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2004 Comprehensive Annual Financial Report
CITY OF SOUTH BEND, INDIANA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENEDED DECEMBER 31, 2004 TABLE OF CONTENTS INTRODUCTORY SECTION Tableof Contents ................................................................................................ ............................... i CityOfficials ......................................................................................................... ............................... iv Controller's Letter of Transmittal ............................... _ ................................. ....... ........ .......... ............ v Certificate of Achievement for Excellence in Financial Reporting ....................... ............................... xvii Organization Chart. ................ iii IJf0I_1ki CalL1� -181 01910 Independent Auditor's Report on Financial Statements and Supplementary Schedule of Expenditures of Federal Awards ............. ............................... Management's Discussion and Analysis ............................................................. ............................... 3 Basic Financial Statements: 73 Government -Wide Financial Statements: Statementof Net Assets ......................................................................... ............................... 13 Statement of Activities ............................................................................ ............................... 15 Fund Financial Statements: Balance Sheet — Governmental Funds ................................................... ............................... 16 Statement of Revenues, Expenditures and Other Changes in Fund 107 Balances — Governmental Funds ..................................................... ............................... 18 Reconciliation of the Statement of Revenues, Expenditures and Changes in 109 Fund Balances of Governmental Funds to the Statement of Activities ........................... 19 Statement of Net Assets — Proprietary Funds... .................................................................... 20 Statement of Revenues, Expenses and Other Changes in Fund Net Assets —Proprietary Funds .............................................. ............................... 22 Statement of Cash Flows — Proprietary Funds ....................................... ............................... 24 Statement of Fiduciary Net Assets — Fiduciary Funds., ............. ............................... ...... 26 Statement of Changes in Fiduciary Net Assets — Fiduciary Funds ........ ............................... 27 Notes to Financial Statements.,... ...................................... r .... .............. .......... ...... 28 Reouired Suoolementary Information: Schedules of Funding Progress ......................... 1— ............ . ....... ............ ...................................... 58 Schedules of Contributions From the Employer and Other Contributing Entities 59 Budgetary Comparison Schedules ................................................................ ............................... 60 Budget/GAAP Reconciliation ........................................................................ ............................... 66 Combining Statements and Schedules: Nonmajor Governmental Funds: Description.................................................................................................... ............................... 67 CombiningBalance Sheet. ............................................................................... ........................... 73 Combining Statement Statement of Revenues, Expenditures and Other Changes in Fund Balances................................................................................................. ............................... 82 Budgetary Comparison Schedules ................................................................ ............................... 91 Nonmajor Enterprise Funds: Description.................................................................................................... ............................... 106 Combining Statement of Net Assets ............................................................. ............................... 107 Combining Statement of Revenues, Expenses and Other Changes in FundNet Assets ..................................................................................... ............................... 109 Combining Statement of Cash Flows ............................................................ ............................... 110 CITY OF SOUTH BEND, INDIANA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENEDED DECEMBER 31, 2004 TABLE OF CONTENTS (Continued) FINANCIAL SECTION (Continued) Internal Service Funds: Description.................................................................................................... ............................... 112 Combining Statement of Net Assets ............................................................. ............................... 113 Combining Statement of Revenues, Expenses and Changes in FundNet Assets ..................................................................................... ............................... 114 Combining Statement of Cash Flows .......................................................... .............................._ 115 Fiduciary Funds: Description.................................................................................................... ............................... 117 Combining Statement of Fiduciary Net Assets — Pension Trust Funds ........ ............................... 118 Combining Statement of Changes in Fiduciary Net Assets — Pension Trust Funds .................... 119 Combining Statement of Changes in Assets and Liabilities — Agency Funds .............................. 120 STATISTICAL SECTION General Governmental Expenditures by Function .............................................. ............................... 122 General Revenues by Source .............................................................................. ............................... 123 Total County Option Income Tax Levy by Taxing Unit ........................................ ............................... 124 Property Tax Levies and Collections ................................................................... ............................... 125 Assessed and Estimated Actual Value of Taxable Property ... .... _ ...................... ............................... 126 Detail of Net Assessed Valuation ........................................................................ ............................... 127 Ratio of Net General Bonded Debt to Assessed Value and NetBonded Debt Per Capita ......................................................................... ............................... 128 Computation of Legal Debt Margin ...................................................................... ............................... 129 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures ......................... ............................... 130 Schedule of Revenue Bond Coverage — Wastewater Utility Bonds ................... .....................1.1....... 131 Schedule of Revenue Bond Coverage —Water Utility Bonds ............................... ............................... 132 Detailof City Tax Rate ......................................................................................... ............................... 133 Property Tax Rates — Direct and Overlapping Governments .......................... ............................... _ 134 Computation of Direct and Overlapping Debt. ....... .................... .................................................. 135 County Income Tax Revenue — History and Projected Distribution.. ............... .................. ............ 136 DemographicsStatistics ...................................................................................... ............................1.1 137 New Construction — Number of Permits and Property Values ............................. ............................... 138 Financial Institution Data ..................................................................................... ............................... 139 City's Ten Largest Taxpayers .............................................................................. ............................... 140 City's Ten Largest Water Customers .................................................................. ............................... 141 City's Ten Largest Sewage Works Customers .................................................... ............................... 142 Comparison of Growth Rates in Personal Income for St. Joseph County, the State of Indiana and U.S. Disposable Personal Income ........................................................ ............................... 143 MiscellaneousStatistics ....................................................................................... ............................... 144 InsuranceCoverage ............................................................................................ ............................... 146 ii CITY OF SOUTH BEND, INDIANA COMPREHENSIVE ANNUAL. FINANCIAL REPORT FOR THE YEAR ENEDED DECEMBER 31, 2004 TABLE OF CONTENTS (Continued) COMPLIANCE SECTION Independent Auditor's Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards ................. ............................... 148 Independent Auditor's Report on Compliance With Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance With OMB Circular A- 133 .................................. ............................... 149 Schedule of Expenditures of Federal Awards ..................................................... ............................... 151 Notes to Schedule of Expenditures of Federal Awards ....................................... ............................... 153 Schedule of Findings and Questioned Costs ............................. ................ ..................... .............. -- 154 Auditee Prepared Schedules: Summary Schedule of Prior Audit Findings .................................................. ............................... 155 f1I CITY OFFICIALS Office Official Term Mayor Mr. Stephen J. Luecke 01 -01 -04 to 12 -31 -07 Controller Mr. Frederick B. 011ett, lil 01 -01 -04 to 04 -17 -05 Ms. M. Catherine Faneilo 04 -18 -05 to 12 -31 -07 City Clerk Mr. John Voorde 01 -01 -04 to 12 -31 -07 President of the Board of Public Works Mr. Gary Gilot 01 -01 -04 to 12 -31 -05 Common Council Members 1 st District Mr. Derek D. Dieter 01 -01 -04 to 12 -31 -07 2 "d District Ms. Charlotte Pfeifer 01 -01 -04 to 12 -31 -07 3rd District Mr. Roland Kelly 01 -01 -04 to 12 -31 -07 4th District Mrs. Ann Puzzello 01 -01 -04 to 12 -31 -07 5th District Mr. David Varner 01 -01 -04 to 12 -31 -07 Stn District Mr. Ervin Kuspa 01 -01 -04 to 12 -31 -07 At Large Ms, Karen L. White 01 -01 -04 to 12 -31 -07 At Large Mr. Sean Coleman 01 -01 -04 to 12 -31 -04 At Large Mr. Timothy A. Rouse 01 -03 -05 to 12 -31 -07 At Large Mr, Al (Buddy) Kirsits 01 -01 -04 to 12 -31 -07 Iv COUNTY -CITY BUILUNG 227 W. JEFFERSON BLVD. Sou,m BEND, INDIANA 46601 -1830 CITY OF SOUTH BEND STEPHEN J. LuscK ., IV AYOR PHONE 5 74123 5-9216 FAx 5741235 -9928 TDD 5741235 -5567 .DEPARTMENT OF ADMINISTRATION AND FINANCE M. CATHERINE BANELLo CONTROLUR June 6, 2005 To the Honorable Mayor Stephen J. Luecke, Members of the City Council, and the Residents of the City of South Bend: The comprehensive annual financial report of the City of South Bend, Indiana (the "City ") for the year ended December 31, 2004, is hereby submitted. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds and account groups of the City. All disclosures necessary to enable the reader to gain an understanding of the government's financial activities have been included. GAAP requires that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of the Management Discussion and Analysis (MD &A). This letter of transmittal is designed to complement the MD &A and should be read in conjunction with it. The City of South Bend's MD &A can be found immediately following the independent auditors report. The comprehensive annual financial report is presented in four sections: introductory information, financial information, statistical information and federal awards supplemental information. The introductory section includes this transmittal letter, the City's organizational chart, a list of principal City officials and the Certificate of Achievement for Excellence in Financial Reporting awarded to the City of South Bend for the year ended December 31, 2003. The financial section begins with the independent auditors' report on the City's financial statements and schedules, the City's management and analysis report, followed by the City's basic financial statements and accompanying footnotes. The remaining portion of this section includes the combining and individual fund and account group financial statements and schedules. The statistical section includes selected financial and demographic information generally presented on a multi -year basis, which has been provided to give the reader a broader understanding of the City. This document ends with the federal awards section, which includes the results of the supplemental audit of the City's federal awards and the internal controls necessary for compliance. The City is required to undergo an annual single audit in conformity with the provisions of the U.S. Office of Management and Budget Circular A -133, Audits of States Local Governments v and Non - Profit Organizations, the provisions of Indiana Code section 5- 11 -1 -9 and the requirements of the Indiana State Board of Accounts. Information related to the single audit, including the schedule of federal financial assistance, findings and recommendations, and the auditors' reports on the internal control structure and compliance with applicable laws and regulations, is included in this document. The following pages of this transmittal letter begin with a general overview of South Bend and the surrounding area. Also summarized are the key financial, budgetary and property tax controls with which the City is required to comply. The remainder includes a discussion of the prior year's financial challenges and accomplishments, the City's goals and objectives for this year and beyond and other key issues the City is facing along with the impact they may have on current and future budgets. GENERAL INFORMATION The City of South Bend is the county seat of St. Joseph County, Indiana, and is the fourth largest city in the state. Its 2000 U.S. Bureau of the Census population of 107,789 classifies it as a "City of the Second Class" under Indiana statues (cities with a population of 35,000 to 250,000). It operates with a mayor as chief executive and a nine - member City Common Council composed of six members elected from districts and three members at- large. The City provides a full range of traditional general governmental services to its citizens. These services include police and fire protection; sanitation services; the construction and maintenance of highways, streets and infrastructure; recreational activities and cultural events. In addition to general governmental activities, the Common Council or City Board of Public Works exercises oversight over the South Bend Water Works, the South Bend Wastewater Treatment Facility, the Century Center, the College Football Hall of fame, the Studebaker Collection, the South Bend Redevelopment Authority and several downtown parking facilities, Location St. Joseph County lies within the heartland of the manufacturing belt and metropolitan regions of the Upper Midwest and Canada. The City of South Bend is located in the north central part of Indiana, ten miles south of the Michigan state line, and is commonly known to be within the "Michiana" area. The Michian area is a vibrant and diverse area with a strong economy based on a mix of agricultural, service, manufacturing, other commercial and tourism industries. This diverse economic mix creates varied employment opportunities for the area's residents while providing insulation via diversification from future economic downturns. The City is approximately 90 miles east of Chicago and 140 miles north of Indianapolis. Accessibility to transportation, including Interstate 80/90, a regional airport (which is the second busiest in the State of Indiana), the South Shore rail line and a port on Lake Michigan, has supported economic growth within the community. Proximity to Chicago, the largest rail and intermodal (rail /truck/ocean/inland waterway) transfer point in the country, is a significant advantage to St. Joseph County. vi St. Joseph County / South Bend - Economic Conditions and Outlook St. Joseph County, with its 2000 U.S. Bureau of the Census population of 265,559, boasts a strong history of manufacturing which continues today. As a complement to that, the service industry and retail trade has also flourished, creating a balance that serves the community well. The County has experienced a net growth in population of 26,945 {11.3% increase) between 1960 and 2000. After experiencing a reduction of 2.6% during 1969 to 1983, at which time the entire Midwest was at the depth of its economic restructuring and recess, the County's population increased 4.0% between 1983 and 1990 and another 7.5% between 1990 and 2000. The total labor force in December 2004 of 136,990 in St. Joseph County is typical of the Midwest: well trained with a strong work ethic. Approximately 32.5% of the area's adult population are high school graduates or higher (as compared to the national average of 28.6 %) with an estimated 23.6% with a Bachelor's Degree or higher. There are ten colleges, universities and technical schools within South Bend and the surrounding area including the University of Notre Dame, Indiana University of South Bend, Saint Mary's College, Bethel College and Ivy Tech State College. At the high school level, there are school -to -work transition programs that help prepare students for the world of work. St. Joseph County is currently experiencing an average unemployment rate of around 4.7 %, which compares favorably to the December 2004 national and State of Indiana rates of 5.9% and 5 %, respectively. The employment profile for St. Joseph County provides a good overview of the economic make- up of this community. Employment statistics for the County's major economic sectors are as follows: Economic Sector Accommodation/Food Service Arts /Entertainment/Recreation Construction Health Care /Social Services Information Manufacturing Professional /Technical Services Retail Trade Wholesale Trade Number Employ % of Total 9,741 6.3% 2,274 1.5% 8,910 5.7% 19,076 12.3% 2,512 1.6% 19,139 12.3% 7,632 49% 19,348 12.4% 7,478 4.8% St. Joseph County presently has an estimated 98,500 households with per household income as follows: 12% with household incomes that exceed $75,000; 18% with incomes $50,000 to $75,000; 25% with incomes $35,000 to $49,999; 18% with incomes $25,000 to $34,999; 15% with incomes $15,000 to $24,999; and the remaining 12% with household incomes under $15,000 per year. The median household effective buying income (disposable income after taxes) in the County in 2000 was $40,420, which equated to more than $4.36 billion in effective buying income for this area. Health and education lead the employment statistics for St. Joseph County. The largest employers in the County as of December 2004 were as follows: University of Notre Dame vii (4,802); Memorial Health System (3,493); South Bend Community School Corporation (3,303); Saint Joseph Regional Medical (2,935); The Diocese of Fort Wayne /South Bend (2,500); AM General (2,151); St. Joseph County (1,750); Martin's Supermarkets (1,484); City of South Bend (1,400); Indiana University of South Bend (1,300). The following provides a profile of the adult population residing in St. Joseph County: Gender: 48% male; 52% female Age: 16.1% 18 -24 years of age; 13% 25 -34 years of age; 14.8% 35 -44 years of age; 13.1% 45 -54 years of age; 7.8% 55 -64 years of age; and 13.6% 65 years or older Race: 82.4% White; 11.5% Black/African American;4.7% Hispanic /Latino; 1 % Asian; and I% Other Marital Status: 59% Married; 18% Widowed /Divorced/Separated; and 23% Single Home Ownership: 78% own; 22% rent Type of Dwelling: 84% single unit; 16% other The cost of living continues to be one of the greatest advantages of living in this community. The housing costs in South Bend are well below the national and regional averages. During the second quarter of 2004, the median sales price for a single family home (per the National and Indiana Association of Realtors) for the nation and the Midwest were $191,300 and $157,200, respectively, compared to South Bend's median price of only $93,800. For the same period, Chicago's median price was $263,300 and Indianapolis stood at $125,900. South Bend's ACCRA cost of living index for the fourth quarter of 2004 was 95.3. A further breakdown of South Bend's cost of living index for this period was as follows: grocery items - 87.8; housing costs - 91.5; utilities - 108.5; transportation ---- 96.8; health care - 102.3; and miscellaneous goods and services - 96.8. The City of South Bend continues to place high emphasis on a growing and diversified local economy. It has been active in developing ten industrial parks, offering itself as a low -cost alternative to the Chicago metropolitan area to companies engaged in light manufacturing, distribution and services. More than 240 businesses operate in South Bend's industrial parks, including companies engaged in metalworking, plastics, warehousing and distribution, and professional services. The South Bend Community School Corporation serves all of the City and some of the surrounding area and has a current enrollment of approximately 21,477 students in grades kindergarten through high school. An estimated 4,441 students attend private or parochial schools within the City. The ten institutions of higher education and technical training located within the South Bend area have a total enrollment of approximately 27,611. Over the years, the University of Notre Dame has provided a stabilizing influence on the economy with a very significant economic impact upon the community. South Bend has continued to progress in its growth since 1842, when Father Edward Sorin named his rustic log chapel "Notre Dame du Lac" and began to teach the local Indians. Today, the chapel has grown into the University of Notre Dame. In 1852, H.C. Studebaker started the viii industry of making wagons and horse drawn buggies that evolved into the manufacturing of the Studebaker automobile. It made the name Studebaker synonymous with the area of South Bend. Another industrial firm that would later become the area's largest began in 1923 when Vincent Bendix began manufacturing automotive brakes. In 1929, the company became the Bendix Aviation Corporation, and now, as Honeywell (formerly AlliedSignal Inc.), is a leading manufacturer of automotive and aerospace products. Other special attractions within the South Bend area include the Olympic -class East Race Waterway and the East Bank area; the newly renovated Morris Performing Arts Center, which provides for the Broadway Theater League, the South Bend Symphony Orchestra with the Chamber and Pops Orchestras and the Southold Dance Theater and Patchwork Dance Company; the South Bend Civic Theater; the Studebaker National Museum; the South Bend Regional Museum of Art; the Snite Museum of Art at Notre Dame; the Northern Indiana Center for History; Copshaholm/The Oliver Mansion; the College Football Hall of Fame; Century Center; Potawatomi Zoo; the Morris Conservatory /Muessel- Ellison Tropical Gardens; Healthworks! Kids Museum; the Farmers` Market; the Belleville Softball Complex; the Firefly Performing Arts Festival. The Coveleski Regional Baseball Stadium, a 5,000 -seat facility which opened in 1987, is rated among the best in minor league baseball. It had record crowds during its seasons of play with the South Bend Silver Hawks, a minor league team of the Chicago White Sox up to the 1997 season. During 1997, the City signed on with the Arizona Diamondbacks and looks forward to continued success with its program. Additional miscellaneous information about the City of South Bend can be found at the end of this transmittal letter. Financial Bud eta and Proper Tax Controls The City's Management Team is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the government are protected from loss, theft or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. Single Audit. As a recipient of federal and state financial assistance, the City also is responsible for ensuring that an adequate internal control structure is in place to ensure compliance with applicable laws and regulations related to those programs. This internal control structure is subject to periodic evaluation by management of the City. As part of the City's single audit described earlier, tests are performed to determine the adequacy of the internal control structure, including that portion related to federal financial assistance programs, as well as to determine that the City has complied with applicable laws and regulations. The results of the City's single audit for the year ended December 31, 2004 disclosed no instances of significant material weaknesses in the internal control structure and no significant violations of applicable laws and ix regulations. Budgetary Controls. In accordance with Indiana statutes, the City maintains budgetary controls integrated within the accounting system. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget (prepared on a cash basis) which is adopted by the City Council and then reviewed and approved by the Indiana's Department of Local Government and Finance. Activities of the general fund, certain special revenue and capital projects funds and the debt service funds are included in the annual budget. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established by major budget classification within funds. The City Council may transfer appropriations from one major budget classification to another within a department by ordinance as long as the total appropriations for that department are not exceeded. Transfers from one department to another, or additional appropriations in excess of the original budget, must be submitted to and approved by the Department of Local Government and Finance after these appropriations have been approved by the City Council. The City also maintains an encumbrance accounting system as one technique of accomplishing budgetary control. Encumbered amounts do not lapse at year end and are carried over to the subsequent year as a part of the subsequent year's budget. Property Tax Controls. In addition to budgetary and other controls established by Indiana statute, the City must operate within specific and rigid controls governing the amount of property tax it may levy. The property tax control program, which began in 1973, limits the amount of property taxes that may be levied by each unit of government in its legally budgeted funds. Indiana law prescribes a maximum property tax levy, which is calculated as a 5% increase over the previous year's maximum levy. However, if a local government has experienced growth in assessed valuation in excess of 5 %, the municipality may use a percentage equal to that growth, up to a maximum of 10 %. Growth is calculated as the average growth in assessed valuation over the last three years, not counting a year of reassessment. In addition, if the governmental unit finds that it cannot maintain basic governmental services for its residents within the property tax "freeze," it may appeal to the Department of Local Government and Finance for an "excess levy" in certain specific instances. As a part of the property tax control program, the state transfers an amount generally equal to 20% of the total property tax levy (except for debt service levies as described below) to the County Auditor to be distributed to each taxing unit as a replacement for 20% of the property taxes levied. This "property tax replacement" is funded through the state sales tax. The levy for Debt Service funds is controlled via a review and approval process by the Government Tax Control Board (with a subsequent review and approval by the Department of Local Government and Finance) for each issuance of general obligation indebtedness (or lease - purchase) entered into by a taxing unit. In addition, all indebtedness incurred after 1983 no longer receives the 20% state property tax replacement funds mentioned above. A historical view of the City's tax rate and its net assessed valuation has been included in the statistical section of this document. Citywide Goals and Objectives for 2004 and Beyond The City has developed eight broad goals that focus on the following areas: economy, safety, quality of life, trust, responsiveness, infrastructure, finance and workforce. The City has identified various objectives that are tied directly to these goals which, if achieved, will result in the attainment of these goals. The eight goals are listed below. GOAL: The Community's Economy Improve South Bend's economy to ensure a vigorous local business climate; ample employment, business and investment opportunities for all our customers; and a tax base that is sufficient to meet the needs of the City, its residents and other customers. GOAL: The Community's Public Safety and Civility Improve South Bend's public safety and civility to ensure that every resident and other customers can live, work, play, run a business and raise a family in a humane, pleasant and safe environment; have adequate, affordable and timely access to all forms of emergency services; and can contribute and participate in a community where people of different backgrounds live in mutual respect and harmony. GOAL: The Community's Quality of Life Improve South Bend's quality of life to ensure that every resident and every family can earn an adequate income; secure adequate housing; live in a safe, pleasant and humane neighborhood; enjoy a wide range of social, cultural and recreational opportunities; and have access to quality educational and medical services within an excellent natural and manmade environment. GOAL: Trust in City Government Improve residents' trust in City government to ensure that South Bend has a broad base of consensus and support on which to build the future, a strong foundation for collaborative action and community partnerships; and an increase in resident and customer participation in the daily public life of the community. GOAL: The City's Responsiveness, Efficiency, and Effectiveness Improve the responsiveness, efficiency, and effectiveness of City government to ensure that the City's customers get the value they expect and deserve. GOAL: The City's Infrastructure Improve the City's infrastructure to ensure that South Bend can support physical growth and economic development; and offer an excellent quality of life to all of its residents and other customers. xi GOAL: The City's Financial Condition Improve the financial condition of City government to ensure that South Bend has the financial resources necessary to achieve all its goals for the next five years. GOAL: The City's Workforce Improve the City government's existing workforce, work environment and human development systems to ensure that South Bend has the human resources necessary to achieve all its goals for the next five years. City Mission Statement and Department Purpose Statements The City provides services to its customers through thirteen administrative departments. These departments have unique purposes that are intended to support the citywide mission statement which is "to be recognized as a model city." Each department has developed a purpose statement which identifies their specific role. Mayor's Office: Leading the community to become a model city through formulating policy, directing operations and responding to customer concerns. Common Council: Making certain that our City government is always responsive to the needs of our residents and that the betterment of South Bend is always our highest priority. City Clerk's Office: Preserving all City Ordinances and Council meeting minutes for generations yet to be, and providing fair and consistent treatment of our Ordinance Violations Bureau customers. Administration and Finance: Providing financial and organizational stability for the City through sound financial management while ensuring the existence of a safe work environment, quality employee benefits and equal treatment for all City employees. Legal Department: Providing superior, professional and ethical legal services for our client, the City of South Bend. Police Department: Protecting the life, property and personal liberties of all individuals; improving the overall quality of life by deterring criminal activity and respecting cultural diversity; delivering fair and impartial law enforcement services to all residents. Fire Department: Providing the highest level of Fire and Emergency Medical Services possible to all of our customers, saving lives and property, and striving to xii become a model Fire Department for other cities in an efficient and cost - effective manner. Code Enforcement: Maintaining and improving the physical quality of life in our neighborhoods. Park and Recreation: Offering all residents and guests of South Bend the highest quality of recreational and leisure activities, while providing well - managed parks and recreational facilities with updated programming and friendly productive service. Community and Economic Development: Creating and expanding opportunities through partnerships in neighborhood revitalization, commercial and industrial development and community enhancement. Public Works: Providing leadership in the development and delivery of engineering, fleet, transportation, sanitation, wastewater, water and other services as called upon by our customers. Building Department: Serving our customers by inspecting, informing and ensuring a safe place to work, play and live. Century Center: Providing a state-of-the-art facility with excellent services to customers while generating maximum economic benefit to our community. Building South Bend in 2004 and beyond Mayor Stephen Luecke's theme for the past several years has been "We're Building South Bend." That theme has had a major influence on the development of the 2005 budget. There were five areas of concentration that became or remained budget priorities for 2005. We lre Building Neighborhoods - Mayor Luecke and the City's elected officials continued their strong commitment to neighborhoods. The City will invest $4.7 million to fund or leverage state and federal funding for housing assistance, development and home ownership programs, neighborhood public works and parks, neighborhood development for social services and organizations, and public safety initiatives. Committing these resources will help us maintain, improve and support strong neighborhood development. We're Building a Safe City - Public safety is the foundation of all the City's efforts to build South Bend. Through the targeted and creative use of available resources, the City is working to provide quality police, fire and ambulance services for the community. The crime rate has increased xiii in several significant categories over past year. South Bend has 2.4 police officers and 2.3 firefighters per thousand population. These ratios are among the highest in the state and well above the national average. We believe that these extra officers are important for officer safety and community safety. We will also complete the long awaited and much needed design for renovation and expansion of Police Department offices. The City's Fire Department is rated one of the highest in the State. We have recently refurbished three main fire trucks to like -new status. The Mayor's top initiatives will focus on regional policing, providing in -car cameras for all patrol cars and placing more emphasis on training and recruitment for the Police and Fire Departments. We i-e Building an Attractive City - We are working to enhance the natural and man -made beauty of our city through effective City programs. For the fifth year in a row we were named a Tree City USA. The Building Block Grant Program helps residents spruce up their neighborhoods, and aggressive Code Enforcement will continue to address deteriorated and nuisance properties. The Commercial Corridors Improvement Fund provides much needed funding to address a variety of needs along five of the City's major corridors. The City is funding major programs for curb & sidewalks, neighborhood centers, weed & seed program, and transforming a former dump into a model outdoor environmental lab. We 1~e Building Opportunity - A key issue for any city is education and opportunity for young people. The City is committed to keeping schools open in our neighborhoods and to maximizing their use by the community. We are building partnerships that will create new strategies for enhancing our formal education system. Working together with families, student groups, school officials, neighborhoods, the faith community and civic organizations, we can support our local schools and improve the level of individual student performance. We 5-e Building a Strong Economy - Local government plays a key role in economic development. By providing adequate infrastructure and offering targeted assistance, the City can stimulate private investment, creating business opportunities and jobs. The City's policies encourage new start- up businesses, strengthen existing business, attract new jobs, increase assessed value and emphasize direct investment in hard -to- develop areas. Efforts have been and will continue to focus on implementing the comprehensive plans for downtown and the East Bank. The City's administration will vigorously pursue the revitalization of older industrial sites, as well as the expansion of the Blackthorn area. Proprietary Operations. The City's proprietary operations comprise several separate and distinct activities accounted for in both Enterprise and Internal Service funds. The Enterprise Fund operations include the following: the City's downtown parking garages, xlv water utility services, wastewater utility services, solid waste services, the Century Center, the consolidated St. Joseph County /South Bend Building Department and, Blackthorn Golf Course. The Internal Service Fund operations include the City's self funded liability insurance program, the City's self - funded employee benefits program, and Central Services (a department that accounts for the expenses related to fuel, vehicle repairs and various other services and supplies provided to City departments on a cost - reimbursement basis). Fiduciary Funds. The City's fiduciary duties are accounted for in both Trust and Agency Funds. The primary trust funds are the Police and Fire Pension Funds (explained below). The Agency Fund is for payroll and related employee deductions. Pension Trust Fund Operations. Most City employees are covered by the Public Employees Retirement Fund and the 1977 Police Officers' and Firefighters' Pension Fund, both administered by the State of Indiana. However, certain police officers and firefighters hired before May 1, 1977, who did not opt into the 1977 fund, continue to be members of the 1925 Police Pension Fund and the 1937 Firefighters' Pension Fund. These two funds are administered by the City. This group of police officers and firefighters will continue to decline in the future both as a total number and as a percentage of total payroll of both the police and fire departments and of the City as a whole. The 1925 and 1937 Plans are funded through a combination of property taxes levied by the City and distributions from the State Pension Relief Fund. As a result of the requirements of the state statute that created these funds, the City is legally prevented from funding them in any other way than a "pay -as- you -go" basis. The City has received an actuarial survey on these funds to provide the proper disclosures required by generally accepted accounting principles. This information is included in the following section. Cash Management. In accordance with state statute, cash temporarily idle during the year is invested in demand deposits, certificates of deposit, obligations of the U.S. Treasury and repurchase agreements that are fully collateralized by U.S. Government or U.S. Government Agency obligations. In addition to the insurance available to all depositors through the Federal government, all deposits of the City are covered by the Public Deposits Insurance Fund maintained by the State Board for Depositories. That fund, established in 1937, covers both principal and interest of all deposits and investments made by an Indiana governmental unit with approved public depositories in accordance with the Public Deposits and Investments Law. Risk Management. The City has established two self-insurance funds: the Self-Funded Employee Benefits Fund and the Liability Insurance Premium Reserve Fund. As previously mentioned, these self - insurance funds are accounted for as Internal Service Funds. The purpose of the Self - Funded Employee Benefits Fund is to pay medical claims of City employees and their covered dependents and minimize the total cost of annual medical insurance to the City. Medical claims exceeding $125,000 per insured on an annual basis are covered through a private carrier. In addition to medical claims, the fund pays premiums for life insurance and long term disability benefits for employees. The Liability Insurance Premium Reserve Fund covers automobile and ►rA comprehensive liability as well as workers' compensation costs. The City's liability for self - insurance is limited to $300,000 per person and $5,000,000 in the aggregate per occurrence in accordance with Indiana Tort Law. The accrued liability for estimated insurance claims represents an estimate of the probable loss on unpaid claims arising prior to year end. Other Information Independent Audit. In accordance with the state statute, the City is required to be audited annually by the Indiana State Board of Accounts, an agency of the State of Indiana. In addition to meeting the requirements set forth in state statutes, the audit also was designed to meet the requirements of the federal Single Audit Act of 1984 and related OMB Circular A -133 as mentioned earlier. The auditors' report on the general purpose financial statements and combining and individual fund statements and schedules is included in the financial section of this report. For the past fourteen years (years ended December 31, 1990 through 2003) the City has received an unqualified audit opinion. The auditors' reports related specifically to the single audit are included in a separately filed report. Awards. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of South Bend for its comprehensive annual financial report for the fiscal year ended December 31, 2003. This was the thirteenth consecutive year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. Acknowledgments. The preparation of the comprehensive annual financial report was made possible by the dedicated service of the City's fiscal officers and the entire staff of the Department of Administration and Finance. Each member of the Department has my sincere appreciation for the contributions made in the preparation of this report. In addition, I would like to thank the Field Examiners of the State Board of Accounts for their hard work and dedication in this effort. In closing, without the leadership and support of Mayor Stephen J. Luecke, the City's Department Heads, and the members of the City Council, preparation of this report would not have been possible. Sincerely, W, &//" 4wlr M. Catherine Fanello, CPA City Controller Thomas J. Skarbek, CPA Director of Budgeting & Financial Reporting xv1 Certificate of Achievement for Excellence in Financial Reporting Presented to City of South Bend, Indiana For its Comprehensive Annual Financial Report for the Fiscal Year Ended Deceirtber 31, 2003 A Certificate of Achievement for Excellence in Financial Reporting is preseznted by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. Q,�CE OFF /� CJ""'• I[.�._. OF iNE�• �� i %UHM STALES ` N r CANADA %} President CORP VCH y� 3�4.L'o`ti �H,caca Executive Director xvii CITY OF SOUTH BEND ORGANIZATIONAL CHART Electorate Police Fire Parks & Public Department Department Recreation Works (Police Chief) (Fire Chleij Su erintendent ( p ) (Director) -Technical Services - Fire Prevention Park Administration - Engineering Division - Administrative Division Division - Investigative Services Division - Park Maintenance - Streets Division Firefighting Division Division - Uniform Patrol Operations Division - Recreation - Water Works Division EMS Division Division Division - Community Relations Potawatomi Zoo Sewage Works Division Division Division Golf Division Central Services Division Solid Waste Division Legal Code Department Enforcement » Hearing Officer Neighborhood Code Enforcement Abandoned Vehicles Unsafe Building - Animal Control Bureau of Weights and Measures xvii . City Clerk Board of Entertainment I Authority/ Oanagers Board �I .. t.... ....., Commission I Community & Morns Century Center Performing Arts Center Economic Development ,Director) (Director) (Director) Economic Development Community Development General Administration Consolidated Building Administration Department !, & Finance City Finance & Budgeting Human Resources Benefits Management Information Technology Safety & Risk Management Human Rights STATE OF INDIANA AN EQUAL OPPORTUNITY EMPLOYER STATE BOARD OF ACCOUNTS 302 WEST WASHINGTON STREET ROOM E41 S INDIANAPOLIS, INDIANA 46204 -2765 Telephone: (317) 232 -2513 Fax: (317) 232-4711 Web Site: www.in.gov /sboa INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS TO: THE OFFICIALS OF THE CITY OF SOUTH BEND, ST. JOSEPH COUNTY, INDIANA We have audited the accompanying financial statements of the governmental activities, the business - type activities, each major fund and the aggregate remaining fund information of the City of South Bend (City), as of and for the year ended December 31, 2004, which collectively comprise the City's primary government basic financial statements. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the City as of December 31, 2004, and the respective changes in financial position and cash flows, where applicable, thereof and forthe yearthen ended, in conformity with ac- counting principles generally accepted in the United States. The Management's Discussion and Analysis, Schedules of Funding Progress, Schedules of Contri- butions From the Employer and Other Contributing Entities and Budgetary Comparison Schedules as listed in the table of contents are not a required part of the basic financial statements but are supplementary informa- tion required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presenta- tion of the required supplementary information. However, we did not audit the information and express no opinion on it. In accordance with Government Auditinq Standards, we have also issued our report dated May 3, 2005, on our consideration of the City's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Our report on compliance and on internal control over financial reporting should be read along with this report. INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued) Our audit was performed far the purpose of forming an opinion on the basic financial statements of the City taken as a whole. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by the U.S. Office of Management and Budget Circular A -133, Audits of States, Local Governments, and Non -Profit Organizations, and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Our audit was conducted for the purpose of forming opinions on the financial statements that collec- tively comprise the City's basic financial statements. The introductory section, combining fund financial state- ments, other budgetary comparison schedules, and statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining fund financial state- ments and other budgetary comparison schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in rela- tion to the basic financial statements taken as a whole. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accord- ingly, we express no opinion on them. May 3, 2005 F) STATE BOARD OF ACCOUNTS Management's Discussion and Analysis As management of the City of South Bend, we offer readers of the City of South Bend's financial statements this narrative overview and analysis of the financial activities of the City of South Bend for the fiscal year ended December 31, 2004. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal. As with other sections of this financial report, the information contained within this MD &A should be considered only a part of a greater whole. The readers of this statement should take time to read and evaluate all sections of this report, including the footnotes and the other Required Supplemental Information ( "RSI") that is provided in addition to this MD &A. Financial Highlights The assets of the City of South Bend exceeded its liabilities at December 31, 2004 by $194,241,292. Of this amount, unrestricted net assets of $78,265,656 may be used to meet the government's ongoing obligations to citizens and creditors. The total net assets decreased by $2,221,450. Of this amount, governmental activities increased by $276,801 and business -type activities decreased by $2,498,25I . Total cost of all of the City's programs were $151.9 million. This is an increase of $14.2 million from last year. At the end of the current fiscal year, unreserved fund balance for the general fund was $19.6 million or 34% of total general fund expenditures. The City of South Bend's total debt obligations increased by the net of $9.7 million. The increase was mostly attributable to the issuance of one new business -type revenue bond. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the City of South Bend's basic financial statements. The City of South Bend's basic financial statements are comprised of three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. The report also includes other supplementary information in addition to the basic financial statements themselves. Government -wide financial statements. The government -wide financial statements are designed to provide readers with a broad overview of the City of South Bend's finances, in a manner similar to a private - sector business. The statement of net assets. This statement reports all assets and liabilities of the City as of December 31, 2004. The difference between total assets and total liabilities is reported as "net assets." Increases in net assets generally indicate an improvement in financial position while decreases may indicate a deterioration of financial position. The statement of activities. This statement serves the purpose of the traditional income statement. It provides consolidated reporting of the results of all activities of the City for the year ended December 31, 2004. Changes in net assets are recorded in the period in which the underlying event takes place, which may differ from the period in which cash is received or disbursed. The Statement of Activities displays the ex ense of the City's various programs net of the related revenues, as well as a separate presentation oTrevenues available for general purposes. Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and 3 charges {business -type activities }. The major governmental activities of the City of South Bend include public safety, urban redevelopment and housing and general government. The major business -type activities of the City include the wastewater utility, water utility and solid waste. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City: like other state and local governments, uses llund accounting to ensure and dlemonstrate compliance with finance- related legal requirements. All of the funds of the City f South Bend can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the saane functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental -fund financial statements focus on near - term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near -term financing requirements. General Government Revenues - The following schedule presents a summary of general revenues for the year ended December 31, 2004 and the amount and percentages. Revenues 2004 Amount % of Total Taxes: General Property $ 63,806,692 56.2% County Option Income 7,001,198 6.2% County Economic Development 3,448,688 3.0% Professional Sports Development 378,099 0.3% Community Revitalization District 655,269 0.5% Licenses and Permits 223,006 0.2% Intergovernmental 17,968,454 15.8% Charges for Services 15,187,711 13.4% Fines and Forfeits 302,376 0.2% Interest 1,668,050 1.4% Donations 261,189 0.2% Other 2,470,938 2.2% $ 113,371,670 100.0% As shown above, taxes continue to represent a significant source of revenue needed to support the services provided by the City. The City's single, argest source of revenue is generated by property taxation. This revenue calculation is based on a relationship between two variables. The first variable is the assessed property valuation of industrial, commercial and residential parcels, both real and personal property. The second variable is the application of a tax rate to arrive at the total tax levy. Taxable property is assessed at 100% of the true tax value. The City has the ability to increase its general property tax levy by 5 %, which it elected to do in 2004. The above general property tax revenue includes taxes collected on behalf of the following funds: General Fund, Park and Recreation Fund, Cumulative Capital Development Funds, various capital funds for the City's Redevelopment Tax Incremental Financing (TIF) Funds and a special levy to cover debt service on general obligation bonds. The increase in property taxes collected on behalf of the TIF funds was the result of an increase in net assessed value and the scheduled roll -off of tax abatements in the Airport Development Economic Area {Blackthorn} TIF. One of the major focuses for the City continues to be the need to diversify its revenue streams. This is necessary to reduce the dependency on general property taxes and to ensure that a broad -base of users, including nonresidents, share in the funding of basic city services. Currently he City's property taxpayers carry a disproportionate share of the cost of public safety (police & fire services) and general government functions (elected officials, Legal Department and Administration and Finance Department). Approximately 86% of the General Fund's 2004 total revenue was derived from property taxes. The public safety nd general government functions constituted approximately 74% of the General Funds 2004 total expenditures. South Bend, like many other cities, has public safety at the top of its priority list. In order to shift part of the financial burden for these services away from the City's homeowners /property owners, new sources of revenue need to be identified. In an attempt to accomplish this, two new taxes have been enacted since 1995 that have begun to shift this financial tax burden. Economic Development Income Tax (EDIT) - This tax was first enacted as of July 1, 1995 at the rate of one tenth of one percent (0.1%) of City residents' (and some nonresidents') adjusted gross income, which generated $1,382,670 and $1,466,029 for the City of South Bend in 1996 and 1997, respectively. The City's Common Council and the St. Joseph County Council passed respective ordinances that increased the rate to two tenths of one percent (0.2% , which effectively doubled the City's distribution beginning in 1998. The Cityy received $3,105,473, $5,462,867, $3,689,202 and $3,448,688 of EDIT distributions in 200I, 2002, 2003 and 2004 respectively, and is anticipating the receipt of $3.5 million from this tax in 2005. Both of the local option income taxes (EDIT and COIT) are collected and administered by the Indiana Department of State Revenue. The EDIT distribution is then remitted to the county, which then allocates these tax receipts between the county and the cities and towns in the county based on the proportionate amounts of property tax levy for each unit. The City's portion of the total county's EDIT ranged from 35.6% to 38.2% over the last four years as the proportionate pro ertyy tax Ievies have changed. The EDIT rate will remain at the current level (0.2 %) unless urt her action is taken by the respective councils. The EDIT rate can legally be raised to four tenths of one percent (0.4 %). County Option Income Tax (COIT) - The City and County Councils enacted this tax effective Jul 1, 1997 at a rate of two tenths of one percent 0.2% with an increase of one tenth of one percent (0.1 %) er year during the next four years. In 2002 the rate was set to its legal limit of six tenths of one percent (0.6 %). The City would not have supported the new County Option. Income Tax if it had not been accompanied by a tandem ordinance, which established an additional 6% homestead credit for property taxpayers. This additional homestead credit increased to 7% in 1999 and to 8% in 2000 (where it will remain at this level). Thus, as a result of the passage of this new tax, City propperty taxpayers were provided relief through a reduction in their property tax bills while the Cit was provided with an additional source of revenue that will eventually slow the growth of future property tax rate increases. The City received $4,491:922 in 2001, $9,531,190 in 2002, $8,015,302 in 2003 and $7,001,198 in 2004. The City is antici ating the receipt of $5.9 million from this tax in 2005. In 2002 a one -time adjustment of 2,318,375 for conservative distribution estimates in the early years of the tax was transferred. These countywide taxes are allocated (net of homestead credits) between all taxing units within the county based on the proportionate amounts of property tax levy for each taxing unit. As mentioned earlier, the City is always looking for other sources of revenue that would reduce its reliance on property taxes. A viable source of revenue is from user fees and /or charges for services currently being performed. It is the City's desire to establish all user charges and fees at a level closely related to the full cost of providin the services while taking into consideration similar charges /fees being levied by other public and private providers. The City recalculates, on an annual basis, the full costs of activities supported by user fees (including the Parks Department programs and EMS ambulance services among others) to identify the impact of inflation and other cost increases. It then revises user fees accordingly. As a result, overall charges for services and user fee revenues are anticipated to increase in line with annual operating and capital budgets. General Government Expenditures - The City breaks its general government expenditures into six categories: general government, public safety, highways and streets, health and welfare, culture and recreation, and urban redevelopment and housing. Infonnation is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, ex enditures, and changes in fund balances for the general, park funds and South Bend Building Cporporation construction which are considered major funds. Data for the other funds are combined into a single, aggregated presentation. Individual fund data for each of these non -major governmental funds is provided in the form of combining statements elsewhere in this report. Proprietary funds. The City of South Bend maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City maintains seven individual enterprise funds. Information is presented separately in the proprietary statement of net assets and the proprietary statement of revenues, expense and changes in fund net assets for the Water Utility, Wastewater Utility and Century Center, which are considered major funds. Data from the other four funds are combined into a single, aggregated presentation. Individual fund data for each of these non -major proprietary funds is provided in the form of combining statements elsewhere in this report. Internal service funds are used to accumulate and allocate costs internally among the City's various functions. The City of South Bend uses internal service funds to account for its self funded liability insurance program, employee benefits program and central services ( a department that accounts for the expenses related to fuel, vehicle repairs and various other services and supplies provided to City departments on a cost - reimbursement basis). Because these services predominantly benefit governmental rather than business- type functions, they have been included within governmental activities in the government -wide financial statements but are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in the report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government -wide financial statement because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The City's fiduciary duties are accounted for in both Trust and Agency Funds. The primary trust funds are the Police and Fire Pension Funds (explained below). The Agency Fund is for payroll and related employee deductions. Pension Trust Fund Operations - Most City employees are covered by the Public Employees Retirement Fund and the 1977 Police Officers' and Firefighters' Pension Fund, both administered by the State of Indiana. However, certain police officers and firefighters hired before May 1, 1977, who did not opt into the 1977 fund, continue to be members of the 1925 Police Pension Fund and the 1937 Firefighters' Pension Fund. These two funds are administered by the City. This group of police officers and firefighters will continue to decline in the future, both as a total number and as a percentage of'total payroll of both the police and fire departments and of the City as a whole. The 1925 and 1937 Plans are funded through a combination of property taxes levied by the City and distributions from the State Pension Relief Fund. As a result or the requirements of the state statute that created these funds, the City is legally prevented from funding them in any other way than a "pay -as- you -go" basis. In January of 2002, the City received an actuarial survey on these funds to provide the proper disclosures required by generally accepted accounting principles. This information is included in the following section. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain other supplementary information. The combining tatements referred to earlier in connection with non -mayor funds, internal service funds and fiduciary funds are presented immediately after the basic financial statements. Also included are budget comparisons for governmental funds other than the General Fund and the Park and Recreation Fund, a major special revenue fund. Government -wide Financial Analysis The financial analysis will focus on the net assets (Table 1) and changes in net assets (Table 2) of the City's governmental and business -type activities. As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. At December 31, 2004, the City's assets exceeded liabilities by $194,241,292, a decrease from 2003 by $2.2 million. The majority of this decrease can be attributed to a reduction of property taxes. For property taxes colleted for 2003, Indiana changed its method of property tax allocation to a market value for assessing property taxes. A County wide reassessment along with major increases in delinquent taxes received had a favorable effect on this revenue. This reassessment caused property taxes received in 2003 to be larger than predicted. This result increased available cash balances. In 2004, after appeals and re- adjustment for tax rates, property tax levels decreased. By far the largest portion of the City's net assets (52 percent) reflects its investment in capital assets (e.g. land, roads, storm sewers, water and sewer systems, buildings and equipment), less any related debt used to acquire those assets that is still outstanding. Capital assets are used to provide services to citizens, and they are not available for future spending. Although the investment in capital assets are reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Governmental Activities 2003 City of South Bend's Net Assets Table 1 Business -Type Activities 2004 2003 2004 Total 2003 2004 Current and other assets $165,297,545 $135,859,344 $31,239,361 $35,393,136 $196,536,906 171,252,480 Capital assets (net) Total assets Long -teen liabilities outstanding Other liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted 96,911,501 112,635,198 157,102,338 157,790,563 254,013,839 270,425,761 262,209,046 248,494,542 188,341,699 193,183,699 450,550,745 441,678,241 164,196,443 163,133,137 51,869,211 62,695,870 216,065,654 225,829,007 29,281,402 16,760,834 6,711,844 4,847,108 35,993,246 21,607,942 193,477,845 179,893,971 58,581,055 67,542,978 252,058,900 247,436,949 31,254,629 7,383,902 102,466,792 93,370,899 133,721,421 6,381,082 1,966,388 14,456,725 13,254,447 20,837,807 31,095,490 59,250,281 12,837,127 19,015,375 43,932,617 100,754,801 15,220,835 78,265,656 Total net assets $68,731,201 $68,600,571 $129,760,644 $125,640,721 $198,491,845 $194,241,292 At the end of the current fiscal year the City is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business -type activities. 7 The net assets for government activities increased by $276,801, from $68.3 million in 2003 to $68.6 million in 2004. This minimal increase is primarily attributable to lower actual Fending that coincides with lower property tax dollars collected. As explained earlier, the City received a larger distribution due to reassessment and an increase in delinquent taxes received in 2003. In 2004, after County wide appeals and property taxes adjustment the levels decreased to normal levels. The business -type net assets activities decreased by $2.5 million, from ($128.1) million in 2003 to ($125.6) million in 2004. This decrease is due to a revenue increases that are not keeping up with utility operating costs. This trend is expected to change with a rate increase (wastewater) that took effect in late 2004 and a proposed rate increase (waterworks) in 2005 to help alleviate this deficit. City of South Bend's Changes in Net Assets Table 2 Expenses: Governmental Business -type Activities Activities Total 17,523,559 0 2003 2004 2003 2004 2003 2004 Revenues: 0 0 48,254,995 45,799,395 Highways and streets Program Revenues: 9,855,890 0 0 6,370,307 9,855,890 Charges for services 14,569,764 9,343,194 35,652,545 36,530,823 50,222,309 45,874,017 Operating grants and Culture and recreation 10,899,340 13,689,893 0 0 contributions 14,813,675 10,718,149 1,130,575 1,165,243 15,944,250 11,883,392 Capital grants and 17,708,054 18,102,343 Interest on long -term debt 3,979,222 6,209,012 contributions 1,790,912 10,326,795 72,370 118,953 1,863,302 10,445,748 General Revenues: Property taxes 67,965,063 62,279,784 0 0 67,965,063 62,279,784 Other taxes 11,492,491 11,483,254 0 0 11,492,491 11,483,254 Grants and contributions not restricted to specific programs 5,286,477 5,133,838 5,286,477 5,133,838 Other Revenues 2,028,399 2,259,320 266,610 362,676 2,295,009 2,621,996 Total Revenues 117,946,781 111,544,334 37,122,120 38,177,695 155,068,901 149,722,029 Expenses: General government 13,529,785 17,523,559 0 0 13,529,785 17,523,559 Public safety 48,254,995 45,799,395 0 0 48,254,995 45,799,395 Highways and streets 6,370,307 9,855,890 0 0 6,370,307 9,855,890 Health and welfare 99,586 102,314 0 0 99,586 102,314 Culture and recreation 10,899,340 13,689,893 0 0 10,899,340 13,689,893 Urban redevelopment 17,708,054 18,102,343 0 0 17,708,054 18,102,343 Interest on long -term debt 3,979,222 6,209,012 0 0 3,979,222 6,209,012 Water 0 0 11,676,058 12,275,029 11,676,058 12,275,029 Wastewater 0 0 16,024,235 16,125,258 14,402,563 16,125,258 Civic center 0 0 3,460,137 3,592,627 3,460,137 3,592,627 Building department 0 0 1,052,861 1,134,986 1,052,861 1,134,986 Parking 0 0 1,451,385 1,739,235 1,451,385 1,739,235 Solid waste 0 0 3,775,137 4,015,831 3,775,137 4,015,831 Golf course 0 0 1,706,537 1,778,107 1,706,537 1,778,107 Total expenses 100,841,289 111,282,406 39,146,350 40,661,073 139,987,639 151,943,479 Changes in net assets before transfers 17,512,923 261,928 (2,024,230) (2,483,378) 17,012,484 (2,221,450) Transfers 12,533 14,873 (12,533) (14,873) 0 0 Change in net assets 17,525,456 276,801 (2,036,763) (2,498,251) 17,1 10,365 (2,221,450) Beginning net assets (restated) 51,205,745 68,323,770 130,175,735 128,138,972 181,381,480 196,462,742 Ending net assets 68,323,770 68,600,571 128,138,972 125,640,721 196,462,742 194,241,292 Governmental Activities Governmental activities net assets increased by only $276,801. This minimal increase is due to revenues decreasing by 6.4 million or 5.4 %. Conversely, expenses increased by $10.4 million or 10.3 %. The major decrease in revenues is a decrease in property taxes which has been explained earlier. The increase in expenses is due to increases in capital investments related parks, streets and infrastructure. Also, the City experienced increased costs related to insurance costs. Business -type Activities Business -type activities had a decrease in changes of net assets of ($2.5) million in 2004. The majority of the decrease is due to an income loss in the Wastewater and the Waterworks departments. The Wastewater department has needed to invest in major capital upgrades to both their facility and infrastructure. In late 2004 new rates went into effect that will help reduce the operational deficit as well as invest in the needed capital. Waterworks is also experiencing a shortfall of revenue due to user rates that are not covering operational and capital needs. In 2005 Waterworks will be petitioning to increase these rates to cover these costs. Financial Analysis of the Governments' Funds As noted earlie , the City of Sout Be pd uses fund accol�t�tip to,en urea and d .Qmonstrate cprupll "ce wit finance- related ega req ire Tents. X11 oft o flans n tie City can be divided into three categories: government un s, proprietary un s and i uciary funds. Governmental funds. The purpose of the City's governmental funds is to provide information on near -term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a governments net resources available for spending at the end of the fiscal year. At the end of the current fiscal year, the City's governmental funds reported a combined ending fund balance of $115,221,287. Of this annount, $73 631,193 (64 percent) is unreserved fund balance, which is available for spending at the City's discretion. The majority of this unreserved fund balance is for major capital projects that have been designated by the City g Council in the subsequent year's expenditures. The remainder of the fund balance is reserved and is not available for new spending because it has already been dedicated for various commitments. The general fund is the City's chief operating fund. At the end of the current fiscal year, unreserved fund balance of the general fund was $19,656,024, an increase of $1,515,666. This is primarily due to lower than budget expenditures on governmental funds. This is a direct result of the property taxes received, which has been detailed earlier. The park and recreation unreserved fund balance saw a decrease of $514,240. The major reason for this decrease is due to lower overall revenues as well as expenditures that had normal increases from the prior year. Since the Park fund is a recipient of property taxes, it has also experienced the problems that have been chronicled earlier. The South Bend building corporation fund is used to account for major capital construction. The unreserved fund balance decreased from $16,858,057 to $3,037,967. The explanation of this decrease is due to the completion of a new central fire station as well as a renovation to the central police station. There is a corresponding increase in the capital increases within the public safety programs. Individual fund data for each of the non -ma or governmental funds is provided in the form of the combining statements in the Supplemental 1'nformation portion. Proprietary funds. Enterprise funds are used to report the same functions presented as business- type activities in the government -wide financial statements. The City maintains seven individual enterprise funds. The basic proprietary fund financial statements can be found later in this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. The basic fiduciary funds financial statements can be found later in this report. General Fund Budgetary Highlights The City adopts an annual appropriated budget for its general fund. The final budget was greater than the original budget by $2,351,893. An amended original budget can be explained by either an encumbrance rollover or a current year budget overrun. The general fund budget is reviewed throughout the year and revised as needed with the approval of the City Council. At the end of the fiscal year the actual expenditures are projected and the budget is amended to prevent any budget overruns. The City tries to work within its original budget by increasing categories that will exceed budget while decreasing other categories to cover these overruns. If this transferring will not cover these expenditures then the City must appropriate from its fund balance. Of the $2,683,910, $2 million, was to amend the original budget to account for the transfer of funds to the health insurance fund to help alleviate increased costs. The remainder was prior year encumbrances that rolled over and were added to the original budget. The actual revenues are $19,603,741 under budget and expenditures are $3,395,055 under budget. The majority of $19 million can be explained by the property taxes that were not distributed by the County until early 2005. The under spending of the expenditures can be partially attributed to the fact that the City budgets at full staff and not all positions were filled in 2004. Also, overtime in public safety was down due to personnel being at full staff. In all, this saving provides evidence that the City's budget has been prepared on a conservative basis and has provided adequate resources to fund services provided. All cities have limited resources and, thus, limited numbers of programs and services that can e provided. We are proud to say that we have done well in terms of maintaining a solid, financially sound organization by spending within our paeans. Capital Asset and Debt Administration Capital assets. The Ci 's investment in capital assets for its governmental and business type activities at December l, 2004 amounts to $270,425,761 (net of accumulated depreciation. This investment in capital assets includes land, buildings, roads, improvements, service lines, 10 automobiles and equipment, and street lights. A detailed note of these capital assets can be found in the Notes to the Basic Financial Statements (Note III Q. Major capital asset additions during the current fiscal year include the following: - River Dam repairs $1.2 million. - Major road renovation at $2.1 million. - New police vehicles added to fleet at a cost of $812 thousand. - Curb and Sidewalk Program $523 thousand. - Upgrade to water wells at a cost of $625 thousand. City of South Bend's Capital Assets Governmental Business -type Activities Activities Total 2003 2004 2003 2004 2003 2004 Capital assets not being depreciated: Land Construction in Progress Total capital assets not being depreciated Capital assets being depreciated: Building Improvements other than buildings Machinery & equipment Roads Totals Less accumulated depreciation for: Buildings Improvements other than buildings Machinery & equipment Roads Totals Total capital assets, being depreciated, net Total activity capital assets, net $10,016,557 $11,564,931 9,728,706 1 5,141,413 36,634,449 36,880,723 19,745,263 26,706,344 $2,457,065 $2,656,367 $12,473,622 11,721,226 2,837,643 21,449,932 14,178,291 5,494,010 33,923,554 69,560,638 79,263,073 95,200,886 95,973,045 8,345,625 8,190,617 74,383,741 86,802,058 36,634,449 36,880,723 43,287,881 43,427,108 468,310 2,101,485 0 0 115,009,022 126,435,898 212,872,508 226,202,211 164,761,524 82,729,366 79,922,330 $14,212,298 175,236,118 94,992,675 80, 307, 831 .J41,00 l,JJV JJ=-'v 'U - 17,013,355 19,102,238 28,581,223 29,879,152 45,594,578 48,981,390 3,835,339 3,985,236 16,002,346 17,554,984 19,837,685 21,540,220 16,970,675 17,367,908 25,364,892 26,471,522 42,335,567 43,839,430 23,415 51,662 0 0 23,415 51,662 37,842,784 40,507,044 69,948,461 73,905,658 107,791,245 114,412,702 77,166,238 85,928,854 142,924,047 152,296,553 220,090,285 238,225,407 $96,911,501 $112,635,198 $157,102,338 $157,790,563 $254,013,839 $270,425,761 11 Debt Administration. At December 31, 2004, the City had a number of debt issues outstanding. These issues included $935,000 of general obligation bonds, $82,135,000 of revenue bonds ayable from governmental funds, 39,815 000 of revenue bonds payable from enterprise funds, 29,525,289 oTfirst mortgage bonds payable from governmental funds and $1,058,415 of first mortgage bonds payable trom enterprise Tunas. unaer the inaiana t-onstitution ana state statute, the City's general obligation bonded debt issuances are subject to a legal limitation based upon 2% of total assessed value of real and personal property. Since Indiana's assessment statutes call for an assessed valuation of one - -third of cost less depreciation, its general obligation debt limitation is one of the most conservative in the United States. The City debt increased by $3.6 million from the prior year. This increase was due to the issuance of bond for various capital upgrades to the Wastewater facility. A detailed listing of this debt can be found in the Notes to the Basic Financial Statements (Note III G). A calculation of the City's legal debt limitation can be found in the statistical section of this document. Economic Factors and Next Year's Budgets and Rates As noted earlier, property taxes are the City's largest source of revenue. Under current legislation all Indiana cities assessed values are based on market values. Under this method some properties are still being re- assessed to reflect the changes in values. This process as well as the overwhelming amount of appeals is still affecting the amount of property taxes received by the City. Due to these current changes, the percentage increase the City is anticipating in 2005 will be less than in previous years. The new sewer rate was enacted in 2004 as well as a new water rate in 2005. The overall Water revenue enhancement with this rate increase will be 15 percent. These rates will continue to be revised to assure that the municipal water and sewer system has sufficient revenue to cover operating and capital expenses. Many major capital projects are slated for construction in 2005. Part of the list would include downtown development which includes a new garage and office project. South side development, water and sewer infrastructure upgrades and the continuation of major road enhancements. Requests for Information This financial report is designed to provide a general overview of the City of South Bend's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or request for additional financial information should be addressed to the Controller's Office, 227 W. 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Z� im F- 0 LL dt U S V j a ^ N Cl) 3 Z N u } � Q n 7 W LL y w i F l Ii N N LO LO O N N rl y cl) n IL hFi a a en es u3 I [ I I E I I vi W m r C2 ISi M O L] LO N 00 (O V c0 O 7 Lq V � �b C M C O cO N 47 N 1— co m O to '� v r M M W cb O (NO N h CD F� � OQ 00 O N m u3 I [ I I E I I vi 27 m a m y N � � N C m y N N O 9 E E O C 01 C O C C X C C QI C C 41 C -0 Q� CC y y A N C 'O C O F c f4 y O N (0 N y m u1 Q- G O W v y N O L y y Iu a 0 ~ c ° I a m E U m m C U z F 0 m¢ z z 27 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS Summary of Significant Accounting Policies A. Reporting Entity The City of South Bend (primary government) was established under the laws of the State of Indiana. The primary government operates under a Council -Mayor form of government and provides the following services: public safety (police and fire), highways and streets, health, welfare and social services, culture and recreation, public improvements, planning and zoning, general administrative services, water, sewer, and urban redevelopment and housing. The accompanying financial statements present the activities of the primary government and its sig- nificant component units. The component units discussed below are included in the primary govern- ment's reporting entity because of the significance of their operational or financial relationships with the primary government. Blended component units, although legally separate entities, are in sub- stance part of the government's operations and exist solely to provide services for the government; data from these units is combined with data of the primary government. Blended Component Units The South Bend Redevelopment Authority, a legally separate entity, is a significant blended com- ponent unit of the primary government. The Redevelopment Authority's sole purpose is to finance and construct land, buildings and other improvements for use by the primary government. Financial statements forthe Redevelopment Authority are available at the City Controller's Office, City of South Bend, 227 West Jefferson, 1400 County -City Building, South Bend, Indiana, 46601. The Friends of the College Football Hail of Fame, Inc., (Friends) is a legally separate nonprofit cor- poration, and is a significant blended component unit of the primary government. The Friends' sole purpose is to solicit donations for the benefit of the City's College Football Hall of Fame. Financial statements of the Friends are available at 111 South St. Joseph Street, South Bend, Indiana, 46601. The Morris Entertainment, Inc., is also a legally separate nonprofit corporation, and is a significant blended component unit of the primary government. The Morris Entertainment, Inc., main purpose is to solicit donations for the restoration and renovation of the City's Morris Civic Auditorium and the City's Palais Royale Ballroom. Financial statements for the Morris Entertainment, Inc., are available at 211 North Michigan, South Bend, Indiana, 46601. The South Bend Building Corporation, Inc., is also a legally separate nonprofit corporation, and is a significant blended component unit of the primary government. The Building Corporation's main purpose is to finance construction and remodeling of City buildings for the City of South Bend, Debt of the Building Corporation is repaid through lease payments from the City. Financial statements for the Building Corporation are available at the City Controller's Office. Related Organizations The primary government's officials are also responsible for appointing the members of the boards of other organizations, but the primary government's accountability for these organizations does not extend beyond making the appointments. The Mayor and the Common Council appoint the board members of the South Bend Housing Authority, South Bend Public Transportation Corporation (TRANSPO), Urban Enterprise Association, and the Special Funds Board of Managers. During 2004, the Special Funds Board of Managers provided $1,164,493, to the City's Century Center and $577,717 to the City's College Football Hall of Fame, to finance operating costs. 28 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) B. Government -Wide and Fund Financial Statements Government -wide financial statements (i.e., the Statement of Net Assets and the Statement of Changes in Net Assets) report information on all of the nonfiduciary activities of the primary govern- ment. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which direct expenses of a given function or segments are offset by program revenues. Direct expenses are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who pur- chase, use or directly benefit from goods, services or privileges provided by a given function or seg- ment and (2) grants and contributions that are restricted to meeting the operational or capital require- ments of a particular function or segment. Taxes and other items not properly included among pro- gram revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government -wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is in- curred, regardless of the timing of the related cash flows. Property taxes are recognized 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. Governmental fund financial statements are reported using the current financial resources meas- urement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are col- lectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the primary government considers revenues to be available if they are collected within sixty days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expendi- tures related to compensated absences, claims and judgments, are recorded only when payment is due. Property taxes, franchise taxes, licenses and interest associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when the primary government receives cash. The primary government reports the following major governmental funds: The general fund is the primary operating fund. It accounts for all financial resources of the gen- eral government, except those required to be accounted for in another fund. 29 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) The park and recreation fund is used to account for the operation of the City park system. Fi- nancing is provided by a specific annual property tax levy to the extent that user fees and mis- cellaneous revenues are insufficient to provide such financing. The South Bend Building Corporation construction fund is used to account for construction and renovation financed by Mortgage Bond Issues. The primary government reports the following major proprietary funds: The water utility fund accounts for the operation of the primary government's water distribution system. The wastewater utility fund accounts for the operation of the primary government's wastewater treatment plant, pumping stations and collection systems. The Century Center fund accounts for the operation and maintenance of the City's convention center. Financing is received from various rental agreements and a subsidy from the St. Joseph County's Special Funds Board of Managers. Additionally, the primary government reports the following fund types: The internal service funds accounts for liability coverage, employee medical coverage, and cen- tral services such as fuel, vehicle repairs and various supplies provided to other departments on a cost - reimbursement basis. The pension trust funds account for the activities of the 1925 police officers' and 1937 firefighters' pension funds which accumulate resources for pension benefit payments. The private - purpose trust fund reports a trust arrangement under which principal and income benefits cemetery maintenance. Agency funds account for assets held by the primary government as an agent for employee pay- roll, pension, and payroll deductions. Private - sector standards of accounting and financial reporting issued prior to December 1, 1989, gen- erally are followed in both the government -wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Stan- dards Board. Governments also have the option of following subsequent private - sector guidance for their business -type activities and enterprise funds, subject to this same limitation. The primary gov- ernment has elected not to follow subsequent private - sector guidance. As a general rule, the effect of interfund activity has been eliminated from the government -wide finan- cial statements. Exceptions to this general rule are payments -in -lieu of taxes and payments of ad- ministrative costs. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include (1) charges to customers or applicants for goods, ser- vices or privileges provided, (2) operating grants and contributions, and (3) capital grants and contri- butions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. 30 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) Proprietary funds distinguish operating revenues from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the enter- prise funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the primary government's policy to use restricted resources first, then unrestricted resources as they are needed. D. Assets, Liabilities and Net Assets or Equity I. Deposits and Investments The primary government's cash and cash equivalents are considered to be cash on hand, demand deposits and short -term investments with original maturities of three months or less from the date of acquisition. State statute (IC 5 -13 -9) authorizes the primary government to invest in securities, including but not limited to, federal government securities, repurchase agreements, and certain money market mutual funds. Certain other statutory restrictions apply to all investments made by local govern- mental units. Nonparticipating certificates of deposit, demand deposits and similar nonparticipating negotiable instruments that are not reported as cash and cash equivalents are reported as investments at cost. Debt securities are reported at fair value. Debt securities are defined as securities backed by the full faith and credit of the United States Treasury or fully insured or guaranteed by the United States or any United States government agency. Open -end mutual funds are reported at fair value. Money market investments that mature within one year or less at the date of their acquisition are reported at amortized cost. Other money market investments are reported at fair value. Investment income, including changes in the fair value of investments, is reported as revenue in the operating statement. 2. Interfund Transactions and Balances Activity between funds that are representative of lend inglborrowing arrangements outstanding at the end of the fiscal year are referred to as "interfund receivables /payables (i.e., the current and noncurrent portion of interfund loans). All other outstanding balances between funds are reported as " interfund services provided /used." Any residual balances outstanding between the govern- mental activities and business -type activities are reported in the government -wide financial state- ments as "internal balances." 31 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) 3. Property Taxes Property taxes levied are collected by the County Treasurer and are usually distributed to the pri- mary government in June and in December. However, for the 2004 tax year, an additional distri- bution was received by the primary government in January, 2005, with a final distribution in April, 2005. Appropriate receivables have been recognized for these distributions. State statutes (IC 6- 1.1- 17 -16) require the Indiana Department of Local Government Finance to establish prop- erty tax rates and levies by February 15. These rates were based upon the preceding year's March 1 (lien date) assessed valuations adjusted for various tax credits. Taxable property is assessed at 100% of the true tax value (determined in accordance with rules and regulations adopted by the Indiana Department of Local Government Finance). Taxes may be paid in two equal installments that become delinquent if not paid by May 10 and November 10, respectively Delinquent property taxes outstanding at year end for governmental and/or proprietary funds, net of allowances for uncollectible accounts, are recorded as a receivable with an offset to unearned revenue since the amounts are not considered available. 4. Inventories and Prepaid Items All inventories are valued at cost using the first in /first out (FIFO) method. Inventories of gov- ernmental funds are recorded as expenditures when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government -wide and fund financial statements. 5. Restricted Assets Certain proceeds of the enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the statement of net assets balance sheet because their use is limited by applicable bond covenants. 6. 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 reported at actual or estimated historical cost based on appraisals or deflated current replacement cost. Contributed or donated assets are reported at estimated fair value at the time received. Capitalization thresholds (the dollar values above which asset acquisitions are added to the capi- tal asset accounts), depreciation methods and estimated useful lives of capital assets reported in the government -wide statements and proprietary funds are as follows: Capitalization Depreciation Estimated Threshold Method Useful Life Buildings and improvements $ Equipment Roads — collectors and residential Water collection systems Wastewater distribution and collection systems 32 50,000 Straight -line 20 to 30 5,000 Straight -line 5 to 20 3,000,000 Straight -line 40 to 50 500 Straight -line 6 to 100 1,000 Straight -line 6 to 100 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) The City has not implemented retroactive reporting of its infrastructure as of December 31, 2004. For depreciated assets, the cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business -type activities is included as part of the capitalized value of the assets constructed. 7. Compensated Absences a. Sick Leave — primary government employees earn sick leave at the rate of two - thirds days for each completed month of service. Sick leave may accumulate to a maximum of ninety days for policemen, one hundred days for firemen, sixty days for teamsters, and sixty -five days for all other employees. Accumulated sick leave is paid to firemen, to policemen, and to team- sters, upon termination of employment, at one -half their current pay rate, at a rate of one -half the corporal's rate of pay up to a maximum of sixty days, and $25 for each accumulated sick leave day, respectively, at the time of retirement. b. Vacation Leave — primary government employees earn vacation leave at rates from nine days to twenty -eight days per year based upon the number of years of service, employee classifi- cation, and hire date during the first year of employment. Vacation leave does not accu- mulate from year to year, except in instances where special cases are approved. Employees earn vacation leave during the year to be used the following year. Unused vacation leave is paid to employees upon termination of employment. c. Personal Leave — primary government policemen earn personal leave at the rate of seven days per year. Personal leave does not accumulate from year to year. Unused personal leave maybe rolled into sick leave. City employees under the teamster contact can use their sick leave for personal leave. d. Compensatory Leave — Policemen and firemen have accumulated overtime - compensatory leave for a variety of reasons. A liability is recognized in the government -wide financial statements and proprietary fund types for sick leave and for compensatory leave of firemen and policemen, and for unused vacation leave all other City employees. 8. D.R.O.P. Payable Pursuantto Indiana Statute, certain City policemen and firemen are eligibeforthe deferred retire- ment option plan (D.R.O.P.). Active policemen and firemen who are eligible to retire before December 31, 2007, can declare their retirement date and then receive a lump sum at retirement based on pension factors. The lump sum amounts for those who have declared are recognized as D.R.O.P. payable. The liability is recognized net of a 50% reduction which is the minimum that the State will reimburse in the following year. 33 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) 9. Long -Term Obligations In the government -wide financial statements and proprietary fund types in the fund financial statements, long -term debt and other long -term obligations are reported as liabilities in the ap- plicable governmental activities, business -type activities or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amor- tized over the life of the bonds using the straight -line method. Bonds payable are reported net of the applicable bond premium or discount. Debt issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and dis- counts, as well as bond issuance costs, during the current period. The face amount of debt is- sued is reported as other financing sources. Premiums received on debt issuance are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from actual debt proceeds received, are reported as debt service expenditures. 10. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. 11. Stewardship, Compliance and Accountability A. Budgetary Information Annual budgets are adopted on the cash basis which is not consistent with accounting principles generally accepted in the United States. All annual appropriations lapse at fiscal year end. On or before August 31, the City Controller submits to the Common Council a proposed operating budget for the year commencing the following January 1. Prior to adoption, the budget is advertised and public hearings are conducted by the Common Council to obtain taxpayer comments. In Septem- ber of each year, the Common Council through the passage of an ordinance approves the budget for the next year. Copies of the budget ordinance and the advertisement for funds for which property taxes are levied or highway use taxes are received are sent to the Indiana Department of Local Gov- ernment Finance. The budget becomes legally enacted after the City Controller receives approval of the Indiana Department of Local Government Finance. The primary government's management cannot transfer budgeted appropriations between object classifications of a budget without approval of the Common Council. The Department of Local Gov- ernment Finance must approve any revisions to the appropriations for any fund or any department of the General Fund. The legal level of budgetary control is by object and department within the fund for the General Fund and by object within the fund for all other budgeted funds. Expenditures did not exceed appropriations for any funds or any departments within the General Fund or within the Park and Recreation Fund, or within any other nonmajor governmental fund which required legally, approved budgets. 34 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) B. Deficit Fund Equity At December 31, 2004, the following funds reported deficits in fund equity, which are violations of State statue: Deficit Governmental funds: Football Hall of Fame Operating $ (1,748,899) Enterprise funds (net assets): Blackthorn Golf Course (799,231) Fund equity deficits arose primarily from expenditures or expenses exceeding revenues due to the underestimate of current requirements. It is anticipated that these deficits will be repaid from future revenues. III. Detailed Notes on All Funds A. Deposits and Investments Deposits, made in accordance with IC 5 -13, with financial institutions in the State of Indiana at year end were entirely insured by the Federal Depository Insurance Corporation or by the Indiana Public Deposit Insurance Fund. This includes any deposit accounts issued or offered by a qualifying finan- cial institution. The primary government's investments are categorized below to give an indication of the level of risk assumed by the primary government at year end. Category 1 includes investments that are insured or registered or for which the securities are held by the primary government or its agent in the primary government's name. Category 2 includes uninsured and unregistered investments for which the securities are held by the counterparty's trust department or agent in the primary government's name. Category 3 includes uninsured and unregistered investments for which the securities are held by the counterparty, or by its trust department or agent but not in the primary government's name. Cate o Reported Fair 1 2 3 Amount Value U.S. Government securities $ - $ - $ 1,762,846 $ 1,762,846 $ 1,762,846 B. Receivables The following receivable accounts have timing and credit characteristics different from typical ac- counts receivable. As of December 31, 2004, City funds recognized the following loan receivable balances. The sched- ule shows the total receivable and the portion that is not due within one year. These loans were for economic development projects. 35 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) Fund Receivable Noncurrent Special revenue funds: Economic Development State Grants $ 4,334,461 $ 4,089,987 Community Development 2,062,443 1,889,774 Urban Development Action Grant 477,759 355,770 Industrial Revolving 5,531,360 4,855,273 Totals C. Capital Assets 17 dnF n7q (Z I 1 1 Qn Rna Capital asset activity for the year ended December 31, 2004, was as follows: Beginning Primary Government Balance Increases Decreases Governmental activities: Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings Improvements other than buildings Machinery and equipment Roads being depreciated Totals Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Roads being depreciated Totals Total capital assets, being depreciated, net Total governmental activity capital assets, net U41 Ending Balance $ 10,016,557 $ 1,606,090 $ 57,716 $ 11,564,931 9,728,706 8,653,848 3,241,141 15,141,413 19,745,263 10,259,938 3,298,857 26,706,344 69,560,638 9,702,435 - 79,263,073 8,345,625 245,415 400,423 8,190,617 36,634,449 2,950,153 2,703,879 36,880,723 468,310 1,633,175 2,101,485 115,009,022 14,531,178 3,104,302 126,435,898 17,013,355 2,166,710 77,827 19,102,238 3,835,339 149,897 - 3,985,236 16,970,675 3,181,013 2,783,780 17,367,908 23,415 28,247 - 51,662 37,842,784 5,525,867 2,861,607 40,507,044 77,166,238 9,005,311 242,695 85,928,854 $ 96,911,501 $ 19,265,249 $ 3,541,552 $ 112,635,198 CITY OF SOUTH SEND NOTES TO FINANCIAL_ STATEMENTS (Continued) Primary Government Business -type activities: Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings Improvements other than buildings Machinery and equipment Totals Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Totals Total capital assets, being depreciated, net Total business -type activity capital assets, net Beginning Ending Balance Increases Decreases Balance $ 2,457,065 $ 199,302 $ - $ 2,656,367 11,721,226 7,352,962 16,236,545 2,837,643 14,178,291 7,552,264 16,236,545 5,494,010 95,200,886 2,327,021 1,554,862 95,973,045 74,383,741 12,480,811 62,494 86,802,058 43,287,881 1,169,741 1,030,514 43,427,108 212,872,508 15,977,573 2,647,870 226,202,211 28,581,223 2,332,446 1,034,517 29,879,152 16,002,346 1,572,126 19,488 17, 554,984 25,364,892 2,089,672 983,042 26,471,522 69,948,461 5,994,244 2,037,047 73,905,658 142,924,047 9,983,329 610,823 152,296,553 $ 157,102,338 $ 17,535,593 $ 16,847,368 $ 157,790,563 Depreciation expense was charged to functions /programs of the primary government as follows: Governmental activities: General government $ 175,737 Public safety 2,346,650 Public works, including depreciation of general infrastructure assets 827,778 Health and sanitation 16,102 Culture and recreation 2,058,828 Community development 27,879 Internal service funds* 72,893 Total depreciation expense - governmental activities $ 5,525,867 "Capital assets held by the primary government's internal service funds are charged to the various functions based on their usage of the assets. 37 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) Business -type activities: Water Wastewater Civic Center Building permits Parking garage Solid waste Golf course Total depreciation expense - business -type activities D. Construction Commitments Construction work in progress is composed of the following: $ 1,519,303 3,467,063 576,367 23,113 202,163 56,596 149,639 $ 5.994.244 Totals - governmental Business -type activities: Water Utility: Cleveland Well Field Pinhook #5 Charles Street Cleveland Well Field /Patricial Lane River Crossing Wastewater Utility; Secondary Improvement Pepperslironwood Sewer Backwater Gate Replacement - Design Erskine /Miami Basin Improvement Other Projects Totals - business -type E. Interfund Balances and Activity 1. Interfund Receivables and Payables $ 16,191,834 $ 15,141,413 $ 1,050,421 $ - $ 299,391 Total Expended to Required 130,772 Project December 31, Future Project Authorized 2004 Committed Funding 5,480 Governmental activities: - - 2,307,274 2,219,683 Riverwalk Sidewalk Repair $ 314,795 $ 293,431 $ 21,364 $ - Public Safety Building - Police 11,180,258 10,539,325 640,933 - St. Joseph Riverdam Improvements 2,435,843 2,435,843 - - Riverside Bikeway/Walkway 363,438 341,503 21,935 - Relocate Park Maintenance Facility 1,680,855 1,342,690 338,165 - Other Projects 216,645 188,621 28,024 - Totals - governmental Business -type activities: Water Utility: Cleveland Well Field Pinhook #5 Charles Street Cleveland Well Field /Patricial Lane River Crossing Wastewater Utility; Secondary Improvement Pepperslironwood Sewer Backwater Gate Replacement - Design Erskine /Miami Basin Improvement Other Projects Totals - business -type E. Interfund Balances and Activity 1. Interfund Receivables and Payables $ 16,191,834 $ 15,141,413 $ 1,050,421 $ - $ 299,391 $ 299,391 $ - $ - 130,772 130,772 - - 66,000 124 65,876 - 11,591 11,591 - - 5,480 5,480 - - 2,307,274 2,219,683 87,591 - 151,415 92,666 58,749 - 50,400 17,075 33,325 - 39,901 39,901 - - 33,805 20,960 12,845 - $ 3,096,029 $ 2,837,643 $ 258,386 $ - The composition of interfund balances as of December 31, 2004, is as follows: WE. CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) Governmental Funds Enterprise Funds Park and Century Nonmajor Internal Receivable General Recreation Nonmajor Water Wastewater Center Enterprise Service Total Governmental funds; Transfer To South Bend General $ $ 2,618 $ 90,401 $ 2,749 $ 1,075 $ 1,260 $ 1,081,012 $ 388,668 $ 1,587,783 Nonmajor Nonmajor Transfer From Fund Construction Governmental Total Governmental - 1,594,014 - 48,093 - 953,870 2,595,977 Enterprise funds! Park and recreation - - 99,292 99,292 Nonmajor governmental 291,696 Water 3,387 1,595 2,075 2,544 1,135 101 10,837 Wastewater 172,535 - 27,687 Totals - - 200,222 Century Center 100 245 345 Nonmajor 15,015 - 1,675 - - - - 16,690 Internal Service 225,413 23,335 1,437 14,806 32,019 264 31,115 53 328.442 Totals $ 416,450 $ 27,548 $ 1,717,534 $ 17,555 $ 83,731 $ 2,659 $ 2,066,098 $ 388,721 $ 4,720,296 Interfund balances resulted from the time lag between the dates that (1) Interfund loans are repaid, (2) Interfund goods and services are provided or reimbursable expenditures occur, (3) transactions are recorded in the accounting system and (4) payments between funds are made. 2. Advances Between Funds The advances included a loan balance due from the Hall of Fame Operating Fund, a nonmajor governmental fund, to the General Fund, $1,750,000. The loan was made during the years from 1996 to 1999. This loan is to be repaid from excess operating revenues of the College Football Hall of Fame. No payment schedule has been established. The advances also include a loan balance, $506,448, due from the Economic Development State Grants Fund to the Industrial Revolving Fund, both nonmajor governmental funds. This loan was made during 2002 for an economic development project. 3. Interfund Transfers Interfund transfers at December 31, 2004, were as follows: The primary government typically uses transfers to fund ongoing operating subsidies and to transfer the portion of state - shared revenues from the general fund to the debt service fund for current -year debt service requirements. Transfer To South Bend Building General Corporation Nonmajor Transfer From Fund Construction Governmental Total General $ - $ - $ 740,997 $ 740,997 Park and recreation - - 99,292 99,292 Nonmajor governmental 291,696 1,837 5,422,552 5,716,085 Nonmajor enterprise - - 14,873 14,873 Totals $ 291.696 $ 1.837 $ 6.277.714 $ 6.571.247 The primary government typically uses transfers to fund ongoing operating subsidies and to transfer the portion of state - shared revenues from the general fund to the debt service fund for current -year debt service requirements. CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) F. Leases 1. Operating Leases The primary government has entered into various operating leases having initial or remaining noncancelable terms exceeding one year for telephone services, vehicles, copiers, and office space. Rental expenditures for these leases were $183,317. The following is a schedule by years of future minimum rental payments as of December 31, 2004: 2005 $ 162,308 2006 58,446 2007 18,609 2008 10,275 2009 13,870 Total S 263.508 2, Capital Leases The primary government has entered into various capital leases for park equipment, street vehi- cles, solid waste equipment, a softball complex, and a parking garage. The parking garage capi- tai lease is being repaid from governmental funds. Future minimum lease payments and present values of the net minimum lease payments under these capital leases as of December 31, 2004, are as follows: 2005 2006 2007 2008 2009 2010 -2014 2015 -2019 Total minimum lease payments Less amount representing interest Present value of net minimum lease payments Gil; Governmental Business -Type Activities Activities $ 725,457 631,792 537,387 373,185 200,000 1,000,000 200,000 3,667,821 $ 253,644 100,216 100,072 100,072 554,004 696,814 33,615 $ 2,971,007 $ 520,389 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) Assets acquired through capital leases still in effect are as follows: Governmental Business -Type Activities Activities Buildings $ 1,960,044 $ - Improvements other than buildings 587,801 - Machinery and equipment 1,560,366 798,101 Totals 4,108,211 798,101 Accumulated depreciation 506,279 217,415 Totals $ 3,601,932 $ 580,686 G. Long -Term Liabilities 1. General Obligation Bonds The primary government issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds are direct obligations and pledge the full faith and credit of the primary government. General obligation bonds currently outstanding at year end are as follows: Interest Original Outstanding Purpose Rates Issue 12 -31 -04 1997 Redevelopment District refunding 4.0% to 5.1% $ 4,750,000 $ 935,000 General obligation bonds at year and include the following amounts of unamortized bond dis- count: Balance Unamortized Adjusted Purpose December 31 Discount Balance 1997 Redevelopment District refunding $ 935,000 $ 5,542 $ 929,458 Annual debt service requirements to maturity for general obligation bonds are as follows: Year Ended Governmental Activities December 31 Principal Interest 2005 $ 615,000 $ 39,445 2006 320,000 8,160 Totals $ 935,000 $ 47.605 41 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) 2. Mortgage Bonds Mortgage Bonds outstanding at year end are as follows: Interest Original Outstanding Purpose Rates Issue 12 -31 -04 Governmental Activities 1999A Fire Station 5% $ 1,388,858 $ 458,089 1999C O'Brien Center 5% 570,000 185,615 2001 Public Works Service Center 4.63% to 5.3% 8,112,250 7,546,585 2003 New Fire Station /Police Renovations 2% to 5% 21,335,000 21,335,000 Total governmental activities $ 31,406,108 $ 29,525,289 Business-Ty- e Activities 2001 Public Works Service Center 4.63% to 5.3% $ 1,137,750 $ 1,058,415 Mortgage bonds at year end include the following amounts of unamortized bond discount (pre- mium): Unamortized Balance at Discount Adjusted Purpose December 31 (Premium) Balance Governmental Activities 1999A Fire Station $ 458,089 $ - $ 458,089 1999C O'Brien Center 185,615 - 185,615 2001 Public Works Service Center 7,546,585 66,926 7,479,659 2003 New Fire Station /Police Renovations 21,335,000 (567,415) 21,902,415 Total governmental activities Business -Type Activities 2001 Public Works Service Center 42 It 29.525289 1500.4891 S 30.025.778 $ 1,058,415 $ 12,320 $ 1,046,095 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) Mortgage debt service requirements to maturity are as follows: Year Ended December 31 2005 2006 2007 2008 2009 2010 -2014 2015 -2019 2020 -2024 Totals 3. Revenue Bonds Governmental Activities Business -Type Activities Principal Interest Principal Interest $ 1,451,232 $ 1,282, 592 $ 42,435 $ 52,104 1,496,372 1,234,694 43,665 50,112 1,199,490 1,186,201 45,510 48,050 1,237,030 1,146,163 47,970 45,859 1,280,185 1,104,519 49,815 43,536 7,193,410 4,709,356 286,590 178,560 8,963,460 2,928,291 366,540 96,769 6,704,110 626,022 175,890 9,453 $ 29,525,289 $ 14,217,838 $ 1,058,415 $ 524,443 The primary government issues bonds to be paid by income derived from the acquired or con- structed assets. Revenue bonds outstanding at year end are as follows: Governmental Activities Tax Incremental Financing Revenue Bonds: 2002 TJX Special Taxing District 2003 Airport TIF 2003 SB Downtown Central Development TIF Redevelopment Authority Revenue Bonds: 1996 Central Development Refinancing 1998 Morris Performing Arts Center 2000 Hall of Fame Refinancing 2001 Century Center Refinancing CEDIT Revenue Bonds: 1997 CEDIT Bonds Total governmental activities Business -Type Activities 1993 Water Works Improvement 1997 Water Works Improvement 2002 Water Works Improvement 2001 Sewage Works Refinancing 2004 Sewage Works Improvements 1998 Blackthorn Golf Course Refinancing Total business -type activities 43 Interest Original Outstanding Rates Issue 12 -31 -04 3.0% to 4.75% $ 6,620,000 $ 6,115,000 1.6% to 5.20% 14,420,000 14,175,000 1.6% to 5.20% 19,795,000 19,715,000 4% to 5.85% 3,790,000 3,265,000 4.5% to 5.1 % 13,300,000 10,545,000 4.45% to 6.0% 15,370,000 13,270,000 2.9% to 5.0% 6,825,000 5,875,000 3.9% to 7.25% 11,870,000 9,175,000 $ 91,990,000 $ 82,135,000 3.4 %to5.1% $ 5,100,000 $ 1,915,000 4.35% to 4.75% 22,500,000 13,035,000 3.5% to 5.0% 5,975,000 5,550,000 3.0% to 4.25% 5,240,000 3,200,000 2.5% to 4.75% 11,425,000 11,425,000 3.25% to 4.8% 6,135,000 4,660,000 $ 56,375,000 $ 39,815,000 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) Purpose Balance at December 31 Unamortized Discount (Premium) Unamortized Loss (Gain) on Refunding Adjusted Balance Governmental Activities 24,637 13,010,363 2002 Water Works Improvement 5,580,000 Tax Incremental Financing Revenue Bonds: 5,558,968 2001 Sewage Works Refinancing 3,200,000 (50,300) 2002 TJX Special Taxing District $ 6,115,000 $ 59,410 $ $ 6,055,590 2003 Airport TIF 14,175,000 - 172,889 4,450,729 14,175,000 2003 SB Downtown Central Development TIF 19,715,000 - 54,371 19,660,629 Redevelopment Authority Revenue Bonds: 1996 Central Development Area Refinancing 3,265,000 5,373 - 3,259,627 1998 Morris Performing Arts Center 10,545,000 87,500 - 10,457,500 2000 Hall of Fame Refinancing 13,270,000 46,594 (13,562) 13,236,968 2001 Century Center Refinancing 5,875,000 46,157 345,110 5,483,733 CEDIT Revenue Bonds: 1997 CEDIT Bonds 9,175,000 91,446 9,083,554 Total governmental activities $ 82,135,000 $ 336,480 $ 385,919 $ 81,412,601 Business -Tvoe Activities 1993 Water Works Improvement $ 1,915,000 $ 3,276 $ 1,911,724 1997 Water Works Improvement 13.035,000 24,637 13,010,363 2002 Water Works Improvement 5,580,000 21,032 5,558,968 2001 Sewage Works Refinancing 3,200,000 (50,300) 96,982 3,153,318 2004 Sewage Works Improvement 11,425,000 10,919 - 11,414,081 1998 Blackthorn Golf Course Refinancing 4,660,000 36,382 172,889 4,450,729 Total business -type activities $ 39,815,000 $ 45,946 $ 269,871 $ 39,499,183 Revenue bonds debt service requirements to maturity are as follows: Year Ended December 31 2005 2006 2007 2008 2009 2010 -2014 2015 -2019 2020 -2024 Totals Governmental Activities Business-Type Activities Principal Interest Principal Interest $ 3,130,000 3,535,000 3,680,000 3,860,000 4,220,000 25,405,000 23,745, 000 14,560,000 $ 3,936,674 3,794,060 3,641,185 3,477,012 3,299,984 13,144,296 6,366,151 2,011,071 $ 1,580,000 3,870,000 4,035,000 4,240,000 3,570,000 12,195,000 4,740,000 5,585,000 $ 1,263,720 1,632,714 1,466,204 1,289,512 1,101,822 3,468,116 1,964,077 748,465 $ 82,135,000 $ 39,670,433 $ 39,815,000 $ 12,934,630 4. Notes and Loans Payable The primary government has entered into various notes/loans. Annual debt service requirements to maturity for the notes/loans are as follows: .. Year Ended December 31 2005 2006 2007 2008 2009 2010 -2014 2015 -2019 2020 -2024 Totals CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) Governmental Activities Business -Type Activities Principal interest Principal Interest $ 919,374 $ 317,105 $ 1,294,500 $ 573,720 953,230 282,144 1,388,582 569,239 862,585 243,825 1,427,122 529,385 915,706 210,446 1,470,765 488,410 908,682 173,759 1,509,514 446,167 2,473,293 346,387 8,068,341 1,557,817 693,624 96,042 6,389,282 386,910 222,374 10,367 182,165 2,641 $ 7,948,868 $ 1,680,075 $ 21,730,271 $ 4,554,289 5. Changes in Long -Term Liabilities Long -term liability activity for the year ended December 31, 2004, was as follows: Primary Government Governmental activities: Bonds payable: General obligation Revenue Mortgage Total bonds payable Notes and loans payable Capital leases Compensated absences Net pension obligation Total governmental activities long -term liabilities Due Beginning Ending Within Balance Additions Reductions Balance One Year $ 1,525,000 $ 85,070,000 30,112, 808 116,707,808 8,131,984 3,659,322 3,530,054 40,669,182 _ - $ 590,000 - 2,935,000 - 587,519 4,112,519 613,767 796,883 - 688,315 3,198,222 2,912,357 $ 935,000 82,135,000 29,525,289 112,595,289 7,948,868 2,971,007 3,816,919 40, 669,182 $ 615,000 3,130,000 1,451,231 5,196,231 919,374 585,091 3,135,211 $172,698,350 $ 3,811,989 $ 8,510,074 $168,000,265 $ 9,835,907 45 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) Primary Government Business -type activities: Revenue bonds payable: Water Utility Wastewater Utility Blackthorn Golf Course Total revenue bonds payable Mortgage bonds payable Capital leases payable Notes and loans payable Total business -type activities long -term liabilities Due Beginning Ending Within Balance Additions Reductions Balance One Year $ 22,665,000 $ - $ 2,135,000 $ 20,530,000 $ 3,905,000 11,425,000 705,000 14,625,000 1,150,000 5,055,000 - 395,000 4,660,000 430,000 31,625,000 11,425,000 3,235,000 39,815,000 1,580,000 1,099,005 - 40,590 1,058,415 42,435 794,885 - 274,496 520,389 235,927 21,338,647 1,739,765 1,348,141 21,730,271 1,294,500 $ 54,857,537 $13,164,765 $ 4,898,227 $ 63,124,075 $ 3,152,862 Compensated absences for governmental activities typically have been liquidated from the general fund and special revenue funds. All of the business -type compensated absences as of December 31, 2004, $563,260 is due within one year. H. Segment Information The primary government issued revenue bonds to finance Blackthorn Golf Course improvements. Investors in the revenue bonds rely solely on the revenue generated by the individual activities for repayment. Summary financial information for the Blackthorn Golf Course is presented below. Total assets $ 4,694,900 Liabilities: Current liabilities $ 971,952 Current liabilities payable from restricted assets 501,450 Noncurrent liabilities 4,020,729 Total liabilities $ 5,494,131 Net assets: Invested in capital assets, net of related debt $ (1,588,144) Restricted 1,257,919 Unrestricted (469,006) Total net assets $ (799,231) M CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) Condensed Statement of Revenues, Expenses and Changes in Net Assets Operating revenues $ 1,689,984 Depreciation expense 149,639 Other operating expenses 1,370,167 Operating income 170,178 Nonoperating revenues (expenses): Investment earnings 20,062 Interest expense (245,603) Amortization (4,335) Loss on sale of fixed assets (8,363) Transfers (14,873) Change in net assets (82,934) Beginning net assets (716,297) Ending net assets $ (799,231) Condensed Statement of Cash Flows Net cash provided (used) by: Operating activities $ 317,316 Noncapital financing activities 334,127 Capital and related financing activities (687,203) Investing activities 16,336 Net increase (decrease) (19,424) Beginning cash and cash equivalents 1,432,771 Ending cash and cash equivalents $ 1,413,347 1. Restricted Assets The balances of restricted asset accounts in the enterprise funds are as follows: 47 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) Cash, cash equivalents, and investments Repair fund $ 140,277 Customer deposits 1,244,351 Revenue bond operations and maintenance account 5,693,329 Capital outlay accounts 15,499,227 Capital outlay accounts - investments 820,580 Repair fund receivable 130,993 Interest receivable 48,194 Total restricted assets $ 23,576,951 J. Restatements and Reclassifications For the year ended December 31, 2004, certain changes have been made to the financial statements to more appropriately reflect financial activity of the primary government. The following schedule pre- sents a summary of restated beginning balances. Prior period adjustments include governmental activities reduction for previously omitted payment to escrow, $672,142, and previously omitted net pension asset, $264,711. Also, the business activities (Wastewater Utility) construction in progress account included some items previously charged to expense prior to 2004 The Pension Trust has been reduced to recognize the D.R.O.P. liability (see Note I.D.8.). Balance Balance as Reported Prior as Restated December 31, Period January 1, Fund Type _ 2003 Adjustments 2004 Governmental activities: Net assets $ 68,731,201 $ (407,431) $ 68,323,770 Business -type activities: Net assets $ 129,760,644 $ (1,621,672) $ 128,138,972 Pension trust: Net assets $ 4,727,590 $ _ (700,602) $ 4,026,988 K. Gain on Sale /Leaseback of Leighton Parking Garage During 2000, the City completed construction of the Leighton Parking Garage and capitalized the cost of the garage, $11,439,712, in the Parking Garage Fund, an enterprise fund. On December 1, 2000, the City sold the garage to the South Bend Transportation Company (TRANSPO) for $3,000,000 as part of a sale/leaseback agreement. The proceeds were receipted into the County Option Income Tax Fund. This fund is also making the future lease payments to TRANSPO, The present value of the lease, $1,960,044, was the new basis for the parking garage. As part of this sale/leaseback, the Parking Garage Fund recognized a deferred loss of $8,439,712, which is being amortized over the fifteen year life of the lease. M CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) L. Property Held For Resale The City,s Redevelopment Commission has purchased properties in blighted areas for redevelopment and subsequent resale. At December 31, 2004, the market value of these properties was not known. These properties are recognized as assets in the funds that purchased the property. IV. Other Information A. Risk Management The primary government is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; job related illnesses or injuries to employees; medical benefits to employees, retirees, and dependents; and natural disasters. The risks of torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters are covered by commercial insurance from independent third parties. Settled claims from these risks have not exceeded commercial insurance coverage for the past three years. There were no significant reductions in insurance by major category of risk. Liability Insurance The primary government has chosen to establish a risk financing fund for risks associated with job related illnesses or injuries to employees, automobile liability, and comprehensive liability. The risk financing fund is accounted for in the Liability Insurance Premium Reserve Fund, an internal service fund, where assets are set aside for claim settlements. An excess policy through commercial insur- ance covers individual claims in excess of $250,000 per year for job related illnesses or injuries to employees, $50,000 per year for police autos and $100,000 for other autos' automotive liability, and $50,000 for comprehensive liability. Settled claims resulting from this risk did not exceed commercial insurance coverage in the past three years. A premium is charged to each fund based on a study of paid claims and based on the number of employees and percent of the total budget. Provisions are also made for unexpected and unusual claims. Claim expenditures and liabilities of the fund are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. These losses include an estimate of claims that have been incurred but not reported (IBNRs). Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amounts of pay outs and other economic and social factors. Changes in the balance of claim liabilities during the past two years are as follows: Unpaid claims, beginning of fiscal year Incurred claims and changes in estimates Claim payments Unpaid claims, end of fiscal year I% 2003 2004 343,876 $ 414,884 1,044,054 1,959,330 973,046 1.617.993 414,884 $ 756,221 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) Group Health Insurance The primary government has chosen to establish a risk financing fund for risks associated with medical benefits of employees and their covered dependents. The risk financing fund is accounted for in the Self- Funded Employee Benefits Fund, an internal service fund, where assets are set aside for benefit costs. An excess policy through commercial insurance covers individual claims in excess of $125,000 per year. Settled claims resulting from this risk did not exceed commercial insurance coverage in the past three years. A premium is charged to each fund bases on the number of em- ployees and estimated costs exceeding the employees' contributions. Provisions are also made for unexpected and unusual claims. Claim expenditures and liabilities of the fund are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. These losses include an estimate of claims that have been incurred but not reported (IBNRs). Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amounts of pay outs and other economic and social factors. Changes in the balance of claim liabilities during the past two years are as follows: Unpaid claims, beginning of fiscal year Incurred claims and changes in estimates Claim payments Unpaid claims, end of fiscal year B. Related Party Transactions 2003 2004 $ 929,130 $ 778,500 9,526,621 9,093,235 9,677,251 8,978,920 $ 778,500 $ 892,815 During the period in which financial statements are presented, the primary government had material transactions with Robert Henry, President of the Park Board, in relation to a construction project in the amount of $1,678,855. As of the balance sheet date, the City has paid $805,554 and the unpaid balance on the contract was $873,301. C. Subsequent Events On February 28, 2005, the City approved selling the Main /Colfax parking garage to TRANSPO for $4,000,000. The City will buy back the parking garage with $200,000 lease payments per year over twenty years. On February 23, 2005, the City approved a settlement agreement in which the City will receive $950,000 for possible future environmental claims related to some of the Studebaker properties that the City is purchasing for redevelopment. During 2005, the City approved lease agreements totaling $2,749,505 for equipment purchases. The City is in the final stages of approving an agreement with a building corporation to finance an addition to the O'Brien Center fitness equipment for approximately $900,000. 50 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) D. Contingent Liabilities College Football Hall of Fame Or)erations The City's General Fund has advanced a total of $1,750,000 to the College Football Hall of Fame Fund in various amounts during the years from 1996 to 1999. The City has always recognized that these advances would be repaid from excess operating revenues of the Hall of Fame. No payment schedule has been established. Beginning with 1996, the first full year of operations, through 2000, the Hall of Fame financial statements show net losses ranging from $521,345 to $1,481,657. During 2001, the City turned over the operations of the Hall of Fame to the National Football Founda- tion and College Football Hall of Fame, Inc. (NFF). The interim agreement authorizing the NFF to operate the Hall of Fame shows that NFF has contributed $1,900,000 to cover operating deficits of the Hall of Fame during the period prior to December 31, 2000. The interim agreement is in effect until December 31, 2005. At that time, the NFF can terminate their participation in the operations and the City shall reimburse the NFF the full amount of the NFF contri- butions towards operations. The reimbursement will be made in five annual installments beginning December 31, 2005. If the NFF elects to continue their participation, then the City will resume oper- ating the Hall of Fame as it had done from 1996 to 2001. The $1,900,000 contingent liability to the NFF is not recognized on the financial statements. Proiect Future The Common Council approved Resolution 3037 -02 in which the City pledges support to Project Future through the year 2006. Project Future promotes the City for economic development purposes. The City has committed $110,000 for each year from 2003 through 2006 contingent upon the fiscal condition of the City. Lawsuits There are several lawsuits pending in which the City is involved. The City is in settlement phase on two of the lawsuits and the City Attorney estimates that the potential damages against the City may exceed $2,100,000 on these two. The other lawsuits are at various stages of court proceedings. During 2005, money the City paid to a third party administrator for the payment of employee medical claims was not used to pay those claims. Law enforcement agencies are investigating this matter. The City has filed suit against the administrator to recover these funds. The City estimates the loss to be $1,057,000 and has fled a claim with its insurance carrier which may cover the loss. Any loss not recovered by the City will be the responsibility of the City and the City may be responsible for the payment of these medical claims. E. Conduit Debt Obligation From time to time, the primary government has issued industrial revenue bonds to provide financial assistance to private - sector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private - sector entity served by the bond issuance. Neither the primary government, the State, nor any political subdivision thereof is obligated in any manner for the repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. 51 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) As of December 31, 2004, there were several series of industrial revenue bonds outstanding. The aggregate principal amount payable is not available to the City. F. Postemployment Benefits In addition to the pension benefits described below, the primary government provides postemploy- ment healthcare benefits, as authorized by IC 5 -10 -8, to retired police officers and firefighters who reach normal retirement while working for the City. Currently, ninety -seven retirees meet these eli- gibility requirements and are covered by the postemployment program. The retirees must pay the em- ployee and employer assessments to remain. During the year ended December 31, 2004, expendi- tures of $491,737 were recognized for postemployment benefits. G. Pension Plans 1. Agent Multi le -Employer and Single-Employer Defined Benefit Pension Plans a. Public Employees' Retirement Fund Plan Description The primary government contributes to the Indiana Public Employees' Retirement Fund (PERF), a defined benefit pension plan. PERF is an agent multiple - employer public em- ployee retirement system, which provides retirement benefits to plan members and bene- ficiaries. All full -time employees are eligible to participate in the defined benefit plan. State statutes (IC 5 -10.2 and 5 -10.3) govern, through the PERF Board, most requirements of the system and give the primary government authority to contribute to the plan. The PERF retire- ment benefit consists of the pension provided by employer contributions plus an annuity pro- vided by the member's annuity savings account. The annuity savings account consists of member's contributions, set by state statute at three percent of compensation, plus the inter- est credited to the member's account. The employer may elect to make the contributions on behalf of the member. PERF administers the plan and issues a publicly available financial report that includes finan- cial statements and required supplementary information for the plan as a whole and for its participants. The report may be obtained by contacting: Public Employees' Retirement Fund Harrison Building, Room 800 143 West Market Street Indianapolis, IN 46204 Ph. (317) 233 -4162 Funding Policy and Annual Pension Cost The contribution requirements of plan members for PERF are established by the Board of Trustees of PERF. The primary government's annual pension cost and related information, as provided by the actuary, is presented in this note. Information to segregate the assetslliabilities and the actuarial study figures between the pri- mary government and the Utilities is not available. Therefore, the Net Pension Asset is con- sidered an obligation of the primary government and is presented in the governmental activi- ties of the financial statements and is not presented as an asset of the proprietary funds. 52 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) b. 1925 Police Officers' Pension Plan Plan Description The primary government contributes to the 1925 Police Officers' Pension Plan which is a single - employer defined benefit pension plan. The plan is administered by the local pension board as authorized by state statute (IC 36 -8 -6). The plan provides retirement, disability, and death benefits to plan members and beneficiaries. The plan was established by the plan ad- ministrator, as provided by state statute. The plan administrator does not issue a publicly available financial report that includes financial statements and required supplementary information of the plan. Funding Policy and Annual Pension Cost The contribution requirements of plan members for the 1925 Police Officers' Pension Plan are established by state statute. The primary government's annual pension cost and related information as provided by the actuary is presented in this note. The Net Pension Obligation (NPO) is considered an obligation of the City and is reflected in the Statement of Net Assets. c. 1937 Firefighters' Pension Plan Plan description The primary government contributes to the 1937 Firefighters' Pension Plan which is a single - employer defined benefit pension plan. The plan is administered by the local pension board as authorized by state statute (IC 36 -8 -7). The plan provides retirement, disability, and death benefits to plan members and beneficiaries. The plan was established by the plan adminis- trator, as provided by state statute. The plan administrator does not issue a publicly available financial report that includes financial statements and required supplementary information of the plan. Funding Policy and Annual Pension Cost The contribution requirements of plan members for the 1937 Firefighters' Pension Plan are established by state statute. The primary government's annual pension cost and related in- formation, as provided by the actuary, is presented in this note. The Net Pension Obligation (NPO) is considered an obligation of the City and is reflected in the Statement of Net Assets. 53 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) Actuarial Information for the Above Plans 1925 Police 1937 Officers' Firefighters' PERF Pension Pension Annual required contribution $ 937,918 $ 8,210,600 $ 7,576,500 Interest on net pension obligation (19,192) 1,284,700 1,154,000 Adjustment to annual required contribution 21,870 (1,916,700) (1,669,600} Annual pension cost Contributions made 940,596 7,578,600 7,060,900 921,210 5,292,559 4,807,902 Increase in net pension obligation 19,386 2,286,041 2,252,998 Net pension obligation, beginning of year (264,711) 19,033,247 17,096,896 Net pension obligation, end of year $ (245,325) $ 21,319,288 $ 19,349,894 1925 Police 1937 Officers' Firefighters' PERF Pension Pension Contribution rates: City Plan members Actuarial valuation date Actuarial cost method Amortization method Amortization period Amortization period (from date) Asset valuation method 3.6% 3% 07 -01 -04 Entry age Level percentage of projected payroll, closed 40 years 07 -01 -97 4 year smoothed market d. Financial Statements for Defined Benefit Plans Statements of Fiduciary Net Assets: Assets Cash and cash equivalents Receivables: Interest and dividends Taxes Accounts Intergovernmental Total assets 54 441% 6% 01 -01 -02 Entry age Level percentage of projected payroll, closed 40 years 12 -31 -77 4 year smoothed market 1925 Police Officers' D—i- $ 1,131,356 2,466 634,619 20 2,343 376% 6% 01 -01 -02 Entry age Level percentage of projected payroll, closed 40 years 12 -31 -77 4 year smoothed market 1937 Firefighters' D--;— $ 1,483,034 3,082 707,772 2,613 1,770,804 2,196,501 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) Liabilities Officers' Firefighters' Accounts payable 89 9,181 Noncurrent liabilities: DROP payable - due within one year 57,449 52,186 DROP payable - long -term 798,534 1,294,490 Total liabilities 856,072 1,355,857 Net Assets Held in trust for pension benefit obligations $ 914,732 $ 840,644 Statements of Changes in Fiduciary Net Assets: 55 1925 Police 1937 Officers' Firefighters' Pension Pension Additions Contributions: Employer $ 4,166,071 $ 4,032,357 Plan members 63,009 45,660 Other 5,021 - Total contributions 4,234,101 4,078,017 Investment income: Interest 17,602 19,863 Total additions 4,251,703 4,097,880 Deductions Benefits and refunds paid to plan members and beneficiaries 5,302,155 5,311,625 Administrative expenses 4,629 2,786 Total deductions 5,306,784 5,314,411 Changes in net assets (1,055,081) (1,216,531) Net assets - beginning 1,969,813 2,057,175 Net assets — ending $ 914,732 $ 840,644 55 CITY OF SOUTH SEND NOTES TO FINANCIAL STATEMENTS (Continued) 1937 Firefighters' 12 -31 -99 5,578,400 47% 13,415,996 Pension Plan 12 -31 -00 6,582,404 47% 16,923,000 12 -31 -01 7,060,900 68% 19,349,894 Membership in the 1925 Police Officers' Pension Plan and the 1937 Firefighters' Pension Plan at January 1, 2003, was comprised of the following: 1925 Police 1937 Officers' Firefighters' Pension Pension Retires and beneficiaries currently receiving benefits 249 217 Terminated employees entitled to but not yet receiving benefits - - Current active employees 13 8 2. Cost -Shade Multiple-Employer Defined Benefit Pension Plan 1977 Police Officers' and Firefighters' Pension and Disability Fund Plan Description The primary government contributes to the 1977 Police Officers' and Firefighters' Pension and Disability Fund, a cost - sharing multiple - employer defined benefit pension plan administered by the Indiana Public Employees' Retirement Plan (PERF) for all police officers and firefighters hired after April 30, 1977. 56 1925 Police 1937 Officers' Firefighters' Actuarial Assumptions PERF Pension Pension Investment rate of return 7.25% 7% 7% Projected future salary increases: Total 5% 5% 5% Attributed to inflation 4% 4% 4% Attributed to merit/seniority 1 % 1% 1% Cost -of- living adjustments 2% 0% 0% Three Year Trend Information Annual Percentage Net Pension Cost of APC Pension Year Ending (APC) Contributed Obligation PERF 06 -30 -02 $ 695,456 109% $ (649,051) 06 -30 -03 1,149,141 67% (264,711) 06 -30 -04 940,596 98% (245,325) 1925 Police Officers' Pension Plan 12 -31 -99 6,567,390 43% 14,928,837 12 -31 -00 7,103,263 51% 18,422,000 12-31 -01 7,578,600 70% 21,319,288 1937 Firefighters' 12 -31 -99 5,578,400 47% 13,415,996 Pension Plan 12 -31 -00 6,582,404 47% 16,923,000 12 -31 -01 7,060,900 68% 19,349,894 Membership in the 1925 Police Officers' Pension Plan and the 1937 Firefighters' Pension Plan at January 1, 2003, was comprised of the following: 1925 Police 1937 Officers' Firefighters' Pension Pension Retires and beneficiaries currently receiving benefits 249 217 Terminated employees entitled to but not yet receiving benefits - - Current active employees 13 8 2. Cost -Shade Multiple-Employer Defined Benefit Pension Plan 1977 Police Officers' and Firefighters' Pension and Disability Fund Plan Description The primary government contributes to the 1977 Police Officers' and Firefighters' Pension and Disability Fund, a cost - sharing multiple - employer defined benefit pension plan administered by the Indiana Public Employees' Retirement Plan (PERF) for all police officers and firefighters hired after April 30, 1977. 56 CITY OF SOUTH BEND NOTES TO FINANCIAL STATEMENTS (Continued) State statute (IC 36 -8 -8) regulates the operations of the system, including benefits, vesting and requirements for contributions by employers and by employees. Covered employees may retire at age fifty -five with twenty years of service. An employee with twenty years of service may leave service, but will not receive benefits until reaching age fifty -five. The plan also provides for death and disability benefits. PERF issues a publicly available financial report that includes financial statements and required supplementary information for the plan as a whole and for its participants. That report may be obtained by contacting: Public Employees' Retirement Fund Harrison Building, Room 800 143 West Market Street Indianapolis, IN 46204 Ph. (317) 233-4162 Funding Policy and Annual Pension Costs Plan members are required to contribute 6% of the first -class police officers' and firefighters' salary and the primary government is to contribute at an actuarially determined rate. The current rate, which has not changed since the inception of the plan, is 21 % of the first -class police offi- cers' and firefighters' salary. The contribution requirements of plan members and the primary government are established by the Board of Trustees of PERF. The primary government's contri- butions to the plan for the years ending December 31, 2004, 2003, and 2002, were $3,068,934, $2,873,958, and $2,673,111, respectively, equal to the required contributions for each year. 57 Z 0 E- 2w a' of O CD 0 zz CO ZZ_ Z 0w� (1} 2 LL. O -j O CL cn :) w U � � w LLI K m 0 c w a' N p Q) (D y N p� .ti ^ -0 N tl p 0 0 0 o a o -tl N y p 0 0 0 0 0 0 U N O ?, a o o uC�.. 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U3 U A d U Ld 'p •w a7 (h M 0) co an0 COO M 7D 00 C co j m Q E N C: O Q en O 1° 0- rC 0 x O rn W w a1 0 a° z G Q .0 =d O LOO u c c r 6q ev co 0OLnM W o I� n n co m 07 m LD V rn OO coco G> I-- V [-- Morn- ao O a000_rn r N (3i c .N j O V) W O 00 M U) M -t 7D O O O N O It 0 Lo (M V' L71 N to 00 C1 01 fO 0 r r A LO Li) r O O N O N m N ch N N 0) Q j C3 a Ln N LD N 717 Lh r v N 63 6q M LO r 0 0 M cm N (D M r fD h 1-- 0 O f— co O Q1 m GO [ 2 V — C7 O © Ln O LO h I- co CO eY f- m CO co N M O O7 C6 Lfl 16 M O L7i W 15 h LO d' CO I-- It CO CO N 39 3 LL ^ 10 Ln (71 M O N O) LO v N LD O N r LO r N r 717 E r E 64 3U Ln 0 0 I` M N N M h 1` y LO d LD O O h N '� M 'I M 0 71) d m O [f1 N O LO O M 0: � N L!) m� In r � [l C O M O co Lo O O) 'T r M O LD 3 07 — r L1) ti L1) CO r r LO LO O N l7] LD IT = co N O N c0 M N M N N O 67 O I-- N O [D r N r L17 rfl 6ci 65 N a1 CD u L o u N C e m O CA O CO1 1L5 a) C C Lm C C a7 . U3 U A d U Ld 01 E c 41 C Q E N C: O Q en O 1° 0- rC 0 x O rn W w a1 0 o N 0 N G Q .0 =d O LOO u c c Q Cl) O a1 v1 w 5 CL UOOU ~ 0~ C) LL QUA Z c "a G> LU LL LL 65 z z 2 o u� 0 }§\\ =i \ ƒR _� $ \ \ § a \j \ §§__ En 2a- o% \)ƒ /5 ( §§z> �®$ «\ }?k� 5co2U. 0 ƒ § § (D CD ] C6 3 d .. � / % J m/§ \ � Emf / § \ �7o k7-m \ § r 2 w j§2 § a) « § ] � 2 (E§ 03, 6s §(( \ ® $Si ° / 7R* / _ LO \ �/\ z j \ J \ � ( 3) ) \ ]±} m 2 2 \ j§2 § § ] GJf ] 2 (E§ \ §(( \ } / / //\ / \ z z 2 J NONMAJOR GOVERNMENTAL. FUNDS Special revenue funds Motor Vehicle Highway - To account for street construction and the operations of the street main- tenance department. Financing is provided by state motor vehicle highway distributions. Recreation Nonreverting - To account for fees and related expenses from park department activities. Housing Maintenance - To account for a loan program financed by monies from the Housing Author- ity which are paid in lieu of property taxes. The loans may be for external maintenance needs of single - family rental units owned by the Housing Authority. Studebaker /Oliver Revitalization Grants - To account for expenditures related to the Studebaker and Oliver revitaliza- tion projects. Financing is provided by federal and state grants and loans and loans from other organizations. Economic Development State Grants - To account for expenditures related to projects promoting economic de- velopment. Financing is provided by state grants and loan payments. Ex- penditures include grants and related expenses. Community Development - To account for revenues received from the U.S. Department of Housing and Urban Development related to community improvement. Police Federal Grant - To account for expenditures relating to federal and state grants. Police State Seizure - To account for law enforcement expenditures financed by the authorized state or local agencies' sale of confiscated property. Juvenile Positive Assistance - To account for monies received from penalties paid for curfew violations. Expenditures include Drug Abuse Resistance Education and Juvenile Aid Bureau. Law Enforcement Continuing Education - To account for police fees collected to finance police officers' continuing education, training, and supplies and equipment. Build Indiana - To account for state grants used to finance various projects. General Grant - To account for grants and donations used solely for the purposes specified in the grant application or by the donor. Local Road and Street - To account for operation and maintenance of local and arterial road and street systems. Financing is provided by state gasoline tax distributions. Human Rights - Federal - To account for expenditures to prevent discrimination and to promote human rights. Financing is provided by federal grants. 67 NONMAJOR GOVERNMENTAL FUNDS (Continued) Special revenue funds (continued) East Race Waterway - To account for donations for the promotion and development of the East Race Waterway. Special Events - To account for revenues and expenditures relating to the operation of special events sponsored or organized by the City. Police Block Grants - To account for a federal grant used to finance police activities. Economic Development Commission - To account for administrative expenditures of the Economic Development Commission. Financing is provided by fees from businesses applying for Economic Development Revenue Bonds. Hazmat - To account for monies generated by the South Bend Fire Department's response to hazardous materials incidents. Funds are used to purchase, repair, or replace hazmat equipment, or for training and supplies. Indiana River Rescue - To account for expenditures related to river rescue training. Financing is provided by registration fees. COPS Block Grant 11 - To account for federal grants which provide financing for police activities. Regional Police Academy - To account for revenues (tuition) and expenditures (seminars, travel, lectures, and career days) related to the advancement of present and future police officers. COPS MORE Grant - To account for a COPS MORE grant which provides financing for police activities. Federal Drug Enforcement - To account for expenditures for drug enforcement. Financing is provided by distributions from the authorized federal agencies' confiscated property sale. Urban Development Action Grant - To account for economic development expenditures which are financed by federal grants and loan repayments. Leaf Collection and Removal - To account for the expenditures of a program to remove leaves from the City each fall. Financing is provided by a monthly service fee charged to all City residents. Police K -9 Unit - To account for donations for development and maintenance of the K -9 unit. .; NONMAJOR GOVERNMENTAL FUNDS (Continued) Special revenue funds continued College Football Hall of Fame - To account for Hotel /Motel Tax and Professional Sports Development Tax revenues dedicated towards the College Football Hall of Fame. Based on an agreement with the National Football Foundation (NFF), the City pays the NFF to assist with the operation and capital costs. Friends of the College Football Hall of Fame To account for donations received by the Friends of the College Football Hall of Fame, Inc., a nonprofit corporation formed to solicit donations for the benefit of the City's College Football Hall of Fame. Football Hall of Fame Operating To account for the former enterprise fund. This fund accounts for the ad- vance from the General Fund which may be repaid from future operating surpluses. Rainy Day - To account for unused and unencumbered funds that are transferred from a fund that has a tax levy. Revenues in this fund also include special distri- butions of county option income tax (COIT) and county economic develop- ment income tax (CEDIT). Industrial Revolving - To account for the revenue and expenditures of providing special loans to qualifying local firms. Financing was originally provided by a $5,000,000 Economic Adjustment Assistance Grant from the U.S. Department of Com- merce. Debt service funds Redevelopment Bond - Studebaker - To accumulate monies for payment of Redevelopment District general obli- gation bonds, which are serial bonds due in annual installments through 2006. Financing is to be provided by an annual property tax levy. College Football Hall of Fame Debt Service - To accumulate monies for the payment of Redevelopment Authority bonds issued to refinance bonds issued for construction of the College Football Hall of Fame. Financing is to be provided by an annual property tax levy. Redevelopment District Bond - To accumulate monies as a reserve for the payment of Redevelopment Authority bonds. EDIT Bond — Plaza Garage - Tax Exempt To accumulate monies to meet the required debt service reserve for the Series A, Economic Development Income Tax Revenue (EDIT) Bonds of 1997. we NONMAJOR GOVERNMENTAL FIENDS (Continued) Debt service funds (continued) EDIT Bond — Plaza Garage - Taxable To accumulate monies to meet the required debt service reserve for the Series B, Taxable Economic Development Income Tax (EDIT) Revenue Bonds of 1997. Redevelopment Authority Debt Service - To accumulate monies for the payment of Redevelopment Authority bonds issued to refinance bonds issued for construction of a parking garage facil- ity, bonds issued for central development area land acquisition and con- struction of public improvements, bonds issued to purchase the Palais Royale, bonds issued to refinance bonds issued for construction of Century Center improvements, and bonds issued for renovations to the Morris Per- forming Art Center. South Bend Building Corporation Debt Service - To account for debt retirement of the Building Corporations Mortgage Bonds. Funding is provided by transfers from other City funds. Capital proiects funds Emergency Medical Services - To account for purchases of necessary equipment for the Fire Department and Emergency Medical Services Department. Financing is provided by ambulance fees. Central Development Area Bond Proceeds - To account for expenses financed by a 2003 revenue bond issue. Coveleski Stadium Capital- To account for expenditures related to the maintenance and improvement of the baseball stadium. Financing is provided by a rental paid by the semi -pro baseball team. Zoo Endowment - To account for construction projects at the City's zoo. Financing is provided by gifts and donations. County Option Income Tax - To account for the City's share of the County Option Income Tax (COIT). Expenditures include land improvements and purchases of motor equip- ment. Park Nonreverting Capital - To account for specific revenues used to finance capital improvements at the City parks. Cumulative Capital Development - To account for expenditures relating to the purchase or lease of capital improvements in the City. Financing is provided by a specific property tax levy. 70 NONMAJOR GOVERNMENTAL FUNDS (Continued) Capital projects funds (continuedj Cumulative Capital Improvement - To account for state cigarette tax distributions used for improvement pro- jects. Economic Development Income Tax - To account for the City,s share of the County Economic Development Tax. Expenditures include construction, acquisition and related costs for eco- nomic development projects. Cumulative Sewer - To account for financial resources for the construction or repairing of storm sewers or sewage disposal plants and sanitary sewers. Tax Incremental Financing (TIF) - Sample /Ewing - To account for expenditures for public improvements in the Sample /Ewing tax incremental district. Financing is provided by property tax proceeds in excess of those attributable to the assessed value of the property in the district before redevelopment (tax increment). Morris Performing Art Center Capital - To accumulate monies for major repairs and capital improvements to the Morris Civic Auditorium. Financing is provided by a surcharge on ticket sales for events held at the auditorium. Tax Incremental Financing (TIF) - Downtown - To account for expenditures for public improvements in the central business tax incremental district. Also, operating transfers are made to debt service funds to meet debt obligations as they mature. Financing is provided by property tax proceeds in excess of those attributable to the assessed valu- ation of the property in the district before redevelopment. Tax Incremental Financing (TIF) — West Washington - To account for expenditures for public improvement projects in the West Washington Economic Development Area. Financing is provided by prop- erty tax proceeds in excess of those attributable to the assessed value of the property in the district before redevelopment. Redevelopment General - To account for eligible redevelopment activities in the Studebaker Corridor financed by proceeds from land sales or leases. Community Revitalization Enhancement District - To account for public improvements in the Studebaker /Oliver Community Revitalization Enhancement District. Financing is provided by income tax and gross retail tax increments in the district. 71 NONMAJOR GOVERNMENTAL FUNDS (Continued) Capital projects funds (continued) Tax Incremental Financing (TI F) - Airport - To account for expenditures for public improvement projects in the Airport Economic Development Area. Financing is provided by property tax pro- ceeds in excess of those attributable to the assessed value of the property in the district before redevelopment. Redevelopment District Allocation Area Capital - To account for local public improvements in the Airport Economic Develop- ment District. Financing is provided by a 2003 bond issue. Tax Incremental Financing (TIF) — Central Medical Service Area - To account for expenditures for public improvements in the central business tax incremental district, medical service area. Financing is provided by property tax proceeds in excess of those attributable to the assessed valu- ation of the property in the district before redevelopment. Equipment Leasing - To account for proceeds from capital lease- purchase agreements used to finance major equipment needs of the City. Century Center 2001 Construction - To account for construction and related costs of improvements to the City's Century Center. Financing was provided by a 2001 bond issue. 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C m � � X 7 (1 00) Zw N 61 � C C v F H CO V sir N 19 a 0 cpi m u 71 df C W 0 C', - , m m LO CLQ0 - - / « -- - - - - - ( ) ] \ } k / \ / $ \ ( \ / / \ \ \ f _ \ / \ \ \ \ ogg a; = m ° CN §2/ * � ® - LL, /k /) - Lq _�-_ ]A m m g /j{ j( ea " \j e5 =\ or - ® Z V \ ��IL m E$ \- - § \ 2 \ {k / E _ ] \ _ »\ m\L [ ) L)f i6 ®0 E §{\ _ ƒ) / )cl \ - - 2/4 k Z 0 J CL / ) ) LL 3 W C] z: A] fl � U ; C p N J M 7 y N LU J � LL M, N O M M ' 47 r ti U C_ cn N c �_ LO U] LO. j m 0 v CL Z N3 64 O M co (D 'T N V O Lit tl' G`' vi u1 W C M O oD [0 T 0 T N LS7 47 N O M M M (V C r LD G7 'U 7 to OD c0 a N O M N 6) w m V O N N a0 M r N a j m F- 6) V V m O V LA 00 Q E9 69 to ff) N 1� CA 0 0 O 6) " M OO N O O co Il S9 O N. M 03 C LO 00 f2 M LL `O? V V O E r r a N N 0 1� 0 4 o ti M o0 W N r N 0 0 O V C:> Q N O SO 'o c to w M LO N tl 4i W N CO .` e� a a V m a r r r !fl 'Al N N N N IO � 9 � w y d 0 U Lo J U d N o m � ttf i6 N .00 a [� U C CU W N .� a � a y (D m a N C N N C N a O a) 2 LM O •V C b (0 L U C C l6 f6 L L V a U J X d utii d N 'D ,p C �" Itl <6 c�0 Intl ; 0- Z W Gl � 0 OL IL ' OG U ; 100 [D N r-- pp77 o N 2 (h7- W m O O 2: N .? (L N N N N Z 5 6s � j `r N Ul) LQ W O N V (O M u7 C;) M O] CD at N O Q O M N W W h c0 u7 C l M M 0 to N cr) r CD T GQ Ch r"q O J in .(� (D Co O 47 W at O M O CO M N M W N 3 N y ro O V 'n co u0-r O N r '-" N r_ CA f� m aU "O Q r 1 m 63 A c9 Ff} : (n a 0 0 G O O O Cp N e? h O O Cp N o0 O U at IC c cl a0 h (fl Q N h C 70N _ro oM C V o at U) at m 0) ups N coa Ifl v I- W r E xU Q) tf+ - a u O o o �n o U) o In to ' m cc C cl CC W Ca , o M o r o v°s m rn Wo m .c - v- r V at oo N M In m (n Ld ua = z `m } LLd o N yy W p 9 N n d :ALL rn ro a V U • LL. ca N Oi 2 L N N N c c G V O 0 G Q. = v 0 ro O N N N N 1 Z w 2 a o c N G) 7 j 7 A N co C d 9 C A) U C N C C1 d C O G j w Yil O ro N 3 d N '�' V1 N n ?nll N c Q7 N N W N ytl D .0 1= G c t C = C C C G tm _ J> L y N 7 O Ga ro .Y O U „d o ro N V m co co f4 a o v j V N l6 ro u co ~ ~ aZF°Hr a)UO aL) m0 L_ Z a c a c z d' W O LL LL [0 100 101 i \ ca \ ) ID Lo cl 2270 § - ® D - 00 k -� - } \ / < < - y - - » a < _ / }\ \ \ \ } \ \3 4\ ( §/ age \- - - - =92R R `_ k \ \\ =,03 . - - - S??2 » LL o4$[% _ _ Oo«2 \�)\ (} 2 2/[ E( ig k /G [ \)§ E §# §2277 S �k \] g - cl, \2(/ 2 \ �)f!/ ID �a cn ƒ,§qq d`` �k�k/ - - oo16 ca ca z 3 \ \ \z a LL a = 101 i \ ca \ ) j� &! j| b� (| o. �a �\ �) �± I7 .\ .\ 102 4'1 00 10 iz { {]ƒ� kQ 00 M 00 M 00 04 m LO ID �/} 'o C4 It (0 C14 Ir CN cli / ] R ° m R ± 7 9 } / co 0 co E ED Cd m 2 m r — � � ( co ) ` 2 \�)E \ \ 0 f .0 { - - ( \�(D \ - _ =G)(� k }3 a. ° - -- co (t ~ k / ) - - ))y#t \ \f§ )L) ) ƒ {Ia&a 2 ) / ) ) a 102 10] ])@ \ \\max \ �)fff / #f)) \ {f#7 \ aza&» z 2 \/] ƒ}cu 64 _ ) /na \§ e m \ \ � \ z \ \/ \ \\ \ \\ \ \ } / a _[» § - - - - � 2]±f /� \ _ §Z$k co Go N 2�` (/k -o) \ �§ - - - §R) w / 339z _ \ \)\ �_! \LU 0 LL ! \\ \ 2\ E - LG f e§2 « LB ` k w\ o {% § ff \ m U 2 60 F5 ] rz %¢2(� ) — — k)� ) ƒ )FT E J \ ) ) 10] ])@ \ \\max \ �)fff / #f)) \ {f#7 \ aza&» z 2 104 cli eq 'COG I } 0 ca } EL ] _ _ D e & , Z -na- -- - j\ < /�\ } \ D C \ \ \ 3 o/o _ T- aE% r E _ - § / \\ _ {; Dfj] -- [ \ \2R2 2A cli CD Lo 04 V4 ±j%§ ® - 42§% Gg§\ - ) § \ \ � \ g ®{ \\ Id k _ }} - \ - w ] e§ \ _ 0 \)2 k �cn ' k {d( in )\ } \ m cr b _ ` irG _ - - =«yy \/\ 0C) ) ƒ f}44 r } ) ) on 104 cli eq 'COG I } 0 ca } 105 0 C� 0co0 _ �� a Cl) m ® - § }& � k -� - - - <5 C5 ( ( ) / m Co - §S z }Lk \ \ \ \ \ \ \ \ \ } m CO CJ §p/ E < ® - z5 c } ) \ Clt } \ } \ \ \ \ \ t f m \ff - 3 A r M n±oa) §357 ® ® §+k| e0z2 ) z2( § - ca ) - §r G ca a. \\ \ ) § E� - < /\ \� \ \\ E E k \ \ - §o e , ! Eoi a ear§: 2 [ t /kk/ - ' )�kXX \ �aID ) k� \ \\ * z § \ /aa/ ()�§ \40 z z $ 3 ) ) I 105 INTERNAL SERVICE FUNDS Liability Insurance Premium Reserve - To account for expenses related to maintaining the City's self- funded liability insurance including administrative costs, claims and premiums. Funding is provided by assessments to certain other City funds. Self - Funded Employee Benefits - To account for employer and employees' contributions for a medical insur- ance plan. Central Services - To account for expenses related to fuel, vehicle repairs and various supplies provided to City departments on a cost- reimbursement basis. 112 113 M O N h r W W N O N D) co Lr) (D N N W O M V M co W W f% (D Q] ti N N O V N 7 O Ql W I- (D Op O N N (D N O (D N co M N N r- 07 u] W M r't (`i V N (D e- O co M M (D M i!) m r M r rD M W O Ly cr n (D N r M V' 64 0� ' r N o r O O m ti (" 1 (D N u7 W V In W N (D O Ill P- W N (D r M ti rn WOl ti V N N (` cQ (p N N CO N N N (D Lb co V E+ V co W M O W W N (D (D W rn Z m LL E9 FA W U O D) (r1 O a0 C) co M O N O (D u2 o) V ?-- O r r r N fD u7 (r) M M i(7 Y [D N wj [") u7 4L) r 7 N m to (D co m cp C Oc a0 W (O W m m NLL z ILm W Q in w W r 0 Co N to O M M O r 0� uOj N m r t u] N t'n E N O W o] Ln m O � T INYI O N r M u-) O co W ti ti N O ch N N y y N N =ate 0z � O Gy U Z W Lli M d F N cL N Z @ Lb c = @ 10 U a0 'a '} o'er N E o m. c (D ID Q( ID N N (i1 Z @ V l6 VJ @ N @ 41 GI N U S51 N ✓� (� > N N C Y y4 @ @@ G N m w m E -aE�w m w'a .1 a m —° w a arsroQNO w ID 2 N C 't = E V _ N @ O y0 @ L m m o c@ @ Q7 ° �_ N y n @ o a> m 2 Q E C E a m a V .y. C Y N C@ m N O @ G .d..1 E U 5 U d CD U p U n d d W y y Q U O F- ca iD 3 U n M N Z a c c F 113 114 m C Q) t- v w 'i7 m c4 00 N_ n W [O W N U-) m O O O m O N io 0) 61 N r N ti/ m Lr) N W W lc Iq N mr n OM, r N N r LO n w N a [Ci O) J' O O m W o ~ v n .^ n rn o n c? rr ey r an m N (p N r r i^^ r Cl) V cq 6q H W U) N 0 Q y ` r r n W L V 4 '7 C a 0 M N WN Q m n m n mn n N W m o Z U N N v N N M Q C V QI N r ZEH 64 7 V Tl co O 47 'D co CO W O1 O W -O N o a v n ca m 0 Ili r co m co m L N m m L6 N m 17 O W W (D lU a O O N o.0 O O W Q) N O m 'IJ n r W n cc n W W n W 0 li E r 2 U o 01 if1 O N N 'D W W N O W cc n co W M o O W co co v N v N im v V o: Zm .O ; E W N M N co Ln C m m iW0 if1 W LLUa l�i� J ca r = Q v _U L LL a- w M- m U D Z L W 7 `o W LL LL O N N Z C W m d x O W O m E m '2 Q O N U E N y C} Dl C j OV U7 C o c Q y m O_ y c@ m y U, Z V a � m y � d a c r ycy Q x o m 'u O y E � N Z y m m E m n o m a o m y i 'o � m Q 3 12 c > Q N y c U } G7 d C]. C N O CL Ol C N -O N C :O Q O O '-~ C w N Sll N T Gyl O N 2 N C V O m @ C C E y C N O1 UNi N O Ol y� 0) W C_ E d @ y O N p ca @ @ E O- N W [p E s L O i- C N E 3 (1 'b O. a y m O H"' m. O N y O. p O O C O L U tU US C C CL O O z U 114 115 V CA m (1 C O a w c D U) m O n N h 0) m m Q V m r C U) N o P] N N p N m h (t) Cl! (D N C7 N m m m C7 r M p) r N O Cl) m O N O 0) O :d m N h N N [D LL7 r- h N Q to M p F V ti ca N cr) m If1 il] t9 N Q) r [+) V3 Vi r O lD In N M 7 3- m u7 m O Q u7 N N N O N m 1� LD (f) N (O N T o r N l�f) 14f) N m�rnQ Cam u'i (Ii Q Z LL ll.l U O m O Q N h tl- CD p CD N N • I.- CD QS m (D to m Cl) Q N n 0 Y+ f+ (p Cl N m w a api m Cl) N Cl) o m ti 0 ~ Q m c (ci N c p m cQ0 Q D �LL� m N z C') FA "Z— ' Z dl f 9 m I+ CD fp CO m N m N Lq m Q 2 7j U C U I N ti to N O V m ? C) m m q v V) w v V- (0 N O N r N 0 b 0 Q LiJ H3 69 o LL v0} Z w W L y U (n F C:7 •p ctl C N 2 N w (n 3 p .%4 (� i 116 Cl) \)§/ \ \ \/§ / § 2 / ) { r-- m - e - - w 00 N , m \/ § z 2 ® m - \ , , ,.. , 5 L ][/ - }/ 3{ ƒD LL tu ƒ® c/\ _ _ LO ,{ \ LQ :2 \ \ \/\ �Ge m } 7Cm N m , 0LL 0 �f!) U- % \a� _ _ _ [0 \ LL ) -0 a U E� \z e> ) _ /( - - G E \ ) = f \/ \ /§ \ \ \ \// \ \ \- } ) k g$ ) �\ o >k��k CL m \ m m \ - \ \82E \)) \ / }� j m ) �@ °# /06 2 -- _ i < »7 = > / k a u0 0 0 /�6= ) « z z 116 NONMAJOR ENTERPRISE FUNDS Consolidated Building - To account for the operation of the consolidated St. Joseph County /South Bend Building Department. Parking Garage - To account for the operation and maintenance of the City's parking garages. Solid Waste - To account for the provision of solid waste services. Blackthorn Golf Course - To account for the operation and maintenance of the City °s Blackthorn Golf Course. 106 LU W Cq 2 F- F O L Cl) [ LL Of U L I o " N I � J � E - U 1 00 iii c m E z C j N G N � v � O N 4O 'O c C U r y C C N 16 7 N ��Na 'O8 a u o GI 6Y y LC U O Q1 0 CO .D Co f6 ftl .0 « _ >" N fn O L L0 2 a 7 y 0 t6 7 c6 O1 y[�7 N 61 hQI .•y+' 17 O y U V N 0 p1 y N 16 N j Q` 'D 4 N U O .N. w 'O c� N O .� N V to -D O O ra rLn °}' m y `I ro cEn In c Q U Z 107 '0 c m o u7 0 m m � h uI m co �z o rn m h h o N mrrd r rn tD C mr- IA Q �md d r t% Q dN Q r Cl) L 00 Q [p o m m (R h (y4 i O r (D m f0 O h N Q m LO 0) Q O O L(1 W v m LD m N r m N LO co LL7 m mr N N rR m CD co W V h r N m m r m 671 m '0 ' ' O 3 O m' 117 (¢ (P 0) Q M m O CI N O Q 4 h CI O 01 h m r O Q O Q ID Q O oc d m (D O h% m R Lt7 M O h Q LO LO m m m m Q L O � M u7 N In m M Q Ln h 4 N Q 41 N (O U r N m co �t b EA Q (o m ' u7 r-- LO (o r N m d h Q 4 m l7i m O N cc N (R N m (R (R 41 m r N r N M a a a ti V N h N 4 m m m m con (f3 N' ' ' ' ' N ' It Q O co m h T N N N N N O N Q to m N N d m a m'T N h C a Y I2 M Q (D m E m m E r Q u0 CL C7 In i I LO i , , i °m LO m LO -0 ado m � o r ct; rn rn m rn rn � C Ln h r fR h 1!'1 m 11'1 QI If1 N RI h oa c 5 O U iii c m E z C j N G N � v � O N 4O 'O c C U r y C C N 16 7 N ��Na 'O8 a u o GI 6Y y LC U O Q1 0 CO .D Co f6 ftl .0 « _ >" N fn O L L0 2 a 7 y 0 t6 7 c6 O1 y[�7 N 61 hQI .•y+' 17 O y U V N 0 p1 y N 16 N j Q` 'D 4 N U O .N. w 'O c� N O .� N V to -D O O ra rLn °}' m y `I ro cEn In c Q U Z 107 '0 c 10 c y O O � y _ O N N (0 N to N a C N m o G am w ( D U E N y C != l0 3 o � ° - rn (y4 i a U V. R 1 y U c m m m o c v m 1-O c°a � O H F cc U h N m (tl Q N O C O U 1[1H U�l ti M co t` O Q Cl) m 00 4 ti 4 U'] p1 h /T Q co Q LO r- 00 (a O F- O? N Cp C7 0 N O N 1p O N LP Q tl w O M 4 4 Q r C0 N 06 (N co r (� m O co (D O Cl) r Q to f__ N r i� MO Cl) M W CO N r o O 't] ('7 r N M °Q N F N co Q Q f� M r (D Q O W ' ' ' O O N W ' m vo- Q W tD ' I O 'Ct' O LO lf1 O 14 O lll' N Il N ti Q O M r O Cl O E T N O r Cl) O o Q co 1- m 0) M r~ t< N N m co W 4 m �e (j W Q Q o o Q Q_ Lo L N Q n CO O O z ll m • NNQ I,- co � ' Q O] M N IN N � m r ' M co 00 fD 1� (Ql (D ' 1� (C O} CO (b � O cq W C, g V r 117 N�? 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U) 7 l4 D C ro m to 0 _ m ro N C N 4) d Q' C ro C C G C (D O Cc N C " —G "2 O C fC a r- 0 f O . ) m .0 y C E O x O C N O Cn N m (n E 0 ro C U a w N 'O O (D C t3 ) ( > (L > N N .O-. N N a O Q (O m C K GO O C O .� Im ` y O7 7 O N .� N (6 O G N O(v (0 N G D m N to m G n N O) N ,C (j .� d 12 d m N 'C 0 7§ y N LO Q) O N rC R O R q) t` O C O O N (s (� o H a o a) �- O 0.2 m 'ro F _ a? O c �, a- con (OD 0 a)0ao 00.52 s 0 � � 0 0 z 109 m C G N N N ro G) c ro a. wi w: x M- E oc IJ, O� U, O ) N m iE .m �v T7 J U1 W r _ F J LL N Q C) M h m r ) m C) N M C) CO Ci m V' N O 0 N w V V M Iti N to 'A V U3 a a0 V a) �p r Iz V� `R f0 N Ca 0] V M h r c0 V u) f- co N M tp V N O O CC7 r u) In to co Q tp N to w q n) c0 N N 0) c0 N r- m C) a I+ M u) to O m cV rn th c (A Y V m m O N m N ffi � O O M m n 4 0 r { to m r O M N t+ ` �l m ti m m vn to op ci N (k N m Q h m p m O [- co W m In N (6 Cl N m J= p m m M CO r M N Co V m Y U fO c M (D N m 3 N (C V V Q o r r d9 va (C 4 LL7(O D m m Ci(D nI, n N mcc CO Co N N O r p r cG c Ci t• ti'l N c0 to kQ a � cc M Lo V Co cc O m m N N N m O 'o m rn N cl CV p m � ti r w w w (n 2r F5 y} to ' c6 Co M co h m O V M dl IA (O cfi i� V (D 6) m Co h N CO O C) c0 c Y (� I- v M u) O OD CO Ln M N IL C7 ra fa O ' , cc V N N c0 c0 Z7 N r V C7 c o r• N (a o (m m W 7 CC w V V q c) cC (O ' d- c a oo .-^ W m (�� N N m m ti N � o m a c p a c ID' C. ID N v d m i Q e LU C ca x C O M . LL O� 111 N Im o li] p c 4 EP ti co ti Q) M Lo cot inN4 �M�� NIC LO r O h N v M r lf) N V) O N M N 'cl' `' r cA Q (9 69 cAk 00 (M ' ' ' ' O 117 O fD ' 00 (f) 1f) LO .~-- M LO V h h O h O M O T M 0 M M M O � "� M N r I� ti t` N v3 69 L% 1 !� W I�G a0 I �� N In � co j Q LD0 m0 m O Oa W V1 h,N- u7 N O N M O LO u 0 N Ch CD ffl ap a0 1 Cp lf) V N V '--' N M 69 ff3 E9 1 V3 M to h M co Lr) ' O 04 N LO � r EQ N v - m co O C? M O N N (11 N UM N N cr ) .O E a - U to Ua (» ) M, 1 , _� e� c N h N(NO9 LO a0 V W N C p rn •w- to C4 067 M N h v V) V V � O c U M v vV N V M L S9 69 09 LPL o N r � —p v G p N C 2 LD _ N M O U M C O y . N M U M a m n y a - m m m C as G Vl � �- a a C a C 7i y cc VI � T O = 'q C C N q 0 ca p EL C p_ o M C w p Q M N E p dl y} S a c O. a U U a g M O p 'k M p M M U r U EO `d p C •� O C l�0 O C Q D 5 U Q G¢ U p W "O CL «53 ❑ W Zw iLll Q O (Mi 0Ut- C a N O K Z Z 111 FIDUCIARY FUNDS Pension trust funds 1925 Police Pension - To account for the provision of retirement and disability benefits to police officers hired prior to May 1, 1977. Financing is provided by mandatory contributions by active members, state pension relief distributions, and a specific annual property tax levy. 1937 Firefighters' Pension - To account for the provision of retirement and disability benefits to firef- ighters hired prior to May 1, 1977. Financing is provided by mandatory con- tributions by active members, state pension relief distributions, and a specific annual property tax levy. Agency fund Payroll - To account for the payroll of City employees and pension benefits of the Police and Firefighters' Pension Funds. Gross payroll and pension benefits are treated as expenditures in other City funds and transferred into this fund, which serves as a clearing account. 117 118 0 00 \�� \ �\ \ \ \ ))� ®EL ) � \ yr - - -- m \ z ( +/ ^N - - �E - 04 - - c[ ga § \/ )ƒ 32/ _ e LL \} §eE (/A C) LL h \ § 2 c \ z 7) 2 § \ - _ - - f - - < -- E [ - _ \ \ \}/ - \ $k/ / ) 2 \ ) 3 e ) _ § 2 E \ - & $ _ \ ƒ/) \ { (4 @00 e \ / LU ) \ ) e ] u z 118 119 / r ƒ ) 0 e [ t� - - \ F-- -k °}a. � LO z ^ " \ / o m C'i - - - - - - 5m -6 � ©z/ z ] <2E m LO )I eee! eont \§§\ LL ( /)§ e§ƒ\ § � LL { 2 2 ID \ _ - r ! ( ; \ \ - ) _ _ _ ± ,f ) ¥ / ) ) - / 6 _ 7 c } a-\ e \ ) -7 ) ) S f f 2 $ 3 z 3 a J z z 119 ww LO r- v z o N CD a ¢ cc a H N :� z EL ❑ O) (1) U m LLl z v LL OZow 2 < w v� r LL N O t r ~ W LL M LU H N w I (nN I EA I 69 7 N W cp <q N m W I O I d' O W n m c h c o cv t- coro � 7 w I (nN I EA I 69 20 ry p a m N 0 7 C S1 (0 c ca c m W n m c Vi G N O L = � 7 M b N = E co O ta m -o y 0 C C - y a 0 U C .- N p V z N y y p V V1 `O V m W fU 2 + L) O N U Q© m Q Q fl Q N J 20 ry p a m N 0 STATISTICAL SECTION (Not Covered by Auditor's Opinion) 121 n c? N M O N� 2 000 m N N � � 1D No n O C7 d' d' N O Vl 14 O N ay V i= V N �c In 00 M 4'1 V� eF O vi T oc O �o O\ n 00 y N DO vl d" Q O 01 cl tifl 10 00 r" r--+ 64 it �r at 122 .m I I L � 3 y I � L .- i I � I L% I � f T 1 � i Y 1 N I O S ` O i l- 00 N 00 00 N 1 O n d6 3h 7F M 00 00 d' M Oi N U1 Vi N n V 10 Ln 1D 00 n N 10 O N n 00 ' O M n N 1D N m v"i T n 00 N 00 00 1D O M Cr I- m n n n 00 ON 0 0 N M (A O C7 d' d' N O Vl 14 O N ay V i= V N �c In 00 M 4'1 V� eF O vi T oc O �o O\ n 00 y N DO vl d" Q O 01 cl tifl 10 00 r" r--+ 64 it �r at 122 .m I I L � 3 y I � L .- i I � I L% I � f T 1 � i Y 1 N I O S ` O i d6 3h 7F 00 v1 M n v� n n 0 0 O N 1D N m v"i T n -- O M_ Vl M n O cd U O O vl f T °� 64 n 00 (C\�€ � N lip N G 00 00 M N 00 M 6 M 01 N ph N O n Q1 O Q1 N n n 00 M O M O �O N 1p 1�1' 00 00 M M 00 N Ln O 41 Y3 n 1D 1 00 00 O 00 "L C z 0 Un w\0 N N v° N�D n Z Z o n 00 In �o rye" °��n n Q >- In InLn�r �r �cr =oo�ro W �r 00 a�LL. °z_M z �o � DC, o Z id O 00 00 C� Ch M V N m N Z W W �� N o � W! � 1:1 uj K U oo a s a; o �2 M W 0 Ix 0 y 00, o0000000 O v�Oo00000 l!1 n 0 0 0 0 0 0 0 `NW Z �„ ct n O O Ln vl N � h M ul V) �o ���n n n n CA Lu V > Q � b9 0 J E„ n 00 m n n V"1 n Vl 1D N N O 1G O N M O LU N N G\ M 11, n T 00 S� m 1P Q v m m lA N 41 m uj v3 'n N 00 M n �o d 00 N 00 to ct .fir 00 It (71 10 10 M Ul CS M N 00 � M Z ON N N � '+� 00 000 VV) Vl In ON M 10 00 O1 O 00 64 O C7 d' d' N O Vl 14 O N ay V i= V N �c In 00 M 4'1 V� eF O vi T oc O �o O\ n 00 y N DO vl d" Q O 01 cl tifl 10 00 r" r--+ 64 it �r at 122 .m I I L � 3 y I � L .- i I � I L% I � f T 1 � i Y 1 N I O S ` O i O vl W d' �C r- O O [� 00 QO O kn FA ,-• O �O Q� M �D N [� � � Ln 0i 00 W) [-- 00 M O kn V] kn 00 l- bR 6\ C% ON 0 0 0 0 0 123 64 14� [- a n m W r M M N� O �-. t " O N A N C[ ti s4 r• kn � o0 00 i N N � }, 'n O O o0 [ -� [ M 00 O M l� kn N N m a do 00 O -n dt 00 M r- irz N �D C N 00 m O O o0 N vz LLL v Z p O M Cn Q G .�. 10 �t M 4, rn M Cl E- V) N� o0 4 �n 00 [- M Q N M ko ko 0 a� LU U. =) Z W L7 s9 W Z W M j j J C. EL U3 [- M W) 01 (- 0w0 N �o 00 C4 N � � [� O �ZV �, ��oa�:o CqM�L 2 w - N O Li Z 40S W o0 O U N [� 7r n W) N d O Da 8a M _ d Cn DO � 4 t� 01 M 00 J>- Ln r- 00 00 cl T z N LLJ w Z M- LU m N O_ M't r �o `n C kn r- w M 00 l- Wn �c N M U Q+ G 00 00 O N N M .Nw ,.mow N CN�E FA ,-• O �O Q� M �D N [� � � Ln 0i 00 W) [-- 00 M O kn V] kn 00 l- bR 6\ C% ON 0 0 0 0 0 123 124 V� DO N It N"D O O dN pO N O O1 O LO 00 O Ln O M 00 d• � Y1 00 �C O ,--� © N vt 00 © v7 O p N k4O N b4 b9 N O7\ N 00 nO 0000 ONO M t!1 Mkf) It ON O M -• N i� d O rq © 00 t-- M M V'1 C) N O d M ^� O p 4 C O N GS bF3 i--t O � E� Vl 00 00 00 © 00 M O O d v i N N oo M -- M a O A M 00 Vt d V) N C N 00 r-.i 00 O LG © i� �f N M 00 d O N Ile O n 'N N x � W O W a _ � 00 v = [� �O a0 a I'D 0000 01 �o N O a o�00 oo 00m n M Q m M °o V H N n 00 kt) N oc o N 5H i-S a r.a bA fA U v U Q Lo W 2 �. :3 3 o A a o UF+v�Oav� 0 o y U a o a o o a ~© o 124 125 o v O� roU "C U C Df3 .-. n W) m n "0 'r T N �--� O C � t• N M �O N 0� �O �n N A :.d U t n d cl N C7 a N F C! in ° oro c-4 ° be c ccD 3 `` 63 N •--� ,-� M N m O 00 U D m 0 0 0 0 0 0 0 0 0 C w M l0 M O CD �O ccaa °' M O [t-- DO N [� O 00 00 Q U N Z 3 O Z U Q In N M w It O1 O t— N N O to ON VII w ON N O kn O, N U a cxC p M v'i N O; 00 t- O v) C U Z uj �' F v V N Cl V 00 �D m N v1 vl ti0 w w �O v'f r, - �D E Q—r O J o --cnmN r N ^Wo U O Z p N M M M ei G} Z U R O C7 Z 69 7 mac4b t- 0 w� T o 0 ui 0 ..a 0 X O a� �Lua�� 0000000000 o} w a N N r,-- 10 N In° O '2 .1 ° Z p U u U 07 10 �O Ln W) In It m N a�rnrnrna�rna,rnrnrn U ° a� � o �� � � U U ° u r� r d 00 d' w M O1 m �+ Cd O 01 C,4 W) m"D d N IO w t- N D U N Oi m N^ m o Ct o �D U' In ON 7 M N �n ' D M O 3 t— O, 00 ON M �t O 01 M N N m m 41 � O U � O +, cV'-n N vmi T p N y M O 00 M N O U •�" U N N CT ao N rr N� O C' Ps oc� M U a m In m bD kr) C � .K K 6" .� N V") aO t~ 0, 0, N t� 00 Q1 O N D O� ON O1 011 O O O M 125 F.y �r W Fr R� � Q CC � H rte, 0 W � F U 0 d A� O W � W z� Q p W W Qi -n O O � O �, cd W Q F" O F" b y N Q b U N W "o R] 0 D. O O O v ro d m m W G] O F. f]. 'C7 � O cu cu N H o U Orl 00 M 00 N 00 d' r7 h� �O M n vi N n n 4 n n M Ln N T N O O N O 00 Vl V 00 00 V] fZ V1 00 00 C0 OO 00 Qr 6^ 00 01 V 69 O cn M CN O1 O N d' Ln vi n N vi N O N n Vl O M n M O kn O N 00 00 lO N �D tiD ti4 �D �D �D �4 O� Ot 00 � N N 69 0 0 0 0 0 0 0 0 0 0 O o0 Vl 't \D C� 00 M N M O cl' kn i- M tp O Vl N Ln O, 41 00 00 n N Lr V lD <'t 0'S M O O 00 �O 00 n N O, 00 n �4 l� n VS N C7 N N M 69 0 0 0 0 0 0 0 C. 0 0 h M O Vl M M O m O O O �D 00 GO N M N M o v o r= o 00 0o v a V' 00 M Vl O Ln ^ Qr o0 o0 v'y O� O �O M M N M V7 �O V7 7 M N N N N N cV N 00 n C? 69 000 N m N M M �D tl� O N d, u7 a0 O M Ln �4 'U' ON O W) OQ kn �D + N M et m M N N �O m oO Ln n n �o N T N O H' O 9 N� Q O 0 � 'er V'S 'n in 'n "o 'iD o0 t 'fit 6a 00 N_ 4 O _O kr O\ V'Y n C> O O Ln V1 00 DO O O V) 7 69 O M N T r- N O V' M � N O, n M 4l 00 M T M 4 --� 00 �D �4 N Vl ,t n 00 vl kn M to 14 It 64 N O N M M 0\ M V7 O O 00 .- N n O T n O O1 D 00 00 n N M n n rn nt o0 o o w, n ,-• v v-1 00 �o ,� n co O �D N = O2 N O V1 v N n N V V V d' cY zt' V N M N N N 64 V) �4 n 00 m O * * * ci� O, O, C, O\ O O x 0 0 0 0 0 V V_1 �o r- 00 m O D G1 U O D\ Q1 T 61 6� D1 O 0 o O C'4 C4 fq 126 O O N cad a N O 0 N C co a. 0. 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N Cl pq N N o 0 o a o NO 0 v o 0 0 0 0 0 69 mD a,, rl— V) � °O r W 64 000 00 OC? o d' 0 0 0 0 0 O 7 „a O C oc a M �f WE- n wrn n o — O rn o O cNro _°oa a n C M 00 � i N O M ,z D iQ �l '" CT N 00 oo fV 00 Ln •D 00 n o0 N "0n Oo 00 m O 000 O = C� "O 0 0 0 0 0 0 0 0 0 0 O O o �o O �c v1 00 O M ,o M IrL M N a M �f WE- n wrn n 00 O cNro _°oa a n 'n h Io M 00 � i b, ,z D iQ �l '" CT N 00 oo fV 00 Ln •D 00 n o0 N "0n Oo 00 m O pW N A 69 6s p A cl o 0 o a o NO 0 v o 0 0 0 0 0 r- oo mD a,, rl— V) � °O r W H cF In c�i o0 �ti rr o v a a �'Q �"� Gq .-•+ v) ^M M M Ln ,D n rV In N r� N = O oo .-r oo t0 CV � O WEd w `il m� z '- M 00CD v CD 1= 00000 o Ln rn kr) oo N r 0C N N U O n" 01 D 'IT oo d oo r- r� m Vl v V1 n o0 OO oo N ,D oo 69 65 000 00 000 'no oo'n o 1n b m It v o0 00 �f rn a 00 n n 00 a M 00 � i b, w ,z D iQ n O m M CT N 00 oo fV 00 Ln •D 00 n o0 N %n sn Oo 00 m O 69 64 C�C i 79 Q w ; Q H U W w H P4 W A A A O Qa E� w Z A zQ z A W O� 0 OH H � A V A A a z W H W O 0 oq � � nnt��D�nd'�naoo aW � Ln d O O O O O 00 O1 V) O1 A C7 © C7 O O O o 0 0 0 c�" M M N N O1 d Wn 00 00 V') M M .d �fl M 00 M 00 M Q d e} m m N N - oq � � nnt��D�nd'�naoo aW � v 0 0 0 0 0 0 0 0 0 0 N O O O O O O O O O O :i Cl 0 0 0 0 o O o O o O O O O ati q C7 © C7 O O O o 0 0 0 .d 0 0 C� O O v i Q v'i O O1 d Wn 00 00 V') M M .d �fl M 00 M 00 M Q d e} m m N N - A v 0 0 0 0 0 0 0 0 0 0 N O O O O O O O O O O :i O O O O O O O O O O ati O C7 C? C7 O u5 wi v'i Q cn a O O N M V1 O1 d O o DO N N 00 N M N N N N N N N N M A ON a1 00 x 00 -- o o -- 00 00 kn vi N N O1 [� [� ti0 �O �O 0 0 0 0 17, 0 0 0 0 0 O �i�I Ln�t- 000,08NMdt C, a, CN a, ON 0 0 0 0 0 a, al a,a,Q000Oo .O d� tn a r- 0000 4 Q N en cc y i 128 dF 0 v �3 ro � a � 0 O y a � � U M y Mr U O � 'ice U 'bA > c� y U � O .O 'C v � y O U O U v 0 O N Q O a o � N v `" 3E 0 0 0 0 0 0 0 0 0 C7 d d O vi O En O �n vi v3 O o DO N N 00 N M in lr �O �n O 14 lD O kn O', O to O1 �n 14D ON M M O, d" d° C', © o "T �ollc�r- vn oO�M b to Ln C= O Ct N 0�0 00 �D N 00 00 - Q M O N t r�r I'D O O1 00 *� N N ON a1 00 x 00 -- o o -- 00 00 kn vi N N O1 [� [� ti0 �O �O 0 0 0 0 17, 0 0 0 0 0 O �i�I Ln�t- 000,08NMdt C, a, CN a, ON 0 0 0 0 0 a, al a,a,Q000Oo .O d� tn a r- 0000 4 Q N en cc y i 128 dF 0 v �3 ro � a � 0 O y a � � U M y Mr U O � 'ice U 'bA > c� y U � O .O 'C v � y O U O U v 0 O N Q O a o � N v `" 3E d A A BQ a O U 0 N M L d a F" U U v1 vi 1' V W N 69 C, p0 V id G w 0 N q 129 rJ O .0 6�T a U C 3 O E H b0 C � bba >> cif' C bU.6 l o R, � U " C cxl • •" 0 t y CA m N (U y o o � � c btu •° '�_ ` E O �' aCi M •�, U C O E N C O U •6 C C C u COO > U E P � y O � •� 'C1 Vi �•+ •� O 2 U � ° r a to y U � -a Q � F .E „ o N vq a� 3 d ° - E .E w E � O M C a ooc ol 00 M V Obi N T V1 00 V �O 00 0o O+ N oo n T O N O O V m M N m 0 t+� O Q, cn 64 64 A a .E b P R O .a A W Wfl E■ N N m v N y A U N > O O d n• C cC C n Ra R a, 7 e "n rs a 'b O 4 n U E a a cl v N b O eG w A U cd E G o a s fl o m v ° ° 129 rJ O .0 6�T a U C 3 O E H b0 C � bba >> cif' C bU.6 l o R, � U " C cxl • •" 0 t y CA m N (U y o o � � c btu •° '�_ ` E O �' aCi M •�, U C O E N C O U •6 C C C u COO > U E P � y O � •� 'C1 Vi �•+ •� O 2 U � ° r a to y U � -a Q � F .E „ o N vq a� 3 d ° - E .E w E � w W Z m J W z W aO z� a0 ❑ N ? 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Q= 4 U \ 4 146 SUPPLEMENTAL AUDIT OF FEDERAL AWARDS 147 STATE OF INDIANA AN EQUAL OPPORTUNITY EMPLOYER STATE BOARD OF ACCOUNTS 302 WEST WASHINGTON STREET ROOM E418 INDIANAPOLIS, INDIANA 46204 -2765 Telephone: (317) 232 -2513 Fax: (317) 232 -4711 Web Site: www.in.gov /sboa INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS TO: THE OFFICIALS OF THE CITY OF SOUTH BEND, ST. JOSEPH COUNTY, INDIANA We have audited the financial statements of the City of South Bend (City), as of and for the year ended December 31, 2004, and have issued our report thereon dated May 3, 2005. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, con- tracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial state- ments and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its opera- tion that we consider to be material weaknesses. This report is intended solely for the information and use of the City's management and federal award- ing agencies and pass - through entities and is not intended to be and should not be used by anyone other than these specified parties. In accordance with Indiana Code 5- 11 -5 -1, this report is a part of the public records of the State Board of Accounts and of the office examined. May 3, 2005 148 STATE BOARD OF ACCOUNTS STATE OF INDIANA AN EQUAL OPPORTUNITY EMPLOYER STATE BOARD OF ACCOUNTS 302 WEST WASHINGTON STREET ROOM E418 INDIANAPOLIS, INDIANA 46204 -2765 Telephone: (317) 232 -2513 Fax: (317) 232 -4711 Web Site: www.in.gov /sboa INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A -133 TO: THE OFFICIALS OF THE CITY OF SOUTH BEND, ST. JOSEPH COUNTY, INDIANA Compliance We have audited the compliance of the City of South Bend (City) with the types of compliance require- ments described in the U.S. Office of Management and Budget OMB CircularA -133 Compliance Supplemen t that are applicable to each of its major federal programs for the year ended December 31, 2004. The City's majorfederal programs are identified in the Summary of Auditor's Results section of the accompanying Sched- ule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the City's management. Our responsibility is to express an opinion on the City's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States; the standards applicable to financial audits contained in Government Auditing_ Standards, issued by the Comptroller General of the United States; and OMB Circular A -133, Audits of States, Local Governments, and Non - Profit Organizations. Those standards and OMB Circular A -133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the City's compliance with those requirements. In our opinion, the City complied in all material respects with the requirements referred to above that are applicable to each of its major federal programs for the year ended December 31, 2004. Internal Control Over Compliance The management of the City is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City's internal control over compliance with require- ments that could have a direct and material effect on a major federal program in order to determine our audit- ing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A -133. 149 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A -133 (Continued) Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involv- ing the internal control over compliance and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of the City's management and federal awarding agencies and pass - through entities and is not intended to be and should not be used by anyone other than these specified parties. in accordance with Indiana Code 5- 11 -5 -1, this report is apart of the public records of the State Board of Accounts and of the office examined. May 3, 2005 150 STATE BOARD OF ACCOUNTS CITY OF SOUTH BEND SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For The Year Ended December 31, 2004 Total for program 99,776 The accompanying notes are an integral part of the Schedule of Expenditures of Federal Awards. 151 Pass - Through Federal Entity (or Other) Total Federal Grantor AgencylPass- Through Entity CFDA Identifying Federal Awards Cluster TitielPro ram TitlelPrdect Title Number Number Expended U.S. DEPARTMENT OF COMMERCE Direct grant Public Works and Economic Development Cluster Economic Adjustment Assistance 11.307 06 -19 -01251 $ 2,472,319 U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Direct grants CDBG - Entitlement and (HUD- Administered) Small Cities Cluster Community Development Block Grants /Entitlement Grants 14,218 B- 03 -MC -18 -0011 3,049,024 B- 04 -MC -18 -0011 119, 996 Section 108 # 5 6,975 Section 108 # 6 1,075 Section 108 # 7 641,803 Total for cluster 3,818,873 Emergency Shelter Grants Program 14.231 S- 03 -MC -18 -0011 11,994 S-04-MC-18-00111 107,169 Total for program 119,163 Shelter Plus Care 14.238 IN- 36 -C200 -007 AIPS 21,579 IN- 36 -C200 -008 MAD 46,738 IN36 -0300 -008 23,860 IN36 -C300 -009 6,631 IN36- C960101 -96 12,008 Total for program 110,816 Fair Housing Assistance Program - State and Local 14.401 89,002 Neighborhood Initiative Projects 14.Unknown B- 01- N1 -IN -SB -001 49,216 Total for federal grantor agency 4,187,070 U.S. DEPARTMENT OF JUSTICE Direct grant Local Law Enforcement Block Grants Program 16.592 02LBBX 2038 192,972 Executive Office for Weed and Seed 16.595 2003 -W S -QX -0020 195,024 2004 -WS -Q4 -0089 21,768 Total for program 216,792 Public Safety Partnership and Community Policing Grants 16.710 D3 ckwx 0123 248,375 03 omwx 0133 50,554 04 shwx 0063 31,250 Total for program 330,179 Pass - Through Indiana Criminal Justice Institute Juvenile Accountability Incentive Block Grants 16.523 01 jb 013 22,074 02jb013 77,702 Total for program 99,776 The accompanying notes are an integral part of the Schedule of Expenditures of Federal Awards. 151 CITY OF SOUTH BEND SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For The Year Ended December 31, 2004 (Continued) Federal Grantor AgencylPass- Through Entity Cluster TitleMfogram Title /Project Title Federal CFDA Number Pass - Through Entity (or Other) Identifying Number Total Federal Awards Expended U.S. DEPARTMENT OF JUSTICE continued) Pass- Through Indiana Criminal Justice Institute Crime Victim Assistance 16.575 03 -VA -140 17,274 03 -VA -142 48,137 04 -VA -012 9,061 04 -VA -138 8,654 04 -VA -139 1,375 04 -VA -140 18,387 Total for program 102,888 Violence Against Women Formula Grants 16.588 03 sl 060 24,870 03 st 061 15,693 04 st 0452 4,526 04 st 063 6,675 Total for program 51,764 Motor Vehicle Theft Protection Act Program 16.597 03 gp 001 3,277 03 gp 002 19,071 03 gp 003 60,000 03 gp 008 10,468 03 gp 012 24 Total for program 92,840 Total for federal grantor agency 1,087,211 U.S. DEPARTMENT OF TRANSPORTATION Pass Through Indiana Govemor's Council on Impaired and Dangerous Driving Highway Safety Cluster Alcohol Traffic Safety and Drunk Driving Prevention Incentive Grants 20.601 J8 03- 03 -03 -47 23,109 154 AS O4 -03 -03 -66 57,378 J8- 02 -03 -03 -100 965 Total for program 81,452 Safety Incentive Grants for Use of Seatbelts 20.604 in -05 -02 -03-45 6,250 Total for federal grantor agency 87,702 U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Direct grant Employment Discrimination -State and Local Fair Employment Practices Agency Contracts 30.002 71,675 U.S. ENVIRONMENTAL PROTECTION AGENCY Pass - through Indiana Department of Environmental Management Capitalization Grants for Clean Water State Revolving Funds 66.458 1,064,859 U.S. CORPORATION FOR NATIONAL AND COMMUNITY SERVICE Pass - through Indiana Commission for Community Services AmeriCorps 94.006 PY 2002 -03 8,310 U.S. DEPARTMENT OF HOMELAND SECURITY Pass - through Indiana Slate Emergency Management Agency State Domestic Preparedness Equipment Support Program 97.004 02 ttcx 0145 19,149 Total federal awards expended $ 8,998,295 The accompanying notes are an integral part of the Schedule of Expenditures of Federal Awards. 152 CITY OF SOUTH BEND NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Note 1. Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the City of South Bend (primary government) and is presented in accordance with the requirements of OMB Circular A -133, Audits of States, Local Governments, and Non - Profit Organizations. Ac- cordingly, the amount of federal awards expended is based on when the activity related to the award occurs. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. Note 2. Subrecipients Of the federal expenditures presented in the schedule, the primary government provided federal awards to subrecipients as follows for the year ended December 31, 2004: 153 Federal Amount CFDA Provided to Program Title Number Subrecipients CDBG — Entitlement and (HUD Administered) Small Cities Cluster 14.218 $ 3,052,757 Crime Victim Assistance 16.575 102,888 Violence Against Women Formula Grants 16.588 51,764 153 CITY OF SOUTH BEND SCHEDULE OF FINDINGS AND QUESTIONED COSTS Section I - _Summary of Auditor's Results Financial Statements: Type of auditor's report issued: Unqualified Internal control over financial reporting: Material weaknesses identified? no Reportable conditions identified that are not considered to be material weaknesses? none reported Noncompliance material to financial statements noted? no Federal Awards: Internal control over major programs: Material weaknesses identified? no Reportable conditions identified that are not considered to be material weaknesses? none reported Type of auditor's report issued on compliance for major programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of Circular A -133? no Identification of Major Programs: CFDA Number Name of Federal Proqram or Cluster 11.307 Public Works and Economic Development Cluster CDBG — Entitlement and (HUD Administered) Small Cities Cluster 16.710 Public Safety Partnership and Community Policing Grants 66.458 Capitalization Grants for Clean Water State Revolving Funds Dollar threshold used to distinguish between Type A and Type B programs: $300,000 Auditee qualified as low -risk auditee? Section 11— Financial Statement Findings No matters are reportable. Section III — Federal Award Findings and Questioned Costs No matters are reportable. 154 rots] CITY OF SOUTH BEND SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS APRIL 14, 2005 FINDING NO. 2003 -1. CASH MANAGEMENT Federal Agency: U.S. Department of Justice Federal Program: Public Safety Partnership and Community Policing Grants CFDA Number: 16.710 Federal Award Number: 2002CKWX0059 The City feels that due to the special situation of this grant the City was in compliance with cash management. An agent of the City contacted the grant issuer, U.S. Department of Justice, and specifically inquired as to time requirements of the funds. The agent for the U.S. Department of Justice informed the City that there were no restrictions that needed to be followed. These instructions, given to the City, were confirmed by an auditor for the U.S. Department of Justice Office of the Inspector General. Thomas J. Skarbek, CPA Director of Budgetin; City of South Bend & Financial Reporting 155