HomeMy WebLinkAbout2007 Annual Financial ReportCity of Livonia, Michigan
Financial Report
with Supplemental Information
November 30, 2007
City of Livonia, Michigan
Contents
Report Letter
1-2
Management's Discussion and Analysis 35
Basic Financial Statements
Govemment-wide Financial Statements:
55
Statement of Net Assets
10
Statement of Activities
11-12
Fund Financial Statements:
55
Governmental Funds:
23
Balance Sheet
13
Reconciliation of Fund Balances of Governmental Funds to Net Assets
2654
of Governmental Activities
14
Statement of Revenue, Expenditures, and Changes in Fund Balances
15
Reconciliation of the Statement of Revenue, Expenditures, and Changes
in Fund Balances of Governmental Funds to the Statement of
Activities
16
Propnetary Funds:
Statement of Net Assets
17
Statement of Revenue, Expenses, and Changes in Net Assets
18
Statement of Cash Flows
19-20
Fiduciary Funds:
Statement of Net Assets
21
Statement of Changes in Net Assets - Pension and Other Employee
Benefits Trust Funds
22
Conponent Units:
55
Statement of Net Assets
23
Statement of Activities
24-25
Notes to Financial Statements
2654
Required Supplemental Information
55
Budgetary Companson Schedule - General Fund
56-58
Budgetary Companson Schedule - Major Special Revenue Funds
5950
City of Livonia, Michigan
Contents (Continued)
Required Supplemental Information (Continued)
Pension System:
Schedule of Funding Progress
61
Schedule of Employer Contributions
61
Retiree Health and Disability Benefits Plan:
Schedule of Funding Progress
62
Schedule of Employer Contributions
62
Postemployment Benefit Plans - Actuarial Assumptions
63
Notes to Required Supplemental Information
6"5
Other Supplemental Information
M"
Nonmajor Governmental Funds:
Combining Balance Sheet 67-70
Combining Statement of Revenue, Expenditures, and Changes in Fund
Balances 71-74
Fiduciary Funds:
Combining Statement of Net Assets 75-76
Combining Statement of Changes in Net Assets 77
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Independent Auditors Report
To the Honorable Mayor and
Members of the City Council
City of Livonia, Michigan
We have audited the accompanying financial statements of the governmental activities, the
business -type activities, the discretely presented component units, each major fund, and the
aggregate remaining fund information of the City of Livonia, Michigan (the "City") as of and for
the year ended November 30, 2007, which collectively comprise the City's basic financial
statements as listed in the table of contents. These financial statements are the responsibility of
the City of Livonia, Michigan's management Our responsibility is to express opinions on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Gommment
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairy, in all material respects,
the respective financial position of the governmental activities, the business -type activities, the
discretely presented component unit, each major fund, and the aggregate remaining fund
information of the City of Livonia, Michigan as of November 30, 2007 and the respective
charges in financial position and cash flows, where applicable, thereof for the year then ended, in
conformity with accounting principles generally accepted in the United States of America.
The management's discussion and analysis, pension system schedule of funding progress and
employer contributions, postemployment benefit plans schedule of funding progress and
employer contributions, and the budgetary comparison schedules, as identified in the table of
contents, are not a required part of the basic financial statements but are supplemental
information required by the Governmental Accounting Standards Board. We have applied
certain limited procedures, which consisted principally of inquiries of management, regarding the
methods of measurement and presentation of the required supplemental information.
However, we did not audit the information and express no opinion on it.
Praxitr:
To the Honorable Mayor and
Members of the City Council
City of Livonia, Michigan
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Livonia, Michigan's basic financial statements. The
accompanying other supplemental information, as identified in the table of contents, is presented
for the purpose of additional analysis and is not a required part of the basic financial statements.
The other supplemental information has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued our report dated
March 19, 2008 on our consideration of the Citys internal control over financial reporting and
on our tests of its compliance with certain provisions of laws, regulations, contacts, and grants.
That report is an integral part of an audit performed in accordance with Government Auditing
Standards and should be read in conjunction with this report in considering the results of our
audit.
AI& If , PLLC
March 19, 2008
City of Livonia, Michigan
Management's Discussion and Analysis
Overview of the Financial Statements
The City of Livonia, Michigan's (the "City") 2007 annual report consists of four parts: (1)
management's discussion and analysis, (2) basic financial statements, (3) required supplemental
information, and (4) other supplemental information that presents combining statements for
nonmajor governmental funds, propnetary funds, and fiduciary funds. 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 are intended to provide longer-
term information about the City's overall financial status. The remaining statements are fund
financial statements that focus on individual parts of the City's government, reporting the City's
operations in more detail than the government -wide financial statements.
Government -wide Financial Statements
The government -wide financial statements report information about the City as a whole using
accounting methods similar to those used by private -sector companies. The statement of net
assets includes all of the government's assets and liabilities. All of the current year's revenues
and expenses are accounted for in the statement of activities regardless cf when cash is received
or paid.
The two government -wide statements report the City's net assets and how they have changed.
Net assets, the difference between the City's assets and liabilities, are one way to measure the
Citys financial health or position.
The government -wide financial statements of the City are divided into three categories:
0 Government Activities - Most of the City's basic services are included here, such as the
police, fire, public works, parks departments, and general administration. Property taxes,
state -shared revenue, and charges for services provide most of the funding for these
activities.
0 Business -type Activities - The City charges fees to customers to cover the costs of certain
services it provides. The City's water and sewer system, golf course operations, and non-
federal senior housing are treated as business -type activities.
0 Component Units - The City includes two other entities in its report, the Plymouth Road
Development Authority and the Economic Development Corporation. Although legally
separate, these 'component units" are important because the City is financially accountable
for them, including debt, which is issued on behalf of the authorities by the City.
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
Fund Financial Statements
The fund financial statements provide more detailed information about the City's most
significant funds - not the City as a whole. Funds are accounting tools that the City uses to keep
track of specific sources of funding and spending for particular purposes. Some funds are
required by state law and bond covenants. Other funds are established to control and manage
money for particular purposes.
The City has three kinds of funds:
0 Governmental Funds - Most of the City's basic services are included in governmental
funds, which focus on him cash and other financial assets that can be converted to cash, flan
in and out, and the balance left at year end that is available for spending. The governmental
fund statements provide a detailed short-term view that helps you determine if there are
more or fewer financial resources available to spend in the near future to finance the City's
program.
0 Proprietary Funds - Services that are intended to be entirely self-supporting by customer
fees are generally reported in proprietary funds. Proprietary fund statements, like
government -wide statements, provide both short- and long-term financial information.
0 Fiduciary Funds - The City is responsible for ensuring that the assets in these funds are
used for their intended purposes. We exclude these activities from the government -wide
financial statements because the City cannot use these assets to finance its operations.
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
The City as a Whole
In a condensed format, the table below shows a comparison of the net assets as of
November 30, 2007 to the prior year.
Net Assets (in millions of dollars)
Summary Condensed Statement d Net Assets (normally presented in thousMs of dollars)
Gmernmenlal&tvhes BusinesstypeMtmtes Total
2007 2006 2007 2006 2007 2006
Assets
Current and other assets $ 576 $ 581 $ 345 $ 328 $ 92.1 $ 909
Cagtal assets 1669 1649 882 822 2471 2471
Total assets 2245 2230 1147 1150 339.2 338.0
Liadlities
Current liabilities 129 174 59 60 188 234
Longterm liadlities 43.3 442 152 169 585 611
Total liabilities 562 616 211 229 71.3 845
Net Assts
Invested incagtalassets -
Not ofrelated! debt 1288 1265 676 679 1964 1944
Restricted 264 256 253 232 517 488
Unrestricted 131 93 87 18 138 103
Total net assets $ 169.3 $ 161.4 $ 93.6 $ 92.1 $ 261.9 $ 253.5
City of Livonia - Net Assets
The City's assets exceed its liabilities at the end of the fiscal year by $261.9 million (net assets).
However, a major portion (75 percent) of the City's net assets represents its investments in
capital assets (e.g., land, roads, infrastructure, buildings, and equipment) less any related debt
used to acquire or construct these assets. The City uses these physical assets to provide
services to its citizens. These assets are illiquid and not available for future spending.
Unrestricted net assets of the City increased from $10.3 million at November 30, 2006 to
$13.6 million at the end of this year. The amount represents the part of net assets that can be
used to finance day-to-day operations without constraints established by debt covenants,
enabling legislation, or other legal requirements.
Further, the City is able to report positive balances in all three categories of net assets, both for
the govemment as a whole, as well as for its separate governmental and business -type activities.
5
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
The following table shows the changes in net assets during the current year, and as compared to
the prior year
Changes in Net Assets (in millions of dollars)
Summary Condensed Income Statement (normally presented in Moumids of dollars):
Gmemmental Activdies Businesstype ActivRies Total
2007 2006 2007 zoos 2007 2006
Revenue
99
93
-
-
99
93
Program revenue:
350
35.]
-
-
350
35.]
Charges for services
$ 165 $
1]] $
279 $
264 $
444 $
441
Operating grants and
contributions
82
86
-
-
82
86
Capital grants and
148
136
-
-
148
136
contributions
82
02
81
11
83
13
Gereral revenue:
-
-
255
241
255
241
Properly taxes
563
53.4
-
-
563
53.4
SftRshared revenue
89
91
-
-
89
91
Rental income and tees
15
1 1
-
-
15
1 1
Interest
43
37
16
11
59
48
Transfer and
69
79
15
16
84
95
miscellaneous
83
05
84
985
87
05
Total revenue
962
943
380
286
1262
122.9
Program Expenses
Gereral government
99
93
-
-
99
93
Public safety
350
35.]
-
-
350
35.]
Publicworks
259
252
-
-
259
252
Community and economic
development
11
16
-
-
11
16
Recreation and culture
148
136
-
-
148
136
Interest on longterm debt
26
i6
-
-
26
i6
Water and sewer
-
-
255
241
255
241
Gdtcoum
-
-
19
16
19
16
Housing
1 1
11
11
1 1
Total program
expenses
893
864
285
270
1178
1134
Chasgein Net Assets
69
79
15
16
84
95
Net Assets- Beginning of year
1614
1535
92.1
985
2535
2440
Net Assets - EM of year $
169.3 $
161A $
93.6 $
92.1 $
261.9 $
253.5
6
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
Governmental Activities
In reviewing the above table, it can be noted that revenues increased by $3.4 million and
expenses increased by $4.3 million. The significant factors impacting revenue include increases
in interest income ($1.1 million) and property taxes ($2.9 million). The most significant factor
impacting the increases in expenses related to interest on long-term debt due to the issuance of
new debt ($1.6 million), increases in water and sewer expenses ($1.4 million), and increases in
recreation and culture expenses ($1.2 million)
Business -type Activities
Livonia has three business -type activities. These include the water and sewer system, the
operating fund for the Fox Creek, Idyl Wyld, and Whispering Willows golf courses, and non-
federal senior housing at Silver Village, Newburgh Village, and 13 scattered site homes.
The following table shows the operating income (loss) before contributions, transfers, and
interest for each of these activities in the current and prior year:
(In thousands of dollars)
Water aM Sewer Goll Courses Housing
2007 2006 2007 2006 2007 2006
Operating Revenue $ 25,246 $ 23,433 $
1,678 $
1,653 $
1,296 $
1,279
Operating apenies (24,780) (23,338)
(1,825)
(1,755)
(960)
(948)
Operating Income(Lms) $ 466 $ N $
(147) $
(IN) $
336 $
331
Capital Assets and Debt Distribution
At the end of fiscal year 2007, the City has $391 million invested, before depredation, in a wide
range of capital assets, including land, buildings, infrastructure, public safety equipment,
computer equipment, and water and sewer lines.
Debt of $38.2 million related to the construction of the above-mentioned capital assets is
reported as a liability in the governmental activities in the statement of net assets.
Debt related to the water and sewer system totaling $13.3 Trillion and debt related to the
housing and golf course activities of $3.5 Trillion is recorded as a liability in the business -type
activities in the statement of net assets. This debt represents construction of and improvements
to existing water and sewer lines and improvements to the golf course and City residential rental
facilities.
7
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
Significant additions to capital assets during fiscal year 2007 indude $4.2 million invested in the
construction of infrastructure and improvements to roads and $2.8 million invested in
equipment and vehicles. There were no significant disposals of capital assets during fiscal year
2007.
The City's Funds
The fund financial statements begin on page 13 and provide detailed information on the most
significant governmental funds - not the City as a whole. Funds are created to help manage
money for special purposes, as well as to show accountability for certain activities, such as
special property tax millages. The Citys major governmental funds for 2007 include the General
Fund, Community Recreation Fund, and Refuse Disposal Fund.
The City's governmental funds reported a combined fund balance of $37.9 million. This is an
increase of approximately $2.8 million for the year. The increases were caused primarily by
ongoing cost containment efforts to restrain spending at a level below expected revenues.
General Fund Budgetary Highlights
Over the course of the year, the City administration and City Council monitor and amend the
budget, primarily to prevent expenditures in excess of budget, as required by the State of
Michigan Budget Act. The final amended budget included $800,000 less in revenues and
expenditures than the original adopted budget. The primary causes of the budget adjustments
were a result of amending the General Fund budget to remove the loan proceeds and related
costs for the City Hall HVAC project, whidi was deferred to 2008 and to reflect the interest
earnings that exceeded original projections.
Actual General Fund revenues were approximately $851,000 below the final budget
Specifically, state -shared revenues were $250,000 less than the final budget because of reduced
sales tax collections by the State of Michigan, permit revenue was $238,000 las than the final
budget because of reduced building activity, and miscellaneous revenue was $535,000 less than
the final budget because of reduced transfers from other funds.
Actual General Fund expenditures were approximately $1.1 million below the final budget. All
departments held expenditures below the final budget.
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
Current Economic Conditions
The City continues to maintain positive fund balances in each of its funds. However, concerns
arse when considering the revenues and expenses that the City is facing in upcoming years.
The majority of the City's revenue base is constrained by factors outside the City's control.
Property taxes, state -shared revenue, and interest income total 72 percent of the City's total
governmental activities revenue. Property tax revenue may actually decrease in coming years as
a result of decreased property values. The State of Michigan has experienced budget deficits
and has significantly reduced revenue-sharing payments to local governments to help reduce
their deficit Interest rates are declining as a result of rate cuts from the Federal Reserve.
On the expense side, certain expenses continue to rise at a rate far in excess of inflation. In
particular, healthcare expenses have continued their trend of double-digit increases. Hiring and
capital outlay freezes, among other measures, have been implemented in previous years to
reduce expenses to the level of available revenue. We are committed to living within our
means, although the result may be diminished programs and service response capabilities.
Contacting the City's Financial Management
The financial report is designed to provide our citizens, taxpayers, customers, investors, and
creditors with a general overview of the City's finances and to show the City's accountability for
the money it receives. If you have questions about this report or need additional financial
information, contact the director of finance at the City of Livonia, 33000 Civic Center Drive,
Livonia, Michigan 48154.
City of Livonia, Michigan
Statement of Net Assets
November 30, 2007
The Notes to Finamial Statements are an 10
Integral Part of this Statement.
C
B�adurtene
AAMteinal
naMea
naMea
Tonl cormonea ums
Assets
C nannlrvame65(Nae3)
s d6,m?2e1 s
15zz1m s
61 SO an s
301H57
Pseud¢
Tam
25608
29,08
-
Qetarters
undrai
1015491
-
4]491]
-
dred 0]
-
Wake�'avre9
949
-
4119
-
Duefmi ahergoa0m
QrehomanugwemrteaMaluniti
40]1232
-
Our 232
-
VEBP
108]BBfi
imm
4836
O[nu
22]09]8
Sir 1w
2822H05
190]
mertoen praala apuinlNa, 27171 naovrs
2223129
fid. Sinme
28R34H
-
IrsGllrten[mariedS
Audi
-
PahlRead'(Nod4) )
93398]
74H road
]dBR, 2"lv
416M
Ba16P3
-
(aplleleaOnMmeal
6
35959420
5726M44t141
213D5,513
DeprNondepretiIDleapamed
DepreRaole apinal x'05 -Na
193 94193fi
]443e 121
2053e0 an
sai
99z5>a7
Todammus
22494713
11474 M
3L ar i]
1408832
oaomeea
Aaarto pareole
5327636
92$91
629,013
141008
Acuuei oter l Pouma
208334
1Q20]
218283
18]55
Damned revenue Mae 13)
912m
6W914
1$43,01
-
Duero dinner never unread unit
-
1 S m3
195043
-
Bmaanaaepalts
-
225 em
25906
-
Noomrroft Inor ned Mae])
Due wRnln we your
4Crdo222
20]249
617301
Mrs
Due In nu re train one year:
B ma and aplhuema pareol a
M7076H
14 90494
51x,210
4681,00
Condemned add enum and l nouran a dalrre
5076822
2248)1
60dri
-
Darnall rare lanll0y
696.004
-
0604
-
Propetynaelaany
TonallanllRled
5,27COG
21 Od91
]I,m4i
640,813
No[Aesh
mate6ln aplGl amed Ner a rates flea
120751
Vsee 193
19653,07
5366T5
Pao-aeu
Community raramr
59]430
-
59])x0
-
Munklpalrtme
6229147
-
6So 147
-
Ararrma,an6Afiervalla
4390691
_
43 1
-
araitiaNsnDarealdn[Ilg
231314
-
2311814
-
u0ran
1118208
-
1182,0
-
wbucffieimrrrrunlatlon
355a]s9
-
390,]0
-
4blublatelloReRma
1793119
-
1PA, 119
-
Deasenlne
W03R
-
93,92
-
Court bi improvements
1541949
-
1541919
-
Dra2gepruje0a
1272W
-
127M
-
QpAF prula6 termini
96#694
963,04
-
Restricted for urbinimomentous
-
31293940
3,290,900
-
Waaandmaer
IIiOY{192
22102192
uuahlded
13091518
3509
1382430
2191
Tonal neraend
a 16oz w S
93160 j]3 S
10,9M.480 S
]$6504
The Notes to Finamial Statements are an 10
Integral Part of this Statement.
City of Livonia, Michigan
The Notes to Financial Statements are an 11
Integral Part of this Statement.
Program Revenues
0peratmg Grams
Charges
and
Gariel Grants antl
Exiaencses Senecas
Contributions
Contributions
Furctian9Ryrars
PliGrery9ovearent
Governmental adheres
General government
8 9,(3646 8 3,996,6%-
35,636$6] 6,011,125
1213,070
-
ruledWorly
PutlKwwk
25,154,733 I,]3],185
6255206
175,5£
antleewenb aevelnpmem
i11a,496 2]9,996
115,s30
-
Recreation
Reereminnaongterre
w,]n,a96 4516,5e3
116,136
-
imerestnnlasg-tern aeN
zw.531
Total governmental activities
a9,3f696r 16j355V
8,146231
175,5£
Busnesel aeivaias:
Water antl serer
25,11r5293 20951,302
-
118,255
Calfcwrse
1852,192 1,610,M0
Hwang
1,109,571 12M,931
Taal wsinesel adheres
2824746 27,926275
-
118,255
T aal purely government
$ 117,788,m $ 44A55,788
$ 8,186,231
$ 293,821
Composed note:
Ecwom: Development Corporation
s w7 sPlymouth
Road Developmmnt Authority
1575,318
Taal component iniis
$ 1,576,285 $
$
$
Genera'revenues .
Propenytaxas
statesharetlrevenue
DnrasVotetl%esantl other
Interest
Miscellaneous
Transkrs
Taal general revenues and
tramkrs
Change in Net 71seb
Net AssetsBeginningofyear
Net Asse6- Entl ofyear
The Notes to Financial Statements are an 11
Integral Part of this Statement.
Statement of Activities
Year Ended November 30, 2007
Not (Er me) Revenue wd Chages in Not ek
Prim C wrmmnt
Gw rnmenbl Busines[y
xoroes Mullis Tdl Ca�neN Nngs
8 (5913,Q 2) 8
- 8 (5,93,Q52) 8
(2],61z691)
- (Z1,612,G91)
(1],6855]6)
- (n,B 5]6)
(U7,0o9,
- (C7,00)
(60151.798)
- (10,zlM)
(2.W53
(2Fd3S31)
(U,003,05� -
(60003 Q57)
- (015936)
(015936)
- (18,152)
(18,152)
185,352
85,352
lmzos
_
- (088.7266)
(E .7266)
(U,W0. 7) (088.726)
(G,W,183)
w
(15]5 8)
(15]6,M)
MAD, 'b
-
5624829E
I,713,3A
891z5s
-
8,9125s
-
lmzos
-
342,055
-
4, ,189
1615069
5,910518
15zd
3],,563
29],626
6!5,183
2g6W
(115660,
115,000
71,326,666
2,628629
]3,350635
1,SBS&e
6883109
1619,363
8,562 Q52
369,54
161]]3958
W,W ,076
2 ,,,628
72.55,525
S 16825),10] $
93,68],3]3 $
261,900,080 $
7565,ON
12
City of Livonia, Michigan
Governmental Funds
Balance Sheet
November 30, 2007
bajonSpecial Revenue Fund:
Other Nonaaujor
Corral Rehuse Dbpnal Governmental Total Govemmenul
General Fund Recreation Seldom Fund: Fund:
msels
Current area:
Cash and nv¢arena
8
4,681 8
7,1l 8
8325511 8
is,ll 8
38.329.712
Rec Ivabes.
Tares
130,411
16,855
58957
3,381
asaujis
Stall assessinent;
4]1,91]
474,917
Workeas'<ompzr®0m
remg
]9,419
Due flown other govemarental Pits
2,066,817
-
-
2804,115
1,011X32
Emporl Rejoined System add WBH
1933886
-
-
-
1933886
Other
915X3'52
edds
58,Kil
Manor
1,181,147
lmnchol prepaid dresses and&"to
522,121
-
-
-
522,421
Rsaiaedasets IN do s,
931,937
933987
Toal area
$
9,181,526 $
],1989]0 $
8,135,161 $
21,735,412 $
46,853,359
Labil lis and Fund Balanced
Hobililied
Hcmuna pal
8
1.233972 8
126,937 8
1,488,561 8
2123,163 8
5,327,636
Hcauedandoner hearses
1aw"12
30910
rode£
85,150
1,938s69
Delerredrevenue more 13)
ZT11111
880,96]
Q5691
493,149
1936E9s
Toal at itis
3361$26
1338,796
1j 'ea1
2701,452
8,955603
Fund deanced
Reserved(w preteidandlnventory
469,835
-
-
-
669,835
Reservedlwapalimprovenena
-
-
-
961,®1
nada%
Unreserved
Deea9mtetl-Reported in
Special Revenue Fund
-
628807
12s651
1720,413
2,1/7,901
Cantel Projects Fund
39,853
39,853
Dndeignaled-Reported in
General Fond
5,08165
-
-
-
5,08165
Special Revenue Fund
-
5238H9
6,768886
11171,969
23,163524
Died Service Fund
-
-
-
2],4]3
27,173
Canal Projects Fund
slassis
5,105508
Trial Fund deduced
6,128000
5,8529,476
tura 10
19023.910
3],83],956
TdaNiablined and Fund debnced
$
9,184,526 $
7,198270 $
8,135,161 $
21,735,412 $
46,853,359
The Notes to Financial Statements are an 13
Integral Part of th'e Statement.
City of Livonia, Michigan
Governmental Funds
Reconciliation of Fund Balances of Governmental Funds to Net Assets of
Governmental Activities
November 30, 2007
Total Fund Balances of Governmental Funds
$ 37,897,956
Amounts reported for governmental activities in the statement of net
assets are different because:
Capital assets used in governmental activities are not financial resources
and are not reported in the funds
166,911,356
Certain receivables are expected to be collected over several years
relating to special assessments and delinquent personal property taxes
784,121
Fines and fees are not available to pay for current year expenditures
1,369,761
The changes in liabilities for accrued interest payable, compensated
absences, and general dainu are recorded when incurred in the
statement of activities:
Compensated absences
(6,762,820)
Accrued interest payable
(149,510)
Landfill closure and postclosure liability is not due and payable in the
current period and is not reported in the funds
(696,084)
Long-term liabilities are not due and payable in the current period and
are not reported in the funds
(38,153,635)
A portion of the Internal Service Fund (self-insurance) is included as
part of governmental activities
7,055,962
Net Assets of Governmental Activities
$ 168,257,107
The Notes to Financialstatements are an 14
Integral Part of the Statement.
City of Livonia, Michigan
Governmental Funds
Statement of Revenue, Expenditures, and
Changes in Fund Balances
Year Ended November 30, 2007
Tda'revenue 52212,758 7,920,]]5 12,121 23836957 scrim ]
Expenditures
General gwemmenl
8180336`1
Will Spedal revenue Fund
-
-
8,M3,3F51
Pubicsakty
32&57521
-
Other Nonnejw
Total
33905,190
Pubicwwks
Com.muniy
Races Diap®I
Garemmenlal
Garemmenlal
27,985,370
General Fund
Recreation
System
Fund
Fund
Revenue
Commintyand economic development
]61,]49
-
-
652,667
PropzMtarsa
s 29j52531
s 3,801.9,12
s 11,489995
s 11232,969
s 56.11
Dcemesandprints
2,110,827
-
-
-
2,110827
Specialaesessmems
-
-
-
1,181,030
1,181,030
Intemo+arnmental revenue:
Tdd espendWres
09,838,893
6,109950
11,859,827
25,411
State sources
8912585
-
-
6,382036
15298621
Federal sources
257,962
-
-
1,082,614
1b8596
Charges M services
3310,551
3,]099]9
116,x50
1100.160
8265,161
Intereat
1952,783
011,858
x58,172
1,055091
3879,3M
Finn and brkiWres
3,E65006
-
-
611,017
0536,023
Miscelaneoss revenue
2246,080
936
x0,37£
?066636
3}58,6]8
Tda'revenue 52212,758 7,920,]]5 12,121 23836957 scrim ]
Expenditures
General gwemmenl
8180336`1
-
-
-
8,M3,3F51
Pubicsakty
32&57521
-
-
1,0,17,66E)
33905,190
Pubicwwks
3,696061
-
11,859,827
12027,082
27,985,370
Recreation andculWre
157,870
6,169950
-
6,055,719
11
Commintyand economic development
]61,]49
-
-
652,667
1,11
Enp'ose benefis, Insurance, and other
1,861903
-
-
-
1,861,903
Cartel moray
258,021
-
-
2272,1isa
2530,875
Deal sere
2,960556
2,960,556
Tdd espendWres
09,838,893
6,109950
11,859,827
25,411
93225,237
Excessd Revenue Over (Under) Expenditures
2373,865
1,814,86
269,760
(1579,610)
2878,840
Other Financing Sources (Used
issuance of long term deet M note n
-
-
-
31,025,000
31,025,000
Parnents to escres, starts for Fond refunding
-
-
-
(31625.00q
(31625.00q
Tsharers in (Note 5)
40,000
-
-
10,6x6,414
10,686,414
Trzmrers cut (Note 5)
(2111pa)
(2173 ]60
(6516 }53t
(10801414(
Tda' deer financing sources (uses)
(zmi z94(
(2173760
4,130,061
(11600%
Net Change in Fund Balances
302571
(358,9,12)
269,760
2550,0.51
2,763,840
Fund Balance-Begmmotyear
5,817,429
6218018
6619,780
16078089
35,130.116
Fund Balances-Enddyear
$ 6,10,000
$ 5,thri $
6,889.5,10
$ 19,028940
$ Mantissa
The Notes to Financial Statements are an 15
Integral Part of this Statement.
City of Livonia, Michigan
Governmental Funds
Reconciliation of the Statement of Revenue, Expenditures,
and Changes in Fund Balances of Governmental Funds
to the Statement of Activities
Year Ended November 30, 2007
Net Change in Fund Balances - Total Governmental Funds
$ 2,763,840
Amounts reported for governmental activities in the statement of
activities are different because:
32,016,745
Governmental funds report capital outlays as expenditures;
in the statement of activities, these costs are allocated over
27,297
their estimated useful lives as depreciation
8,787,504
Depreciation, net of disposals, is recorded as an expense in the
(31,025,000)
statement of activities but not in the governmental funds
(6,718,406)
Loss on disposal of fixed assets is recorded in the statement
551,486
of activities but not in the governmental funds
(127,996)
Certain revenue reported in the governmental funds was
(17,892)
recorded as revenue in the statement of activities in previous
years
219,575
Repayment of bond principal is an expenditure in the
governmental funds, but not in the statement of activities
(where it reduces long-term debt)
32,016,745
Interest expense is recorded when incurred in the statement
of activities
27,297
Bond proceeds are not reported as financing uses
on the statement of activities
(31,025,000)
Net decrease in accumulated employee sick and vacation pay is
recorded when incurred in the statement of activities
551,486
Increase in landfill liability is recorded when incurred in the
statement of activities
(17,892)
A portion of the Internal Service Fund (self-insurance) is also
included as governmental activities in the statement of activities
405,996
Change in Net Assets of Governmental Activities
$ 6,883,149
The Notes to Financial Statements are an 16
Integral Part of this Statement.
City of Livonia, Michigan
Proprietary Funds
Statement of Net Assets
November 30, 2007
&I
Current male:
Cash andinv¢irrents
Accounts reconvene:
Cust ers
Omer
Invi aefed expenditure, and&"to
Total current assets
Noncurrent asset:
R¢tnded asset IN me 8)
N odeamane assets
Oeaeaiana assets Not
Total noncurrent mob
Total asset
NolnnP!
baa Enterprise Fund: Enterprise Find
Total Enterprise Internal seM<e
Walerand Serer Hmsim GdfCmrse Fund: Fund
s 14,058,711 s
405,126 s
- s
14,46393] s
b,VaF.4m
1o,aul
-
-
10,aw,v1
-
334,781
2j
19,931
35],18]
-
921,713
925,3]]
4263
925976
1,831,860
16,82
1,486
102507
-
Duemmhersosemnenblunt
25769,656
407,681
24,194
26201531
18,291
7,482,406
-
-
7,482,406
-
561,657
1581948
3,542688
5,726,93
-
6l,93s,150
4,391271
2,111720
74,438,141
520,818
4234
2,697249
Total current haHines
5,056,718
]59]9213
5973219
5,®4288
87,646F10
Nmmrtem hablities Lms-brm Ru- Net of
181748,869
6388988
5,718682
113,848,171
18,29360
Habililies
Current III
Accounts rescue
711
44,363
161370
925,3]]
-
Haruedandmherhabrnes
84299
16,82
1,486
102507
-
Duemmhersosemnenblunt
1950,473
-
-
1950,473
-
Deterred revenue mote 13)
00,914
-
-
00,914
-
8mdandRpait
102,191
123$05
-
225996
-
Current pndimoflms4armoNsators
1572167
520,818
4234
2,697249
Total current haHines
5,056,718
]05,]68
n8,18
5932516
-
Nmmrtem hablities Lms-brm Ru- Net of
current portion (Note 7)
1193]2]8
3&8678
149T 948
24896/!
Total liadlAi¢
16,993,966
3,74l
178,818
28918,6&t
24896/!
Net risen
Invested In cartel made Net of related Ru
59,43170
2073219
5,®4208
6]5orsue
-
Rstridedfwwtlnancereryrenenb
3258,968
-
-
3258,988
-
unrsVided
22,872,192
161215
(605816)
22887591
7,806,638
Total net mob
$ 84,754,881 $
2,634,34
$ 5548,392
92937,787 $
7,80.5,638
Nnwms repodedfor bsineartype activit es in the sbbrrent
of net mob are dRerent because a
potion of the Internal sella Fundis induced as
Wsinesel adiwies
749,666
Net Assets of Bminaslype!¢tivities
$ 93,687,373
The Notes to Firencialstatements are an 17
Integral Part of the Statement.
City of Livonia, Michigan
Proprietary Funds
Statement of Revenue, Expenses, and Changes in Net Assets
Year Ended November 30, 2007
Nminajor
Major Enterprise Funds Enterprise Fund
Taal Enterprise Internal Samoa
Walerand Sewer Hmsng GofCourse Fuld Fund
Operating Revenue
customer forms
$ 23,985,695
$ -
$ - $
23,965095 $
-
Finesandfwfeiwres
746,470
-
-
746,476
Samoa connections
154,762
-
154,762
-
Greem%es
-
-
1511919
1511919
-
Gdf Gas
-
-
94524
94524
-
CitycmNWtims
13,411588
Rental income
-
1291,323
-
1294,323
Other revenue
359,29
2,299
71996
0.33505
T otal operating revenue
25,241
1295,622
16]8,441
26220,996
13,411586
Operating Expenses
Coat ofwater
7410,093
7,476,696
-
Costcremagedsp®I
9,479,229
-
-
9,439220
-
systemmsintenanceandoperatim
4,306,789
-
-
4,306,789
-
Generalandadministrative
961.171
-
-
961,171
-
Oelxeciatim
2603,122
165,508
11
2956,076
-
Reinsurancecdargesandcams
-
-
-
-
13579512
S tarns atlwages
-
353,650
131,364
485,034
-
suppose
-
11,490
208,124
219,614
-
Otherservi<¢aticharges
-
429,792
1298,300
1]28,092
-
roaloperatingexpenses
24780,400
960,440
1825254
27,566 094
13557512
Operating income (Loss)
465,535
336,162
n468131
654,904
(10.5,924)
Nmoperating Revenue (Expens)
Lms on me ofasets
-
-
(3,103)
(3,103)
Interest income
1583,039
32,392
-
1,615,409
449805
Interest expense
(641507(
(13]541)
-
(]]9048)
-
roalnmoperatingre,enue
defense)
941510
(15149)
(3103(
833258
449805
Income(Loss) - Before cmtGWtms and transfers
1407,045
231,033
(149916)
1688,162
303,881
Cl Contri Wted turner Oevebpers
and Grants
116,255
-
-
118255
-
TrannerslnBNde5)
-
-
115,666
115,000
-
Change inNet Assets
1525,300
231,033
(34916)
1,721617
303,881
Net Assets- Beginning of year
83.229.581
2,403,91
5583,308
91216290
7501]49
Nadal Endofyear
$ 84,754,881
$ 2634,dot
S 5,5481392 $
92937,707 $
7,805,630
Net Change in Net Assets- Tda Enterpise Fund
$
1721,417
Ammon[; reported for wsineslype activates in the statement ofactivates
are different
mfzose the Internal Samoa Fad a allocated
pertalym bmineartype
adiNRes
(102,114)
Chmgein Nel Ametsd BminaslypellctwRm
$
1,619,30.3
The Notes to Financial Statements are an 18
Integral Part of th'e Statement.
City of Livonia, Michigan
Proprietary Funds
Statement of Cash Flows
Year Ended November 30, 2007
No a or
XApr Enterprise Fund Enterprise Fund
Taal Enterprise Imemalsemce
The Notes to Financialstatements are an 19
Integral Part of this Statement.
mterand Sever
Housng
GiNfCourse
Fund
Fund
C6M1 Flwvs frown Operating Activities
Rec iprs tom customers
8 239,12,798
8 12 .192 8
1.676,6is
8 26.913,658 8
13011588
prymentstosuladers
(1],]60527)
(442075)
(11685,,162)
(N,SP3,Yd)
(140]60]7)
prymentstonvoyees
(3,89320.5)
(32],,165)
035,973)
(4,356,913)
Other receipr9tarments
(711351)
392
(4,263)
(71,222)
-
N at ash proaidtl by (used in) operating
activitles
15n,667
524,641
(09,022)
zoD,289
(I,o6,1$ad
CmM1 Flwvs Van Nondaptal Financing rltlrvilia- Net
vamrersmaherrand
-
-
ns,000
11,000
-
CesM1 nwrs frown carnal and ae atea Financing
Activities
cobtritutmm Mom customers
118255
-
-
118,255
-
pnnaprlaminterestteimnlog-term debt
(1,927,6501
(,1,023393)
-
(59511(13)
-
Proceedfranissanceofdeal
-
3380,000
-
3330,000
Purchase of carol assets
(8r
(5910)
(421875)
(902,92)
-
N at ash used In aptal and related
fimncing activities
(2,663582)
(6,19383)
(42,875)
(3,355,638)
-
CmM1 Flwrs frown Investing Activities
Interest received on investments
1583,817
32392
-
1,61,489
4,19885
N at rural of investment x(rvities
(28135%
24,915
(3179)
(10.536)
166,873
N at ash proaidedty (used In) investing
activities
1381,w
5]38]
(3,10)
1,435,811
6158]8
Net increase mel in Cash ala Cash Equivalents
295,832
(67352)
-
MAD
(4,19,01)
Caslhand CasM1Equivaenls-Oecenber1,2886
1],183 E98
363,158
-
17,551,648
6,6229,17
Caslhand CasM1Equivaenls-Nwember38288]
$ 17,48,13n
$ 295,798 $
$ 1],]811,128 $
6,18936
Balance SM1cet Clasificalion of Cash ala Can Equivalents
Cash and Investments
a 14,858,711
$ 485,126 $
-
$ 14,,163,07 a
8,45],4,1]
Restricted assets (Note 8)
7221652
7221652
T oel ash and investments
21238363
485,126
-
21,685,489
8,45],4,1]
as investments
(3]96 rt
(109,d
(390369)
(2233511)
N at ash antl ash succulents
$ 17,48,13n
$ 295,798 $
$ 1],]811,128 $
6,18936
The Notes to Financialstatements are an 19
Integral Part of this Statement.
City of Livonia, Michigan
Proprietary Funds
Statement of Cash Flows (Continued)
Year Ended November 30, 2007
Reconciliation of Operating Income (Los) to Net Cash
from Operating Activities
Opaffiing Income (loss)
Adjustments to reconcile operating Intone two
to net cash Tom operating activities
Deprecation
Changes In assets and liadNies
Re< cods
Inventory, prefeid, am dpaits
nccamso
eauetlandmther
Itlrlmes
Detailed revenue
Boodam dpats
Net ash frosted by (wed m operating
Nonmaior
all Enterprise Fund Enterprise Fund
Tmal Enterprise Imemal Semce
mterantl Sewer Housing CdfCourse Fund Fmtl
8 N ,ins 8
336,182 8
046.81B) 8
651,96E 8
(135924)
2663,122
165566
11
2956W6
-
(1380243)
(2430)
(1,165)
h':st,33a)
-
(116591)
-
(4,263)
rat'sal
(834,46(s
749,86)
162g6
(9],659)
6163,566
(227,492)
(294,100)
8,698
(5,963)
",971)
132981
(41
(449.325)
390
390
activitia $ 1,577,66/ $ 44,644 S(69622 $ 2,613289 $ (1!l
Nanrmh floating, Cal and Financing Activities- During the year ended November 30, 2007, there were no water and sewer lines d>m@tlto the
City'sV✓aterantl Sewer Funtlrydrvelopzrs. The Housing Fund ladnoash financing adivity radiance in the amount of83386006.
The Notes to Financial Statements are an 20
Integral Part of this Statement.
City of Livonia, Michigan
Fiduciary Funds
Statement of Net Assets
November 30, 2007
Liabilities
Accounts payable
Pension and Other
156,712
Employee Benefits Agency Funds
Assets
4,404,779
Cash and cash equivalents (Note 3)
$ 990,613 $ 13,613,710
Investments (Note 3):
-
U.S. government securities
58,776,216 -
Common stock
126,487,542 -
Corpoate bonds
45,164,757 -
Foreign stock
2,901,156 -
Mutual funds
30,643,080 -
Real estate investment trust
15,547,137 -
Securities lending short-term collateral bank
investment pool
22,972,348 -
Due from other governmental units
85,671 -
Due from other agency funds
986,028 -
Other receivables
952,868
Total assets
305,507,416 $ 13,613,710
Liabilities
Accounts payable
3,388,557 $
156,712
Accrued and other liabilities
-
4,404,779
Due to other governmental units
-
8,066,191
Due to other trust funds
-
986,028
Amounts due to broker under securities lending
agreement
22,972,348
Total liabilities
26,360,905 $
13,613,710
Net Assets- Held in trust for pension and other
enployee benefits
$ 279,146,511
The Notes to Financial Statements are an 21
Integral Part of this Statement.
City of Livonia, Michigan
Fiduciary Funds
Statement of Changes in Net Assets
Pension and Other Employee Benefits Trust Funds
Year Ended November 30, 2007
Pension and Other
Deductions
Benefit payments 11,501,321
Medical benefit payments 6,401,302
Administrative expenses 146,123
Refunds of contributions 343.783
Total deductions 18,392,529
Net Increase 11,190,474
Net Assets Held in Trust for Pension and Other Employee
Benefits
Beginning of year 267,956,037
End ofyear $ 279,146,511
The Notes to Financialstatements are an 22
Integral Part of this Statement.
Employee Benefits
Additions
Investment income:
Interest and dividends
$ 9,356,404
Net appreciation in fair value of investments
13,401,303
Less investment expenses
(617,357)
Net investment income
22,140,350
Securities lending income:
Interest and fees
1,391,607
Less borrower rebates and bank fees
(1,314,167)
Total securities lending income
77,440
Contributions:
Employer
6,455,607
Employee
909,606
Total contributions
7,365,213
Total additions
29,583,003
Deductions
Benefit payments 11,501,321
Medical benefit payments 6,401,302
Administrative expenses 146,123
Refunds of contributions 343.783
Total deductions 18,392,529
Net Increase 11,190,474
Net Assets Held in Trust for Pension and Other Employee
Benefits
Beginning of year 267,956,037
End ofyear $ 279,146,511
The Notes to Financialstatements are an 22
Integral Part of this Statement.
City of Livonia, Michigan
Component Units
Statement of Net Assets
November 30, 2007
Assets
Cash and cash equivalents
A¢ounts receivable
Capital assets (Note 4).
Nondepreciable capital assets
Depreciable capital assets- Net
Total assets
Liadlities
&count; payable
Accrued andother liabilities
Noncurrent liabilities:
Duewithamoneyear
Due in more than ore year
Total liadlities
Net Assts
Iniestetl in cegtal assets - Net of related debt
Unrestricted
Total net assets
The Notes to Financial3tatements are an 23
Integral Part of this Statement.
Economic Plymou0i Road
Deielopment Deielopment Total Compownt
amender Authority Units
$ 2,378 $ 3,686,699 $ 3,609,077
19,500 - 19,500
- 474,448 474,448
9,925,867 9,925867
21,878 14, 007, 014 14, 028, 892
140 1,409,918 1,410,058
- 18,755 18,755
- 355,000 355,000
4,680,001) 4,680,001)
140 6,463,673 6,463813
- 5365,315 5,365315
21,738 2,178,026 2,199,764
$ 21,7219 $ 7,54],341 $ 7,565,079
City of Livonia, Michigan
Program Revenues
Operating Capital Grants
Charges for Grants and and
Expenses 5eraces Contnbu5ms CcMnlautoos
Economic Development Corporation -General
government $ 947 $ - $ - $ -
Plymouth Road Development Authonty
Community and economic development
1338,311 - - -
Interest on lung -term debt
23],82]
Total Plymou8i Road Development
Authority
1,575,338
Total governmental achvgies
$ 1,6]6,285 $ $ $
General revenues:
Taxes
Interest
Miscellaneous
Total general revenues
Change in Net Assets
Net Assets - Beginning of year
Net Assets - Entl myear
The Notes to Financial Statements are an 24
Integral Part of this Statement.
Net (Expense) Revenue and Changes in Net Assets
Emnomic Plymouth Road
Dowlopnent Dowlopnent
Corporation AuBmnty Total
$ (947) $ - $ (947)
- (1338,311) (1336,311)
(237,827) (237,827)
(1575,338) (1575,338)
(947) (1575,338) (1576,285)
-
1713,379
1713,379
133
152,327
152,468
20,000
7,543,341
20,000
20,133
1,865,706
16&5, 839
19,186 29368 389,554
2,552
7,252,973
7,255,525
$ 21,739
$
7,543,341
$
7,565,079
25
Component Units
Statement of Activities
November 30, 2007
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 1 - Summary of Significant Accounting Policies
The accounting policies of the City of Livonia, Michigan (the "City") conform to
accounting principles generally accepted in the United States of America (GAAP) as
applicable to governmental units. The folloxirg is a summary of the significant
accounting policies used by the City of Livonia, Michigan:
Reporting Entity
The City of Livonia, Michigan's legislative branch is governed by an elected seven -
member council. The City's administration operates under the overall direction of an
elected mayor. The accompanying financial statements present the City and its
component units. The component units are entities for which the City is considered to
be financially accountable. Although blended component units are legally separate
entities, in substance, they are part of the City's operations. The discretely presented
component units are aggregated and reported in a separate column in the government -
wide financial statements to emphasize that they are legally separate from the City (see
discussion below for description).
Blended Component Units - The Municipal Building Authority of Livonia is governed
by a board that is appointed by the mayor. Although it is legally separate from the City,
it is reported as if it were part of the primary government because its primary purpose is
to finance and construct the City's public buildings. The operations of the Authority are
reported as a nonmajor Debt Service Fund.
The City of Livonia Employees' Retirement System and the City of Livonia Health and
Disability Plan have been blended into the City's financial statements. These systems are
governed by a five -member Pension Board that includes three individuals chosen by the
City Council and/or the mayor. The systems are reported as if they were part of the
primary government because of the fiduciary responsibility that the City retains relative
to the operations of each system. The operations of the Employees' Retirement System
and the City of Livonia Health and Disability Plan are reported as a Pension and Other
Employee Benefits Fiduciary Fund.
Discretely Presented Component Units - The Economic Development Corporation
was created to provide means and methods for the encouragement and assistance of
industrial and commercial enterprises in relocating, purchasing, constructing, improving,
or expanding within the City so as to provide needed services and facilities of such
enterprises to the residents of the City. The Corporation's governing body, which
consists of eight individuals, is selected by the mayor and approved by the City Council.
Internally prepared financial statements for the EDC can be obtained from the City of
Livonia Finance Department at 33000 Civic Center Drive, Livonia, MI 48154.
26
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 1 - Summary of Significant Accounting Policies (Continued)
The Plymouth Road Development Authority was created to encourage additional
economic activity and growth in the Plymouth Road business district. The Authority's
governing body, which consists of 12 individuals, is selected by the mayor and approved
by the City Council. Internally prepared financial statements for the Plymouth Road
Development Authority can be obtained from the City of Livonia Finance Department at
33000 Civic Center Drive, Livonia, MI 48154.
The City has excluded the Housing Commission from this report. Even though the City
appoints the Housing Commission's directors, it does not have the ability to impose its
will.
Government -wide and Fund Financial Statements
The government -wide financial statements (i.e., the statement of net assets and the
statement of activities) report information on all of the nonfiduciary activities of the City
(the primary government) and its discretely presented component units. The effect of
interfund activity has been removed from these statements. Governmental activities,
normally supported by taxes and intergovernmental revenues, are reported separately
from business -type activities, which rely to a significant extent on fees and charges for
support. Likewise, the primary government is reported separately from certain legally
separate component units for which the primary government is financially accountable.
The statement of activities demonstrates the degree to which the direct expenses of a
given function (governmental activities) or segment (business -type activities) are offset
by program revenues. Direct expenses are those that are clearly identifiable with a
specific function or segment. Program revenues include (1) charges to customers or
applicants who purchase, use, or directly benefit from goods, services, or privileges
provided by a given function or segment and (2) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or
segment. Taxes and other items not applicable to specific programs are reported
instead as general revenue.
Separate financial statements are provided for governmental funds, proprietary funds,
and fiduciary funds, even though the latter are excluded from the government -wide
financial statements. Major individual governmental funds and major individual Enterprise
Funds are reported as separate columns in the fund financial statements.
27
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 1 - Summary of Significant Accounting Policies (Continued)
Measurement Focus, Basis of Accounting, and Financial Statement
Presentation
The government -wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the proprietary fund,
fiduciary fund, and component unit financial statements. Revenue is recorded when
earned and expenses are recorded when a liability is incurred, regardless ofthe timing of
related cash flows. Property taxes are recognized as revenue in the year for which they
are levied. Gants and similar items are recognized as revenue as soon as all eligibility
requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial
resources measurement focus and the modified accrual basis of accounting. Revenue is
recognized as soon as it is both measurable and available. Revenue is considered to be
available if it is collected 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. The
following major revenue sources meet the availability criterion: state -shared revenue,
state gas and weight tax revenue, district court fines, and interest associated with the
current fiscal period. Conversely, special assessments and certain federal grant
reirrbursements will be collected after the period of availability; receivables have been
recorded forthese, along with a "deferred revenue' liability.
Expenditures generally are recorded when a liability is incurred, as under accrual
accounting. However, debt service expenditures, expenditures relating to compensated
absences, and claims and judgments are recorded only when payment is due.
The City reports the following major governmental funds:
General Fund - The General Fund is the City's primary operating fund. It accounts for
all financial resources of the general government, except those required to be accounted
for in another fund.
Refuse Disposal Fund - The Refuse Disposal Fund amounts for the operations of the
refuse disposal activities of the City. Funding is provided primarily through a local
property tax levy.
Community Recreation Fund - The Community Recreation Fund accounts for the
activities of the Livonia Community Recreation Center, ice rinks, and certain other
recreation activities. Funding is provided primarily by a local property tax levy and user
charges.
IN
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 1 - Summary of Significant Accounting Policies (Continued)
The City reports the following major proprietary funds:
Water and Sewer Fund- The Water and Sewer Fund accounts for the activities of the
water distribution system and sewage collection system. Funding is provided primarily
through user charges.
Housing Fund - The Housing Fund amounts for the Newburgh and Silver Village
residential rental facilities. Funding is provided primarily through user charges.
Additionally, the City reports the following fund types:
Internal Service Fund - The Internal Service Fund is used to fund general, workers'
compensation, and employee health care liability claims and to purchase insurance that
provides excess general liability coverage for City employees and property. The fund is
finsnced primarily by charges to the various departments of the City.
Pension and Other Employee Benefits Trust Funds - The Pension and Other
Employee Benefits Trust Fund accounts for the activities of employee benefit plans that
accumulate resources for pension and other postemployment benefit payments to
qualified employees.
Agency Funds - The Agency Funds account for assets held by the City in a trustee
capacity. Agency Funds are custodial in nature (assets equal liabilities) and do not
involve the measurement of results of operations.
Private sector standards of amounting issued prior to December 1, 1989 are generally
followed in both the government -wide and proprietary fund financial statements to the
extent that those standards do not conflict with the standards of the Governmental
Accounting Standards Board. The City has elected not to follow private sector standards
issued after November 30, 1989 for its business -type activities.
As a general rule, the effect of interfund activity has been eliminated from the
government -wide financial statements. Exceptions to this general rule are charges
between the Citys water and sewer function and various other functions of the City.
Eliminations of these charges would distort the direct costs and program revenues
reported for the various functions concerned.
Amounts reported as program revenue include (1) charges to customers or applicants
for gods, services, or privileges provided, (2) operating grants and contributions, and
(3) capital grants and contributions, including special assessments. Internally dedicated
resources are reported as general revenue rather than as program revenue. Likewise,
general revenue indudes all taxes.
29
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 1 - Summary of Significant Accounting Policies (Continued)
When an expense is incurred for the purposes for which both restricted an unrestricted
netassets are available, the City's policy is tofrst apply restricted resources.
Proprietary funds distinguish operating revenue and expenses from nonoperating items.
Operating revenue 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 revenue of the City's proprietary fund (Water and
Sewer Fund) relates to charges to customers for sales and services. The Water and
Sewer Fund also recognizes the portion of tap fees intended to recover current costs
(e.g., labor and materials to hook up new customers) as operating revenue. The portion
intended to recover the cost of the infrastructure is recognized as nonoperating
revenue. Operating expenses for proprietary funds include the cost of sales and
services, administrative expenses, and depreciation on capital assets. All revenue and
expenses not meeting this definition are reported as nonoperating revenue and
expenses.
Property Tax Revenue
Properties are assessed as of December 31 and the related
property taxes become a
lien when billed. These taxes are billed on duly 1 and December 1 of the following year,
and are due on September 14 and February 14, respectively.
After the final collection
on the last day of February, real property taxes are added to the county tax rolls. The
2006 taxable valuation of the City of Livonia totaled $5.078
billion (a portion of which is
abated and a portion of which is captured by the PRDA).
The millages levied by the City
and the resulting revenues are as follows:
Approximate
Revenue
Purpose of Millage
Millage Rate (in millions)
Operating purposes
4.0447 $ 19.67
Police
0.8088 3.93
Police and fire
1.2134 5.89
Library
0.8088 3.91
Refuse and recycling
2.3746 11.49
Industrial development
0.0102 0.05
Debt service
0.1330 0.64
Roads, sidewalks, and trees
0.8893 4.30
Recreation
0.7855 3.80
Transit and capital inprovement
0.5000 2.43
30
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 1 - Summary of Significant Accounting Policies (Continued)
These amounts are recognized in the respective General, Special Revenue, and Debt
Service Funds financial statements as tax revenue.
The delinquent real property taxes of the City are purchased by Wayne County. The
county sells tax notes, the proceeds of which are used to pay the City for these
property taxa. Wayne County remitted its purchased delinquent real property taxes in
August 2007. Wayne County delinquent real property taxes have been recorded as
revenue in the current year.
Assets, Liabilities, and Net Assets or Equity
Bank Deposits and Investments - Cash and cash equivalents include cash on hand,
demand deposits, and short-term investments with a maturity of three months or less
when acquired. Investments are stated at fair value. Pooled investment income from
the Investment Agency Fund is generally allocated to each fund using a weighted average
of balance for the principal held for each fund on a daily basis.
Receivables and Payables - In general, outstanding balances between funds are
reported as "due to/from other funds." Any residual balances outstanding between the
governmental activities and the business -type activities are reported in the government -
wide financial statements as "internal balances." All trade and property tax receivables
are shown as net of allowance for uncollectible amounts.
Inventories and Prepaid Items - Inventories are valued at cost, on a first -in, first -out
basis. Inventories ofgovemmental funds are recorded as expenditures when consumed
rather than when purchased. Certain payments to vendors reflect costs applicable to
future fiscal years and are recorded as prepaid items in both government -wide and fund
financial statements.
Restricted Assets - The revenue bonds of the Enterprise Funds require amounts to be
set aside for construction, debt service principal and interest, operations and
maintenance, and a bond reserve. Unspent bond proceeds have also been set aside for
construction. These amounts have been classified as restricted assets, as well as
amounts on deposit at the county and the state being held for the construction and debt
service. The 1990 Street Improvement Capital Projects Fund has unspent bond
proceeds that have been set aside for construction and that have been classified as
restricted assets.
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 1 - Summary of Significant Accounting Policies (Continued)
Capital Assets - Capital assets, which indude 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 $5,000 and an estimated useful life in excess of one year.
Such assets are recorded at historical cost or estimated historical cost if purchased or
constructed. Donated capital assets are recorded at estimated fair market value at the
date of donation.
Buildings, equipment, and vehicles are depreciated using the straight-line method over
the following useful lives:
Infrastructure 33 to 40 years
Road rights 33 years
Buildings and improvements 20 to 50 years
Machinery, equipment, and vehides 2 to 20 years
Water and sewer distribution systems 50 years
Compensated Absences (Vacation and Sick Leave) - It is the City's policy to permit
employees to accumulate earned but unused sick and vacation pay benefits. Under the
Citys policy, employees earn benefits based on time of service with the City. All
vacation and sick pay is accrued when incurred in the government -wide and proprietary
fund financial statements. A liability for these amounts is reported in governmental
funds only for employee terminations as of year end.
Long-term Obligations - In the government -wide financial statements and the
proprietary fund types in the fund financial statements, long-term debt and other long-
term obligations are reported as liabilities in the applicable governmental activities,
business -type activities, or proprietary fund -type statement of net assets. Bond
premiums and discounts, as well as issuance costs, are deferred and amortized over the
life of the bonds usirg the effective interest method. Bonds payable are reported net of
the applicable bond premium or discount. Bond issuance costs are reported as deferred
charges and amortized over the term of the related debt. In the fund financial
statements, governmental fund types recognize bond premiums and discounts, as well as
bond issuance costs during the current period. The face amount of debt issued is
reported as other financing sources. Premiums received on debt issuances are reported
as other financing sources while discounts are reported as other financing uses. Issuance
costs are reported as debt service expenditures.
32
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 1 - Summary of Significant Accounting Policies (Continued)
Fund Equity - In the fund financial statements, governmental funds report reservations
of fund balance for amounts that are not available for appropriation or are legally
restricted by outside parties for use for a specific purpose.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the
period. Actual results could differ from those estimates.
Note 2 - Stewardship, Compliance, and Accountability
Constmction Code Fees - The City oversees building construction, in accordance
with the State's Construction Code Act, including inspection of building construction
and renovation, to ensure compliance with the building codes. The City charges fees for
these services. The law requires that collection of these fees be used only for
construction code costs, including an allocation of estimated overhead costs. A
summary of the current year activity and the cumulative surplus or shortfall generated
since January 1, 2000 is as follows:
Cumulative shortfall at December 1, 2006 $ (742,551)
Current year building permit revenue 2,062,800
Related expenses:
Direct costs $ 1,652,989
Estimated indirect costs 487,202
Total related expenses (2,140,191)
Current year net expenses (77,391)
Cumulative shortfall at November 30, 2007 $ (819,942)
Fund Deficits - The Goff Course Fund had a deficit of $145,816 at November 30, 2007
in unrestricted net assets. The deficit will be eliminated by cost management over
several years.
33
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 3 - Deposits and Investments
Michigan Compiled Laws Section 129.91 (Public Act 20 of 1943, as amended) authorizes
local governmental units to make deposits and invest in the accounts of federally insured
banks, credit unions, and savings and loan associations that have offices in Michigan. The
local unit is allayed to invest in bonds, securities, and other direct obligations of the
United States or any agency or instrumentality of the United States; repurchase
agreements; bankers' acceptances of United States banks; commercial paper rated
within the two highest classifications, which matures not more than 270 days after the
date of purchase; obligations of the State of Michigan or its political subdivisions, which
are rated as investment grade; and mutual funds composed of investment vehicles that
are legal for direct investment by local units of government in Michigan.
The pension trust fund and retiree health care fund are also authorized by Michigan
Public Act 314 of 1965, as amended, to invest in certain reverse repurchase agreements,
stocks, diversified investment companies, annuity investment contracts, real estate
leased to public entities, mortgages, real estate (if the trust fund's assets exceed $250
million), debt or equity of certain small businesses, certain state and local government
obligations, and certain other specified investment vehicles.
The City has designated five banks for the deposit of its funds. The investment policy
adopted by the Council in accordance with Public Act 196 of 1997 has authorized
investment in bonds and securities of the United States government and bank accounts
and CDs, but not the remainder of state statutory authority as listed above. The City of
Livonia's deposits and investment policies are in accordance with statutory authority.
As permitted by state statutes and under the provisions of a securities lending
authorization agreement, the City of Livonia Employees' Retirement System (the
"System") (see Note 10) lends securities to broker-dealers and banks for collateral that
will be returned for the same securities in the future. The System's custodial bank
manages the securities lending program and receives cash as collateral. Borrowers are
required to deliver collateral for each loan equal to not less than 100 percent of the
market value of the loaned securities. During the year ended November 30, 2007, only
United States currency was received as collateral.
The System did not impose any restrictions during the fiscal year on the amount of loans
made on its behalf by the custodial bank. There were no failures by any borrowers to
return loaned securities or pay distributions thereon during the fiscal year. Moreover,
there were no losses during the fiscal year resulting from a default of the borrowers or
custodial bank.
34
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 3 - Deposits and Investments (Continued)
The City of Livonia Employees' Retirement System and the borrower maintain the right
to terminate all securities lending transactions on demand. The cash collateral received
on each loan was invested, together with the cash collateral of other lenders, in an
investment pool. The average duration of such investment pools as of November 30,
2007 was 129 days. Because the loans are terminable on demand, their duration did not
generally match the duration of the investments made with cash collateral. On
November 30, 2007, the System had no credit risk exposure to borrowers. The
collateral held and the fair market value of the underlying securities on loan for the
System as of November 30, 2007 was $22,972,348 and $22,421,657, respectively.
The City's cash and investments are subject to several types of risk, which are examined
in more detail below:
Custodial Credit Risk of Bank Deposits
Custodial credit risk is the risk that in the event of a bankfailure, the City's deposits may
not be returned to it. The City does not have a deposit policy for custodial credit risk.
At year end, the City of Livonia had $42,121,453 of bank deposits (certificates of
deposit, checking, and savings accounts) that were uninsured and uncollateralized. The
City of Livonia believes that due to the dollar amounts of cash deposits and the limits of
FDIC insurance, it is impractical to insure all deposits. As a result, the City of Livonia
evaluates each financial institution with which it deposits funds and assesses the level of
risk of each institution; only those institutions with an acceptable estimated risk level are
used as depositories.
35
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 3 - Deposits and Investments (Continued)
Interest Rate Risk
Interest rate risk is the risk that the value of investments will decrease as a result of a
rise in interest rates. The City's investment policy does not restrict investment
maturities, other than commercial paper which can only be purchased with a 270 -day
maturity. At year end, the average maturities of investments are as follows:
Inveshnent
Primary Government
Bank investment pods
City of Livonia Employees
Relirement System
Corporate bonds
US agency securities
US Treasury securities
City of Livonia Retiree Health
and Disability Benefits Plan
Corporate bonds
US. agency secunhes
US. Treasury securities
Fair Value 0to5Years 61o15Years Overl5Years
$ 16,583,70.5 $ 16,563,70.5 $ - $ -
36,729,858 8,931288 9,829,647 18,768,995
39,697,000 1243,254 8,809396 29,644,350
6433187 - 5816751 616.436
8,434,987 2,439,874 2,516,586 3,479,247
11235,543 78,311 2,836,129 8,321,183
1,410,486 244,202 545,624 620,660
36
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 3 - Deposits and Investments (Continued)
Credit Risk
State law limits investments in commercial paper to the top two ratings issued by
nationally recognized statistical rating organizations. The City has no investment policy
that would further limit its investment choices. As of year end, the credit quality ratings
of debt securities (other than the U.S. govemment) are as follows:
ImesMent Fair Value Rating Rating Organization
Bankinseshnentpods
$ 3,838,763
Aaa
Moodfs
Bankinvesimentpocis
37,237,421
Al
Sw
Corporate bond
1263,552
A
Sw
Corporate bond
2,184587
A-
Sw
Corporate bond
688,899
A+
Sw
Corporate bond
969,829
A+E
Sw
Corporate bond
559,362
M
Sw
Corporate bond
957,136
AA-
Sw
Corporate bond
58,798
M+
S&P
Corporate bondAssetbacked
18,877,238
MA
Sw
Corporate bond
804,999
AME
Sw
Corporate bond
710,920
M{
Sw
Corporate bond
1,094,705
B
Sw
Corporate bond
150,588
B+
Sw
Corporate bond
233,450
B&
Sw
Corporate bond
335,039
BB+
Sw
Corporate bond
3,138,840
BBB
Sw
Corporate bond
1287,984
BB&
Sw
Corporate bond
5,000,441
BBB+
Sw
Corporate bondCMO146,102
NR
Sw
Corporate bond
5,401174
NR
Sw
Corporate bond
465,042
A-
Sw
Corporate bond
916,975
BBB+
Sw
US- agencies scourges
1,476,023
AAA
Sw
US- agencies scourges
49,0.56520
NR
Sw
US- agencies scourges -CMO
872,425
NR
Sw
US treasury securities
7,843,673
MA
Sw
Component Unit- Bank
investment pools
3,606,699
Aaa
Mootlys
37
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 4 - Capital Assets
Capital asset activity of the City's governmental and business -type activities was as
follows:
Balance Balance
D ecenrber 1, nationals and November 51,
2106 Reclassifications Additions Adusbrents 2001
Guvemmenbal ARivites
Capital assets not being deprecated
Land
E 34410,310 E
-
E - E
- E
34410310
Constmction in progress
335,222
(49,513)
1213,391
1409110
Subtotal
34805,532
(49,513)
1213,391
-
35,959,420
Capital aseb beingdegreaated
Inketructure
13953,533
-
3,583,452
-
11,536985
Read! nghts
16,1n,958
-
894430
-
17,065,385
Buildings and i"rovenents
90,524,491
-
610,118
-
91 135215
Ecuipnent and vehicles
28,411246
49,513
2,435,950
(1,036,012)
23,260691
Subtotal
25,063,234
49,513
7,524,610
(1,036,012)
215,511345
A nrulated depreciation:
Inketructure
28,062,189
-
2,195732
-
30251921
Read! nghts
4,726,051
-
491,249
-
5,211306
Buildings and i"rovenents
21516,191
-
1,9?0386
-
23,4465H
Ecuipnent and vehicles
18,594075
2,101039
(951,519)
19,731605
Subtotal
78,898,512
6,718,406
(951,519)
84,659,409
Netcapital asets being deprecated
130,164,122
805,214
(18493)
130941936
Net gmernnental capital asets
3164,970,254 $
32,019,595 3
(78,493) 3
163,911,356
38
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 4 - Capital Assets (Continued)
39
Balance
Balance
Decanter 1,
oisposalsand
Novernber33,
2006
Reclassifications
AcIdgions
Adiusbrent
2097
Busimss-type Activities
Capdal asset not being de precasted
Land
$ 5,164,436
$ - $
-
$ -
$ 5,164,436
Construction in progess
1216,184
(1470,013)
755,486
561,657
suuotal
6,W,620
(1470,013)
755,486
-
5,n6,093
Capdal asset bein g deprecated
Buildings and building irryroverrent
9,428596
-
-
-
9,428596
Land inryrovenent
2,880746
-
-
-
2,880,746
Vehicles
1,966992
-
5,911
(15,312)
1,951,441
Manhin any and equiprent
2,282,354
1W,iw
144ffi0
(100,890)
2,523274
Water and sewer distabsBon
115ss3,403
12ns13
116,936316
suuotl
1a,222,001
1470,013
1W's31
(116,172)
1a3,n6373
Accu irrigated deprecation:
Buildings and building irryroverrent
3,528370
-
188,787
-
3,717,157
Land inirovement
2,&6688
-
110,518
-
2,186206
Vehicles
967,400
-
170,647
(15,312)
1,142,675
Machinery and equipnent
1,326853
-
171,796
[87,617)
1,400,972
Water and sewer distribution
48526894
2,314328
50841222
suuotal
55445205
2,955&6
(113&9)
59288232
Net capdal asset being deprecated
75,716,796
1,470013
(2,8!5,545)
(3,123)
74,438,141
Net governimntal capdal asset
$ffi217416
$ $
(2,050,059)
$ (3,123)
$ 89.164234
39
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 4 - Capital Assets (Continued)
Capital asset activity for the City of Livonia's component units for the year was as
follows:
Balance Balance
Decenne. 1, November m,
M06 Additions 2(107
Campenent Unib
Development Authority:
Capital assets not! ping aepreci-Unit
$ 474,448 $
-
$ 474,448
Capital assets being aepreci-Unit
inyrovenents
15,219243
65,133
15,284,316
Accumilatecl depreciation - Lana
inyrovenents
4,591412
761,097
5,359,509
Net reptal assets being depreaated
10,621931
(695964)
9,925,867
Net ci ant a nit reptal assets
$ 11096279 $
(695964)
$ 10,400,315
Depreciation expense was charged to programs of the primarygovernment
as follows:
Governmental activities:
General government
$
501,106
Public safety
1,263,188
Publicworks
3,217,569
Recreation and culture
1,736,543
Total governmental activities
$
6,718,406
Business -type activities
Water and sewer $ 2,603,121
Housing 187,447
Golf course 165,508
Total business -type activities $ 2,956,076
40
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 4 - Capital Assets (Continued)
Constmction Commitments - The City has active construction projects at year end.
At year end, the Citys commitments with contactors are as follows:
Spentto Remaining
Date Commitment
Street and sidewalkprojects $ 6,442,468 $ 1,109,318
Storm water retention project 612,525 72,475
Utility related projects 465,778 3,086,672
Total $ 7,520,771 $ 4,268,465
Note 5 - Interfund Receivables, Payables, and Transfers
The City of Livonia Retiree Health and Disability Benefits Plan (the "VEBA") has an
interfund receivable of $986,028 from the Investment Administration Fund for
contributions payable to the VEBA as of the end of the year.
Interfund transfers reported in the fund financial statements are comprised of the
following:
Fund! Transferred From Fond Tansferred To Amount
Gereal Fund! Nonmajorgovemmental funds $ 1996,294'
Goff Course Fund 115,000
Total General Fund 2,111 294
Community Recreation Fund Nonmajor governmental funds 2,173,767 "
Nonmajor governmental funds General Fond 40,000
Noningorgovemmental funds 6,476,353 ...
Total nonmajor governmental funds 6,516,353
Total $ 10,801 414
Tanslerof unrestricted resources to finance capital projects and general obligation debt serWce in
arcadaze with budgetary au0iaraations
Transfer from a Community Recreation Fund far debt service
... Pnmanly transfers of gas and weight tax revenues Form Me Major Streets Fund and Final Streals Fund
to the Road and Si@walk Fond and Capital Improvement Fond in arcadaze with Act 51,
also includes transfer for debt service
41
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 6 - Leases
Capital Leases - The City has entered into a lease agreement as lessee for financing the
purchase of police, fire, and energy conservation equipment. This lease agreement
qualifies as a capital lease for accounting purposes and, therefore, has been recorded at
the present value of the future minimum lease payments as of the inception date. The
future minimum lease obligations and the net present value are as follows:
Years Ending
Governmental
November 30
Activities
2008
$ 229,690
2009
229,690
2010
229,692
2011
229,690
Total minimum lease payments
918,762
Less amount representing interest
(70,127)
Present value at November 30, 2007
$ 848,635
These leases are included in the long-term debt schedules in Note 7.
Note 7 - Long-term Debt
The City issues bonds to provide for the acquisition and construction of major capital
facilities. General obligation bonds are direct obligations and pledge the full faith and
credit of the City. Capital lease obligations are also general obligations of the
government. Special assessment bonds provide for capital improvements that benefit
specific properties, and will be repaid from amounts levied against those properties
benefited from the construction. In the event that a deficiency exists because of unpaid
or delinquent special assessments at the time a debt service payment is due, the City is
obligated to provide resources to cover the deficiency until other resources (such as tax
sale proceeds or a re -assessment of the district) are received. Revenue bonds involve a
pledge of specific income derived from the acquired or constructed assets to pay debt
service.
42
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 7 - Long-term Debt (Continued)
Long-term obligation activity can be summarized as follows:
Interred Prnneal
Idle Munn BWnnlg QreWtnn
Wigs Admen &lanre AddRore FeWdds Ending Mans OneV®r
Gina nrtaJul aINted
BUIIdIIdr AUNORy Brands
19A MBA Bre AndenBinds
Artrauddsaue-S17WM
Maturlrymnvgn2ml
2O9 Psratlran Brands
Arnwrmmbwe-S39CO"
Maturin tAodh2mg
2OT Paratlran Brands
Amount msaoe-sv,SW,Wg
Wurindtrcwgnam9
2N5 MBA Refunding Bonds
Arnwrt mesue-S37Wi89
Wurim trc wan 2m5
2W! MBA Refunding Bonds
Anndunt dwue-a1 fl25 g
Matorlrg m even 2mg
Sdwt and walmay Gaiam Obugaeon
Gnllmted Tax Brands
laB Pod Inprweuet Brands
Anaxnt ral seue-M5CO
Wurae Anwar MpB
2 W2 General Oblgrtlon Renanag Bonds
Arnrummbeue-s3A59W
Maturligmredah2W7
Caplhlleme oblqurare:
Energy conservation Equipment
ArtWntdsaue-S5 1237
Wurim tAodh 2W7
Fteiruk Puupa
Artount dsbaue-5485nW
Wurim tAodh 2(11
FteTmd Purtpa
A ntdssue-332,40
Wurim moan 2W7
Tnrspabadn Buser
Mdunt of saue-S 6912
Wurim mougn 2(11
Trial gwemnnertal aQMty debt
I]OM
VA" s
7580 s - s
95") s
- s
-
5gw.e
sim"
37ae -
05")
3al,eee
nwo
38B%-
Z25"
5m%
5/ dw
32 dw -
M,u@dw)
19b,"
525dw
3u
31106"
316rM
- (AB 147)
2' AW
61175
e25%
5225"
3ra[6" -
(25,")
3MWg
idandw
e Ww-
VA"
475%
3110,03
- 31@503
-
31 B5,0W
115 W%
125%
51003
uAdw
- (375")
U],W3
IWW3
3W%
Y55gm
2 dw
38B%-
W1175 -
3P%
WI
316rM
- (AB 147)
2' AW
61175
3Mab
$13102
13102
- (131 M)
-
-
V3dT74-
3fi0%
31$918]16912
(im"3910521P774
m idA3m
31 N5,W3 (8,816,745)
3B 151,635
1AtAnd
43
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 7 - Long-term Debt (Continued)
44
Inneret
anmdpal
Pale
Wtunty
Beginning
Qre Wthn
Parga
Bugs'
Balance
Anders
Pedal Ending Balance
OneYear
anerlonn tanm obligations:
Genera uaellrty dan women
mrmensauon and neat lreeamm
Jan Cul 9)
5 23MU4 5
-
5 (263) 3
2311,275
5 -
�naill Jowl and gndpauraIali
fi7O192
1782
-
fiSGul
-
congersrted ahenca
731e3E
2722fiN
P274110)
6mm
3231273
T dual gow a m¢Ral a duti im
$$ 19f`W2 $5
33JIi5W
3 M317234 $5
47`014
$$ d�6M
Inneret
aninatel
Pate
Mammy
deal
Ore Winn
Ral
Rang¢
Balance
Additions
Pedal Ending Balance
OneYear
BielneatyyeadMtl¢
Bullding Anno.'ItyBonds.
193fi MBA Ra(vandry Bonds
AnounRol Bene-S4i939i955
MaturlrgtrcnvgnRme
4u%
5385,00
S 3725gBB S
-
5 PJSS B) 5
-
5 -
19da MRA Pe02ndry Bans
A nRme3ae-51210"
Mnurlrgtrromgn200
400%
5120900
2459W
-
(1u")
120"
120900
2WI MRA Raundlrg Bonds
A nlnbaoe-S33W0]
xrel09u
Maturlrgtrcwgn2m5
aWse
SwSgoB
-
33WWB
-
3330,090
3Wgog
Wale Supply and N05tx.Me System Bonds.
IDL WMe Supply and N4texMe Staten
Peeenue Bonds
Annipu oe-55999,09
515%
5125"
Wuring inr wan AA
533%
5150 W]
37p"
-
(125,03)
2A` W3
125"
axe Wne supply and Waamxne erten
Peeenue Ria ing Bonds
Annipu sue -.&30009
2509e-
W10M
Wurminrngn AlR
103%
51(11
5050]
-
(9003)
17L,00
97003
I dneredanmunnonrefindlry
(10082)
-
MW
M470
-
2OEWne NffitaMe System
BondlYand
P retie Bond
9Resue-.44,00503
359%-
$2fi5,OL -
Wun
ha[rg Nrggn ARO
orn
50%
$010]
461$0]
-
(28,0])
430,000
Rfijgp
IDB Wne 5u pply and NAstexne Sten
Pectens Pdundlrg Bonds
A nnalswe-.w,11am9
3Wge-
$15W9-
hffiunrginrogn2l20
50%
SU003
4015"(15"1�0]
Trtal belt®'-typeadMty dn[
1028110
33003
R257136)
16u26524
1%7$0]
44
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 7 - Long-term Debt (Continued)
Iciest Printlgal
Me Maturity BWlnnlrg Fre Wthn
Fal Wrga' Balance Menem PeM6Iwv Ening Balance OneV®r
cway marertom obllgal
Sate Bevunllg Fund man -N. Huronwllry Rel
Valley We4ewader Cortml S daem
nrumma¢ae-51;429703
ManurlmthrwgbM1
anerlarg-lendobllnal
Fendemuabutiramra, workers
mrmer®tlon,
and bean Durance
can (Nobe 9)
cormensated amender
rural a%nam -type wambm
Taal gooerendertal and
bminesnWe a¢Mag
GnywneRunitr
1 M Ovxaown 0 a 9 ogrtert Bmds.
anneaa rcbw p51opo13
Maurleg[rtna20b
2L60=nn wn O%dogrteit Pefindlry Bow
anneal U90"
Maorlegtrtwab2018
Tdal¢nywnml un3 aelMty
WOCKX)
225% 1259m 3 20.0YJ 5 - S (213,03) S M" S 200.11
21355%
-
(wind)
1e5
-
19u5H
3519, H7
RW 1")
17 M1
2(d/2n
3 fiB571311 33 37�`14M 3 (40360M 3 05M419 3
3n50m-
e713% 850131313 s s - s (330") s 53,131313 3 350131313
<m%- u,000 -
5O3% $A55W] 44M" 445d"
45
3 5�`W] S - = (330" 3 $635.01] 33pp
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 7 - Long-term Debt (Continued)
Annual debt service requirements to maturity for the above bonds and note obligations
are as follows:
20M
2009
2010
2011
2012
2013-2017
2018-2822
2023-2027
2028-2030
Total
Govemmental Achmhes
Pnmpal
Interest
Total
$ 1,445,949 $
1573,224 $
3,819,173
1,163,243
1,515,347
2,678,590
1305,80.5
1,459,576
2,765,381
1,468,638
15n,3zs
3045,967
1370,888
1342,726
2,712,726
B,SSS, ora
5,757,273
14312,273
9,365,000
3,872,716
13,237,716
8,740,000
1,907,569
10,647,569
4,748,888
388,475
5,848,475
$ 38,153,635 $
19,306,235 $
57,459,870
Businesstype Achmhes
Pnwipal
Interest
Total
$ 1822595
$ 662,876
$ 2,484,671
1,767,593
595,809
2,363,402
1133998
522,296
2,256,286
1,793,990
459,439
2,253429
1,844,995
393,451
2,238,446
5,290,225
1099,040
6,389,265
2,543136
202,768
2,745,904
2012
430,000
147,600
$ 16,796524
$ 3934,879
$ 28,731483
Defeased Debt
During the year, the City issued $34,405,000 in Building Authority Refunding Bonds with
interest rates ranging from 4.00 percent to 4.75 percent. The proceeds of these bonds
were used to advance refund $3,380,000 for Series 1996 MBA Refinancing Bonds and
$29,980,000 for 2001 Recreation Bonds. There is no remaining outstanding liability for
Series 1996 MBA Refinancing bonds and the remaining outstanding liability is $1,900,000
for the 2001 Recreation Bonds. The advance refunding reduced total debt service
payments over the next 20 years by $2,062,633, which represents an economic gain of
$1,675,355.
46
Component Units
Principal
Interest
Total
2008
$ 355,000
$ 212,830 $
567,830
2009
370,000
196,353
566,353
2010
390,000
180,400
570,400
2011
410,000
164,400
574,400
2012
430,000
147,600
577,600
2013-2017
2,510,000
430,950
2,940,950
2018-2022
570,000
12,113
582,113
Total
$ 5,035,000
$ 1,344,646 $
6,379,646
Defeased Debt
During the year, the City issued $34,405,000 in Building Authority Refunding Bonds with
interest rates ranging from 4.00 percent to 4.75 percent. The proceeds of these bonds
were used to advance refund $3,380,000 for Series 1996 MBA Refinancing Bonds and
$29,980,000 for 2001 Recreation Bonds. There is no remaining outstanding liability for
Series 1996 MBA Refinancing bonds and the remaining outstanding liability is $1,900,000
for the 2001 Recreation Bonds. The advance refunding reduced total debt service
payments over the next 20 years by $2,062,633, which represents an economic gain of
$1,675,355.
46
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 7 - Long-term Debt (Continued)
In prior years, the City defeased certain bonds by placing the proceeds of new bonds in
an irrevocable trust to provide for all future debt service payments on the old bonds.
Accordingly, the trust accounts' assets and liabilities for the defeased bonds are not
included in the basic financial statements. At November 30, 2007, $53,025,000 of
bonds outstanding are considered defeased.
No Commitment Debt - The City has issued Industrial Development Revenue Bonds
and Economic Development Corporation Bonds under state law which authorizes
municipalities under certain circumstances to acquire and lease industrial sites, buildings,
and equipment and lease them to third parties. The revenue bonds issued are payable
solely from the net revenue derived from the respective leases and are not a general
obligation of the City. After these bonds are issued, all financial activity is taken over by
the paying agent. The bonds and related lease contracts are not reflected in the City's
financial statements. Information regarding the status of each bond issue, including
possible default, must be obtained from the paying agent or other knowledgeable
source. As of November30, 2007, there is approximately $61,367,000 of no
commitment debt outstanding.
Note 8 - Restricted Assets
The balances of the restricted asset accounts are as follows:
Cash and cash equivalents:
Revenue bond reserves
Bond proceeds
Total cash and cash equivalents
Assets held by Wayne County
Receivable from Wayne County
Total restricted assets
47
Governmental
Business -type
Activities
Activities
Other
Nonmajor
Governmental
Water and
Funds
Sewer Fund
f - $ 4,231,426
736,581 2,990,226
736,581 7,221,652
- 260,754
197,406
f 933,987 $ 7,482,406
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 8 - Restricted Assets (Continued)
Governmental Activities - The govemmental activilies have unspent bond proceeds
relating to debt issued for the construction of streets and for police computer upgrades.
The City also has a receivable from Wayne County relating to street construction
financed by the City on behalf of the County with bond proceeds.
Business -type Activities - At November 30, 2007, the City was in compliance with
the provisions ofthe Water Supply and Wastewater System Revenue bonds.
Bond proceeds held in the amount of $2,990,226 in the Water and Sewer Fund relate to
excess funds from the 2006 Water Supply and Wastewater System Revenue bonds to be
used forfuture water and sewer obligations.
The City also has assets of $260,754 held at Wayne County that are restricted for future
water and sewer obligations.
Note 9 - Risk Management
The City is exposed to various risks of loss related to property loss, torts, errors and
omissions, and employee injures (workers' compensation), as well as medical benefits
provided to employees. The City has purchased commercial insurance for medical
benefits and workers' compensation and participates in the Michigan Municipal Risk
Management Authority (the "Authority").
The Michigan Municipal Risk Management Authority risk pool program operates as a
claims servicing pool for amounts up to member retention limits, and operates as a
common risk -sharing management program for losses in excess of member retention
amounts. Although premiums are paid annuallyto the Authority that the Authority uses
to pay claims up to the retention limits, the ultimate liability for those claims remains
with the City.
48
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 9 - Risk Management (Continued)
The City estimates the liability for general liability, workers' compensation, and medical
claims that have been incurred through the end of the fiscal year, including claims that
have been reported as well as those that have not yet been reported. These estimates
are recorded in the Self-insurance Internal Service Fund. The estimated liability for
property loss, general liability, workers' compensation, and medical claims is recorded
within the governmental activities and business -type activities columns of the statement
of net assets. Changes in the estimated liability for the past two fiscal years were as
follows:
General Liability Workers' Conryemation medical Claims
2107 20]6 200' 2105 2107 20]6
Estimated! liability -
Begnningofyear
$ 523,488
$ 523,368
$ 959,762
$ 1,041221
$ 1100,932
$ 1,W755
Edimmteci daimm
incuried, including
on an ges in estimates
1145,559
1311,675
658,461
268,812
11153,492
8,891,755
Claim payments
(1,784,390)
(1311,555)
(486,643)
(3m Hn
(11,386,984)
(8,836,579)
Estimated! liability -
End ofyear
$ ba4,617
$ 523,468
$ 1,131,580
$ 959,762
$ 873,446
$ 1160,932
Note 10 - Pension Plans
Retirement Svstem
Plan Description - The City of Livonia Employees' Retirement System (the "System")
is a single -employer defined benefit pension plan that is administered by the City of
Livonia Employees' Retirement System; this plan covers the following employees of the
City unless they elected to transfer to the City's 401(a) defined contribution pension
plan (see Note 11):
0 General employee members - All members hired prior to March 17, 1997 and their
beneficiaries
0 Police lieutenant and sergeant members - All members hired prior to December 8,
1997 and their beneficiaries
0 Police officer members - All members hired prior to November 24, 1998 and their
beneficiaries
0 Fire fighter members - All members hired prior to duly 1, 1998 and their
beneficiaries
49
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 10 - Pension Plans (Continued)
The System provides retirement, disability, and death benefits to plan members and
their beneficiaries. At November 30, 2006, the date of the most recent actuarial
valuation, membership consisted of 571 retirees and beneficiaries currently receiving
benefits and terminated employees entitled to benefits but not yet receiving them, and
262 current active employees. The System does not issue a separate financial report
Contributions - Plan member contributions are recognized in the period in which the
conhibutionsaredue. Employer contributions to the plan are recognized when due and
the employer has made a formal commitment to provide the contributions. Benefits
and refunds are recognized when due and payable in accordance with the terms of the
plan. Please refer to Note l forfurther significant accounting policies.
The obligation to contribute to and maintain the System for these employees was
established by negotiation with the City's collective bargaining units and requires a
contribution from the employees from 2.55 percent to 5.21 percent. The funding policy
provides for periodic employer contributions at actuarially determined rates.
Administrative costs of the plan are financed through investment earnings.
Annual Pension Cost - For the year ended November 30, 2007, the City was not
required to and did not make a contribution. The annual required contribution was
determined as part of an actuarial valuation at November 30, 2005 using the entry age
actuarial cost method. Significant actuarial assumptions used include (a) an 8.25 percent
rate of return and (b) projected salary increases of 4.75 percent to 12.67 percent per
year. Both (a) and (b) include an inflation component of 4.75 percent The actuarial
value of assets was determined using techniques that smooth the effects of short-term
volatility over a five-year period. The unfunded actuarial liability is being amortized as a
level percentage of payroll on a dosed basis. The remaining amortization period is the
expected future working lifetime.
Reserves - As of November 30, 2007, the plan's reserves have been fully funded as
follows:
Legally required reserves:
Reserve for employees'contributions $ 10,257,841
Reserve for retired benefit payments 64,047,621
Additional reserves- Reserve for employer contributions 150,557,367
Total reserves $ 224,862,829
5D
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 10 - Pension Plans (Continued)
Three-year Trend Information
Fiscal Year Ended November 30
2005 2006 2007
Annual pension cost (APC) $ - $ - $ -
Pereent of APC mntdbuted 100% 100% 100
Net pension obligation $ - $ - $ -
Note 11 - Defined Contribution Pension Plan
The City established a defined contribution pension plan under Section 401(a) of the
Internal Revenue Code for the following employees:
0 General employee merrbers -AII members hired on or after March 17, 1997
0 Police lieutenant and sergeant members - All members hired on or after
December 8, 1997
0 Police officer members -All members hired on or after November 24, 1998
0 Fire fighter members- All members hired on or after July 1, 1998
In addition, the plan covers all employees electing to transfer from the City's defined
benefit pension plan (see Note 10).
In a defined contribution plan, benefits depend solely on amounts contributed to the
plan plus investment earnings. As established by the City of Livonia through collective
bargaining agreements, the City contributes a percentage of employees' earnings as
follows:
Employees Transtarring
New Employees Hireel
fmm[he Detneel Benefit
Afterthe Efactiie Dates
Pension Plan
NotedA w
Employer Employee
Employer Employee
Contribution C ntntmhen
C ntnbuhan Contribution
General
12%
31%to366%
7%
31%to 366%
Police lieutenants and sergeants
13%
521%
9%
521%
Police
13%
5%
9%
5%
Fire
13%
356%
11%
356%
51
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 11 - Defined Contribution Pension Plan (Continued)
The employee contribution percentages noted above represent the minimum required
contribution. Employees are penritted to contribute additional amounts up to the
maximum allowed by law.
The City's contributions for each employee (plus interest allocated to the employee's
account) are fully vested after four years of service and are vested immediately for
employees transferring from the existing defined benefit pension.
In accordance with the above requirements, the City contributed $1,822,314 during the
current year, and employees contributed $709,114.
Note 12 - Postemployment Benefits
The Citv of Livonia Retiree Health and Disabilitv Benefits Plan
Plan Description - Effective November 4, 1998, the City created the City of Livonia
Retiree Health and Disability Benefits Plan (the'VEBA''). The plan provides medical and
healthcare benefits, including hospitalization and disability benefits, for the welfare of all
retirees and their spouses and eligible dependents. At November 30, 2006, the date of
the most recent actuarial valuation, membership consisted of 628 active participants, 611
retired participants, and 40 inactive vested participants. After November 4, 1998, all
contributions related to postemployment benefits for all members of the Defined Benefit
Pension Plan and Defined Contribution Pension Plan and their beneficiaries will be
recorded as revenue in the City's Other Employee Benefits Trust Fund.
Eligibility - All retirees of the Defined Benefit Pension plan and the Defined
Contribution Pension Plan and their beneficiaries and future retirees who complete 10
years or more of credited service are eligible.
Contributions - Employer contributions to the trust are recognized when due and the
employer has made a formal commitment to provide the contributions. Benefits are
recognized when due and payable in accordance with the term of the plan.
The obligation to contribute to and maintain the System for these employees was
established by negotiation with certain bargaining units, including general and
administrative employees. These employees are required to make a contribution of 2.00
percent beginning December 1, 2006. The funding policy provides for periodic
employer contributions at actuarially determined rates. Administrative costs of the plan
are financed through investment earnings.
52
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 12 - Postemployment Benefits (Continued)
Annual Cost - For the year ended November 30, 2007, the City's annual
postemployment cost of $6,455,607 for the plan was equal to the City's required and
actual contribution. The annual required contribution was determined as part of an
actuarial valuation at November 30, 2005, using the entry actual age cost method.
Significant actuarial assumptions used include (a) an 8.25 percent investment ate of
return and (b) a graduated projected annual inflation ate for medical care. A 6.00
percent annual rate for medical care inflation was assumed for the year following the
valuation, 5.50 percent for the next year, and 4.75 percent thereafter. The actuarial
value of assets was determined using techniques that smooth the effects of short-term
volatility over a five-year period. The unfunded actuarial liability is being amortized as a
level percentage of payroll on an open basis. The remaining amortization period is 50
years for health and 30 years for disability.
Reserves - As of November 30, 2007, the plan's reserves have been fully funded as
follows:
Reserve for health insurance $ 52,549,038
Reserve for disability insurance 1,734,644
Total reserves $ 54,283,682
Three-year Trend Information
Fiscal Year Ended November 30
2005 2006 2007
Annual OPEB cost
$
5,534,608
$ 7,755,379
$
6,455,607
Percent of OPEB cost contributed
100%
100%
100%
Net OPEB obligation
$
-
$ -
$
-
Upcoming Reporting Change - The Governmental Accounting Standards Board has
recently released Statement Number 45, Accounting and Reporting by Employers for
Postemployment Benefits Other Than Pensions. The new pronouncement provides
guidance for local units of government in recognizing the cost of retiree health care, as
well as any "other' postemployment benefits (other than pensions). The new rules will
cause the government -wide financial statements to recognize the cost of providing
retiree healthcare coverage over the working life of the employee, rather than at the
time the healthcare premiums are paid. The new pronouncement is effective for the
year ending November 30, 2009.
53
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2007
Note 13 - Deferred Revenue
Governmental funds report deferred revenue in connection with revenue that is not
considered to be available to liquidate liabilities of the current penod. Governmental
funds and Enterprise Funds also defer revenue recognition in connection with resources
that have been received but not yet earned. At the end of the current fiscal year, the
various components of deferred revenue are as follows:
Property[aX special asseorrent,
and other receivables
con.reno recreation center
son net passes
Interest recar%able on sewer
connections
Assets held A Wayne county
Grant paynent rereiretl prior to
meeting all eligibility reW warrants
Total
Governnental 6osiness4ype
Govemmental Funds Aeroaies Aaroaies
Unavailable Unearned Total Unearned Unearned
$ 784,121 $ - $ 784,121 $ - $
3H,,891
253823
31830 31,8 31'ano
$ 784,121 $ 912,Tir $ 1606,896 $ 912,M $ e30,914
54
Required Supplemental Information
55
City of Livonia, Michigan
Required Supplemental Information
Budgetary Comparison Schedule - General Fund
Year Ended November 30, 2007
56
W once one Fire
Orisiml Budget
Fiml Budget
Actual
Budget
Reavens
ProperlyTaxes
8 23.]TI.170 8
23.]TI.170 8
29i5z531
8 (219639)
Licemes and Permits
Business
10,588
10,50
10.5,319
(15,181)
Honwsinees
z1M,2no
z1M,2oo
1965,5M
(222692)
Total aero¢ and Parents
z3E6.]IIS
z3E6.7o8
2,118,821'
(23],8]3)
Intergovernmental Revenue
Stale and loal
9,162,578
9,162,578
891l
(209,993)
Federal
16,568
16,50
u7,982
139,422
Total intergovernmental revenue
9281,138
9281,13
91]056]
(1105T1)
Changes kar services
3,300,08
3,300,848
3314,561
14,524
Interest
1.588.888
18$80
195zm
96.]51
Fines and ForkRures
3.769,888
3,769,800
3,E65,485
9(x4W
Miscellaneous Revenue
Rent and rotates
1163,322
1163322
1243734
88,412
sale nrfixed assets
100,000
100,000
641]3
(35.827)
Other racel6nema
z6M.905
1513,906
9]503
(535]32)
Total mscel6nema revenue
3,92]22]
z]/7.2T7
22B6,8LR)
(49114](
Total revenue
S 53601 IS S
53,103,W5 S
424,758
S (850$17)
Exnend'wres
6eneral6a,ernmem
Legislative:
City Councl
$ 395,613
395RM $
385,786
$ 9,992
Cly Clerk
52,965
525985
483419
42586
Electors
281,Is57
281,719
265,319
nds;
Total legislative
1203,430
1203,430
1iu,sra
74,846
mdcel
z975,Mg
3071,859
3070,153
1701
�eawve-Mayors office
dial
46],140
453,6M
1347'
Human resources
Human Relations Commsion
7,413
7,4133
5,567
1916
IaWrrelalinm
WORD
136,700
1366N
38
Civil service
]?2.69]
]02,93]
627,953
]S,OM
Total human resources
84],188
Wide
]78,198
76,990
56
City of Livonia, Michigan
Required Supplemental Information
Budgetary Comparison Schedule - General Fund (Continued)
Year Ended November 30, 2007
Wrbn<e with Final
Original Budget Final Budget Rubel Budget
Expenditures (Continued)
(3eeeral co ernmem (Continued)
Tonal administration:
Recounting
s 499e59 5
504,30 s
504187 s
22
Rssessim
581
581
574,7,14
14,034
Finance
167,419
271,309
271220
99
Intlzpendent audit
A,772
A,7R
53,9711
3,802
Board of Review
3,691
3,991
3,962
9
Treasurer
SD,819
SD,Sfl
511,816
21,20
Dau processing
6412,395
624,145
536,oez
s3o99
Total man<ial adnnistragon
2,534,323
z5ra,3z1
2,457104
127222
Omeradimges:
Legal
gal
676,628
616,583
65
Li andsufires
bell
603162
520832
di
M46iton of land
9,000
9.000
-
9,000
Research and investigation
24,000
24.000
18,000
6,000
Dues andsum<ngions
57,mo
46900
31,347
11
Total othercal�wlms
1,355,710
1,365,710
12457e
114948
Total general government
9,449,642
9,'#5,6,12
9,131459
413,184
Public Safely
Police
Traffic bureau
6412,311
799,511
795,510
1
Administration
z731,262
z493,452
2,498,305
155
Detectwe bureau
zz38,458
z5ri
2583629
29
Rptomdaa seM<e
481
499,875
499,873
2
Commin�tiordRecwd bureau
854,456
921655
921,600
56
Ciders guard
76,612
45,332
45,20
94
RMd liaison
572,185
616,485
616,472
13
ReservePais
318,309
344509
34,486
0
Patrol bureau
11360,692
10,873.692
108]1815
Ill
Intelligence bureau
1493,885
1,869,463
1868.116
1,344
Total Pdice
207r3?4o
11048,640
21,041
z5m
Fire
R6ministration
1099570
1045470
961316
Pal
Firefighting
1006 0
10,006430
10,011
55
Fire prevention
463,769
461,769
461zs7
2482
Total ore
11597,6699
11597,669
11510978
86691
Protective inspection:
talcum Code Board oflKpzab
1161
1661
1%
12R
Inspection
13114,798
13%,7%
1275,771
39,027
Total protective Inspection
1316259
1316,259
1275,970
40,299
Omeraotedw
Offs of
Par,827
143127
143,075
Sz
TraRiccomnisim
6,84
6,391
5,446
948
Total other lrotemve i6d2 l 149x11 148,521 Tom
Total Wti<sffly8,8'x,089 34112,089 33,981514 130,575
57
City of Livonia, Michigan
Required Supplemental Information
Budgetary Comparison Schedule - General Fund (Continued)
Year Ended November 30, 2007
58
variance with Finel
Original Budget
Fnal Budget
Actual
Budget
Expenditures (Continued)
Nk cwork
Pudicservic s- Highways, streets, and
intenance
Engineering
$ ]29988 $
]29988 $
538871
$ 191
Parlsneintenans
98266`+
982,x£
8552E6
E6,388
nnmmistraBm
15,818
27,318
20,071
7247
Eqaprent maintenance
ligi
76,895
]6,sga
1
Building maintenance
3287,921
2,1821621
2,11
96
Rest lighting
313,]83
313,]83
290,498
23285
Maintenance
Weets
]2958
53658
11
40,901
TraRcserviss
1115M
1815M
93,868
],]01
Fw¢iry
]3)21
]3)21
15,910
57,311
Total WdK works
5613,6!6
0,,153 616
0,889689
3]395]
Pearral'wn and cultural
Parksandrea®tim:
Adininstratim
386,196
0.31,196
431;186
3,698
Recreation halides
Sy321
61821
57,115
0,786
Recreation athletic
128862
100,862
100,859
23
Recreation program
81710
51216
53512
782
Total Missend recreation
01,113
651,113
612592
8521
Cultural:
Historic Presemtion Conmision
5,636
5,631
3,]2]
1987
Historical Commission
86687
81887
79,001
5,483
GbaryCommision
458888
450,888
0.58,888
-
AreCommision
23,795
23,795
2,487
1,388
Community resources
923696
925296
921
632
Total cultural
1089,612
1,489,612
1088282
9X0
Total recreation andculWral
2,140]
2,140, TT5
2,11
17,851
(ananunl(y and Ecoaesnlc Be.elapmem
City Planning comaission
fifi6ue
fifi6ua
s5944s
16,018
Zoning Board ofAintmls
133,645
133,645
111,381
22}14
Total connminilyand econonnK
develcia l
800,111
800,111
]61]49
38,352
5nployee Banelil; Insurance, and Other
2,032,801
2,03Z,801
1,861,903
172,101
Total expencHures
$ 53,8W21] $
53,01 $
51,951
$ 1,146,0311
58
City of Livonia, Michigan
Original Final Variance with
Budget Budget AAM) Final Bud3et
Inwinuim
Protmnytaa¢
$ 3,838601 8
3,838601 8
38019!2
8 (35.3595
Charges Mservic¢
3,96],300
3,967,300
3,]099]9
(257,321)
Interest
210,000
210,000
411,158
201,158
Miscellaneous revenue
996
996
Total revem¢
8,015701
8,015701
7,920,n5
(90,926)
rxgennnurim
&mtauon
-
-
-
-
Recreationandcuiture
],016,]01
7,E09M7
6,109950
1}A,59]
TranskrsM
2282,651
2282651
2,173,767
108,861
Total is enMuris
9,699,352
9,732,198
8283,]1]
1668,181
Ums of as ani O.ar(uni
&peirdii
(1683651)
(1,716,497)
(358,912)
1,357,555
Fund BeNnce-BNinning ofyear
6218618
6218618
6218618
-
Fund BaNnce-end ofyear
$ 1,533]6) $
450"21 $
5,MA76
$ 1}n555
59
Required Supplemental Information
Budgetary Comparison Schedule
Major Special Revenue Funds
Year Ended November 30, 2007
Reuse
Original Final Valance with
Bute1 But at H<Lel Fina'B1
$ 11,6636M17 $
11603,Fd7 $
11.489 $
(113,6521
110,5'J0
110500
11
25,951
17s,Wo
175,000
458,1n
Min
10,Wo
10,000
M,9W
M,,966
11,8'%,147
11899167
12,129,58]
230,660
11921,IR
12290611
11859,82]
0.30,586
11921,156 12290611 11859,ffi] 0.30,586
(22,W7)
(391261)
M,7W
661,024
6,66,780
6611
6611
-
S 6597,83 $
628516 $
6889510 $
661,024
60
City of Livonia, Michigan
Required Supplemental Information
Pension System
Schedule of Funding Progress
(000s omitted)
. Valued usingroa bre-year^amour ed Ending nrerb:tvalue
Schedule of Employer Contributions
Year Ended
November 30
Actuarial
Valuation Date
Annual
Required
Contribution
Percentage
Contributed
2002
11/30/00
ummnded
100
Actuarial
Actuarial
Unfunded
Funded
2004
(overmnded)
Actuarial
Value of
Accrued Ualulay
(overmnded)
Ratio
Covered
NgFoa
Valuation
Assets
(AAL)En"Age
AAL(UAAL)
(Percent)
Pryroll
Percentage of
(late
(a)
(b)
(tra)
(alb)
(c)
Covered Pryroll
11130101
$ 200,93!
` $ 151,430
$ (49,493)
1327
$ 16,721
(296.0)
11130102
199621
` 159,2n
(40,355)
1253
11285
(2335)
11130103
203,505
` 159,"
(43,605)
1273
11103
(2549)
MMM
19957a
. 164,37a
(35200)
1214
16,070
(2190)
11139005
200,005
. 161226
(32,775)
1196
15,005
(206.4)
11130106
205,101
` 169,506
(35.595)
1210
16,135
(2206)
. Valued usingroa bre-year^amour ed Ending nrerb:tvalue
Schedule of Employer Contributions
Year Ended
November 30
Actuarial
Valuation Date
Annual
Required
Contribution
Percentage
Contributed
2002
11/30/00
$ 645,335
100
2003
11/30/01
417,464
100
2004
11/30/02
392,639
100
2005
11/30/03
-
100
2006
11/30/04
-
100
2007
11/30/05
-
100
The schedule of funding progress presented above was determined as part of the actuarial
valuations at the dates indicated. Additional information as of November 30, 2006, the latest
actuarial valuation, follows:
Actuarial cod method Entry age
Amortization method Level percent, closed
Remaining amortization period Expected future worlang lifetime
Asset valuation method Five-year smoothed market
Actuarial assumptions:
Investment ate of return 8.25
Projected salary increases,
including inflation at 4.75% 4.750/c-12.67%
61
City of Livonia, Michigan
Required Supplemental Information
Retiree Health and Disability Benefits Plan
Schedule of Funding Progress
(000s omitted)
"Information not available
Schedule of Employer Contributions
Year Ended
Novenber 30
Actuarial
Actuarial
Percentage
Contributed
Funded
11/30/00
$ 4,575,001
Actuarial
Value of
Accrued Lialulay
Unfunded
Ratio
Covered
[/AAL as
Valuation
Assets
(AAL)Entry Age
A uJAAL)
(Percent)
Payroll
Percentage of
(late
(a)
(b)
(ba)
(alb)
(c)
Covered Payroll
11/30101
••
••
11/30102
••
••
11/30103
$ 30,4]5
$ 104,386
$ 73,911
292
$ 34,084
2168
11/30104
37690
110,1Y
72,466
342
33,355
2173
11/30105
41,981
122,019
80,032
34.4
33,312
2403
11/30106
47673
122261
74594
390
34373
2170
"Information not available
Schedule of Employer Contributions
Year Ended
Novenber 30
Actuarial
Valuation Date
Annual Required
Contribution `
Percentage
Contributed
2002
11/30/00
$ 4,575,001
100
2003
11/30/01
4,960,217
100
2004
11/30/02
5,859,287
100
2005
11/30/03
5,534,608
100
2006
11/30/04
7,755,379
100
2007
11/30/05
6,455,607
100
The required contribution is expressed to the City as a percentage of payroll.
62
City of Livonia, Michigan
Required Supplemental Information (Continued)
Postemployment Benefit Plans
Actuarial Assumptions
(000s omitted)
The information presented above was determined as part of the actuarial valuations at the dates
indicated. Additional information as of November 30, 2006, the latest actuarial valuation, follows:
Actuarial cost method
Amortization method
Remaining amortization period:
Health
Disability
Asset valuation method
Actuarial assumptions:
Investment ate of return
Projected annual premium increases,
including inflation at 4.75
63
Entry age
Level percent, open
50 years
30 years
Five-year smoothed market
8.25%
10.75
City of Livonia, Michigan
Notes to Required Supplemental Information
November 30, 2007
Note 1 - Reconciliation of Budgeted Amounts to Basic Financial Statements
The budgetary comparison schedules for the General and Major Special Revenue Funds are
presented on the same basis of accounting used in preparing the adopted budget.
Following is a reconciliation of the budgetary comparison schedule to the governmental
funds (statement of revenues, expenditures, and changes in fund balances):
Amounts per operating statement $ 52,212,758 $ 49,838,893 $ 6,109,950
Operating transfers budgeted as
revenue and expenditures 40,000 2,111,294 2,173,767
Amounts per budget statement $ 52,252,758 $ 51,950,187 $ 8,283,717
Note 2 - Budgetary Information
Budgetary Information - Annual budgets are adopted on a basis consistent with
accounting principles generally accepted in the United States of America for the General
Fund and all Special Revenue Funds except that operating transfers and debt proceeds have
been included in the 'revenue" and "expenditures" categories, rather than as "other
financing sources (uses)." All annual appropriations lapse at fiscal year end; encumbrances
are not included as expenditures. During the year, the budget was amended in a legally
Permissible manner, except that the General Fund and Economic Development
Corporation Component Unit were amended after year end.
The City follows these procedures in establishing the budgetary data reflected in the
financial statements:
1. On or before September 15, the mayor submits to the City Council a proposed
operating budget for the fiscal year commencing the following December 1. The
operating budget includes proposed expenditures and the means of financing them.
2. Public hearings are conducted to obtain citizen comments.
3. As provided for by the City Charter, not later than November 1, the Council shall
adopt the budget through the passage of a budget resolution and transmit the budget to
the mayor. Not later than November 15, the mayor shall either approve or disapprove
the adopted budget, in whole or in part.
64
Community
General Fund
Recreation
Total Total
Total
Revenue Expenditures
Expenditures
Amounts per operating statement $ 52,212,758 $ 49,838,893 $ 6,109,950
Operating transfers budgeted as
revenue and expenditures 40,000 2,111,294 2,173,767
Amounts per budget statement $ 52,252,758 $ 51,950,187 $ 8,283,717
Note 2 - Budgetary Information
Budgetary Information - Annual budgets are adopted on a basis consistent with
accounting principles generally accepted in the United States of America for the General
Fund and all Special Revenue Funds except that operating transfers and debt proceeds have
been included in the 'revenue" and "expenditures" categories, rather than as "other
financing sources (uses)." All annual appropriations lapse at fiscal year end; encumbrances
are not included as expenditures. During the year, the budget was amended in a legally
Permissible manner, except that the General Fund and Economic Development
Corporation Component Unit were amended after year end.
The City follows these procedures in establishing the budgetary data reflected in the
financial statements:
1. On or before September 15, the mayor submits to the City Council a proposed
operating budget for the fiscal year commencing the following December 1. The
operating budget includes proposed expenditures and the means of financing them.
2. Public hearings are conducted to obtain citizen comments.
3. As provided for by the City Charter, not later than November 1, the Council shall
adopt the budget through the passage of a budget resolution and transmit the budget to
the mayor. Not later than November 15, the mayor shall either approve or disapprove
the adopted budget, in whole or in part.
64
City of Livonia, Michigan
Notes to Required Supplemental Information
November 30, 2007
Note 2 - Budgetary Information (Continued)
4. The legislative budget is adopted at a functional level for the General Fund, and at the
fund level for other governmental and proprietary funds. The budget document
presents information by fund, function, department, and line items. Management may
amend the budget at the detail level within the legislative summary constraints.
Appropriations that exceed the summary budget constraints require City Council
approval.
Excess of Expenditures Over Appropriations in Budgeted Funds - The City did not
have significant expenditure budget variances.
65
Other Supplemental Information
66
City of Livonia, Michigan
67
Special Revenue Fund
Graft andW
PudKSkly
64jw Sheets
Local Slreeld
Street Lighting Cade Televaw
Literary
Cwnmmialon
losels
Cash and nvestments
8 I.]A,W]
8 708,N3
8 (38,M) 8
12 .420 8
1)26600
8 3j 1,M
Rec wd¢:
Taxes
17357
Specialasessmenls
-
-
6,688
-
-
-
Other
6'%Vl
-
2263
0,755
iM,855
-
Due hwn other governmental unto
1,iW,W1
251,711
0!0810
-
-
-
Restri<leclasels
Taa'mob
S 2y)W. 2
S 1.000,280
$ 011,667 S
1,204,1B S
I.WA 3
S 3,551,092
Liabilities and Fund Bearden
Liabilities
Accounts 1@abe
$ 580,193
$ -
$ 159,085 $
10,480 $
108626
$ 303
Acauedandother liadlties
-
-
20,766
6258
58,120
-
Oebrredrevenue
06,713
15,563
bAAbdlilies
580,193
-
226$£
170,736
182313
303
FUN Balances
ReservedMaPtal impoverrents
Unreserved
Designated
322912
23,313
-
2U,0]8
-
] 500
Ilndsigmted
202D,w
976,911
185,101
874363
i;lf£510
3073269
Total and Nbnces
Zdurd'J9
1p30,ffi0
185,101
1129,041
1;166510
3550,789
Total lia aloes and
Nnd Wbnces
$ 2y)W. 2
S 1,000,280
$ 011,66] $
1,300,179 S
1,34SAD
S 3,551,092
67
Other Supplemental Information
Combining Balance Sheet
Nonmajor Governmental Funds
November 30, 2007
Transit and
PQuciated CwnminAy Rwdand CapUl 19gOSlreel Special 2005 MBH 2007 M
FwkiWres Transit SiRwalks Iinnarovement Iinnarovement Assessments ReLndng ReNndng
s 1835,334 s 3B,o94 s 1967697 s - s w $
- - 19,064 19,089 zssd - -
z3s
- 151203 - - - - -
S 1,835,234 $ 189,297 $ 1,886,981 $ 19,089 $ 31397 $ 26,635 $ $
8 36215 8
10,424 8
330,673 8
532 8
- 8 - 8 - 8
-
-
17,112
11
Z4 - -
36215
10,424
347,785
19,089
Zs
M1600
757519
178,873
1539,196
836
Ni,615
17ai
178,873
1539,196
836
Ni,615
S 1,835,334 $ 189,297 $ 1,886981 $ 191089 $ 3}07 $ 26,635 $ $
68
City of Livonia, Michigan
69
Deal senee Fund
Capra Projects Fund
Drainage
cdrCcurse
nnunbipal Burning
Preheats
lvgosrreel
Cap1a
Capital
wlhorrtvanaomer
Camvrcltan
Imua+enrem
Imua+emem
Imua+enrem
Assets
Cash and investments
8 -
8 127,2D0
8 -
8 356.736
8 3,181930
Ramadan
Taxes
special assessments
-
-
-
-
-
Other
Due nam other gmemmental inns
-
-
-
-
-
Reslriaeaassele
933.987
Total asele
S
S 127.200
$ 933,987
S LS6,T36
$ 3,181,990
Liabilities aN Rural Between
Hai
Hcmmk Babe
8 -
8 -
8 `99216
$ 60,904
$ 18,037
ncarealanalother gabmie
-
-
-
-
-
Derarrearevenue
Total labmies
-
-
'89216
60,904
18,037
Rural Balance
Resei capital imprwenenta
-
-
ddd'1l
-
62b,923
Dnr ha d
Designated
-
-
-
-
39,853
DnRsignaled
127,2D0
395,832
2495,117
Total Nntl deduce
V7,2D0
ddd' 1l
395,832
3,163833
Total and
Nntl deduce
S
$ 117,200
$ 933,987
$ 456,II6
53,181,990
69
Qpul argecb Fug
Trial Nw�jw
Sp CIA couN BUIUM C rnmedA
r 0%"Na imua "gs Fund:
8 521,476 8 1j 1,9 8 18,'W4821
58,381
E61,9'b -
144,060 - 2,7 ,452
474,917
118878
sasplo 15x1 94s
2,M,415
93987
5x5,410 1511949
5.028948
$ 989,470 $ 1541919 $
21,735,M12
8 51,415 8 - 8
2,M,163
s ,150
3K2 -
53149
144,060 - 2,7 ,452
$ 989,470 $ 1541949 $ 21,735,1x2
Other Supplemental Information
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
November 30, 2007
70
yi3694
7
sasplo 15x1 94s
w,3o4,950950
5x5,410 1511949
5.028948
$ 989,470 $ 1541949 $ 21,735,1x2
Other Supplemental Information
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
November 30, 2007
70
City of Livonia, Michigan
71
Special Revenue Find
Grantham]
MD street
Quo
PudcSafety
Major Streets
Local Slreeld
resting
Televerion
Libary
Cor mumostim
Revenues
Propetlytaxes
8 -
8 -
8 -
8 - 8
3,95,'49
8
Spacialessessments
919799
-
-
Intergovernmental revenue
State and local
6,537866
1,718510
31,59
-
-
-
Federal
-
-
881,'40
Charges M services
275,798
Edli
Interest
131,661
18,6N
2,507
62,175
18,53
1i
Fines and forfanmes
-
-
-
-
]3,]60
Miscellaneous revenue
21]0
83,616
592,168
T otal revenue
6671,5W
1]3]219
1,923383
651,343
6,381,90
800206
Expenditures
Pudicakly
-
-
2`9,463
-
-
23,89
Puticvorks
3,161,9766
1738,308
901]61
-
-
-
RecreationantlNture
-
-
42,956
655,722
6,461267
-
CommunilyandecmwncRvebprenl
-
-
652,837
-
-
-
Captaloul6y
Befit- Prim pal retirement
-
-
-
-
-
-
Beht-mterestantldher
Total eryenatures
3,161,9766
1738,308
1856.3!0
655 ]T2
6,461,267
23,89
Excess d Revenues Over(unaer)
Expenditures
1503,526
(1089)
66.513
0.379)
(77,(17)
726536
rnner Rnancing Sources (uses)
Proceeds nammeiauance oflorg4erm debt
-
-
-
-
-
-
Payments to escrow agents ku bantlrefuntlng
Tanagers In
-
1926,46]
-
-
450W0
-
Transrars out
(2,124,46/)
(1925000)
-
(60,00q
-
-
Tdaldhergmnaingsources(uses)
(212446R
(533)
(4000w
aw,Wo
Net change In Fuad Balances
(620,943)
(1612)
66,513
(61,3]95
372,983
726536
FundBalandes- Beginningofyear
2966.062
1,001,906
118,548
11i
]9{47
2,]]6253
FundBalandes-Endofyear
$ 2}63,099
$ 1.001
$ 135101
$ 1,129,661 $
1,166,510
$ 3,551
71
Other Supplemental Information
Combining Statement of Revenue, Expenditures,
and Changes in Fund Balances
Nonmajor Governmental Funds
Year Ended November 30, 2007
72
Tramp and
n4dmted
Cnmmmity
Rand
aptal
1%0 street
sgeaial
tom lash
tom lash
FwkiWres
Transit
SiRwalks
Iml+werrent
Wrwement
Assessments
ReNndng
ReNndng
4,307,7M
s 2428116
s W.M-
-
-
-
-
-
2,9110
-
-
M,491
201,M
-
-
-
-
-
-
-
-
17,486
-
-
-
-
-
-
nw
15,610
15 ,740
-
232
M1
-
-
597,2W
3W
274
18,000
898,Y
187,E61
4073,469
2426,886
W,057
4,441
]U5@
6619,834
895,]94
-
-
-
-
00,000
-
ze0w
-
zr3
147,6%
16830(5
7U,5@
895,Tb
6619,834
093112
1726%
16830(5
126198
(]0],933)
(2,145 )
24268116
(17,32)
4,441
(172(%)
(1,403,DW
-
-
-
-
-
-
-
31,825000
-
-
-
-
-
-
(31,825000)
-
808,000
2,125000
-
-
-
1 ztm
1003,85(i
800,000
2,125000z�
1 ztm
1,403056
12,190
92661
(2925)
-
(17,325)
4,aa1
-
-
167z9b
tersm
1j 9,761
-
18,10
22194
S 1,799,119
$ 178,88 $
i,it9,196
$
$ M8
$ M,6M
$
$
72
City of Livonia, Michigan
73
DeaseMce Fund
Capel Projects Fundi:
cdfCarse
Municipal Burning
Drainage Projects
TAB Street
Carol
/authority anaother
Construction
Imaroemed
Imaroemed
Revenue
PropertylaxesSnead
movements
-
-
-
Intergovernmental revenue
Slate am loan
-
-
-
-
Federal
-
-
-
-
Charges Mserviss
-
-
-
12,010
Interest
-
6,186
b,fA
23Ea2
Fines and forfeitures
-
-
-
Miscellaneous revenue
T otal revenue
-
6,188
b,fA
131,a52
Expenditures
Puaicsakty
-
-
-
-
Puaicworks
-
-
-
Recreation and culture
-
-
-
-
Comnuntyand economcdevelopment
-
-
-
Coal odby
-
-
59,215
213,423
oea- Pricaal retirement
600,000
-
-
-
oea- Interest and other
125,413
Total expenditures
]25,413
-
59215
213,49
Excess d Revenue over(Bnc er)
Expenditures
( .413)
6,188
(561
(31951)
Other Rrencing Soirees (uses)
Proceeds fromtheiesuance oflonyterm debt
-
-
-
-
Paymentstoeadox agents sm thondrefunding
Transfers In
] ,413
-
-
-
TranskrsaN
Total other fall sources(uses)
TT,413
Net Change in FuN Balances
-
6,133
(Yd,S'Y)
(31951)
FundBalandes-Begnning ofyear
-
121,012
grgi
47F]j83
FundBalandes-Endofyear
$ -
$ iZ)210
$ 3M.771 $
A5,832
73
Other Supplemental Information
Combining Statement of Revenue, Expenditures,
and Changes in Fund Balances (Continued)
Nonmajor Governmental Funds
Year Ended November 30, 2007
Qpul argecb Fug
Qpbl Spe<ia' CwN Buidng Tda'Nw�jor
Xw"nt r 0e edg lav menk cwemmenul Funs
11292969
258251 - 1,181,838
6,382,636
1,882,610
1%,150
136,w6 as,cn w,a]a 10w,491
6n %]
2D8 30976 33813M1 1CNi.6K
136&16 338919 392638 23836'%7
I,%]'6
- - - 1z4n,m
- - - 6'4,63]
1,3G5,6W 150592 - z2U,3X
1z%%o
173Y
135,600 150592 - z,,4w,6
(1181,838) 180,327 3926w (15%,618)
31025 %o
(31025,%0)
2]6r,]r3
-
2]80%
10,606010
(651 )
276!,]]3
2]88W
0,138,861
15%3935
180,327
6]8,6%
2559'51
1'5%.%8
361083
871301
16,41,089
S 3,163,893 $
S Ato $
154"y $
19,028,900
74
City of Livonia, Michigan
75
Trust Funds
Pension and Other Employee Benefit
Plans
Agency Funds
investment
Emp'gre¢'
Adnnstration
Retirement Sptem
WBA
Total
Fuml
Assets
Cash antlass call
$ 812,215 $
218396 $
930613
$ 3,02860.3
Investments:
US. government securities
6S,120187
12,616,29
58,]!6216
Common stock
103,52.6,131
5,901011
1s6E87M2
Corporatebnd
36]29120
8,6321907
0.5,5!,]5]
-
Foreign corp5ratestocks
2,655,87
2E0,
2,901;155
all Thus
14,0.31,752
5211328
38613,80
-
Realestatelnvstmenttmst
15,51],13]
-
15,51],iW
-
Semritieslendngshod-termcdlateral
has investment"
22,9]2318
-
22,9]2318
-
DueTomothergovernmentalLnd
85,6]1
-
85,6]1
-
DueTommenghnds
-
9(1
916o2B
-
Otherreceil
9'2,858
'%2,858
Totai assets
249,500.]E6
55,W2,610
305,87,016
3,028613
Liabilities
Amounts parade
2,Mb(i9
1318,988
3,38855]
156,712
Ammed and otherliadlities
-
-
-
1,8/1,903
Due to other governmental hands
-
-
-
-
Duemwstrund
-
-
-
936028
Amounts due to broker under securities
lendig agreement
22.9]2,318
22,9]2318
Total ladlities
25011917
1318,966
26360905
3,028613
Net Asets-Reservetl
Emporees Retirement System
220.862,129
-
221,552829
-
Emporees postempoynent health are as
all benefts
512143682
50.A3662
Total net assets
$ 221,862,829 $
9,283,682 $
W9,146,511
$
75
Other Supplemental Information
Combining Statement of Net Assets
Fiduciary Funds
Year Ended November 30, 2007
Historical
Speaal Trust LiMaryTnst Commsion An Commission Commisionon OndsViMed Tax
Fund Fund Fund Fund !nine Fund Fund Taal
$ 1898,912 $ 16,W $ 696,716 $ 115,935 $ 2614 $ 8,066,191 13613,710
1898,912 16,661 696,716 115,935 26b 8,0(5,191 13613,710
1M,712
1898912 16,661 696,716 115,935 26b - 60M,]N
8,8(5,191 8,8(5,191
986,028
1898,912 16,661 696,716 115,935 2616 8,066,191 13613,710
76
City of Livonia, Michigan
Other Supplemental Information
Combining Statement of Changes in Net Assets
Fiduciary Funds
Year Ended November 30, 2007
Additions
Imeshnentirxnme:
InlerestanddiH@iWs
Net appreoation in fair value of investments
Less inves6nent expenses
Netinveshnentincame
secanM1es lording irxnme:
Inlerestanalkes
Less borrower rebates and bank fees
Total lording irxnme
C ntnbutions:
Emplo}er
EmploWe
Total contnbutians
Total additons
Deductions
Benefit payments
Medical benefit payments
Administrative expenses
Refunds ofcontnbutions
Total deductions
Net Increase
Net Assets Held in Tmstfor Pension and Other
R nploWar Benefits
Beginning of year
End! of }ear
77
EmploWe5
Retirement
System VEBA Total
$ 7,489529 $
1,866,875 $
9,356,484
10,617,626
2,783,67]
13,481383
(532389)
(85,648)
(617,357)
17,574846
4,565504
22,140,350
1,391,607
-
1,391,607
(1314167)
(1314167)
n,441)
-
n,441)
-
6,ass,607
6,4ss,607
545,624
363982
909,606
545,624
6,819589
7,365,213
18,197,910
11365,093
29,583,003
11,M,634 15,687 11501321
30,485 6,378817 6,401302
131,511 14,612 146,123
343.783 - 343.783
i1F14xI KSJlliIQ01DiDBRIM A:
6,206,497 4,s639R 11190,474
218,656,332
49,,299,705
267,956,0.17
$ 22A,962,929 $
54,293,692
$
2]9,146,511
District Court Funds of District No. 16
City of Livonia, Michigan
Financial Report
with Additional Information
November 30, 2007
District Court Funds of District No. 16
City of Livonia, Michigan
Contents
Report Letter
Management's Discussion and Analysis 2-3
Financial Statement
Statement of Net Assets - Fiduciary Funds
4
Notes to Statement of Net Assets
5-6
Other Supplemental Information
Schedule of Cash Receipts and Disbursements
FTI AT
plante 1W11,,o�n.eI
P1IIO R.flP,
moranm�a M"M,.�,
a. GAIL 352 xxu
Fu'. 118 351.W18
PMlemwenwn
Independent Auditors Report
To the District Judges of the
16th District Court
Honorable Kathleen McCann and
Honorable Robert Brzezinski
Livonia, Michigan
We have audited the statement of net assets - fiduciary funds of District Court Funds of District
No. 16, City of Livonia, Michigan (the "Court") as of November 30, 2007. This financial
statement is the responsibility of the Courts management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material misstatement An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statement An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in all material respects,
the financial position of District Court Funds of District No. 16, City of Livonia, Michigan at
November 30, 2007, in conformity with accounting principles generally accepted in the United
States of America.
Our audit was conducted for the purpose of forming an opinion on District Court Funds of
District No. 16, City of Livonia's basic financial statement. The accompanying other
supplemental information, as identified in the table of contents, is presented for the purpose of
additional analysis and is not a required part of the basic financial statement The other
supplemental information has been subjected to the auditing procedures applied in the audit of
the basic financial statement and, in our opinion, is fairly stated in all material respects in relation
to the basic financial statement taken as a whole.
March 12, 2008
AFFNt& f l PLtV
Praxity
District Court Funds of District No. 16
City of Livonia, Michigan
Management's Discussion and Analysis
Our discussion and analysis of District Court Funds of District No. 16, City of Livonia, Michigan's
(the "District Court") financial performance provides an overview of the District Court's
financial activities for the fiscal year ended November 30, 2007. Please read it in conjunction
with the District Court's financial statements.
Using this Financial Report
This financial report represents the activities of the funds of the District Court during the year.
The funds of the District Court are Agency Funds. Therefore, the activities are limited to
collection of amounts that are subsequently returned or paid to third parties. The funds are
custodial in nature (assets equal liabilities) and do not involve the measurement of results of
operations. A detailed schedule of cash receipts and disbursements is shown in the
supplemental information portion of the financial report.
The District Court as a Whole
The following table shows, in a condensed format, the assets and liabilities as of November 30,
2007 and compared to the prior year:
Assets
Cash and Investments (Note 2)
Due from bond account
Total assets
Liabilities
Due to City of Livonia
Due to State of Michigan
Bond deposits, Volunteer Work Program,
Civil Drug Fund, and other
Other liabilities
2007 2006
f 798,232 $ 774,811
17,315 1,511
$ 815,547 $ 776,322
f 326,042 $ 302,925
146,181 114,117
315,337 347,988
27,987 11,292
Total liabilities $ 815,547 $ 776,322
District Court Funds of District No. 16
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
The District Court's combined receipts increased approximately 10.7 percent from a year ago -
increasing from $7.0 million to $7.8 million. This increase is due to several factors that occurred
throughout last year. The first being slightly increased fines and costs on several violations which
generated additional revenue. The second being increased issuance of tickets by the City's police
department. The third and probably most significant increases are as a result of the District
Court's aggressive collection program. This was brought about through a collection module
piece of software, which one of our derks has been using. It first entails using mailers that are
sent 85 days from entry of a civil infraction ticket Through use of the software program, the
mailers include the added costs of all late fees and a notice that the violator's license may be
suspended for failing to pay. A follow-up mailer is sent 60 days after the first mailer and includes
the same charges from the first mailer. At this time, we only utilize the program for civil
infraction tickets, although in the future we may utilize it forall additional collections.
Contacting the District Court's Management
This financial report is intended to provide our citizens and customers with a general overview
of the District Court's activities and to shay the District Court's accountability for the money it
receives. If you have questions about this report or need additional information, we welcome
you to contact the District Court directly at 734-466-2500.
District Court Funds of District No. 16
City of Livonia, Michigan
Statement of Net Assets
Fiduciary Funds
November 30, 2007
Agency Funds
Volunteer
Depository Bond Work Civil Drug
Amount Amount Proaram Fund Total
Assets
Cash and investments (Note 2)
$ 474,941
$ 187,187
$ 112,076
$ 24,028
$ 798,232
Due from bond account
7,954
7,741
1,620
17,315
Total assets
$482,895
$187,187
$119,817
$25,648
$815,547
Liabilities
Due to:
Depository account
$ -
$ 7,954
$ -
$ -
$ 7,954
Volunteer Work Program
-
7,741
-
-
7,741
Civil Drug Fund
-
1,620
-
-
1,620
City of Livonia
326,042
-
-
-
326,042
State of Michigan
146,181
-
-
-
146,181
Wayne County
10,672
-
-
-
10,672
Volunteer Work Program
-
-
119,817
-
119,817
Civil Drug Fund
-
-
-
25,648
25,648
Bond deposits and other
169,872
169,872
Total liabilities $482,895 $187,187 $119,817 $25,648 $815,547
See Notesto Statement of Net Assets. 4
District Court Funds of District No. 16
City of Livonia, Michigan
Notes to Statement of Net Assets
November 30, 2007
Note 1 - Significant Accounting Policies
The accounting policies of District Court Funds of Distinct No. 16, City of Livonia,
Michigan (the "District Court") conform to accounting principles generally accepted
in the United States of America (GAAP) as applicable to governmental units. The
District Court is governed by two elected judges. There are no component units.
The following is a summary of the significant accounting policies used by District
Court Funds of District No. 16, City of Livonia, Michigan:
The funds of the Distinct Court are Agency Funds. The financial activities of the
funds are limited to collections of amounts that are subsequently returned or paid to
third parties. The funds are custodial in nature (assets equal liabilities) and do not
involve the measurement of results of opembons. The District Court is responsible
for traffic and moving violations, certain civil matters, and misdemeanors within the
city limits.
Note 2 - Cash and Cash Equivalents
Michigan Compiled Laws, Section 129.91, authorizes local governmental units to
make deposits and invest in the accounts of federally insured banks, credit unions,
and savings and loan associations that have offices in Michigan. The Distinct Court is
allowed to invest in bonds, securities, and other direct obligations of the United
States or any agency or instrumentality of the United States; repurchase agreements;
bankers' acceptance of United States banks; commercial paper rated within the two
highest dassifcztions, which matures not more than 270 days after the date of
purchase; obligations of the State of Michigan or its political subdivisions, which are
rated as investment grade; and mutual funds cor posed of investment vehicles that
are legal for direct investment by local units ofgovemment in Michigan.
The District Court has designated three banks for the deposit of Distinct Court
funds. The investment policy adopted by the city council in accordance with Public
Act 196 of 1997 has authorized investment in bonds and securities of the United
States government, bank accounts and CDs, and such obligations, bonds, and
securities as perrritted by the statutes of the State of Michigan.
District Court Funds of District No. 16
City of Livonia, Michigan
Notes to Statement of Net Assets
November 30, 2007
Note 2 - Cash and Cash Equivalents (Continued)
Custodial Credit Risk of Bank Deposits - Custodial credit risk is the risk that in
the event of bank failure, the District Court's deposits may not be returned to it.
The District Court does not have a deposit policy for custodial credit risk. At year
end, the District Court had $462,002 of bank deposits (checking accounts) that were
uninsured and uncollatemlized. The District Court believes that due to the dollar
amounts of cash deposits and the limits of FDIC insurance, it is impractical to insure
all deposits. As a result, the District Court evaluates each financial institution with
which it deposits funds and assesses the level of risk of each institution; only those
institutions with an acceptable estimated risk level are used as depositories.
Note 3 - Court Operations
The costs relating to the operation of the District Court (including risk management)
are a budgeted item of the City of Livonia, Michigan General Fund and, accordingly,
such costs are paid by the General Fund.
The District Court is exposed to various risks of loss related to property loss, torts,
errors and omissions, and employee injuries (workers' conpensation), as well as
medical benefits provided to employees.
General Liability - The District Court participates in the Michigan Municipal Risk
Management Authority for claims relating to general and auto liability, auto physical
damage, and property loss claims.
The Michigan Municipal Risk Management Authority (the "Authority") risk pool
progmm operates as a claims servicing pool for amounts up to member retention
limits and operates as a common risk -sharing management program for losses in
excess of member retention amounts. Although premiums are paid annually to the
Authority that the Authority uses to pay claims up to the retention limits, the
ultimate liability for those claims remains with the City of Livonia. In addition to the
Imes retained, the City of Livonia is responsiblefor certain defense costs.
Workers' Compensation - The District Court employees are covered under the
City of Livonia's self-insured workers' compensation program. However, the
workers assigned to the court voluntary work progmm in lieu of jail are not covered.
The District Court does have a policy that covers up to the first $1,000 per
occurrence and the City of Livonia's self-insured plan covers claims in excess of
$1,000.
Medical Claims - The District Court participates in the City of Livonia's healthcare
coverage plan in the same rranner as the City of Livonia employees.
District Court Funds of District No. 16
City of Livonia, Michigan
Other Supplemental Information
Schedule of Cash Receipts and Disbursements
Year Ended November 30, 2007
Cash and Cash Equivalents- December 1, 2096 $ 425,312 $ 213,296 $ 126,413 $ 9,798
Receipts
Fines and fees collected
Bond receipts
Wayne County penal fines
Volunteer Work Program
Civil Drug Fund
Restitution, judgments, and other
Transfers from Bond Account
Interest income
Total receipts
Disbursements
Transfers:
City of Livonia
Court Building Fund - City of Livonia
State of Michigan
Wayne County
Volunteer Work Program
Civil Drug Fund
Bond transfers and refunds
Bond forfeitures
Volunteer Work Program and Civil Drug Fund
Restitution, judgments, and other
Total disbursements
Cash and Cash Equivalents - November 30,
2007
5,992,962
-
Volunteer
-
Depository
Bond
Work
Civil Drug
Amount
Account
Program
Fund
Cash and Cash Equivalents- December 1, 2096 $ 425,312 $ 213,296 $ 126,413 $ 9,798
Receipts
Fines and fees collected
Bond receipts
Wayne County penal fines
Volunteer Work Program
Civil Drug Fund
Restitution, judgments, and other
Transfers from Bond Account
Interest income
Total receipts
Disbursements
Transfers:
City of Livonia
Court Building Fund - City of Livonia
State of Michigan
Wayne County
Volunteer Work Program
Civil Drug Fund
Bond transfers and refunds
Bond forfeitures
Volunteer Work Program and Civil Drug Fund
Restitution, judgments, and other
Total disbursements
Cash and Cash Equivalents - November 30,
2007
5,992,962
-
-
-
-
1,124,854
-
-
122,694
-
-
-
-
132,455
-
-
-
17,750
-
-
9,534
140,858
-
20,860
-
-
141,283
17,510
20,635
6,113
3,094
99
6,145,825
1,422,030
144,377
38,469
3,809,265
- -
-
338,881
- -
-
1,780,091
- -
-
121,660
- -
-
-
141,283 -
-
-
17,510 -
-
-
970,845 -
-
-
125,148 -
-
-
- 158,714
23,999
46,299
193,353
232
6,096,196
1,446,139 158,714
24,231
7
$ 474,941 $ 187,187 $ 772,076 $ 24,028
City of Livonia, Michigan
Federal Awards
Supplemental Information
November 30, 2007
City of Livonia, Michigan
Contents
Independent Auditors Report
1
Report on Internal Control Over Financial Reporting and on Compliance and
Other Matters Based on an Audit of Financial Statements Performed in
Accordance with GovemmentAuditing Standard's
2-3
Report on Compliance with Requirements Applicable to Each Major Program and on
Internal Control Over Compliance in Accordance with OMB Circular A-133
4-6
Schedule of Expenditures of Federal Awards
7
Reconciliation of Basic Financial Statements Federal Revenue with Schedule of
Expenditures of Federal Awards
8
Notes to Schedule of Expenditures of Federal Awards
Schedule of Findings and Questioned Costs 10.12
Plante IEI °"`
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Independent Auditors Report
To the Honorable Mayor and
Members of the City Council
City of Livonia, Michigan
NARROW DATE
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We have audited the financial statements of the governmental activities, the business -type
activities, the aggregate discretely presented component units, each major fund, and the
aggregate remaining fund information of the aty of Livonia, Michigan (the "City") as of and for
the year ended November 30, 2007, which collectively comprise the City's basic financial
statements, and have issued our report thereon dated March 19, 2008. Those basic financial
statements are the responsibility of the management of the City of Livonia, Michigan. Our
responsibility was to express opinions on those basic 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
basic financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the basic financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinions.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City's basic financial statements. The accompanying schedule of
expenditures of federal awards is presented for the purpose of additional analysis and is not a
required part of the basic financial statements. The information in this schedule has been
subjected to the auditing procedures applied in the audit of the basic financial statements and, in
our opinion, is fairy stated in all material respects in relation to the basic financial statements
taken as a whole.
March 19, 2008
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Report on Internal Control Over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with GovemmentAudifing Standards
To the Honorable Mayor and
Members of the City Council
City of Livonia, Michigan
We have audited the financial statements of the governmental activities, the business -type
activities, the aggregate discretely presented component units, each major fund, and the
aggregate remaining fund information of the City as of and for the year ended November 30,
2007, which collectively comprise the City's basic financial statements, and have issued our
report thereon dated March 19, 2008. 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 Standard's, issued by the Comptroller General of
the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the City's internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our
opinion on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the City's internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of the City's internal control over financial reporting.
A control deficiency 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 misstatements on a timely basis. A significant deficiency is a control
deficiency, or combination of control deficiencies, that adversely affects the entity's ability to
initiate, authorize, record, process, or report financial data reliably in accordance with generally
accepted accounting principles such that there is more than a remote likelihood that a
misstatement of the entity's financial statements that is more than inconsequential will not be
prevented or detected by the entity's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that a material misstatement of the financial statements
will not be prevented or detected by the entity's internal control. Our consideration of the
internal control over financial reporting was for the limited purpose described in the first
paragraph of this section and would not necessarily identify all deficiencies in internal control that
might be significant deficiencies or material weaknesses. We believe that the deficiency
described in the schedule of findings and questioned costs as item 07-01 constitutes a material
weakness.
Praxitr:
To the Honorable Mayor and
Members of the City Council
City of Livonia, Michigan
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free
of material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an
opinion on compliance with those provisions was not an objective of our audit and, accordingly,
we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing
Standards.
The City of Livonia, Michigan's response to the material weakness identified in our audit and
described in the accompanying schedule of findings and questioned costs has not been subjected
to the auditing procedures applied in the audit of the financial statements and, accordingly, we
express no opinion on it.
This report is intended solely for the information and use of the city council, management,
federal awarding agencies, and other pass-through entities and is not intended to be and should
not be used by anyone other than these specified parties.
rt V& f &"�r PLtC
March 19, 2008
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Report on Compliance with Requirements Applicable to Each
Major Program and on Internal Control Over Compliance
in Accordance with OMB Circular A-133
To the Honorable Mayor and
Members of the City Council
City of Livonia, Michigan
Compliance
We have audited the compliance of the City with the types of compliance requirements
described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance
Supplement that are applicable to its major federal program for the year ended November 30,
2007. The major federal programs of the City is identified in the summary of auditor's results
section of the accompanying schedule of findings and questioned costs. Compliance with the
requirements of laws, regulations, contacts, and grants applicable to its major federal program
is the responsibility of the City's management. Our responsibility is to express an opinion on the
City's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted
in the United States of America; the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States; and
OMB Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations. Those
standards and OMB Circular A-133 require that we plan and perform the audit to obtain
reasonable assurance about whether noncompliance with the types of compliance requirements
referred to above that could have a direct and material effect on a major federal program
occurred. An audit includes examining, on a test basis, evidence about the City's compliance
with those requirements and performing such other procedures as we considered necessary in
the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our
audit does not provide a legal determination on the City's compliance with those requirements.
In our opinion, the City complied, in all material respects, with the requirements referred to
above that are applicable to its major federal program for the year ended November 30, 2007.
Praxitr
To the Honorable Mayor and
Members of the City Council
City of Livonia, Michigan
Internal Control Over Compliance
The management of the City is responsible for establishing and maintaining effective internal
control over compliance with the requirements of laws, regulations, contacts, and grants
applicable to federal programs. In planning and performing our audit, we considered the City's
internal control over compliance with the requirements that could have a direct and material
effect on a major federal program in order to determine our auditing procedures for the
purpose of expressing our opinion on compliance, but not for the purpose of expressing an
opinion on the effectiveness of internal control over compliance. Accordingly, we do not
express an opinion on the effectiveness of the entity's internal control over compliance.
Our consideration of internal control over compliance was for the limited purpose described in
the preceding paragraph and would not necessarily identify all deficiencies in internal control that
might be significant deficiencies or material weaknesses. However, as discussed below, we
identified a certain deficiency in internal control over compliance and its operation that we
consider to be a significant deficiency.
A control deficiency in an entity's internal control over compliance emts 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 noncompliance with a type of
compliance requirement of a federal program on a timely basis. A significant deficiency is a
control deficiency, or combination of control deficiencies, that adversely affects the entity's
ability to administer a federal program such that there is more than a remote likelihood that
noncompliance with a type of compliance requirement of a federal program that is more than
inconsequential will not be prevented or detected by the entity's internal control. We consider
the control deficiency described in the accompanying schedule of findings and questioned costs
as item 07-02 to be a significant deficiency in internal control over compliance.
A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that material noncompliance with a type of compliance
requirement of a federal program will not be prevented or detected by the entity's internal
control.
Our consideration of internal control over compliance was for the limited purpose described in
the first paragraph of this section and would not necessarily identify all deficiencies in internal
control that might be significant deficiencies or material weaknesses. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses, as
defined above.
To the Honorable Mayor and
Members of the City Council
City of Livonia, Michigan
The City of Livonia, Michigan's response to the significant deficiency identified in our audit and
described in the accompanying schedule of findings and questioned costs has not been subjected
to the auditing procedures applied in the audit of the financial statements and, accordingly, we
express no opinion on it.
This report is intended solely for the information and use of the city council, management,
federal awarding agencies, and other pass-through entities and is not intended to be and should
not be used by anyone other than these specified parties.
I f Ptct
March 19, 2008
City of Livonia, Michigan
Schedule of Expenditures of Federal Awards
Year Ended November 30, 2007
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See Notes to Schedule of Expenditures 7
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City of Livonia, Michigan
Reconciliation of Basic Financial Statements
Federal Revenue with Schedule of Expenditures
of Federal Awards
Year Ended November 30, 2007
Revenue from federal sources - As reported on financial statements
(includes all funds)
$ 1,340,596
Less other nonfederal reimbursements recorded as grants
(226,500)
Add federal expenditures in excess of revenues
395,483
Federal expenditures per the schedule of expenditures of federal awards
$ 1,509,579
City of Livonia, Michigan
Notes to Schedule of Expenditures of Federal Awards
Year Ended November 30, 2007
Note 1 - Significant Accounting Policies
The accompanying schedule of expenditures of federal awards includes the federal
grant activity of the City and is presented on the same basis of accounting as the
basic financial statements. The information in this schedule is presented in
accordance with the requirements of OMB Circular A-133, Audits of States, Local
Governments, and Non -Profit Organizations. Therefore, some amounts presented in
this schedule may differ from amounts presented in, or used in the preparation of,
the basic financial statements.
Note 2 - Noncash Assistance
The value ofthe noncash assistance received was determined in accordance with the
provisions of OMB Circular A-133.
Summary of Noncash Assistance - The grantee received the following noncash
assistance during the year ended November 30, 2007 that is not included on the
schedule of expenditures of federal awards:
CFDA
Federal Program Number Description Amount
U.S. Department of Agriculture - Passed
through the Wayne Metropolitan USDA Food
Community Services Agency 10.569 Distribution $ 26,848
Note 3 - Subrecipient Awards
Of the federal expenditures presented in the schedule, federal awards were
provided to subrmipients as follows:
91
Amount
CFDA
Provided to
Cluster/Program Title Number
Subrecipients
Community Development Block Grant 14.218
$ 22,510
91
City of Livonia, Michigan
Schedule of Findings and Questioned Costs
Year Ended November 30, 2007
Section I - Summary of Auditor's Results
Financial Statements
Type of auditors report issued: Unqualified
Internal control over financial reporting:
0 Material weakness(es) identified? X Ya No
0 Significant deficiency(ies) identified that are
not considered to be material weaknesses? Ya X None reported
Noncompliance material to financial
statements noted? Ya X No
Federal Awards
Internal control over major program(s)
0 Material weakness(es) identified? Yes X No
0 Significant deficiency(ies) identified that are
not considered to be material weaknesses? X Yes None reported
Type of auditors report issued on compliance for major program(s): Unqualified
Any audit findings disclosed that are required
to be reported in accordance with
Section 510(a) of Circular A-133? Yes X No
Identification of major program:
CFDA Numbers Name of Federal Program or Cluster
14.218 Community Development Block Grant
Dollar threshold used to distinguish between type A and type B programs: $300,000
Auditee qualified as low-dsk auditee? X Ya No
10
City of Livonia, Michigan
Schedule of Findings and Questioned Costs (Continued)
Year Ended November 30, 2007
Section II -Financial Statement Audit Findings
Reference
Number Findings
07-01 Adjustments related to fund level statements
Finding Type - Material weakness
Criteria - Management's goal was to accurately record all adjustments for the
fund level statements.
Condition - Journal entries were necessary to adjust various account balances
in order to properly state them as of November 30, 2007.
Context - These entries were made to various funds to reflect current year
activity. The adjustments affected prepaids, bond proceeds, accounts payable,
and revenue/expense recognition.
Effect - As a result of these transactions not being completely recorded,
several account balances required adjustment as of November 30, 2007.
Cause - For certain financial statement accounts, the City did not have a
system in place to ensure that year-end balances agree to detail and are
properly stated.
Recommendation - The City should develop mntrols to ensure that all
appropriate journal entries are made so that ending balances are mmect.
Views of Responsible Officials and Planned Corrective Actions - The
City concurs with the recommendation and will put a process in place to
address the issue. The City completed the current year-end closing while in
the process of a new financial rrmnagement system implementation and with
personnel changes.
City of Livonia, Michigan
Schedule of Findings and Questioned Costs (Continued)
Year Ended November 30, 2007
Section III - Federal Program Audit Findings
Reference
Number Findings
07-02 Program Name - Community Development Block Grant - 14.218,
Department of Housing and Urban Development
Finding Type - Significant deficiency
Criteria - The City's Comprehensive Annual Performance Report (CAPR)
should be derived from information within the City's general ledger.
Condition - During testing, it was noted that the CAPR did not include all
expenditures recorded in the general ledger.
Questioned Costs- None
Context - Total expenditures per the CAPR were reported at $512,351 and
should have been $26,995 higher.
Cause and Effect - The City has control procedures in place to reconcile
between the general ledger and the CAPR. However, the City did not
adequately follow up on the identified differences. As a result, certain balances
as stated in the CAPR were incorrect.
Recommendation - It is recommended that the City develop and adhere to
its controls to reconcile the general ledger activity to the CAPR.
Views of Responsible Officials and Planned Corrective Actions - The
City concurs with the recommendation and will put a process in place to
address the issue.
12
Plante ""INCI&M °LC
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March 19, 2008
To the Honorable Mayor and
Members of the City Council
City of Livonia
33000 Civic Center Drive
Livonia, MI 48154
Dear Mayor and Council Members:
We have recently completed our audit of the financial statements of the City of Livonia (the
"City") for the year ended November 30, 2007. As a result of our audit, we have the following
comments and recommendations for your consideration.
Revenue Sharing
The annual funding of revenue sharing continues to be static at best - which is down
considerably compared to funding levels in 2000 and 2001. In 2000 and 2001, the City received
approximately $11.2 million in revenue sharing annually. The current funding level is about
$8.8 million - a decrease ofapproximately $2.4 million from historical funding levels.
The condition of the State's budget remains tenuous and that will impact the funding of revenue
sharing going forward. The governor's budget that was introduced for the State's 2008/2009
fiscal year currently includes a small funding increase in revenue sharing. However, many open
issues remain to be resolved with the revenue-sharing program and the governor's 2008/2009
fiscal year budget occurred before issues with 2008 taxable valuations will be quantified (which
could impact the State's School Aid Fund and indirectly the State's General Fund). There are a
number of other factors that will impact revenue sharing including:
0 Future of County Participation in Statutory Revenue Sharing - The question that
remains is when the reserve funds established by counties several years ago as a result of the
shift of the county tax levy date are depleted, will counties come back into the "revenue-
sharing formula" and to what extent? Will the size of the statutory pot grow to
accommodate counties or will there be a shift of the same monies from cities, villages, and
townships to the counties?
0 Statutory Revenue-sharing Formula - Legislative action is required on this Act for
appropriations to continue beyond 2008.
Praxitr'
To the Honorable Mayor and 2 March 19, 2008
Members of the City Council
City of Livonia
0 Changes to Michigan's Tax Structure -Significant changes to the Michigan tax structure
were made in 2007 (elimination of the single business tax, creation of new Michigan business
tax, passage and then subsequent repeal of the services tax, and addition of a surcharge to
the Michigan business tax). Technical corrections on the new Michigan business tax continue
to occur. The true financial impact on the State's budget of all these changes is hard to
predict.
As previously indicated, the 2008/2009 state budget as introduced includes a slight increase in
state -shared revenue. Specific details related to the funding remain to be worked out through
the appropriations process. Given the continued uncertainty of the state budget and the recent
history related to state -shared revenue, we strongly encourage all local governments to be
conservative when budgeting or projecting the revenue-sharing line item.
Property Taxes and Taxable Value Changes
Challenges with property values in the current Michigan econony have been very well
publicized. A number of factors are impacting the market value of properties including
foreclosures, properties on the market for extended periods of time, properties selling below
market value, etc. Property tax assessments are being completed currently for the 2008 tax
year and tax rolls will not be finalized until May 2008. However, early indications are that
declines in state equalized value may threaten the inflationary growth in tenable value that
communities had been experiencing following the passage of Proposal A. We caution the City to
keep this in mind as it reviews the expected financial results for 2008, its budget for 2009, and
the next few years thereafter.
As a response to the situation with the real estate market, legislation is being discussed in
Lansing to adjust the mechanics of the general property tax act. The nature of the legislation has
ranged from the suspension of the "pop-up" or increase in taxable value that occurs when a
property sells or a "super cap" on taxable value that prohibits an increase in taxable value when
market values are declining. The outcome of this legislation could also have a significant impact
on the City.
Lastly, more personal property tax relief is also part of the new Michigan business tax. Business
personal property classified as "industrial" or "commercial" will be exempt from certain
personal property taxes - specifically from the State Education Tax (SET) and local school
operating mills. 'Industrial" personal property will receive exemptions from the six SET mills
and the 18 schools operating mills (for a total of 24 mill exemptions). "Commercial" personal
property will be exempt from 12 of the 18 school operating rills.
To the Honorable Mayor and 3 March 19, 2008
Members of the City Council
City of Livonia
Transportation Funding Declines
The Michigan Department of Transportation recently revised its projections of gas and weight
tax distributions for fiscal year 2007/2008 with its most recent projections showing that actual
payments may be up to 4 percent less than originally expected. In addition, the Michigan
Department of Transportation just released its forecasted distribution rates for fiscal year
2008/2009 which forecast another decrease of approximately 3 percent to 4 percent from the
2007/2008 rates. If these results are realized, they will negatively impact the City's Major and
Local Street Funds. The City does have a tax levy to supplement its road activities and the
above results may put greater pressure on this revenue source.
New Auditing Standards
Effective for the Audit of the Year Ended November 30, 2007
New auditing rules effective December 15, 2006 have resulted in some changes in the
communications that we are required to provide following our audit. These rules require us to
more formally communicate matters we note about your accounting procedures and internal
controls. While we have always provided our observations in these areas as part of our audit,
we are now required to tell you about more items than we may have in the past, and to
communicate them in writing.
The new auditing standards (Statement on Auditing Standards Number 112, referred to as
SAS 112) require us to inform you about any matters noted in your accounting procedures or
internal controls that the new auditing standards define as a significant deficiency. The new
threshold for a significant deficiency is a low one - a significant deficiency is any flaw that creates
more than a remote risk of errors in your financial statements that could matter to a user of the
statements. Matters that may be immaterial to the financial statements still may be classified by
the new auditing standards as a significant deficiency. For example, the requirements of SAS 112
go so far as to classify certain journal entries proposed by your auditor as a significant deficiency.
In addition to the comments and recommendations in this letter, our observations and
comments regarding the City's internal controls, including any significant deficiencies and
material weaknesses that we identified, have been reported to you in the 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. This report is
included in the federal awards supplemental information (the single audit report), and we
recommend that the matters we have noted there receive your careful consideration.
To the Honorable Mayor and 4 March 19, 2008
Members of the City Council
City of Livonia
Effective for the Audit of the Year Ending November 30, 2008
Several additional audit standards will require implementation with the City's next financial
statement audit. These new rules, which are known collectively as the new Risk Assessment
Standards, significantly change the procedures auditors must perform in all financial statement
audits. These changes to auditing standards continue to occur as a result of the major corporate
scandals (i.e., Enron, Worldcom) that happened several years ago and are designed to
strengthen the confidence of users in audited financial statements.
Under these new rules, auditors will be required to:
0 More thoroughly examine and evaluate the City's accounting processes and controls,
including the overall control environment, key controls over significant transactions, the
quality of internal oversight of the financial reporting process, and information technology
general controls
0 More thoroughly assess and document conditions in clients' system and processes that
create risks of material misstatement in their financial statements, and perform additional
testing in response to these risks
0 Design and perform more analytical tests of accounting and financial data
0 Apply more stringent standards in identifying, assessing, and communicating internal control
deficiencies
0 Communicate more information about the results of the auditor's work to individuals
involved in overseeing strategic direction and accountability for operations
As a practical effect of these new rules, we will need to make more detailed and specific
requests for information from the City, particularly about processes and controls. We have
developed tools that we will give to the City to comply with these new requirements.
Monthly Financial Reporting
We noted during the audit that the monthly financial information normally distributed to the City
Council was not prepared for several months of the year due to complications resulting from the
implementation of new software. It is our understanding that beginning with December 2007,
the City Council is again receiving monthly financial information.
Retiree Health Care and New Accounting Standards
The City will be required to implement GASB Nos. 43 and 45 in fiscal years ending
November 30, 2008 and November 30, 2009, respectively. GASB Nos. 43 and 45 require a
governmental unit to measure its retiree healthcare liability through actuarial valuations that are
to be performed at least biennially. These valuations compute an annual required contribution
(ARC). The annual required contribution is the amount the actuary believes is necessary to fund
the benefit over a period of 30 years or less.
To the Honorable Mayor and 5 March 19, 2008
Members of the City Council
City of Livonia
The City has progressively gotten ahead of these new accounting standards. In past years, the
City already had its actuary perform the calculations required by these accounting standards and
has begun the process of actuarial funding. We compliment the City for the actions taken in this
regard. While the City is already having actuarial valuations prepared and making an annual
contribution, the VERA plan is currently using an amortization period (40 years) that is
somewhat longer than allowed for under the new standards (30 years). Using this longer period
will likely result in the City's contribution being less than the annual required contribution and
will require the City to record a liability for the difference on the government -wide financial
statements at November 30, 2009.
At November 30, 2007, the VEBA fund currently has approximately $54 million set aside for
these costs. As of the date of the most recent actuarial valuation (November 30, 2006), the
liability for retiree health care was approximately $122 million (compared to $51 million at
November 30, 1998). These costs continue to be a very significant part of the City's budget
(contribution of approximately $6.5 million for the year ended November 30, 2007).
Pension Contributions
As noted last year, the City's actuary has not recommended that the City make any contribution
to its defined benefit pension plan since 2003. There are a variety of factors that impact the
calculation and estimates made by the actuary, including investment performance, life
expectancy, etc. We continue to caution the City and users of the financial statements to
recognize that future contributions to the system my be required.
We would like to thank the mayor and the City Council for the opportunity to serve as auditors
for the City. We would also like to express our appreciation for the courtesy and cooperation
extended to us by the administration during the audit and, in particular, the City's finance
department staff. During this years audit, the finance department was in the midst of an
implementation of an update to its financial management system. Despite that challenge, we
received a very high level of attention and cooperation from staff to complete the audit in a
timely manner. If any questions arise on reviewing the financial statements or on the above
comments, we would be happy to discuss them with you further.
Very truly yours,
Plante & Moran, PLLC
Frank W.Audia
Brian J. Camiller