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CITY OF MUSKEGON,
MICHIGAN
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
JUNE 30, 2020
Prepared By
FINANCIAL SERVICES DIVISION
Elizabeth Lewis James Maurer
Finance Director Information Systems Director
Kenneth Grant Mike VanderMolen
Assistant Finance Director Management Assistant
Sarah Petersen
City Treasurer
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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 Auditor’s Report ................................................................................................................. 17
Management’s Discussion and Analysis ................................................................................................. 21
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 (Deficit).......................................................................................................... 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
Discretely Presented Component Units
Statement of Net Position ................................................................................................................. 44
Statement of Activities ...................................................................................................................... 45
Notes to Financial Statements .............................................................................................................. 46
Required Supplementary Information
Budgetary Comparison Schedule—General Fund ............................................................................... 84
Budgetary Comparison Schedule—Major Street and Trunkline Fund ................................................ 89
Schedule of Changes in Net Pension Liability and Related Ratios ...................................................... 90
Pension System Schedule of Contributions ......................................................................................... 91
Retiree Healthcare System Schedule of Changes in the
Net OPEB Liability and Related Ratios ............................................................................................. 92
Retiree Healthcare System Schedule of Contributions ........................................................................ 93
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City of Muskegon
TABLE OF CONTENTS
Other Supplemental Information
Other Governmental Funds
Description of Other Governmental Funds ....................................................................................... 96
Combining Balance Sheet ................................................................................................................. 98
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances................................................................................................................................ 99
Other Special Revenue Funds
Combining Balance Sheet............................................................................................................ 100
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances .......................................................................................................................... 101
Budgetary Comparison Schedule—Other Special Revenue Funds ............................................. 102
Other Capital Projects Funds
Combining Balance Sheet............................................................................................................ 105
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances .......................................................................................................................... 106
Internal Service Funds
Description of Internal Service Funds ............................................................................................ 107
Combining Statement of Net Position ............................................................................................ 108
Combining Statement of Revenues, Expenses and
Changes in Fund Net Position ..................................................................................................... 109
Combining Statement of Cash Flows.............................................................................................. 110
Fiduciary Funds
Description of Fiduciary Funds....................................................................................................... 111
Agency Funds
Combining Statement of Assets and Liabilities ........................................................................... 112
Statement of Changes in Assets and Liabilities ........................................................................... 113
Discretely Presented Component Units
Description of Discretely Presented Component Units .................................................................. 115
Combining Balance Sheet ............................................................................................................... 116
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Position .................................................................................................. 117
Combining Statement of Revenues, Expenditures and Changes
in Fund Balances (Deficits) ......................................................................................................... 118
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures and Changes in Fund Balances (Deficits) to the Statement
of Activities ................................................................................................................................. 119
Schedule of Indebtedness ................................................................................................................... 121
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City of Muskegon
TABLE OF CONTENTS
STATISTICAL SECTION
Financial Trends
Net Assets/Net Position by Component ............................................................................................. 126
Changes in Net Assets/Net Position ................................................................................................... 127
Fund Balances of Governmental Funds ............................................................................................. 129
Changes in Fund Balances of Governmental Funds .......................................................................... 130
Revenue Capacity
Governmental Activities Revenues by Source ................................................................................... 131
Taxable, Assessed and Equalized and Estimated Actual Valuation of Property................................ 132
Principal Property Taxpayers ............................................................................................................. 133
Property Tax Rates – Direct and Overlapping Government Units ..................................................... 134
Property Tax Levies and Collections ................................................................................................. 135
Total Income Tax Collected and Number of Returns Filed ............................................................... 136
Debt Capacity
Ratio of Outstanding Debt by Type ................................................................................................... 138
Direct and Overlapping Debt ............................................................................................................. 139
Legal Debt Margin Information ......................................................................................................... 140
Revenue Bond Coverage .................................................................................................................... 141
Demographic and Economic Information
Demographic and Economic Statistics ............................................................................................... 142
Principal Employers ........................................................................................................................... 143
Operation Information
Full-time Equivalent Government Employees ................................................................................... 144
Operating Indicators by Function/Program ........................................................................................ 145
Capital Asset Statistics by Function/Program .................................................................................... 146
SINGLE AUDIT OF FEDERAL FINANCIAL ASSISTANCE PROGRAMS
Independent Auditor’s Report on Internal Control over Financial
Reporting and on Compliance and Other Matters Based on an
Audit of Financial Statements Performed in Accordance with
Government Auditing Standards .................................................................................................... 148
Independent Auditor’s Report on Compliance for Each Major
Program and on Internal Control over Compliance Required by
the Uniform Guidance .................................................................................................................... 150
Schedule of Expenditures of Federal Awards ..................................................................................... 152
Notes to Schedule of Expenditures of Federal Awards ....................................................................... 154
Schedule of Findings and Responses................................................................................................... 155
Client Documents
Summary Schedule of Prior Audit Findings ................................................................................... 158
Corrective Action Plan ................................................................................................................... 159
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Affirmative Action
(231)724-6703
FAX (231)722-1214
Assessor/
Equalization Co.
(231)724-6386
FAX (231)724-1129
Cemetery/Forestry
(231)724-6783
FAX (231)724-4188
City Manager
(231)724-6724
FAX (231)722-1214 December 22, 2020
Clerk
(231)724-6705
FAX (231)724-4178
To the Honorable Mayor, Members of the City Commission and Citizens of the City of
Comm. & Neigh.
Services
Muskegon:
(231)724-6717
FAX (231)726-2501
State law requires that every general-purpose local government publish, within six
Computer Info. months of the close of each fiscal year, a complete set of audited financial
Technology
(231)724-4126 statements. This report is published to fulfill that requirement for the fiscal year ended
FAX (231)722-4301 June 30, 2020.
Engineering
(231)724-6707
FAX (231)727-6904 Management assumes full responsibility for the completeness and reliability of the
information contained in this report, based upon a comprehensive framework of
Finance
(231)724-6713 internal control that it has established for this purpose. Because the cost of internal
FAX (231)726-2325 control should not exceed anticipated benefits, the objective is to provide reasonable,
Fire Department rather than absolute, assurance that the financial statements are free of any material
(231)724-6795
FAX (231)724-6985
misstatements.
Human Resources
Co. (Civil Service) Brickley DeLong, PC, Certified Public Accountants, have issued an unmodified
(231)724-6442 (“clean”) opinion on the City of Muskegon’s financial statements for the year ended
FAX (231)724-6840
June 30, 2020. The independent auditor’s report is located at the front of the financial
Income Tax
(231)724-6770
section of this report.
FAX (231)724-6768
Mayor’s Office
Management’s discussion and analysis (MD&A) immediately follows the independent
(231)724-6701 auditor’s report and provides a narrative introduction, overview, and analysis of the
FAX (231)722-1214
basic financial statements. MD&A complements this letter of transmittal and should
Planning/Zoning be read in conjunction with it.
(231)724-6702
FAX (231)724-6790
Police Department
(231)724-6750 Profile of the government
FAX (231)722-5140
The City of Muskegon operates under a commission-manager form of government
Public Works
(231)724-4100 and provides a full range of traditional municipal services. Policy-making and
FAX (231)722-4188 legislative authority are vested in the governing board (Commission) consisting of the
SafeBuilt mayor and six commissioners. Two commissioners are elected at large and each of
(Inspections) the four ward commissioners is elected by the voters of their respective wards.
(231)724-6715
FAX (231)728-4371 Commission members serve four-year terms, with the two at large members elected
Treasurer every four years in odd years and the four ward commissioners elected every four
(231)724-6720 years in even years. The Mayor is also elected at-large for a four-year term. The
FAX (231)724-6768
Mayor and Commission appoint the City of Muskegon’s manager.
Water Billing
(231)724-6718
FAX (231)724-6768
Water Filtration
(231)724-4106
FAX (231)755-5290 5
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 and economic
development; and general administrative support services. The City also provides treated
drinking 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 18 square miles (including 4 miles of water) 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:
• 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. 2020 marks the ferry service’s
seventeenth 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 welcomes tens of thousands of visitors from across the United States each
summer.
• Muskegon is home to successful summertime festivals that attract tens of thousands of
visitors to the community. These include Taste of Muskegon, which attracts thousands
of visitors to Muskegon each June, Bike Time and Rebel Road, which attract motorcycle
enthusiasts to the City in July, the Unity Christian Music Festival, Shoreline Jazz
Festival, Great Lakes Surf Festival, and the Burning Foot Beer Fest in August, and the
Muskegon Polish Festival and Michigan Irish Music Festival in September.
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• Muskegon is the cultural hub for west Michigan with numerous museums and live
performances. The Muskegon Museum of Art has one of the largest and premier art
collections in the Midwest, and the Muskegon County Museum provides insight into the
area’s history. The former residences of Muskegon’s lumber barons, Charles H.
Hackley and Thomas Hume, proudly display the glory of the Victorian age. The Fire
Barn Museum takes visitors back to an 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. The Heritage Museum provides historic
perspective on the city’s industrial roots.
• Muskegon’s downtown is home to dozens of monumental public art pieces, and new
pieces are acquired each 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 is docked at the Muskegon Lake Channel;
• LST-393, a landing craft used in the D-day invasion and one of only two such
vessels remaining in existence is docked downtown Muskegon at the West Michigan
Dock and Market; 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 is
docked in the Lakeside Business District.
Muskegon has a diverse local economy. The manufacturing sector is strong in the areas of
aerospace, plastics, defense, metals and castings, office furniture, recreational items, 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.
The local economy has experienced some significant adjustments to the COVID-19 pandemic.
However, headed into the pandemic, all local indicators pointed to a strong economy – with
both corporate profits and income tax withholdings significantly higher than previous years.
Indications are that the local economy will recover to pre-COVID-19 levels in 2021.
The City fully recognizes the difficulties it faces as an older urban rust-belt community. Thus,
we have attempted to position ourselves as a leader in fiscal stability and sustainability.
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Long-term financial planning and major initiatives
Unassigned fund balance in the General Fund at year end was 20.6% of total actual General
Fund revenues for the preceding year. 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 revenue 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. Two years ago, the City purchased a new web-based information source
providing financial information and forecasting for municipal governments and schools. This
new system should provide staff with enhanced information to improve forecasting.
Among the City's major initiatives and accomplishments in fiscal year 2019-20 were the
following:
• Downtown Muskegon experienced the commencement and/or completion of a number
of development projects. The 1021 Jefferson project will provide low and moderate
income workforce housing adjacent to city hall in a mixed-use setting; the Western
Place Townhouses have been completed, and all 14 units are occupied; funding was
secured for the second phase of Lakeview Lofts and the Leonard Building – both five
story mixed-use buildings.
• Staff has made significant progress in addressing the former rail line that bisects the
Windward Pointe development site – this is the last major hurdle to commencing
development on the 120-acre site.
• The City continued construction on the $21 Million convention center that will be
attached to the both the Delta Marriott hotel and the Mercy Health Arena. Substantial
completion is anticipated in February 2021.
• Construction of Midtown Square Phase 2, which consists of 10 townhouses and 6 single
family homes in the Nelson neighborhood, was started in 2019.
• KL Outdoor, the world’s largest manufacturer of kayaks, filed for bankruptcy, but was
purchased within weeks. The new 500,000 square foot distribution center that was
opened in the Port City Industrial Park in early 2019 is still in operation. The new KL
Outdoors Company has pledged to keep most of the jobs in Muskegon – using most of
the company’s pre-bankruptcy facilities.
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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, 2018. This was the 32nd consecutive year that the City has received this award. The City
has submitted the June 30, 2019 CAFR for consideration but has not received award
confirmation at this time. In order to be awarded a Certificate of Achievement, a government
must publish an easily readable and efficiently organized CAFR that satisfies 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.
9
The preparation of this report would not have been possible without the skill, effort, and
dedication of the Finance Division and the entire city staff. We express appreciation to those
staff members who assisted and contributed to the preparation of this report. Credit also must
be given to the Mayor and Commissioners for their support for maintaining the highest
standards of professionalism in the management of the City of Muskegon’s finances.
Respectfully submitted,
Frank Peterson Elizabeth Lewis
City Manager Finance Director
10
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Muskegon
Text38:
Michigan
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2018
Executive Director/CEO
11
Organizational Structure 2019-20
Mayor and City Commission
City Manager External Auditors
City Attorney
Planning Commission
Finance and Public Works Zoning Board of Appeals
Public Safety Development Services
Administrative Services Historic District Commission
Housing Code Board of Appeals
Board of Review
Finance Administration Income Tax Board of Review
Treasury/Income Tax Community Civil Service Commission
City Clerk Streets/Highways Development DDA/BRA
Police Information Systems Utilities Neighborhood Services LDFA
Parks and Recreation Planning/Zoning
12
Fire Public Relations BID Board
Code Enforcement Elections Cemeteries Sanitation Economic Development Equal Opportunities Committee
Risk Management Streetlights Strategic Planning Local Officers Compensation
Employee Relations Special Events Committee
Farmers Market Citizen's Police Review Board
CDBG District Council
Election Commission
Environmental Code Construction Board of Appeals
(SAFEbuilt) Human Resources (County) Consumers Energy
Inspections (SAFEbuilt) Assessing (County) Republic Waste Services Muskegon Area First Housing Commission
Prosecutions (Parmenter LC Walker Arena (Two T's LLC) County Wastewater
O'Toole)
Elected Officials
Independent Bodies Municipal Executive Division Heads
Frontline Staff Contractual
COMPREHENSIVE ANNUAL FINANCIAL REPORT
CITY OF MUSKEGON, MICHIGAN
LIST OF PRINCIPAL OFFICIALS
June 30, 2020
ELECTED OFFICIALS
Mayor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stephen J. Gawron
At Large
Vice Mayor-Commissioner. . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . Eric Hood
Ward 1
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Willie German
Ward 2
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Teresa Emory
Ward 3
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Michael Ramsey
Ward 4
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ken Johnson
At Large
Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Dan Rinsema-Sybenga
At Large
APPOINTED OFFICIALS
City Manager. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Frank Peterson
City Attorney. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . John C. Schrier
Finance Director. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Elizabeth Lewis
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FINANCIAL SECTION
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INDEPENDENT AUDITOR’S REPORT
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, 2020, 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.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in the United States of America and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no
such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
Grand Haven | Grand Rapids | Hart | Muskegon
www.brickleydelong.com
17
BRICKLEY DELONG
City Commission
City of Muskegon
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, 2020, 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 schedules, and pension and other post-employment benefit
information on pages 21 through 31 and 84 through 93 be presented to supplement the basic financial statements.
Such information, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic
financial statements in an appropriate operational, economic, or historical context. We have applied certain
limited procedures to the required supplementary information in accordance with auditing standards generally
accepted in the United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management’s responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City of Muskegon, Michigan'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 Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a
required part of the basic financial statements.
18
BRICKLEY DELONG
City Commission
City of Muskegon
Page 3
Other Matters—Continued
Other 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
December 22, 2020
19
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2020 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, 2020. Please read it in conjunction
with the City’s financial statements, which follow this section.
FINANCIAL HIGHLIGHTS
The assets/deferred outflows of resources of the City of Muskegon exceeded its liabilities/deferred
inflows of resources by $89,438,792 as of June 30, 2020. The City has a deficit in unrestricted net
position of $30,438,577. The deficit in unrestricted net position is caused by the City’s long-term
pension and other postemployment benefits liabilities.
The City’s total combined net position decreased by $13,225,060 during the year ended June 30, 2020.
The City’s governmental funds reported combined ending fund balance of $21,571,564, an increase of
$4,996,547(30%) from the prior year.
The City’s General Fund reported a total fund balance of $7,901,855, a decrease of $603,340 from the
prior year balance of $8,505,195. The decrease is primarily the result of the COVID-19 pandemic.
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of three parts - management’s discussion and analysis (this section), the
basic financial statements, and required supplementary information. The basic financial statements
include two kinds of statements that present different views of the City.
• The first two statements are government-wide financial
statements that provide both long-term and short-term
information about the City’s overall financial status.
• The remaining statements are fund financial statements
that focus on individual parts of the government, reporting
individual City operations in greater detail than the government-
wide statements.
• The governmental funds statements tell how general
government services were financed in the short-term as
well as what remains available for future spending.
• Proprietary fund statements offer short- and long-term
financial information about activities the City operates like
private businesses.
• Fiduciary fund statements provide information about the
financial relationships in which the City acts solely as a trustee or agent
for the benefit of others, to whom the resources in question belong.
21
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 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.
22
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.
• Component units – Finally, the City of Muskegon’s Comprehensive Annual Financial report includes
seven 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, BRA 2 , BRA 3 and BRA 4). 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.
23
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 $89,438,792 as of June 30, 2020. This is a decrease of $13,225,060
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
6/30/2020 6/30/2019 6/30/2020 6/30/2019 6/30/2020 6/30/2019 Change
Current and other assets $31,646 $23,349 $4,304 $6,718 $35,950 $30,067 19.57%
Capital assets 89,062 73,229 51,747 47,886 140,809 121,115 16.26%
Total Assets 120,708 96,578 56,051 54,604 176,759 151,182 16.92%
Deferred outflows of resources 4,278 10,997 297 764 4,575 11,761 -61.10%
Total Assets and Deferred Outflows of Resources 124,986 107,575 56,348 55,368 181,334 162,943 11.29%
Long-term liabilities 67,333 42,851 8,880 7,517 76,213 50,368 51.31%
Other liabilities 10,208 6,482 4,624 3,061 14,832 9,543 55.42%
Total Liabilities 77,541 49,333 13,504 10,578 91,045 59,911 51.97%
Deferred inflows of resources 795 344 55 24 850 368 130.98%
Total Liabilities and Deferred Outflows of Resources 78,336 49,677 13,559 10,602 91,895 60,279 52.45%
Net Position
Net investment in capital assets 70,275 66,734 44,543 41,742 114,818 108,476 5.85%
Restricted 4,460 5,519 599 599 5,059 6,118 -17.31%
Unrestricted -28,085 -14,355 -2,353 2,425 -30,438 -11,930 155.14%
Total Net Position $46,650 $57,898 $42,789 $44,766 $89,439 $102,664 -12.88%
The bulk of the City’s net position $114,818,070 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 $5,059,299 of the City’s net position are legally restricted as to use. The City has a deficit in
unrestricted net position of $30,438,577. The deficit in unrestricted net position is caused by the City’s
long-term pension and other postemployment benefits liabilities. The City’s unrestricted net position
decreased $18,508,050 during the year.
Changes in net position. The City’s total revenues were $61,022,981 for the year ended June 30, 2020.
This represents a less than 1% increase over total revenues collected during the prior fiscal year.
Approximately 40.6% of the City’s revenue stream came from charges to users of specific services such
as water or sewer. Another 18.9% came from grants from the state and federal governments and 29.3%
was from local property and income taxes. The remainder was comprised of state revenues and other
sources such as franchise fees and investment income.
24
The total cost of all City programs and services for the year ended June 30, 2020 was $74,248,041. This
represents a 19.6% increase from reported expenses for the last fiscal year ended June 30, 2019. 74.6%
of the City’s expenses were for governmental activities such as police and fire protection, streets, parks,
and general administration. The remaining 25.4% 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 $11,248,368 and the net position for
business-type activities decreased by $1,976,782. For governmental activities, most of these changes
are related to the increased net pension liability and net other postemployment benefits liability. For
business-type activities, the changes similarly represent the impact of the increased net pension liability
and other postemployment benefits liability.
Changes in City’s Net Position
(In thousands of dollars)
Governmental Business-Type
Activities Activities Total Percentage
6/30/2020 6/30/2019 6/30/2020 6/30/2019 6/30/2020 6/30/2019 Change
Program revenues
Charges for services $7,980 $7,632 $16,789 $16,344 $24,769 $23,976 3.31%
Operating grants and contributions 7,398 6,893 94 511 7,492 7,404 1.19%
Capital grants and contributions 4,064 4,015 - - 4,064 4,015 1.22%
General revenues
Property taxes 8,467 8,230 - - 8,467 8,230 2.88%
Income taxes 9,437 8,940 - - 9,437 8,940 5.56%
State shared revenues 5,276 5,102 - - 5,276 5,102 3.41%
All other 1,508 2,811 9 24 1,517 2,835 -46.49%
Total revenues 44,130 43,623 16,892 16,879 61,022 60,502 0.86%
Governmental activities expenses
Public representation 1,501 1,336 - - 1,501 1,336 12.35%
Administrative services 962 801 - - 962 801 20.10%
Financial services 3,007 2,701 - - 3,007 2,701 11.33%
Public safety 25,982 20,433 - - 25,982 20,433 27.16%
Public works 4,582 4,438 - - 4,582 4,438 3.24%
Highways, streets and bridges 7,593 7,186 - - 7,593 7,186 5.66%
Community and economic development 5,359 2,890 - - 5,359 2,890 85.43%
Culture and recreation 5,270 4,542 - - 5,270 4,542 16.03%
General administration 390 302 - - 390 302 29.14%
Interest on long-term debt 732 151 - - 732 151 384.77%
Business-type activities expenses
Sewer - - 9,902 9,120 9,902 9,120 8.57%
Water - - 8,438 7,753 8,438 7,753 8.84%
Marina and launch ramp - - 529 430 529 430 23.02%
Total expenses 55,378 44,780 18,869 17,303 74,247 62,083 19.59%
Change in net position (11,248) (1,157) (1,977) (424) (13,225) (1,581) 736.50%
Net position at beginning of year 57,898 59,055 44,766 45,190 102,664 104,245 -1.52%
Net position at end of year $46,650 $57,898 $42,789 $44,766 $89,439 $102,664 -12.88%
25
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, 2020 was
$55,378,657.
• The net cost that City taxpayers paid for these activities through local property taxes and income
taxes was $17,904,337, or about 32% 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 or use of net position.
Net Cost of Selected City Functions
(in thousands of dollars)
Total Cost of Services Net Cost of Services
6/30/2020 6/30/2019 % Change 6/30/2020 6/30/2019 % Change
Governmental activities
Public safety $25,982 $20,433 27.16% $23,528 $18,049 30.36%
Public works 4,581 4,438 3.22% 3,746 3,747 -0.03%
Highways, streets and bridges 7,593 7,186 5.66% 897 544 64.89%
Community and economic development 5,359 2,890 85.43% (38) (1,188) -96.80%
Culture and recreation 5,270 4,542 16.03% 2,853 1,600 78.31%
All other 6,593 5,291 24.61% 4,950 3,419 44.78%
Total governmental activities $55,378 $44,780 23.67% $35,936 $26,171 37.31%
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, 2020, the City’s total business-type activities realized an
overall decrease in net position of $1,976,692.
Sewer Fund net position decreased $1,435,021 primarily as result of increased wastewater treatment
costs. The Water Fund saw a net position increase of $37,222. Marina and Launch Ramp Fund net
position decreased $452,375 due to lower revenues after not opening for the season due to high water
issues.
26
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, 2020 were the General Fund, the Major
Street and Trunkline Fund, the State Grants Fund, Public Improvement Fund, and Convention Center
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 unassigned fund
balance for the last five years.
Unassigned Fund
Year-End
Year-to-Year % Prior Year’s Balance as a % of Prior
Year Ended Unassigned
Change Revenues Year Revenues (Policy
Fund Balance
Target=13%)
6/30/2020 $5,920,869 -9.79% $28,747,772 20.60%
6/30/2019 6,563,511 1.46% 28,729,919 22.85%
6/30/2018 6,469,108 5.22% 27,051,766 23.91%
6/30/2017 6,148,292 0.81% 25,821,114 23.81%
6/30/2016 6,098,977 19.10% 24,890,399 24.50%
For the year ended June 30, 2020, General Fund revenues were $753,537 higher than the final amended
budget estimate. This variance is primarily due to the Third Quarter Budget Reforecast not being official
approved by the City Commission.
General Fund expenditures were $769,270 higher than projected in the final amended budget. This was
mostly due to COVID-19 and expenses associated with the pandemic.
Major Street and Trunkline, State Grant, Public Improvement and Convention Center 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, 2020, the fund balance of the Major Street and Trunkline Fund decreased $943,540
which is attributable to an increase in construction projects including Lakeshore Drive from Laketon to
McCracken.
The State Grants Fund received an upfront payment of $4,000,000 on a Michigan Enhancement Grant at
the former prison site. The project is expected to be complete in FY2020-21.
Heritage Square Phase 2 Housing Project is being accounted for in the Public Improvement Fund. For
the fiscal year ended June 30, 2020 the Public Improvement Fund is in a deficit of $1,601,331. This
deficit will go away as the City records the revenue from the sale of the houses in Heritage Square Phase
2 Housing Project.
The Convention Center Fund is accounting for the construction of the Convention Center and is being
funded by the 2019 Capital Improvement Bond of $19,420,000.
27
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
As of June 30, 2020, the City had invested $139,197,588 in a variety of capital assets, including land,
streets, equipment, buildings, water and sewer lines, and vehicles. This is an increase of $19,834,314
from capital assets reported as of June 30, 2019. The increase is due to current year additions offset by
normal depreciation of assets. Note F of the notes to the basic
financial statements provides detailed information on the
Bond Ratings
City’s capital asset investment.
Long-Term Debt The City’s limited full faith and credit bonds
(bonds guaranteed by the City’s taxing
At June 30, 2020, the City had $43,996,660 in bonds and other powers) were upgraded by Standard &
long-term obligations outstanding. This represents a 172.2% Poor’s from a rating of “A+” to “AA-“ in
increase from the prior year. The City issued new debt for a early 2016. The City’s rating remained at
new convention center, Mercy Health Arena improvements,
“AA-“ in 2020. The City’s Water System
and water and sewer improvements.
revenue bonds carry the “AA-“ S&P rating.
Additional information concerning the City’s long-term debt is
presented in Note I to the basic financial statements.
City’s Long-Term Debt – Bonds and Other Obligations
(In thousands of dollars)
Governmental Business-Type
Activities Activities Total Percentage
6/30/2020 6/30/2019 6/30/2020 6/30/2019 6/30/2020 6/30/2019 Change
Due within one year $1,340 $818 $803 $780 $2,143 $1,598 34.11%
Due in more than one year 26,793 6,283 6,061 4,975 32,854 11,258 191.83%
Total bonds & other obligations $28,133 $7,101 $6,864 $5,755 $34,997 $12,856 172.22%
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 $1,760,377 at year-end
as shown in the table below. This represents a decrease of 44% 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 I to the basic financial statements and
is summarized as follows:
Component Unit Long Term Debt – Bonds and Other Obligations (In thousands of dollars)
Downtown Local Development
Total Percentage
Development Authority Finance Authority
6/30/20 6/30/19 6/30/20 6/30/19 6/30/20 6/30/019 Change
Due within one year $0 $1,000 $395 $390 $395 $1,390 -71.58%
Due in more than one year 0 0 1,365 1,777 1,365 1,777 -23.19%
$0 $1,000 $1,760 $2,167 $1,760 $3,167
Total bonds & other obligations -44.43%
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ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The City’s fiscal year 2020-21 capital budget anticipates spending $23,028,998 for capital projects,
consisting of street improvements, water and sewer system improvements, scheduled equipment
replacements, Midtown Square Phase II housing construction, the rehab of houses in a city
neighborhood and the replacement of fire department rescue equipment. These improvements will be
funded by anticipated grants ($1,186,726), State Revolving Loan revenue ($8,940,000) revenues
generated from operations and fund balance.
From an operating standpoint, the City’s 2020-21 budget will be relatively stable while the City attempts
to maintain a healthy fund balance and allow time to plan for and address economic challenges with a
long-term solution:
• The full-time personnel complement will remain stable at 245.
• Some user fees will be increased and new fees recommended during the course of the year.
• The City will continue to look for opportunities to partner with other entities to deliver quality
services in a cost-effective manner (e.g. Farmers’ Market kitchen management, Marsh Field and
recreation programs).
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 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 5.1% from $8,691,673 for the year ended June 30, 2019 to $9,137,714
for year ended June 30, 2020. For 2020-21, the City estimates income tax revenue to be $7,750,000.
Year City Income Tax Revenues Percent Change
6/30/2020 $9,137,714 5.1%
6/30/2019 8,691,673 -0.8%
6/30/2018 8,758,674 1.7%
6/30/2017 8,610,812 5.6%
6/30/2016 8,151,902 -1.5%
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 2020-21, the City tax levy will be at 10 mills for general operations and 3 mills for sanitation service.
We project that $7,355,060 in total property tax revenue will be collected during fiscal year 2020-21.
It should be noted that several property tax appeals are currently pending. The impact of these appeals
on City finances is being monitored closely.
State Shared Revenues
State shared sales tax revenues represent about 14% 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 as follows:
Year State Shared Revenues Percent Change
6/30/2020 $4,117,935 -3.6%
6/30/2019 4,271,438 2.8%
6/30/2018 4,153,072 2.8%
6/30/2017 4,046,147 4.1%
6/30/2016 3,886,514 -0.1%
For 2020-21, the City projects $4,130,818 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:
Year Street Revenues from State Percent Change
6/30/2020 $5,450,220 6.2%
6/30/2019 5,134,277 1.4%
6/30/2018 5,060,936 25.9%
6/30/2017 4,020,630 1.0%
6/30/2016 3,981,345 10.8%
30
Based on recent legislative changes, the City began seeing increases in street funding that will carry into
future years. At this time, the City is projecting an increase in street revenues for fiscal year 2020-21 up
to $5,686,000.
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 $16,357,650 during the year ended June 30, 2020. Charges to
customers are based on the amount of metered services used times rates periodically set by the City
Commission. During the year ended June 30, 2020 water rates increased by 4%. Water rates will
increase by 4% in each of the next three fiscal years to pay for improvements being made at the Water
Filtration Plant. The City began 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 allows the
spreading of water treatment costs over a larger customer base while remaining well within the plant’s
rated treatment capacity.
Due to the impact of continued increases in wastewater treatment charges from the Muskegon County
Wastewater Treatment System, the City Commission passed a resolution effective July 1, 2016, which
ties the sewer rate the City will charge to its customers to a multiplier of the rate that the county bills
the City for wastewater treatment. This rate change is expected to help maintain the financial viability
of the City’s sewer system.
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and investors and
creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for
the money it receives. If you have questions about this report, need additional financial information, or
wish to obtain separate financial statements for the City’s component units, contact the City’s Finance
Department at (231) 724-6713 or by e-mail (finance@shorelinecity.com).
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32
FINANCIAL STATEMENTS
33
City of Muskegon
STATEMENT OF NET POSITION
June 30, 2020
Governmental Business-type Component
Activities Activities Total Units
ASSETS
Current assets
Cash and investments $ 23,471,098 $ 1,930,535 $ 25,401,633 $ 99,100
Assets managed by others 1,261,605 - 1,261,605 -
Receivables 4,059,105 2,517,138 6,576,243 -
Due from other governmental units 1,836,536 19,403 1,855,939 -
Internal balances 427,950 (427,950) - -
Inventories 6,033 124,609 130,642 -
Prepaid items 583,220 139,838 723,058 -
Total current assets 31,645,547 4,303,573 35,949,120 99,100
Noncurrent assets
Restricted cash and investments - 595,500 595,500 -
Advances to component units 721,831 - 721,831 -
Notes receivable, less amounts due within one year 294,294 - 294,294 -
Capital assets, net
Nondepreciable 32,988,730 9,085,133 42,073,863 400,000
Depreciable 55,057,511 42,066,214 97,123,725 935,177
Total noncurrent assets 89,062,366 51,746,847 140,809,213 1,335,177
Total assets 120,707,913 56,050,420 176,758,333 1,434,277
DEFERRED OUTFLOWS OF RESOURCES
Related to pension 1,220,001 84,813 1,304,814 -
Related to other postemployment benefits 3,057,597 212,560 3,270,157 -
Total deferred outflows of resources 4,277,598 297,373 4,574,971 -
Total assets and deferred outflows of resources 124,985,511 56,347,793 181,333,304 1,434,277
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities 5,581,515 2,471,253 8,052,768 14,832
Due to other governmental units 100,066 1,344,044 1,444,110 -
Short-term draw note 1,102,021 - 1,102,021 -
Unearned revenues - unused Farmers Market tokens 107,527 - 107,527 -
Unearned revenues - expenditure-driven grants 1,976,701 - 1,976,701 -
Unearned revenues - prepaid fees - 6,183 6,183 -
Bonds and other obligations, due within one year 1,339,844 802,600 2,142,444 395,000
Total current liabilities 10,207,674 4,624,080 14,831,754 409,832
Noncurrent liabilities
Advances from primary government - - - 721,831
Bonds and other obligations, less amounts due within one year 26,793,148 6,061,068 32,854,216 1,365,377
Net pension liability 28,920,873 2,010,542 30,931,415 -
Net other postemployment benefits liability 11,618,909 807,732 12,426,641 -
Total noncurrent liabilities 67,332,930 8,879,342 76,212,272 2,087,208
Total liabilities 77,540,604 13,503,422 91,044,026 2,497,040
DEFERRED INFLOWS OF RESOURCES
Related to other postemployment benefits 795,205 55,281 850,486 -
Total liabilities and deferred inflows of resources 78,335,809 13,558,703 91,894,512 2,497,040
NET POSITION
Net investment in capital assets 70,274,679 44,543,391 114,818,070 (425,200)
Restricted
Highways, streets and bridges 2,262,658 - 2,262,658 -
Debt service - 599,500 599,500 -
Mercy Health Arena 31,560 - 31,560 -
Law enforcement 11,844 - 11,844 -
Downtown BID 176,813 - 176,813 -
Perpetual care
Expendable 365,171 - 365,171 -
Non-expendable 1,605,620 - 1,605,620 -
Other purposes 6,133 - 6,133 -
Unrestricted (28,084,776) (2,353,801) (30,438,577) (637,563)
Total net position $ 46,649,702 $ 42,789,090 $ 89,438,792 $ (1,062,763)
The accompanying notes are an integral part of this statement.
34
City of Muskegon
STATEMENT OF ACTIVITIES
For the year ended June 30, 2020
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 $ 1,501,079 $ 253,511 $ - $ - $ (1,247,568) $ - $ (1,247,568) $ -
Administrative services 962,981 538,791 - - (424,190) - (424,190) -
Financial services 3,007,018 913,968 40,000 - (2,053,050) - (2,053,050) -
Public safety 25,982,246 2,290,640 163,365 - (23,528,241) - (23,528,241) -
Public works 4,581,526 835,149 - - (3,746,377) - (3,746,377) -
Highways, streets and bridges 7,593,019 193,267 5,289,916 1,049,653 (1,060,183) - (1,060,183) -
Community and economic development 5,359,282 769,860 1,833,603 2,793,863 38,044 - 38,044 -
Culture and recreation 5,269,578 2,124,968 71,318 220,700 (2,852,592) - (2,852,592) -
General administration 389,863 59,537 - - (330,326) - (330,326) -
Interest on long-term debt 732,065 - - - (732,065) - (732,065) -
Total governmental activities 55,378,657 7,979,691 7,398,202 4,064,216 (35,936,548) - (35,936,548) -
Business-type activities
Sewer 9,902,515 8,397,838 - - - (1,504,677) (1,504,677) -
Water 8,437,862 8,316,552 94,462 - - (26,848) (26,848) -
Marina and launch ramp 529,007 74,659 - - - (454,348) (454,348) -
Total business-type activities 18,869,384 16,789,049 94,462 - - (1,985,873) (1,985,873) -
35
Total primary government $ 74,248,041 $ 24,768,740 $ 7,492,664 $ 4,064,216 (35,936,548) (1,985,873) (37,922,421) -
Component units
Local Development Finance Authority - SmartZone $ 218,806 $ - $ - $ 360,000 - - - 141,194
Downtown Development Authority 134,919 - 2,000 134,072 - - - 1,153
Tax Increment Finance Authority 40,000 - - - - - - (40,000)
Brownfield Redevelopment Authority I 26,659 - - - - - - (26,659)
Brownfield Redevelopment Authority II 180,000 - - - - - - (180,000)
Brownfield Redevelopment Authority III 274,776 - - - - - - (274,776)
Brownfield Redevelopment Authority IV 6,771 - - - - - - (6,771)
Total component units $ 881,931 $ - $ 2,000 $ 494,072 - - - (385,859)
General revenues
Property taxes 8,466,886 - 8,466,886 1,653,545
Income taxes 9,437,451 - 9,437,451 -
Cable franchise agreement 361,405 - 361,405 -
Grants and contributions not restricted to specific programs 5,276,036 - 5,276,036 25,821
Unrestricted investment earnings 568,408 9,181 577,589 1,246
Miscellaneous 577,677 - 577,677 -
Gain on sale of capital asset 317 - 317 -
Total general revenues 24,688,180 9,181 24,697,361 1,680,612
Change in net position (11,248,368) (1,976,692) (13,225,060) 1,294,753
Net position at beginning of year 57,898,070 44,765,782 102,663,852 (2,357,516)
Net position at end of year $ 46,649,702 $ 42,789,090 $ 89,438,792 $ (1,062,763)
The accompanying notes are an integral part of this statement.
City of Muskegon
BALANCE SHEET
Governmental Funds
June 30, 2020
Convention
Major Street Public Center Other Total
General and Trunkline State Grants Improvement Construction Governmental Governmental
Fund Fund Fund Fund Fund Funds Funds
ASSETS
Cash and investments $ 5,619,284 $ 1,665,548 $ 2,071,905 $ - $ 10,009,335 $ 2,851,259 $ 22,217,331
Assets managed by others - - - 26,868 - 1,234,737 1,261,605
Receivables
Accounts and loans (net of allowance for uncollectibles) 196,140 41,588 18,555 295,525 - 730,967 1,282,775
Property taxes 28,093 - - - - - 28,093
Income taxes 1,556,602 - - - - - 1,556,602
Special assessments - 5,448 - - - 2,072 7,520
Due from other governmental units 601,524 585,708 15,564 - 377,377 256,364 1,836,537
Due from other funds 2,478,129 - - - - - 2,478,129
Advances to component units - - - - - 240,611 240,611
Prepaid items 270,986 32,430 - - - 35,929 339,345
Total assets $ 10,750,758 $ 2,330,722 $ 2,106,024 $ 322,393 $ 10,386,712 $ 5,351,939 $ 31,248,548
LIABILITIES
Accounts payable $ 1,763,532 $ 18,564 $ 285,001 $ 324,578 $ 1,974,717 $ 164,756 $ 4,531,148
Accrued liabilities 431,241 11,997 - - - 25,284 468,522
Due to other governmental units 53,276 43,530 - - - 2,140 98,946
Due to other funds - - - 341,125 - 443,475 784,600
Short-term draw note - - - 1,102,021 - - 1,102,021
Unearned revenues - unused Farmers Market tokens - - - - - 107,527 107,527
Unearned revenues - expenditure-driven grants 854 - 1,819,847 156,000 - - 1,976,701
Total liabilities 2,248,903 74,091 2,104,848 1,923,724 1,974,717 743,182 9,069,465
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - income taxes 600,000 - - - - - 600,000
Unavailable revenues - special assessments - 5,447 - - - 2,072 7,519
Total deferred inflows of resources 600,000 5,447 - - - 2,072 607,519
FUND BALANCES (DEFICIT)
Nonspendable
Prepaid items 270,986 32,430 - - - 35,929 339,345
Perpetual care 10,000 - - - - 1,595,620 1,605,620
Restricted
Highways, streets and bridges - 2,218,754 - - - 1,061,222 3,279,976
Capital projects - - - - 8,411,995 - 8,411,995
Mercy Health Arena - - - - - 2,524 2,524
Law enforcement - - - - - 11,844 11,844
Downtown BID - - - - - 176,813 176,813
Perpetual care - - - - - 365,171 365,171
Other purposes - - - - - 6,133 6,133
Assigned for capital projects and public improvements 1,700,000 - 1,176 - - 1,351,429 3,052,605
Unassigned 5,920,869 - - (1,601,331) - - 4,319,538
Total fund balances (deficit) 7,901,855 2,251,184 1,176 (1,601,331) 8,411,995 4,606,685 21,571,564
Total liabilities, deferred inflows of
resources and fund balances (deficit) $ 10,750,758 $ 2,330,722 $ 2,106,024 $ 322,393 $ 10,386,712 $ 5,351,939 $ 31,248,548
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, 2020
Total fund balance—governmental funds $ 21,571,564
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 $ 154,927,932
Accumulated depreciation (69,888,453) 85,039,479
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 600,000
Special assessments 7,520 607,520
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 (198,000)
Bonds and notes payable (26,183,557)
Compensated absences (1,823,243)
Net pension liability and related deferred outflows/inflows of resources (26,515,807)
Net other post employment benefits liability and related
outflows/inflows of resources (8,956,238) (63,676,845)
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 3,979,046
Internal balances representing the cumulative difference between
actual costs and amounts charged to business-type activities (871,062) 3,107,984
Net position of governmental activities $ 46,649,702
The accompanying notes are an integral part of this statement.
37
City of Muskegon
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICIT)
Governmental Funds
For the year ended June 30, 2020
Convention
Major Street Public Center Other Total
General and Trunkline State Grants Improvement Construction Governmental Governmental
Fund Fund Fund Fund Fund Funds Funds
REVENUES
Taxes $ 17,253,857 $ - $ - $ - $ - $ - $ 17,253,857
Licenses and permits 2,420,604 - - - - - 2,420,604
Intergovernmental revenues
Federal 147,191 1,049,653 - - - 1,833,603 3,030,447
State 5,031,525 4,174,142 2,028,611 220,700 420,914 1,276,078 13,151,970
Local 40,000 - - 294,300 260,685 - 594,985
Charges for services 3,135,282 18,001 - 22,424 - 1,387,945 4,563,652
Fines and forfeitures 412,325 - - - - 250 412,575
Investment earnings and rental income 537,665 9,665 - 569 143,132 24,620 715,651
Income from assets managed by others - - - 8,968 - 17,948 26,916
Other 674,999 55,016 - 790,493 - 648,752 2,169,260
Total revenues 29,653,448 5,306,477 2,028,611 1,337,454 824,731 5,189,196 44,339,917
EXPENDITURES
Current
Public representation services 1,379,406 - - - - - 1,379,406
Administrative services 844,270 - - - - - 844,270
Financial services 2,358,848 - - - - - 2,358,848
Public safety 16,795,547 - - - - 24,809 16,820,356
Public works 3,439,326 - - - - 112,629 3,551,955
Highways, streets and bridges - 6,018,144 - - - 1,405,870 7,424,014
Community and economic development 773,101 - - - - - 773,101
Culture and recreation 1,924,793 - - - - 2,207,827 4,132,620
Other governmental functions 371,461 - - - - - 371,461
Debt service
Principal 290,000 215,000 19,699 293,586 - - 818,285
Interest and fees 160,811 16,873 394 104,977 260,685 - 543,740
Bond issuance costs - - - - 70,525 - 70,525
Capital outlay 786,725 - 2,028,610 6,446,282 10,474,016 2,682,820 22,418,453
Total expenditures 29,124,288 6,250,017 2,048,703 6,844,845 10,805,226 6,433,955 61,507,034
Excess of revenues over (under) expenditures 529,160 (943,540) (20,092) (5,507,391) (9,980,495) (1,244,759) (17,167,117)
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets - - - 448,218 - 43,706 491,924
Long-term debt issued - - - 2,417,390 19,420,000 - 21,837,390
Discount on long-term debt issued - - - - (145,650) - (145,650)
Transfers in - - 10,000 881,860 - 1,125,217 2,017,077
Transfers out (1,132,500) - - - (881,860) (22,717) (2,037,077)
Total other financing sources (uses) (1,132,500) - 10,000 3,747,468 18,392,490 1,146,206 22,163,664
Net change in fund balances (deficit) (603,340) (943,540) (10,092) (1,759,923) 8,411,995 (98,553) 4,996,547
Fund balances at beginning of year 8,505,195 3,194,724 11,268 158,592 - 4,705,238 16,575,017
Fund balances (deficit) at end of year $ 7,901,855 $ 2,251,184 $ 1,176 $ (1,601,331) $ 8,411,995 $ 4,606,685 $ 21,571,564
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, 2020
Net change in fund balances—total governmental funds $ 4,996,547
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 $ (4,731,160)
Capital outlay 21,498,055 16,766,895
The net effect of various miscellaneous transactions involving capital assets
(i.e., sales and donations) on net position.
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. (860,048)
Revenues reported in the Statement of Activities that do not provide current
financial resources are not reported as revenues in the governmental funds. 80,000
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.
Issuance of long-term debt (21,837,390)
Discount on long-term debt issued 145,650
Repayment of principal on long-term debt 818,285 (20,873,455)
Changes in accrual of interest and amortization of premiums and discounts
Change in accrued interest payable (150,300)
Amortization of premiums and discounts 32,500 (117,800)
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 compensated absences (179,748)
Change in net pension liability and related deferred outflows/inflows of resources (8,105,232)
Change in net other post employment benefits liability
and related deferred outflows/inflows of resources (2,560,924) (10,845,904)
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 (521,121)
Change in internal balances representing the current year difference
between actual costs and amounts charged to business-type activities 126,518 (394,603)
Change in net position of governmental activities $ (11,248,368)
The accompanying notes are an integral part of this statement.
39
City of Muskegon
STATEMENT OF NET POSITION
Proprietary Funds
June 30, 2020
Governmental
Activities -
Business-type Activities - Enterprise Funds Internal
Marina and Service
Sewer Water Launch Ramp Total Funds
ASSETS
Current assets
Cash and investments $ - $ 1,844,501 $ 86,034 $ 1,930,535 $ 1,253,766
Receivables 1,384,312 1,120,770 12,056 2,517,138 1,478,408
Due from other governmental units - 19,403 - 19,403 -
Inventories 15,505 109,104 - 124,609 6,033
Prepaid items 58,195 77,368 4,275 139,838 243,875
Total current assets 1,458,012 3,171,146 102,365 4,731,523 2,982,082
Noncurrent assets
Restricted cash and investments - 595,500 - 595,500 -
Advances to component units - - - - 481,220
Capital assets
Land 16,188 103,500 22,562 142,250 65,000
Land improvements - 62,948 1,888,965 1,951,913 301,715
Buildings, improvements and systems 22,407,278 70,986,199 2,322,488 95,715,965 1,668,215
Machinery and equipment 129,622 3,073,170 60,620 3,263,412 9,878,509
Construction in progress 4,447,799 4,440,084 55,000 8,942,883 79,822
Less accumulated depreciation (11,599,533) (43,918,802) (3,346,741) (58,865,076) (8,986,499)
Net capital assets 15,401,354 34,747,099 1,002,894 51,151,347 3,006,762
Total noncurrent assets 15,401,354 35,342,599 1,002,894 51,746,847 3,487,982
Total assets 16,859,366 38,513,745 1,105,259 56,478,370 6,470,064
DEFERRED OUTFLOWS OF RESOURCES
Related to pension 19,572 65,241 - 84,813 52,192
Related to other postemployment benefits 49,052 163,508 - 212,560 130,806
Total deferred outflows of resources 68,624 228,749 - 297,373 182,998
Total assets and deferred outflows of resources 16,927,990 38,742,494 1,105,259 56,775,743 6,653,062
LIABILITIES
Current liabilities
Accounts payable 1,746,573 581,002 11,708 2,339,283 345,205
Accrued liabilities 27,169 103,325 1,476 131,970 38,641
Due to other governmental units 1,318,293 25,631 120 1,344,044 1,120
Due to other funds 1,299,012 - - 1,299,012 394,517
Unearned revenues - prepaid fees - - 6,183 6,183 -
Bonds and other obligations, due within one year 11,400 791,000 200 802,600 21,000
Total current liabilities 4,402,447 1,500,958 19,687 5,923,092 800,483
Noncurrent liabilities
Bonds and other obligations, less amounts due within one year 1,601,765 4,458,232 1,071 6,061,068 105,191
Net pension liability 463,971 1,546,571 - 2,010,542 1,237,257
Net other postemployment benefits liability 186,400 621,332 - 807,732 497,066
Total noncurrent liabilities 2,252,136 6,626,135 1,071 8,879,342 1,839,514
Total liabilities 6,654,583 8,127,093 20,758 14,802,434 2,639,997
DEFERRED INFLOWS OF RESOURCES
Related to other postemployment benefits 12,757 42,524 - 55,281 34,019
Total liabilities and deferred inflows of resources 6,667,340 8,169,617 20,758 14,857,715 2,674,016
NET POSITION
Net investment in capital assets 13,856,615 29,683,882 1,002,894 44,543,391 3,006,762
Restricted for debt service - 599,500 - 599,500 -
Unrestricted (3,595,965) 289,495 81,607 (3,224,863) 972,284
Total net position $ 10,260,650 $ 30,572,877 $ 1,084,501 41,918,028 $ 3,979,046
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 871,062
Net position of business-type activities $ 42,789,090
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, 2020
Governmental
Activities -
Business-type Activities - Enterprise Funds Internal
Marina and Service
Sewer Water Launch Ramp Total Funds
OPERATING REVENUES
Charges for services $ 8,272,639 $ 8,085,011 $ 72,744 $ 16,430,394 $ 9,362,324
Other 125,199 326,003 1,915 453,117 115,171
Total operating revenues 8,397,838 8,411,014 74,659 16,883,511 9,477,495
OPERATING EXPENSES
Administration 476,958 989,718 8,066 1,474,742 304,305
Insurance premiums and claims - - - - 5,455,327
Wastewater treatment 6,978,294 - - 6,978,294 -
Wastewater maintenance 1,852,145 - - 1,852,145 -
Filtration plant operations - 2,659,232 - 2,659,232 -
Water distribution - 2,725,083 - 2,725,083 -
Other operations - - 414,143 414,143 3,753,969
Depreciation 462,846 1,866,375 106,040 2,435,261 523,925
Total operating expenses 9,770,243 8,240,408 528,249 18,538,900 10,037,526
Operating income (loss) (1,372,405) 170,606 (453,590) (1,655,389) (560,031)
NONOPERATING REVENUES (EXPENSES)
Investment earnings 1,209 6,757 1,215 9,181 27,071
Gain on sale of capital assets - - - - (8,161)
Interest expense (7,200) (110,516) - (117,716) -
Bond issuance costs (56,625) (29,625) - (86,250) -
Total nonoperating revenue (expenses) (62,616) (133,384) 1,215 (194,785) 18,910
Income (loss) before transfers (1,435,021) 37,222 (452,375) (1,850,174) (541,121)
TRANSFERS
Transfers in - - - - 20,000
Change in net position (1,435,021) 37,222 (452,375) (1,850,174) (521,121)
Net position at beginning of year 11,695,671 30,535,655 1,536,876 4,500,167
Net position at end of year $ 10,260,650 $ 30,572,877 $ 1,084,501 $ 3,979,046
Adjustment for the net effect of the current year activity between
the internal service funds and the enterprise funds (126,518)
Change in net position of business-type activities $ (1,976,692)
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, 2020
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 $ 8,291,023 $ 8,969,828 $ 86,094 $ 17,346,945 $ 106,659
Receipts from interfund services provided 71,606 173,459 - 245,065 7,303,632
Other receipts - - - - 1,867,451
Payments to suppliers (7,221,435) (3,131,481) (369,204) (10,722,120) (6,680,206)
Payments to employees (709,542) (2,097,526) (48,064) (2,855,132) (1,503,546)
Payments for interfund services used (597,578) (906,709) (32,213) (1,536,500) (828,757)
Net cash provided by (used for) operating activities (165,926) 3,007,571 (363,387) 2,478,258 265,233
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Interfund borrowing 1,228,368 - - 1,228,368 40,954
Advances to component units - - - - 87,282
Net cash provided by (used for) noncapital financing activities 1,228,368 - - 1,228,368 148,236
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Proceeds from long-term debt 1,544,739 263,217 - 1,807,956 -
Issuance costs on long-term debt (56,625) (29,625) - (86,250) -
Purchases of capital assets (2,551,765) (2,417,260) - (4,969,025) (622,533)
Principal paid on capital debt - (745,000) - (745,000) -
Interest paid on capital debt - (109,916) - (109,916) -
Proceeds from sale of capital assets - - - - 27,661
Net cash provided by (used for) capital and related financing activities (1,063,651) (3,038,584) - (4,102,235) (594,872)
CASH FLOW FROM INVESTING ACTIVITIES
Investment earnings 1,209 6,757 1,215 9,181 27,071
Net increase (decrease) in cash and investments - (24,256) (362,172) (386,428) (154,332)
Cash and investments at beginning of year - 2,464,257 448,206 2,912,463 1,408,098
Cash and investments at end of year $ - $ 2,440,001 $ 86,034 $ 2,526,035 $ 1,253,766
Reconciliation of cash and investments to the Statement of Net Position
Cash and investments $ - $ 1,844,501 $ 86,034 $ 1,930,535 $ 1,253,766
Restricted cash and investments - 595,500 - 595,500 -
$ - $ 2,440,001 $ 86,034 $ 2,526,035 $ 1,253,766
Reconciliation of operating income (loss) to net cash provided by (used for)
operating activities
Operating income (loss) $ (1,372,405) $ 170,606 $ (453,590) $ (1,655,389) $ (560,031)
Adjustments to reconcile operating income (loss) to net cash provided by
(used for) operating activities
Depreciation expense 462,846 1,866,375 106,040 2,435,261 523,925
Change in assets and liabilities
Receivables (35,209) 732,273 5,252 702,316 (199,753)
Inventories 1,447 (339) - 1,108 3,292
Prepaid items (9,537) (15,533) (1,739) (26,809) 28,985
Accounts payable 590,456 (373,508) (26,628) 190,320 (21,014)
Unearned revenues - - 6,183 6,183 -
Accrued liabilities 196,476 627,697 1,095 825,268 489,829
Net cash provided by (used for) operating activities $ (165,926) $ 3,007,571 $ (363,387) $ 2,478,258 $ 265,233
The accompanying notes are an integral part of this statement.
42
City of Muskegon
STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES
Fiduciary Funds
June 30, 2020
Agency
Funds
ASSETS
Cash and investments $ 927,093
Accounts receivable 73,203
Total assets $ 1,000,296
LIABILITIES
Accounts payable $ 327,077
Due to other governmental units 511,793
Deposits held for others 161,426
Total liabilities $ 1,000,296
The accompanying notes are an integral part of this statement.
43
City of Muskegon
STATEMENT OF NET POSITION
Discretely Presented Component Units
June 30, 2020
Local
Development Tax
Finance Downtown Increment Brownfield Brownfield Brownfield
Authority - Development Finance Redevelopment Redevelopment Redevelopment
SmartZone Authority Authority Authority I Authority II Authority III Total
ASSETS
Current assets
Cash and investments $ 32,146 $ 11,529 $ 15,888 $ 3,450 $ 13,115 $ 22,972 $ 99,100
Noncurrent assets
Capital assets, net
Nondepreciable 400,000 - - - - - 400,000
Depreciable 935,177 - - - - - 935,177
Total noncurrent assets 1,335,177 - - - - - 1,335,177
Total assets 1,367,323 11,529 15,888 3,450 13,115 22,972 1,434,277
LIABILITIES
44
Current liabilities
Accounts payable - 806 - - - - 806
Accrued liabilities 9,650 4,376 - - - - 14,026
Bonds and other obligations, due within one year 395,000 - - - - - 395,000
Total current liabilities 404,650 5,182 - - - - 409,832
Noncurrent liabilities
Advances from primary government - - - 721,831 - - 721,831
Bonds and other obligations, less amounts due
within one year 1,365,377 - - - - - 1,365,377
Total noncurrent liabilities 1,365,377 - - 721,831 - - 2,087,208
Total liabilities 1,770,027 5,182 - 721,831 - - 2,497,040
NET POSITION
Net investment in capital assets (425,200) - - - - - (425,200)
Unrestricted 22,496 6,347 15,888 (718,381) 13,115 22,972 (637,563)
Total net position $ (402,704) $ 6,347 $ 15,888 $ (718,381) $ 13,115 $ 22,972 $ (1,062,763)
The accompanying notes are an integral part of this statement.
City of Muskegon
STATEMENT OF ACTIVITIES
Discretely Presented Component Units
For the year ended June 30, 2020
Net (Expense) Revenue and Changes in Net Position
Local
Program Revenue Development Tax
Operating Capital Finance Downtown Increment Brownfield Brownfield Brownfield Brownfield
Grants and Grants and Authority - Development Finance Redevelopment Redevelopment Redevelopment Redevelopment
Functions/Programs Expenses Contributions Contributions SmartZone Authority Authority Authority I Authority II Authority III Authority IV Total
Local Development Finance Authority - SmartZone
Community and economic development $ 172,648 $ - $ - $ (172,648) $ - $ - $ - $ - $ - $ - $ (172,648)
Interest on long-term debt 46,158 - 360,000 313,842 - - - - - - 313,842
Total Local Development Finance
Authority - SmartZone 218,806 - 360,000 141,194 - - - - - - 141,194
Downtown Development Authority
Economic development 134,919 2,000 134,072 - 1,153 - - - - - 1,153
Tax Increment Finance Authority
Community and economic development 40,000 - - - - (40,000) - - - - (40,000)
Brownfield Redevelopment Authority I
Interest on long-term debt 26,659 - - - - - (26,659) - - - (26,659)
Brownfield Redevelopment Authority II
Community and economic development 180,000 - - - - - - (180,000) - - (180,000)
45
Brownfield Redevelopment Authority III
Community and economic development 274,776 - - - - - - - (274,776) - (274,776)
Brownfield Redevelopment Authority IV
Community and economic development 6,771 - - - - - - - - (6,771) (6,771)
Total discretely presented component units $ 875,160 $ - $ 494,072 141,194 1,153 (40,000) (26,659) (180,000) (274,776) (6,771) (385,859)
General revenues
Property taxes 98,643 924,457 35,383 138,401 168,248 281,642 6,771 1,653,545
Grants and contributions not restricted to specific programs 3,311 - 7,270 6,822 8,418 - - 25,821
Unrestricted investment income 95 280 54 44 382 391 - 1,246
Total general revenues 102,049 924,737 42,707 145,267 177,048 282,033 6,771 1,680,612
Change in net position 243,243 925,890 2,707 118,608 (2,952) 7,257 - 1,294,753
Net position at beginning of year (645,947) (919,543) 13,181 (836,989) 16,067 15,715 - (2,357,516)
Net position at end of year $ (402,704) $ 6,347 $ 15,888 $ (718,381) $ 13,115 $ 22,972 $ - $ (1,062,763)
The accompanying notes are an integral part of this statement.
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
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 four separate designated areas under the aegis of the
BRA – the Betten-Henry Street site, the former downtown mall site, the Terrace Point site, and the Pigeon
Hill 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, 2020
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, 2020, 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, 2019, the date
of its latest audited financial statements is as follows:
Total assets and deferred outflows of resources $ 3,637,610
Total liabilities and deferred inflows of resources (452,090)
Total net position $ 3,185,520
Total operating income $ 2,016,544
Total operating expenses (2,332,975)
Total nonoperating revenues 383
Capital contributions 127,240
Prior period adjustment 91,707
Change in net position $ (97,101)
47
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
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.
The State Grants Fund accounts for grant revenues received from the State of Michigan for the purpose of
improvements and/or rehabilitation of City property, environmental remediation at lakeshore sites or new
infrastructure in the City’s downtown.
The Public Improvement Fund accounts for grant, private contributions, sale of property and other
resources used to finance various capital projects.
48
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Basis of Presentation—Government-wide and Fund Financial Statements—Continued
The Convention Center Construction Fund accounts for proceeds from debt issuance for the construction
of a convention center in downtown Muskegon.
The City reports the following three major proprietary funds:
The Sewer Fund accounts for user charges, operating expenses and debt service of the City’s sewer
system.
The Water Fund accounts for user charges, operating expenses and debt service of the City’s water
system.
The Marina and Launch Ramp Fund accounts for user fees collected and operating expenses for the
Hartshorn Marina and boat launch ramp facilities.
Additionally, the City reports the following fund types:
Internal Service Funds account for internal engineering services for City projects; the purchase, operation,
and depreciation of all City owned equipment; the payment of insurance claims and benefits; and the
operation, maintenance, and depreciation of the City’s public service building to other funds of the
government on a cost reimbursement basis.
The Agency Funds are used to account for employee payroll withholdings, property taxes collected by the
City on behalf of other governments, and deposits made by housing rehabilitation program participants.
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, 2020
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, 2020
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, 2020
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
Defined Benefit Plan
The City offers a defined benefit pension plan to its employees through Municipal Employees Retirement
System (MERS). The City records a net pension liability for the difference between the total pension liability
calculated by the actuary and the Plan’s fiduciary net position. For purposes of measuring the net pension
liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension
expense, information about the fiduciary net position of the Plan and additions to/deductions from the Plan’s
fiduciary net position have been determined on the same basis as they are reported by MERS. For this
purpose, benefit payments (including refunds of employee contributions) are recognized when due and
payable in accordance with the benefit terms. Investments are reported at fair value.
Other Postemployment Benefit Costs
The City offers a defined benefit retiree healthcare benefits to retirees. The City records a net other
postemployment benefit (OPEB) liability for the difference between the total OPEB liability calculated by the
actuary and the OPEB Plan’s fiduciary net position. For purposes of measuring the net OPEB liability,
deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense,
information about the fiduciary net position of the OPEB Plan and additions to/deductions from the OPEB
Plan’s fiduciary net position have been determined on the same basis as they are reported by the OPEB Plan.
For this purpose, benefit payments (including refunds of employee contributions) are recognized when due
and payable in accordance with the benefit terms. Investments are reported at fair value.
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.
52
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance—Continued
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).
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 of the General Fund 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.
53
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued
Revenues and Expenditures/Expenses—Continued
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 2019 state taxable value for real/personal property of the City totaled approximately $573,830,000 of
which approximately $31,817,000 was captured by the component units. The ad valorem taxes levied
consisted of 10.0, 3.0 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, BRA II, BRA III, and BRA IV component units.
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. In addition, certain items in the 2019 financial statements have been reclassified to conform
to the 2020 presentation.
54
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
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.
Excess of Expenditures Over Appropriations
During the year ended June 30, 2020, actual expenditures exceeded appropriations for:
Final
Budget Actual
General Fund
Administrative Services
Clerk $ 547,208 $ 621,603
Public safety
Police department 10,190,969 10,445,491
Fire department 3,847,106 4,353,377
Public works
General sanitation 1,969,345 2,216,029
Culture and recreation
Parks maintenance 1,624,617 1,873,339
Other governmental functions
Insurance premiums 287,041 340,189
Transfers out 485,000 1,132,500
Major Streets Fund
Principal - 215,000
Mercy Health Arena Fund
Culture and recreation 1,511,843 1,994,840
These overexpenditures were funded with available fund balance.
Fund Deficit
As of June 30, 2020, the City’s Sewer Fund, Engineering Services Fund, and Public Service Building Fund
had unrestricted fund net position deficits of $3,595,965, $17,034, and $656,261, respectively. The Public
Improvement Fund had an unassigned fund deficit of $1,601,331. These deficits will be eliminated through
future operations or an interfund transfer.
55
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE C—DEPOSITS AND INVESTMENTS
As of June 30, 2020, the City had the following investments:
Weighted
Average
Maturity
Fair Value (Months) S&P Percent
Investment Type
Money market funds $ 1,150,557 1 AAA 5.5 %
Negotiable certificates of deposit 2,998,531 28 not rated 14.1
US agency obligations 5,821,900 248 AA+ 27.4
Local units of government obligations 616,582 20 AA 2.9
External investment pool 10,643,286 2 AAA 50.1
Total fair value $ 21,230,856 100.0 %
Portfolio weighted average maturity 74
The City voluntarily invests certain excess funds in an external investment pool (Pool). The Pool is an
external investment pool of "qualified" investments for Michigan municipalities. The Pool is not regulated nor
registered with the SEC. The fair value of the City's investments is the same as the value of the Pool’s shares.
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. The City has more than 5 percent of its investments in the following securities:
Percent of
Security Total Investments
Federal Home Loan Mortgage Corporation obligations 6.1%
Government National Mortgage Association obligations 20.9%
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, 2020, $5,557,860 of the City’s bank balance of $6,057,860 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.
56
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE C—DEPOSITS AND INVESTMENTS—Continued
Deposit and Investment Risks—Continued
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, 2020, restricted
cash and investments in the Water Fund of $595,500 were restricted by bond ordinance.
NOTE D—ASSETS MANAGED BY OTHERS
As allowed by MCL 123.874 and MCL 128.4, the City is permitted to place monies in community
foundations.
The Funds
The City has six funds with the Community Foundation of Muskegon County (Community Foundation).
Lakeshore Trails Improvement Fund
The Lakeshore Trails Improvement Fund was established by the City primarily to be used for the general
support of the bike trails, which are located in the City of Muskegon. The agreement with the Community
Foundation allows the use of the Fund’s income in accordance with the Community Foundation’s spending
policy and principal in certain circumstances.
Cemetery Perpetual Care Fund
The City of Muskegon Cemetery Perpetual Care Fund was established by the City primarily to be used for the
care and maintenance of the cemeteries that are operated by the City. The agreement with the Community
Foundation allows the use of the Fund’s income in accordance with the Community Foundation’s spending
policy and principal in certain circumstances.
Pere Marquette and Margaret Drake Elliot Park Fund
The Pere Marquette and Margaret Drake Elliot Park Fund (Marquette and Elliot Park Fund) was established by
the City to be used for capital improvements at Pere Marquette and Margaret Drake Elliot Parks. The
agreement with the Community Foundation allows the use of the Fund’s income in accordance with the
Community Foundation’s spending policy and principal in certain circumstances.
Darl and Kathleen Staley Charity Fund
The Darl and Kathleen Staley Charity Fund (Staley Charity Fund) was established after the City received
monies from the Staley’s estate. The Fund is to be used for capital improvements needs at City parks. The
agreement with the Community Foundation allows the use of the Fund’s income in accordance with the
Community Foundation’s spending policy and principal in certain circumstances.
City of Muskegon Parks Fund
The City of Muskegon Parks Fund (Muskegon Parks Fund) was established by the City to primarily be used
for general maintenance and improvements to parks located in the City of Muskegon. The agreement with the
Community Foundation allows the use of the Fund’s income in accordance with the Community Foundation’s
spending policy and principal in certain circumstances.
City of Muskegon Events and Sponsorships Fund
The City of Muskegon Events and Sponsorships Fund (Events and Sponsorships Fund) was established after
the Community Foundation received monies from donors intended to be used for various events within the City
of Muskegon. The agreement with the Community Foundation allows the use of the Fund’s income in
accordance with the Community Foundation’s spending policy and principal in certain circumstances.
57
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE D—ASSETS MANAGED BY OTHERS—Continued
The Funds—Continued
The Community Foundation invests the contributions to the funds in various types of marketable equity and debt
securities, U.S. Treasuries, commercial paper, and certificates of deposit. The majority of investments are
uninsured and uncollateralized.
Reporting of the Assets of the Funds
The investments held at the Community Foundation, which were contributed by the City to the funds along with
the earnings on these investments, are reported at fair value as assets of the City. The contributions to these funds
made by third party donors directly to the Community Foundation have been excluded from the assets of the City.
Summary of the Community Foundation Funds
A summary of revenues, expenses, and changes in the assets at fair value of the funds for the year ended June 30,
2020 follows:
Lakeshore
Trails Cemetery Marquette Staley Muskegon Events and
Improvement Perpetual and Elliot Charity Parks Sponsorships
Fund Care Fund Park Fund Fund Fund Fund Totals
Revenues
Contributions $ 600 $ - $ - $ - $ - $ 6,100 $ 6,700
Dividends and interest 1,370 17,086 2,674 9,272 515 60 30,977
Realized and unrealized gain
(loss) on investments 760 9,739 1,532 5,293 296 - 17,620
2,730 26,825 4,206 14,565 811 6,160 55,297
Expenses
Grants and scholarships - - 1,548 10,000 11,548
Administration fees 431 8,877 1,823 4,867 162 500 16,660
Revenues over expenses 2,299 17,948 2,383 9,698 (899) (4,340) 27,089
Total assets at beginning of year 57,165 1,216,789 112,488 389,244 23,099 9,125 1,807,910
Total assets at end of year 59,464 1,234,737 114,871 398,942 22,200 4,785 1,834,999
Less assets recorded as those
of the Foundation (41,049) - (114,871) (398,942) (13,747) (4,785) (573,394)
Assets reported on the Balance
Sheet/Statement of Net Position $ 18,415 $ 1,234,737 $ - $ - $ 8,453 $ - $ 1,261,605
The Board of Trustees of the Community Foundation has the power to modify any restriction or condition on the
distribution of funds for any specified charitable purpose or to a specified organization if, in the sole judgment of
the Board, such restriction or condition becomes, in effect, unnecessary, incapable of fulfillment, or inconsistent
with the charitable needs of the community served. The authority to modify restrictions is sometimes referred to
as “variance power” and is a legal standard imposed on all community foundations.
58
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE E—FAIR VALUE MEASUREMENTS
The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in
active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level
3). The three levels of the fair value hierarchy are described below:
Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical
assets or liabilities in active markets that the City the ability to access.
Level 2 Inputs to the valuation methodology include the following:
- Quoted prices for similar assets or liabilities in active markets;
- Quoted prices for identical or similar assets or liabilities in inactive markets;
- Inputs other than quoted prices that are observable for the asset or liability;
- Inputs that are derived principally from or corroborated by observable
market data by correlation or other means.
If the asset or liability has a specified (contractual) term, the level 2 input must be
observable for substantially the full term of the asset or liability.
Level 3 Inputs to the valuation methodology are unobservable and significant to the fair
value measurement.
The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest
level of any input that is significant to the fair value measurement. Valuation techniques used need to
maximize the use of observable inputs and minimize the use of unobservable inputs.
Following is a description of the valuation methodologies used for assets measured at fair value. There have
been no changes in the methodologies used at June 30, 2020.
Money market funds: Valued at amortized cost, which approximates fair value.
Negotiable certificates of deposit, US agency obligations, and local units of government obligations:
Valued at the closing price reported on the active market on which the individual securities are traded.
59
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE E—FAIR VALUE MEASUREMENTS—Continued
External investment pools and assets managed by others: The assets are valued based upon the City’s
allocable share of the Michigan CLASS and Community Foundation of Muskegon County (Pools) pooled
investment portfolios. The allocable shares are based on the value of the underlying assets owned by the
Pools, minus their liabilities.
The assets managed by others are valued monthly by the Pools and are allocated based upon each
organization’s calculated share of the Pools’ pooled investment portfolios. Each entity with an interest
within the pooled investments receives statements from the Pools indicating the additions to the
investments (via contributions), withdrawals from the investments (via grants), and the investment returns
allocated via a unitization process. The City calculates the fair value of its share of the pooled investment
assets held by the Pools based on the estimated fair value of the underlying assets. The Pools control the
investments and make all management and investment decisions.
The preceding methods described may produce a fair value calculation that may not be indicative of net
realizable value or reflective of future fair values. Furthermore, while the City believes its valuation methods
are appropriate and consistent with other market participants, the use of different methodologies or
assumptions to determine the fair value of certain financial instruments could result in a different fair value
measurement at the reporting date.
The following table sets forth by level, within the fair value hierarchy, the City’s assets at fair value on a
recurring basis as of June 30, 2020:
Assets at Fair Value as of June 30, 2020
Level 1 Level 2 Level 3 Total
Money market funds $ - $ 1,150,557 $ - $ 1,150,557
Negotiable certificates of deposit 2,998,531 - - 2,998,531
US agency obligations 5,821,900 - - 5,821,900
Local units of government
obligations 616,582 - - 616,582
External investment pools - 10,643,286 - 10,643,286
Assets managed by others - 1,261,605 - 1,261,605
Total assets at fair value $ 9,437,013 $ 13,055,448 $ - $ 22,492,461
60
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE F—CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2020 was as follows:
Balance Balance
July 1, 2019 Additions Deductions June 30, 2020
Governmental activities:
Capital assets, not being depreciated:
Land $ 14,652,328 $ 466,564 $ 860,048 $ 14,258,844
Construction in progress 4,202,992 18,205,789 3,678,895 18,729,886
Total capital assets, not being depreciated 18,855,320 18,672,353 4,538,943 32,988,730
Capital assets, being depreciated:
Land improvements 5,310,030 136,274 - 5,446,304
Leasehold improvements 534,821 - - 534,821
Buildings and improvements 24,994,642 4,919,910 - 29,914,552
Furniture, vehicles and equipment 16,001,743 592,271 220,162 16,373,852
Infrastructure 75,636,254 1,478,675 2,357,288 74,757,641
Shared improvements 6,905,293 - - 6,905,293
Total capital assets, being depreciated 129,382,783 7,127,130 2,577,450 133,932,463
Less accumulated depreciation:
Land improvements 2,091,463 161,390 - 2,252,853
Leasehold improvements 485,708 6,002 - 491,710
Buildings and improvements 17,783,281 462,372 - 18,245,653
Furniture, vehicles and equipment 12,214,180 676,506 184,340 12,706,346
Infrastructure 38,784,813 3,603,550 2,357,288 40,031,075
Shared improvements 4,802,050 345,265 - 5,147,315
Total accumulated depreciation 76,161,495 5,255,085 2,541,628 78,874,952
Total capital assets, being
depreciated, net 53,221,288 1,872,045 35,822 55,057,511
Capital assets, net $ 72,076,608 $ 20,544,398 $ 4,574,765 $ 88,046,241
Business-type activities:
Capital assets, not being depreciated:
Land $ 142,250 $ - $ - $ 142,250
Construction in progress 3,724,614 6,276,289 1,058,020 8,942,883
Total capital assets, not being depreciated 3,866,864 6,276,289 1,058,020 9,085,133
Capital assets, being depreciated:
Land improvements 1,951,913 - - 1,951,913
Buildings, improvements and systems 94,650,625 1,065,340 - 95,715,965
Machinery and equipment 3,247,079 16,333 - 3,263,412
Total capital assets, being depreciated 99,849,617 1,081,673 - 100,931,290
Less accumulated depreciation:
Land improvements 1,831,076 9,522 - 1,840,598
Buildings, improvements and systems 51,817,850 2,365,908 - 54,183,758
Machinery and equipment 2,780,889 59,831 - 2,840,720
Total accumulated depreciation 56,429,815 2,435,261 - 58,865,076
Total capital assets, being
depreciated, net 43,419,802 (1,353,588) - 42,066,214
Capital assets, net $ 47,286,666 $ 4,922,701 $ 1,058,020 $ 51,151,347
61
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE F—CAPITAL ASSETS—Continued
Depreciation
Depreciation expense was charged to functions as follows:
Governmental activities:
Public representation services $ 2,518
Adminstrative services 2,485
Public safety 132,669
Public works 2,126
Highways, streets and bridges 4,078,423
Community and economic development 75,717
Culture and recreation 418,820
General administration 18,402
Internal Service Fund depreciation 523,925
$ 5,255,085
Business-type activities:
Sewer $ 462,846
Water 1,866,375
Marina and Launch Ramp 106,040
$ 2,435,261
Balance Balance
July 1, 2019 Additions Deductions June 30, 2020
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 2,690,433 172,648 - 2,863,081
Total capital assets, being
depreciated, net 1,107,825 (172,648) - 935,177
Capital assets, net $ 1,507,825 $ (172,648) $ - $ 1,335,177
Depreciation
Depreciation expense was charged to economic development.
62
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE G—INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
The composition of interfund balances as of June 30, 2020 is as follows:
Due To/From Other Funds:
Receivable Fund Payable Fund Amount
General Fund Mercy Health Arena Fund $ 398,371
General Fund Public Improvement Fund 341,125
General Fund Lead Abatement Fund 38,766
General Fund HOME Rehabilitation Fund 6,338
General Fund Sewer Fund 1,299,012
General Fund General Insurance Fund 394,517
$ 2,478,129
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
$721,831 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
State Grant Fund $ 10,000 General Fund $ 10,000
Nonmajor Governmental Funds
Local Streets Fund 250,000 General Fund 1,102,500
Mercy Health Arena Fund 800,000
Farmers Market and
Kitchen 242 Fund 45,000
Tree Replacement Fund 7,500
1,102,500 1,102,500
Internal Service Funds
Engineering Fund 20,000 General Fund 20,000
Convention Center
Public Improvement Fund 881,860 Construction Fund 881,860
Nonmajor Governmental Funds Nonmajor Governmental Funds
Community Development Block
HOME Rehabilitation Fund 22,717 Grant Fund 22,717
$ 2,037,077 $ 2,037,077
63
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE G—INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS—Continued
The General Fund transferred funds to the Local Streets Fund for capital improvements and to the Mercy
Health Arena Fund and other funds for operation subsidies. The Convention Center Fund transferred funds to
the Public Improvement Fund as reimbursement for costs incurred for the convention center project prior to
debt issuance. Other transfers between funds were made to meet grant matching requirements or other
operational needs.
NOTE H—SHORT-TERM DEBT
Summary of Changes in Short-Term Liabilities
The following is a summary of short-term liabilities activity for the City for the year ended June 30, 2020.
Balance Balance
July 1, 2019 Additions Deductions June 30, 2020
Governmental activities:
Short-term draw note $ - $ 1,102,021 $ - $ 1,102,021
The purpose of all short-term borrowings are to provide resources for infill housing within the City of
Muskegon. The form of financing used is a short-term non-revolving draw note with amounts advanced at
the City’s discretion. Interest amounts are at a variable interest rate of 1.25 percent above the 30 day LIBOR,
adjusted monthly. Borrowed amounts will be repaid as infill housing units are sold with final payment being
due three years from the closing date.
64
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE I—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, 2020.
Balance Balance Due Within
July 1, 2019 Additions Deductions June 30, 2020 One Year
Governmental activities:
Public placement debt
General obligation debt $ 5,065,000 $ 19,420,000 $ 505,000 $ 23,980,000 $ 690,000
Discount - (145,650) (2,500) (143,150) -
Premium 257,903 - 35,000 222,903 -
Direct borrowings and
direct placements
Intergovernmental obligations 19,699 - 19,699 - -
Installment purchase
agreements - 2,417,390 293,586 2,123,804 324,944
Compensated absences 1,758,789 1,428,024 1,237,378 1,949,435 324,900
Governmental activities
long-term liabilities $ 7,101,391 $ 23,119,764 $ 2,088,163 $ 28,132,992 $ 1,339,844
Business-type activities:
Public placement debt
Revenue obligations $ 5,545,000 $ 1,807,956 $ 745,000 $ 6,607,956 $ 760,000
Compensated absences 209,568 221,474 175,330 255,712 42,600
Business-type activities
long-term liabilities $ 5,754,568 $ 2,029,430 $ 920,330 $ 6,863,668 $ 802,600
Component units:
Public placement debt
General obligation debt $ 2,110,000 $ - $ 390,000 $ 1,720,000 $ 395,000
Premium 57,419 - 17,042 40,377 -
Direct borrowings and
direct placements
Intergovernmental obligations 1,000,000 - 1,000,000 - -
Component unit long-
term liabilities $ 3,167,419 $ - $ 1,407,042 $ 1,760,377 $ 395,000
65
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE I—LONG-TERM DEBT—Continued
Public Placement Debt
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, 2020 is as follows:
Original Date of
Borrowing Interest Rate Maturity Balance
General obligation debt:
Governmental activities:
2011 Capital Improvement Bonds $ 2,000,000 2.98% September 2021 $ 450,000
2016 Limited Tax General Obligation
Refunding Bonds 4,535,000 3% - 4% October 2032 4,110,000
2019 Capital Improvement Bonds 19,420,000 1.83% - 3.58% December 2049 19,420,000
$ 23,980,000
Component units:
2012 LDFA Tax Increment Refunding Bonds $ 4,100,000 3% - 4% November 2025 $ 1,720,000
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, 2020 are as follows:
Original Date of
Borrowing Interest Rate Maturity Balance
Revenue obligations:
Business-type activities:
2004 Drinking Water State Revolving Fund $ 13,900,000 2.13% October 2025 $ 4,800,000
2019 Water Supply System Junior Lien Bond 263,217 2% October 2025 263,217
2019 Sanitary Sewer System Junior Lien Bond 1,544,739 2% October 2033 1,544,739
$ 6,607,956
The City has pledged future water customer revenues, net of specified operating expenses, to repay the 2004
Drinking Water State Revolving Fund Loan. Proceeds from the issuance were used to make improvements to
the City’s water supply system. The bond is payable solely from water customer net revenues and is payable
through 2025. Annual principal and interest payments on the bond are expected to require less than 35
percent of net revenues through 2025. The total principal and interest remaining to be paid on the bond is
$5,112,058. Principal and interest paid for the year ended June 30, 2020 and total customer net revenues were
$854,916 and $2,043,738, respectively.
The total amount of the 2019 Water Supply System Junior Lien Bond and 2019 Sanitary Sewer System Junior
Lien Bond are $2,000,000 and $11,500,000, respectively, with the City expecting to draw the remaining
amount in the upcoming year. If certain conditions are met, principal amounts of up to $400,000 and
$8,625,000, respectively, of these balances may be forgiven.
The City was in compliance in all material respects with all the revenue bond ordinances at June 30, 2020.
66
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE I—LONG-TERM DEBT—Continued
Direct Borrowings and Direct Placements
Installment Purchase Agreements
The City has entered into an installment agreement for capital improvements to the Mercy Health Arena in
2020. The installment purchase agreement is secured by the equipment purchase and if the City defaults
under the agreement, the lessor has the right to demand payment in full of the unpaid balance or recover
possession of any or all items of secured equipment. Installment purchase agreements outstanding as of June
30, 2020 are as follows:
Original Date of
Borrowing Interest Rate Maturity Balance
Installment purchase agreements:
Governmental activities:
2019 Capital Improvement Installment Loan $ 2,417,000 4.42% - 5.32% April 2026 $ 2,123,804
For governmental activities, pension liabilities (i.e. net pension and OPEB liabilities), 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, 2020 was approximately $2,497,572. The City is unaware of any
circumstances that would cause a shortfall in the near future.
Annual debt service requirements to maturity for public placement debt and for direct borrowings and direct
placements outstanding as of June 30, 2020 follow:
Governmental Activites
Direct Borrowings and Business-type Activities
Year Ending Public Placement Debt Direct Placements Public Placement Debt
June 30, Principal Interest Principal Interest Principal Interest
2021 $ 690,000 $ 776,856 $ 324,944 $ 90,299 $ 760,000 $ 183,425
2022 740,000 757,613 340,307 75,277 960,000 165,916
2023 550,000 740,885 356,217 59,367 980,000 145,588
2024 600,000 725,140 372,871 42,713 1,005,000 124,738
2025 640,000 706,645 390,306 25,278 1,008,217 103,466
2026-2030 3,540,000 3,219,790 339,159 7,159 1,510,000 214,425
2031-2035 3,520,000 2,634,359 - - 384,739 90,100
2036-2040 3,405,000 2,116,883 - - - -
2041-2045 4,475,000 1,447,983 - - - -
2046-2050 5,820,000 542,370 - - - -
$ 23,980,000 $ 13,668,524 $ 2,123,804 $ 300,093 $ 6,607,956 $ 1,027,658
67
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE I—LONG-TERM DEBT—Continued
Component Units
Year Ending Public Placement Debt
June 30, Principal Interest
2021 $ 395,000 $ 50,100
2022 245,000 37,300
2023 255,000 28,575
2024 265,000 20,775
2025 275,000 12,675
2026-2030 285,000 4,275
2031-2035 - -
2036-2040 - -
2041-2045 - -
2046-2050 - -
$ 1,720,000 $ 153,700
Annual debt service requirements to maturity by type of debt as of June 30, 2020 follow:
Installment
Revenue Purchase
General Obligation Debt Obligations Agreements
Year Ending Governmental Component Business-type Governmental
June 30, Activities Units Activities Activities
2021 $ 1,466,856 $ 445,100 $ 943,425 $ 415,243
2022 1,497,613 282,300 1,125,916 415,584
2023 1,290,885 283,575 1,125,588 415,584
2024 1,325,140 285,775 1,129,738 415,584
2025 1,346,645 287,675 1,111,683 415,584
2026-2030 6,759,790 289,275 1,724,425 346,318
2031-2035 6,154,359 - 474,839 -
2036-2040 5,521,883 - - -
2041-2045 5,922,983 - - -
2046-2050 6,362,370 - - -
$ 37,648,524 $ 1,873,700 $ 7,635,614 $ 2,423,897
68
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE J—OTHER INFORMATION
Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets;
errors and omissions; injuries to employees and natural disasters. The City manages its liability and property
risk by participating in the Michigan Municipal Risk Management Authority (MMRMA), a public entity risk
pool providing property and liability coverage to its participating members. The City pays an annual
premium to MMRMA for its insurance coverage. The MMRMA is self-sustaining through member
premiums and provides, subject to certain deductibles, occurrence-based casualty coverage for each incident
and occurrence-based property coverage to its members by internally assuring certain risks and reinsuring
risks through commercial companies. A $150,000 deductible is maintained to place the responsibility for
small charges with the City. Settled claims resulting from these risks have not exceeded insurance coverage
in any of the past three fiscal years. Changes in the fund’s claim liability amount in 2020 and 2019 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, 2020 $ 224,580 $ 94,465 $ 185,681 $ 133,364
June 30, 2019 78,289 227,646 81,355 224,580
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, 2020, the claims liability including incurred but
not reported claims was $111,410. 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 2020 and 2019
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, 2020 $ 51,401 $ 2,267,390 $ 2,207,381 $ 111,410
June 30, 2019 33,784 1,643,632 1,626,015 51,401
69
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE J—OTHER INFORMATION—Continued
Contingencies
Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies,
principally the federal government. Any disallowed claims, including amounts already collected, may
constitute a liability to the applicable funds. The amount, if any, of expenditures that may be disallowed by
the grantor cannot be determined at this time, although the City expects such amounts, if any, to be
immaterial.
The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently
determinable, in the opinion of the City's counsel the resolution of these matters will not have a material
adverse effect on the financial condition of the City.
Commitments
The City has several contracts for street projects including water and sewer system improvements as of June
30, 2020 with a remaining amount of approximately $27,027,000. Approximately $238,000 of the
commitments in the Water Fund are being financed by a grant and approximately $9,955,000 and $1,737,000
of the commitments in the Sewer and Water funds, respectively, are being financed by long-term debt with
the remainder being paid out of available funds as follows:
Fund Amount
Major Street and Trunkline $ 4,439,000
Local Street 57,000
Sewer 9,231,000
Water 13,300,000
$ 27,027,000
Leases
The City leases an office facility under a noncancelable operating lease that expires June 2022 with the option
by the tenant to renew the term of the lease for two successive periods of five years each. The City received
rental income (including pro-rata utility usage) of $56,772 for the year ended June 30, 2020. The future
minimum rental income for this lease is as follows:
Year Ending
June 30, Amount
2021 $ 55,463
2022 55,584
$ 111,047
NOTE K—TAX ABATEMENTS
Industrial Facilities Exemption
The City entered into property tax abatement agreements with local businesses under the Plant Rehabilitation
and Industrial Developments Act, (known as the Industrial Facilities Exemptions or IFTs) PA 198 of 1974, as
amended. The IFTs provides a tax incentive to manufacturers to enable renovation and expansion of aging
facilities, assist in the building of new facilities, and to promote the establishment of high tech facilities.
Properties qualifying for IFT status are taxed at half the local property tax millage rate applicable to other real
and personal property in the City for a term of one to twelve years as determined by the City.
For the year ended June 30, 2020, the City abated property taxes revenues totaling $63,532 under this
program.
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City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE K—TAX ABATEMENTS—Continued
Brownfield Redevelopment Authority
The City entered into property tax abatement agreements with local businesses under the Brownfield
Redevelopment Act, PA 381 of 1996, as amended. Brownfield properties are those in which the
redevelopment or reuse of property may be complicated by the presence or perception of contamination.
Brownfields use tax increment financing where growth in taxable value above the initial value of the
Brownfield is captured and used to repay the developer for remediation costs.
For the year ended June 30, 2020, the City abated property taxes revenues totaling $150,073 under this
program.
Payment in Lieu of Taxes (PILOT)
The City uses the State Housing Development Authority Act, PA 346 of 1966, as amended, to enter into
agreements that provide for a service charge in lieu of taxes to encourage the development of housing of its
elderly citizens of low and moderate income.
For the year ended June 30, 2020, the City abated property taxes revenues totaling $131,151 under this
program.
NOTE L—EMPLOYEE RETIREMENT SYSTEM AND PENSION PLAN
Defined Benefit Pension Plan
Plan Description
The City participates in the Municipal Employees Retirement System (MERS) of Michigan. MERS is an
agent multiple-employer, statewide public employee pension plan established by the Michigan Legislature
under Public Act 135 of 1945 and administered by a nine member Retirement Board. MERS issues a publicly
available financial report that includes financial statements and required supplementary information. This
report may be obtained accessing the MERS website at www.mersofmich.com.
Benefits Provided
The City’s defined benefit pension plan provides certain retirement, disability and death benefits to plan
members and beneficiaries. Public Act 427 of 1984, as amended, established and amends the benefit
provisions of the participants in MERS. The Plan covers all full-time employees hired prior to January 2005.
Beginning in January 2005, the various employee divisions began to be closed. By July 2006, all employee
divisions were closed.
71
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE L—EMPLOYEE RETIREMENT SYSTEM AND PENSION PLAN—Continued
Defined Benefit Pension Plan—Continued
Benefits Provided—Continued
Benefits provided are based on the following by employee division:
Normal Reduced
Vesting Retirement Early Early
Mulitplier Period Age Retirement Retirement
Non-Union General 2.25%* 5 years 60 55/25 50/25 or 55/15
Non-Union Police 3.00% 10 years 55 53/25 50/25
Clerical 2.25%* 5 years 60 55/25 50/25 or 55/15
Department of Public Works 2.25%* 10 years 60 55/30 50/25 or 55/15
Police Patrol 3.00%* 10 years 55 50/25 Not applicable
Police Command 3.00% 10 years 55 50/25 Not applicable
Fire 2.75% 10 years 55 53/25 50/25
*Effective January 2017, the multiplier for Non-Union General and Department of Public Works was changed
to 2.00% and the multiplier for Police Patrol was changed to 2.675%. Effective December 2018, the
multiplier for Clerical was changed to 2.00%.
Final average compensation is calculated based on 3 years.
Employees Covered by Benefit Terms
At December 31, 2019 valuation date, the following employees were covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 326
Inactive employees entitled to but not yet receiving benefits 39
Active employees 85
Total employees covered by MERS 450
Contributions
The City is required to contribute amounts at least equal to the actuarially determined rate, as established by
the MERS Retirement Board. The actuarially determined rate is the estimated amount necessary to finance
the cost of benefits earned by employees during the year, with an additional amount to finance any unfunded
accrued liability. The City may establish contribution rates to be paid by its covered employees.
For the year ended June 30, 2020, the City had a flat-dollar employer contribution to the Plan of $1,855,248
in lieu of a percentage of covered employee payroll, as the Plan is closed to new employees. Member
contributions range from 4 percent to 6.5 percent.
Net Pension Liability
The City’s net pension liability was measured as of December 31, 2019, and the total pension liability used to
calculate the net pension liability was determined by an annual actuarial valuation as of that date.
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City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE L—EMPLOYEE RETIREMENT SYSTEM AND PENSION PLAN—Continued
Defined Benefit Pension Plan—Continued
Actuarial Assumptions
The total pension liability in the December 31, 2019 actuarial valuation was determined using the following
actuarial assumptions, applied to all periods included in the measurement:
Inflation 2.5 percent
Salary increases 3.75 percent changed to 3.0 percent in the long-term
effective with the December 31, 2019 valuation
Investment rate of return 7.75 percent changed to 7.35 percent, net of administrative and
investment expenses effective with the December 31, 2019
valuation
Although no specific price inflation assumptions are needed for the valuation, the 2.5 percent long-term wage
inflation assumption would be consistent with a price inflation of 3-4 percent. Mortality rates used were
based on the RP-2014 Group Annuity Mortality Table of a 50 percent Male and 50 percent Female blend.
The actuarial assumptions used in valuation were based on the results of the most recent actuarial experience
study of 2009 through 2013.
The long-term expected rate of return on pension plan investments was determined using a model method in
which the best-estimate ranges of expected future real rates of return (expected returns, net of investment and
administrative expenses and inflation) are developed for each major asset class. These ranges are combined
to produce the long-term expected rate of return by weighting the expected future real rates of return by the
target asset allocation percentage and by adding expected inflation. The target allocation and best estimates
of arithmetic real rates of return for each major asset class are summarized in the following table:
Target Long-Term Long-Term
Allocation Expected Expected
Target Gross Rate of Gross Rate Inflation Real Rate
Asset Class Allocation Return of Return Assumption of Return
Global equity 60.0% 7.75% 4.65% 2.50% 3.15%
Global fixed income 20.0% 3.75% 0.75% 2.50% 0.25%
Private assets 20.0% 9.75% 1.95% 2.50% 1.45%
Total 100.0% 7.35% 4.85%
Discount Rate
The discount rate used to measure the total pension liability was 7.60 percent for 2019. The projection of
cash flows used to determine the discount rate assumed that employee contributions will be made at the
current contribution rate and that City contributions will be made at rates equal to the difference between
actuarially determined contribution rates and the employee rate. Based on those assumptions, the pension
plan's fiduciary net position was projected to be available to pay all projected future benefit payments of
current active and inactive employees. Therefore, the long-term expected rate of return on pension plan
investments was applied to all periods of projected benefit payments to determine the total pension liability.
The discount rate used to calculate the liability at the beginning of the year was 8.00 percent.
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City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE L—EMPLOYEE RETIREMENT SYSTEM AND PENSION PLAN—Continued
Defined Benefit Pension Plan—Continued
Changes in the Net Pension Liability
Increase (Decrease)
Plan Net Pension
Total Pension Fiduciary Liability
Liability (a) Position (b) (a)-(b)
Balance at beginning of year $ 112,728,195 $ 83,140,099 $ 29,588,096
Changes for the year
Service cost 732,228 - 732,228
Interest 8,718,797 - 8,718,797
Difference between expected and
actual experience 1,830,804 - 1,830,804
Changes in assumptions 4,134,788 - 4,134,788
Contributions - employer - 2,712,204 (2,712,204)
Contributions - employee - 491,814 (491,814)
Net investment income - 11,059,388 (11,059,388)
Administrative expenses - (190,108) 190,108
Benefit payments including refund of
employee contributions (8,218,689) (8,218,689) -
Net changes 7,197,928 5,854,609 1,343,319
Balance at end of year $ 119,926,123 $ 88,994,708 $30,931,415
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability of the City, calculated using the discount rate of 7.6 percent,
as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1-
percentage-point lower (6.6 percent) or 1-percentage-point higher (8.6 percent) than the current rate:
1% Decrease Current Discount 1% Increase
(6.6%) Rate (7.6%) (8.6%)
City's net pension liability $ 43,459,409 $ 30,931,415 $ 20,307,360
Note: The current discount rate shown for GASB 68 purposes is higher than the MERS assumed rate of
return. This is because for GASB 68 purposes, the discount rate must be gross of administrative expenses,
whereas for funding purposes, it is net of administrative expense.
74
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE L—EMPLOYEE RETIREMENT SYSTEM AND PENSION PLAN—Continued
Defined Benefit Pension Plan—Continued
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
For the year ended June 30, 2020, the City recognized pension expense of $11,833,767. At June 30, 2020, the
City reported deferred outflows of resources and deferred inflows of resources related to pensions from the
following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Net differences between projected
and actual net investment income $ 287,519 $ -
Contributions subsequent to the
measurement date* 1,017,295 -
Total $ 1,304,814 $ -
*The amount reported as deferred outflows of resources resulting from contributions subsequent to the
measurement date will be recognized as a reduction in the net pension liability for the year ending June 30,
2021.
Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will
be recognized in pension expense as follows:
Year Ending
June 30, Amount
2021 $ (251,301)
2022 290,703
2023 1,175,325
2024 (927,208)
Payables to the Pension Plan
At June 30, 2020, the City reported a payable of $264,472 for the outstanding amount of contributions to the
pension plan required for the year ended June 30, 2020.
75
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE L—EMPLOYEE RETIREMENT SYSTEM AND PENSION PLAN—Continued
Defined Contribution Pension Plan
The City also maintains a defined contribution plan offered by MERS for its full-time employees hired after
the defined benefit plan was closed to new participants.
Benefit terms, including contribution requirements, for the MERS defined contribution plan are established
and may be amended by the City Commission as determined by negotiated labor contracts. The City is
required to contribute 3 percent to 13 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, 2020, City and employee
contributions were $849,470 and $383,608, respectively.
Employees are immediately vested in their own contributions and earnings on those contributions and become
vested in City contributions and earnings on City contributions by 20 percent for each full year of service,
leaving employees fully vested after five years of service. Nonvested City contributions are forfeited upon
termination of employment. Such forfeitures are used to cover a portion of the pension plan’s administrative
expenses. For the year ended June 30, 2020, forfeitures reduced the City’s pension expense by $51,556.
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).
NOTE M—OTHER POSTEMPLOYMENT BENEFITS
Retiree Healthcare Plan
Plan Description
The City’s defined benefit OPEB Plan, the City of Muskegon Retiree Healthcare Plan (OPEB Plan), provides
healthcare benefits to certain employees and their spouses upon retirement. The Plan is a defined benefit plan
administered by the City Commission. The benefits are provided under collective bargaining agreements and
at the discretion of the City Commission. The OPEB Plan does not issue a publicly available report.
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City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE M—OTHER POSTEMPLOYMENT BENEFITS—CONTINUED
Retiree Healthcare Plan—Continued
Benefits Provided
The OPEB Plan provides medical and dental insurances for eligible retirees and spouses who meet the
following criteria:
Normal
Vesting Retirement Early
Eligibility Period Age Retirement
Non-Union General Hired before January 1, 2011 5 years 60 55/25
Non-Union Police Hired before January 1, 2011 10 years 55 53/25
Clerical Hired before January 1, 2009 10 years 60 55/30
Department of Public Works Hired before January 1, 2011 10 years 60 55/30
Police Patrol Hired before January 1, 2012 10 years 55 50/25
Police Command Hired before January 1, 2010 10 years 55 50/25
Fire Hired before January 1, 2010 10 years 55 53/25
Benefits are provided through a third party insurer.
Employees Covered by Benefit Terms
At the December 31, 2019 valuation, the following employees were covered by the benefit terms:
Active members 109
Inactive members 40
Retirees and beneficiaries 302
Total employees covered by OPEB Plan 451
Contributions
The OPEB Plan’s funding policy is that the City will make contributions equal to the recommended annual
contribution. There are no long-term contracts for contributions to the OPEB Plan. The OPEB Plan has no
legally required reserves. For the year ended June 30, 2020, the City made payments for postemployment
healthcare benefits of $1,233,505.
Net OPEB Liability
The City’s net OPEB liability was measured as of December 31, 2019, and the total OPEB liability used to
calculate the net OPEB liability was determined by an actuarial valuation as December 31, 2019.
77
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE M—OTHER POSTEMPLOYMENT BENEFITS—Continued
Retiree Healthcare Plan—Continued
Actuarial Assumptions
The total OPEB liability in the December 31, 2019 actuarial valuation was determined using the following
actuarial assumptions, applied to all periods included in the measurement:
Inflation 2.5 percent
Salary increases 3.0 percent
Investment rate of return 6.24 percent (including inflation), net of administrative
and investment expenses
Healthcare cost trend rates Pre-Medicare: 8.25 percent graded down to 4.5 percent by .25 percent per year
Post-Medicare: 6.5 percent graded down to 4.5 percent by .25 percent per year
Mortality
Mortality rates for police and fire were as set forth in the Public Safety 2010 Employee and Healthy Retiree,
headcount weighted, MP-2018 improvement scale. Mortality rates for others were as set forth in the Public
General 2010 Employee and Healthy Retiree, headcount weighted, MP-2018 improvement scale.
Investment Rate of Return
The long-term rate of return on retirement plan investments was determined using a building-block method in
which best-estimate ranges of expected future real rates of return (expected returns, net of OPEB Plan
investment expense and inflation) are developed for each major asset class. These ranges are combined to
produce the long-term expected rate of return by weighting the expected future real rates of return by the
target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of
return for each major asset class included in the OPEB Plan’s target asset allocation are summarized in the
following table:
Target Long-Term Long-Term
Allocation Expected Expected
Target Gross Rate of Gross Rate Inflation Real Rate
Asset Class Allocation Return of Return Assumption of Return
Total market portfolio 55.0% 7.35% 4.04% 2.50% 2.67%
Est market port (60/40) 25.0% 6.70% 1.68% 2.50% 1.05%
Divers bond port (0/100) 16.0% 3.00% 0.48% 2.50% 0.08%
Short-term income 4.0% 1.00% 0.04% 2.50% -0.06%
Total 100.0% 6.24% 3.74%
Discount Rate
The discount rate used to measure the total OPEB liability was 6.24 percent. The projection of cash flows
used to determine the discount rate assumed that the City will make future contributions at the same level as
2019. Based on this assumption, the OPEB plan’s fiduciary net position was projected to be sufficient to
make projected future benefit payments of current plan members. For projected benefits that are covered by
projected assets, the long-term expected rate was used to discount the projected benefits. From the year that
benefit payments were not projected be covered by the projected assets (the “depletion date”), projected
benefits were discounted at a discount rate reflecting a 20-year AA/Aa tax-exempt municipal bond yield. A
single equivalent discount rate that yields the same present value of benefits is calculated. This discount rate
is used to determine the total OPEB liability. As of December 31, 2018 the discount rate used to value OPEB
liabilities was 7.75 percent.
78
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE M—OTHER POSTEMPLOYMENT BENEFITS—Continued
Retiree Healthcare Plan—Continued
Changes in the Net OPEB Liability
Increase (Decrease)
Net OPEB
Total OPEB Plan Fiduciary Liability
Liability (a) Position (b) (a)-(b)
Balance at January 1, 2019 $ 29,100,636 $ 19,578,969 $ 9,521,667
Changes for the year
Service cost 165,306 - 165,306
Interest 2,191,233 - 2,191,233
Difference between expected and
actual experience (2,119,868) - (2,119,868)
Changes of assumptions 6,288,823 - 6,288,823
Contributions - employer - 1,001,447 (1,001,447)
Net investment income - 2,660,470 (2,660,470)
Administrative expenses - (41,397) 41,397
Benefit payments including refund of
employee contributions (1,983,928) (1,983,928) -
Net changes 4,541,566 1,636,592 2,904,974
Balance at December 31, 2019 $ 33,642,202 $ 21,215,561 $ 12,426,641
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate
The following presents the net OPEB liability of the City, calculated using the discount rate of 6.24 percent,
as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is 1-
percentage-point lower (5.24 percent) or 1-percentage-point higher (7.24 percent) than the current rate:
1% Decrease Current Discount 1% Increase
(5.24%) Rate (6.24%) (7.24%)
City's net OPEB liability $ 16,257,461 $ 12,426,641 $ 9,245,708
79
City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE M—OTHER POSTEMPLOYMENT BENEFITS—Continued
Retiree Healthcare Plan—Continued
Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rate
The following presents the net OPEB liability of the City, calculated using the healthcare cost trend rate for
pre-Medicare of 8.25 percent, decreasing to 4.5 percent and post-Medicare of 6.5 percent decreasing to 4.5
percent, as well as what the City’s net OPEB liability would be if it were calculated using healthcare cost
trend rates that are 1-percentage-point lower (7.25 percent decreasing to 3.5 percent or 5.5 percent decreasing
to 3.5 percent) or 1-percentage-point higher (9.25 percent decreasing to 5.5 percent or 7.5 percent decreasing
to 5.5 percent) than the current rate:
Current
Healthcare Cost
1% Decrease Trend Rate 1% Increase
City's net OPEB liability $ 9,226,377 $ 12,426,641 $ 16,257,103
OPEB Plan Fiduciary Net Position
Detailed information about the OPEB Plan’s fiduciary net position is not available in a separately issued
financial report. For purposes of measuring the net OPEB liability, deferred outflows of resources and
deferred inflows of resources related to OPEB, and OPEB expenses, information about the fiduciary net
position of the OPEB Plan and additions to/deductions from the City’s fiduciary net position have been
determined on the same basis as they are reported by the City. For these purposes, benefit payments
(including refunds of employee contributions) are recognized when due and payable in accordance with the
benefit terms. Investments are reported at fair value.
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
For the year ended June 30, 2020, the City recognized OPEB expense of $4,011,969. At June 30, 2020, the
City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the
following sources:
Deferred Outflows of Deferred Inflows of
Resources Resources
Differences in experience $ - $ 850,486
Changes in assumptions 2,523,061 -
Net difference between projected
and actual net investment income 168,793 -
Contributions subsequent to the
measurement date* 578,303 -
Total $ 3,270,157 $ 850,486
*The amount reported as deferred outflows of resources resulting from contributions subsequent to the
measurement date will be recognized as a reduction in the net pension liability for the year ending June 30,
2021.
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City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE M—OTHER POSTEMPLOYMENT BENEFITS—Continued
Retiree Healthcare Plan—Continued
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to
OPEB—Continued
Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will
be recognized in OPEB expense as follows:
Year Ending
June 30, Amount
2021 $ 1,764,465
2022 91,892
2023 221,566
2024 (236,555)
Payables to the OPEB Plan
At June 30, 2020, the City did not have a payable to the OPEB Plan.
Healthcare Savings Plan
The City also maintains a defined contribution OPEB Plan (Health Care Savings Plan or HCSP) which
provides certain health care benefits to plan member and legal dependents upon termination of employment.
The HCSP covers all City employees hired after July 1, 2012 in lieu of the traditional retiree healthcare plan.
The City participates in the Municipal Employees Retirement System (MERS) of Michigan. MERS is an
agent multiple employer, statewide public employee defined contribution OPEB Plan established by the
Michigan Legislature under Public Act 135 of 1945 and administered by a nine-member Retirement Board.
Public Act 427 of 1984, as amended, establishes and amends the benefit provisions of the participants in
MERS. MERS issues a publicly available financial report that includes financial statements and required
supplementary information. This report may be obtained accessing the MERS website at
www.mersofmich.com.
Depending on employee group, the Plan covers all qualified City employees hired after January 2009 to
December 2012 in lieu of the traditional retiree healthcare plan. 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. 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.
Employees are immediately vested in all contributions and earnings of those contributions.
For the year ended June 30, 2020, City and employee contributions were $158,374 and $207,067,
respectively.
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City of Muskegon
NOTES TO FINANCIAL STATEMENTS
June 30, 2020
NOTE N—UPCOMING ACCOUNTING PRONOUNCEMENTS
GASB Statement 84—Fiduciary Activities was issued by the GASB in January 2017 and will be effective for
the City’s 2021 fiscal year. The objective of this Statement is to improve guidance regarding the
identification of fiduciary activities for accounting and financial reporting purposes and how those activities
should be reported. This Statement establishes criteria for identifying fiduciary activities for all state and
local governments. The focus on the criteria generally is on (1) whether a government is controlling the
assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. An activity
meeting the criteria should be reported in a fiduciary fund in the basic financial statements.
GASB Statement 87—Leases was issued by the GASB in June 2017 and will be effective for the City’s 2022
fiscal year. The objective of this Statement is to better meet the information needs of financial statement
users by improving accounting and financial reporting for leases by governments. This Statement increases
the usefulness of governments' financial statements by requiring recognition of certain lease assets and
liabilities for leases that previously were classified as operating leases and recognized as inflows of resources
or outflows of resources based on the payment provisions of the contract. It establishes a single model for
lease accounting based on the foundational principle that leases are financings of the right to use an
underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible
right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of
resources, thereby enhancing the relevance and consistency of information about governments' leasing
activities.
NOTE O—SUBSEQUENT EVENTS
The COVID-19 pandemic that the world is experiencing is unprecedented. It is nearly impossible to fully
understand the impact that it will have on the economy and on the City’s operations. As of December 22,
2020, the City is in the process of implementing risk mitigation tactics including all aspects of the City’s
business transactions with customers, vendors and human interaction within and outside of the City.
On September 30, 2020, the City issued Revenue Bonds for the Sewer Fund of $4,715,000 and the Water
Fund of $4,225,000 for improvements to the sewer and drinking water systems.
On November 12, 2020, the City issued Capital Improvement Bonds of $4,325,000 and $2,055,000 for
various capital improvement projects including public safety equipment, improvements to the Muskegon
Central Dispatch 9-1-1 facility and City central fire station, improvements to the Hartshorn Marina Village,
and improvements to the Mercy Health Arena.
82
REQUIRED SUPPLEMENTARY INFORMATION
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City of Muskegon
BUDGETARY COMPARISON SCHEDULE
General Fund
For the year ended June 30, 2020
(with comparative actual amounts for the year ended June 30, 2019)
2020 2019
Variance with
Final Budget-
Budgeted Amounts Positive
Original Final Actual (Negative) Actual
REVENUES
Taxes
City income taxes $ 8,650,000 $ 8,650,000 $ 9,137,714 $ 487,714 $ 8,691,673
Property taxes 7,251,000 7,251,000 7,373,617 122,617 7,168,126
Industrial facilities taxes 76,468 76,468 128,212 51,744 106,297
Payments in lieu of taxes 566,877 566,877 614,314 47,437 615,934
Total taxes 16,544,345 16,544,345 17,253,857 709,512 16,582,030
Licenses and permits
Business licenses 75,000 75,000 42,520 (32,480) 52,345
Liquor licenses 55,000 55,000 49,557 (5,443) 55,467
Marihuana facilities licenses 95,000 95,000 143,300 48,300 115,700
Cable TV fees 370,000 370,000 361,405 (8,595) 380,343
Rental property registration 397,500 397,500 354,830 (42,670) 363,915
Burial permits 80,000 80,000 76,615 (3,385) 68,275
Building permits 1,000,000 1,000,000 911,057 (88,943) 933,745
Electrical permits 190,000 190,000 172,531 (17,469) 169,690
Plumbing permits 80,000 80,000 103,139 23,139 102,101
Mechanical permits 125,000 125,000 144,730 19,730 137,826
Vacant building fees 40,000 40,000 60,570 20,570 72,665
Other inspections - - 350 350 735
Total licenses and permits 2,507,500 2,507,500 2,420,604 (86,896) 2,452,807
Intergovernmental revenues
Federal grants 40,000 40,000 147,191 107,191 57,894
State
Grants 776,000 776,000 913,590 137,590 862,839
State shared revenue 4,376,711 4,376,711 4,117,935 (258,776) 4,271,438
Total intergovernmental revenues - State 5,152,711 5,152,711 5,031,525 (121,186) 5,134,277
Local 142,000 42,000 40,000 (2,000) 40,000
84
City of Muskegon
BUDGETARY COMPARISON SCHEDULE—CONTINUED
General Fund
For the year ended June 30, 2020
(with comparative actual amounts for the year ended June 30, 2019)
2020 2019
Variance with
Final Budget-
Budgeted Amounts Positive
Original Final Actual (Negative) Actual
Charges for services
Tax administration fees $ 327,000 $ 327,000 $ 350,742 $ 23,742 $ 340,217
Utility administration fees 310,000 310,000 310,000 - 310,000
Reimbursement for elections - - 50,142 50,142 13,455
Brownfield authority admin fee 162,000 162,000 180,000 18,000 162,000
Indirect cost reimbursements 1,175,719 1,175,719 1,066,967 (108,752) 1,114,735
Site plan review fee 6,000 6,000 7,600 1,600 6,900
Sale of cemetery lots 25,000 25,000 28,440 3,440 31,159
Police miscellaneous 137,301 137,301 116,108 (21,193) 143,322
Police impound fees 35,000 35,000 38,293 3,293 39,470
Landlord's alert fee 30,000 30,000 25,990 (4,010) 30,323
Fire protection - state property 81,750 173,718 173,718 - 81,766
Zoning fees 15,000 15,000 29,855 14,855 19,070
Muskegon Heights zoning 6,000 6,000 5,670 (330) 10,465
Clerk fees 5,000 5,000 1,329 (3,671) 5,432
Clerk fees - passport fees 80,000 80,000 63,520 (16,480) 82,662
Tax abatement application fees 6,000 6,000 8,890 2,890 3,802
Treasurer fees 67,000 67,000 67,177 177 84,289
False alarm fees 9,000 9,000 6,780 (2,220) 10,365
Miscellaneous cemetery income 16,000 16,000 16,383 383 14,547
Fire miscellaneous 9,500 9,500 1,681 (7,819) 14,506
Sanitation stickers 396,100 396,100 336,827 (59,273) 249,043
Lot cleanup fees 39,500 39,500 31,566 (7,934) 35,697
Reimbursements - lot mowing and demolitions 5,000 5,000 124 (4,876) 1,067
Special events reimbursements 55,000 55,000 61,625 6,625 26,505
Recreation program fees 4,500 4,500 8,634 4,134 11,029
Parking - - 146,821 146,821 -
Other charges for services - - 400 400 -
Total charges for services 3,003,370 3,095,338 3,135,282 39,944 2,841,826
Fines and forfeitures
Income tax - penalty and interest 200,000 200,000 201,614 1,614 207,424
Late fees on current taxes 20,000 20,000 18,123 (1,877) 16,790
Interest on late invoices 11,000 11,000 11,006 6 11,516
Parking fines 55,000 55,000 76,543 21,543 57,782
Court fines 120,000 120,000 83,061 (36,939) 137,732
Civil infractions 16,500 16,500 21,978 5,478 30,876
Total fines and forfeitures 422,500 422,500 412,325 (10,175) 462,120
Investment earnings and rental income
Interest income 100,000 100,000 153,093 53,093 108,155
Net increase (decrease) in the fair value of investments - - 193,005 193,005 344,122
City right of way rental 6,800 6,800 6,800 - 6,800
Fire station lease - Central Dispatch 54,000 54,000 56,772 2,772 45,292
Parking rentals 68,750 68,750 48,500 (20,250) 68,500
Great Lakes Naval Memorial lease 15,000 15,000 - (15,000) -
McGraft Park rentals 97,000 97,000 44,637 (52,363) 96,084
Other park rentals 55,000 55,000 34,858 (20,142) 47,964
Total investment earnings and rental income 396,550 396,550 537,665 141,115 716,917
85
City of Muskegon
BUDGETARY COMPARISON SCHEDULE—CONTINUED
General Fund
For the year ended June 30, 2020
(with comparative actual amounts for the year ended June 30, 2019)
2020 2019
Variance with
Final Budget-
Budgeted Amounts Positive
Original Final Actual (Negative) Actual
Other
Police sale and auction proceeds $ 1,000 $ 1,000 $ 28,818 $ 27,818 $ -
CDBG program reimbursements 534,167 548,967 482,833 (66,134) 332,857
Fisherman's Landing reimbursement 17,500 17,500 24,842 7,342 -
Contributions 20,000 20,000 22,227 2,227 2,046
Contributions - Veteran's Park maintenance 18,500 18,500 16,811 (1,689) -
Community Foundation for Muskegon County 10,000 10,000 9,982 (18) 24,892
Miscellaneous and sundry 83,000 83,000 89,486 6,486 100,106
Total other 684,167 698,967 674,999 (23,968) 459,901
Total revenues 28,893,143 28,899,911 29,653,448 753,537 28,747,772
EXPENDITURES
Current
Public representation services
City commission 85,936 85,936 93,898 (7,962) 88,892
City promotions and public relations 88,000 88,000 92,409 (4,409) 81,890
City manager 419,762 419,762 432,401 (12,639) 379,819
Contributions to outside agencies 424,513 424,513 386,779 37,734 384,968
City attorney 360,000 360,000 373,919 (13,919) 345,538
Total public representation services 1,378,211 1,378,211 1,379,406 (1,195) 1,281,107
Administrative services
City clerk 547,208 547,208 621,603 (74,395) 542,248
Civil service 210,412 210,412 222,645 (12,233) 195,275
Affirmative action - - 22 (22) 1,778
Total administrative services 757,620 757,620 844,270 (86,650) 739,301
Financial services
Finance administration 611,136 615,136 587,625 27,511 570,805
Assessing 332,000 332,000 258,238 73,762 335,977
Arena administration - - 24,049 (24,049) 13,510
Income tax administration 378,431 378,431 363,889 14,542 362,595
Information systems 492,581 492,581 535,954 (43,373) 550,516
City treasurer 609,617 609,617 589,093 20,524 561,463
Total financial services 2,423,765 2,427,765 2,358,848 68,917 2,394,866
Public safety
Police department 10,190,969 10,190,969 10,445,491 (254,522) 9,880,736
Fire department 3,827,106 3,847,106 4,353,377 (506,271) 3,989,048
Fire safety inspections 2,296,579 2,096,254 1,996,679 99,575 2,224,747
Total public safety 16,314,654 16,134,329 16,795,547 (661,218) 16,094,531
86
City of Muskegon
BUDGETARY COMPARISON SCHEDULE—CONTINUED
General Fund
For the year ended June 30, 2020
(with comparative actual amounts for the year ended June 30, 2019)
2020 2019
Variance with
Final Budget-
Budgeted Amounts Positive
Original Final Actual (Negative) Actual
Public works
Street lighting $ 490,000 $ 490,000 $ 390,116 $ 99,884 $ 551,818
Community event support 103,159 103,159 81,049 22,110 73,216
General sanitation 1,969,345 1,969,345 2,216,029 (246,684) 2,107,545
Storm water management 14,000 14,000 13,340 660 4,000
City hall maintenance 276,491 276,491 309,388 (32,897) 316,868
Cemeteries maintenance 507,902 507,902 429,404 78,498 440,130
Total public works 3,360,897 3,360,897 3,439,326 (78,429) 3,493,577
Community and economic development
Planning, zoning and economic development 417,911 429,711 405,688 24,023 376,679
Environmental services - - 7,413 (7,413) -
Edison Landing subsidy 360,000 360,000 360,000 - 360,000
Total community and economic development 777,911 789,711 773,101 16,610 736,679
Culture and recreation
Parks maintenance 1,624,617 1,624,617 1,873,339 (248,722) 1,676,222
McGraft Park maintenance 120,076 120,076 18,142 101,934 133,573
General and inner city recreation programs - - 1,928 (1,928) 12,050
Forestry - - 656 (656) 92
Parking operations - - 30,524 (30,524) 2,393
Farmers market and flea market - - 204 (204) 210
Total culture and recreation 1,744,693 1,744,693 1,924,793 (180,100) 1,824,540
Other governmental functions
Insurance premiums 287,041 287,041 340,189 (53,148) 292,037
Other 100,000 100,000 31,272 68,728 (10,326)
Total other governmental functions 387,041 387,041 371,461 15,580 281,711
Debt service
Principal 290,000 290,000 290,000 - 65,000
Interest and fees 159,750 159,750 160,811 (1,061) 165,851
Total debt service 449,750 449,750 450,811 (1,061) 230,851
Capital outlay 895,201 925,001 786,725 138,276 801,483
Total expenditures 28,489,743 28,355,018 29,124,288 (769,270) 27,878,646
Excess of revenues over (under) expenditures 403,400 544,893 529,160 (15,733) 869,126
87
City of Muskegon
BUDGETARY COMPARISON SCHEDULE—CONTINUED
General Fund
For the year ended June 30, 2020
(with comparative actual amounts for the year ended June 30, 2019)
2020 2019
Variance with
Final Budget-
Budgeted Amounts Positive
Original Final Actual (Negative) Actual
OTHER FINANCING SOURCES (USES)
Transfers in $ 100,000 $ 100,000 $ - $ (100,000) $ 5,989
Transfers out (485,000) (485,000) (1,132,500) (647,500) (761,486)
Total other financing sources (uses) (385,000) (385,000) (1,132,500) (747,500) (755,497)
Net change in fund balance $ 18,400 $ 159,893 (603,340) $ (763,233) 113,629
Fund balance at beginning of year 8,505,195 8,391,566
Fund balance at end of year $ 7,901,855 $ 8,505,195
Note: Both budgets and actual figures are prepared in accordance with generally accepted accounting principles.
88
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
Major Street and Trunkline Fund
For the year ended June 30, 2020
Variance with
Final Budget-
Budgeted Amounts Positive
Original Final Actual (Negative)
REVENUES
Intergovernmental revenues
Federal $ 1,460,000 $ 1,050,000 $ 1,049,653 $ (347)
State 4,840,774 5,440,774 4,174,142 (1,266,632)
Charges for services - - 18,001 18,001
Investment earnings 10,000 10,000 9,665 (335)
Other - 40,000 55,016 15,016
Total revenues 6,310,774 6,540,774 5,306,477 (1,234,297)
EXPENDITURES
Current
Highways, streets and bridges 5,328,443 7,633,443 6,018,144 1,615,299
Debt service
Principal - - 215,000 (215,000)
Interest and fees - - 16,873 (16,873)
Total expenditures 5,328,443 7,633,443 6,250,017 1,383,426
Net change in fund balance $ 982,331 $ (1,092,669) (943,540) $ 149,129
Fund balance at beginning of year 3,194,724
Fund balance at end of year $ 2,251,184
Note: Both budgets and actual figures are prepared in accordance with generally accepted accounting principles.
89
City of Muskegon
Required Supplemental Information
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
Last Ten Fiscal Years (Amounts were determined as of December 31 of each fiscal year)
2019 2018 2017 2016 2015 2014
TOTAL PENSION LIABILITY
Service cost $ 732,228 $ 806,565 $ 1,018,541 $ 1,130,408 $ 1,194,909 $ 1,190,507
Interest 8,718,797 8,345,836 8,429,233 8,345,661 8,034,035 7,817,503
Differences between expected and actual experience 1,830,804 3,642,392 1,326,122 (1,697,797) (647,017) -
Changes in assumptions 4,134,788 - - - 4,779,382 -
Benefit payments, including refunds of employee contributions (8,218,689) (7,512,608) (6,937,544) (6,417,825) (6,363,249) (6,407,932)
Other changes - (229,967) (4,485,289) - - -
Net change in total pension liability 7,197,928 5,052,218 (648,937) 1,360,447 6,998,060 2,600,078
Total pension liability at beginning of year 112,728,195 107,675,977 108,324,914 106,964,467 99,966,407 97,366,329
Total pension liability at end of year (a) $ 119,926,123 $ 112,728,195 $ 107,675,977 $ 108,324,914 $ 106,964,467 $ 99,966,407
PLAN FIDUCIARY NET POSITION
Contributions-employer $ 2,712,204 $ 2,671,175 $ 1,801,016 $ 1,996,512 $ 1,420,218 $ 1,166,652
Contributions-employee 491,814 848,562 687,391 563,898 566,045 564,409
90
Net investment income 11,059,388 (3,452,538) 10,964,115 8,890,951 (1,237,895) 5,282,031
Benefit payments, including refunds or employee contributions (8,218,689) (7,512,608) (6,937,544) (6,417,825) (6,363,249) (6,407,932)
Administrative expense (190,108) (173,509) (173,921) (175,718) (183,599) (193,139)
-
Net change in plan fiduciary net position 5,854,609 (7,618,918) 6,341,057 4,857,818 (5,798,480) 412,021
Plan fiduciary net position at beginning of year 83,140,099 90,759,017 84,417,960 79,560,142 85,358,622 84,946,601
Plan fiduciary net position at end of year (b) $ 88,994,708 $ 83,140,099 $ 90,759,017 $ 84,417,960 $ 79,560,142 $ 85,358,622
City's net pension liability at end of year (a)-(b) $ 30,931,415 $ 29,588,096 $ 16,916,960 $ 23,906,954 $ 27,404,325 $ 14,607,785
Plan fiduciary net position as a percentage of the total pension liability 74.21% 73.75% 84.29% 77.93% 74.38% 85.39%
Covered payroll $ 6,110,950 $ 6,565,169 $ 7,645,789 $ 8,460,078 $ 9,108,948 $ 9,171,511
City's net pension liability as a percentage of covered payroll 506.16% 450.68% 221.26% 282.59% 300.85% 159.27%
Notes to Schedule
Additional actuarial data is not available and will be provided in subsequent years.
City of Muskegon
Required Supplemental Information
PENSION SYSTEM SCHEDULE OF CONTRIBUTIONS
Last Ten Fiscal Years (Amounts were determined as of June 30 of each fiscal year)
2020 2019 2018 2017 2016 2015 2014 2013 2012 2011
Actuarially determined contribution $ 1,855,248 $ 1,902,696 $ 1,798,140 $ 1,897,158 $ 1,546,440 $ 1,293,996 $ 1,043,040 $ 1,035,772 $ 1,160,870 $ 1,211,612
Contributions in relation to the actuarially
determined contribution 2,777,641 2,218,663 1,964,214 2,276,200 1,753,272 1,293,996 1,543,040 1,035,772 1,160,870 2,211,612
Contribution deficiency (excess) $ (922,393) $ (315,967) $ (166,074) $ (379,042) $ (206,832) $ - $ (500,000) $ - $ - $ (1,000,000)
Covered payroll $ 6,110,950 $ 6,561,169 $ 7,645,789 $ 8,460,078 $ 9,108,948 $ 9,171,511 $ 9,198,938 $ 10,185,425 $ 10,650,990 $ 11,533,186
Contributions as percentage of covered
payroll 45.5% 33.8% 25.7% 26.9% 19.2% 14.1% 16.8% 10.2% 10.9% 19.2%
Notes to Schedule
Valuation Date:
Actuarially determined contribution rates are calculated as of December 31, two years prior to the end of the fiscal year in which contributions are reported.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry age
Amortization method Level percentage of payroll, Closed
91
Remaining amortization period 3 to 21 years depending on division
Asset valuation method 5-year smoothed market
Inflation 2.5 percent
Salary increases 3.75 percent changed to 3.0 percent in the long-term effective with the December 31, 2019 valuation
Investment rate of return 7.75 percent changed to 7.35 percent, net of investment and administrative expenses effective with the December 31, 2019 valuation
Retirement age Varies depending on plan adoption
Mortality 50 percent Female/50 percent Male RP-2014 Group Annuity Mortality Table
City of Muskegon
REQUIRED SUPPLEMENTARY INFORMATION
RETIREE HEALTHCARE SYSTEM SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS
Last Ten Fiscal Years (Amounts were determined as of December 31 of each fiscal year)
2019 2018 2017
TOTAL OPEB LIABILITY
Service cost $ 165,306 $ 178,243 $ 165,423
Interest 2,191,233 2,035,720 1,954,979
Differences between expected and actual experience (2,119,868) (992,432) -
Changes of assumptions 6,288,823 2,349,210 -
Benefit payments, including refunds of employee contributions (1,983,928) (1,118,442) (1,064,376)
Net change in total OPEB liability 4,541,566 2,452,299 1,056,026
Total OPEB liability at beginning of year 29,100,636 26,648,337 25,592,311
Total OPEB liability at end of year (a) $ 33,642,202 $ 29,100,636 $ 26,648,337
PLAN FIDUCIARY NET POSITION
Contributions-employer $ 1,001,447 $ 671,363 $ 736,039
Net investment income 2,660,470 (699,603) 2,110,019
92
Benefit payments, including refunds or employee contributions (1,983,928) (1,118,442) (1,064,376)
Administrative expense (41,397) (53,927) (52,313)
Net change in plan fiduciary net position 1,636,592 (1,200,609) 1,729,369
Plan fiduciary net position at beginning of year 19,578,969 20,779,578 19,050,209
Plan fiduciary net position at end of year (b) $ 21,215,561 $ 19,578,969 $ 20,779,578
City's net OPEB liability at end of year (a)-(b) $ 12,426,641 $ 9,521,667 $ 5,868,759
Plan fiduciary net position as a percentage of the total OPEB liability 63.06% 67.28% 77.98%
Covered payroll $ 8,952,683 Not Available $ 8,095,840
City's net OPEB liability as a percentage of covered payroll 138.80% Not Available 72.49%
Notes to Schedule
Additional actuarial data is not available and will be provided in subsequent years.
City of Muskegon
REQUIRED SUPPLEMENTARY INFORMATION
RETIREE HEALTHCARE SYSTEM SCHEDULE OF CONTRIBUTIONS
Last Ten Fiscal Years (Amounts were determined as of June 30 of each fiscal year)
2020 2019 2018 2017 2016 2015 2014 2013 2012 2011
Actuarially determined contribution $ 2,115,188 $ 1,470,562 $ 956,532 $ 606,506 $ 639,428 $ 659,451 $ 696,634 $ 728,863 $ 832,891 $ 1,079,000
Contributions in relation to the actuarially
determined contribution 1,233,505 1,260,887 687,642 606,506 639,428 659,451 696,634 728,863 832,891 1,079,000
Contribution deficiency (excess) $ 881,683 $ 209,675 $ 268,890 $ - $ - $ - $ - $ - $ - $ -
Covered payroll $ 8,952,683 Not Available $ 8,095,840 $ 10,830,000 $ 10,830,000 $ 10,005,000 $ 10,005,000 $ 12,365,000 $ 12,365,000 $ 13,293,000
Contributions as percentage of covered
payroll 13.8% Not Available 8.5% 5.6% 5.9% 6.6% 7.0% 5.9% 6.7% 8.1%
Notes to Schedule
Valuation Date:
Actuarially determined contribution rates are calculated as of December 31, 2019.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry age normal (level percentage of compensation)
Amortization method Level percentage of payroll, Closed
93
Remaining amortization period 8 years
Asset valuation method Equal to market value of assets
Inflation 2.5 percent
Salary increases 3.0 percent
Investment rate of return 6.24 percent (including inflation), net of administrative and investment expenses
Retirement age 55 - 60 years of age
Mortality Mortality rates for police and fire were as set forth in the Public Safety 2010 Employee and Healthy Retiree, headcount weighted, 2018 improvement scale.
Mortality rates for others were as set forth in the Public General 2010 Employee and Healthy Retiree, headcount weighted, 2018 improvement scale.
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94
OTHER SUPPLEMENTAL INFORMATION
95
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.
Mercy Health Arena – to account for revenues received for the operation and maintenance of Mercy Health
Arena.
Criminal Forfeitures – to account for receipts generated through the sale of assets seized through criminal court
proceedings.
Downtown BID – to account for the collection of special assessment revenue in the downtown to be used for
improvement and maintenance of downtown public infrastructure.
Tree Replacement – to account for contributions and other revenues earmarked for tree replacement throughout
the City.
Farmers Market and Kitchen 242 – to account for revenues received for the City’s Farmers Market and Kitchen
242.
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.
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.
96
DESCRIPTION OF
OTHER GOVERNMENTAL FUNDS—CONTINUED
Capital Projects Funds—Continued
HOME Rehabilitation – to account for grant revenues received from the U. S. Department of Housing and Urban
Development for the purpose of providing housing assistance to low and moderate income households in the City.
Lead Abatement – to account for grant revenues received from the U. S. Department of Health and Human
Services for the purpose of abatement of lead from homes in the City.
Senior Millage – to account for proceeds from the County millage for senior services that were distributed to the
City for specific projects.
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.
97
City of Muskegon
COMBINING BALANCE SHEET
Other Governmental Funds
June 30, 2020
Other Other Permanent
Total Other Special Capital Fund -
Governmental Revenue Projects Cemetery
Funds Funds Funds Perpetual Care
ASSETS
Cash and investments $ 2,851,259 $ 1,281,084 $ 1,085,722 $ 484,453
Assets managed by others 1,234,737 - - 1,234,737
Receivables
Accounts and loans (net of allowance for uncollectibles) 730,967 442,981 286,996 990
Special assessments 2,072 2,072 - -
Due from other governmental units 256,364 153,237 103,127 -
Advances to component units 240,611 - - 240,611
Prepaid items 35,929 35,929 - -
Total assets $ 5,351,939 $ 1,915,303 $ 1,475,845 $ 1,960,791
LIABILITIES
Accounts payable $ 164,756 $ 96,249 $ 68,507 $ -
Accrued liabilities 25,284 14,567 10,717 -
Due to other governmental units 2,140 2,052 88 -
Due to other funds 443,475 398,371 45,104 -
Unearned revenues - unused Farmers Market tokens 107,527 107,527 - -
Total liabilities 743,182 618,766 124,416 -
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - special assessments 2,072 2,072 - -
FUND BALANCES
Nonspendable
Prepaid items 35,929 35,929 - -
Perpetual care 1,595,620 - - 1,595,620
Restricted
Highways, streets and bridges 1,061,222 1,061,222 - -
Mercy Health Arena 2,524 2,524 - -
Law enforcement 11,844 11,844 - -
Downtown BID 176,813 176,813 - -
Perpetual care 365,171 - - 365,171
Other purposes 6,133 6,133 - -
Assigned for capital projects and public improvements 1,351,429 - 1,351,429 -
Total fund balances 4,606,685 1,294,465 1,351,429 1,960,791
Total liabilities, deferred inflows of
resources and fund balances $ 5,351,939 $ 1,915,303 $ 1,475,845 $ 1,960,791
98
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
Other Governmental Funds
For the year ended June 30, 2020
Other Other Permanent
Total Other Special Capital Fund -
Governmental Revenue Projects Cemetery
Funds Funds Funds Perpetual Care
REVENUES
Intergovernmental revenues
Federal $ 1,833,603 $ - $ 1,833,603 $ -
State 1,276,078 1,276,078 - -
Charges for services 1,387,945 1,353,505 6,000 28,440
Fines and forfeitures 250 250 - -
Investment earnings 24,620 4,215 9,286 11,119
Income from assets managed by others 17,948 - - 17,948
Other 648,752 213,861 434,891 -
Total revenues 5,189,196 2,847,909 2,283,780 57,507
EXPENDITURES
Current
Public safety 24,809 24,809 - -
Public works 112,629 112,629 - -
Highways, streets and bridges 1,405,870 1,405,870 - -
Culture and recreation 2,207,827 2,207,827 - -
Capital outlay 2,682,820 52,664 2,630,156 -
Total expenditures 6,433,955 3,803,799 2,630,156 -
Excess of revenues over (under) expenditures (1,244,759) (955,890) (346,376) 57,507
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets 43,706 - 43,706 -
Transfers in 1,125,217 1,102,500 22,717 -
Transfers out (22,717) - (22,717) -
Total other financing sources (uses) 1,146,206 1,102,500 43,706 -
Net change in fund balances (98,553) 146,610 (302,670) 57,507
Fund balances at beginning of year 4,705,238 1,147,855 1,654,099 1,903,284
Fund balances at end of year $ 4,606,685 $ 1,294,465 $ 1,351,429 $ 1,960,791
99
City of Muskegon
COMBINING BALANCE SHEET
Other Special Revenue Funds
June 30, 2020
Total Other Farmers
Special Revenue Local Mercy Health Criminal Downtown Tree Market and
Funds Street Arena Forfeitures BID Replacement Kitchen 242
ASSETS
Cash and investments $ 1,281,084 $ 969,978 $ - $ 11,844 $ 176,813 $ 1,019 $ 121,430
Receivables
Accounts 442,981 7,549 432,628 - - - 2,804
Special assessments 2,072 2,072 - - - - -
Due from other governmental units 153,237 153,237 - - - - -
Prepaid items 35,929 6,893 29,036 - - - -
Total assets $ 1,915,303 $ 1,139,729 $ 461,664 $ 11,844 $ 176,813 $ 1,019 $ 124,234
LIABILITIES
Accounts payable $ 96,249 $ 60,223 $ 25,868 $ - $ - $ - $ 10,158
Accrued liabilities 14,567 9,319 3,813 - - - 1,435
Due to other governmental units 2,052 - 2,052 - - - -
100
Due to other funds 398,371 - 398,371 - - - -
Unearned revenues - unused Farmers Market tokens 107,527 - - - - - 107,527
Total liabilities 618,766 69,542 430,104 - - - 119,120
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - special assessments 2,072 2,072 - - - - -
FUND BALANCES
Nonspendable - prepaid items 35,929 6,893 29,036 - - - -
Restricted
Highways, streets and bridges 1,061,222 1,061,222 - - - - -
Mercy Health Arena 2,524 - 2,524 - - - -
Law enforcement 11,844 - - 11,844 - - -
Downtown BID 176,813 - - - 176,813 - -
Other purposes 6,133 - - - - 1,019 5,114
Total fund balances 1,294,465 1,068,115 31,560 11,844 176,813 1,019 5,114
Total liabilities, deferred inflows of
resources and fund balances $ 1,915,303 $ 1,139,729 $ 461,664 $ 11,844 $ 176,813 $ 1,019 $ 124,234
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
Other Special Revenue Funds
For the year ended June 30, 2020
Total Other Farmers
Special Revenue Local Mercy Health Criminal Downtown Tree Market and
Funds Street Arena Forfeitures BID Replacement Kitchen 242
REVENUES
Intergovernmental revenues - State $ 1,276,078 $ 1,276,078 $ - $ - $ - $ - $ -
Charges for services 1,353,505 5,298 1,240,200 - - 2,500 105,507
Fines and forfeitures 250 - - 250 - - -
Investment earnings 4,215 3,286 - 66 581 2 280
Other 213,861 380 12,228 - 151,067 4,803 45,383
Total revenues 2,847,909 1,285,042 1,252,428 316 151,648 7,305 151,170
EXPENDITURES
Current
Public safety 24,809 - - 24,809 - - -
Public works 112,629 - - - 112,629 - -
101
Highways, streets and bridges 1,405,870 1,405,870 - - - - -
Culture and recreation 2,207,827 - 1,994,840 - - 15,707 197,280
Capital outlay 52,664 - 52,664 - - - -
Total expenditures 3,803,799 1,405,870 2,047,504 24,809 112,629 15,707 197,280
Excess of revenues over (under) expenditures (955,890) (120,828) (795,076) (24,493) 39,019 (8,402) (46,110)
OTHER FINANCING SOURCES
Transfers in 1,102,500 250,000 800,000 - - 7,500 45,000
Net change in fund balances 146,610 129,172 4,924 (24,493) 39,019 (902) (1,110)
Fund balances at beginning of year 1,147,855 938,943 26,636 36,337 137,794 1,921 6,224
Fund balances at end of year $ 1,294,465 $ 1,068,115 $ 31,560 $ 11,844 $ 176,813 $ 1,019 $ 5,114
City of Muskegon
BUDGETARY COMPARISON SCHEDULE
Other Special Revenue Funds
For the year ended June 30, 2020
Local Street Mercy Health Arena
Variance - Variance -
Final Positive Final Positive
Budget Actual (Negative) Budget Actual (Negative)
REVENUES
Intergovernmental revenues - State $ 1,374,952 $ 1,276,078 $ (98,874) $ - $ - $ -
Charges for services 15,000 5,298 (9,702) 1,277,000 1,240,200 (36,800)
Investment earnings 3,500 3,286 (214) - - -
Other 2,000 380 (1,620) 4,000 12,228 8,228
Total revenues 1,395,452 1,285,042 (110,410) 1,281,000 1,252,428 (28,572)
EXPENDITURES
Current
102
Highways, streets and bridges 1,719,723 1,405,870 313,853 - - -
Culture and recreation - - - 1,511,843 1,994,840 (482,997)
Capital outlay - - - 50,000 52,664 (2,664)
Total expenditures 1,719,723 1,405,870 313,853 1,561,843 2,047,504 (485,661)
Excess of revenues over (under) expenditures (324,271) (120,828) 203,443 (280,843) (795,076) (514,233)
OTHER FINANCING SOURCES
Transfers in 250,000 250,000 - 235,000 800,000 565,000
Net change in fund balances $ (74,271) 129,172 $ 203,443 $ (45,843) 4,924 $ 50,767
Fund balances at beginning of year 938,943 26,636
Fund balances at end of year $ 1,068,115 $ 31,560
City of Muskegon
BUDGETARY COMPARISON SCHEDULE─CONTINUED
Other Special Revenue Funds
For the year ended June 30, 2020
Criminal Forfeitures Downtown BID
Variance - Variance -
Final Positive Final Positive
budget Actual (Negative) Budget Actual (Negative)
REVENUES
Fines and forfeitures $ 1,000 $ 250 $ (750) $ - $ - $ -
Investment earnings 400 66 (334) - 581 581
Other - - - 161,647 151,067 (10,580)
Total revenues 1,400 316 (1,084) 161,647 151,648 (9,999)
EXPENDITURES
Current
Public safety 28,314 24,809 3,505 - - -
Public works - - - 161,647 112,629 49,018
103
Total expenditures 28,314 24,809 3,505 161,647 112,629 49,018
Net change in fund balances $ (26,914) (24,493) $ 2,421 $ - 39,019 $ 39,019
Fund balance at beginning of year 36,337 137,794
Fund balance at end of year $ 11,844 $ 176,813
City of Muskegon
BUDGETARY COMPARISON SCHEDULE─CONTINUED
Other Special Revenue Funds
For the year ended June 30, 2020
Tree Replacement Farmers Market and Kitchen 242
Variance - Variance -
Final Positive Final Positive
Budget Actual (Negative) Budget Actual (Negative)
REVENUES
Charges for services $ 5,000 $ 2,500 $ (2,500) $ 159,000 $ 105,507 $ (53,493)
Investment earnings - 2 2 200 280 80
Other - 4,803 4,803 80,500 45,383 (35,117)
Total revenues 5,000 7,305 2,305 239,700 151,170 (88,530)
EXPENDITURES
Current
Culture and recreation 5,000 15,707 (10,707) 200,306 197,280 3,026
104
Excess of revenues over (under) expenditures - (8,402) (8,402) 39,394 (46,110) (85,504)
OTHER FINANCING SOURCES
Transfers in - 7,500 7,500 - 45,000 45,000
Net change in fund balances $ - (902) $ (902) $ 39,394 (1,110) $ (40,504)
Fund balance at beginning of year 1,921 6,224
Fund balance at end of year $ 1,019 $ 5,114
City of Muskegon
COMBINING BALANCE SHEET
Other Capital Projects Funds
June 30, 2020
Total Other EDC Community
Capital Projects Michcon Revolving Development HOME Lead Senior
Funds Remediation Loan Block Grant Rehabilitation Abatement Millage
ASSETS
Cash and investments $ 1,085,722 $ 226,411 $ 769,408 $ 6,670 $ - $ - $ 83,233
Accounts and loans (net of
allowance for uncollectibles) 286,996 - 275,739 11,257 - - -
Due from other governmental units 103,127 - - 11,131 7,417 84,579 -
Total assets $ 1,475,845 $ 226,411 $ 1,045,147 $ 29,058 $ 7,417 $ 84,579 $ 83,233
LIABILITIES
Accounts payable $ 68,507 $ - $ 2,323 $ 21,385 $ 290 $ 44,360 $ 149
Accrued liabilities 10,717 - - 7,585 789 1,453 890
Due to other governmental units 88 - - 88 - - -
Due to other funds 45,104 - - - 6,338 38,766 -
Total liabilities 124,416 - 2,323 29,058 7,417 84,579 1,039
105
FUND BALANCES
Assigned for capital projects and public improvements 1,351,429 226,411 1,042,824 - - - 82,194
Total liabilities and fund balances $ 1,475,845 $ 226,411 $ 1,045,147 $ 29,058 $ 7,417 $ 84,579 $ 83,233
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
Other Capital Projects Funds
For the year ended June 30, 2020
Total Other EDC Community
Capital Projects Michcon Revolving Development HOME Lead Senior
Funds Remediation Loan Block Grant Rehabilitation Abatement Millage
REVENUES
Intergovernmental revenues - Federal $ 1,833,603 $ - $ - $ 967,046 $ 199,633 $ 666,924 $ -
Charges for services 6,000 - 6,000 - - - -
Investment earnings 9,286 1,129 8,141 6 - - 10
Other 434,891 - 50,038 3,000 - - 381,853
Total revenues 2,283,780 1,129 64,179 970,052 199,633 666,924 381,863
EXPENDITURES
Capital outlay 2,630,156 - 217,592 985,501 460,470 666,924 299,669
Excess of revenues over (under) expenditures (346,376) 1,129 (153,413) (15,449) (260,837) - 82,194
OTHER FINANCING SOURCES (USES)
106
Proceeds from sale of capital assets 43,706 - - 38,166 5,540 - -
Transfers in 22,717 - - - 22,717 - -
Transfers out (22,717) - - (22,717) - - -
Total other financing sources (uses) 43,706 - - 15,449 28,257 - -
Net change in fund balances (302,670) 1,129 (153,413) - (232,580) - 82,194
Fund balances at beginning of year 1,654,099 225,282 1,196,237 - 232,580 - -
Fund balances at end of year $ 1,351,429 $ 226,411 $ 1,042,824 $ - $ - $ - $ 82,194
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.
107
City of Muskegon
COMBINING STATEMENT OF NET POSITION
Internal Service Funds
June 30, 2020
Total Internal Engineering General Public Service
Service Funds Services Equipment Insurance Building
ASSETS
Current assets
Cash and investments $ 1,253,766 $ 11,975 $ 798,045 $ - $ 443,746
Accounts receivable 1,478,408 484 9,120 1,468,804 -
Inventories 6,033 - 6,033 - -
Prepaid items 243,875 2,645 64,558 169,948 6,724
Total current assets 2,982,082 15,104 877,756 1,638,752 450,470
Noncurrent assets
Advances to component units 481,220 - 240,610 240,610 -
Capital assets
Land 65,000 - - - 65,000
Land improvements 301,715 - - - 301,715
Buildings and improvements 1,668,215 - - - 1,668,215
Machinery and equipment 9,878,509 51,346 9,732,799 - 94,364
Construction in progress 79,822 - 79,822 - -
Less accumulated depreciation (8,986,499) (28,646) (7,202,341) - (1,755,512)
Net capital assets 3,006,762 22,700 2,610,280 - 373,782
Total noncurrent assets 3,487,982 22,700 2,850,890 240,610 373,782
Total assets 6,470,064 37,804 3,728,646 1,879,362 824,252
DEFERRED OUTFLOWS OF RESOURCES
Related to pension 52,192 - 19,572 - 32,620
Related to other postemployment benefits 130,806 - 49,052 - 81,754
Total deferred outflows of resources 182,998 - 68,624 - 114,374
Total assets and deferred outflows of resources 6,653,062 37,804 3,797,270 1,879,362 938,626
LIABILITIES
Current liabilities
Accounts payable 345,205 633 46,316 244,774 53,482
Accrued liabilities 38,641 8,683 12,623 1,357 15,978
Due to other governmental units 1,120 - - 1,120 -
Due to other funds 394,517 - - 394,517 -
Bonds and other obligations, due within one year 21,000 3,800 8,600 900 7,700
Total current liabilities 800,483 13,116 67,539 642,668 77,160
Noncurrent liabilities
Bonds and other obligations, less amounts due within one year 105,191 19,022 42,711 4,726 38,732
Net pension liability 1,237,257 - 463,972 - 773,285
Net other postemployment benefits liability 497,066 - 186,400 - 310,666
Total noncurrent liabilities 1,839,514 19,022 693,083 4,726 1,122,683
Total liabilities 2,639,997 32,138 760,622 647,394 1,199,843
DEFERRED INFLOWS OF RESOURCES
Related to other postemployment benefits 34,019 - 12,757 - 21,262
Total liabilities and deferred inflows of resources 2,674,016 32,138 773,379 647,394 1,221,105
NET POSITION
Net investment in capital assets 3,006,762 22,700 2,610,280 - 373,782
Unrestricted 972,284 (17,034) 413,611 1,231,968 (656,261)
Total net position $ 3,979,046 $ 5,666 $ 3,023,891 $ 1,231,968 $ (282,479)
108
City of Muskegon
COMBINING STATEMENT OF REVENUE, EXPENSES AND CHANGES IN NET POSITION
Internal Service Funds
For the year ended June 30, 2020
Total Internal Engineering General Public Service
Service Funds Services Equipment Insurance Building
OPERATING REVENUES
Charges for services $ 9,362,324 $ 276,605 $ 2,364,948 $ 5,671,637 $ 1,049,134
Other 115,171 30,453 84,718 - -
Total operating revenues 9,477,495 307,058 2,449,666 5,671,637 1,049,134
OPERATING EXPENSES
Administration 304,305 41,253 89,706 49,323 124,023
Insurance premiums and claims 5,455,327 - - 5,455,327 -
Other operations 3,753,969 368,442 1,996,524 68,717 1,320,286
Depreciation 523,925 2,291 478,464 - 43,170
Total operating expenses 10,037,526 411,986 2,564,694 5,573,367 1,487,479
Operating income (loss) (560,031) (104,928) (115,028) 98,270 (438,345)
NONOPERATING REVENUES (EXPENSES)
Investment earnings 27,071 124 13,180 10,980 2,787
Gain (loss) on sale of capital assets (8,161) - (8,161) - -
Total nonoperating revenues (expenses) 18,910 124 5,019 10,980 2,787
Income (loss) before transfers (541,121) (104,804) (110,009) 109,250 (435,558)
TRANSFERS
Transfers in 20,000 20,000 - - -
Change in net position (521,121) (84,804) (110,009) 109,250 (435,558)
Net position at beginning of year 4,500,167 90,470 3,133,900 1,122,718 153,079
Net position at end of year $ 3,979,046 $ 5,666 $ 3,023,891 $ 1,231,968 $ (282,479)
109
City of Muskegon
COMBINING STATEMENT OF CASH FLOWS
Internal Service Funds
For the year ended June 30, 2020
Total Internal Engineering General Public Service
Service Funds Services Equipment Insurance Building
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 106,659 $ 30,379 $ 76,280 $ - $ -
Receipts from interfund services provided 7,303,632 276,605 2,364,948 3,612,945 1,049,134
Other receipts 1,867,451 - - 1,867,451 -
Payments to suppliers (6,680,206) (84,638) (921,306) (5,324,172) (350,090)
Payments to employees (1,503,546) (215,797) (391,137) (248,228) (648,384)
Payments for interfund services used (828,757) (95,910) (607,434) (3,571) (121,842)
Net cash provided by (used for) operating activities 265,233 (89,361) 521,351 (95,575) (71,182)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers in 20,000 20,000 - - -
Interfund borrowing 40,954 - - 40,954 -
Collections on advances to component units 87,282 - 43,641 43,641 -
Net cash provided by (used for) noncapital financing activities 148,236 20,000 43,641 84,595 -
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Purchases of capital assets (622,533) (24,991) (488,661) - (108,881)
110
Proceeds from sale of capital assets 27,661 - 27,661 - -
Net cash provided by (used for) capital and related financing activities (594,872) (24,991) (461,000) - (108,881)
CASH FLOW FROM INVESTING ACTIVITIES
Investment earnings 27,071 124 13,180 10,980 2,787
Net increase (decrease) in cash and investments (154,332) (94,228) 117,172 - (177,276)
Cash and investments at beginning of year 1,408,098 106,203 680,873 - 621,022
Cash and investments at end of year $ 1,253,766 $ 11,975 $ 798,045 $ - $ 443,746
Reconciliation of operating income (loss) to net cash provided by (used for)
operating activities
Operating income (loss) $ (560,031) $ (104,928) $ (115,028) $ 98,270 $ (438,345)
Adjustments to reconcile operating income (loss) to net cash provided by
(used for) operating activities
Depreciation expense 523,925 2,291 478,464 - 43,170
Change in assets and liabilities
Receivables (199,753) (74) (8,438) (191,241) -
Inventories 3,292 - 3,292 - -
Prepaid items 28,985 (1,081) (2,814) 34,182 (1,302)
Accounts payable (21,014) (397) (20,375) (37,955) 37,713
Accrued liabilities 489,829 14,828 186,250 1,169 287,582
Net cash provided by (used for) operating activities $ 265,233 $ (89,361) $ 521,351 $ (95,575) $ (71,182)
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, public school districts, and other governmental entities.
Rehab Loan Escrow – to account for deposits made by housing rehabilitation program participants and their
expenditures for the intended purposes.
111
City of Muskegon
COMBINING STATEMENT OF ASSETS AND LIABILITIES
Agency Funds
June 30, 2020
Total Current Rehab Loan
Agency Funds Collector Tax Escrow
ASSETS
Cash and investments $ 927,093 $ 926,712 $ - $ 381
Accounts receivable 73,203 73,203 - -
Total assets $ 1,000,296 $ 999,915 $ - $ 381
LIABILITIES
Accounts payable $ 327,077 $ 326,696 $ - $ 381
Due to other governmental units 511,793 511,793 - -
Deposits held for others 161,426 161,426 - -
Total liabilities $ 1,000,296 $ 999,915 $ - $ 381
112
City of Muskegon
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
Agency Funds
For the year ended June 30, 2020
Balance Balance
July 1, June 30,
COLLECTOR FUND 2019 Additions Deductions 2020
ASSETS
Cash and investments $ 944,157 $ 10,193,707 $ 10,211,152 $ 926,712
Accounts receivable 30,521 391,465 348,783 73,203
Total assets $ 974,678 $ 10,585,172 $ 10,559,935 $ 999,915
LIABILITIES
Accounts payable $ 333,297 $ 5,242,831 $ 5,249,432 $ 326,696
Due to other governmental units 446,320 2,546,025 2,480,552 511,793
Deposits held for others 195,061 2,882,774 2,916,409 161,426
Total liabilities $ 974,678 $ 10,671,630 $ 10,646,393 $ 999,915
CURRENT TAX FUND
ASSETS
Cash and investments $ - $ 22,484,149 $ 22,484,149 $ -
LIABILITIES
Due to other governmental units $ - $ 22,412,489 $ 22,412,489 $ -
Due to component units - 1,603,563 1,603,563 -
Deposits held for others - 107,522 107,522 -
Total liabilities $ - $ 24,123,574 $ 24,123,574 $ -
REHAB LOAN ESCROW FUND
ASSETS
Cash and investments $ 381 $ - $ - $ 381
LIABILITIES
Accounts payable $ 381 $ - $ - $ 381
ALL AGENCY FUNDS
ASSETS
Cash and investments $ 944,538 $ 32,677,856 $ 32,695,301 $ 927,093
Accounts receivable 30,521 391,465 348,783 73,203
Total assets $ 975,059 $ 33,069,321 $ 33,044,084 $ 1,000,296
LIABILITIES
Accounts payable $ 333,678 $ 5,242,831 $ 5,249,432 $ 327,077
Due to other governmental units 446,320 24,958,514 24,893,041 511,793
Due to component units - 1,603,563 1,603,563 -
Deposits held for others 195,061 2,990,296 3,023,931 161,426
Total liabilities $ 975,059 $ 34,795,204 $ 34,769,967 $ 1,000,296
113
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114
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 four designated brownfield areas capturing tax
increments.
Area I – Betten-Henry Street brownfield site.
Area II – Former downtown mall brownfield site.
Area III – Terrace Point brownfield site.
Area IV – Pigeon Hill brownfield site.
115
City of Muskegon
COMBINING BALANCE SHEET
Discretely Presented Component Units
June 30, 2020
Local
Total Discretely Development
Presented Finance Downtown Tax Increment Brownfield Brownfield Brownfield Brownfield
Component Authority - Development Finance Redevelopment Redevelopment Redevelopment Redevelopment
Units SmartZone Authority Authority Authority I Authority II Authority III Authority IV
ASSETS
Cash and investments $ 99,100 $ 32,146 $ 11,529 $ 15,888 $ 3,450 $ 13,115 $ 22,972 $ -
LIABILITIES
Accounts payable $ 806 $ - $ 806 $ - $ - $ - $ - $ -
Accrued liabilities 4,376 - 4,376 - - - - -
Advances from primary government 721,831 - - - 721,831 - - -
Total liabilities 727,013 - 5,182 - 721,831 - - -
FUND BALANCES (DEFICITS)
Unassigned (627,913) 32,146 6,347 15,888 (718,381) 13,115 22,972 -
116
Total liabilities and fund
balances (deficits) $ 99,100 $ 32,146 $ 11,529 $ 15,888 $ 3,450 $ 13,115 $ 22,972 $ -
City of Muskegon
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET POSITION
Discretely Presented Component Units
June 30, 2020
Total fund balances (deficits)—governmental funds $ (627,913)
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 (2,863,081) 1,335,177
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 (9,650)
Bonds and notes payable (1,760,377) (1,770,027)
Net position of governmental activities $ (1,062,763)
117
City of Muskegon
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS)
Discretely Presented Component Units
For the year ended June 30, 2020
Local
Total Discretely Development
Presented Finance Downtown Tax Increment Brownfield Brownfield Brownfield Brownfield
Component Authority - Development Finance Redevelopment Redevelopment Redevelopment Redevelopment
Units SmartZone Authority Authority Authority I Authority II Authority III Authority IV
REVENUES
Property taxes $ 1,653,545 $ 98,643 $ 924,457 $ 35,383 $ 138,401 $ 168,248 $ 281,642 $ 6,771
Intergovernmental revenues
State 25,821 3,311 - 7,270 6,822 8,418 - -
Local 494,072 360,000 134,072 - - - - -
Investment earnings 1,246 95 280 54 44 382 391 -
Total revenues 2,176,684 462,049 1,060,809 42,707 145,267 177,048 282,033 6,771
EXPENDITURES
Current
Community and economic development 636,466 - 134,919 40,000 - 180,000 274,776 6,771
Debt service
118
Principal 1,390,000 390,000 1,000,000 - - - - -
Interest and fees 92,459 65,800 - - 26,659 - - -
Total expenditures 2,118,925 455,800 1,134,919 40,000 26,659 180,000 274,776 6,771
Net change in fund balances (deficits) 57,759 6,249 (74,110) 2,707 118,608 (2,952) 7,257 -
Fund balances (deficits) at beginning of year (685,672) 25,897 80,457 13,181 (836,989) 16,067 15,715 -
Fund balances (deficits) at end of year $ (627,913) $ 32,146 $ 6,347 $ 15,888 $ (718,381) $ 13,115 $ 22,972 $ -
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, 2020
Net change in fund balances—total governmental funds $ 57,759
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 1,390,000
Changes in accrual of interest and amortization of premiums and discounts
Change in accrued interest payable $ 2,600
Amortization of premiums 17,042 19,642
Change in net position of governmental activities $ 1,294,753
119
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120
SCHEDULE OF INDEBTEDNESS
121
City of Muskegon
SCHEDULE OF INDEBTEDNESS
June 30, 2020
Annual
Date Amount Interest Date of Interest
of Issue of Issue Rate Maturity 6/30/2019 6/30/2020 Payable
Business-Type Activities Bonds and Loans Payable:
Drinking Water State Revolving 3/2/2004 $ 13,900,000 2.13% 10/01/19 $ 745,000 $ - $ -
Fund 2.13% 10/01/20 760,000 760,000 93,925
2.13% 10/01/21 775,000 775,000 77,616
Type of debt: state loan 2.13% 10/01/22 790,000 790,000 60,988
Revenue pledged: water system net revenues 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
5,545,000 4,800,000 312,058
Drinking Water State Revolving Fund* 8/30/2019 $563,700 2.00% 10/01/20 - - 32,000
2.00% 10/01/21 - 65,000 32,000
Type of debt: state loan 2.00% 10/01/22 - 70,000 30,700
Revenue Pledged: water system net revenues 2.00% 10/01/23 - 70,000 29,300
Forgiveness: 20% 2.00% 10/01/24 - 58,217 27,900
2.00% 10/01/25 - - -
2.00% 10/01/26 - - -
2.00% 10/01/27 - - -
2.00% 10/01/28 - - -
2.00% 10/01/29 - - -
2.00% 10/01/30 - - -
2.00% 10/01/31 - - -
2.00% 10/01/32 - - -
2.00% 10/01/33 - - -
2.00% 10/01/34 - - -
2.00% 10/01/35 - - -
2.00% 10/01/36 - - -
2.00% 10/01/37 - - -
2.00% 10/01/38 - - -
2.00% 10/01/39 - - -
2.00% 10/01/40 - - -
- 263,217 151,900
Sanitary Sewer State Revolving Fund* 8/30/2019 $1,544,739 2.00% 10/01/20 - - 57,500
2.00% 10/01/21 - 120,000 56,300
Type of debt: state loan 2.00% 10/01/22 - 120,000 53,900
Revenue Pledged: sanitary sewer system net revenues 2.00% 10/01/23 - 125,000 51,450
Forgiveness: 75% 2.00% 10/01/24 - 125,000 48,950
2.00% 10/01/25 - 130,000 46,400
2.00% 10/01/26 - 130,000 43,800
2.00% 10/01/27 - 135,000 41,150
2.00% 10/01/28 - 135,000 38,450
2.00% 10/01/29 - 140,000 35,700
2.00% 10/01/30 - 140,000 32,900
2.00% 10/01/31 - 145,000 30,050
2.00% 10/01/32 - 99,739 27,150
2.00% 10/01/33 - - -
2.00% 10/01/34 - - -
2.00% 10/01/35 - - -
2.00% 10/01/36 - - -
2.00% 10/01/37 - - -
2.00% 10/01/38 - - -
2.00% 10/01/39 - - -
2.00% 10/01/40 - - -
- 1,544,739 563,700
TOTAL BUSINESS TYPE ACTIVITIES BONDS AND LOAN PAYABLE: $ 5,545,000 $ 6,607,956 $ 1,027,658
*The total amount of the 2019 Water Supply System Junior Lien Bond and 2019 Sanitary Sewer
System Junior Lien Bond are $2,000,000 and $11,500,000 respectively, with the City expecting to
draw the remaining amount in the upcoming year. If certain conditions are met, the principal
amounts of up to $400,000 and $8,625,000, respectively, of the balances may be forgiven.
122
City of Muskegon
SCHEDULE OF INDEBTEDNESS
June 30, 2020
Annual
Date Amount Interest Date of Interest
of Issue of Issue Rate Maturity 6/30/2019 6/30/2020 Payable
Governmental Activities Bonds and Loan Payable:
Capital Improvement refunding bonds of 2016 3/8/2016 $ 4,815,000 2.00% 10/01/19 $ 290,000 $ - $ -
($222,903 unamortized premium) 3.00% 10/01/20 295,000 295,000 150,975
3.00% 10/01/21 305,000 305,000 141,975
Type of debt: limited G.O. bonds 3.00% 10/01/22 300,000 300,000 132,900
Revenue pledge: General Fund 3.00% 10/01/23 300,000 300,000 122,400
4.00% 10/01/24 320,000 320,000 110,000
4.00% 10/01/25 325,000 325,000 97,100
4.00% 10/01/26 325,000 325,000 84,100
4.00% 10/01/27 325,000 325,000 71,100
4.00% 10/01/28 325,000 325,000 58,100
4.00% 10/01/29 325,000 325,000 45,100
4.00% 10/01/30 325,000 325,000 32,100
4.00% 10/01/31 320,000 320,000 19,200
4.00% 10/01/32 320,000 320,000 6,400
4,400,000 4,110,000 1,071,450
Capital improvement bonds 9/30/2011 $ 2,000,000 2.98% 09/01/19 215,000 - -
of 2011 (streets) 2.98% 09/01/20 220,000 220,000 10,132
2.98% 09/01/21 230,000 230,000 3,427
Type of debt: limited G.O. bond 665,000 450,000 13,559
Revenue pledged: gas tax, general revenues
Capital Improvement Bonds of 2019 10/9/2019 $ 19,420,000 1.90% 10/01/20 - 175,000 615,749
Convention Center 1.83% 10/01/21 - 205,000 612,211
($143,150 unamortized discount) 1.88% 10/01/22 - 250,000 607,985
1.93% 10/01/23 - 300,000 602,740
Type of debt: limited G.O. bonds 2.00% 10/01/24 - 320,000 596,645
Revenue Pledged: excise tax on hotel rooms levied by the 2.10% 10/01/25 - 340,000 589,875
County of Muskegon pursuant to Act 263 2.24% 10/01/26 - 360,000 582,273
2.34% 10/01/27 - 380,000 573,795
2.43% 10/01/28 - 405,000 564,429
2.60% 10/01/29 - 430,000 553,918
2.60% 10/01/30 - 455,000 542,412
2.68% 10/01/31 - 480,000 530,066
2.78% 10/01/32 - 510,000 516,544
2.83% 10/01/33 - 540,000 501,815
2.93% 10/01/34 - 570,000 485,822
3.30% 10/01/35 - 605,000 467,399
3.30% 10/01/36 - 640,000 446,670
3.30% 10/01/37 - 680,000 424,692
3.30% 10/01/38 - 720,000 401,382
3.30% 10/01/39 - 760,000 376,740
3.48% 10/01/40 - 800,000 350,166
3.48% 10/01/41 - 845,000 321,543
3.48% 10/01/42 - 895,000 291,267
3.48% 10/01/43 - 940,000 259,338
3.48% 10/01/44 - 995,000 225,669
3.58% 10/01/45 - 1,045,000 189,651
3.58% 10/01/46 - 1,105,000 151,165
3.58% 10/01/47 - 1,160,000 110,622
3.58% 10/01/48 - 1,225,000 67,931
3.58% 10/01/49 - 1,285,000 23,001
- 19,420,000 12,583,515
State of Michigan 6/18/2010 $ 500,000 2.00% 03/18/20 19,699 - -
environmental assessment loan 19,699 - -
Type of debt: state loan
Revenue pledged: general revenues
123
City of Muskegon
SCHEDULE OF INDEBTEDNESS
June 30, 2020
Annual
Date Amount Interest Date of Interest
of Issue of Issue Rate Maturity 6/30/2019 6/30/2020 Payable
Governmental Activities Bonds and Loan Payable—Continued:
Installment Purchase Agreements $ 2,417,390 4.4% - 5.3% 04/22/21 $ - $ 324,944 $ 90,299
Mercy Health Arena 4.4% - 5.3% 04/22/22 - 340,307 75,277
Type of debt: installment purchase 4.4% - 5.3% 04/22/23 - 356,217 59,367
Revenue pledged: general revenues 4.4% - 5.3% 04/22/24 - 372,871 42,713
4.4% - 5.3% 04/22/25 - 390,306 25,278
4.4% - 5.3% 04/22/26 - 339,159 7,159
- 2,123,804 300,093
TOTAL GOVERNMENTAL ACTIVITIES BONDS AND LOANS PAYABLE $ 5,084,699 $ 26,103,804 $ 13,968,617
TOTAL PRIMARY GOVERNMENT BONDS AND LOANS PAYABLE $ 10,629,699 $ 32,711,760 $ 14,996,275
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 $ - $ -
promissory note to Muskegon County 1,000,000 - -
Type of debt: intergovernmental note
Revenue pledged: DDA tax increments
Local Development Finance Authority 3/20/2012 $ 4,100,000 4.00% 11/01/19 390,000 - -
Smartzone Refunding Bonds 4.00% 11/01/20 395,000 395,000 50,100
($40,377 unamortized premium) 4.00% 11/01/21 245,000 245,000 37,300
3.00% 11/01/22 255,000 255,000 28,575
Type of debt: limited G.O. bond 3.00% 11/01/23 265,000 265,000 20,775
Revenue pledged: LDFA tax increments, general revenues 3.00% 11/01/24 275,000 275,000 12,675
3.00% 11/01/25 285,000 285,000 4,275
2,110,000 1,720,000 153,700
TOTAL DISCRETELY PRESENTED COMPONENT UNIT BONDS AND LOANS PAYABLE $ 3,110,000 $ 1,720,000 $ 153,700
TOTAL REPORTING ENTITY BONDS AND LOANS PAYABLE $ 13,739,699 $ 34,431,760 $ 15,149,975
124
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. 126
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. 131
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. 138
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. 142
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. 144
Sources: Unless otherwise noted, the information in these schedules is derived form the Comprehensive Annual
Financial Reports for the relevant year.
125
City of Muskegon
NET ASSETS/NET POSITION BY COMPONENT
Last Ten Fiscal Years
2011 2012 2013 (a) 2014 2015 (b) 2016 2017 2018 (c) 2019 2020
Governmental Activities
Net Investment in Capital Assets $ 67,944,957 $ 66,862,806 $ 63,842,092 $ 63,731,255 $ 63,514,691 $ 64,326,891 $ 62,520,466 $ 61,267,518 $ 66,734,006 $ 70,274,679
Restricted 3,656,410 3,526,343 4,572,848 4,023,895 4,807,531 4,140,342 3,777,410 6,138,596 5,519,207 4,459,799
Unrestricted 12,598,197 12,836,573 13,299,523 12,811,852 491,914 (4,142,119) (5,566,349) (8,350,634) (14,355,143) (28,084,776)
Total Governmental Net Assets/Net Position $ 84,199,564 $ 83,225,722 $ 81,714,463 $ 80,567,002 $ 68,814,136 $ 64,325,114 $ 60,731,527 $ 59,055,480 $ 57,898,070 $ 46,649,702
Business-type Activities
Net Investment in Capital Assets $ 40,419,728 $ 40,147,600 $ 40,032,858 $ 39,365,043 $ 39,231,223 $ 39,013,529 $ 38,114,686 $ 38,549,547 $ 41,741,666 $ 44,543,391
Restricted 672,000 672,000 599,500 599,500 599,500 599,500 599,500 599,500 599,500 599,500
Unrestricted 9,211,610 8,961,713 8,491,848 8,377,093 6,423,540 5,762,272 6,382,906 6,041,091 2,424,616 (2,353,801)
Total Business-type Activities Net Assets/Net Position $ 50,303,338 $ 49,781,313 $ 49,124,206 $ 48,341,636 $ 46,254,263 $ 45,375,301 $ 45,097,092 $ 45,190,138 $ 44,765,782 $ 42,789,090
Primary Government
Net Investment in Capital Assets $ 108,364,685 $ 107,010,406 $ 103,874,950 $ 103,096,298 $ 102,745,914 $ 103,340,420 $ 100,635,152 $ 99,817,065 $ 108,475,672 $ 114,818,070
Restricted 4,328,410 4,198,343 5,172,348 4,623,395 5,407,031 4,739,842 4,376,910 6,738,096 6,118,707 5,059,299
Unrestricted 21,809,807 21,798,286 21,791,371 21,188,945 6,915,454 1,620,153 816,557 (2,309,543) (11,930,527) (30,438,577)
Total Primary Government Net Assets/Net Position $ 134,502,902 $ 133,007,035 $ 130,838,669 $ 128,908,638 $ 115,068,399 $ 109,700,415 $ 105,828,619 $ 104,245,618 $ 102,663,852 $ 89,438,792
126
(a) In 2013, the City implemented GASB 63 and 65 which changed the elements of the financial statements.
(b) In 2015, the City implemented GASB 68 and 71 which changed how governments measure and report pension liabilities.
(c) In 2018, the City implemented GASB 75 which changed how governments measure and report other postemployment benefit liabilities.
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 NET ASSETS/NET POSITION
Last Ten Fiscal Years
Year Ended June 30
2011 2012 2013 (a) 2014 2015 (b) 2016 2017 2018 (c) 2019 2020
EXPENSES
Governmental Activities
Public representation $ 854,249 $ 866,809 $ 893,981 $ 1,030,006 $ 939,907 $ 1,107,551 $ 1,113,897 $ 1,347,618 $ 1,336,014 $ 1,501,079
Administrative services 645,585 566,161 565,307 543,425 614,757 663,077 679,139 507,275 800,887 962,981
Financial services 2,373,141 2,399,147 2,241,061 2,171,958 2,547,766 2,331,236 2,483,519 1,995,426 2,700,775 3,007,018
Public safety 13,390,888 13,213,251 12,987,842 12,946,466 14,243,233 17,118,742 16,910,473 12,404,126 20,433,642 25,982,246
Public works 3,471,051 2,958,367 3,201,806 3,361,422 3,183,627 3,109,454 3,551,230 3,471,618 4,438,358 4,581,526
Highways, streets and bridges 7,013,216 6,568,448 6,672,374 7,053,326 7,165,703 7,251,882 6,996,540 6,917,260 7,185,642 7,593,019
Community and economic development 2,830,867 2,447,373 2,499,404 2,417,518 2,712,131 5,223,431 3,738,566 5,015,160 2,890,216 5,359,282
Culture and recreation 1,524,331 1,601,316 1,592,358 1,671,185 1,806,790 3,551,692 3,918,814 3,994,582 4,541,739 5,269,578
General administration 794,115 791,197 322,348 366,634 389,248 326,452 301,287 376,112 302,582 389,863
Interest on long-term debt 272,940 283,186 291,535 277,345 271,607 248,223 172,591 165,023 151,304 732,065
Total Governmental Activities Expenses 33,170,383 31,695,255 31,268,016 31,839,285 33,874,769 40,931,740 39,866,056 36,194,200 44,781,159 55,378,657
Business-type Activities
Water 5,869,241 5,974,173 6,228,788 6,016,192 6,047,244 6,750,826 7,206,564 7,090,770 7,752,703 8,437,862
Sewer 5,288,622 6,202,359 7,226,839 7,582,602 8,460,509 8,669,469 8,876,690 8,093,752 9,119,941 9,902,515
Marina and launch ramp 292,889 310,174 426,553 503,997 305,990 327,832 336,912 377,614 430,431 529,007
Total Business-type Activities Expenses 11,450,752 12,486,706 13,882,180 14,102,791 14,813,743 15,748,127 16,420,166 15,562,136 17,303,075 18,869,384
Total Primary Government Expenses $ 44,621,135 $ 44,181,961 $ 45,150,196 $ 45,942,076 $ 48,688,512 $ 56,679,867 $ 56,286,222 $ 51,756,336 $ 62,084,234 $ 74,248,041
127
PROGRAM REVENUES
Governmental Activities
Charges for Services
Public representation $ 196,886 $ 196,886 $ 173,739 $ 189,444 $ 188,638 $ 226,559 $ 228,767 $ 232,736 $ 250,931 $ 253,511
Administrative services 263,473 270,886 268,535 325,937 415,308 474,737 572,739 539,178 604,290 538,791
Financial services 879,905 881,229 830,919 871,632 823,547 925,474 895,924 903,322 921,748 913,968
Public safety 1,109,659 1,136,942 1,133,666 1,407,722 1,218,644 1,248,911 1,824,114 2,794,347 2,292,158 2,290,640
Public works 642,082 480,487 671,494 796,739 571,426 379,877 646,876 743,110 691,312 835,149
Highways, streets and bridges 451,473 230,241 245,609 351,962 258,475 234,861 256,190 188,248 191,883 193,267
Community and economic development 457,952 617,379 432,240 477,486 576,863 444,632 706,195 348,933 786,120 769,860
Culture and recreation 300,367 315,010 606,818 535,211 368,168 1,229,067 1,463,839 1,651,304 1,853,547 2,124,968
General administration 116,690 116,690 287,729 50,728 48,764 52,512 37,892 38,549 40,400 59,537
Operating grants and contributions 5,425,165 4,651,576 4,681,345 4,664,098 5,071,239 5,330,825 5,208,818 6,478,526 6,892,530 7,398,202
Capital grants and contributions 2,257,163 1,568,005 886,108 1,408,424 3,496,623 3,804,656 862,074 2,305,620 4,015,097 4,064,216
Total Governmental Program Revenues 12,100,815 10,465,331 10,218,202 11,079,383 13,037,695 14,352,111 12,703,428 16,223,873 18,540,016 19,442,109
Business-type Activities
Water 5,454,760 5,254,095 5,890,614 6,099,480 6,375,869 7,485,013 7,430,314 7,445,669 7,946,983 8,316,552
Sewer 6,652,851 6,455,634 7,058,315 6,633,911 6,363,808 6,305,554 7,620,208 8,217,497 8,098,828 8,397,838
Marina and launch ramp 194,311 208,370 234,229 228,339 255,638 287,547 278,753 325,917 298,312 74,659
Operating grants and contributions - - 6,188 - - - 2,436 42,531 510,533 94,462
Capital grants and contributions 20,074 - 88,046 327,240 474,681 765,363 784,969 - - -
Total Business-type program revenues 12,321,996 11,918,099 13,277,392 13,288,970 13,469,996 14,843,477 16,116,680 16,031,614 16,854,656 16,883,511
Total Primary Government program revenues $ 24,422,811 $ 22,383,430 $ 23,495,594 $ 24,368,353 $ 26,507,691 $ 29,195,588 $ 28,820,108 $ 32,255,487 $ 35,394,672 $ 36,325,620
NET (EXPENSE) REVENUE
Governmental Activities $ (21,069,568) $ (21,229,924) $ (21,049,814) $ (20,759,902) $ (20,837,074) $ (26,579,629) $ (27,162,628) $ (19,970,327) $ (26,241,143) $ (35,936,548)
Business-type Activities 871,244 (568,607) (604,788) (813,821) (1,343,747) (904,650) (303,486) 469,478 (448,419) (1,985,873)
Total Primary Government net expense $ (20,198,324) $ (21,798,531) $ (21,654,602) $ (21,573,723) $ (22,180,821) $ (27,484,279) $ (27,466,114) $ (19,500,849) $ (26,689,562) $ (37,922,421)
City of Muskegon
CHANGES IN NET ASSETS/NET POSITION
Last Ten Fiscal Years
Year Ended June 30
2011 2012 2013 (a) 2014 2015 (b) 2016 2017 2018 (c) 2019 2020
GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS/NET POSITION
Governmental Activities
Property taxes $ 8,844,004 $ 8,383,224 $ 7,592,847 $ 7,383,236 $ 7,894,189 $ 8,366,212 $ 8,389,243 $ 8,450,103 $ 8,230,573 $ 8,466,886
Income taxes 6,866,967 7,663,534 8,057,145 7,762,719 8,478,231 8,386,775 8,707,279 8,995,294 8,939,887 9,437,451
Franchise fees 362,103 342,376 358,785 358,754 369,965 372,117 378,955 368,495 380,343 361,405
Grants and contributions not restricted for specific programs 3,846,859 3,577,848 3,700,871 3,813,221 3,989,178 4,051,050 4,630,111 4,955,168 5,102,602 5,276,036
Unrestricted investment earnings 193,435 100,073 73,157 146,590 99,733 189,408 106,653 92,771 546,533 568,408
Miscellaneous 432,880 154,531 102,388 124,085 805,432 626,014 512,738 545,536 550,381 577,677
Gain on sale of capital asset 25,815 34,496 44,899 23,836 20,302 99,031 844,062 712,415 1,333,414 317
Total Governmental Program Revenues 20,572,063 20,256,082 19,930,092 19,612,441 21,657,030 22,090,607 23,569,041 24,119,782 25,083,733 24,688,180
Business-type Activities
Unrestricted investment earnings 23,959 46,582 33,148 31,251 29,879 25,688 25,277 28,550 24,063 9,181
Total Primary Government program revenues $ 20,596,022 $ 20,302,664 $ 19,963,240 $ 19,643,692 $ 21,686,909 $ 22,116,295 $ 23,594,318 $ 24,148,332 $ 25,107,796 $ 24,697,361
CHANGE IN NET ASSETS/NET POSITION
Governmental Activities $ (497,505) $ (973,842) $ (1,119,722) $ (1,147,461) $ 819,956 $ (4,489,022) $ (3,593,587) $ 4,149,455 $ (1,157,410) $ (11,248,368)
Business-type Activities 895,203 (522,025) (571,640) (782,570) (1,313,868) (878,962) (278,209) 498,028 (424,356) (1,976,692)
Total Primary Government $ 397,698 $ (1,495,867) $ (1,691,362) $ (1,930,031) $ (493,912) $ (5,367,984) $ (3,871,796) $ 4,647,483 $ (1,581,766) $ (13,225,060)
(a) In 2013, the City implemented GASB 63 and 65 which changed the elements of the financial statements.
128
(b) In 2015, the City implemented GASB 68 and 71 which changed how governments measure and report pension liabilities.
(c) In 2018, the City implemented GASB 75 which changed how governments measure and report other postemployment benefit liabilities.
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
2011 (a) 2012 2013 2014 2015 2016 2017 2018 2019 2020
General fund
Nonspendable $ 251,173 $ 178,468 $ 447,341 $ 300,952 $ 220,178 $ 232,332 $ 209,353 $ 222,458 $ 241,684 $ 280,986
Assigned 2,385,728 2,075,738 2,292,495 1,700,000 1,700,000 1,700,000 1,700,000 1,700,000 1,700,000 1,700,000
Unassigned 3,374,481 4,265,839 4,613,722 5,495,145 5,883,318 6,098,977 6,148,292 6,469,108 6,563,511 5,920,869
Total general fund $ 6,011,382 $ 6,520,045 $ 7,353,558 $ 7,496,097 $ 7,803,496 $ 8,031,309 $ 8,057,645 $ 8,391,566 $ 8,505,195 $ 7,901,855
All other governmental funds
Nonspendable $ 1,704,256 $ 1,568,318 $ 1,547,793 $ 1,556,347 $ 2,073,747 $ 1,597,371 $ 1,716,825 $ 1,589,699 $ 1,624,737 $ 1,663,979
Restricted 1,375,779 3,485,073 2,749,396 2,305,385 3,159,130 2,995,610 2,726,754 5,130,188 4,621,126 3,842,461
Assigned 2,073,027 2,055,904 2,087,359 1,729,457 2,146,050 1,373,669 3,510,747 2,619,342 1,823,959 9,764,600
Unassigned (238,104) (191,282) (82,048) (100,054) - - - - - (1,601,331)
Total all other governmental funds $ 4,914,958 $ 6,918,013 $ 6,302,500 $ 5,491,135 $ 7,378,927 $ 5,966,650 $ 7,954,326 $ 9,339,229 $ 8,069,822 $ 13,669,709
SOURCE: The information in these schedules
(unless otherwise noted) is derived from the
comprehensive annual financial reports for the
129
relevant year.
City of Muskegon
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Revenues
Taxes $ 15,146,430 $ 15,506,668 $ 14,832,027 $ 14,954,904 $ 15,830,137 $ 16,178,761 $ 16,667,272 $ 16,877,055 $ 16,582,030 $ 17,253,857
Intergovernmental 11,525,749 9,899,379 9,403,554 9,945,065 12,301,594 11,711,788 10,743,434 13,488,014 15,776,333 16,777,402
Charges for services 2,769,204 2,596,328 2,769,227 2,569,335 2,468,889 3,468,938 3,918,217 4,229,797 4,430,419 4,563,652
Other 3,461,292 3,237,189 2,795,952 3,256,324 4,003,105 3,868,958 4,005,126 5,251,208 5,312,773 5,745,006
Total revenues 32,902,675 31,239,564 29,800,760 30,725,628 34,603,725 35,228,445 35,334,049 39,846,074 42,101,555 44,339,917
Expenditures
Public representation 851,918 867,762 892,113 1,031,984 930,788 1,064,503 1,080,032 1,383,573 1,281,107 1,379,406
Administrative services 586,328 515,988 508,130 497,025 554,330 577,454 624,284 537,913 739,301 844,270
Financial services 2,352,709 2,407,131 2,196,917 2,197,651 2,476,740 2,068,208 2,236,941 2,191,245 2,394,866 2,358,848
Public safety 13,087,976 12,963,122 12,724,094 12,987,898 13,285,004 13,476,557 14,086,619 15,156,977 16,131,196 16,820,356
Public works 3,079,342 2,835,000 2,878,328 2,918,305 2,876,576 2,864,878 3,206,050 3,377,174 4,176,904 4,187,956
Highways, streets and bridges 3,226,377 2,756,010 2,815,337 3,011,611 2,986,909 3,102,391 3,096,875 4,554,968 2,963,498 2,965,598
Community and economic development 3,109,693 2,850,593 2,578,073 2,687,933 2,957,071 5,415,436 3,878,547 3,962,759 2,930,725 4,986,000
Culture and recreation 1,197,020 1,265,743 1,248,174 1,308,481 1,444,471 3,100,338 3,523,178 3,713,177 4,050,986 4,662,534
Other governmental functions 1,775,128 770,910 299,812 643,666 369,408 305,807 280,416 355,241 281,711 371,461
Debt service
130
Principal 1,345,183 289,597 395,211 402,492 417,842 428,199 283,563 288,934 294,313 818,285
Interest 267,258 268,315 292,554 278,412 272,946 257,516 211,242 197,723 189,905 543,740
Issuance costs - - - - - 97,578 - - - 70,525
Capital outlay 3,301,273 2,948,610 3,230,586 3,577,837 3,992,111 3,867,579 2,328,615 3,134,369 9,363,862 21,498,055
Total expenditure 34,180,205 30,738,781 30,059,329 31,543,295 32,564,196 36,626,444 34,836,362 38,854,053 44,798,374 61,507,034
Excess of revenues over (under) expenditures (1,277,530) 500,783 (258,569) (817,667) 2,039,529 (1,397,999) 497,687 992,021 (2,696,819) (17,167,117)
Other financing sources (uses)
Transfers in 1,348,694 510,907 1,356,229 743,035 853,910 1,563,094 1,805,000 1,370,000 1,210,236 2,017,077
Transfers out (1,376,740) (613,953) (784,275) (771,081) (942,933) (1,638,094) (1,818,000) (1,385,000) (1,210,236) (2,037,077)
Bonds issued - 2,000,000 - - - 97,578 - - - 21,691,740
Sale of capital assets 120,118 113,981 190,263 176,887 244,685 190,957 1,529,325 741,803 1,541,041 491,924
Total other financing sources (uses) 92,072 2,010,935 762,217 148,841 155,662 213,535 1,516,325 726,803 1,541,041 22,163,664
Net change in fund balances $ (1,185,458) $ 2,511,718 $ 503,648 $ (668,826) $ 2,195,191 $ (1,184,464) $ 2,014,012 $ 1,718,824 $ (1,155,778) $ 4,996,547
Debt service as a percentage of noncapital
expenditures 5.22% 2.01% 2.56% 2.43% 2.42% 2.09% 1.52% 1.36% 1.37% 3.40%
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
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%
2015 7,555,471 21.8% 8,274,666 23.9% 12,301,594 35.5% 2,468,889 7.1% 1,361,721 3.9% 452,004 1.3% 343,105 1.0% 1,846,275 5.3% 34,603,725 12.6%
2016 8,026,859 22.8% 8,151,902 23.1% 11,711,788 33.2% 3,468,938 9.8% 1,443,144 4.1% 459,181 1.3% 455,671 1.3% 1,510,962 4.3% 35,228,445 1.8%
2017 8,056,460 22.8% 8,610,812 24.4% 10,743,434 30.4% 3,918,217 11.1% 1,884,341 5.3% 494,369 1.4% 290,578 0.8% 1,335,838 3.8% 35,334,049 0.3%
2018 8,118,381 20.4% 8,758,674 22.0% 13,488,014 33.9% 4,229,797 10.6% 2,965,599 7.4% 457,172 1.1% 212,069 0.5% 1,616,368 4.1% 39,846,074 12.8%
2019 7,890,357 18.7% 8,691,673 20.6% 15,776,333 37.5% 4,430,419 10.5% 2,452,807 5.8% 488,578 1.2% 757,911 1.8% 1,613,477 3.8% 42,101,555 5.7%
2020 8,116,143 18.3% 9,137,714 20.6% 16,777,402 37.8% 4,563,652 10.3% 2,420,604 5.5% 412,575 0.9% 742,567 1.7% 2,169,260 4.9% 44,339,917 5.3%
SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for the relevant year.
131
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
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%
2014 312,031,296 - 115,070,943 61,196,955 488,299,194 91,020,452 579,319,646 3,874,303 6,512,600 - 10,386,903 589,706,549 13.0875 96.26%
2015 314,055,244 - 116,448,947 54,898,389 485,402,580 95,098,912 580,501,492 3,149,352 7,772,000 - 10,921,352 591,422,844 13.0869 95.28%
2016 314,299,363 - 114,855,236 50,232,295 479,386,894 74,155,243 553,542,137 3,628,098 5,690,600 - 9,318,698 562,860,835 13.0905 93.60%
2017 319,768,625 - 113,497,599 50,381,292 483,647,516 67,760,237 551,407,753 3,692,357 4,627,400 - 8,319,757 559,727,510 13.0908 91.38%
2018 331,347,976 - 113,370,852 48,272,032 492,990,860 65,728,440 558,719,300 3,990,263 3,739,800 - 7,730,063 566,449,363 13.0899 89.69%
2019 346,233,797 - 120,836,165 48,156,907 515,226,869 61,993,800 577,220,669 6,561,033 3,146,800 - 9,707,833 586,928,502 13.0865 87.80%
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
Year Residential Agriculture Commercial Industrial Property Property Ad Valorem Property Property Property IFT and CFT Valuation Value
132
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
2014 326,690,900 - 120,803,800 63,704,200 511,198,900 91,004,400 602,203,300 3,877,300 6,512,600 - 10,389,900 612,593,200 1,225,186,400
2015 335,445,400 - 122,235,800 57,024,100 514,705,300 95,084,900 609,790,200 3,149,800 7,772,000 - 10,921,800 620,712,000 1,241,424,000
2016 342,767,600 - 122,574,300 52,323,600 517,665,500 74,140,100 591,805,600 3,851,200 5,690,600 - 9,541,800 601,347,400 1,202,694,800
2017 363,318,800 - 120,587,210 52,278,900 536,184,910 67,745,200 603,930,110 3,957,900 4,639,600 - 8,597,500 612,527,610 1,225,055,220
2018 382,994,200 - 124,938,600 50,130,470 558,063,270 65,713,100 623,776,370 4,017,100 3,739,800 - 7,756,900 631,533,270 1,263,066,540
2019 409,745,000 - 135,884,102 51,070,400 596,699,502 61,981,500 658,681,002 6,649,100 3,146,800 - 9,795,900 668,476,902 1,336,953,804
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, 2020
6/30/2020 6/30/2010
Percent of Percent of
Taxable Total Taxable Taxable Total Taxable
Taxpayer Valuation Rank Valuation Valuation Rank Valuation
Consumers Energy $ 18,131,539 1 3.0% $ 78,615,856 1 10.1%
DTE Gas Company 10,288,149 2 1.7% 5,852,200 6 0.7%
Muskegon SC Holdings LLC 5,955,780 3 1.0%
Michigan Electric Transmission 5,075,300 4 0.8%
Mercy Health 3,769,741 5 0.6%
Glen Oaks Apartments LLC 3,504,178 6 0.6% 4,776,500 7
Muskegon Investments I LLC 2,782,120 7 0.5%
Core Sherman LLC 2,718,309 8 0.5% 0.0%
133
Hinman Lake LLC 2,865,457 9 0.5%
Broadstone PC Michigan LLC 2,390,309 10 0.4%
Sappi (S.D. Warren Co.) 31,205,687 2 4.0%
Johnson Technology 7,679,263 3 1.0%
Adac Plastics 7,379,563 4 0.9%
Esco Company 6,578,855 5 0.8%
Honeywell Inc 4,738,900 8 0.6%
Faram Muskegon LLC 4,570,300 9 0.6%
Lorin Industries 4,318,889 10 0.6%
Total - 10 Largest 57,480,882 9.6% 155,716,013 19.9%
Total - All Other 542,557,212 90.4% 624,819,939 80.1%
$ 600,038,094 100.0% $ 780,535,952 100.0%
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 Library
Year Operating Promotion Sanitation City District Debt
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 -
2014 10.0000 0.0875 3.0000 13.0875 2.4000 -
2015 10.0000 0.0869 3.0000 13.0869 2.4000 0.5611
2016 10.0000 0.0905 3.0000 13.0905 2.4000 0.4962
2017 10.0000 0.0908 3.0000 13.0908 2.4000 0.4999
2018 10.0000 0.0899 3.0000 13.0899 2.4000 0.4866
2019 10.0000 0.0865 3.0000 13.0865 2.4000 0.4522
Overlapping - County-Wide Rates
Muskegon Intermediate Special Vocational Community MAISD Community
Year County School Education Education College Gen Ed College Debt
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 - -
2014 6.6557 0.4597 2.2987 0.9996 2.2037 1.0000 0.3400
2015 6.6357 0.4597 2.2987 0.9996 2.2037 1.0000 0.3400
2016 6.8957 0.4597 2.2987 0.9996 2.2037 1.0000 0.3400
2017 6.8957 0.4597 2.2987 0.9996 2.2037 1.0000 0.3400
2018 6.8957 0.4597 2.2987 0.9996 2.2037 1.0000 0.3400
2019 6.8957 0.4597 2.2987 0.9996 2.2037 1.0000 0.3400
Overlapping - School District Grand Total
State Non-
Year Operating Debt Total Education Homestead Homestead
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
2014 18.0000 7.6000 25.6000 6.0000 43.0449 61.0449
2015 18.0000 6.8000 24.8000 6.0000 42.7854 60.7854
2016 18.0000 6.3500 24.3500 6.0000 42.5341 60.5341
2017 18.0000 7.6800 25.6800 6.0000 43.8681 61.8681
2018 18.0000 8.3600 26.3600 6.0000 44.5339 62.5339
2019 18.0000 8.3600 26.3600 6.0000 44.4961 62.4961
134
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
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%
2014 8,032,955 7,069,804 88.0% 917,806 7,987,610 99.4% 57,680 41,074 2,788 1.26%
2015 8,132,782 7,247,701 89.1% 848,266 8,095,967 99.5% 62,345 33,407 1,862 1.20%
2016 7,719,829 6,828,816 88.5% 853,639 7,682,455 99.5% 42,063 23,671 1,365 0.87%
2017 7,633,290 6,776,856 88.8% 795,164 7,572,020 99.2% 51,584 43,665 11,728 1.40%
2018 9,545,232 8,631,502 90.4% 839,208 9,470,710 99.2% - 53,873 13,529 0.71%
2019 9,737,757 8,873,258 91.1% 821,601 9,694,859 99.6% - 20,987 15,355 0.37%
135
SOURCE: City of Muskegon Treasurer' Office
City of Muskegon
Total Income Tax Collected and Number of Returns Filed - Graphical
Last Ten Fiscal Years
Income Tax 2010 - 2020
$5,000,000
$4,500,000
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
INCOME TAX $
$1,500,000
$1,000,000
$500,000
$-
2010 - 2011 2011 - 2012 2012 - 2013 2013 - 2014 2014 - 2015 2015 - 2016 2016 - 2017 2017 - 2018 2018 - 2019 2019 - 2020
Resident $2,566,198 $2,755,079 $2,692,211 $2,849,530 $3,070,581 $2,925,036 $3,284,777 $3,278,759 $3,457,902 $3,655,458
Non-Resident 3,136,464 3,367,318 3,290,480 3,482,760 3,752,932 3,575,045 4,014,691 4,007,372 4,226,325 4,467,781
Other 897,091 1,290,407 1,523,781 1,499,133 1,451,153 1,651,821 1,311,374 1,472,517 1,007,446 1,014,475
FISCAL YEAR
136
NUMBER OF RETURNS 2010 - 2020
25,000
20,000
1,750
1,750
1,750 1,750 1,750 1,750 1,750 1,650
1,650
15,000 1,650
11,612 Other
11,259 11,009
10,997 10,631 10,713 10,578 10,278 10,256 Non-Resident
RETURNS
10,000
9,426 Resident
5,000
6,326 5,690 5,110 5,463 5,458 5,337 5,464 5,352 5,493 4,852
-
2010 - 2011 2011 - 2012 2012 - 2013 2013 - 2014 2014 - 2015 2015 - 2016 2016 - 2017 2017 - 2018 2018 - 2019 2019 - 2020
FISCAL YEAR
City of Muskegon
Total Income Tax Collected and Number of Returns Filed - Data
Last Ten Fiscal Years
Income Tax 2010 - 2020
Year 2010 - 2011 2011 - 2012 2012 - 2013 2013 - 2014 2014 - 2015 2015 - 2016 2016 - 2017 2017 - 2018 2018 - 2019 2019 - 2020
Resident $ 2,566,198 $ 2,755,079 $ 2,692,211 $ 2,849,530 $ 3,070,581 $ 2,925,036 $ 3,284,777 $ 3,278,759 $ 3,457,902 $ 3,655,458
Non-Resident 3,136,464 3,367,318 3,290,480 3,482,760 3,752,932 3,575,045 4,014,691 4,007,372 4,226,325 4,467,781
Other 897,091 1,290,407 1,523,781 1,499,133 1,451,153 1,651,821 1,311,374 1,472,517 1,007,446 1,014,475
Total Income Tax $ 6,599,753 $ 7,412,804 $ 7,506,472 $ 7,831,423 $ 8,274,666 $ 8,151,902 $ 8,610,842 $ 8,758,648 $ 8,691,673 $ 9,137,714
Number of Returns 2010 - 2020
Year 2010 - 2011 2011 - 2012 2012 - 2013 2013 - 2014 2014 - 2015 2015 - 2016 2016 - 2017 2017 - 2018 2018 - 2019 2019 - 2020
Resident 6,326 5,690 5,110 5,463 5,458 5,337 5,464 5,352 5,493 4,852
Non-Resident 11,612 11,259 10,997 11,009 10,631 10,713 10,578 10,278 10,256 9,426
Other 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,650 1,650 1,650
Total Returns 19,688 18,699 17,857 18,222 17,839 17,800 17,792 17,280 17,399 15,928
137
City of Muskegon
RATIO OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
Governmental Activities Business-Type Activities
General
Obligation Installment Total
Limited Tax Purchase Governmental Revenue Total Business- Total Primary Per
Year Bonds Agreements State Loans Activities Bonds State Loans Type Activities Government Capita
2011 $ 5,920,000 $ - $ 244,850 $ 6,164,850 $ 5,415,000 $ 10,955,000 $ 16,370,000 $ 22,534,850 $ 587
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 6,954,535 - 112,550 7,067,085 3,630,728 9,030,000 12,660,728 19,727,813 533
2015 6,555,436 - 94,708 6,650,144 2,949,368 8,360,000 11,309,368 17,959,512 483
138
2016 6,243,903 - 76,509 6,320,412 2,246,962 7,675,000 9,921,962 16,242,374 436
2017 5,940,903 - 57,946 5,998,849 1,523,661 6,980,000 8,503,661 14,502,510 378
2018 5,633,903 - 39,012 5,672,915 774,614 6,270,000 7,044,614 12,717,529 331
2019 5,322,903 - 19,699 5,342,602 - 5,545,000 5,545,000 10,887,602 284
2020 24,059,753 2,123,804 - 26,183,557 - 6,607,956 6,607,956 32,791,513 854
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, 2020
Total Debt Debt Supported by City
Name of Governmental Unit Outstanding Self Supporting General Revenues
Direct Debt
City of Muskegon:
Revenue Bonds $ 6,607,956 $ 6,607,956 $ -
Capital Improvement Bonds 24,059,753 - 24,059,753
Installment Purchase Agreements 2,123,804 - 2,123,804
Component Unit Debt:
Downtown Development Authority - - -
Local Development Finance Authority 1,760,377 1,760,377 -
Total City Direct Debt $ 34,551,890 $ 8,368,333 $ 26,183,557
City Share as
Gross Percent of Gross Net
Overlapping Debt
Muskegon School District $ 8,665,000 95.48% $ 8,273,342
Orchard View School District 38,990,021 18.69% 7,287,235
Reith's Puffer School District 64,337,816 0.68% 437,497
Hackley Public Library 2,135,000 95.48% 2,038,498
Muskegon County 109,272,267 12.57% 13,735,524
Muskegon Community College 32,050,000 12.57% 4,028,685
Total Overlapping Debt $ 255,450,104 35,800,781
Total City Direct and Overlapping Debt $ 61,984,338
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
determining the portion of the City's taxable value that is within each overalapping government 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.
139
City of Muskegon
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Debt Limit $ 78,308,925 $ 73,585,150 $ 68,555,700 $ 61,706,477 $ 61,510,980 $ 60,962,090 $ 61,333,841 $ 64,124,907 $ 101,083,635 $ 108,732,428
Total net debt applicable to limit 12,929,850 14,375,253 13,655,042 12,847,550 11,969,708 11,313,794 10,290,785 9,240,855 8,510,021 27,943,934
Legal debt margin $ 65,379,075 $ 59,209,897 $ 54,900,658 $ 48,858,927 $ 49,541,272 $ 49,648,296 $ 51,043,056 $ 54,884,052 $ 92,573,614 $ 80,788,494
Total net debt applicable to the limit as 16.51% 19.54% 19.92% 20.82% 19.46% 18.56% 16.78% 14.41% 8.42% 25.70%
a percentage of debt limit
Legal Debt Margin Calculation for 2019:
Assessed Valuation: $ 1,087,324,277
Legal Debt Limit (10% ) 108,732,428
Total Indebtedness: $ 34,551,890
Debt not Subject to Limitation:
Paid by Special Assessment -
Revenue Bonds (6,607,956)
Debt Subject to Limitation 27,943,934
140
Legal Debt Margin $ 80,788,494
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
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
2015 6,388,474 3,774,508 2,613,966 1,330,000 320,857 1,650,857 1.58
2016 7,498,376 4,460,076 3,038,300 1,370,000 283,360 1,653,360 1.84
2017 7,449,646 4,997,912 2,451,734 1,405,000 246,434 1,651,434 1.48
2018 7,507,323 4,949,807 2,557,516 1,450,000 203,106 1,653,106 1.55
2019 8,472,413 5,672,522 2,799,891 1,495,000 158,260 1,653,260 1.69
2020 8,417,771 6,374,033 2,043,738 745,000 109,916 854,916 2.39
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
2011 No Direct System Indebtedness
2012 No Direct System Indebtedness
2013 No Direct System Indebtedness
2014 No Direct System Indebtedness
2015 No Direct System Indebtedness
2016 No Direct System Indebtedness
2017 No Direct System Indebtedness
2018 No Direct System Indebtedness
2019 No Direct System Indebtedness
2020 8,399,047 9,307,397 (908,350) - - - #DIV/0!
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.
141
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
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%
2014 37,213 769,789,707 20,686 34.1 4,808 1,108 54,065,115 9.6%
2015 37,213 789,034,450 21,203 35.8 4,387 1,102 46,541,966 10.3%
2016 37,213 808,760,311 21,733 35.8 4,206 1,112 58,924,856 8.3%
2017 38,349 854,285,543 22,277 35.8 3,985 1,075 78,271,395 4.8%
2018 38,401 876,830,025 22,834 35.4 3,732 1,202 171,523,877 4.1%
2019 38,401 898,750,775 23,404 35.4 3,589 1,295 94,667,004 4.2%
142
2020 38,401 921,219,545 23,989 36.3 3,625 1,233 92,319,998 17.7%
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
2020 2010
Percentage Percentage
of total of total
City City
Employer Employees Rank employment Employees Rank employment
Mercy General Health Partners* 4,674 1 31.1% 3,227 1 19.3%
County of Muskegon 990 2 6.6% 980 2 5.9%
ADAC Automotive 911 3 6.1% 400 8 2.4%
G.E. Aviation (formerly Johnson Technology Inc.) 850 4 5.7% 474 5 2.8%
Muskegon Public Schools 426 5 2.8% 697 4
Port City Group Companies 425 6 2.8%
Muskegon Area Intermediate School District 418 7 2.8%
Knoll Group 315 8 2.1% 450 6
143
Betten Automotive Group 300 9 2.0%
Muskegon Community College 224 10 1.5%
State of Michigan 772 3 4.6%
Verizon 325 9 1.9%
City of Muskegon 281 10 1.7%
Baker College 430 7 2.6%
* Hackley Hospital merged with the former Mercy Hospital to become Mercy General Health Partners.
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 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Administration 0.40 0.40 0.40 0.40 - - - - - -
Affirmative Action 1.10 1.10 1.10 1.10 1.30 1.30 1.46 0.40 1.00 1.00
Cemetaries 2.20 1.75 1.25 1.25 1.25 1.25 1.25 1.25 1.25 2.25
City Clerk & Elections 3.00 3.00 3.00 3.00 3.00 3.00 3.54 3.80 3.80 4.80
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 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 1.05
City Manager's Office 2.25 2.25 2.25 2.25 2.05 2.05 1.75 2.75 2.75 2.75
City Treasurer's Office 5.00 5.00 5.00 4.50 5.50 5.50 5.50 5.50 5.50 5.50
Civil Service 1.00 - - - - - - - -
Environmental Services 2.00 5.00 5.00 5.00 2.00 2.00 2.00 2.00 -
Farmers Market 0.05 0.05 0.05 0.05 0.05 0.05 - 0.20 1.20 1.20
Finance Administration 3.00 3.00 2.00 2.00 3.00 3.00 3.00 3.60 3.00 3.45
Fire 33.00 35.00 28.00 28.83 32.00 35.00 35.00 35.00 26.00 29.00
Fire Safety Inspections 8.00 6.00 6.00 0.83 - - - - -
General Recreation - - - - - - - - -
Income Tax Administration 5.00 5.00 5.00 4.50 3.50 3.50 3.50 3.50 3.50 3.50
Information Systems 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.50 3.50 3.50
Parks 6.00 6.05 6.05 6.00 6.00 6.00 7.05 7.05 10.05 10.05
144
Planning, Zoning & Economic Development 4.00 3.00 3.00 3.00 3.40 3.40 3.45 3.45 5.45 6.00
Police 88.00 88.00 88.00 87.34 88.00 88.00 88.00 88.00 89.00 89.00
Sanitation 0.30 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20
Senior Transit - 0.05 0.05 0.05 - - - - - -
MVH-Major Streets 12.00 11.70 10.70 10.70 10.70 10.70 10.70 10.70 12.20 12.20
MVH-Local Streets 7.00 6.70 6.70 6.70 6.70 6.70 6.70 6.70 7.20 7.20
Community Development 4.00 4.00 4.00 4.00 4.00 4.00 4.00 3.55 3.55 4.30
Home Program 0.25 - - - - - - - - -
Lead Program 0.75 - - - - - - - - -
Sewer Maintenance 10.20 9.75 9.75 9.80 9.80 9.80 9.80 9.80 9.80 10.80
Water Filtration 10.00 9.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 11.00
Water Maintenance 12.40 11.75 11.75 11.75 11.75 11.75 11.75 11.75 11.75 12.75
Hartshorn Marina Fund 0.05 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30
Mercy Health Arena - - - - - - - - - 3.00
Public Service Building 8.05 7.95 8.45 8.45 8.50 8.50 8.50 8.50 8.50 8.75
Engineering 4.95 4.95 4.95 4.95 4.95 4.95 4.95 4.95 5.95 5.20
Equipment 6.25 6.25 6.25 6.25 6.25 6.25 6.25 6.25 6.25 6.25
244.00 241.00 233.00 227.00 228.00 231.00 232.45 233.50 232.50 245.25
SOURCE: City of Muskegon Finance Department
City of Muskegon
OPERATING INDICATORS BY FUNCTION/PROGRAM
Last Ten Fiscal Years
Function/Program 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Administrative Services
Elections
Number of registered voters 26,330 26,324 26,098 26,025 24,014 24,005 24,612 26,136 25,182 28,127
Number of votes cast:
Last general election 8,106 1,933 13,487 3,029 7,763 2,547 13,179 15,271 11,407 3,105
Last city election 8,106 1,933 2,131 3,029 7,763 2,547 13,179 2,254 1,938 3,105
Percentage of registered voters voting:
Last general election 31% 7% 52% 12% 32% 11% 54% 58% 45% 11%
Last city election 31% 7% 8% 12% 32% 11% 54% 9% 8% 11%
Financial Services
Property Tax Bills 15,351 15,261 15,291 15,211 14,528 14,611 14,243 14,229 14,180 15,090
Income Tax Returns 19,688 18,699 17,857 18,222 17,839 17,800 17,792 17,280 17,399 15,928
Paper Check Issued to Vendors 2,986 3,746 1,677 1,404 1,527 1,608 1,675 1,782 1,863 1,946
Electronic Payments to Vendors 884 1,334 1,251 1,579 1,471 1,849 1,998 2,104 2,307 2,494
145
Public Safety
Fire Protection
Number of firefighter and officer positions 37 36 41 38 35 35 35 23 29 26
Number of emergency calls 4,402 4,676 4,563 4,354 4,881 4,938 4,895 4,948 5,106 5,147
Police Protection
Number of sworn officer positions 79 79 79 76 76 76 75 79 80 80
Part I (Major) Crimes 2,859 2,772 2,647 2,240 2,107 1,989 2,816 2,357 1,728 1,621
Public Works
Refuse Collected (Tons per Year) 12,703 10,153 9,958 10,217 10,512 10,994 11,009 10,801 10,753 11,534
Recyclables Collected (Tons per Year) - - - - - - - - - 160
Water & Sewer
Number of consumers 13,037 13,109 13,144 13,086 13,223 13,307 13,248 13,104 13,343 13,422
Average daily water consumption (GPD) 8,417,000 7,700,000 7,651,000 7,666,000 8,293,570 11,027,945 10,947,233 9,559,304 10,867,590 10,674,712
Water main breaks repaired 12 5 11 30 15 16 12 15 11 17
Sewer flows (Millions Gallons per Year) 1,625 1,695 1,777 1,833 2,013 1,794 1,815 1,832 2,048 2,138
Sewer Service Calls 591 522 508 532 501 521 462 451 443 475
SOURCE: City of Muskegon Departments
City of Muskegon
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
Last Ten Fiscal Years
Function/Program 2011 2012 2013 2014 2015 2016 2017 2018 2019
Public Safety
Fire Protection
Number of stations 3 3 3 3 3 3 3 3 3
Police Protection
Number of stations 1 1 1 1 1 1 1 1 1
Highways, Streets and Bridges
Miles of Streets 196.95 196.95 196.95 196.95 196.95 196.95 196.95 196.95 197.19
Number of streetlights 3,065 2,838 2,838 2,838 2,838 2,900 2,984 2,967 2,930
Culture and Recreation
Number of parks (acres) 701 701 701 701 701 701 701 701 701
Lake Michigan beaches (acres) 119 119 119 119 119 119 119 119 119
Hockey/Entertainment Arena 1 1 1 1 1 1 1 1 1
146
Sewer
Sanitary sewers (miles) 177.04 177.04 177.04 177.04 177.04 177.04 177.04 177.04 177.04
Storm sewers (miles) 184.35 184.35 184.35 184.25 184.35 184.35 184.35 184.35 184.35
Water
Water mains (miles) 195.69 195.40 195.95 195.95 195.95 195.95 195.95 195.95 195.27
SOURCE: City of Muskegon Departments
SINGLE AUDIT OF FEDERAL FINANCIAL ASSISTANCE PROGRAMS
147
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
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 City of Muskegon, as of and for the year ended June 30, 2020, and the related notes to the
financial statements, which collectively comprise City of Muskegon’s basic financial statements, and have issued
our report thereon dated December 22, 2020.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered 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 City of Muskegon’s internal control. Accordingly, we do not
express an opinion on the effectiveness of City of Muskegon’s internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was
not designed to identify all deficiencies in internal control that might be material weaknesses or significant
deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified.
However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain
deficiencies in internal control that we consider to be material weaknesses and significant deficiencies.
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. We consider the deficiency described in the
accompanying Schedule of Findings and Questioned Costs as Finding 2020-001 to be a material weakness.
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BRICKLEY DELONG
City Commission
City of Muskegon
Page 2
Compliance or Other Matters
As part of obtaining reasonable assurance about whether 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.
City of Muskegon’s Response to Findings
City of Muskegon’s response to the findings identified in our audit is described in the accompanying Schedule of
Findings and Questioned Costs. City of Muskegon’s response was not subjected to auditing procedures applied in
the audit of the financial statements and, accordingly, we express no opinion on it.
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
December 22, 2020
149
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL
PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM
GUIDANCE
City Commission
City of Muskegon
Muskegon, Michigan
Report on Compliance for Each Major Federal Program
We have audited City of Muskegon’s compliance with the types of compliance requirements described in the
OMB Compliance Supplement that could have a direct and material effect on each of City of Muskegon’s major
federal programs for the year ended June 30, 2020. City of Muskegon’s major federal programs are identified in
the Summary of Auditor’s Results section of the accompanying Schedule of Findings and Questioned Costs.
Management’s Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its
federal awards applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of City of Muskegon’s major federal programs
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 the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200,
Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform
Guidance). Those standards and the Uniform Guidance 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 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 each major federal
program. However, our audit does not provide a legal determination of City of Muskegon’s compliance.
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150
BRICKLEY DELONG
City Commission
City of Muskegon
Page 2
Opinion on Each Major Federal Program
In our opinion, 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 each of its major federal programs for the year
ended June 30, 2020.
Report on Internal Control Over Compliance
Management of 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 City of Muskegon’s internal control over compliance with the types of requirements
that could have a direct and material effect on each major federal program to determine the auditing procedures
that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major
federal program and to test and report on internal control over compliance in accordance with the Uniform
Guidance, 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 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 a 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 requirements of the Uniform
Guidance. Accordingly, this report is not suitable for any other purpose.
Muskegon, Michigan
December 22, 2020
151
City of Muskegon
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the year ended June 30, 2020
Accrue d Cash or Accrued
Federal Program or (Unearne d) Adjustme nts Payments In- Amount of (Unearne d) Passed
Federal Grantor/Pass-Through Grantor/ CFDA Award Re venue and Kind Re ce ive d Grant Revenue Through to
Program or Cluster Title/Identifying Number Number Amount July 1, 2019 Transfers (Cash Basis) Expenditure s June 30, 2020 Subrecipe nts
U.S. Department of Housing and Urban Development
Direct programs
Community Development Block Grants/Entitlement Grants 14.218
B-14-MC-26-0026 $ 897,025 $ - $ - $ 709 $ 709 $ - $ -
B-15-MC-26-0026 895,410 - - 286 286 - -
B-16-MC-26-0026 886,662 375 - 8,987 8,612 - -
B-17-MC-26-0026 871,542 27,653 - 72,326 44,673 - -
B-18-MC-26-0026 937,658 115,079 - 355,205 240,126 - -
B-19-MC-26-0026 973,451 - - 661,509 672,640 11,131 -
Program Income 18,455 - - 18,455 18,455 - -
Total Community Development Block Grants/
Entitlement Grants 5,480,203 143,107 - 1,117,477 985,501 11,131 -
HOME Investment Partnerships Program 14.239
M-15-MC-26-0215 268,639 - - 13,889 13,889 - 13,889
M-16-MC-26-0215 264,277 31,459 - 39,641 8,182 - 39,641
152
M-17-MC-26-0215 249,537 - - 63,335 63,335 - 37,434
M-18-MC-26-0215 327,681 63,481 - 158,835 95,354 - -
M-19-MC-26-0215 334,818 - - 11,455 18,872 7,417 -
Program Income 5,540 - - 5,540 5,540 - -
Total HOME Investment Partnerships Program 1,450,492 94,940 - 292,695 205,172 7,417 90,964
Total U.S. Department of Housing and Urban Development 6,930,695 238,047 - 1,410,172 1,190,673 18,548 90,964
City of Muskegon
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS—CONTINUED
For the year ended June 30, 2020
Accrue d Cash or Accrue d
Fe deral Program or (Une arne d) Adjustme nts Payments In- Amount of (Une arne d) Passe d
Fede ral Grantor/Pass-Through Grantor/ CFDA Award Reve nue and Kind Re ceive d Grant Re ve nue Through to
Program or Cluste r Title/Ide ntifying Number Numbe r Amount July 1, 2019 Transfe rs (Cash Basis) Expenditure s June 30, 2020 Subrecipe nts
U.S. Department of Justice
Direct programs
Coronavirus Emergency Supplemental Funding Program 16.034
2020-VD-BX-1081 - COVID $ 65,931 $ - $ - $ - $ 32,602 $ 32,602 $ -
Bulletproof Vest Partnership Grant 16.607
2017 Grant 5,570 - - 735 735 - -
2018 Grant 8,876 - - 735 6,248 5,513 -
14,446 - - 1,470 6,983 5,513 -
Edward Byrne Memorial Justice Assistance Grant 16.738
Program
2018-DJ-BX-0619 37,971 - - 23,030 34,537 11,507 -
2019-DJ-BX-0927 35,195 - - 20,000 20,463 463 -
73,166 - - 43,030 55,000 11,970 -
Justice and Mental Health Collaboration Program 16.745
2019-MO-BX-0006 100,000 - - 10,573 12,794 2,221 -
Total direct programs 253,543 - - 55,073 107,379 52,306 -
Passed through Michigan Department of Health and Human Services
153
STOP Violence Against Women Grant 16.588
E20203703-00 73,100 - - 16,540 21,648 5,108 -
Passed through Ottawa County
Edward Byrne Memorial Justice Assistance Grant 16.738
Program
2017-MU-BX-0191 14,000 14,000 - 14,000 - - -
2019-MU-BX-0061 15,000 - - - 15,000 15,000 -
29,000 14,000 - 14,000 15,000 15,000 -
Total U.S. Department of Justice 355,643 14,000 - 85,613 144,027 72,414 -
U.S. Department of Transportation, National Highway Safety Administration
Passed through Michigan State Police
National Priority Safety Programs 20.616
Bicycle and Pedestrian Safety Initiative Grant 19,944 - - 1,393 3,165 1,772 -
U.S. Department of Health and Human Services
Passed through Michigan Department of Health and
Human Services
Children's Health Insurance Program 93.767
E20192797-001 880,005 36,712 - 244,907 208,195 - -
E20202333-00 880,005 - - 374,150 458,729 84,579 -
Total Department of Health and Human Services 1,760,010 36,712 - 619,057 666,924 84,579 -
TOTAL FEDERAL ASSISTANCE $ 9,066,292 $ 288,759 $ - $ 2,116,235 $ 2,004,789 $ 177,313 $ 90,964
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, 2020
1. The accompanying Schedule of Expenditures of Federal Awards (the “schedule”) includes the federal award activity of the City under programs of the federal
government for the year ended June 30, 2020. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal
Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). 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 the Uniform Guidance, 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. The City is not using the ten-
percent de minimis indirect cost rate as allowed under the Uniform Guidance.
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, 2020 and federal expenditures per the Schedule of Expenditures of Federal Awards.
Federal revenues per City of Muskegon financial statements
General Fund $ 147,191
Major Street and Trunkline Fund 1,049,653
Other governmental funds 1,833,603
154
3,030,447
Plus program income 23,995
Less MDOT contracted projects as shown below (1,049,653)
Federal expenditures per the Schedule of Expenditures of Federal Awards $ 2,004,789
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, 2020
the federal aid received and expended by the City of Muskegon was $1,049,653 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 1900(309) Contract 19-5041 $ 799,853 $ 799,853
Proj 20A0(056) Contract 19-5543 249,800 249,800
Total U.S. Department of Transportation,
Federal Highway Administration (contracted projects) $ 1,049,653 $ 1,049,653
City of Muskegon
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the year ended June 30, 2020
SECTION I—SUMMARY OF AUDITOR’S RESULTS
A. Financial Statements
1. Type of report the auditor issued on whether the financial statements audited were prepared in accordance
with GAAP: Unmodified
2. Internal control over financial reporting:
Material weakness(es) identified? X yes no
Significant deficiency(ies) identified? yes X none reported
3. Noncompliance material to financial statements noted? yes X no
B. Federal Awards
1. Internal control over major federal programs:
Material weakness(es) identified? yes X no
Significant deficiency(ies) identified? yes X none reported
2. Type of auditor’s report issued on compliance for major federal programs: Unmodified
3. Any audit findings disclosed that are required to be reported in
accordance with 2 CFR 200.516(a)? 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: $750,000
6. Auditee qualified as low-risk auditee? yes X no
155
City of Muskegon
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the year ended June 30, 2020
SECTION II – FINANCIAL STATEMENT FINDINGS
Finding 2020-001: MATERIAL WEAKNESS—Budgetary Process
Criteria or Specific Requirement: The Budget Act, Public Act 621 of 1978, an amendment to Public Act 2 of
1968, requires that all local units of government in Michigan adopt balanced budgets, establishes
responsibilities and defines the procedures for the preparation, adoption, and maintenance of the budget, and
requires certain information for the budget process. This includes regular review of the budget and
amendment as soon as a deviation is apparent.
Condition: We noted a number of significant budget variances including cost centers that had expenditures in
excess of the amount budgeted.
Cause: The City did not amend its budget after the first quarter due to issues surrounding the COVID-19
pandemic and an oversight in approving proposed third quarter budget amendments.
Effect: Expenditures exceeded amounts budgeted in a number of cost centers in violation of the Budget Act.
Context: We noted a number of budget violations while performing budgetary analytical procedures and
reviewing a draft of the financial statements.
Repeat Finding: This is not a repeat finding.
Recommendation: The City should review its budgetary policies and procedures to ensure a regular review of
the budget is performed and budgets are amended as necessary to ensure compliance with the Budget Act. In
addition to complying with the Budget Act, this is also a good governance policy to monitor spending and
ensure that all purchases are properly budgeted and authorized.
Views of Responsible Officials: The City agrees with the finding.
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
There were no findings reported in relation to major federal awards during the single audit for the year ended
June 30, 2020.
156
CLIENT DOCUMENTS
157
Affirmative Action
(231)724-6703
FAX (231)722-1214
Assessor/
Equalization Co.
(231)724-6386
FAX (231)724-1129
Cemetery/Forestry
(231)724-6783
FAX (231)724-4188
City Manager
(231)724-6724
FAX (231)722-1214
Clerk SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
(231)724-6705
FAX (231)724-4178
Comm. & Neigh.
Services December 22, 2020
(231)724-6717
FAX (231)726-2501
Computer Info. U.S. Department of Housing and Urban Development
Technology
(231)724-4126
Washington, D.C.
FAX (231)722-4301
Engineering
City of Muskegon respectfully submits the following summary of the current status of prior audit
(231)724-6707 findings contained in the single audit report for the year ended June 30, 2019 dated December 2, 2019.
FAX (231)727-6904
Finance SECTION II – FINANCIAL STATEMENT FINDINGS
(231)724-6713
FAX (231)726-2325
Finding 2019-001: MATERIAL WEAKNESS—Year-End Closing Procedures for Accounts
Fire Department Payable
(231)724-6795
FAX (231)724-6985
Condition: Certain costs paid after the end of the year were not recorded as payables at year-end.
Human Resources
Co. (Civil Service)
(231)724-6442
Recommendation: The City should review its policies and procedures surrounding year-end payables
FAX (231)724-6840 and improve them to ensure that expenditures are recorded in the correct accounting period.
Income Tax
(231)724-6770 Current Status: This recommendation was implemented during the year ended June 30, 2020. No
FAX (231)724-6768 similar finding was reported during the single audit for the year ended June 30, 2020.
Mayor’s Office
(231)724-6701
FAX (231)722-1214 SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Planning/Zoning
(231)724-6702 There were no findings reported in relation to major federal award programs during the single audit for
FAX (231)724-6790 the year ended June 30, 2019.
Police Department
(231)724-6750
FAX (231)722-5140 Sincerely,
Public Works
(231)724-4100
FAX (231)722-4188
SafeBuilt
(Inspections)
(231)724-6715 Elizabeth Lewis
FAX (231)728-4371 Finance Director
Treasurer
(231)724-6720
FAX (231)724-6768
Water Billing
(231)724-6718
FAX (231)724-6768
Water Filtration City of Muskegon, 933 Terrace Street, P.O. Box 536, Muskegon, MI 49443-0536
(231)724-4106 http://www.shorelinecity.com
FAX (231)755-5290 158
Affirmative Action
(231)724-6703
FAX (231)722-1214
Assessor/
Equalization Co.
(231)724-6386
FAX (231)724-1129
Cemetery/Forestry
(231)724-6783
FAX (231)724-4188
City Manager
(231)724-6724
FAX (231)722-1214
Clerk CORRECTIVE ACTION PLAN
(231)724-6705
FAX (231)724-4178
Comm. & Neigh.
Services December 22, 2020
(231)724-6717
FAX (231)726-2501
Computer Info. U.S. Department of Housing and Urban Development
Technology
(231)724-4126
Washington, D.C.
FAX (231)722-4301
Engineering
(231)724-6707 City of Muskegon respectfully submits the following Corrective Action Plan for the year ended June
FAX (231)727-6904 30, 2020.
Finance
(231)724-6713 Name and address of independent public accounting firm:
FAX (231)726-2325
Brickley DeLong, P.C.
Fire Department
(231)724-6795 P.O. Box 999
FAX (231)724-6985 Muskegon, MI 49443
Human Resources Audit period: June 30, 2020
Co. (Civil Service)
(231)724-6442
FAX (231)724-6840 The findings from the Schedule of Findings and Questioned Costs for the year ended June 30, 2020 are
Income Tax discussed below. The findings are numbered consistently with the numbers assigned in the schedule.
(231)724-6770
FAX (231)724-6768
SECTION II – FINANCIAL STATEMENT FINDINGS
Mayor’s Office
(231)724-6701 Finding 2020-001: MATERIAL WEAKNESS—Budgetary Process
FAX (231)722-1214
Planning/Zoning Recommendation: The City should review its budgetary policies and procedures to ensure a regular
(231)724-6702
FAX (231)724-6790 review of the budget is performed and budgets are amended as necessary to ensure compliance with the
Budget Act. In addition to complying with the Budget Act, this is also a good governance policy to
Police Department
(231)724-6750 monitor spending and ensure that all purchases are properly budgeted and authorized.
FAX (231)722-5140
Public Works
(231)724-4100
FAX (231)722-4188
Action Taken: The City Finance department will ensure that a budget reforecast is submitted and
SafeBuilt approved by the City Commission each quarter to ensure that all purchases are properly budgeted and
(Inspections) authorized.
(231)724-6715
FAX (231)728-4371
Treasurer
(231)724-6720
FAX (231)724-6768 Responsible Person and Anticipated Completion Date: Finance Director by June 30, 2021.
Water Billing
(231)724-6718
FAX (231)724-6768
Water Filtration City of Muskegon, 933 Terrace Street, P.O. Box 536, Muskegon, MI 49443-0536
(231)724-4106 http://www.shorelinecity.com
FAX (231)755-5290 159
U.S. Department of Housing and Urban Development
December 22, 2020
Page 2
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
There were no findings reported in relation to major federal awards during the single audit for the year ended June
30, 2020
If the U.S. Department of Housing and Urban Development has questions regarding this plan, please call
Elizabeth Lewis at (231) 724-6917.
Sincerely,
Elizabeth Lewis
Finance Director
160
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