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Home My WebLink About2016 City of South Bend Popular Annual Financial ReportFor more information, please visit: hƩps://www.southbendin.gov/ 2 Message from the Mayor: June 30, 2017 Dear residents and visitors of the City of South Bend, As with any large organization, management has a duty to provide meaningful reports that summarize the organization’s condition within its current environment to its executive board. In that spirit, I am pleased to present the City of South Bend’s second Popular Annual Financial Report (PAFR) to you, the City’s ultimate executive board. The PAFR contains information about the City and its finances in a user-friendly format that is easier to digest and understand than the City’s 318-page Comprehensive Annual Financial Report (CAFR). The financial information presented herein is excerpted from the CAFR and I encourage readers interested in more detail to refer to that document for further information. The City is delighted to announce that its 2015 PAFR received an award for outstanding achievement in Popular Annual Financial Reporting from the Government Finance Officers Association. 2016 was a year of progress for the City of South Bend. The population of our City increased as more people discovered the advantages of Midwestern urban living. The City made strides in important signature community development projects including increased residential and commercial development in the downtown area, the enhancement of neighborhoods and school safety with curb, sidewalk and lighting projects, and ongoing construction of the “Smart Streets” conversion of one-way streets to two-way with the objective of enhancing economic activity. During 2016, the City enjoyed the completion of the renovated, historic LaSalle Apartments and the start of construction of the new Courtyard by Marriott hotel (by the former College Football Hall of Fame), the conversion of the JMS Building to residential uses, and the massive renovation of the former Chase Tower. At the same time, the City maintained its financial strength as evidenced by its strong AA bond rating, one the best for cities of its size in Indiana. The City of South Bend is interested in your feedback so we may improve the PAFR in future years. I welcome your comments and suggestions on behalf of the Administration & Finance Department and encourage you to contact John Murphy, CFO at (574) 235-7678 or Jennifer Hockenhull, City Controller at (574) 235-9822. With Highest Regards, Pete Buttigieg, Mayor City of South Bend Mayor Pete Buttigieg For more information, please visit: hƩps://www.southbendin.gov/ 3 The Popular Annual Financial Report City Government Finances: Overview ...... 4 Our Organizational Chart ........................... 5 We Are South Bend ...................................... 6 South Bend Education and Business ........ 7 South Bend Culture and Recreation .......... 8 South Bend Events ...................................... 9 The City’s Revenue ..................................... 10 The Cost of City Services ......................... 11 The City’s Net Position .............................. 12 Government-Wide Revenue and Expenses .......................................... 13 The City’s Debt Burden ............................ 14 Full-Time Employees (FTE’s) ................... 15 Contact Information ................................... 16 For more information, please visit: hƩps://www.southbendin.gov/ 4 The goal of a business venture is to provide income for its stakeholders. In contrast, the goal of government is to provide services to its citizens. The measurement of success in business is a positive “bottom line”: revenue exceeds expenses. But the measurement of success for a government is the ability to serve its population within its financial constraints. And unlike a business, the government is prohibited by law from allowing expenditures to exceed budgeted limitations. Like any city in the United States, South Bend uses “fund-based” accounting. A “fund” is a segregated group of resources that have been identified to meet a specific purpose. A fund is just like a checkbook: cash receipts and disbursements are recorded in it and, like a checkbook, the City strives to maintain a positive balance. Broadly speaking, there are two main types of funds: governmental funds and business-type funds. Governmental funds are used to account for basic services: police and fire protection, street maintenance as examples. We all pay for these services through our tax dollars so that they’ll be available to any of us who need them, whenever we need them. City Government Finances: Overview Business-type funds are run like a business. They charge only the people who use the service and are expected to have revenues cover their operating expenses as well as any loan payments. In South Bend, these funds include Water Works, Wastewater, Solid Waste, Century Center and the EMS system. Across all funds, there are inflows and outflows; revenue and expenses, or expenditures. Revenue is the sum of money coming in to the City. The main sources, as noted above, are tax dollars and charges for services. Revenue also includes proceeds from new debt, such as a bond to finance a construction project. Each of these sources can be further broken down, as you’ll see in later pages. Expenditures are the costs of the City and are divided into three main types: operating, debt service and capital outlay. Operating expenditures are the costs for salaries and supplies needed to provide the services. These expenditures are ongoing, in that they will be incurred year after year as the City performs its services, but the amounts may change significantly based upon the level of services the City administration chooses to provide. Debt Service comprises the principal and interest payments made to repay the City’s debt obligations. Before the City can apply for any new debt, it must be able to prove that it will be able to repay that debt along with any prior debt still outstanding. These expenditures are ongoing as well, but the amounts are stable, based on the repayment schedules negotiated at the time the debt was incurred. Capital outlay expenditures can be either large, one-time expenditures, such as a new building, or smaller annual expenditures such as new vehicle purchases within a fleet maintenance program. These expenditures can vary widely year to year, based on current requirements. With these broad definitions in mind, we hope that you’ll find the foregoing reports meaningful and interesting. For more information, please visit: hƩps://www.southbendin.gov/ 5 Our Organizational Chart Mayor Pete Buttigieg Chief Executive Officer, 4-year term City Clerk Kareemah Fowler Maintain Council records, ordinance violation collections, 4-year term Fire Department Police Department Public Works Legal Department Code Enforcement Administration & Finance Innovation & Technology Building Department Venues, Parks & Arts Community Investment Common Council City Clerk Mayor The Residents of South Bend Common Council Legislative Authority, 4 years each For more information, please visit: hƩps://www.southbendin.gov/ 6 Population (2015 Estimate) 101,590 % Female (2010 Census) 51.6% % Male (2010 Census) 48.4% Average Persons Per Household 2.54 (2011 – 2015) Median Household Income $34,523 (2011 – 2015) Persons Below Poverty Level 28.3% (2015 Estimate) Educational Attainment (2011 - 2015) High school graduate or higher 83.5% Bachelor’s degree or higher 23.8% Population Demographics (2015 Estimate) White 54.2% Black or African American 26.8% Hispanic or Latino 13.8% Asian 1.4% American Indian/Alaska Native 0.3% Native American and Other Pacific Islander 0.1% Other Race 0.1% Two or more races 3.3% Veterans (2015 Estimate) 4,983 Source: U.S. Census Bureau (https://factfinder.census.gov/) 2011-2015 American Community Survey 5-Year Estimates The City Administration’s Mission “We deliver services that empower everyone to thrive.” The City Administration’s Values Excellence Goal: best in state and/or top 25% nationally Accountability Goal: offer services with the greatest value to the taxpayer Innovation Goal: deliver services more efficiently through creativity Inclusion Goal: include diverse voices in decision-making Empowerment Goal: establish a work environment that allows employees to contribute richly Population Statistics We are South Bend For more information, please visit: hƩps://www.southbendin.gov/ 7 South Bend Education and Business University of Notre Dame Indiana University South Bend Holy Cross College Saint Mary’s College Ivy Tech Community College Colleges and Universities 1st Source Bank (Financial Institution) Tire Rack (Automotive Parts Supplier) Fulton Industries (Custom Component Manufacturing) ABRO Industries (Automotive & Household Chemical Products) Data Realty (Digital Information Management) Crowe Horwath LLP (CPA Firm) Press Ganey (Health Care Management) Local Businesses Headquarters Largest Employers University of Notre Dame (Higher Education) Beacon Health System (Memorial) (Health Care) South Bend Community Schools (Public Schools) Indiana University South Bend (Higher Education) AM General (Automotive Manufacturing & Assembly) Saint Joseph County (Government) City of South Bend (Government) For more information, please visit: hƩps://www.southbendin.gov/ 8 South Bend Culture and Recreation For more information, please visit: hƩps://www.southbendin.gov/ 9 Year Round First Fridays, Downtown Spring St. Patrick’s Day parade and “Greening of the East Race” Egg Stravaganza River Lights Music Festival Mayors’ Ride Bike to Work Week Best. Week. Ever. South Bend Events Summer South Bend Cubs baseball Seitz & Sounds music series West Side Memorial Day Parade Art Beat Outdoor film series Red Table Plaza Fridays by the Fountain Restaurant Week East Race Waterway Rafting Fall/Winter Downtown for the Holidays Restaurant Week For more information, please visit: hƩps://www.southbendin.gov/ 10 Revenue from Governmental Activities totaled $152.7 million in 2016. The largest revenue sources were property taxes and local income taxes. Property taxes are capped at approximately 1% of property values for homeowners. Revenue from Business-Type Activities totaled $75.5 million in 2016. The Wastewater and Water Utilities were the largest Business- Type funds and provide essential services to residents. Solid Waste provides trash collection services on a weekly basis and EMS provides emergency ambulance services to residents in need. The City’s Revenue For more information, please visit: hƩps://www.southbendin.gov/ 11 Total Expenses for Governmental Activities was $134.5 million in 2016. The largest category was Public Safety (police and fire) followed by Economic Development, Streets, and Culture & Recreation. During 2016, the Venues, Parks & Arts Department was established to manage culture and recreation activities City-wide. The Cost of City Services Total Expenses for Business-Type Activities was $64.1 million in 2016. The largest Business-Type activities are the Wastewater and Water Works operations, which charge fees for services rendered. Solid Waste provides trash collection services that are essential to City residents. The City also manages three downtown parking garages and owns the Century Center convention venue located on the Saint Joseph River. For more information, please visit: hƩps://www.southbendin.gov/ 12 The City’s Net Position For 2016, the City's Net Position was $365.3 million. "Net Position" is the difference between the City's assets and its liabilities. It represents resources currently available to the City for future services and economic safety buffers. The majority of Net Position consists of investment in capital assets and is, therefore, not able to be spent on governmental programs and services. Net Position declined from 2013 to 2014 due to new accounting rules for recording pensions. For more information, please visit: hƩps://www.southbendin.gov/ 13 Changes 2015 to 2016 Governmental Activities expenses decreased from 2015 to 2016 due to lower capital expenditures and lower general administrative expenses. Government-Wide Revenue & Expenses Changes 2015 to 2016 Property tax revenue increased during 2016 due to higher property values and collections. Local income tax revenue increased due to an improving economy and a one-time state distribution of income tax monies held in reserve. For more information, please visit: hƩps://www.southbendin.gov/ 14 The City’s total debt obligation at the end of 2016 was $435.7 million and long-term debt decreased by $23.4 million during 2016. The City’s use of debt allows it to leverage current resources to buy or construct assets to be used in the future, such as the lease of police cars or the construction of infrastructure. These arrangements allow the City to pay for the vehicles or infrastructure during the periods in which the residents receive the benefits of the services. The largest segment of the City’s debt is its pension and other employment liability. In 2016, the City’s Net Pension Liability was $180.7 million. The City is required to contribute 11.2% of annual payroll for non- bargaining and Teamster employees, and 17.5% for Police and Fire department employees. Pension liabilities are funded over a long-term time period. Most Capital Leases require a 5-year repayment schedule. The goal is to pay off the lease in less time than the expected useful life of the asset being leased. Bonds and other loans have a longer repayment period, typically 20 years; this is appropriate since they are used to pay for longer-lasting assets such as buildings, roads, and other infrastructure. In 2016, the City’s expenditures toward debt repayment were $23.1 million, 11.6% of government-wide expenses. During 2016, the City initiated the following debt transactions: Entered capital lease transactions of $8.9 million to purchase vehicles and equipment. Issued Water Works refunding bonds of $3.3 million to refinance existing debt at a lower interest rates. The City’s Debt Burden For more information, please visit: hƩps://www.southbendin.gov/ 15 Culture & Recreation Parks & Recreation ················· 89 Convention and Events Management ······················ 12 Community Investment Dept of Community Investment ························ 23 Highways & Streets Street Department ·················· 59 Enterprise Funds Water Works ························ 65 Wastewater ·························· 44 Organic Resources ··················· 6 Sewer ································· 31 Solid Waste ·························· 25 Building Department ··············· 14 Code Enforcement / Animal Care & Control ·········· 26 General Government Mayor's Office ······················· 6 City Clerk's Office ··················· 5 Common Council (elected officials, part-time) ······ 9 Administration & Finance / Information Technology ········ 26 Legal Department ·················· 11 Engineering ························· 18 311 Call Center ······················· 7 Safety and Risk ······················· 2 Human Rights ························ 6 Public Safety Police Department ················ 290 Fire Department ·················· 268 Internal Services Central Services ····················· 37 Full-Time Employees (FTE’s) In 2014, 33 Parks & Recreation employees working at the Zoo began working for the Potawatomi Zoological Society and were no longer City employees. In 2015, 34 central dispatch employees began working for Saint Joseph County due to consolidation of 911 operations. For more information, please visit: hƩps://www.southbendin.gov/ 16 We hope that you found this report useful. We also hope to continually improve this report and look forward to your participation in doing so. Please feel free to CONTACT US: John H. Murphy, CFO City of South Bend 227 W. Jefferson Blvd., Suite 1200 South Bend, IN 46601 (574) 235-7678 jmurphy@southbendin.gov www.southbendin.gov Jennifer Hockenhull, Controller City of South Bend 227 W. Jefferson Blvd., Suite 1200 South Bend, IN 46601 (574) 235-9822 jhockenh@southbendin.gov www.southbendin.gov For more detail regarding financial data, please refer to the 2016 Comprehensive Annual Financial Report (CAFR), found at www.southbendin.gov/2016_CAFR