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City of Muskegon,
Michigan
Comprehensive Annual
Financial Report
For The Fiscal Year Ended June 30, 2014
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CITY OF MUSKEGON,
MICHIGAN
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
JUNE 30, 2014
Prepared By
FINANCIAL SERVICES DIVISION
Derrick Smith James Maurer
Director of Finance Information Systems Director
Elizabeth Lewis Kathy Coleman
Assistant Finance Director Finance & Payroll Coordinator
Kenneth Grant
City Treasurer/Income Tax Administrator
Cover Photo: Farmers Market Clock
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City of Muskegon
TABLE OF CONTENTS
INTRODUCTORY SECTION
Letter of Transmittal .................................................................................................................................. 5
Certificate of Achievement for Excellence in Financial Reporting ......................................................... 11
Organization Chart ................................................................................................................................... 12
List of Principal Officials......................................................................................................................... 13
FINANCIAL SECTION
Independent Auditors’ Report.................................................................................................................. 17
Management’s Discussion and Analysis.................................................................................................. 20
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Position .................................................................................................................. 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 Position ................................................................................................. 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 Position............................................................................................................... 40
Statement of Revenues, Expenses and Changes in Net Position ................................................... 41
Statement of Cash Flows ................................................................................................................ 42
Fiduciary Funds
Statement of Fiduciary Assets and Liabilities ................................................................................ 43
Component Units
Statement of Net Position .................................................................................................................. 44
Statement of Activities ...................................................................................................................... 45
Notes to Financial Statements .............................................................................................................. 46
Required Supplementary Information
Budgetary Comparison Schedule—General Fund ................................................................................ 72
Budgetary Comparison Schedule—Major Street and Trunkline Fund ................................................. 77
Schedule of Funding Progress .............................................................................................................. 78
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City of Muskegon
TABLE OF CONTENTS
Other Supplemental Information
Other Governmental Funds
Description of Other Governmental Funds ....................................................................................... 80
Combining Balance Sheet ................................................................................................................. 82
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances ................................................................................................................................ 83
Other Special Revenue Funds
Combining Balance Sheet .............................................................................................................. 84
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances ............................................................................................................................. 85
Budgetary Comparison Schedule—Other Special Revenue Funds ............................................... 86
Other Capital Projects Funds
Combining Balance Sheet .............................................................................................................. 88
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances (Deficits)............................................................................................................. 89
Internal Service Funds
Description of Internal Service Funds ............................................................................................... 91
Combining Statement of Net Position ............................................................................................... 92
Combining Statement of Revenues, Expenses and
Changes in Fund Net Position ........................................................................................................ 93
Combining Statement of Cash Flows ................................................................................................ 94
Fiduciary Funds
Description of Fiduciary Funds ......................................................................................................... 95
Agency Funds
Combining Statement of Assets and Liabilities ............................................................................. 96
Statement of Changes in Assets and Liabilities ............................................................................. 97
Component Units
Description of Component Units ....................................................................................................... 99
Combining Balance Sheet ............................................................................................................... 100
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Position ................................................................................................... 101
Combining Statement of Revenues, Expenditures and Changes
in Fund Balances (Deficits) .......................................................................................................... 102
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures and Changes in Fund Balances (Deficits) to the Statement
of Activities .................................................................................................................................. 103
Schedule of Indebtedness ................................................................................................................... 105
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City of Muskegon
TABLE OF CONTENTS
STATISTICAL SECTION
Financial Trends
Net Assets/Net Position by Component.............................................................................................. 110
Changes in Net Assets/Net Position ................................................................................................... 111
Fund Balances of Governmental Funds .............................................................................................. 113
Changes in Fund Balances of Governmental Funds ........................................................................... 114
Revenue Capacity
Governmental Activities Revenues by Source ................................................................................... 115
Taxable, Assessed and Equalized and Estimated Actual Valuation of Property ................................ 116
Principal Property Taxpayers ............................................................................................................. 117
Property Tax Rates – Direct and Overlapping Government Units ..................................................... 118
Property Tax Levies and Collections .................................................................................................. 119
Segmented Data on Income Tax Filers, Rates and Liability .............................................................. 120
Debt Capacity
Ratio of Outstanding Debt by Type .................................................................................................... 121
Direct and Overlapping Debt .............................................................................................................. 122
Legal Debt Margin Information.......................................................................................................... 123
Revenue Bond Coverage .................................................................................................................... 124
Demographic and Economic Information
Demographic and Economic Statistics ............................................................................................... 125
Principal Employers............................................................................................................................ 126
Operation Information
Full-time Equivalent Government Employees ................................................................................... 127
Operating Indicators by Function/Program ........................................................................................ 128
Capital Asset Statistics by Function/Program .................................................................................... 129
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 ..................................................................................................... 132
Independent Auditors’ Report on Compliance for Each Major
Program and on Internal Control over Compliance Required by
OMB Circular A-133 ...................................................................................................................... 134
Schedule of Expenditures of Federal Awards ...................................................................................... 136
Notes to Schedule of Expenditures of Federal Awards ....................................................................... 138
Schedule of Findings and Responses ................................................................................................... 139
Client Documents
Summary Schedule of Prior Audit Findings ................................................................................... 142
Corrective Action Plan .................................................................................................................... 143
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Affirmative
Action
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Cemetery
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City Manager
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October 17, 2014
Civil Service
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Clerk
(231)724-6705 To the Honorable Mayor, Members of the City Commission and Citizens of the City of
FAX (231)724- Muskegon:
4178
Comm. &
Neigh. Services
(231)724-6717 State law requires that every general purpose local government publish, within six months
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of the close of each fiscal year, a complete set of audited financial statements. This report
is published to fulfill that requirement for the fiscal year ended June 30, 2014.
Finance
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FAX (231)724- Management assumes full responsibility for the completeness and reliability of the
6768
information contained in this report, based upon a comprehensive framework of internal
Fire Department control that it has established for this purpose. Because the cost of internal control should
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FAX (231)724- not exceed anticipated benefits, the objective is to provide reasonable, rather than
6985
absolute, assurance that the financial statements are free of any material misstatements.
Income Tax
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FAX (231)724- Brickley Delong, PC, Certified Public Accountants, have issued an unmodified (“clean”)
6768 opinion on the City of Muskegon’s financial statements for the year ended June 30, 2014.
Inspection The independent auditor’s report is located at the front of the financial section of this
Services
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report.
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Management’s discussion and analysis (MD&A) immediately follows the independent
Leisure Services
(231)724-6704 auditor’s report and provides a narrative introduction, overview, and analysis of the basic
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financial statements. MD&A complements this letter of transmittal and should be read in
conjunction with it.
Mayor’s Office
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Planning/Zoning
(231)724-6702 Profile of the government
FAX (231)724-
6790 The City of Muskegon operates under a commission-manager form of government and
Police provides a full range of traditional municipal services. Policy-making and legislative
Department authority are vested in the governing board (Commission) consisting of the mayor and six
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FAX (231)722- commissioners. Two commissioners are elected at large and each of the four ward
5140 commissioners is elected by the voters of their respective wards. Commission members
Public Works serve four-year terms, with the two at large members elected every four years in odd
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FAX (231)722- years and the four ward commissioners elected every four years in even years. The
4188 Mayor is also elected for a four-year term. The Mayor and Commission appoint the City of
Treasurer Muskegon’s manager.
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City of Muskegon, 933 Terrace Street, P.O. Box 536, Muskegon, MI 49443-0536
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The City of Muskegon provides a full range of services, including police and fire protection; solid waste
collection; parks and recreation activities; the construction and maintenance of streets and roadways;
street snowplowing; traffic control; building inspections; licenses and permits; water distribution and
sewer disposal services; community development; and general administrative support services. The
City also provides treated water to several surrounding communities.
The Commission is required to adopt an initial budget for the fiscal year no later than the last regular
meeting in June preceding the beginning of the fiscal year on July 1. This annual budget serves as the
foundation for the City of Muskegon’s financial planning and control. The budget is prepared by fund,
function (e.g., public safety), and department (e.g., police). The City Manager and department heads
may transfer resources within a department as they see fit. Transfers between departments, however,
need special approval from the Commission.
Local economy
The City of Muskegon is located in Western Michigan on the shores of Lake Michigan. The City covers
eighteen square miles and, with a 2010 census population of 38,401, 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 Metropolitan Statistical Area (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. 2014 marks the ferry service’s eleventh 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 the Bike Time festival which attracts motorcycle enthusiasts to the City
each July, the Unity Christian Music Festival in August and Irish Fest in September.
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
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lumber barons, Charles H. Hackley and Thomas Hume, proudly display the glory of the Victorian
age. The Fire Barn Museum takes visitors back to a 1890’s 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
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.
Muskegon has a diverse local economy. The manufacturing sector is strong in the areas of aerospace,
chemicals, plastics, defense, 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. Even though these institutions are exempt from paying property taxes, local income tax
withholdings remitted by these employers provide stability to City finances.
Consumers Energy, the City’s largest property taxpayer, has announced it plans to close its sixty-five
year-old B.C. Cobb electric generating facility in spring 2016 due to age, federal pollution regulations
and slowing electric demand. The closure will have a significant impact on City revenues and municipal
operations. The City is actively planning longer-term strategies to deal with the scheduled closure of
the plant.
On a more positive note, the local economy has seen improvement as reflected in higher employment
levels. According to the September 2014 Business Outlook prepared by the W.E. Upjohn Institute for
Employment Research:
“The area’s economic indicators are positive, suggesting job growth will return next quarter. While
county employment by place of work declined, employment by place of residency inched up this
quarter, suggesting Muskegon residents are finding work outside the county. The unemployment
rate dropped half a point to 7.2 from 7.7 percent. This is exactly in line with the drop of 1.5 points
over the previous three quarters; the unemployment rate from the second quarter of 2013 was 9.2
percent.”
The City fully recognizes the magnitude of financial challenges it faces due to the pending loss of its
largest property tax payer. We have positioned ourselves to be in as strong position as possible to face
this challenge: the City’s General Fund balance has never been healthier, pension and retiree
healthcare costs are under control and debt levels are moderate.
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Long-term financial planning and major initiatives
Unrestricted fund balance (the total of the assigned and unassigned components of fund balance) in the
general fund at year end was 30 percent of total general fund revenues. This amount was well above
the policy guidelines set by the Commission for budgetary and planning purposes (i.e., 13% of total
actual general fund revenues for the preceding year). Adequate fund balances are maintained to allow
the City to continue providing services to the community in case of unexpected emergencies or
requirements and/or economic downturns.
The City incorporates a five-year fiscal forecast into its yearly budget process. The forecast is a
macro-level projection of major revenue sources, expenses and fund balances, taking into account
identifiable factors, recent trends and management’s judgment as to future developments.
The current five-year forecast is focused on the projected financial impact from the announced closure
of the B.C Cobb electric generation facility. As noted earlier, this facility is the City’s single largest
taxpayer and is scheduled to close in the spring of 2016. The City is actively planning for the revenue
loss that will accompany this closure and has already made numerous budget adjustments to ensure
that high-quality municipal services will continue to be provided.
Among the City's major initiatives and accomplishments in fiscal year 2013-14 were the following:
Construction was completed on the new $4 million Farmers’ Market facility in downtown
Muskegon. The new market was open for business in spring 2014, anchoring a key entrance
into the downtown area. The facility was financed through private donations and grants and will
soon be deeded to the City, who is responsible for its operation. The first season of operations of
the new facility has drawn significantly increased crowds to the market;
Under a development agreement with the City, Harris Hospitality Group opened The Deck, a
food and entertainment facility at Pere Marquette beach, in June 2014;
The City applied for and received a grant from the State of Michigan to demolish the former
Bluffton Elementary School building. With the demolition now being complete, this highly-
desirable residential area property has the potential to bring a number of high-end homes to the
City’s west side. The City continues work to encourage Muskegon Public Schools to require a
development plan for the site as part of any potential sale;
The City entered into an agreement with Heritage Square Townhomes Development with the
owner to build and sell two townhomes using a City investment not to exceed $500,000. The
$500,000 investment will be returned to the City upon the sale of the two townhomes;
The City entered into an agreement with SAFEbuilt of Michigan, Inc. to provide rental program
and environmental code compliance services to the City of Muskegon. It is anticipated that the
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contract will save the City on costs associated with the rental program and environmental code
compliance services;
The City was successful in reaching agreements with several of its bargaining units. This gives
the City some means of stability in projecting labor costs for the next few years.
Relevant financial policies
The City of Muskegon has adopted a comprehensive set of financial policies used to ensure adequate
protection of the City’s assets from loss, theft, or misuse, and provide adequate accounting data to
allow for preparation of financial statements in conformity with generally accepted accounting principles.
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.
Awards and Acknowledgements
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 (CAFR) for the fiscal year ended June 30, 2013. This was the
twenty-eighth consecutive year that the government has achieved this prestigious award. In order to be
awarded a Certificate of Achievement, the government had to publish an easily readable and efficiently
organized CAFR that satisfied both generally accepted accounting principles and applicable program
requirements.
A Certificate of Achievement for Excellence in Financial Reporting is valid for a period of one year only.
However, we believe our current CAFR continues to meet the Certificate of Achievement for Excellence
in Financial Reporting Program’s requirements, and we are submitting it to the GFOA to determine its
eligibility for another certificate.
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The preparation of this report would not have been possible without the skill, effort, and dedication of
the staff of the Financial Services Division. We wish to thank all City departments for their assistance in
providing the data necessary to prepare this report. Credit is also due the mayor and the Commission
for their unfailing support for maintaining the highest standards of professionalism in the management
of the City of Muskegon’s finances.
Respectfully submitted,
Frank Peterson Derrick Smith
City Manager Finance Director
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CITY OF MUSKEGON
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COMPREHENSIVE ANNUAL FINANCIAL REPORT
CITY OF MUSKEGON, MICHIGAN
LIST OF PRINCIPAL OFFICIALS
June 30, 2014
ELECTED OFFICIALS
Mayor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stephen J. Gawron
At Large
Vice Mayor-Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lawrence O. Spataro
Ward 3
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Eric Hood
Ward 1
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Willie German
Ward 2
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Byron Turnquist
Ward 4
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ken Johnson
At Large
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Dan Rinsema-Sybenga
At Large
APPOINTED OFFICIALS
City Manager. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Frank Peterson
City Attorney. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . John C. Schrier
Director of Finance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derrick Smith
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FINANCIAL SECTION
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BRICKLEY DELONG
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS’ REPORT
October 17, 2014
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, Michigan as of and for the year ended June 30, 2014, and the related notes
to the financial statements, which collectively comprise the City's basic financial statements as listed in the table
of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America. This includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in the United States of America and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no
such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
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Grand Rapids, MI 49504 Muskegon, MI 49443 Hart, MI 49420
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www.brickleydelong.com
17
BRICKLEY DELONG
City Commission
October 17, 2014
Page 2
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,
Michigan, as of June 30, 2014, and the respective changes in financial position and, where applicable, cash flows
thereof for the year then ended in accordance with accounting principles generally accepted in the United States
of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis, budgetary comparison information, and schedule of funding progress on pages 20
through 32 and 72 through 78 be presented to supplement the basic financial statements. Such information,
although not a part of the basic financial statements, is required by the Governmental Accounting Standards
Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in
an appropriate operational, economic, or historical context. We have applied certain limited procedures to the
required supplementary information in accordance with auditing standards generally accepted in the United States
of America, which consisted of inquiries of management about the methods of preparing the information and
comparing the information for consistency with management’s responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements. We do not
express an opinion or provide any assurance on the information because the limited procedures do not provide us
with sufficient evidence to express an opinion or provide any assurance.
Other Supplemental Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City of Muskegon's basic financial statements. 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 basic financial statements. The 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 basic financial statements.
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BRICKLEY DELONG
City Commission
October 17, 2014
Page 3
Other Matters—Continued
Other Supplemental Information—Continued
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
records used to prepare the basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and certain additional procedures, including
comparing and reconciling such information directly to the underlying accounting and other records used to
prepare the basic financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of America. In our
opinion, the 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 fairly stated in
all material respects in relation to the basic 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.
Muskegon, Michigan
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2014 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,
2014. Please read it in conjunction with the City’s financial statements, which follow this
section.
FINANCIAL HIGHLIGHTS
The assets of the City of Muskegon exceeded its liabilities by $128,908,638 as of
June 30, 2014. Of the City’s total net position, $21,188,945 (16.4%) was
unrestricted and may be used to meet the City’s ongoing obligations to citizens
and creditors.
The City’s total combined net position decreased by $1,930,031 during the year
ended June 30, 2014.
The City’s governmental funds reported combined ending fund balance of
$12,987,232, a decrease of $668,826 (4.9%) from the prior year.
The City’s General Fund reported a total fund balance of $7,496,097, an increase
of $142,539 from the prior year balance of $7,353,558. The favorable increase is
the result of slightly higher than anticipated income taxes, licenses and permit fees
revenues and tight budget controls.
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.
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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
of net position includes all of the government’s assets/deferred outflows of resources
and liabilities/deferred inflows of resources. 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 position and how they have
changed. Net position—the difference between the City’s assets/deferred outflows of
resources and liabilities/deferred inflow of resources—is one way to measure the City’s
overall financial health or position. Over time, increases or decreases in the City’s net
position 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 public
representation services, administrative services, financial services, public safety, public
21
works, highways, streets and bridges, community and economic development, culture
and recreation, general administration, 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.
Proprietary funds—Services for which the City charges customers a fee and are
intended to be self-supporting are generally reported in proprietary funds. The
City uses three proprietary funds: water, sewer, and marina and launch ramp.
Proprietary funds, like the government-wide statements, provide both long-term
and short-term financial information.
The City uses 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 position
and a statement of changes in fiduciary net position. We exclude these activities
from the City’s government-wide financial statements because the City cannot use
these assets to finance its operations.
22
• Component units – Finally, the City of Muskegon’s Comprehensive Annual
Financial report includes five 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 1 and BRA 2). 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 position. The Statement of Net Position provides an overview of the City’s
assets/deferred outflows of resources, liabilities/deferred inflow of resources and net
position. Over time this can provide a good indicator of the City’s fiscal health. The total
net position of the City was $128,908,638 as of June 30, 2014. This is a decrease of
$1,930,031 from reported net position for the prior year. An overview of the City’s net
position follows:
City's Net Position
(In Thousands of Dollars)
Governmental Business-Type
Activities Activities Total Percentage
6/30/2014 6/30/2013 6/30/2014 6/30/2013 6/30/2014 6/30/2013 Change
Current and other assets $20,248 $21,670 $10,038 $10,227 $30,286 $31,897 -5.05%
Capital assets 70,798 71,311 52,026 54,014 122,824 125,325 -2.00%
Total Assets 91,046 92,981 62,064 64,241 153,110 157,222 -2.62%
Long-term liabilities 7,572 7,940 11,441 12,790 19,013 20,730 -8.28%
Other liabilities 2,907 3,326 2,281 2,327 5,188 5,653 -8.23%
Total Liabilities 10,479 11,266 13,722 15,117 24,201 26,383 -8.27%
Net Position
Net investment in capital assets 63,731 63,842 39,365 40,033 103,096 103,875 -0.75%
Restricted 4,024 4,573 600 599 4,624 5,172 -10.59%
Unrestricted 12,812 13,300 8,377 8,492 21,189 21,792 -2.77%
Total Net Position $80,567 $81,715 $48,342 $49,124 $128,909 $130,839 -1.48%
The bulk of the City’s net position ($103,096,298 or 80%) represents investments in
capital assets net of accumulated depreciation, less the remaining balance of debt
issued to acquire those assets. These infrastructure assets are used to provide public
services to citizens and are not available for spending.
Another 4.0% ($4,623,395) of the City’s net position are legally restricted as to use.
Unrestricted net position ($21,188,945) represents assets that may be used to meet the
City’s operating needs and ongoing obligations. The City’s unrestricted net position
decreased ($602,426) during the year.
23
Changes in net position. The City’s total revenues were $44,012,045 for the year
ended June 30, 2014. This represents a 1.3% increase over total revenues collected
during the prior fiscal year. About 41% of the City’s revenue stream came from charges
to users of specific services such as water or sewer. Another 11% came from grants
from the state and federal governments and 34% 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 year ended June 30, 2014 was
$45,942,076. This represents a 2% increase from reported expenses for the last fiscal
year ended June 30, 2013. 69% of the City’s expenses were for governmental activities
such as police and fire protection, streets, parks, and general administration. The
remaining 31% represents the costs of the City’s business-type activities, specifically,
water, sewer and marina operations.
The table on the following page (Changes in City’s Net Position) further breaks down
the change in total net position into period-to-period changes in individual revenue and
expense categories.
As can be seen, net position for governmental activities decreased $1,147,461 while net
position for business-type activities decreased by $782,570. These changes represent
the impact of the City enduring a sluggish economic recovery while being faced with
higher costs along with demographic and fiscal realities.
24
Changes in City’s Net Position
(In thousands of dollars)
Governmental Business-Type
Activities Activities Total Percentage
6/30/2014 6/30/2013 6/30/2014 6/30/2013 6/30/2014 6/30/2013 Change
Program revenues
Charges for services $5,007 $4,651 $12,962 $13,183 $17,969 $17,834 0.76%
Operating grants and contributions 4,664 4,681 - 6 4,664 4,687 -0.49%
Capital grants and contributions 1,408 886 327 88 1,735 974 78.13%
General revenues
Property taxes 7,383 7,593 - - 7,383 7,593 -2.77%
Income taxes 7,763 8,057 - - 7,763 8,057 -3.65%
State shared revenues 3,813 3,701 - - 3,813 3,701 3.03%
All other 654 580 31 33 685 613 11.75%
Total revenues 30,692 30,149 13,320 13,310 44,012 43,459 1.27%
Governmental activities expenses
Public representation 1,030 894 - - 1,030 894 15.21%
Administrative services 544 565 - - 544 565 -3.72%
Financial services 2,171 2,241 - - 2,171 2,241 -3.12%
Public safety 12,947 12,988 - - 12,947 12,988 -0.32%
Public w orks 3,361 3,202 - - 3,361 3,202 4.97%
Highw ays, streets and bridges 7,053 6,672 - - 7,053 6,672 5.71%
Community and economic development 2,418 2,499 - - 2,418 2,499 -3.24%
Culture and recreation 1,671 1,593 - - 1,671 1,593 4.90%
General administration 368 322 - - 368 322 14.29%
Interest on long-term debt 277 292 - - 277 292 -5.14%
Business-type activities expenses
Sew er - - 7,582 7,227 7,582 7,227 4.91%
Water - - 6,016 6,229 6,016 6,229 -3.42%
Marina and Launch Ramp - - 504 426 504 426 18.31%
Total expenses 31,840 31,268 14,102 13,882 45,942 45,150 1.75%
Change in net position (1,148) (1,119) (782) (572) (1,930) (1,691) 14.13%
Net position at beginning of year 81,715 82,834 49,124 49,696 130,839 132,530 -1.28%
Net position at end of year $80,567 $81,715 $48,342 $49,124 $128,909 $130,839 -1.48%
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 year ended June 30,
2014 was $31,839,285.
• The net cost that City taxpayers paid for these activities through local property
taxes and income taxes was $15,145,955, or about 48% 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.
25
Business-Type Activities
The financial goal of the City’s business-type activities (i.e. water, sewer and marina
and launch ramp operations) is to operate on a self-supporting basis without making
significant profit or needing general tax subsidies. For the fiscal year ended June 30,
2014, the City’s total business-type activities realized an overall decrease in net position
of $782,570.
Sewer Fund net position decreased $760,650 primarily as result of an increase in
County wastewater treatment rates. The Water Fund saw a net position increase of
$121,972. This is primarily attributable to a water rate increase of 10% that was
effective October 1, 2013. Marina and Launch Ramp Fund net position decreased
$65,165 due to dredging costs incurred to keep launch ramps accessible.
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 year ended June 30, 2014
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.
26
The City changed its fiscal year transitioning with a six-month fiscal period ended June
30, 2010. This change resulted in a large one-time increase to the General Fund fund
balance due to the fact that annual property taxes are collected in full during this period.
For the year ended June 30, 2014, General Fund revenues were $502,874 higher than
the final amended budget estimate. This variance is primarily due to higher than
expected local income tax and licenses and permits revenues.
General Fund expenditures were $562,197 lower than projected in the final amended
budget. Most 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.
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. For the year ended June 30, 2014, the fund balance of the Major
Street and Trunkline Fund decreased $800,762 which is attributable to the scheduled
use of fund balance reserves for street projects as well as additional maintenance costs
due to harsh winter season.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
As of June 30, 2014, the City and its component units had invested $122,824,111 in a
variety of capital assets, including land, streets, equipment, buildings, water and sewer
lines, and vehicles. This is a decrease of $2,500,424 from capital assets reported as of
June 30, 2013. The decrease is due to normal depreciation of assets offset by current
year additions. Note D of the notes to the basic financial statements provides detailed
information on the City’s capital asset investment.
27
Long-Term Debt
Bond Ratings
At June 30, 2014, the City had $20,968,122 in bonds and
The City’s limited full faith and
other long-term obligations outstanding. This represents a credit bonds (bonds guaranteed
7.3% decrease from the prior year. The City did not issue by the City’s taxing powers) are
any new debt during the fiscal year. rated “A+” by Standard & Poor’s.
The City’s Water System
revenue bonds carry the “AA-“
Additional information concerning the City’s long-term debt S&P rating.
is presented in Note F to the basic financial statements.
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 $6,282,300 at year-end as shown in the table below. This represents a
decrease of 8.5% from the prior year.
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
F to the basic financial statements and is summarized as follows:
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ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The City’s fiscal year 2014-15 capital budget anticipates spending $7,460,000 for capital
projects, consisting of street improvements, water and sewer system improvements,
and scheduled equipment replacements. These improvements will be funded by
anticipated grants ($3,921,000) and revenues generated from operations. No new debt
issuance is anticipated.
From an operating standpoint, the City’s 2014-15 budget will be relatively stable while
the City is attempting to maintain a healthy fund balance and plan for and address long
term financial challenges:
The full-time personnel complement will be increased from 227 positions to 228
positions for a net gain of 1.
With the previous success of outsourcing building and trade inspection functions
to SAFEbuilt, environmental and rental registration services have now also been
contracted out, resulting in the reduction of three full-time positions.
One clerical position to be shared between the manager’s office and planning
department has been added.
Three career firefighter positions were added with a reduction in contractual
services for part-time firefighters.
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.
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 increased 4.3% from $7,506,472 for the year ended June 30,
2013 to $7,831,423 for the year ended June 30, 2014. For 2014-15, the City has
estimated income tax revenue to be $7,650,000.
29
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 2014-15, the City tax levy will be at 10 mills for general operations and 3 mills for
sanitation service. We project that $7,199,000 in total property tax revenue will be
collected during fiscal year 2014-15.
In December 2012, the State approved a complicated plan leading to elimination of
personal property taxes over the next several years. Successful implementation of the
plan required several steps to be taken including passage of a statewide referendum in
August 2014, which was approved by the voters. If everything goes according to the
State’s plan, the City estimates a loss of personal property tax revenue of approximately
$70,000 annually. The complexity of the issue will require continued monitoring by the
City.
It should be noted that several significant property tax appeals are pending. The impact
of these appeals on City finances is being monitored closely.
State Shared Revenues
State shared sales tax revenues represent about 16% 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 non-
constitutional component is determined by a complex formula and is subject to
adjustment through the State’s annual budget process. Both components depend, of
course, on overall state sales tax collections. The City’s recent state shared revenue
history is summarized below:
30
Erosion of state shared revenues (both from economic factors and from legislative
action) constitutes a major on-going concern for City finances.
For 2014-15, the City projects $4,072,893 in state shared revenues.
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 been more stable than general state sales tax state-shared revenues
have been:
The State is considering a major overhaul of the transportation funding system.
However, at this time, the City is not projecting any significant change in street revenues
for fiscal year 2014-15.
Water and Sewer Fees
From a government-wide entity perspective, combined water and sewer fees represent
one of the City’s largest income streams, totaling $12,333,404 during the year ended
June 30, 2014. Charges to customers are based on the amount of metered services
used times rates periodically set by the City Commission. Water rates are currently
planned to remain unchanged. The City will begin providing treated water to the City of
Norton Shores and Fruitport Charter Township in May 2015. The addition of these two
new large municipal customers will allow the spreading of water treatment costs over a
larger customer base while remaining well within the plant’s rated treatment capacity.
31
Sewer rates may need to be increased during the year, however, depending on the
impact of Muskegon of County’s increase in its wastewater treatment charges.
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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FINANCIAL STATEMENTS
33
City of Muskegon
STATEMENT OF NET POSITION
June 30, 2014
Governmental Business-type Component
Activities Activities Total Units
ASSETS
Current assets
Cash and investments $ 13,926,593 $ 5,770,359 $ 19,696,952 $ 253,633
Receivables 2,245,240 1,904,085 4,149,325 -
Due from other governmental units 1,588,056 312,338 1,900,394 -
Internal balances (1,238,850) 1,238,850 - -
Inventories 13,102 118,348 131,450 -
Prepaid items 595,294 94,972 690,266 -
Total current assets 17,129,435 9,438,952 26,568,387 253,633
Noncurrent assets
Restricted cash and investments - 599,500 599,500 -
Advances to component units 1,447,632 - 1,447,632 -
Special assessments receivable, less amounts due within one year 106,292 - 106,292 -
Notes receivable, less amounts due within one year 117,558 - 117,558 -
Net pension asset 1,446,253 - 1,446,253 -
Capital assets, net
Nondepreciable 13,970,727 1,218,736 15,189,463 400,000
Depreciable 56,827,613 50,807,035 107,634,648 1,971,066
Total noncurrent assets 73,916,075 52,625,271 126,541,346 2,371,066
Total assets 91,045,510 62,064,223 153,109,733 2,624,699
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities 2,177,520 310,004 2,487,524 24,166
Due to other governmental units 47,386 619,093 666,479 -
Unearned revenues - unused Farmers Market tokens 39,709 - 39,709 -
Unearned revenues - expenditure-driven grants 39,261 - 39,261 -
Bonds and other obligations, due within one year 602,600 1,352,200 1,954,800 605,000
Total current liabilities 2,906,476 2,281,297 5,187,773 629,166
Noncurrent liabilities
Advances from primary government - - - 1,447,632
Bonds and other obligations, less amounts due within one year 7,572,032 11,441,290 19,013,322 5,677,300
Total noncurrent liabilities 7,572,032 11,441,290 19,013,322 7,124,932
Total liabilities 10,478,508 13,722,587 24,201,095 7,754,098
NET POSITION
Net investment in capital assets 63,731,255 39,365,043 103,096,298 (1,666,458)
Restricted
Highways, streets and bridges 2,348,446 - 2,348,446 -
Debt service - 599,500 599,500 -
Law enforcement 189,410 - 189,410 -
Perpetual care
Expendable 45,685 - 45,685 -
Non-expendable 1,439,198 - 1,439,198 -
Other purposes 1,156 - 1,156 -
Unrestricted 12,811,852 8,377,093 21,188,945 (3,462,941)
Total net position $ 80,567,002 $ 48,341,636 $ 128,908,638 $ (5,129,399)
The accompanying notes are an integral part of this statement.
34
City of Muskegon
STATEMENT OF ACTIVITIES
For the year ended June 30, 2014
Net (Expense) Revenue and Changes in Net Position
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 $ 1,030,006 $ 189,444 $ - $ - $ (840,562) $ - $ (840,562) $ -
Administrative services 543,425 325,937 25,000 - (192,488) - (192,488) -
Financial services 2,171,958 871,632 50,000 - (1,250,326) - (1,250,326) -
Public safety 12,946,466 1,407,722 97,882 97,339 (11,343,523) - (11,343,523) -
Public works 3,361,422 796,739 - 1,697 (2,562,986) - (2,562,986) -
Highways, streets and bridges 7,053,326 351,962 3,395,966 1,012,949 (2,292,449) - (2,292,449) -
Community and economic development 2,417,518 477,486 1,082,697 296,439 (560,896) - (560,896) -
Culture and recreation 1,671,185 535,211 12,553 - (1,123,421) - (1,123,421) -
General administration 366,634 50,728 - - (315,906) - (315,906) -
Interest on long-term debt 277,345 - - - (277,345) - (277,345) -
Total governmental activities 31,839,285 5,006,861 4,664,098 1,408,424 (20,759,902) - (20,759,902) -
Business-type activities
Sewer 7,582,602 6,633,911 - 118,946 - (829,745) (829,745) -
Water 6,016,192 6,099,480 - - - 83,288 83,288 -
Marina and Ramp 503,997 228,339 - 208,294 - (67,364) (67,364) -
35
Total business-type activities 14,102,791 12,961,730 - 327,240 - (813,821) (813,821) -
Total primary government $ 45,942,076 $ 17,968,591 $ 4,664,098 $ 1,735,664 (20,759,902) (813,821) (21,573,723) -
Component units
Local Development Finance Authority - SmartZone $ 259,033 $ - $ - $ 260,000 - - - 967
Downtown Development Authority 47,125 - - - - - - (47,125)
Tax Increment Finance Authority 50,000 - - - - - - (50,000)
Brownfield Redevelopment Authority I 49,685 - - - - - - (49,685)
Brownfield Redevelopment Authority II 79,922 - - - - - - (79,922)
Total component units $ 485,765 $ - $ - $ 260,000 - - - (225,765)
General revenues
Property taxes 7,383,236 - 7,383,236 638,632
Income taxes 7,762,719 - 7,762,719 -
Cable franchise agreement 358,754 - 358,754 -
Grants and contributions not restricted to specific programs 3,813,221 - 3,813,221 -
Unrestricted investment earnings 146,590 31,251 177,841 1,684
Miscellaneous 124,085 - 124,085 -
Gain on sale of capital asset 23,836 - 23,836 -
Total general revenues 19,612,441 31,251 19,643,692 640,316
Change in net position (1,147,461) (782,570) (1,930,031) 414,551
Net position at July 1, 2013 81,714,463 49,124,206 130,838,669 (5,543,950)
Net position at June 30, 2014 $ 80,567,002 $ 48,341,636 $ 128,908,638 $ (5,129,399)
The accompanying notes are an integral part of this statement.
City of Muskegon
BALANCE SHEET
Governmental Funds
June 30, 2014
Major Street Other Total
General and Trunkline Governmental Governmental
Fund Fund Funds Funds
ASSETS
Cash and investments $ 6,350,162 $ 959,516 $ 3,657,636 $ 10,967,314
Receivables
Accounts and loans 183,009 439 219,921 403,369
Property taxes 79,411 - - 79,411
Income taxes 1,606,223 - - 1,606,223
Special assessments - 163,646 105,647 269,293
Due from other governmental units 657,622 427,388 503,046 1,588,056
Due from other funds 466,012 - - 466,012
Advances to component units - - 482,544 482,544
Prepaid items 290,952 16,838 4,461 312,251
Total assets $ 9,633,391 $ 1,567,827 $ 4,973,255 $ 16,174,473
LIABILITIES
Accounts payable $ 1,161,229 $ 44,709 $ 202,351 $ 1,408,289
Accrued liabilities 221,199 6,550 9,958 237,707
Due to other governmental units 35,157 - - 35,157
Due to other funds - - 466,012 466,012
Unearned revenues - unused Farmers Market tokens 39,709 - - 39,709
Unearned revenues - expenditure-driven grants - - 39,262 39,262
Total liabilities 1,457,294 51,259 717,583 2,226,136
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - income taxes 680,000 - - 680,000
Unavailable revenues - special assessments - 163,646 105,750 269,396
Unavailable revenues - other long-term receivables - - 11,709 11,709
Total deferred inflows of resources 680,000 163,646 117,459 961,105
FUND BALANCES
Nonspendable
Prepaid items 290,952 16,838 4,461 312,251
Long-term loans receivable - - 105,850 105,850
Perpetual care 10,000 - 1,429,198 1,439,198
Restricted
Highways, streets and bridges - 1,336,084 733,050 2,069,134
Law enforcement - - 189,410 189,410
Perpetual care - - 45,685 45,685
Other purposes - - 1,156 1,156
Assigned for capital projects and public improvements 1,700,000 - 1,729,457 3,429,457
Unassigned 5,495,145 - (100,054) 5,395,091
Total fund balances 7,496,097 1,352,922 4,138,213 12,987,232
Total liabilities, deferred inflows of
resources and fund balances $ 9,633,391 $ 1,567,827 $ 4,973,255 $ 16,174,473
The accompanying notes are an integral part of this statement.
36
City of Muskegon
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION
June 30, 2014
Total fund balance—governmental funds $ 12,987,232
Amounts reported for governmental activities in the Statement of Net Position
are different because:
The net pension asset is not an available resource and, therefore, is not
reported in the governmental funds. 1,446,253
Capital assets used in governmental activities are not current financial
resources and, therefore, are not reported in the governmental funds.
Cost of capital assets $ 133,934,383
Accumulated depreciation (65,436,703) 68,497,680
Other long-term assets are not available to pay for current period
expenditures and, therefore, are reported as unavailable revenues
in the governmental funds.
Income taxes 680,000
Special assessments 269,396
Other long-term receivables 11,709 961,105
Long-term liabilities in governmental activities are not due and payable in the
current period and, therefore, are not reported in the governmental funds.
Accrued interest payable (59,073)
Bonds and notes payable (7,067,085)
Compensated absences (1,024,715) (8,150,873)
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 Position.
Net position of the internal service funds 6,064,455
Internal balances representing the cumulative difference between
actual costs and amounts charged to business-type activities (1,238,850) 4,825,605
Net position of governmental activities $ 80,567,002
The accompanying notes are an integral part of this statement.
37
City of Muskegon
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
Governmental Funds
For the year ended June 30, 2014
Major Street Other Total
General and Trunkline Governmental Governmental
Fund Fund Funds Funds
REVENUES
Taxes $ 14,954,904 $ - $ - $ 14,954,904
Licenses and permits 1,570,137 - - 1,570,137
Intergovernmental revenues
Federal 83,324 1,005,475 1,075,697 2,164,496
State 3,827,778 2,795,957 1,106,834 7,730,569
Local 50,000 - - 50,000
Charges for services 2,219,898 59,696 289,741 2,569,335
Fines and forfeitures 402,748 - 15,943 418,691
Interest and rental income 290,234 16,390 45,529 352,153
Other 561,735 94,237 259,371 915,343
Total revenues 23,960,758 3,971,755 2,793,115 30,725,628
EXPENDITURES
Current
Public representation services 1,031,984 - - 1,031,984
Administrative services 497,025 - - 497,025
Financial services 2,197,651 - - 2,197,651
Public safety 12,987,898 - - 12,987,898
Public works 2,918,305 - - 2,918,305
Highways, streets and bridges - 4,540,103 1,380,304 5,920,407
Community and economic development 1,171,291 - - 1,171,291
Culture and recreation 1,308,151 - 330 1,308,481
Other governmental functions 643,666 - - 643,666
Debt service
Principal 70,000 180,000 152,492 402,492
Interest and fees 206,257 52,414 19,741 278,412
Capital outlay 20,980 - 2,164,703 2,185,683
Total expenditures 23,053,208 4,772,517 3,717,570 31,543,295
Excess of revenues over (under) expenditures 907,550 (800,762) (924,455) (817,667)
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets - - 176,887 176,887
Transfers in 3,035 - 740,000 743,035
Transfers out (768,046) - (3,035) (771,081)
Total other financing sources (uses) (765,011) - 913,852 148,841
Net change in fund balances 142,539 (800,762) (10,603) (668,826)
Fund balances at July 1, 2013 7,353,558 2,153,684 4,148,816 13,656,058
Fund balances at June 30, 2014 $ 7,496,097 $ 1,352,922 $ 4,138,213 $ 12,987,232
The accompanying notes are an integral part of this statement.
38
City of Muskegon
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
For the year ended June 30, 2014
Net change in fund balances—total governmental funds $ (668,826)
Amounts reported for governmental activities in the Statement of Activities are
different because:
Governmental funds report outlays for capital assets as expenditures. However,
in the Statement of Activities, the cost of these assets is allocated over their
estimated useful lives and reported as depreciation expense.
Depreciation expense $ (4,522,425)
Capital outlay 3,577,837 (944,588)
In the Statement of Activities, only the gain or loss on the sale of capital
assets is reported. However, in the governmental funds, the proceeds
from the sale increase financial resources. Thus, the change in net
position differs from the change in fund balance by the remaining
undepreciated cost of the capital assets sold. (36,550)
Revenues reported in the Statement of Activities that do not provide current
financial resources are not reported as revenues in the governmental funds. (466,618)
The issuance of long-term debt provides current financial resources to
governmental funds, but increases liabilities in the Statement of Net Position.
Repayment of debt is an expenditure in the governmental funds, but reduces
long-term liabilities in the Statement of Net Position.
Repayment of principal on long-term debt 402,492
Changes in accrual of interest and amortization of premiums and discounts
Change in accrued interest payable 1,981
Amortization of premiums and discounts (914) 1,067
Some expenses reported in the Statement of Activities do not require the use
of current financial resources and, therefore, are not reported as expenditures
in the governmental funds.
Change in net pension asset 452,960
Change in compensated absences (53,906) 399,054
The internal service funds are used by management to charge the costs of
certain activities used to individual funds. The net revenue of certain activities
of the internal service fund is reported with governmental activities.
Change in net position of the internal service funds 87,781
Change in internal balances representing the current year difference
between actual costs and amounts charged to business-type activities 78,727 166,508
Change in net position of governmental activities $ (1,147,461)
The accompanying notes are an integral part of this statement.
39
City of Muskegon
STATEMENT OF NET POSITION
Proprietary Funds
June 30, 2014
Governmental
Activities -
Business-type Activities - Enterprise Funds Internal
Marina and Service
Sewer Water Ramp Total Funds
ASSETS
Current assets
Cash and investments $ 3,545,607 $ 2,057,111 $ 167,641 $ 5,770,359 $ 2,959,277
Accounts receivable 902,555 989,305 12,225 1,904,085 110,796
Due from other governmental units 118,946 38,955 154,437 312,338 -
Inventories 27,743 90,605 - 118,348 13,102
Prepaid items 40,957 51,929 2,086 94,972 283,043
Total current assets 4,635,808 3,227,905 336,389 8,200,102 3,366,218
Noncurrent assets
Restricted cash and investments - 599,500 - 599,500 -
Advances to component units - - - - 965,088
Capital assets
Land 16,188 103,500 22,562 142,250 65,000
Land improvements - - 1,888,965 1,888,965 301,715
Buildings, improvements and systems 21,201,158 66,334,692 2,322,488 89,858,338 1,559,334
Machinery and equipment 83,643 2,842,951 - 2,926,594 8,046,959
Construction in progress 112,125 964,361 - 1,076,486 -
Less accumulated depreciation (8,858,011) (32,320,137) (2,688,714) (43,866,862) (7,672,348)
Net capital assets 12,555,103 37,925,367 1,545,301 52,025,771 2,300,660
Total noncurrent assets 12,555,103 38,524,867 1,545,301 52,625,271 3,265,748
Total assets 17,190,911 41,752,772 1,881,690 60,825,373 6,631,966
LIABILITIES
Current liabilities
Accounts payable 94,455 92,381 20,098 206,934 450,762
Accrued liabilities 8,822 93,893 355 103,070 21,688
Due to other governmental units 619,093 - - 619,093 12,229
Bonds and other obligations, due within one year 7,300 1,344,600 300 1,352,200 13,800
Total current liabilities 729,670 1,530,874 20,753 2,281,297 498,479
Noncurrent liabilities
Bonds and other obligations, less amounts due within one year 36,263 11,403,796 1,231 11,441,290 69,032
Total liabilities 765,933 12,934,670 21,984 13,722,587 567,511
NET POSITION
Net investment in capital assets 12,555,103 25,264,639 1,545,301 39,365,043 2,300,660
Restricted for debt service - 599,500 - 599,500 -
Unrestricted 3,869,875 2,953,963 314,405 7,138,243 3,763,795
Total net position $ 16,424,978 $ 28,818,102 $ 1,859,706 47,102,786 $ 6,064,455
Adjustment to report the cumulative internal balance for the net effect of the activity
between the internal service funds and the enterprise funds over time 1,238,850
Net position of business-type activities $ 48,341,636
The accompanying notes are an integral part of this statement.
40
City of Muskegon
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
Proprietary Funds
For the year ended June 30, 2014
Governmental
Activities -
Business-type Activities - Enterprise Funds Internal
Marina and Service
Sewer Water Ramp Total Funds
OPERATING REVENUES
Charges for services $ 6,501,812 $ 5,831,592 $ 217,563 $ 12,550,967 $ 8,004,495
Other 132,099 267,888 10,776 410,763 451,733
Total operating revenues 6,633,911 6,099,480 228,339 12,961,730 8,456,228
OPERATING EXPENSES
Administration 291,653 516,566 3,632 811,851 362,748
Insurance premiums and claims - - - - 4,133,641
Wastewater treatment 5,679,994 - - 5,679,994 -
Wastewater maintenance 1,124,966 - - 1,124,966 -
Filtration plant operations - 1,368,868 - 1,368,868 -
Water distribution - 1,626,043 - 1,626,043 -
Other operations - - 385,807 385,807 3,679,073
Depreciation 437,278 2,154,685 113,562 2,705,525 394,955
Total operating expenses 7,533,891 5,666,162 503,001 13,703,054 8,570,417
Operating income (loss) (899,980) 433,318 (274,662) (741,324) (114,189)
NONOPERATING REVENUES (EXPENSES)
Investment earnings 20,384 9,664 1,203 31,251 47,070
Gain on sale of capital assets - - - - 29,515
Interest expense - (321,010) - (321,010) -
Total nonoperating revenue (expenses) 20,384 (311,346) 1,203 (289,759) 76,585
Income (loss) before contributions and transfers (879,596) 121,972 (273,459) (1,031,083) (37,604)
CAPITAL CONTRIBUTIONS AND TRANSFERS
Capital contributions 118,946 - 208,294 327,240 97,339
Transfers in - - - - 28,046
Total capital contributions and transfers 118,946 - 208,294 327,240 125,385
Change in net position (760,650) 121,972 (65,165) (703,843) 87,781
Net position at July 1, 2013 17,185,628 28,696,130 1,924,871 5,976,674
Net position at June 30, 2014 $ 16,424,978 $ 28,818,102 $ 1,859,706 $ 6,064,455
Adjustment for the net effect of the current year activity between
the internal service funds and the enterprise funds (78,727)
Change in net position of business-type activities $ (782,570)
The accompanying notes are an integral part of this statement.
41
City of Muskegon
STATEMENT OF CASH FLOWS
Proprietary Funds
For the year ended June 30, 2014
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 $ 6,575,626 $ 5,898,314 $ 144,594 $ 12,618,534 $ 427,118
Receipts from interfund services provided 11,820 122,814 - 134,634 8,004,495
Payments to suppliers (6,049,627) (1,731,979) (363,218) (8,144,824) (5,846,737)
Payments to employees (420,094) (1,248,729) (19,756) (1,688,579) (1,415,596)
Payments for interfund services used (479,006) (722,908) (9,483) (1,211,397) (881,360)
Net cash provided by (used for) operating activities (361,281) 2,317,512 (247,863) 1,708,368 287,920
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers in - - - - 28,046
Advances to component units - - - - 71,930
Net cash provided by noncapital financing activities - - - - 99,976
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Capital contributions 118,946 - 208,294 327,240 97,339
Purchases of capital assets (391,411) (326,105) - (717,516) (865,955)
Principal paid on capital debt - (1,295,000) - (1,295,000) -
Interest paid on capital debt - (352,634) - (352,634) -
Proceeds from sale of capital assets - - - - 31,792
Net cash provided by (used for) capital and related financing activities (272,465) (1,973,739) 208,294 (2,037,910) (736,824)
CASH FLOW FROM INVESTING ACTIVITIES
Investment earnings 20,384 9,664 1,203 31,251 47,070
Net increase (decrease) in cash and investments (613,362) 353,437 (38,366) (298,291) (301,858)
Cash and investments July 1, 2013 4,158,969 2,303,174 206,007 6,668,150 3,261,135
Cash and investments at June 30, 2014 $ 3,545,607 $ 2,656,611 $ 167,641 $ 6,369,859 $ 2,959,277
Reconciliation of cash and investments to the Statement of Net Position
Cash and investments $ 3,545,607 $ 2,057,111 $ 167,641 $ 5,770,359 $ 2,959,277
Restricted cash and investments - 599,500 - 599,500 -
$ 3,545,607 $ 2,656,611 $ 167,641 $ 6,369,859 $ 2,959,277
Reconciliation of operating income (loss) to net cash provided by (used for)
operating activities
Operating income (loss) $ (899,980) $ 433,318 $ (274,662) $ (741,324) $ (114,189)
Adjustments to reconcile operating income (loss) to net cash provided by
(used for) operating activities
Depreciation expense 437,278 2,154,685 113,562 2,705,525 394,955
Bad debt expense 24,535 18,376 - 42,911 -
Change in assets and liabilities
Receivables (71,000) (96,728) (83,745) (251,473) (24,615)
Inventories 7,648 8,536 - 16,184 7,475
Prepaid items 891 2,810 169 3,870 103,772
Accounts payable 137,905 (215,384) (3,569) (81,048) (82,045)
Accrued liabilities 1,442 11,899 382 13,723 2,567
Net cash provided by (used for) operating activities $ (361,281) $ 2,317,512 $ (247,863) $ 1,708,368 $ 287,920
The accompanying notes are an integral part of this statement.
42
City of Muskegon
STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES
Fiduciary Funds
June 30, 2014
Agency
Funds
ASSETS
Cash and investments $ 395,193
Accounts receivable 1,867
Total assets $ 397,060
LIABILITIES
Accounts payable $ 96,463
Due to other governmental units 245,855
Deposits held for others 54,742
Total liabilities $ 397,060
The accompanying notes are an integral part of this statement.
43
City of Muskegon
STATEMENT OF NET POSITION
Discretely Presented Component Units
June 30, 2014
Local
Development Tax
Finance Downtown Increment Brownfield Brownfield
Authority - Development Finance Redevelopment Redevelopment
SmartZone Authority Authority Authority I Authority II Total
ASSETS
Current assets
Cash and investments $ 42,847 $ 93,778 $ 829 $ 116,179 $ - $ 253,633
Noncurrent assets
Capital assets, net
Nondepreciable 400,000 - - - - 400,000
Depreciable 1,971,066 - - - - 1,971,066
Total noncurrent assets 2,371,066 - - - - 2,371,066
Total assets 2,413,913 93,778 829 116,179 - 2,624,699
LIABILITIES
Current liabilities
Accrued liabilities 20,450 3,716 - - - 24,166
Bonds and other obligations, due within one year 320,000 285,000 - - - 605,000
Total current liabilities 340,450 288,716 - - - 629,166
Noncurrent liabilities
Advances from primary government - - - 1,447,632 - 1,447,632
Bonds and other obligations, less amounts due
within one year 3,717,524 1,959,776 - - - 5,677,300
Total noncurrent liabilities 3,717,524 1,959,776 - 1,447,632 - 7,124,932
Total liabilities 4,057,974 2,248,492 - 1,447,632 - 7,754,098
NET POSITION
Net investment in capital assets (1,666,458) - - - - (1,666,458)
Unrestricted 22,397 (2,154,714) 829 (1,331,453) - (3,462,941)
Total net position $ (1,644,061) $ (2,154,714) $ 829 $ (1,331,453) $ - $ (5,129,399)
The accompanying notes are an integral part of this statement.
44
City of Muskegon
STATEMENT OF ACTIVITIES
Discretely Presented Component Units
For the year ended June 30, 2014
Program
Revenue Net (Expense) Revenue and Changes in Net Position
Local
Development Tax
Capital Finance Downtown Increment Brownfield Brownfield
Grants and Authority - Development Finance Redevelopment Redevelopment
Functions/Programs Expenses Contributions SmartZone Authority Authority Authority I Authority II Total
Local Development Finance Authority - SmartZone
Community and economic development $ 172,648 $ - $ (172,648) $ - $ - $ - $ - $ (172,648)
Interest on long-term debt 86,385 260,000 173,615 - - - - 173,615
Total Local Development Finance Authority - SmartZone 259,033 260,000 967 - - - - 967
Downtown Development Authority
Interest on long-term debt 47,125 - - (47,125) - - - (47,125)
Tax Increment Finance Authority
Community and economic development 50,000 - - - (50,000) - - (50,000)
Brownfield Redevelopment Authority I
Interest on long-term debt 49,685 - - - - (49,685) - (49,685)
45
Brownfield Redevelopment Authority II
Community and economic development 79,922 - - - - - (79,922) (79,922)
Total discretely presented component units $ 485,765 $ 260,000 967 (47,125) (50,000) (49,685) (79,922) (225,765)
General revenues
Property taxes 137,742 257,660 36,624 126,684 79,922 638,632
Unrestricted investment income 139 928 42 575 - 1,684
Total general revenues 137,881 258,588 36,666 127,259 79,922 640,316
Change in net position 138,848 211,463 (13,334) 77,574 - 414,551
Net position at July 1, 2013 (1,782,909) (2,366,177) 14,163 (1,409,027) - (5,543,950)
Net position at June 30, 2014 $ (1,644,061) $ (2,154,714) $ 829 $ (1,331,453) $ - $ (5,129,399)
The accompanying notes are an integral part of this statement.
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
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.
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 City and its component units, entities for which the government is considered
to be financially accountable. Blended component units, are, in substance, part of the primary government's
operations, even though they are legally separate entities. Thus, blended component units are appropriately
presented as funds of the primary government. 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 City.
Discretely Presented Component Units
Downtown Development Authority (DDA). The DDA’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 TIFA’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 (SmartZone).
Currently only the SmartZone is active. 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.
Brownfield Redevelopment Authority (BRA). There are two separate designated areas under the aegis of the
BRA – the Betten-Henry Street site and former downtown mall site. 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 areas are presented as governmental fund types.
46
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Reporting Entity—Continued
Discretely Presented Component Units—Continued
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, 2014, 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, 2012, the date
of its latest audited financial statements is as follows:
Total assets $ 5,121,807
Total liabilities (187,464)
Total net assets $ 4,934,343
Total operating income $ 1,360,098
Total operating expenses (1,874,034)
Total nonoperating revenues 2,951
Capital contributions 11,915
Change in net assets $ (499,070)
47
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Basis of Presentation—Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities)
report information on all of the nonfiduciary activities of the primary government and its component units.
All fiduciary activities are reported only in the fund financial statements. Governmental activities, which
normally are supported by taxes, intergovernmental revenues, and other nonexchange transactions, are
reported separately from business-type activities, which rely to a significant extent on fees and charges to
external customers for support. Likewise, the primary government is reported separately from certain legally
separate component units for which the primary government is financially accountable.
While separate government-wide and fund financial statements are presented, they are interrelated. The
governmental activities column incorporates data from governmental funds and internal service funds, while
business-type activities incorporate data from the City’s enterprise funds. 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.
As discussed earlier, the City’s discretely presented component units are reported in a separate column in the
government-wide financial statements.
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 where the amounts are reasonably
equivalent in value to the interfund services provided and other charges between the City's water and sewer
functions 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.
The fund financial statements provide information about the City’s funds, including its fiduciary funds and
blended component units. Separate statements for each fund category – governmental, proprietary, and
fiduciary – are presented. The emphasis of fund financial statements is on major governmental and enterprise
funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated
and reported as nonmajor funds. Major individual governmental and enterprise funds are reported as separate
columns in the fund financial statements.
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.
48
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Basis of Presentation—Government-wide and Fund Financial Statements—Continued
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 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.
During the course of operations the City has activity between funds for various purposes. Any residual
balances outstanding at year-end are reported as due from/to other funds and advances to/from other funds.
While these balances are reported in fund financial statements, certain eliminations are made in the
preparation of the government-wide financial statements. Balances between funds included in governmental
activities (i.e., the governmental and internal service funds) are eliminated so that only the net amount is
included as internal balances in the governmental activities column. Similarly, balances between the funds
included in business-type activities (i.e., enterprise funds) are eliminated so that only the net amount is
included as internal balances in the business-type activities column.
Further, certain activity occurs during the year involving transfers of resources between funds. In fund
financial statements these amounts are reported at gross amounts as transfers in/out. While reported in fund
financial statements, certain eliminations are made in the preparation of the government-wide financial
statements. Transfers between the funds included in governmental activities are eliminated so that only the
net amount is included as transfers in the governmental activities column. Similarly, balances between funds
included in business-type activities are eliminated so that only the net amount is included as transfers in the
business-type activities column.
Measurement Focus and Basis of Accounting
The accounting and financial reporting treatment is determined by the applicable measurement focus and
basis of accounting. Measurement focus indicates the type of resources being measured such as current
financial resources or economic resources. The basis of accounting indicates the timing of transactions or
events for recognition in the financial statements.
49
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Measurement Focus and Basis of Accounting—Continued
The government-wide financial statements are reported using the economic resources measurement focus and
the accrual basis of accounting. 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.
The 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 City
considers revenues to be available if they are collected within 60 days of the end of the current fiscal period.
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. General capital asset acquisitions are reported as expenditures in
governmental funds. Issuance of long-term debt and acquisitions under capital leases are reported as other
financing sources.
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. Entitlements are recorded as revenues when all eligibility requirements are met, including any time
requirements, and the amount is received during the period or within the availability period for this revenue
source (within 60 days of year-end). Expenditure-driven grants are recognized as revenue when the
qualifying expenditures have been incurred and all other eligibility requirements have been met. Only the
portion of special assessments receivable 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.
The proprietary funds are reported using the economic resources measurement focus and the accrual basis of
accounting. The agency fund has no measurement focus but utilizes the accrual basis of accounting for
reporting its assets and liabilities.
Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance
Cash 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.
Investments for the City are reported at fair value (generally based on quoted market prices).
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.
50
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance—Continued
Cash and Investments—Continued
The component unit’s cash and investments are maintained within the City’s investment pool.
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.
Inventories and Prepaid Items
All inventories are valued at cost using the first-in/first-out (FIFO) method. The cost of such inventories is
recorded as expenses when consumed rather than when purchased in the business-type activities.
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. The cost of prepaid items is recorded as
expenditures/expenses when consumed rather than when purchased.
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 column
in the government-wide financial statements. Capital assets are defined by the City as assets with an initial,
individual cost of more than $10,000 and an estimated useful life in excess of two years.
In the case of 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.
As the City constructs or acquires additional capital assets each period, including infrastructure assets, they
are capitalized and reported at historical cost. The reported value excludes normal maintenance and repairs
which are essentially amounts spent in relation to capital assets that do not increase the capacity or efficiency
of the item or increase its estimated useful life. Donated capital assets are recorded at their estimated fair
value at the date of donation.
Interest incurred during the construction phase of capital assets of enterprise funds is included as part of the
capitalized value of the assets constructed. The amount of interest capitalized depends on the specific
circumstances.
Land and construction in progress are not depreciated. The other property, plant, equipment, and
infrastructure of the City are depreciated using the straight-line method over the following estimated useful
lives:
51
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance—Continued
Capital Assets—Continued
Capital Asset Classes Years
Land improvements 5-25
Leasehold improvements 10-25
Buildings and improvements 25-50
Utility buildings, improvements and systems 40-100
Furniture, vehicles and equipment 5-20
Infrastructure 15-50
Shared improvements 20
Deferred Outflows/Inflows of Resources
In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred
outflows of resources. This separate financial statement element, deferred outflows of resources, represents a
consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of
resources (expense/expenditures) until then.
In addition to liabilities, the Statement of Net Position will sometimes report a separate section for deferred
inflows of resources. This separate financial statement element, deferred inflows of resources, represents an
acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of
resources (revenue) until that time.
Net Position Flow Assumption
Sometimes the government will fund outlays for a particular purpose from both restricted (e.g., restricted
bond or grant proceeds) and unrestricted resources. In order to calculate the amounts of net position to report
as restricted and unrestricted in the government-wide and proprietary fund financial statements, a flow
assumption must be made about the order in which the resources are considered to be applied. It is the City’s
policy to consider restricted net position to have been depleted before unrestricted net position is applied.
Fund Balance Flow Assumptions
Sometimes the City will fund outlays for a particular purpose from both restricted and unrestricted resources
(the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as
restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a
flow assumption must be made about the order in which the resources are considered to be applied. It is the
City’s policy to consider restricted fund balance to have been depleted before using any of the components of
unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the
same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund
balance is applied last.
Fund Balance Policies
Fund balance of governmental funds is reported in various categories based on the nature of any limitations
requiring the use of resources for specific purposes. The City itself can establish limitation on the use of
resources through either a commitment (committed fund balance) or an assignment (assigned fund balance).
52
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance—Continued
Fund Balance Policies—Continued
The committed fund balance classification includes amounts that can be used only for the specific purposes
determined by a formal action of the City’s highest level of decision-making authority. The City Commission
is the highest level of decision-making authority for the City that can, by adoption of a resolution prior to the
end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the resolution remains
in place until a similar action is taken (the adoption of another resolution) to remove or revise the limitation.
Amounts in the assigned fund balance classification are intended to be used by the City for specific purposes
but do not meet the criteria to be classified as committed. The City Commission has by resolution authorized
the city manager to assign fund balance. The City Commission may also assign fund balance as it does when
appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent
year’s appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other
words, an additional action does not normally have to be taken for the removal of an assignment. Conversely,
as discussed above, an additional action is essential to either remove or revise a commitment.
The City has a minimum fund balance policy requiring unassigned fund balance be at least 13 percent of prior
year actual revenues.
Revenues and Expenditures/Expenses
Program Revenues
Amounts reported as 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 (including special assessments) that are restricted to meeting the operational or capital
requirements of a particular function or segment. All taxes, including those dedicated for specific purposes,
and other internally dedicated resources are reported as general revenues rather than as program revenues.
Property Taxes
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 and liened on 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. Uncollected 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 of 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 2013 state taxable value for real/personal property of the City totaled approximately $586,848,000 of
which approximately $8,039,000 was captured by the component units. The ad valorem taxes levied
consisted of 9.5, 2.5 and .0865 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 SmartZone, DDA, BRA I, and BRA II component units.
53
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Revenues and Expenditures/Expenses—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.
Proprietary Funds Operating and Nonoperating Revenues and Expenses
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 enterprise
funds and internal service 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.
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 2013 financial statements have been reclassified to conform to the
2014 presentation.
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 special revenue funds.
The appropriated budget is prepared by fund, function and department. The City Manager and department
heads may make transfers of appropriations within a department. 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.
Appropriations in all budgeted funds lapse at the end of the fiscal year.
54
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE B—STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY—Continued
Excess of Expenditures Over Appropriations
During the year ended June 30, 2014, actual expenditures exceeded appropriations for:
Final
Budget Actual
General Fund
Public representation services
City attorney $ 342,000 $ 388,362
Public safety
Fire department 3,684,420 3,794,247
Fire safety inspections 563,435 588,172
Public works
Cemeteries maintenance 351,510 386,829
Major Street and Trunkline Fund
Highways, streets and bridges 4,484,024 4,540,103
These overexpenditures were funded with available fund balance.
Fund Deficits
As of June 30, 2014, the Neighborhood Stabilization Fund had an unassigned fund deficit of $100,054. The
deficit will be eliminated through future operations.
NOTE C—DEPOSITS AND INVESTMENTS
As of June 30, 2014, the City had the following investments:
Weighted
Average
Maturity
Fair value (Months) Moody's Percent
Investment Type
Money market funds $ 1,886,601 1 AAA 26.6 %
Negotiable certificates of deposit 250,300 23 not rated 3.5
US Agency obligations 4,951,138 113 AA+ 69.9
Total fair value $ 7,088,039 100.0 %
Portfolio weighted average maturity 80
55
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE C—DEPOSITS AND INVESTMENTS—Continued
Deposit and Investment Risks
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 percent of the City’s total
portfolio must be in instruments maturing in 30 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 percent each of the
total portfolio. More than 5 percent of the City’s investments are in various U.S. Agency obligations
including Financial Home Loan Mortgage Corporation, Federal Home Loan Bank System, Government
National Mortgage Association, and Federal National Mortgage Association obligations. These investments
are 33 percent, 21 percent, 9 percent and 7 percent, respectively, of the City’s investments.
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, 2014, $13,676,590 of the City’s bank balance of $14,176,590 was 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, 2014, restricted
cash and investments in the Water Fund of $599,500 were restricted by bond ordinance.
56
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE D—CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2014 was as follows:
Balance Balance
July 1, 2013 Additions Deductions June 30, 2014
Governmental activities:
Capital assets, not being depreciated:
Land $ 12,216,535 $ - $ 36,550 $ 12,179,985
Construction in progress 6,209,305 2,908,797 7,327,360 1,790,742
Total capital assets, not being depreciated 18,425,840 2,908,797 7,363,910 13,970,727
Capital assets, being depreciated:
Land improvements 4,356,868 87,508 - 4,444,376
Leasehold improvements 534,821 - - 534,821
Buildings and improvements 22,169,325 17,152 - 22,186,477
Furniture, vehicle and equipment 12,582,904 1,430,336 359,938 13,653,302
Infrastructure 76,213,428 6,969,451 - 83,182,879
Shared improvements 5,576,901 357,908 - 5,934,809
Total capital assets, being depreciated 121,434,247 8,862,355 359,938 129,936,664
Less accumulated depreciation:
Land improvements 1,154,009 147,924 - 1,301,933
Leasehold improvements 303,904 55,232 - 359,136
Buildings and improvements 14,972,602 489,946 - 15,462,548
Furniture, vehicle and equipment 10,308,787 497,632 357,661 10,448,758
Infrastructure 38,916,100 3,447,801 - 42,363,901
Shared improvements 2,893,930 278,845 - 3,172,775
Total accumulated depreciation 68,549,332 4,917,380 357,661 73,109,051
Total capital assets, being
depreciated, net 52,884,915 3,944,975 2,277 56,827,613
Capital assets, net $ 71,310,755 $ 6,853,772 $ 7,366,187 $ 70,798,340
Business-type activities:
Capital assets, not being depreciated:
Land $ 142,250 $ - $ - $ 142,250
Construction in progress 1,208,538 683,955 816,007 1,076,486
Total capital assets, not being depreciated 1,350,788 683,955 816,007 1,218,736
Capital assets, being depreciated:
Land improvements 1,888,965 - - 1,888,965
Buildings, improvements and systems 89,042,331 816,007 - 89,858,338
Machinery and equipment 2,893,033 33,561 - 2,926,594
Total capital assets, being depreciated 93,824,329 849,568 - 94,673,897
Less accumulated depreciation:
Land improvements 1,739,579 20,589 - 1,760,168
Buildings, improvements and systems 37,329,210 2,376,818 - 39,706,028
Machinery and equipment 2,092,548 308,118 - 2,400,666
Total accumulated depreciation 41,161,337 2,705,525 - 43,866,862
Total capital assets, being
depreciated, net 52,662,992 (1,855,957) - 50,807,035
Capital assets, net $ 54,013,780 $ (1,172,002) $ 816,007 $ 52,025,771
57
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE D—CAPITAL ASSETS—Continued
Depreciation
Depreciation expense was charged to functions as follows:
Governmental activities:
Adminstrative services $ 52,454
Financial services 32,299
Public safety 141,183
Public works 28,156
Highways, streets and bridges 3,849,227
Community and economic development 75,717
Culture and recreation 320,422
General administration 22,967
Internal Service Fund depreciation 394,955
$ 4,917,380
Business-type activities:
Sewer $ 437,278
Water 2,154,685
Marina and Launch Ramp 113,562
$ 2,705,525
Balance Balance
July 1, 2013 Additions Deductions June 30, 2014
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:
Building and improvements 1,654,544 172,648 - 1,827,192
Total capital assets, being
depreciated, net 2,143,714 (172,648) - 1,971,066
Capital assets, net $ 2,543,714 $ (172,648) $ - $ 2,371,066
Depreciation
Depreciation expense was charged to economic development.
58
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE E—INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
The composition of interfund balances as of June 30, 2014 is as follows:
Due To/From Other Funds:
Receivable Fund Payable Fund Amount
General Fund Community Development Block Grant Fund $ 347,099
General Fund State Grants Fund 20,076
General Fund Neighborhood Stabilization Fund 98,837
$ 466,012
The outstanding balances between funds result from the payable funds having negative positions in the City’s
cash and investment pool.
Component Unit Advance:
The Cemetery Perpetual Care Fund, Equipment Fund, and General Insurance Fund advanced the BRA I
$1,447,632 to enable the BRA I to retire a redevelopment commitment early. The advance will be repaid with
future tax captures.
Interfund Transfers:
Transfers In Amount Transfers Out Amount
Nonmajor Governmental Funds
General Fund $ 3,035 State Grants Fund $ 3,035
Nonmajor Governmental Funds
Local Street Fund 740,000 General Fund 740,000
Internal Service Funds
General Insurance Fund 28,046 General Fund 28,046
$ 771,081 $ 771,081
The General Fund transferred funds to the Local Street Fund to finance capital improvements. Other transfers
between funds were made to meet grant matching requirements or other operational needs.
59
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE F—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 year ended June 30, 2014.
Balance Balance Due Within
July 1, 2013 Additions Deductions June 30, 2014 One Year
Governmental activities:
General obligation debt $ 7,350,000 $ - $ 385,000 $ 6,965,000 $ 400,000
Discount (11,379) - (914) (10,465) -
Intergovernmental obligations 130,042 - 17,492 112,550 18,000
Compensated absences 1,053,389 1,300,910 1,246,752 1,107,547 184,600
Governmental activities
long-term liabilities $ 8,522,052 $ 1,300,910 $ 1,648,330 $ 8,174,632 $ 602,600
Business-type activities:
Revenue obligations $ 13,890,000 $ - $ 1,295,000 $ 12,595,000 $ 1,330,000
Premium 90,922 - 25,194 65,728 -
Compensated absences 124,160 156,648 148,046 132,762 22,200
Business-type activities
long-term liabilities $ 14,105,082 $ 156,648 $ 1,468,240 $ 12,793,490 $ 1,352,200
Component units:
Intergovernmental obligations $ 1,000,000 $ - $ - $ 1,000,000 $ -
General obligation debt 5,605,000 - 540,000 5,065,000 605,000
Premium 259,869 - 42,569 217,300 -
Component unit long-
term liabilities $ 6,864,869 $ - $ 582,569 $ 6,282,300 $ 605,000
General Obligation Debt
The City has issued general obligation debt to provide funds for the acquisition and construction of major
capital facilities. General obligation debt is a direct obligation and pledges the full faith and credit of the City.
This debt is generally issued as serial bonds with varying amounts of principal maturing each year. Certain
debt issued by the City’s component units is also backed by the full faith and credit of the City if there is a
shortfall in tax increment revenues. General obligation debt outstanding as of June 30, 2014 is as follows:
Original Date of
Borrowing Interest Rate Maturity Balance
General obligation debt:
Governmental activities:
2003 Capital Improvement Bonds $ 1,575,000 4% - 4.05% June 2016 $ 295,000
2006 Limited Tax General Obligation Bonds 5,400,000 4% - 4.2% October 2032 5,025,000
2011 Capital Improvement Bonds 2,000,000 2.98% September 2021 1,645,000
$ 6,965,000
Component units:
2011 DDA Tax Increment Refunding Bonds $ 2,045,000 3.25% - 4% June 2018 $ 1,225,000
2012 LDFA Tax Increment Refunding Bonds 4,100,000 2% - 4% November 2025 3,840,000
$ 5,065,000
60
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE F—LONG-TERM DEBT—Continued
General Obligation Debt—Continued
The LDFA Tax Increment Refunding Bonds 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 shortfalls, up to $75,000 annually. This commitment
extends through December 31, 2016.
Intergovernmental Obligations
The City has long-term contractual obligations with other governmental entities for program purposes.
Intergovernmental contractual obligations outstanding as of June 30, 2014 are as follows:
Original Date of
Borrowing Interest Rate Maturity Balance
Intergovernmental Contractual Obligations:
Governmental activities:
2008 State of Michigan Brownfield
Redevelopment Loan $ 500,000 2% March 2020 $ 112,550
Component units:
1989 DDA Promissory Note to
Muskegon County $ 1,000,000 0% August 2019 $ 1,000,000
Revenue Obligations
The City has issued bonds where the income derived from the acquired or constructed assets is pledged to pay
debt service. Revenue obligations outstanding as of June 30, 2014 are as follows:
Original Date of
Borrowing Interest Rate Maturity Balance
Business-type activities:
Revenue obligations:
2004 Drinking Water State Revolving Fund $ 13,900,000 2.13% October 2025 $ 9,030,000
2010 Water Supply System Refunding Bonds 5,995,000 3.5% - 4.25% May 2019 3,565,000
$ 12,595,000
The City has pledged future water customer revenues, net of specified operating expenses, to repay the 2004
Drinking Water State Revolving Fund Loan and 2010 Water Supply System Refunding Bonds. Proceeds
from both issuances were used to make improvements to the City’s water supply system. The bonds are
payable solely from water customer net revenues and are payable through 2025 and 2019, respectively.
Annual principal and interest payments on the bonds are expected to require less than 63 percent of net
revenues through 2019 and less than 33 percent after 2019 through 2025. The total principal and interest
remaining to be paid on the bonds is $14,228,990. Principal and interest paid for the year ended June 30,
2014 and total customer net revenues were $1,647,635 and $2,597,667, respectively.
The City was in compliance in all material respects with all the revenue bond ordinances at June 30, 2014.
61
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE F—LONG-TERM DEBT—Continued
For governmental activities, claims and judgments and compensated absences are generally liquidated by the
General Fund.
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, 2014 was approximately $4,428,000. The City is unaware of any
circumstances that would cause a shortfall in the near future.
Annual debt service requirements to maturity for debt outstanding as of June 30, 2014 follow:
Year Ending Governmental Activites Business-type Activities Component Units
June 30, Principal Interest Principal Interest Principal Interest
2015 $ 417,842 $ 263,136 $ 1,330,000 $ 320,857 $ 605,000 $ 164,088
2016 428,199 248,591 1,370,000 283,360 635,000 148,276
2017 283,563 233,616 1,405,000 246,434 655,000 129,251
2018 288,934 224,559 1,450,000 203,106 685,000 107,125
2019 299,313 215,271 1,495,000 158,259 375,000 81,100
2020-2024 2,234,699 828,692 3,880,000 386,433 2,550,000 202,550
2025-2029 1,725,000 468,333 1,665,000 35,541 560,000 16,950
2030-2033 1,400,000 117,425 - - - -
$ 7,077,550 $ 2,599,623 $ 12,595,000 $ 1,633,990 $ 6,065,000 $ 849,340
Annual debt service requirements to maturity by type of debt as of June 30, 2014 follow:
Revenue
General Obligation Debt Obligations Intergovernmental
Year Ending Governmental Component Business-type Governmental Component
June 30, Activities Units Activities Activities Units
2015 $ 660,885 $ 769,088 $ 1,650,857 $ 20,093 $ -
2016 656,697 783,276 1,653,360 20,093 -
2017 497,086 784,251 1,651,434 20,093 -
2018 493,400 792,125 1,653,106 20,093 -
2019 494,491 456,100 1,653,259 20,093 -
2020-2024 3,043,298 1,752,550 4,266,433 20,093 1,000,000
2025-2029 2,193,333 576,950 1,700,541 - -
2030-2033 1,517,425 - - - -
$ 9,556,615 $ 5,914,340 $ 14,228,990 $ 120,558 $ 1,000,000
62
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE G—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 2014 and 2013 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, 2014 $ 65,972 $ 67,645 $ 28,717 $ 104,900
June 30, 2013 124,721 70,391 129,140 65,972
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 up to
$500,000 per covered individual’s lifetime. As of June 30, 2014, the claims liability including incurred but
not reported claims was $47,960. 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 2014 and 2013
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, 2014 $ 12,005 $ 1,100,557 $ 1,064,602 $ 47,960
June 30, 2013 81,702 844,407 914,104 12,005
63
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE G—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.
Commitments
The City has various contract agreements for street projects as of June 30, 2014 of approximately $374,000.
The cost of the projects will be paid with available fund balance in the Major Street and Trunkline Fund. The
City also has various contract agreements for wastewater and storm water management plans and
improvements as of June 30, 2014 of approximately $2,000,000. The cost of these projects will be paid with
a grant in the Sewer Fund.
Leases
The City leases an office facility under a noncancelable operating lease that expires June 2017 with the option
by the tenant to renew the term of the lease for four successive periods of five years each. The City received
rental income (including pro-rata utility usage) of $46,782 for the year ended June 30, 2014. The future
minimum rental income for this lease is as follows:
Year Ending
June 30, Amount
2015 $ 34,202
2016 33,864
2017 33,841
$ 101,907
NOTE H—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
64
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE H—PENSION PLANS—Continued
Defined Benefit Pension Plan—Continued
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 5.11 to
16.09 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 the City depending on the MERS contribution
program adopted by the City.
Annual Pension Cost and Net Pension Asset
For the year ended June 30, 2014, the City’s annual pension cost was $1,024,745. Due to early funding in
prior years, the City’s required contribution was $977,705. The City’s actual contribution was $1,477,705.
The following table shows the components of the City’s annual pension cost for the year, the amount actually
contributed, and changes in the City’s net pension asset:
Annual required contribution $ 977,705
Interest on net pension asset (79,463)
Adjustment to annual required contribution 126,503
Annual pension cost 1,024,745
Contributions made 1,477,705
Increase in net pension asset 452,960
Net pension asset at beginning of year 993,293
Net pension asset at end of year $ 1,446,253
Trend Information
Percentage Net Pension
Annual Pension of APC Obligation
Year Ended Cost (APC) Contributed (Asset)
June 30, 2012 $ 1,161,996 100 % $ (996,641)
June 30, 2013 1,192,282 100 (993,293)
June 30, 2014 1,024,745 144 (1,446,253)
The required contribution was determined as part of the December 31, 2011 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 13 percent, and (c) 1
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 ten-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,
2011 was 17 years.
65
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE H—PENSION PLANS—Continued
Defined Benefit Pension Plan—Continued
Funding Status and Funding Progress
As of December 31, 2013, the most recent actuarial valuation date, the plan was 91 percent funded. The
actuarial accrued liability for benefits was approximately $98,938,000, and the actuarial value of assets was
approximately $90,200,000, resulting in an unfunded actuarial accrued liability (UAAL) of approximately
$8,738,000. The covered payroll (annual payroll of active employees covered by the plan) was approximately
$9,199,000, and the ratio of the UAAL to the covered payroll was 95 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.
Defined Contribution Pension Plan
The City also maintains a defined contribution plan offered by MERS. In a defined contribution plan,
benefits depend solely on amounts contributed to the plan plus investment earnings. 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
year ended June 30, 2014, City and employee contributions were approximately $209,000 and $116,000,
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. Payments from the deferred compensation plan are not available to
participants until termination, retirement, death, or unforeseeable emergency. Active participants are allowed
to borrow from their accumulated assets for limited purposes such as family education costs, medical costs, or
down payment for a new home. The City must approve program loans.
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).
66
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE I—OTHER POST-EMPLOYMENT BENEFITS
Retiree Healthcare Plan
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 3.82 to 7.44 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 depending on the benefits program adopted by the City.
Annual OPEB Cost
For the year ended June 30, 2014, the City’s OPEB cost (expense) of $696,634 was equal to the City’s ARC
and actual contribution.
Trend Information
Percentage of
Annual
Annual OPEB OPEB Cost Net OPEB
Year Ended Cost Contributed Obligation
June 30, 2012 $ 832,891 100 % $ -
June 30, 2013 728,863 100 -
June 30, 2014 696,634 100 -
67
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE I—OTHER POST-EMPLOYMENT BENEFITS—Continued
Retiree Healthcare Plan—Continued
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, 2011 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 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, 2011 is 26 years.
Funded Status and Progress
As of December 31, 2013, the most recent actuarial valuation date, the plan was 87 percent funded. The
actuarial accrued liability for benefits was approximately $21,102,000, and the actuarial value of assets was
approximately $18,261,000, resulting in an unfunded actuarial liability (UAAL) of approximately $2,841,000.
The covered payroll (annual payroll of active employees covered by the plan) was approximately
$10,005,000, and the ratio of the UAAL to the covered payroll was 28 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.
Healthcare Saving Plan
The City also maintains a defined contribution Health Care Savings Plan offered by MERS. In this plan,
post-employment healthcare benefits depend solely on amounts contributed to the plan plus investment
earnings. Depending on employee group, the Plan covers all City employees hired after January 2009 to
December 2012 in lieu of the traditional retiree healthcare 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 1 or 2 percent of
a qualified employees’ annual compensation each year depending on employee group. Qualified employees
are also required to contribute 1 or 2 percent of annual compensation. Additionally, some employees,
regardless of hire date, may make voluntary contributions to the HCSP. For the year ended June 30, 2014,
City and employee contributions were approximately $17,000 and $142,000, respectively.
68
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2014
NOTE J—SUBSEQUENT EVENTS
Subsequent to year-end, the City entered into contracts for street improvements of approximately $295,000.
The projects will be paid with available fund balance in the Local Street Fund.
NOTE K—UPCOMING ACCOUNTING PRONOUNCEMENT
GASB Statement 68—Accounting and Financial Reporting for Pensions was issued by the GASB in June
2012 and will be effective for the City’s 2015 fiscal year. The statement requires governments that participate
in defined benefit pension plans to report in their Statement of Net Position a net pension liability. The net
pension liability is the difference between the total pension liability (the present value of projected benefit
payments to employees based on their past service) and the assets (mostly investments reported at fair value)
set aside in a trust and restricted to paying benefits to current employees, retirees, and their beneficiaries.
69
70
REQUIRED SUPPLEMENTARY INFORMATION
71
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
General Fund
For the year ended June 30, 2014
(with comparative actual amounts for the year ended June 30, 2013)
2014 2013
Variance with
Final Budget-
Budgeted Amounts Positive
Original Final Actual (Negative) Actual
REVENUES
Taxes
City income taxes $ 7,600,000 $ 7,600,000 $ 7,831,423 $ 231,423 $ 7,506,472
Property taxes 6,859,131 6,896,169 6,938,304 42,135 7,171,122
Industrial facilities taxes 76,421 76,421 91,292 14,871 58,087
Payments in lieu of taxes 95,000 95,000 93,885 (1,115) 96,346
Delinquent chargeback collected 200 200 - (200) -
Total taxes 14,630,752 14,667,790 14,954,904 287,114 14,832,027
Licenses and permits
Business licenses 29,500 29,500 38,200 8,700 31,623
Liquor licenses 60,000 66,720 63,084 (3,636) 53,005
Cable TV fees 350,000 350,000 358,754 8,754 358,785
Rental property registration 168,000 131,000 196,269 65,269 163,300
Burial permits 110,000 110,000 89,459 (20,541) 89,170
Building permits 255,000 460,000 488,041 28,041 278,166
Electrical permits 82,000 90,000 108,657 18,657 67,128
Plumbing permits 31,000 45,000 48,221 3,221 26,519
Mechanical permits 60,000 65,000 72,051 7,051 62,305
Vacant building fees 100,000 100,000 105,751 5,751 108,284
Police gun registration - 2,500 1,650 (850) -
Total licenses and permits 1,245,500 1,449,720 1,570,137 120,417 1,238,285
Intergovernmental revenues
Federal grants 42,675 83,324 83,324 - 117,324
State
Grants 15,000 15,000 14,557 (443) 13,819
State shared revenue 3,776,201 3,806,443 3,813,221 6,778 3,700,871
Total intergovernmental revenues - State 3,791,201 3,821,443 3,827,778 6,335 3,714,690
Local 50,000 50,000 50,000 - 50,000
72
City of Muskegon
BUDGETARY COMPARISON SCHEDULE—CONTINUED
General Fund
For the year ended June 30, 2014
(with comparative actual amounts for the year ended June 30, 2013)
2014 2013
Variance with
Final Budget-
Budgeted Amounts Positive
Original Final Actual (Negative) Actual
Charges for services
Tax administration fees $ 245,300 $ 245,300 $ 259,755 $ 14,455 $ 267,293
Utility administration fees 250,000 250,000 250,000 - 250,000
Reimbursement for elections 15,500 13,300 13,341 41 329
Brownfield authority admin fee 79,249 79,249 79,922 673 52,995
Indirect cost reimbursements 984,445 984,445 983,104 (1,341) 1,171,536
Site plan review fee 3,500 3,500 2,700 (800) 3,600
Sale of cemetery lots 26,000 26,000 28,817 2,817 33,207
Police miscellaneous 69,525 87,525 109,104 21,579 92,624
Police impound fees 42,000 37,000 34,700 (2,300) 38,844
Fire protection-state property 84,970 82,500 82,526 26 117,776
Zoning fees 11,000 11,000 12,515 1,515 11,164
Muskegon Heights zoning - 1,600 2,958 1,358 -
Clerk fees 2,800 2,800 2,445 (355) 2,827
Clerk fees - passport fees 3,500 4,800 5,565 765 4,160
Tax abatement application fees 6,000 6,000 750 (5,250) 5,904
Treasurer fees 65,000 60,000 62,639 2,639 58,648
False alarm fees 13,000 10,000 14,220 4,220 5,265
Miscellaneous cemetery income 20,000 20,000 16,288 (3,712) 17,369
Senior transit program fees - - - - 8,382
Fire miscellaneous 2,200 6,500 10,191 3,691 2,843
Sanitation stickers 81,300 81,300 75,938 (5,362) 81,116
Lot cleanup fees 35,000 24,000 27,826 3,826 32,462
Reimbursements - lot mowing and demolitions 50,000 45,000 47,760 2,760 43,648
Special events reimbursements 75,000 75,000 90,233 15,233 66,596
Recreation program fees 6,500 6,500 6,601 101 6,667
Total charges for services 2,171,789 2,163,319 2,219,898 56,579 2,375,255
Fines and forfeitures
Income tax - penalty and interest 175,000 175,000 173,321 (1,679) 174,801
Late fees on current taxes 40,000 40,000 47,975 7,975 30,872
Interest on late invoices 2,000 2,000 2,086 86 2,318
Parking fines 90,000 70,000 75,451 5,451 77,803
Court fines 130,000 130,000 102,465 (27,535) 125,184
Civil infractions - - 1,450 1,450 -
Total fines and forfeitures 437,000 417,000 402,748 (14,252) 410,978
Interest and rental income
Interest income 50,000 50,000 27,049 (22,951) 69,568
Net increase (decrease) in the fair value of investments - - 15,907 15,907 (123,263)
Flea market 35,000 35,000 26,410 (8,590) 30,935
Farmers' market 40,000 40,000 58,440 18,440 42,599
City right of way rental 6,800 6,800 6,800 - 6,800
Fire station lease - Central Dispatch 45,000 45,000 46,782 1,782 44,938
Great Lakes Naval Memorial lease 15,000 15,000 15,000 - 15,000
McGraft park rentals 46,000 46,000 47,651 1,651 61,053
Other park rentals 64,200 64,200 46,195 (18,005) 38,344
Total interest and rental income 302,000 302,000 290,234 (11,766) 185,974
73
City of Muskegon
BUDGETARY COMPARISON SCHEDULE—CONTINUED
General Fund
For the year ended June 30, 2014
(with comparative actual amounts for the year ended June 30, 2013)
2014 2013
Variance with
Final Budget-
Budgeted Amounts Positive
Original Final Actual (Negative) Actual
Other
Sale of land and assets $ 1,000 $ 1,000 $ 2,000 $ 1,000 $ -
Police sale and auction proceeds 2,000 2,000 - (2,000) 6,058
CDBG program reimbursements 336,288 334,288 330,129 (4,159) 344,568
Fisherman's Landing reimbursement 16,500 18,000 18,196 196 17,471
Contributions 33,000 35,000 11,355 (23,645) 10,485
Contributions - Veteran's Park maintenance 16,500 19,000 64,387 45,387 16,155
Community Foundation for Muskegon County 15,000 15,000 30,198 15,198 14,800
Miscellaneous and sundry 69,000 79,000 105,470 26,470 73,339
Total other 489,288 503,288 561,735 58,447 482,876
Total revenues 23,160,205 23,457,884 23,960,758 502,874 23,407,409
EXPENDITURES
Current
Public representation services
City commission 95,778 95,778 101,102 (5,324) 93,509
City promotions and public relations 9,350 9,350 9,252 98 9,832
City manager 271,636 321,400 300,159 21,241 269,910
Contributions to outside agencies 240,369 240,369 233,109 7,260 197,926
City attorney 342,000 342,000 388,362 (46,362) 320,936
Total public representation services 959,133 1,008,897 1,031,984 (23,087) 892,113
Administrative services
Administration - - 12 (12) -
City clerk 336,940 336,940 332,828 4,112 337,252
Civil service 88,350 88,350 91,492 (3,142) 88,439
Affirmative action 85,015 83,668 72,693 10,975 82,439
Total administrative services 510,305 508,958 497,025 11,933 508,130
Financial services
Finance administration 371,291 367,840 358,074 9,766 364,146
Assessing 326,200 326,200 302,478 23,722 330,190
Arena administration 239,550 284,550 283,572 978 238,961
Income tax administration 422,303 417,303 404,230 13,073 388,767
Information systems 387,036 414,752 415,115 (363) 391,345
City treasurer 474,822 426,427 434,182 (7,755) 483,508
Total financial services 2,221,202 2,237,072 2,197,651 39,421 2,196,917
Public safety
Police department 8,797,547 8,794,947 8,605,479 189,468 8,642,294
Fire department 3,636,270 3,684,420 3,794,247 (109,827) 3,472,038
Fire safety inspections 444,467 563,435 588,172 (24,737) 472,933
Total public safety 12,878,284 13,042,802 12,987,898 54,904 12,587,265
74
City of Muskegon
BUDGETARY COMPARISON SCHEDULE—CONTINUED
General Fund
For the year ended June 30, 2014
(with comparative actual amounts for the year ended June 30, 2013)
2014 2013
Variance with
Final Budget-
Budgeted Amounts Positive
Original Final Actual (Negative) Actual
Public works
Street lighting $ 655,000 $ 655,000 $ 647,680 $ 7,320 $ 655,118
Community event support 20,800 21,200 22,370 (1,170) 19,270
Senior citizen transit 43,771 23,771 8,379 15,392 41,816
General sanitation 1,693,558 1,701,514 1,608,483 93,031 1,541,931
Storm water management 15,000 10,000 11,444 (1,444) 12,994
City hall maintenance 285,542 287,275 233,120 54,155 244,296
Cemeteries maintenance 351,510 351,510 386,829 (35,319) 362,903
Total public works 3,065,181 3,050,270 2,918,305 131,965 2,878,328
Community and economic development
Planning, zoning and economic development 355,111 326,671 335,127 (8,456) 300,222
Environmental services 604,889 714,689 676,164 38,525 541,493
Edison Landing subsidy 160,000 160,000 160,000 - 160,000
Total community and economic development 1,120,000 1,201,360 1,171,291 30,069 1,001,715
Culture and recreation
Parks maintenance 1,134,379 1,136,879 1,066,259 70,620 1,009,455
McGraft park maintenance 45,195 66,750 51,232 15,518 23,461
General and inner city recreation programs 95,900 95,900 105,498 (9,598) 95,944
Graffiti removal 8,861 8,861 2,162 6,699 3,854
Parking operations 5,200 5,200 6,282 (1,082) 5,266
Farmers' market and flea market 61,358 73,800 76,718 (2,918) 63,266
Total culture and recreation 1,350,893 1,387,390 1,308,151 79,239 1,201,246
Other governmental functions
Insurance premiums 251,656 251,656 244,653 7,003 233,873
Other 250,000 250,000 99,013 150,987 65,939
Additional contribution to MERS pension plan - 300,000 300,000 - -
Total other governmental functions 501,656 801,656 643,666 157,990 299,812
Debt service
Principal 70,000 70,000 70,000 - 70,000
Interest and fees 210,000 210,000 206,257 3,743 209,678
Total debt service 280,000 280,000 276,257 3,743 279,678
Capital outlay 121,000 97,000 20,980 76,020 105,651
Total expenditures 23,007,654 23,615,405 23,053,208 562,197 21,950,855
Excess of revenues over (under) expenditures 152,551 (157,521) 907,550 1,065,071 1,456,554
75
City of Muskegon
BUDGETARY COMPARISON SCHEDULE—CONTINUED
General Fund
For the year ended June 30, 2014
(with comparative actual amounts for the year ended June 30, 2013)
2014 2013
Variance with
Final Budget-
Budgeted Amounts Positive
Original Final Actual (Negative) Actual
OTHER FINANCING SOURCES (USES)
Transfers in $ 23,000 $ 23,000 $ 3,035 $ (19,965) $ 420,653
Transfers out (768,046) (768,046) (768,046) - (758,046)
Total other financing sources (uses) (745,046) (745,046) (765,011) (19,965) (337,393)
Net change in fund balance $ (592,495) $ (902,567) 142,539 $ 1,045,106 1,119,161
Fund balance at beginning of year 7,353,558 6,234,397
Fund balance at end of year $ 7,496,097 $ 7,353,558
Note: Both budgets and actual figures are prepared in accordance with generally accepted accounting principles.
76
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
Major Street and Trunkline Fund
For the year ended June 30, 2014
Variance with
Final Budget-
Budgeted Amounts Positive
Original Final Actual (Negative)
REVENUES
Intergovernmental revenues
Federal $ 1,005,000 $ 1,005,000 $ 1,005,475 $ 475
State 2,682,945 2,771,945 2,795,957 24,012
Charges for services - - 59,696 59,696
Investment earnings 25,000 25,000 16,390 (8,610)
Other 140,000 140,000 94,237 (45,763)
Total revenues 3,852,945 3,941,945 3,971,755 29,810
EXPENDITURES
Current
Highways, streets and bridges 4,684,024 4,484,024 4,540,103 (56,079)
Debt service
Principal 180,000 180,000 180,000 -
Interest 51,703 51,703 52,414 (711)
Total expenditures 4,915,727 4,715,727 4,772,517 (56,790)
Net change in fund balance $ (1,062,782) $ (773,782) (800,762) $ (26,980)
Fund balance at July 1, 2013 2,153,684
Fund balance at June 30, 2014 $ 1,352,922
Note: Both budgets and actual figures are prepared in accordance with generally accepted accounting principles.
77
City of Muskegon
Required Supplemental Information
SCHEDULE OF FUNDING PROGRESS
For the year ended June 30, 2014
MUNICIPAL EMPLOYEES RETIREMENT SYSTEM (MERS) PENSION PLAN
SCHEDULE OF FUNDING PROGRESS
(Dollar amounts in thousands)
Actuarial
Actuarial Actuarial Accrued Unfunded UAAL as a
Valuation Value of Liability (AAL) AAL Funded Covered Percentage of
Date Assets Entry Age (UAAL) Ratio Payroll Covered Payroll
12/31/11 $ 89,501 $ 92,614 $ 3,113 97 % $ 10,651 29 %
12/31/12 89,199 95,220 6,021 94 10,185 59
12/31/13 90,200 98,938 8,738 91 9,199 95
78
MUNICIPAL EMPLOYEES RETIREMENT SYSTEM (MERS) OTHER POSTEMPLOYMENT BENEFITS PLAN
SCHEDULE OF FUNDING PROGRESS
(Dollar amounts in thousands)
Actuarial
Actuarial Actuarial Accrued Unfunded UAAL as a
Valuation Value of Liability (AAL) AAL Funded Covered Percentage of
Date Assets Entry Age (UAAL) Ratio Payroll Covered Payroll
12/31/09 $ 13,260 $ 24,024 $ 10,764 55 % $ 13,293 81 %
12/31/11 15,331 20,168 4,837 76 12,365 39
12/31/13 18,261 21,102 2,841 87 10,005 28
OTHER SUPPLEMENTAL INFORMATION
79
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.
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 assets 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.
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.
80
DESCRIPTION OF
OTHER GOVERNMENTAL FUNDS—CONTINUED
Capital Projects Funds—Continued
Arena Capital Improvements – to account for ticket revenue collections earmarked for large capital
improvements and repairs to the L.C. Walker Arena.
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.
81
City of Muskegon
COMBINING BALANCE SHEET
Other Governmental Funds
June 30, 2014
Permanent
Total Other Special Capital Fund -
Governmental Revenue Projects Cemetery
Funds Funds Funds Perpetual Care
ASSETS
Cash and investments $ 3,657,636 $ 925,110 $ 1,741,005 $ 991,521
Receivables
Accounts and loans (net of allowance for uncollectibles) 219,921 6,197 212,906 818
Special assessments 105,647 94,367 11,280 -
Due from other governmental units 503,046 109,461 393,585 -
Advances to component units 482,544 - - 482,544
Prepaid items 4,461 4,461 - -
Total assets $ 4,973,255 $ 1,139,596 $ 2,358,776 $ 1,474,883
LIABILITIES
Accounts payable $ 202,351 $ 111,745 $ 90,606 $ -
Accrued liabilities 9,958 5,407 4,551 -
Due to other funds 466,012 - 466,012 -
Unearned revenues - expenditure-driven grants 39,262 - 39,262 -
Total liabilities 717,583 117,152 600,431 -
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - special assessments 105,750 94,367 11,383 -
Unavailable revenues - other long-term receivables 11,709 - 11,709 -
Total deferred inflows of resources 117,459 94,367 23,092 -
FUND BALANCES
Nonspendable
Prepaid items 4,461 4,461 - -
Long-term loans receivable 105,850 - 105,850 -
Perpetual care 1,429,198 - - 1,429,198
Restricted
Highways, streets and bridges 733,050 733,050 - -
Law enforcement 189,410 189,410 - -
Perpetual care 45,685 - - 45,685
Other purposes 1,156 1,156 - -
Assigned for capital projects and public improvements 1,729,457 - 1,729,457 -
Unassigned (100,054) - (100,054) -
Total fund balances 4,138,213 928,077 1,735,253 1,474,883
Total liabilities, deferred inflows of
resources and fund balances $ 4,973,255 $ 1,139,596 $ 2,358,776 $ 1,474,883
82
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
Other Governmental Funds
For the year ended June 30, 2014
Permanent
Total Other Special Capital Fund -
Governmental Revenue Projects Cemetery
Funds Funds Funds Perpetual Care
REVENUES
Intergovernmental revenues
Federal $ 1,075,697 $ - $ 1,075,697 $ -
State 1,106,834 880,714 226,120 -
Charges for services 289,741 24,949 234,475 30,317
Fines and forfeitures 15,943 15,943 - -
Investment earnings 45,529 10,206 15,454 19,869
Other 259,371 40,683 218,688 -
Total revenues 2,793,115 972,495 1,770,434 50,186
EXPENDITURES
Current
Highways, streets and bridges 1,380,304 1,380,304 - -
Culture and recreation 330 330 - -
Debt service
Principal 152,492 - 152,492 -
Interest and fees 19,741 - 19,741 -
Capital outlay 2,164,703 - 2,164,703 -
Total expenditures 3,717,570 1,380,634 2,336,936 -
Excess of revenues over (under) expenditures (924,455) (408,139) (566,502) 50,186
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets 176,887 - 176,887 -
Transfers in 740,000 740,000 - -
Transfers out (3,035) - (3,035) -
Total other financing sources (uses) 913,852 740,000 173,852 -
Net change in fund balances (10,603) 331,861 (392,650) 50,186
Fund balances at July 1, 2013 4,148,816 596,216 2,127,903 1,424,697
Fund balances at June 30, 2014 $ 4,138,213 $ 928,077 $ 1,735,253 $ 1,474,883
83
City of Muskegon
COMBINING BALANCE SHEET
Other Special Revenue Funds
June 30, 2014
Total Other
Special Revenue Local Criminal Tree
Funds Street Forfeitures Replacement
ASSETS
Cash and investments $ 925,110 $ 734,544 $ 189,410 $ 1,156
Receivables
Accounts 6,197 6,197 - -
Special assessments 94,367 94,367 - -
Due from other governmental units 109,461 109,461 - -
Prepaid items 4,461 4,461 - -
Total assets $ 1,139,596 $ 949,030 $ 189,410 $ 1,156
LIABILITIES
Accounts payable $ 111,745 $ 111,745 $ - $ -
Accrued liabilities 5,407 5,407 - -
Total liabilities 117,152 117,152 - -
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - special assessments 94,367 94,367 - -
FUND BALANCES
Nonspendable - prepaid items 4,461 4,461 - -
Restricted
Highways, streets and bridges 733,050 733,050 - -
Law enforcement 189,410 - 189,410 -
Other purposes 1,156 - - 1,156
Total fund balances 928,077 737,511 189,410 1,156
Total liabilities, deferred inflows of
resources and fund balances $ 1,139,596 $ 949,030 $ 189,410 $ 1,156
84
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
Other Special Revenue Funds
For the year ended June 30, 2014
Total Other
Special Revenue Local Criminal Tree
Funds Street Forfeitures Replacement
REVENUES
Intergovernmental revenues - State $ 880,714 $ 880,714 $ - $ -
Charges for services 24,949 24,949 - -
Fines and forfeitures 15,943 - 15,943 -
Investment earnings 10,206 9,310 889 7
Other 40,683 40,683 - -
Total revenues 972,495 955,656 16,832 7
EXPENDITURES
Current
Highways, streets and bridges 1,380,304 1,380,304 - -
Culture and recreation 330 - - 330
Total expenditures 1,380,634 1,380,304 - 330
Excess of revenues over (under) expenditures (408,139) (424,648) 16,832 (323)
OTHER FINANCING SOURCES
Transfers in 740,000 740,000 - -
Net change in fund balances 331,861 315,352 16,832 (323)
Fund balances at July 1, 2013 596,216 422,159 172,578 1,479
Fund balances at June 30, 2014 $ 928,077 $ 737,511 $ 189,410 $ 1,156
85
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
Other Special Revenue Funds
For the year ended June 30, 2014
Local Street Criminal Forfeitures
Variance - Variance -
Final Positive Final Positive
Budget Actual (Negative) Budget Actual (Negative)
REVENUES
Intergovernmental revenues
Federal $ 32,000 $ - $ (32,000) $ - $ - $ -
State 880,698 880,714 16 - - -
Charges for services - 24,949 24,949 - - -
Fines and forfeitures - - - 18,000 15,943 (2,057)
Investment earnings 20,000 9,310 (10,690) 700 889 189
Other 105,000 40,683 (64,317) - - -
Total revenues 1,037,698 955,656 (82,042) 18,700 16,832 (1,868)
EXPENDITURES
Current
Public safety - - - 7,530 - 7,530
Highways, streets and bridges 1,652,549 1,380,304 272,245 - - -
Total expenditures 1,652,549 1,380,304 272,245 7,530 - 7,530
Excess of revenues over (under) expenditures (614,851) (424,648) 190,203 11,170 16,832 5,662
OTHER FINANCING SOURCES
Transfers in 740,000 740,000 - - - -
Net change in fund balances $ 125,149 315,352 $ 190,203 $ 11,170 16,832 $ 5,662
Fund balances at July 1, 2013 422,159 172,578
Fund balances at June 30, 2014 $ 737,511 $ 189,410
86
City of Muskegon
BUDGETARY COMPARISON SCHEDULE─CONTINUED
Other Special Revenue Funds
For the year ended June 30, 2014
Tree Replacement
Variance -
Final Positive
Budget Actual (Negative)
REVENUES
Intergovernmental revenues - State $ - $ - $ -
Charges for services 1,500 - (1,500)
Investment earnings 50 7 (43)
Total revenues 1,550 7 (1,543)
EXPENDITURES
Current
Culture and recreation 1,000 330 670
Net change in fund balances $ 550 (323) $ (873)
Fund balance at July 1, 2013 1,479
Fund balance at June 30, 2014 $ 1,156
87
City of Muskegon
COMBINING BALANCE SHEET
Other Capital Projects Funds
June 30, 2014
Total Other EDC Community Arena Economic
Capital Projects Public Sidewalk Michcon Revolving Development State HOME Capital Neighborhood Development -
Funds Improvement Replacement Remediation Loan Block Grant Grants Rehabilitation Improvements Stabilization Sappi
ASSETS
Cash and investments $ 1,741,005 $ 369,368 $ 343,859 $ 219,726 $ 233,677 $ - $ - $ 32,477 $ 30,007 $ - $ 511,891
Receivables
Accounts and loans (net of
allowance for uncollectibles) 212,906 12,609 - - 20,000 94,447 85,850 - - - -
Special assessments 11,280 - 11,280 - - - - - - - -
Due from other governmental units 393,585 - - - - 291,433 92,865 9,287 - - -
Total assets $ 2,358,776 $ 381,977 $ 355,139 $ 219,726 $ 253,677 $ 385,880 $ 178,715 $ 41,764 $ 30,007 $ - $ 511,891
LIABILITIES
Accounts payable $ 90,606 $ - $ - $ - $ - $ 34,788 $ 11,400 $ 41,206 $ 1,995 $ 1,217 $ -
Accrued liabilities 4,551 - - - - 3,993 - 558 - - -
Due to other funds 466,012 - - - - 347,099 20,076 - - 98,837 -
Unearned revenues - expenditure-driven grants 39,262 - - - - - 39,262 - - - -
Total liabilities 600,431 - - - - 385,880 70,738 41,764 1,995 100,054 -
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - special assessments 11,383 - 11,383 - - - - - - - -
Unavailable revenues - other long-term receivables 11,709 11,709 - - - - - - - - -
Total deferred inflows of resources 23,092 11,709 11,383 - - - - - - - -
88
FUND BALANCES (DEFICITS)
Nonspendable - long-term loans receivable 105,850 - - - 20,000 - 85,850 - - - -
Assigned for capital projects and public improvements 1,729,457 370,268 343,756 219,726 233,677 - 22,127 - 28,012 - 511,891
Unassigned (100,054) - - - - - - - - (100,054) -
Total fund balances (deficits) 1,735,253 370,268 343,756 219,726 253,677 - 107,977 - 28,012 (100,054) 511,891
Total liabilities, deferred inflows of
resources and fund balances (deficits) $ 2,358,776 $ 381,977 $ 355,139 $ 219,726 $ 253,677 $ 385,880 $ 178,715 $ 41,764 $ 30,007 $ - $ 511,891
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS)
Other Capital Projects Funds
For the year ended June 30, 2014
Total Other EDC Community Arena Economic
Capital Projects Public Sidewalk Michcon Revolving Development State HOME Capital Neighborhood Development -
Funds Improvement Replacement Remediation Loan Block Grant Grants Rehabilitation Improvements Stabilization Sappi
REVENUES
Intergovernmental revenues
Federal $ 1,075,697 $ - $ - $ - $ - $ 849,155 $ - $ 226,542 $ - $ - $ -
State 226,120 - - - - - 226,120 - - - -
Charges for services 234,475 200,000 - - - - - - 34,475 - -
Investment earnings 15,454 3,846 3,974 1,095 1,004 671 1,813 - 501 - 2,550
Other 218,688 - 29,339 - 70,319 29,308 33,163 - - 56,559 -
Total revenues 1,770,434 203,846 33,313 1,095 71,323 879,134 261,096 226,542 34,976 56,559 2,550
EXPENDITURES
Debt service
Principal 152,492 - 135,000 - - - 17,492 - - - -
Interest and fees 19,741 - 17,140 - - - 2,601 - - - -
Capital outlay 2,164,703 543,596 6,905 - 21,156 879,984 256,248 327,137 11,831 117,846 -
Total expenditures 2,336,936 543,596 159,045 - 21,156 879,984 276,341 327,137 11,831 117,846 -
Excess of revenues over (under) expenditures (566,502) (339,750) (125,732) 1,095 50,167 (850) (15,245) (100,595) 23,145 (61,287) 2,550
OTHER FINANCING SOURCES (USES)
89
Proceeds from sale of capital assets 176,887 32,161 - - - 850 - 143,876 - - -
Transfers out (3,035) - - - - - (3,035) - - - -
Total other financing sources (uses) 173,852 32,161 - - - 850 (3,035) 143,876 - - -
Net change in fund balances (392,650) (307,589) (125,732) 1,095 50,167 - (18,280) 43,281 23,145 (61,287) 2,550
Fund balances (deficits) at July 1, 2013 2,127,903 677,857 469,488 218,631 203,510 - 126,257 (43,281) 4,867 (38,767) 509,341
Fund balances (deficits) at June 30, 2014 $ 1,735,253 $ 370,268 $ 343,756 $ 219,726 $ 253,677 $ - $ 107,977 $ - $ 28,012 $ (100,054) $ 511,891
90
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.
91
City of Muskegon
COMBINING STATEMENT OF NET POSITION
Internal Service Funds
June 30, 2014
Total Internal Engineering General Public Service
Service Funds Services Equipment Insurance Building
ASSETS
Current assets
Cash and investments $ 2,959,277 $ 79,207 $ 802,987 $ 1,509,014 $ 568,069
Accounts receivable 110,796 17,003 20,931 72,862 -
Inventories 13,102 - 13,102 - -
Prepaid items 283,043 2,492 62,084 212,937 5,530
Total current assets 3,366,218 98,702 899,104 1,794,813 573,599
Noncurrent assets
Advances to component units 965,088 - 482,544 482,544 -
Capital assets
Land 65,000 - - - 65,000
Land improvements 301,715 - - - 301,715
Buildings and improvements 1,559,334 - - - 1,559,334
Machinery and equipment 8,046,959 26,355 7,947,130 - 73,474
Less accumulated depreciation (7,672,348) (26,355) (6,220,943) - (1,425,050)
Net capital assets 2,300,660 - 1,726,187 - 574,473
Total noncurrent assets 3,265,748 - 2,208,731 482,544 574,473
Total assets 6,631,966 98,702 3,107,835 2,277,357 1,148,072
LIABILITIES
Current liabilities
Accounts payable 450,762 1,039 26,460 415,001 8,262
Accrued liabilities 21,688 4,432 6,000 607 10,649
Due to other governmental units 12,229 12,229 - - -
Bonds and other obligations, due within one year 13,800 2,600 3,700 300 7,200
Total current liabilities 498,479 20,300 36,160 415,908 26,111
Noncurrent liabilities
Bonds and other obligations, less amounts due within one year 69,032 12,716 18,600 1,780 35,936
Total liabilities 567,511 33,016 54,760 417,688 62,047
NET POSITION
Net investment in capital assets 2,300,660 - 1,726,187 - 574,473
Unrestricted 3,763,795 65,686 1,326,888 1,859,669 511,552
Total net position $ 6,064,455 $ 65,686 $ 3,053,075 $ 1,859,669 $ 1,086,025
92
City of Muskegon
COMBINING STATEMENT OF REVENUE, EXPENSES AND CHANGES IN NET POSITION
Internal Service Funds
For the year ended June 30, 2014
Total Internal Engineering General Public Service
Service Funds Services Equipment Insurance Building
OPERATING REVENUES
Charges for services $ 8,004,495 $ 400,890 $ 2,223,073 $ 4,295,243 $ 1,085,289
Other 451,733 40,969 70,315 340,449 -
Total operating revenues 8,456,228 441,859 2,293,388 4,635,692 1,085,289
OPERATING EXPENSES
Administration 362,748 64,698 93,673 84,184 120,193
Insurance premiums and claims 4,133,641 - - 4,133,641 -
Other operations 3,679,073 432,279 2,402,630 37,088 807,076
Depreciation 394,955 - 315,925 - 79,030
Total operating expenses 8,570,417 496,977 2,812,228 4,254,913 1,006,299
Operating income (loss) (114,189) (55,118) (518,840) 380,779 78,990
NONOPERATING REVENUES
Investment earnings 47,070 311 23,976 20,411 2,372
Gain on sale of capital assets 29,515 - 29,515 - -
Total nonoperating revenues 76,585 311 53,491 20,411 2,372
Income (loss) before contributions
and transfers (37,604) (54,807) (465,349) 401,190 81,362
CAPITAL CONTRIBUTIONS AND TRANSFERS
Capital contributions 97,339 - 97,339 - -
Transfers in 28,046 - - 28,046 -
Total capital contributions
and transfers 125,385 - 97,339 28,046 -
Change in net position 87,781 (54,807) (368,010) 429,236 81,362
Net position at July 1, 2013 5,976,674 120,493 3,421,085 1,430,433 1,004,663
Net position at June 30, 2014 $ 6,064,455 $ 65,686 $ 3,053,075 $ 1,859,669 $ 1,086,025
93
City of Muskegon
COMBINING STATEMENT OF CASH FLOWS
Internal Service Funds
For the year ended June 30, 2014
Total Internal Engineering General Public Service
Service Funds Services Equipment Insurance Building
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 427,118 $ 39,400 $ 57,676 $ 330,042 $ -
Receipts from interfund services provided 8,004,495 400,890 2,223,073 4,295,243 1,085,289
Payments to suppliers (5,846,737) (134,054) (1,692,157) (3,699,356) (321,170)
Payments to employees (1,415,596) (240,132) (302,592) (378,328) (494,544)
Payments for interfund services used (881,360) (111,095) (654,644) (3,323) (112,298)
Net cash provided by (used for) operating activities 287,920 (44,991) (368,644) 544,278 157,277
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers in 28,046 - - 28,046 -
Collections on advances to component units 71,930 - 35,965 35,965 -
Net cash provided by noncapital financing activities 99,976 - 35,965 64,011 -
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Capital contributions 97,339 - 97,339 - -
Purchases of capital assets (865,955) - (839,130) - (26,825)
Proceeds from sale of capital assets 31,792 - 31,792 - -
94
Net cash used for capital and related financing activities (736,824) - (709,999) - (26,825)
CASH FLOW FROM INVESTING ACTIVITIES
Investment earnings 47,070 311 23,976 20,411 2,372
Net increase (decrease) in cash and investments (301,858) (44,680) (1,018,702) 628,700 132,824
Cash and investments at July 1, 2013 3,261,135 123,887 1,821,689 880,314 435,245
Cash and investments at June 30, 2014 $ 2,959,277 $ 79,207 $ 802,987 $ 1,509,014 $ 568,069
Reconciliation of operating income (loss) to net cash provided by (used for)
operating activities
Operating income (loss) $ (114,189) $ (55,118) $ (518,840) $ 380,779 $ 78,990
Adjustments to reconcile operating income (loss) to net cash provided by
(used for) operating activities
Depreciation expense 394,955 - 315,925 - 79,030
Change in assets and liabilities
Receivables (24,615) (1,569) (12,639) (10,407) -
Inventories 7,475 - 7,475 - -
Prepaid items 103,772 246 (6,344) 110,027 (157)
Accounts payable (82,045) 12,399 (157,404) 63,505 (545)
Accrued liabilities 2,567 (949) 3,183 374 (41)
Net cash provided by (used for) operating activities $ 287,920 $ (44,991) $ (368,644) $ 544,278 $ 157,277
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.
95
City of Muskegon
COMBINING STATEMENT OF ASSETS AND LIABILITIES
Agency Funds
June 30, 2014
Total Current Rehab Loan
Agency Funds Collector Tax Escrow
ASSETS
Cash and investments $ 395,193 $ 395,193 $ - $ -
Accounts receivable 1,867 1,867 - -
Total assets $ 397,060 $ 397,060 $ - $ -
LIABILITIES
Accounts payable $ 96,463 $ 96,463 $ - $ -
Due to other governmental units 245,855 245,855 - -
Deposits held for others 54,742 54,742 - -
Total liabilities $ 397,060 $ 397,060 $ - $ -
96
City of Muskegon
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
Agency Funds
For the year ended June 30, 2014
Balance Balance
July 1, June 30,
COLLECTOR FUND 2013 Additions Deductions 2014
ASSETS
Cash and investments $ 799,080 $ 6,835,592 $ 7,239,479 $ 395,193
Accounts receivable 1,867 283,073 283,073 1,867
Total assets $ 800,947 $ 7,118,665 $ 7,522,552 $ 397,060
LIABILITIES
Accounts payable $ 352,700 $ 3,283,560 $ 3,539,797 $ 96,463
Due to other governmental units 316,760 1,957,949 2,028,854 245,855
Deposits held for others 131,487 2,321,769 2,398,514 54,742
Total liabilities $ 800,947 $ 7,563,278 $ 7,967,165 $ 397,060
CURRENT TAX FUND
ASSETS
Cash and investments $ - $ 27,408,453 $ 27,408,453 $ -
LIABILITIES
Due to other governmental units $ - $ 19,217,766 $ 19,217,766 $ -
Due to other funds - 7,286,488 7,286,488 -
Due to component units - 638,632 638,632 -
Deposits held for others - 108,350 108,350 -
Total liabilities $ - $ 27,251,236 $ 27,251,236 $ -
REHAB LOAN ESCROW FUND
ASSETS
Cash and investments $ - $ 1,713 $ 1,713 $ -
LIABILITIES
Accounts payable $ - $ 1,713 $ 1,713 $ -
ALL AGENCY FUNDS
ASSETS
Cash and investments $ 799,080 $ 34,245,758 $ 34,649,645 $ 395,193
Accounts receivable 1,867 283,073 283,073 1,867
Total assets $ 800,947 $ 34,528,831 $ 34,932,718 $ 397,060
LIABILITIES
Accounts payable $ 352,700 $ 3,285,273 $ 3,541,510 $ 96,463
Due to other governmental units 316,760 21,175,715 21,246,620 245,855
Due to other funds - 7,286,488 7,286,488 -
Due to component units - 638,632 638,632 -
Deposits held for others 131,487 2,430,119 2,506,864 54,742
Total liabilities $ 800,947 $ 34,816,227 $ 35,220,114 $ 397,060
97
98
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 - SmartZone – 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. Currently there are two designated brownfield
areas capturing tax increments.
• Area I – Betten-Henry Street brownfield site.
• Area II – Former downtown mall brownfield site.
99
City of Muskegon
COMBINING BALANCE SHEET
Discretely Presented Component Units
June 30, 2014
Local
Total Discretely Development
Presented Finance Downtown Tax Increment Brownfield Brownfield
Component Authority - Development Finance Redevelopment Redevelopment
Units SmartZone Authority Authority Authority I Authority II
ASSETS
Cash and investments $ 253,633 $ 42,847 $ 93,778 $ 829 $ 116,179 $ -
LIABILITIES
Advances from primary government $ 1,447,632 $ - $ - $ - $ 1,447,632 $ -
FUND BALANCES (DEFICITS)
Unassigned (1,193,999) 42,847 93,778 829 (1,331,453) -
Total liabilities and fund
balances (deficits) $ 253,633 $ 42,847 $ 93,778 $ 829 $ 116,179 $ -
100
City of Muskegon
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET POSITION
Discretely Presented Component Units
June 30, 2014
Total fund balances—governmental funds $ (1,193,999)
Amounts reported for governmental activities in the Statement of Net Position
are different because:
Capital assets used in governmental activities are not current financial
resources and, therefore, are not reported in the governmental funds.
Cost of capital assets $ 4,198,258
Accumulated depreciation (1,827,192) 2,371,066
Long-term liabilities in governmental activities are not due and payable in the
current period and, therefore, are not reported in the governmental funds.
Accrued interest payable (24,166)
Bonds and notes payable (6,282,300) (6,306,466)
Net position of governmental activities $ (5,129,399)
101
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS)
Discretely Presented Component Units
For the year ended June 30, 2014
Local
Total Discretely Development
Presented Finance Downtown Tax Increment Brownfield Brownfield
Component Authority - Development Finance Redevelopment Redevelopment
Units SmartZone Authority Authority Authority I Authority II
REVENUES
Property taxes $ 638,632 $ 137,742 $ 257,660 $ 36,624 $ 126,684 $ 79,922
Intergovernmental revenues - Local 160,000 160,000 - - - -
Investment earnings 1,684 139 928 42 575 -
Other 100,000 100,000 - - - -
Total revenues 900,316 397,881 258,588 36,666 127,259 79,922
EXPENDITURES
Current
Community and economic development 129,922 - - 50,000 - 79,922
102
Debt service
Principal 540,000 260,000 280,000 - - -
Interest and fees 227,272 125,300 52,287 - 49,685 -
Total expenditures 897,194 385,300 332,287 50,000 49,685 79,922
Net change in fund balances (deficits) 3,122 12,581 (73,699) (13,334) 77,574 -
Fund balances (deficits) at July 1, 2013 (1,197,121) 30,266 167,477 14,163 (1,409,027) -
Fund balances (deficits) at June 30, 2014 $ (1,193,999) $ 42,847 $ 93,778 $ 829 $ (1,331,453) $ -
City of Muskegon
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES (DEFICITS)
TO THE STATEMENT OF ACTIVITIES
Discretely Presented Component Units
For the year ended June 30, 2014
Net change in fund balances—total governmental funds $ 3,122
Amounts reported for governmental activities in the Statement of Activities are
different because:
Governmental funds report outlays for capital assets as expenditures. However,
in the Statement of Activities, the cost of these assets is allocated over their
estimated useful lives and reported as depreciation expense.
Depreciation expense (172,648)
The issuance of long-term debt provides current financial resources to
governmental funds, but increases liabilities in the Statement of Net Position.
Repayment of debt is an expenditure in the governmental funds, but reduces
long-term liabilities in the Statement of Net Position.
Repayment of principal on long-term debt 540,000
Changes in accrual of interest and amortization of premiums and discounts
Change in accrued interest payable $ 1,508
Amortization of premiums 42,569 44,077
Change in net position of governmental activities $ 414,551
103
104
SCHEDULE OF INDEBTEDNESS
105
City of Muskegon
SCHEDULE OF INDEBTEDNESS
June 30, 2014
Annual
Date Amount Interest Date of Interest
of Issue of Issue Rate Maturity 6/30/2013 6/30/2014 Payable
Business-Type Activities Bonds and Loans Payable:
Water supply system bonds 4/1/2010 $ 5,995,000 2.77% 05/01/14 $ 640,000 $ - $ -
($65,728 unamortized premium) 3.50% 05/01/15 660,000 660,000 136,088
3.25% 05/01/16 685,000 685,000 112,988
Type of debt: revenue bond 4.00% 05/01/17 710,000 710,000 90,725
Revenue pledged: water system net revenues 4.00% 05/01/18 740,000 740,000 62,325
4.25% 05/01/19 770,000 770,000 32,725
4,205,000 3,565,000 434,851
Drinking Water State Revolving 3/2/2004 $ 13,900,000 2.13% 10/01/13 655,000 - -
Fund 2.13% 10/01/14 670,000 670,000 184,769
2.13% 10/01/15 685,000 685,000 170,372
Type of debt: state loan 2.13% 10/01/16 695,000 695,000 155,709
Revenue pledged: water system net revenues 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
9,685,000 9,030,000 1,199,139
TOTAL BUSINESS-TYPE ACTIVITIES BONDS AND LOANS PAYABLE $ 13,890,000 $ 12,595,000 $ 1,633,990
106
City of Muskegon
SCHEDULE OF INDEBTEDNESS - CONTINUED
June 30, 2014
Annual
Date Amount Interest Date of Interest
of Issue of Issue Rate Maturity 6/30/2013 6/30/2014 Payable
Governmental Activities Bonds and Loans Payable:
Capital improvement bonds 3/1/2003 $ 1,575,000 3.90% 06/01/14 $ 135,000 $ - $ -
of 2003 (sidewalks) 4.00% 06/01/15 145,000 145,000 11,875
4.05% 06/01/16 150,000 150,000 6,075
Type of debt: limited G.O. bond 430,000 295,000 17,950
Revenue pledged: special assessments, general revenues
Capital improvement bonds 10/24/2006 $ 5,400,000 4.00% 10/01/13 70,000 - -
of 2006 (fire station, recreation) 4.00% 10/01/14 70,000 70,000 202,745
($10,465 unamortized discount) 4.00% 10/01/15 70,000 70,000 199,945
4.00% 10/01/16 70,000 70,000 197,145
Type of debt: limited G.O. bond 4.00% 10/01/17 70,000 70,000 194,345
Revenue pledged: general revenues 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
5,095,000 5,025,000 2,369,608
Capital improvement bonds 9/30/2011 $ 2,000,000 2.98% 09/01/13 180,000 - -
of 2011 (streets) 2.98% 09/01/14 185,000 185,000 46,265
2.98% 09/01/15 190,000 190,000 40,677
Type of debt: limited G.O. bond 2.98% 09/01/16 195,000 195,000 34,941
Revenue pledged: gas tax, general revenues 2.98% 09/01/17 200,000 200,000 29,055
2.98% 09/01/18 210,000 210,000 22,946
2.98% 09/01/19 215,000 215,000 16,614
2.98% 09/01/20 220,000 220,000 10,132
2.98% 09/01/21 230,000 230,000 3,427
1,825,000 1,645,000 204,057
State of Michigan 6/18/2010 $ 500,000 2.00% 03/18/14 20,615 - -
environmental assessment loan 2.00% 03/18/15 21,027 17,842 2,251
2.00% 03/18/16 21,448 18,199 1,894
Type of debt: state loan 2.00% 03/18/17 21,877 18,563 1,530
Revenue pledged: general revenues 2.00% 03/18/18 22,314 18,934 1,159
2.00% 03/18/19 22,761 19,313 780
2.00% 03/18/20 - 19,699 394
130,042 112,550 8,008
TOTAL GOVERNMENTAL ACTIVITIES BONDS AND LOANS PAYABLE $ 7,480,042 $ 7,077,550 $ 2,599,623
TOTAL PRIMARY GOVERNMENT BONDS AND LOANS PAYABLE $ 21,370,042 $ 19,672,550 $ 4,233,613
107
City of Muskegon
SCHEDULE OF INDEBTEDNESS - CONTINUED
June 30, 2014
Annual
Date Amount Interest Date of Interest
of Issue of Issue Rate Maturity 6/30/2013 6/30/2014 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 -
Type of debt: intergovernmental note
Revenue pledged: DDA tax increments
Downtown Development Authority 3/22/2011 $ 2,045,000 2.75% 06/01/14 280,000 - -
refunding bonds 3.25% 06/01/15 285,000 285,000 44,588
($19,776 unamortized premium) 3.50% 06/01/16 300,000 300,000 35,326
3.75% 06/01/17 310,000 310,000 24,826
Type of debt: limited G.O. bond 4.00% 06/01/18 330,000 330,000 13,200
Revenue pledged: DDA tax increments, general revenues 1,505,000 1,225,000 117,940
Local Development Finance Authority 3/20/2012 $ 4,100,000 2.00% 11/01/13 260,000 - -
Smartzone Refunding Bonds 2.00% 11/01/14 320,000 320,000 119,500
($197,524 unamortized premium) 2.00% 11/01/15 335,000 335,000 112,950
3.00% 11/01/16 345,000 345,000 104,425
Type of debt: limited G.O. bond 3.00% 11/01/17 355,000 355,000 93,925
Revenue pledged: LDFA tax increments, general revenues 4.00% 11/01/18 375,000 375,000 81,100
4.00% 11/01/19 390,000 390,000 65,800
4.00% 11/01/20 395,000 395,000 50,100
4.00% 11/01/21 245,000 245,000 37,300
3.00% 11/01/22 255,000 255,000 28,575
3.00% 11/01/23 265,000 265,000 20,775
3.00% 11/01/24 275,000 275,000 12,675
3.00% 11/01/25 285,000 285,000 4,275
4,100,000 3,840,000 731,400
TOTAL DISCRETELY PRESENTED COMPONENT UNIT BONDS AND LOANS PAYABLE $ 6,605,000 $ 6,065,000 $ 849,340
TOTAL REPORTING ENTITY BONDS AND LOANS PAYABLE $ 27,975,042 $ 25,737,550 $ 5,082,953
108
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. 110
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. 115
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. 121
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. 125
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. 127
Sources: Unless otherwise noted, the information in these schedules is derived form the Comprehensive Annual
Financial Reports for the relevant year.
109
City of Muskegon
NET ASSETS/NET POSITION BY COMPONENT
Last Ten Fiscal Years
December 31 June 30
2005 2006 2007 2008 2009 2010 2011 2012 2013 (a) 2014
Governmental Activities
Net Investment in Capital Assets $ 67,119,658 $ 68,189,021 $ 68,059,626 $ 69,564,935 $ 69,064,800 $ 67,809,630 $ 67,944,957 $ 66,862,806 $ 63,842,092 $ 63,731,255
Restricted 5,420,482 5,378,669 5,485,703 3,557,678 2,956,449 3,059,208 3,656,410 3,526,343 4,572,848 4,023,895
Unrestricted 7,811,489 8,778,786 10,162,425 10,708,529 8,920,621 13,828,231 12,598,197 12,836,573 13,299,523 12,811,852
Total Governmental Net Assets/Net Position $ 80,351,629 $ 82,346,476 $ 83,707,754 $ 83,831,142 $ 80,941,870 $ 84,697,069 $ 84,199,564 $ 83,225,722 $ 81,714,463 $ 80,567,002
Business-type Activities
Net Investment in Capital Assets $ 36,742,669 $ 39,441,912 $ 39,356,966 $ 40,876,621 $ 41,876,507 $ 41,105,739 $ 40,419,728 $ 40,147,600 $ 40,032,858 $ 39,365,043
Restricted 822,559 822,559 822,559 822,559 672,000 672,000 672,000 672,000 599,500 599,500
Unrestricted 6,663,563 6,910,247 7,980,823 6,775,508 5,983,935 7,630,396 9,211,610 8,961,713 8,491,848 8,377,093
Total Business-type Activities Net Assets/Net Position $ 44,228,791 $ 47,174,718 $ 48,160,348 $ 48,474,688 $ 48,532,442 $ 49,408,135 $ 50,303,338 $ 49,781,313 $ 49,124,206 $ 48,341,636
Primary Government
Net Investment in Capital Assets $ 103,862,327 $ 107,630,933 $ 107,416,592 $ 110,441,556 $ 110,941,307 $ 108,915,369 $ 108,364,685 $ 107,010,406 $ 103,874,950 $ 103,096,298
Restricted 6,243,041 6,201,228 6,308,262 4,380,237 3,628,449 3,731,208 4,328,410 4,198,343 5,172,348 4,623,395
Unrestricted 14,475,052 15,689,033 18,143,248 17,484,037 14,904,556 21,458,627 21,809,807 21,798,286 21,791,371 21,188,945
Total Primary Government Net Assets/Net Position $ 124,580,420 $ 129,521,194 $ 131,868,102 $ 132,305,830 $ 129,474,312 $ 134,105,204 $ 134,502,902 $ 133,007,035 $ 130,838,669 $ 128,908,638
110
(a) In 2013, the City implemented GASB 63 and 65 which changed the elements of the financial statements.
SOURCE: The information in these schedules (unless otherwise noted) is derived from the
City of Muskegon
CHANGES IN NET ASSETS/NET POSITION
Last Ten Fiscal Years
Period Ended
Year Ended December 31, June 30 Year Ended June 30
2005 2006 2007 2008 2009 2010 2011 2012 2013 (a) 2014
EXPENSES
Governmental Activities
Public representation $ 885,365 $ 904,109 $ 925,124 $ 986,696 $ 923,911 $ 445,251 $ 854,249 $ 866,809 $ 893,981 $ 1,030,006
Administrative services 803,783 732,715 783,713 782,362 698,022 317,873 645,585 566,161 565,307 543,425
Financial services 1,872,159 2,061,836 2,205,041 2,292,430 2,406,517 1,209,694 2,373,141 2,399,147 2,241,061 2,171,958
Public safety 12,481,826 13,059,358 12,802,488 13,955,811 13,614,112 6,332,728 13,390,888 13,213,251 12,987,842 12,946,466
Public works 2,853,497 3,089,522 2,989,433 3,019,411 2,986,747 1,640,946 3,471,051 2,958,367 3,201,806 3,361,422
Highways, streets and bridges 5,910,307 5,672,590 7,272,288 7,265,438 7,160,797 3,680,196 7,013,216 6,568,448 6,672,374 7,053,326
Community and economic development 3,693,187 3,383,157 3,054,087 3,174,508 4,139,765 1,275,026 2,830,867 2,447,373 2,499,404 2,417,518
Culture and recreation 2,504,692 2,464,567 2,433,020 2,623,501 2,463,375 759,392 1,524,331 1,601,316 1,592,358 1,671,185
General administration 1,608,108 1,143,963 358,225 574,955 451,651 210,117 794,115 791,197 322,348 366,634
Interest on long-term debt 170,814 206,768 343,106 324,076 288,073 139,006 272,940 283,186 291,535 277,345
Total Governmental Activities Expenses 32,783,738 32,718,585 33,166,525 34,999,188 35,132,970 16,010,229 33,170,383 31,695,255 31,268,016 31,839,285
Business-type Activities
Water 4,181,855 4,500,578 5,795,279 5,800,977 6,080,230 2,958,795 5,869,241 5,974,173 6,228,788 6,016,192
Sewer 3,953,838 5,006,594 5,066,693 5,503,144 5,426,321 2,525,067 5,288,622 6,202,359 7,226,839 7,582,602
Marina and launch ramp 343,599 332,826 392,994 347,642 310,773 150,055 292,889 310,174 426,553 503,997
Total Business-type Activities Expenses 8,479,292 9,839,998 11,254,966 11,651,763 11,817,324 5,633,917 11,450,752 12,486,706 13,882,180 14,102,791
Total Primary Government Expenses $ 41,263,030 $ 42,558,583 $ 44,421,491 $ 46,650,951 $ 46,950,294 $ 21,644,146 $ 44,621,135 $ 44,181,961 $ 45,150,196 $ 45,942,076
111
PROGRAM REVENUES
Governmental Activities
Charges for Services
Public representation $ 195,316 $ 202,939 $ 199,759 $ 188,467 $ 213,885 $ 100,177 $ 196,886 $ 196,886 $ 173,739 $ 189,444
Administrative services 311,529 306,964 287,011 257,850 271,117 129,630 263,473 270,886 268,535 325,937
Financial services 537,445 728,332 744,109 726,572 818,845 475,031 879,905 881,229 830,919 871,632
Public safety 1,116,755 1,134,686 1,224,062 1,217,616 1,117,476 536,419 1,109,659 1,136,942 1,133,666 1,407,722
Public works 467,849 588,566 407,569 382,072 383,733 209,203 642,082 480,487 671,494 796,739
Highways, streets and bridges 267,689 263,423 372,133 301,955 251,840 139,009 451,473 230,241 245,609 351,962
Community and economic development 815,980 762,220 356,051 297,854 249,241 186,572 457,952 617,379 432,240 477,486
Culture and recreation 1,141,865 809,228 454,154 405,520 445,891 129,025 300,367 315,010 606,818 535,211
General administration 314,658 170,240 64,366 99,494 123,426 59,373 116,690 116,690 287,729 50,728
Operating grants and contributions 6,017,421 5,093,355 5,229,279 5,367,152 6,443,223 3,131,811 5,425,165 4,651,576 4,681,345 4,664,098
Capital grants and contributions 5,894,358 5,360,014 3,347,680 3,444,957 2,105,557 255,234 2,257,163 1,568,005 886,108 1,408,424
Total Governmental Program Revenues 17,080,865 15,419,967 12,686,173 12,689,509 12,424,234 5,351,484 12,100,815 10,465,331 10,218,202 11,079,383
Business-type Activities
Water 6,912,719 6,342,110 6,569,228 6,240,060 5,883,830 2,891,169 5,454,760 5,254,095 5,890,614 6,099,480
Sewer 4,149,187 4,803,702 5,179,095 5,326,787 5,720,171 3,441,924 6,652,851 6,455,634 7,058,315 6,633,911
Marina and launch ramp 248,460 267,412 281,679 250,266 242,055 156,767 194,311 208,370 234,229 228,339
Operating grants and contributions - - - - - - - - 6,188 -
Capital grants and contributions 100,373 710,641 - - 5,179 - 20,074 - 88,046 327,240
Total Business-type program revenues 11,410,739 12,123,865 12,030,002 11,817,113 11,851,235 6,489,860 12,321,996 11,918,099 13,277,392 13,288,970
Total Primary Government program revenues $ 28,491,604 $ 27,543,832 $ 24,716,175 $ 24,506,622 $ 24,275,469 $ 11,841,344 $ 24,422,811 $ 22,383,430 $ 23,495,594 $ 24,368,353
NET (EXPENSE) REVENUE
Governmental Activities $ (15,702,873) $ (17,298,618) $ (20,480,352) $ (22,309,679) $ (22,708,736) $ (10,658,745) $ (21,069,568) $ (21,229,924) $ (21,049,814) $ (20,759,902)
Business-type Activities 2,931,447 2,283,867 775,036 165,350 33,911 855,943 871,244 (568,607) (604,788) (813,821)
Total Primary Government net expense $ (12,771,426) $ (15,014,751) $ (19,705,316) $ (22,144,329) $ (22,674,825) $ (9,802,802) $ (20,198,324) $ (21,798,531) $ (21,654,602) $ (21,573,723)
City of Muskegon
CHANGES IN NET ASSETS/NET POSITION - CONTINUED
Last Ten Fiscal Years
Period Ended
Year Ended December 31, June 30 Year Ended June 30
2005 2006 2007 2008 2009 2010 2011 2012 2013 (a) 2014
GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS/NET POSITION
Governmental Activities
Property taxes $ 7,670,384 $ 7,846,707 $ 8,014,102 $ 8,349,341 $ 8,492,507 $ 8,681,256 $ 8,844,004 $ 8,383,224 $ 7,592,847 $ 7,383,236
Income taxes 7,238,552 7,673,696 7,757,707 8,117,566 6,628,365 3,505,264 6,866,967 7,663,534 8,057,145 7,762,719
Franchise fees 286,265 285,124 297,200 304,812 321,852 178,239 362,103 342,376 358,785 358,754
Grants and contributions not restricted for specific programs 4,627,915 4,674,157 4,475,462 4,487,698 3,841,922 1,832,066 3,846,859 3,577,848 3,700,871 3,813,221
Unrestricted investment earnings 420,595 832,300 1,247,520 730,142 185,436 104,086 193,435 100,073 73,157 146,590
Miscellaneous 70,402 64,645 88,035 160,460 226,124 51,638 432,880 154,531 102,388 124,085
Gain on sale of capital asset 300,037 81,372 1,604 323,048 123,258 65,155 25,815 34,496 44,899 23,836
Transfers (80,000) (540,000) (40,000) (40,000) - (3,760) - - - -
Total Governmental Program Revenues 20,534,150 20,918,001 21,841,630 22,433,067 19,819,464 14,413,944 20,572,063 20,256,082 19,930,092 19,612,441
Business-type Activities
Unrestricted investment earnings 138,053 122,060 170,594 108,990 23,843 15,990 23,959 46,582 33,148 31,251
Gain on sale of capital asset - - - - - - - - - -
Transfers 80,000 540,000 40,000 40,000 - 3,760 - - - -
Total Business-type program revenues 218,053 662,060 210,594 148,990 23,843 19,750 23,959 46,582 33,148 31,251
Total Primary Government program revenues $ 20,752,203 $ 21,580,061 $ 22,052,224 $ 22,582,057 $ 19,843,307 $ 14,433,694 $ 20,596,022 $ 20,302,664 $ 19,963,240 $ 19,643,692
CHANGE IN NET ASSETS/NET POSITION
Governmental Activities $ 4,831,277 $ 3,619,383 $ 1,361,278 $ 123,388 $ (2,889,272) $ 3,755,199 $ (497,505) $ (973,842) $ (1,119,722) $ (1,147,461)
Business-type Activities 3,149,500 2,945,927 985,630 314,340 57,754 875,693 895,203 (522,025) (571,640) (782,570)
112
Total Primary Government $ 7,980,777 $ 6,565,310 $ 2,346,908 $ 437,728 $ (2,831,518) $ 4,630,892 $ 397,698 $ (1,495,867) $ (1,691,362) $ (1,930,031)
(a) In 2013, the City implemented GASB 63 and 65 which changed the elements of the financial statements.
SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial
reports for the relevant year.
City of Muskegon
FUND BALANCE OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
December 31 June 30
2005 2006 2007 2008 2009 2010 2011 (a) 2012 2013 2014
General fund
Reserved $ 79,356 $ 177,076 $ 180,410 $ 214,819 $ 187,633 $ 300,969 $ - $ - $ - $ -
Nonspendable - - - - - - 251,173 178,468 447,341 300,952
Restricted - - - - - - - - - -
Assigned - - - - - - 2,385,728 2,075,738 2,292,495 1,700,000
Unassigned - - - - - - 3,374,481 4,265,839 4,613,722 5,495,145
Unreserved 2,440,249 2,512,963 2,740,222 2,168,906 1,451,029 5,737,485 - - - -
Total general fund $ 2,519,605 $ 2,690,039 $ 2,920,632 $ 2,383,725 $ 1,638,662 $ 6,038,454 $ 6,011,382 $ 6,520,045 $ 7,353,558 $ 7,496,097
All other governmental funds
Reserved $ 2,915,106 $ 7,044,394 $ 4,130,995 $ 4,382,118 $ 3,613,858 $ 3,887,289 $ - $ - $ - $ -
Nonspendable - - - - - - 1,704,256 1,568,318 1,547,793 1,556,347
Restricted - - - - - - 1,375,779 3,485,073 2,749,396 2,305,385
Assigned - - - - - - 2,073,027 2,055,904 2,087,359 1,729,457
Unassigned - - - - - - (238,104) (191,282) (82,048) (100,054)
Unreserved, reported in:
113
Special revenue funds 2,910,285 3,030,096 4,462,015 2,768,886 2,060,117 2,163,041 - - - -
Capital project funds 1,239,763 390,282 635,676 675,898 554,273 6,035 - - - -
Permanent funds 22,890 77,300 84,413 60,813 15,613 16,979 - - - -
Total all other governmental funds $ 7,088,044 $ 10,542,072 $ 9,313,099 $ 7,887,715 $ 6,243,861 $ 6,073,344 $ 4,914,958 $ 6,918,013 $ 6,302,500 $ 5,491,135
(a) In fiscal 2011, the City adopted GASB 54 which changed fund balance classifications.
SOURCE: The information in these schedules (unless otherwise
noted) is derived from the comprehensive annual financial reports
for the relevant year.
City of Muskegon
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
Period Ended
Year Ended December 31 June 30 Year Ended June 30
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Revenues
Taxes $ 14,521,769 $ 15,052,708 $ 15,420,032 $ 15,728,859 $ 14,673,012 $ 11,855,182 $ 15,146,430 $ 15,506,668 $ 14,832,027 $ 14,954,904
Intergovernmental 15,445,949 14,703,371 12,752,363 13,012,035 12,400,408 4,785,494 11,525,749 9,899,379 9,403,554 9,945,065
Charges for services 3,147,066 2,938,246 2,722,894 2,463,975 2,620,372 1,338,194 2,769,204 2,596,328 2,769,227 2,569,335
Other 4,134,604 3,758,956 4,618,149 3,624,579 3,177,522 1,768,895 3,461,292 3,237,189 2,795,952 3,256,324
Total revenues 37,249,388 36,453,281 35,513,438 34,829,448 32,871,314 19,747,765 32,902,675 31,239,564 29,800,760 30,725,628
Expenditures
Public representation 886,717 903,895 927,320 987,229 923,923 448,703 851,918 867,762 892,113 1,031,984
Administrative services 748,588 669,789 644,913 632,513 645,704 303,555 586,328 515,988 508,130 497,025
Financial services 1,905,714 2,056,580 2,231,519 2,298,830 2,406,623 1,241,430 2,352,709 2,407,131 2,196,917 2,197,651
Public safety 12,624,532 13,002,233 12,902,815 13,754,394 13,567,101 6,578,735 13,087,976 12,963,122 12,724,094 12,987,898
Public works 2,661,073 2,730,415 2,768,906 2,831,177 2,860,510 1,589,090 3,079,342 2,835,000 2,878,328 2,918,305
Highways, streets and bridges 9,531,840 8,023,539 6,504,915 6,414,453 3,436,069 1,823,089 3,226,377 2,756,010 2,815,337 3,011,611
Community and economic development 784,396 763,211 894,879 1,077,312 4,440,687 1,330,794 3,109,693 2,850,593 2,578,073 2,687,933
Culture and recreation 2,197,276 2,190,835 2,254,117 2,394,031 2,196,186 639,852 1,197,020 1,265,743 1,248,174 1,308,481
114
Other governmental functions 1,603,292 1,139,148 350,385 562,341 438,292 200,623 1,775,128 770,910 299,812 643,666
Debt service
Principal 1,115,000 1,189,785 1,241,921 999,148 663,371 303,466 1,345,183 289,597 395,211 402,492
Interest and issuance costs 166,071 271,233 324,577 310,432 282,174 136,013 267,258 268,315 292,554 278,412
Capital outlay 3,734,082 6,066,783 5,683,657 5,473,828 3,517,741 980,822 3,301,273 2,948,610 3,230,586 3,577,837
Total expenditure 37,958,581 39,007,446 36,729,924 37,735,688 35,378,381 15,576,172 34,180,205 30,738,781 30,059,329 31,543,295
Excess of revenues over (under) expenditures (709,193) (2,554,165) (1,216,486) (2,906,240) (2,507,067) 4,171,593 (1,277,530) 500,783 (258,569) (817,667)
Other financing sources (uses)
Transfers in 1,839,631 2,358,509 1,926,538 1,477,717 1,359,608 342,188 1,348,694 510,907 1,356,229 743,035
Transfers out (1,947,677) (2,926,554) (1,994,584) (1,409,491) (1,309,910) (359,971) (1,376,740) (613,953) (784,275) (771,081)
Bonds issued 1,061,900 5,626,331 - 500,000 - - - 2,000,000 - -
Sale of capital assets 827,141 1,120,341 286,152 375,723 68,452 75,465 120,118 113,981 190,263 176,887
Total other financing sources (uses) 1,780,995 6,178,627 218,106 943,949 118,150 57,682 92,072 2,010,935 762,217 148,841
Net change in fund balances $ 1,071,802 $ 3,624,462 $ (998,380) $ (1,962,291) $ (2,388,917) $ 4,229,275 $ (1,185,458) $ 2,511,718 $ 503,648 $ (668,826)
Debt service as a percentage of noncapital
expenditures 3.74% 4.44% 5.05% 4.06% 2.97% 3.01% 5.22% 2.01% 2.56% 2.43%
SOURCE: The information in these schedules (unless otherwise
noted) is derived from the comprehensive annual financial reports
for the relevant year.
City of Muskegon
GOVERNMENTAL ACTIVITIES REVENUES BY SOURCE
Last Ten Fiscal Years
Fiscal 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
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%
2011 8,546,677 26.0% 6,599,753 20.1% 11,525,749 35.0% 2,769,204 8.4% 1,179,639 3.6% 447,254 1.4% 412,498 1.3% 1,421,901 4.3% 32,902,675 66.6%
2012 8,093,864 25.9% 7,412,804 23.7% 9,899,379 31.7% 2,596,328 8.3% 1,223,034 3.9% 459,401 1.5% 307,891 1.0% 1,246,863 4.0% 31,239,564 -5.1%
2013 7,325,555 24.6% 7,506,472 25.2% 9,403,554 31.6% 2,769,227 9.3% 1,238,285 4.2% 435,893 1.5% 267,397 0.9% 854,377 2.9% 29,800,760 -4.6%
2014 7,123,481 23.2% 7,831,423 25.5% 9,945,065 32.4% 2,569,335 8.4% 1,570,137 5.1% 418,691 1.4% 352,153 1.1% 915,343 3.0% 30,725,628 3.1%
* 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.
115
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 Total As a Percent
Year Residential Agriculture Commercial Industrial Property Property Ad Valorem Property Property Property IFT and CFT Valuation City Actual
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 11.0768 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 11.0755 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 11.0732 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 11.0685 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 11.0682 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 11.0680 91.48%
2010 332,105,030 - 144,721,736 109,507,141 586,333,907 104,029,037 690,362,944 4,111,154 9,129,000 - 13,240,154 703,603,098 12.0680 94.04%
2011 331,901,631 - 144,675,509 87,261,346 563,838,486 93,465,537 657,304,023 3,071,654 9,129,000 - 12,200,654 669,504,677 12.0749 94.95%
2012 312,930,252 - 134,635,427 81,575,476 529,141,155 91,750,891 620,892,046 3,587,223 6,161,900 - 9,749,123 630,641,169 12.0789 96.40%
2013 310,252,865 - 118,856,014 76,331,458 505,440,337 91,730,093 597,170,430 6,677,737 7,472,900 - 14,150,637 611,321,067 12.0865 96.97%
Assessed and Equalized Valuation of Property
Ad Valorem Assessment Roll Industrial and Commercial Facilities Assessment Roll
Total Industrial Industrial Commercial Total Estimated
Real Personal Total Real Personal Real Total Assessed Actual
116
Year Residential Agriculture Commercial Industrial Property Property Ad Valorem Property Property Property IFT and CFT Valuation Value
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
2010 354,044,700 - 154,185,000 122,703,400 630,933,100 104,020,200 734,953,300 4,120,400 9,129,000 - 13,249,400 748,202,700 1,496,405,400
2011 354,307,945 - 154,700,200 90,467,700 599,475,845 93,456,700 692,932,545 3,080,900 9,129,000 - 12,209,900 705,142,445 1,410,284,890
2012 327,226,000 - 141,238,834 84,084,000 552,548,834 91,740,800 644,289,634 3,719,300 6,161,900 - 9,881,200 654,170,834 1,308,341,668
2013 321,604,220 - 123,831,400 79,037,400 524,473,020 91,720,300 616,193,320 6,766,000 7,472,900 - 14,238,900 630,432,220 1,260,864,440
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, 2014
6/30/2014 12/31/2004
Percent of Percent of
Taxable Total Taxable Taxable Total Taxable
Taxpayer Valuation Rank Valuation Valuation Rank Valuation
Consumers Energy $ 43,086,282 1 7.0% $ 69,169,392 1 9.6%
ADAC Plastics Inc 8,975,700 2 1.5% 6,728,200 5 0.9%
ESCO Company 6,860,454 3 1.1% 5,621,506 10 0.8%
DTE Energy (formerly MichCon) 6,655,800 4 1.1% 9,070,170 3 1.3%
GE Aviation (Johnson Technology) 5,526,800 5 0.9% 7,877,244 4 1.1%
Fleet Engineers Inc 4,176,400 6 0.7% - 0.0%
Muskegon SC Holdings LLC 3,971,900 7 0.6% - 0.0%
117
Lorin Industries 3,837,267 8 0.6% - 0.0%
Glen Oaks Apartments LLC 3,432,300 9 0.6% - 0.0%
Coles Quality Foods 3,263,824 10 0.5% - 0.0%
Sappi (S.D. Warren Co.) - 0.0% 53,981,701 2 7.5%
Dudley Corporation - 0.0% 6,323,467 6 0.9%
Bekaert Steel Wire Corporation - 0.0% 6,038,037 7 0.8%
Holland Neway International - 0.0% 5,735,876 8 0.8%
Brunswick - 0.0% 5,719,010 9 0.8%
Total - 10 Largest 89,786,727 14.7% 176,264,603 24.4%
Total - All Other 521,534,340 85.3% 546,954,113 75.6%
$ 611,321,067 100.0% $ 723,218,716 100.0%
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
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
2010 9.5000 0.0680 2.5000 12.0680 2.4000
2011 9.5000 0.0749 2.5000 12.0749 2.4000
2012 9.5000 0.0789 2.5000 12.0789 2.4000
2013 9.5000 0.0865 2.5000 12.0865 2.4000
Overlapping - County-Wide Rates
Muskegon Intermediate Special Vocational Community
Year County School Education Education College
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
2010 6.6957 0.4597 2.2987 0.9996 2.2037
2011 6.6957 0.4597 2.2987 0.9996 2.2037
2012 6.6957 0.4597 2.2987 0.9996 2.2037
2013 6.6957 0.4597 2.2987 0.9996 2.2037
Overlapping - School District Grand Total
State Non-
Year Operating Debt Total Education Homestead Homestead
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
2010 18.0000 5.7500 23.7500 6.0000 38.8754 56.8754
2011 18.0000 6.2500 24.2500 6.0000 39.3823 57.3823
2012 18.0000 7.1000 25.1000 6.0000 40.2363 58.2363
2013 18.0000 7.1000 25.1000 6.0000 40.2439 58.2439
118
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
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%
2010 8,945,500 7,784,052 87.0% 1,077,056 8,861,108 99.1% 58,027 70,745 13,647 1.59%
2011 8,583,284 7,457,610 86.9% 1,030,902 8,488,512 98.9% 54,707 80,068 12,935 1.72%
2012 7,872,541 6,882,534 87.4% 915,950 7,798,484 99.1% 27,163 68,945 5,113 1.29%
2013 7,668,166 6,703,147 87.4% 912,362 7,615,509 99.3% 102,713 45,361 7,296 2.03%
119
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
Year Ended June 30, 2014 Year Ended December 31, 2004
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 967 5% $ 1,136,500 $ 11,365 0% 1,166 5% $ 1,112,400 $ 11,124 0%
$2,501-$7,500 610 3% 6,437,100 64,371 1% 942 4% 6,735,600 67,356 1%
$7,501-$25,000 1,555 9% 5,313,000 53,130 1% 2,368 10% 55,235,800 552,358 8%
$25,001-$50,000 1,340 7% 104,428,600 1,044,286 13% 2,046 9% 105,764,900 1,057,649 15%
$50,001-$100,000 826 5% 118,323,600 1,183,236 15% 858 4% 82,679,200 826,792 12%
More than $100,000 165 1% 53,651,800 536,518 7% 147 1% 34,794,300 347,943 5%
Subtotal 5,463 30% $ 289,290,600 $ 2,892,906 36% 7,527 32% $ 286,322,200 $ 2,863,222 41%
Non-Residents Taxpayers:
120
(Non-residents are taxed at a rate of 0.5% on income earned within the City.)
$2,500 or less 1,635 9% $ 930,400 $ 7,614 0% 2,105 9% $ 1,421,600 $ 10,432 0%
$2,501-$7,500 1,046 6% 5,008,000 40,984 1% 1,382 6% 6,643,600 48,728 1%
$7,501-$25,000 2,534 14% 41,386,200 338,696 4% 3,593 15% 59,821,200 448,663 6%
$25,001-$50,000 2,999 16% 109,639,600 897,267 11% 4,193 18% 153,858,400 1,153,709 16%
$50,001-$100,000 2,162 12% 143,963,296 1,178,164 15% 2,209 9% 144,881,000 1,020,196 15%
More than $100,000 633 3% 131,118,800 1,073,048 14% 549 2% 111,706,652 817,765 12%
Subtotal 11,009 60% $ 432,046,296 $ 3,535,773 45% 14,031 60% $ 478,332,452 $ 3,499,493 50%
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 1,750 10% $ 1,499,133 19% 1,800 8% $ 670,672 10%
Total 18,222 100% $ 7,927,812 100% 23,358 100% $ 7,033,387 100%
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.
City of Muskegon
RATIO OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
Governmental Activities Business-Type Activities
General
Obligation Special Total
Limited Tax Assessment Governmental Revenue Intergovernmental Total Business- Total Primary Per
Year Bonds Bonds State Loans Activities Bonds Contactual Debt State Loans Type Activities Government Capita
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 $ 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 34,042,040 855
2007 7,444,118 395,000 1,136,900 8,976,018 7,565,000 1,221,207 12,760,000 21,546,207 30,522,225 766
2008 6,844,970 215,000 1,416,900 8,476,870 7,075,000 - 12,170,000 19,245,000 27,721,870 696
2009 6,623,499 70,000 1,120,000 7,813,499 6,565,000 - 11,570,000 18,135,000 25,948,499 659
2010* 6,444,605 - 1,065,428 7,510,033 5,995,000 - 11,570,000 17,565,000 25,075,033 639
2011 5,920,000 - 244,850 6,164,850 5,415,000 - 10,955,000 16,370,000 22,534,850 587
121
2012 7,725,000 - 150,253 7,875,253 4,815,000 - 10,325,000 15,140,000 23,015,253 599
2013 7,350,000 - 130,042 7,480,042 4,205,000 - 9,685,000 13,890,000 21,370,042 577
2014 6,965,000 - 112,550 7,077,550 3,565,000 - 9,030,000 12,595,000 19,672,550 531
* 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.
City of Muskegon
DIRECT AND OVERLAPPING DEBT
June 30, 2014
Total Debt Debt Supported by City
Name of Governmental Unit Outstanding Self Supporting General Revenues
Direct Debt
City of Muskegon:
Revenue Bonds $ 12,595,000 $ 12,595,000 $ -
Capital Improvement Bonds 6,965,000 - 6,965,000
Intergovernmental Bonds 112,550 - 112,550
Component Unit Debt:
Downtown Development Authority 2,225,000 2,225,000 -
Local Development Finance Authority 3,840,000 3,840,000 -
Total City Direct Debt $ 25,737,550 $ 18,660,000 $ 7,077,550
City Share as
Gross Percent of Gross Net
Overlapping Debt
Muskegon School Distict $ 23,970,000 95.04% $ 22,781,088
Orchard View School Distict 45,982,806 25.85% 11,886,555
Reeths Puffer School Distict 75,273,889 6.20% 4,666,981
Muskegon Intermediate School District - -
Muskegon County 62,155,000 14.12% 8,776,286
Muskegon Community College 6,675,000 14.12% 942,510
Total Overlapping Debt $ 214,056,695 49,053,420
Total City Direct and Overlapping Debt $ 56,130,970
NOTE: None of the debt issued by the City is payable through the levy of property tax millages
The percentage of overlapping debt is estimated using taxable property values. Applicable percentages were estimated by
detrmining the portion of the City's taxable value that is within each overalapping governemnt unit's boundaries. 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.
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City of Muskegon
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
2005 2006 2007 2008 2009 2010* 2011 2012 2013 2014
Debt Limit $ 76,252,738 $ 78,773,640 $ 84,174,359 $ 85,933,940 $ 82,198,965 $ 82,198,965 $ 78,308,925 $ 73,585,150 $ 68,555,700 $ 61,706,477
Total net debt applicable to limit 9,918,800 16,142,939 15,591,018 15,481,870 14,778,499 14,435,033 12,929,850 14,375,253 13,655,042 12,847,550
Legal debt margin $ 66,333,938 $ 62,630,701 $ 68,583,341 $ 70,452,070 $ 67,420,466 $ 67,763,932 $ 65,379,075 $ 59,209,897 $ 54,900,658 $ 48,858,927
Total net debt applicable to the limit as 13.01% 20.49% 18.52% 18.02% 17.98% 17.56% 16.51% 19.54% 19.92% 20.82%
a percentage of debt limit
Legal Debt Margin Calculation for 2013:
Assessed Valuation: $ 617,064,770
Legal Debt Limit (10% ) 61,706,477
Total Indebtedness: $ 25,737,550
Debt not Subject to Limitation:
Paid by Special Assessment (295,000)
Revenue Bonds (12,595,000)
123
Debt Subject to Limitation 12,847,550
Legal Debt Margin $ 48,858,927
* 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.
City of Muskegon
REVENUE BOND COVERAGE
Last Ten Fiscal Years
Water Supply System
Direct Net Revenue
Fiscal Gross Operating Available For Debt Service Requirements
Year Revenue (a) Expenses (b) Debt Service Principal Interest Total Coverage
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
2011 5,467,785 3,294,530 2,173,255 1,195,000 451,323 1,646,323 1.32
2012 5,273,720 3,441,078 1,832,642 1,230,000 410,187 1,640,187 1.12
2013 5,907,784 3,729,276 2,178,508 1,250,000 384,694 1,634,694 1.33
2014 6,109,144 3,511,477 2,597,667 1,295,000 352,634 1,647,634 1.58
Sewage Disposal System
Direct Net Revenue
Fiscal Gross Operating Available For Debt Service Requirements
Year Revenue (a) Expenses (b) Debt Service Principal Interest Total Coverage
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 Direct System Indebtedness
2010* No Direct System Indebtedness
2011 No Direct System Indebtedness
2012 No Direct System Indebtedness
2013 No Direct System Indebtedness
2014 No Direct 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 position 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.
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City of Muskegon
DEMOGRAPHIC AND ECONOMIC STATISTICS
Last Ten Fiscal Years
Fiscal Personal Per Capita Median Public School Building Permits
Year Population Income Income Age Enrollment Number Value Unemployment
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%
2011 38,401 737,646,617 19,209 34.1 5,162 835 18,829,825 13.8%
2012 38,225 752,622,470 19,689 34.1 5,428 891 21,932,738 8.5%
2013 37,046 747,644,037 20,182 34.1 4,367 826 24,613,938 12.0%
125
2014 37,213 769,789,707 20,686 34.1 4,808 1,108 54,065,115 9.6%
SOURCE: US Census Bureau, Muskegon Area Intermediate School Distrct (MAISD), City of Muskegon Inspections Department, Michigan Department of Technology,
Management, & Budget
City of Muskegon
PRINCIPAL EMPLOYERS
Current Year and Ten Years Ago
2014 2005
Percentage Percentage
of total of total
City City
Employer Employees Rank employment Employees Rank employment
Mercy General Health Partners* 3,881 1 25.8% 2,000 1 11.9%
County of Muskegon 1,250 2 8.3% 1,280 3 7.6%
Muskegon Public Schools 676 5 4.5% 1,050 5 6.3%
State of Michigan 750 4 5.0% 1,175 4 7.0%
ADAC Plastics 1,000 3 6.7% 500 6 3.0%
GE Aviation formerly Johnson Technology 647 6 4.3% 425 7 2.5%
126
Port City Group 622 7 4.1% - - 0.0%
Knoll Group 375 8 2.5% - - 0.0%
SAF Holland USA 350 9 2.3% - - 0.0%
Muskegon Community College 209 10 1.4% - - 0.0%
Hackley Hospital* - - 0.0% 1,610 2 9.6%
Sappi/S.D. Warren Company - - 0.0% 323 9 1.9%
Verizon - - 0.0% 350 8 2.1%
Brunswick - - 0.0% 315 10 1.9%
* Hackley Hospital merged with the former Mercy Hospital.
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 2005 2006 2007 2008 2009 2010* 2011 2012 2013 2014
Administration 1.50 1.50 1.50 1.50 - - 0.40 0.40 0.40 0.40
Affirmative Action 1.50 1.50 1.50 1.50 1.50 1.50 1.10 1.10 1.10 1.10
Cemetaries 3.25 3.00 3.25 3.25 3.25 2.50 2.20 1.75 1.25 1.25
City Clerk & Elections 4.00 4.00 4.00 4.00 4.00 3.00 3.00 3.00 3.00 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 1.00 1.00 1.00 1.00 1.00 1.00 0.55 0.55 0.55 0.55
City Manager's Office 1.75 1.75 1.75 1.75 3.25 2.25 2.25 2.25 2.25 2.25
City Treasurer's Office 5.00 5.00 4.00 5.00 5.00 5.00 5.00 5.00 5.00 4.50
Civil Service 2.00 2.00 2.00 2.00 2.00 2.00 1.00 - - -
Environmental Services 2.00 2.00 2.00 2.00 2.00 2.00 2.00 5.00 5.00 5.00
Farmers Market - - - - 0.05 0.05 0.05 0.05 0.05 0.05
Finance Administration 4.00 4.00 4.00 4.00 4.00 3.00 3.00 3.00 2.00 2.00
Fire 40.00 38.00 38.00 38.00 38.00 36.00 33.00 35.00 28.00 28.83
Fire Safety Inspections 10.00 12.00 12.00 12.00 12.00 9.00 8.00 6.00 6.00 0.83
Forestry - - - - - - - - - -
General Recreation 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 4.50
127
Information Systems 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Parks 8.48 8.25 8.15 8.15 7.99 7.15 6.00 6.05 6.05 6.00
Planning, Zoning & Economic Development 6.00 6.00 6.00 6.00 6.00 5.00 4.00 3.00 3.00 3.00
Police 94.00 94.00 94.00 94.00 94.00 88.00 88.00 88.00 88.00 87.34
Sanitation 1.10 1.00 1.00 1.00 1.00 - 0.30 0.20 0.20 0.20
Senior Transit - - - - - - - 0.05 0.05 0.05
MVH-Major Streets 15.25 16.00 17.75 15.75 13.75 12.00 12.00 11.70 10.70 10.70
MVH-Local Streets 7.00 7.00 7.00 6.00 8.00 7.00 7.00 6.70 6.70 6.70
MVH-State Trunklines 2.00 2.00 - - - - - - - -
Walker Arena - - - - - - - - - -
Community Development 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Home Program 1.00 1.00 1.00 1.00 1.00 0.25 0.25 - - -
Lead Program - - - - - 0.75 0.75 - - -
Sewer Maintenance 15.05 16.00 16.20 15.20 13.20 10.20 10.20 9.75 9.75 9.80
Water Filtration 10.00 10.00 10.00 10.00 10.00 10.00 10.00 9.00 10.00 10.00
Water Maintenance 14.65 13.00 12.50 13.50 15.40 12.40 12.40 11.75 11.75 11.75
Hartshorn Marina Fund 0.67 0.73 0.67 0.34 0.05 0.05 0.05 0.30 0.30 0.30
Public Service Building 3.85 3.45 3.45 3.45 3.70 8.95 8.05 7.95 8.45 8.45
Engineering 7.70 7.45 7.45 7.45 7.45 5.45 4.95 4.95 4.95 4.95
Equipment 8.00 8.95 8.25 8.25 8.50 7.25 6.25 6.25 6.25 6.25
284.00 284.00 282.00 280.00 280.00 256.00 244.00 241.00 233.00 227.00
* 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 2005 2006 2007 2008 2009 2010* 2011 2012 2013 2014
Administrative Services
Elections
Number of registered voters 25,918 26,028 26,345 27,678 26,136 26,136 26,330 26,324 26,098 26,025
Number of votes cast:
Last general election 14,169 10,410 10,410 15,271 15,271 15,271 8,106 1,933 13,487 3,029
Last city election 4,022 4,022 1,101 1,101 2,254 2,254 8,106 1,933 2,131 3,029
Percentage of registered voters voting:
Last general election 55% 40% 40% 55% 58% 58% 31% 7% 52% 12%
Last city election 16% 15% 4% 4% 9% 9% 31% 7% 8% 12%
Financial Services
Property Tax Bills 15,404 15,354 15,376 15,350 15,435 - 15,351 15,261 15,291 15,211
Income Tax Returns 23,884 23,493 23,141 22,598 21,071 19,963 19,688 18,699 17,857 18,222
Paper Check Issued to Vendors 3,205 3,248 3,347 3,346 3,113 1,486 2,986 3,746 1,677 1,404
Electronic Payments to Vendors 828 800 772 763 963 450 884 1,334 1,251 1,579
128
Public Safety
Fire Protection
Number of firefighter and officer positions 41 41 41 41 37 37 37 36 41 38
Number of emergency calls 4,206 4,092 4,171 4,298 4,220 2,062 4,402 4,676 4,563 4,354
Police Protection
Number of sworn officer positions 83 84 84 84 79 79 79 79 79 76
Part I (Major) Crimes 3,303 3,495 2,997 3,107 3,071 1,305 2,859 2,772 2,647 2,240
Public Works
Refuse Collected (Tons per Year) 11,074 11,192 10,375 10,401 10,526 6,042 12,703 10,153 9,958 10,217
Recyclables Collected (Tons per Year) 588 559 629 626 309 - - - - -
Water & Sewer
Number of consumers 14,455 14,412 14,364 13,131 12,987 12,966 13,037 13,109 13,144 13,086
Average daily water consumption (GPD) 9,582,000 8,998,000 9,314,000 8,879,000 7,976,000 7,163,000 8,417,000 7,700,000 7,651,000 7,666,000
Water main breaks repaired 5 13 21 34 17 6 12 5 11 30
Sewer flows (Millions Gallons per Year) 1,700 2,040 1,945 2,181 1,979 965 1,625 1,695 1,777 1,833
Sewer Service Calls 638 605 598 533 508 263 591 522 508 532
* 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 2005 2006 2007 2008 2009 2010* 2011 2012 2013 2014
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 196.95 197.48 197.79 197.79 196.95 196.95 196.95 196.95 196.95 196.95
Number of streetlights 3,159 3,159 3,134 3,134 3,192 3,125 3,065 2,838 2,838 2,838
Culture and Recreation
Number of parks (acres) 701 701 701 701 701 701 701 701 701 701
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
129
Sanitary sewers (miles) 179.41 175.74 177.04 177.04 177.04 177.04 177.04 177.04 177.04 177.04
Storm sewers (miles) 179.23 180.48 183.25 183.60 184.35 184.35 184.35 184.35 184.35 184.25
Water
Water mains (miles) 194.14 194.15 195.63 195.58 195.69 195.69 195.69 195.40 195.95 195.95
* The City changed its fiscal year end from December 31 to June 30. 2010 figures are for six months.
SOURCE: City of Muskegon Departments
130
SINGLE AUDIT OF FEDERAL FINANCIAL ASSISTANCE PROGRAMS
131
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
October 17, 2014
City Commission
City of Muskegon
Muskegon, Michigan
We have audited, in accordance with the auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in the Government Auditing Standards issued by the
Comptroller General of the United States, the 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 year ended June 30, 2014, and the related notes to the
financial statements, which collectively comprise the City of Muskegon’s basic financial statements, and have
issued our report thereon dated October 17, 2014.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City of Muskegon’s internal
control over financial reporting (internal control) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of
expressing an opinion on the effectiveness of the City of Muskegon’s internal control. Accordingly, we do not
express an opinion on the effectiveness of the City of Muskegon’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal
control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements
will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a
combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough
to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section
and was not designed to identify all deficiencies in internal control that might be material weaknesses or
significant deficiencies. Given these limitations, during our audit, we did not identify any deficiencies in internal
control that we consider to be material weaknesses. However, material weaknesses may exist that have not been
identified.
678 Front Ave., NW Suite 230 316 Morris Ave., Suite 500, P.O. Box 999 907 S. State St.
Grand Rapids, MI 49504 Muskegon, MI 49443 Hart, MI 49420
PHONE (616) 742-1300 PHONE (231) 726-5800 PHONE (231) 873-1040
FAX (616) 742-1318 FAX (231) 722-0260 FAX (231) 873-0602
www.brickleydelong.com
132
BRICKLEY DELONG
City Commission
October 17, 2014
Page 2
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City of Muskegon’s financial statements are free
from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of
our tests disclosed no instances of noncompliance or other matters that are required to be reported under
Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the
results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on
compliance. This report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not
suitable for any other purpose.
Muskegon, Michigan
133
BRICKLEY DELONG
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJOR
PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE
REQUIRED BY OMB CIRCULAR A-133
October 17, 2014
City Commission
City of Muskegon
Muskegon, Michigan
Report on Compliance for Major Federal Program
We have audited the City of Muskegon’s compliance with the types of compliance requirements described in the
OMB Circular A-133 Compliance Supplement that could have a direct and material effect on the City of
Muskegon’s major federal program for the year ended June 30, 2014. The City of Muskegon’s major federal
program is identified in the Summary of Auditors’ Results section of the accompanying Schedule of Findings and
Responses.
Management’s Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants
applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for the City of Muskegon’s major federal program
based on our audit of the types of compliance requirements referred to above. 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 on compliance for the major federal
program. However, our audit does not provide a legal determination of the City of Muskegon’s compliance.
Opinion on Major Federal Program
In our opinion, the City of Muskegon complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on its major federal program for the
year ended June 30, 2014.
678 Front Ave., NW Suite 230 316 Morris Ave., Suite 500, P.O. Box 999 907 S. State St.
Grand Rapids, MI 49504 Muskegon, MI 49443 Hart, MI 49420
PHONE (616) 742-1300 PHONE (231) 726-5800 PHONE (231) 873-1040
FAX (616) 742-1318 FAX (231) 722-0260 FAX (231) 873-0602
www.brickleydelong.com
134
BRICKLEY DELONG
City Commission
October 17, 2014
Page 2
Report on Internal Control Over Compliance
Management of the City of Muskegon is responsible for establishing and maintaining effective internal control
over compliance with the types of compliance requirements referred to above. In planning and performing our
audit of compliance, we considered the City of Muskegon’s internal control over compliance with the types of
requirements that could have a direct and material effect on the major federal program to determine the auditing
procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for
the major federal program 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.
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. A significant deficiency in internal control over compliance is a deficiency, or a
combination of deficiencies, in internal control over compliance with a type of compliance requirement of a
federal program that is less severe than a material weakness in internal control over compliance, yet important
enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control over compliance that might be
material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over
compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not
been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of
internal control over compliance and the results of that testing based on the requirement of OMB Circular A-133.
Accordingly, this report is not suitable for any other purpose.
Muskegon, Michigan
135
City of Muskegon
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the year ended June 30, 2014
Accrued Accrued
Entitlement (Deferred) Cash or (Deferred)
Federal Program or Revenue Payments In- Amount of Revenue
Federal Grantor/Pass-Through CFDA Award July 1, Kind Received Grant June 30,
Grantor/Program Title Number Amount 2013 (Cash Basis) Expenditures 2014 Notes
U.S. Department of Housing and Urban Development
Direct programs
Community Development Block Grants/Entitlement Grants 14.218
B-12-MC-26-0026 $ 827,856 $ 209,990 $ 259,918 $ 49,928 $ -
B-13-MC-26-0026 887,919 - 507,794 799,227 291,433
Program Income 30,829 - 30,829 30,829 -
Total Community Development Block Grants/
Entitlement Grants 1,746,604 209,990 798,541 879,984 291,433 5
HOME Investment Partnerships Program 14.239
M-12-MC-26-0215 246,299 18,026 159,405 141,379 -
136
M-13-MC-26-0215 282,526 - 75,876 85,163 9,287
Program Income 143,876 - 143,876 143,876 -
Total HOME Investment Partnerships Program 672,701 18,026 379,157 370,418 9,287
Total direct programs 2,419,305 228,016 1,177,698 1,250,402 300,720
Passed through Michigan State Housing Development Authority
Community Development Block Grants/Entitlement Grants 14.218
Neighborhood Stabilization Program
NSP-2008-0280-ENT 1,670,891 130,391 130,391 - -
Program Income 56,559 - 56,559 56,559 -
Total Neighborhood Stabilization Program 1,727,450 130,391 186,950 56,559 - 5
Total U.S. Department of Housing and
Urban Development 4,146,755 358,407 1,364,648 1,306,961 300,720
City of Muskegon
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS—CONTINUED
For the year ended June 30, 2014
Accrued Accrued
Entitlement (Deferred) Cash or (Deferred)
Federal Program or Revenue Payments In- Amount of Revenue
Federal Grantor/Pass-Through CFDA Award July 1, Kind Received Grant June 30,
Grantor/Program Title Number Amount 2013 (Cash Basis) Expenditures 2014 Notes
U.S. Department of Justice
Direct programs
Bulletproof Vest Partnership Grant 16.607
2012 Grant $ 3,500 $ - $ 2,675 $ 2,675 $ -
2013 Grant 9,766 - 2,395 2,395 -
13,266 - 5,070 5,070 -
Edward Byrne Memorial Justice Assistance Grant 16.738
Program
2012-DJ-BX-0725 46,074 - 17,561 17,561 -
2013-DJ-BX-0101 43,895 - 43,895 43,895 -
89,969 - 61,456 61,456 -
137
Total direct programs 103,235 - 66,526 66,526 -
Passed through Ottawa County
Edward Byrne Memorial Justice Assistance Grant 16.738
Program
70834-614B 16,798 - 16,798 16,798 -
Total U.S. Department of Justice 120,033 - 83,324 83,324 -
U.S. Department of Homeland Security
Passed through Muskegon County
Port Security Grant Program 97.056
EMW-2013-PU-00159-S01 83,254 - 83,112 83,112 -
TOTAL FEDERAL ASSISTANCE $ 4,350,042 $ 358,407 $ 1,531,084 $ 1,473,397 $ 300,720
The accompanying notes are an integral part of this schedule.
City of Muskegon
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the year ended June 30, 2014
1. The accompanying Schedule of Expenditures of Federal Awards (the "schedule") includes the federal grant activity of the City under programs of the federal government for the year
ended June 30, 2014. The information in this schedule is presented in accordance with the requirements of the Office of Management and Budget (OMB) Circular A-133, Audits of
States, Local Governments, and Non-Profit Organizations. Because the schedule presents only a selected portion of the operations of the City, it is not intended to and does not present
the financial position or change in net position of the City.
2. Please see the financial statement footnotes for the significant accounting policies used in preparing this schedule. Expenditures are recognized following the cost principles contained
in OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments, wherein certain types of expenditures are not allowable or are limited as to reimbursement.
Negative amounts shown on the schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Pass-through
entity identifying numbers are presented where available.
3. 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's financial
statements for the year ended June 30, 2014 and federal expenditures per the Schedule of Expenditures of Federal Awards.
Federal revenues per City of Muskegon financial statements
General Fund $ 83,324
Major Street and Trunkline Fund 1,005,475
Other governmental funds 1,075,697
2,164,496
Plus federal revenues reported as capital contributions in the Equipment Fund 83,112
138
Plus program income 231,264
Less MDOT contracted projects as shown below (1,005,475)
Federal expenditures per the Schedule of Expenditures of Federal Awards $ 1,473,397
4. The Michigan Department of Transportation (MDOT) requires that cities report all federal and state grants pertaining to their city. During the year ended June 30, 2014 the federal aid
received and expended by the City of Muskegon was $1,005,475 for contracted projects as shown below. Contracted projects are defined as projects performed by private contractors
and paid for and administrated by MDOT (they are included in MDOT's single audit). Negotiated projects are projects where the City of Muskegon 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 (Federal-Aid Highway Program) 20.205
Proj STP 1361(022) Fed Item HH8841 Contract 13-5425 $ 704,475 $ 704,475
Proj STP 1361(015) Fed Item HH8514 Contract 13-5097 301,000 301,000
Total U.S. Department of Transportation,
Federal Highway Administration (contracted projects) $ 1,005,475 $ 1,005,475
5. Community Development Block Grants/Entitlement Grants
City of Muskegon
SCHEDULE OF FINDINGS AND RESPONSES
Year ended June 30, 2014
SECTION I—SUMMARY OF AUDITORS’ RESULTS
A. Financial Statements
1. Type of auditors' report issued: Unmodified
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? yes X 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: Unmodified
3. Any audit findings disclosed that are required to be reported in
accordance with section 510(a) of OMB Circular A-133? yes X no
4. Identification of major programs:
CFDA Number(s) Name of Federal Program/Cluster
U.S. Department of Housing and Urban Development
14.218 Community Development Block Grants/Entitlement Grants
5. Dollar threshold used to distinguish between type A and type B programs: $300,000
6. Auditee qualified as low-risk auditee? yes X no
SECTION II – FINANCIAL STATEMENT FINDINGS
NONE
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
NONE
139
140
CLIENT DOCUMENTS
141
City of Muskegon
933 Terrace Street
Muskegon, MI 49440
Phone: (231) 724-6709
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
October 17, 2014
U.S. Department of Housing and Urban Development
Washington, D.C.
The City of Muskegon respectfully advises you that there were no audit findings reported in our single audit
report, dated October 25, 2013, for the year ended June 30, 2013.
Sincerely,
Derrick Smith
Finance Director
142
City of Muskegon
933 Terrace Street
Muskegon, MI 49440
Phone: (231) 724-6709
CORRECTIVE ACTION PLAN
October 17, 2014
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,
2014.
Name and address of independent public accounting firm:
Brickley DeLong, P.C.
P.O. Box 999
Muskegon, Michigan 49443
Audit period: June 30, 2014
The findings from the Schedule of Findings and Responses for the year ended June 30, 2014 provided no findings
in either Section II or Section III. Accordingly, there are no matters requiring corrective action as shown below.
SECTION II – FINANCIAL STATEMENT FINDINGS
There were no findings in relation to the financial statement audit.
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
There were no findings in relation to the major federal award programs.
If the U.S. Department of Housing and Urban Development has questions regarding this plan, please call Derrick
Smith at (231) 724-6709.
Sincerely,
Derrick Smith
Finance Director
143
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