HomeMy WebLinkAbout2014 Annual Financial ReportCity of Livonia, Michigan
Financial Report
with Supplemental Information
November 30, 2014
City of Livonia, Michigan
Contents
Report Letter
1-3
Management's Discussion and Analysis 4-10
Basic Financial Statements
Government -wide Financial Statements
Statement of Net Position
11
Statement of Activities
12-13
Fund Financial Statements:
19
Governmental Funds:
20-21
Balance Sheet
14
Reconciliation of the Balance Sheet to the Statement
22
of Net Position
15
Statement of Revenue, Expenditures, and Changes in Fund Balances
16
Reconciliation of the Statement of Revenue, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities
17
Propnetary Funds:
Statement of Net Position
18
Statement of Revenue, Expenses, and Changes in Net Position
19
Statement of Cash Flows
20-21
Fiduciary Funds:
Statement of Fiduciary Net Position
22
Statement of Changes in Fiduciary Net Position - Pension and Other
Employee Benefits Trust Funds
23
Component Units:
Statement of Net Position
24
Statement of Activities
25-26
Notes to Financial Statements 27-61
City of Livonia, Michigan
Contents (Continued)
Required Supplemental Information
62
Budgetary Comparison Schedule - General Fund
63-65
Budgetary Comparison Schedule - Community Recreation Fund
66
Budgetary Comparison Schedule - Refuse Disposal System
67
Pension System- Schedule of Funding Progress
68
Pension System - Schedule of Investment Returns
69
Pension System- Schedule of Changes in the City Net Pension Liability and
81-82
Related Ratios
70
Pension System - Schedule of City Contributions
71-72
Retiree Health and Disability Benefits Plan -Schedule of Funding Progress
73
Note to Required Supplemental Information
7475
Other Supplemental Information
76
Nonmaicr Governmental Funds:
Combining Balance Sheet
77-78
Combining Statement of Revenue, Expenditures, and Changes in Fund
Balances
79-80
Fiduciary Funds:
Combining Statement of Net Position
81-82
Combining Statement of Changes in Fiduciary Net Position
83
Independent Auditor's Report
To the Honorable Mayor and
Members of the City Council
City of Livonia, Michigan
Report on the Financial Statements
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,
2014 and the related notes to the financial statements, which collectively comprise the City of Livonia,
Michigan's basic financial statements as listed in the table of contents.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditort Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the financial statements in order to resign audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of sgnificanf accounting
estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
To the Honorable Mayor and
Members of the City Council
City of Livonia, Michigan
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business -type activities, the discretely
presented component units, each major fund, and the aggregate remaining fund information of the City
of Livonia, Michigan as of November 30, 2014 and the respective changes in its financial position and,
where applicable, cash flows for the year then ended, in accordance with accounting principles generally
accepted in the United States of America.
Emphasis of Matter
As discussed in Note 20 to the basic financial statements, in fiscal year 2014, the City adopted GASB
Statement No. 65, Items Previously Reported as Assets and Liabilities, and GASB Statement No. 67,
Financial Reporting for -Pension Plans. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplemental Information
Accounting principles generally accepted in the United States of America require that the management's
tliscussion and analysis and required supplemental information as identified in the table of contents be
presented to supplement the basic financial statements. Such information, although not a part of the
basic financial statements, is required by the Governmental Amounting Standards Board, which considers
it to be an essential part of financial reporting for placing the basic financial statements in an appropriate
operational, economic, or historical context. We have applied certain limited procedures to the required
supplemental information in accordance with auditing standards generally accepted in the United States
of America, which consisted of inquiries of management about the methods of preparing the information
and comparing the information for consistency with managements responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial statements.
We do not express an opinion or provide any assurance on the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other -Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City of Livonia, Michigan's basic financial statements. The other supplemental information,
as identified in the table of contents, is presented for purposes of additional analysis and b not a required
part of the basic financial statements.
The other supplemental information is the responsibility of management and was derived from and
relates directly to the underlying accounting and other records used to prepare the basic financial
statements. Such information has been subjected to the auditing procedures applied in the audit of the
bask financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in
accordance with auditing standards generally accepted in the United States of America. In our opinion,
the other supplemental information is fairly stated in all material respects in relation to the bask financial
statements as a whole.
To the Honorable Mayor and
Members of the City Council
City of Livonia, Michigan
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated April 3, 2015 on
our consideration of the City of Livonia, Michigan's internal control over financial reporting and on our
tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and
other matters. The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on the
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Govemment Auditing Standards in considering City of Livonia, Michigan's
internal control over financial reporting and compliance.
April 3, 2015
City of Livonia, Michigan
Management's Discussion and Analysis
Overview of the Financial Statements
The City of Livonia, Michigan's (the "City") 2014 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, proprietary 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
position includes all of the Citys assets, liabilities, deferred inflows, and deferred outflows. All of
the current year's revenue and expenses are accounted for in the statement of activities
regardless ofwhen cash is received or paid.
The two government -wide statements report the City's net position and how they have
changed. Net position, the difference between the City's assets/deferred outflows and
liabilities/deferred inflows, is one way to measure the Citys financial health or position.
The government -wide financial statements ofthe City are divided into threecategodes:
• 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.
• 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
nonfederal senior housing are treated as business -type activities.
• Component Units - The City includes three other entities in its report, the Plymouth Road
Development Authority, the Economic Development Corporation, and the Livonia
Brownfield Redevelopment Authority. 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 inforrmtion 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:
• Governmental Funds - Most of the City's basic services are included in governmental
funds, which focus on how cash, and other financial assets that can be converted to cash,
flow 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 Citys programs.
• 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.
• 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 position as of November
30, 2014 to the prior year.
Summary Condensed Statement of Net Position (in millions of dollars)
Governmental Activities BusinesstypeActivities Tdal
2014 2013 2014 2013 2814 2813
Assets
Current aN other assets $ 620 $ 565 $ 329 $ 313 $ 949 $ 878
Capital assets 1849 184.0 789 736 2638 257.6
Total assets 2469 2405 1118 1049 3587 3454
Deferrest Odfl ava d Resovices-
Bond reMWing bss being aniorteeal - - 81 81 81 0.1
Liabilibes
Current liabilities 67 113 51 49 118 162
Longterm liabilities 545 471 145 60 690 53.1
Total liabilities 612 58.4 196 109 808 693
Net Position
Net invatment in
capital assets 1493 1464 676 669 2169 2133
Rotrided 263 218 18 16 273 234
Unrestricted 181 139 237 256 338 395
Total net lesbian $ 185.7 $ 182.1 $ 92.3 $ %A $ 98.6 $ 2]6.2
City of Livonia - Net Position
The Citys assets/deferred outflow exceed its liabilities at the end of the fiscal year by $278.0
million (net position). However, a major portion (78 percent) of the City's net position
represents its investments in capital assets (i.e., 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 position of the City's governmental activities decreased from $13.9 million at
November 30, 2013 to $10.1 million at the end of this year. The amount represents the part of
net position that can be used to finance day-to-day operations without constraints established by
debt covenants, enabling legislation, or other legal requirements.
Furthermore, the City is able to report positive balances in all three categories of net position,
both for the City as awhole, as well as for its separate govemmental and business -type activities.
0
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
The following table shows the changes in net position during the current year and as compared
to the prior year:
Summary Condensed Statement of Changes in Net Position (in millions of dollars)
7
Governmental Activities Business -Type Activities
Total
2014
2013
2014
2013
2014
2013
Revenue
Program revenue:
Charges for services
$ 17.5 $
17.9
$ 34.8
$ 35.3
$ 52.3 $
53.2
Operating grants and
contributions
9.2
9.1
-
-
9.2
9.1
Capital grants and
contributions
3.2
1.0
0.4
0.4
3.6
1.4
General revenue:
Property taxes
53.5
53.2
-
-
53.5
53.2
State -shared revenue
8.3
8.1
-
-
8.3
8.1
Rental income and fees
2.8
2.6
-
-
2.8
2.6
Interest
0.3
0.1
0.1
-
0.4
0.1
Transfer and miscellaneous
0.3
0.3
0.1
0.1
0.4
0.4
Total revenue
95.1
92.3
35.4
35.8
130.5
128.1
Program Expenses
General government
9.7
10.2
-
-
9.7
10.2
Public safety
37.7
35.8
-
-
37.7
35.8
Public works
28.5
24.1
-
-
28.5
24.1
Community and economic
development
1.2
1.2
-
-
1.2
1.2
Recreation and cdhre
12.8
12.3
-
-
12.8
12.3
Interest on long-term debt
1.6
1.6
-
-
1.6
1.6
Water and sewer
-
-
31.7
31.4
31.7
31.4
Goff course
-
-
1.8
1.8
1.8
1.8
Housing
1.2
1.1
1.2
1.1
Total expenses
91.5
85.2
34.7
34.3
126.2
119.5
Extraordinary Item
-
-
(2.5)
-
(2.5)
-
ChangeinNetPosition
3.6
7.1
(1.8)
1.5
1.8
8.6
Net Position- Begirring of year
182.1
175.0
94.1
92.6
276.2
267.6
Net Position - End of year
$ 185.7 $
182.1
$ 92.3
$ 94.1
$ 278.0 $
276.2
7
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
Governmental Activities
In reviewing governmental activities in the above table, it can be noted that revenue increased
by $2.8 million and expenses increased by $6.3 million. The change in revenue is primarily
attributable to the receipt of one-time supplemental road funding from the State of Michigan.
The significant factors impacting expenses were increased road construction spending and the
settlement cost ofthe 2011 sanitary sewer overflow event paid from insurance reserves.
Business -type Activities
The City 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
nonfederal senior housing at Silver Village and Newburgh Village.
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 antl Sewer Golf Courses Housing
2014 2013 2014 2013 2014 2013
Operating Revenue $ 31,843 $ 31,975 $ 1,536 $ 1,710 $ 1,369 $ 1,355
Operating Expenses (31,346) (30,969) (1,797) (1825) (1212) (1,096)
Operating Income (Loss) $ 497 $ 1,006 $ (261) $ (115) $ 177 $ 259
The operating income of the Water and Sewer Fund dedined between 2013 and 2014. Units of
water sold decreased as a result of a cold, wet summer. The City's recently revised rate
structure was able to absorb the lower sales volume as the new rates have a larger fixed fee
component that is not dependent on sales volumes. The golf course operating loss also
increased as a result of the poor weather conditions in the 2014 golf season.
Capital Assets and Debt Distribution
At the end of fiscal year 2014, the City has $467.6 million invested, before depreciation, in a
wide range of capital assets, including land, buildings, infrastructure, public safety equipment,
computer equipment and water and sewer lines.
Debt of $35.7 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 position.
Debt related to the water and sewer system totaling $10.8 million and debt related to housing
activities of $0.4 million is recorded as a liability in the business -type activities in the statement of
net position. This debt represents construction of and improvements to existing water and
sewer lines and senior housing rental facilities.
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
Significant additions to capital assets during fiscal year 2014 include $6.4 million invested in the
construction of infrastructure and improvements to roads, $2.2 million invested in equipment
and vehicles and $8.2 million in water and sewer system infrastructure. Significant disposals of
capital assets during fiscal year 2014 included the disposal of vehicles and equipment with a total
cost of $2.1 million.
The City's Funds
The fund financial statements begin on page 14 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 City's major governmental funds for 2014 include the General
Fund, Community Recreation Fund, and Refuse Disposal Fund.
The City's governmental funds reported a combined fund balance of $39.1 million. This is an
increase of approximately $4.7 million for the year. The increase was caused primarily by
spending constraint in the General Fund and capital improvement projects which began in 2014
but will not be completed until 2015.
General Fund Budgetary Highlights
Over the course of the year, the City administration and City Council monitor and amend the
budget, prirmrily to prevent expenditures in excess of budget, as required by the State of
Michigan Budget Act. The final amended budget included nearly the same total revenue and
expenditures as the original adopted budget.
Actual General Fund revenue was approximately $344,000 below the final budget. Shortfalls
were experienced as a result of tax appeals ($168,000), lower cable franchise fees ($155,000),
and reduced transfers of 911 fees to the General Fund ($900,000). These shortfalls were offset
by better than anticipated revenue for licenses and permits ($459,000) and court fines
($230,000).
Actual General Fund expenditures were approxirmtely $949,000 below the final budget. Nearly
all departments held expenditures below the final budget.
Current Economic Conditions
The City continues to maintain positive fund balances in each of its funds. However, concerns
arise when considering the revenue and expenses that the City is facing in upcoming years.
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
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 75 percent of the City's total
governmental activities revenue. It appears that revenues are beginning to slowly increase after
many years of reductions. Property assessments are projected to increase in fiscal year 2015.
State -shared revenue is projected to increase slightly in fiscal year 2015.
On the expense side, aging infrastructure and delayed capital improvement projects will require
additional funding in coming years. Staff reductions, unpaid furlough days, and increased
employee cost-sharing for medical expenses, 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 Citys finances and to shoe 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.
10
City of Livonia, Michigan
0eene0utlbw:olRapunv-Bonreedr Mss
Statement of Net Position
dead arnereied
November 30, 2014
7435
7435
Pnnorr(3avemrrert
w ime
caerniarrl
Bwnalype
n®um Treble
Mates
Mates
Trial Cprtppnentunb
a en
Canandirralnen6 s
43,55,047
s 13 61 041
s 60636,60) s 597m
n®um rimae:
-
Due toarroaemOnto
1%
Taxis
2si
-
A11m 133,34
C toners
131857
12350,03)
12553,W3 -
worremarroendtmn
1,609
-
17T9 -
oiertpmaRrevernrteiGlunls
414731
-
414731 -
VEBn
903,333
Noted and demand
903,79
when aaTano re®eable
3336,53
70,79
4151592 2125
saedo�aerreno
3¢,257
110345
472602 w
uwanrelor dabtm acei
-
tu5501
tu5501
oartampnrrervpo+eirrem
cormereatedameroad
302.657
1%
neeno'v, rend erperaddi and depab
4211216
OKI 455
4744fi11 -
Rahneedaesedswaen
-
&9, 3b
91955 -
Capital aeee. Noted)
151513)
34m3w
33,000
Nadepredableeepnel wee
34936,570
9452,519
44.35609 474443
oareableeepte assets Net
150,012231
6044505
219451020 405,410
Totalaesets
246 TO 113
111"532
353,]9]05 6000615
0eene0utlbw:olRapunv-Bonreedr Mss
dead arnereied
-
7435
7435
-
w ime
n®um Treble
394,654
17T407
5n251
TOM
Due to deny aa+ernrrenal unto
2413,28
21d5i
21d5i
-
Due toarroaemOnto
1%
_
1%
-
Duel and deny l abnlea
2196,114
131857
=901
loom
unearned revenue
45123
31390
563,513
-
Due toEnnui RenrentaiSeem
1451
-
1451
-
Noted and demand
-
213143
213143
-
Norarrent Imbnutna Ndee61
144,693
-
144,693
-
Due within one war:
03957
0395
-
cormereatedameroad
302.657
Mir,
3O1 d)4
-
Pry,3noneroanrre
300,060
2530,0))
550),(a))
L rret Nonnonmloratenmbmt
ini
151513)
34m3w
33,000
Due in rrorettan onevwr:
S 1351125349 S
9}}641393 S
253rd 2 S
35020009
cormersated nmenci and lreua2e done
3,491,990
ei
9, 3017
-
Landfill doeureobureunn
02M
02,393
-
NooPEBobllwtnon
3360,140
10414
303554
Badsend mp)all easy devable
33n0933
9]56560
n4ei
1,68,960
Tend abIIM®
612474
19617TO
MM274
2 233 @B
Ni
Net lm®imenln naplbl weeds
149i2IDi51
67621
2167603413
372107353
aemdedmr
conanariv rar®eor
3631061
-
3631061
-
MunndWlrotme
2413,28
-
2413,28
-
4reetrads,andscen a
]715476
_
]715476
-
Library
1125,27
-
1125,27
-
PubursNeryarrrrunr:ea
3O2531
-
3O2531
-
craie
61,600
-
61,600
-
sreeupinlru
MV5
-
MV5
-
sdlpdnretmeoetured
144,693
-
144,693
-
corrrruntvtransit
03957
0395
-
ordnrenaerapnrennents
ONTO
0958
-
raplellrmraerrenm
517953
517953
urrao-n¢ed
101159®
21631,195
m,3,0104
471151
Taal net postai
S 1351125349 S
9}}641393 S
253rd 2 S
35020009
The Notes to Financial Statements are an
Integral Part of this Statement. 11
City of Livonia, Michigan
The Notes to Financial Statements are an
Integral Part of this Statement. 12
Program Revenues
Operatin g Grants
Captal Grants
Chagas for
and
and
Expenses Services
Contributions
Contributions
FurnctionyPragams
Prindry government
Governmental activities:
General government
$ 9,741,1@ $ 3,097093
$ -
$ -
Putiosafety
3Bngy 18 6,920,3&1
1408,fian
560]95
Publoworl¢
28,504,431 2,MM
6,89744]
2,114,7/6
Community and economic development
1149,116 282,314
607728
-
Remeationandculture
12812,864) 4,3115,558
313022
511242
Interest on lonTlermdebt
1584,8]2
Total governmental arteries
91489,268 17468,441
9,286,883
3,198813
Businesstype arteries:
Water and sewer
31BB1,891 31842,7]9
-
3368g9
Housing
1230391 1389,112
-
13845
Golfmurse
1797245 1536,542
Total brain es"pe activities
3'eg5,52I 34,768,493
350,744
Total prirrery government
$ 126,164,]95 $ 52,236,931
$ 9,266,663
$ 3,549,557
Componentunds:
Plymouth Roadoevelopmentauthority
$ 1134,066 $ -
$ -
$ -
Brownfield Redevelopment Authority
52,657
Total cnryonent unit
$ 1,166,723 $ -
$ -
$ -
General revenues:
Property t,as
State shared revenue
nvubrent income
Cable hanahise fees
other nhocellaneous noure
Gain on ale ofrt Basset
Total gen eral raven ues
Ertraordimry Item-Settlmmnt a tense IN one 18)
Transfers
Charge in Net addition
Net Position -Beginning ofyear
Net Position -End often
The Notes to Financial Statements are an
Integral Part of this Statement. 12
Statement of Activities
Year Ended November 30, 2014
Net (Expense) Revenue and C cages in Net Position
Pnirery Govern Arent
Governnental Isiness-type Conryonent
Activities Activities Total Unit
E (s,s44,aa9) E
- $ (6,&14,O(9) E
( ft"9n)
- (26,00495)
(16,109,14)
- (10,]59,14)
(259,1n)
- (539,134)
p,sn,on)
- (7,537,5n)
ry 604,04)
ry sea,an) _
(61536,131)
- (61536,131)
- 517,117 517,1ff -
- 166 els lssen -
- (2sa,153) (2 7(2) -
423,110 423,110
(61536,131) 423,110 (61111,421)
ry 134066)
(s2,W)
(1106,123)
s3,4a6,o46
-
s3,4a6,o46
ss1 an
8,317,51
-
8,317,51
-
M,M
111,M
4o3,aa1
264
2,a42,a35
-
2,a42,a35
-
n0,aoa
n0,aoa
1269
2,825
2,825
ss,3o
113,aae
66,423,04
%lass
(122,100)
122100
3,ss2,2ae
ry aw,ao2)
1811,926
(200,828)
1U,43,151
9t,1o4,6%
216,iT/,a46
4,o25,an
S 155,725,399 S
92,361,393 $
2T1,959,782 $
3,792,999
13
City of Livonia, Michigan
romped
333,702
Governmental Funds
333,702
1,andsidwalls
-
-
-
Balance Sheet
6,6io553
forfeitures
November 30, 2014
1444693
1,W,693
mends
NialmoSpecial
Revenue Fund
-
5,449,368
5,449,368
recreation
-
community
Refuse Dspesa
-
3,86855
fuse
-
Genera'Fund
Recreation
sptem
Nwmrejor Fund;
Total
Amets
222,875
222,875
-
rush andirtrestments
8
16178206 8
6,187213
8 0,81851
8 21559',49 8
40.506839
Rec wNes
3,'52],]46
3,'52],]46
dr�muication
n
-
-
-
Tares
548,005
K1245
18,175
60906
56857
297,1m
Stall amusements
:apnal imaroverrends
-
-
-
3ir1257
3ir1257
Workels'<ompenstim
17,699
-
912,481
912,481
17,699
Due tom other gwemueda
(218569)
10,Orl
Total untl tal
11351226
units
3,002973
2,151045
-
-
19962]2
4,14l
V BH
933,730
933,730
Other
deferred Inflorvs of
10F5541
166213
68251
52;Rtt
1]6!288
Due tom other find(N de S)
386,097
386,097
nvedory, prepeid expenses, add
4371,601 $
4,711,008 $
24,435238 S
4$812112
tlzpcsis
333.702
313.702
Total seek
S
15,294,265 S
4,371,601
S 4,711,010
S 24,435,238 5
48,812,112
Da di
Pccounts poll
s
1033290 s
U0503
s 181323
s 1229538 s
3934658
Due tocwnpment mits(Note S)
195
-
-
195
Due to other funds IN de S)
386,097
386,097
Accrued mtl other fiat
1395,444
64906
59,047
14],314
2,O66,711
Unearned revenue
-
485,128
-
-
485,128
Due tom Fmpgeer Retirement
System
1ai3
-
-
-
1ai3
Toa labmies
2,811
ea) 37
1650,370
1 ]62,949
6,934238
Dederretl 1m1o.,: of Nesoorees-
Una lade revenue
1112,65]
144206
57,665
1489,134
2,313,664
romped
The Notes to Financial Statements are an
Integral Part of this Statement. 14
333,702
333,702
1,andsidwalls
-
-
-
6,660553
6,6io553
forfeitures
1444693
1,W,693
mends
-
-
5,449,368
5,449,368
recreation
-
3,86856
-
3,86855
fuse
-
-
3,0029T3
3,002973
V
222,875
222,875
-
-
-
110]555
110]555
-
-
-
3,'52],]46
3,'52],]46
dr�muication
n
-
-
-
548,005
548,005
aide accesdeleension
-
-
-
989,814
939,814
:apnal imaroverrends
-
-
-
SSS,6u
Ss8,6u
rg improverrends
-
-
912,481
912,481
11817524
(218569)
10,Orl
Total untl tal
11351226
3,86,856
3,002973
21,183,155
39,014210
Total IiadlAies,
deferred Inflorvs of
resources,and fund
,
$
15,294,265 S
4371,601 $
4,711,008 $
24,435238 S
4$812112
The Notes to Financial Statements are an
Integral Part of this Statement. 14
City of Livonia, Michigan
Governmental Funds
Reconciliation of the Balance Sheet to the Statement
of Net Position
November 30, 2014
Total Fund Balances of Governmental Funds $ 39,074,210
Amounts reported for governmental activities in the statement
of net position are different because:
Capital assets used in governmental activities are not financial
resources and are not reported in the funds
184,948,801
Certain receivables are expected to be collected over several
years, including special assessments, delinquent personal
(35,680,000)
property taxes, and grants
1,629,575
Grants and other receivables that are collected after year end,
(3,720,140)
such that they are not available to pay bills outstanding as of
(129,400)
year end, are not recognized in the funds
2,803,664
The liability for compensated absences is recorded when
6,539,977
incurred in the statement of activities
(9,128,915)
Landfill closure and postclosure liability is not due and payable
in the current period and is not reported in the funds
(612,383)
Long-term liabilities are not due and payable in the current
period and are not reported in the funds
(35,680,000)
Net OPEB obligation is not due and payable in the current
period and is not reported in the funds
(3,720,140)
Accrued interest payable
(129,400)
The Internal Service Fund (self-insurance) is included as part of
the governmental activities
6,539,977
Net Position of Governmental Activities $
185,725,389
The Notes to Financial Statements are an
Integral Part of this Statement. 15
City of Livonia, Michigan
Governmental Funds
Statement of Revenue, Expenditures, and Changes in Fund Balances
Year Ended November 30, 2014
The Notes to Financial Statements are an
Integral Part of this Statement. 16
Major Special Revenue Fund:
Total
Community
Reuse Donee
Goemmental
General Fund
Recreation
System
Noxi Fund
Fund
Revenue
proreNy taxes
8 38.68.713 8
2,991,E06
8 11511
8 8,311,433
8 53.513,981
basses and parents
2,229,6ao
-
-
2,229,6ao
Federal revenue
33,766
-
1,169582
1,383268
dateandloal revenue
8,237,n0
517242
8,561574
n,m556
Charges ku services
3,911,762
3,924,55
02,159
soul
8,61
Fines and bristures
4,222332
W6,373
5,108,785
Interest
T26932
21,614
22146
84,]85
255537
Other revenue:
Special asesnents
1,451,989
1,451,989
Other real income
3,530,W
11],8]3
12,824
1,459,836
5,tt85]!
Tda'revenue
5hrjra 9
7,A2888
11,835918
22,785,749
5,869026
Expenditures
Curren:
General goemrrent
8,164,483
-
-
8,164,483
pubicskty
3y676275
-
I,W5819
35,752,834
pubi<Wds
3,215398
-
11,537,616
16916863
5.719369
Com unityande< me
1616
deueloprent
588]66
-
648388
1,%9,176
recreation aticulWre
I,Y£646
5,161,886
-
4,253,858
18,882398
Emnolee %¢ecus, Insurance, and
other
2,095,187
-
-
2,095,187
Cental outlay
-
-
-
3,fW387
3,fW387
Dead service
3,451
3,451
Tda'expenditures
58.V6.]!4
5,161586
11537,616
21,429355
95,215,631
Excess d Revenue over (under)
Expenditures
2,58,15
2,410914
u8302
(M.6(ld
4,733795
Omer Financing sources (lees)
Trans%a In IN de S)
-
],10],]]3
],10],]]3
Trans%rs out (Note S)
(2,365890)
(2.]21351)
-
(2,532.63T1
(7,619873)
Tda' other inning
(used scurces
(2,365s90)
(2,n13s1)
-
4,965,141
(vraidd
Net Charge In Fund Balances
m295
(316437)
nual
4,241535
4,671695
FundBalances-Begimirgai
16758931
3,811
2,410,611
16,91188
1f,482515
FundBelances-Endai
S 11,351,2M S
3, 6.856
S 3,102973
S 21,183,155
S 39,874,218
The Notes to Financial Statements are an
Integral Part of this Statement. 16
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, 2014
Net Change in Fund Balances - Total Governmental Funds $
4,671,695
Amounts reported for governmental activities in the statement
of activities are different because:
Governmental funds report capital outlays as expenditures;
however, in the statement of activities, these costs are
allocated over their estimated useful lives as depreciation:
Capital outlay
9,526,290
Depreciation expense
(8,370,722)
Loss on disposal of fixed assets
(165,267)
Certain revenue reported in the statement of activities is
recorded in the governmental funds as unavailable revenue
621,555
Repayment of bond principal is an expenditure in the
governmental funds, but not in the statement of activities
(where it reduces long-term debt)
1,865,000
Interest expense is recorded when incurred in the statement of
activities
6,170
Net increase in accumulated employee sick and vacation pay is
recorded when incurred in the statement of activities
(503,322)
Increase in landfill liability is recorded when incurred in the
statement of activities
(19,989)
Increase in net OPEB obligation is recorded when incurred in
the statement of activities
(755,937)
Internal service funds are included as part of governmental
activities
(3,223,235)
Change in Net Position of Governmental Activities $
3,652,238
The Notes to Financial Statements are an
Integral Part of this Statement. 17
City of Livonia, Michigan
Proprietary Funds
Statement of Net Position
November 30, 2014
The Notes to Financial Statements are an
Integral Part of this Statement. 18
MW Erneeatie
Fund
Nonnapr EM1a
ase Funds
Tend Endraine
Internal Says
wales and 5ewa
Horelr0
cmcourw
Funds
Fain
a en
anenrt�em
c nandlrorm
s 17mmT s
se2za s
102,010
s 1am1 w1
s 3073Accountslaecn
Accounts
5yedalasaarrenb
-
-
0030
-
OM
124900
12 ,00
-
hie
a hen
0B,6x
2630
910
J54
-
Nievvancefor
-
-
(n750)
(13,]0)
(n750
oryWaddexpefilamnR
Inventory Waded apeMlNs,aM
depm6
545155
w455
30),514
TodecareHaOs
31120,596
GA)854
111 0)
31 m -41m
11945,]22
No,arrenrtamend
Patrl6edaeNS(Nonel)
as 5k
-
-
as 5k
-
spedal�aerremr�baNen
102,655
-
-
1@655
Capelmend (Noo4)
Nmdepretiidle dean m ed
493,093
1911918
3202430
9452,519
-
Osr®ablenaplteaesers-N4
55,090)4
3393,455
M510
694@8)
-
Tonal nawrrm[s'S
]B.M013
4911161
492,200
nM419
Tdalmeers
1015A)614
502257
4MJe!1
111"502
11945,]22
9lerredOutlba:olRa�u. r0)-94ertel
bas on raundlr0
34251
-
-
74251
-
wbOmev
Curran labilted
yam moble
1517321
x,712
33334
1m4m
-
Duemahago+ernrrercalunts
2s5i
2s5i
-
PmnsIabilnedandrtha
159,033
13M
4064
1318")
-
unernedrevenue
312ad)
-
312ad)
-
Bmdsanddsm'Irs
81181
1211
-
218148
-
G pe�edamer�-ouewohln
ones r
213714
20,5u
4M
2310
Rmwfox mlrrn
dead"
-
-
dead"
30)0,00)
arrart port emiylenmobu pan
10000))
4550))
1915"
TNal current abllibed
8H7255
W631
4]9]
9412221
303,813
Nonnurrent uablll0ev
connoensitedabeenced D einnere
than one revr
1m9m
340)1
29,9))
216,242
-
NetOPEBobu9anior
10,414
-
-
10,414
-
toy[enmdebt NNaarrentpMlm
(Noted)
9]5650
-
-
9]5650
24]5]45
Teal nmwnml holies
10001,60
31
29,90
1025,327
295745
Tonalleb)Ibs
180308
MM
J7140
19075550
5435,745
Ne PasNdon
Not msMeM1ln ndpAUl assets
531011241
451010
45e!9B
63G9912
-
Psbl6ed- Ordlranee reptirenend
as 5k
as 5k
Unsbl6ed
23,33,159
33,40
31,583
23,04,195
Swire)
Teal not pu[iIm
S az. %]r S
4$9$5 S
4,917911
S 9�3
S 65391917
The Notes to Financial Statements are an
Integral Part of this Statement. 18
City of Livonia, Michigan
Proprietary Funds
Statement of Revenue, Expenses, and Changes in Net Position
Year Ended November 30, 2014
The Notes to Financial Statements are an
Integral Part of this Statement. 19
Map'ORaphe
Fund
Nommpr Emffain
d:
TotalEReri
Internal seryls
"iff and serer
1Mx51g
GaGurw
Grad
Fund
Cprffing Ra
Qetorrer bddrvan
s 29,&9813 s
- s
-
s 29,112 13 s
-
roa'andlMetwed
1309 U7
-
-
1309 U7
-
Ga loo mnre6grs
44 147
-
44 147
-
Granrois
-
-
19191
19191
-
lea
-
-
91,524
91,524
City
City
-
12403'
12 H1,1g1
Rental
1H1
91113
18,952
-
Otherrrmrte
Oingreyeiue
1'P,Ifi2
2d)
1T10
71 121
2213113
Total operadig rrveve
31&2]5
123)15
15l6w
31,]®,131
120.e 101
Operating E•pennis
Cost olwMer
9MM
-
-
9MM
-
Costmexa]ednp®I
131136227
-
-
131136227
-
iyaernrrelmerenmandopinion
4656,9))
-
-
4656,9®
-
Generaland admm4rMrve
18]31"
-
18]31"
Rersuranm:arga and darns
-
21M
21M
15]514)5
s3lada and wage
-
don 116
146373
wig
-
wppde
-
5) 495
191510
212013
-
Other urvl®'and tlarga
91637
191w
190l
-
Garannow
2on 210
151413
125,09)
2snM
-
Tonaloperadigape¢a
319545
1211691
15]20.5
31,51,914
15 J51
OpxMnglnconai as)
85031
1]]491
(28)81)
41355
(3253,9)4)
Nonopera0ng Revenue (E versa)
waNertlnoona e)
165005
5113
(5)
111003
35,68
raire1¢9teme
(315913)
R47(13)
-
(38,513)
-
6alnonaaleot�'ns
2825
2825
Ta
ex
a
npernalraerpe
(X1112ewpernlg )
(13w)
(51
(2;36,]251
25 add
boon) (Lan1-Beforecont a
transfers and e4rsnNnary tern
98719
153,917
(240M
1951151
pioon,28)
Caplpl CantRWtlwnatrmn Gevebpers and
Grants
Caplall grans
66,55
-
66,55
-
CaplallmAldRm
90104
1380.5
-
29,95
-
TotalaplhlmMnbutoa
Romdadogersand
grans
38,E
13815
-
2097"
-
Trenikrsln(Note5)
-
-
122,19
122,19
-
EmaordlnarvRen-seftlerren[wea'e
(Note181
( zSngoB)
(z SngoB)
Crape in Net Pallon
(1 W4
18]52
(1$6321
(l w21121
55251
Netpallon-BBlnnlrgotyear
Menzies
481,19
4715261
94,104,695
934212
Netpallon-End otywr
S 8z. 94] S
4.969965 S
4807.581
S 9;Gl S
6.9945
The Notes to Financial Statements are an
Integral Part of this Statement. 19
City of Livonia, Michigan
Proprietary Funds
Statement of Cash Flows
Year Ended November 30, 2014
The Notes to Financial Statements are an
Integral Part of this Statement. 20
Major Enterprise
Fund
Nmmajor Enterprise Fund
Total
Enterprise Internal
Semce
Wa@randSewer
Housing
GodCmr
Fund
Fund
Cal Flwrs from Operating Actirilies
Receiprarcwn<otwrera
s 33$3,543 s
1360,218 s
1585.900 s
36.81 s
12,761,120
Payments bsuppiels
(24,730,57)
(635,430)
(1,535,899)
(26901,85)
(13174,120)
Payments to nVoyees
(3806,269)
(432011)
Ourtr2)
(4382,112)
Other(porranta receiprs
(205.017)
yearn
-
rl
Net cash prwidtl by(used in)
operating actedles
5,135,690
319,697
(94,861)
5 '%e
(391
Caslh Flors from Noma l Financing
Activities -Net Vaskrs rcwn dM1erfind
-
-
122100
122100
-
�sM1 Naas from Capital and aemtea
Flrencin9 Actiritia
smance affiance
5,]8,'50
-
-
5,]8,'50
-
aeceiprofap8agrants
s6,3s
-
-
s6,3s
-
Specalasesrrentcdlectom
real
-
-
real
-
CmViWtimsVwn<ciwners
24,409
-
-
24,409
-
Not purchases ofaPtalassets
(7,13,32)
(7,13,32)
Princitel andln@rest load on long term
0.N
(1691,86)
(461152)
(1552.218)
Net cash usedln Investing
activities
(2382.]L5)
(461152)
-
(2,843.817)
-
CmM1 Flwrs from deal rlctivitia
Interest received on investments
105,,016
6,1%
IN
111158
35,65
Not (purchased sales of investments
(1729AO)
67,50
(13,81)
r'sn 1)
1]7/181
Net cash (wed in) prwidtl by
investing activities
(1624.564)
73,696
(13,07)
(15611'%5)
all
Net Increase (Decreased in Cash and Cal
E9urvakn6
1;128,401
(6],39)
11
1,074,224
(171160)
Can am Can Equivalents -
Beginningofyear
80.86,818
376,871
37,423
8901,102
425,234
Can am Can Equivalents -
Endofyear
S 9,615209 S
309,112 S
51,005 S
9,975326 S
4,0l
Balance Sheet Clmsi cadim of Cash and
CmM1 Equrvaknts
Cas and Investments
$ 17330,317 $
618,224 $
102010 $
18.051 .0,11 $
8,078,398
ResVictedasets (Note 7)
949,54
949,58
L�investments
(86'L,154)
(309112)
(51605)
(9,01591)
(4,039,104)
Tota'cash saddens equivalents
S 9,615209 S
315,112 S
51,005 S
9,975326 $
4,038104
The Notes to Financial Statements are an
Integral Part of this Statement. 20
City of Livonia, Michigan
Proprietary Funds
Statement of Cash Flows (Continued)
Year Ended November 30, 2014
Rammiliation d Operating Income (ros7
to Net Cash trod Operating lmtiviHes
Operating Incmre (Ioss)
Ntustments to reconcile operating
inconne (Ioss) to net mh from
operating antlrities:
Oeaeastion
Changes In asetsantlliablities:
Recession
inventor
Pretaia ane otherassets
Accounts needs
Estinre@n chins hardly
Accrued and other liablities
Other mob
Net desh ixwidtl by
(used in) operatng
activities
Nunirejor
X4jor Enterpise Fund Enterpise Fund
Total Enterprise internal Senece
Mier andSewer Housing GofCmr Fund Fund
8 096,311 8
11 8
(260213) 8
011 8
(329,8]0)
2,661365
11
125,381
299,®5
-
61836]
-
09,358
719,125
291,((19
(65,913)
(65,913)
6!6,8]1
6!6,8]1
(0T{WS)
812tl32
(13,218)
(1094)
811,380
3,800,8]8
3],]115
6,8Fa
1,511
15,D1
-
(1r298)
(2004)
(74,(O2)
S 5135,690 S 319,69] S (94,861) S 5p3 6826 S (3911,Ip0)
During the year endtl November 38, 2814, the City recPrred $270,iM of donated Ines repadec s denial assets In the Mier antl Seser
Fwdandreceivdtl 3,845ofxouViMeaantal nthe Housing Fund
The Notes to Financial Statements are an
Integral Part of this Statement. 21
City of Livonia, Michigan
llrlini
Accounts payable
Fiduciary Funds
$ -
Statement of Fiduciary Net Position
21,637
November 30, 2014
Due to primary government
Pension and
-
Other Employee
-
Benefits Agency Funds,
Assets
-
Cash and cash equivalents (Note 3)
$ 656,110 $ 10,229,190
Investments: (Note 3)
-
U.S. government securities
16,866,370 -
Collateralized mortgage obligations
9,241,755 -
Commonstock
151,823,439 -
Common bonds
24,380,621 -
Real estate investment trust
11,156,381 -
Foreign bonds
3,561,440 -
Mutual funtls
99770,830 -
Secur6ies lending collateral pool -Mutual funds 3,332,289 -
Accounts receivable
194,480 -
Duefrom primary government
1,453 -
Duefrom agency funds
1,268,414 27,145
Total assets
322,253,582 $10,256,335
llrlini
Accounts payable
959,989
$ -
Due toother governmental units
21,637
5,352,256
Due to primary government
993,730
-
Duetoagency funds
-
1,295,559
Accrued and other liabilities
-
3,608,520
Amounts due to broker under securities lending agreement
3,494,662
-
Totalliabilities
5,470,018
$10,256,335
Net Position Held in Trust for Pension and Other Employee
Benefits
$ 316,783,564
The Notes to Financial Statements are an
Integral Part of this Statement. 22
City of Livonia, Michigan
Fiduciary Funds
Statement of Changes in Fiduciary Net Position - Pension and Other
Employee Benefits Trust Funds
Year Ended November 30, 2014
The Notes to Financial Statements are an
Integral Part of this Statement. 23
Pension and
Other
Employee
Benefits
Additions
Investment income:
Interest and dividends
$ 9,514,274
Net charge in fair value of investments
19,358,603
Less investment expenses
(812,000)
Net investment income
28,060,877
Contributions:
Employer
10,022,144
Employee
963,610
Total contributions
10,985,754
Total additions
39,046,631
Deductions
Pension benefit payments
15,916,004
Medical benefit payments
7,109,852
Refunds of contributions
604,440
Administrative expenses
226,677
Total deductions
23,856,973
Net Increase in Net Position Held in Trust
15,189,658
Net Position Held in Trust for Pension and Other Employee Benefits -
Beginning of year
301,593,906
Net Position Held in Trust for Pension and Other Employee Benefits -
End of year
$ 316,783,564
The Notes to Financial Statements are an
Integral Part of this Statement. 23
City of Livonia, Michigan
Component Units
Statement
of Net Position
November 30, 2014
Emmmi<
Plymouth R®tl
Brownfield
Deeabprea
Deeabprea
Redoebpma
corPorabn
Authority
Authority Taal
Awards
Cash andash e4isa'enls
$ 23 ]2o
$ 552}5]
$ 1,006 $ 87,883
M<wnth re<eil
-
stress
65821 hai
Due tornlrrmhry government
-
195
- 195
Dual (Note 4)
NonRpeciade apUl assets
-
474,448
- 474,448
Depe<iateaplalaaets Net
-
4,885018
- 4,885018
TotJ mos
23 ]2o
5,995895
65827 5,85545
Hadlitim
Accounts trade
-
75,695
52,557 725353
Accrued and mer hati
-
10$53
- 10$53
Noncurrent ladlitia:
Due wenn we year
-
500,000
- 500,000
Due in more than we year
-
1650,050
- 1550,000
Tad' mbmies
223597)
52,651 2,238,636
Net Position
Net investment in eapml assets
3210,858
5210,858
umeamaed
23no
5432x1
14,170 581,151
Taa'not pool
S 23.710
S 3.154.119
S 14.170 S 3.792009
The Notes to Financial Statements are an
Integral Part of this Statement. 24
City of Livonia, Michigan
FunctiorWPrograns
Economic Development Corporation -
Generalgowmment
Plymou8i Road Devebpment Authonty
Community and economic
development
Interest on longterm @bt
Total Plymouth Road
Devebpment XAhonty
Brownfield RealowlopmentAuthonty-
Community and economic
development
Totaloormonentumb
Program Revenue
Operating Capital Grants
Charges for Grants and and
Expanses Seraws Contnbutions Contnbutions
1,025,979 - - -
188,887 - - -
1134,866 - - -
52,65]
$ 1,1efi,n3 $ $ $
General revenue:
Pmperty taxes
Interest
Miscellaneous
Total general revenue
Change in Net Position
Net Position - Beginning of year
Net Position - End myear
The Notes to Financial Statements are an
Integral Part of this Statement. 25
Component Units
Statement of Activities
Year Ended November 30, 2014
Net (Expense) Rewnm and Changes in Net Position
Emmmic Plymo Road Br nfieb
Dewlapment Dewlapment Re wbpment
Corporation Mftnty Mftnty Total
(1025,919) - (1025,919)
(108,081) - (108,081)
(1134,066) - (1134,066)
- (52,651) (52,651)
(1134066) (52,651) (1186,123)
-
885,551
65,821
951,372
101
141
6
254
269
1,000
1,269
101
8a5W
66,821
952,e95
101
(248,899)
14,170
(233,828)
23,619
4,002,218
-
4,025,831
$ 23,720 $
3,754,119 $
14,170 $
3,]92,009
26
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 1 - Summary of Significant Accounting Policies
The following is a summary of the significant accounting policies used by the City of
Livonia, Michigan:
Reporting Entity
The City of Livonia, Michigan (the "City") is governed by an elected seven-menber
council. The City's adninistation operates under the overall direction of an elected
mayor. The acconpanying financial statements present the City and its component
units, entities for which the City is considered to be financially accountable. Although
blended conponent units are legal separate entities, in substance, they are part of the
Citys operations. Each discretely presented component unit is reported in a separate
column in the government -wide financial statements to emphasize that it is 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 pnnmry purpose
is to finance and construct the City's public buildings. The operations of the Municipal
Building Authonty are reported as a nommjor Debt Service Fund.
The Distinct Court Funds of District No. 16 are reported within the Trust and Agency
Funds. Although it is legally separate from the City, it is reported as if it were part of the
primary government because of the fiduciary relationship it has with the City.
Discretely Presented Component Units - The Economic Development Corporation
(the "EDC") was created to provide means and methods for the encouragement and
assistance of industrial and commercial enterpnses 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 EDC'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.
The Plymouth Road Development Authority was created to encourage additional
economic activity and growth in the Plymouth Road business district. The Plymouth
Road Development 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, M 148154.
27
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 1 - Summary of Significant Accounting Policies (Continued)
The Brownfield Redevelopment Authority was created, pursuant to Public Act 381 of
1996, to promote revitalization of environmentally distressed areas within the 36 -square
mile boundary of the City. The Brownfield Redevelopment Authority is funded primarily
by property tax revenue captures. The Brownfield Redevelopment Authority is
governed by a nine -member board that is designated by the mayor and appointed by the
City Council.
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.
Accounting and Reporting Principles
The City follows accounting principles generally accepted in the United States of
America (GAAP) as applicable to governmental units. Accounting and financial reporting
pronouncements are promulgated by the Governmental Accounting Standards Board.
Report Presentation
Governmental accounting principles require that financial reports include two different
perspectives - the government -wide perspective and the fund -based perspective. The
government -wide financial statements (i.e., the statement of net position and the
statement of activities) report information on all of the nonfiduciary activities of the
primary government and its component units. The government -wide financial
statements are presented on the economic resources measurement focus and the full
accrual basis of accounting. Property taxes are recognized as revenues in the year for
which they are levied. Grants and similar items are recognized as revenue as soon as all
eligibility requirements imposed by the provider have been met. The statements also
present a schedule reconciling these amounts to the modified accrual -based
presentation found in the fund -based statements.
The statement of activities demonstrates the degree to which the direct expenses of a
given function or segment are offset by program revenues. Direct expenses are those
that are clearly identifiable with a specific function or segment. Program revenues
include: (1) charges to customers or applicants for goods, services, or privileges
provided; (2) operating grants and contributions; and (3) capital grants and
contributions, including special assessments. Taxes and other items not properly
included among program revenues are reported instead as general revenue.
For the most part, the effect of irRerfund activity has been removed from these
statements. Exceptions to this general rule are charges between the City's water and
sewer function and various other functions of the City. Elirrinations of these charges
would distort the direct costs and program revenues reported for the various functions
concemed.
471
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 1 - Summary of Significant Accounting Policies (Continued)
Separate financial statements are provided for governmental funds, proprietary funds,
and fiduciary funds, even though the latter are exduded 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.
Fund Accounting
The City accounts for its various activities in several different funds, in order to
demonstrate accountability for how we have spent certain resources - separate funds
allow us to show the particular expenditures that specific revenues were used for. The
various funds are aggregated into three broad fund types:
Governmental Funds include all activities that provide general governmental services
that are not business -type activities. This includes the General Fund, special revenue
funds, debt service funds, capital project funds, and permanent funds. The City reports
the following funds as "major' governmental funds:
The General Fund, which is the primary operating fund because it accounts for all
financial resources used to provide general government services, other than those
specifically assigned to another 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 dedicated property tax levy and user
charges.
The Refuse Disposal Fund accounts for the operations of the refuse disposal
activities of the City. Funding is provided primarily through a local dedicated
property tax levy
Proprietary Funds include enterprise funds (which provide goods or services to users
in exchange for charges or fees) and internal service funds (which provide goods or
services to other funds of the City). The City reports the following funds as "major"
enterprise funds:
The Water and Sewer Fund accounts for the activities of the water and sewer
distribution system and sewage collection system. Funding is provided primarily
through user charges.
The City's Internal Service Fund is used to fund general, workers compensation, and
employee healthcare liability claims to purchase insurance that provides excess general
liability coverage for City employees and property. The fund is financed primarily by
charges to the various departments of the City.
29
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 1 - Summary of Significant Accounting Policies (Continued)
Fiduciary Funds include amounts held in a fiduciary capacity for others. These amounts
will not be used to operate our governments programs. Activities that are reported as
fiduciary include:
Pension and Other Employee Benefits Trust Fund, which accounts for the activities
of employee benefit plans that accumulate resources for pension and other
postemployment benefit payments to qualified employees.
The City of Livonia Employees' Retirement System and the City of Livonia Health
and Disability Plan have been blended into the Citys financial statements. These
systems are governed by a five -member pension board that includes three
individuals chosen by the City Council anNor 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.
Agency Funds, which 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.
Interfund activity: During the course of operations the City has activity between funds
for various purposes. Any residual balances outstanding at year end are reported as due
fromito other funds and advances to/from other funds. While these balances are
reported in fund financial statements, certain eliminations are made in the preparation of
the government -wide financial statements. Balances between the funds included in
governmental activities (i.e., the governmental and internal service funds) are eliminated
so that only the net amount is included as internal balances in the governmental activities
column. Sirrilady, balances between the funds included in business -type activities (i.e.,
the enterprise funds) are eliminated so that only the net amount is included as internal
balances in the business -type activities column.
Further, certain activity occurs during the year involving transfers of resources between
funds. In fund financial statements these amounts are reported at gross amounts as
transfers in/out. While reported in fund financial statements, certain eliminations are
made in the preparation of the government -wide financial statements. Transfers
between the funds included in governmental activities are eliminated so that onlythe net
amount is included as transfers in the governmental activities column. Similarly, balances
between the funds included in business -type activities are eliminated so that only the net
amount is included as transfers in the business -type activities column.
30
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 1 - Summary of Significant Accounting Policies (Continued)
Basis of Accountin
The governmental funds use the current financial resources measurement focus and the
modified accrual basis of accounting. This bass of accounting is intended to better
demonstrate accountability for how the government has spent its resources.
Expenditures are reported when the goods are received or the services are rendered.
Capital outlays are reported as expenditures (rather than as capital assets) because they
reduce the ability to spend resources in the future; conversely, employee benefit costs
that will be funded in the future (such as pension and retiree health care related costs,
or sick and vacation pay) are not counted until they come due for payment. In addition,
debt service expenditures, claims, and judgments are recorded only when payment is
due.
Revenues are not recognized until they are collected, or collected soon enough after the
end ofthe yearthat they are available to pay for obligations outstanding at the end ofthe
year. For this purpose, the City considers amounts collected within 60 days of year end
to be available for recognition. 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 federal grant reimbursements will be collected after the period of
availability; receivables have been recorded for these, along with a "deferred inflow of
rescurce
Proprietary funds and fiduciary funds use the economic resources measurement focus
and the full accrual basis of accounting. Revenue is recorded when earned and expenses
are recorded when a liability is incurred, regardless of the timing of related cash flows.
Specific Balances and Transactions
Cash, Cash Equivalents, 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 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 statements as "internal balances." All trade and propertytax receivables are shown
as net of allowance for uncollectible amounts.
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 1 - Summary of Significant Accounting Policies (Continued)
Inventories and Prepaid Items - Inventories are valued at cost, on a first -in, first -out
basis. Inventories of governmental 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 a bond reserve. These amounts have been dassified as restricted assets.
Capital Assets - Capital assets, which include property, plant, equipment, and
infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in
the applicable governmental or business -type activities column in the government -wide
financial statements. Capital assets are defined by the City as assets with an initial
individual cost of more than $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.
Infrastructure, buildings, equipment, and vehicles are depreciated using the straight-line
method over the following useful lives:
Capital asset dass Lives
Infrastructure
33 to 40 years
Road rights
33 years
Buildings and improvements
20 to 50 years
Machinery, equipment, and vehicles
2 to 20 years
Water and sewer distribution systems
50 years
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 position. Bond
premiums and discounts are deferred and amortized over the life of the bonds using the
effective interest method; bonds payable are reported net of the applicable bond
premium or discount. Bond issuance costs are expensed at the time they are incurred.
In the fund financial statements, governmental fund types recognize bond issuances as an
"other financing source," as well as bond premiums and discounts. The General Fund
and debt service funds are generally used to liquidate governmental long-term debt.
32
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 1 - Summary of Significant Accounting Policies (Continued)
Deferred Outflowsllnflows of Resources
In addition to assets, the statement of net position and/or balance sheet will sometimes
report a separate section for deferred outflows of resources. This separate financial
statement element represents a consumption of net position that applies to a future
period(s) and so will not be recognized as an outflow of resources
(expense/expenditure) until then. The City has one item that qualifies for reporting in
this category: bond refunding loss being amortized.
In addition to liabilities, the statement of net position andlor balance sheet will
sometimes report a separate section for deferred inflows of resources. This separate
financial statement element represents an acquisition of net position that applies to a
future period(s) and so will not be recognized as an inflow of resources (revenue) until
that time. The City has one item that qualifies for reporting in this category. Unavailable
revenue is reported only in the governmental funds balance sheet. The governmental
funds report unavailable revenues from various sources shown in Note 17. These
amounts are deferred and recognized as an inflow of resources in the period that the
amounts become available.
Net Position Flow Assumption
Sometimes the City will fund outlays for a particular purpose from both restricted (e.g.,
restricted bond or grant proceeds) and unrestricted resources. In order to calculate the
amounts to report as restricted - net position and unrestricted - net position in the
government -wide and proprietary fund financial statements, a flow assumption must be
made about the order in which the resources are considered to be applied. It is the
government's policy to consider restricted - net position to have been depleted before
unrestricted- net position is applied except as noted below.
33
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 1 - Summary of Significant Accounting Policies (Continued)
Fund Balance Flow Assumption
Sometimes the City will fund outlays for a particular purpose from both restricted and
unrestricted resources (the total of committed, assigned, and unassigned fund balance).
In order to calculate the amounts to report as restricted, committed, assigned, and
unassigned fund balance in the governmental fund financial statements a flow assumption
must be made about the order in which the resources are considered to be applied. It is
the Citys policy to consider restricted fund balance to have been depleted before using
any of the components of unrestricted fund balance. The exception to this are the
Community Recreation Fund and Capital Inprovement Fund, which appy unrestricted
fund balance first. Further, when the components of unrestricted fund balance can be
used for the same purpose, committed fund balance is depleted first, followed by
assigned fund balance. Unassigned fund balance is applied last. This is true for all funds
except the Community Recreation Fund and Capital Improvement Fund. As noted
above, the policy for these funds is to use unrestricted funds first; therefore, the order
of spending is unassigned, restricted, committed, and assigned.
Fund Balance Policies
Fund balance of governmental funds is reported in various categories based on the
nature of any limitations requiring the use of resources for specific purposes. The City
itself can establish limitations on the use of resources through either a commitment
(committed fund balance) or an assignment (assigned fund balance).
The committed fund balance classification includes amounts that can be used only for
the specific purposes determined by a formal action of the City's highest level of
decision -m king authority. The City Council is the highest level of decision-making
authority for the City that can, by adoption of an ordinance prior to the end of the fiscal
year, commit fund balance. Once adopted, the limitation imposed by the ordinance
remains in place until a similar action is taken (the adoption of another ordinance) to
remove or revise the limitation.
Amounts in the assigned fund balance classification are intended to be used by the City
for specific purposes but do not meet the criteria to be classified as committed. The
City Council has by resolution authorized the finance director to assign fund balance.
The City Council may also assign fund balance as it does when appropriating fund
balance to cover a gap between estimated revenue and appropriations in the
subsequent years appropriated budget. Unlike commitments, assignments generally
only exist temporarily. In other words, an additional action does not normally have to be
taken for the removal of an assignment. Conversely, as discussed above, an additional
action is essential to either remove or revise a commitment.
34
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 1 - Summary of Significant Accounting Policies (Continued)
Property Tax Revenue
Property taxes are levied on each July 1 and December 1 on the taxable valuation of
property as of the preceding December 31. These taxes are due on September 14 and
February 14, respectively. Taxes are considered delinquent on March 1, at which time
penalties and interest are assessed.
The City's 2013 tax is levied and collectible on December 1, 2013 and is recognized as
revenue in the year ended November 30, 2014, when the proceeds of the levy are
budgeted and available for the financing of operations.
The 2013 taxable valuation of the City totaled $3.92 billion. Properties in the Plymouth
Road Development Authority (PRDA) are assessed a millage of 2.0000 on July 1. The
2014 taxable valuation of PRDA totaled $482 million. The rrillages levied by the City
and the resulting revenue are as follows:
Approximate
Revenue
Purpose Millage Rate (in 000s)
Operating purposes 4.0447 $ 15,430
Police and fire 0.8088 3,085
Police and fire and snow 1.2134 4,629
Library 0.8088 3,080
Refuse and recycling 3.0246 11,519
Industrial development 0.0130 50
Roads, sidewalks, and trees 0.8893 3,387
Recreation 0.7855 3,018
Public safety 1.7000 6,485
Culture and senior services 0.2500 954
Transit and capital improvement 0.5000 1,904
Plymouth Road Development Authority 2.0000 896
Total 16.0381 $ 54,437
These amounts are recognized in the respective General, Special Revenue, Debt
Service, and Plymouth Road Development Authority Funds financial statements as tax
revenue.
The delinquent real property taxes of the City are purchased by Wayne County (the
"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 taxa in June 2014. Wayne County delinquent real property taxa have been
recorded as revenue in the current year.
35
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 1 - Summary of Significant Accounting Policies (Continued)
Pension and Other Postemployment Benefit Costs - The City offers both pension
and retiree health care benefits to retirees. The City receives an actuarial valuation to
compute the annual required contribution (ARC) necessary to fund the obligation over
the remaining amortization period. In the governmental funds, pension and OPEB costs
are recognized as contributions are made. For the government -wide statements and
proprietary funds, the City reports the full accrual cost equal to the current year
required contribution, adjusted for interest and "adjustment to the ARC" on the
beginning of year underpaid amount, if any.
Compensated Absences (vacation Leave, Sick Leave, and Comp Time) - It is the
Citys policy to permit employees to accumulate earned but unused sick and vacation
pay benefits as well as comp time. Under the City's policy, employees earn benefits
based on time of service with the City. All vacation and sick pay as well as comp time 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. All other accrued compensated absences are
reported in the government -wide financial statements; generally the funds that report
each employee's compensation (the General Fund and Water and Sewer Fund,
primarily) are used to liquidate obligation.
Proprietary Funds Operating Classification - Proprietary funds distinguish operating
revenues and expenses from nonopeating items. Operating revenues and expenses
generally result from providing services and producing and delivering goods in
connection with a proprietary fund's principal ongoing operations. The principal
operating revenues of the Water and Sewer Fund and internal service funds are charges
to customers for sales and services. The Water and Sewer Fund also recognizes as
operating revenue the portion of tap fees intended to recover the cost of connecting
new customers to the system. Operating expenses for enterprise funds and internal
service funds include the cost of sales and services, administrative expenses, and
depreciation on capital assets. All revenues and expenses not meeting this definition are
reported as nonoperating revenues and expenses.
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.
36
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 2 - Stewardship, Compliance, and Accountability
Construction 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, 2013 $ (1,321,607)
Current year building permit revenue 2,052,592
Related expenses:
Direct costs 1,168,652
Estimated indirect costs 357,513 1,526,165
Current year net revenue 526,427
Cumulative shortfall at November 30, 2014 $ (795,180)
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
law also allows investments outside the State of Michigan when fully insured. The local
unit 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' acceptances of United States banks; commercial paper rated within the two
highest classifications, which mature 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 six banks for the deposit of its 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 and bank accounts
and CDs. The City's deposits and investment policies are in accordance with statutory
authority.
37
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 3 - Deposits and Investments (Continued)
As permitted by state statutes and under the provisions of a securities lending
authorization agreement, the City of Livonia Employees' Retirement System (the
"System") lends securities to broker-dealers and banks for the 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, 2014, only United States
currency was received as collateral. The City then converts that cash received as
collateral into other investments.
The System imposed a limit of $4 million 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
The 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, 2014 was one day 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, 2014, the System had no
credit risk exposure to borrowers. The collateral held (cost basis) and the fair market
value ofthe underlying securities on loan for the System as of November 30, 2014 were
$3,494,662 and $3,332,289, 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 bank failure, the City's deposits may not be returned to R The City does not
have a deposit policy for custodial credit risk. At year end, the City had $48,874,577 of
bank deposits (certificates of deposit, checking and savings accounts) that were
uninsured and uncollateralized. In addition, the District Court, a component unit, had
$509,089 of bank deposits (checking and savings accounts, certificates of deposit) that
were uninsured and uncollateralized. The City 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 evaluates each financial institution it deposits funds with and
assesses the level of risk of each institution; only those institutions with an acceptable
estimated risk level are used as depositories.
M
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
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 arise 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.
425964
1s336s
us ageocysecunees
At year end, the City had the following
investments and maturities:
22.25
annerywemnem
Fair vane
6msY®rs 6m 16 Years
over 10 Years
us. ageocysecnees $
24.00,189
$ 24,636,189
-
all feel
1,416,072
1,416,07 -
-
US.Treasurysecuritim
2,828,925
2828925
89812D6
Tma $
20,125,186
$ 20.1tr5,1s6 $
$
Cry of if Fmpori Retirement system
Fair vane
11 6m 16 Years
over 10 Years
corporate mnd;
17510,350
6,592205 7224511
36x.884
Foreign bond
2571476
291,334 1,801
476,759
us. agencysecurmes
s579.8D
481 100,959
7,991966
us. Treasurysecurmm
2591970
149900 633,150
146a,r,46
Cdlateralrzed mortgage odgasons
6517,028
318,364 55,070
6,143,590
Total $
3],]69,85
$ 7,848,933 $ 9811
$ 28,111,959
Cly or Fmonia Retiree H®Im and El
Corporate bonds
6470271
2930,456
2764,093
1171,722
Foreign ei
909,970
189761
425964
1s336s
us ageocysecunees
35x,051
in e31
22.25
3,396,595
us Treasuresecunsm
2,136,312
61
461,325
1.03992
Collateralised mortgage area ns
2,724
154,163
25,032
2515,532
Total
$ 16288,331 $
3,478,746 $
391 $
89812D6
39
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
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. government) are as follows:
AA
Rating
Investment Fair Value
Rating Organization
Primary Government
S&P
Bank investment pools $ 1,017,081
Aaa Moodys
Bank investment pools 55,063
A2/P1 Moodys
U.S. agenciessecurities 24,680,189
AA+ S&P
Municipal bonds 1,416,072
AA- S&P
U.S. treasury securities 2,028,925
AA+ S&P
Total $ 29,197,330
Fiduciary Funds
Corporate bond
$ 2,214,361
AAA
S&P
Corporate bond
1,509,830
AA
S&P
Corporate bond
4,998,062
A
S&P
Corporate bond
11,287,954
BBB
S&P
Corporate bond
1,634,321
BB
S&P
Corporate bond
649,813
B
S&P
Corporate bond
2,094,280
NR
S&P
Foreign bonds
468,275
AA
S&P
Foreign bonds
1,396,596
A
S&P
Foreign bonds
1,696,569
BBB
S&P
U.S. agenciessecurities
269,827
A
S&P
U.S. agenciessecurities
11,868,253
NR
S&P
U.S. treasury securities
4,728,298
NR
S&P
Collateralized mortgage obligations
1,148,060
AAA
S&P
Collateralized mortgage obligations
1,207,694
AA
S&P
Collateralized mortgage obligations
2,699,546
A
S&P
Collateralized mortgage obligations
649,819
BBB
S&P
Collateralized mortgage obligations
3,536,617
NR
S&P
Total
$ 54,050,187
Component Units - Bank investment pools
$ 562,357
Aaa
Moodys
40
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 4 - Capital Assets
Capital asset activity of the City's governmental and business -type activities was as
follows:
41
Baan
Balm
NaerNa 31
G ttmenral A[M
9earNa 1, M13
RiaAueades
Additions
Qepaad
M14
Caplhl anand me bard daaoaee.
And
s 34flG1]fi5 s
s
s
(5436) s
34853,35
Cvatn Qdm In amrims
dmddi
(1 31234)
1imm
-
n241
Wbtdel
35,116155
(1,31234)
1,14,229
(5,431)
x1945711
Laplhladsarsbeligdepa®[e1
Imralrunure
101,59,20
-
4331812
-
112x1 sc
swdrgrla
13MN5
145848
20139,351
Bulldlnanand lrtprwenneds
1076134
114942
Wadi
100563Q
Eprlpnmtandvehaded
3346/653
9/033
2/411615
810156)
x0482
Subtotal
2ff7vMW
119{96
314011905
aWdx7)
2140101543
AmmulMeddepremban:
mranrujre
46,1n66
-
314519/
-
49,322341
B¢drgrla
84132%
-
551324
894,G9
Bulldlnanand lrtamenend
42635,®
2300149
(1ss")
44,20),412
EwlpnmAndvadaa'
21 M071
x1565)
23x652
x051255)
204.0
9:WtaI
1184&06
8i sin)
83442
R2®51fi)
1240)4,31]
NNapAI anAd berg dear ed
143,W4
193,535
31181
(1'P,91)
150012231
NeapAlaas
S 10,95350 S
(13844) S
1103,412 S
(102F) S
13494
Balm
Bali
6spaadand
Novella L,
Bunn t eARrvRa
De ff 1, M13
ReansWprs
Additions
Ady.9reib
M14
(aphl sera M bang depreoafee.
And
s 51644141 s
s
s
s
51"4
Cvaln Qdminadgras
Wdidi
(4j I,2E5
8033455
2933
4283083
Subtpal
5247,39
(4j I,2E5
3033455
2933
9452519
Laplhlmopbelrgdeaemnef
Wa[a andsmix daulW[ion
127,43016
4W252
12820
-
1Ymm
BuIIdIrv# and Wlldlrg lnprwenarA
940,833
-
9403,803
h4Tlnarandewlpnem
212352
35,35`
(29565)
2135,19/
Venae
19132
-
1340
(9132)
1e34315
And lAxdverreik
2916M
2916M
5 Obaal
idd Jiam
440,02
13650
(6302)
148,54759
AmmulMed depremnion:
WMa andsmix diuulWron
ss, s:tl
-
2531
-
6),954,235
BuIIdIrv# and Wlldlrg lnprwenarA
43D,555
1Pi,m
4930510
h4TlnaYand eprlpnert
199,94
21565
41x
(4399)
144514
Venae
1d'5, 185
-
82,ff9
(9137)
1169,83)
And lw o iareig
2M6_'✓1
-
51,074
-
271469
sandal
4214319
21565
21dnM
(3)26)
410),843
NeaplAla'asbeegdear ed
61,92151
433141
(2M155)
135x
WdAdM
NeaplAlm'as
S 465433 S
13815 S
5247331 S
21582 S
13022 3
41
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 4 - Capital Assets (Continued)
Component Units - Plymouth Road
Development Authority
Capital assets not being depreciated - Land
Capital assets being tlepreciatetl- Land
improvements
Accumulated depreciation- Land
improvements
Net capital assets being depreciated
Net capital assets
Balance Balance
December 1, November
2013 Additions 30, 2014
$ 474,448 $ - $ 474,448
15,703,227 - 15,703,227
10,031,656 785,161 10,816,817
5,671,571 (785,161) 4,886,410
$ 6,146,019 $ (785,161) $ 5,360,858
Depreciation expense was charged to programs of the primary government as follows:
Governmental Activities:
5,758,170
General government
$ 660,913
Public safety
1,489,716
Publicworks
4,297,571
Recreation and culture
1,922,522
Total governmental activities
$ 8,370,722
Business -type Activities
Water and sewer $ 2,681,365
Golf course 125,887
Newburgh and Silver Village 151,443
Total business -type activities $ 2,958,695
Construction Commitments - The City has active construction projects at year end.
At year end, the Citys commitments with contactors are as follows:
Street and sidewalk projects
Dain and sewer projects
Equipment
City hall improvements
Community recreation center improvements
42
Remaining
Spentto Date Commitment
$ 8,148,189 $
2,146,939
5,758,170
3,317,123
416,020
1,707,902
81,650
399,387
-
252,200
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 5 - Interfund Receivables, Payables, and Transfers
Receivable Fund Payable Fund Amount
Due to/from Other Funds
General Fund Nonmajor governmental funds $ 386,097
VEBA Fund Investment Administration
Agency Fund 773,185
EmployeesRetirement System Investment Administration
Fund Agency Fund 495,229
Court Volunteer Work Program
Agency Fund
Court Bond Agency Fund
20,826
Court Civil Drug Agency Fund
Court Bond Agency Fund
3,192
Court Bond Agency Fund
Court Depository Agency
Fund
3,127
Total
f 1,681,656
Receivable Fund
Payable Fund
Amount
Due to/from Primary Government
and Component Units
Plymouth Road Development
Authority
General Fund
$ 195
43
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 5 - Interfund Receivables, Payables, and Transfers (Continued)
These balances result from the time lag between the dates that goods and services are
provided or reimbursable expenditures occur, transactions are recorded in the
accounting system, and payments between funds are made.
Interfund transfers reported in the fund financial statements are comprised of the
following:
Transfer Out Transfer In Amount
General Fund Nonmajor governmental funds $ 2,343,790 `
Golf Course Fund 22,100 `
Total General Fund 2,365,890
Community Recreation Fund Nonmajor governmental funds 2,721,351 "
Nonmajorgovernmental funds Nonmajor governmental funds 2,432,632
Golf Course Fund 100,000 `
Total nonmajor
governmental
funds 2,532,632
Total f 7,619,873
` Transfer of unrestricted resources to finance capital projects and general obligation
debt service in accordance with budgetary authorizations
"Tansferfromthe Community Recreation Fund for debt service
*** The majority of transfers are for gas and weight tax revenue from the Major Streets
Fund to the Local Streets Fund and from these funds to the Road and Sidewalk Fund in
accordance with Act 51. Most of the remaining transfers relate to debt service.
44
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 6 - 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. County contractual agreements are also general obligations of the
City. 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 reassessment of the City) are received. Revenue bonds involve a
pledge of specific income derived from the acquired or constructed assets to pay debt
service.
Long-term debt activity can be summarized as follows:
Principal
I marest Rate raturiry Beginning Ending Due
wish
Ranges Ranges Balance Acid Redctims Balance
One Year
Governmental Mriuilig
Bunning Authority Bonds:
205 MBA Refunding Bond:
Ammm of issue R3,730,000 055,000 -
Maturing through 20zs 40M 425% $05,000 $ 2580000 $ - $ (z7s,))q $ 2,305,00) $
280,000
2007 MBA taunting Bmd:
Amount ornice -01,025.0)0 $tax5,o)0-
Maturing through 2030 400',0-475% $1,705,000 27,305,0)) - Ndss,00q 2s?50,0)0
1,44s,000
2003MBA CmdCmstrul
Bonds-
Amnmtnrgue-W5)o,o00 $245,))) -
Maturing through 2033 400',0-525% $530,000 7,660,000 - (23s,))q 7,425,0))
245,000
Total gmemmental aaihty da 37s15,)0) - (1,865.))0, 3sceo,o)o
1?70000
Other brg-term orbitatims:
General really chug, workers'
ompensation and health
claims 2114,x23 29i'm - 24)5745
claim
Proasioon mr - 3000,000 - 3000,000
30))0))
Landfill amore and postdgure
hadlily 592j94 19,989 - 612883
-
OPEBhadlity 2,96Z120 755,937 3,720,140
Compereatedah:ences 8 593 33�2(.8749_11 91289112
302667
TddiNtigmmental
$51811913 $7,445,17] $ (4,739910) $!ht 47,13) $
8,)12,f47
Compensated absences attributable to the governmental activities will be liquidated
primarily by the General Fund. The daims liability will generally be liquidated through
the City's self insurance internal service funds. That fund will finance the payment of
those claims by charging the other funds based on management's assessment of the
relative insurance risk that should be assumed by individual funds. The net OPEB
obligation will be liquidated from the funds that the individual employee's salaries are
paid from, generally the General Fund.
45
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 6 - Long-term Debt (Continued)
Principal
Interest Rate
Maturity
interest Rate
Maturity
Beginning
Ranges
Erring
Doe Whin
Reductions Balance
Ranges
Ranges
Balance
Atltlitiom
Reductions
Burance
One year
Businesslype Activities
Refunding Bond:
Buildng Authority Bonds:
Amount of issue M.470,000
$500,000 -
2007 MBA Refimdng Bond::
Maturing through 2018
425%-500%
$570,000 $
2625.000 $ -
$ (475,000) $ 2150,000
$ 500,000
Amount of issue $3,390,000
Maturing through 2015
4006
U35,000
$ 870,000 $
-
$ (435,000)
$ 435,000
$ 435,000
Water Dupery and Wasteeater
System Bond;:
2013 State ofMidiigan Clean Water
Program State Revolving Loan:
Amount ofissue -$3620000
$125000 -
Maturing through 2034
200%
$20,000
42016
2,701,659
-
2,749,37515
125,000
2014 State of Michigan Drinking
Water Program Revolving Loan:
Amountofissue-5.115,000
545,000 -
Maturing through 2034
250%
535,000
-
3006,861
-
3006,861
145000
2005 Water Suryty and Wastewater
System Revenue Bonds:
Amountoflssue -$4,885,000
$315,000 -
Maturing through 2020
3]5%-500%
$100000
2,630,000
-
(330,000)
2300.000
3!5000
20% Water Suryty and Wastewater
System Revenue ReNndng Bond:
Amount ofissue -$1110,000
Sa35,000-
Maturing through 2ND
3]5%-500%
Sa55,000
3=000
(448,000)2=000
a45BBB
rota bnineartyPe
actiVityda
6,fin,46
5,74,520
(1205,000)
11146,566
1,490,000
Cmnlycontractual odigatims:
Rate RevoMng Fund Iran- N.
Huron ValeylRouge Valley
Wasteveater control system:
anount of i%ue-54.428]03
Maturing through 2ml
225%
r Rgrr
11
-
(25,000)
125,000
25. BBB
Other brg-term odgatims:
Prwisim for daims
2500,000
-
2,500. BBB
2.500, BBB
OPEB rankly
121
33,]69
163,414
CompersatedaWences
521
211
1524454
239,107
3ntaates e
acnwtlg
$ 7,445,437 $
8,467,342
(_345)
$ 1453,
$ 14,459,434
$ azsa,lm
Pnndlal
Interest Rate
Maturity
Beginning
Ending
Due Whin
Ranges
Rang=
Be lame Ailitims
Reductions Balance
One year
Comporent Unit Activities
20%Doentown De elnnnent
Refunding Bond:
Amount of issue M.470,000
$500,000 -
Maturing through 2018
425%-500%
$570,000 $
2625.000 $ -
$ (475,000) $ 2150,000
$ 500,000
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 6 - Long -tern Debt (Continued)
Annual debt service requirements to maturity for the above bonds and note obligations
are as follows:
` State of Michigan Clean Water Program State Revolving Loan and Drinking Water
Program Revolving Fund Loan principal and interest reported above are based on
amounts drawn as of November 30, 2014.
Revenue Bond- The City has pledged substantially all revenue of the Water and Sewer
Fund, net of operating expenses, to repay the above water and sewer revenue bonds.
Proceeds from the bonds provided financing for improvements to the water and sewer
system. The bonds are payable solely from the net revenues of the water and sewer
system. The remaining principal and interest to be paid on the bonds is approximately
$14.1 million. During the current year, net revenue of the system was approximately
$3.3 million compared to the annual debt requirements of approximately $1.5 million.
During fiscal year 2013, the City was approved for a State of Michigan Clean Water
Program State Revolving Loan in the amount of $3,620,000. Proceeds from the loan are
to provide for the acquisition and construction of additions, extensions, and
improvements to the water supply and wastewater system of the City of Livonia
During the year, the City drew down $2,707,659 of the authorized debt amount The
project is still ongoing and the City expects to draw down the full amount before
principal payments begin in 2015.
During fiscal year 2014, the City was approved for a State of Michigan Drinking Water
Program Revolving Fund Loan in the amount of $3,775,000. Proceeds from the loan are
to provide for the purchase, acquisition, construction, improvement, enlargement,
extension, and repair of public improvements to the water supply and wastewater
system of the City of Livonia During the year, the City drew down $3,006,861 of the
authorized debt amount. The project is still ongoing and the City expects to draw down
the full amount before principal payments begin in 2015.
47
,aN.�
m
A.,m.
A.,m.
` State of Michigan Clean Water Program State Revolving Loan and Drinking Water
Program Revolving Fund Loan principal and interest reported above are based on
amounts drawn as of November 30, 2014.
Revenue Bond- The City has pledged substantially all revenue of the Water and Sewer
Fund, net of operating expenses, to repay the above water and sewer revenue bonds.
Proceeds from the bonds provided financing for improvements to the water and sewer
system. The bonds are payable solely from the net revenues of the water and sewer
system. The remaining principal and interest to be paid on the bonds is approximately
$14.1 million. During the current year, net revenue of the system was approximately
$3.3 million compared to the annual debt requirements of approximately $1.5 million.
During fiscal year 2013, the City was approved for a State of Michigan Clean Water
Program State Revolving Loan in the amount of $3,620,000. Proceeds from the loan are
to provide for the acquisition and construction of additions, extensions, and
improvements to the water supply and wastewater system of the City of Livonia
During the year, the City drew down $2,707,659 of the authorized debt amount The
project is still ongoing and the City expects to draw down the full amount before
principal payments begin in 2015.
During fiscal year 2014, the City was approved for a State of Michigan Drinking Water
Program Revolving Fund Loan in the amount of $3,775,000. Proceeds from the loan are
to provide for the purchase, acquisition, construction, improvement, enlargement,
extension, and repair of public improvements to the water supply and wastewater
system of the City of Livonia During the year, the City drew down $3,006,861 of the
authorized debt amount. The project is still ongoing and the City expects to draw down
the full amount before principal payments begin in 2015.
47
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 6 - Long -tern Debt (Continued)
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 Citys
financial statements. Information regarding the status of each bond issue, including
possible default, crust be obtained from the paying agent or other knowledgeable
source. The aggregate original issue amount was $83,667,000.
Note 7 - Restricted Assets
Business -type Activities - In accordance with the provisions of the Water Supply and
Wastewater System Revenue bonds, the City is required to set aside monies in a bond
reserve account. At November 30, 2014, the City set aside $949,556 of cash and cash
equivalents to comply with these requirements.
Note 8 - Risk Management
The City is exposed to various risks of loss related to property loss, torts, errors and
omissions, and employee injuries (workers' compensation), as well as medical benefits
provided to employees. The City has purchased commercial insurance for medical
benefits and workerscompensation 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 pcol 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 prerriums 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.
m
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 8 - 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 daims 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 column in the statement of net position. Changes in
the estimated liability for the past two fiscal years were as follows:
General Liabfly workmi Cmmperealion Modal Chum
2814 2813 2814 2813 2814 2013
Btirmlealiablily
-
Beginnngofyeal $ HGSj4] $ 790448 $ @Ig614 $ all $ 448,385 $ 930,303
Btirmleaclaims
«ed including
changes in estimates I,2g,154 I,00],]95 Zi8915 185,863 10906,740 12,101105
Claim Py is (]49,]03) (932088) (852028) (58,995) (10911,659) (12,613103)
Eslirrelealiablily-Entl
yeah 6 1415,198 $ HGSj4] $ 5]],161 $ &106]4 $ 413,386 $ 448,305
Note 9 - Defined Contribution Pension Plan
The City established a defined contribution pension plan under Section 401(a) of the
Internal Revenue Code for the following employee:
• General employee members -AII members hired on or after March 17, 1997
• Police lieutenant and sergeant members - AII members hired on or after
December 8, 1997
• Police officer members -AII members hired on or after November 24, 1998
• Firefighter members - AII 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 through collective bargaining
agreements, the City contributes a percentage of employees' earnings as follows:
Employees Transkamngfmmthe New Employees Hined Afferthe
Defined Barrel Pension Plan Efiectile Dates Noted Above
Employer Employee Employer Employee
Contribution Contribution Contribution Contribution
General
13%
3.1kto366%
8%
3.19JW366%
Police lieutenants and sergeants
13%
521%
11%
521%
Police
13%
5%
11%
5%
Fire
13%
356%
11%
356%
49
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 9 - Defined Contribution Pension Plan (Continued)
The employee contribution percentages noted above represent the minimum required
contribution. Employees are permitted to contribute additional amounts up to the
maximum allowed by law.
The Citys contributions for each employee (plus interest allocated to the employee's
account) are fully vested after four years of service.
In accordance with the above requirements, the City contributed $1,915,795 during the
current year and employees contributed $813,121.
Note 10 - Defined Benefit Pension Plan Description
Plan Administration - The City of Livonia Employees' Retirement System administers
the City of Livonia Employees' Retirement System (the "System") - a single -employer
defined benefit pension plan that provides retirement, disability, and death benefits to
the following employees of the City unless they elected to transfer to the City's 401(a)
defined contribution pension plan (see Note 9):
• General employee members - All merrbers hired prior to March 17, 1997 and their
beneficiaries
• Police lieutenant and sergeant members - All members hired prior to December 8,
1997 and their beneficiaries
• Police officer members - All members hired prior to November 24, 1998 and their
beneficiaries
• Firefighter members - All members hired prior to July 1, 1998 and their
beneficiaries
Management of the System is vested in the System Board of Trustees, which consists of
five members - the Mayor or Mayor's designated administrative representative, a
member of the City Council to be selected by the Council, a member of the Civil
Service Commission to be selected by the Civil Service Commission, a police or fire
member to be elected by the police and fire members, and a member of any retirement
plan established by City ordinance who is not a police or fire member to be elected by
the members of any retirement plan established by City ordinance other than police and
fire members.
Plan Membership - The plan is dosed to new hires. At November 30, 2013, the date
of the most recent actuarial valuation, System membership consisted of the following:
Inactive plan members or beneficiaries currently receiving benefits 576
Inactive plan members entitled to but not yet receiving benefits 20
Active plan members 131
50
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 10 - Defined Benefit Pension Plan Description (Continued)
Benefits Provided - The System provides retirement, disability, and death benefits as
follows:
General Members: Eligible after 30 years of service regardless of age, or age 55 with 10
years of service. Permanent part-time General members need only 10 calendar years
of membership instead of 10 years of credited service. Pension amount is 2.5 percent of
the member's average final compensation (AFC) times years of credited service
(maximum is 75 percent of AFC).
Police Officers Sergeants & Lieutenants: Eligible after 25 years of service regardless of
age, or age 52 with 10 years of service. (Age 50 with 10 years but less than 25 years of
service - early retirement with reduced benefit of % percent per month below age 52.)
Pension amount is 2.8 percent of the member's average final compensation (AFC) times
the first 24 years of credited service, plus 7.8 percent of AFC for the 25th year of
credited service (maximum is 75 percent of AFC).
Police Command: Eligible after 27 years of service regardless of age, or age 50 with 10
years of service. (Age 48 with 10 years but less than 27 years of service - early
retirement with reduced benefit of % percent per month below age 50.) Pension
amount is 2.8 percent of the members average final compensation (AFC) times the
years of credited service (maximum is 75 percent of AFC).
Fire Members: Eligible after 27 years of service regardless of age, or age 52 with 10
years of service. (Age 50 with 10 years but less than 27 years of service - early
retirement with reduced benefit of % percent per month below age 52.) Pension
amount is 2.8 percent of the members average final compensation (AFC) times the
years of credited service (maximum is 75 percent of AFC).
Average Final Compensation (AFC) is the average of the highest annual compensations
received during any three years of service contained within the 10 years of service
immediately preceding retirement, including base salary, longevity, shift differential, paid
time oft, holiday pay, and payment of accumulated vacation time up to the limits
established by the respective bargaining agreements. In addition, medt pay is included
for Police members and Paramedic/EMT or ALS bonuses are included forfrefighters.
Benefit terms provide for annual cost of living adjustments to each members retirement
allowance subsequent to the member's retirement date. The monthly adjustments vary
between $20 and $250 depending on year of retirement and amount of years past
retirement.
Plan members are eligible for disability retirement upon termination of City employment
by reason of total and permanent disability after completing at least 10 full years of
credited service, except that in the event of a duty disability, the 10 -year service
requirement is waived. Special age and service requirements apply in the calculation of
the disability benefit provided.
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 10 - Defined Benefit Pension Plan Description (Continued)
Contributions - Article 9, Section 24 of the State of Michigan constitution requires that
financial benefits arising on account of employee service rendered in each year be
funded during that year. Accordingly, the System Board of Trustees retains an
independent actuary to determine the annual contribution. The actuarially determined
rate is the estimated amount necessary to finance the costs of benefits earned by plan
members during the year, with an additional amount to finance any unfunded accrued
liability. Contribution requirements of plan members are established and may be
amended by the Board of Trustees in accordance with the City Charter, union
contracts, and plan provisions. For the year ended November 30, 2014, the average
active member contribution rate ranged from 2.55 to 7.30 percent of annual pay. The
funding policy provides for periodic employer contributions at actuarially determined
rates.
Note 11 - Defined Benefit Pension Plan Reserves
In accordance with plan documents, the following reserves are required to be set aside
within the pension plan:
The pension reserve fund (retiree reserve) is to be computed annually by the actuary as
the present value of estimated benefit payments for all current retirees. The amounts
reserved may be used solely to pay monthly retiree benefit payments.
The pension savings fund (employee reserve) is credited as employee contributions are
received throughout the year; the System maintains a record of the amount contributed
by each employee, and credits interest annually at a rate of percent. For any employee
who terminates before vesting in the pension plan, their balance is returned to them; for
those who stay until retirement, the balance is transferred into the retiree reserve.
The pension accumulation fund (employer reserve) account is used to account for the
residual net position balance in the pension plan after funding the above two reserves.
The balances of the reserve accounts at November 30, 2014 are as follow:
Required Reserve Amount Funded
Pension reserve fund $ 146,226,521 $ 146,226,521
Pension savings fund 7,197,706 7,197,706
Pension accumulation fund N/A 72,630,636
52
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 12 - Defined Benefit Pension Plan Investments - Policy and Rate of
Return
Investment Policy - The Systems policy in regard to the allocation of invested assets is
established and may be amended by the System Board of Trustees by a majority vote of
its members. It is the policy of the System Board of Trustees to pursue an investment
strategy that manages risk through the prudent diversification of the portfolio across a
broad selection of distinct asset classes. The System's investment policy discourages the
use of cash equivalents, except for liquidity purposes, and aims to refrain from
drarmtically shifting asset class allocations over short time spans. The following was the
System's adopted asset allocation policy as of November 30, 2014:
Asset Class Target Allocation
Domestic equity 45
International equity 5
U.S. Core fixed income 30
Global fixed income 5
High yield fixed income 5
Real estate 10
Rate of Return - For the year ended November 30, 2014, the annual money -weighted
rate of return on pension plan investments, net of pension plan investment expense, was
9.60 percent. The money -weighted rate of return expresses investment performance,
net of investment expense, adjusted forthe changing amounts actually invested.
Note 13 - City Defined Benefit Pension Cost and Related Obligation
The pension plan does not issue a separate financial report.
Annual Pension Cost - For the year ended November 30, 2014, the Citys annual
pension cost of $3,634,058 for the plan was equal to the Citys required and actual
contribution. The pension cost for the three most recent years is as follows:
Fiscal Year Ended November 30
53
2014
2013
2012
Annual pension cost (APC)
$ 3,634,058 $
2,082,220 $
747,119
Percentage of APC contributed
100.0%
100.0%
100.0
Net pension obligation
-
-
-
53
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 13 - City Defined Benefit Pension Cost and Related Obligation
(Continued)
Funding Status and Funding Progress - As of November 30, 2013, the most recent
actuarial valuation date, the plan was 98.1 percent funded. The actuarial accrued liability
for benefits was $201.4 million, and the actuarial value of assets was $197.5 million,
resulting in an unfunded actuarial accrued liability of $3.9 million. The covered payroll
(annual payroll to active employees covered by the plan) was $9.9 million, and the ratio
of the unfunded actuarial accrued liability to the covered payroll was 39.3 percent.
The schedule of funding progress, presented as required supplemental information (RSI)
following the notes to the financial statements, presents multiyear trend information
about whether the actuarial value of plan assets are increasing or decreasing over time
relative to the actuarial accrued liability of benefits.
Actuarial Methods and Assumptions - The annual required contribution was
determined as part of an actuarial valuation at November 30, 2012, using the aggregate
cost method. Significant actuarial assumptions used include (a) an 8 percent investment
rate of return and (b) projected salary increases of 4 percent to 11.92 percent per year.
Both (a) and (b) include an inflation component of 4 percent. The actuarial value of
assets was determined using tedmiques 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 closed basis. The remaining amortization period is the
expected future wonting lifetime.
Note 14 - Net Pension Asset of the City
The City reports pension expense based on funding requirements, as directed by GASB
27. Beginning next year, the City will adopt GASB 68 which will require the
measurement of pension expense as it is earned, rather than as it is funded. The net
pension asset of the City has been measured as of November 30, 2014 and is composed
of the following:
The components of the net pension asset of the City at November 30, 2014, were as
follows:
Total pension liability $ 202,434,682
Plan fiduciary net position (226,054,863)
Citys net pension asset $ (23,620,181)
Plan fiduciary net position as a percentage of the total pension
liability 111.7
54
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 14 - Net Pension Asset of the City (Continued)
Actuarial Assumptions - The total pension liability was determined by an actuarial
valuation as of November 30, 2014. The valuation used the following actuarial
assumptions, applied to all periods included in the measurement:
Inflation 4.0
Salary increases 11.9-4.0 % Average, including inflation
Investment ate of return 8.0 % Net of pension plan investment
expense, including inflation
Mortality rates were based on the 1983 Group Annuity Mortality Table.
Discount Rate - The discount rate used to measure the total pension liability was 8.0
percent. The projection of cash flows used to determine the discount ate assumed that
employee contributions will be made at the current contribution rate and that City
contributions will be made at rates equal to the difference between actuarially
determined contribution rates and the employee rate.
Projected Cash Flows
Based on those assumptions, the pension plan's fiduciary net position was projected to
be available to make all projected future benefit payments of current active and inactive
employees. Therefore, the long-term expected rate of return on pension plan
investments was applied to all periods of projected henefd payments to determine the
total pension liability.
The long-term expected rate of return on pension plan investments was determined
using a building-block method in which best-estimute ranges of expected future real
rates of return (expected returns, net of pension plan investment expense and inflation)
are developed for each major asset class. These ranges are combined to produce the
long-term expected rate of return by weighting the expected future real rates of return
by the target asset allocation percentage and by adding expected inflation.
Sensitivity of the Net Pension Asset to Changes in the Discount Rate - The
following presents the net pension asset of the City, calculated using the discount rate of
8.0 percent, as well as what the City's net pension asset would be if it were calculated
using a discount rate that is one percentage point lower (7.0 percent) or one percentage
point higher (9.0 percent) than the current rate:
1 Percent Current 1 Percent
Decrease Discount Rate Increase
(7.0 Percent) (8.0 Percent) (9.0 Percent)
Net pension asset ofthe City $ (5,054,527) $ (23,620,181) $ (39,600,291)
55
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 15 - Other Postemployment Benefits
The City of Livonia Retiree Health and Disability Benefits Plan
Plan Description - Effective November 4, 1998, the City created the City of Livonia
Retiree Health and Disability Benefits Plan (the "VERA"). 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, 2013, the date of
the most recent actuarial valuation, membership consisted of 527 active participants,
653 retired participants, and 31 inactive vested participants.
Eligibility - Most 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. Effective December 1, 2009, certain
newly hired employees receive a health reimbursement account instead of being eligible
for the VEBA. As of November 30, 2012, the plan began to provide Health
Reimbursement Savings Accounts (HRSA) to all new hires in lieu of the VEBA medical
benefits.
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 terms of the plan.
The obligation to contribute to and maintain the System for these employees was
established by negotiation with certain bargaining units, including genal and
administrative employees. These employees are required to make a contribution of 2
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.
Funding Progress - For the year ended November 30, 2014, the City has estimated
the cost of providing retiree healthcare benefits through an actuarial valuation as of
November 30, 2012. The valuation computes an annual required contribution which
represents a level of funding that, if paid on an ongoing basis, is projected to cover
normal costs each year and amortize any unfunded actuarial liabilities over a period not
to exceed 30 years. This valuation's computed contribution and actual funding are
summarized as follows:
56
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 15 - Other Postemployment Benefits (Continued)
Annual required contribution (recommended) $
7,066,283
Interest on the prioryears net OPEB obligation
247,508
Less adjustment to the annual required contribution
(135,999)
Annual OPEB cost
7,177,792
Contributions to VEBA
(6,388,086)
Increase in net OPEB obligation
789,706
OPEB obligation - Beginning ofyear
3,093,848
OPEB obligation - End of year $
3,883,554
The annual OPEB costs, the percentage contributed to the plan, and the
net OPEB
obligation for the current and two preceding years were as follows:
Percentage
Fiscal Year Annual OPEB OPEB Costs
Net OPEB
Ended Costs Contributed
Obligation
11/30/12 $ 7,318,583 89.9
2,373,877
11/30/13 7,163,583 89.9
3,093,848
11/30/14 7,177,792 89.0
3,883,554
The funding progress of the plan as of the most recent valuation date is as follows (in
000s):
Aduanal Aduanal
UML as
Aduanal Value of P nietl Unfunded Funded Ratio Covered
Percentage
Valuation Assets' Liability AAL(UML) (Percent) Payroll
of Cmered
Date (a) uW)(b) (ba) (a/lb) (c)
Payroll
11/38/11 $ 62,491 $ 156,268 $ 93,769 400 $ 32,871
2853
11/38/12 65,667 169,363 183,696 388 30,964
3349
11/38/13 74550 i6Q552 86,882 464 30,568
2814
Valued using the the yaar "smoothed tuntling' market value
57
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 15 - Other Postemployment Benefits (Continued)
Actuarial Methods and Assumptions - Actuarial valuations of an ongoing plan involve
estimates of the value of reported amounts and assumptions about the probability of
occurrence of events far into the future. Examples include assumptions about future
employment, mortality, and the healthcare cost trend. Amounts determined regarding
the funded status of the plan and the annual required contributions of the employer are
subject to continual revision as actual results are compared with past expectations and
new estimates are made about the future. The schedule of funding progress, presented
as required supplemental information following the notes to financial statements,
presents multiyear trend information about whether the actuarial value of plan assets is
increasing or decreasing over time relativeto the actuarial accrued liabilities for benefits.
Projections of benefits for financial reporting purposes are based on the substantive plan
(the plan as understood by the employer and the plan members) and include the types
of benefits provided at the time of each valuation and the historical pattern of sharing of
benefit costs between the employer and plan members to that point. The actuarial
methods and assumptions used include techniques that are designed to reduce the
effects of short-term volatility in actuarial accrued liabilities and the actuarial value of
assets, consistent with the long-term perspective of the calculations.
In the November 30, 2013 actuarial valuation, the entry age actuarial cost method was
used. The actuarial assumptions included an 8 percent investment rate of return (net of
administrative expenses), which is a blended ate of the expected long-term investment
returns on plan assets and on the employers own investments calculated based on the
funded level of the plan at the valuation date, and an annual healthcare cost rate of 6
percent for fiscal year 2014, 5.5 percent for the following year, and 4.75 percent
thereafter. Both rates included a 4 percent inflation assumption. The actuarial value of
assets was determined using techniques that spread the effects of short-term volatility in
the market value of investments over a five-year period. The IJAAL is being amortized
as a level percentage of projected payroll on an open basis, over 30 years.
58
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 16 - Pension and Other Employee Benefit Trust Funds
The following are condensed financial statements for the City's defined benefit plan (see
Notes 10 through 14) and the postemployment healthcare plan (see Note 15). The
plans do not issue separate financial statements.
Employees'
Retirement
System VEBA
Statement of Net Position
Cash and investments
$229,515,162
$
91,274,073
Other assets
496,682
967,665
Liabilities
3,956,981
1,513,037
Net position
$226,054,863
$
90,728,701
Statement of Changes in Net Position
Investment income
$ 20,367,342
$
7,693,535
Contributions
4,034,561
6,951,193
Benefit payments
(15,916,004)
(7,109,852)
Other decreases
(798,807)
(32,310)
Change in Net Position
$ 7,687,092
$
7,502,566
Note 17 - Deferred Inflows/Outflows of Resources
At the end of the current fiscal year, the various components of deferred inflows of
resources are as follows:
Governmental
Funds
Property taxes, special assessments, and other receivables -
Unavailable $ 1,988,711
911 surcharge revenue- Unavailable 384,785
Grant revenue - Unavailable 430,168
Total deferred inflows $ 2,803,664
At the end of the current fiscal year, deferred outflow of resources consisted of
$74,351 of bond refunding loss being amortized in the Water and Sewer Fund.
59
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 18 - Contingent Liabilities
Sanitation System Overflow- In the spring of 2011, the City experienced a 100 -year
rain event. In connection with this event, certain properties in Livonia experienced
flooding and approximately 1,000 residents fled daim against the City for flood
damage. The City has been served with a class action lawsuit for those claims. In
January2015, the City agreed to a settlement, which the City intends to pay out offunds
available in the Self -Insurance Internal Service Fund and the Water and Sewer Fund, and
has recorded a provision for claim at the settlement amount as of November 30, 2014.
The City has also agreed to make $1.5 million dollars in improvements to the sanitary
sewer system beginning in 2016 and concluding in 2017 as part of the settlement. The
settlement is subject to Court approval which is anticipated but not yet granted.
Note 19 - Upcoming Accounting Pronouncements
In June 2012, the Governmental Accounting Standards Board (the "GASB") issued
Statement No. 68, Accounting and Financial Reporting for Pensions. Statement No. 68
requires governments providing defined benefit pensions to recognize their unfunded
pension benefit obligation as a liability for the first time, and to more comprehensively
and comparably measure the annual costs of pension benefits. This net pension liability
that will be recorded on the government -wide, proprietary, and discretely presented
component units statements will be computed differently than the current unfunded
actuarial accrued liability, using specific parameters set forth by the GASB. The
statement also enhances accountability and transparency through revised note
disclosures and required supplemental information (RSI). The City is currently evaluating
the impact this standard will have on the financial statements when adopted. The
provisions of this statement are effective for financial statements for the year ending
November 30, 2015.
In January 2013, the GASB issued Statement No. 69, Government Combinations and
Disposals of Government Operations. Until now, governments had been accounting for
mergers, acquisitions, and transfers of operations by analogizing to accounting and
financial reporting guidance intended for the business environment. This statement
provides specific accounting and financial reporting guidance for combinations in the
governmental environment. This statement also requires that disclosures be made by
governments about combination arrangements in which they engage and for disposals of
government operations. GASB Statement No. 69 is required to be adopted for years
beginning after December 15, 2013. The City is currently evaluating the impact this
standard will have on the financial statements when adopted, during the City's year
ending November 30, 2015.
fdd
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2014
Note 19 - Upcoming Accounting Pronouncements (Continued)
In February 2015, the GASB issued Statement No. 72, Fair Value Measurement and
Application. The requirements of this statement will enhance comparability of financial
statements among governments by requiring measurement of certain assets and
liabilities at fair value using a consistent and more detailed definition of fair value and
accepted valuation techniques. This statement also will enhance fair value application
guidance and related disclosures in order to provide information to financial statement
users about the impact of fair value measurements on a government's financial position.
GASB Statement No. 72 is required to be adopted for years beginning after June 15,
2015. The City is currently evaluating the impact this standard will have on the financial
statements when adopted, during the city's 2016 fiscal year.
Note 20 - Change in Accounting
During the current year, the City adopted GASB Statement No. 65, Items Previously
Reported as Assets and Liabilities. The objective ofthis statement is to establish standards
that reclassify certain items that were previously reported as assets and liabilities and
instead to classify them as deferred inflows of resources, deferred outflows of
resources, or as outflows of resources.
As a result of implementing this statement, the following assets and liabilitia have been
reclassified, as indicated:
New Gassifimtion after
Prior Reporting Adoption of GASB
Item Amount Classihcationfreatment Statement No. 65
Deferred loss on refundng of $ 74351 Reduction of Liability Deferred outflow 01
bends reseurces
Revenue in governmental fmWs 2,883,664 Liability Deferred inflow of
not collected within 68 days of reseurces
yeareixl
During the current year, the City also adopted GASB Statement No. 67, Financial
Reporting for Pension Plans. This statement required changes to the actuarial valuations
resulting in a different measurement of the liability of the employer to plan members for
benefits provided through the pension plan. As a result, the disclosures within the
pension footnote have changed considerably along with the related schedules in the
required supplemental information.
Required Supplemental Information
62
City of Livonia, Michigan
Expenditures
Required Supplemental Information
Budgetary
Comparison Schedule - General
Fund
General Govemment
Year Ended
November
30, 2014
Lemslahw
Vanameviilh
Onumal BLKINt
Final BWWt
Mail
Final Bud3et
Revenue
City Clerk
514,882
511,882
415,883
Property Taxes
$ 30,189,869
$ 30,800,869
$ 3632,713
$ (168,156)
Licensesand Permits
Total legislative
1,131892
1131,92
1844,712
Business
140,700
140,700
151,019
10,319
Nonbusiness
1,630,200
1630,200
2,078,621
448,421
Total licenses and! permits
11]0900
1,770,900
2,229,640
458,140
Iniergovemmental Revenue
Laborielatons
96,500
96,500
51,636
Stale and kxal
8,170,234
8,170,234
8,287,1D
117,536
Federal
102,000
102600
133,766
31,766
Total intergovernmental revenue
8,272,234
8,272,234
8,421536
149,302
Charges for Services
3,922863
3922,863
3941]62
18,899
Interest and Rents
2,902955
2,902955
2,112,053
(190,902)
Fines and Forfeitures
3,542,000
3992,000
4222,332
230,332
Miscellaneous Revenue
Sale affixed assets
50,000
50,000
72,248
22,248
011ier miscellaneous
1737,457
1]31,451
812,6]5
(864,782)
Total miscellaneous revenue
1,787,457
1,787,$57
944,W3
(842,534)
Total revenue
$ 52,9]9,2]8
$ 53,419,2]8
$ 53,IN,959
$ (341,319)
Expenditures
General Govemment
Lemslahw
City Counal
$ 342,564 $
342,564 $
335,221 $
7,337
City Clerk
514,882
511,882
415,883
41999
Elections
273,646
270,646
233,602
37,044
Total legislative
1,131892
1131,92
1844,712
86,380
JWiaal
3,088,214
3,088,214
3,024,184
63,430
E tve-lvtayorsofice
408,924
498924
401,799
7,125
Human resources:
Laborielatons
96,500
96,500
51,636
44,864
Civil service
599,166
599,166
572,378
26,188
Total human resources 695,666 695,666 624,014 71,652
63
City of Livonia, Michigan
Required Supplemental Information
Budgetary Comparison Schedule - General Fund (Continued)
Year Ended November 30, 2014
Vanancewilh
Original Buciget Final Budget P ual Final Bud3et
Expenditures (Confined)
General Government (Confined)
Financial administabon:
Accounting
$ 212,146 $
283,076 $
1]3,85] $
30,019
Assessing
441,896
468,615
467,825
190
Finance
264,082
266,432
265,411
1,021
Independent andit
39,678
39,678
36,382
3,296
Board of Review
4,821
4,821
3,362
1,459
Treasurer
528,824
528,824
491,496
37,328
Information systems
543,759
543,759
503,064
40,695
Total financial a8ninistation
2,835,205
2,055205
1940,597
114,606
Other achvihas:
Legal
519,880
519,860
559,002
20,878
Utildias and supplies
621,206
537,205
531,120
85
Acquisihen of land
3,000
3,000
-
3,000
Dues and subscriptions
40,000
40,000
39,210
130
Total other acbmtess
1244,085
1160,085
1135,392
24,693
Total genal government
8,683,186
8539,186
8,111298
361,888
Public Safety
Police:
Tatfx bureau
1,181311
1182551
1181,633
924
Adnini4ation
2,253843
2,518,043
2,511]24
6,319
Data processing
180,843
680,843
661,500
13,343
Detective bureau
2,584,106
2,484,108
2,416,610
1,498
Automotive service
561,000
596,000
595,950
50
Communicabens/Records bureau
138,040
658,040
644,848
13,192
Cmssingguards
60,984
60,984
55,618
5366
School liaison
426,166
426,166
410,993
15,113
OtRceofemergencyleaparedress
183,113
184,149
184451
298
Reserve police
331224
331224
318,128
13,096
Pabol bureau
11,652,822
11 ]10,606
11 ]02,099
68,507
lntelligence bureau
2,821148
1,881,748
1,870,062
11,686
Total police
22,n5,068
22,115,068
22,619,616
155,452
Fire:
Adninistation
956,818
980,682
965,192
14,890
Firefighting
11,415,301
11454,450
11 312,990
141,460
Fire prevention
615,100
612,141
612,083
64
Total fire
13,041,219
13,041,219
12,890,865
156,414
64
City of Livonia, Michigan
Required Supplemental Information
Budgetary Comparison Schedule
- General Fund (Continued)
Year
Ended
November
30, 2014
Vanancewilh
Original Budget
Final Budget
A ual
Final Budget
Eaperditures(conhnued)
Public Safety (conhnued)
Protective inspection:
Building code Bracing Appeals
$ 941
$ 941
$ -
$ 941
Inspection
1,140,616
1838,231
1833,011
5,220
Total protective inspection
1,141617
1839,172
1833,011
6,161
Other proh:cbw- Traficcanmission
2,034
2834
1]11
323
Total pudic safety
36,965,998
36863553
36545,203
318,350
Public Works
Public services- Highways, Annals, and
maintenance:
Engineering
15],29]
244217
215,485
28,732
Parks maintenance
1,443,643
1,411,348
1377,657
33,691
Administration
42
15307
8,844
6,463
Equipmantmaidanance
(57,181)
48,471
48,281
190
Building maintenance
1,0555A
974035
96],]64
6,271
Street lighting
344,900
344,900
344,831
69
Maintenance:
Streets
439,386
268,886
260,063
8,823
Traffic sermons
39,671
46,171
22,995
23,176
Forestry
15,490
17,490
1'932
15,558
Total pudic works
3436825
3310,825
3,247,852
122,973
Parks and Recreation and cultural
Parks and recreation:
Adoinistration
280,527
296,]2]
296,642
85
Recreabonfacildias
32809
24,760
24,682
18
Recreation athletics
94,360
86,209
86,150
59
Total parks and recroation
407,696
407,696
40],4]4
222
cultural:
Senior services
449,473
446,213
395,215
50,998
creenmead and culhaal
104,026
107,286
691,641
15,639
Total onlhrml
1,153,499
1153,499
1886,862
66,631
Total parks and recroalion and culhrml
1,561,195
1561195
1,494,W6
66,859
Communilyard Economic Davdopment
Qty Planning commission
506,159
523,511
416,902
46,609
Zoning Board of Appeals
43,458
43,0.58
31,886
11,572
Total communityandeconomic
development
550,211
566,969
508,188
58,181
Employee Benefit; Insurance, and Other
1,858,313
2,560313
2,545,181
15,126
Total eapmdihrros
$ 52,M,734
$ 53,462,041
$ 52,512,664
$ 949,3]]
65
City of Livonia, Michigan
Required Supplemental Information
Budgetary Comparison Schedule - Major Special Revenue Funds
Community Recreation
Year Ended November 30, 2014
66
vanancewilh
Amende
Anneuded
Onginal Bud3el
Budget
A Ual
Budget
Revenue
PmNrtytaxes
$ 3,002,466 $
3,002,466 $
2,991,446
$ (11,020)
State -shared revenue and grants
91,000
91,000
517,242
426,242
Charges for services
4,063,350
4,063,350
3,924,565
(138,785)
Interest
20,000
20,000
21,6/4
1,6/4
Miscellanrous rawnue
18,100
18,100
117,813
39,173
Total rewrare
1,255,516
1,255,516
1,512,800
311,284
Expenditures
Recreation and wltum
5,260,590
5,195,621
5,161886
633,141
Tansfarsout
2,121351
2,121351
2,121351
Totalexpeiddures
1,981941
8,516,918
1,883,231
633,141
Net Charge i n Fund Balance
(/26,425)
(1261462)
(310,431)
951,025
Fund Balance- Beginning of }ear
3,841,293
3,841,293
3,841,293
Fund Balance -End of }ear
$ 3,120,868 $
2,585,831 $
3,536,856
$ 951,025
66
City of Livonia, Michigan
Required Supplemental Information
Budgetary Comparison Schedule - Major Special Revenue Funds
Refuse Disposal System
Year Ended November 30, 2014
Revenue
PmNrly taxes
Charges for services
Interest
Mi%allanwus revenue
Total revenue
Expenditures-San9atim
Na Charge in Fund Balance
Fund Balance - Beginning of year
Fund Balance -End of year
vanancewilh
Amendetl Amaided
Onginal Bud3el BWWt A Ual Budget
$ 18,987,558
$ 19,987,558
$ 11,518,789 $
531,239
125,288
125,299
132,159
6,959
25,999
25,999
22,146
(2,854)
15,999
15,999
12,824
(2,176)
11152,758 11152,758 11685,918 533,168
12,175,254 12,175,254 11537,616 637,636
(1022,584) (1022,584) 148,382 1178,886
2,854,671 2,854,671 2,854,671
$ 1,932,167 $ 1,932,167 $ 3,092,973 $ 1,179,996
67
City of Livonia, Michigan
Required Supplemental Information
Pension System
Schedule of Funding Progress
Year Ended November 30, 2014
The schedule of funding progress is as follows (OOOs omitted):
Actuarial Valuation
Annual Regiiretl
Percentage
Fiscal Year Ended
Actuarial
Contribution
Conhibutod
11130N3
11/38/81
$ 392,639
Actuarial
A<cmed
11/30/02
-
100
UAAL as
11/30/03
Value of
Liability(AAL)
UnfmWatl
Funded Ratio
Covered
Percentage of
Actuarial
Assets'
Entry Age
AAL(UAAD
(Percent)
Payroll
Covered
Valuation Data
(a)
(b)
(ba)
(alb)
(c)
Payroll
11/30/88
$ 218,519
$ 179,096
$ (31,423)
1175% $
16,055
(1957)96
11/30/09
207,959
190,134
(17,825)
1094
15,855
(1124)
11/30/10
203,934
195,105
(8,829)
1045
13,800
(640)
11/30/11
194,515
196,420
1,905
990
12,455
153
11/30/12
186,245
200,224
13,979
930
11,282
1239
11/30/13
197,513
201,390
3,877
981
9,870
393
Valued using the tva year "smoothing funning' market value
Schedule of Employer Contributions
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, 2013, the latest
actuarial valuation, is as follows:
Actuarial cost method
Actuarial Valuation
Annual Regiiretl
Percentage
Fiscal Year Ended
Date
Contribution
Conhibutod
11130N3
11/38/81
$ 392,639
100
11130N4
11/30/02
-
100
1113005
11/30/03
-
100
1113006
11/30104
-
100
11130N7
11/30/05
-
100
11130N8
11/30/06
-
100
1113009
11/30/07
-
100
11/30/10
11WOB
-
100
11/30/11
1U30/09
-
100
11/30/12
1U30/10
747,119
100
11/30/13
11/30/11
2,082,220
100
11/30/14
1180/12
3,634,058
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, 2013, the latest
actuarial valuation, is as follows:
Actuarial cost method
Aggregate (employer contribution) entry age
normal (schedule of funding progress)
Amortization method
Level percent - Closed
Remaining amortization period
Expected future working lifetime
Asset valuation method
Five-year smoothed market
Actuarial assumptions
Investment rate of return
8.80%
Projected salary increases- Including inflation at
4.00 pement
4.80%-11.92%
68
City of Livonia, Michigan
Required Supplemental Information
Pension System
Schedule of Investment Returns
2014
Annual money -weighted rate of return, net of investment expense 9.6
M.
City of Livonia, Michigan
Required Supplemental
Information
Schedule of Changes in the City Net Pension Asset
and Related Ratios
2014
Total Pension Liability
Service cost
$ 1,647,392
Interest
15,516,271
Charges in benefit terms
-
Diferences between expected and actual experience
401,554
Charges in assumptions
-
Benefit payments, including refunds
(16,520,444)
Net Charge in Total Pension Liability
1,044,773
Total Pension Liability- Beginning ofyear
201,389,909
Total Pension Liability- End ofyear
$202,434,682
Plan Fiduciary Net Position
Contributions -Employer
$ 3,634,058
Contributions- Member
400,503
Net investment income
20,367,342
Administrative expenses
(194,367)
Benefit payments, including refunds
(16,520,444)
Other
Net Change in Plan Fiduciary Net Position
7,687,092
Plan Fiduciary Net Position- Beginning ofyear
218,367,771
Plan Fiduciary Net Position- End ofyear
$226,054,863
City's Net Pension Asset - Ending
$ (23,620,181)
Plan Fiduciary Net Position as a Percent of Total Pension Liability
111.67%
Covered Employee Payroll
$ 9,312,278
City's Net Pension Asset as a Percent of Covered Employee Payroll
(253.6)%
70
City of Livonia, Michigan
Actuanally determined contribution
Contributions in relation to the
actuarially determined contribution
Contribution Deficiency
Covered Employee Payroll
Contributions as a Percentage of
Covered Employee Payroll
2014 2013 2012 2011
$ 3,634,058 $ 2,082,219 $ 747,119 $ -
3,634,058 2,082,219 747,119
$ 9,312,278 $ 9,870,211 $ 11,282,045 $ 12,455,231
39.0% 21.1% 6.6% - %
Notes to Schedule of City Contributions
Actuarial valuation information relatine to the determination of contributions:
Valuation Data Actuarially determined contribution rates are calculated as of
November 30, two years prior to the end of the fiscal }ear in which
Me contributions are reported. C red employee paymll is as of
November 30 of the currentffiml }ear
Methods and assumptions user
Actuarial cost method
Amortization method
Remaining amort¢ation period
Asset valuation method
Inflation
Salaryinereams
Investment rate of return
Mortality
rates:
Aggregate
N/A
Future working lifetime
5 years smoothed market
40%
11 9- 40%, including inflation
80%
1983 Group Annuity MortalityTable
71
Required Supplemental Information
Pension System
Schedule of City Contributions
Last Ten Fiscal Years
2010 2009 2008 2007 2006 2005
$ 13,799,848 $ 15,854,893 $ 16,054,563 $ 15,657,398 $ 16,134,618 $ 15,885,315
72
City of Livonia, Michigan
Required Supplemental Information
Retiree Health and Disability Benefits Plan
Schedule of Funding Progress
Year Ended November 30, 2014
The schedule of funding progress is as follows (000s omitted):
Valux! using the twe year "smoothing imcling' market value
Schedule of Employer Contributions
A tuanal Valuation Annual Requiretl Percentage
Fisaal Year Ended Date ConhiWtion- ConhiWtetl"
11/36N9 11/36N7 $ 6,197,363 92 %
11/30/10 11136N8 6,155,752 92
11/30/11 11/36N9 6,639,053 92
11/30/12 11/30/10 7,259,781 91
11/30/13 11/30/11 7,078,024 91
11/30/14 11/30/12 7,066,283 90
The require contri Wtm is a Kess W the Co as a percentage of payroll.
" The tsml }ear eiWetl Nowint er 30, 2009 was the first }ear of implementation of GASB Statement No. 45. As
such, it was the first }ear the annual requiretl contribution was celculatetl using the GASB No. 45 recon eil
30-yearanortization. Previouslgthe Coused Uca-50years.
The information presented above was determined as part of the actuarial valuations at the dates
indicated. Additional information as of November 30, 2013, the latest actuarial valuation, is as
follows:
Amortization method Level percent, open
Remaining amortization period 30 years
Asset valuation method Five-year smoothed market
Actuarial assumptions:
Investment rate of return 8.00
Projected annual premium increase 6% for this year, 5.5% for next year,
and 4.75% thereafter
73
Actuarial
Actuarial
P n acl
UML as a
Value of
LiabilityoA )
Unfuni
Funded Ratio
Coierecl
Percentage of
Actuarial
Assets'
Entry Age
AAL(UMD
(Percent)
Payroll
Coierecl
Valuation Date
(a)
(b)
(ba)
(alta)
(c)
Payroll
11/30/08
$ 55,361
$ 122,117
$ 66,756
453 % $
37,483
1785%
11/30/09
57,845
137,822
79,97
420
36,981
2163
11/30/10
60,361
153,223
92,862
394
34,062
2726
11/30/11
62,491
156,260
93,769
400
32,871
2853
11/30/12
65,667
169,363
103,696
388
30,964
W49
11/30/13
74,550
16Q552
86,002
464
30,560
2814
Valux! using the twe year "smoothing imcling' market value
Schedule of Employer Contributions
A tuanal Valuation Annual Requiretl Percentage
Fisaal Year Ended Date ConhiWtion- ConhiWtetl"
11/36N9 11/36N7 $ 6,197,363 92 %
11/30/10 11136N8 6,155,752 92
11/30/11 11/36N9 6,639,053 92
11/30/12 11/30/10 7,259,781 91
11/30/13 11/30/11 7,078,024 91
11/30/14 11/30/12 7,066,283 90
The require contri Wtm is a Kess W the Co as a percentage of payroll.
" The tsml }ear eiWetl Nowint er 30, 2009 was the first }ear of implementation of GASB Statement No. 45. As
such, it was the first }ear the annual requiretl contribution was celculatetl using the GASB No. 45 recon eil
30-yearanortization. Previouslgthe Coused Uca-50years.
The information presented above was determined as part of the actuarial valuations at the dates
indicated. Additional information as of November 30, 2013, the latest actuarial valuation, is as
follows:
Amortization method Level percent, open
Remaining amortization period 30 years
Asset valuation method Five-year smoothed market
Actuarial assumptions:
Investment rate of return 8.00
Projected annual premium increase 6% for this year, 5.5% for next year,
and 4.75% thereafter
73
City of Livonia, Michigan
Note to Required Supplemental Information
Year Ended November 30, 2014
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. The following is a reconciliation
of the budgetary comparison schedule to the governmental funds (statement of revenue,
expenditures, and changes in fund balances):
Total
Expenditures
Geneml Fund
Amounts per operating statement $ 50,146,774
Operating transfers budgeted as revenue and expenditures 2,365,890
Amounts per budget statement $ 52,512,664
Total
Expenditures
Community Recreation Fund
Amounts per operating statement $ 5,161,886
Operating transfers budgeted as revenue and expenditures 2,721,351
Amounts per budget statement $ 7.883.237
Budgetary Information - Annual budgets are adopted on a basis consistent with accounting
principles generally accepted in the United States of Amends 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.
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 City Council shall adopt
the budget through the passage of a budget resolution and transmit the budget to the nnayor.
Not later than November 15, the mayor shall either approve or disapprove the adopted
budget, in whole or in part.
74
City of Livonia, Michigan
Note to Required Supplemental Information (Continued)
Year Ended November 30, 2014
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.
75
Other Supplemental Information
76
City of Livonia, Michigan
ul
mspyevs
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-
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Other Supplemental Information
Combining Balance Sheet
Nonmajor Governmental Funds
November 30, 2014
I 1. f GM.In f 4:5pn f f f f x;ms f 4W.n1 f I.AaW f a;®I f 24MAMH
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78
City of Livonia, Michigan
spMn Rerenuewnda
SVC Brea ode NWNcb1eF7 ndjui
1misresn EnaNs 3oNm TnMnon Funny r rvaflm ForreRures
Rete
Paopetyhxes
S 5
- 5
5
- 5
- 5
389192 5
- 5
Feral revenue
1511
91,69
-
-
-
218075
,lteand Imll menu¢
6230613
215961
14084
CRr9nulorsei
-
-
-
-
-
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1116211
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-
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9m
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67M
ane
speaamesurei@
_
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1,269217
rnnnuuanedusi re
Sw19
1815
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6271917
2113,213
864074
1M217
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3351 M
96785
5499
EAprp Wra
Qmo[
andlneuee7
511,91
-
-
140 137
3491
wdlnworlo
3%31381
1527,54
-
11®116
-
-
-
-
CorrtnrnFraode c
deenoprrent
-
-
640,3®
-
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-
-
-
-
161 zn
310151
-
-
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-
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-
-
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Prinopal reererrem
-
-
-
-
-
-
-
-
lnneresxandrtrer
Todu e[pendnures
3139
1U7 W1112tl11116
16191
3151
110,137191
Eire.v of Rmnue aer lunner)
EipeiplWra
247611
615M
WO} )
8591
106973
217112
Finn 643
151,112
aner Financing sources JUFs
Transfers in
11A69
-
-
-
-
-
-
Tarslasan
(1 15189)
187501))
----
—
Taalomerfi nni
(uses)sorm
( 115169)
e5,69
NaClen¢ In Fund Edd s
131m
1OF52VB
WO} )
8591
106973
217112
Finn 643
151112
FUM PnNrces-Be]Innlrg
1 War
1m85
imm
0176
137071
92011
&9,14
291M
19151
FuMPnNrces-Endayear
S 31n.912$ 249,92$(233569)$
222$755
99814$ 1107J5313NT.71611
3
79
m
Other Supplemental Information
Combining
Statement of Revenue, Expenditures, and Changes in
Fund Balances
Nonmajor Governmental Funds
Year Ended November 30, 2014
Spe®l Revenue vends
Gmtsemw Funds
op4al Frgenls wnm
M papal
Toel
Bululry
Gore rse Nonrepn
Cartnnity
Rwds and
2LL5M1 P M61
Aulndrny
(Sgdl (Spial Sp®al CwtBullulig GwenrtneTal
Tnanan
Auevaallo
R4unurg Refunding
and Other
IWwereM IWovereM 0.ea * Iwmennents Funds
S ]9$M S
33MQ 45 3
- 3 - 3
-
3 - 3 1 111 T 3 - 3 - 3 $3]169
852%
1169$02
17916
3W�4
®425
-
- -
-
Ms - - ¢469
619 DL 91 M
2981
11M
21% 105& 7$22 3451 04]05
-
- -
-
- 19,m - 1451 M
39
1459,6w
909424
3430
354,408 112195 1w2N fiII,451 22]15,]49
1 N5319
-
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- -
-
- - - - 109wdo
688055
-
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-
- 42969
3519)0
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275013 13$09
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145013
91,]111 1123,95
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91612)
(1®241)
(94]111) 84]$95)
2II2130 (11n99) (8932) 622,451 (%2486)
-
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94]111 2MM
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(1m0991 W2 W) (?5R
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$ 548.W5 $
859.99 $
S $
$ 58.614 S4816.T19 S =8 S 912.81 $21.161.15
m
City of Livonia, Michigan
81
Penton Trust Funds
Fgenq Fund
Fnpge¢'
Investment
Retirement
Tota Pension
Administration
SPecia Trust
System
WBH
Trust Fund
Fund
Fund
Assets
Cash children nutriments
8 47,919
8 158,191
8 69.110
8 1.42602
82,205,855
Investments:
IT S. government securities
11171007
5'ai
5,8556370
-
-
CdlatemizetlmMgageodgatims
6,517,028
2,720,]2]
9,211]55
-
Common stock
113,480,605
33,34,833
151823839
-
-
CwPorateMnd
17,510}50
6,8]02]1
24,330621
-
-
Fdrlestateinvestmenttrust
10,shi
2Eht155
1156,381
-
-
FiceignLond
2,571p10
961
3,561x40
-
Mutual Took;
63,54526!
36m Stat
99710,83o
-
-
Securities lending c6lateral
Mutual much
3,332289
3,332289
-
Recounts someone
194,480
194,480
-
-
DueTomprimarygovernment
149
1,453
-
-
Due Tom agengTook;
45229
773,185
127+8.416
-
-
Total mob
23o,01184x
92,2x1 T38
32129582
S 7,422602
$22115866
HaNlnies
nccountaleyude
44o,6Bz
511
959,989-
Duetaamergovermrentalonik
21631
21631
-
-
ouetoaimmeovemment
-
993,130
933,130
-
ouetoagengmnd
-
-
-
1263.414
Accrued liaemies and other gaalmes
-
-
-
54,188
2,205,865
Amounts die to broker under securities
lenahg agreement
3896 wz
-
3,904662
-
-
Total liadlnies
3.956981
1513,031
5,40018
S 7,422602
$22115866
Net Positron Held! in Trust her
Pension me other Fmggce Beretits
$ 226,054,863
$ 90,778,7011
$ 316,783564
81
Other Supplemental Information
Combining Statement of Net Position
Fiduciary Funds
November 30, 2014
Hisiwial
M
Cwn
Vdwteer
Co I%w
Co I%w
HndsViWted
Oe"iti
CwHBwd
Wwk
CWn Civil
TdIPgenq
Fund
Fund
Tex Fund
Fina
Fina
Prrgrem
ori Fwd
Fu�
s ncua
s 75,00
$ 4,s54,12
$ 501275
$ 22],806
$ 45S,sss
$ 2M.491
$ 102 1g
3,127 20,szs 3,1W 27,1e5
$ ns,W $ 75,M $4,M4,IDB $ MI,W5 $ BI,M $ 475,n4 $ m5,503 $10,] X5
- - a,ssa,lm 485,145 - - - 5ssz2w
- - -
3,127 24,013 12s5s
ncua 75c80 - - 207,015 470,n4 20,ss3 3c2,,5M
$ 27,364 $ 75,600 $4,M4,1Os $ MI,W5 $ ]31,OB $ 475,n4 $ m5,503 $10,] X5
82
City of Livonia, Michigan
Other Supplemental Information
Combining Statement of Changes in Fiduciary Net Position
Fiduciary Funds
Year Ended November 30, 2014
Additions
Inpahnent imam:
Interest and disidansts
Net change in fair valor of inpatments
Less investment relate! expenses
Net inpatment imome
Contributions:
Employer
Employee
Totalcmtributions
Total additions - Net
Deductions
Pension bemTd payments
Wdrel benefit payments
Refunds of ordintrbons
Administrative expenses
Tolaldedushons
Net Increase
Net Position Held in Trust for Pension and Other
Employee Benefits- Beginning of year
Net Position Held in Trust for Pension and Other
Employee Benefits- End of year
83
Empbyees'
Retirement
System WBA Total
$ 6,582,216 $
2,932,058 $
9,514,214
14,442,240
4,916,363
19,358,603
1651,1141
(154,M)
1812, 0001
20,36/,342
1,693,535
28,06n81]
3,634,058
6,386,086
10,022,144
400,503
563,101
963,610
4,034,561
6,951,1W
10,985,754
24,401903
14,644,128
39,046,631
15,916,004
-
15,916,004
-
1,109,852
1,109,852
604,440
-
604,440
194,367
32,310
226,68
16,114,811
1,142,162
23,856,913
7,687,092
7,502,566
15,189,656
218,367,111 83,226,135 361,593,906
$226,05E,B63 $ 90,]28,]01 $316,193,56E
City of Livonia, Michigan
Federal Awards
Supplemental Information
November 30, 2014
City of Livonia, Michigan
Contents
Independent Auditors Reports:
Report on Schedule of Expenditures of Federal Awards Required by
OMB Circular A-133
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 Government Auditing Standards
2-3
Report on Compliance for Each Major Federal Program;
Report on Internal Control Over Compliance
4-6
Schedule of Expenditures of Federal Awards
7-8
Reconciliation of Basic Financial Statements Federal Revenue with Schedule of
Expenditures of Federal Awards
9
Notes to Schedule of Expenditures of Federal Awards
10
Schedule of Findings and Questioned Costs
11-13
Summary Schedule of Pnor Audit Findings
14
Report on Schedule of Expenditures of Federal Awards
Required by OMB Circular A-133
Independent Auditor's Report
To 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 of Livonia, Michigan (the "City') as of and for
the year ended November 30, 2014 and the related notes to the financial statements, which
collectively comprise the Citys basic financial statements. We issued our report thereon dated
April 3, 2015, which contained unmodified opinions on 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. Our audit
was conducted for the purpose of forming an opinion on the financial statements that collectively
comprise the basic financial statements. We have not performed any procedures with respect
to the audited financial statements subsequent to April 3, 2015.
The accompanying schedule of expenditures of federal awards and reconciliation of financial
statements federal revenue with schedule of expenditures of federal awards are presented for
the purpose of additional analysis as required by U.S. Office of Management and Budget Circular
A-133, Audits of States, Local Governments, and Non -Profit Organizations, and are not a required
part of the basic financial statements. Such information is the responsibility of management and
was derived from and relates directly to the underlying accounting and other records used to
prepare the financial statements. The information has been subjected to the auditing procedures
applied in the audit of the financial statements and certain additional procedures, including
comparing and reconciling such information directly to the underlying accounting and other
records used to prepare the financial statements or to the financial statements themselves, and
other additional procedures in accordance with auditing standards generally accepted in the
United States of America. In our opinion, the information is fairly stated in all material respects
in relation to the financial statements as a whole.
Ave& I v PLL[
April 3, 2015
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 Standard's
Independent Auditor's Report
To Management and the City Council
City of Livonia, Michigan
We have audited, 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, the financial statements of the
governmental activities, the business -type activities, the aggregate discretely presented
component units, each major fund, and the aggregate remaining fund information of the City of
Livonia, Michigan (the "City') as of and for the year ended November 30, 2014 and the related
notes to the financial statements, which collectively comprise the City's basic financial
statements, and have issued our report thereon dated April 3, 2015.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City of
Livonia, Michigan's internal control over financial reporting (internal control) to deterrtine the
audit procedures that are appropriate in the circumstances for the purpose of expressing our
opinions on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the City's internal control. Accordingly, we do not express an opinion on the
effectiveness of the City's internal control.
Our consideration of internal control was for the limited purpose described in the preceding
paragraph and was not designed to identify all deficiencies in internal control that night be
material weaknesses or significant deficiencies and therefore, material weaknesses or significant
deficiencies may exist that were not identified. However, as described in the accompanying
schedule of findings and questioned costs, we identified a certain deficiency in internal control
that we consider to be a material weakness.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct, misstatements on a timely bass. A material weakness is a
deficiency, or a combination of deficiencies, in internal control such that there is a reasonable
possibility that a material misstatement of the City's financial statements will not be prevented, or
detected and corrected, on a timely bass. We consider the deficiency described in the
accompanying schedule of findings and questioned costs as Finding 2014-01 to be a material
weakness.
To Management and the City Council
City of Livonia, Michigan
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City of Livonia, Michigan's financial
statements are free from material misstatement, we performed tests of its compliance with
certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with
which could have a direct and anterial 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 Standard's.
City of Livonia, Michigan's Response to Finding
The City of Livonia, Michigan's response to the finding identified in our audit is described in the
accompanying schedule of findings and questioned costs. City of Livonia, Michigan's response
was not subjected to the auditing procedures applied in the audit of the financial statements and,
accordingly, we express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of
the City's internal control or on compliance. This report is an integral part of an audit performed
in accordance with Government Auditing Standards in considering the City's internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
rfL& I &"uf PLIC
April 3, 2015
Report on Compliance for Each Major Federal Program;
Report on Internal Control Over Compliance
Independent Auditor's Report
To the City Council
City of Livonia, Michigan
Report on Compliance for Each Major Federal Program
We have audited the City of Livonia, Michigan's compliance with the types of compliance
requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133
Compliance Supplement that could have a direct and material effect on each of its major federal
programs for the year ended November 30, 2014. The City of Livonia, Michigan's major federal
programs are identified in the summary of auditors results section of the accompanying schedule
of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts,
and grants applicable to each of its federal programs.
Auditors Responsibility
Our responsibility is to express an opinion on compliance for each of the City of Livonia,
Michigan's major federal programs based on our audit of the types of compliance requirements
referred to above.
We conducted our audit of compliance in accordance with auditing standards generally accepted
in the United States of America; the standards applicable to financial audits contained in
Government Auditing Standard's, issued by the Comptroller General of the United States; and
OMB Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations. Those
standards and OMB Circular A-133 require that we plan and perform the audit to obtain
reasonable assurance about whether noncompliance with the types of compliance requirements
referred to above that could have a direct and material effect on a major federal program
occurred. An audit includes examining, on a test basis, evidence about the City of Livonia,
Michigan's compliance with those requirements and performing such other procedures as we
considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each
major federal program. However, our audit does not provide a legal determination of the City
of Livonia, Michigan's compliance.
To the City Council
City of Livonia, Michigan
Opinion on Each Major Federal Program
In our opinion, the City of Livonia, Michigan complied, in all material respects, with the types of
compliance requirements referred to above that could have a direct and material effect on each
of its major federal programs for the year ended November 30, 2014.
Report on Internal Control Over Compliance
Management of the City of Livonia, Michigan is responsible for establishing and maintaining
effective internal control over compliance with the types of compliance requirements referred
to above. In planning and performing our audit of compliance, we considered the City of Livonia,
Michigan's internal control over compliance with the types of requirements that could have a
direct and material effect on each major federal program to determine the auditing procedures
that are appropriate in the circumstances for the purpose of expressing an opinion on
compliance for each major federal program and to test and report on internal control over
compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an
opinion on the effectiveness of internal control over compliance. Accordingly, we do not express
an opinion on the effectiveness of the Citys internal control over compliance.
Our consideration of internal control over compliance was for the limited purpose described in
the preceding paragraph and was not designed identify all deficiencies in internal control over
compliance that might be significant deficiencies or anterial weaknesses and therefore, there
can be no assurance that all deficiencies, significant deficiencies, or anterial weaknesses have
been identified. However, as discussed below, we identified a certain deficiency in internal
control over compliance that we consider to be a anterial weakness.
A deficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing
their assigned functions, to prevent, or detect and correct, noncompliance with a type of
compliance requirement of a federal program on a timely basis. A material weakness in internal
control over compliance is a deficiency, or a combination of deficiencies, in internal control over
compliance such that there is a reasonable possibility that material noncompliance with a type of
compliance requirement of a federal program will not be prevented, or detected and corrected,
on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a
combination of deficiencies, in internal control over compliance with a type of compliance
requirement of a federal program that is less severe than a material weakness in internal control
over compliance, yet important enough to merit attention of those charged with governance.
We consider the deficiency in internal control over compliance described in the accompanying
schedule of findings and questioned costs as Finding 2014-002 to be a material weakness.
The City of Livonia, Michigan's response to the internal control over compliance finding
identified in our audit is described in the accompanying schedule of findings and questioned costs
and/or corrective action plan. The City of Livonia, Michigan's response was not subjected to the
auditing procedures applied in the audit of compliance and, accordingly, we express no opinion
on the response.
To the City Council
City of Livonia, Michigan
The purpose of this report on internal control over compliance is solely to describe the scope of
our testing of internal control over compliance and the results of that testing based on the
requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other
purpose.
4e , f PLLG
April 3, 2015
City of Livonia, Michigan
Schedule of Expenditures of Federal Awards
Year Ended November 30, 2014
See Notes to Schedule of Expenditures
of Federal Awards. 7
CFDA
Pasermrougn Entity
Award
Federal
Federal Agency/Pas-through Agency ProsramTitle
Number
Identifying Number
Amount
Expenditures
US. Oete rtiment ofAgriculture - Errergerry Footl Asistance Clistery
Pasedthrough the Wayne Metropolitan Community Arr sFgwry-
Emerger Fund isUmePmgam(FwdCom itim)
10569
N/A
$ 5!288
$ R208
US. OeteNrentofHosingand Urrn Develormea:
CHEM ENtlement Gants Cluster
Community Development B look Grant:
Program year 2014-605 MC26D810
16218
N/A
328256
2Wed
Program year 2013-B05 MC 26D813
14218
N/A
324,936
20743
Total CUBA Entig ement Gants Cluster
453574
Passed through the Michigan State Hone M Development Authority -
HOME ImsbrentPartnershipProgram-Programyear2003
14239
M20W5068
2]]200
925
Pasedthrough WayneCouHly- HOMEIrtrsbnent Partnership
Program- Horre Consortium Fund:
14.239
N/A
226,000
155515
Taal US. Department ofHouaiiny and
Urwn Development
610,014
US. Departmentausg<e:
AGProgram Custer
Parsedmrough Wayne County:
2011 Edward Byrne Memorial Justice Assistance Gant
16738
DfBX-2481
5,086
5,008
2012 Edward Arne Memorial Justice Assistance Gant
16736
D18X-0730
392
392
Total Passed through Wayne Coal
5,400
Passed through Michigan Slate Police:
2012 Edward Byrne Memorial Justice Assistance Gant
16736
D18X-0109
19532
19532
Taal AG Program Cluster
24,932
Federal Ecantade Sharing Program
16922
N/A
118896
118,898
Drug EnfIX[mrea PAn mtra4w Task Force
16 unknown
N/A
17,920
17290
US. Marshals Found Fusti Apprehension Task Force
16 unknown
N/A
1],0]3
1],0]3
T oal US. Department ofJuai<e
176,193
See Notes to Schedule of Expenditures
of Federal Awards. 7
City of Livonia, Michigan
Schedule of Expenditures of Federal Awards (Continued)
Year Ended November 30, 2014
See Notes to Schedule of Expenditures
of Federal Awards. 8
CFDA
Pasihrogh Entity Avard
Federal
Fecera I Ason<WPas/hrogh Ag onMProgramTiBe
Hunter
Idi Nwrber Abut
EPendWres
US. DepartmentofTranspmta6m:
Highway Planing SCwVm4m Cluster Passencithrough the Michigan
DelartmeNofTlanspmtal ARRA- Highway Plannigand
ComVm4m- Five Milefo Uuren Parkri
28285
1111]r]3 $ 51,142
$ 634
HighwaySaMy Cl ster-Pasedihroy hthe Michigan OR<e of
Highways kfy- SlafeandCommnily Highways kfy-Belt
Enfw<emenl
28688
PT131715,159
15,159
Feceral Tramil Chs@r- Pasedihrog h the Southeast Michigan
CouwilofCrnemments bmia CommnilyTramit Gant
28588
N/A 2135M
283,822
Total US. DeletlirrentofTrampertation
219,115
USEnvironmentalProtectionAgen<y-
PasedmroughtheMi<higan Department of Em;romrental oiagry:
Clean Water State Rerdving Fundareter-Capiuhratimcrants
ku Clean Water State Reuolvirg Fuld
66Q8
5513-81 3,628088
2256,292
Driniag WaterState Rrvdvirg Fara inter- Captalvation Gants
ku Driniag Water State Rrvdvirg Furnace
66,168
735581 3,7/5088
1,663,202
Total US Emiromrental ProtectionAgency
3911
US. Department of Homeland Security
Pasecithroyh the Michigan Department of State Pdi<e-
2811Emergen<yMamge"dPerk "mo Gant
97 M2
N/A 64,412
61,112
Pasecithroyh Wayne County- HorrelandSecurity
2811Gant Prcgram(UPSlt
97 86/
N/A 13],]96
137,825
2812 Gant Prcgra m(UASD
97 86/
N/A 158936
i5g921
Total US. DepsrtnentofiorrelandSe<urily,
352,361
Total kdral award
$ 5,333,385
See Notes to Schedule of Expenditures
of Federal Awards. 8
City of Livonia, Michigan
Reconciliation of Basic Financial Statements
Federal Revenue with Schedule of Expenditures
of Federal Awards
Year Ended November 30, 2014
Revenue from federal sources- As reported on financial statements
(includes all funds)
$ 1,303,268
Add value of loans received
3,919,494
Less other nonfederal reimbursements recorded as federal revenue
(133,766)
Add value of noncash assistance
54,208
Add change in unavailable revenue
302,290
Revenue earned in excess of expenditures
(99,177)
Other differences
(12,932)
Federal expenditures per the schedule of expenditures of federal awards $ 5,333,385
City of Livonia, Michigan
Notes to Schedule of Expenditures of Federal Awards
Year Ended November 30, 2014
Note 1 - Basis of Presentation and Significant Accounting Policies
The accompanying schedule of expenditures of federal awards (the "Schedule") includes
the federal grant activity of the City of Livonia, Michigan under programs of the federal
government for the year ended November 30, 2014. Expenditures reported on the
Schedule are reported on the same basis of accounting as the basic financial statements,
although the basis for determining when federal awards are expended is presented in
accordance with the requirements of OMB Circular A-133, Audits of States, Local
Governments, and Non -Profit Organizations. In addition, expenditures reported on the
Schedule are recognized following the cost principles contained in OMB Circular A-87,
wherein certain types of expenditures are not allowable or are limited as to
reimbursement. Therefore, some amounts presented in this Schedule may differ from
amounts presented in, or used in the preparation of, the basic financial statements.
Because the Schedule presents only a selected portion of the operations of City of
Livonia, Michigan, it is not intended to and does not present the financial position,
changes in net position, or cash flows, if applicable, of the City of Livonia, Michigan.
Pass-through entity identifying numbers are presented where available.
Note 2 - Noncash Assistance
The value of the 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, 2014 that is included on the schedule of
expenditures of federal awards:
Federal Program CFDA Number Description Amount
U.S. Department of
Agriculture - Passed
through Wayne
Metropolitan
Community Services
Agency 10.569 USDA Food Distribution f 54,208
Note 3 - Subrecipient Awards
Of the federal expenditures presented in the schedule of expenditures of federal
awards, federal awards were provided to subrecipients as follows:
Amount
Provided to
Federal Program Title CFDA Number Subrecipients
Community Development Block Grant 14.218 f 6,950
10
City of Livonia, Michigan
Schedule of Findings and Questioned Costs
Year Ended November 30, 2014
Section I - Summary of Auditor's Results
Financial Statements
Type ofauditors report issued: Unmodified
Internal control over financial reporting:
• Material weakness(es) identified? X Ya No
• Significant deficiency(ies) identified that are
not considered to be material weaknesses? Yes X None reported
Noncompliance material to financial
statements noted? _Yes X No
Federal Awards
Internal control over major programs:
• Material weakness(es) identified? X Yes No
• Significant deficiency(ies) identified that are
not considered to be material weaknesses? Ya X None reported
Type of auditors report issued on compliancefor major programs: Unmodified
Any audit findings disclosed that are required
to be reported in accordance with
Section 510(a) of Circular A-133? X Yes No
Identification of major programs:
CFDA Numbers Name of Federal Program or Custer
14.218 CDBG Entitlement Grants Cluster - Community Development
Block Grant
66.458 Clean Water State Revolving Fund Cluster- Capitalization Grants
for Clean Water State Revolving Funds
66.468 Drinking Water State Revolving Fund Cluster- Capitalization
Grants for Drinking Water State Revolving Funds
Dollar threshold used to distinguish between type A and type B programs: $300,000
Auditee qualified as lav -risk auditee? Yes X No
11
City of Livonia, Michigan
Schedule of Findings and Questioned Costs (Continued)
Year Ended November 30, 2014
Section II - Financial Statement Audit Findings
Reference
Number Finding
2014-001 Finding Type - Material weakness
Criteria - Management's goal was to accurately record all adjustments for the fund
level and government -wide statements.
Condition - Journal entries were necessary to adjust various account balances in
order to properly state them as of November 30, 2014.
Context - Six entries were made to various funds to reflect current year activity.
The adjustments affected liabilities, expenses, receivables, and revenue and
included: a reduction to the worker's compensation loss reserve to correct a
formula error; a decrease in intergovernmental receivables related to an amount
received in a prior year, a transfer to the Community Development Block Grant
Fund to clear out a negative cash balance; a correction to sundry income related to
a grant receivable; a transfer of Home Consortium Funds program revenue to the
proper fund; and a reduction to the compensated absence liability to adjust for a
calculation error.
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.
Effect - As a result of these six transactions not being completely recorded, several
account balances required adjustments as of November 30, 2014. The financial
statements were misstated prior to the auditor proposing the entries.
Recommendation - The City should develop controls to ensure that all
appropriate journal entries are made so that ending balances are correct.
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
City of Livonia, Michigan
Schedule of Findings and Questioned Costs (Continued)
Year Ended November 30, 2014
Section III - Federal Program Audit Findings
Reference
Number Finding
2014-002 Program Name - Home Consortium Funds Program - CFDA #14.239 and
Federal Transit cluster- CDFA #20.500
Pass-through Entity - CFDA #14.239 - Wayne County and CFDA #20.500 -
Southeast Michigan Council of Governments
Finding Type - Material weakness
Criteria - A complete and accurate schedule of expenditures of federal awards
(SEFA) is necessary to record all program expenditures as required by OMB
Circular A-133.
Condition - Management's goal is to prepare a complete and accurate SEFA to
record all program expenditures in order to comply with the above criteria.
Questioned Costs - None
Context - The original SEFA provided by the City of Livonia, Michigan as part of
the audit did not include the correct amount of expenditures related to the Home
Consortium Funds Program and the Federal Transit Cluster.
Cause and Effect - The City did not have appropriate procedures in place to
ensure the conpleteness of the SEFA. As a result, the SEFA required changes
during the course of the audit in order to ensure amounts on the SEFA reflected the
appropriate activity per the City's general ledger. The incorrect amounts noted on
the original SEFA did not impact major program determination.
Recommendation - We recommend that the City implement an additional level of
review to ensure the completeness of the SEFA including a reconciliation to the
federal revenue amounts recorded in the general ledger.
Views of Responsible Officials and Planned Corrective Actions - The City
concurs with the recommendation and will add another review prior to completing
the SEFA.
13
City of Livonia, Michigan
Summary Schedule of Prior Audit Findings
Year Ended November 30, 2014
Prior Year
Finding
Number
Federal Program
Original Finding
Description
Status
Planned
Corrective
Action
2013-002
Assistance to Firefighters
The original SEFA
Repeat finding
Sea above
Grant Program -CFDA
provided by the City
impacting the
finding
#97.044; CDBG
of Livonia, Michigan as
federal programs
2014-002
Entitlement Grants
part of the audit did
noted in finding
Cluster - Neighborhood
not include the
2014-002 above
Stabilization Program-
correct amount of
CFDA #14.218; River
expenditures related
Rouge National Wet
tothe Assistanceto
Weather Project-
Firefighters Grant
CFDA#66.202;
Program, the
Highway Safety Cluster
Neighborhood
-CFDA#22.205
Stabilization Program,
the River Rouge Wet
Weather Program,
and the Highway
Safety Cluster.
14
April 3, 2015
To the Mayor and Members of the City Council
City of Livonia, Michigan
We have audited the financial statements of the City of Livonia, Michigan (the "City') as of and for the
year ended November 30, 2014 and have issued our report thereon dated April 3, 2015. Professional
standards require that we provide you with the following information related to our audit which Is
divided into the following sections:
Section I - Required Communications with Those Charged with Governance
Section 11 -Other Recommendation and Related Information
Section III- Legislative and Informational items
Section I includes information that current auditing standards require independent auditors to
communicate to those individuals charged with governance. We will report this information annually to
the City Council of the City of Livonia.
Section 11 presents recommendations related to infernal control, procedures, and other matters noted
during our current year audit. These comments are offered in the interest of helping the City in its
efforts toward continuous improvement, not just in the areas of internal control and accounting
procetlures, but also in operational or administrative efficiency and effectiveness.
Section III contains updated legislative and informational items that we believe will be of interest to you.
We would like to take this opportunity to thank the City's staff for the cooperation and courtesy
extended to us during our audit Their assistance and professionalism are invaluable.
This report is intended solely for the use of the City Council and management of the City and is not
intended to be and should not be Lead by anyone other than these specified parties.
We welcome any questions you may have regarding the following communications and we would be
willing to discuss any of these or other questions that you might have at your convenience.
Very truly yours,
Plante & Moran, PLLC
2,, ,t 1)- QJ,
Frank W. Audiiaay�����
I r IGA.U. yl.rrr9(,C_.
Marie L. Stiegel U
To the Mayor and Members of the City Council April 3, 2015
City of Livonia, Michigan
Section I - Required Communications with Those Charged with Governance
Our Resronsibility Under U.S. Generally Asserted Auditing Standards
As stated in our engagement letter dated December 9, 2014, our responsibility, as described by
professional standards, is to express an opinion about whether the financial statements prepared by
management with your oversight are fairly presented in all material respects, in conformity with U.S.
generally accepted accounting principles. Our audit of the financial statements does not relieve you or
management of your responsibilities. Our responsibility is to plan and perform the audit to obtain
reasonable, but not absolute, assurance that the financial statements are free of material misstatement.
As part of our audit, we considered the internal control of the City. Such considerations were solely for
the purpose of determining our audit procedures and not to provide any assurance concerning such
internal control.
We are responsible for communicating significant matters related to the audit that are, in our professional
judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we
are not required to design procedures specifically to identify such matters.
Our audit of the City's financial statements has also been conducted in accordance with Govemment
Auditing Standards, issued by the Comptroller General of the United States. Under Government Auditing
Standen%, we are obligated to communicate certain matters that come to our attention related to our
audit to those responsible for the govemance of the City, including compliance with certain provisions of
laws, regulations, contracts, grant agreements, certain instances of error or fraud, illegal acts applicable to
government agencies, and significant deficiencies in internal control that we identify during our audit.
Toward this end, we issued a separate letter dated April 3, 2015 regarding our consideration of the City's
internal control over financial reporting and on our tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements.
We performed the audit according to the planned scope and timing previously communicated to you in
our letter regarding planning matters dated January 12, 2015.
Significant Audit Findings
Qualitative Aspects ofAccounting Practices
Management is responsible for the selection and use of appropriate accounting policies. In accordance
with the terms of our engagement letter, we will advise management about the appropriateness of
accounting policies and their application. The significant accounting policies used by the City are
described in Note 1 to the financial statements.
As described in Note 20, the City adopted newly effective accounting policies related to Governmental
Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities,
and GASB Statement No. 67, Financial Reporting for Pension Plans. The objective of GASB Statement No.
65 is to establish standards that reclassify certain items that were previously reported as assets and
liabilities and instead to classify them as deferred inflows of resources, deferred outflows of resources, or
outflows of resources. The objective of GASB Statement No. 67 is to provide additional disclosures and
greater consistency in regard to the assumptions used in the actuarial valuations Lead to measure the net
pension liability of the Retirement System.
To the Mayor and Members of the City Council April 3, 2015
City of Livonia, Michigan
We noted no transactions entered into by the City during the year for which there is a lack of
authoritative guidance or consensus.
There are no significant transactions that have been recognized in the financial statements in a different
period than when the transaction occurred.
Acawnting estimates are an integral part of the financial statements prepared by management and are
based on management's knowledge and experience about past and current events and assumptions about
future events. Certain accounting estimates are particularly sensitive because of their significance to the
financial statements and because of the possibility that future events affecting them may differ significantly
from those expected. The most sensitive estimates affecting the financial statements are as follows:
Incurred but not reported amounts related to the City's self-insured medical claims, workers'
compensation, and general liability
Untitled water and sewer receivables
The collectability of any delinquent receivables, including property taxes and utility billing
The landfill closure and postclosure liability
The liability related to pending property tax appeals
In the Employees' Retirement System, the value of the SAS equity real estate investment trust (the
"REIT") managed by the Seminole Companies.
The estimate of chargebacks from Wayne County for delinquent real property taxes previously
purchased from the City
Reporting of good damage claims
Pension costs (actuarial methods and assumptions)
Management's estimate of the various incurred but not reported amounts and untitled water and sewer
receivables is based on historical information. The property tax appeals liability is calculated by the City's
legal department in conjunction with assessing. All delinquent receivables are considered collectible by
the City finance department based on past history. As such, no allowances for uncollectible amounts
have been recorded. The landfill liability is calculated by the City's engineering department. We
evaluated the key factors and assumptions used to develop the estimates in determining that they are
reasonable in relation to the financial statements taken as a whole.
Management has reported the SAS equity real estate investment trust at an amount provided by the
Seminole Companies. We obtained audited financial statements for the investment fund itself as of
December 31, 2013 and performed various procedures to evaluate the calculations and assumptions used
by REIT management for the unaudited quarterly reports and member equity statements received since
the date of the audit. We also performed limited analytical procedures on the revenue and expenses
reported by REIT from January 1, 2014 to November 30, 2014. We performed these procedures on the
data used by management to develop the estimate to determine that it's reasonable in relation to the
financial statements taken as a whole.
To the Mayor and Members of the City Council April 3, 2015
City of Livonia, Michigan
Management has not recorded an estimated liability related to any potential property tax chargebacks for
delinquent real property taxes purchased from the City by Wayne County, Michigan as the City estimates
any potential liability to be inconsequential. We reviewed the City's recent chargeback history from
Wayne County and reviewed the history with management personnel to determine that management's
estimate is reasonable in relation to the financial statements taken as a whole.
Related to the food damage claims, management has recorded an estimated liability based on a
settlement agreement subject to Court approval which is anticipated but not yet granted. We have
reviewed this matter with management and the City's legal counsel to determine that management's
estimate is reasonable in relation to the financial statements taken as a whole.
During the current year, the City was required to report additional pension disclosures in accordance
with GASB Statement No. 67. Based on our review of the actuarial study performed in connection with
these required disclosures, we noted that the actuarial study did not use the most current available
mortality tables when calculating the net pension liability. it is our understanding that an experience
study has been recommended to the Pension Board to determine the accuracy of the mortality rates
currently being Lead compared to more current available mortality tables.
The disclosures in the financial statements are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our
audit.
Disagreements with Management
For the purpose of this letter, professional standards define a disagreement with management as a
financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could
be significant to the financial statements or the auditor's report. We are pleased to report that no such
disagreements arose during the course of our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the
audit, other than those that are trivial, and communicate them to the appropriate level of management.
The attached schedule summarizes uncorrected misstatements of the financial statements which were
requested to be recorded. Management has determined that their effects are immaterial, both
individually and in the aggregate, to the financial statements taken as a whole. Management has corrected
all other misstatements.
Significant Findings or James
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, business conditions affecting the City, and business plans and strategies that may affect the
risks of material misstatement with management each year prior to our retention as the City's auditors.
However, these discussions occurred in the normal course of our professional relationship and our
responses were not a condition of our retention.
To the Mayor and Members of the City Council April 3, 2015
City of Livonia, Michigan
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated April 3, 2015.
Management Consultations with 011ier Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting
matters, similar to obtaining a "second opinion' on certain situations. If a consultation involves
application of an accounting principle to the City's financial statements or a determination of the type of
auditor's opinion that may be expressed on those statements, our professional standards require the
consulting accountant to check with us to determine that the consultant has all the relevant facts. To our
knowledge, there were no such consultations with other accountants.
To the Mayor and Members of the City Council April 3, 2015
City of Livonia, Michigan
Section II - Other Recommendations and Related Information
During our audlt, we noted areas where we believe there are opportunities for the City to further
strengthen internal control or to increase operating efficiencies. Our observations on those areas and
other financial matters are presented for your consideration below:
General Fund
Like other Metro Detroit local governments, the City experienced General Fund revenue declines from
2008 to 2011 as a result of significant property tax -related events and changes caused by the recession
that impacted the nation and this region. The City has reacted by reducing the City's General Fund
expenditures during that time period and by also enacting two new voter -approved millages in 2011. As
a result, the City was able to maintain its General Fund fund balance during this very difficult and
continually challenging period for local governments. For the year ended November 30, 2014, General
Fund revenue exceeded General Fund expenditures by approximately $592,000 as actual spending in the
General Fund was approximately $949,000 less than budget while actual revenue in the General Fund
was approximately $344,000 less than budget.
The City's financial management practices through the economic downturn have been very important to
preserving the financial health of the City's General Fund. While the overall economy continues to
improve as re0ected by lower unemployment and increased home sale activity, these trends do not
directly translate into better firancisl times for Michigan local units of government and the City of Livonia.
Even as property values rise, it will likely take many years for taxable value to return to its historical peak
as growth on existing property is limited by the State's Constitution to the lesser of inflation or 5 percent.
State shared revenue funding levels are still significantly below the levels from more than a decade ago.
Given the overriding challenges that exist with the Michigan municipal finance model at a macro level
which we have discussed a number of times with the City, we continue to encourage all of our
governmental clients, including the City of Livonia, to consider these structural limitations as part of its
annual budget process.
Millage Expiration Dates
As a reminder, the City through a vote of the people enacted! 2 dedicated millages in 2011 as part of its
fiscal sustainability plan. The City's public safety and cultural/senior services millages of 1.7000 and.2500
mills, respectively, will expire after the upcoming 2015 tax year levy. These millages provided
approximately $7,400,000 in tax revenue during fiscal year 2014 within the General Fund to specifically
support public safety and cultural/senior service expenditures. These millages provide an important
funding source to allow the City to continue to provide the current level of service.
Plymouth Road Development Authority
The impact of the 2008 recession continues to negatively impacted the fiscal health of the Plymouth Road
Development Authority (PRDA). The recent enactment of a 2 mill property tax levy on PRDA property
(which was levied in 2013) raised approximately $888,000 in property tax revenue for the year ended
November 30, 2014. This millage has currently prevented the General Fund from becoming responsible
for payments on the remaining $2.35 million of debt service related to the 2006 Downtown
Development Refunding Bond issue. That debt issue fully matures in 2018.
To the Mayor and Members of the City Council April 3, 2015
City of Livonia, Michigan
Street Funding
The renewal of the road improvement millage in August 2012 has allowed the City to stabilize the fund
balance of its road funds (Major Streets, Local Streets, and Roads and Sidewalks Funds). In 2014, the
State provided various one-time supplemental funds that helped to increase the total fund balance of
these three funds to $6.7 million in 2014. The State of Michigan's challenges with road funding are well
documented. The level of Act 51 monies from the State of Michigan has not kept pace with the needs of
the State's infrastructure system. Even with the City's dedicated millage, it will remain a challenge to
continue to maintain and improve the City's road system. While there is a statewide ballot issue on road
funding, there are critical State level road and bridge needs that the State is looking to address with these
additional resources.
Pension Funding
In fiscal years 2012, 2013, and 2014, the City was required to make its first contribution to the defined
benefit pension plan since 2003. The Employees Retirement System recognized contributions from the
City totaling $747,119 in 2012, $2,082,220 in 2013, and $3,634,058 in 2014. During fiscal year 2015, the
required contribution will be approximately $2.3 million. There are a variety of factors that impact the
calculation and estimates made by the City's actuary, including investment performance, life expectancy,
number of retirees, etc. In the most recent valuation dated November 30, 2013, according to the
actuary, the system's funding remained below 100 percent. Despite the current funding status of the
City's pension system, future contributions by the City may be required and should be considered for
budget and long tens financial planning purposes.
New Pension Standard
Beginning with the City's November 30, 2015 year end, a new accounting standards issued by the
Governmental Amounting Standards Board (GASB) will significantly impact the Citys financial statements.
GASB Statement No. 68, Accounting and Financial Reporting for Pensions, significantly revise the current
accounting and reporting requirements for pensions from an employer perspective.
Employers providing defined benefit pensions to its employees must now recognize their unfunded
pension benefit obligation as a liability for the first time, and must more comprehensively and comparably
measure the annual costs of pension benefits. As a result of implementing this new standard, the City's
will be required to record a net pension liability, resulting in a sgnRcant impact to the Citys
governmental and business -Type activities.
SignRcant coordination between the City, the actuary, and Plante & Moan, PLLC has already taken place
and will continue in order to implement this pronouncement effectively. We are happy to work with the
City over the next year to ensure smooth implementations of the new standard.
As previously mentioned, the City adopted GFS B No. 67 for the year ended November 30, 2014. GASB
No. 67 now requires the inclusion of significantly more disclosure information in the City's financial
statements on the assumptions used in the actuarial valuations to measure the net pension liability.
To the Mayor and Members of the City Council April 3, 2015
City of Livonia, Michigan
Water and Sewer Fund
Based on our testing of the City's utility billing system data for the year ended November 30, 2014, units
of water sold in fiscal year 2014 are down approximately 9.5 percent from 2013. There was also a
decrease from 2012 to 2013 of 13 percent. Despite the reduction in units sold, the City's Water and
Sewer Fund reported an operating income and income before capital contributed from developers and
grants in 2013 and 2014 after having reported losses from fiscal years 2009 through 2012. We are
encouraging the City and other local units to continue to monitor the rate making methodology of the
City's supplier of water and sewer services and to consider the impact of changes made to the City's rate
structure.
The Water and Sewer Fund revenue bonds include several covenants, including a requirement to
maintain a debt service coverage ratio of at least 100 percent on a prospective basis. This means that the
City must set its customer rates such that the City plane to generate sufficient revenue to pay for the
required debt service in addition to the normal operating costs of the system, such as purchases of
service from the Detroit Water and Sewerage Department (DWSD) and Wayne County, employee
compensation, and other operational costs. Using realistic assumptions of future activity, the City's
budget for the Water and Sewer Fund does, in fact, plan to cover all necessary costs.
Retiree Health Care
The City has been actuarially funding the growing liability associated with postemployment health care for
many years, ahead of the accounfing standards and, as a result, has been able to accumulate as of
November 30, 2014 approximately $91 million for these costs. According to the most recent actuarial
valuation (November 30, 2013), the plan is approximately 46.4 percent funded.
While the City has been completing these actuarial valuations and making an annual contribution for many
years, the VEB4 plan has used an amortization period (40 years) that is somewhat longer than what's
allowed under the new standards (30 years). Using this longer period has resulted in the City's
contributions being less than the actuarially calculated annual required contribution (ARC) under the new
standards. As a result, since the adoption of GASB Statement No. 45 in 2009, the City's required to
record a liability for the difference between the ARC and what the City actually contributes to the VEB4.
As of November 30, 2014, that liability is now over $163,000 in the Water and Sewer Fund and
approximately $3.7 million in the government -wide financial statements.
To the Mayor and Members of the City Council April 3, 2015
City of Livonia, Michigan
Section III - Legislative and Informational Items
Revenue Sharing
The State of Michigan's 2014-2015 budget eliminated the Economic Vitality Incentive Program (EVIP) for
cities, villages, and townships. EVIP created the need for communities to meet certain requirements to
obtain what had been the statutory portion of state -shared revenue. The statutory revenue sharing is
now called "City, Village, and Township Revenue Sharing." (CVTRS). Key provisions of the new revenue
sharing formula are as follows:
1. The CVTRS revenue sharing for cities, villages, and brwrehips that are currently receiving EVIP will
be as follows:
a. For those with a population greater than 7,500 - the greater of a payment that is equal to the
prior year (fiscal year 2013-2014) payment plus 3.05 percent or a total payment equal to
$2.64659 per capita. The State estimates that only about 15 local units will receive more using
the per capita formula, all others will see a 3.05 percent increase.
b. Communities with populations less than 7,500 will simply receive a payment equal to an increase
of 3.05 percent over their 2013-2014 EVIP payment.
2. An additional appropriation of$5.8 million will be available for one-time funding to cities, villages, and
townships that are newly eligible. These communities will receive a per capita payment of$2.64659.
Comtitutional Revenue Sharing - Communities were projected to see an increase of 2.4 percent in
their constitutional revenue sharing payment.
In addition to the dollars above, $B million has been set aside to help financially distressed cities. The
funds will be applied for and disbursed through a grant -type program by the Department of Treasury.
Payments are being made on the last business day of October, December, February, April, June, and
August; 1/6th of the total payment is distributed on each date.
The State has published the estimated payments for each community for 2014-2015 at the following link
State Shared Revenue 2014-2015 estimates.
The deadline for the accountability and transparency documents has passed and there are no additional
"to-do's for communities for the balance of the State's 2014-2015 budget year.
The Governor's initial recommendation for the State's focal year 2015-2016 budget includes a small
increase in revenue sharing to cities. We will keep you apprised to any changes to CVTRS that occur
during the 2015-2016 State budget process.
TIF Authority Personal Property Tax Reimbursement forms are due June 15, 2015
The Michigan Municipal League has communicated that the two forms created by Treasury for
reimbursement of TIF plans for Small Parcel Exemption Losses are available on the Treasury's website
under local Government Services > Forms > Instructions > local Government Officials Forms. The forms
are:
- Form 5176 - N on -Brownfield Authorities (to be used for DDAs, LDFAs, CIAs, etc.)
- Form 5176BR - Brownfield Authorities
To the Mayor and Members of the City Council April 3, 2015
City of Livonia, Michigan
Authorities can only receive reimbursement for the Small Parcel Exemption Loss to the extent the
exemption actually causes revenue loss. In the one where an Authority has "negative capture' overall
and would not have any tax increment revenue regardless of the Small Parcel Exemption Loss, they are
not eligible for any reimbursement. Therefore, one step on the form requires the estimated 2015 tax
increment revenue for all property by class to be provided. Since Brownfield Authorities cannot have
negative capture, that step is omitted from the Form 5176BR.
The forms have multiple tabs requiring input, but in essence the calculation takes the difference between
the 2014 captured value of the personal property in the TIF district and the 2015 captured value of the
personal property in the TIF district, times the captured millages adjusted forexemptions by Plass to get the
personal property TIF revenue loss or gain. This total Is compared to the saturated overall TIF revenue
including small taxpayerlow (FY 2015) to determine the amount to be reimbursed.
Personal Property Tax
Significant personal property tax legislation was passed and approved by the voters in August 2014. Key
provisions of the new law include:
1. There will be a shift in use tax dollars to create a revenue replacement fund.
2. Businesses with less than $40,000 of personal property taxable value ($80,000 true cash value) would
not have to file personal property tax returns or pay any personal property tax. This exemption
began with the 2014 tax year (December 31, 2013 assessments) and will continue.
3. A State Essential Services Assessment (ESA) will be levied which Is actually a tax but is being referred
to as an assessment.
4. Reimbursement to local units for lost personal property tax revenue of an amount stated as 100
percent replacement.
5. "Eligible Manufacturing' property is exempt from personal property tax. The would be phased in
beginning in 2016 (December 31, 2015 assessment Plate), with the following provisions:
a. Any property purchased subsequent to December 31, 2012 would be exempt immediately
effective in 2016.
b. Property purchased prior to December 31, 2012 would be reduced to zero by its 10th year of
existence (should take 9 years).
Determining the Amount of Community Lou:
Communities will first need to calculate their losses. Losses are classified as either debt loss or non-delot
Ions, as follows:
Debt Lou - Debt lou is defined as the amount of ad valorem and dedicated taxes that go toward
debt that are lost as a result of the personal property tax exemption. During FY 2014-2015 and
2015-2016, revenue distributed by the newly created Local Community Stabilization Authority
(LCSA) would equal either a community's debt loss or, in the case of a TIF, the small taxpayer loss.
Through the 2015-2016 fiscal year, the losses are limited to the impact of the $40,000 small business
exemption. When the phase-out of Eligible Manufacturing property would begin to occur when tax
bills go out in 2016, the debt loss (and conresponding reimbursement) will increase.
10
To the Mayor and Members of the City Council April 3, 2015
City of Livonia, Michigan
Non -debt Loss - Non -debt loss is calculated using the lowest rate of each individual millage levied in
the period between 2012 and the year immediately preceding the current year. This will exclude
debt millage. The department will compute the loss by comparing the current year taxable value of
commercial and industrial property to the taxable value that existed at December 31, 2012 (2013 tax
year). In 2016, cities will be reimbursed for non -debt loss for 2014 and 2015 related to the small
taxpayer exemption Ions. This is for cities only. For 2014 and 2015, townships will be getting
reimbursed for the debt Ions related to the small business exemption, but not the other losses
created by the small business exemption. Starting in 2016, all municipalities are reimbursed for non -
debt loss.
Reimbursement Mechanisms
Beginning in 2015-2016, the LCSA would reimburse local units. Reimbursements to communities for the
losses comes from two funding sources:
• Use Tax Shift - a portion of use tax will shift to the LCSA
Essential Services Reimbursement - Beginning in 2015-2016, the LCSA would receive a portion
of the use tax as well as the full Essential Services Assessments in which to reimburse local units. This
assessment is set at a prescribed millage rate based on the acquisition cost of property (depreciation
will no longer apply). The rate is set at 2.4 mills for a property's first five years; then 1.25 mills for
the next five; then 0.9 mills thereafter. Essential services are defined as ambulance, fire, and police
services, as well as jail operations. This includes the cost of related pensionfunding.
The losses described by the bill are to be paid in order of this priority: school debt; Intermediate School
District losses; school operations; government essential services; debt and TIFA forgone increases; and all
other reimbursements (defined below). In theory, if there is not enough money available, the lower
priority items may not be fully reimbursed. However, that department has indicated that they expect the
fund to have enough to coverall reimbursements.
All other reimbursements- These reimbursements come from the use tax and would also begin in 2015-
2016 and initially be proportional to each local unit's share of total "qualified losses," taking into account
the losses of all municipalities. Overtime the reimbursement will shift to be based on each entity's share
of eligible manufacturing personal property (based on the amount used in the ESA calculation above
Beginning in FY 2017-2018, 5 percent of the revenue would be distributed proportionally based on each
local unit's share of eligible manufacturing personal property. The 5 percent portion would increase in 5
percent increments in each subsequent year. By FY 2036-2037, all revenue in the last category of
reimbursements would be dbtributed based on the local unit's share of eligible manufacturing personal
property. In short, in the beginning, the reimbursement is closely tied to the amount of lost personal
property taxes, but over time, the community's reimbursement will be tied to the level of eligible
manufacturing personal property.
These are substantial changes and more guidance is expected from the State
To the Mayor and Members of the City Council April 3, 2015
City of Livonia, Michigan
The Governor signed PA 563 of 2014 into effect in January 2015. This new act is effective beginning
July 1, 2015 and will change the regulations on how governmental entities charge for FO to requests.
Under the new law, public bodies will need to establish and make publically available written procedures
and guidelines for FOIA requests. This can be done by providing paper copies or a link on the
government's website. The written procedures and guidelines, which must be provided free of charge
upon request, must include the following:
- How tosubmit written requeststothe public body and explain how to understand responses
- Deposit requirements
- Fee calculations
- Avenues to challenge or appeal the public bodies denial of a request
- Astandard form with detailed itemization of the following fee components stipulated by the Act:
o Actual mailing costs
o Actual incremental costs ofduplication or publication, including labor
o Actual cost of search, examination, and review
o Actual cost of deletion and separation of exempt from nonexempt information
Other key points to this legislation include:
- Public bodies can charge the cost of labor for activities associated with the duplication or publication
of items requested within limits stated in the Act. Costs are limited to the hourly wage of its lowest -
paid employee capable of necessary duplication or publication in the particular instance, regardless of
whether that person is available and regardless of who actually performs the labor.
- If the public body has the technological capability to provide records on nonpaper physical media
(email, PDF, CD, DVD, etc.) by the requestor they must do so.
- The fee for paper copies shall not exceed $.10 per sheet of paper for paper copies (excluding labor
costs).
- Allows the public body to charge for the actual cost of mailing of public records in an economical and
reasonable manner. This excludes any expedited shipping or insurance.
- Allows the public body to charge up to 50 percent of labor cost for fringe benefits.
- Allows the public body to inform the requestor if the items of public record were already available on
their website at the time of the request. Such requests are exempt from charges.
- If an employee of the government receives a verbal request for information that is already available
on the government's website, the employee receiving the request is required to provide the
requestor with the applicable website address.
- Allows the public body in certain situations to require a 100 percent deposit for a request if the
requestor has not paid the public body for previous FO to requests.
- If the government does not willfully and intentionally comply with the request, a court is required to
impose an additional $2,500 to $7,500 civil fine per oczurrence. Additionally, if the public body tices
not respond timely, the body (in certain circumstances) can be required to lower the charges for
labor costs related to responding to the request
- If a court determines that the public body has arbitrarily and capriciously violated this act a new
$1,000 civil fine must be awarded by the court along with $1,000 punitive damages to be awarded to
the plaintiff.
12
To the Mayor and Members of the City Council April 3, 2015
City of Livonia, Michigan
As you can see, this new Act will require a significant change in practice. We advise that the appropriate
City personnel read the entire Act to ensure understanding with all the related provisions. Written
documentation and appropriate tracking mechanisms will need to be put in place to ensure compliance
by July 1, 2015.
Retro -pay Prohibition
Public Act 54 of 2011, which was signed by the governor on June 7, 2011, prohibits retroactive pay on an
expired contract and calls for employees working under an expired agreement to bear the cost of any
increased healthcare casts until a new contract's in effect. During that period, the public employer's
authorized to make payroll deductions necessary to pay the increased cost of maintaining those benefits.
H B 5097 of 2013, which has now been signed into law by the Governor as PA 301 of 2014, provides for
exceptions to the retro -pay prohibition for public safety personnel that are subject to compulsory
arbitration of labor disputes under PA 312 of 1969. The passing of this legislation would mean that
police, fire, and emergency medical personnel would be eligible to receive retroactive increases in
compensation (this includes wage or benefit increases and step increases) that cover the period after a
bargaining agreement expires and before a new agreement is in place if those higher benefit levels are a
result of arbitration under PA 312 or included in a negotiated bargaining agreement after expiration of
their collective bargaining agreement. In addition, these employees would only be required to pay
increases in insurance benefits after a collective bargaining agreement expired and before a new
agreement is in place that would not exceed the amount of the employee's share under the Publicly
Funded Health Insurance Contribution Act.
EVIP-like Requirements Tied to Act 51 Monies (Public Act 301 of 2014)
PA 301 of 2014 became effective October 9, 2014. This Act creates EVIP-like requirements for those
who pay employees with Act 51 monies. For the purposes of this Act, "transportation employee' means
an employee paid in whole or in part through Act 51 revenues or who is engaged in work funded through
Act 51 revenues.
The act requires local units receiving ACT 51 money for the construction or maintenance of roads to
comply with one of the fo flowing conditions by September 30, 2015:
1. Develop and publicize a transportation employee compensation plan that the local agency intends to
implement with any new, modified, or extended employment contracts or agreements. This
compensation plan must include all of the following:
o For new employee hires, the employer contribution toward retirement plans must be capped at
10 percent of base salary.
o Defined benefit pension plans may use a maximum multiplier of 1.5 percent of final average
compensation it postemployment healthcare is provided and 2.25 percent if postemployment
healthcare is not provided.
o For defined benefit pension plans, the final average compensation must be calculated using a
minimum of three years of compensation and must not include more than 240 hours of paid
leave. Overtime hours cannot be used in calculating final average compensation.
13
To the Mayor and Members of the City Council April 3, 2015
City of Livonia, Michigan
o The employer contribution for health are coverage for new employee hires is capped at 80
percent of the employee's premium or must be competitive with the new state -preferred
provider organization health plan on a per -employee basis.
2. Comply with Public Act 152 of 2011, which requires public employers to place hard caps on the
amounts they contribute toward healthcare costs with an option to elect an 80 percent contribution
cap rather than a hard cap. These hard caps are adjusted annually for inflation. The caps in 2012
were $5,000 for single coverage, $11,000 for individual and spousal coverage, and $15,000 for family
coverage. See below for a discussion of Senate Bill 542 that proposes changes to the individual and
spousal coverage limit from $11,000 to $13,455.
3. Certify that the local road agency tices not offer medical benefits to its transportation employees or
elected public officials.
If a local unit receiving Act 51 money does not certify that it complies with one of the above criteria by
September 30 of each year, the Department of Transportation may withhold Pct 51 distributions until
compliance is established.
Ant 301 also requires local road agencies to maintain a searchable website (accessible to the public) that
includes the current budget, the number of active transportation employees by job classRcation and
wage rate, a financial performance dashboard, the names and contact information of the governing body,
and a copy of the annual certifcation provided to MDOT.
For our communities who are already complying with the requirements of Public Act 152 of 2011, we do
not expect this new legislation to have a significant impact on operations since it essentially just creates a
new reporting requirement; however please contact your audit team if you would like to talk through the
details of the act and your community's compliance.
New Rules Governing Management of Federal Programs
The Office of Management and Budget (OMB) has issued significant reforms to the compliance
requirements that must be followed by non-fetleral entities receiving federal funding. Al entities
receiving federal dollars will need to understand the changes made as a result of these reforms and may
be required to make changes to internal procedures, processes, and controls.
These reforms impact three key areas of federal grants management:
1. Audit Requirements - For fiscal years beginning on or after January 1, 2015, the threshold for
obtaining a federal awards audit will increase from the current threshold of $500,000 of annual
federal spending to $750,000. There will also be significant changes to the criteria for qualifying ass
low-risk auditee and a reduction in the number of major programs required to be tested for some
clients.
2. Cast Principles - Effective for all federal awards received on or after December 26, 2014, the grant
reforms related to cost principles go into effect. Not only were certain changes made to allowable
costs under this new guidance, but there were significant changes in the area of time and effort
reporting and indirect costs.
14
To the Mayor and Members of the City Council April 3, 2015
City of Livonia, Michigan
3. Administrative Requirements - Also effective for all federal awards received on or after
December 26, 2014, nonfederal entities receiving federal funding must adhere to new rules related
to administering federal awards. Most notably, these requirements may impact the CityS
procurement systems, including maintaining written conflict of interest policies and disclosures.
These revisions are clearly the most significant change to occur to federal grants management in recent
history. Entities receiving federal funding will read to carefully digest these changes. Plante & Moran,
PI -LC has been on the cutting edge of these reforms, offering our clients free webimrs, implementation
checklists, and other tools to aid in implementation. The City will need to ensure that the
implementation of the new regulations occurs in a timely and complete manner. Plank & Moran, PI -LC
has many experts in this area who would welcome any question or needs you may have in this area.
Reminder: Brownfield, TIFA. LDFA, and DDA Annual Reporting
Please remember that if you have any sot of tax capture district, you may have annual filing requirements
with the Department of Treasury.
For TIFA, LID FA, and DDA districts
Form 2604 (or Form 2967) is due annually in July. These forms are titled Tax Increment Financing Plan
Report for Capture of Property Taxes and State Reimbursement Amount. Form 2604 is for plans that
have only one school district. Form 2967 is for plans that capture from two or more school districts.
If the TIF plan had no el'p ible obligations and tlitl not capture any school taxes (state education tax, local
school district tax, or ISD tax), the form still needs to be completed although it basically only involves
providing background information and checking a box. The State has indicated that it will notify local
units when they are no longer required to file this form.
In addition, an Annual Report (AR) is required by State Tax Commission Bulletin 9 of 1997 setting forth
the amount and source of tax increments received, amount and purpose of expenditures, etc. In
addition, authorities must submit a copy of the assessor's or treasurer's worksheet for the authority5 tax
increment financing plan district, which was used to determine the plan's tax increment revenue. This is
the worksheet that was used to compute how much money to send to the authority, and it may be ether
handwritten or computed.
Reporting for BRAS includes information similar to the items noted above, but also includes capital
investment, square footage, number of residential units constructed, etc.
A recent Michigan Auditor General once audit indicated neither the brownfield redevelopment
authorities nor the Department of Treasury were in compliance with reporting requirements of the
Brownfield Redevelopment Financing Act (Act 381 of 1996) between January 2011 and December 2013.
More than 72 percent of brownfield redevelopment authorities tlitl not submit the required annual
financial status reports to the Department of Treasury.
15
To the Mayor and Members of the City Council April 3, 2015
City of Livonia, Michigan
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