HomeMy WebLinkAbout2018 Annual Financial ReportCity of Livonia, Michigan
Financial Report
with Supplemental Information
November 30, 2018
City of Livonia, Michigan
Contents
Independent Auditor's Report 1-2
Management's Discussion and Analysis 3-7
Basic Financial Statements
Government-wide Financial Statements:
Statement of Net Position 8-9
Statement of Activities 10-11
Fund Financial Statements:
Governmental Funds:
Balance Sheet 12-13
Reconciliation of the Balance Sheet to the Statement of Net Position 14
Statement of Revenue, Expenditures, and Changes in Fund Balances 15
Reconciliation of the Statement of Revenue, Expenditures, and Changes in Fund
Balances to the Statement of Activities 16
Proprietary Funds:
Statement of Net Position 17
Statement of Revenue, Expenses, and Changes in Net Position 18
Statement of Cash Flows 19-21
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 27-59
Required Supplemental Information 60
Budgetary Comparison Schedule - General Fund 61-63
Budgetary Comparison Schedule - Major Special Revenue Fund - Refuse Disposal System 64
Schedule of Pension Investment Returns 65
Schedule of Changes in the Net Pension Liability (Asset) and Related Ratios 66
Schedule of Pension Contributions 67
Schedule of OPEB Investment Returns 68
Schedule of Changes in the Net OPEB Liability and Related Ratios 69
Schedule of OPEB Contributions 70
Notes to Required Supplemental Information 71
Other Supplemental Information 72
Nonmajor Governmental Funds:
Combining Balance Sheet 73-75
Combining Statement of Revenue, Expenditures, and Changes in Fund Balances 76-78
Fiduciary Funds:
Combining Statement of Fiduciary Net Position 79
Combining Statement of Changes in Fiduciary Net Position 80
Combining Statement of Assets and Liabilities 81-82
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 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, 2018 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.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. W e conducted our audit
in accordance with auditing standards generally accepted in the United States of America and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no
such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, the business-type activities, the aggregate discretely presented
component units, each major fund, and the aggregate remaining fund information of the City of Livonia, Michigan
as of November 30, 2018 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 described in Note 1 to the financial statements, during the year ended November 30, 2018, the City adopted
Governmental Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment
Benefits Other than Pensions, which established accounting and financial reporting standards for defined benefit
OPEB plans provided to the employees of governmental employers. Our opinion is not modified with respect to
this matter.
1
To the Honorable Mayor and
Mem bers of the City Council
City of Livonia, Michigan
Other Matters
Required Supplemental Information
Accounting principles generally accepted in the United States of America require that the management's
discussion 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 Accounting 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 managem ent about the methods of preparing the information and comparing the information for
consistency with management's responses to our inquiries, the basic financial statements, and other knowledge
we obtained during our audit of the basic financial statements. We do not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with sufficient evidence to express
an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming an opinion 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 the purpose of additional analysis and is 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 basic financial statements and certain
additional procedures, including comparing and reconciling such information directly to the underlying accounting
and other records used to prepare the basic financial statements or to the basic financial statements themselves,
and other additional procedures in accordance with auditing standards generally accepted in the United States of
Am erica. In our opinion, the other supplemental information is fairly stated in all material respects in relation to the
basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated April 25, 2019 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 Government
Auditing Standards in considering the City of Livonia, Michigan's internal control over financial reporting and
compliance.
April 25, 2019
2
City of Livonia, Michigan
Management's Discussion and Analysis
Overview of the Financial Statements
The City of Livonia, Michigan’s (the “City”) 2018 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 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 City’s 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 of when cash is received or paid.
The two government-wide statements report the City’s net position and how it has changed. Net position, the
difference between the City’s assets/deferred outflows and liabilities/deferred inflows, is one way to measure the
City’s financial health or position.
The government-wide financial statements of the City are divided into three categories:
Governmental 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.
Fund Financial Statements
The fund financial statements provide more detailed information about the City’s most significant funds - not the
City as a whole. Funds are accounting tools that the City uses to keep track of specific sources of funding and
spending for particular purposes. Some funds are required by state law and bond covenants. Other funds are
established to control and manage money for particular purposes.
The City has three kinds of funds:
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 City’s 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.
3
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
Fiduciary 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.
Government-wide Overall Financial Analysis
In a condensed format, the table below shows a comparison of the net position as of November 30, 2018 to the
prior year.
City's Net Position
Governmental Activities Business-type Activities Total
2018 2017 2018 2017 2018 2017
Assets
Current and other assets $73,168,716 $83,837,782 $37,884,083 $34,153,630 $111,052,799 $117,991,412
Capital assets 204,990,267 199,123,421 88,880,568 89,089,185 293,870,835 288,212,606
Total assets 278,158,983 282,961,203 126,764,651 123,242,815 404,923,634 406,204,018
Deferred Outflows of Resources 51,107,632 444,720 2,988,055 37,172 54,095,687 481,892
Liabilities 238,402,419 56,051,820 30,539,544 20,368,791 268,941,963 76,420,611
Deferred Inflows of Resources 10,134,891 7,463,193 590,910 501,005 10,725,801 7,964,198
Net Position
Net investment in capital assets 176,376,371 168,922,731 75,974,710 74,907,908 252,351,081 243,830,639
Restricted 36,983,547 35,093,065 1,338,069 1,335,663 38,321,616 36,428,728
Unrestricted (132,630,613)15,875,114 21,309,473 26,166,620 (111,321,140)42,041,734
Total net position $80,729,305 $219,890,910 $98,622,252 $102,410,191 $179,351,557 $322,301,101
City of Livonia - Net Position
The City’s assets/deferred outflows exceed its liabilities/deferred inflows at the end of the fiscal year by $179.4
million (net position). However, a major portion (140.7 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 $15.9 million at November 30, 2017
to $(132.6) million at the end of this year. The decrease was primarily related to the implementation of GASB
Statement 75. 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 a
whole, as well as for its separate governmental and business-type activities.
4
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:
City's Changes in Net Position
Governmental Activities Business-type Activities Total
2018 2017 2018 2017 2018 2017
Revenue
Program revenue:
Charges for services $19,010,466 $18,539,840 $45,021,322 $41,738,033 $64,031,788 $60,277,873
Operating grants and contributions 13,203,606 10,798,016 --13,203,606 10,798,016
Capital grants and contributions 1,536,686 1,514,002 518,295 331,662 2,054,981 1,845,664
General revenue:
Property taxes 54,961,950 54,393,357 --54,961,950 54,393,357
State-shared revenue 11,782,355 13,137,673 --11,782,355 13,137,673
Interest 1,216,787 428,189 270,713 112,206 1,487,500 540,395
Other revenue:
Rental income and fees 2,566,848 2,581,922 --2,566,848 2,581,922
Transfer and miscellaneous 580,687 925,121 148,875 49,815 729,562 974,936
Total revenue 104,859,385 102,318,120 45,959,205 42,231,716 150,818,590 144,549,836
Expenses
General government 15,878,147 11,942,235 --15,878,147 11,942,235
Public safety 64,679,658 43,706,967 --64,679,658 43,706,967
Public works 28,850,123 27,018,506 --28,850,123 27,018,506
Community and economic development 1,625,430 1,455,621 --1,625,430 1,455,621
Recreation and culture 15,096,817 12,455,632 --15,096,817 12,455,632
Interest on long-term debt 850,185 1,573,887 --850,185 1,573,887
Water and Sewer --40,036,740 38,139,176 40,036,740 38,139,176
Golf Course --1,761,515 1,706,722 1,761,515 1,706,722
Housing --1,434,113 1,168,864 1,434,113 1,168,864
Total expenses 126,980,360 98,152,848 43,232,368 41,014,762 170,212,728 139,167,610
Change in Net Position (22,120,975)4,165,272 2,726,837 1,216,954 (19,394,138)5,382,226
Net Position - Beginning of year, as
restated (Note 1)102,850,280 215,725,638 95,895,415 101,193,237 198,745,695 316,918,875
Net Position - End of year $80,729,305 $219,890,910 $98,622,252 $102,410,191 $179,351,557 $322,301,101
Governmental Activities
In reviewing governmental activities in the above table, it can be noted that revenue increased by $2.5 million and
expenses increased by $28.8 million. The change in revenue is primarily attributable to road funding from the
State of Michigan and increased parks grant and donation revenue. The most significant factors impacting
expenses were increased capital expenditures for recreation and public works projects and increases to pension
and OPEB liabilities.
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 before contributions, transfers, and interest for each of these
activities in the current and prior year:
Water and Sewer Golf Course Housing
2018 2017 2018 2017 2018 2017
Operating revenue $41,867,091 $38,544,064 $1,712,539 $1,767,104 $1,441,692 $1,426,865
Operating expenses (39,707,832)(37,812,169)(1,761,515)(1,706,722)(1,434,113)(1,168,864)
Total $2,159,259 $731,895 $(48,976)$60,382 $7,579 $258,001
5
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
The operating income of the W ater and Sewer Fund increased between 2017 and 2018. W ater rates increased by
approximately 4 percent, resulting in current year increase in net operating income.
Financial Analysis of Individual Funds
The fund financial statements begin on page 12 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 2018 include the General Fund and Refuse Disposal Fund.
The City’s governmental funds reported a combined fund balance of $51.6 million. This is an increase of
approximately $4.1 million for the year. The primary contributors to the increase were lower than expected costs in
the Refuse Disposal System Fund and the Community Recreation Fund, road and sidewalk projects that were not
completed by year end but will be finished in 2019, establishment of a new Building Improvement Fund, and
overall spending constraints in the General Fund.
General Fund Budgetary Highlights
Over the course of the year, the City’s administration and City Council monitor and amend the budget, primarily to
prevent expenditures in excess of budget, as required by the State of Michigan Budget Act. The final amended
budget included increases to revenue to reflect personal property tax reimbursements from the Local Community
Stabilization Authority (LCSA), building permits, ambulance transports, and interest income that exceeded
originally budgeted projections. The budget amendment allowed for these extra funds to be contributed to the
VEBA as additional funding for postemployment medical benefits, as well as the establishment of a Building
Improvement capital projects fund for future building needs.
Actual General Fund revenue was approximately $50,000 above the final budget.
Actual General Fund expenditures were approximately $243,000 below the final budget. All departments held
expenditures below the final budget, except for health insurance benefit costs, which exceeded budget.
Capital Assets and Debt Administration
At the end of fiscal year 2018, the City has $537.3 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 $28.6 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 $12.9 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.
Significant additions to capital assets during fiscal year 2018 include $9.1 million invested in the construction of
infrastructure and improvements to roads, $4.1 million invested in equipment and vehicles, and $3.0 million in
water and sewer system infrastructure. Significant disposals of capital assets during fiscal year 2018 included the
disposal of vehicles and equipment with a total cost of $2.0 million.
Economic Factors and Next Year's Budgets and Rates
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.
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. Revenue
is beginning to slowly increase after many years of reductions. Property assessments are projected to increase in
fiscal year 2019. State-shared revenue is also projected to increase slightly in fiscal year 2019.
6
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
On the expense side, we expect that normal inflationary increases, as well as employee wage and benefit
increases, will offset the small revenue increases. We are committed to living within our means, although the
result may be diminished programs and service response capabilities.
Requests for Further Information
The financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a
general overview of the City’s finances and to show the City’s accountability for the money it receives. If you have
questions about this report or need additional financial information, contact the director of finance at the City of
Livonia, 33000 Civic Center Drive, Livonia, MI 48154.
7
City of Livonia, Michigan
Statement of Net Position
November 30, 2018
Primary Government
Governmental
Activities
Business-type
Activities Total
Component
Units
Assets
Cash and cash equivalents $54,130,685 $21,160,535 $75,291,220 $877,641
Accounts receivable:
Property taxes 377,967 -377,967 131,412
Special assessments 116,524 270,317 386,841 -
Customers -13,805,044 13,805,044 -
Workers' compensation 42,303 -42,303 -
Due from other governmental units 6,987,161 -6,987,161 -
VEBA 190,914 -190,914 -
Other 5,525,044 277,867 5,802,911 -
Allowance for doubtful accounts -(2,083)(2,083)-
Due from component units 582,113 -582,113 -
Inventory, prepaid expenses, and deposits 5,216,005 1,034,334 6,250,339 -
Restricted assets (Note 8)-1,338,069 1,338,069 -
Capital assets: (Note 5)
Nondepreciable capital assets 35,433,200 13,676,343 49,109,543 474,448
Depreciable capital assets - Net 169,557,067 75,204,225 244,761,292 1,311,753
Total assets 278,158,983 126,764,651 404,923,634 2,795,254
Deferred Outflows of Resources
Bond refunding loss being amortized 417,277 24,779 442,056 -
Deferred pension costs (Note 11)6,826,952 405,844 7,232,796 -
Deferred OPEB costs (Note 13)43,863,403 2,557,432 46,420,835 -
Total deferred outflows of
resources 51,107,632 2,988,055 54,095,687 -
Liabilities
Accounts payable 5,317,739 1,971,495 7,289,234 155,556
Due to other governmental units -3,512,463 3,512,463 4,048
Due to primary government ---582,113
Accrued and other liabilities 1,426,401 135,815 1,562,216 -
Unearned revenue 563,652 5,403 569,055 -
Bonds and deposits -299,482 299,482 -
Noncurrent liabilities: (Note 7)
Due within one year:
Compensated absences 2,966,493 240,061 3,206,554 -
Current portion of long-term debt 2,083,479 1,415,000 3,498,479 -
Due in more than one year:
Compensated absences and
insurance claims 7,112,391 264,681 7,377,072 -
Landfill closure and postclosure 662,842 -662,842 -
Net pension liability (Note 11)21,519,662 1,279,294 22,798,956 -
Net OPEB liability (Note 13)169,802,066 9,900,213 179,702,279 -
Long-term debt - Net of current portion 26,947,694 11,515,637 38,463,331 -
Total liabilities 238,402,419 30,539,544 268,941,963 741,717
See notes to financial statements.8
City of Livonia, Michigan
Statement of Net Position (Continued)
November 30, 2018
Primary Government
Governmental
Activities
Business-type
Activities Total
Component
Units
Deferred Inflows of Resources - Deferred
OPEB cost reductions (Note 13)$10,134,891 $590,910 $10,725,801 $-
Net Position
Net investment in capital assets 176,376,371 75,974,710 252,351,081 1,786,201
Restricted:
Community recreation 4,725,778 -4,725,778 -
Municipal refuse 6,992,404 -6,992,404 -
Streets, roads, and sidewalks 8,623,000 -8,623,000 -
Library 2,521,538 -2,521,538 -
Public safety communication 3,853,598 -3,853,598 -
Grants 79,135 -79,135 -
Ordinance requirements -1,338,069 1,338,069 -
Street lighting 341,012 -341,012 -
Adjudicated forfeitures 1,966,283 -1,966,283 -
Community transit 766,950 -766,950 -
Capital improvements 7,113,849 -7,113,849 -
Unrestricted (132,630,613)21,309,473 (111,321,140)267,336
Total net position $80,729,305 $98,622,252 $179,351,557 $2,053,537
See notes to financial statements.9
City of Livonia, Michigan
Program Revenue
Expenses
Charges for
Services
Operating
Grants and
Contributions
Capital Grants
and
Contributions
Functions/Programs
Primary government:
Governmental activities:
General government $15,878,147 $3,489,311 $-$-
Public safety 64,679,658 9,209,334 373,795 -
Public works 28,850,123 1,570,531 11,248,327 1,422,858
Community and economic
development 1,625,430 432,198 758,387 -
Recreation and culture 15,096,817 4,309,092 823,097 113,828
Interest on long-term debt 850,185 ---
Total governmental activities 126,980,360 19,010,466 13,203,606 1,536,686
Business-type activities:
Water and Sewer 40,036,740 41,867,091 -518,295
Housing 1,434,113 1,441,692 --
Golf Course 1,761,515 1,712,539 --
Total business-type activities 43,232,368 45,021,322 -518,295
Total primary government $170,212,728 $64,031,788 $13,203,606 $2,054,981
Component units:
Plymouth Road Development Authority $795,414 $-$-$-
Brownfield Redevelopment Authority 330,595 ---
Total component units $1,126,009 $-$-$-
General revenue:
Property taxes
State-shared revenue
Investment income
Cable franchise fees
Gain on sale of fixed assets
Other miscellaneous income
Total general revenue
Transfers
Change in Net Position
Net Position - Beginning of year, as restated (Note 1)
Net Position - End of year
See notes to financial statements.10
Statement of Activities
Year Ended November 30, 2018
Net (Expense) Revenue and Changes in Net Position
Primary Government
Governmental
Activities
Business-type
Activities Total
Component
Units
$(12,388,836)$-$(12,388,836)$-
(55,096,529)-(55,096,529)-
(14,608,407)-(14,608,407)-
(434,845)-(434,845)-
(9,850,800)-(9,850,800)-
(850,185)-(850,185)-
(93,229,602)-(93,229,602)-
-2,348,646 2,348,646 -
-7,579 7,579 -
-(48,976)(48,976)-
-2,307,249 2,307,249 -
(93,229,602)2,307,249 (90,922,353)-
---(795,414)
---(330,595)
---(1,126,009)
54,961,950 -54,961,950 1,084,443
11,782,355 -11,782,355 -
1,216,787 270,713 1,487,500 2,300
2,566,848 -2,566,848 -
-75,975 75,975 -
653,587 -653,587 1,000
71,181,527 346,688 71,528,215 1,087,743
(72,900)72,900 --
(22,120,975)2,726,837 (19,394,138)(38,266)
102,850,280 95,895,415 198,745,695 2,091,803
$80,729,305 $98,622,252 $179,351,557 $2,053,537
11
City of Livonia, Michigan
Governmental Funds
Balance Sheet
November 30, 2018
Major Special
Revenue Fund
General Fund
Refuse
Disposal
System
Nonmajor
Funds
Total
Governmental
Funds
Assets
Cash and investments $10,944,207 $8,427,693 $32,092,466 $51,464,366
Accounts receivable:
Property taxes 217,169 80,107 80,691 377,967
Special assessments --116,524 116,524
Workers' compensation 42,303 --42,303
Due from other governmental units 3,877,187 547,056 2,562,918 6,987,161
VEBA 190,914 --190,914
Other 2,967,544 29,784 473,205 3,470,533
Due from component units 582,113 --582,113
Due from other funds (Note 6)64,048 -442,212 506,260
Inventory, prepaid expenses, and deposits 275,454 -78,867 354,321
Total assets $19,160,939 $9,084,640 $35,846,883 $64,092,462
Liabilities
Accounts payable $1,345,322 $1,412,854 $2,559,563 $5,317,739
Due to other funds (Note 6)442,212 -64,048 506,260
Accrued and other liabilities 1,183,438 16,540 135,537 1,335,515
Unearned revenue --563,652 563,652
Total liabilities 2,970,972 1,429,394 3,322,800 7,723,166
Deferred Inflows of Resources - Unavailable
revenue 3,123,293 624,584 1,009,620 4,757,497
See notes to financial statements.12
City of Livonia, Michigan
Governmental Funds
Balance Sheet (Continued)
November 30, 2018
Major Special
Revenue Fund
General Fund
Refuse
Disposal
System
Nonmajor
Funds
Total
Governmental
Funds
Fund Balances
Nonspendable - Inventory and prepaid assets $275,454 $-$78,867 $354,321
Restricted:
Streets, roads, and sidewalks --8,433,372 8,433,372
Adjudicated forfeitures --1,966,283 1,966,283
Grants --57,821 57,821
Capital improvements --6,941,508 6,941,508
Community recreation --4,558,282 4,558,282
Municipal refuse -7,030,662 -7,030,662
Street lighting --341,012 341,012
Library --2,349,062 2,349,062
Public safety communication --3,594,983 3,594,983
Community transit --660,333 660,333
Committed - Cable access television --934,977 934,977
Assigned:
Golf course capital improvements --208,871 208,871
Building improvements --425,000 425,000
Court building improvements --964,092 964,092
Unassigned 12,791,220 --12,791,220
Total fund balances 13,066,674 7,030,662 31,514,463 51,611,799
Total liabilities, deferred inflows
of resources, and fund
balances $19,160,939 $9,084,640 $35,846,883 $64,092,462
See notes to financial statements.13
City of Livonia, Michigan
Governmental Funds
Reconciliation of the Balance Sheet to the Statement of Net Position
November 30, 2018
Fund Balances Reported in Governmental Funds $51,611,799
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 204,990,267
Certain receivables are expected to be collected over several years, including special
assessments, delinquent personal property taxes, and grants 2,054,511
Grants and other receivables that are collected after year end, such that they are not
available to pay bills outstanding as of year end, are not recognized in the funds 4,757,497
Landfill closure and postclosure liability is not due and payable in the current period and
is not reported in the funds (662,842)
Long-term liabilities are not due and payable in the current period and are not reported in
the funds (29,031,173)
Deferred charges on bond refunding are reported as deferred outflows of resources in
the statement of net position, but are not reported in the funds 417,277
Accrued interest is not due and payable in the current period and is not reported in the
funds (90,886)
Some employee fringe benefits are payable over a long period of years and do not
represent a claim on current financial resources; therefore, they are not reported as
fund liabilities:
Employee compensated absences (8,900,367)
Pension benefits (14,692,710)
Retiree healthcare benefits (136,073,554)
The Internal Service Fund (self-insurance) is included as part of governmental activities 6,349,486
Net Position of Governmental Activities $80,729,305
See notes to financial statements.14
City of Livonia, Michigan
Governmental Funds
Statement of Revenue, Expenditures, and Changes in Fund Balances
Year Ended November 30, 2018
Major Special
Revenue Fund
General Fund
Refuse Disposal
System Nonmajor Funds
Total
Governmental
Funds
Revenue
Property taxes $31,730,613 $11,522,022 $11,753,814 $55,006,449
Special assessments --1,422,858 1,422,858
Intergovernmental:
Federal revenue --897,356 897,356
State and local revenue 10,978,446 1,222,874 13,661,251 25,862,571
Charges for services 4,339,944 95,889 4,635,422 9,071,255
Fines and forfeitures 4,394,239 -957,943 5,352,182
Licenses and permits 3,181,630 --3,181,630
Interest 502,386 150,551 517,015 1,169,952
Other revenue 3,358,708 23,382 829,395 4,211,485
Total revenue 58,485,966 13,014,718 34,675,054 106,175,738
Expenditures
Current services:
General government 9,430,120 --9,430,120
Employee benefits, insurance, and other 3,137,379 --3,137,379
Public safety 37,153,873 -1,303,082 38,456,955
Public works 3,338,093 11,385,112 15,663,248 30,386,453
Community and economic development 744,658 -755,772 1,500,430
Recreation and culture 1,958,713 -10,250,439 12,209,152
Capital outlay --4,053,093 4,053,093
Debt service:
Principal retirement --1,830,000 1,830,000
Interest and other --1,028,550 1,028,550
Total expenditures 55,762,836 11,385,112 34,884,184 102,032,132
Excess of Revenue Over (Under) Expenditures 2,723,130 1,629,606 (209,130)4,143,606
Other Financing Sources (Uses)
Transfers in (Note 6)--14,855,962 14,855,962
Transfers out (Note 6)(2,472,978)-(12,455,884)(14,928,862)
Total other financing (uses)
sources (2,472,978)-2,400,078 (72,900)
Net Change in Fund Balances 250,152 1,629,606 2,190,948 4,070,706
Fund Balances - Beginning of year 12,816,522 5,401,056 29,323,515 47,541,093
Fund Balances - End of year $13,066,674 $7,030,662 $31,514,463 $51,611,799
See notes to financial statements.15
City of Livonia, Michigan
Governmental Funds
Reconciliation of the Statement of Revenue, Expenditures, and Changes in
Fund Balances to the Statement of Activities
Year Ended November 30, 2018
Net Change in Fund Balances Reported in Governmental Funds $4,070,706
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 15,346,355
Depreciation expense (9,340,741)
Net book value of assets disposed of (138,768)
Revenue in the statement of activities that does not provide current financial resources is
not reported as revenue in the funds until it is available (1,607,286)
Repayment of bond principal is an expenditure in the governmental funds, but not in the
statement of activities (where it reduces long-term debt)1,830,000
Interest expense is recognized in the government-wide statements as it accrues 178,365
Change in net pension liability and related deferred inflows and outflows reported in the
statement of activities do not require the use of current resources, and, therefore, are
not reported in the fund statements until they come due for payment (18,119,013)
Change in net OPEB liability and related deferred inflows and outflows reported in the
statement of activities do not require the use of current resources, and, therefore, are
not reported in the fund statements until they come due for payment (14,466,298)
Net increase in accumulated employee sick and vacation pay is recorded when incurred
in the statement of activities (319,202)
Increase in landfill liability is recorded when incurred in the statement of activities (11,476)
Internal service funds are included as part of governmental activities 456,383
Change in Net Position of Governmental Activities $(22,120,975)
See notes to financial statements.16
City of Livonia, Michigan
Proprietary Funds
Statement of Net Position
November 30, 2018
Major Enterprise
Funds Nonmajor Enterprise Funds
Governmental
Activities
Water and
Sewer Housing Golf Course
Total Enterprise
Funds
Internal Service
Fund
Assets
Current assets:
Cash and investments $18,336,099 $2,075,795 $748,641 $21,160,535 $2,666,319
Accounts receivable:
Customers 13,805,044 --13,805,044 -
Other 266,519 -11,348 277,867 -
Allowance for doubtful accounts --(2,083)(2,083)-
Inventory, prepaid expenses, and deposits 1,034,334 --1,034,334 4,861,684
Total current assets 33,441,996 2,075,795 757,906 36,275,697 7,528,003
Noncurrent assets:
Restricted assets (Note 8)1,338,069 --1,338,069 -
Special assessment receivables 270,317 --270,317 -
Capital assets: (Note 5)
Nondepreciable capital assets 8,509,057 1,584,798 3,582,488 13,676,343 -
Depreciable capital assets - Net 71,531,553 2,984,473 688,199 75,204,225 -
Total noncurrent assets 81,648,996 4,569,271 4,270,687 90,488,954 -
Total assets 115,090,992 6,645,066 5,028,593 126,764,651 7,528,003
Deferred Outflows of Resources
Bond refunding loss being amortized 24,779 --24,779 -
Deferred pension costs 339,566 66,278 -405,844 -
Deferred OPEB costs 2,019,077 410,531 127,824 2,557,432 -
Total deferred outflows of
resources 2,383,422 476,809 127,824 2,988,055 -
Liabilities
Current liabilities:
Accounts payable 1,842,967 39,519 89,009 1,971,495 -
Due to other governmental units 3,512,463 --3,512,463 -
Accrued and other liabilities 126,513 6,773 2,529 135,815 -
Unearned revenue 5,403 --5,403 -
Bonds and deposits 134,836 164,646 -299,482 -
Compensated absences (Note 7)200,777 32,280 7,004 240,061 -
Current portion of long-term debt (Note 7)1,415,000 --1,415,000 -
Total current liabilities 7,237,959 243,218 98,542 7,579,719 -
Noncurrent liabilities:
Compensated absences and insurance
claims (Note 7)138,129 96,514 30,038 264,681 -
Net pension liability 1,070,368 208,926 -1,279,294 -
Net OPEB liability (Note 13)7,816,161 1,589,224 494,828 9,900,213 -
Long-term debt - Net of current
portion (Note 7)11,515,637 --11,515,637 1,178,517
Total noncurrent liabilities 20,540,295 1,894,664 524,866 22,959,825 1,178,517
Total liabilities 27,778,254 2,137,882 623,408 30,539,544 1,178,517
Deferred Inflows of Resources 466,519 94,856 29,535 590,910 -
Net Position
Net investment in capital assets 67,134,752 4,569,271 4,270,687 75,974,710 -
Restricted - Ordinance requirements 1,338,069 --1,338,069 -
Unrestricted 20,756,820 319,866 232,787 21,309,473 6,349,486
Total net position $89,229,641 $4,889,137 $4,503,474 $98,622,252 $6,349,486
See notes to financial statements.17
City of Livonia, Michigan
Proprietary Funds
Statement of Revenue, Expenses, and Changes in Net Position
Year Ended November 30, 2018
Major
Enterprise
Funds Nonmajor Enterprise Funds
Governmental
Activities
Water and
Sewer Housing Golf Course
Total
Enterprise
Funds
Internal
Service Fund
Operating Revenue
Customer billings $39,834,062 $-$-$39,834,062 $-
Fines and forfeitures 1,851,194 --1,851,194 -
Service connections 80,819 --80,819 -
Greens fees --1,429,764 1,429,764 -
Golf cart fees --118,000 118,000 -
City contributions ----12,830,802
Rental income -1,440,645 4,000 1,444,645 -
Other revenue 101,016 1,047 160,775 262,838 -
Total operating revenue 41,867,091 1,441,692 1,712,539 45,021,322 12,830,802
Operating Expenses
Cost of water 13,931,174 --13,931,174 -
Cost of sewage disposal 14,469,546 --14,469,546 -
System maintenance and operation 6,921,054 --6,921,054 -
General and administration 1,071,356 --1,071,356 -
Reinsurance charges and claims ----12,421,255
Salaries and wages -832,442 214,427 1,046,869 -
Supplies -25,915 193,761 219,676 -
Other services and charges -404,381 1,294,211 1,698,592 -
Depreciation 3,314,702 171,375 59,116 3,545,193 -
Total operating expenses 39,707,832 1,434,113 1,761,515 42,903,460 12,421,255
Operating Income (Loss)2,159,259 7,579 (48,976)2,117,862 409,547
Nonoperating Revenue (Expense)
Investment income 238,443 26,044 6,226 270,713 46,836
Interest expense (328,908)--(328,908)-
Gain on sale of assets 63,275 12,700 -75,975 -
Total nonoperating
(expense) revenue (27,190)38,744 6,226 17,780 46,836
Income (Loss) - Before contributions and
transfers 2,132,069 46,323 (42,750)2,135,642 456,383
Capital Contributions 518,295 --518,295 -
Transfers In --72,900 72,900 -
Change in Net Position 2,650,364 46,323 30,150 2,726,837 456,383
Net Position - Beginning of year, as
restated (Note 1)86,579,277 4,842,814 4,473,324 95,895,415 5,893,103
Net Position - End of year $89,229,641 $4,889,137 $4,503,474 $98,622,252 $6,349,486
See notes to financial statements.18
City of Livonia, Michigan
Proprietary Funds
Statement of Cash Flows
Year Ended November 30, 2018
Major
Enterprise
Fund Nonmajor Enterprise Funds
Governmental
Activities
Water and
Sewer Housing Golf Course
Total
Enterprise
Funds
Internal
Service Fund
Cash Flows from Operating
Activities
Receipts from customers $42,013,566 $1,441,692 $1,708,615 $45,163,873 $12,336,719
Payments to suppliers (30,015,361)(418,005)(1,476,359)(31,909,725)(13,270,721)
Payments to employees (4,093,913)(415,941)(139,744)(4,649,598)-
Other receipts 280,472 --280,472 -
Net cash and cash
equivalents provided
by (used in)
operating activities 8,184,764 607,746 92,512 8,885,022 (934,002)
Cash Flows Provided by Noncapital
Financing Activities - Transfers in --72,900 72,900 -
Cash Flows from Capital and
Related Financing Activities
Special assessment collections 52,895 --52,895 -
Proceeds from sale of capital
assets 63,275 12,701 -75,976 -
Net purchases of capital assets (2,806,791)(11,490)-(2,818,281)-
Principal and interest paid on long-
term debt (1,619,875)--(1,619,875)-
Net cash and cash
equivalents (used in)
provided by capital
and related financing
activities $(4,310,496)$1,211 $-$(4,309,285)$-
See notes to financial statements.19
City of Livonia, Michigan
Proprietary Funds
Statement of Cash Flows (Continued)
Year Ended November 30, 2018
Major
Enterprise
Fund Nonmajor Enterprise Funds
Governmental
Activities
Water and
Sewer Housing Golf Course
Total
Enterprise
Funds
Internal
Service Fund
Cash Flows from Investing
Activities
Interest received on investments $238,443 $26,044 $6,226 $270,713 $46,836
Purchases of investment securities (2,055,153)(317,501)(85,819)(2,458,473)-
Proceeds from sale and maturities
of investment securities ----443,583
Net cash and cash
equivalents (used in)
provided by investing
activities (1,816,710)(291,457)(79,593)(2,187,760)490,419
Net Increase (Decrease) in Cash and
Cash Equivalents 2,057,558 317,500 85,819 2,460,877 (443,583)
Cash and Cash Equivalents -
Beginning of year 8,448,810 720,497 288,502 9,457,809 1,776,742
Cash and Cash Equivalents - End of
year $10,506,368 $1,037,997 $374,321 $11,918,686 $1,333,159
Classification of Cash and Cash
Equivalents
Cash and investments $18,336,099 $2,075,795 $748,641 $21,160,535 $2,666,319
Restricted cash (Note 8)1,338,069 --1,338,069 -
Less investments (9,167,800)(1,037,798)(374,320)(10,579,918)(1,333,160)
Total cash and cash
equivalents $10,506,368 $1,037,997 $374,321 $11,918,686 $1,333,159
See notes to financial statements.20
City of Livonia, Michigan
Proprietary Funds
Statement of Cash Flows (Continued)
Year Ended November 30, 2018
Major
Enterprise
Fund Nonmajor Enterprise Funds
Governmental
Activities
Water and
Sewer Housing Golf Course
Total
Enterprise
Funds
Internal
Service Fund
Reconciliation of Operating Income
(Loss) to Net Cash from Operating
Activities
Operating income (loss)$2,159,259 $7,579 $(48,976)$2,117,862 $409,547
Adjustments to reconcile operating
income (loss) to net cash from
operating activities:
Depreciation and amortization 3,314,702 171,375 59,116 3,545,193 -
Changes in assets and
liabilities:
Receivables 146,475 -(3,924)142,551 -
Inventories (132,667)--(132,667)-
Prepaid and other assets 34,283 --34,283 (849,466)
Net pension and OPEB
liabilities 1,806,279 412,559 77,462 2,296,300 -
Accounts payable 617,251 12,291 11,613 641,155 -
Accrued and other liabilities (41,290)3,942 (2,779)(40,127)(494,083)
Other assets 280,472 --280,472 -
Net cash and cash
equivalents provided
by (used in)
operating activities $8,184,764 $607,746 $92,512 $8,885,022 $(934,002)
During the year end November 30, 2018, the City received $518,295 of donated lines reported as capital assets in
the W ater and Sewer Fund.
See notes to financial statements.21
City of Livonia, Michigan
Fiduciary Funds
Statement of Fiduciary Net Position
November 30, 2018
Pension and
Other Employee
Benefits Agency
Assets
Cash and cash equivalents (Note 3)$652,464 $9,494,404
Investments: (Note 3)
U.S. government securities 20,575,986 -
Collateralized mortgage obligations 6,553,775 -
Common stock 137,073,686 -
Corporate bonds 23,671,146 -
Real estate investment trust 11,287,026 -
Foreign bonds 3,163,669 -
Mutual funds 115,834,179 -
Accounts receivable 84,690 -
Due from other funds 772,525 42,038
Total assets 319,669,146 $9,536,442
Liabilities
Accounts payable 1,288,400 $-
Due to other governmental units 31,193 3,698,877
Due to primary government 190,914 -
Due to other funds -814,563
Accrued and other liabilities -5,023,002
Total liabilities 1,510,507 $9,536,442
Net Position Restricted for Pension and Other Post Employment
Benefits $318,158,639
See notes to financial statements.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, 2018
Additions
Investment income (expense):
Interest and dividends $8,466,059
Net change in fair value of investments (10,822,455)
Less investment expenses (836,272)
Net investment loss (3,192,668)
Contributions:
Employer 5,057,892
Employee 781,422
Total contributions 5,839,314
Total additions 2,646,646
Deductions
Pension benefit payments 17,484,418
Medical benefit payments 7,544,389
Disability benefit payments 164,574
Refunds of contributions 401,899
Administrative expenses 288,829
Total deductions 25,884,109
Net Decrease in Net Position (23,237,463)
Net Position Restricted for Pension and Other Postemployment Benefits - Beginning of
year 341,396,102
Net Position Restricted for Pension and Other Postemployment Benefits - End of year $318,158,639
See notes to financial statements.23
City of Livonia, Michigan
Component Units
Statement of Net Position
November 30, 2018
Economic
Development
Corporation
Plymouth Road
Development
Authority
Brownfield
Redevelopment
Authority Total
Assets
Cash and cash equivalents $24,257 $625,306 $228,078 $877,641
Accounts receivable -131,412 -131,412
Capital assets: (Note 5)
Nondepreciable capital assets -474,448 -474,448
Depreciable capital assets - Net -1,311,753 -1,311,753
Total assets 24,257 2,542,919 228,078 2,795,254
Liabilities
Accounts payable -91,870 63,686 155,556
Due to other governmental units --4,048 4,048
Due to primary government -582,113 -582,113
Total liabilities -673,983 67,734 741,717
Net Position
Net investment in capital assets -1,786,201 -1,786,201
Unrestricted 24,257 82,735 160,344 267,336
Total net position $24,257 $1,868,936 $160,344 $2,053,537
See notes to financial statements.24
City of Livonia, Michigan
Program Revenue
Expenses
Charges for
Services
Operating
Grants and
Contributions
Capital Grants
and
Contributions
Functions/Programs
Economic Development
Corporation $-$-$-$-
Plymouth Road Development
Authority:
Community and economic
development 785,319 ---
Interest on long-term debt 10,095 ---
Total Plymouth
Road
Development
Authority 795,414 ---
Brownfield Redevelopment
Authority -
Community and economic
development 330,595 ---
Total component
units $1,126,009 $-$-$-
General revenue:
Property taxes
Interest
Miscellaneous
Total general revenue
Change in Net Position
Net Position - Beginning of year
Net Position - End of year
See notes to financial statements.25
Component Units
Statement of Activities
Year Ended November 30, 2018
Net (Expense) Revenue and Changes in Net Position
Economic
Development
Corporation
Plymouth Road
Development
Authority
Brownfield
Redevelopment
Authority Total
$-$-$-$-
-(785,319)-(785,319)
-(10,095)-(10,095)
-(795,414)-(795,414)
--(330,595)(330,595)
-(795,414)(330,595)(1,126,009)
-718,162 366,281 1,084,443
319 109 1,872 2,300
--1,000 1,000
319 718,271 369,153 1,087,743
319 (77,143)38,558 (38,266)
23,938 1,946,079 121,786 2,091,803
$24,257 $1,868,936 $160,344 $2,053,537
26
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 1 - 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-member council. The City's
administration operates under the overall direction of an elected mayor. The accompanying financial
statements present the City and its component units, entities for which the City is considered to be
financially accountable. Blended component units are, in substance, part of the City's operations, even
though they are separate legal entities. Thus, blended component units are appropriately presented as
funds of the City. 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.
Blended Component Units
The Municipal Building Authority of Livonia is governed by a board that is appointed by the City's mayor.
Although it is legally separate from the City, it is reported as if it were part of the primary government
because its primary purpose is to finance and construct the City's public buildings. The operations of the
Municipal Building Authority are reported as a nonmajor debt service fund.
The District Court Funds of District No. 16 (the "District Court") 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 enterprises in relocating, purchasing,
constructing, improving, or expanding within the City so as to provide needed services and facilities of
such enterprises to the residents of the City. The 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, MI 48154.
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.
27
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 1 - Significant Accounting Policies (Continued)
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 revenue 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 revenue. Direct expenses are those that are clearly identifiable with a
specific function or segment. Program revenue includes: (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, unrestricted intergovernmental receipts, and other
items not properly included among program revenue are reported instead as general revenue.
As a general rule, the effect of interfund activity has been removed from the government-wide financial
statements. Exceptions to this general rule occur when there are charges between the City's water and
sewer function and various other functions. Eliminations of these charges would distort the direct costs
and program revenue reported for the various functions concerned.
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds
even though the latter are excluded from the government-wide financial statements. Major individual
governmental funds and major individual enterprise funds, if any, 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 it spends certain resources; separate funds allow the City to show the particular expenditures for
which specific revenue is used. The various funds are aggregated into three broad fund types:
Governmental Funds
Governmental funds include all activities that provide general governmental services that are not
business-type activities. Governmental funds can include 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 is the primary operating fund because it accounts for all financial resources used to
provide government services other than those specifically assigned to another fund.
The Refuse Disposal Fund accounts for the operations of the refuse disposal activities of the City.
Funding is primarily through a local dedicated property tax levy.
Proprietary Funds
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 fund as a “major” enterprise fund:
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.
28
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 1 - Significant Accounting Policies (Continued)
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.
Fiduciary Funds
Fiduciary funds include amounts held in a fiduciary capacity for others. These amounts are not used to
operate the City’s programs. Activities that are reported as fiduciary include the following:
Pension and Other Employee Benefits Trust Fund accounts for the activities of employee benefit plans
that accumulate resources for pension and other postemployment benefit payments to qualified
employees.
The City of Livonia Employees Retirement System and the City of Livonia Health and Disability Plan
have been blended into the City's financial statements. These systems are governed by a five-member
pension board that includes three individuals chosen by the City Council and/or 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 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 from/to other funds and advances to/from other
funds. While these balances are reported in fund financial statements, certain eliminations are made in
the preparation of the government-wide financial statements. Balances between 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. Similarly, 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.
Furthermore, certain activity occurs during the year involving transfers of resources between funds. In
fund financial statements, these amounts are reported at gross amounts as transfers in/out. While
reported in fund financial statements, certain eliminations are made in the preparation of the government-
wide financial statements. Transfers between the funds included in governmental activities are eliminated
so that only the net amount is included as transfers in the governmental activities column. Similarly,
balances between 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.
Basis of Accounting
The governmental funds use the current financial resources measurement focus and the modified accrual
basis of accounting. This basis of accounting is intended to better demonstrate accountability for how the
City 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 healthcare-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.
29
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 1 - Significant Accounting Policies (Continued)
Revenue is not recognized until it is collected or collected soon enough after the end of the year that it is
available to pay for obligations outstanding at the end of the 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, delinquent personal property
taxes, certain state-shared revenue payments, 911 surcharges, special assessments, and other
miscellaneous revenue will be collected after the period of availability; receivables have been recorded for
these, along with a “deferred inflow.”
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 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 Administration Fund (an 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 property tax receivables are shown
as net of allowance for uncollectible amounts.
Inventories and Prepaid Items
Inventories are valued at cost, on a first-in, first-out basis. Inventories 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 bond reserve. These
amounts have been classified 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 acquisition value at the date of donation.
30
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 1 - Significant Accounting Policies (Continued)
Infrastructure, buildings, equipment, and vehicles are depreciated using the straight-line method over the
following useful lives:
Depreciable Life -
Years
Infrastructure 33 to 40
Road rights 33
Buildings and improvements 25 to 50
Machinery, equipment, and vehicles 2 to 20
Water and sewer distribution systems 50
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 and premiums as an “other financing source” and bond discounts as
"other financing uses." The General Fund and debt service funds are generally used to liquidate
governmental long-term debt.
Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position will sometimes report a separate section for deferred
outflows of resources. This separate financial statement element represents a consumption of net position
that applies to future periods and will not be recognized as an outflow of resources (expense/expenditure)
until then. The City reports deferred outflows related to bond refunding charges and the pension and
OPEB plans, as detailed in Notes 11 and 13, respectively.
In addition to liabilities, the statement of net position will sometimes report a separate section for deferred
inflows of resources. This separate financial statement element represents an acquisition of net position
that applies to future periods and will not be recognized as an inflow of resources (revenue) until that time.
The City reports deferred inflows related to two items. Unavailable revenue is reported only in the
governmental funds balance sheet. The governmental funds report unavailable revenue from various
sources shown in Note 16. These amounts are deferred and recognized as an inflow of resources in the
period that the amounts become available. The City also reports deferred inflows of resources related to
the OPEB plan, as detailed in Note 13.
Net Position Flow Assumption
The City will sometimes 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 City’s policy to consider restricted net position to have been depleted before unrestricted net position is
applied, except as noted below.
31
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 1 - Significant Accounting Policies (Continued)
Fund Balance Flow Assumptions
The City will sometimes fund outlays for a particular purpose from both restricted and unrestricted
resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the
amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental
fund financial statements, a flow assumption must be made about the order in which the resources are
considered to be applied. It is the City’s policy to consider restricted fund balance to have been depleted
before using any of the components of unrestricted fund balance. The exceptions to this are the
Community Recreation Fund and Capital Improvement Fund, which apply unrestricted fund balance first.
Furthermore, 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-making 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 year’s appropriated budget. Unlike commitments, assignments generally only exist
temporarily. In other words, an additional action does not normally have to be taken for the removal of an
assignment. Conversely, as discussed above, an additional action is essential to either remove or revise a
commitment.
Property Tax Revenue
Property taxes are levied on each July 1 and December 1 and become an enforceable lien at that time;
the tax is based 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 of the
following year, at which time penalties and interest are assessed.
The City's 2017 property tax revenue was levied and collectible on December 1, 2017 and is recognized
as revenue in the year ended November 30, 2018 when the proceeds of the levy are budgeted and
available for the financing of operations.
32
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 1 - Significant Accounting Policies (Continued)
The 2017 taxable valuation of the City totaled $3.99 billion. Properties in the Plymouth Road Development
Authority (PRDA) are assessed a millage of 2.0000 on July 1. The 2018 taxable valuation of PRDA totaled
$380 million. The millages levied by the City and the resulting revenue are as follows:
Purpose Millage Rate
Approximate
Revenue (in
000s)
Operating purposes 4.0337 $15,984
Police and fire 0.8066 3,196
Police and fire and snow 1.2101 4,795
Library 0.8066 3,186
Refuse and recycling 2.9163 11,522
Industrial development 0.0126 50
Roads, sidewalks, and trees 0.8868 3,503
Recreation 0.7833 3,094
Public safety 1.6954 6,718
Culture and senior services 0.2493 988
Transit and capital improvement 0.4986 1,970
Plymouth Road Development Authority 2.0000 715
Total $55,721
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, Michigan (the "County").
The County sells tax notes, the proceeds of which are used to pay the City for these property taxes.
Wayne County, Michigan remitted its purchased delinquent real property taxes in June 2018. Wayne
County, Michigan delinquent real property taxes have been recorded as revenue in the current year.
Pension
The City offers a defined benefit pension plan to certain employees. The City records a net pension liability
for the difference between the total pension liability calculated by the actuary and the pension plan’s
fiduciary net position. For the purpose of measuring the net pension liability, deferred outflows of
resources and deferred inflows of resources related to pensions, and pension expense, information about
the fiduciary net position of the City of Livonia Employees Retirement System and additions to/deductions
from the pension plan’s fiduciary net position have been determined on the same basis as they are
reported by the pension plan. For this purpose, benefit payments (including refunds of employee
contributions) are recognized when due and payable in accordance with the benefit terms. Investments
are reported at fair value.
Other Postemployment Benefit Costs
The City offers retiree healthcare benefits to certain retirees. The City records a net OPEB liability for the
difference between the total OPEB liability calculated by the actuary and the OPEB plan’s fiduciary net
position. For the purpose of measuring the net OPEB liability, deferred outflows of resources and deferred
inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of
the City of Livonia Retiree Health and Disability Benefits Plan and additions to/deductions from the OPEB
plan’s fiduciary net position have been determined on the same basis as they are reported by the OPEB
plan. For this purpose, benefit payments are recognized when due and payable in accordance with the
benefit terms. Investments are reported at fair value.
33
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 1 - Significant Accounting Policies (Continued)
Compensated Absences (Vacation and Sick Leave)
It is the City's policy to permit employees to accumulate earned but unused sick and vacation pay benefits
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 W ater and Sewer Fund, primarily) are used to liquidate obligation.
Proprietary Funds Operating Classification
Proprietary funds distinguish operating revenue and expenses from nonoperating items. Operating
revenue and expenses generally result from providing services and producing and delivering goods in
connection with a proprietary fund’s principal ongoing operations. The principal operating revenue of the
Water and Sewer Fund, Housing Fund, Golf Course Fund, and internal service funds is charges to
customers for sales or 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 these funds include the cost of sales or services, administrative expenses, and depreciation
on capital assets. All revenue and expenses not meeting this definition are reported as nonoperating
revenue 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.
Upcoming Accounting Pronouncements
In January 2017, the Governmental Accounting Standards Board (GASB) issued Statement No. 84,
Fiduciary Activities. This statement establishes criteria for identifying fiduciary activities of all state and
local governments. An activity meeting the criteria should be reported in a fiduciary fund in the basic
financial statements. 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 the City's financial statements
for the year ending November 30, 2020.
In June 2017, the Governmental Accounting Standards Board issued GASB Statement No. 87, Leases,
which improves accounting and financial reporting for leases by governments. This statement requires
recognition of certain lease assets and liabilities for leases that were previously classified as operating
leases and recognized as inflows of resources or outflows of resources based on the payment provisions
of the contract. It establishes a single model for lease accounting based on the foundational principle that
leases are financings of the right to use an underlying asset. Under this statement, a lessee is required to
recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize
a lease receivable and a deferred inflow of resources. 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 the City's financial statements for the year ending November 30, 2021.
34
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 1 - Significant Accounting Policies (Continued)
In March 2018, the GASB issued Statement No. 88, Certain Disclosures Related to Debt, Including Direct
Borrowings and Direct Placements. This statement establishes criteria to improve the information that is
disclosed in the notes to the government financial statements related to debt, including direct
borrowings and direct placements. It also clarifies which liabilities governments should include when
disclosing information related to debt. 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 the City's
financial statements for the year ending November 30, 2019.
In June 2018, the GASB issued Statement No. 89, Accounting for Interest Cost Incurred Before the End of
a Construction Period, which simplifies accounting for interest cost incurred before the end of construction
and requires those costs to be expensed in the period incurred. As a result, interest cost incurred before
the end of a construction period will not be capitalized and included in the historical cost of a capital asset
reported in a business-type activity or enterprise fund. This statement also reiterates that, in financial
statements prepared using the current financial resources measurement focus, interest cost incurred
before the end of a construction period should be recognized as an expenditure on a basis consistent with
governmental fund accounting principles. The requirements of the standard will be applied prospectively
and result in increased interest expense during periods of construction. The provisions of this statement
are effective for the City's financial statements for the November 30, 2021 fiscal year.
Adoption of New Accounting Pronouncements
During the current year, the City adopted GASB Statement No. 75, Accounting and Financial Reporting for
Postemployment Benefits Other than Pensions, which replaces GASB Statement No. 45. As a result, the
government-wide statements and proprietary funds now include a liability for the City's estimated unfunded
other postemployment benefit (OPEB) costs. Some of the changes in this net OPEB liability will be
recognized immediately as part of the OPEB expense measurement, and part will be deferred and
recognized over future years. Refer to the other postemployment benefit plan disclosure (see Note 13) for
further details. This change does not impact the modified accrual funds.
The financial statements for the year ended November 30, 2017 have been restated in order to adopt
GASB Statement No. 75. The effect of this new standard was a decrease in net position to record the net
OPEB liability at November 30, 2017. Additionally, the net OPEB obligation previously recorded in the
government-wide statements and proprietary funds in accordance with GASB Statement No. 45 has been
eliminated, and the overall result was a decrease in net position as of the beginning of the current fiscal
year.
Governmental
Activities
Business-type
Activities
Water and
Sewer
Nonmajor
Enterprise
Funds
Net position - Beginning of year, as
previously reported $219,890,910 $102,410,191 $91,741,795 $10,668,396
Adjustment for GASB Statement
No. 75 - To record the net OPEB
liability (121,607,256)(6,740,842)(5,388,584)(1,352,258)
Adjustment for GASB Statement
No. 75 - To eliminate the net
OPEB obligation previously
recorded under GASB Statement
No. 45 4,566,626 226,066 226,066 -
Net position - Beginning of year, as
restated $102,850,280 $95,895,415 $86,579,277 $9,316,138
35
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
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:
Adjusted cumulative shortfall at December 1, 2017 $(2,350,477)
Current year building permit revenue 2,887,887
Related expenses:
Direct costs $2,105,157
Estimated indirect costs 572,947 2,678,104
Current year net revenue 209,783
Cumulative shortfall at November 30, 2018 $(2,140,694)
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 matures not more than 270 days after the date of purchase; obligations of the State
of Michigan or its political subdivisions, which are rated as investment grade; and mutual funds composed
of investment vehicles that are legal for direct investment by local units of government in Michigan.
The pension trust fund and retiree health care fund are also authorized by Michigan Public Act 314 of
1965, as amended, to invest in certain reverse repurchase agreements, stocks, diversified investment
companies, annuity investment contracts, real estate leased to public entities, mortgages, real estate (if
the trust fund's assets exceed $250 million), debt or equity of certain small businesses, certain state and
local government obligations, and certain other specified investment vehicles.
The City has designated nine 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 investments are in
accordance with statutory authority.
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 it. The City does not have a deposit policy for custodial credit risk. At year end, the City had
$39,193,336 of bank deposits (certificates of deposit and checking and savings accounts) that were
uninsured and uncollateralized.In addition, the District Court, a component unit, had $886,946 of bank
deposits (checking and savings accounts) 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 with which it deposits funds and
assesses the level of risk of each institution; only those institutions with an acceptable estimated risk level
are used as depositories.
36
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 3 - Deposits and Investments (Continued)
Interest Rate Risk
Interest rate risk is the risk that the value of investments will decrease as a result of a rise in interest rates.
The City's investment policy does not restrict investment maturities other than commercial paper, which
can only be purchased with a 270-day maturity.
At year end, the City had the following investments and maturities:
Primary Government Fair Value 0-5 Years 6-10 Years
More Than 10
Years
U.S. agency securities $18,361,905 $18,361,905 $-$-
U.S. Treasury securities 8,592,581 8,592,581 --
Commercial paper 2,137,463 2,137,463 --
Total $29,091,949 $29,091,949 $-$-
City of Livonia Employees
Retirement System Fair Value 0-5 Years 6-10 Years
More Than 10
Years
Corporate bonds $12,853,957 $5,896,240 $4,053,224 $2,904,493
Foreign bonds 1,934,230 1,462,354 310,206 161,670
U.S. agency securities 7,358,923 5,630 44,828 7,308,465
U.S. Treasury securities 3,686,889 314,811 -3,372,078
Collateralized mortgage obligations 4,061,079 59,063 -4,002,016
Total $29,895,078 $7,738,098 $4,408,258 $17,748,722
City of Livonia Retiree Health and
Disability Benefits Plan Fair Value 0-5 Years 6-10 Years
More Than 10
Years
Corporate bonds $10,817,189 $5,916,683 $2,984,477 $1,916,029
Foreign bonds 1,229,439 1,038,959 95,740 94,740
U.S. agency securities 5,266,113 5,599 980 5,259,534
U.S. Treasury securities 4,264,061 695,193 1,269,644 2,299,224
Collateralized mortgage obligations 2,492,696 60,139 350,368 2,082,189
Total $24,069,498 $7,716,573 $4,701,209 $11,651,716
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 November 30, 2018, the credit quality ratings of debt securities (other than the U.S.
government) are as follows:
Investment Fair Value Rating
Rating
Organization
Primary Government
Bank investment pools $70,866 Aa1/P1 Moody's
Bank investment pools 16,989,125 A2/P1 Moody's
U.S. agency securities 18,361,905 AA+S&P
U.S. Treasury securities 8,592,581 AA+S&P
Commercial paper 2,137,463 A-1 S&P
Total $46,151,940
37
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 3 - Deposits and Investments (Continued)
Investment Fair Value Rating
Rating
Organization
Fiduciary Funds
Corporate bond $1,639,470 Aaa Moody's
Corporate bond 73,514 Aa1 Moody's
Corporate bond 365,887 Aa2 Moody's
Corporate bond 236,608 Aa3 Moody's
Corporate bond 1,042,431 A1 Moody's
Corporate bond 3,066,587 A2 Moody's
Corporate bond 2,203,914 A3 Moody's
Corporate bond 12,030,663 Baa1 and below Moody's
Corporate bond 3,012,072 NR N/A
Foreign bonds 267,570 Aa1 Moody's
Foreign bonds 648,282 Aa2 Moody's
Foreign bonds 362,385 Aa3 Moody's
Foreign bonds 356,502 A1 Moody's
Foreign bonds 53,620 A2 Moody's
Foreign bonds 83,109 A3 Moody's
Foreign bonds 1,177,973 Baa1 and below Moody's
Foreign bonds 214,228 NR N/A
U.S. agency securities 12,625,036 NR N/A
U.S. Treasury securities 7,396,282 Aaa Moody's
U.S. Treasury securities 554,668 NR N/A
Collateralized mortgage obligations 4,132,423 Aaa Moody's
Collateralized mortgage obligations 2,421,352 NR N/A
Total $53,964,576
There are no limitations or restrictions on participant withdrawals for the bank investment pools that are
recorded at amortized cost.
Note 4 - Fair Value Measurements
The City categorizes its fair value measurements within the fair value hierarchy established by generally
accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair
value of the assets. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs
are significant other observable inputs; Level 3 inputs are significant unobservable inputs. Investments
that are measured at fair value using net asset value per share (or its equivalent) as a practical expedient
are not classified in the fair value hierarchy below.
In instances whereby inputs used to measure fair value fall into different levels in the fair value hierarchy,
fair value measurements in their entirety are categorized based on the lowest level input that is significant
to the valuation. The City’s assessment of the significance of particular inputs to these fair value
measurements requires judgment and considers factors specific to each asset.
38
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 4 - Fair Value Measurements (Continued)
The City has the following recurring fair value measurements as of November 30, 2018:
Assets Measured at Fair Value on a Recurring Basis at
November 30, 2018
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Balance at
November 30,
2018
Investments by Fair Value Level
Debt securities:
U.S. Treasury securities $14,247,920 $-$-$14,247,920
Mortgage-backed securities -12,625,036 -12,625,036
Collateralized mortgage
obligations -6,553,775 -6,553,775
Corporate bonds -19,694,735 -19,694,735
Foreign bonds and notes -3,163,669 -3,163,669
Government agencies -18,361,905 -18,361,905
Private placements -420,758 -420,758
Asset-backed securities -3,555,653 -3,555,653
Total debt securities 14,247,920 64,375,531 -78,623,451
Equity securities:
Common stock 130,316,366 --130,316,366
Foreign stock 6,338,282 --6,338,282
Open end MF - Equity 53,390,222 --53,390,222
Open end MF - Fixed
income tax 13,548,730 --13,548,730
ADR 9,464,779 --9,464,779
REIT 2,829,460 --2,829,460
Short-term investments -4,653,212 -4,653,212
Total equity securities 215,887,839 4,653,212 -220,541,051
Total investments by fair
value level $230,135,759 $69,028,743 $-299,164,502
Investments measured at NAV:
Real estate funds 17,730,135
CIF - Fixed income 25,846,938
Total investments
measured at NAV 43,577,073
Total investments $342,741,575
Debt and equity securities classified in Level 1 are valued using prices quoted in active markets for those
securities.
The fair value of mortgage-backed securities, collateralized mortgage obligations, corporate bonds,
foreign bonds and notes, government agency securities, private placements, asset-backed securities, and
short-term investments at November 30, 2018 was determined primarily based on Level 2 inputs. The City
estimates the fair value of these investments using other inputs, such as interest rates and yield curves,
that are observable at commonly quoted intervals.
The valuation method for investments measured at net asset value (NAV) per share (or its equivalent) is
presented in the following table.
39
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 4 - Fair Value Measurements (Continued)
Investments in Entities that Calculate Net Asset Value per Share
The City holds shares or interests in investment companies whereby the fair value of the investments is
measured on a recurring basis using net asset value per share (or its equivalent) of the investment
companies as a practical expedient.
As of November 30, 2018, the fair value, unfunded commitments, and redemption rules of those
investments are as follows:
Fair Value
Unfunded
Commitments
Redemption
Frequency, if
Eligible
Redemption
Notice Period
Real estate funds $17,730,135 $-Unlimited 12 months
CIF - Fixed income 25,846,938 -Unlimited
15 business
days
Total investments measured
at NAV $43,577,073 $-
The real estate funds class include the Seminole Equity REIT, the Alidade Capital Fund, and the Valstone
Opportunity Fund that invest primarily in U.S. commercial real estate. The fair values of the investments in
this class have been estimated using net asset value of the City's ownership interest in partners' capital.
As it relates to the Seminole Equity REIT, a plan was approved by the participants to liquidate all of the
REIT's assets no later than June 30, 2020. Net income earned and amounts received from payoffs of
investments will be distributed to the participants as cash is available until all funds are distributed.
The CIF - fixed income class includes the Loomis Sayles Senior Loan Fund, which invests primarily in
bank loans. The fair values of the investments in this class have been estimated using net asset value of
the City's ownership interest in the market value of the total fund.
40
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 5 - Capital Assets
Capital asset activity of the City's governmental and business-type activities was as follows:
Governmental Activities
Balance
December 1,
2017 Reclassifications Additions Disposals
Balance
November 30,
2018
Capital assets not being
depreciated:
Land $34,842,692 $-$40,000 $(19,724)$34,862,968
Construction in progress 371,561 (1,472,467)1,681,563 (10,425)570,232
Subtotal 35,214,253 (1,472,467)1,721,563 (30,149)35,433,200
Capital assets being depreciated:
Infrastructure 136,339,115 -9,112,737 -145,451,852
Road rights 21,188,482 -118,237 -21,306,719
Buildings and improvements 112,573,254 1,472,467 612,613 (132,100)114,526,234
Equipment and vehicles 38,380,063 -3,781,205 (1,368,364)40,792,904
Subtotal 308,480,914 1,472,467 13,624,792 (1,500,464)322,077,709
Accumulated depreciation:
Infrastructure 59,499,632 -3,759,533 -63,259,165
Road rights 10,754,506 -610,304 -11,364,810
Buildings and improvements 50,990,084 -2,295,616 (99,557)53,186,143
Equipment and vehicles 23,327,524 -2,675,288 (1,292,288)24,710,524
Subtotal 144,571,746 -9,340,741 (1,391,845)152,520,642
Net capital assets being
depreciated 163,909,168 1,472,467 4,284,051 (108,619)169,557,067
Net governmental activities
capital assets $199,123,421 $-$6,005,614 $(138,768)$204,990,267
41
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 5 - Capital Assets (Continued)
Business-type Activities
Balance
December 1,
2017 Reclassifications Additions Disposals
Balance
November 30,
2018
Capital assets not being
depreciated:
Land $5,164,436 $-$-$-$5,164,436
Construction in progress 9,634,158 (3,619,784)2,497,533 -8,511,907
Subtotal 14,798,594 (3,619,784)2,497,533 -13,676,343
Capital assets being depreciated:
Water and sewer distribution 143,230,301 3,619,784 478,501 -147,328,586
Buildings and building
improvements 10,412,874 ---10,412,874
Machinery and equipment 2,178,593 -102,940 -2,281,533
Vehicles 3,494,701 -257,602 (675,101)3,077,202
Land improvements 3,039,595 ---3,039,595
Subtotal 162,356,064 3,619,784 839,043 (675,101)166,139,790
Accumulated depreciation:
Water and sewer distribution 76,189,047 -2,868,022 -79,057,069
Buildings and building
improvements 5,572,361 -206,689 -5,779,050
Machinery and equipment 1,775,400 -93,950 -1,869,350
Vehicles 1,709,006 -344,639 (675,101)1,378,544
Land improvements 2,819,659 -31,893 -2,851,552
Subtotal 88,065,473 -3,545,193 (675,101)90,935,565
Net capital assets being
depreciated 74,290,591 3,619,784 (2,706,150)-75,204,225
Net business-type activity
capital assets $89,089,185 $-$(208,617)$-$88,880,568
Capital asset activity for the City's component units for the year ended November 30, 2018 was as follows:
Component Unit - Plymouth Road Development Authority
Balance
December 1,
2017 Reclassifications Additions
Disposals and
Adjustments
Balance
November 30,
2018
Capital assets not being
depreciated - Land $474,448 $-$-$-$474,448
Capital assets being depreciated -
Land improvements 12,195,788 ---12,195,788
Accumulated depreciation - Land
improvements 10,278,977 -605,058 -10,884,035
Net capital assets being
depreciated 1,916,811 -(605,058)-1,311,753
Net capital assets $2,391,259 $-$(605,058)$-$1,786,201
42
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 5 - Capital Assets (Continued)
Depreciation expense was charged to programs of the primary government as follows:
Governmental activities:
General government $537,172
Public safety 1,509,186
Public works 5,201,794
Recreation and culture 2,092,589
Total governmental activities $9,340,741
Business-type activities:
Water and sewer $3,314,702
Golf course 59,116
Newburgh and Silver Village 171,375
Total business-type activities $3,545,193
Construction Commitments
The City has active construction projects at year end. At year end, the City's commitments with contractors
are as follows:
Spent to Date
Remaining
Commitment
Street and sidewalk projects $17,912,798 $1,697,595
Drain and sewer projects 13,566,677 2,734,683
Library improvements 9,000 191,000
City hall improvements 929,000 47,000
Tree planting and removal 1,183,805 1,020,808
Note 6 - Interfund Receivables, Payables, and Transfers
The composition of interfund balances is as follows:
Receivable Fund Payable Fund Amount
General Fund Nonmajor governmental funds $64,048
Nonmajor governmental funds General Fund 442,212
VEBA Fund Investment Administration Agency Fund 638,119
Employees' Retirement System Investment Administration Agency Fund 134,406
Court Volunteer W ork Program Agency
Fund Court Bond Agency Fund 25,753
Court Civil Drug Agency Fund Court Bond Agency Fund 6,389
Court Bond Agency Fund Court Depository Agency Fund 9,896
Total $1,320,823
The balance of amounts loaned to (borrowed from) discretely presented component units is as follows:
Receivable Payable Amount
General Fund Plymouth Road Development Authority $582,113
43
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 6 - 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 composed of the following:
Paying Fund (Transfer Out)Receiving Fund (Transfer In)Amount
General Fund Nonmajor governmental funds $2,400,078
Golf Course Fund 72,900
Total General Fund 2,472,978
Nonmajor governmental funds Nonmajor governmental funds 12,455,884
Total $14,928,862
The transfer from the General Fund to the nonmajor governmental funds is unrestricted resources to
finance capital projects and general obligation debt service in accordance with budgetary authorizations.
The transfer from the General Fund to the Golf Course Fund is unrestricted parks and recreation
resources to be used at the golf courses.
The majority of transfers between the nonmajor governmental funds 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 and capital
projects.
Note 7 - Long-term Debt
The City issues bonds to provide for the acquisition and construction of major capital facilities. General
obligation bonds are direct obligations and pledge the full faith and credit of the City. 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.
44
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 7 - Long-term Debt (Continued)
Long-term debt activity for the year ended November 30, 2018 can be summarized as follows:
Governmental Activities
Interest Rate
Ranges
Principal
Maturity
Ranges
Beginning
Balance Additions Reductions Ending Balance
Due within
One Year
Building Authority Bonds:
2008 MBA Court Construction
Bonds:
Amount of issue - $8,500,000
Maturing through 2018 4.00% - 5.25%
$270,000 -
$580,000 $285,000 $-$(285,000)$-$-
2015 MBA Refunding Bonds:
Amount of issue - $2,050,000
Maturing through 2025 2.47%
$175,000 -
$300,000 1,460,000 -(295,000)1,165,000 155,000
2016 MBA Refunding Bonds:
Amount of issue - $6,180,000
Maturing through 2033 4.00%
$305,000 -
$540,000 6,180,000 --6,180,000 305,000
2017 MBA Refunding Bonds:
Amount of issue - $19,980,000
Maturing through 2030 3.00% - 5.00%
$1,250,000 -
$1,945,000 19,980,000 -(1,250,000)18,730,000 1,290,000
Capital leases -416,075 -416,075 133,167
Unamortized bond premiums 2,740,410 -(200,312)2,540,098 200,312
Total 30,645,410 416,075 (2,030,312)29,031,173 2,083,479
General liability claims, workers'
compensation, and health insurance
claims (Note 9)1,672,600 -(494,083)1,178,517 -
Net pension (asset) liability (10,889,496)32,409,158 -21,519,662 -
Net OPEB liability 121,607,256 48,194,810 -169,802,066 -
Compensated absences 8,581,165 3,179,305 (2,860,103)8,900,367 2,966,493
Landfill closure and postclosure 651,366 11,476 -662,842 -
Total governmental activities
long-term debt $152,268,301 $84,210,824 $(5,384,498)$231,094,627 $5,049,972
Compensated absences attributable to the governmental activities will be liquidated primarily by the
General Fund. The claims 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 liability will be liquidated from the funds from which the individual employee’s salaries are paid,
primarily the General Fund.
45
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 7 - Long-term Debt (Continued)
Business-type Activities
Interest Rate
Ranges
Principal
Maturity Ranges
Beginning
Balance Additions Reductions Ending Balance
Due within One
Year
Water Supply and Wastewater System
Bonds:
2013 State of Michigan Clean
Water Program State Revolving
Loan:
Amount of issue - $3,620,000
Maturing through 2034 2.00%
$125,000 -
$220,000 $2,990,730 $-$(160,000)$2,830,730 $150,000
2014 State of Michigan Drinking
Water Program Revolving Loan:
Amount of issue - $3,552,013
Maturing through 2036 2.50%
$145,000 -
$235,000 3,117,013 -(150,000)2,967,013 155,000
2015 State of Michigan Drinking
Water Program Revolving Loan:
Amount of issue - $7,104,415
Maturing through 2040 2.50%
$274,415 -
$570,000 5,545,706 167,188 (285,000)5,427,894 245,000
2015 Water Supply and
Wastewater Refunding Bonds:
Amount of issue - $4,170,000
Maturing through 2020 1.90%
$835,000 -
$840,000 2,515,000 -(835,000)1,680,000 840,000
County contractual obligations:
State Revolving Fund Loan - N.
Huron Valley/Rouge Valley
Wastewater Control System:
Amount of issue - $14,428,703
Maturing through 2021 2.25%$25,000 50,000 -(25,000)25,000 25,000
Total 14,218,449 167,188 (1,455,000)12,930,637 1,415,000
Net pension (asset) liability (731,006)2,010,300 -1,279,294 -
Net OPEB liability 6,740,842 3,159,371 -9,900,213 -
Compensated absences 443,315 306,920 (245,493)504,742 240,061
Total business-type activities
long-term debt $20,671,600 $5,643,779 $(1,700,493)$24,614,886 $1,655,061
Component Unit
Interest Rate
Ranges
Principal
Maturity Ranges
Beginning
Balance Additions Reductions Ending Balance
Due within One
Year
2006 Downtown Development
Refunding Bonds:
Amount of issue - $4,470,000
Maturing through 2018 4.25% - 5.00%
$555,000 -
$570,000 $570,000 $-$(570,000)$-$-
Revenue Bonds
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 revenue of the
water and sewer system. The remaining principal and interest to be paid on the bonds total approximately
$15.4 million. During the current year, net revenue of the system was approximately $7.6 million
compared to the annual debt requirements of approximately $1.8 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, Michigan. As of November 30, 2018, the City drew down $3,415,730 of the authorized
debt amount. The project has been completed, and the City began making principal payments in 2016.
46
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 7 - Long-term Debt (Continued)
During fiscal year 2015, the City was approved for a State of Michigan Drinking W ater Program Revolving
Fund Loan in the amount of $7,104,415. 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, Michigan. As of November 30, 2018, the City
drew down $5,987,209 of the authorized debt amount. The project is now complete, and the City began
making principal payments in 2017.
No Commitment Debt
The City has issued Industrial Development Revenue Bonds and Economic Development Corporation
Bonds under state law, which authorizes municipalities under certain circumstances to acquire and lease
industrial sites, buildings, and equipment and lease them to third parties. The revenue bonds issued are
payable solely from the net revenue derived from the respective leases and are not a general obligation of
the City. After these bonds are issued, all financial activity is taken over by the paying agent. The bonds
and related lease contracts are not reflected in the City's financial statements. Information regarding the
status of each bond issue, including possible default, must be obtained from the paying agent or other
knowledgeable source. The aggregate original issue amount was $83,667,000.
Debt Service Requirements to Maturity
Annual debt service requirements to maturity for the above bonds and note obligations (excluding bond
premiums and deferred charges) are as follows:
Governmental Activities Business-type Activities*
Years Ending
November 30 Principal Interest Total Principal Interest Total
2019 $1,883,167 $984,570 $2,867,737 $1,415,000 $292,210 $1,707,210
2020 1,948,310 923,737 2,872,047 1,400,000 262,835 1,662,835
2021 1,999,254 860,664 2,859,918 575,000 233,475 808,475
2022 1,935,344 799,128 2,734,472 585,000 219,775 804,775
2023 1,985,000 737,220 2,722,220 600,000 205,775 805,775
2024-2028 10,460,000 2,604,945 13,064,945 3,235,000 805,537 4,040,537
2029-2033 6,280,000 448,625 6,728,625 3,615,000 400,824 4,015,824
2034-2036 ---1,505,637 45,701 1,551,338
Total $26,491,075 $7,358,889 $33,849,964 $12,930,637 $2,466,132 $15,396,769
* State of Michigan Clean Water Program State Revolving Loan and Drinking W ater Program Revolving Fund Loan principal and interest reported above
are based on amounts drawn as of November 30, 2018.
Bond Refunding
In previous years, the City defeased an advance refunding. As of November 30, 2018, there is still
$19,740,000 of bonds outstanding that is considered defeased.
Note 8 - 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, 2018, the City set aside
$1,338,069 of cash and cash equivalents to comply with these requirements.
Note 9 - 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 workers' compensation and participates in
the Michigan Municipal Risk Management Authority (the "Authority").
47
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 9 - Risk Management (Continued)
The Michigan Municipal Risk Management Authority risk pool program operates as a claims servicing pool
for amounts up to member retention limits and operates as a common risk-sharing management program
for losses in excess of member retention amounts. Although premiums are paid annually to the Authority,
which it uses to pay claims up to the retention limits, the ultimate liability for those claims remains with the
City.
The City estimates the liability for general liability, workers' compensation, and medical claims that have
been incurred through the end of the fiscal year, including claims that have been reported, as well as
those that have not yet been reported. These estimates are recorded in the Self-insurance Internal
Service Fund. The estimated liability for property loss, general liability, workers' compensation, and
medical claims is recorded within the governmental activities column in the statement of net position.
Changes in the estimated liability for the past two fiscal years were as follows:
General Liability Workers' Compensation Medical Claims
2018 2017 2018 2017 2018 2017
Estimated liability - Beginning of
year $919,325 $965,316 $361,855 $706,267 $391,420 $587,560
Estimated claims incurred,
including changes in estimates 812,989 1,191,817 188,943 166,196 11,287,854 11,077,231
Claim payments (1,060,560)(1,237,808)(418,600)(510,608)(11,304,709)(11,273,371)
Estimated liability - End of year $671,754 $919,325 $132,198 $361,855 $374,565 $391,420
The City is subject to various legal proceedings and claims that arise in the ordinary course of its
business. The City believes that the amount, if any, of ultimate liability with respect to legal actions will be
insignificant or will be covered by insurance.
Note 10 - Defined Contribution Pension Plan
The City of Livonia Employees Retirement System Defined Contribution Plan is administered by the City of
Livonia Employees Retirement System and the City of Livonia, Michigan. The plan was established under
Section 401(a) of the Internal Revenue Code for the following employees:
General employee members - All members hired on or after March 17, 1997
Police lieutenant and sergeant members - All members hired on or after December 8, 1997
Police officer members - All members hired on or after November 24, 1998
Firefighter members - All members hired on or after July 1, 1998
In addition, the plan covers all employees electing to transfer from the City's defined benefit pension plan
(see Note 11).
48
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 10 - Defined Contribution Pension Plan (Continued)
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 Transferring from the
Defined Benefit Pension Plan
New Employees Hired after the
Effective Dates Noted Above
Employer
Contribution
Employee
Contribution
Employer
Contribution
Employee
Contribution
General *%13.00 %3.66 %9.00 %4.00
Police lieutenants and sergeants 13.00 5.21 12.00 5.21
Police **13.00 3.10 9.00 4.00
Fire 13.00 4.50 12.00 4.50
* For general employees, the employee contribution can range from 3.66 percent to 4.00 percent for
employees transferring from the defined benefit pension plan and 4.00 percent to 4.50 percent for new
employees hired after March 17, 1997.
** For police employees, the employee contribution can range from 3.10 percent to 5.00 percent for
employees transferring from the defined benefit plan. The employer and employee contributions can range
from 9.00 percent to 12.00 and 4.00 percent to 5.00 percent, respectively, for employees hired after
November 24, 1998.
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 City's contributions for each employee are fully vested after four years of service.
In accordance with the above requirements, the City contributed $3,120,273 during the current year, and
employees contributed $1,353,385.
Note 11 - Pension Plan
Plan Description
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 10):
General employee members - All members 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
The financial statements of the pension system are included in these financial statements as a pension
and other employee benefit trust fund (a fiduciary fund).
Management of the plan is vested in the System's 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, 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.
49
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 11 - Pension Plan (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, and 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 0.5 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 25 years of service regardless of age, or age 50 with 10 years of service.
(Age 48 with 10 years but less than 25 years of service - early retirement with reduced benefit of 0.5
percent per month below age 50.) Pension amount is 2.8 percent of the member's average final
compensation (AFC) times the years of credited service (maximum is 75 percent of AFC).
Fire Members - 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 0.5
percent per month below age 52.) Pension amount is 2.8 percent of the member's 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 compensation 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 off, holiday pay, and payment of accumulated vacation
time up to the limits established by the respective bargaining agreements. In addition, merit pay is
included for police members, and paramedic/EMT or ALS bonuses are included for firefighters.
Benefit terms provide for annual cost of living adjustments to each member's retirement allowance
subsequent to the member's retirement date. The monthly adjustments vary between $20 and $375
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.
Employees Covered by Benefit Terms
The following members were covered by the benefit terms:
Date of member count
November 30,
2018
Inactive plan members or beneficiaries currently receiving benefits 536
Inactive plan members entitled to but not yet receiving benefits 13
Active plan members 71
Total employees covered by the plan 620
50
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 11 - Pension Plan (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's 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, 2018, 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.
Net Pension Liability
The City has chosen to use November 30, 2018 as its measurement date for the net pension liability. The
November 30, 2018 reported net pension liability was determined using a measure of the total pension
liability and the pension net position as of that date.
Changes in the net pension (asset) liability during the measurement year were as follows:
Increase (Decrease)
Changes in Net Pension (Asset) Liability
Total Pension
Liability
Plan Net
Position
Net Pension
(Asset) Liability
Balance at November 30, 2017 $219,435,490 $231,055,992 $(11,620,502)
Changes for the year:
Service cost 1,655,509 -1,655,509
Interest 15,849,006 -15,849,006
Changes in benefits 110,794 -110,794
Differences between expected and actual
experience 990,792 -990,792
Changes in assumptions 14,813,206 -14,813,206
Contributions - Employer -558,568 (558,568)
Contributions - Employee -308,076 (308,076)
Net investment loss -(1,636,195)1,636,195
Benefit payments, including refunds (17,886,317)(17,886,317)-
Administrative expenses -(230,600)230,600
Net changes 15,532,990 (18,886,468)34,419,458
Balance at November 30, 2018 $234,968,480 $212,169,524 $22,798,956
The plan's fiduciary net position represents 90.3 percent of the total pension liability.
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to Pensions
For the year ended November 30, 2018, the City recognized pension expense of $19,781,035.
At November 30, 2018, the City reported deferred outflows of resources related to pensions from the
following sources:
Deferred
Outflows of
Resources
Net difference between projected and actual earnings on pension plan investments $7,232,796
51
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 11 - Pension Plan (Continued)
Amounts reported as deferred outflows of resources related to pensions will be recognized in pension
expense as follows:
Years Ending
November 30 Amount
2019 $3,121,517
2020 486,538
2021 (38,961)
2022 3,663,702
Actuarial Assumptions
The total pension liability in the November 30, 2018 actuarial valuation was determined using an inflation
assumption of 4.0 percent, assumed salary increases (including inflation) of 11.9 to 4.0 percent, an
investment rate of return (net of investment expenses) of 7.38 percent, and the RP-2014 Healthy
Annuitant Mortality Table with MP 2017.
The actuarial assumptions used in the November 30, 2018 valuation were based on the results of an
actuarial experience study for the period from December 1, 2008 through November 30, 2014.
Discount Rate
The discount rate used to measure the total pension liability was 7.38 percent. The projection of cash
flows used to determine the discount rate assumed that employee contributions will be made at the
current contribution rate and that city contributions will be made at rates equal to the difference between
actuarially determined contribution rates and the employee rate.
Based on those assumptions, the pension plan's fiduciary net position was not projected to be available to
make all projected future benefit payments of current active and inactive employees through the year
2062. Therefore, the discount rate was determined by blending the long-term expected rate of return on
pension plan investments (7.50 percent) with the current yield for 20-year, tax-exempt general obligation
municipal bonds with an average rating of AA/Aa or higher, which currently stands at 3.48 percent (based
on the S&P Municipal Bond 20 Year High Grade Index as of November 30, 2018).
Investment Rate of Return
The long-term expected rate of return on pension plan investments was determined using a building-block
method in which best-estimate ranges of expected future real rates of return (expected returns, net of
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.
Asset Class
Long-term
Expected Real
Rate of Return
Domestic large-cap value stocks %9.20
Domestic large-cap growth stocks 9.20
Domestic small-cap value/core stocks 10.30
International stocks 8.80
U.S. core fixed income 4.80
Global fixed income 4.50
High-yield fixed income 6.90
Bank loans 6.90
Real estate (direct)6.50
Real estate investment trusts 8.00
52
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 11 - Pension Plan (Continued)
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability of the City, calculated using the discount rate of 7.38
percent, as well as what the City's net pension liability would be if it were calculated using a discount rate
that is 1 percentage point lower or 1 percentage point higher than the current rate:
1 Percent
Decrease
(6.38%)
Current Discount
Rate
(7.38%)
1 Percent
Increase
(8.38%)
Net pension liability of the City $46,278,904 $22,798,956 $2,750,265
Assumption Changes
The discount rate was changed from 7.50 percent to 7.38 percent. The mortality table was updated from
the RP 2000 Combined Healthy Mortality Table projected to 2014 (Scale AA) to the RP 2014 Healthy
Annuitant Mortality Table with MP 2017.
Investment Policy
The System's policy in regard to the allocation of invested assets is established and may be amended by
the System's board of trustees by a majority vote of its members. It is the policy of the System's 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 dramatically shifting
asset class allocations over short time spans. The following was the System's adopted asset allocation
policy as of Novem ber 30, 2018:
Asset Class Target Allocation
Cash %2.00
Domestic large-cap value stocks 20.00
Domestic large-cap growth stocks 15.00
Domestic small-cap value/core stocks 10.00
International stocks 10.00
U.S. core fixed income 20.00
Global fixed income 5.00
High-yield fixed income 5.00
Bank loans 5.00
Real estate (direct)4.00
Real estate investment trusts 4.00
Rate of Return
For the year ended November 30, 2018, the annual money-weighted rate of return on pension plan
investments, net of pension plan investment expense, was (1.66) percent. The money-weighted rate of
return expresses investment performance, net of investment expense, adjusted for the changing amounts
actually invested.
Note 12 - 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.
53
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 12 - Pension Plan Reserves (Continued)
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 4 percent. For any employee who terminates before vesting in the
pension plan, the employee's balance is returned to the employee; 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, 2018 are as follows:
Required
Reserve
Amount
Funded
Pension reserve fund $166,763,445 $166,763,445
Pension savings fund 5,579,189 5,579,189
Pension accumulation fund -39,826,890
Note 13 - Other Postemployment Benefit Plan
Plan Description
The board of trustees of the Livonia Employees Retirement System administers the City of Livonia Retiree
Health and Disability Benefits Plan (the "VEBA"), a multiemployer, cost-sharing defined benefit OPEB plan
that is used to provide medical and healthcare benefits, including hospitalization and disability benefits, for
the welfare of eligible retirees and their spouses and eligible dependents of the City of Livonia, Michigan
and the Livonia Housing Commission. 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.
The financial statements of the OPEB plan are included in these financial statements as a pension and
other employee benefit trust fund (a fiduciary fund).
Management of the VEBA is vested with the board of trustees of the Livonia Employees' Retirement
System, which consists of five members: the mayor or mayor's designated administrative representative, a
member of the City Council to be selected by the City Council, a member of 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.
Benefits Provided
The VEBA provides medical and healthcare benefits, including hospitalization and disability benefits, to
eligible retirees and their spouses and eligible dependents. Benefits are provided through a combination of
third-party insurers and the City's self-insurance program. Of the total cost of benefits, 100 percent is
covered by the VEBA for defined benefit pension plan members, and between 100 and 50 percent of the
total cost of the benefits is covered by the VEBA for defined contribution pension plan members,
depending on age and service requirements.
54
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 13 - Other Postemployment Benefit Plan (Continued)
Employees Covered by Benefit Terms
The following members were covered by the benefit terms:
Date of member count
November 30,
2018
Inactive plan members or beneficiaries currently receiving benefits 673
Inactive plan members entitled to but not yet receiving benefits 33
Active plan members 596
Total plan members 1,302
Contributions
The obligation to contribute to and maintain the VEBA was established by negotiation with certain
bargaining units, including general and administrative employees. The funding policy provides for periodic
employer contributions at actuarially determined rates per a funding valuation. For the year ended
November 30, 2018, the City's average contribution rate was 16.68 percent of covered employee payroll.
Plan members were required to make a contribution of 2 percent beginning December 1, 2006.
Net OPEB Liability
The City has chosen to use the November 30 measurement date as its measurement date for the net
OPEB liability. The November 30, 2018 fiscal year end reported net OPEB liability was determined using a
measure of the total OPEB liability and the OPEB net position as of the November 30, 2018 measurement
date. The November 30, 2018 measurement date total OPEB liability was determined by an actuarial
valuation performed as of that date.
Changes in the net OPEB liability during the measurement year were as follows:
Increase (Decrease)
Changes in Net OPEB Liability
Total OPEB
Liability
Plan Net
Position
Net OPEB
Liability
Balance at November 30, 2017 $241,182,425 $110,340,110 $130,842,315
Changes for the year:
Service cost 5,181,469 -5,181,469
Interest 12,715,690 -12,715,690
Differences between expected and actual
experience (14,191,268)-(14,191,268)
Changes in assumptions 51,279,390 -51,279,390
Contributions - Employer -4,499,324 (4,499,324)
Contributions - Employee -473,346 (473,346)
Net investment loss -(1,556,473)1,556,473
Benefit payments, including refunds (7,708,963)(7,708,963)-
Administrative expenses -(58,229)58,229
Net changes 47,276,318 (4,350,995)51,627,313
Balance at November 30, 2018 $288,458,743 $105,989,115 $182,469,628
The plan's fiduciary net position represents 36.7 percent of the total OPEB liability.
At November 30, 2018, the City reported a liability of $179,702,279 for its proportionate share of the net
OPEB liability.
55
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 13 - Other Postemployment Benefit Plan (Continued)
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to
OPEB
For the year ended November 30, 2018, the City recognized OPEB expense of $20,158,468.
At November 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources
related to OPEB from the following sources:
Deferred
Outflows of
Resources
Deferred Inflows
of Resources
Difference between expected and actual experience $-$10,725,801
Changes in assumptions 38,757,106 -
Net difference between projected and actual earnings on OPEB plan
investments 7,663,729 -
Total $46,420,835 $10,725,801
Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB
will be recognized in OPEB expense as follows:
Years Ending
November 30 Amount
2019 $10,410,267
2020 10,410,267
2021 10,410,267
2022 4,464,233
Actuarial Assumptions
The total OPEB liability in the November 30, 2018 actuarial valuation was determined using an inflation
assumption of 4.00 percent; an investment rate of return (net of investment expenses) of 7.50 percent; a
healthcare cost trend rate of 6.00 percent for 2019, decreasing 0.1 percent per year to an ultimate rate of
5.00 percent for 2029 and later years; and the RP-2014 mortality table with MP 2017. These assumptions
were applied to all periods included in the measurement.
Discount Rate
The discount rate used to measure the total OPEB liability at November 30, 2018 was 4.92 percent. This
was a change from the discount rate of 5.3 percent used to measure the total OPEB liability at November
30, 2017. The projection of cash flows used to determine the discount rate assumed that city contributions
will be made at rates equal to the actuarially determined contribution rates.
Based on those assumptions, the VEBA’s fiduciary net position was not projected to be available to make
all projected future benefit payments of current active and inactive employees. Therefore, the discount
rate incorporates a municipal bond rate that was 3.48 percent. The source of that bond rate was the S&P
Municipal Bond 20 Year High Grade Index as of November 30, 2018. The long-term expected rate of
return on OPEB plan investments was applied to projected benefit payments from 2019 to 2044, and the
municipal bond rate was applied to the remaining periods.
Investment Rate of Return
The long-term expected rate of return on OPEB plan investments was determined using a building-block
method in which best-estimate ranges of expected future real rates of return (expected returns, net of
OPEB plan investment expense and inflation) are developed for each major asset class. These ranges
are combined to produce the long-term expected rate of return by weighting the expected future real rates
of return by the target asset allocation percentage and adding expected inflation.
56
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 13 - Other Postemployment Benefit Plan (Continued)
Asset Class
Long-term
Expected Real
Rate of Return
Domestic large-cap value stocks %9.20
Domestic large-cap growth stocks 9.20
Domestic small-cap value/core 10.30
International stocks 8.80
U.S. core fixed income 4.80
Global fixed income 4.50
High-yield fixed income 6.90
Real estate (direct)6.50
Real estate investment trusts 8.00
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate
The following presents the net OPEB liability of the City, calculated using the discount rate of 4.92 percent,
as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is 1
percentage point lower or 1 percentage point higher than the current rate:
1 Percent
Decrease
(3.92%)
Current Discount
Rate
(4.92%)
1 Percent
Increase
(5.92%)
Net OPEB liability $228,669,498 $179,702,279 $139,680,586
Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rate
The following presents the net OPEB liability of the City, calculated using the healthcare cost trend rate of
6.0 percent, decreasing to 5.0 percent, as well as what the City's net OPEB liability would be if it were
calculated using a healthcare cost trend rate that is 1 percentage point lower or 1 percentage point higher
than the current rate:
1 Percent
Decrease (5.0%,
Decreasing to
4.0%)
Current
Healthcare Cost
Trend Rate
(6.0%,
Decreasing to
5.0%)
1 Percent
Increase (7.0%,
Decreasing to
6.0%)
Net OPEB liability $143,073,811 $179,702,279 $226,853,074
Assumption Changes
The discount rate was changed from 5.3 percent to 4.92 percent. The mortality table was updated from
the RP 2000 Combined Healthy Mortality Table projected to 2014 (Scale AA) to the RP 2014 Table with
MP 2017.
57
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 13 - Other Postemployment Benefit Plan (Continued)
Investment Policy
The VEBA's policy in regard to the allocation of invested assets is established and may be amended by
the board of trustees of the Livonia Employees Retirement System by a majority vote of its members. It is
the policy of the board to pursue an investment strategy that reduces risk through the prudent
diversification of the portfolio across a broad selection of distinct asset classes. The VEBA's investment
policy discourages the use of cash equivalents, except for liquidity purposes, and aims to refrain from
dramatically shifting asset class allocations over short time spans. The following was the VEBA's adopted
asset allocation policy as of November 30, 2018:
City of Livonia Retiree Health and Disability Benefits Plan
Asset Class Target Allocation
Cash %2.00
Domestic large-cap value stocks 20.00
Domestic large-cap growth stocks 15.00
Domestic small-cap value/core stocks 10.00
International stocks 10.00
U.S. core fixed income 20.00
Global fixed income 5.00
High-yield fixed income 5.00
Bank loans 5.00
Real estate (direct)4.00
Real estate investment trusts 4.00
Rate of Return
For the year ended November 30, 2018, the annual money-weighted rate of return on OPEB plan
investments, net of OPEB plan investment expense, was (2.29) percent. The money-weighted rate of
return expresses investment performance, net of investment expense, adjusted for the changing amounts
actually invested.
Note 14 - Pension and Other Employee Benefit Trust Funds
The following are condensed financial statements for the City's defined benefit plan (see Notes 11 and 12)
and the postemployment healthcare plan (see Note 13). The plans do not issue separate financial
statements.
Employees'
Retirement
System VEBA
Statement of Net Position
Cash and investments $212,507,693 $106,304,238
Other assets 204,762 652,453
Liabilities 542,931 967,576
Net position $212,169,524 $105,989,115
Statement of Changes in Net Position
Investment loss $(1,636,195)$(1,556,473)
Contributions 866,644 4,972,670
Benefit payments 17,484,418 7,708,963
Other decreases 632,499 58,229
Net change in net position $(18,886,468)$(4,350,995)
58
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2018
Note 15 - Tax Abatements
The City uses the Industrial Facilities Tax exemption (PA 198 of 1974) to enter into agreements with local
businesses to construct new industrial facilities or rehabilitate historical facilities. Under the program, the
City grants reductions of 50 percent of the property tax bill for new property (or it can freeze taxable values
for rehabilitation properties) for up to 12 years. For the fiscal year ended November 30, 2018, the City
abated $412,446 of taxes under this program. There are no provisions to recapture taxes; however, the
abatement may be eliminated if taxes are not paid timely.
The City also uses the Personal Property Tax Relief in Distressed Communities exemption (PA 328 of
1998) to abate personal property taxes on new investments made by eligible businesses. Under this
program, the City grants reductions of 100 percent of the personal property tax bill. For the fiscal year
ended November 30, 2018, the City abated $416,683 of taxes under the program. There are no provisions
to recapture taxes.
Additionally, the Brownfield Redevelopment Authority, a discretely presented component unit, uses
Brownfield Redevelopment Agreements under PA 381 of 1996 to reimburse taxpayers that remediate
environmental contamination on their properties. As a result of these agreements, the Brownfield's tax
revenue is reduced. For the fiscal year ended November 30, 2018, the Authority abated $96,101 of taxes
under this program. There are no provisions to recapture taxes.
There are no significant abatements made by other governments that reduce the City’s tax revenue.
Note 16 - Deferred Inflows 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 $1,133,012
State sources - Unavailable 737,249
911 surcharge revenue - Unavailable 258,615
Local Community Stabilization Authority - Unavailable 2,607,307
Grant revenue - Unavailable 21,314
Total deferred inflows $4,757,497
59
Required Supplemental Information
60
City of Livonia, Michigan
Required Supplemental Information
Budgetary Comparison Schedule – General Fund
Year Ended November 30, 2018
Original
Budget Final Budget Actual
Variance with
Final Budget
Revenue
Property Taxes 31,475,899$ 31,475,899$ 31,730,613$ 254,714$
Licenses and Permits
Business 187,100 187,100 186,978 (122)
Nonbusiness 2,429,100 2,834,100 2,994,652 160,552
Total licenses and permits 2,616,200 3,021,200 3,181,630 160,430
Intergovernmental Revenue
State and local 10,436,450 10,556,450 10,816,128 259,678
Grants 106,400 132,400162,318 29,918
Total intergovernmental revenue 10,542,850 10,688,850 10,978,446 289,596
Charges for Services 4,306,381 4,506,381 4,339,944 (166,437)
Interest and Rents 2,876,416 2,916,416 3,003,790 87,374
Fines and Forfeitures 4,566,000 4,540,000 4,394,239 (145,761)
Miscellaneous Revenue
Sale of fixed assets 125,000 125,000 90,950 (34,050)
Other miscellaneous 1,761,522 1,761,522 1,366,354 (395,168)
Total miscellaneous revenue 1,886,522 1,886,522 1,457,304 (429,218)
Total revenue 58,270,268$ 59,035,268$ 59,085,966$ 50,698$
Expenditures
General Government
Legislative:
City Council 366,920$ 361,900$ 361,570$ 330$
City Clerk 556,707 537,406 537,333 73
Elections 207,847 282,768282,710 58
Total legislative 1,131,474 1,182,074 1,181,613 461
Judicial 3,228,090 3,228,090 3,141,858 86,232
Executive - Mayor's office 547,071 547,071 530,147 16,924
Human resources:
Labor relations 96,500 96,500 41,771 54,729
Civil service 777,650 777,650681,882 95,768
Total human resources 874,150 874,150 723,653 150,497
61
City of Livonia, Michigan
Required Supplemental Information
Budgetary Comparison Schedule – General Fund (Continued)
Year Ended November 30, 2018
Original
Budget Final Budget Actual
Variance with
Final Budget
Expenditures (Continued)
General Government (Continued)
Financial administration:
Accounting 243,223$ 243,223$ 177,618$ 65,605$
Assessing 491,821 491,821 441,161 50,660
Finance 384,041 384,041 345,727 38,314
Independent audit 40,586 40,586 27,072 13,514
Board of review 3,745 3,745 3,181 564
Treasurer 544,424 544,424 521,931 22,493
Information systems 891,187 891,187 813,374 77,813
Total financial administration 2,599,027 2,599,027 2,330,064 268,963
Other activities:
Legal 661,882 651,382 617,812 33,570
Utilities and supplies 952,735 874,035 873,708 327
Dues and subscriptions 45,000 49,200 48,477 723
Total other activities 1,659,617 1,574,617 1,539,997 34,620
Total general government 10,039,429 10,005,029 9,447,332 557,697
Public Safety
Police:
Traffic bureau 1,201,580 1,248,580 1,247,608 972
Administration 2,300,182 2,343,788 2,342,688 1,100
Data processing 1,043,578 872,578 871,562 1,016
Detective bureau 2,541,512 2,805,612 2,805,592 20
Automotive service 556,150 528,150 527,604 546
Communications/Records bureau 816,995 781,995 780,827 1,168
Crossing guards 61,034 65,034 64,095 939
School liaison 367,845 378,845 378,156 689
Office of emergency preparedness 118,779 107,103 106,283 820
Reserve police 304,085 354,085 353,235 850
Patrol bureau 11,737,283 11,567,353 11,566,243 1,110
Intelligence bureau 2,006,801 2,138,801 2,137,928 873
Total police 23,055,824 23,191,924 23,181,821 10,103
Fire:
Administration 1,146,493 1,160,758 1,111,021 49,737
Firefighting 12,005,260 11,984,169 11,867,753 116,416
Fire prevention 587,363 594,189 592,491 1,698
Total fire 13,739,116 13,739,116 13,571,265 167,851
62
City of Livonia, Michigan
Required Supplemental Information
Budgetary Comparison Schedule – General Fund (Continued)
Year Ended November 30, 2018
Original
Budget Final Budget Actual
Variance with
Final Budget
Expenditures (Continued)
Public Safety (Continued)
Protective inspection:
Building Code Board of Appeals 1,431$ 531$ 264$ 267$
Inspection 1,311,577 1,338,077 1,337,987 90
Total protective inspection 1,313,008 1,338,608 1,338,251 357
Other protective - Traffic commission 2,353 2,353 2,148 205
Total public safety 38,110,301 38,272,001 38,093,485 178,516
Public Works
Public services - Highways, streets, and
maintenance:
Engineering 4,076 4,076 199 3,877
Parks maintenance 1,519,364 1,467,919 1,407,724 60,195
Administration 2,816 2,816 166 2,650
Equipment maintenance 191,317 209,935 207,025 2,910
Building maintenance 1,429,298 1,220,340 1,187,419 32,921
Street lighting 283,346 283,346 197,665 85,681
Maintenance - Streets 309,795 339,280 337,895 1,385
Total public works 3,740,012 3,527,712 3,338,093 189,619
Parks and Recreation and Cultural
Parks and recreation:
Administration 394,031 425,580 425,577 3
Recreation facilities 286,103 279,832 279,827 5
Recreation athletics 108,269 82,991 82,984 7
Total parks and recreation 788,403 788,403 788,388 15
Cultural:
Senior services 529,032 562,032 558,817 3,215
Greenmead and cultural 951,101 918,101 862,662 55,439
Total cultural 1,480,133 1,480,133 1,421,479 58,654
Total parks and recreation and cul 2,268,536 2,268,536 2,209,867 58,669
Community and Economic Development
City Planning Commission 717,858 773,640 696,138 77,502
Zoning Board of Appeals 62,981 62,981 48,520 14,461
Total community and economic
development 780,839 836,621 744,658 91,963
Employee Benefits, Insurance, and Other 3,318,536 4,168,536 5,002,379 (833,843)
Total expenditures 58,257,653$ 59,078,435$ 58,835,814$ 242,621$
63
City of Livonia, Michigan
Required Supplemental Information
Budgetary Comparison Schedule - Major Special Revenue Fund
Refuse Disposal System
Year Ended November 30, 2018
Original Budget
Amended
Budget Actual
Variance with
Amended
Budget
Revenue
Property taxes $11,449,722 $11,449,722 $11,522,022 $72,300
State and local revenue 557,832 557,832 1,222,874 665,042
Charges for services 140,000 140,000 95,889 (44,111)
Interest 40,000 40,000 150,551 110,551
Other revenue 15,000 15,000 23,382 8,382
Total revenue 12,202,554 12,202,554 13,014,718 812,164
Expenditures - Sanitation 11,965,339 12,438,036 11,385,112 1,052,924
Net Change in Fund Balance 237,215 (235,482)1,629,606 1,865,088
Fund Balance - Beginning of year 5,401,056 5,401,056 5,401,056 -
Fund Balance - End of year $5,638,271 $5,165,574 $7,030,662 $1,865,088
See notes to required supplemental information.64
City of Livonia, Michigan
Required Supplemental Information
Schedule of Pension Investment Returns
Last Five Fiscal Years
Years Ended November 30
2018 2017 2016 2015 2014
Annual money-weighted rate of return -
Net of investment expense %(1.66)%17.45 %6.50 %1.40 %9.60
* Schedule is built prospectively upon implementation of GASB No. 68
See notes to required supplemental information.65
City of Livonia, Michigan
Required Supplemental Information
Schedule of Changes in the Net Pension Liability (Asset) and Related Ratios
Last Five Fiscal Years
2018 2017 2016 2015 2014
Total Pension Liability
Service cost $1,655,509 $1,721,106 $1,644,915 $1,530,027 $1,647,392
Interest 15,849,006 16,209,241 15,949,081 15,607,024 15,516,271
Changes in benefit terms 110,794 -526,875 --
Differences between expected and
actual experience 990,792 (235,377)3,014,188 (673,125)401,554
Changes in assumptions 14,813,206 9,009,758 -4,763,196 -
Benefit payments, including refunds (17,886,317)(18,048,385)(17,793,928)(16,223,788)(16,520,444)
Net Change in Total Pension Liability 15,532,990 8,656,343 3,341,131 5,003,334 1,044,773
Total Pension Liability - Beginning of year 219,435,490 210,779,147 207,438,016 202,434,682 201,389,909
Total Pension Liability - End of year $234,968,480 $219,435,490 $210,779,147 $207,438,016 $202,434,682
Plan Fiduciary Net Position
Contributions - Employer $558,568 $336,320 $815,291 $2,158,913 $3,634,058
Contributions - Member 308,076 345,164 380,988 386,983 400,503
Net investment (loss) income (1,636,195)34,908,239 14,021,405 4,353,881 20,367,342
Administrative expenses (230,600)(210,695)(216,924)(212,335)(194,367)
Benefit payments, including refunds (17,886,317)(18,048,385)(17,793,928)(16,223,788)(16,520,444)
Net Change in Plan Fiduciary Net
Position (18,886,468)17,330,643 (2,793,168)(9,536,346)7,687,092
Plan Fiduciary Net Position - Beginning of
year 231,055,992 213,725,349 216,518,517 226,054,863 218,367,771
Plan Fiduciary Net Position - End of year $212,169,524 $231,055,992 $213,725,349 $216,518,517 $226,054,863
City's Net Pension Liability (Asset) -
Ending $22,798,956 $(11,620,502)$(2,946,202)$(9,080,501)$(23,620,181)
Plan Fiduciary Net Position as a
Percentage of Total Pension Liability %90.30 %105.30 %101.40 %104.38 %111.67
Covered Payroll $6,446,503 $6,682,629 $7,625,911 $9,070,569 $9,312,278
City's Net Pension Liability as a
Percentage of Covered Payroll %353.66 %(173.89)%(38.63)%(100.11)%(253.65)
* Schedule is built prospectively upon implementation of GASB No. 68
See notes to required supplemental information.66
City of Livonia, Michigan
Required Supplemental Information
Schedule of Pension Contributions
Pension System
Last Ten Fiscal Years
Years Ended November 30
2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
Actuarially determined
contribution $-$336,320 $815,291 $2,158,913 $3,634,058 $2,082,219 $747,119 $-$-$-
Contributions in relation to
the actuarially determined
contribution 558,568 336,320 815,291 2,158,913 3,634,058 2,082,219 747,119 ---
Contribution Excess $558,568 $-$-$-$-$-$-$-$-$-
Covered Payroll $6,446,503 $6,682,629 $7,625,911 $9,070,569 $9,312,278 $9,870,211 $11,282,045 $12,455,231 $13,799,848 $15,854,893
Contributions as a
Percentage of Covered
Payroll %8.66 %5.03 %10.69 %23.80 %39.02 %21.10 %6.62 %-%-%-
Notes to Schedule of Pension Contributions
Actuarial valuation information relative to the determination of contributions:
Valuation date Actuarially determined contribution rates are calculated as of November 30, two years prior to the end of the fiscal year in which
the contributions are reported. Covered employee payroll is as of November 30 of the current fiscal year.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Aggregate
Amortization method N/A
Remaining amortization period Future working lifetime
Asset valuation method Five-year smoothed market
Inflation 4.0 percent
Salary increase 11.9 - 4.0 percent, including inflation
Investment rate of return 8.0 percent (7.5 percent effective with November 30, 2017 valuation)
Mortality RP 2000 Combined Healthy Mortality Table projected to 2014
See notes to required supplemental information.67
City of Livonia, Michigan
Required Supplemental Information
Schedule of OPEB Investment Returns
Last Two Fiscal Years
Years Ended November 30
2018 2017
Annual money-weighted rate of return, net of investment expense %(2.29)%16.21
* Schedule built prospectively upon implementation of GASB No. 74/75
See notes to required supplemental information.68
City of Livonia, Michigan
Required Supplemental Information
Schedule of Changes in the Net OPEB Liability and Related Ratios
Last Two Fiscal Years
2018 2017
Total OPEB Liability
Service cost $5,181,469 $4,381,818
Interest 12,715,690 12,061,649
Differences between expected and actual experience (14,191,268)9,974,080
Changes in assumptions 51,279,390 24,668,349
Benefit payments, including refunds (7,708,963)(7,037,118)
Net Change in Total OPEB Liability 47,276,318 44,048,778
Total OPEB Liability - Beginning of year 241,182,425 197,133,647
Total OPEB Liability - End of year $288,458,743 $241,182,425
Plan Fiduciary Net Position
Contributions - Employer $4,499,324 $5,087,462
Contributions - Active and inactive plan members not yet receiving
benefits 473,346 484,737
Net investment (loss) income (1,556,473)15,195,332
Administrative expenses (58,229)(35,971)
Benefit payments, including refunds (7,708,963)(7,037,118)
Net Change in Plan Fiduciary Net Position (4,350,995)13,694,442
Plan Fiduciary Net Position - Beginning of year 110,340,110 96,645,668
Plan Fiduciary Net Position - End of year $105,989,115 $110,340,110
Net OPEB Liability - Ending $182,469,628 $130,842,315
Plan Fiduciary Net Position as a Percentage of Total OPEB Liability %36.74 %45.75
Covered Payroll $36,890,435 $34,729,209
Net OPEB Liability as a Percentage of Covered Payroll %494.63 %376.75
* Schedule is built prospectively upon implementation of GASB No. 74/75
See notes to required supplemental information.69
City of Livonia, Michigan
Required Supplemental Information
Schedule of OPEB Contributions
Last Ten Fiscal Years
Years Ended November 30
2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
Actuarially determined
contribution $4,018,307 $4,517,014 $5,108,040 $5,907,902 $7,066,283 $7,078,024 $7,086,251 $6,647,609 $6,154,678 $6,198,151
Contributions in relation to the
actuarially determined
contribution 4,499,324 5,087,462 4,665,664 5,361,926 6,388,086 6,443,612 6,399,781 6,105,568 5,636,055 5,683,044
Contribution excess (deficiency)$481,017 $570,448 $(442,376)$(545,976)$(678,197)$(634,412)$(686,470)$(542,041)$(518,623)$(515,107)
Covered payroll $36,890,435 $34,729,209 $31,408,000 $30,560,000 $30,964,000 $32,871,000 $34,062,000 $36,981,000 $37,403,000 $35,354,000
Contributions as a percentage of
covered payroll %12.20 %14.65 %14.86 %17.55 %20.63 %19.60 %18.79 %16.51 %15.07 %16.07
Notes to Schedule of OPEB Contributions
Actuarial valuation information relative to the determination of contributions:
Valuation date Actuarially determined contribution rates are calculated as of November 30, two years prior to the end of the fiscal year in which the contributions
are reported. Covered employee payroll is as of November 30 of the current fiscal year.
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry age
Amortization method Level percentage of payroll, open
Remaining amortization period 40 years (30 years effective December 1, 2017)
Asset valuation method Smoothed funding value over five years
Inflation 4.0 percent
Healthcare cost trend rates 6.0 percent for the year of valuation, 5.5 percent the following year, 4.75 percent thereafter
Salary increase 4.0 percent
Investment rate of return 8.0 percent (7.5 percent effective with November 30, 2018 valuation)
Mortality RP 2000 Combined Healthy Annuitant Mortality Table Projected to 2014 (scale AA)
See notes to required supplemental information.70
City of Livonia, Michigan
Notes to Required Supplemental Information
November 30, 2018
Reconciliation of Budgeted Amounts to Basic Financial Statemets
The budgetary comparison schedules for the General Fund and major special revenue fund are presented on the
same basis of accounting used in preparing the adopted budget. The following is a reconciliation of the General
Fund budgetary comparison schedule to the governmental funds statement of revenue, expenditures, and
changes in fund balance:
Total Revenue
Total
Expenditures
Amounts per operating statement $58,485,966 $55,762,836
Operating transfers budgeted as expenditures -2,472,978
Reimbursing transfer budgeted as revenue 600,000 600,000
Amounts per budget statement $59,085,966 $58,835,814
Budgetary Information
Annual budgets are adopted on a basis consistent with generally accepted accounting principles for the General
Fund and all special revenue funds, except that operating transfers and debt proceeds have been included in the
"revenue" and "expenditures" categories, rather than as "other financing sources (uses)." All annual appropriations
lapse at fiscal year end; encumbrances are not included as expenditures. During the year, the budget was
amended in a legally permissible manner, except for the General Fund, which was amended after year end.
The City follows these procedures in establishing the budgetary data reflected in the financial statements:
1. On or before September 15, the mayor submits to the City Council a proposed operating budget for the fiscal
year commencing the following December 1. The operating budget includes proposed expenditures and the
means of financing them.
2. Public hearings are conducted to obtain citizen comments.
3. As provided for by the City Charter, not later than November 1, the City Council shall adopt the budget through
the passage of a budget resolution and transmit the budget to the mayor. Not later than November 15, the mayor
shall either approve or disapprove the adopted budget, in whole or in part.
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 a detail level within the legislative summary constraints.
Appropriations that exceed the summary budget constraints require City Council approval.
Excess of Expenditures Over Appropriations in Budgeted Funds - During the year, the City incurred
expenditures that were in excess of the amounts budgeted for employee benefis and insurance costs of $833,843.
71
Other Supplemental Information
72
City of Livonia, Michigan
Other Supplemental Information
Combining Balance Sheet
Nonmajor Governmental Funds
November 30, 2018
Special Revenue Funds
Major Streets Local Streets
Community
Recreation Grants
SAD Street
Lighting
Cable
Television Library
Assets
Cash and investments $3,781,449 $1,876,390 $5,292,407 $57,811 $341,012 $984,530 $2,430,549
Accounts receivable:
Property taxes --21,244 ---21,874
Special assessments -------
Due from other governmental units 1,541,045 360,781 146,936 102,969 --151,306
Other 6,994 ------
Due from other funds ---17,212 ---
Prepaid expenses -------
Total assets $5,329,488 $2,237,171 $5,460,587 $177,992 $341,012 $984,530 $2,603,729
Liabilities
Accounts payable $88,737 $34 $121,676 $14,647 $-$42,740 $33,322
Due to other funds ---63,613 ---
Accrued and other liabilities --49,716 20,362 -6,813 48,869
Unearned revenue --563,417 235 ---
Total liabilities 88,737 34 734,809 98,857 -49,553 82,191
Deferred Inflows of Resources - Unavailable
revenue --167,496 21,314 --172,476
Fund Balances
Nonspendable - Inventory and prepaid
assets -------
Restricted:
Streets, roads, and sidewalks 5,240,751 2,237,137 -----
Adjudicated forfeitures -------
Grants ---57,821 ---
Capital improvements -------
Community recreation --4,558,282 ----
Street lighting ----341,012 --
Library ------2,349,062
Public safety communication -------
Community transit -------
Committed - Cable access television -----934,977 -
Assigned:
Golf course capital improvements -------
Building improvements -------
Court building improvements -------
Total fund balances 5,240,751 2,237,137 4,558,282 57,821 341,012 934,977 2,349,062
Total liabilities, deferred
inflows of resources, and
fund balances $5,329,488 $2,237,171 $5,460,587 $177,992 $341,012 $984,530 $2,603,729
73
City of Livonia, Michigan
Other Supplemental Information
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
November 30, 2018
Special Revenue Funds Debt Service Funds
Public Safety
Communication
Adjudicated
Forfeitures
Community
Transit
Roads and
Sidewalks
2015 MBA
Refunding
2016 MBA
Refunding
Municipal
Building
Authority and
Other
Assets
Cash and investments $3,456,225 $1,969,003 $695,599 $1,913,314 $-$-$-
Accounts receivable:
Property taxes --13,522 24,051 ---
Special assessments -------
Due from other governmental units --93,530 166,351 ---
Other 404,055 14,484 47,672 ----
Due from other funds -------
Prepaid expenses -------
Total assets $3,860,280 $1,983,487 $850,323 $2,103,716 $-$-$-
Liabilities
Accounts payable $6,682 $17,204 $73,161 $958,604 $-$-$-
Due to other funds --435 ----
Accrued and other liabilities --9,777 ----
Unearned revenue -------
Total liabilities 6,682 17,204 83,373 958,604 ---
Deferred Inflows of Resources - Unavailable
revenue 258,615 -106,617 189,628 ---
Fund Balances
Nonspendable - Inventory and prepaid
assets -------
Restricted:
Streets, roads, and sidewalks ---955,484 ---
Adjudicated forfeitures -1,966,283 -----
Grants -------
Capital improvements -------
Community recreation -------
Street lighting -------
Library -------
Public safety communication 3,594,983 ------
Community transit --660,333 ----
Committed - Cable access television -------
Assigned:
Golf course capital improvements -------
Building improvements -------
Court building improvements -------
Total fund balances 3,594,983 1,966,283 660,333 955,484 ---
Total liabilities, deferred
inflows of resources, and
fund balances $3,860,280 $1,983,487 $850,323 $2,103,716 $-$-$-
74
City of Livonia, Michigan
Other Supplemental Information
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
November 30, 2018
Debt Service
Funds Capital Project Funds
2017 MBA
Refunding
Golf Course
Capital
Improvement
Capital
Improvement
Special
Assessments
Court Building
Improvements
Building
Improvement
Fund
Total
Nonmajor
Governmental
Funds
Assets
Cash and investments $-$237,357 $6,852,333 $1,240,395 $964,092 $-$32,092,466
Accounts receivable:
Property taxes ------80,691
Special assessments ---116,524 --116,524
Due from other governmental units ------2,562,918
Other ------473,205
Due from other funds -----425,000 442,212
Prepaid expenses --78,867 ---78,867
Total assets $-$237,357 $6,931,200 $1,356,919 $964,092 $425,000 $35,846,883
Liabilities
Accounts payable $-$28,486 $1,090,833 $83,437 $-$-$2,559,563
Due to other funds ------64,048
Accrued and other liabilities ------135,537
Unearned revenue ------563,652
Total liabilities -28,486 1,090,833 83,437 --3,322,800
Deferred Inflows of Resources - Unavailable
revenue ---93,474 --1,009,620
Fund Balances
Nonspendable - Inventory and prepaid
assets --78,867 ---78,867
Restricted:
Streets, roads, and sidewalks ------8,433,372
Adjudicated forfeitures ------1,966,283
Grants ------57,821
Capital improvements --5,761,500 1,180,008 --6,941,508
Community recreation ------4,558,282
Street lighting ------341,012
Library ------2,349,062
Public safety communication ------3,594,983
Community transit ------660,333
Committed - Cable access television ------934,977
Assigned:
Golf course capital improvements -208,871 ----208,871
Building improvements -----425,000 425,000
Court building improvements ----964,092 -964,092
Total fund balances -208,871 5,840,367 1,180,008 964,092 425,000 31,514,463
Total liabilities, deferred
inflows of resources, and
fund balances $-$237,357 $6,931,200 $1,356,919 $964,092 $425,000 $35,846,883
75
City of Livonia, Michigan
Other Supplemental Information
Combining Statement of Revenue, Expenditures, and Changes in Fund Balances
Nonmajor Governmental Funds
Year Ended November 30, 2018
Special Revenue Funds
Major Streets Local Streets
Community
Recreation Grants
SAD Street
Lighting
Cable
Television Library
Revenue
Property taxes $-$-$3,094,381 $-$-$-$3,186,462
Special assessments ----1,280,504 --
Intergovernmental:
Federal revenue ---844,962 ---
State and local revenue 8,481,550 2,766,777 1,107,765 51,194 --549,120
Charges for services --3,919,582 ---30,143
Fines and forfeitures ------42,066
Interest 51,590 30,413 84,922 773 3,590 12,910 44,773
Other revenue 261,311 -84,713 --403,437 61,850
Total revenue 8,794,451 2,797,190 8,291,363 896,929 1,284,094 416,347 3,914,414
Expenditures
Current services:
Public safety ---162,489 ---
Public works 3,688,809 1,621,069 --1,172,755 --
Community and economic development ---755,772 ---
Recreation and culture --5,532,482 --487,513 3,351,885
Capital outlay -------
Debt service:
Principal retirement -------
Interest and other -------
Total expenditures 3,688,809 1,621,069 5,532,482 918,261 1,172,755 487,513 3,351,885
Excess of Revenue Over (Under)
Expenditures 5,105,642 1,176,121 2,758,881 (21,332)111,339 (71,166)562,529
Other Financing Sources (Uses)
Transfers in -4,067,677 -17,212 ---
Transfers out (4,067,677)(5,656,451)(2,192,875)----
Total other financing (uses)
sources (4,067,677)(1,588,774)(2,192,875)17,212 ---
Net Change in Fund Balances 1,037,965 (412,653)566,006 (4,120)111,339 (71,166)562,529
Fund Balances - Beginning of year 4,202,786 2,649,790 3,992,276 61,941 229,673 1,006,143 1,786,533
Fund Balances - End of year $5,240,751 $2,237,137 $4,558,282 $57,821 $341,012 $934,977 $2,349,062
76
City of Livonia, Michigan
Other Supplemental Information
Combining Statement of Revenue, Expenditures, and Changes in Fund Balances
(Continued)
Year Ended November 30, 2018
Special Revenue Funds Debt Service Funds
Public Safety
Communication
Adjudicated
Forfeitures
Community
Transit
Roads and
Sidewalks
2015 MBA
Refunding
2016 MBA
Refunding
Municipal
Building
Authority and
Other
Revenue
Property taxes $-$-$464,828 $3,503,286 $-$-$-
Special assessments -------
Intergovernmental:
Federal revenue -52,394 -----
State and local revenue --326,531 378,314 ---
Charges for services 551,078 -53,367 ----
Fines and forfeitures -352,809 -----
Interest 52,212 22,883 10,781 58,037 ---
Other revenue -13,878 18 25 ---
Total revenue 603,290 441,964 855,525 3,939,662 ---
Expenditures
Current services:
Public safety 783,162 357,431 -----
Public works ---9,180,615 ---
Community and economic development -------
Recreation and culture --878,559 ----
Capital outlay -------
Debt service:
Principal retirement ----295,000 -285,000
Interest and other ----32,919 247,700 6,181
Total expenditures 783,162 357,431 878,559 9,180,615 327,919 247,700 291,181
Excess of Revenue Over (Under)
Expenditures (179,872)84,533 (23,034)(5,240,953)(327,919)(247,700)(291,181)
Other Financing Sources (Uses)
Transfers in ---5,656,451 327,919 247,700 291,181
Transfers out -------
Total other financing (uses)
sources ---5,656,451 327,919 247,700 291,181
Net Change in Fund Balances (179,872)84,533 (23,034)415,498 ---
Fund Balances - Beginning of year 3,774,855 1,881,750 683,367 539,986 ---
Fund Balances - End of year $3,594,983 $1,966,283 $660,333 $955,484 $-$-$-
77
City of Livonia, Michigan
Other Supplemental Information
Combining Statement of Revenue, Expenditures, and Changes in Fund Balances
(Continued)
Year Ended November 30, 2018
Debt Service
Funds Capital Projects Funds
2017 MBA
Refunding
Golf Course
Capital
Improvement
Capital
Improvement
Special
Assessments
Court Building
Improvements
Building
Improvement
Fund
Total
Nonmajor
Governmental
Funds
Revenue
Property taxes $-$-$1,504,857 $-$-$-$11,753,814
Special assessments ---142,354 --1,422,858
Intergovernmental:
Federal revenue ------897,356
State and local revenue ------13,661,251
Charges for services -81,252 ----4,635,422
Fines and forfeitures ----563,068 -957,943
Interest -2,338 98,201 31,577 12,015 -517,015
Other revenue --4,163 ---829,395
Total revenue -83,590 1,607,221 173,931 575,083 -34,675,054
Expenditures
Current services:
Public safety ------1,303,082
Public works ------15,663,248
Community and economic development ------755,772
Recreation and culture ------10,250,439
Capital outlay -172,440 3,847,819 32,834 --4,053,093
Debt service:
Principal retirement 1,250,000 -----1,830,000
Interest and other 741,750 -----1,028,550
Total expenditures 1,991,750 172,440 3,847,819 32,834 --34,884,184
Excess of Revenue Over (Under)
Expenditures (1,991,750)(88,850)(2,240,598)141,097 575,083 -(209,130)
Other Financing Sources (Uses)
Transfers in 1,991,750 -1,831,072 --425,000 14,855,962
Transfers out ----(538,881)-(12,455,884)
Total other financing (uses)
sources 1,991,750 -1,831,072 -(538,881)425,000 2,400,078
Net Change in Fund Balances -(88,850)(409,526)141,097 36,202 425,000 2,190,948
Fund Balances - Beginning of year -297,721 6,249,893 1,038,911 927,890 -29,323,515
Fund Balances - End of year $-$208,871 $5,840,367 $1,180,008 $964,092 $425,000 $31,514,463
78
City of Livonia, Michigan
Other Supplemental Information
Combining Statement of Fiduciary Net Position
Fiduciary Funds
November 30, 2018
Employees
Retirement
System VEBA Total
Assets
Cash and cash equivalents $455,907 $196,557 $652,464
Investments:
U.S. government securities 11,045,812 9,530,174 20,575,986
Collateralized mortgage obligations 4,061,079 2,492,696 6,553,775
Common stock 95,341,775 41,731,911 137,073,686
Corporate bonds 12,853,957 10,817,189 23,671,146
Real estate investment trust 10,608,753 678,273 11,287,026
Foreign bonds 1,934,230 1,229,439 3,163,669
Mutual funds 76,206,180 39,627,999 115,834,179
Accounts receivable 70,356 14,334 84,690
Due from agency funds 134,406 638,119 772,525
Total assets 212,712,455 106,956,691 319,669,146
Liabilities
Accounts payable 511,738 776,662 1,288,400
Due to other governmental units 31,193 -31,193
Due to primary government -190,914 190,914
Total liabilities 542,931 967,576 1,510,507
Net Position Restricted for Pension and Other
Postemployment Benefits $212,169,524 $105,989,115 $318,158,639
79
City of Livonia, Michigan
Other Supplemental Information
Combining Statement of Changes in Fiduciary Net Position
Fiduciary Funds
Year Ended November 30, 2018
Employees
Retirement
System VEBA Total
Additions
Investment income (expense):
Interest and dividends $4,599,512 $3,866,547 $8,466,059
Net change in fair value of investments (5,686,612)(5,135,843)(10,822,455)
Less investment expenses (549,095)(287,177)(836,272)
Net investment loss (1,636,195)(1,556,473)(3,192,668)
Contributions:
Employer 558,568 4,499,324 5,057,892
Employee 308,076 473,346 781,422
Total contributions 866,644 4,972,670 5,839,314
Total additions - Net (769,551)3,416,197 2,646,646
Deductions
Pension benefit payments 17,484,418 -17,484,418
Medical benefit payments -7,544,389 7,544,389
Disability benefit payments -164,574 164,574
Refunds of contributions 401,899 -401,899
Administrative expenses 230,600 58,229 288,829
Total deductions 18,116,917 7,767,192 25,884,109
Net Decrease in Net Position (18,886,468)(4,350,995)(23,237,463)
Net Position Restricted for Pension and Other
Postemployment Benefits - Beginning of year 231,055,992 110,340,110 341,396,102
Net Position Restricted for Pension and Other
Postemployment Benefits - End of year $212,169,524 $105,989,115 $318,158,639
80
City of Livonia, Michigan
Investment
Administration
Fund
Special Trust
Fund
Historical
Commission
Fund
Art
Commission
Fund
Assets
Cash and cash equivalents $1,036,162 $3,523,980 $195,367 $81,842
Due from agency funds ----
Total assets $1,036,162 $3,523,980 $195,367 $81,842
Liabilities
Due to other governmental units $-$-$-$-
Due to other fiduciary/agency funds 772,525 ---
Accrued and other liabilities 263,637 3,523,980 195,367 81,842
Total liabilities $1,036,162 $3,523,980 $195,367 $81,842
81
Other Supplemental Information
Combining Statement of Assets and Liabilities
Agency Funds
November 30, 2018
Undistributed
Tax Fund
Court
Depository
Fund
Court Bond
Fund
Court
Volunteer
Work Program
Court Civil
Drug Fund
Special
Operation
Team
Total Agency
Funds
$3,541,471 $167,302 $162,138 $500,828 $248,469 $36,845 $9,494,404
--9,896 25,753 6,389 -42,038
$3,541,471 $167,302 $172,034 $526,581 $254,858 $36,845 $9,536,442
$3,541,471 $157,406 $-$-$-$-$3,698,877
-9,896 32,142 ---814,563
--139,892 526,581 254,858 36,845 5,023,002
$3,541,471 $167,302 $172,034 $526,581 $254,858 $36,845 $9,536,442
82