 872,617 Public safety - - - 1,005,485 - 368,203 1,373,688 Public service - 7,919,145 944,273 - - 1,352,816 10,216,234 Public welfare - - - - - 3,088,027 3,088,027 Debt service - - - - 803,565 3,329,750 4,133,315 Total restricted - 7,919,145 944,273 1,005,485 803,565 9,011,413 19,683,881 CommittedGeneral government - - - - - 1,046,970 1,046,970 Public safety - - - - - 1,317,302 1,317,302 Public welfare - - - - - 1,099,442 1,099,442 Total committed - - - - - 3,463,714 3,463,714 AssignedGeneral government 2,427,369 - - - - - 2,427,369 Public welfare 30,000 - - - - - 30,000 Capital projects 702,160 - - - - - 702,160 Budget ordinance minimum 16.67% 3,903,435 - - - - - 3,903,435 Total assigned 7,062,964 - - - - - 7,062,964 Unassigned264,091 - - - - (51,586) 212,505 Total fund balances 7,327,055$ 7,919,145$ 944,273$ 1,005,485$ 803,565$ 13,537,025$ 31,536,548$ 220
91 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2012 NOTE 26. SUBSEQUENT EVENTS Management has evaluated subsequent events through December 17, 2012, the date on which the financial statements were available to be issued. The City reached a settlement with MMIA regarding the Delaney matter (see Note 20 Contingencies) on December 10, 2012. A liability of $2 million has been accrued on the entity-wide financials at June 30, 2012. 221
C. REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION AND ANALYSIS222
92Net OPEB Obligation1,472,055$ 1,608,338$ 1,729,462$ The funded status of the plan was as follows:2,203,253$ - 2,203,253$ 0.0%12,788,780$ 17.23%Actuarial Valuation DateActuarial Value of Assets (a)Actuarial Accrued Liability (AAL) (b)Unfunded AAL (UAAL) (b-a)Funded Ratio (a/b)Covered Payroll(c) UAAL as a Percentage of Covered Payroll ((b - a) / c)7/1/2008 -$ 4,899,179$ 4,899,179$ 0%Not available Not available7/1/2010 -$ 2,203,253$ 2,203,253$ 0%12,788,780$ 17.2%SCHEDULE OF FUNDING PROGRESSRetiree Medical Plan(c) Covered payrollYear Ended6/30/2010Annual OPEB Cost794,598$ Percentage of OPEB Cost 10.01%FUNDED STATUSUnfunded actuarial accrued liability (funding excess) as a percentage of covered payroll ({(a) - (b)} / (c))(a) Actuarial accrued liability (AAL)(b) Actuarial value of plan assets (UAAL)Unfunded actuarial accrued liability (funding excess) [(a) - (b)]Funded ratio (b) / (a)CITY OF BOZEMAN, MONTANASCHEDULE OF FUNDING PROGRESS - OTHER POST-EMPLOYMENT HEALTHCARE BENEFITSFor the Year Ended June 30, 2012ANNUAL OPEB COSTRetiree Health PlanThe annual OPEB costs, the percentage of OPEB cost contributed to the plan, and the net OPEB obligation for June 30, 2012 for the Retiree Health Plan are as follows: 6/30/2012 234,397$ 48.33%6/30/2011 236,826$ 42.45%223
93Variance withActual Final BudgetOriginal Final Amounts Positive (Negative)Budgetary fund balance, July 1 6,897,250$ 6,897,250$ 6,897,250$ -$ Resources (inflows):Taxes 11,310,004 11,310,004 11,535,471 225,467 Special assessments - - 9,257 9,257 Licenses and permits 278,250 278,250 294,411 16,161 Intergovernmental 5,767,836 5,767,836 6,139,548 371,712 Charges for services 2,160,935 2,160,935 2,166,750 5,815 Fines and forfeitures 1,226,500 1,226,500 1,241,798 15,298 Sale of assets - - - - Interest on investments 70,000 70,000 55,104 (14,896) Transfers from other funds 2,080,567 2,080,567 1,952,844 (127,723) Other 46,500 46,500 25,425 (21,075) Amounts available for appropriation 29,837,842 29,837,842 30,317,858 480,016 Charges to appropriations (outflows):CurrentGeneral government 7,246,008 5,776,784 5,529,823 246,961 Public safety 10,027,085 11,940,317 11,180,578 759,739 Public service 205,702 205,702 125,634 80,068 Public welfare 4,856,008 4,522,531 4,292,126 230,405 Capital outlay 649,500 772,153 771,296 857 Debt service 150,000 213,000 212,771 229 Transfers to other funds 712,150 878,681 878,575 106 Total charges to appropriations 23,846,453 24,309,168 22,990,803 1,318,365 Budgetary fund balance, June 30 5,991,389$ 5,528,674$ 7,327,055$ 1,798,381$ Budgeted AmountsCITY OF BOZEMAN, MONTANASCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUALGENERAL FUNDFor the Year Ended June 30, 2012224
94Variance withActual Amounts Final BudgetOriginal Final Budgetary Basis Positive (Negative)Budgetary fund balance, July 1 8,049,347$ 8,049,347$ 8,049,347$ -$ Resources (inflows):Charges for services 750,000 750,000 1,335,965 585,965 Interest on investments 100,000 100,000 63,432 (36,568) Other- - - - Proceeds from long-term debt - - - - Amounts available for appropriation 8,899,347 8,899,347 9,448,744 549,397 Charges to appropriations (outflows):CurrentPublic safety 17,500 37,000 36,978 22 Public service - 69,500 69,055 445 Capital outlay 850,000 1,244,500 1,244,166 334 Transfers to other funds179,400 179,400 179,400 - Total charges to appropriations 1,046,900 1,530,400 1,529,599 801 Budgetary fund balance, June 30 7,852,447$ 7,368,947$ 7,919,145$ 550,198$ Budgeted AmountsCITY OF BOZEMAN, MONTANASCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES- BUDGET TO ACTUALSTREET AND FIRE IMPACT FEE SPECIAL REVENUE FUNDYear Ended June 30, 2012225
95Variance withActual Amounts Final BudgetOriginal Final Budgetary Basis Positive (Negative)Budgetary fund balance, July 1 600,049$ 600,049$ 600,049$ -$ Resources (inflows):Taxes - - - - Special assessments 2,000 2,000 73,096 71,096 Licenses and permits 15,000 15,000 4,750 (10,250) Intergovernmental - - 974 974 Charges for services 3,032,504 3,032,504 2,692,020 (340,484) Fines and forfeitures - - - - Sale of Assets - - 7,589 7,589 Interest on investments 11,000 11,000 7,316 (3,684) Other 10,000 10,000 2,275 (7,725) Proceeds from long-term debt 1,480,200 1,480,200 185,530 (1,294,670) Transfers from other funds 29,400 29,400 48,055 18,655 Amounts available for appropriation 5,180,153 5,180,153 3,621,654 (1,558,499) Charges to appropriations (outflows):CurrentGeneral government - - - - Public safety - - - - Public service 2,081,579 2,081,579 1,993,081 88,498 Public welfare 439,452 439,452 - 439,452 Other - - - - Capital outlay 1,667,100 1,648,600 460,687 1,187,913 Debt service 135,000 205,500 205,173 327 Transfers to other funds- 18,500 18,440 60 Total charges to appropriations 4,323,131 4,393,631 2,677,381 1,716,250 Budgetary fund balance, June 30 857,022$ 786,522$ 944,273$ 157,751$ CITY OF BOZEMAN, MONTANASCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES- BUDGET TO ACTUALSTREET MAINTENANCE SPECIAL REVENUE FUNDYear Ended June 30, 2012Budgeted Amounts226
96Variance withActual Amounts Final BudgetOriginal Final Budgetary Basis Positive (Negative)Budgetary fund balance, July 1 814,982$ 814,982$ 814,982$ -$ Resources (inflows):Taxes - - - - Special assessments - - - - Licenses and permits 854,600 854,600 915,544 60,944 Intergovernmental - - 9,063 9,063 Charges for services 4,500 4,500 983 (3,517) Fines and forfeitures - - - - Sale of Assets - - - - Interest on investments 10,000 10,000 10,373 373 Other - - 30 30 Proceeds from long-term debt - - - - Transfers from other funds - - 42,411 42,411 Amounts available for appropriation 1,684,082 1,684,082 1,793,386 109,304 Charges to appropriations (outflows):CurrentGeneral government - - - - Public safety 868,136 909,518 787,901 121,617 Public service - - - - Public welfare - - - - Capital outlay - - - - Debt service - - - - Transfers to other funds- - - - Total charges to appropriations 868,136 909,518 787,901 121,617 Budgetary fund balance, June 30 815,946$ 774,564$ 1,005,485$ 230,921$ CITY OF BOZEMAN, MONTANASCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES- BUDGET TO ACTUALBUILDING INSPECTION SPECIAL REVENUE FUNDYear Ended June 30, 2012Budgeted Amounts227
97Street and FireGeneral Impact Street and Tree BuildingFund Fees Maintenance InspectionSources/inflows of resourcesActual amounts (budgetary basis) "available for appropriation" from the budgetarycomparison schedule 30,317,858$ 9,448,744$ 3,621,654$ 1,793,386$ Differences - budget to GAAP:The fund balance at the beginning of the year is a budgetary resource but isnot a current-year revenue for financial reporting purposes. (6,897,250) (8,049,347) (600,049) (814,982) Transfers from other funds are inflows of budgetary resources but are notrevenues for financial reporting purposes. (1,952,844) - (48,055) (42,411) The proceeds from the issuance of long-term debt are a budgetary resourcebut are a other financing source for financial reporting purposes - - (185,530) - The proceeds from the sale of assets are budgetary resources but are regardedas a special item, rather than revenue, for financial reporting purposes - - (7,589) - Total revenues as reported on the statement of revenues, expenditures, andchanges in fund balances - governmental funds 21,467,764$ 1,399,397$ 2,780,431$ 935,993$ Uses/outflows of resourcesActual amounts (budgetary basis) "total charges to appropriations" from thebudgetary comparison schedule 22,990,803$ 1,529,599$ 2,677,381 787,901 Differences - budget to GAAP:Transfers to other funds are outflows of budgetary resources but are notexpenditures for financial reporting purposes. (878,575) (179,400) (18,440) - Total expenditures as reported on the statement of revenues, expenditures, andchanges in fund balances - governmental funds 22,112,228$ 1,350,199$ 2,658,941$ 787,901$ CITY OF BOZEMAN, MONTANANOTES TO REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION AND ANALYSISYear Ended June 30, 2012228
D. SUPPLEMENTAL INFORMATION 229
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES230
NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Departmental Special Revenues – Accounts for monies received and expended for projects relating to various City departments. 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 Gallatin County, to be expended on drug law enforcement and education. Beautification of Bozeman– Accounts for monies for special beautification projects throughout Bozeman. 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. Special Projects – Accounts for the receipt and expenditure of Valley Unit Special Improvement District funds which are in excess of the amounts required to retire the outstanding SID indebtedness. 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. Highway Safety Improvement Projects – Accounts for grants, other revenues, and expenditure related to the U. S. Department of Transportation funded program to reduce number and severity of traffic accidents. 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. 231
Community Housing – Accounts for money set aside by the City Commission and related expenditure for the establishment of safe, decent and affordable housing for low and moderate-income citizens. Downtown Improvement District – In November 1995, the City adopted an Urban Renewal Plan for the downtown area. This fund accounts for the revenue and expenditures associated with the district. Street Lighting – Accounts for special assessment revenues levied, received and expended for street and public highway lighting provided to specific property owners. Park Land – Accounts for monies donated for the purpose of acquiring and developing City Parks. Municipal Court Restitution – Accounts for checks that were canceled on the restitution checking account, per MCA 46-18-250. DEBT SERVICE FUNDS Special Improvement District (SID) Revolving – Accounts for property tax revenues received and expended for the payment of special improvement district bond principal and interest. General Obligation Bonds Debt Service Fund – Accounts for the debt service payments associated with the Library and Transportation general obligation bonds. Tax Increment Financing Bonds Debt Service Fund – Accounts for the debt service payments associated with the Tax Increment Urban Renewal Revenue Bonds issued as partial funding for the construction of a Downtown Intermodal Parking Facility. CAPITAL PROJECTS FUNDS General Improvements Capital Projects Fund – Accounts for the construction of general improvement projects financed by special assessments other than those financed by proprietary funds. PERMANENT FUNDS Perpetual Cemetery Care- Accounts for 15% maintenance fee received from the sale of City cemetery plots which is to be used for perpetual care. The interest income from the trust is transferred to the general fund for use in maintaining the City’s cemetery. 232
98CITY OF BOZEMAN, MONTANACOMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDSJune 30, 2012Special Revenue FundsDepartmental CitySpecial Planning Health-Medical Gas TaxRevenues Board Insurance ApportionmentASSETSCash and cash equivalents 4,361,671$ 211,269$ 414,486$ 600,918$ ReceivablesProperty taxes 49,867 16,234 142,287 - Accrued interest 2,576 - - - Customers, net - - - - Special assessments 3,515 - - - Other governments 227,993 - - - Others - - - - Due from other City funds - - - - Prepaid expenditures - - - - Notes receivable 43,996 - - - Restricted cash and cash equivalents 25,000 149,026 - - Total assets 4,714,618 376,529 556,773 600,918 LIABILITIES AND FUND BALANCESLiabilities:Accounts payable 344,331 1,588 - 2,306 Escheat property payable - - - - Accrued employee benefits payable 2,042 7,657 - - Deferred revenue 55,166 4,093 47,347 - Due to other City funds 461,553 - - - Total liabilities 863,092 13,338 47,347 2,306 Fund balances:Nonspendable - - - - Restricted 1,222,935 363,191 509,426 598,612 Committed 2,628,591 - - - Assigned - - - - Unassigned - - - - Total fund balances 3,851,526 363,191 509,426 598,612 Total liabilities and fund balances 4,714,618$ 376,529$ 556,773$ 600,918$ (continued)233
99CITY OF BOZEMAN, MONTANACOMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)June 30, 2012Special Revenue FundsCity-County Beauti- Law andDrug Drug fication Tree JusticeForfeitures Forfeitures of Bozeman Maintenance CenterASSETSCash and cash equivalents 116,477$ 152,242$ 986$ 256,625$ -$ ReceivablesProperty taxes - - - - - Accrued interest - - - - - Customers, net 718 - - - - Special assessments - - - 39,992 - Other governments 12,892 - - - - Others - - - - - Due from other City funds - - - - - Prepaid expenditures - - - - 427,125 Notes receivable - - - - - Restricted cash and cash equivalents - - - 11 - Total assets 130,087 152,242 986 296,628 427,125 LIABILITIES AND FUND BALANCESLiabilities:Accounts payable 986 - - 19,660 - Escheat property payable - - - - - Accrued employee benefits payable 2,865 - - 4,012 - Deferred revenue - - - 31,792 - Due to other City funds - - - - - Total liabilities 3,851 - - 55,464 - Fund balances:Nonspendable - - - - 427,125 Restricted - - 986 241,164 - Committed 126,236 152,242 - - - Assigned - - - - - Unassigned - - - - - Total fund balances 126,236 152,242 986 241,164 427,125 Total liabilities and fund balances 130,087$ 152,242$ 986$ 296,628$ 427,125$ (continued)234
100June 30, 2012Special Revenue FundsEconomic HousingSpecial Community Highway Development Revolving Projects Transportation Safety Revolving Loan Loan FundASSETSCash and cash equivalents -$ 65,829$ 22,343$ -$ 23,513$ ReceivablesProperty taxes - - - - - Accrued interest - - - Customers, net - - - - - Special assessments - - - - - Other governments - - - - - Others - - - 706,198 - Due from other City funds - - - - - Prepaid expenditures - - - - - Notes receivable - - - 182,116 26,143 Restricted cash and cash equivalents - - - - - Total assets - 65,829 22,343 888,314 49,656 LIABILITIES AND FUND BALANCESLiabilities:Accounts payable - - - - - Escheat property payable - - - - - Accrued employee benefits payable - - - - - Deferred revenue - - - 182,116 26,143 Due to other City funds - - - - - Total liabilities - - - 182,116 26,143 Fund balances:Nonspendable - - - - - Restricted - 65,829 - 706,198 23,513 Committed - - 22,343 - - Assigned - - - - - Unassigned - - - - - Total fund balances - 65,829 22,343 706,198 23,513 Total liabilities and fund balances -$ 65,829$ 22,343$ 888,314$ 49,656$ (continued)CITY OF BOZEMAN, MONTANACOMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)235
101NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)June 30, 2012Special Revenue FundsDowntownCommunity Improvement Street Park Municipal CourtHousing District Lighting Land RestitutionASSETSCash and cash equivalents 327,914$ 1,703,951$ 655,796$ 206,388$ 43,767$ ReceivablesProperty taxes - 47,199 - - - Accrued interest - 1,981 - Customers, net - - - - - Special assessments - 2,062 59,285 - - Other governments - - - - - Others - - - - - Due from other City funds - - - - - Prepaid expenditures - - - - - Notes receivable 72,499 - - - - Restricted cash and cash equivalents - - - - - Total assets 400,413 1,755,193 715,081 206,388 43,767 LIABILITIES AND FUND EQUITYLiabilities:Accounts payable - 493,043 26,706 - 1,000 Escheat property payable - - - - 42,667 Accrued employee benefits payable - - - - - Deferred revenue 72,499 816 - - - Due to other City funds - - - - - Total liabilities72,499 493,859 26,706 - 43,667 Fund balances:Nonspendable - - - - - Restricted - 1,261,334 688,375 - 100 Committed 327,914 - - 206,388 - Assigned - - - - - Unassigned - - - - - Total fund balances 327,914 1,261,334 688,375 206,388 100 Total liabilities and fund balances 400,413$ 1,755,193$ 715,081$ 206,388$ 43,767$ (continued)CITY OF BOZEMAN, MONTANACOMBINING BALANCE SHEET236
102SpecialRevenueFundsTotalASSETSCash and cash equivalents 9,164,175$ ReceivablesProperty taxes 255,587 Accrued interest 4,557 Customers, net 718 Special assessments 104,854 Other governments 240,885 Others 706,198 Due from other City funds - Prepaid expenditures 427,125 Notes receivable 324,754 Restricted cash and cash equivalents 174,037 Total assets 11,402,890 LIABILITIES AND FUND BALANCESLiabilities:Accounts payable 889,620 Escheat property payable 42,667 Accrued employee benefits payable 16,576 Deferred revenue 419,972 Due to other City funds 461,553 Total liabilities 1,830,388 Fund balances:Nonspendable 427,125 Restricted 5,681,663 Committed 3,463,714 Assigned - Unassigned - Total fund balances 9,572,502 Total liabilities and fund balances 11,402,890$ (continued)CITY OF BOZEMAN, MONTANACOMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)June 30, 2012237
103Capital Projects Debt Service Funds FundSID G.O. TIF General Revolving Bonds Bonds Total ImprovementsASSETSCash and cash equivalents 3,190,244$ 150,647$ 4,788$ 3,345,679$ 331,578$ ReceivablesProperty taxes - 60,083 - 60,083 - Accrued interest 5,251 5,251 Customers, net - - - - Special assessments - - - - - Other governments - - - - - Others - - - - Due from other City funds - - - - - Prepaid expenditures - - - - - Notes receivable - - - - - Restricted cash and cash equivalents - 3,193,081 - 3,193,081 - Total assets 3,195,495 3,403,811 4,788 6,604,094 331,578 LIABILITIES AND FUND BALANCESLiabilities:Accounts payable - 3,254,500 - 3,254,500 383,164 Escheat property payable - - - - - Accrued employee benefits payable - - - - - Deferred revenue - 19,844 - 19,844 - Due to other City funds - - - - - Total liabilities - 3,274,344 - 3,274,344 383,164 Fund balances:Nonspendable - - - - - Restricted 3,195,495 129,467 4,788 3,329,750 - Committed - - - - - Assigned - - - - - Unassigned - - - - (51,586) Total fund balances 3,195,495 129,467 4,788 3,329,750 (51,586) Total liabilities and fund balances 3,195,495$ 3,403,811$ 4,788$ 6,604,094$ 331,578$ CITY OF BOZEMAN, MONTANACOMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)June 30, 2012238
104PermanentFund TotalNonmajorPerpetual GovernmentalCemetery Care FundsASSETSCash and cash equivalents -$ 12,841,432$ ReceivablesProperty taxes - 315,670 Accrued interest - 9,808 Customers, net - 718 Special assessments - 104,854 Other governments - 240,885 Others - 706,198 Due from other City funds - - Prepaid expenditures - 427,125 Notes receivable - 324,754 Restricted cash and cash equivalents 686,359 4,053,477 Total assets 686,359 19,024,921 LIABILITIES AND FUND BALANCESLiabilities:Accounts payable - 4,527,284 Escheat property payable - 42,667 Accrued employee benefits payable - 16,576 Deferred revenue - 439,816 Due to other City funds - 461,553 Total liabilities - 5,487,896 Fund balances:Nonspendable 686,359 1,113,484 Restricted - 9,011,413 Committed - 3,463,714 Assigned - - Unassigned - (51,586) Total fund balances 686,359 13,537,025 Total liabilities and fund balances 686,359$ 19,024,921$ CITY OF BOZEMAN, MONTANACOMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)June 30, 2012239
105Departmental CitySpecial Planning Health-Medical Gas TaxRevenues Board Insurance ApportionmentREVENUESTaxes 967,014$ 165,523$ 1,866,700$ -$ Special assessments 399,054 - - - Licenses and permits - - - - Intergovernmental 452,695 99,516 - 650,383 Charges for services 19,363 159,858 - - Fines and forfeitures 73,640 - - - Interest on investments 36,955 1,251 272 4,100 Loan repayment 3,445 - - - Other 59,578 14,789 - - Total revenues 2,011,744 440,937 1,866,972 654,483 EXPENDITURESCurrentGeneral government 87,911 648,832 - - Public safety 221,385 - - - Public service 19,825 - - 191,669 Public welfare 908,389 - - - Capital outlay 278,905 - - 424,018 Debt servicePrincipal - - - - Interest and fiscal fees - - - - Total expenditures 1,516,415 648,832 - 615,687 Revenues over (under) expenditures 495,329 (207,895) 1,866,972 38,796 OTHER FINANCING SOURCES (USES)Transfers in 168,440 331,482 40,000 - Transfers out (217,250) - (1,789,983) - Long-term debt issued - - - - Payments to refunded bond escrow agent - - - - Sale of capital assets 39,290 - - - Total other financing sources and uses (9,520) 331,482 (1,749,983) - Net change in fund balance 485,809 123,587 116,989 38,796 FUND BALANCES, beginning of year 3,365,717 239,604 392,437 559,816 FUND BALANCES, end of year 3,851,526$ 363,191$ 509,426$ 598,612$ (continued)Special Revenue FundsCITY OF BOZEMAN, MONTANACOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES-NONMAJOR GOVERNMENTAL FUNDSYear Ended June 30, 2012240
106Special Revenue FundsCity-County Beauti- Law andDrug Drug fication Tree JusticeForfeitures Forfeitures of Bozeman Maintenance CenterREVENUESTaxes -$ -$ -$ -$ -$ Special assessments - - - 4,753 - Licenses and permits - - - - - Intergovernmental 136,199 - - 1,000 - Charges for services - - - 429,082 - Fines and forfeitures 48,894 285 - - - Interest on investments 392 1,837 9 2,000 - Loan repayment - - - - - Other 46 - - 5,950 - Total revenues 185,531 2,122 9 442,785 - EXPENDITURESCurrentGeneral government - - - - - Public safety 208,420 58,883 - - 19,125 Public service - - - - - Public welfare - - 54 428,552 - Capital outlay - - - - - Debt servicePrincipal - - - - - Interest and fiscal fees - - - - - Total expenditures 208,420 58,883 54 428,552 19,125 Revenues over (under) expenditures (22,889) (56,761) (45) 14,233 (19,125) OTHER FINANCING SOURCES (USES)Transfers in 140,000 - - 14,851 - Transfers out - - - - - Long-term debt issued - - - - - Payments to refunded bond escrow agent - - - - - Sale of capital assets 9,125 - - 3,200 - Total other financing sources and uses 149,125 - - 18,051 - Net change in fund balances 126,236 (56,761) (45) 32,284 (19,125) FUND BALANCES, beginning of year - 209,003 1,031 208,880 446,250 FUND BALANCES, end of year 126,236$ 152,242$ 986$ 241,164$ 427,125$ (continued)COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES-NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2012CITY OF BOZEMAN, MONTANA241
107Special Revenue FundsEconomic HousingSpecial Community Highway Development Revolving Projects Transportation Safety Revolving Loan Loan FundREVENUESTaxes -$ -$ -$ -$ -$ Special assessments - - - - - Licenses and permits - - - - - Intergovernmental 9,300 167,801 - - - Charges for services - - - - - Fines and forfeitures - - - - - Interest on investments - - 207 17,502 521 Loan repayment - - - 292,496 5,444 Other - 35,679 - - - Total revenues 9,300 203,480 207 309,998 5,965 EXPENDITURESCurrentGeneral government - - - - - Public safety - - - - - Public service - - - - - Public welfare 3,460 - - 78,835 44,400 Capital outlay 2,060 222,493 - - - Debt servicePrincipal - - - - - Interest and fiscal fees - - - - - Total expenditures 5,520 222,493 - 78,835 44,400 Revenues over (under) expenditures 3,780 (19,013) 207 231,163 (38,435) OTHER FINANCING SOURCES (USES)Transfers in 83,014 30,150 - - - Transfers out (289,624) - - - - Long-term debt issued - - - - - Payments to refunded bond escrow agent - - - - - Sale of capital assets - - - - - Total other financing sources and uses (206,610) 30,150 - - - Net change in fund balance (202,830) 11,137 207 231,163 (38,435) FUND BALANCES, beginning of year 202,830 54,692 22,136 475,035 61,948 FUND BALANCES, end of year -$ 65,829$ 22,343$ 706,198$ 23,513$ (continued)CITY OF BOZEMAN, MONTANACOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES-NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2012242
108Special Revenue FundsDowntown MunicipalCommunity Improvement Street Park CourtHousing District Lighting Land Restitution TotalsREVENUESTaxes -$ 731,796$ -$ -$ -$ 3,731,033$ Special assessments - 113,803 439,345 - - 956,955 Licenses and permits - - - - - - Intergovernmental - 31,158 - - - 1,548,052 Charges for services - - - - - 608,303 Fines and forfeitures - - - - - 122,819 Interest on investments 2,956 10,771 5,494 1,854 3 86,124 Loan repayment 5,000 - - - - 306,385 Other - - - 11,712 - 127,754 Total revenues 7,956 887,528 444,839 13,566 3 7,487,425 EXPENDITURESCurrentGeneral government - - - - - 736,743 Public safety - - - - - 507,813 Public service - - 336,836 - - 548,330 Public welfare 40,000 388,257 - - - 1,891,947 Capital outlay - - - - - 927,476 Debt servicePrincipal - - - - - - Interest and fiscal fees - - - - - - Total expenditures 40,000 388,257 336,836 - - 4,612,309 Revenues over (under) expenditures (32,044) 499,271 108,003 13,566 3 2,875,116 OTHER FINANCING SOURCES (USES)Transfers in 41,031 - - - - 848,968 Transfers out - (447,738) - - - (2,744,595) Long-term debt issued - - - - - - Payments to refunded bond escrow agent - - - - - - Sale of capital assets - - - - - 51,615 Total other financing sources and uses 41,031 (447,738) - - - (1,844,012) Net change in fund balance 8,987 51,533 108,003 13,566 3 1,031,104 FUND BALANCES, beginning of year 318,927 1,209,801 580,372 192,822 97 8,541,398 FUND BALANCES, end of year 327,914$ 1,261,334$ 688,375$ 206,388$ 100$ 9,572,502$ (continued)Year Ended June 30, 2012NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES-CITY OF BOZEMAN, MONTANA243
109Debt Service FundsSID G.O. TIFRevolving Bonds Bonds TotalsREVENUESTaxes -$ 790,814$ -$ 790,814$ Special assessments - - - - Licenses and permits - - - - Intergovernmental - - - - Charges for services - - - - Fines and forfeitures - - - - Interest on investments 28,554 637 1,213 30,404 Loan repayment - - - - Other - - - - Total revenues 28,554 791,451 1,213 821,218 EXPENDITURESCurrentGeneral government - - - - Public safety - - - - Public service - - - - Public welfare - - - - Capital outlay - - - - Debt servicePrincipal - 590,000 165,000 755,000 Interest and fiscal fees - 197,494 256,988 454,482 Total expenditures - 787,494 421,988 1,209,482 Revenues over (under) expenditures 28,554 3,957 (420,775) (388,264) OTHER FINANCING SOURCES (USES)Transfers in - - 424,878 424,878 Transfers out - - - - Long-term debt issued - 3,172,268 - 3,172,268 Payments to refunded bond escrow agent - (3,120,000) - (3,120,000) Sale of capital assets - - - - Total other financing sources and uses - 52,268 424,878 477,146 Net change in fund balance 28,554 56,225 4,103 88,882 FUND BALANCES, beginning of year 3,166,941 73,242 685 3,240,868 FUND BALANCES, end of year 3,195,495$ 129,467$ 4,788$ 3,329,750$ Year Ended June 30, 2012CITY OF BOZEMAN, MONTANACOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES-NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)244
110 Capital Projects FundPermanent FundTotalNonmajorGeneral Cemetery Governmental Improvements Perpetual Care FundsREVENUESTaxes -$ -$ 4,521,847$ Special assessments - - 956,955 Licenses and permits - - - Intergovernmental - - 1,548,052 Charges for services - 87,573 695,876 Fines and forfeitures - - 122,819 Interest on investments 558 5,572 122,658 Loan repayment - - 306,385 Other - - 127,754 Total revenues 558 93,145 8,402,346 EXPENDITURESCurrentGeneral government - - 736,743 Public safety - - 507,813 Public Service 1,966 - 550,296 Public welfare - - 1,891,947 Capital outlay 477,763 - 1,405,239 Debt servicePrincipal - - 755,000 Interest and fiscal fees - - 454,482 Total expenditures 479,729 - 6,301,520 Revenues over (under) expenditures (479,171) 93,145 2,100,826 OTHER FINANCING SOURCES (USES)Transfers in 125,394 40,000 1,439,240 Transfers out - - (2,744,595) Long-term debt issued- 3,172,268 Payments to refunded bond escrow agent - (3,120,000) Sale of capital assets - - 51,615 Total other financing sources and uses 125,394 40,000 (1,201,472) Net change in fund balance (353,777) 133,145 899,354 FUND BALANCES, beginning of year 302,191 553,214 12,637,671 FUND BALANCES, end of year (51,586)$ 686,359$ 13,537,025$ CITY OF BOZEMAN, MONTANACOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES-NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2012245
BUDGET TO ACTUAL SCHEDULES – OTHER MAJOR FUNDS246
111 Variance withActual Amounts Final BudgetOriginal Final Budgetary Basis Positive (Negative)Budgetary fund balance, July 1 2,196,830$ 2,196,830$ 2,196,830$ -$ Resources (inflows):Taxes - - - - Special assessments 1,500,000 1,500,000 858,699 (641,301) Licenses and permits - - - - Intergovernmental - - - - Charges for services - - - - Fines and forfeitures - - - - Interest on investments - - 22,356 22,356 Transfers from other funds - - - - Proceeds from long term debt - - - - Premium on bonds issued - - - - Proceeds from the sale of fixed assets - - - Other - - - - Amounts available for appropriation 3,696,830 3,696,830 3,077,885 (618,945) Charges to appropriations (outflows):CurrentGeneral government - - - - Public safety - - - - Public service - - - - Public welfare - - - - Capital outlay - - - - Debt service 1,500,000 2,275,000 2,274,320 680 Transfers to other funds - - - - Total charges to appropriations 1,500,000 2,275,000 2,274,320 680 Budgetary fund balance, June 30 2,196,830$ 1,421,830$ 803,565$ (618,265)$ CITY OF BOZEMAN, MONTANASCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET TO ACTUALOTHER MAJOR FUNDS - SID SINKING FUNDBudgeted AmountsYear Ended June 30, 2012247
112SIDSinkingSources/inflows of resourcesActual amounts (budgetary basis) "available for appropriation" from the budgetarycomparison schedule 3,077,885$ Differences - budget to GAAP:The fund balance at the beginning of the year is a budgetary resource but isnot a current-year revenue for financial reporting purposes. (2,196,830) Proceeds of long term debt are inflows for budgetary purposes, but are notrevenues for financial reporting purposes. - Proceeds from the sale of fixed assets are a budgetary resource but are not a current-year revenue for financial reporting purposes. - Transfers from other funds are inflows of budgetary purposes, but are notrevenues for financial reporting purposes. - Total revenues as reported on the statement of revenues, expenditures, andchanges in fund balances - Other nonmajor governmental funds 881,055$ Uses/outflows of resourcesActual amounts (budgetary basis) "total charges to appropriations" from thebudgetary comparison schedule 2,274,320$ Differences - budget to GAAP:Bond issuance costs are outflows for budgetary purposes, but are notexpenditures for financial reporting purposes. - Transfers to other funds are outflows of budgetary purposes, but are notexpenditures for financial reporting purposes. - Total expenditures as reported on the statement of revenues, expenditures, andchanges in fund balances - Other nonmajor governmental funds 2,274,320$ CITY OF BOZEMAN, MONTANANOTE TO BUDGET TO ACTUAL STATEMENT - OTHER MAJOR FUNDSYear Ended June 30, 2012248
BUDGET TO ACTUAL SCHEDULES – NONMAJOR FUNDS249
113CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUALYear Ended June 30, 2012Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes 1,023,310$ 967,014$ (56,296)$ 164,124$ 165,523$ 1,399$ Special assessments 398,000 399,054 (1,054) - - - Licenses and permits - - - - - - Intergovernmental - 452,695 452,695 76,500 99,516 23,016 Charges for services 40,000 19,363 (20,637) 125,960 159,858 33,898 Fines and forfeitures 70,000 73,640 3,640 - - - Interest on investments 33,700 36,955 3,255 - 1,251 1,251 Loan repayment - 3,445 3,445 - - - Other 11,000 59,578 48,578 33,000 14,789 (18,211) Total revenues 1,576,010 2,011,744 435,734 399,584 440,937 41,353 EXPENDITURES - BUDGETUNIT 2,353,375 1,516,415 836,960 661,405 648,832 12,573 Revenues over (under) expenditures (777,365) 495,329 1,272,694 (261,821) (207,895) 53,926 OTHER FINANCING SOURCES (USES)Transfers in 150,000 168,440 18,440 312,000 331,482 19,482 Transfers out (288,000) (217,250) 70,750 - - - Long-term debt issued - - - - - - Sale of capital assets - 39,290 39,290 - - - Total other financing sources (uses) (138,000) (9,520) 128,480 312,000 331,482 19,482 Revenues and other sources over(under) expenditures (915,365)$ 485,809 1,401,174$ 50,179$ 123,587 73,408$ FUND BALANCES, beginning of year 3,365,717 239,604 FUND BALANCES, end of year 3,851,526$ 363,191$ (continued)Departmental Special Revenues City Planning BoardNONMAJOR GOVERNMENTAL FUNDS250
114Variance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes 1,849,219$ 1,866,700$ 17,481$ -$ -$ -$ Special assessments - - - - - - Licenses and permits - - - - - - Intergovernmental - - - 660,960 650,383 (10,577) Charges for services - - - - - - Fines and forfeitures - - - - - - Interest on investments - 272 272 7,500 4,100 (3,400) Loan repayment - - - - - - Other 40,000 - (40,000) - - - Total revenues 1,889,219 1,866,972 (22,247) 668,460 654,483 (13,977) EXPENDITURES - BUDGETUNIT - - - 656,500 615,687 40,813 Revenues over (under) expenditures 1,889,219 1,866,972 (22,247) 11,960 38,796 26,836 OTHER FINANCING SOURCES (USES)Transfers in 40,000 40,000 - - - - Transfers out (2,002,219) (1,789,983) 212,236 - - - Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources (uses) (1,962,219) (1,749,983) 212,236 - - - Revenues and other sources over(under) expenditures (73,000)$ 116,989 189,989$ 11,960$ 38,796 26,836$ FUND BALANCES, beginning of year 392,437 559,816 FUND BALANCES, end of year 509,426$ 598,612$ (continued)Gas Tax Apportionment InsuranceSpecial Revenue FundsCITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2012251
115CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUALYear Ended June 30, 2012Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ -$ -$ -$ -$ -$ Special assessments - - - - - - Licenses and permits - - - - - - Intergovernmental - 136,199 136,199 - - - Charges for services - - - - - - Fines and forfeitures 40,000 48,894 8,894 50,000 285 (49,715) Interest on investments - 392 392 5,000 1,837 (3,163) Loan repayment - - - - - - Other 7,000 46 (6,954) - - - Total revenues 47,000 185,531 138,531 55,000 2,122 (52,878) EXPENDITURES - BUDGETUNIT 216,801 208,420 8,381 59,000 58,883 117 Revenues over (under) expenditures (169,801) (22,889) 146,912 (4,000) (56,761) (52,761) OTHER FINANCING SOURCES (USES)Transfers in 140,000 140,000 - - - - Transfers out - - - - - - Long-term debt issued - - - - - - Sale of capital assets - 9,125 9,125 - - - Total other financing sources (uses) 140,000 149,125 9,125 - - - Revenues and other sources over(under) expenditures (29,801)$ 126,236 156,037$ (4,000)$ (56,761) (52,761)$ FUND BALANCES, beginning of year - 209,003 FUND BALANCES, end of year 126,236$ 152,242$ (continued)Drug Forfeitures City-County Drug ForfeituresNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)252
116Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ -$ -$ -$ -$ -$ Special assessments - - - 2,000 4,753 2,753 Licenses and permits - - - - - - Intergovernmental - - - - 1,000 1,000 Charges for services - - - 416,000 429,082 13,082 Fines and forfeitures - - - - - - Interest on investments - 9 9 3,500 2,000 (1,500) Loan repayment - - - - - - Other 1,000 - (1,000) 10,000 5,950 (4,050) Total revenues 1,000 9 (991) 431,500 442,785 11,285 EXPENDITURES - BUDGETUNIT 100 54 46 439,452 428,552 10,900 Revenues over (under) expenditures 900 (45) (945) (7,952) 14,233 22,185 OTHER FINANCING SOURCES (USES)Transfers in - - - - 14,851 14,851 Transfers out - - - - - - Long-term debt issued - - - - - - Sale of capital assets - - - - 3,200 3,200 Total other financing sources (uses) - - - - 18,051 18,051 Revenues and other sources over(under) expenditures 900$ (45) (945)$ (7,952)$ 32,284 40,236$ FUND BALANCES, beginning of year 1,031 208,880 FUND BALANCES, end of year 986$ 241,164$ (continued)CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2012Beautification of Bozeman Tree Maintenance253
117CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2012VariancePositiveBudget Actual (Negative)REVENUESTaxes -$ -$ -$ Special assessments - - - Licenses and permits - - - Intergovernmental - - - Charges for services - - - Fines and forfeitures - - - Interest on investments - - - Loan repayment - - - Other - - - Total revenues - - - EXPENDITURES - BUDGETUNIT 20,000 19,125 875 Revenues over (under) expenditures (20,000) (19,125) 875 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 (20,000)$ (19,125) 875$ FUND BALANCES, beginning of year 446,250 FUND BALANCES, end of year 427,125$ (continued)Special Revenue FundsLaw and Justice Center254
118CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2012Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ -$ -$ -$ -$ -$ Special assessments - - - - - - Licenses and permits - - - - - - Intergovernmental - 9,300 9,300 - 167,801 167,801 Charges for services - - - - - - Fines and forfeitures - - - - - - Interest on investments - - - - - - Loan repayment - - - - - - Other - - - - 35,679 35,679 Total revenues - 9,300 9,300 - 203,480 203,480 EXPENDITURES - BUDGETUNIT 6,000 5,520 480 222,515 222,493 22 Revenues over (under) expenditures (6,000) 3,780 9,780 (222,515) (19,013) 203,502 OTHER FINANCING SOURCESTransfers in - 83,014 83,014 30,150 30,150 - Transfers out (290,000) (289,624) 376 - - - Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources (uses) (290,000) (206,610) 83,390 30,150 30,150 - Revenues and other sources over(under) expenditures (296,000)$ (202,830) 93,170$ (192,365)$ 11,137 203,502$ FUND BALANCES, beginning of year 202,830 54,692 FUND BALANCES, end of year -$ 65,829$ (continued)Special Projects Community Transportation255
119CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2012VariancePositiveBudget Actual (Negative)REVENUESTaxes-$ -$ -$ Special assessments - - - Licenses and permits - - - Intergovernmental - - - Charges for services - - - Fines and forfeitures - - - Interest on investments - 207 207 Loan repayment - - - Other- - - Total revenues - 207 207 EXPENDITURES - BUDGETUNIT- - - Revenues over (under) expenditures - 207 207 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 -$ 207 207$ FUND BALANCES, beginning of year 22,136 FUND BALANCES, end of year22,343$ (continued)Special Revenue FundsHighway Safety256
120CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2012Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ -$ -$ -$ -$ -$ Special assessments - - - - - - Licenses and permits - - - - - - Intergovernmental - - - - - - Charges for services - - - - - - Fines and forfeitures - - - - - - Interest on investments - 17,502 17,502 3,000 521 (2,479) Loan repayment - 292,496 292,496 4,000 5,444 1,444 Other - - - - - - Total revenues - 309,998 309,998 7,000 5,965 (1,035) EXPENDITURES - BUDGETUNIT - 78,835 (78,835) 44,400 44,400 - Revenues over (under) expenditures - 231,163 231,163 (37,400) (38,435) (1,035) 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 -$ 231,163 231,163$ (37,400)$ (38,435) (1,035)$ FUND BALANCES, beginning of year 475,035 61,948 FUND BALANCES, end of year 706,198$ 23,513$ (continued)Economic Development Revolving Loan Fumd Housing Revolving Loan Fund257
121Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes 41,031$ -$ (41,031)$ 1,339,000$ 731,796$ (607,204)$ Special assessments - - - 114,000 113,803 (197) Licenses and permits - - - - - - Intergovernmental - - - 31,158 31,158 - Charges for services - - - - - - Fines and forfeitures - - - - - - Interest on investments 5,000 2,956 (2,044) 10,000 10,771 771 Loan repayment 5,000 5,000 - - - - Other - - - - - - Total revenues 51,031 7,956 (43,075) 1,494,158 887,528 (606,630) EXPENDITURES - BUDGETUNIT 40,000 40,000 - 2,189,000 388,257 1,800,743 Revenues over (under) expenditures 11,031 (32,044) (43,075) (694,842) 499,271 1,194,113 OTHER FINANCING SOURCES (USES)Transfers in - 41,031 41,031 - - - Transfers out - - - (447,878) (447,738) 140 Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources (uses) - 41,031 41,031 (447,878) (447,738) 140 Revenues and other sources over(under) expenditures 11,031$ 8,987 (2,044)$ (1,142,720)$ 51,533 1,194,253$ FUND BALANCES, beginning of year 318,927 1,209,801 FUND BALANCES, end of year 327,914$ 1,261,334$ (continued)CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2012Community Housing Downtown Improvement District258
122Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ -$ -$ -$ -$ -$ Special assessments 315,000 439,345 124,345 - - - Licenses and permits - - - - - - Intergovernmental - - - - - - Charges for services - - - - - - Fines and forfeitures - - - - - - Interest on investments - 5,494 5,494 - 1,854 1,854 Loan repayment - - - - - - Other - - - - 11,712 11,712 Total revenues 315,000 444,839 129,839 - 13,566 13,566 EXPENDITURES - BUDGETUNIT 337,000 336,836 164 - - - Revenues over (under) expenditures (22,000) 108,003 130,003 - 13,566 13,566 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 (22,000)$ 108,003 130,003$ -$ 13,566 13,566$ FUND BALANCES, beginning of year 580,372 192,822 FUND BALANCES, end of year 688,375$ 206,388$ (continued)NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2012CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUALPark LandStreet Lighting259
123Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ -$ -$ 4,416,684$ 3,731,033$ (685,651)$ Special assessments - - - 829,000 956,955 127,955 Licenses and permits - - - - - - Intergovernmental - - - 768,618 1,548,052 779,434 Charges for services - - - 581,960 608,303 26,343 Fines and forfeitures - - - 160,000 122,819 (37,181) Interest on investments - 3 3 67,700 86,124 18,424 Loan repayment - - - 9,000 306,385 297,385 Other - - - 102,000 127,754 25,754 Total revenues - 3 3 6,934,962 7,487,425 552,463 EXPENDITURES - BUDGETUNIT - - - 7,245,548 4,612,309 2,633,239 Revenues over (under) expenditures - 3 3 (310,586) 2,875,116 3,185,702 OTHER FINANCING SOURCES (USES)Transfers in - - - 672,150 848,968 176,818 Transfers out - - - (3,028,097) (2,744,595) 283,502 Long-term debt issued - - - - - - Sale of capital assets - - - - 51,615 51,615 Total other financing sources (uses) - - - (2,355,947) (1,844,012) 511,935 Revenues and other sources over(under) expenditures -$ 3 3$ (2,666,533)$ 1,031,104 3,697,637$ FUND BALANCES, beginning of year 97 8,541,398 FUND BALANCES, end of year 100$ 9,572,502$ (continued)CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2012Municipal Court Restitution Total260
124Debt Service FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ -$ -$ 783,937$ 790,814$ 6,877$ Intergovernmental- - - - - - Interest on investments 20,000 28,554 8,554 - 637 637 Total revenue 20,000 28,554 8,554 783,937 791,451 7,514 EXPENDITURESOther - - - - - - Debt servicePrincipal - - - 590,000 590,000 - Interest and fiscal fees - - - 187,498 197,494 (9,996) Total expenditures - - - 777,498 787,494 (9,996) Revenues over (under)expenditures 20,000 28,554 8,554 6,439 3,957 (2,482) OTHER FINANCING SOURCES(USES)Operating transfers in- - - - - - Operating transfers out - - - - - - Proceeds of long-term debt - - - 3,172,269 3,172,268 (1) Payments to refunded bond escrow agent- - - (3,120,000) (3,120,000) - Total other financingsources (uses) - - - 52,269 52,268 (1) Revenues and other sources over(under) expenditures 20,000$ 28,554 8,554$ 58,708$ 56,225 (2,483)$ FUND BALANCES, beginning of year3,166,941 73,242 FUND BALANCES, end of year3,195,495$ 129,467$ (continued)G.O. BondsCITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2012SID Revolving261
125Variance VarianceFavorable PositiveBudget Actual (Unfavorable) Budget Actual (Negative)REVENUESTaxes -$ -$ -$ 783,937$ 790,814$ 6,877$ Intergovernmental- - - - - - Interest on investments- 1,213 1,213 20,000 30,404 10,404 Total revenue - 1,213 1,213 803,937 821,218 17,281 EXPENDITURESOther - - - - - - Debt servicePrincipal 165,000 165,000 - 755,000 755,000 - Interest and fiscal fees 259,878 256,988 2,890 447,376 454,482 (7,106) Total expenditures 424,878 421,988 2,890 1,202,376 1,209,482 (7,106) Revenues over (under)expenditures (424,878) (420,775) 4,103 (398,439) (388,264) 10,175 OTHER FINANCING SOURCES(USES)Operating transfers in424,878 424,878 - 424,878 424,878 - Operating transfers out - - - - - - Proceeds of long-term debt - - - 3,172,269 3,172,268 (1) Payments to refunded bond escrow agent- - - (3,120,000) (3,120,000) - Total other financingsources (uses) 424,878 424,878 - 477,147 477,146 (1) Revenues and other sources over(under) expenditures -$ 4,103 4,103$ 78,708$ 88,882$ 10,174$ FUND BALANCES, beginning of year685 3,240,868 FUND BALANCES, end of year4,788$ 3,329,750$ CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2012TIF Bonds TotalDebt Service Funds262
126Variance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ -$ -$ -$ -$ -$ Special assessments - - - - - - Licenses and permits - - - - - - Intergovernmental - - - - - - Charges for services - - - 84,000 87,573 3,573 Fines and forfeitures - - - - - - Interest on investments - 558 558 8,000 5,572 (2,428) Loan repayment - - - - - - Other - - - - - - Total revenues - 558 558 92,000 93,145 1,145 EXPENDITURES - BUDGETUNIT 480,000 479,729 271 - - - Revenues over (under) expenditures (480,000) (479,171) 829 92,000 93,145 1,145 OTHER FINANCING SOURCES (USES)Transfers in - 125,394 125,394 40,000 40,000 - Transfers out - - - - - - Total other financing sources - 125,394 125,394 40,000 40,000 - Revenues and other sources over(under) expenditures (480,000)$ (353,777) 126,223$ 132,000$ 133,145 1,145$ FUND BALANCES, beginning of year302,191 553,214 FUND BALANCES, end of year(51,586)$ 686,359$ CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2012Cemetery Perpetual CarePermanent FundCapital Projects FundGeneral Improvements263
INTERNAL SERVICE FUNDS STATEMENTS 264
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 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 and dental claims incurred by city employees and retirees which are in-turn paid to the City’s insurance program coordinator. 265
127Vehicle MedicalMaintenance HealthShop Insurance Total ASSETSCurrent assetsCash and equivalents 529,403$ 243,167$ 772,570$ Customer receivables, net - 14,355 14,355 Total current assets 529,403 257,522 786,925 Machinery and equipment 135,166 - 135,166 Vehicles 70,312 - 70,312 Buildings 1,388,583 - 1,388,583 Less: accumulated depreciation (294,766) - (294,766) Net property, plant, and equipment 1,299,295 - 1,299,295 Total assets 1,828,698$ 257,522$ 2,086,220$ LIABILITIESCurrent liabilitiesAccounts payable 43,071$ 468$ 43,539$ Accrued employee benefits 12,051 - 12,051 Other post-employment health benefits - implicit rate subsidy21,093 - 21,093 Due to other City funds - - - Total current liabilities 76,215 468 76,683 NET ASSETSInvested in capital assets, net of related debt 1,299,295 - 1,299,295 Unrestricted 453,188 257,054 710,242 Total net assets 1,752,483$ 257,054$ 2,009,537$ CITY OF BOZEMAN, MONTANACOMBINING STATEMENT OF NET ASSETSJune 30, 2012INTERNAL SERVICE FUNDS266
128Vehicle MedicalMaintenance HealthShop Insurance TotalOPERATING REVENUESCharges for services 763,086$ 3,684,416$ 4,447,502$ OPERATING EXPENSESSalaries and benefits 267,252 - 267,252 Materials and supplies 377,237 - 377,237 Repairs and maintenance 2,611 - 2,611 Utilities 4,961 - 4,961 Administrative charges 38,344 - 38,344 Insurance claims - 3,628,512 3,628,512 Other expenses 19,920 66,054 85,974 Depreciation 79,193 - 79,193 Total operating expenses 789,518 3,694,566 4,484,084 Operating income (loss) (26,432) (10,150) (36,582) NON-OPERATING REVENUES (EXPENSES)Interest income 1,851 - 1,851 Interest expense - (446) (446) Other income 3,128 8,297 11,425 Total non-operating revenue (expenses) 4,979 7,851 12,830 Income (loss) before transfers (21,453) (2,299) (23,752) Transfers in 301,324 - 301,324 Transfers out - - - Change in net assets 279,871 (2,299) 277,572 NET ASSETS, beginning of year 1,472,612 259,353 1,731,965 NET ASSETS, end of year 1,752,483$ 257,054$ 2,009,537$ CITY OF BOZEMAN, MONTANACOMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETSINTERNAL SERVICE FUNDSYear Ended June 30, 2012267
129Vehicle MedicalMaintenance HealthShop Insurance TotalCASH FLOWS FROM OPERATIONS:Receipts from customers 763,086$ 3,684,421$ 4,447,507$ Receipts from others 3,128 8,297 11,425 Operating loans from other City funds 301,324 - 301,324 Payments to suppliers (385,802) (65,641) (451,443) Payments to employees (257,077) (3,628,512) (3,885,589) Payments to Internal Service Funds and administrative fees (38,344) - (38,344) Net Cash Provided (Used) by Operating Activities 386,315 (1,435) 384,880 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:Additions to property, plant and equipment (72,966) - (72,966) Interest paid on bonds, interfund loans, loans and leases - (446) (446) Net Cash Flows Used by Capital and Related Financing Activities (72,966) (446) (73,412) CASH FLOWS FROM INVESTING ACTIVITIES:Interest on investments 1,851 - 1,851 Net Increase (Decrease) in Cash and Cash Equivalents 315,200 (1,881) 313,319 CASH AND EQUIVALENTS, beginning of year 214,203 245,048 459,251 CASH AND EQUIVALENTS, end of year 529,403$ 243,167$ 772,570$ (continued)CITY OF BOZEMAN, MONTANAINTERNAL SERVICE FUNDSCOMBINING STATEMENT OF CASH FLOWSYear Ended June 30, 2012268
130A reconciliation of operating loss to cash provided (used) by operating activities follows:Vehicle MedicalMaintenance HealthShop Insurance TotalOPERATING INCOME (LOSS) (26,432)$ (10,150)$ (36,582)$ Adjustments to reconcile operating income (loss)to net cash provided (used) by operating activitiesDepreciation 79,193 - 79,193 Other income 3,128 8,297 11,425 Changes in assets and liabilities:(Increase) Decrease in: Customer receivables - 5 5 Prepaid expenses - - - Increase (Decrease) in: Accounts payable 18,927 413 19,340 Accrued employee benefits payable 10,175 - 10,175 Interfund borrowings 301,324 - 301,324 Total adjustments 412,747 8,715 421,462 Net cash provided (used) by operating activities 386,315$ (1,435)$ 384,880$ CITY OF BOZEMAN, MONTANAINTERNAL SERVICE FUNDSCOMBINING STATEMENT OF CASH FLOWS (CONTINUED)Year Ended June 30, 2012269
AGENCY FUNDS STATEMENTS270
AGENCY FUNDS Agency Funds are used to account for assets held by the City as an agent for individuals, private organizations, or other governments. Montana Arts Council – Accounts for pass-through monies granted by the State of Montana for use by the Montana Ballet Company, Bozeman Symphony Orchestra, Intermountain Opera Association, Children’s Museum of Bozeman, Emerson Cultural Center, and the Equinox Theater Company. Municipal Court – Accounts for monies held for court appearance bonds. 271
131TotalMontana Municipal AgencyArts Council Court FundsASSETSCash and cash equivalents -$ 111,575$ 111,575$ Customer receivables - 560 560 Total assets -$ 112,135$ 112,135$ LIABILITIESAccounts payable -$ 112,135$ 112,135$ Total liabilities -$ 112,135$ 112,135$ CITY OF BOZEMAN, MONTANAAGENCY FUNDSCOMBINING STATEMENT OF FIDUCIARY NET ASSETSJune 30, 2012272
132MontanaArts Council Balance June 30, 2011 Additions Deletions Balance June 30, 2012 ASSETSCash and cash equivalents -$ 11,092$ (11,092)$ -$ Total assets - 11,092 (11,092) - LIABILITIESAccounts payable -$ 11,092$ (11,092)$ -$ Total liabilities -$ 11,092$ (11,092)$ -$ Municipal Court Balance June 30, 2011 Additions Deletions Balance June 30, 2012 ASSETSCash and cash equivalents 218,595$ -$ (107,020)$ 111,575$ Customer receivables 1,725 - (1,165) 560 Total assets 220,320$ -$ (108,185)$ 112,135$ LIABILITIESAccounts payable 220,320$ (108,185)$ 112,135$ Total liabilities 220,320$ -$ (108,185)$ 112,135$ CITY OF BOZEMAN, MONTANAAGENCY FUNDSCOMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIESYear ended June 30, 2012273
PART III STATISTICAL SECTION 274
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 financialstatements, note disclosures and required supplementary information says about the government's overall financial health. ContentsPageFinancial TrendsThese schedules contain trend information to help the reader understand how the government's financial performance and well-being have changed over time 133Revenue CapacityThese schedules contain information to help the reader assess the government's most significant local revenue source, the property tax. 138Debt CapacityThese schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's abilityto issue additional debt in the future. 144Demographic and Economic InformationThese schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activitiestake place.149Operating InformationThese schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to theservices the government provides and the activities it performs.151Sources: Unless otherwise noted, the information in these schedules is derived from the City of Bozeman comprehensive annual financial reports for the relevant year.Note: The City of Bozeman implemented GASB Statement 34 in Fiscal Year 2002, therefore the data for prior years are not shown; schedules presenting government-wide information include information beginning in that year. Statistical Section275
FINANCIAL TRENDS SECTION 276
1332003200420052006200720082009201020112012Governmental activitiesInvested in capital assets, net of related debt (1,618,282) 5,197,117 8,409,053 22,987,166 77,734,584 80,873,924 83,707,824 84,113,904 88,844,404 88,500,437 Restricted 6,890,530 10,615,720 12,343,248 5,242,903 546,916 9,254,307 7,699,511 8,082,181 20,962,038 20,797,365 Unrestricted 24,396,920 17,345,961 21,077,779 25,537,959 28,481,673 23,443,921 20,871,106 25,076,908 16,049,044 13,470,543 Total governmental activities net assets 29,669,168$ 33,158,798$ 41,830,080$ 53,768,028$ 106,763,173$ 113,572,152$ 112,278,441$ 117,272,993$ 125,855,486$ 122,768,345$ Business-type activitiesInvested in capital assets, net of related debt 19,960,910 25,174,352 28,124,307 28,416,015 154,227,534 177,379,168 188,077,778 189,965,189 188,180,889 192,485,459 Restricted 967,939 13,357,348 11,041,147 13,462,443 17,099,866 18,322,089 19,775,588 9,044,280 12,660,466 11,446,886 Unrestricted 19,412,803 9,174,747 12,284,379 12,899,363 16,550,235 17,547,218 11,936,119 16,069,597 12,382,018 2,809,558 Total business-type activities 40,341,652$ 47,706,447$ 51,449,833$ 54,777,821$ 187,877,635$ 213,248,475$ 219,789,485$ 215,079,066$ 213,223,373$ 206,741,903$ Primary governmentInvested in capital assets, net of related debt 18,342,628 30,371,469 36,533,360 51,403,181 231,962,118 258,253,092 271,785,602 274,079,093 277,025,293 280,985,896 Restricted 7,858,469 23,973,068 23,384,395 18,705,346 17,646,782 27,576,396 27,475,099 17,126,461 33,622,504 32,244,251 Unrestricted 43,809,723 26,520,708 33,362,158 38,437,322 45,031,908 40,991,139 32,807,225 41,146,505 28,431,062 16,280,101 Total primary government net assets 70,010,820$ 80,865,245$ 93,279,913$ 108,545,849$ 294,640,808$ 326,820,627$ 332,067,926$ 332,352,059$ 339,078,859$ 329,510,248$ Fiscal YearCITY OF BOZEMAN, MONTANANET ASSETS BY COMPONENTPast Ten Fiscal YearsUnaudited statistical section.277
1342003200420052006200720082009201020112012ExpensesGovernmental Activities:General government 5,095,401 4,427,676 4,986,413 5,666,069 5,733,371 6,969,181 6,629,783 6,299,831 6,122,190 8,706,665 Public Safety 8,027,193 8,078,120 8,834,875 9,858,055 10,488,873 11,183,637 11,556,016 12,382,157 12,859,702 13,215,680 Public Service 3,182,445 3,096,273 3,475,067 4,163,644 8,511,308 8,979,085 10,130,184 9,703,594 9,190,515 8,174,461 Public Welfare 3,542,608 4,017,654 4,372,959 5,477,065 5,536,741 5,412,192 6,465,940 6,915,557 7,500,727 7,249,008 Interest and fiscal fees 672,243 667,118 709,178 550,296 549,667 649,226 737,762 714,714 679,652 636,478 Total governmental activities expenses 20,519,890$ 20,286,841$ 22,378,492$ 25,715,129$ 30,819,960$ 33,193,321$ 35,519,685$ 36,015,853$ 36,352,786$ 37,982,292$ Business-type activities:Water 2,924,951 3,782,726 4,292,503 4,824,505 10,490,811 11,150,266 11,872,984 12,016,149 11,649,639 11,674,222 Wastewater 2,556,245 3,353,567 4,246,156 4,586,959 7,376,348 8,061,412 10,293,894 9,143,077 10,128,397 10,203,165 Solid waste 1,955,939 2,462,291 2,720,738 3,547,902 3,283,135 2,574,651 2,687,590 2,561,124 2,578,109 2,584,899 Parking766,454 967,077 991,712 990,229 Total business-type activities expenses 7,437,135 9,598,584 11,259,397 12,959,366 21,150,294 21,786,329 25,620,922 24,687,427 25,347,857 25,452,515 Total primary government expenses 27,957,025$ 29,885,425$ 33,637,889$ 38,674,495$ 51,970,254$ 54,979,650 61,140,607 60,703,280 61,700,643 63,434,807 Program RevenuesGovernmental activities: Charges for services:General government 1,230,771 793,529 1,261,652 1,496,818 2,023,362 2,237,962 1,795,469 2,774,869 2,870,443 1,949,125 Public Safety 2,586,058 2,390,179 1,898,531 1,984,642 3,712,280 3,575,133 3,500,929 2,414,893 2,684,724 2,638,811 Public Service 4,084,641 3,934,801 10,302,583 9,217,198 5,361,852 4,858,444 4,790,460 3,742,856 4,454,492 4,983,420 Public Welfare 812,909 865,910 567,471 718,162 704,790 713,342 779,841 399,280 451,960 1,102,896 Operating grants and contributions 461,355 878,713 360,980 502,198 409,263 502,863 439,131 693,342 1,114,835 566,586 Capital grants and contributions 61,675 37,538 513,034 1,380,553 18,694,375 7,153,103 8,219,791 5,307,118 7,867,093 635,758 Total governmental activities program revenues 9,237,409$ 8,900,670$ 14,904,251$ 15,299,571$ 30,905,922$ 19,040,847$ 19,525,621$ 15,332,358$ 19,443,547$ 11,876,596$ Business-type activities Charges for services:Water 5,503,363 5,842,122 6,547,228 7,434,574 8,604,498 8,222,724 7,221,378 6,986,247 7,064,571 7,921,483 Wastewater 5,626,790 5,765,594 6,074,615 6,430,206 7,052,987 6,918,132 6,052,668 6,505,119 6,930,036 7,488,473 Solid waste 3,632,183 3,884,723 3,648,930 2,582,437 2,428,230 2,608,662 2,391,641 2,716,981 2,569,607 2,570,644 Parking - - - - - - 467,607 326,820 417,114 385,056 Operating grants and contributions 14,643 35,396 36,129 - - - - - - - Capital grants and contributions: 1,520,318 1,585,544 1,595,805 1,624,237 26,464,222 29,405,599 6,465,230 3,621,051 6,589,612 566,138 Total business-type activities program revenues 16,297,297 17,113,379 17,902,707 18,071,454 44,549,937 47,155,117 22,598,524 20,156,218 23,570,940 18,931,794 Total primary government program revenues 25,534,706$ 26,014,049$ 32,806,958$ 33,371,025$ 75,455,859$ 66,195,964 42,124,145 35,488,576 43,014,487 30,808,390 CITY OF BOZEMAN, MONTANACHANGES IN NET ASSETSPast Ten Fiscal Years(accrual basis of accounting)Fiscal YearUnaudited statistical section.278
135CITY OF BOZEMAN, MONTANACHANGES IN NET ASSETSPast Ten Fiscal Years(accrual basis of accounting)2003200420052006200720082009201020112012Net (Expense) / RevenueGovernmental activities (11,282,481) (11,386,171) (7,474,241) (10,415,558) 85,962 (14,152,474) (15,994,064) (20,683,495) (16,909,239) (26,105,696) Business-type activities 8,860,162 7,514,795 6,643,310 5,112,088 23,399,643 25,368,788 (3,022,398) (4,531,209) (1,776,917) (6,520,721) Total primary government net expense (2,422,319)$ (3,871,376)$ (830,931)$ (5,303,470)$ 23,485,605$ 11,216,314$ (19,016,462)$ (25,214,704)$ (18,686,156)$ (32,626,417)$ General Revenues and Other Changes in Net AssetsGovernmental activities: TaxesProperty taxes 8,028,832 9,104,945 10,437,702 11,137,006 11,836,748 12,070,765 14,629,230 15,501,316 16,342,053 15,716,055 Unrestricted grants and contributions 4,732,127 4,327,489 4,910,306 5,163,288 5,375,807 5,617,243 6,125,789 6,284,467 6,782,383 6,898,717 Investment earnings 417,156 344,013 606,120 852,222 1,093,115 1,362,790 671,859 352,378 301,424 283,090 Miscellaneous 1,093,888 979,820 2,422,805 3,416,890 1,940,156 1,859,313 2,766,671 2,256,071 1,556,790 155,484 Sale of capital assets - - - - 490,637 51,342 68,057 761,952 (8,168) 2,326 Transfers of capital assets - - - - - - (6,311,324) - - - Transfers - 150,000 - 1,784,100 489,780 - (3,249,929) 521,863 517,250 (37,136) Extraordinary items - - (2,231,410) - - - - - - - Total governmental activities 14,272,003$ 14,906,267$ 16,145,523$ 22,353,506$ 21,226,243$ 20,961,453$ 14,700,353$ 25,678,047$ 25,491,732$ 23,018,536$ Business-type activities: Unrestricted grants and contributions - - - - 3,182 2,052 2,155 342,653 438,475 2,115 Transfers of capital assets - - - - - - 6,311,324 - - - Transfers - (150,000) - (1,784,100) (489,780) - 3,249,929 (521,863) (517,251) 37,136 Extraordinary items - - (2,899,924) - - - - - - - Total business-type activities - (150,000) (2,899,924) (1,784,100) (486,598) 2,052 9,563,408 (179,210) (78,776) 39,251 Total primary government 14,272,003$ 14,756,267$ 13,245,599$ 20,569,406$ 20,739,645$ 20,963,505 24,263,761 25,498,837 25,412,956 23,057,787 Change in Net AssetsGovernmental activities 2,989,522 3,520,096 8,671,282 11,937,948 21,312,205 6,808,979 (1,293,711) 4,994,552 8,582,493 (3,087,160) Business-type activities 8,860,162 7,364,795 3,743,386 3,327,988 22,913,045 25,370,840 6,541,010 (4,710,419) (1,855,693) (6,481,470) Total primary government 11,849,684$ 10,884,891$ 12,414,668$ 15,265,936$ 44,225,250$ 32,179,819$ 5,247,299$ 284,133$ 6,726,800$ (9,568,630)$ Fiscal YearUnaudited statistical section.279
1362003200420052006200720082009201020112012General FundReserved - - 11,687 5,725 3,000 3,000 63,000 - Unreserved 3,083,832 3,345,541 3,996,600 3,173,374 4,367,538 4,516,814 5,301,397 5,119,400 Nonspendable- - Restricted- - Committed- - Assigned5,991,388 7,062,964 Unassigned905,862 264,091 Total general fund 3,083,832 3,345,541 4,008,287 3,179,099 4,370,538 4,519,814 5,364,397 5,119,400 6,897,250 7,327,055 All Other Governmental Reserved 7,965,826 7,315,275 1,606,904 2,164,698 2,996,832 3,045,231 2,660,918 6,597,569 Unreserved, reported in:Special revenue funds 11,993,869 14,362,029 16,296,309 9,776,823 13,205,328 13,723,846 12,516,240 14,916,152 Capital projects funds 3,656,555 2,037,255 4,545,867 6,598,235 - 2,884,553 - 1,793,287 Debt service funds - - - - - - - - Nonspendable999,464 1,113,484 Restricted19,962,574 19,683,881 Committed3,278,422 3,463,714 Assigned6,049,807 7,062,964 Unassigned905,862 212,205 Total all other governmental funds 23,616,250 23,714,559 22,449,080 18,539,756 16,202,160 19,653,630 15,177,158 23,307,008 31,196,129 31,536,248 Note: The City of Bozeman implemented the new standards for reporting fund balance GASB Statement 54 in fiscal year 2011Fiscal YearCITY OF BOZEMAN, MONTANAFUND BALANCE, GOVERNMENTAL FUNDSPast Ten Fiscal Years(modified accrual basis of accounting)Unaudited statistical section.280
1372003200420052006200720082009201020112012RevenuesTaxes 7,940,777 9,274,923 10,480,668 11,222,034 11,853,872 12,004,946 14,451,954 15,055,844 16,634,924 16,057,318 Special assessments 1,234,119 1,164,151 2,478,024 1,931,261 1,866,717 1,793,813 1,633,896 1,643,500 1,866,272 1,898,007 Licenses and permits 1,138,801 1,120,864 1,566,812 1,653,546 1,762,086 1,351,887 1,140,831 958,590 1,308,378 1,214,705 Intergovernmental 5,255,157 5,243,740 5,784,320 7,046,039 6,115,697 9,642,918 7,102,049 7,900,176 8,299,803 7,697,637 Charges for service 5,637,618 5,246,608 5,818,566 6,347,087 7,403,739 6,748,891 6,468,006 5,790,382 6,629,507 6,891,594 Fines and forfeitures 1,305,536 1,188,706 1,443,468 1,461,398 1,746,213 1,644,767 1,597,236 1,518,481 1,441,383 1,364,617 Interest on investments 413,212 342,979 545,805 848,909 1,068,802 1,360,914 671,859 352,378 300,516 281,239 loan repayment 211,936 183,987 426,076 291,338 10,193 19,849 9,985 10,401 193,302 306,385 Other 1,037,347 901,696 2,421,201 3,412,410 1,940,156 1,859,313 2,766,671 2,256,071 1,556,790 155,484 Total revenues 24,174,503 24,667,654 30,964,940 34,214,022 33,767,475 36,427,298 35,842,487 35,485,823 38,230,875 35,866,986 ExpendituresGeneral government 3,853,464 4,406,577 5,006,986 5,309,637 5,577,810 6,153,838 5,946,355 5,690,488 5,939,771 6,266,566 Public safety 7,232,374 7,661,421 8,535,646 9,494,622 10,160,291 10,778,917 11,056,742 11,709,170 12,137,616 12,513,270 Public service 2,028,864 2,115,856 2,363,585 2,276,802 3,060,672 3,020,855 2,976,711 2,702,510 3,002,021 2,738,066 Public welfare 3,430,983 4,154,228 4,320,299 5,099,873 4,315,086 4,819,758 5,161,997 4,916,828 6,435,916 6,184,073 Capital outlay 3,536,045 4,824,965 6,417,671 18,374,651 11,397,365 12,205,040 9,380,742 4,248,758 3,299,017 3,881,388 Debt servicePrincipal 850,119 1,448,320 6,788,969 989,041 833,158 2,013,232 1,138,051 1,194,819 1,611,087 3,235,664 Interest & Fiscal Fees 672,243 667,118 709,178 570,360 549,667 649,662 738,198 715,150 680,088 666,082 Total expenditures 21,604,092 25,278,485 34,142,334 42,135,050 35,894,049 39,641,302 36,398,796 31,177,723 33,105,516 35,485,109 Excess of revenuesover (under) expenditures 2,570,411 (610,831) (3,177,394) (7,921,028) (2,126,574) (3,214,004) (556,309) 4,308,100 5,125,359 381,877 Other Financing Sources (Uses)Proceeds from borrowing 5,271,000 - 4,804,467 1,376,869 - - - - - - Transfers in 3,012,716 3,137,517 5,497,553 17,619,744 4,565,896 4,604,100 8,394,126 10,857,332 6,985,734 3,482,550 Transfers out (3,013,286) (2,987,517) (5,497,553) (15,835,644) (4,076,116) (4,604,100) (11,733,378) (11,033,925) (7,255,505) (3,821,010) Issuance of debt6,554,166 177,346 890,000 - 3,357,798 Premium on Bonds Issued10,896 - - - - Payments to Refunded Bond Escrow Agent(3,120,000) Sales of capital assets 7,856 820,849 1,604 1,483 490,637 249,688 86,326 766,922 10,555 59,204 Total other financing sources (uses) 5,278,286 970,849 4,806,071 3,162,452 980,417 6,814,750 (3,075,580) 1,480,329 (259,216) (41,458) Extraordinary itemsNet change in fund balances 7,848,697$ 360,018$ 1,628,677$ (4,758,576)$ (1,146,157)$ 3,600,746$ (3,631,889)$ 5,788,429$ 4,866,143$ 340,419$ Debt service as a percentage of 8.4% 10.3% 27.0% 6.6% 5.6% 9.7% 6.9% 7.1% 7.7% 12.3%noncapital expendituresFiscal YearCITY OF BOZEMAN, MONTANACHANGES IN FUND BALANCES, GOVERNMENTAL FUNDSPast Ten Fiscal Years(modified accrual basis of accounting)Unaudited statistical section.281
REVENUE CAPACITY SECTION 282
138FiscalTotal TotalYearTaxable DirectEnded Residential Commercial & Agricultural Assessed TaxJune 30,PropertyIndustrial PropertyPropertyValueRate2003 25,790,800 17,500,900 2,763,300 46,055,000 154.21 2004 27,753,040 18,832,420 2,973,540 49,559,000 163.31 2005 29,671,600 20,134,300 3,179,100 52,985,000 171.99 2006 32,515,280 22,063,940 3,483,780 58,063,000 168.26 2007 35,419,440 24,034,620 3,794,940 63,249,000 163.42 2008 38,629,360 26,212,780 4,138,860 68,981,000 154.18 2009 41,539,680 28,187,640 4,450,680 74,178,000 171.16 2010 43,842,400 29,750,200 4,697,400 78,290,000 170.19 2011 45,023,440 30,551,620 4,823,940 80,399,000 168.75 2012 45,954,720 31,183,560 4,923,720 82,062,000 166.75 Source: Based on information provided by Gallatin County and Department of RevenueNote: Property is assessed by the State Department of Revenue every six years.CITY OF BOZEMAN, MONTANAASSESSED VALUE OF TAXABLE PROPERTYPast Ten Fiscal YearsUnaudited statistical section.283
139Fiscal General TotalYear Obligation Direct BozemanEnded Basic Debt Tax School Gallatin State ofJune 30,RateServiceRateDistrictCountyMontana2003 139.95 14.26 154.21 252.94 189.94 46.00 2004 154.09 9.22 163.31 266.43 200.59 46.00 2005 158.67 13.32 171.99 264.68 194.15 46.00 2006 155.89 12.37 168.26 265.55 196.74 46.00 2007 152.07 11.35 163.42 182.74 197.36 46.00 2008 142.98 11.20 154.18 183.85 205.40 46.00 2009 160.59 10.57 171.16 212.53 210.14 46.00 2010 160.18 10.01 170.19 199.54 210.25 46.00 2011 158.96 9.79 168.75 196.89 217.21 46.00 2012 157.19 9.56 166.75 196.86 215.77 46.00 Source: Based on information provided by Gallatin County and Department of RevenueCITY OF BOZEMAN, MONTANADIRECT AND OVERLAPPING PROPERTY TAX RATESPast Ten Fiscal Years(rate per $1,000 of assessed value)Unaudited statistical section.284
140Percentage Percentageof Total City of Total CityTaxable Taxable Total TaxableAssessed Assessed Assessed AssessedTaxpayerValueRankValueValueRankValueNorthwestern Corp Transmission & Distribution 3,476,581 1 4.24% 2,194,321 1 4.76%Qwest Corporation 974,616 2 1.19% 1,286,347 2 2.79%Bresnan Communications 973,911 3 1.19%Verizon Wireless 543,977 4 0.66%Harry Daum - Gallatin Mall 508,230 5 0.62% 633,689 3 1.38%Stone Ridge Partners LLC 440,095 6 0.54%First Security Bank 342,184 7 0.42% 218,822 8 0.48%Bridger Peaks Holding LLC 339,009 8 0.41% 303,380 4 0.66%Highgate Bozeman LLC 321,938 9 0.39%BVI/HJSI Bozeman LLC 308,067 10 0.38%Bozeman Deaconess Foundation279,071 5 0.61%Costco Wholesale270,589 6 0.59%Dayton Hudson Corporation224,177 7 0.49%Bozeman Investors of Duluth, LP214,026 9 0.46%Arcadia Gardens Apartments LLC205,239 10 0.45%Total 8,228,608$ 10.03% 5,829,661$ 12.66%Total City Taxable Assessed Value 82,062,000$ 46,055,000$ Source: Gallatin County Treasurer2012 2003CITY OF BOZEMAN, MONTANAPRINCIPAL PROPERTY TAX PAYERSCurrent Year and Nine Years AgoUnaudited statistical section.285
141FiscalYear Taxes Levied CollectionsEnded for the Percentage in Subsequent PercentageJune 30,Fiscal YearAmountof LevyYearsAmountof Levy2003 7,102,142 6,691,991 94.22% 406,806 7,098,797 99.95%2004 8,093,480 7,910,446 97.74% 181,351 8,091,797 99.98%2005 9,112,890 8,825,662 96.85% 285,312 9,110,973 99.98%2006 9,769,893 9,490,225 97.14% 183,410 9,673,635 99.01%2007 10,336,467 10,227,386 98.94% 105,990 10,333,376 99.97%2008 10,635,491 10,324,653 97.08% 221,694 10,546,347 99.16%2009 12,696,306 12,493,145 98.40% 138,874 12,632,018 99.49%2010 13,324,175 12,415,922 93.18% 883,305 13,299,227 99.81%2011 13,567,611 13,001,537 95.83% 434,439 13,435,976 99.03%2012 13,683,839 13,108,003 95.79% - 13,108,003 95.79%Source: Gallatin CountyCity Manager's Final Adopted BudgetCollected within the Fiscal Year of the Levy Total Collections to DateCITY OF BOZEMAN, MONTANAPROPERTY TAX LEVIES AND COLLECTIONSPast Ten Fiscal YearsUnaudited statistical section.286
1422003200420052006200720082009201020112012Type of CustomerResidential 1,224,671 1,255,288 1,286,670 1,318,837 1,437,114 1,379,115 1,516,359 1,224,164 1,181,195 1,323,816 Government 25,667 26,308 26,966 27,640 62,913 49,623 66,253 51,168 48,228 49,349 MSU 274,049 280,901 287,923 295,121 298,352 260,232 254,891 228,789 227,019 235,965 Commercial 661,049 677,576 694,515 711,878 659,831 626,846 670,961 571,223 568,474 602,352 Total 2,185,436 2,240,072 2,296,074 2,353,476 2,458,209 2,315,816 2,508,464 2,075,343 2,024,916 2,211,481Total direct rate 1,653.23$ 1,790.77$ 1,753.67$ 2,055.72$ 2,190.03$ 2,478.36$ 2,495.43$ 2,679.44$ 2,787.06$ 2,887.40$ per 1,000 HCFSource: City of Bozeman Finance DepartmentFiscal YearCITY OF BOZEMAN, MONTANAWATER SOLD BY TYPE OF CUSTOMERPast Ten Fiscal Years(in hundreds of cubic feet "HCF")Unaudited statistical section.287
143FiscalYear Monthly Rate per Monthly Rate perEnded Base 1,000 Base 1,000June 30,RateGallonsRateGallons2003 9.92$ 16.06$ 10.74$ 17.80$ 2004 9.92$ 17.24$ 10.74$ 17.80$ 2005 10.42$ 16.83$ 8.59$ 14.20$ 2006 11.46$ 18.53$ 9.88$ 16.30$ 2007 12.60$ 19.74$ 10.87$ 18.00$ 2008 12.60$ 19.74$ 11.17$ 18.50$ 2009 12.60$ 19.74$ 12.13$ 20.10$ 2010 13.00$ 20.37$ 13.37$ 22.15$ 2011 13.42$ 21.02$ 14.73$ 24.41$ 2012 14.02$ 21.96$ 15.61$ 25.87$ * For Residential Customers, using 5/8 inch meter size.Sources: City of Bozeman, Montana Commission Resolution 3804City of Bozeman, Montana Commission Resolution 3805City of Bozeman, Montana Commission Resolution 3929City of Bozeman, Montana Commission Resolution 3930City of Bozeman, Montana Commission Resolution 4042City of Bozeman, Montana Commission Resolution 4043City of Bozeman, Montana Commission Resolution 4184City of Bozeman, Montana Commission Resolution 4185City of Bozeman, Montana Commission Resolution 4327City of Bozeman, Montana Commission Resolution 4328Water SewerCITY OF BOZEMAN, MONTANAWATER AND SEWER RATESPast Ten Fiscal YearsUnaudited statistical section.288
DEBT CAPACITY SECTION 289
144FiscalYear General Special Tax Increment Water Wastewater Total PercentageEnded Obligation Notes Assessment Financing Revenue State of MT Primary of Personal PerJune 30,BondsPayableBondsBondsBondsRLF LoansGovernmentIncomeCapita2003 10,960,000 377,761 5,152,000 - 1,995,578 - 18,485,339 4.09% 622.55$ 2004 10,565,000 308,397 4,149,800 - 1,582,299 - 16,605,496 3.38% 538.95$ 2005 6,800,000 235,628 6,065,600 - 1,150,633 - 14,251,861 2.66% 446.40$ 2006 6,325,000 159,286 7,004,769 - 700,412 - 14,189,467 2.42% 426.37$ 2007 5,840,000 79,198 6,736,700 - 226,460 - 12,882,358 2.00% 369.84$ 2008 5,340,000 - 5,601,000 6,000,000 143,729 - 17,084,729 2.43% 475.32$ 2009 4,815,000 - 5,211,000 5,850,000 56,615 - 15,932,615 1.97% 431.39$ 2010 4,275,000 851,071 4,819,000 5,695,000 28,992 7,902,127 23,571,191 2.72% 635.32$ 2011 3,710,000 509,705 4,351,500 5,535,000 - 24,017,080 38,123,285 4.65% 1,022.62$ 2012 3,080,000 306,727 2,269,500 5,370,000 182,577 23,853,427 35,062,231 4.36% 922.08$ Sources: City Manager's Final Adopted BudgetCity of Bozeman Finance DepartmentBusiness-Type ActivitiesGovernmental ActivitiesCITY OF BOZEMAN, MONTANARATIO OF OUTSTANDING DEBT BY TYPEPast Ten Fiscal YearsUnaudited statistical section.290
145Percentage ofFiscal Actual Year General Special TaxableEnded Obligation Assessment Value of PerJune 30, Bonds Bonds Total Property Capita2003 10,960,000 - 16,112,000 35.0% 542.62$ 2004 10,565,000 - 14,714,800 29.7% 477.58$ 2005 6,800,000 - 12,865,600 24.3% 402.98$ 2006 6,325,000 - 13,329,769 23.0% 400.53$ 2007 5,840,000 - 12,576,700 19.9% 361.07$ 2008 5,340,000 6,000,000 11,340,000 16.4% 315.49$ 2009 4,815,000 5,850,000 10,665,000 14.4% 288.77$ 2010 4,275,000 5,695,000 9,970,000 12.7% 268.73$ 2011 3,710,000 5,535,000 9,245,000 11.5% 247.99$ 2012 3,080,000 5,370,000 8,450,000 10.3% 222.22$ Source: City Manager's Final Adopted BudgetGeneral Bonded Debt OutstandingCITY OF BOZEMAN, MONTANARATIOS OF GENERAL BONDED DEBT OUTSTANDINGPast Ten Fiscal YearsUnaudited statistical section.291
146Debt Estimated Outstanding Estimated Share ofas of Percentage Overlapping June 30, 2012 Applicable (1) DebtOverlapping Bonded IndebtednessGallatin County:Various issues outstanding 55,929,523$ 36% 19,994,529$ Bozeman School District #7:Various issues outstanding 64,799,451 68% 43,815,887$ Subtotal overlapping debt 63,810,416$ City of Bozeman, MontanaDirect Debt 11,230,088 100% 11,230,088$ Total Direct & Overlapping Debt 75,040,505$ 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 #7CITY OF BOZEMAN, MONTANADIRECT & OVERLAPPING GOVERNMENTAL ACTIVITIES DEBTPast Two Fiscal YearsUnaudited statistical section.292
1472003200420052006200720082009201020112012Debt limit* 21,560,620 23,737,036 26,559,967 29,591,000 34,755,653 54,804,000 60,185,000 66,375,000 70,688,000 74,875,000 Total net debt applicable to limit (7,747,833) (7,588,181) (3,750,411) (6,568,569) (5,595,558) (5,423,128) (4,842,905) (4,295,240)$ (3,638,239)$ (3,386,727)$ Legal debt margin 13,812,787$ 16,148,855$ 22,809,556$ 23,022,431$ 29,160,095$ 49,380,872$ 55,342,095$ 62,079,760$ 67,049,761$ 71,488,273$ Total net debt applicable to the limit 35.9% 32.0% 14.1% 22.2% 16.1% 9.9% 8.0% 6.5% 5.1% 4.5% as a percentage of debt limit*2.5% of total market value of taxable property of $2.995 BillionSource: City Manager's Final Adopted BudgetFiscal YearCITY OF BOZEMAN, MONTANALEGAL DEBT MARGIN INFORMATIONPast Ten Fiscal YearsUnaudited statistical section.293
148FiscalYear Utility Less: SpecialEnded Service Operating AssessmentJune 30,Charges Expenses Principal InterestCoverage Collections Principal InterestCoverage- 2003 3,935,636 (2,271,120) (395,052) (103,613) 1,165,851 1,050,180 (479,000) (270,202) 300,978 2004 4,359,299 (2,440,762) (413,280) (85,391) 1,419,866 932,771 (997,200) (250,571) (315,000) 2005 4,429,294 (2,647,507) (431,666) (65,963) 1,284,158 588,887 (2,951,200) (364,814) (2,727,127) 2006 5,401,069 (2,866,140) (450,220) (45,317) 2,039,392 1,472,058 (437,700) (297,876) 736,482 2007 6,124,533 (3,114,053) (473,952) (23,391) 2,513,137 1,428,084 (268,069) (309,119) 850,896 2008 6,163,883 (3,769,941) (82,731) (10,231) 2,300,981 1,178,846 (1,135,700) (278,393) (235,247) 2009 5,938,745 (3,770,800) (87,009) (5,978) 2,074,958 1,022,641 (390,000) (241,395) 391,246 2010 5,860,144 (3,950,566) (27,622) (2,440) 1,879,516 989,977 (392,000) (223,763) 374,214 2011 6,013,211 (3,869,048) (28,992) (1,070) 2,114,101 1,134,049 (467,500) (211,204) 455,345 2012 6,814,990 (4,063,529) (159,000) (6,405) 2,586,056 858,699 (2,082,000) (192,320) (1,415,621) FiscalYear Utility Less:Ended Service OperatingJune 30,Charges Expenses Principal InterestCoverage2003 3,877,903 (1,873,649) - - 2,004,254 2004 3,929,029 (2,163,495) - - 1,765,534 2005 3,388,716 (2,608,972) - - 779,744 2006 3,839,157 (2,675,004) - - 1,164,153 2007 4,262,052 (2,792,274) - - 1,469,778 2008 4,739,702 (2,981,164) - - 1,758,538 2009 4,905,772 (4,843,180) - - 62,592 2010 5,389,070 (3,468,705) (166,300) (69,470) 1,684,594 2011 5,939,996 (4,183,596) (606,000) (494,298) 656,102 2012 6,385,404 (3,784,420) (883,000) (857,842) 860,141 CITY OF BOZEMAN, MONTANAPLEDGED-REVENUE COVERAGEPast Ten Fiscal YearsWaste Water Revenue BondsDebt ServiceWater Revenue Bonds Special Assessment BondsDebt Service Debt ServiceUnaudited statistical section.294
DEMOGRAPHICS AND ECONOMIC SECTION 295
149Fiscal Estimated Per ResidentsYear Annual % Capita Median with Bachelors K-12Ended Change in Personal Personal Age Degree or School UnemploymentJune 30,Population Population Income Income (years) Higher Schooling Enrollment Rate2003 29,693 2.6% 451,556,301$ 17,755$ 25.8 49.2% 5,101 3.3%2004 30,811 3.6% 491,986,201$ 18,642$ 25.9 49.3% 5,086 3.2%2005 31,926 3.5% 535,279,901$ 19,575$ 26.1 49.4% 5,198 2.8%2006 33,280 4.1% 585,880,500$ 20,553$ 26.3 49.5% 5,332 2.0%2007 34,832 4.5% 643,862,953$ 21,581$ 26.5 49.5% 5,356 1.5%2008 35,944 3.1% 703,013,220$ 23,387$ 27.2 53.7% 5,432 1.8%2009 36,933 2.7% 808,624,803$ 26,313$ 27.0 52.7% 5,463 4.7%2010 37,101 0.5% 866,396,960$ 25,909$ 26.0 50.6% 5,509 5.2%2011 37,280 0.5% 819,014,169$ 25,611$ 27.2 50.1% 5,679 7.7%2012 38,025 2.0% 803,487,262$ 24,709$ 27.2 53.9% 5,810 8.4%Sources: Bozeman Area Chamber of Commerce Bozeman Public Schools U.S. Census BureauCITY OF BOZEMAN, MONTANADEMOGRAPHIC AND ECONOMIC STATISTICSPast Ten Fiscal YearsUnaudited statistical section.296
150Private Employer Private EmployerEmployers Class Employers ClassBy Class Size By Class SizeBozeman Deaconess Hospital 9 Bozeman Deaconess Hospital 8Oracle America Inc. 7 Capital Opportunities (Home Care Services) 8Wal-Mart 7 Ranch & Home Supply (Murdoch's) 7Albertson’s 6 Wal-Mart 7Community Food Co-Op 6 Albertson's 6Costco 6 Bozeman Daily Chronicle 6Croakies 6 Costco 6First Security Bank 6 First Security Bank 6Gibson Guitar 6 Home Depot 6Kenyon Noble Lumber & Hardware 6 JC Billion 6Lowes 6 JTL Group 6Luzenac America 6 Kenyon Noble Lumber & Hardware 6Martel Construction 6 Louisiana Pacific 6McDonald's 6 Martel Construction 6Murdoch's Ranch & Home Supply 6 McDonalds 6Ressler Chevrolet Cadillac & Toyota 6 Montana Conservation Corps 6Rosauers Supermarket 6 Right Now Technologies 6Town & Country Foods 6 Simkins Hallin Lumber 6Town Pump 6 Video Lottery Consultants 6Zoot Enterprises 6 Williams Plumbing & Heating 6Public Employer Public EmployerEmployers Class Employers ClassBy Class Size By Class SizeMontana State University 9 Montana State University 9School District #7 9 School District #7 8City of Bozeman 7 City of Bozeman 7Gallatin County 7 Gallatin County 5Class 6 - 100 to 249 EmployeesClass 7 - 250 to 499 EmployeesClass 8 - 500 to 999 EmployeesSource: Montana Department of Labor & IndustryClass 9 - 1,000+ Employees20122003CITY OF BOZEMAN, MONTANAPRINCIPAL EMPLOYERSCurrent Year and Ten Years AgoJuneJuneUnaudited statistical section.297
OPERATING SECTION 298
1512003 2004 2005 2006 2007 2008 2009 2010 2011 2012General GovernmentCity commission 4.00 4.00 4.00 2.10 2.10 2.10 2.10 2.10 2.10 2.10 City manager6.50 7.50 7.50 9.50 9.50 10.50 10.50 11.50 11.50 8.00 Municipal court 5.00 6.00 6.00 6.00 6.00 7.00 7.00 7.50 8.50 8.50 City attorney6.00 6.00 6.00 6.00 6.00 7.00 6.00 11.50 7.00 7.00 Finance 16.00 16.00 16.00 16.00 16.00 10.00 10.00 8.75 8.75 10.00 Information Technology (used to be in Finance)- - - - - 6.00 6.00 5.88 5.88 6.00 Office of planning & community development12.70 12.70 12.70 12.70 12.70 15.20 13.70 12.20 12.20 9.00 Building maintenance 0.55 1.55 2.55 2.55 2.55 3.05 3.55 3.55 3.55 3.50 Total general government50.75 53.75 54.75 54.85 54.85 60.85 58.85 62.98 59.48 54.10 Public SafetyPolice department48.25 48.25 49.75 52.75 54.75 57.75 62.75 71.75 71.75 71.25 Fire department29.75 29.75 29.25 29.25 31.25 34.25 45.25 41.75 41.75 41.75 Building inspection 10.55 10.55 15.05 15.05 15.55 16.55 13.55 9.55 10.55 10.55 Parking 2.75 2.75 2.75 2.75 3.75 3.75 4.75 4.75 4.75 4.50 Total public safety91.30 91.30 96.80 99.80 105.30 112.30 126.30 127.80 128.80 128.05 Public ServicesPublic services administration 7.15 7.15 7.15 7.15 7.15 8.15 8.15 8.15 8.15 10.00 Streets 13.62 13.62 13.62 13.62 15.62 15.62 17.62 17.62 17.62 17.62 Stormwater- - - - - - - - - - Water plant9.27 9.27 9.27 9.27 9.27 9.27 9.27 9.27 9.27 9.27 Water operations 14.12 14.12 14.12 14.62 14.62 15.62 16.62 15.62 15.62 15.62 Wastewater operations7.75 7.75 7.75 9.25 9.25 10.25 11.25 10.25 10.25 10.25 Wastewater plant15.87 14.87 14.87 14.87 14.87 14.87 15.87 15.87 15.87 15.87 Solid waste collection10.74 10.74 11.74 11.74 12.74 14.74 14.74 14.74 14.74 14.74 Solid waste disposal 7.66 7.66 7.66 7.66 7.66 2.00 - - - - Solid waste recycling- - - - - 1.00 1.00 1.00 1.00 1.00 Vehicle maintenance 2.50 2.50 3.50 3.50 4.00 3.00 4.00 5.00 5.00 5.00 Total public services 88.68 87.68 89.68 91.68 95.18 94.52 98.52 97.52 97.52 99.37 Public WelfareCemetery (numerous seasonals)5.25 5.25 5.25 5.25 5.25 5.75 5.75 5.75 5.75 3.33 Parks (numerous seasonals) 11.95 11.95 11.95 11.95 12.95 13.45 13.45 13.45 13.45 11.77 Forestry3.60 3.60 3.60 3.60 4.60 4.60 4.60 4.60 4.60 4.60 Library19.66 19.66 19.66 19.66 19.66 20.66 21.66 21.66 21.66 21.66 Recreation 14.65 14.65 14.65 14.65 14.65 14.90 15.00 15.00 15.00 15.83 Community development1.00 1.00 1.00 1.00 1.00 2.00 1.00 2.00 2.00 2.00 Total public welfare56.11 56.11 56.11 56.11 58.11 61.36 61.46 62.46 62.46 59.19 Total all funds 286.84 288.84 297.34 302.44 313.44 329.03 345.13 350.76 348.26 340.71 Source: City Manager's Final Adopted BudgetFiscal Year Ended June 30,CITY OF BOZEMAN, MONTANAFULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAMPast Ten Fiscal YearsUnaudited statistical section.299
1522003 2004 2005 2006 2007 2008 2009 2010 2011 2012FinanceSID Statements 9,955 10,443 10,443 11,086 11,086 14,919 15,000 15,816 16,000 16,000 Utility Bills 101,303 105,720 111,463 111,463 112,775 134,460 134,000 135,000 135,000 135,000 Grants Recorded and Reported 23 25 26 25 26 13 30 30 35 Business Licenses2,812 3,360 3,588 3,596 3,596 3,836 3,800 4,260 3,750 4,250 PoliceNumber of Officers 39 40 42 47 45 51 52 55 56 60 Calls for Service 34,000 34,797 36,842 39,790 40,758 42,728 45,145 43,385 45,131 48,404 Arrests 3,800 2,400 2,106 2,299 2,524 2,581 2,853 2,338 2,325 2,066 Traffic Citation Issued ** n/an/an/an/an/an/an/a3,311 4,504 5,988 Traffic Stops ** n/an/an/an/an/an/an/a10,702 10,036 10,104 Traffic Crashes 1,800 1,644 1,521 1,666 1,780 1,519 1,302 1,194 1,486 1,362 FireFires, Hazardous Conditions & Rupture/Explosions265 295 280 230 242 230 248 248 278 278 Emergency Medical Services/Rescue 1,300 1,398 1,270 1,373 1,454 1,658 1,441 1,441 1,483 1,483 Service Calls 50 50 55 96 118 148 145 145 187 187 Building InspectionCommercial Permits: Number 30 22 37 44 50 234 284 252 817 416 Value (Millions) 22.04 27.91 36.85 43.11 38.54 103.98 100.71 38.55 88.01 41.60 Residential Permits: Number 440 257 927 890 764 431 705 879 2,972 1,549 Value (Millions) 67.29 34.11 118.25 135.64 118.15 77.60 28.10 46.00 54.00 79.40 WaterNew Service Main Taps 28 30 39 76 79 15 39 16 20 15Meter Replacement/Repair 0 100 120 844 663 878 368 650 467 650Water Main Breaks 13665856414WastewaterMain Line Flushing (in Miles)94 120 134 101 95 110 90 81 78.26 90New Infrastructure TV (in Miles) 7 7 6 10 19 4.81111New Service Taps 33 20 41 29 37 22 15 5 4 10Solid WasteResidential Customers 5,549 5,551 5,800 6,310 6,608 6,779 6,957 7,130 7,092 7,240 Commercial Customers 202 202 200 211 239 254 262 268 271 281 Recycling Customers - - - - - 484 881 965 970 1,000 Yearly Tonnage Collected: Collections Program 8,500 8,499 9,000 11,171 11,953 11,879 10,397 10,657 10,920 11,248 Vehicle MaintenanceWork Orders Processed1,261 1,275 1,300 1,068 1,070 974 870 1,005 1,435 1,473 Gallons of Oil Disposed14,382 13,500 14,500 11,384 10,000 9,350 9,350 9,175 9,445 8,751 ParksPark Reservations 500 330 330 340 340 360 221 280 319 320 Sources: City Manager's Final Adopted Budget City of Bozeman Finance Department** Not used as an operating indicator until 2010CITY OF BOZEMAN, MONTANAOPERATING INDICATORS BY FUNCTION/PROGRAMPast Ten Fiscal YearsFiscal Year Ended June 30,Unaudited statistical section.300
1532003 2004 2005 2006 2007 2008 2009 2010 2011 2012PoliceStations 1 1 1 1 1 1 1 1 1 1 Patrol Units (Cars) 13 14 15 16 17 18 19 20 20 20 Patrol Units (Motorcycles) 4 4 4 4 4 4 4 4 4 4 FireStations 2 2 2 2 2 2 3 3 3 3 Fire Trucks 5 5 5 5 5 5 5 6 6 6 StreetsStreet & Alley Mileage 145.364 172.817 188.694 196.773 229.905 234.736 242.650 246.951 254.565 254.957Lineal Fee of Curb Replaced 562 275 1,330 737 750 1,526 240 0 0 630Number of Signs Installed 310 370 649 756 652 652 732 750 187 220WaterWater Mains (Miles) 194.30 202.22 218.87 230.15 247.23 250.16 253.73 256.32 257.51 261.33Fire Hydrants 1,730 1,888 1,973 2,045 2,206 2,238 2,274 2,308 2,324 2,351 WastewaterSanitary Sewers (Miles) 150.31 161.69 171.29 179.45 198.17 200.01 201.37 205.00 205.00 207.56Number of Manholes 3,321 3,345 3,397 3,571 3,888 3,946 3,988 4,034 4,080 4,084 Solid WasteNumber of Collection Vehicles3445767777Number of Roll-off Trucks1111234444Number of Recycling Trucks0000001111ParksFormal Turf Acres 228 250 250 258 258 265 120 120 125 125Natural Parkland Acres 219 118 118 110 110 115 205 205 210 220Miles of Trails 23 25 25 45 45 50 50 54 55 55Sources: City Manager's Final Adopted Budget City of Bozeman Finance Department City of Bozeman GIS Department City of Bozeman Police DepartmentCITY OF BOZEMAN, MONTANACAPITAL ASSET STATISTICS BY FUNCTION/PROGRAMPast Ten Fiscal YearsFiscal Year Ended June 30,Unaudited statistical section.301
PART IV REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS AND SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AS REQUIRED BY U.S. OFFICE OF MANAGEMENT AND BUDGET CIRCULAR A-133, SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2012 AUDITS OF STATE AND LOCAL GOVERNMENTS AND NON-PROFIT ORGANIZATIONS302
154 CITY OF BOZEMAN, MONTANA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2012 Grant Grant FederalGrant Balance Revenue Revenue Total Awards BalanceFEDERAL GRANTORCFDA Award June 30, 2011 Received Accrued Revenue Expended June 30, 2012U.S. Department of JusticeRural Domestic Violence Assistance Program 16.589 119,315$ -$ 17,387$ 101,928$ 119,315$ 119,315$ -$ Passed through Gallatin County:Missouri River Drug Task Force 16.579 56,628 - 56,628 - 56,628 56,628 - Edward Byrne JAG Local Solicitation - Electronic Ticket Writer 2009-SB-B9-2080 (ARRA) 16.804 32,736 - 32,736 32,736 32,736 - JAG: Police Rifles 2011-DJ-BX-2464 16.738 17,888 - 17,887 1 17,888 17,888 - Bullet-Proof Vest Partnership 16.607 6,150 - 6,150 6,150 6,150 - U.S. Department of TransportationPassed through MT Dept. of Transportation:Highway Traffic SafetySTEP-Bozeman Occupant Protection: 00-03-09-02 20.600 13,129 - 13,129 13,129 13,129 - CTEP Community Transportation Enhancement ProjectsSTPE1299(22) - College Pathway 20.205 167,801 - 167,801 - 167,801 167,801 - U.S. Department of InteriorPassed through the Historical Society:Historic Preservation 15.904 5,500 - 5,500 - 5,500 5,500 - Federal Emergency Management AgencySAFER Firefighter Grant (Dept. of Homeland Security) 97.083 97,023 - - 97,023 97,023 97,023 - Fire FEMA Assistance to Firefighters Grant - Opticom 83.554 25,333 - - 25,333 25,333 25,333 - U.S. Department of Energy - National Energy Tech LaboratoryEnergy Efficiency and Conservation Block Grant (ARRA) 81.128 120,741 - 120,741 - 120,741 120,741 - U.S. Department of Housing & Urban DevelopmentPassed through MT Department of Commerce:HUD EDI-SP #B-10-SP-MT-0075 14.251 148,100 - 22,035 126,066 148,100 148,100 - Total Federal Financial Assistance 810,344$ -$ 453,844$ 356,500$ 810,344$ 810,344$ -$ 303
155 CITY OF BOZEMAN, MONTANA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS June 30, 2012 NOTE 1. REPORTING ENTITY The City of Bozeman’s reporting entity is defined in Note 1 of the City’s financial statements. Expenditures of federal awards received directly from federal agencies as well as federal awards passed through other government agencies are included in the accompanying schedule. NOTE 2. BASIS OF ACCOUNTING The accompanying Schedule of Expenditures of Federal Awards is presented using the modified accrual basis of accounting, which is described in Note 1 of the City’s financial statements. NOTE 3. NON-CASH TRANSACTIONS The City had no non-cash transactions in the accompanying schedule of expenditures of federal awards. 304
INDEPENDENT AUDITORS’ 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 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, Montana, as of and for the year ended June 30, 2012, and have issued our report thereon dated December 17, 2012. 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. Internal Control over Financial Reporting Management of the City of Bozeman is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the City of Bozeman’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over financial reporting. 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. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph of the section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. 305
157 Compliance and Other Matters As part of obtaining reasonable assurance about whether the 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 that is required to be reported under Government Auditing Standards. This report is intended solely for the information and use of the City of Bozeman’s management, Board of Commissioners, the Montana Department of Administration, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Junkermier, Clark, Campanella, Stevens, P.C. Bozeman, Montana December 17, 2012306
INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Honorable Mayor, City Commissioners, and City Manager of the City of Bozeman, Montana: Compliance We have audited the City of Bozeman’s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the City of Bozeman’s major federal programs for the year ended June 30, 2012. The City of Bozeman’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Compliance with the requirement of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the City of Bozeman’s management. Our responsibility is to express an opinion on the City of Bozeman’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City of Bozeman’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the City of Bozeman’s compliance with those requirements. In our opinion, the City of Bozeman complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2012. 307
159 Internal Control Over Compliance Management of the City of Bozeman is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City of Bozeman’s internal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City of Bozeman’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of the City of Bozeman’s management, Board of Commissioners, the Montana Department of Administration, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Junkermier Clark Campanella & Stevens, PC Bozeman, Montana December 17, 2012308
160 CITY OF BOZEMAN SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended June 30, 2012 SUMMARY OF AUDIT RESULTS Financial Statements Type of auditors’ report issued Unqualified Internal control over financial reporting: Material weakness(es) identified? No Significant deficiencies noted not considered to be material weaknesses? No Non-compliance material to the financial statements noted? No Federal Awards Internal control over major programs: Material weakness(es) identified? No Significant deficiencies identified not considered to be material weaknesses No Type of auditors’ report issued on compliance for major programs Unqualified Audit findings that are required to be reported in accordance with section 510(a) of Circular A-133? No Major Programs: Community Transportation Enhancement Project, CFDA 20.205 Energy Efficiency and Conservation Block Grant, CFDA 81.128 Dollar threshold used to distinguish between Types A and Type B programs $300,000 Auditee qualified as a low-risk auditee? Yes FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAM AUDIT None reported. 309
161 CITY OF BOZEMAN CURRENT STATUS OF PRIOR YEAR RECOMMENDATIONS Year Ended June 30, 2011 There were no prior year audit findings relative to federal award programs. 310
311
312
313
314
315
316
317