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City of Muskegon,
Michigan
Comprehensive Annual
Financial Report
For The Six Months Ended June 30, 2010
www.shorelinecity.com
CITY OF MUSKEGON,
MICHIGAN
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
FOR THE SIX MONTHS ENDED
JUNE 30, 2010
Prepared By
FINANCIAL SERVICES DIVISION
Timothy Paul
Director of Finance
Elizabeth Lewis Derrick Smith
Assistant Finance Director City Treasurer
Kenneth Grant James Maurer
Income Tax Administrator Information Systems Director
Kathy Coleman
Finance & Payroll Coordinator
Cover Photo: The Root Park fountain in downtown Muskegon. Donated to the City in 1902, the fountain was completely refurbished by city
workers in 2010 with the help of Eagle-Alloy, Inc. (Courtesy of Ann Becker)
www.shorelinecity.com
City of Muskegon
TABLE OF CONTENTS
INTRODUCTORY SECTION
Letter of Transmittal ..................................................................................................................................5
Certificate of Achievement for Excellence in Financial Reporting .........................................................12
Organization Chart...................................................................................................................................13
List of Principal Officials.........................................................................................................................14
FINANCIAL SECTION
Independent Auditors’ Report..................................................................................................................17
Management’s Discussion and Analysis..................................................................................................19
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Assets (Deficits) ....................................................................................................34
Statement of Activities ......................................................................................................................35
Fund Financial Statements
Governmental Funds
Balance Sheet .................................................................................................................................36
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Assets ....................................................................................................37
Statement of Revenues, Expenditures and Changes
in Fund Balances.........................................................................................................................38
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures and Changes in Fund Balances to the Statement of
Activities.....................................................................................................................................39
Proprietary Funds
Statement of Net Assets .................................................................................................................40
Statement of Revenues, Expenses and Changes in Fund Net Assets ............................................. 41
Statement of Cash Flows................................................................................................................42
Fiduciary Funds
Statement of Fiduciary Assets and Liabilities................................................................................43
Component Units
Statement of Net Assets (Deficits) ....................................................................................................44
Statement of Activities ......................................................................................................................45
Notes to Financial Statements ..............................................................................................................46
Required Supplementary Information
Budgetary Comparison Schedule—General Fund................................................................................74
Budgetary Comparison Schedule—Major Street and Trunkline Fund.................................................80
Schedule of Funding Progress ..............................................................................................................81
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City of Muskegon
TABLE OF CONTENTS
Other Supplemental Information
Other Governmental Funds
Description of Other Governmental Funds .......................................................................................84
Combining Balance Sheet .................................................................................................................86
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances ................................................................................................................................87
Other Special Revenue Funds
Combining Balance Sheet ..............................................................................................................88
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances.............................................................................................................................89
Budgetary Comparison Schedule—Other Special Revenue Funds ...............................................90
Other Capital Projects Funds
Combining Balance Sheet ..............................................................................................................92
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances (Deficit) ..............................................................................................................93
Internal Service Funds
Description of Internal Service Funds...............................................................................................95
Combining Statement of Net Assets (Deficits) .................................................................................96
Combining Statement of Revenues, Expenses and
Changes in Fund Net Assets (Deficits) ..........................................................................................97
Combining Statement of Cash Flows ................................................................................................ 98
Fiduciary Funds
Description of Fiduciary Funds .........................................................................................................99
Agency Funds
Combining Statement of Assets and Liabilities ...........................................................................100
Statement of Changes in Assets and Liabilities ...........................................................................101
Component Units
Description of Component Units.....................................................................................................103
Combining Balance Sheet ...............................................................................................................104
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Assets (Deficits) .....................................................................................105
Combining Statement of Revenues, Expenditures and Changes
in Fund Balances (Deficit) ...........................................................................................................106
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures and Changes in Fund Balances to the Statement of
Activities .....................................................................................................................................107
Schedule of Indebtedness ...................................................................................................................109
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City of Muskegon
TABLE OF CONTENTS
STATISTICAL SECTION
Financial Trends
Net Assets by Component ..................................................................................................................116
Changes in Net Assets ........................................................................................................................117
Fund Balances of Governmental Funds.............................................................................................. 118
Changes in Fund Balances of Governmental Funds...........................................................................119
Revenue Capacity
Governmental Activities Revenues by Source ...................................................................................120
Taxable, Assessed and Equalized and Estimated Actual Valuation of Property ................................121
Principal Property Taxpayers .............................................................................................................122
Property Tax Rates – Direct and Overlapping Government Units .....................................................123
Property Tax Levies and Collections..................................................................................................124
Segmented Data on Income Tax Filers, Rates and Liability ..............................................................125
Debt Capacity
Ratio of Outstanding Debt by Type....................................................................................................126
Direct and Overlapping Debt..............................................................................................................127
Legal Debt Margin Information..........................................................................................................128
Revenue Bond Coverage ....................................................................................................................129
Demographic and Economic Information
Demographic and Economic Statistics ............................................................................................... 130
Principal Employers............................................................................................................................131
Operation Information
Full-time Equivalent Government Employees ...................................................................................132
Operating Indicators by Function/Program ........................................................................................133
Capital Asset Statistics by Function/Program ....................................................................................134
SINGLE AUDIT OF FEDERAL FINANCIAL ASSISTANCE PROGRAMS
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 ..................................................................................................... 136
Independent Auditors’ Report on Compliance with Requirements Applicable
to Each Major Program and Internal Control over Compliance in
Accordance with OMB Circular A-133 .......................................................................................... 138
Schedule of Expenditures of Federal Awards...................................................................................... 140
Schedule of Findings and Questioned Costs........................................................................................ 144
Client Documents
Summary Schedule of Prior Audit Findings ................................................................................... 148
Corrective Action Plan.................................................................................................................... 150
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Affirmative
Action
(231)724-6703
FAX (231)722-
1214
Cemetery
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FAX (231)726-
5617
City Manager
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FAX (231)722-
1214
November 5, 2010
Civil Service
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FAX (231)724-
4405
Honorable Mayor and Members of the
Clerk
(231)724-6705 City Commission
FAX (231)724- City of Muskegon
4178
Muskegon, Michigan 49443
Comm. &
Neigh. Services
(231)724-6717
FAX (231)726-
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Ladies and Gentlemen:
Finance
(231)724-6713
FAX (231)724- We are pleased to present to you the Comprehensive Annual Financial Report (CAFR) for
6768
the City of Muskegon, Michigan, for the six months ended June 30, 2010. In November
Fire Department 2009, voters approved City Charter amendments allowing the City Commission to set a
(231)724-6792
FAX (231)724- fiscal year other than the calendar year that had been specified in the Charter. The
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Commission subsequently implemented this authority by setting June 30 as the City’s new
Income Tax fiscal period end date. This CAFR report covers the six-month period from January 1,
(231)724-6770
FAX (231)724- 2010 through June 30, 2010 that will transition the City to its new fiscal year.
6768
Inspection This report includes the City’s audited financial statements in accordance with the
Services requirements of state law. The financial statements are presented in conformity with
(231)724-6715
FAX (231)728- accounting principles generally accepted in the United States of America (GAAP), and
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audited in accordance with generally accepted auditing standards by a firm of licensed
Leisure Services certified public accountants. This annual report is formatted to comply with the financial
(231)724-6704
FAX (231)724- reporting model developed by the Government Accounting Standards Board (GASB)
1196 Statement 34.
Mayor’s Office
(231)724-6701
FAX (231)722-
GAAP requires that management provide a narrative introduction, overview, and analysis
1214 to accompany the basic financial statements in the form of Management’s Discussion and
Planning/Zoning Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and
(231)724-6702 should be read in conjunction with the financial statements. The City of Muskegon’s
FAX (231)724-
6790 MD&A can be found immediately following the independent auditor’s report.
Police
Department
(231)724-6750 The Comprehensive Annual Financial Report is prepared by the City’s Finance
FAX (231)722- Department and responsibility for both the accuracy of the data presented and the
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completeness and fairness of the presentation, including all disclosures, rests with the
Public Works City. We believe the data as presented is accurate in all material respects; that it is
(231)724-4100
FAX (231)722- presented in a manner designed to set forth fairly the financial position and results of
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operation of the City as measured by the financial activity of its various funds and
Treasurer component units; and that all disclosures necessary to enable the reader to gain the
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FAX (231)724-
6768
City of Muskegon, 933 Terrace Street, P.O. Box 536, Muskegon, MI 49443-0536
http://www.shorelinecity.com
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maximum understanding of the City’s finances have been included. Brickley DeLong, P.C., Certified
Public Accountants, performed the independent audit of all accounts of the City as required by state law
and their report and unqualified opinion is presented as the first component of the financial section of
this report.
THE CITY AND THE REGION
The City of Muskegon is located in Western Michigan on the shores of Lake Michigan. The City covers
eighteen square miles and, with a population of approximately 40,000, is the largest city on the eastern
shore of Lake Michigan. The City is located in Muskegon County and is part of the Muskegon-Norton
Shores MSA.
Muskegon is home to many outstanding sports, recreation and cultural activities:
Michigan Adventure, located north of the city, is the largest amusement park complex in
Michigan. The City provides water to both the amusement park and the water park located on the
site.
Muskegon is the eastern terminus for the high speed cross-lake ferry. Connecting Muskegon
with Milwaukee, Wisconsin, the Lake Express service ferries 100,000-plus passengers each season
between the two cities. 2010 marked the ferry service’s seventh successful year of operations.
Muskegon is home to the annual Miss Michigan pageant.
Pere Marquette beach is nationally recognized as one of the best beaches in the nation and is
the only beach in Michigan to receive and maintain the Blue Wave Certification by the Clean
Beaches Council. The Blue Wave certification identifies the nation's cleanest, safest and most
environmentally well-managed beaches.
Muskegon is home to successful summertime festivals that attract thousands of visitors to the
community. These include Muskegon Summer Celebration which brings top name musical groups
to town for 11 days of waterfront music celebration and the Bike Time festival which attracts
motorcycle enthusiasts to the city each July.
Muskegon is the cultural hub for West Michigan with numerous museums and live performances.
The Muskegon Museum of Art has one of the best art collections in the Midwest, and the Muskegon
County Museum provides insight into the area’s history. The former residences of Muskegon’s
lumber barons, Charles H. Hackley and Thomas Hume, proudly display the glory of the Victorian
ages. The Fire Barn Museum takes visitors back to a 1890s Muskegon Fire Station. The West Shore
Symphony and Muskegon Civic Theater bring the stage of the Frauenthal Center for the Performing
Arts to life throughout the year.
Muskegon is home to three historic museum ships that attract thousands of visitors each year:
USS Silversides, a rare surviving World War II submarine maintained in pristine condition;
LST-393, a landing craft used in the D-day invasion and one of only two such vessels
remaining in existence; and the
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Milwaukee Clipper, a Great Lakes passenger ship built before the Titanic that for many years
served as a cross-lake ferry between Muskegon and Milwaukee.
The City of Muskegon operates under a Commission-Manager form of government and provides a full
range of traditional municipal services. These include police and fire protection, parks and recreation
activities, public works operations, water and sewer services, solid waste collection, community
development and general administrative support services. The City also provides treated water to
several surrounding communities on a wholesale basis.
COMPONENT UNITS
The City has four discretely presented component unit types. These entities are discretely presented in
the financial statements as the governing boards of the component units are appointed and approved
by the City’s governing board:
The Downtown Development Authority (DDA) exists primarily for the purpose of financing
redevelopment activities in the City’s downtown area. The DDA has issued bonds that are repaid
through tax increment revenues generated from development within the Authority’s boundaries.
The Tax Increment Finance Authority (TIFA), exists primarily for the purpose of financing
redevelopment activities in a sub-section of the City’s downtown area. The TIFA generates tax
increment revenues through development within the Authority’s boundaries.
The Local Development Finance Authority (LDFA) issues bonds for development activities in the
City’s industrial park and high-tech park areas. Bonds are repaid through tax increment revenues
generated by development within the Authority’s boundaries.
The Brownfield Redevelopment Authority (BRA), which exists primarily for the purpose of
financing redevelopment of designated environmental brownfields. The BRA generates tax
increment revenues through development within its boundaries.
LOCAL ECONOMIC CONDITION AND OUTLOOK
Muskegon is fortunate to have a diverse local economy. The manufacturing sector is strong in the
areas of aerospace, chemicals, plastics, paper products, metals and castings, office furniture and
automotive parts. The City of Muskegon also benefits from being home to large government,
corrections, healthcare, and educational employers. Local income tax withholdings remitted by these
employers provide stability to City finances in times of economic weakness.
Still, Muskegon has been heavily impacted by the current economic recession. Area unemployment
remains high and the resultant impact in City income tax revenue has been severe. There are signs,
though, that recovery has started. The W.E. Upjohn Institute for Employment Research publishes a
regular local economic forecast. Their most recent quarterly forecast (September 2010) gives an
upbeat assessment of the local economy:
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“(T)he (Muskegon) region’s prospects for continued growth should be good. Initial claims for
unemployment insurance fell by 14.8 percent during the quarter to a level less than half of that seen
at the same time last year. This decline clearly indicates that layoff activity has slowed and that local
firms are feeling more confident about keeping workers. Also, the number of new dwelling units
under contract grew by 28.9 percent as buyers slowly came out of hiding and ordered new homes.
Although the number of new-dwelling-unit contracts still remains flat compared to a year ago, it may
simply mean that the market will be stabilizing at a new, albeit lower, level.”
MAJOR INITIATIVES AND ACCOMPLISHMENTS
Among the City's major initiatives and accomplishments in 2009 were the following:
The City changed its fiscal year from a December 31 end date to a June 30 end date. The
change was made to achieve the following:
Consistency and comparability with the overwhelming majority of Michigan cities that follow a
June 30 fiscal year.
Even out workflows for a scaled back finance division staff by moving year-end close and
audit tasks to a less crowded time of year;
Realize a significant one-time increase to the City’s General Fund fund balance.
Development activity in the City’s downtown continued with several additional condominiums in
the Heritage Square “live-work” development completed or started. A total of twenty-two units
are planned for this downtown development.
The City was successful in reaching agreements with several of its bargaining units that include
significant savings in the area of retiree healthcare costs. Also, the agreement with the
firefighters union allows the City to hire part-time firefighters to supplement the full-time force.
The City believes that moving to a combination full-time/part-time fire service will be a big
contributor to stabilizing City finances and services levels.
Work continued on a major $12 million auto dealership expansion encompassing GM, Honda
and Hyundai brands. The GM and Honda facilities are completed and work is underway on the
Hyundai facility as well as a used vehicle facility. The City assisted in this project with the
creation of a Brownfield Redevelopment Authority and securing a low-interest state loan to help
finance environmental work.
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OTHER INFORMATION
INTERNAL ACCOUNTING CONTROLS
The City’s management is responsible for establishing and maintaining an internal control structure that
is designed to ensure adequate protection of the City’s assets from loss, theft, or misuse, and adequate
accounting data to allow for preparation of financial statements in conformity with generally accepted
accounting principles. The internal control structure is designed to provide reasonable, but not absolute
assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the
costs of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and
benefits requires estimates and judgments by management.
All internal control evaluations occur within the above framework. We believe that the City’s internal
accounting controls adequately safeguard assets and provide reasonable assurances of proper
recording of financial transactions.
BUDGETARY CONTROL
Budgetary control is maintained through an annual budget resolution passed by the City Commission.
Budgetary control at the functional level is maintained by review of estimated expenditures prior to
making purchases. Encumbrances are not recorded in the City’s funds. The City does, however, utilize
an informal monitoring system to facilitate budgetary control over proposed purchases. Essentially, this
system entails the use of on-line budgetary information that details year-to-date “actual versus
budgeted” expenditure comparisons by budget category. This information is accessible to appropriate
personnel to enable them to ascertain the budget status of an expenditure category prior to authorizing
additional purchases.
FINANCIAL POLICIES
The City’s financial policies are reviewed and updated bi-annually. One of the more significant policy
standards provides that the City maintain a General Fund fund balance equal to at least 10% of prior
expenditures. At June 30, 2010, the City’s General Fund fund balance was $6,038,454 or 24.30% of
prior year expenditures. The change in the City’s fiscal year from a December 31 to June 30 year-end
created a significant one-time boost to the fund balance. It should be noted too that the City maintains
a separate Budget Stabilization fund that had a $1.5 million balance at year-end.
DEBT ADMINISTRATION
At June 30, 2010, the total of City bonds and contractual debt outstanding (including discretely
presented component unit debt) was $34,406,886. In April 2010, the City refunded $6,030,000 in
outstanding water system bonds. The refunding achieved net present value savings of $334,200 or,
5.54% of refunded principal.
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Standard & Poor’s rates the City’s general obligation debt A+. The City’s water revenue bonds carry a
AA- rating, affirmed in March 2010.
PENSIONS AND OTHER POST-EMPLOYMENT BENEFITS
The City has transferred administrative responsibility for defined benefit pensions to the statewide
Municipal Employees Retirement System (MERS) of Michigan. This was done to achieve the
economies of scale and investment diversification that the $5 billion MERS program offers. All new
employees hired by the City since 2007 are covered by a defined contribution retirement program.
The City also provides post-retirement healthcare benefits for retirees and their dependents. Since
1987, the City has had an actuarial valuation of its post employment healthcare obligation prepared
regularly and has followed a program of prefunding the obligation in the same manner as its pension
obligations. In 2005, the City implemented the requirements of GASB statements 43 and 45 –
“Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions.”
SINGLE AUDIT
The City is required to have a single audit in conformity with the provisions of the Single Audit Act
Amendments of 1996 and U.S. Office of Management and Budget Circular A-133, “Audits of State,
Local Governments and Non-Profit Organizations”. Information related to the single audit, including the
schedule of federal awards, findings and questioned costs, and auditors’ reports on internal control over
financial reporting and compliance with certain laws, regulations and grants are included herein. The
financial activities related to the single audit requirements, such as the Community Development Block
Grant Program, are also included in this financial report.
AWARDS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to the City of Muskegon for its
Comprehensive Annual Financial Report for the year ended December 31, 2008. This marked the
twenty-third consecutive year that the City has received this prestigious award. In order to be awarded
a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently
organized Comprehensive Annual Financial Report, whose contents conform to program standards.
Such reports must satisfy both generally accepted accounting principles and applicable legal
requirements.
A Certificate of Achievement is valid for a period of one year only. We believe our current report
continues to conform to the Certificate of Achievement Program requirements, and we are submitting it
to the GFOA to determine its eligibility for another certificate.
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ACKNOWLEDGEMENTS
We would like to thank the members of the City Commission for their continued interest and support in
conducting the financial affairs of the City in a responsible and progressive manner and for their efforts
in working for the betterment of the Muskegon community. We would also like to thank the many City
employees who participate in the preparation of this report.
Respectfully submitted,
Bryon L. Mazade Timothy J. Paul
City Manager Director of Finance
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Citizens of Muskegon
The 7-member
Commission
The Citizens of The 7-member
appoints various
Muskegon elect Commission
Boards and
this Commission appoints the City
Commissions
Attorney
Various Boards & 7-Member City
City Attorney
Commissions Commission
The 7-member
Commission
appoints the City
Manager
City Manager
Administrative Services Financial Services
Division Division
Leisure Services
Public Safety Division
Division
Community & Economic
Public Works Division
Development Division
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COMPREHENSIVE ANNUAL FINANCIAL REPORT
CITY OF MUSKEGON, MICHIGAN
LIST OF PRINCIPAL OFFICIALS
June 30, 2010
ELECTED OFFICIALS
Mayor-Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Steve Warmington
At Large
Vice Mayor-Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Stephen J. Gawron
At Large
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chris Carter
Ward 1
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Clara Shepherd
Ward 2
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lawrence O. Spataro
Ward 3
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Steve Wisneski
Ward 4
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sue Wierengo
At Large
APPOINTED OFFICIALS
City Manager. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bryon L. Mazade
City Attorney. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . John C. Schrier
Director of Finance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Timothy J. Paul
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FINANCIAL SECTION
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BRICKLEY DELONG
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS’ REPORT
November 5, 2010
City Commission
City of Muskegon
Muskegon, Michigan
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, the aggregate discretely presented component units, each major fund, and the aggregate
remaining fund information of the City of Muskegon as of and for the six months ended June 30, 2010,
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 Muskegon'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, the aggregate
discretely presented component units, each major fund, and the aggregate remaining fund information of the
City of Muskegon, as of June 30, 2010, and the respective changes in financial position, and cash flows,
where applicable, thereof for the six months then ended in conformity with accounting principles generally
accepted in the United States of America.
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis and required supplementary information on pages 19 - 31 and 74 - 81 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.
316 Morris Ave., Suite 500 • P.O. Box 999 • Muskegon, MI 49443 907 S. State Street • P.O. Box 331 • Hart, MI 49420
PHONE (231) 726-5800 • FAX (231) 722-0260 PHONE (231) 873-1040 • FAX (231) 873-0602
17
BRICKLEY DELONG
City Commission
November 5, 2010
Page 2
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City of Muskegon’s financial statements as a whole. The introductory section, combining and
individual nonmajor fund financial statements, budgetary comparison information for nonmajor funds,
schedule of indebtedness, and statistical section, are presented for purposes of additional analysis and are not
a required part of the financial statements. The accompanying schedule of expenditures of federal awards is
presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular
A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of
the financial statements. The combining and individual nonmajor fund financial statements, budgetary
comparison information for nonmajor funds, schedule of indebtedness, 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 record 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 record used 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 State 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.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
This section of the City of Muskegon’s annual financial report presents our discussion
and analysis of the City’s financial performance during the fiscal year ended June 30,
2010. Please read it in conjunction with the City’s financial statements, which follow this
section.
FINANCIAL HIGHLIGHTS
The City changed its fiscal year end from December 31 to June 30. This financial
report is for the six-month transition period ended June 30, 2010. The change in
fiscal years was made to achieve the following benefits:
consistency with most other Michigan cities
smooth out finance division workflows
realize a significant one-time fund balance increase
The assets of the City of Muskegon exceeded its liabilities by $134,105,204 as of
June 30, 2010. Of the total net assets, $21,458,627 (16.0%) was unrestricted and
may be used to meet the City’s ongoing obligations to citizens and creditors.
The City’s total combined net assets increased $4,630,892 (3.6%) during the six-
month period ended June 30, 2010. This increase is primarily results from the
fiscal year change noted above.
The City’s governmental funds reported combined ending fund balance of
$12,111,798, an increase of $4,229,275 (53.6%) from the prior year.
The City’s General Fund reported a total fund balance of $6,038,454, an increase
of $4,399,792 from the prior year. Again, this increase is due to the fiscal year
change coupled with continued tight budget controls. Recognizing the one-time
nature of this increase, the City has designated a large portion of the fund balance
to pay down outstanding liabilities:
$1.0 million is designated as a supplemental contribution to the City’s defined
benefit pension program to maintain 100% actuarial funding levels;
$620,000 is designated for early retirement of an outstanding economic
development loan from the State of Michigan;
$334,605 is designated for early retirement of a lease-purchase contract for
two City fire trucks; and
$100,000 is designated to pay future debt service on outstanding sidewalk
assessment bonds.
These payments were made in October 2010.
The City maintains a separate Budget Stabilization (or “rainy day”) Fund that
reported a $1.5 million fund balance of at June 30, 2010, unchanged from the
previous fiscal period.
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OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of three parts—
management’s discussion and analysis (this section),
the basic financial statements, and required
supplementary information. The basic financial
statements include two kinds of statements that present
different views of the City.
The first two statements are government-wide
financial statements that provide both long-term
and short-term information about the City’s overall
financial status.
The remaining statements are fund financial
statements that focus on individual parts of the
government, reporting individual City operations in
greater detail than the government-wide
statements.
The governmental funds statements tell how general government services
were financed in the short-term as well as what remains available for future
spending.
Proprietary fund statements offer short- and long-term financial information
about activities the City operates like private businesses.
Fiduciary fund statements provide information about the financial relationships
in which the City acts solely as a trustee or agent for the benefit of others, to
whom the resources in question belong.
The financial statements also include detailed notes that explain some of the
information in the financial statements and provide additional data. The statements are
followed by a section of required supplementary information that further explains and
supports the information in the financial statements. The figure above shows how the
required parts of this annual report are arranged and related to one another.
The remainder of this overview section of management’s discussion and analysis
explains the structure and contents of each of the statements.
Government-Wide Statements
The government-wide statements report information about the City as a whole using
accounting methods similar to those used by private-sector companies. The statement
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of net assets includes all of the government’s assets and liabilities. All of the current
year’s revenues and expenses are accounted for in the statement of activities
regardless of when cash is received or paid.
The two government-wide statements report the City’s net assets and how they have
changed. Net assets—the difference between the City’s assets and liabilities—is one
way to measure the City’s overall financial health or position. Over time, increases or
decreases in the City’s net assets are an indicator of whether its financial health is
improving or deteriorating, respectively. However, to assess the overall health of the
City, one needs to consider additional nonfinancial factors such as changes in the City’s
tax base.
The government-wide financial statements include not only the City of Muskegon itself
(known as the primary government), but also legally separate component units for which
the City is financially accountable. Financial information for these component units is
reported separately from the financial information presented for the primary government
itself.
The government-wide financial statements of the City include the governmental
activities. Most of the City’s basic services are included here, such as general
government, public safety, highways and streets, sanitation, economic development,
parks and recreation, and interest on long-term debt. Income taxes, federal grants,
property taxes and revenues from the State of Michigan finance most of these activities.
Also included in the government-wide statements are the City’s business-type activities:
water, sewer and marina operations.
Fund Financial Statements
The fund financial statements provide more detailed information about the City’s major
funds—not the City as a whole. Funds are accounting devices that the City uses to
keep track of specific sources of funding and spending for particular purposes.
The City has the following kinds of funds:
Governmental funds—Most of the City’s basic services are included in
governmental funds, which focus on (1) how cash and other financial assets that
can readily be converted to cash flow in and out and (2) the balances left at year-
end that are available for spending. Consequently, the governmental fund
statements provide a detailed short-term view that helps the user determine
whether there are more or fewer financial resources that can be spent in the near
future to finance the City’s programs. Because this information does not
encompass the additional long-term focus of the government-wide statements, we
provide additional information on the subsequent page of the governmental funds
statements that explain the relationship (or differences) between them.
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Proprietary funds—Services for which the City charges customers a fee are
generally reported in proprietary funds. The City uses three proprietary funds:
water, sewer, and marina. Proprietary funds, like the government-wide
statements, provide both long-term and short-term financial information.
We use internal service funds to report activities that provide supplies and services
for the City’s other programs and activities.
Fiduciary funds—The City is the trustee, or fiduciary, for certain funds. It is also
responsible for other assets that—because of a trust arrangement—can be used
only for the trust beneficiaries. The City is responsible for ensuring that the assets
reported in these funds are used for their intended purposes. All of the City’s
fiduciary activities are reported in a separate statement of fiduciary net assets and
a statement of changes in fiduciary net assets. We exclude these activities from
the City’s government-wide financial statements because the City cannot use
these assets to finance its operations.
Component units – Finally, the City of Muskegon’s Comprehensive Annual
Financial report includes four component units: the Downtown Development
Authority (DDA), the Tax Increment Finance Authority (TIFA), the Local
Development Finance Authority (LDFA) and, the Brownfield Redevelopment
Authority (BRA). Component units are separate legal entities for which the City of
Muskegon has some level of financial accountability. The component units of the
City exist primarily for the issuance and repayment of debt to finance projects in
specific areas of the City. Accordingly, they are discussed below under the Capital
Assets and Debt Administration heading.
FINANCIAL ANALYSIS OF THE CITY AS A WHOLE
Net assets. The Statement of Net Assets provides an overview of the City’s assets,
liabilities and net assets. Over time this can provide a good indicator of the City’s fiscal
health. The total net assets of the City were $134,105,204 as of June 30, 2010. This is
an increase of $4,630,892 from reported net assets for the prior year. An overview of
the City’s net assets follows:
22
City's Net Assets
(In Thousands of Dollars)
Governmental Business-Type
Activities Activities Total Percentage
6/30/2010* 12/31/2009 6/30/2010* 12/31/2009 6/30/2010* 12/31/2009 Change
Current and other assets $20,026 $23,192 $8,985 $7,510 $29,011 $30,701 -5.51%
Capital assets 75,306 76,739 58,859 59,912 134,165 136,651 -1.82%
Total Assets 95,332 99,931 67,844 67,422 163,176 167,353 -2.50%
Long-term liabilities 8,229 8,492 16,702 17,105 24,931 25,597 -2.60%
Other liabilities 2,406 10,497 1,734 1,785 4,139 12,282 -66.30%
Total Liabilities 10,635 18,989 18,436 18,890 29,070 37,879 -23.26%
Net Assets
Invested in capital assets,
net of related debt 67,810 69,065 41,106 41,876 108,916 110,941 -1.83%
Restricted 3,059 2,956 672 672 3,731 3,628 2.84%
Unrestricted 13,828 8,921 7,630 5,984 21,458 14,905 43.97%
Total Net Assets $84,697 $80,942 $49,408 $48,532 $134,105 $129,474 3.58%
* Six‐month fiscal period
The bulk of the City’s net assets ($108,915,369 or 81%) represent investments in
capital infrastructure assets, less the remaining balance of debt issued to acquire those
assets. Infrastructure assets are used to provide public services to citizens and are not
available for spending. Another 2.8% ($3,731,208) of the City’s net assets are legally
restricted as to use. Remaining net assets ($21,458,627) are unrestricted and may be
used to meet the City’s operating needs and ongoing obligations. Significantly, the
City’s unrestricted net assets increased $6,554,071 (44%) due mostly to the change in
fiscal years.
Changes in net assets. The City’s total revenues were $26,275,038 for the six months
ended June 30, 2010. This represents about 60% of total revenues collected during the
City’s last twelve-month fiscal year ended December 31, 2009. About 32% of the City’s
revenue stream came from charges to users of specific services such as water or
sewer. Another thirteen percent came from grants from the state and federal
governments and forty-six percent was from local property and income taxes. The
remainder was comprised of state revenues and other sources such as franchise fees
and investment income.
The total cost of all City programs and services for the six months ended June 30, 2010
was $21,644,146. This represents 46% of total expenses incurred during the City’s last
twelve-month fiscal year ended December 31, 2009. Seventy-four percent of these
costs were for governmental activities such as police and fire protection, streets, parks,
and general administration. The remaining twenty-six percent represents the costs of
the City’s business-type activities, specifically, water, sewer and marina operations.
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The difference between the City’s total revenues and expenses ($4,630,892) represents
the increase in total net assets realized in the six-month fiscal period ended June 30,
2010. The following table (Changes in City’s Net Assets) further breaks down the
change in total net assets into period-to-period changes in individual revenue and
expense categories:
Changes in City’s Net Assets
(In thousands of dollars)
Governmental Business-Type
Activities Activities Total Percentage
6/30/2010* 12/31/2009 6/30/2010* 12/31/2009 6/30/2010* 12/31/2009 Change
Program revenues
Charges for services $1,964 $3,875 $6,490 $11,846 $8,454 $15,721 -46.22%
Operating grants and contributions 3,132 6,443 - - 3,132 6,443 -51.39%
Capital grants and contributions 255 2,106 - 5 255 2,111 -87.92%
General revenues
Property taxes 8,681 8,493 - - 8,681 8,493 2.21%
Income taxes 3,505 6,628 - - 3,505 6,628 -47.12%
State shared revenues 1,832 3,842 - - 1,832 3,842 -52.32%
All other 400 857 17 24 417 881 -52.65%
Total revenues 19,769 32,244 6,507 11,875 26,276 44,119 -40.44%
Governmental activities expenses
Public representation 445 924 - - 445 924 -51.84%
Administrative services 318 698 - - 318 698 -54.44%
Financial services 1,210 2,406 - - 1,210 2,406 -49.71%
Public safety 6,333 13,614 - - 6,333 13,614 -53.48%
Public w orks 1,641 2,987 - - 1,641 2,987 -45.06%
Highw ays, streets and bridges 3,680 7,161 - - 3,680 7,161 -48.61%
Community and economic development 1,275 4,140 - - 1,275 4,140 -69.20%
Culture and recreation 760 2,463 - - 760 2,463 -69.14%
General administration 210 452 - - 210 452 -53.54%
Interest on long-term debt 139 288 - - 139 288 -51.74%
Business-type activities expenses
Water - - 2,959 6,080 2,959 6,080 -51.33%
Sew er - - 2,525 5,427 2,525 5,427 -53.47%
Marina and Launch Ramp - - 150 311 150 311 -51.77%
Total expenses 16,011 35,133 5,634 11,818 21,645 46,951 -53.90%
Change in net assets before transfers 3,758 (2,889) 873 57 4,631 (2,832) -263.50%
Transfers (3) - 3 - - - -
Change in net assets 3,755 (2,889) 876 57 4,631 (2,832) -263.50%
Net assets at beginning of year 80,942 83,831 48,532 48,475 129,474 132,306 -2.14%
Net assets at end of year $84,697 $80,942 $49,408 $48,532 $134,105 $129,474 3.58%
* Six‐month fiscal period
Net assets for governmental activities increased $3,755,199 while net assets for
business-type activities increased of $875,693. Both increases can be attributed
primarily to the financial impact of changing the City’s fiscal year.
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Governmental Activities
The following table (Net Cost of Selected City Functions) presents the cost of each of
the City’s largest functions as well as each function’s net cost (total cost less fees
generated by the activities and intergovernmental aid specifically related to the
function). The net cost reflects the portion of costs funded by local tax dollars and other
general resources:
The operational cost of all governmental activities during the six months ended
June 30, 2010 was $16,010,229.
The net cost that City taxpayers paid for these activities through local property
taxes and income taxes was $12,186,520, or 75% of the total.
The remaining cost was paid by user charges to those directly benefitting from the
programs or by state and federal grants and contributions
Net Cost of Selected City Functions
(in thousands of dollars)
Total Cost of Services Net Cost of Services
6/30/2010* 12/31/2009 % Change 6/30/2010* 12/31/2009 % Change
Governmental activities
Public safety $6,333 $13,614 -53.48% $5,666 $12,415 -54.36%
Community and economic development 1,275 4,140 -69.20% (482) 500 -196.40%
Culture and recreation 760 2,463 -69.14% 611 1,996 -69.39%
Highw ays, streets and bridges 3,680 7,161 -48.61% 1,919 1,964 -2.29%
Public w orks 1,641 2,987 -45.06% 1,416 2,561 -44.71%
All other 2,322 4,769 -51.31% 1,529 3,272 -53.27%
Total governmental activities $16,011 $35,133 -54.43% $10,659 $22,709 -53.06%
* Six‐month fiscal period
Business-Type Activities
The financial goal of the City’s business-type activities (i.e. water, sewer and marina
operations) is to operate on a more or less “break-even” basis without making
significant profit or needing general tax subsidies. For the six months ended June 30,
2010, the City’s total business-type activities realized an overall increase in net assets
of $875,693.
Sewer Fund net assets increased $916,527 primarily as result of higher fees for
services and stabilization in wholesale sewage treatment costs paid to Muskegon
County. The Water Fund saw net assets fall $74,154. This falloff is attributable to the
fact the six month fiscal period reported here did not include the summer season,
typically the peak collection period for water revenues Marina and Launch Ramp Fund
net assets increased $10,459 due to lower operating costs brought about by tight
budget controls.
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FINANCIAL ANALYSIS OF THE CITY’S FUNDS
The fund financial statements provide detailed information about the major City funds,
not the City as a whole. The City’s major funds for the fiscal period ended June 30,
2010 were the General Fund and the Major Street and Trunkline Fund.
General Fund Highlights
The General Fund receives most public attention since it is where local tax revenues
are accounted for and where the most visible municipal services such as police, fire and
parks are funded. The City reforecasts its General Fund budget on a quarterly basis
taking into account changing economic conditions and policy priorities. The following
table shows the General Fund year-end fund balance for the last five years.
Prior Year’s Fund Balance as a % of
Year-End Fund Year‐to‐Year %
Year Ended
Balance
Expenditures and Prior Year Expenditures
Change (Policy Target=10%
Other Uses
6/30/2010* $6,038,454 153.32% $24,850,082 24.30%
12/31/2009 1,638,662 -31.26% 26,100,530 6.28%
12/31/2008 2,383,725 -18.38% 24,800,810 9.61%
12/31/2007 2,920,632 8.57% 24,498,778 11.92%
12/31/2006 2,690,039 6.76% 23,658,227 11.37%
* Six‐month fiscal period
The City changed its fiscal year transitioning with a six-month fiscal period ended June
30, 2010. This change resulted in a significant one-time increase to the General Fund
fund balance due to the fact that annual property taxes are collected in full during this
period. The fiscal year change was implemented not only for the positive financial
statement impacts, but also to achieve 1) improved comparability with other Michigan
cities (most of which are already on June 30 fiscal years) and, 2) more level workflows
for the City’s finance staff by moving year-end audit functions away from the heavy
federal and state reporting requirements at the end of each calendar year.
General Fund revenues for the six-month transition period ended June 30, 2010 were
$907,355 higher than the amended budget estimate made at the time it was decided to
implement a new fiscal year. The positive revenue variance is mostly due to higher
than expected income tax revenues and to a one-time industrial facilities tax payment.
Another benefit realized by the City from the change in fiscal years is that it was not
necessary to use Budget Stabilization fund reserves. The original budget anticipated
using $500,000 from the Budget Stabilization fund to help offset declining revenues.
General Fund expenditures were $1,797,641 less than projected in the amended
budget. Almost all city departments spent less than expected due to a combination of
1) tight budget controls, 2) conservative budget projections and, 3) cost savings realized
from budget cuts made in the prior year.
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Major Street and Trunkline Fund Highlights
The Major Street and Trunkline Fund accounts for all of the City’s street construction
and maintenance activities on its primary road system. Primary funding comes from the
State of Michigan. During the six months ended June 30, 2010, the fund balance of the
Major Street and Trunkline Fund increased $86,311.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
As of June 30, 2010, the City and its component units had invested $137,225,998 in a
variety of capital assets, including land, streets, equipment, buildings, water and sewer
lines, and vehicles. This is a decrease of $2,572,531 from capital assets as of
December 31, 2009. The decrease is due to normal depreciation and to the fact that
capital construction activity during the first six months of the year is generally light. Note
D of the notes to the basic financial statements provides detailed information on the
City’s capital asset investment.
Long-Term Debt
Bond Ratings
At June 30, 2010, the City had $26,681,764 in bonds and
The City’s limited full faith and
other long-term obligations outstanding. This represents a credit bonds (bonds guaranteed
decrease of 6.5% from the prior year. On April 1, 2010 by the City’s taxing powers)
$6,030,000 of outstanding Water System Revenue Bonds were upgraded by Standard &
Poor’s from a rating of “A” to
were refunded with new bonds issued at lower interest “A+” in early 2010. The City’s
rates. The net present value savings from the refunding Water System revenue bonds
are $334,200 or 5.54% of the refunded principal amount. carry the “AA-“ rating.
This represents the only significant debt activity during the
six months ended June 30, 2010.
Additional information concerning the City’s long-term debt is presented in Note H to the
basic financial statements.
City’s Long Term Debt – Bonds and Other Obligations
(In thousands of dollars)
Governmental Business-Type
Activities Activities Total Percentage
6/30/2010* 12/31/2009 6/30/2010* 12/31/2009 6/30/2010* 12/31/2009 Change
Due w ithin one year $527 $611 $1,223 $1,182 $1,750 $1,793 -2.40%
Due in more than one year 8,230 8,493 16,702 17,106 24,932 25,599 -2.61%
Total bonds & other obligations $8,757 $9,104 $17,925 $18,288 $26,682 $27,392 -2.59%
* Six‐month fiscal period
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In addition to direct City debt, component units such as the Downtown Development
Authority (DDA) and Local Development Finance Authority (LDFA) had outstanding debt
totaling $7,725,122 at year-end as shown in the table below. This represents a
decrease of 2.9% from the prior year. No new component unit debt was issued during
the first six months of 2010.
Debt issued by component units typically is secured by the limited full faith and credit of
the City and so is an important consideration in assessing the City’s overall fiscal health.
Additional information concerning component units’ long-term debt is presented in Note
H to the basic financial statements and is summarized as follows:
Component Unit Long Term Debt – Bonds and Other Obligations
(In thousands of dollars)
Dow ntow n Development Local Development
Total Percentage
Finance Authority Finance Authority
6/30/2010* 12/31/2009 6/30/2010* 12/31/2009 6/30/2010* 12/31/2009 Change
Due w ithin one year $240 $230 $80 $80 $320 $310 3.23%
Due in more than one year 3,005 3,245 4,400 4,400 7,405 7,645 -3.14%
Total bonds & other obligations $3,245 $3,475 $4,480 $4,480 $7,725 $7,955 -2.89%
* Six‐month fiscal period
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The City’s fiscal year 2010-11 capital budget anticipates spending $7,256,925 for capital
projects, consisting of street improvements, water and sewer system improvements,
and scheduled equipment replacements. These improvements will be funded through
grants and revenues generated from operations. The City may issue bonds during
2010-11 to provide matching funds for several significant street projects for which state
and federal matching grants are available.
From an operating standpoint, the City’s 2010-11 budget will entail further program and
position cuts to better balance the City’s operating expenses with recurring revenue
streams:
Several positions are scheduled to be eliminated with job functions being
consolidated with remaining positions;
Three firefighter positions were scheduled to be cut. However, the City and its
firefighter’s union were able to reach agreement on an innovative contract that
will, among other things, allow the City to hire part-time firefighters in the future.
Other service cuts including elimination of lifeguards at Pere Marquette Beach,
removal of some mid-block streetlights and reductions in the use of seasonal
workers in parks and cemeteries are also scheduled.
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City operations depend on five major sources of revenue: local income taxes, local
property taxes, state-shared revenues, state street funds, and water and sewer utility
fees. Together, these five income sources account for about three-quarters of total
revenues. Meaningful discussion of the City’s financial outlook needs to center on
these major income sources.
Local Income Tax
The City income tax was approved by voters in 1993 and now is the primary source of
funding for police, fire, parks and other general operations. The income tax rate is 1%
on City residents and ½ of 1% on non-residents working in the City. The income tax
provides key advantages for core cities such as Muskegon. First, it allows the City to
regionalize its tax structure by taxing non-residents who work here and use City
services. Second, it allows the City to benefit from development occurring outside City
limits because City residents employed by non-City employers pay income taxes.
Finally, the income tax generates revenue from workers at not-for-profit hospitals,
churches, government agencies, colleges and other institutions that are traditionally
exempt from paying local property taxes. This is particularly important for Muskegon
since it is the regional center for many such institutions.
Income tax revenues fell from $6,482,200 in 2009 to $3,368,057 for 2010 due to the
fiscal year change and six month reporting period. For 2010-11, the City has
conservatively estimated income tax revenue to be $6,000,000.
City Income Percent
Year
Tax Revenues Change
6/30/2010* $3,368,057 -48.0%
12/31/2009 6,482,290 -15.8%
12/31/2008 7,694,780 1.0%
12/31/2007 7,618,461 2.6%
12/31/2006 7,425,173 4.8%
* Six‐month fiscal period
Local Property Tax
City charter and state law authorize the City to levy a general operating millage up to 10
mills and a maximum sanitation millage of 3 mills. Millage rates are applied to the
taxable value of property in the City to arrive at the City’s property tax levy.
For 2010-11, the City has increased its operating millage from 8.5 to 9.5 mills. The
sanitation millage will remain at 2.5 mills. We project $8,334,919 in property tax
revenue. On the November 2010 ballot is a proposed City Charter amendment that, if
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passed, would allow the City to levy 1 mill for street maintenance. If passed, the City
intends to roll back the general operating millage to 8.5 mills.
Total Assessed Percent Estimated Actual
Year
Value Change Value
2009 $867,330,950 -4.23% $1,734,661,900
2008 905,682,400 2.65% 1,811,364,800
2007 882,300,288 3.11% 1,764,600,576
2006 855,662,300 2.78% 1,711,324,600
2005 832,507,264 0.19% 1,665,014,528
2004 830,948,500 -0.97% 1,661,897,000
It should be noted that a major property taxpayer ceased operations in the City within
the last twelve months. The property is currently for sale and the current owner has
agreed to continue paying property taxes at current values for one additional year. The
impact of this plant closure on City finances is being monitored closely.
State Shared Revenues
State shared sales tax revenues represent about sixteen percent of total General Fund
revenue. The City’s state shared revenue allocation is made up of two parts. The
constitutional component is a fixed percentage of total state sales tax collections that is
allocated to cities on a per capita basis and that cannot be reduced by the legislature.
The statutory component is determined by a complex formula and is subject to
adjustment through the State’s budget process. Both constitutional and statutory
components depend, of course, on overall state sales tax collections. The City’s recent
state shared revenue history is summarized below:
State Shared Percent
Revenues
Year Change
6/30/2010* $1,832,066 -52.3%
12/31/2009 3,841,922 -14.4%
12/31/2008 4,487,698 0.3%
12/31/2007 4,475,462 -1.8%
12/31/2006 4,556,801 -0.8%
* Six‐month fiscal period
Erosion of state shared revenues (both from economic factors and from legislative
action) constitutes a major on-going concern for City finances.
For 2010-11 fiscal year, the City has projected $3,774,813 in state shared revenues and
the most recent information available indicate that this estimate remains viable.
30
Street Funds
The State also returns to the City a share of gasoline tax revenues to help fund
maintenance and construction of major and local streets within the City. These
revenues have not suffered to the extent that general state sales tax revenues have:
Street Revenues
from State Percent
Year
Change
6/30/2010* $1,741,233 -45.2%
12/31/2009 3,177,862 -0.7%
12/31/2008 3,199,930 -2.7%
12/31/2007 3,288,098 -0.3%
12/31/2006 3,297,183 -0.7%
* Six‐month fiscal period
For 2010-11, the City is projecting no material change in street funds from the State of
Michigan.
Water and Sewer Fees
From a government-wide entity perspective, combined water and sewer fees represent
the City’s largest income stream totaling $6,333,093 during the six month period ended
June 30, 2010. Charges to customers are based on the amount of metered services
used times rates periodically set by the City Commission. During 2009, sewer rates
were increased twelve percent as result of higher wastewater treatment and debt
service charges enacted by Muskegon County. A further sewer rate increases will
likely be needed in 2010-11 due to the shutdown of a major industrial sewer customer.
Water rates are expected to remain stable in 2010-11.
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
demonstrate the City’s accountability for the money it receives. If you have questions
about this report, need additional financial information, or wish to obtain separate
financial statements for the City’s component units, contact the City’s Finance
Department at (231) 724-6713 or by e-mail (finance@shorelinecity.com).
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32
FINANCIAL STATEMENTS
33
City of Muskegon
STATEMENT OF NET ASSETS (DEFICITS)
June 30, 2010
ASSETS
Governmental Business-type Component
activities activities Total units
CURRENT ASSETS
Cash and investments $ 13,209,870 $ 4,261,377 $ 17,471,247 $ 403,953
Receivables 3,044,677 2,104,819 5,149,496 -
Due from other governmental units 2,363,683 69,830 2,433,513 -
Internal balances (1,504,692) 1,504,692 - -
Due from component units 9,217 - 9,217 -
Inventories 28,711 128,681 157,392 -
Prepaid items 1,091,959 109,879 1,201,838 -
Total current assets 18,243,425 8,179,278 26,422,703 403,953
NONCURRENT ASSETS
Restricted assets - 672,000 672,000 -
Capital assets, net
Nondepreciable 19,128,717 2,468,044 21,596,761 400,000
Depreciable 56,176,749 56,390,830 112,567,579 2,661,658
Bond issuance costs, net 121,150 134,250 255,400 95,673
Special assessments receivable 1,345,704 - 1,345,704 -
Notes receivable 316,231 - 316,231 -
Total noncurrent assets 77,088,551 59,665,124 136,753,675 3,157,331
Total assets 95,331,976 67,844,402 163,176,378 3,561,284
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LIABILITIES AND NET ASSETS (DEFICITS)
CURRENT LIABILITIES
Accounts payable and accrued liabilities 1,361,827 183,166 1,544,993 41,600
Due to other governmental units 19,962 328,073 348,035 -
Due to primary government - - - 9,217
Unearned revenue 496,382 - 496,382 -
Bonds and other obligations, due within one year 527,300 1,223,100 1,750,400 320,000
Total current liabilities 2,405,471 1,734,339 4,139,810 370,817
NONCURRENT LIABILITIES
Bonds and other obligations, less amounts due within one year 8,229,436 16,701,928 24,931,364 7,405,122
Total liabilities 10,634,907 18,436,267 29,071,174 7,775,939
NET ASSETS (DEFICITS)
Invested in capital assets, net of related debt 67,809,630 41,105,739 108,915,369 (1,418,464)
Restricted for:
Streets and highways 1,725,685 - 1,725,685 -
Debt service - 672,000 672,000 -
Perpetual care
Expendable 16,979 - 16,979 -
Non-expendable 1,316,544 - 1,316,544 -
Unrestricted 13,828,231 7,630,396 21,458,627 (2,796,191)
Total net assets (deficits) $ 84,697,069 $ 49,408,135 $ 134,105,204 $ (4,214,655)
The accompanying notes are an integral part of this statement.
City of Muskegon
STATEMENT OF ACTIVITIES
For the six months ended June 30, 2010
Net (Expense) Revenue and Changes in Net Assets
Program Revenue Primary Government
Charges for Operating grants Capital grants Governmental Business-type Component
Functions/Programs Expenses services and contributions and contributions activities activities Total units
Primary government
Governmental activities
Public representation services $ 445,251 $ 100,177 $ - $ - $ (345,074) $ - $ (345,074) $ -
Administrative services 317,873 129,630 2,394 - (185,849) - (185,849) -
Financial services 1,209,694 475,031 25,000 - (709,663) - (709,663) -
Public safety 6,332,728 536,419 130,770 - (5,665,539) - (5,665,539) -
Public works 1,640,946 209,203 - 15,501 (1,416,242) - (1,416,242) -
Highways, streets and bridges 3,680,196 139,009 1,613,077 9,443 (1,918,667) - (1,918,667) -
Community and economic development 1,275,026 186,572 1,340,830 230,290 482,666 - 482,666 -
Culture and recreation 759,392 129,025 19,740 - (610,627) - (610,627) -
General administration 210,117 59,373 - - (150,744) - (150,744) -
Interest on long-term debt 139,006 - - - (139,006) - (139,006) -
Total governmental activities 16,010,229 1,964,439 3,131,811 255,234 (10,658,745) - (10,658,745) -
Business-type activities
Sewer 2,525,067 3,441,924 - - - 916,857 916,857 -
Water 2,958,795 2,891,169 - - - (67,626) (67,626) -
Marina and Launch Ramp 150,055 156,767 - - - 6,712 6,712 -
Total business-type activities 5,633,917 6,489,860 - - - 855,943 855,943 -
Total primary government $ 21,644,146 $ 8,454,299 $ 3,131,811 $ 255,234 (10,658,745) 855,943 (9,802,802) -
35
Component units
Local Development Finance Authority III $ 188,108 $ - $ - $ 50,000 - - - (138,108)
Downtown Development Authority 57,726 - - - - - - (57,726)
Tax Increment Finance Authority 25,000 - - - - - - (25,000)
Brownfield Redevelopment Authority 14,920 - - - - - - (14,920)
Total component units $ 285,754 $ - $ - $ 50,000 - - - (235,754)
General revenues
Property taxes 8,681,256 - 8,681,256 455,284
Income taxes 3,505,264 - 3,505,264 -
Cable franchises 178,239 - 178,239 -
Grants and contributions not restricted to specific programs 1,832,066 - 1,832,066 -
Unrestricted investment earnings 104,086 15,990 120,076 1,456
Miscellaneous 51,638 - 51,638 -
Gain on sale of capital asset 65,155 - 65,155 -
Transfers (3,760) 3,760 - -
Total general revenues and transfers 14,413,944 19,750 14,433,694 456,740
Change in net assets 3,755,199 875,693 4,630,892 220,986
Net assets (deficit) at January 1, 2010 80,941,870 48,532,442 129,474,312 (4,435,641)
Net assets (deficit) at June 30, 2010 $ 84,697,069 $ 49,408,135 $ 134,105,204 $ (4,214,655)
The accompanying notes are an integral part of this statement.
City of Muskegon
BALANCE SHEET
Governmental Funds
June 30, 2010
Major Street Other Total
General and Trunkline governmental governmental
Fund Fund funds funds
ASSETS
Cash and investments $ 4,269,650 $ - $ 4,624,184 $ 8,893,834
Receivables
Accounts and loans 201,136 36,587 723,615 961,338
Property taxes 70,713 - - 70,713
Income taxes 836,896 - - 836,896
Special assessments - 712,984 679,720 1,392,704
Due from other governmental units 805,809 440,883 1,116,990 2,363,682
Due from other funds - - 1,241,916 1,241,916
Due from component units - - 9,217 9,217
Prepaid items 290,969 27,289 6,673 324,931
Total assets $ 6,475,173 $ 1,217,743 $ 8,402,315 $ 16,095,231
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable $ 257,029 $ 32,547 $ 464,916 $ 754,492
Accrued liabilities 119,281 4,674 6,613 130,568
Due to other governmental units 14,109 5,853 - 19,962
36
Due to other funds - 102,528 1,040,496 1,143,024
Deferred revenue 46,300 712,984 1,176,103 1,935,387
Total liabilities 436,719 858,586 2,688,128 3,983,433
Fund balances
Reserved for:
Prepaid items 290,969 27,289 6,673 324,931
Long-term loans receivable - - 293,100 293,100
Capital projects - - 2,253,683 2,253,683
Perpetual care 10,000 - 1,306,544 1,316,544
Unreserved
Designated, reported in
General Fund 2,054,605 - - 2,054,605
Capital projects funds - - 247,439 247,439
Undesignated, reported in
General Fund 3,682,880 - - 3,682,880
Special revenue funds - 331,868 1,831,173 2,163,041
Capital projects funds - - (241,404) (241,404)
Permanent funds - - 16,979 16,979
Total fund balances 6,038,454 359,157 5,714,187 12,111,798
Total liabilities and fund balances $ 6,475,173 $ 1,217,743 $ 8,402,315 $ 16,095,231
The accompanying notes are an integral part of this statement.
City of Muskegon
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS
June 30, 2010
Total fund balance—governmental funds $ 12,111,798
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
are not reported in the governmental funds.
Cost of capital assets $ 124,291,432
Accumulated depreciation (50,795,949) 73,495,483
Bond issuance costs are not capitalized and amortized in the governmental funds.
Bond issuance costs 160,106
Accumulated amortization (38,956) 121,150
Other receivables in governmental activities are not reported in the
governmental funds. 571,300
37
Accrued interest in governmental activities is not reported in the
governmental funds. (59,600)
Special assessment revenue is not recognized until it is receivable in the current
period and therefore is shown as deferred revenue in the governmental funds. 1,392,704
Long-term liabilities in governmental activities are not due and payable in the
current period and are not reported in the governmental funds.
Bonds and notes payable (7,495,836)
Compensated absences (1,159,626) (8,655,462)
Internal service funds are used by management to charge the costs of certain activities
to individual funds. The assets and liabilities of the internal service funds are reported
with governmental activities in the Statement of Net Assets. 5,719,696
Net assets of governmental activities in the Statement of Net Assets $ 84,697,069
The accompanying notes are an integral part of this statement.
City of Muskegon
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
Governmental Funds
For the six months ended June 30, 2010
Major Street Other Total
General and Trunkline governmental governmental
Fund Fund funds funds
REVENUES
Taxes $ 11,855,182 $ - $ - $ 11,855,182
Licenses and permits 584,162 - - 584,162
Intergovernmental revenues
Federal 122,965 9,443 848,127 980,535
State 1,839,871 1,280,365 659,723 3,779,959
Local 25,000 - - 25,000
Charges for services 1,206,213 7,961 124,020 1,338,194
Fines and forfeitures 296,543 - 500 297,043
Interest and rental income 92,338 44,302 57,233 193,873
Other 118,303 11,211 564,303 693,817
Total revenues 16,140,577 1,353,282 2,253,906 19,747,765
EXPENDITURES
Current
Public representation services 448,703 - - 448,703
Administrative services 255,166 - - 255,166
Financial services 1,241,430 - - 1,241,430
Public safety 6,571,096 - 7,639 6,578,735
Public works 1,589,090 - - 1,589,090
38
Highways, streets and bridges - 1,166,971 850,168 2,017,139
Community and economic development 419,534 - - 419,534
Culture and recreation 636,652 - 3,200 639,852
Other governmental functions 200,623 - - 200,623
Debt service
Principal - - 303,466 303,466
Interest and fees 109,174 - 26,839 136,013
Capital outlay 13,722 - 1,732,699 1,746,421
Total expenditures 11,485,190 1,166,971 2,924,011 15,576,172
Excess of revenues over (under) expenditures 4,655,387 186,311 (670,105) 4,171,593
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets - - 75,465 75,465
Transfers in 2,188 - 340,000 342,188
Transfers out (257,783) (100,000) (2,188) (359,971)
Total other financing sources (uses) (255,595) (100,000) 413,277 57,682
Net change in fund balances 4,399,792 86,311 (256,828) 4,229,275
Fund balances at January 1, 2010 1,638,662 272,846 5,971,015 7,882,523
Fund balances at June 30, 2010 $ 6,038,454 $ 359,157 $ 5,714,187 $ 12,111,798
The accompanying notes are an integral part of this statement.
City of Muskegon
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
For the six months ended June 30, 2010
Net change in fund balances—total governmental funds $ 4,229,275
Amounts reported for governmental activities in the Statement of Activities are
different because:
Governmental funds report outlays for capital assets and bond issuance costs as expenditures; in the Statement
of Activities, these costs are depreciated and amortized over their estimated useful lives, respectively.
Depreciation and amortization expense $ (2,143,236)
Capital outlay 980,822 (1,162,414)
Governmental funds report the entire proceeds from the sale of capital assets as revenue,
but the Statement of Activities reports only the gain or loss on the sale of the capital assets. (2,488)
Revenue reported in the Statement of Activities that does not provide current
financial resources are not reported as revenue in the governmental funds. (35,000)
Repayment of principal on long-term debt is an expenditure in the governmental funds, but
39
the repayment reduces long-term liabilities in the Statement of Net Assets. 302,987
Interest expense on long-term debt is recorded in the Statement of Activities
when incurred, but is not reported in the governmental funds until paid. 1,300
Compensated absences are reported on the accrual method in the Statement
of Activities and reported as expenditures when financial resources are
used in the governmental funds. 51,009
Governmental funds recognize special assessments as revenue as they become current,
however they are recognized in full when levied in the Statement of Net Assets. (47,822)
The internal service funds are used by management to charge the costs of certain activities to
individual funds. The net change of the internal service funds is reported with governmental
activities. 418,352
Change in net assets of governmental activities $ 3,755,199
The accompanying notes are an integral part of this statement.
City of Muskegon
STATEMENT OF NET ASSETS
Proprietary Funds
June 30, 2010
ASSETS
Governmental
Activities -
Business-type Activities - Enterprise Funds Internal
Marina and Service
Sewer Water Launch Ramp Total Funds
CURRENT ASSETS
Cash and investments $ 1,585,879 $ 2,456,123 $ 219,375 $ 4,261,377 $ 4,316,036
Accounts receivable 1,089,868 1,010,843 4,108 2,104,819 919,963
Due from other governmental units - 64,580 5,250 69,830 -
Inventories 31,233 97,448 - 128,681 28,711
Prepaid items 43,388 63,999 2,492 109,879 767,028
Total current assets 2,750,368 3,692,993 231,225 6,674,586 6,031,738
NONCURRENT ASSETS
Restricted assets - 672,000 - 672,000 -
Capital assets
Land 16,188 103,500 22,562 142,250 65,000
Land improvements - - 1,888,965 1,888,965 121,648
Buildings, improvements and systems 19,675,396 62,895,980 2,322,488 84,893,864 1,559,334
Machinery and equipment 39,722 2,788,156 - 2,827,878 7,006,260
Construction in progress 632,904 1,692,890 - 2,325,794 -
Less accumulated depreciation (7,161,808) (23,825,376) (2,232,693) (33,219,877) (6,942,259)
Net capital assets 13,202,402 43,655,150 2,001,322 58,858,874 1,809,983
Bond issuance costs, net - 134,250 - 134,250 -
40
Total noncurrent assets 13,202,402 44,461,400 2,001,322 59,665,124 1,809,983
Total assets 15,952,770 48,154,393 2,232,547 66,339,710 7,841,721
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
Accounts payable 1,386 56,288 9,793 67,467 406,687
Accrued liabilities 3,978 110,293 1,428 115,699 10,480
Due to other governmental units 302,598 25,475 - 328,073 -
Due to other funds - - - - 98,892
Bonds and other obligations, due within one year 9,000 1,214,000 100 1,223,100 17,300
Total current liabilities 316,962 1,406,056 11,321 1,734,339 533,359
NONCURRENT LIABILITIES
Bonds and other obligations, less amounts due within one year 45,643 16,655,787 498 16,701,928 83,974
Total liabilities 362,605 18,061,843 11,819 18,436,267 617,333
NET ASSETS
Invested in capital assets, net of related debt 13,202,402 25,902,015 2,001,322 41,105,739 1,809,983
Restricted for debt service - 672,000 - 672,000 -
Unrestricted 2,387,763 3,518,535 219,406 6,125,704 5,414,405
Total net assets $ 15,590,165 $ 30,092,550 $ 2,220,728 47,903,443 $ 7,224,388
Adjustment to reflect the consolidation of internal service fund activities
related to enterprise funds 1,504,692
Net assets of business-type activities $ 49,408,135
The accompanying notes are an integral part of this statement.
City of Muskegon
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
Proprietary Funds
For the six months ended June 30, 2010
Governmental
Activities -
Business-type Activities - Enterprise Funds Internal
Marina and Service
Sewer Water Launch Ramp Total Funds
OPERATING REVENUES
Charges for services $ 3,407,733 $ 2,795,713 $ 152,416 $ 6,355,862 $ 4,254,554
Other 34,191 95,456 4,351 133,998 46,579
Total operating revenues 3,441,924 2,891,169 156,767 6,489,860 4,301,133
OPERATING EXPENSES
Administration 188,402 259,451 11,268 459,121 160,176
Insurance premiums and claims - - - - 1,884,968
Wastewater treatment 2,136,938 - - 2,136,938 -
Filtration plant operations - 666,691 - 666,691 -
Water distribution - 649,133 - 649,133 -
Other operations - - 82,446 82,446 1,644,498
Depreciation and amortization 201,736 1,074,308 57,099 1,333,143 271,813
Total operating expenses 2,527,076 2,649,583 150,813 5,327,472 3,961,455
41
Operating income 914,848 241,586 5,954 1,162,388 339,678
NONOPERATING REVENUES (EXPENSES)
Investment earnings 1,679 13,566 745 15,990 20,400
Gain on sale of capital assets - - - - 67,112
Interest expense - (329,306) - (329,306) -
Total nonoperating revenue (expenses) 1,679 (315,740) 745 (313,316) 87,512
Income (loss) before transfers 916,527 (74,154) 6,699 849,072 427,190
Transfers in - - 3,760 3,760 14,023
Change in net assets 916,527 (74,154) 10,459 852,832 441,213
Net assets at January 1, 2010 14,673,638 30,166,704 2,210,269 6,783,175
Net assets at June 30, 2010 $ 15,590,165 $ 30,092,550 $ 2,220,728 $ 7,224,388
Adjustments to reflect the consolidation of internal service fund activities
related to enterprise funds 22,861
Change in net assets of business-type activities $ 875,693
The accompanying notes are an integral part of this statement.
City of Muskegon
STATEMENT OF CASH FLOWS
Proprietary Funds
For the six months ended June 30, 2010
Governmental
Activities -
Business-type Activities - Enterprise Funds Internal
Marina and Service
Sewer Water Launch Ramp Total Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 3,514,365 $ 2,781,819 $ 155,862 $ 6,452,046 $ 49,456
Receipts from interfund services provided 6,304 17,869 - 24,173 3,993,626
Payments to suppliers (1,926,569) (772,714) (53,563) (2,752,846) (3,014,539)
Payments to employees (221,909) (594,368) (30,592) (846,869) (665,819)
Payments for interfund services used (245,455) (317,728) (6,833) (570,016) (520,771)
Net cash provided by (used for) operating activities 1,126,736 1,114,878 64,874 2,306,488 (158,047)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers in - - 3,760 3,760 14,023
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Proceeds from refunding debt - 5,995,000 - 5,995,000 -
Premium on refunding debt - 188,136 - 188,136 -
Issuance costs of refunding debt - (134,250) - (134,250) -
Purchases of capital assets (64,016) (185,979) - (249,995) -
Principal paid on capital debt - (6,565,000) - (6,565,000) -
Interest paid on capital debt - (271,522) - (271,522) -
Proceeds from sale of capital assets - - - - 67,404
Net cash provided by (used for) capital and related financing activities (64,016) (973,615) - (1,037,631) 67,404
42
CASH FLOW FROM INVESTING ACTIVITIES
Investment earnings 1,679 13,566 745 15,990 20,400
Net increase (decrease) in cash and investments 1,064,399 154,829 69,379 1,288,607 (56,220)
Cash and investments at January 1, 2010 521,480 2,973,294 149,996 3,644,770 4,372,256
Cash and investments at June 30, 2010 $ 1,585,879 $ 3,128,123 $ 219,375 $ 4,933,377 $ 4,316,036
Reconciliation of cash and investments to the statement of net assets
Cash and investments $ 1,585,879 $ 2,456,123 $ 219,375 $ 4,261,377 $ 4,316,036
Restricted cash and investments - 672,000 - 672,000 -
$ 1,585,879 $ 3,128,123 $ 219,375 $ 4,933,377 $ 4,316,036
Reconciliation of operating income to net cash provided by (used for)
operating activities
Operating income $ 914,848 $ 241,586 $ 5,954 $ 1,162,388 $ 339,678
Adjustments to reconcile operating income to net cash provided by
(used for) operating activities
Depreciation and amortization expense 201,736 1,074,308 57,099 1,333,143 271,813
Bad debt expense 6,254 7,960 - 14,214 -
Change in assets and liabilities
Receivables, net 72,491 (99,441) (905) (27,855) (347,004)
Inventories 15,386 (5,259) - 10,127 (4,961)
Prepaid items (32,828) (49,951) (1,923) (84,702) (569,673)
Accounts payable (24,187) (57,086) 3,496 (77,777) 97,426
Accrued liabilities (26,964) 2,761 1,153 (23,050) 4,118
Due to other funds - - - - 50,556
Net cash provided by (used for) operating activities $ 1,126,736 $ 1,114,878 $ 64,874 $ 2,306,488 $ (158,047)
The accompanying notes are an integral part of this statement.
City of Muskegon
STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES
Fiduciary Funds
June 30, 2010
Agency
Funds
ASSETS
Cash and investments $ 725,123
Accounts receivable 1,867
Total assets $ 726,990
LIABILITIES
Accounts payable $ 71,071
Due to other governmental units 396,210
43
Deposits held for others 259,709
Total liabilities $ 726,990
The accompanying notes are an integral part of this statement.
City of Muskegon
STATEMENT OF NET ASSETS (DEFICITS)
Discretely Presented Component Units
June 30, 2010
ASSETS
Local Tax
Development Downtown Increment Brownfield
Finance Development Finance Redevelopment
Authority III Authority Authority Authority Total
CURRENT ASSETS
Cash and investments $ 36,834 $ 329,585 $ 37,534 $ - $ 403,953
NONCURRENT ASSETS
Capital assets, net
Nondepreciable 400,000 - - - 400,000
Depreciable 2,661,658 - - - 2,661,658
Net capital assets 3,061,658 - - - 3,061,658
Bond issuance costs, net 95,673 - - - 95,673
Total noncurrent assets 3,157,331 - - - 3,157,331
44
Total assets 3,194,165 329,585 37,534 - 3,561,284
LIABILITIES AND NET ASSETS (DEFICITS)
CURRENT LIABILITIES
Accrued liabilities 32,800 8,800 - - 41,600
Due to primary government - - - 9,217 9,217
Bonds and other obligations, due within one year 80,000 240,000 - - 320,000
Total current liabilities 112,800 248,800 - 9,217 370,817
NONCURRENT LIABILITIES
Bonds and other obligations, less amounts due
within one year 4,400,122 3,005,000 - - 7,405,122
Total liabilities 4,512,922 3,253,800 - 9,217 7,775,939
NET ASSETS (DEFICITS)
Invested in capital assets, net of related debt (1,418,464) - - - (1,418,464)
Unrestricted 99,707 (2,924,215) 37,534 (9,217) (2,796,191)
Total net assets (deficits) $ (1,318,757) $ (2,924,215) $ 37,534 $ (9,217) $ (4,214,655)
The accompanying notes are an integral part of this statement.
City of Muskegon
STATEMENT OF ACTIVITIES
Discretely Presented Component Units
For the six months ended June 30, 2010
Program
Revenue Net (Expense) Revenue and Changes in Net Assets
Local Tax
Capital grants Development Downtown Increment Brownfield
and Finance Development Finance Redevelopment
Functions/Programs Expenses contributions Authority III Authority Authority Authority Total
Local Development Finance Authority III
Economic development $ 89,410 $ - $ (89,410) $ - $ - $ - $ (89,410)
Interest on long-term debt 98,698 50,000 (48,698) - - - (48,698)
Total Local Development Finance Authority III 188,108 50,000 (138,108) - - - (138,108)
Downtown Development Authority
Interest on long-term debt 57,726 - - (57,726) - - (57,726)
Tax Increment Finance Authority
Economic development 25,000 - - - (25,000) - (25,000)
Brownfield Redevelopment Authority
45
Economic development 14,920 - - - - (14,920) (14,920)
Total discretely presented component units $ 285,754 $ 50,000 (138,108) (57,726) (25,000) (14,920) (235,754)
General revenues
Property taxes 71,360 327,373 40,634 15,917 455,284
Unrestricted investment income 133 1,212 111 - 1,456
Total general revenues 71,493 328,585 40,745 15,917 456,740
Change in net assets (66,615) 270,859 15,745 997 220,986
Net assets (deficits) at January 1, 2010 (1,252,142) (3,195,074) 21,789 (10,214) (4,435,641)
Net assets (deficits) at June 30, 2010 $ (1,318,757) $ (2,924,215) $ 37,534 $ (9,217) $ (4,214,655)
The accompanying notes are an integral part of this statement.
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the City of Muskegon (City) have been prepared in conformity with accounting
principles generally accepted in the United States of America (GAAP) as applied to government units. The
Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing
governmental accounting and financial reporting principles. The more significant of the City's accounting
policies are described below.
Effective January 1, 2010, the City changed its fiscal year end from December 31 to June 30.
Reporting Entity
The City of Muskegon was incorporated October 6, 1919, under the provisions of the Home Rule Act of the
State of Michigan. The City is a municipal corporation governed by an elected mayor and six-member City
Commission and is administered by a city manager appointed by the City Commission. The accompanying
financial statements present the government and its component units, entities for which the government is
considered to be financially accountable. Blended component units, although legally separate entities, are, in
substance, part of the government's operations. Each discretely presented component unit is reported in a
separate column in the government-wide financial statements (see note below for description) to emphasize
that it is legally separate from the government. Each discretely presented component unit has a June 30 fiscal
year end.
Discretely Presented Component Units
Downtown Development Authority (DDA). The Authority’s sole purpose is the collection of property
tax incremental revenues, the issuance and repayment of debt and the construction of public facilities
to promote and facilitate economic growth in the downtown district. Members of the DDA are
appointed by the City Commission and the Authority is fiscally dependent on the City since the City
Commission approves the DDA budget and must approve any debt issuance. The DDA is presented
as a governmental fund type.
Tax Increment Finance Authority (TIFA). The Authority’s sole purpose is the collection of property tax
incremental revenues and promotion of economic development activities (including issuance of debt) in a
sub-section of the downtown district. Members of the TIFA are appointed by the City Commission and the
Authority is fiscally dependent on the City since the City Commission approves the TIFA budget and must
approve any debt issuance. The TIFA is presented as a governmental fund type.
Local Development Finance Authority (LDFA). The City has created three separate local development
finance authority districts under the aegis of the LDFA to promote and facilitate economic growth in the Port
City Industrial Park, the Medendorp Industrial Park, and the SmartZone Hi-Tech Park. The LDFA’s sole
purpose is the collection of property tax incremental revenues and the construction of public facilities within
the districts. Members of the LDFA are appointed by the City Commission and the Authority is fiscally
dependent on the City since the City Commission approves budgets and must approve any debt issuance. The
LDFA districts are presented as governmental fund types.
46
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Reporting Entity—Continued
Discretely Presented Component Units—Continued
Brownfield Redevelopment Authority (BRA). The Authority’s sole purpose is the collection of property tax
incremental revenues and promotion of environmental remediation (including issuance of debt) in designated
brownfield areas. Members of the BRA are appointed by the City Commission and the Authority is fiscally
dependent on the City since the City Commission approves the BRA budget and must approve any debt
issuance. The BRA is presented as a governmental fund type.
Complete financial statements of the component units can be obtained from their administrative offices,
933 Terrace Street, Muskegon, Michigan 49443.
Related Organizations
The following organizations are related to the City’s financial reporting entity:
Muskegon Hospital Finance Authority. The Muskegon Hospital Finance Authority was created by the City of
Muskegon in accordance with the laws of the State of Michigan. Members of the Hospital Finance Authority
are appointed by the City but the City is not financially accountable for the Authority and therefore the
Authority is excluded from the accompanying financial statements. The Hospital Finance Authority’s sole
purpose is to issue tax-exempt debt for the benefit of Mercy Health Partners Hospital which is located within
the City. The Authority has no assets or financial activity and does not prepare financial statements. The
Hospital Finance Authority has no taxing power. As of June 30, 2010, there was no outstanding debt issued
by the Hospital Finance Authority. The City is not obligated in any manner for repayment of debt issued by
the Hospital Finance Authority, as any debt is payable solely from contractual payments from the hospitals.
Muskegon Housing Commission. The Muskegon Housing Commission was created by the City of Muskegon
in accordance with the laws of the State of Michigan. Members of the Housing Commission are appointed by
the City but the City is not financially accountable for the Commission and therefore the Commission is
excluded from the accompanying financial statements. The Housing Commission’s main purpose is to
administer activities that provide adequate housing facilities for low-income families and the elimination of
housing conditions that are detrimental to the public peace, health, safety, and welfare. The Commission’s
policy is to prepare its financial statements on the basis prescribed by the Department of Housing and Urban
Development. Accordingly, the summary information below (which is required by federal regulations), is not
intended to present financial position and results of operations in conformity with generally accepted
accounting principles. Summary financial information for the fiscal year ended September 30, 2009, the date
of its latest audited financial statements is as follows:
Total assets $ 5,850,136
Total liabilities (202,226)
Total net assets $ 5,647,910
Total operating income $ 1,982,819
Total operating expenses (2,025,888)
Total nonoperating revenues 52,921
Capital contributions 452,531
Change in net assets $ 462,383
47
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net assets and the statement of changes in net
assets) report information on all of the nonfiduciary activities of the primary government and its component
units. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are
reported separately from business-type activities, which rely to a significant extent on fees and charges for
support. Likewise, the primary government is reported separately from certain legally separate component
units for which the primary government is financially accountable.
The statement of activities demonstrates the degree to which the direct expenses of a given function or
segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific
function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or
directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and
contributions that are restricted to meeting the operational or capital requirement of a particular function or
segment. Taxes and other items not properly included among program revenues are reported instead as
general revenues.
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds,
even though the latter are excluded from the government-wide financial statements. Major individual
governmental funds and major individual enterprise funds are reported as separate columns in the fund
financial statements.
Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources measurement focus and
the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements excepting
agency funds which have no measurement focus. Revenues are recorded when earned and expenses are
recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are
recognized as revenues in the year for which they are levied. Grants and similar items are recognized as
revenue as soon as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources measurement focus
and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable
and available. Revenues are considered to be available when they are collectible within the current period or
soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers
revenues to be available if they are collected within 60 days of the end of the current fiscal period.
Reimbursements due for expenditure-driven grants are accrued as revenue at the time the expenditures are
made, or when received in advance, deferred until expenditures are made. Expenditures generally are
recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as
well as expenditures related to compensated absences and claims and judgments, are recorded only when
payment is due.
Income taxes, property taxes, franchise taxes, licenses and interest associated with the current fiscal period are
all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal
period. Only the portion of special assessments receivable due within 60 days of the end of the current fiscal
period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are
considered to be measurable and available only when cash is received by the government.
48
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Measurement Focus, Basis of Accounting and Financial Statement Presentation—Continued
The City reports the following major governmental funds:
The General Fund is the government's primary operating fund. It accounts for all financial
resources of the general government, except those required to be accounted for in another fund.
The Major Street and Trunkline Fund accounts for gas and weight tax allocations to the City by
the Michigan Department of Transportation for construction and maintenance of major streets
within the City.
The City reports the following three major proprietary funds:
The Sewer Fund accounts for user charges and for operating expenses and debt service of the
City’s sewer system.
The Water Fund accounts for user charges and for operating expenses and debt service of the
City’s water system.
The Marina and Launch Ramp Fund accounts for user fees collected and operating expenses for
the Hartshorn Marina and boat launch ramp facilities.
Additionally, the City reports the following fund types:
Internal Service Funds account for internal engineering services for City projects; the purchase,
operation, and depreciation of all City owned equipment; the payment of insurance claims and
benefits; and the operation, maintenance, and depreciation of the City’s public service building to
other funds of the government on a cost reimbursement basis.
The Agency Funds are used to account for assets held by the City as an agent for another
organization or individual.
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally
are followed in both the government-wide and proprietary fund financial statements to the extent that those
standards do not conflict with or contradict guidance of the Government Accounting Standards Board.
Governments also have the option of following subsequent private-sector guidance for their business-type
activities and enterprise funds, subject to this same limitation. The City has elected not to follow
subsequent private-sector guidance.
As a general rule the effect of interfund activity has been eliminated from the government-wide financial
statements. Exceptions to this general rule are payments-in-lieu of taxes and other charges between the City's
water and sewer function and various other functions of the government. Elimination of these charges would
distort the direct costs and program revenues reported for the various functions concerned.
49
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Measurement Focus, Basis of Accounting and Financial Statement Presentation—Continued
Amounts reported as program revenues include 1) charges to customers or applicants for goods, services or
privileges provided, 2) operating grants and contributions and 3) capital grants and contributions, including
special assessments. Internally dedicated resources are reported as general revenues rather than as program
revenues. Likewise, general revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues
and expenses generally result from providing services and producing and delivering goods in connection with
a proprietary fund's principal ongoing operations. The principal operating revenues are charges to customers
for sales and services. The enterprise funds also recognize as operating revenue the portion of tap fees
intended to recover the cost of connecting new customers to the system. Operating expenses for proprietary
funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All
revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted
resources first, then unrestricted resources as they are needed.
Assets, Liabilities and Net Assets or Equity
Deposits and Investments
The City's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term
investments with original maturities of three months or less from the date of acquisition.
The City reports its investments in accordance with GASB Statement No. 31, Accounting and Financial
Reporting for Certain Investments and for External Investment Pools. Under this standard, certain
investments are valued at fair value as determined by quoted market prices or by estimated fair values when
quoted market prices are not available. The standard also provides that certain investments are valued at cost
(or amortized cost) when they are of a short-term duration, the rate of return is fixed, and the City intends to
hold the investment until maturity.
The City has adopted an investment policy in compliance with State of Michigan statutes. Those statutes
authorize the City to invest in obligations of the United States, certificates of deposit, prime commercial
paper, securities guaranteed by United States agencies or instrumentalities, United States government or
federal agency obligation repurchase agreements, bankers acceptances, state-approved investment pools and
certain mutual funds.
The City maintains a cash and investment pool that is available for use by all funds and component units.
Each fund type’s or component unit’s portion of this pool is displayed on the combined balance sheet as “cash
and investments”. Cash overdrafts represent a deficit position in the pooled account and have been classified
as amounts due to other funds.
50
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Assets, Liabilities and Net Assets or Equity—Continued
Deposits and Investments—Continued
For the purpose of the statement of cash flows, the City considers all assets held in the cash and investment
pool to be cash and cash equivalents because the investments are not identifiable to the specific funds and the
assets can be withdrawn at any time, similar to a demand deposit account.
In accordance with State law, interest earned in the Budget Stabilization Fund is recorded in the General
Fund.
Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of
the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans)
or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding
balances between funds are reported as "due to/from other funds". Any residual balances outstanding
between the governmental activities and business-type activities are reported in the government-wide
financial statements as "internal balances".
Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve
account in applicable governmental funds to indicate that they are not available for appropriation and are not
expendable available financial resources.
All trade and property tax receivables are shown net of allowance for uncollectibles.
The City bills and collects its own property taxes and also collects taxes for the county, school and State of
Michigan. Taxes are levied on each December 1 on the taxable valuation of property (as defined by state
statutes) located in the Local Governmental Unit as of the preceding December 31. Uncollectible real
property taxes as of the following March 1 are turned over by the City to the County for collection. The
County advances the City all these delinquent real property taxes. The delinquent personal property taxes
remain the responsibility of the City. The City recognizes all available revenue from the current tax levy.
Available means collected within the current period or expected to be collected soon enough thereafter to be
used to pay liabilities of the current period (60 days).
The 2009 state taxable value for real/personal property of the City totaled approximately $728,408,000 of
which approximately $11,634,000 was captured by the component units. The ad valorem taxes levied
consisted of 8.9, 2.1, and .068 mills for the City's general operating, sanitation, and community promotion
purposes. These amounts are recognized in the General Fund with captured amounts shown in the TIFA,
LDFA, DDA, and BRA component units.
Inventories and Prepaid Items
All inventories are valued at cost using the first-in/first-out (FIFO) method. Inventories of business-type
funds are recorded as expenditures when consumed rather than when purchased.
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid
items in both government-wide and fund financial statements.
51
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Assets, Liabilities and Net Assets or Equity—Continued
Restricted Assets
Certain proceeds of the Water Fund revenue bonds, as well as certain resources set aside for their repayment,
are classified as restricted assets on the statement of net assets because their use is limited by applicable bond
covenants.
Capital Assets
Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges,
sidewalks and similar items), are reported in the applicable governmental or business-type activities columns
in the government-wide financial statements. Capital assets are defined by the government as assets with an
initial, individual cost of more than $10,000 and an estimated useful life in excess of two years. Such assets
are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets
are recorded at estimated fair market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend
assets lives are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest
incurred during the construction phase of capital assets of business-type activities is included as part of the
capitalized value of the assets constructed.
In the case of the initial capitalization of general infrastructure assets (i.e., those reported by governmental
activities) the City chose to include all such items regardless of their acquisition date or amount. The City
was able to obtain the historical cost of the initial reporting of these assets by recording the actual costs
incurred by the City.
Property, plant and equipment of the primary government, as well as the component units, is depreciated
using the straight-line method over the following estimated useful lives:
Assets Years
Land improvements 5-25
Leasehold improvements 10-25
Buildings and improvements 25-50
Water and sewage mains 40-100
Furniture, vehicles and equipment 5-20
Infrastructure 15-50
Shared improvements 20
52
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Assets, Liabilities and Net Assets or Equity—Continued
Compensated Absences
City employees are granted vacation and sick leave in varying amounts based on length of service and
employee group. Unused vacation and sick leave days are paid to employees upon termination under limits
that vary by employee group. The liability for these compensated absences is accrued when incurred in the
government-wide and proprietary fund financial statements. The current portion of this debt is estimated
based on historical trends. A liability for these amounts is reported in the governmental funds only if they
have matured, for example, as a result of employee resignations and retirements.
Long-Term Obligations
In the government-wide financial statements and proprietary fund types in the fund financial statements, long-
term debt and other long-term obligations are reported as liabilities in the applicable governmental activities,
business-type activities or proprietary fund type statement of net assets. Bond premiums and discounts as
well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest
method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs
are reported as deferred charges and amortized over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as
bond issuance costs, during the current period. The face amount of debt issued is reported as other financing
sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt
issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt
proceeds received, are reported as debt service expenditures.
Fund Equity
In the fund financial statements, governmental funds report reservations of fund balance for amounts that
are not available for appropriation or are legally restricted by outside parties for use for a specific
purpose. Designations of fund balance represent tentative management plans that are subject to change.
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.
Comparative Data
Comparative total data for the prior year have been presented in selected sections of the accompanying
financial statements in order to provide an understanding of changes in the City’s financial position and
operations. However, comparative (i.e. presentation of prior year’s totals by fund type) data has not been
presented in each of the statements since its inclusion would make the statements unduly complex and
difficult to read. Also, certain items in the 2009 financial statements have been reclassified to conform to
the 2010 presentation.
53
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE B—STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
Budgetary Information
Annual budgets are adopted on a basis consistent with generally accepted accounting principles for the
general fund and all special revenue funds. All annual appropriations lapse at fiscal year end.
The City follows these procedures in establishing the budgetary information provided in the financial
statements:
a. On or before the second regular City Commission meeting in May, the City Manager
submits to the City Commission a proposed operating budget for the fiscal year
commencing the following July 1. The operating budget includes proposed
expenditures and the means of financing them.
b. Public hearings are conducted at City Hall to obtain public comments.
c. Not later than the last regular City Commission meeting in June, the budget is legally
adopted by the City Commission.
d. Supplemental appropriations, when required to provide for additional expenditures,
are matched by additional anticipated revenues or an appropriation of available fund
balance and must be approved by the City Commission.
The appropriated budget is prepared by fund, function and department. The City Manager may transfer
line-item budget amounts within departments. Transfers of appropriations between departments require
the approval of the City Commission. The legal level of budgetary control is the department level for the
General Fund and the total expenditure or “fund” level for all other funds. The City Commission made
several supplemental budgetary appropriations throughout the year.
Excess of Expenditures Over Appropriations
During the six months ended June 30, 2010, actual expenditures exceeded appropriations for the street
lighting department by $38,615 in the General Fund. These over-expenditures were funded with available
fund balance.
Fund Deficits
As of June 30, 2010, the BRA Fund had an unreserved fund deficit of $9,217, the Engineering Services Fund
had an unreserved fund deficit of $102,318, and the HOME Fund had an unreserved fund deficit of $241,404.
The deficits will be eliminated through future operations.
54
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE C—DEPOSITS AND INVESTMENTS
As of June 30, 2010, the City had the following investments:
Weighted
average
maturity
Fair value (Months) Moody's Percent
Investment Type
Money market funds $ 1,656,521 1.5 AAA 22.8 %
US Agency obligations 4,595,931 107.2 AAA 63.3
US Treasury notes 1,004,450 3.0 not rated 13.9
Total fair value $ 7,256,902 100.0 %
Portfolio weighted average maturity 68.6
Interest rate risk. The City has a formal investment policy that limits investment maturities as a means of
managing its exposure to fair value losses arising from increasing interest rates. At least 10% of the City’s
total portfolio must be in instruments maturing in 30 days or less and the weighted average maturity cannot be
over three years. US Agency obligations, federal instrumentality securities and time certificates of deposit
cannot have a final maturity exceeding five years, repurchase agreements cannot have a final maturity
exceeding one year, commercial paper cannot have a final maturity exceeding 270 days and eligible bankers’
acceptances cannot have a final maturity exceeding 180 days.
Credit risk. State law limits investments in commercial paper and corporate bonds to the two highest
classifications issued by nationally recognized statistical rating organizations. The City has no investment
policy that would further limit its investment choices.
Concentration of credit risk. Concentration of credit risk is the risk of loss attributed to the magnitude of
the City investment in a single issuer, by diversifying the investment portfolio so that the impact of potential
losses from any one type of security or issuer will be minimized. The City has a concentration of credit risk
policy that limits investment in commercial paper, eligible bankers acceptances and time certificates of
deposit to 25% each of the total portfolio. More than 5 percent of the City’s investments are in U.S. Agency
obligations issued by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association and the Federal Home Loan Bank. These investments are 10.41 percent, 25.23 percent and 27.69
percent, respectively, of the City’s investments.
55
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE C—DEPOSITS AND INVESTMENTS—Continued
Custodial credit risk - deposits. In the case of deposits, this is the risk that in the event of a bank failure, the
City's deposits may not be returned to it. As of June 30, 2010, the City's bank balance of $13,364,343 was not
exposed to custodial credit risk because it was fully insured. Effective July 1, 2010, the unlimited deposit
insurance program that the City was part of expired leaving $13,114,343 of the City’s bank balance of
$13,364,343 exposed to custodial credit risk because it was uninsured and uncollateralized. The City’s
investment policy sets certain credit requirements that a bank must meet for the City to deposit funds in it.
Custodial credit risk - investments. This is the risk that, in the event of the failure of the counterparty, the
City will not be able to recover the value of its investments or collateral securities that are in the possession of
an outside party. The City has a custodial credit risk policy for investments that requires that all investments
that are held with a third-party for safekeeping be in the City’s name.
Foreign currency risk. The City is not authorized to invest in investments which have this type of risk.
Restricted Assets
Restrictions are placed on assets by bond ordinance and City Commission action. At June 30, 2010, restricted
cash and investments in the Water Fund of $672,000 were restricted by bond ordinance.
NOTE D—CAPITAL ASSETS
Capital asset activity for the six months ended June 30, 2010 was as follows:
Balance Balance
January 1, June 30,
2010 Additions Deductions 2010
Governmental activities:
Capital assets, not being depreciated:
Land $ 12,424,174 $ - $ - $ 12,424,174
Construction in progress 6,231,059 473,484 - 6,704,543
Total capital assets, not being depreciated 18,655,233 473,484 - 19,128,717
Capital assets, being depreciated:
Land improvements 4,118,319 - - 4,118,319
Leasehold improvements 343,614 - - 343,614
Buildings and improvements 21,078,437 13,722 - 21,092,159
Furniture, vehicles and equipment 11,842,600 493,616 433,465 11,902,751
Infrastructure 70,890,542 - 9,329 70,881,213
Shared improvements 5,576,901 - - 5,576,901
Total capital assets, being depreciated 113,850,413 507,338 442,794 113,914,957
56
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE D—CAPITAL ASSETS—Continued
Balance Balance
January 1, June 30,
2010 Additions Deductions 2010
Governmental activities—Continued
Less accumulated depreciation:
Land improvements $ 657,144 $ 68,817 $ - $ 725,961
Leasehold improvements 135,981 16,011 - 151,992
Buildings and improvements 13,345,141 220,814 - 13,565,955
Furniture, vehicles and equipment 9,484,710 295,874 433,173 9,347,411
Infrastructure 30,226,039 1,670,296 6,841 31,889,494
Shared improvements 1,917,973 139,422 - 2,057,395
Total accumulated depreciation 55,766,988 2,411,234 440,014 57,738,208
Total capital assets, being
depreciated, net 58,083,425 (1,903,896) 2,780 56,176,749
Capital assets, net $ 76,738,658 $ (1,430,412) $ 2,780 $ 75,305,466
Business-type activities:
Capital assets, not being depreciated:
Land $ 142,250 $ - $ - $ 142,250
Construction in progress 2,445,555 249,995 369,756 2,325,794
Total capital assets, not being depreciated 2,587,805 249,995 369,756 2,468,044
Capital assets, being depreciated:
Land improvements 1,888,965 - - 1,888,965
Buildings and systems 84,524,108 369,756 - 84,893,864
Machinery and equipment 2,827,878 - - 2,827,878
Total capital assets, being depreciated 89,240,951 369,756 - 89,610,707
Less accumulated depreciation:
Land improvements 1,665,428 10,612 - 1,676,040
Buildings and systems 29,280,614 1,132,238 - 30,412,852
Machinery and equipment 970,825 160,160 - 1,130,985
Total accumulated depreciation 31,916,867 1,303,010 - 33,219,877
Total capital assets, being
depreciated, net 57,324,084 (933,254) - 56,390,830
Capital assets, net $ 59,911,889 $ (683,259) $ 369,756 $ 58,858,874
57
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE D—CAPITAL ASSETS—Continued
Depreciation
Depreciation expense was charged to functions as follows:
Governmental activities:
Administrative services $ 26,227
Public safety 53,268
Public works 37,725
Highways, streets and bridges 1,850,168
Community and economic development 37,859
Culture and recreation 124,681
General administration 9,493
Internal Service Fund depreciation is charged to the
various programs based on their usage of the assets 271,813
$ 2,411,234
Business-type activities:
Water $ 1,044,175
Sewer 201,736
Marina and Launch Ramp 57,099
$ 1,303,010
Balance Balance
January 1, June 30,
2010 Additions Deductions 2010
Component units:
Capital assets, not being depreciated:
Land $ 400,000 $ - $ - $ 400,000
Capital assets, being depreciated:
Building and improvements 3,798,258 - - 3,798,258
Less accumulated depreciation:
Buildings and improvements 1,050,276 86,324 - 1,136,600
Total capital assets, being
depreciated, net 2,747,982 (86,324) - 2,661,658
Capital assets, net $ 3,147,982 $ (86,324) $ - $ 3,061,658
Depreciation
Depreciation expense was charged to economic development.
58
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE E—BOND ISSUANCE COSTS
Bond issuance cost activity for the six months ended June 30, 2010 was as follows:
Balance Balance
January 1, June 30,
2010 Additions Deductions 2010
Governmental activities:
Bond issuance costs $ 160,106 $ - $ - $ 160,106
Less accumulated amortization 35,141 3,815 - 38,956
Bond issuance costs, net $ 124,965 $ (3,815) $ - $ 121,150
Business-type activities:
Bond issuance costs $ 270,814 $ 134,250 $ 270,814 $ 134,250
Less accumulated amortization 211,662 59,152 270,814 -
Bond issuance costs, net $ 59,152 $ 75,098 $ - $ 134,250
Amortization
Amortization expense was charged to functions as follows:
Governmental Activities:
Interest on long-term debt $ 3,815
Business-type Activities:
Water $ 59,152
NOTE F—INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
The composition of interfund balances as of June 30, 2010 is as follows:
Due to/from other funds:
Receivable Fund Payable Fund Amount
Budget Stabilization Fund Major Street and Trunkline Fund $ 102,528
Budget Stabilization Fund Neighborhood Stabilization Fund 312,895
Budget Stabilization Fund Lead Abatement Fund 32,306
Budget Stabilization Fund Community Development Block Grant Fund 378,292
Budget Stabilization Fund HOME Rehabilitation Fund 297,901
Budget Stabilization Fund Engineering Services Fund 98,892
Lead Abatement Fund HOME Rehabilitation Fund 19,102
$ 1,241,916
59
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE F—INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS—Continued
The outstanding balances between funds result from the payable funds having negative positions in the City’s
cash and investment pool.
The BRA component unit owes the Budget Stabilization Fund $9,217 as a result of having a negative position
in the City’s cash and investment pool.
Interfund transfers:
Transfers in Amount Transfers out Amount
General Fund $ 2,188 Nonmajor Governmental Funds
Cemetery Fund $ 2,188
Marina and Launch Ramp 3,760 General Fund 3,760
Nonmajor Governmental Funds General Fund 240,000
Local Street Fund 340,000 Major Street and Trunkline Fund 100,000
340,000 340,000
Internal Service Fund General Fund 14,023
General Insurance Fund 14,023
$ 359,971 $ 359,971
The General Fund and Major Street and Trunkline Fund transferred funds to the Local Street Fund to finance
capital improvements. Other transfers between funds are made to meet grant matching requirements or other
operational needs.
60
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE G—DEFERRED REVENUE
Governmental funds report deferred revenue in connection with receivables for revenues that are not
considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue
recognition in connection with resources that have been received, but not yet earned. At the end of the current
fiscal period, the various components of deferred revenue reported in the governmental funds were as follows:
Unavailable Unearned
Receivables $ 61,300 $ 481,383
Special assessments 1,392,704 -
Total deferred revenue for governmental funds $ 1,454,004 $ 481,383
NOTE H—LONG-TERM DEBT
Summary of Changes in Long-Term Liabilities
The following is a summary of long-term liabilities activity for the City for the six months ended June 30,
2010.
Balance Balance
January 1, June 30, Due within
2010 Additions Reductions 2010 one year
Governmental activities:
General obligation debt $ 5,290,324 $ - $ (479) $ 5,290,803 $ 70,000
Intergovernmental
contractual obligations 1,120,000 - 54,572 1,065,428 65,600
Special assessment obligations 995,000 - 190,000 805,000 120,000
Installment purchase
agreement 393,499 - 58,894 334,605 61,400
Compensated absences 1,304,331 626,362 669,793 1,260,900 210,300
Governmental activity
long-term liabilities $ 9,103,154 $ 626,362 $ 972,780 $ 8,756,736 $ 527,300
61
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE H—LONG-TERM DEBT—Continued
Summary of Changes in Long-Term Liabilities—Continued
Balance Balance
January 1, June 30, Due within
2010 Additions Reductions 2010 one year
Business-type activities:
Revenue obligations $ 18,094,535 $ 6,183,136 $ 6,524,535 $ 17,753,136 $ 1,195,000
Compensated absences 193,196 51,964 73,268 171,892 28,100
Business-type activity
long-term liabilities$ 18,287,731 $ 6,235,100 $ 6,597,803 $ 17,925,028 $ 1,223,100
Component units:
Revenue obligations $ 1,000,000 $ - $ - $ 1,000,000 $ -
General obligation debt 6,954,848 - 229,726 6,725,122 320,000
Component unit long-
term liabilities $ 7,954,848 $ - $ 229,726 $ 7,725,122 $ 320,000
Governmental activities:
General obligation debt:
$5,400,000 Limited Tax General Obligation Bonds of
2006 payable in annual installments of $70,000 to
$350,000 through October 2032; interest at 4% to 4.2% $ 5,305,000
Less bond discount (14,197)
Intergovernmental contractual obligations:
$700,000 Non-interest bearing State of Michigan urban land
assembly loan of 2005 payable in annual installments of
$20,000 to $120,000 through September 2015 620,000
$500,000 State of Michigan Brownfield Redevelopment loan
of 2008 payable in annual installments of $54,572 through
March 2019; including interest at 2% 445,428
62
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE H—LONG-TERM DEBT—Continued
Summary of Changes in Long-Term Liabilities—Continued
Governmental activities:—Continued
Special assessment obligations:
$1,575,000 Capital improvement bonds of 2003 payable
in annual installments of $120,000 to $150,000
through June 2016; interest at 3.5% to 4.05% $ 805,000
Installment purchase agreement:
$605,824 Note payable to bank in annual installments of
$61,420 to $72,658 through April 2015; interest at
3.83% 334,605
7,495,836
Compensated absences 1,260,900
$ 8,756,736
Business-type activities:
Revenue obligations:
$5,995,000 Water supply system refunding bonds of 2010
payable in annual installments of $580,000 to $770,000
through May 2019; interest at 2.00% to 4.25% $ 5,995,000
Add bond premium 188,136
$13,900,000 Drinking Water State Revolving Fund loan
of 2004 payable in annual installments of $615,000 to
$840,000 through October 2025; interest at 2.13% 11,570,000
17,753,136
Compensated absences 171,892
$ 17,925,028
63
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE H—LONG-TERM DEBT—Continued
Summary of Changes in Long-Term Liabilities—Continued
Component units:
Revenue obligations:
$1,000,000 Non-interest bearing Downtown Development
Authority promissory note to Muskegon County
payable August 2019 $ 1,000,000
General obligation debt:
$4,005,000 Downtown Development Authority tax
increment refunding bonds of 2001 payable in annual
installments of $240,000 to $335,000 through June
2018; interest at 4.35% to 5% 2,245,000
$4,725,000 Local Development Finance Authority
tax increment bonds of 2002 payable in annual
installments of $80,000 to $400,000 through
November 2025; interest at 3.88% to 4.85% 4,485,000
Less bond discount (4,878)
$ 7,725,122
For governmental activities, claims and judgments and compensated absences are generally liquidated by the
General Fund.
The special assessment bonds are backed by the limited full faith and credit of the City.
On April 1, 2010, the City issued $5,995,000 of Water Supply System Refunding Bonds of 2010 to advance
refund the outstanding balance of the Water Supply System Bonds of 1993 and 1999. The proceeds from the
refunding bonds were used to purchase U.S. government securities. Those securities were deposited in an
irrevocable trust with an escrow agent to provide for principal redemption and interest on the Water Supply
System Bonds of 1993 and 1999 through May 2019. As a result, the Water Supply System Bonds of 1993
and 1999 are considered to be defeased and the liability for those bonds has been removed from long-term
obligations.
The City refunded the Water Supply System Revenue Bonds of 1993 and 1999 to reduce its total debt service
payments over the next 10 years by $389,669 and to obtain an economic gain (difference between the present
values of the debt service payments on the old and new debt) of approximately $334,200.
In 2005, the County of Muskegon began making improvements to the regional sewer treatment facilities. The
project was funded with $17,500,000 bonds issued through the State of Michigan Clean Water Revolving
Fund Loan Program. The County operates the system and makes payments on the bonds with user charges to
the local units. The City has pledged its limited tax full faith and credit for the payment of its portion of the
debt should user charges collected by the County be insufficient to make the debt payments. The City’s
portion of the debt on June 30, 2010 was approximately $5,050,000. The City is unaware of any
circumstances that would cause a shortfall in the near future.
64
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE H—LONG-TERM DEBT—Continued
The $4,725,000 Local Development Finance Authority (LDFA) tax increment bonds of 2002 are partially
guaranteed by the Community Foundation for Muskegon County. If LDFA tax increment revenues are not
sufficient to cover debt service costs in any year, the Foundation has agreed to pay one-half of such shortfall,
up to $75,000 annually. This commitment extends through December 31, 2016.
The City was in compliance in all material respects with all the revenue bond ordinances at June 30, 2010.
Annual debt service requirements to maturity for debt outstanding as of June 30, 2010 follows:
Year ending Governmental activites Business-type activities Component units
June 30, Principal Interest Principal Interest Principal Interest
2011 $ 317,083 $ 266,574 $ 1,195,000 $ 451,323 $ 320,000 $ 301,376
2012 425,632 256,308 1,230,000 410,188 325,000 287,835
2013 434,311 245,499 1,250,000 384,694 440,000 271,783
2014 443,127 234,250 1,295,000 352,635 510,000 251,673
2015 457,085 222,548 1,330,000 320,857 585,000 228,261
2016-2020 1,052,795 983,793 6,465,000 1,001,075 3,740,000 725,384
2021-2025 1,595,000 735,225 3,960,000 303,133 1,495,000 245,571
2026-2030 1,735,000 398,263 840,000 8,925 315,000 7,639
2031-2033 1,050,000 66,150 - - - -
$ 7,510,033 $ 3,408,610 $ 17,565,000 $ 3,232,830 $ 7,730,000 $ 2,319,522
Annual debt service requirements to maturity by type of debt as of June 30, 2010 follows:
General Obligation Debt Revenue Obligations
Year ending Governmental Component Business-type Component
June 30, activities units activities units
2011 $ 283,945 $ 621,376 $ 1,646,323 $ -
2012 281,145 612,835 1,640,188 -
2013 278,345 711,783 1,634,694 -
2014 275,545 761,673 1,647,635 -
2015 272,745 813,261 1,650,857 -
2016-2020 1,542,225 3,465,384 7,466,075 1,000,000
2021-2025 2,330,225 1,740,571 4,263,133 -
2026-2030 2,133,263 322,639 848,925 -
2031-2033 1,116,150 - - -
$ 8,513,588 $ 9,049,522 $ 20,797,830 $ 1,000,000
65
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE H—LONG-TERM DEBT—Continued
Installment
Purchase Special
Intergovernmental Agreement Assessment
Year ending Governmental Governmental Governmental
June 30, activities activities activities
2011 $ 74,572 $ 74,235 $ 150,905
2012 174,572 74,518 151,705
2013 174,572 74,813 152,080
2014 174,572 75,120 152,140
2015 174,572 75,441 156,875
2016-2020 338,288 - 156,075
2021-2025 - - -
2026-2030 - - -
2031-2033 - - -
$ 1,111,148 $ 374,127 $ 919,780
NOTE I—DESIGNATED FUND BALANCE
Unreserved fund balances designated for specific purposes as of June 30, 2010 were as follows:
General Fund
Designated for contribution to MERS $ 1,000,000
Designated for early retirement of Urban Land Assembly loan 620,000
Designated for early retirement of installment purchase agreement 334,605
Designated for transfer to Sidewalk Fund 100,000
2,054,605
Public Improvement Fund
Designated for fire equipment replacement 211,631
Designated for Pere Marquette Park improvements 35,808
247,439
$ 2,302,044
66
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE J—OTHER INFORMATION
Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets;
errors and omissions; injuries to employees and natural disasters. The City manages its liability and property
risk by participating in the Michigan Municipal Risk Management Authority (MMRMA), a public entity risk
pool providing property and liability coverage to its participating members. The City pays an annual
premium to MMRMA for its insurance coverage. The MMRMA is self-sustaining through member
premiums and provides, subject to certain deductibles, occurrence-based casualty coverage for each incident
and occurrence-based property coverage to its members by internally assuring certain risks and reinsuring
risks through commercial companies. A $150,000 deductible is maintained to place the responsibility for
small charges with the City. Settled claims resulting from these risks have not exceeded insurance coverage
in any of the past three fiscal years. Changes in the fund’s claim liability amount in 2010 and 2009 were as
follows:
Current year
Balance claims and Balance
at beginning changes in Claims at end
Year ended of year estimates payments of year
June 30, 2010* $ 186,566 $ 73,015 $ 81,029 $ 178,552
December 31, 2010 180,353 138,790 132,577 186,566
* Six month fiscal period
The City manages its workers' compensation risk by participating in the Michigan Municipal Workers'
Compensation Fund (MMWCF), a public entity risk pool providing workers' compensation coverage to its
participating members. The City pays an annual premium to MMWCF for its workers' compensation
coverage. The MMWCF is self-sustaining through member premiums and provides statutory workers'
compensation coverage to its members by internally assuring certain risks and reinsuring risks through
commercial companies. Settled claims resulting from these risks have not exceeded insurance coverage in
any of the past three fiscal years.
The City is self-insured for employee health care benefits for those employees selecting the City plan over
other options. Under this plan, the General Insurance Fund provides coverage for up to a maximum of
$350,000 per covered individual’s lifetime. As of June 30, 2010, the claims liability including incurred but
not reported claims was $7,040. A liability was recorded in the accompanying financial statements for the
estimated claims liability. The claims liability was based on past experience, a review of pending claims and
other social and economic factors. The above estimate was not discounted and there were no outstanding
claims for which annuity contracts have been purchased in the claimant’s name. No significant reductions in
insurance coverage were made in the last fiscal year. Settled claims have not exceeded the commercial
coverage in any of the past three fiscal years. Changes in the fund’s claim liability amount in 2010 and 2009
were as follows:
Current year
Balance claims and Balance
at beginning changes in Claims at end
Year ended of year estimates payments of year
June 30, 2010* $ 50,267 $ 410,382 $ 453,609 $ 7,040
December 31, 2010 18,875 1,165,505 1,134,113 50,267
* Six month fiscal period
67
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE J—OTHER INFORMATION—Continued
Contingencies
Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor
agencies, principally the federal government. Any disallowed claims, including amounts already
collected, may constitute a liability to the applicable funds. The amount, if any, of expenditures that may
be disallowed by the grantor cannot be determined at this time, although the City expects such amounts, if
any, to be immaterial.
The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently
determinable, in the opinion of the City's counsel the resolution of these matters will not have a material
adverse effect on the financial condition of the City.
Leases
The City leases an office facility under a noncancelable operating lease that expires June 2012 with the
option by the tenant to renew the term of the lease for five successive periods of five years each. The City
received rental income of $20,879 for the six months ended June 30, 2010. The future minimum rental
income for this lease is as follows:
Year ending
June 30, Amount
2011 $ 34,227
2012 33,889
$ 68,116
NOTE K—PENSION PLANS
Defined Benefit Pension Plan
Plan Description. The City has an agent multiple-employer defined benefit pension plan with the
Municipal Employees Retirement System (MERS). The Plan provides retirement and disability benefits,
annual cost-of-living adjustments, and death benefits to Plan members and beneficiaries. Act No. 427 of
the Public Acts of 1984 of the State of Michigan assigns the authority to establish and amend the benefit
provisions of the plans that participate in MERS to the respective employer entities; that authority rests
with the City. A copy of the complete financial report and required supplemental information can be
obtained by writing to:
City of Muskegon
933 Terrace Street
Muskegon, MI 49443
Funding Policy. City employees are required to contribute 5 to 6 percent to the Plan depending on
employee contract. The City is required to contribute at an actuarially-determined rate depending upon
employee group from 5.37 to 18.25 percent of annual covered payroll depending on the plan. The
contributions requirements of plan members and the City are established and may be amended by MERS.
68
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE K—PENSION PLANS—Continued
Defined Benefit Pension Plan—Continued
Annual Pension Cost. For the six months ended June 30, 2010, the City’s annual pension cost was
approximately $605,000 was equal to the City’s required and actual contribution.
Trend Information
Approximate Percentage
Annual Pension of APC Net Pension
Year ended Cost (APC) Contributed Obligation
December 31, 2008 $ 1,167,000 100 % $ -
December 31, 2009 888,000 100 -
June 30, 2010* 605,000 100 -
* Six month fiscal period
The required contribution was determined as part of the December 31, 2008 actuarial valuation using the
entry age actuarial cost method. The actuarial assumptions included (a) 8 percent investment rate of
return (net of administrative expenses), (b) projected salary increases ranging from 0 percent to 8.4
percent, and (c) 2 percent to 4.5 percent per year compounded annually attributable to inflation. The
actuarial value of plan assets was determined using techniques that smooth the effects of short-term
volatility in the market value of investments over a five-year period. The plan’s unfunded actuarial
accrued liability is being amortized as a level percentage of projected payroll on a closed basis. The
remaining amortization period at December 31, 2009 was 7 years which will be reduced by two years in
the next valuation until reaching 5 years after which the 5 year period will be reestablished with each
annual actuarial valuation.
Funding Status and Funding Progress. As of December 31, 2009, the most recent actuarial valuation
date, the plan was 99 percent funded. The actuarial accrued liability for benefits was approximately
$87,395,000, and the actuarial value of assets was approximately $86,682,000, resulting in an unfunded
actuarial accrued liability (UAAL) of approximately $713,000. The covered payroll (annual payroll of
active employees covered by the plan) was approximately $12,614,000, and the ratio of the UAAL to the
covered payroll was 6 percent.
The schedule of funding progress, presented as RSI following the notes to the financial statements,
presents multiyear trend information about whether the actuarial value of the plan assets is increasing or
decreasing over time relative to the actuarial accrued liability for benefits.
69
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE K—PENSION PLANS—Continued
Defined Contribution Pension Plan
The City also maintains a defined contribution plan offered by MERS and administered by the ICMA
Retirement Corporation, an independent third party. In a defined contribution plan, benefits depend
solely on amounts contributed to the plan plus investments. Depending on employee group, the Plan
covers all City employees hired after January 2005 to July 2006 and those hired earlier who elected to
convert from the defined benefit plan. The authority for establishing or amending the plan’s provisions
and for establishing or amending contribution requirements rests with the City Commission as determined
by negotiated labor contracts. The City is required to contribute 3 percent to 10 percent of a qualified
employees’ annual compensation each year depending on employee group. Qualified employees are
required to contribute 0 percent to 6 percent of annual compensation depending on employee group. For
the six months ended June 30, 2010, City and employee contributions were approximately $57,000 and
$32,000, respectively.
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 full-time employees at their option, permits participants to defer
a portion of their salary until future years. The deferred compensation is not available to participants until
termination, retirement, death, or unforeseeable emergency.
The Plan has created a trust for the exclusive benefit of the Plan’s participants and beneficiaries under rules
provided by Internal Revenue Code Section 401(f).
NOTE L—OTHER POST-EMPLOYMENT BENEFITS
Plan Description. The City has a retiree healthcare funding vehicle administered Municipal Employees
Retirement System (MERS), an agent multiple-employer postemployment healthcare plan (OPEB). The
retiree healthcare funding vehicle is established under the authority of section 115 of the IRS code and is
exempt from taxation. The Plan provides health insurance to eligible retirees and their spouses. Act No.
149 of the Public Acts of 1999 of the State of Michigan assigns the authority to establish and amend the
benefit provisions of the plans that participate in MERS to the respective employer entities; that authority
rests with the City. A copy of the complete financial report and required supplemental information can be
obtained by writing to:
City of Muskegon
933 Terrace Street
Muskegon, MI 49443
Funding Policy. Plan members are not required to contribute to the Plan. The City is required to
contribute the annual required contribution of the employer (ARC) at an actuarially-determined rate
which varies upon employee group from 3.4 to 12.5 percent of covered wages. The ARC represents a
level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize
any unfunded liabilities (or funding excess) over a period not to exceed thirty years. The contribution
requirements of plan members and the City are established and may be amended by MERS.
70
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
NOTE L—OTHER POST-EMPLOYMENT BENEFITS—Continued
Annual OPEB Cost. For the six months ended June 30, 2010, the City’s OPEB cost (expense) of
approximately $530,000 was equal to the City’s ARC and actual contribution.
Trend Information
Approximate
Annual Required Percentage
Contribution of ARC Net ARC
Period ended (ARC) Contributed Obligation
December 31, 2008 $ 1,476,000 100 % $ -
December 31, 2009 1,698,000 100 -
June 30, 2010* 530,000 100 -
* Six month fiscal period
Actuarial Methods and Assumptions. Actuarial valuations of an ongoing plan involve 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.
Actuarially determined amounts are subject to continual revision as actual results are compared with past
expectations and new estimates are made about the future.
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 Plan members not contributing to the Plan. The actuarial 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.
The required contribution was determined as part of the December 31, 2009 actuarial valuation using the
entry age actuarial cost method. The actuarial assumptions included (a) 8 percent investment rate of
return (net of administrative expenses), (b) an annual healthcare trend rate of 9 percent initially, reduced
by decrements to an ultimate rate of 4.5 percent after 10 years. Both rates assume include a 4.5 percent
inflation assumption. The Plan’s unfunded actuarial accrued liability is being amortized as a level
percentage of projected payroll on a closed basis. The remaining amortization period at December 31,
2009 is 28 years.
Funded Status and Progress. As of December 31, 2009, the most recent actuarial valuation date, the plan was
55.2 percent funded. The actuarial accrued liability for benefits was approximately $24,024,000, and the
actuarial value of assets was approximately $13,260,000, resulting in an unfunded actuarial liability (UAAL)
of approximately $10,764,000. The covered payroll (annual payroll of active employees covered by the plan)
was approximately $13,293,000, and the ratio of the UAAL to the covered payroll was 81 percent.
The schedule of funding progress, presented as required supplementary information following the notes to the
financial statements, presents multiyear trend information that shows whether the actuarial value of plan
assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
NOTE M—SUBSEQUENT EVENTS
Subsequent to year-end, the City approved contracts for parking lot improvements, vehicle purchases and
improvements to the Arena Annex for approximately $59,000, $268,000 and $56,000, respectively.
71
72
REQUIRED SUPPLEMENTARY INFORMATION
73
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
General Fund
For the six months ended June 30, 2010
(with comparative actual amounts for the year ended December 31, 2009)
2010 2009
Variance with
final budget-
Budgeted amounts positive
Original Final Actual (negative) Actual
REVENUES
Taxes
City income tax $ 6,200,000 $ 3,000,000 $ 3,368,057 $ 368,057 $ 6,482,290
Property taxes 8,034,944 7,900,000 7,927,575 27,575 7,882,325
Industrial facilities taxes 183,072 186,322 468,369 282,047 216,962
Payments in lieu of taxes 91,000 91,000 91,181 181 91,435
Delinquent chargeback collected 5,000 5,000 - (5,000) -
Total taxes 14,514,016 11,182,322 11,855,182 672,860 14,673,012
Licenses and permits
Business licenses 32,500 32,500 25,934 (6,566) 31,573
74
Liquor licenses 59,000 18,000 22,739 4,739 54,235
Cable TV fees 310,000 155,000 178,239 23,239 321,852
Rental property registration 100,000 15,000 47,367 32,367 112,110
Burial permits 110,000 55,000 39,624 (15,376) 105,616
Building permits 225,000 150,000 135,155 (14,845) 232,797
Electrical permits 85,000 40,000 43,576 3,576 73,940
Plumbing permits 35,000 20,000 20,254 254 28,966
Mechanical permits 50,000 30,000 26,204 (3,796) 45,452
Cat licenses - - - - 2,390
Vacant building fees 25,000 27,000 45,070 18,070 23,750
Total licenses and permits 1,031,500 542,500 584,162 41,662 1,032,681
Intergovernmental revenues
Federal grants 40,000 91,465 122,965 31,500 64,613
State
Grants 28,000 - 7,805 7,805 16,363
State shared revenue 4,071,393 1,760,021 1,832,066 72,045 3,841,922
Total intergovernmental revenues - State 4,099,393 1,760,021 1,839,871 79,850 3,858,285
Local 50,000 25,000 25,000 - 60,347
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
General Fund
For the six months ended June 30, 2010
(with comparative actual amounts for the year ended December 31, 2009)
2010 2009
Variance with
final budget-
Budgeted amounts positive
Original Final Actual (negative) Actual
Charges for services
Tax administration fees $ 306,400 $ 192,744 $ 194,131 $ 1,387 $ 301,784
Utility administration fees 225,000 112,500 110,000 (2,500) 200,000
Reimbursement for elections - - 79 79 14,409
Indirect cost reimbursements 1,171,979 585,990 582,084 (3,906) 1,140,720
Site plan review fee 4,000 1,000 1,500 500 3,400
Sale of cemetery lots 27,400 12,000 12,914 914 24,895
Police miscellaneous 80,000 53,000 31,375 (21,625) 82,882
Police impound fees 40,000 20,000 23,300 3,300 43,629
Landlord's alert fee 300 150 155 5 175
Fire protection-state property 99,000 - 35,212 35,212 110,079
Zoning fees 8,000 4,000 3,290 (710) 5,697
75
Clerk fees 3,500 1,500 197 (1,303) 1,098
Clerk fees - passport fees 5,000 3,000 3,555 555 3,827
Tax abatement application fees 10,000 - - - 2,211
Treasurer fees 60,000 25,000 62,523 37,523 61,033
False alarm fees 10,000 4,000 6,125 2,125 10,500
Miscellaneous cemetery income 22,000 11,000 6,571 (4,429) 18,108
Senior transit program fees 9,000 4,500 5,082 582 9,572
Fire miscellaneous 3,000 1,000 560 (440) 1,889
Sanitation stickers 80,000 40,000 38,809 (1,191) 83,254
Lot cleanup fees 70,000 25,000 18,349 (6,651) 42,244
Reimbursements - lot mowing and demolitions 70,000 25,000 20,102 (4,898) 59,447
Special events reimbursements 100,000 25,000 30,546 5,546 164,966
Recreation program fees 45,000 20,000 19,754 (246) 50,642
Total charges for services 2,449,579 1,166,384 1,206,213 39,829 2,436,461
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
General Fund
For the six months ended June 30, 2010
(with comparative actual amounts for the year ended December 31, 2009)
2010 2009
Variance with
final budget-
Budgeted amounts positive
Original Final Actual (negative) Actual
Fines and forfeitures
Income tax - penalty and interest $ 225,000 $ 90,000 $ 109,441 $ 19,441 $ 219,490
Late fees on current taxes 40,000 30,000 42,766 12,766 36,585
Interest on late invoices 2,000 1,000 247 (753) 1,717
Parking fines 100,000 50,000 71,160 21,160 111,022
Court fines 170,000 75,000 72,929 (2,071) 154,801
Total fines and forfeitures 537,000 246,000 296,543 50,543 523,615
Interest and rental income
Investment earnings 84,000 15,000 (2,349) (17,349) 47,181
Flea market 29,000 10,000 11,346 1,346 27,262
76
Farmers' market 35,000 12,000 18,484 6,484 41,629
City right of way rental 6,800 6,800 6,800 - 6,881
Fire station lease - Central Dispatch 42,000 21,000 20,879 (121) 44,166
Parking rentals - - - - 1,400
Great Lakes Naval Memorial lease 15,000 7,500 - (7,500) 4,958
McGraft park rentals 45,000 10,000 13,844 3,844 61,585
Other park rentals 30,000 21,200 23,334 2,134 35,330
Total interest and rental income 286,800 103,500 92,338 (11,162) 270,392
Other
Sale of land and assets 1,000 1,000 500 (500) -
Police sale and auction proceeds - - 1,823 1,823 503
CDBG program reimbursements 335,000 50,000 48,030 (1,970) 386,164
Fisherman's Landing reimbursement 14,500 - - - -
Sanitation reimbursements - 43,030 43,030 - -
Contributions 14,000 11,000 19,740 8,740 21,561
Contribution - Veteran's Park maintenance 18,500 - - - 15,757
Community Foundation for Muskegon County 1,500 500 2,394 1,894 7,920
Miscellaneous reimbursements 1,000 500 - (500) -
Miscellaneous and sundry 25,000 10,000 2,786 (7,214) 120,940
Total other 410,500 116,030 118,303 2,273 552,845
Total revenues 23,418,788 15,233,222 16,140,577 907,355 23,472,251
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
General Fund
For the six months ended June 30, 2010
(with comparative actual amounts for the year ended December 31, 2009)
2010 2009
Variance with
final budget-
Budgeted amounts positive
Original Final Actual (negative) Actual
EXPENDITURES
Current
Public representation services
City commission $ 86,213 $ 46,467 $ 44,724 $ 1,743 $ 84,426
City promotions and public relations 11,350 5,200 3,044 2,156 11,107
City manager 265,114 146,450 142,878 3,572 266,023
Contributions to outside agencies 155,824 99,695 98,026 1,669 213,481
City attorney 352,508 177,254 160,031 17,223 348,886
Total public representation services 871,009 475,066 448,703 26,363 923,923
Administrative services
City clerk 303,793 169,540 123,748 45,792 275,738
77
Civil service 189,807 105,750 91,460 14,290 190,104
Julia Hackley internships - - - - 2,861
Affirmative action 82,728 45,714 39,958 5,756 81,130
Total administrative services 576,328 321,004 255,166 65,838 549,833
Financial services
Finance administration 436,494 233,805 233,852 (47) 451,766
Assessing 465,665 232,833 240,136 (7,303) 467,854
Arena administration 235,000 105,000 101,867 3,133 254,262
Income tax administration 419,527 235,050 217,821 17,229 405,182
Information systems 386,304 217,639 196,816 20,823 380,699
City treasurer 452,194 255,678 250,938 4,740 446,860
Total financial services 2,395,184 1,280,005 1,241,430 38,575 2,406,623
Public safety
Police department 8,462,045 4,706,676 4,338,742 367,934 8,835,302
Fire department 3,608,449 2,020,948 1,860,345 160,603 3,794,329
Fire safety inspections 757,085 428,425 372,009 56,416 932,967
Total public safety 12,827,579 7,156,049 6,571,096 584,953 13,562,598
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
General Fund
For the six months ended June 30, 2010
(with comparative actual amounts for the year ended December 31, 2009)
2010 2009
Variance with
final budget-
Budgeted amounts positive
Original Final Actual (negative) Actual
Public works
Street lighting $ 635,000 $ 390,000 $ 428,615 $ (38,615) $ 735,479
Community event support 31,314 24,814 14,560 10,254 40,596
Senior citizen transit 68,103 37,249 31,899 5,350 62,903
General sanitation 1,603,347 944,174 789,587 154,587 1,624,899
Recycling - - - - 92,784
Storm water management 17,786 10,000 4,000 6,000 16,991
City hall maintenance 311,086 204,640 136,435 68,205 286,858
Cemeteries maintenance 456,194 236,514 183,994 52,520 482,352
Total public works 3,122,830 1,847,391 1,589,090 258,301 3,342,862
Community and economic development
78
Planning, zoning and economic development 449,129 207,316 203,414 3,902 513,812
Environmental services 316,359 172,777 166,120 6,657 306,083
Edison Landing subsidy 100,000 50,000 50,000 - 120,000
Total community and economic development 865,488 430,093 419,534 10,559 939,895
Culture and recreation
Parks maintenance 1,315,021 711,490 495,147 216,343 1,264,433
McGraft park maintenance 53,946 31,600 14,396 17,204 65,522
General and inner city recreation programs 255,755 123,450 101,357 22,093 325,116
Graffiti removal 4,861 2,000 2,454 (454) 535
Parking operations 3,054 2,500 2,445 55 5,116
Farmers' market and flea market 51,997 29,076 20,853 8,223 49,986
Total culture and recreation 1,684,634 900,116 636,652 263,464 1,710,708
Other governmental functions
Insurance premiums 309,642 286,933 133,527 153,406 311,636
Other 300,000 400,000 67,096 332,904 126,656
Total other governmental functions 609,642 686,933 200,623 486,310 438,292
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
General Fund
For the six months ended June 30, 2010
(with comparative actual amounts for the year ended December 31, 2009)
2010 2009
Variance with
final budget-
Budgeted amounts positive
Original Final Actual (negative) Actual
Debt service
Principal $ - $ - $ - $ - $ 50,000
Interest and fees 285,345 109,174 109,174 - 220,063
Total debt service 285,345 109,174 109,174 - 270,063
Capital outlay 20,000 77,000 13,722 63,278 167,239
Total expenditures 23,258,039 13,282,831 11,485,190 1,797,641 24,312,036
Excess of revenues over (under) expenditures 160,749 1,950,391 4,655,387 2,704,996 (839,785)
OTHER FINANCING SOURCES (USES)
79
Transfers in 550,000 25,000 2,188 (22,812) 632,768
Transfers out (666,548) (154,023) (257,783) (103,760) (538,046)
Total other financing sources (uses) (116,548) (129,023) (255,595) (126,572) 94,722
Net change in fund balance $ 44,201 $ 1,821,368 4,399,792 $ 2,578,424 (745,063)
Fund balance at beginning of year 1,638,662 2,383,725
Fund balance at end of year $ 6,038,454 $ 1,638,662
Note: Both budgets and actual figures are prepared in accordance with generally accepted accounting principles.
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
Major Street and Trunkline Fund
For the six months ended June 30, 2010
Variance with
final budget-
Budgeted amounts positive
Original Final Actual (negative)
REVENUES
Intergovernmental revenues
Federal $ 866,000 $ 150,250 $ 9,443 $ (140,807)
State 2,686,841 1,343,420 1,280,365 (63,055)
Charges for services 75,000 30,000 7,961 (22,039)
Investment earnings 25,000 5,000 44,302 39,302
Other 200,000 25,000 11,211 (13,789)
Total revenues 3,852,841 1,553,670 1,353,282 (200,388)
EXPENDITURES
Current
Highways, streets and bridges 3,575,085 1,516,725 1,166,971 349,754
Total expenditures 3,575,085 1,516,725 1,166,971 349,754
80
Excess of revenues over expenditures 277,756 36,945 186,311 149,366
OTHER FINANCING USES
Transfers out (200,000) (100,000) (100,000) -
Net change in fund balance $ 77,756 $ (63,055) 86,311 $ 149,366
Fund balance at January 1, 2010 272,846
Fund balance at June 30, 2010 $ 359,157
Note: Both budgets and actual figures are prepared in accordance with generally accepted accounting principles.
City of Muskegon
Required Supplemental Information
SCHEDULE OF FUNDING PROGRESS
For the six months ended June 30, 2010
MUNICIPAL EMPLOYEES RETIREMENT SYSTEM (MERS) PENSION PLAN
SCHEDULE OF FUNDING PROGRESS
(Dollar amounts in thousands)
Actuarial UAAL as a
Accrued percentage
Actuarial Actuarial Liability Unfunded of
valuation value of (AAL) AAL Funded Covered covered
date assets Entry Age (UAAL) ratio payroll payroll
12/31/07 $ 86,157 $ 83,118 $ (3,039) 104 % $ 12,684 (24) %
12/31/08 86,928 86,794 (134) 100 13,107 (1)
12/31/09 86,682 87,395 713 99 12,614 6
81
MUNICIPAL EMPLOYEES RETIREMENT SYSTEM (MERS) OTHER POSTEMPLOYMENT BENEFITS PLAN
SCHEDULE OF FUNDING PROGRESS
(Dollar amounts in thousands)
Actuarial UAAL as a
Accrued percentage
Actuarial Actuarial Liability Unfunded of
valuation value of (AAL) AAL Funded Covered covered
date assets Entry Age (UAAL) ratio payroll payroll
12/31/07 $ 13,831 $ 29,722 $ 15,891 46.5 % $ 13,290 120 %
12/31/09 13,260 24,024 10,764 55.2 13,293 81
Additional actuarial data is not available from MERS and will be provided in subsequent years.
82
OTHER SUPPLEMENTAL INFORMATION
83
DESCRIPTION OF
OTHER GOVERNMENTAL FUNDS
Special Revenue Funds
The special revenue funds are used to account for the proceeds of special revenue sources that are
legally restricted to expenditures for specific purposes.
Local Street – to account for gas and weight allocations to the City by the Michigan Department
of Transportation for construction and maintenance of local streets within the City.
Criminal Forfeitures – to account for receipts generated through the sale of assets seized through
criminal court proceedings.
Budget Stabilization – to account for funds appropriated from the City’s General Fund for the
purpose of mitigating adverse affects on the City's budget from downturns in the business cycle.
Farmers’ Market Improvement – to account for funds allocated for maintenance and
improvements to the City’s farmers’ market facility.
Tree Replacement – to account for contributions and other revenues earmarked for tree
replacement throughout the City.
Capital Projects Funds
Capital projects funds are used to account for financial resources to be used for the acquisition or
construction of major capital facilities other than those financed by proprietary funds and trust
funds.
Public Improvement – to account for grants, private contributions, sale of property and other
resources used to finance various capital projects.
Sidewalk Replacement – to account for resources allocated for a multi-year city-wide sidewalk
replacement program.
Michcon Remediation – to account for reimbursements received from Michcon Gas Company for
environmental remediation of their former downtown site.
EDC Revolving Loan – to account for funds received upon repayment of Urban Development
Action Grant loans and subsequently reloaned to small business enterprises.
Community Development Block Grant – to account for categorical grants received from the U. S.
Department of Housing and Urban Development for the construction of major city public
improvements and the rehabilitation of residential housing and other qualifying expenditures.
State Grants – to account for grant revenues received from the State of Michigan and earmarked
for the purpose of improvements and/or rehabilitation of City property, environmental
remediation at lakeshore sites or new infrastructure in the City’s downtown.
84
DESCRIPTION OF
OTHER GOVERNMENTAL FUNDS—CONTINUED
Capital Projects Funds—Continued
HOME Rehabilitation – to account for grant revenues received from the U. S. Department of
Housing and Urban Development for the purpose of providing housing assistance to low and
moderate income households in the City.
Arena Capital Improvements – to account for ticket revenue collections earmarked for large
capital improvements and repairs to the L.C. Walker Arena.
Lead Abatement – to account for grant revenues received from the U. S. Department of Housing
and Urban Development for the purpose of abatement of lead from homes in the City.
Neighborhood Stabilization Fund – to account for grant revenues received from the US
Department of Housing and Urban Development for the purpose of stabilizing neighborhoods that
have suffered from foreclosure and abandonment.
Economic Development - Sappi Fund – to account for funds contributed to the City for economic
redevelopment of vacated industrial property sites.
Permanent Funds
Permanent funds are used to report resources that are legally restricted to the extent that only
earnings, not principal, may be used for purposes that support the reporting government’s
programs.
Cemetery Perpetual Care – to account for charges for services collected and investment income
earned and to account for transfers to the General Fund to partially cover cemetery care expenses.
85
City of Muskegon
COMBINING BALANCE SHEET
Other Governmental Funds
June 30, 2010
Permanent
Total other Special Capital Fund -
governmental Revenue Projects Cemetery
funds Funds Funds Perpetual Care
ASSETS
Cash and investments $ 4,624,184 $ 544,746 $ 2,760,555 $ 1,318,883
Receivables
Accounts and loans (net of allowance for uncollectibles) 723,615 2,207 716,768 4,640
Special assessments 679,720 473,064 206,656 -
Due from other governmental units 1,116,990 100,806 1,016,184 -
Due from other funds 1,241,916 1,222,814 19,102 -
Due from component units 9,217 9,217 - -
Prepaid items 6,673 6,673 - -
Total assets $ 8,402,315 $ 2,359,527 $ 4,719,265 $ 1,323,523
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable $ 464,916 $ 8,386 $ 456,530 $ -
86
Accrued liabilities 6,613 3,484 3,129 -
Due to other funds 1,040,496 - 1,040,496 -
Deferred revenue 1,176,103 509,811 666,292 -
Total liabilities 2,688,128 521,681 2,166,447 -
Fund balances
Reserved for:
Prepaid items 6,673 6,673 - -
Long-term loans receivable 293,100 - 293,100 -
Capital projects 2,253,683 - 2,253,683 -
Perpetual care 1,306,544 - - 1,306,544
Unreserved
Designated, reported in capital projects funds 247,439 - 247,439 -
Undesignated, reported in
Special revenue funds 1,831,173 1,831,173 - -
Capital projects funds (241,404) - (241,404) -
Permanent funds 16,979 - - 16,979
Total fund balances 5,714,187 1,837,846 2,552,818 1,323,523
Total liabilities and fund balances $ 8,402,315 $ 2,359,527 $ 4,719,265 $ 1,323,523
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
Other Governmental Funds
For the six months ended June 30, 2010
Permanent
Total other Special Capital Fund -
governmental Revenue Projects Cemetery
funds Funds Funds Perpetual Care
REVENUES
Intergovernmental revenues
Federal $ 848,127 $ - $ 848,127 $ -
State 659,723 460,868 198,855 -
Charges for services 124,020 41,285 70,990 11,745
Fines and forfeitures 500 500 - -
Investment earnings 57,233 22,921 30,759 3,553
Other 564,303 31,887 532,416 -
Total revenues 2,253,906 557,461 1,681,147 15,298
EXPENDITURES
Current
Public safety 7,639 7,639 - -
Highways, streets and bridges 850,168 850,168 - -
Culture and recreation 3,200 3,200 - -
87
Debt service
Principal 303,466 - 303,466 -
Interest and fees 26,839 - 26,839 -
Capital outlay 1,732,699 - 1,732,699 -
Total expenditures 2,924,011 861,007 2,063,004 -
Excess of revenues over (under) expenditures (670,105) (303,546) (381,857) 15,298
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets 75,465 - 75,465 -
Transfers in 340,000 340,000 - -
Transfers out (2,188) - - (2,188)
Total other financing sources (uses) 413,277 340,000 75,465 (2,188)
Net change in fund balances (256,828) 36,454 (306,392) 13,110
Fund balances at January 1, 2010 5,971,015 1,801,392 2,859,210 1,310,413
Fund balances at June 30, 2010 $ 5,714,187 $ 1,837,846 $ 2,552,818 $ 1,323,523
City of Muskegon
COMBINING BALANCE SHEET
Other Special Revenue Funds
June 30, 2010
Total other Farmers'
special revenue Local Criminal Budget Market Tree
funds Street Forfeitures Stabilization Improvement Replacement
ASSETS
Cash and investments $ 544,746 $ 119,411 $ 134,116 $ 267,969 $ 17,814 $ 5,436
Receivables (net of allowance for uncollectibles)
Accounts 2,207 2,207 - - - -
Special assessments 473,064 473,064 - - - -
Due from other governmental units 100,806 100,806 - - - -
Due from other funds 1,222,814 - - 1,222,814 - -
Due from component units 9,217 - - 9,217 - -
Prepaid items 6,673 6,673 - - - -
Total assets $ 2,359,527 $ 702,161 $ 134,116 $ 1,500,000 $ 17,814 $ 5,436
LIABILITIES AND FUND BALANCES
Liabilities
88
Accounts payable $ 8,386 $ 8,386 $ - $ - $ - $ -
Accrued liabilities 3,484 3,484 - - - -
Deferred revenue 509,811 509,811 - - - -
Total liabilities 521,681 521,681 - - - -
Fund balances
Reserved for prepaid items 6,673 6,673 - - - -
Unreserved 1,831,173 173,807 134,116 1,500,000 17,814 5,436
Total fund balances 1,837,846 180,480 134,116 1,500,000 17,814 5,436
Total liabilities and fund balances $ 2,359,527 $ 702,161 $ 134,116 $ 1,500,000 $ 17,814 $ 5,436
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
Other Special Revenue Funds
For the six months ended June 30, 2010
Total other Farmers'
special revenue Local Criminal Budget Market Tree
funds Street Forfeitures Stabilization Improvement Replacement
REVENUES
Intergovernmental revenues - State $ 460,868 $ 460,868 $ - $ - $ - $ -
Charges for services 41,285 41,285 - - - -
Fines and forfeitures 500 - 500 - - -
Investment earnings 22,921 22,171 615 - 89 46
Other 31,887 31,887 - - - -
Total revenues 557,461 556,211 1,115 - 89 46
EXPENDITURES
Current
Public safety 7,639 - 7,639 - - -
Highways, streets and bridges 850,168 850,168 - - - -
Culture and recreation 3,200 - - - - 3,200
89
Total expenditures 861,007 850,168 7,639 - - 3,200
Excess of revenues over (under) expenditures (303,546) (293,957) (6,524) - 89 (3,154)
OTHER FINANCING SOURCES
Transfers in 340,000 340,000 - - - -
Net change in fund balances 36,454 46,043 (6,524) - 89 (3,154)
Fund balances at January 1, 2010 1,801,392 134,437 140,640 1,500,000 17,725 8,590
Fund balances at June 30, 2010 $ 1,837,846 $ 180,480 $ 134,116 $ 1,500,000 $ 17,814 $ 5,436
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
Other Special Revenue Funds
For the six months ended June 30, 2010
Local Street Criminal Forfeitures Budget Stabilization
Variance - Variance - Variance -
Final positive Final positive Final positive
budget Actual (negative) budget Actual (negative) budget Actual (negative)
REVENUES
Intergovernmental revenues - State $ 545,590 $ 460,868 $ (84,722) $ - $ - $ - $ - $ - $ -
Charges for services - 41,285 41,285 - - - - - -
Fines and forfeitures - - - 5,000 500 (4,500) - - -
Investment earnings 2,000 22,171 20,171 250 615 365 - - -
Other 9,500 31,887 22,387 - - - - - -
Total revenues 557,090 556,211 (879) 5,250 1,115 (4,135) - - -
EXPENDITURES
Current
Public safety - - - 22,500 7,639 14,861 - - -
Highways, streets and bridges 970,358 850,168 120,190 - - - - - -
Culture and recreation - - - - - - - - -
Total expenditures 970,358 850,168 120,190 22,500 7,639 14,861 - - -
90
Excess of revenues over (under) expenditures (413,268) (293,957) 119,311 (17,250) (6,524) 10,726 - - -
OTHER FINANCING SOURCES
Transfers in 340,000 340,000 - - - - - - -
Net change in fund balances $ (73,268) 46,043 $ 119,311 $ (17,250) (6,524) $ 10,726 $ - - $ -
Fund balances at January 1, 2010 134,437 140,640 1,500,000
Fund balances at June 30, 2010 $ 180,480 $ 134,116 $ 1,500,000
City of Muskegon
BUDGETARY COMPARISON SCHEDULE—CONTINUED
Other Special Revenue Funds
For the six months ended June 30, 2010
Farmers' Market Improvement Tree Replacement
Variance - Variance -
Final positive Final positive
budget Actual (negative) budget Actual (negative)
REVENUES
Intergovernmental revenues - State $ - $ - $ - $ - $ - $ -
Charges for services - - - 20 - (20)
Fines and forfeitures - - - - - -
Investment earnings 100 89 (11) 50 46 (4)
Other - - - - - -
Total revenues 100 89 (11) 70 46 (24)
EXPENDITURES
Current
Public safety - - - - - -
91
Highways, streets and bridges - - - - - -
Culture and recreation 5,000 - 5,000 1,850 3,200 (1,350)
Total expenditures 5,000 - 5,000 1,850 3,200 (1,350)
Excess of revenues over (under) expenditures (4,900) 89 4,989 (1,780) (3,154) (1,374)
OTHER FINANCING SOURCES
Transfers in - - - - - -
Net change in fund balances $ (4,900) 89 $ 4,989 $ (1,780) (3,154) $ (1,374)
Fund balances at January 1, 2010 17,725 8,590
Fund balances at June 30, 2010 $ 17,814 $ 5,436
City of Muskegon
COMBINING BALANCE SHEET
Other Capital Projects Funds
June 30, 2010
Total other EDC Community Arena Economic
capital projects Public Sidewalk Michcon Revolving Development State HOME Capital Lead Neighborhood Development -
funds Improvement Replacement Remediation Loan Block Grant Grants Rehabilitation Improvements Abatement Stabilization Sappi
ASSETS
Cash and investments $ 2,760,555 $ 1,115,276 $ 631,996 $ 215,079 $ 123,360 $ - $ 97,785 $ - $ 76,955 $ - $ - $ 500,104
Receivables
Accounts and loans (net of
allowance for uncollectibles) 716,768 24,031 - - 43,407 376,117 249,693 - - 23,520 - -
Special assessments 206,656 - 206,656 - - - - - - - - -
Due from other governmental units 1,016,184 - - - - 286,757 324,934 76,901 - 938 326,654 -
Due from other funds 19,102 - - - - - - - - 19,102 - -
Total assets $ 4,719,265 $ 1,139,307 $ 838,652 $ 215,079 $ 166,767 $ 662,874 $ 672,412 $ 76,901 $ 76,955 $ 43,560 $ 326,654 $ 500,104
LIABILITIES AND FUND BALANCES (DEFICIT)
Liabilities
Accounts payable $ 456,530 $ 426,676 $ - $ - $ - $ 1,273 $ 9,542 $ 1,021 $ 4,704 $ - $ 13,314 $ -
Accrued liabilities 3,129 - - - - 2,403 - 281 - - 445 -
Due to other funds 1,040,496 - - - - 378,292 - 317,003 - 32,306 312,895 -
Deferred revenue 666,292 16,000 206,656 - - 280,906 162,730 - - - - -
Total liabilities 2,166,447 442,676 206,656 - - 662,874 172,272 318,305 4,704 32,306 326,654 -
Fund balances (deficit)
Reserved for:
Long-term loans receivable 293,100 - - - 43,407 - 249,693 - - - - -
Capital projects 2,253,683 449,192 631,996 215,079 123,360 - 250,447 - 72,251 11,254 - 500,104
Unreserved
92
Designated for approved projects 247,439 247,439 - - - - - - - - - -
Undesignated (241,404) - - - - - - (241,404) - - - -
Total fund balances (deficit) 2,552,818 696,631 631,996 215,079 166,767 - 500,140 (241,404) 72,251 11,254 - 500,104
Total liabilities and fund balances (deficit) $ 4,719,265 $ 1,139,307 $ 838,652 $ 215,079 $ 166,767 $ 662,874 $ 672,412 $ 76,901 $ 76,955 $ 43,560 $ 326,654 $ 500,104
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICIT)
Other Capital Projects Funds
For the six months ended June 30, 2010
Total other EDC Community Arena Economic
capital projects Public Sidewalk Michcon Revolving Development State HOME Capital Lead Neighborhood Development -
funds Improvement Replacement Remediation Loan Block Grant Grants Rehabilitation Improvements Abatement Stabilization Sappi
REVENUES
Intergovernmental revenues
Federal $ 848,127 $ - $ - $ - $ - $ 420,169 $ 18,551 $ 143,912 $ - $ - $ 265,495 $ -
State 198,855 - - - - - 198,855 - - - - -
Charges for services 70,990 48,211 - - - - - - 22,779 - - -
Investment earnings 30,759 8,557 19,395 1,100 1,024 96 37 - 446 - - 104
Other 532,416 - 5,117 - 12,885 2,340 - - - 11,254 820 500,000
Total revenues 1,681,147 56,768 24,512 1,100 13,909 422,605 217,443 143,912 23,225 11,254 266,315 500,104
EXPENDITURES
Debt service
Principal 303,466 113,466 190,000 - - - - - - - - -
Interest and fees 26,839 7,536 19,303 - - - - - - - - -
Capital outlay 1,732,699 558,892 2,296 203 - 422,605 316,478 143,912 21,998 - 266,315 -
Total expenditures 2,063,004 679,894 211,599 203 - 422,605 316,478 143,912 21,998 - 266,315 -
Excess of revenues over (under) expenditures (381,857) (623,126) (187,087) 897 13,909 - (99,035) - 1,227 11,254 - 500,104
OTHER FINANCING SOURCES
Proceeds from sale of capital assets 75,465 31 - - - - - 75,434 - - - -
Net change in fund balances (306,392) (623,095) (187,087) 897 13,909 - (99,035) 75,434 1,227 11,254 - 500,104
Fund balances (deficit) at January 1, 2010 2,859,210 1,319,726 819,083 214,182 152,858 - 599,175 (316,838) 71,024 - - -
93
Fund balances (deficit) at June 30, 2010 $ 2,552,818 $ 696,631 $ 631,996 $ 215,079 $ 166,767 $ - $ 500,140 $ (241,404) $ 72,251 $ 11,254 $ - $ 500,104
94
DESCRIPTION OF
INTERNAL SERVICE FUNDS
Internal service funds are used to account for the financing of goods or services provided by one
department to other departments of a governmental unit or to other governments on a cost-
reimbursement basis.
A list and description of internal service funds maintained by the City follows:
Engineering Services – to account for salary, benefit and other costs related to the provision of
internal engineering services for City projects; to account for charges to the user funds and
projects to cover those expenses.
Equipment – to account for the purchase, operation, maintenance and depreciation of all City-
owned vehicles and equipment; to account for charges to the user funds and departments to cover
those expenses.
General Insurance – to account for the payment of claims and benefits, excess liability premiums
and operating expenses; to account for charges to other funds and departments to cover the
expenses.
Public Service Building – to account for the operation, maintenance and depreciation of the City's
Public Service Building; to account for charges to the user funds and departments to cover these
expenses.
95
City of Muskegon
COMBINING STATEMENT OF NET ASSETS (DEFICITS)
Internal Service Funds
June 30, 2010
ASSETS
Total internal Engineering General Public Service
service funds Services Equipment Insurance Building
CURRENT ASSETS
Cash and investments $ 4,316,036 $ - $ 2,755,881 $ 1,115,224 $ 444,931
Accounts receivable 919,963 18,023 4,851 897,089 -
Inventories 28,711 - 28,711 - -
Prepaid items 767,028 2,893 54,130 705,601 4,404
Total current assets 6,031,738 20,916 2,843,573 2,717,914 449,335
NONCURRENT ASSETS
Capital assets
Land 65,000 - - - 65,000
Land improvements 121,648 - - - 121,648
Buildings and improvements 1,559,334 - - - 1,559,334
Machinery and equipment 7,006,260 26,355 6,945,216 - 34,689
Less accumulated depreciation (6,942,259) (26,355) (5,782,714) - (1,133,190)
Total noncurrent assets 1,809,983 - 1,162,502 - 647,481
96
Total assets 7,841,721 20,916 4,006,075 2,717,914 1,096,816
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
Accounts payable 406,687 687 31,584 372,511 1,905
Accrued liabilities 10,480 2,530 2,995 250 4,705
Due to other funds 98,892 98,892 - - -
Bonds and other obligations, due within one year 17,300 4,000 5,000 300 8,000
Total current liabilities 533,359 106,109 39,579 373,061 14,610
NONCURRENT LIABILITIES
Bonds and other obligations, less amounts due within one year 83,974 17,125 25,732 1,253 39,864
Total liabilities 617,333 123,234 65,311 374,314 54,474
NET ASSETS (DEFICITS)
Invested in capital assets 1,809,983 - 1,162,502 - 647,481
Unrestricted 5,414,405 (102,318) 2,778,262 2,343,600 394,861
Total net assets (deficits) $ 7,224,388 $ (102,318) $ 3,940,764 $ 2,343,600 $ 1,042,342
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS (DEFICITS)
Internal Service Funds
For the six months ended June 30, 2010
Total internal Engineering General Public Service
service funds Services Equipment Insurance Building
OPERATING REVENUES
Charges for services $ 4,254,554 $ 160,307 $ 1,181,728 $ 2,427,849 $ 484,670
Other 46,579 17,467 23,075 6,037 -
Total operating revenues 4,301,133 177,774 1,204,803 2,433,886 484,670
OPERATING EXPENSES
Administration 160,176 37,026 62,562 35,820 24,768
Insurance premiums and claims 1,884,968 - - 1,884,968 -
Other operations 1,644,498 181,218 902,244 15,667 545,369
Depreciation 271,813 - 239,112 - 32,701
Total operating expenses 3,961,455 218,244 1,203,918 1,936,455 602,838
Operating income (loss) 339,678 (40,470) 885 497,431 (118,168)
97
NONOPERATING REVENUES
Investment earnings 20,400 103 13,150 4,577 2,570
Gain on sale of capital assets 67,112 - 67,112 - -
Total nonoperating revenues 87,512 103 80,262 4,577 2,570
Income (loss) before transfers 427,190 (40,367) 81,147 502,008 (115,598)
Transfers in 14,023 - - 14,023 -
Change in net assets 441,213 (40,367) 81,147 516,031 (115,598)
Net assets (defict) at January 1, 2010 6,783,175 (61,951) 3,859,617 1,827,569 1,157,940
Net assets (deficit) at June 30, 2010 $ 7,224,388 $ (102,318) $ 3,940,764 $ 2,343,600 $ 1,042,342
City of Muskegon
COMBINING STATEMENT OF CASH FLOWS
Internal Service Funds
For the six months ended June 30, 2010
Total internal Engineering General Public Service
service funds Services Equipment Insurance Building
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 49,456 $ 17,337 $ 26,082 $ 6,037 $ -
Receipts from interfund services provided 3,993,626 210,863 1,181,728 2,116,365 484,670
Payments to suppliers (3,014,539) (73,769) (603,145) (2,184,542) (153,083)
Payments to employees (665,819) (127,054) (179,562) (13,424) (345,779)
Payments for interfund services used (520,771) (27,480) (269,218) (167,048) (57,025)
Net cash provided by (used for) operating activities (158,047) (103) 155,885 (242,612) (71,217)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers in 14,023 - - 14,023 -
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Proceeds from sale of capital assets 67,404 - 67,404 - -
CASH FLOW FROM INVESTING ACTIVITIES
Investment earnings 20,400 103 13,150 4,577 2,570
98
Net increase (decrease) in cash and investments (56,220) - 236,439 (224,012) (68,647)
Cash and investments at January 1, 2010 4,372,256 - 2,519,442 1,339,236 513,578
Cash and investments at June 30, 2010 $ 4,316,036 $ - $ 2,755,881 $ 1,115,224 $ 444,931
Reconciliation of operating income (loss) to net cash provided by (used for)
operating activities
Operating income (loss) $ 339,678 $ (40,470) $ 885 $ 497,431 $ (118,168)
Adjustments to reconcile operating income (loss) to net cash provided by
(used for) operating activities
Depreciation expense 271,813 - 239,112 - 32,701
Change in assets and liabilities
Receivables, net (347,004) (130) 3,007 (349,881) -
Inventories (4,961) - (4,961) - -
Prepaid items (569,673) (2,029) (38,656) (525,734) (3,254)
Accounts payable 97,426 (2,169) (22,585) 135,678 (13,498)
Accrued liabilities 4,118 (5,861) (20,917) (106) 31,002
Due to other funds 50,556 50,556 - - -
Net cash provided by (used for) operating activities $ (158,047) $ (103) $ 155,885 $ (242,612) $ (71,217)
DESCRIPTION OF
FIDUCIARY FUNDS
Fiduciary funds are used to account for assets held by a government in a trustee capacity for
individuals, private organizations, other governments or other funds.
A list and description of the fiduciary funds maintained by the City follows:
AGENCY FUNDS are used to account for assets held as an agent for another organization or
individual.
Collector – to account for the collections and disbursement of funds to other entities and
individuals and to account for payroll withholdings and their remittance to the appropriate
governmental agencies.
Current Tax – to account for levy, collection and payment of taxes levied for the general and
other funds of the City, county and public school districts.
Rehab Loan Escrow – to account for deposits made by housing rehabilitation program
participants and their expenditures for the intended purposes.
99
City of Muskegon
COMBINING STATEMENT OF ASSETS AND LIABILITIES
Agency Funds
June 30, 2010
Total Current Rehab Loan
agency funds Collector tax Escrow
ASSETS
Cash and investments $ 725,123 $ 724,878 $ - $ 245
Accounts receivable 1,867 1,867 - -
Total assets $ 726,990 $ 726,745 $ - $ 245
LIABILITIES
Accounts payable $ 71,071 $ 70,826 $ - $ 245
Due to other governmental units 396,210 396,210 - -
Deposits held for others 259,709 259,709 - -
100
Total liabilities $ 726,990 $ 726,745 $ - $ 245
City of Muskegon
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
Agency Funds
For the six months ended June 30, 2010
Balance Balance
January 1, June 30,
COLLECTOR FUND 2010 Additions Deductions 2010
ASSETS
Cash and investments $ 707,927 $ 10,245,217 $ 10,228,266 $ 724,878
Accounts receivable 1,868 218,075 218,076 1,867
Total assets $ 709,795 $ 10,463,292 $ 10,446,342 $ 726,745
LIABILITIES
Accounts payable $ 204,587 $ 7,448,167 $ 7,581,928 $ 70,826
Due to other governmental units 314,374 1,305,293 1,223,457 396,210
Deposits held for others 190,834 2,955,082 2,886,207 259,709
Total liabilities $ 709,795 $ 11,708,542 $ 11,691,592 $ 726,745
CURRENT TAX FUND
ASSETS
Cash and investments $ 4,705,073 $ 21,477,923 $ 26,182,996 $ -
Property taxes receivable 15,016,716 - 15,016,716 -
Total assets $ 19,721,789 $ 21,477,923 $ 41,199,712 $ -
LIABILITIES
Due to other governmental units $ 19,682,873 $ - $ 19,682,873 $ -
Due to other funds - 5,742,126 5,742,126 -
Due to component units - 668,785 668,785 -
101
Deposits held for others 38,916 50,296 89,212 -
Total liabilities $ 19,721,789 $ 6,461,207 $ 26,182,996 $ -
REHAB LOAN ESCROW FUND
ASSETS
Cash and investments $ - $ 1,287 $ 1,042 $ 245
LIABILITIES
Accounts payable $ - $ 1,853 $ 1,608 $ 245
ALL AGENCY FUNDS
ASSETS
Cash and investments $ 5,413,000 $ 31,724,427 $ 36,412,304 $ 725,123
Receivables
Accounts 1,868 218,075 218,076 1,867
Property taxes 15,016,716 - 15,016,716 -
Total assets $ 20,431,584 $ 31,942,502 $ 51,647,096 $ 726,990
LIABILITIES
Accounts payable $ 204,587 $ 7,450,020 $ 7,583,536 $ 71,071
Due to other governmental units 19,997,247 1,305,293 20,906,330 396,210
Due to other funds - 5,742,126 5,742,126 -
Due to component units - 668,785 668,785 -
Deposits held for others 229,750 3,005,378 2,975,419 259,709
Total liabilities $ 20,431,584 $ 18,171,602 $ 37,876,196 $ 726,990
102
DESCRIPTION OF
DISCRETELY PRESENTED COMPONENT UNITS
A list and description of the discretely presented component units maintained by the City are as
follows:
Downtown Development Authority – to account for the collection of tax increment revenues, the
issuance and repayment of debt and the construction of public facilities to promote and facilitate
economic growth in the downtown.
Local Development Finance Authority III – to account for the collection of tax increment
revenues and the construction of public facilities to promote and facilitate economic growth in the
SmartZone Hi-Tech Park.
Tax Increment Finance Authority – to account for the collection of tax increment revenues, the
issuance and repayment of debt to promote and facilitate economic growth in a sub section of the
downtown.
Brownfield Redevelopment Authority – to account for the collection of tax increment revenues
for environmental remediation in designated brownfield areas.
103
City of Muskegon
COMBINING BALANCE SHEET
Discretely Presented Component Units
June 30, 2010
Total discretely Local
presented Development Downtown Tax Increment Brownfield
component Finance Development Finance Redevelopment
units Authority III Authority Authority Authority
ASSETS
Cash and investments $ 403,953 $ 36,834 $ 329,585 $ 37,534 $ -
LIABILITIES AND FUND BALANCES (DEFICITS)
Liabilities
Due to primary government $ 9,217 $ - $ - $ - $ 9,217
Fund balances (deficits)
Unreserved 394,736 36,834 329,585 37,534 (9,217)
Total liabilities and fund balances (deficits) $ 403,953 $ 36,834 $ 329,585 $ 37,534 $ -
104
City of Muskegon
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET ASSETS (DEFICITS)
Discretely Presented Component Units
June 30, 2010
Total fund balance—governmental funds $ 394,736
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 reported as assets in the governmental funds.
Capital assets $ 4,198,258
Accumulated depreciation (1,136,600) 3,061,658
105
Bond issuance costs are not capitalized and amortized in the
governmental funds.
Bond issuance costs 141,966
Accumulated amortization (46,293) 95,673
Accrued interest in governmental activities is not reported in the
governmental funds. (41,600)
Long-term liabilities, including bonds and notes payable, are not due
and payable in the current period and therefore are not reported
as liabilities in the governmental funds. (7,725,122)
Net assets of governmental activities in the Statement of Net Assets (Deficits) $ (4,214,655)
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICIT)
Discretely Presented Component Units
For the six months ended June 30, 2010
Total discretely Local
presented Development Downtown Tax Increment Brownfield
component Finance Development Finance Redevelopment
units Authority III Authority Authority Authority
REVENUES
Property taxes $ 455,284 $ 71,360 $ 327,373 $ 40,634 $ 15,917
Intergovernmental revenues - Local 50,000 50,000 - - -
Investment earnings 1,456 133 1,212 111 -
Total revenues 506,740 121,493 328,585 40,745 15,917
EXPENDITURES
Current
Community and economic development 39,920 - - 25,000 14,920
Debt service
Principal 230,000 - 230,000 - -
106
Interest and fees 156,950 98,424 58,526 - -
Total expenditures 426,870 98,424 288,526 25,000 14,920
Net change in fund balances 79,870 23,069 40,059 15,745 997
Fund balances (deficit) at January 1, 2010 314,866 13,765 289,526 21,789 (10,214)
Fund balances (deficit) at June 30, 2010 $ 394,736 $ 36,834 $ 329,585 $ 37,534 $ (9,217)
City of Muskegon
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
Discretely Presented Component Units
For the six months ended June 30, 2010
Net change in fund balances—total governmental funds $ 79,870
Amounts reported for governmental activities in the Statement of Activities are
different because:
Governmental funds report outlays for capital assets and bond issuance costs as
expenditures; in the Statement of Activities, these costs are depreciated and
amortized over their estimated useful lives, respectively.
Depreciation and amortization expense (89,410)
107
Repayment of principal on long-term debt is an expenditure in the governmental funds,
but the repayment reduces long-term liabilities in the Statement of Net Assets. 229,726
Interest expense on long-term debt is recorded in the Statement of Activities when
incurred, but is not reported in the governmental funds until paid. 800
Change in net assets of governmental activities $ 220,986
108
SCHEDULE OF INDEBTEDNESS
109
City of Muskegon
SCHEDULE OF INDEBTEDNESS
June 30, 2010
Annual
Date Amount Interest Date of Interest
of Issue of Issue Rate Maturity 12/31/2009 6/30/2010 Payable
Business-Type Activities Bonds and Loans Payable:
Water supply system bonds 10/1/1993 $ 5,465,000 0.00% 05/01/10 $ - $ - $ -
0.00% 05/01/11 - - -
4.50% 05/01/12 450,000 - -
4.50% 05/01/13 450,000 - -
900,000 - -
Water supply system bonds 3/2/1999 $ 9,575,000 4.20% 05/01/10 535,000 - -
4.30% 05/01/11 555,000 - -
4.35% 05/01/12 130,000 - -
4.40% 05/01/13 155,000 - -
4.50% 05/01/14 635,000 - -
4.55% 05/01/15 665,000 - -
4.60% 05/01/16 695,000 - -
4.65% 05/01/17 730,000 - -
4.75% 05/01/18 765,000 - -
4.75% 05/01/19 800,000 - -
5,665,000 - -
Water supply system bonds 4/1/2010 $ 5,995,000 2.00% 05/01/11 - 580,000 211,995
($188,136 unamortized premium) 2.00% 05/01/12 - 600,000 184,088
3.00% 05/01/13 - 610,000 172,088
2.77% 05/01/14 - 640,000 153,788
3.50% 05/01/15 - 660,000 136,088
3.25% 05/01/16 - 685,000 112,988
4.00% 05/01/17 - 710,000 90,725
4.00% 05/01/18 - 740,000 62,325
4.25% 05/01/19 - 770,000 32,725
- 5,995,000 1,156,807
Drinking Water State Revolving 3/2/2004 $ 13,900,000 2.13% 10/01/10 615,000 615,000 239,328
Fund (DWSRF) 2.13% 10/01/11 630,000 630,000 226,100
2.13% 10/01/12 640,000 640,000 212,606
2.13% 10/01/13 655,000 655,000 198,847
2.13% 10/01/14 670,000 670,000 184,769
2.13% 10/01/15 685,000 685,000 170,372
2.13% 10/01/16 695,000 695,000 155,709
2.13% 10/01/17 710,000 710,000 140,781
2.13% 10/01/18 725,000 725,000 125,534
2.13% 10/01/19 745,000 745,000 109,916
2.13% 10/01/20 760,000 760,000 93,925
2.13% 10/01/21 775,000 775,000 77,616
2.13% 10/01/22 790,000 790,000 60,988
2.13% 10/01/23 810,000 810,000 43,988
2.13% 10/01/24 825,000 825,000 26,616
2.13% 10/01/25 840,000 840,000 8,925
11,570,000 11,570,000 2,076,019
TOTAL BUSINESS-TYPE ACTIVITIES BONDS AND LOANS PAYABLE $ 18,135,000 $ 17,565,000 $ 3,232,826
110
City of Muskegon
SCHEDULE OF INDEBTEDNESS - CONTINUED
June 30, 2010
Annual
Date Amount Interest Date of Interest
of Issue of Issue Rate Maturity 12/31/2009 6/30/2010 Payable
Governmental Activities Bonds and Loans Payable:
Installment purchase contract 7/26/2005 $ 605,824 3.83% 04/01/10 $ 58,894 $ - $ -
of 2005 (firetrucks) 3.83% 04/01/11 61,420 61,420 12,816
3.83% 04/01/12 64,055 64,055 10,462
3.83% 04/01/13 66,803 66,803 8,010
3.83% 04/01/14 69,669 69,669 5,452
3.83% 04/01/15 72,658 72,658 2,782
393,499 334,605 39,522
Special assessment improvement 12/1/2000 $ 825,000 5.00% 04/01/10 70,000 - -
bonds of 2000 (sidewalks) 70,000 - -
Capital improvement bonds 3/1/2003 $ 1,575,000 3.50% 06/01/10 120,000 - -
of 2003 (sidewalks) 3.50% 06/01/11 120,000 120,000 30,905
3.70% 06/01/12 125,000 125,000 26,705
3.80% 06/01/13 130,000 130,000 22,080
3.90% 06/01/14 135,000 135,000 17,140
4.00% 06/01/15 145,000 145,000 11,875
4.05% 06/01/16 150,000 150,000 6,075
925,000 805,000 114,780
Capital improvement bonds 10/24/2006 $ 5,400,000 4.00% 10/01/10 70,000 70,000 213,945
of 2006 (fire station, recreation) 4.00% 10/01/11 70,000 70,000 211,145
($14,197 unamortized discount) 4.00% 10/01/12 70,000 70,000 208,345
4.00% 10/01/13 70,000 70,000 205,545
4.00% 10/01/14 70,000 70,000 202,745
4.00% 10/01/15 70,000 70,000 199,945
4.00% 10/01/16 70,000 70,000 197,145
4.00% 10/01/17 70,000 70,000 194,345
4.00% 10/01/18 70,000 70,000 191,545
4.00% 10/01/19 295,000 295,000 184,245
4.00% 10/01/20 305,000 305,000 172,245
4.00% 10/01/21 315,000 315,000 159,845
4.00% 10/01/22 315,000 315,000 147,245
4.00% 10/01/23 320,000 320,000 134,545
4.00% 10/01/24 340,000 340,000 121,345
4.00% 10/01/25 345,000 345,000 107,645
4.00% 10/01/26 345,000 345,000 93,845
4.10% 10/01/27 345,000 345,000 79,873
4.10% 10/01/28 350,000 350,000 65,625
4.10% 10/01/29 350,000 350,000 51,275
4.20% 10/01/30 350,000 350,000 36,750
4.20% 10/01/31 350,000 350,000 22,050
4.20% 10/01/32 350,000 350,000 7,350
5,305,000 5,305,000 3,208,588
111
City of Muskegon
SCHEDULE OF INDEBTEDNESS - CONTINUED
June 30, 2010
Annual
Date Amount Interest Date of Interest
of Issue of Issue Rate Maturity 12/31/2009 6/30/2010 Payable
Governmental Activities Bonds and Loans Payable:
State of Michigan urban land 8/1/2005 $ 700,000 0.00% 09/01/10 20,000 20,000 -
assembly loan 0.00% 09/01/11 120,000 120,000 -
0.00% 09/01/12 120,000 120,000 -
0.00% 09/01/13 120,000 120,000 -
0.00% 09/01/14 120,000 120,000 -
0.00% 09/01/15 120,000 120,000 -
620,000 620,000 -
State of Michigan 8/1/2005 $ 500,000 0.00% 03/18/10 54,572 - -
environmental assessment loan 2.00% 03/18/11 45,663 45,663 8,909
2.00% 03/18/12 46,577 46,577 7,995
2.00% 03/18/13 47,508 47,508 7,064
2.00% 03/18/14 48,458 48,458 6,114
2.00% 03/18/15 49,427 49,427 5,144
2.00% 03/18/16 50,416 50,416 4,156
2.00% 03/18/17 51,424 51,424 3,148
2.00% 03/18/18 52,453 52,453 2,119
2.00% 03/18/19 53,502 53,502 1,070
500,000 445,428 45,718
TOTAL GOVERNMENTAL ACTIVITIES BONDS AND LOANS PAYABLE $ 7,813,499 $ 7,510,033 $ 3,408,608
TOTAL PRIMARY GOVERNMENT BONDS AND LOANS PAYABLE $ 25,948,499 $ 25,075,033 $ 6,641,434
112
City of Muskegon
SCHEDULE OF INDEBTEDNESS - CONTINUED
June 30, 2010
Annual
Date Amount Interest Date of Interest
of Issue of Issue Rate Maturity 12/31/2009 6/30/2010 Payable
Discretely Presented Component Unit Bonds and Loans Payable:
Downtown Development Authority 8/10/1989 $ 1,000,000 0.00% 08/30/19 $ 1,000,000 $ 1,000,000 $ -
promissory note to Muskegon County 1,000,000 1,000,000 -
Downtown Development Authority 9/1/2001 $ 4,005,000 4.25% 06/01/10 230,000 - -
refunding bonds 4.35% 06/01/11 240,000 240,000 106,078
4.45% 06/01/12 245,000 245,000 95,638
4.55% 06/01/13 260,000 260,000 84,735
4.65% 06/01/14 270,000 270,000 72,905
4.75% 06/01/15 280,000 280,000 60,350
4.85% 06/01/16 300,000 300,000 47,050
5.00% 06/01/17 315,000 315,000 32,500
5.00% 06/01/18 335,000 335,000 16,750
2,475,000 2,245,000 516,005
Local Development Finance Authority 11/1/2002 $ 4,725,000 3.88% 11/01/10 80,000 80,000 195,298
Smartzone Bonds 3.88% 11/01/11 80,000 80,000 192,197
($4,878 unamortized discount) 4.00% 11/01/12 180,000 180,000 187,048
3.90% 11/01/13 240,000 240,000 178,768
4.05% 11/01/14 305,000 305,000 167,911
4.05% 11/01/15 325,000 325,000 155,154
4.15% 11/01/16 340,000 340,000 141,518
4.25% 11/01/17 355,000 355,000 126,919
4.35% 11/01/18 375,000 375,000 111,219
4.45% 11/01/19 395,000 395,000 94,274
4.60% 11/01/20 400,000 400,000 76,285
4.60% 11/01/21 255,000 255,000 61,220
4.60% 11/01/22 265,000 265,000 49,260
4.85% 11/01/23 280,000 280,000 36,375
4.85% 11/01/24 295,000 295,000 22,431
4.85% 11/01/25 315,000 315,000 7,639
4,485,000 4,485,000 1,803,513
TOTAL DISCRETELY PRESENTED COMPONENT UNIT BONDS AND LOANS PAYABLE $ 7,960,000 $ 7,730,000 $ 2,319,518
TOTAL REPORTING ENTITY BONDS AND LOANS PAYABLE $ 33,908,499 $ 32,805,033 $ 8,960,952
113
114
Statistical Section
This part of the City of Muskegon’s Comprehensive Annual Financial Report presents detailed
information as a context for understanding what the information in the financial statements,
note disclosures, and required supplementary information says about the City’s overall
financial health.
Contents Page
Financial Trends
These schedules contain trend information to help the reader understand how the
City’s financial performance and well-being have changed over time. 116
Revenue Capacity
These schedules contain information to help the reader assess the factors affecting
the City’s ability to generate its property and sales taxes. 120
Debt Capacity
These schedules present information to help the reader assess the affordability of
the City’s current levels of outstanding debt and the City’s ability to issue additional
debt in the future. 126
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader
understand the environment within which the City’s financial activities take place
and to help make comparisons over time and with other governments. 130
Operating Information
These schedules contain information about the City’s operations and resources to help
the reader understand how the City’s financial information relates to the services the
City provides and the activities it performs. 132
Sources: Unless otherwise noted, the information in these schedules is derived form the Comprehensive Annual
Financial Reports for the relevant year. The City implemented Statement 34 in 2002; schedules presenting
government-wide information include information beginning in that year.
115
City of Muskegon
NET ASSETS BY COMPONENT
Last Eight Fiscal Years
December 31 June 30
2003 2004 2005 (a) 2006 2007 2008 2009 2010
Governmental Activities
Invested in Capital Assets, net of related debt $ 32,120,134 $ 40,663,844 $ 67,119,658 $ 68,189,021 $ 68,059,626 $ 69,564,935 $ 69,064,800 $ 67,809,630
Restricted 5,674,787 5,209,654 5,420,482 5,378,669 5,485,703 3,557,678 2,956,449 3,059,208
Unrestricted 9,286,551 7,407,355 7,811,489 8,778,786 10,162,425 10,708,529 8,920,621 13,828,231
Total Governmental Net Assets $ 47,081,472 $ 53,280,853 $ 80,351,629 $ 82,346,476 $ 83,707,754 $ 83,831,142 $ 80,941,870 $ 84,697,069
Business-type Activities
Invested in Capital Assets, net of related debt $ 27,808,792 $ 31,609,016 $ 36,742,669 $ 39,441,912 $ 39,356,966 $ 40,876,621 $ 41,876,507 $ 41,105,739
Restricted 822,559 822,559 822,559 822,559 822,559 822,559 672,000 672,000
Unrestricted 10,488,022 8,647,716 6,663,563 6,910,247 7,980,823 6,775,508 5,983,935 7,630,396
Total Business-type Activities Net Assets $ 39,119,373 $ 41,079,291 $ 44,228,791 $ 47,174,718 $ 48,160,348 $ 48,474,688 $ 48,532,442 $ 49,408,135
Primary Government
116
Invested in Capital Assets, net of related debt $ 59,928,926 $ 72,272,860 $ 103,862,327 $ 107,630,933 $ 107,416,592 $ 110,441,556 $ 110,941,307 $ 108,915,369
Restricted 6,497,346 6,032,213 6,243,041 6,201,228 6,308,262 4,380,237 3,628,449 3,731,208
Unrestricted 19,774,573 16,055,071 14,475,052 15,689,033 18,143,248 17,484,037 14,904,556 21,458,627
Total Primary Government Net Assets $ 86,200,845 $ 94,360,144 $ 124,580,420 $ 129,521,194 $ 131,868,102 $ 132,305,830 $ 129,474,312 $ 134,105,204
(a) In 2005, the City began reporting historic infrastructure assets as required by GASB 34.
SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial
reports for the relevant year. The City implemented GASB Statement 34 in 2002; schedules presenting government-wide
information include information start that year. Certain other information has not been presented previously. Reported numbers
begin with the year for which information believed to be accurate is available.
City of Muskegon
CHANGES IN NET ASSETS
Last Eight Fiscal Years
Period Ended
Year Ended December 31 June 30
2003 2004 2005 2006 2007 2008 2009 2010
EXPENSES
Governmental Activities
Public representation $ 887,496 $ 866,669 $ 885,365 $ 904,109 $ 925,124 $ 986,696 $ 923,911 $ 445,251
Administrative services 1,227,407 1,132,229 803,783 732,715 783,713 782,362 698,022 317,873
Financial services 1,842,653 1,809,136 1,872,159 2,061,836 2,205,041 2,292,430 2,406,517 1,209,694
Public safety 11,583,282 12,164,389 12,481,826 13,059,358 12,802,488 13,955,811 13,614,112 6,332,728
Public works 2,947,194 2,847,755 2,853,497 3,089,522 2,989,433 3,019,411 2,986,747 1,640,946
Highways, streets and bridges 3,483,032 3,879,462 5,910,307 5,672,590 7,272,288 7,265,438 7,160,797 3,680,196
Community and economic development 3,371,472 2,652,497 3,693,187 3,383,157 3,054,087 3,174,508 4,139,765 1,275,026
Culture and recreation 3,042,315 2,468,059 2,504,692 2,464,567 2,433,020 2,623,501 2,463,375 759,392
General administration 1,601,112 1,725,225 1,608,108 1,143,963 358,225 574,955 451,651 210,117
Interest on long-term debt 223,717 193,021 170,814 206,768 343,106 324,076 288,073 139,006
Total Governmental Activities Expenses 30,209,680 29,738,442 32,783,738 32,718,585 33,166,525 34,999,188 35,132,970 16,010,229
Business-type Activities
Water 4,538,186 4,122,822 4,181,855 4,500,578 5,795,279 5,800,977 6,080,230 2,958,795
Sewer 3,416,372 3,745,156 3,953,838 5,006,594 5,066,693 5,503,144 5,426,321 2,525,067
Marina and launch ramp 325,401 351,705 343,599 332,826 392,994 347,642 310,773 150,055
Total Business-type Activities Expenses 8,279,959 8,219,683 8,479,292 9,839,998 11,254,966 11,651,763 11,817,324 5,633,917
Total Primary Government Expenses $ 38,489,639 $ 37,958,125 $ 41,263,030 $ 42,558,583 $ 44,421,491 $ 46,650,951 $ 46,950,294 $ 21,644,146
PROGRAM REVENUES
Governmental Activities
Charges for Services
Public representation $ 204,435 $ 210,238 $ 195,316 $ 202,939 $ 199,759 $ 188,467 $ 213,885 $ 100,177
Administrative services 292,665 314,028 311,529 306,964 287,011 257,850 271,117 129,630
Financial services 591,174 645,166 537,445 728,332 744,109 726,572 818,845 475,031
Public safety 1,162,175 1,098,793 1,116,755 1,134,686 1,224,062 1,217,616 1,117,476 536,419
Public works 266,045 452,606 467,849 588,566 407,569 382,072 383,733 209,203
Highways, streets and bridges 273,893 555,018 267,689 263,423 372,133 301,955 251,840 139,009
Community and economic development 977,448 414,543 815,980 762,220 356,051 297,854 249,241 186,572
Culture and recreation 1,026,822 1,151,687 1,141,865 809,228 454,154 405,520 445,891 129,025
General administration 122,447 200,434 314,658 170,240 64,366 99,494 123,426 59,373
Operating grants and contributions 5,613,628 6,008,978 6,017,421 5,093,355 5,229,279 5,367,152 6,443,223 3,131,811
Capital grants and contributions 10,494,617 5,785,604 5,894,358 5,360,014 3,347,680 3,444,957 2,105,557 255,234
Total Governmental Program Revenues 21,025,349 16,837,095 17,080,865 15,419,967 12,686,173 12,689,509 12,424,234 5,351,484
Business-type Activities
Water 4,131,126 4,977,320 6,912,719 6,342,110 6,569,228 6,240,060 5,883,830 2,891,169
Sewer 4,057,743 4,083,591 4,149,187 4,803,702 5,179,095 5,326,787 5,720,171 3,441,924
Marina and launch ramp 274,258 266,981 248,460 267,412 281,679 250,266 242,055 156,767
Operating grants and contributions - - - - - - - -
Capital grants and contributions 256,612 657,521 100,373 710,641 - - 5,179 -
Total Business-type program revenues 8,719,739 9,985,413 11,410,739 12,123,865 12,030,002 11,817,113 11,851,235 6,489,860
Total Primary Government program revenues $ 29,745,088 $ 26,822,508 $ 28,491,604 $ 27,543,832 $ 24,716,175 $ 24,506,622 $ 24,275,469 $ 11,841,344
NET (EXPENSE) REVENUE
Governmental Activities (9,184,331) (12,901,347) (15,702,873) (17,298,618) (20,480,352) (22,309,679) (22,708,736) (10,658,745)
Business-type Activities 439,780 1,765,730 2,931,447 2,283,867 775,036 165,350 33,911 855,943
Total Primary Government net expense $ (8,744,551) $ (11,135,617) $ (12,771,426) $ (15,014,751) $ (19,705,316) $ (22,144,329) $ (22,674,825) $ (9,802,802)
GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS
Governmental Activities
Property taxes $ 7,029,393 $ 6,962,453 $ 7,670,384 $ 7,846,707 $ 8,014,102 $ 8,349,341 $ 8,492,507 $ 8,681,256
Income taxes 6,644,708 7,326,811 7,238,552 7,673,696 7,757,707 8,117,566 6,628,365 3,505,264
Franchise fees 265,532 - 286,265 285,124 297,200 304,812 321,852 178,239
Grants and contributions not restricted for specific programs 4,938,861 4,645,348 4,627,915 4,674,157 4,475,462 4,487,698 3,841,922 1,832,066
Unrestricted investment earnings 281,492 170,094 420,595 832,300 1,247,520 730,142 185,436 104,086
Miscellaneous 109,620 68,405 70,402 64,645 88,035 160,460 226,124 51,638
Gain on sale of capital asset 62,992 70,886 300,037 81,372 1,604 323,048 123,258 65,155
Transfers - (142,420) (80,000) (540,000) (40,000) (40,000) - (3,760)
Total Governmental Program Revenues 19,332,598 19,101,577 20,534,150 20,918,001 21,841,630 22,433,067 19,819,464 14,413,944
Business-type Activities
Unrestricted investment earnings 71,628 51,768 138,053 122,060 170,594 108,990 23,843 15,990
Gain on sale of capital asset (88,767) - - - - - - -
Transfers - 142,420 80,000 540,000 40,000 40,000 - 3,760
Total Business-type program revenues (17,139) 194,188 218,053 662,060 210,594 148,990 23,843 19,750
Total Primary Government program revenues $ 19,315,459 $ 19,295,765 $ 20,752,203 $ 21,580,061 $ 22,052,224 $ 22,582,057 $ 19,843,307 $ 14,433,694
CHANGE IN NET ASSETS
Governmental Activities 10,148,267 6,200,230 4,831,277 3,619,383 1,361,278 123,388 (2,889,272) 3,755,199
Business-type Activities 422,641 1,959,918 3,149,500 2,945,927 985,630 314,340 57,754 875,693
Total Primary Government $ 10,570,908 $ 8,160,148 $ 7,980,777 $ 6,565,310 $ 2,346,908 $ 437,728 $ (2,831,518) $ 4,630,892
SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for the relevant year.
The City implemented GASB Statement 34 in 2002; schedules presenting government-wide information include information start that year. Certain other
information has not been presented previously. Reported numbers begin with the year for which information believed to be accurate is available.
117
City of Muskegon
FUND BALANCE OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
December 31 June 30
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
General fund
Reserved $ 75,337 $ 173,696 $ 110,642 $ 74,349 $ 79,356 $ 177,076 $ 180,410 $ 214,819 $ 187,633 $ 300,969
Unreserved 3,087,031 2,634,300 2,320,776 2,370,842 2,440,249 2,512,963 2,740,222 2,168,906 1,451,029 5,737,485
Total general fund $ 3,162,368 $ 2,807,996 $ 2,431,418 $ 2,445,191 $ 2,519,605 $ 2,690,039 $ 2,920,632 $ 2,383,725 $ 1,638,662 $ 6,038,454
All other governmental funds
Reserved $ 2,533,419 $ 2,309,214 $ 1,159,364 $ 1,187,662 $ 2,915,106 $ 7,044,394 $ 4,130,995 $ 4,382,118 $ 3,613,858 $ 3,887,289
Unreserved, reported in:
Special revenue funds 4,579,430 3,785,857 3,254,746 2,692,431 2,910,285 3,030,096 4,462,015 2,768,886 2,060,117 2,163,041
Debt service - - 153,955 - - - - - - -
Capital project funds 2,143,770 1,614,636 3,849,868 2,187,667 1,239,763 390,282 635,676 675,898 554,273 6,035
Permanent funds 91,707 102,837 63,798 22,896 22,890 77,300 84,413 60,813 15,613 16,979
Total all other governmental funds $ 9,348,326 $ 7,812,544 $ 8,481,731 $ 6,090,656 $ 7,088,044 $ 10,542,072 $ 9,313,099 $ 7,887,715 $ 6,243,861 $ 6,073,344
SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports
for the relevant year. The City implemented GASB Statement 34 in 2002; schedules presenting government-wide information
118
include information start that year.
City of Muskegon
CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
Period Ended
Year Ended December 31 June 30
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Revenues
Taxes $ 12,996,607 $ 13,607,863 $ 13,306,798 $ 13,767,040 $ 14,521,769 $ 15,052,708 $ 15,420,032 $ 15,728,859 $ 14,673,012 $ 11,855,182
Intergovernmental 15,847,954 15,473,320 18,879,071 15,448,865 15,445,949 14,703,371 12,752,363 13,012,035 12,400,408 4,785,494
Charges for services 2,847,201 3,010,798 3,307,607 3,437,220 3,147,066 2,938,246 2,722,894 2,463,975 2,620,372 1,338,194
Other 4,965,889 3,872,459 3,629,983 3,828,223 4,134,604 3,758,956 4,618,149 3,624,579 3,177,522 1,768,895
Total revenues 36,657,651 35,964,440 39,123,459 36,481,348 37,249,388 36,453,281 35,513,438 34,829,448 32,871,314 19,747,765
Expenditures
Public representation 903,378 985,107 889,188 869,342 886,717 903,895 927,320 987,229 923,923 448,703
Administrative services 717,680 816,581 785,966 704,667 748,588 669,789 644,913 632,513 549,833 255,166
Financial services 1,679,979 1,797,662 1,846,558 1,829,276 1,905,714 2,056,580 2,231,519 2,298,830 2,406,623 1,241,430
Public safety 11,136,752 11,514,151 11,439,487 12,277,677 12,624,532 13,002,233 12,902,815 13,754,394 13,567,101 6,578,735
Public works 2,678,089 2,680,695 2,731,241 2,543,512 2,661,073 2,730,415 2,768,906 2,831,177 2,860,510 1,589,090
Highways, streets and bridges 8,309,998 8,816,305 11,800,017 8,654,931 9,531,840 8,023,539 6,504,915 6,414,453 6,562,964 2,017,139
Community and economic development 948,756 971,335 987,097 797,072 784,396 763,211 894,879 1,077,312 939,895 419,534
Culture and recreation 2,637,586 2,610,935 2,624,275 2,259,699 2,197,276 2,190,835 2,254,117 2,394,031 2,196,186 639,852
Other governmental functions 1,441,234 1,798,345 1,589,572 1,708,868 1,603,292 1,139,148 350,385 562,341 438,292 200,623
119
Debt service
Principal 1,425,741 1,345,000 1,270,000 1,335,000 1,115,000 1,189,785 1,241,921 999,148 663,371 303,466
Interest and issuance costs 367,317 316,255 230,907 201,447 166,071 271,233 324,577 310,432 282,174 136,013
Capital outlay 5,338,105 4,721,155 4,496,631 6,139,597 3,734,082 6,066,783 5,683,657 5,473,828 3,987,509 1,746,421
Total expenditure 37,584,615 38,373,526 40,690,939 39,321,088 37,958,581 39,007,446 36,729,924 37,735,688 35,378,381 15,576,172
Excess of revenues over (under) expenditures (926,964) (2,409,086) (1,567,480) (2,839,740) (709,193) (2,554,165) (1,216,486) (2,906,240) (2,507,067) 4,171,593
Other financing sources (uses)
Transfers in 2,713,591 2,059,336 2,740,742 3,342,612 1,839,631 2,358,509 1,926,538 1,477,717 1,359,608 342,188
Transfers out (2,403,591) (2,047,491) (2,740,742) (3,233,369) (1,947,677) (2,926,554) (1,994,584) (1,409,491) (1,309,910) (359,971)
Bonds issued - 106,807 1,578,009 - 1,061,900 5,626,331 - 500,000 - -
Sale of capital assets 289,786 400,280 282,080 483,544 827,141 1,120,341 286,152 375,723 68,452 75,465
Total other financing sources (uses) 599,786 518,932 1,860,089 592,787 1,780,995 6,178,627 218,106 943,949 118,150 57,682
Net change in fund balances $ (327,178) $ (1,890,154) $ 292,609 $ (2,246,953) $ 1,071,802 $ 3,624,462 $ (998,380) $ (1,962,291) $ (2,388,917) $ 4,229,275
Debt service as a percentage of noncapital
expenditures 5.56% 4.94% 4.15% 4.63% 3.74% 4.44% 5.05% 4.06% 3.01% 3.18%
SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports
for the relevant year. The City implemented GASB Statement 34 in 2002; schedules presenting government-wide information
include information start that year.
City of Muskegon
GOVERNMENTAL ACTIVITIES REVENUES BY SOURCE
Last Ten Fiscal Years
Property % of Income % of Intergo- % of Charges for % of Licenses % of Fines % of Interest % of % of %
Year Tax Total Tax Total vernmental Total Service Total and Permits Total and Fees Total and Rent Total Other Total Total Change
2001 $ 6,176,436 16.8% $ 6,820,171 18.6% $ 15,847,954 43.2% $ 2,847,201 7.8% $ 1,014,598 2.8% $ 350,557 1.0% $ 914,214 2.5% $ 2,686,520 7.3% $ 36,657,651 -0.1%
2002 6,915,254 19.2% 6,692,609 18.6% 15,473,320 43.0% 3,010,798 8.4% 947,428 2.6% 393,314 1.1% 662,513 1.8% 1,869,204 5.2% 35,964,440 -1.9%
2003 6,764,443 17.3% 6,542,355 16.7% 18,879,071 48.3% 3,307,607 8.5% 1,108,780 2.8% 471,682 1.2% 516,482 1.3% 1,533,039 3.9% 39,123,459 8.8%
2004 6,733,653 18.5% 7,033,387 19.3% 15,448,865 42.3% 3,437,220 9.4% 1,139,014 3.1% 622,165 1.7% 435,152 1.2% 1,631,892 4.5% 36,481,348 -6.8%
2005 7,438,382 20.0% 7,083,023 19.0% 15,445,949 41.5% 3,147,066 8.4% 1,047,981 2.8% 648,300 1.7% 684,165 1.8% 1,754,158 4.7% 37,249,024 2.1%
2006 7,627,535 20.9% 7,425,173 20.4% 14,703,371 40.3% 2,938,246 8.1% 1,009,023 2.8% 544,902 1.5% 1,139,466 3.1% 1,065,565 2.9% 36,453,281 -2.1%
2007 7,801,571 22.0% 7,618,461 21.5% 12,752,363 35.9% 2,722,894 7.7% 1,115,518 3.1% 606,545 1.7% 1,348,819 3.8% 1,547,267 4.4% 35,513,438 -2.6%
2008 8,034,079 23.1% 7,694,780 22.1% 13,012,035 37.4% 2,463,975 7.1% 1,089,187 3.1% 570,526 1.6% 861,515 2.5% 1,103,351 3.2% 34,829,448 -1.9%
2009 8,190,722 24.9% 6,482,290 19.7% 12,400,408 37.7% 2,620,372 8.0% 1,032,681 3.1% 582,394 1.8% 400,900 1.2% 1,161,547 3.5% 32,871,314 -5.6%
2010* 8,487,125 43.0% 3,368,057 17.1% 4,785,494 24.2% 1,338,194 6.8% 584,162 3.0% 297,043 1.5% 193,873 1.0% 693,817 3.5% 19,747,765 -39.9%
* The City changed its fiscal year end from December 31 to June 30. 2010 figures are for six months.
SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB Statement 34 in 2002; schedules
presenting government-wide information include information start that year.
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City of Muskegon
Taxable, Assessed and Equalized and Estimated Actual Valuation of Property
Last Ten Fiscal Years
Taxable Valuation of Property
Ad Valorem Assessment Roll Industrial and Commercial Facilities Assessment Roll
Total Industrial Industrial Commercial Total Taxable Value
Real Personal Total Real Personal Real Total Taxable As a Percent
Year Residential Agriculture Commercial Industrial Property Property Ad Valorem Property Property Property IFT and CFT Valuation Actual
2001 $ 259,245,700 $ 160,831 $ 117,380,175 $ 104,812,046 $ 481,598,752 $ 150,081,900 $ 631,680,652 $ 15,928,671 $ 61,421,700 $ - $ 77,350,371 $ 709,031,023 87.40%
2002 277,504,213 163,166 129,199,142 103,473,256 510,339,777 125,589,450 635,929,227 10,786,400 61,521,500 - 72,307,900 708,237,127 86.36%
2003 295,311,699 163,844 124,679,713 101,987,394 522,142,650 124,833,198 646,975,848 9,114,034 51,183,000 - 60,297,034 707,272,882 85.80%
2004 309,291,380 167,357 123,303,933 103,175,554 535,938,224 115,456,493 651,394,717 7,564,826 51,056,856 - 58,621,682 710,016,399 87.00%
2005 322,359,014 164,935 126,046,550 104,163,650 552,734,149 109,273,769 662,007,918 7,235,276 47,458,411 - 54,693,687 716,701,605 87.62%
2006 341,365,730 - 132,415,743 105,982,619 579,764,092 103,282,670 683,046,762 6,062,774 44,389,891 - 50,452,665 733,499,427 87.46%
2007 364,789,125 - 143,991,195 109,089,684 617,870,004 111,824,925 729,694,929 5,433,443 31,408,300 - 36,841,743 766,536,672 87.21%
2008 376,414,856 160,219 140,833,691 109,931,336 627,340,102 114,100,484 741,440,586 5,747,358 24,617,400 - 30,364,758 771,805,344 86.71%
2009 376,545,791 157,682 147,276,887 114,185,691 638,166,051 111,493,852 749,659,903 5,259,649 25,616,400 - 30,876,049 780,535,952 91.48%
Assessed and Equalized Valuation of Property
Ad Valorem Assessment Roll Industrial and Commercial Facilities Assessment Roll
121
Total Industrial Industrial Commercial Total Estimated
Real Personal Total Real Personal Real Total Assessed Actual
Year Residential Agriculture Commercial Industrial Property Property Ad Valorem Property Property Property IFT and CFT Valuation Value
2001 $ 336,150,700 $ 173,600 $ 136,833,700 $ 109,888,900 $ 583,046,900 $ 150,081,900 $ 733,128,800 $ 16,676,500 $ 61,421,700 $ - $ 78,098,200 $ 811,227,000 $ 1,622,454,000
2002 358,727,850 173,600 152,324,900 110,440,500 621,666,850 125,597,200 747,264,050 11,272,200 61,521,500 - 72,793,700 820,057,750 1,640,115,500
2003 383,845,613 181,300 144,310,700 110,600,499 638,938,112 124,840,700 763,778,812 9,333,500 51,183,000 - 60,516,500 824,295,312 1,648,590,624
2004 384,783,400 184,800 141,579,300 114,496,500 641,044,000 115,591,300 756,635,300 7,717,000 51,785,000 - 59,502,000 816,137,300 1,632,274,600
2005 397,915,080 200,800 142,436,699 112,694,600 653,247,179 109,280,200 762,527,379 7,481,500 47,924,200 - 55,405,700 817,933,079 1,635,866,158
2006 420,608,600 - 149,948,800 113,890,900 684,448,300 103,288,100 787,736,400 6,454,200 44,470,600 - 50,924,800 838,661,200 1,677,322,400
2007 448,120,317 - 160,361,200 121,432,880 729,914,397 111,829,191 841,743,588 5,850,600 31,408,300 - 37,258,900 879,002,488 1,758,004,976
2008 466,633,100 194,800 156,596,000 121,810,900 745,234,800 114,104,600 859,339,400 6,162,900 24,617,400 - 30,780,300 890,119,700 1,780,239,400
2009 426,002,850 191,100 161,996,600 122,301,800 710,492,350 111,497,300 821,989,650 5,606,100 25,616,400 - 31,222,500 853,212,150 1,706,424,300
Property is assessed at 50% of true cash value. The assessed and equalized valuation of taxable property is determined as of December 31st of each year and is the basis upon which taxes are levied during the succeeding fiscal year. The passage of
Proposal A in May, 1994 altered how tax values are determined. Beginning in the 1995-1996 fiscal year, property taxes are based on taxable value instead of state equalized value. Proposal A also capped taxable value of each parcel of property, adjusted for
additions and losses, at the previous year's rate of inflation or 5% whichever is less, until the property is sold or transferred. When ownership of a parcel of property is transferred, the taxable value becomes 50% of true cash value, or the state equalized
valuation. The industrial and Commercial Facilities Tax Acts permit certain property to be taxed at one-half the tax rate for a period up to twelve years.
City of Muskegon
Principal Property Taxpayers
June 30, 2010
12/31/2009 12/31/2000
Percent of Percent of
Taxable Total Taxable Taxable Total Taxable
Taxpayer Valuation Rank Valuation Valuation Rank Valuation
Consumers Energy $ 78,615,856 1 10.1% $ 67,248,351 1 10.2%
Sappi/S.D. Warren Company 31,205,687 2 4.0% 54,094,785 2 8.2%
Johnson Technology 7,679,263 3 1.0% 8,950,262 4 1.4%
ADAC Plastics Inc 7,379,563 4 0.9% 7,147,253 8 1.1%
ESCO Company 6,578,855 5 0.8% - 0.0%
DTE Energy (formerly MichCon) 5,852,200 6 0.7% 9,142,300 3 1.4%
Glen Oaks Apartments LLC 4,776,500 7 0.6% - 0.0%
122
Honeywell Inc 4,738,900 8 0.6% - 0.0%
Faram Muskegon LLC 4,570,300 9 0.6% - 0.0%
Lorin Industries 4,318,889 10 0.6% 8,564,530 6 1.3%
Brunswick Corp - 0.0% 8,634,000 5 1.3%
Neway Anchorlok International - 0.0% 8,370,668 7 1.3%
Anglo-American Clays Corporation - 0.0% 6,876,300 9 1.0%
Muskegon Properties Company - 0.0% 6,392,900 10 1.0%
Total - 10 Largest 155,716,013 19.9% 185,421,349 28.2%
Total - All Other 624,819,939 80.1% 472,356,912 71.8%
$ 780,535,952 100.0% $ 657,778,261 100.0%
Source: Muskegon County Equalization Department; City of Muskegon Treasurer's Office
City of Muskegon
Property Tax Rates - Direct and Overlapping Government Units
Property Tax Rates Per $1,000 Taxable Valuation
Last Ten Fiscal Years
City-Wide Rates
Total Library
Year Operating Promotion Sanitation City District
2001 7.0000 0.0792 3.0000 10.0792 2.4000
2002 7.0000 0.0786 3.0000 10.0786 2.4000
2003 7.5000 0.0774 2.5000 10.0774 2.4000
2004 8.5000 0.0768 2.5000 11.0768 2.4000
2005 8.5000 0.0755 2.5000 11.0755 2.4000
2006 8.5000 0.0732 2.5000 11.0732 2.4000
2007 8.5000 0.0685 2.5000 11.0685 2.4000
2008 8.5000 0.0682 2.5000 11.0682 2.4000
2009 8.9000 0.0680 2.1000 11.0680 2.4000
Overlapping - County-Wide Rates
Muskegon Intermediate Special Vocational Community
Year County School Education Education College
2001 6.5799 0.4640 2.3202 - 2.2233
2002 6.6957 0.4599 2.2997 1.0000 2.2037
2003 6.7957 0.4597 2.2983 1.0000 2.2037
2004 6.7957 0.4597 2.2983 1.0000 2.2037
2005 6.7757 0.4597 2.2983 1.0000 2.2037
2006 6.7557 0.4597 2.2987 0.9996 2.2037
2007 6.7357 0.4597 2.2987 0.9996 2.2037
2008 6.6957 0.4597 2.2987 0.9996 2.2037
2009 6.6957 0.4597 2.2987 0.9996 2.2037
Overlapping - School District Grand Total
State Non-
Year Operating Debt Total Education Homestead Homestead
2001 18.0000 7.0000 25.0000 6.0000 37.0666 55.0666
2002 18.0000 7.0000 25.0000 6.0000 38.1376 56.1376
2003 18.0000 7.0000 25.0000 5.0000 37.2348 55.2348
2004 18.0000 7.0000 25.0000 6.0000 39.2342 57.2342
2005 18.0000 7.0000 25.0000 6.0000 39.2129 57.2129
2006 18.0000 7.0000 25.0000 6.0000 39.1906 57.1906
2007 18.0000 7.0000 25.0000 6.0000 39.1659 57.1659
2008 18.0000 5.5000 23.5000 6.0000 37.6256 55.6256
2009 18.0000 5.6000 23.6000 6.0000 37.7254 55.7254
123
City of Muskegon
PROPERTY TAX LEVIES AND COLLECTIONS
Last Ten Fiscal Years
Charge backs
Total Current Percent Delinquent Total Tax On Uncollected Outstanding Outstanding Percent of
Fiscal Tax Tax Of Levy Tax Total Tax Collections Delinquent Delinquent Delinquent Delinquent
Year Levy Collections Collected Collections Collections as % of Levy Taxes Personal Specific Taxes to Levy
2001 $ 7,449,191 $ 6,625,670 88.9% $ 88,768 $ 6,714,438 90.1% $ 24,866 $ 184,894 $ 5,496 2.89%
2002 7,922,898 7,036,846 88.8% 123,906 7,160,752 90.4% 30,056 168,666 15,700 2.71%
2003 8,095,194 7,201,599 89.0% 710,353 7,911,952 97.7% 27,338 154,843 20,856 2.51%
2004 8,292,451 7,230,231 87.2% 772,545 8,002,776 96.5% 36,179 82,305 22,655 1.70%
2005 8,121,734 6,920,960 85.2% 1,027,932 7,948,892 97.9% 28,156 78,641 21,100 1.57%
2006 8,207,019 7,231,508 88.1% 885,675 8,117,183 98.9% 13,461 65,297 24,539 1.26%
2007 8,542,477 7,509,102 87.9% 949,754 8,458,856 99.0% - 67,586 20,748 1.03%
2008 8,466,096 7,219,540 85.3% 1,135,738 8,355,278 98.7% 36,917 73,430 37,388 1.75%
2009 8,700,017 7,522,462 86.5% 1,102,891 8,625,353 99.1% 25,755 73,440 34,758 1.54%
124
SOURCE: City of Muskegon Treasurer' Office
City of Muskegon
SEGMENTED DATA ON INCOME TAX FILERS, RATES AND LIABILITY
Most recent Year and Ten Years Previous
Period Ended June 30, 2010 Period Ended December 31, 2010
Taxable Income per Return # of % of Total Total Taxable % of Total # of % of Total Total Taxable % of Total
Individual and Joint Returns Returns Returns Filed Income Tax Dollars Tax Dollars Returns Returns Filed Income Tax Dollars Tax Dollars
Resident Taxpayers:
(City resident income, after exemptions, exclusions and deductions is taxed at a flat rate of 1%.)
$2,500 or less 1,210 6% $ 511,340 $ 5,113 0% 1,179 5% $ 1,029,474 $ 10,295 0%
$2,501-$7,500 782 4% 2,899,922 28,999 1% 1,169 5% 6,827,297 68,273 1%
$7,501-$25,000 1,909 10% 22,609,665 226,097 7% 2,704 10% 52,426,935 524,269 7%
$25,001-$50,000 1,475 7% 40,001,838 400,018 12% 2,394 9% 101,907,814 1,019,078 14%
$50,001-$100,000 839 4% 42,561,878 425,619 13% 986 4% 88,566,998 885,670 13%
More than $100,000 151 1% 19,067,457 190,675 6% 142 1% 40,253,382 402,534 6%
Subtotal 6,366 32% $ 127,652,100 $ 1,276,521 38% 8,574 33% $ 291,011,900 $ 2,910,119 41%
Non-Residents Taxpayers:
(Non-residents are taxed at a rate of 0.5% on income earned within the City.)
125
$2,500 or less 1,791 9% $ 995,800 $ 4,006 0% 1,939 8% $ 1,428,558 $ 9,525 0%
$2,501-$7,500 1,069 5% 5,073,800 20,412 1% 1,665 6% 7,901,142 52,677 1%
$7,501-$25,000 2,838 14% 45,984,600 185,001 5% 4,208 16% 68,958,300 459,742 6%
$25,001-$50,000 3,289 16% 120,403,000 484,394 14% 4,917 19% 177,165,226 1,181,151 17%
$50,001-$100,000 2,366 12% 157,034,800 631,767 19% 2,102 8% 135,900,236 906,039 13%
More than $100,000 444 2% 58,316,200 234,612 7% 527 2% 118,501,368 790,042 11%
Subtotal 11,797 59% $ 387,808,200 $ 1,560,192 46% 15,358 60% $ 509,854,830 $ 3,399,176 48%
All Other Returns
(Mostly corporate returns which pay at a rate of 1% on income earned in City and partnerships which pay based on partners residence status.)
Subtotal 1,800 9% $ 530,956 16% 1,850 7% $ 769,276 11%
Total 19,963 100% $ 3,367,669 100% 25,782 100% $ 7,078,571 100%
NOTE: Due to confidentiality issues, the names of the ten largest income tax payers are not available. The categories presented are intended to provide alternative information regarding sources of the City's revenue.
SOURCE: City of Muskegon Income Tax Department. The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB
Statement 34 in 2002; schedules presenting government-wide information include information starting that year. Certain other information has not been presented previously. Reported numbers begin with the year for which
information believed to be accurate is available.
City of Muskegon
RATIO OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
Governmental Activities Business-Type Activities
General
Obligation Special Total Percent of
Limited Tax Assessment Governmental Revenue Intergovernmental Total Business- Total Primary Personal Per
Year Bonds Bonds State Loans Activities Bonds Contactual Debt State Loans Type Activities Government Income Capita
2001 $ 4,425,000 $ 2,395,000 $ 1,276,900 $ 8,096,900 $ 10,140,000 $ 8,262,203 $ - $ 18,402,203 $ 26,499,103 4.4% $ 661
2002 3,735,000 1,835,000 1,276,900 6,846,900 9,750,000 7,038,014 - 16,788,014 23,634,914 3.8% 589
2003 4,565,000 1,460,000 1,126,900 7,151,900 9,345,000 5,886,923 - 15,231,923 22,383,823 3.6% 562
2004 3,700,000 1,140,000 976,900 5,816,900 8,925,000 4,779,656 8,483,766 22,188,422 28,005,322 4.4% 703
2005 3,615,824 865,000 1,282,976 5,763,800 8,490,000 3,606,017 13,900,000 25,996,017 31,759,817 4.8% 797
2006 8,246,039 615,000 1,356,900 10,217,939 8,035,000 2,454,101 13,335,000 23,824,101 34,042,040 5.0% 855
2007 7,444,118 395,000 1,136,900 8,976,018 7,565,000 1,221,207 12,760,000 21,546,207 30,522,225 4.5% 766
2008 6,844,970 215,000 1,416,900 8,476,870 7,075,000 - 12,170,000 19,245,000 27,721,870 4.1% 696
2009 6,623,499 70,000 1,120,000 7,813,499 6,565,000 - 11,570,000 18,135,000 25,948,499 3.8% 659
2010* 6,444,605 - 1,065,428 7,510,033 5,995,000 - 11,570,000 17,565,000 25,075,033 3.7% 639
126
* The City changed its fiscal year end from December 31 to June 30. 2010 figures are for six months.
NOTE: None of the debt issued by the City is payable through the levy of property tax millages.
SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB
Statement 34 in 2002; schedules presenting government-wide information include information start that year.
City of Muskegon
DIRECT AND OVERLAPPING DEBT
June 30, 2010*
Total Debt City General
Name of Governmental Unit Outstanding Self Supporting Taxes
Direct Debt
City of Muskegon:
Revenue Bonds $ 17,565,000 $ 17,565,000 $ -
Special Assessment Bonds - - -
Capital Improvement Bonds 6,110,000 - 6,110,000
Intergovernmental Bonds 1,065,428 - 1,065,428
Act 99 Installment Purchase 334,605 - 334,605
Component Unit Debt:
Downtown Development Authority 3,245,000 3,245,000 -
Local Development Finance Authority 4,485,000 4,485,000 -
Total City Direct Debt $ 32,805,033 $ 25,295,000 $ 7,510,033
City Share as
Gross Percent of Gross Net
Overlapping Debt
Muskegon School Distict $ 34,891,459 94.48% $ 32,965,450
Orchard View School Distict 46,404,704 25.95% 12,042,021
Reeths Puffer School Distict 67,227,033 10.65% 7,159,679
Muskegon Intermediate School District - 0.00% -
Muskegon County 20,519,000 15.66% 3,213,275
Muskegon Community College 14,920,000 15.66% 2,336,472
Total Overlapping Debt $ 183,962,196 57,716,898
Total City Direct and Overlapping Debt $ 65,226,931
* The City changed its fiscal year end from December 31 to June 30. 2010 figures are for six months.
NOTE: None of the debt issued by the City is payable through the levy of property tax millages.
Details regarding the City's outstanding debt can be found in the notes to the financial statements.
SOURCE: Municipal Advisory Council of Michigan and City of Muskegon Finance Department. The information
in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for the
relevant year. The City implemented GASB Statement 34 in 2002; schedules presenting government-wide
information include information start that year.
127
City of Muskegon
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*
Debt Limit $ 73,312,880 $ 74,726,405 $ 76,377,881 $ 75,663,530 $ 76,252,738 $ 78,773,640 $ 84,174,359 $ 85,933,940 $ 82,198,965 $ 82,198,965
Total net debt applicable to limit 7,232,900 11,066,900 9,726,900 9,191,900 9,918,800 16,142,939 15,591,018 15,481,870 14,778,499 14,435,033
Legal debt margin $ 66,079,980 $ 63,659,505 $ 66,650,981 $ 66,471,630 $ 66,333,938 $ 62,630,701 $ 68,583,341 $ 70,452,070 $ 67,420,466 $ 67,763,932
Total net debt applicable to the limit as 9.87% 14.81% 12.74% 12.15% 13.01% 20.49% 18.52% 18.02% 17.98% 17.56%
a percentage of debt limit
Legal Debt Margin Calculation for 2010*:
Assessed Valuation: $ 821,989,650
Legal Debt Limit (10% ) 82,198,965
Total Indebtedness: $ 32,805,033
Debt not Subject to Limitation:
Paid by Special Assessment (805,000)
128
Revenue Bonds (17,565,000)
Debt Subject to Limitation 14,435,033
Legal Debt Margin $ 67,763,932
* The City changed its fiscal year end from December 31 to June 30. 2010 figures are for six months.
SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for the relevant year.
The City implemented GASB Statement 34 in 2002; schedules presenting government-wide information include information start that year. Certain other
information has not been presented previously. Reported numbers begin with the year for which information believed to be accurate is available.
City of Muskegon
REVENUE BOND COVERAGE
Water Supply System
Last Ten Fiscal Years
Direct Net Revenue Debt Service Requirements
Fiscal Gross Operating Available For
Year Revenue (a) Expenses (b) Debt Service Principal Interest Total Coverage
2001 $ 4,263,107 $ 3,203,080 $ 1,060,027 $ 370,000 $ 471,301 $ 841,301 1.26
2002 4,051,015 3,030,959 1,020,056 390,000 453,666 843,666 1.21
2003 4,183,015 3,539,690 643,325 405,000 417,559 822,559 0.78
2004 5,016,267 3,186,067 1,830,200 420,000 411,867 831,867 2.20
2005 7,017,844 3,197,232 3,820,612 435,000 418,549 853,549 4.48
2006 6,424,971 3,172,882 3,252,089 1,020,000 662,774 1,682,774 1.93
2007 6,705,739 3,404,649 3,301,090 1,045,000 632,036 1,677,036 1.97
2008 6,336,135 3,407,903 2,928,232 1,080,000 600,377 1,680,377 1.74
2009 5,906,313 3,498,263 2,408,050 1,110,000 567,462 1,677,462 1.44
2010* 2,904,735 1,575,275 1,329,460 535,000 271,522 806,522 1.65
Sewage Disposal System
Direct Net Revenue Debt Service Requirements
Fiscal Gross Operating Available For
Year Revenue (a) Expenses (b) Debt Service Principal Interest Total Coverage
2001 $ 3,991,295 $ 2,656,382 $ 1,334,913 $ 399,933 $ 197,169 $ 597,102 2.24
2002 4,039,448 2,726,975 1,312,473 458,918 137,622 596,540 2.20
2003 4,077,482 2,649,454 1,428,028 473,329 132,214 605,543 2.36
2004 4,096,412 3,038,939 1,057,473 455,179 110,520 565,699 1.87
2005 4,182,115 3,128,119 1,053,996 522,956 114,388 637,344 1.65
2006 4,842,901 4,270,296 572,605 511,626 63,233 574,859 1.00
2007 5,213,140 4,435,211 777,929 506,822 25,221 532,043 1.46
2008 5,338,647 4,979,343 359,304 546,278 12,550 558,828 0.64
2009 No System Indebtedness
2010* No System Indebtedness
* The City changed its fiscal year end from December 31 to June 30. 2010 figures are for six months.
For years in which "revenue bond coverage" is less than 1.00, the shortfall was made up either by use of net assets or by transfer in.
(a) "Gross Revenue" equals total operating revenues plus interest income.
(b) "Direct Operating Expenses" equal total operating expenses net of depreciation expense.
SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for
the relevant year. The City implemented GASB Statement 34 in 2002; schedules presenting government-wide information include
information start that year. Certain other information has not been presented previously. Reported numbers begin with the year for
which information believed to be accurate is available.
129
City of Muskegon
DEMOGRAPHIC AND ECONOMIC STATISTICS
Last Ten Fiscal Years
Fiscal Pesonal Per Capita Median Public School Building Permits
Year Population Income Income Age Enrollment Number Value Unemployment
2001 40,105 $ 601,818,713 $ 15,006 32.3 6,761 893 $ 26,052,549 9.3%
2002 40,105 616,864,181 15,381 32.3 6,603 1,008 39,705,174 12.1%
2003 39,825 627,871,373 15,766 32.3 6,327 1,061 21,369,545 13.9%
2004 39,825 643,568,157 16,160 32.3 6,088 1,152 37,963,075 11.1%
2005 39,825 659,657,361 16,564 32.3 5,862 966 30,041,025 9.0%
2006 39,825 676,148,795 16,978 32.3 5,625 1,063 27,328,144 8.6%
2007 39,825 693,052,515 17,402 32.3 5,534 941 36,129,064 9.5%
2008 39,825 710,378,828 17,838 32.3 5,361 946 23,001,998 11.5%
2009 39,401 720,386,117 18,283 32.8 5,931 909 18,417,289 16.2%
2010 39,259 735,734,614 18,741 32.8 5,931 374 11,900,915 17.8%
130
SOURCE: US Census Bureau, Muskegon Area Intermediate School Distrct (MAISD), City of Muskegon Inspections Department
City of Muskegon
PRINCIPAL EMPLOYERS
Current Year and Nine Years Ago
2010 2001
Percentage Percentage
of total of total
City City
Employer Employees Rank employment Employees Rank employment
Mercy General Health Partners 3,227 1 17.9% 1,300 1 7.1%
County of Muskegon 980 2 5.4% 650 5 3.6%
State of Michigan 772 3 4.3% 901 3 4.9%
Muskegon Public Schools 697 4 3.9% 550 6 3.0%
Johnson Technology 474 5 2.6% 550 6 3.0%
Knoll Group 450 6 2.5% - - 0.0%
Baker College 430 7 2.4% - - 0.0%
131
ADAC Plastics 400 8 2.2% 480 7 2.6%
Verizon 325 9 1.8% 350 9 1.9%
City of Muskegon 281 10 1.6% - - 0.0%
Brunswick 180 - 0.0% 400 8 2.2%
Hackley Hospital - - 0.0% 1,000 2 5.5%
Sappi Fine Paper - - 0.0% 740 4 4.1%
SOURCE: City of Muskegon; Muskegon Area First; Michigan Department of Energy, Labor & Economic Growth
City of Muskegon
BUDGETED FULL-TIME CITY GOVERNMENT POSITIONS BY DEPARTMENT
Last Ten Fiscal Years
Department 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*
Administration 1.70 1.50 1.50 1.50 1.50 1.50 1.50 1.50 - -
Affirmative Action 1.00 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50
Cemetaries 3.52 3.52 3.52 3.52 3.25 3.00 3.25 3.25 3.25 2.50
City Assessors Office - - - - - - - - - -
City Clerk & Elections 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 3.00
City Commission 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25
City Hall Maintenance 1.20 1.25 1.20 1.00 1.00 1.00 1.00 1.00 1.00 1.00
City Manager's Office 3.05 2.75 1.75 1.75 1.75 1.75 1.75 1.75 3.25 2.25
City Treasurer's Office 6.00 6.00 6.00 5.00 5.00 5.00 4.00 5.00 5.00 5.00
Civil Service 2.00 3.00 3.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00
Community Event Support 0.60 0.20 0.20 - - - - - - -
Environmental Services 4.00 4.00 4.00 3.50 2.00 2.00 2.00 2.00 2.00 2.00
Farmers Market 0.12 0.12 0.12 0.12 - - - - 0.05 0.05
Finance Administration 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 3.00
Fire 44.00 44.00 43.00 41.00 40.00 38.00 38.00 38.00 38.00 36.00
Fire Safety Inspections 13.00 12.00 13.00 12.00 10.00 12.00 12.00 12.00 12.00 9.00
Forestry 2.68 2.18 1.93 0.93 - - - - - -
General Recreation 0.78 0.78 2.24 1.24 1.00 1.17 1.33 1.66 1.66 2.00
Income Tax Administration 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00
132
Information Systems 3.00 4.00 4.00 4.00 3.00 3.00 3.00 3.00 3.00 3.00
Inner City Recreation 1.46 1.46 - - - - - - - -
Parking 0.30 0.30 0.30 - - - - - - -
Parks 11.53 11.53 10.53 9.68 8.48 8.25 8.15 8.15 7.99 7.15
Planning, Zoning & Economic Development 7.50 7.50 7.50 6.50 6.00 6.00 6.00 6.00 6.00 5.00
Police 102.00 102.00 96.00 94.00 94.00 94.00 94.00 94.00 94.00 88.00
Sanitation 1.10 1.25 1.25 1.10 1.10 1.00 1.00 1.00 1.00 -
MVH-Major Streets 13.75 14.70 15.30 15.45 15.25 16.00 17.75 15.75 13.75 12.00
MVH-Local Streets 7.40 7.20 7.20 7.00 7.00 7.00 7.00 6.00 8.00 7.00
MVH-State Trunklines 1.60 1.60 1.60 2.00 2.00 2.00 - - - -
Street Lighting 0.10 0.10 - - - - - - - -
Walker Arena 0.12 0.12 0.12 0.12 - - - - - -
Community Development 5.00 5.00 5.00 5.00 4.00 4.00 4.00 4.00 4.00 4.00
Home Program 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 0.25
Lead Program - - - - - - - - - 0.75
Sewer Maintenance 14.40 14.40 15.15 14.55 15.05 16.00 16.20 15.20 13.20 10.20
Water Filtration 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00
Water Maintenance 15.65 15.65 15.65 15.15 14.65 13.00 12.50 13.50 15.40 12.40
Hartshorn Marina Fund 0.79 0.79 0.79 0.79 0.67 0.73 0.67 0.34 0.05 0.05
Public Service Building 3.30 3.30 3.30 3.65 3.85 3.45 3.45 3.45 3.70 8.95
Engineering 9.40 9.35 9.40 7.70 7.70 7.45 7.45 7.45 7.45 5.45
Equipment 7.70 7.70 7.70 8.00 8.00 8.95 8.25 8.25 8.50 7.25
314.00 315.00 308.00 294.00 284.00 284.00 282.00 280.00 280.00 256.00
* The City changed its fiscal year end from December 31 to June 30. 2010 figures are for six months.
SOURCE: City of Muskegon Finance Department
City of Muskegon
OPERATING INDICATORS BY FUNCTION/PROGRAM
Last Ten Fiscal Years
Function/Program 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*
Administrative Services
Elections
Number of registered voters 23,457 23,931 23,904 25,261 25,918 26,028 26,345 27,678 26,136 26,136
Number of votes cast:
Last general election 12,054 8,916 8,916 14,169 14,169 10,410 10,410 15,271 15,271 15,271
Last city election 3,840 3,840 4,325 4,325 4,022 4,022 1,101 1,101 2,254 2,254
Percentage of registered voters voting:
Last general election 51% 37% 37% 56% 55% 40% 40% 55% 58% 58%
Last city election 16% 16% 18% 17% 16% 15% 4% 4% 9% 9%
Financial Services
Property Tax Bills 15,804 15,586 15,428 15,403 15,404 15,354 15,376 15,350 15,435 -
Income Tax Returns N/A 25,135 25,043 24,378 23,884 23,493 23,141 22,598 21,071 19,963
Paper Check Issued to Vendors 3,922 4,012 3,784 3,405 3,205 3,248 3,347 3,346 3,113 1,486
Electronic Payments to Vendors 662 651 746 752 828 800 772 763 963 450
133
Public Safety
Fire Protection
Number of firefighter and officer positions 45 44 42 41 41 41 41 41 37 37
Number of emergency calls 3,818 3,878 3,656 4,116 4,206 4,092 4,171 4,298 4,220 2,062
Police Protection
Number of sworn officer positions 91 85 83 83 83 84 84 84 79 79
Part I (Major) Crimes 3,429 3,504 2,971 3,360 3,303 3,495 2,997 3,107 3,071 1,305
Public Works
Refuse Collected (Tons per Year) 11,718 11,420 11,780 11,925 11,074 11,192 10,375 10,401 10,526 6,042
Recyclables Collected (Tons per Year) 838 808 775 779 588 559 629 626 309 -
Water & Sewer
Number of consumers 14,917 14,917 14,917 14,917 14,455 14,412 14,364 13,131 12,987 12,966
Average daily water consumption (GPD) 9,877,000 9,453,000 9,453,000 8,870,000 9,582,000 8,998,000 9,314,000 8,879,000 7,976,000 7,163,000
Water main breaks repaired 12 12 19 10 5 13 21 34 17 6
Sewer flows (Millions Gallons per Year) 1,994 1,477 1,387 1,475 1,700 2,040 1,945 2,181 1,979 965
Sewer Service Calls 799 661 624 568 638 605 598 533 508 263
* The City changed its fiscal year end from December 31 to June 30.
SOURCE: City of Muskegon Departments
City of Muskegon
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
Last Ten Fiscal Years
Function/Program 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*
Public Safety
Fire Protection
Number of stations 3 3 3 3 3 3 3 3 3 3
Police Protection
Number of stations 1 1 1 1 1 1 1 1 1 1
Highways, Streets and Bridges
Miles of Streets 197.52 197.39 197.96 196.95 196.95 197.48 197.79 197.79 196.95 196.95
Number of streetlights 3,111 3,114 3,123 3,111 3,159 3,159 3,134 3,134 3,192 3,125
Culture and Recreation
Number of parks (acres) 612 612 701 701 701 701 701 701 701 701
Lake Michigan beaches (acres) 119 119 119 119 119 119 119 119 119 119
Hockey/Entertainment Arena 1 1 1 1 1 1 1 1 1 1
Sewer
Sanitary sewers (miles) 175.01 175.33 175.33 178.02 179.41 175.74 177.04 177.04 177.04 177.04
134
Storm sewers (miles) 178.29 178.57 178.57 178.61 179.23 180.48 183.25 183.60 184.35 184.35
Water
Water mains (miles) 192.60 193.09 193.66 194.14 194.14 194.15 195.63 195.58 195.69 195.69
* The City changed its fiscal year end from December 31 to June 30. 2010 figures are for six months.
SOURCE: City of Muskegon Departments
SINGLE AUDIT OF FEDERAL FINANCIAL ASSISTANCE PROGRAMS
135
BRICKLEY DELONG
CERTIFIED PUBLIC ACCOUNTANTS
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
November 5, 2010
City Commission
City of Muskegon
Muskegon, Michigan
We have audited the financial statements of the City of Muskegon as of and for the six months ended June 30,
2010 and have issued our report thereon dated November 5, 2010. 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
In planning and performing our audit, we considered the City of Muskegon’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 of
Muskegon’s internal control over financial reporting. Accordingly, we do not express an opinion on the
effectiveness of the City of Muskegon’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 first
paragraph of this 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.
316 Morris Ave., Suite 500 • P.O. Box 999 • Muskegon, MI 49443 907 S. State St. • P.O. Box 331 • Hart, MI 49420
PHONE (231) 726-5800 • FAX (231) 722-0260 PHONE (231) 873-1040 • FAX (231) 873-0602
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City Commission
November 5, 2010
Page 2
Compliance
As part of obtaining reasonable assurance about whether the City of Muskegon’s financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of
our tests disclosed no instances of noncompliance or other matters that are required to be reported under
Government Auditing Standards.
This report is intended solely for the information and use of the City Commission, management, 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.
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BRICKLEY DELONG
CERTIFIED PUBLIC ACCOUNTANTS
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
November 5, 2010
City Commission
City of Muskegon
Muskegon, Michigan
Compliance
We have audited the City of Muskegon's compliance with the types of compliance requirements described in the
U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct
and material effect on each of the City of Muskegon's major federal programs for the six months ended June 30,
2010. The City of Muskegon’s major federal programs are identified in the Summary of Auditors’ Results
section of the accompanying Schedule of Findings and Responses. Compliance with the requirements of laws,
regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of City of
Muskegon’s management. Our responsibility is to express an opinion on the City of Muskegon’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 Muskegon’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 Muskegon’s compliance with those requirements.
In our opinion, the City of Muskegon 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 six
months ended June 30, 2010. However, the results of our auditing procedures disclosed an instance of
noncompliance with those requirements, which is required to be reported in accordance with OMB Circular A-
133 and which is described as Finding 2010-1 in Section III of the accompanying Schedule of Findings and
Responses.
316 Morris Ave., Suite 500 • P.O. Box 999 • Muskegon, MI 49443 907 S. State St. • P.O. Box 331 • Hart, MI 49420
PHONE (231) 726-5800 • FAX (231) 722-0260 PHONE (231) 873-1040 • FAX (231) 873-0602
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City Commission
November 5, 2010
Page 2
Internal Control Over Compliance
Management of the City of Muskegon 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 Muskegon’s internal control over compliance with
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 Muskegon’s internal control over compliance.
Our consideration of internal control over compliance was for the limited purpose described in the preceding
paragraph and was not designed to identify all deficiencies in internal control over compliance that might be
significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies,
significant deficiencies, or material weaknesses have been identified. However, as discussed below, we identified
a certain deficiency in internal control over compliance that we consider to be a material weakness.
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. We consider the deficiency in internal control over compliance described in the
accompanying Schedule of Findings and Responses, as Finding 2010-1 to be a material weakness.
The City of Muskegon’s response to the findings identified in our audit is described in the accompanying
Schedule of Findings and Responses. We did not audit the City of Muskegon’s response and, accordingly, we
express no opinion on it.
This report is intended solely for the information and use of the City Commission, management, 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.
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City of Muskegon
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the six months ended June 30, 2010
Accrued Accrued
Entitlement (deferred) Cash or (deferred)
Federal program or revenue payments in Amount of revenue
Federal grantor/pass-through CFDA award January 1, kind received grant June 30,
grantor/program title number amount 2010 (cash basis) expenditures 2010 Notes
U.S. Department of Housing and Urban Development
Direct programs
Community Development Block Grant 14.218
B-09-MC-26-0026 $ 999,433 $ 484,867 $ 570,796 $ 254,409 $ 168,480
Program Income 2,436 - 2,436 2,436 -
Total Community Development Block Grant 1,001,869 484,867 573,232 256,845 168,480 4
ARRA - Community Development Block Grant - Recovery 14.253
B-09-MY-26-0026 267,182 - 47,483 165,760 118,277 4
Home Investment Partnership Program 14.239
M-06-MC-26-0215 301,767 2,100 2,100 - -
M-08-MC-26-0215 290,049 63,537 63,537 - -
M-09-MC-26-0215 322,469 135,885 202,897 143,912 76,900
Program Income 75,434 - 75,434 75,434 -
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Total Home Investment Partnership Program 989,719 201,522 343,968 219,346 76,900
Lead-Based Paint Hazard Control in Privately-Owned Housing 14.900
FR-5100-N-20A 2,079,492 938 - - 938
Program Income 11,254 - 11,254 11,254 -
Total Lead-Based Paint Hazard Control in Privately-Owned Housing 2,090,746 938 11,254 11,254 938
Total direct programs 4,349,516 687,327 975,937 653,205 364,595
Passed through Michigan Department of Housing Development Authority
Community Development Block Grant 14.218
Neighborhood Stabilization Program
NSP-2008-0280-ENT 570,460 195,642 134,482 265,495 326,655
Program Income 820 - 820 820 -
Total Neighborhood Stabilization Program 571,280 195,642 135,302 266,315 326,655 4
Total U.S. Department of Housing and
Urban Development 4,920,796 882,969 1,111,239 919,520 691,250
City of Muskegon
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the six months ended June 30, 2010
Accrued Accrued
Entitlement (deferred) Cash or (deferred)
Federal program or revenue payments in Amount of revenue
Federal grantor/pass-through CFDA award January 1, kind received grant June 30,
grantor/program title number amount 2010 (cash basis) expenditures 2010 Notes
U.S. Department of Justice
Direct programs
Bulletproof Vest Partnership Grant 16.607
2007 Grant $ 7,788 $ - $ - $ 53 $ 53
2008 Grant 5,563 - - 5,479 5,479
13,351 - - 5,532 5,532
Justice Assistance Grant 16.738
2009-DJ-BX-0692 81,109 36,088 75,780 39,692 -
Total direct programs 94,460 36,088 75,780 45,224 5,532
Passed through Grand Valley State University
Project Safe Neighborhood 16.609
2009-GP-GX-0041 5,000 - 5,000 5,000 -
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Passed through Ottawa County
WEMET Multi-Jurisdictional Drug
Enforcement CO-OP 16.738
70834-210B 36,799 - 26,315 35,445 9,130
Passed through Muskegon County
ARRA - Justice Assistance Grant 16.804
2009-SB-B9-1824 218,169 - 24,760 28,296 3,536
Total U.S. Department of Justice 354,428 36,088 131,855 113,965 18,198
U.S. Department of Energy
Direct programs
Energy Efficiency and Conservation Block Grant 81.128
041714125 181,600 (181,280) - 18,551 (162,729)
City of Muskegon
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the six months ended June 30, 2010
Accrued Accrued
Entitlement (deferred) Cash or (deferred)
Federal program or revenue payments in Amount of revenue
Federal grantor/pass-through CFDA award January 1, kind received grant June 30,
grantor/program title number amount 2010 (cash basis) expenditures 2010 Notes
U.S. Department of Health and Human Services
Passed through the Michigan Department of State
Voting Access for Individuals with Disabilities Program 93.617 $ 16,750 $ 16,750 $ 16,750 $ - $ -
U.S. Department of Homeland Security
Direct programs
Assistance to Firefighters
EMW-2009-FP-00389 97.044 9,000 - - 9,000 9,000
TOTAL FEDERAL ASSISTANCE $ 5,482,574 $ 754,527 $ 1,259,844 $ 1,061,036 $ 555,719
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The accompanying notes are an integral part of this schedule.
City of Muskegon
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the six months ended June 30, 2010
1. See the notes to the financial statements for significant accounting policies used in preparing this schedule.
2. The following is a reconciliation of federal revenues as reported on the Statement of Revenues, Expenditures and Changes in Fund Balances of the City of Muskegon
financial statements for the six months ended June 30, 2010 and federal expenditures per the Schedule of Expenditures of Federal Awards.
Federal revenues per City of Muskegon financial statements
General Fund $ 122,965
Major Street and Trunkline Fund 9,443
Other governmental funds 848,127
980,535
Plus program income 89,944
Less MDOT contracted projects as shown below (9,443)
Federal expenditures per the Schedule of Expenditures of Federal Awards $ 1,061,036
3. The Michigan Department of Transportation (MDOT) requires that cities report all federal and state grants pertaining to their city. During the six months ended June 30,
2010, the federal aid received and expended by the City was $9,443 for contracted projects as shown below. Contracted projects are defined as projects performed by
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private contractors and paid for and administrated by MDOT (they are included in MDOT's single audit). Negotiated projects are projects where the City administers the
grant and either performs the work or contracts it out.
Federal
CFDA Revenue Federal
number Recognized Expenditures
U.S Department of Transportation, Federal Highway Administration (contracted projects)
Passed through the Michigan Department of Transportation
Highway Planning and Construction Program 20.205
Proj STP 1061 (309) Fed Item RR7077 Contract 10-5009 $ 9,443 $ 9,443
Total U.S. Department of Transportation,
Federal Highway Administration (contracted projects) $ 9,443 $ 9,443
4. Community Development Block Grant cluster
City of Muskegon
SCHEDULE OF FINDINGS AND RESPONSES
Six months ended June 30, 2010
SECTION I—SUMMARY OF AUDITORS’ RESULTS
A. Financial Statements
1. Type of auditors' report issued: Unqualified
2. Internal control over financial reporting:
• Material weakness(es) identified? yes X no
• Significant deficiency(ies) identified that are not considered to
be material weaknesses? yes X none reported
3. Noncompliance material to financial statements noted? yes X no
B. Federal Awards
1. Internal control over major programs:
• Material weakness(es) identified? X yes no
• Significant deficiency(ies) identified that are not considered to
be material weaknesses? yes X none reported
2. Type of auditors' report issued on compliance for major programs: Unqualified
3. Any audit findings disclosed that are required to be reported in
accordance with section 510(a) of OMB Circular A-133? X yes no
4. Identification of major programs:
CFDA Number(s) Name of Federal Program/Cluster
U.S. Department of Housing and Urban Development
14.218 and 14.253 CDBG Entitlement Grant Cluster
14.239 Home Investment Partnership Program
5. Dollar threshold used to distinguish between type A and type B programs: $150,000 (6-month period)
6. Auditee qualified as low-risk auditee? yes X no
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City of Muskegon
SCHEDULE OF FINDINGS AND RESPONSES
Six months ended June 30, 2010
SECTION II – FINANCIAL STATEMENT FINDINGS
NONE
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
U.S. Department of Housing and Urban Development
Finding 2010-1: CDBG Entitlement Grant Cluster
CFDA: 14.218 and 14.253
Award Number: B-09-MC-26-0026, B-09-MY-26-0215, NSP-2008-0280-ENT
Award Year End: June 30, 2010
Home Investment Partnership Program
CFDA: 14.239
Award Number: M-09-MC-26-0215
Award Year End: June 30, 2010
Specific Requirement: Allowable Costs/Cost Principles
Criteria: The cost principle of OMB Circular A-87 requires, “…Where employees are expected to work
solely on a single federal award or cost objective, charges for their salaries and wages will be supported by
periodic certifications that the employees worked solely on that program for the period covered by the
certification. These certifications will be prepared at least semi-annually and will be signed by the employee
or supervisory official having first hand knowledge of the work performed by the employee. …Where
employees work on multiple activities or cost objectives, a distribution of their salaries or wages will be
supported by personnel activity reports or equivalent documentation. Personnel activity reports must be
prepared at least monthly and must coincide with one or more pay periods and they must be signed by the
employee.”
Condition: During our detailed testing, we noted that none of the employees whose wages and benefits were
charged to either grant had proper time and effort documentation.
Questioned Costs: $140,316 and $19,647 for CDBG Entitlement Grant Cluster and Home Investment
Partnership Program, respectively, which represents the portion of salaries and benefits charged to the grants
for all employees who did not have adequate documentation.
Context: None of the employees, for which personnel activity reports or semi-annual certifications were
required, had adequate documentation.
Effect: The salaries and benefits charged to the CDBG Entitlement Grant Cluster and Home Investment
Partnership Program could be disallowed.
Cause: The City became aware of time documentation requirements during the six month period under
audit, but did not fully implement the requirements.
Recommendation: The City should require all employees, who fall under OMB Circular A-87 requirements
for documenting time charged to federal award programs, to prepare the required documentation.
Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. The City
recognizes this federal requirement and has put in place procedures to better document employee time
allocations.
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CLIENT DOCUMENTS
147
City of Muskegon
933 Terrace Street
Muskegon, MI 49440
Phone: (231) 724-6709
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
November 5, 2010
U.S. Department of Housing and Urban Development
Washington, D.C.
The City of Muskegon respectfully submits the following summary of the current status of prior audit
findings contained in the single audit report for the year ended December 31, 2009 dated April 5, 2010.
SECTION II – FINANCIAL STATEMENT FINDINGS
2009 Finding No. 1: MATERIAL WEAKNESS—Grant Revenue Recognition Procedures
Condition: Grant revenues were not properly recorded which caused grant revenues and receivables to be
misstated as of the year end.
Recommendation: Year end procedures for reconciling grant receivables and associated revenues should
be improved.
Current Status: The City implemented this recommendation during the period under audit. No similar
finding was reported for the single audit for the six months ended June 30, 2010.
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U.S. Department of Housing and Urban Development
November 5, 2010
Page 2
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
U.S. Department of Housing and Urban Development
2009 Finding No. 2: Community Development Block Grant
CFDA: 14.218
Award Number: B-08-MC-26-0026, B-09-MC-0026, NSP-2008-0280-ENT
Award Year End: December 31, 2009
Lead-Based Paint Hazard Control in Privately-Owned Housing Grant
CFDA: 14.900
Award Number: FR-5100-N-20A
Award Year End: December 31, 2009
Specific Requirement: Allowable Costs/Cost Principles
Condition: During our detailed testing, we noted that none of the employees whose wages and benefits
were charged to either grant had proper time and effort documentation.
Recommendation: The City should require all employees, who fall under OMB Circular A-87 requirements
for documenting time charged to federal award programs, to prepare the required documentation.
City Response: See Finding 2010-1 in the Schedule of Findings and Responses for the six months ended
June 30, 2010 for a similar finding reported.
Sincerely,
Timothy J. Paul
Finance Director
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City of Muskegon
933 Terrace Street
Muskegon, MI 49440
Phone: (231) 724-6709
CORRECTIVE ACTION PLAN
November 5, 2010
U.S. Department of Housing and Urban Development
Washington, D.C.
The City of Muskegon respectfully submits the following Corrective Action Plan for the year ended June 30,
2010.
Name and address of independent public accounting firm:
Brickley DeLong, P.C.
P.O. Box 999
Muskegon, Michigan 49443
Audit period: June 30, 2010
The finding from the Schedule of Findings and Responses for the six months ended June 30, 2010 is
discussed below. The finding is numbered consistently with the numbers assigned in the schedule.
SECTION II – FINANCIAL STATEMENT FINDINGS
There were no findings in relation to the financial statements.
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U.S. Department of Housing and Urban Development
November 5, 2010
Page 2
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
U.S. Department of Housing and Urban Development
Finding 2010-1: CDBG Entitlement Grant Cluster
CFDA: 14.218 and 14.253
Award Number: B-09-MC-26-0026, B-09-MY-26-0215, NSP-2008-0280-ENT
Award Year End: June 30, 2010
Home Investment Partnership Program
CFDA: 14.239
Award Number: M-09-MC-26-0215
Award Year End: June 30, 2010
Specific Requirement: Allowable Costs/Cost Principles
Recommendation: The City should require all employees, who fall under OMB Circular A-87
requirements for documenting time charged to federal award programs, to prepare the required
documentation.
Action Taken: The City recognizes this federal requirement and has put in place procedures to
better document employee time allocation.
If the U.S. Department of Housing and Urban Development has questions regarding this plan, please call
Timothy J. Paul at (231) 724-6709.
Sincerely,
Timothy J. Paul
Finance Director
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