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Home My WebLink About2015 City of South Bend Popular Annual Financial ReportCity of South Bend, Indiana Popular Annual Financial Report (PAFR) For the Year Ended December 31, 2015 Prepared by the Department of Administration & Finance For more informaƟon, please visit: hƩps://www.southbendin.gov/ 2 Message from the Mayor: June 30, 2016 Dear residents and visitors of the City of South Bend, As with any large organization, management has a duty to provide meaningful reports that summarize the organization’s condition within its current environment to its executive board. In that spirit, I am pleased to present the City of South Bend’s first Popular Annual Financial Report (PAFR) to you, the City’s ultimate executive board. The PAFR contains information about the City and its finances in a user-friendly format that is easier to digest and understand than the City’s 302-page Comprehensive Annual Financial Report (CAFR). The financial information presented herein is excerpted from the CAFR and I encourage readers interested in more detail to refer to that document for further information. 2015 was a year of progress for the City of South Bend. The population of our City increased as more people discovered the advantages of Midwestern urban living. The City made strides in important signature community development projects including completion of the vacant and abandoned building initiative, increased residential and commercial development in the downtown area, the enhancement of neighborhoods and school safety with curb, sidewalk and lighting projects, and the start of the “Smart Streets” conversion of one-way streets to two-way with the objective of enhancing economic activity. At the same time, the City maintained its financial strength as evi- denced by its strong AA bond rating, one the best for cities of its size in Indiana. As this is the City’s first PAFR, we are especially interested in your feedback so that we may improve its presentation in future years. I welcome your comments and suggestions on behalf of the Administration and Finance Department and encourage you to contact John Murphy, City Controller at 574/235-7678 or e-mail jmurphy@southbendin.gov. With Highest Regards, Pete Buttigieg, Mayor City of South Bend Mayor Pete Buttigieg For more informaƟon, please visit: hƩps://www.southbendin.gov/ 3 The Popular Annual Financial Report City Government Finances: A Primer ...................................................................... 4 Our Organizational Chart .......................................................................................... 5 We Are South Bend ..................................................................................................... 6 South Bend Education and Business ....................................................................... 7 South Bend Culture and Recreation ......................................................................... 8 South Bend Events ..................................................................................................... 9 The City’s Revenues ................................................................................................. 10 The Cost of City Services....................................................................................... 11 The City’s Debt Burden .......................................................................................... 12 Full-Time Employees (FTE’s) ................................................................................ 13 Contact Information ................................................................................................ 14 Cover Image: design for Smart Streets two-way conversion of St. Joseph Street in front of the Century Center, Lawson-Fisher Associates For more informaƟon, please visit: hƩps://www.southbendin.gov/ 4 City Government Finance: A Primer The goal of a business venture is to provide income for its stakeholders. In contrast, the goal of gov- ernment is to provide services to its citizens. The measurement of success in business is a positive “bottom line”: revenues exceed expenses. But the measurement of success for a government is the ability to serve its population within its financial constraints. And unlike a business, the government is prohibited by law from allowing expenditures to exceed budgeted limitations. Like any city in the United States, South Bend uses “fund-based” accounting. A “fund” is a segregated group of resources that have been identified to meet a specific purpose. A fund is just like a check- book: cash receipts and disbursements are recorded in it and, like a checkbook, the City strives to main- tain a positive balance. Broadly speaking, there are two main types of funds: governmental funds and business-type funds. Gov- ernmental funds are used to account for basic services: police and fire protection, street maintenance as examples. We all pay for these services through our tax dollars so that they’ll be available to any of us who need them, whenever we need them. Business-type funds are run like a business. They charge only the people who use the service and are ex- pected to have revenues cover their operating expenses as well as any loan payments. In South Bend, these funds include Water Works, Wastewater, Solid Waste, Century Center and the EMS system. Across all funds, there are inflows and outflows; revenues and expenditures or expenses. Revenues are the sums of money coming in to the City. The main sources, as noted above, are tax dollars and charges for services. Revenues also include proceeds from new debt, such as a bond to fi- nance a construction project. Each of these sources can be further broken down, as you’ll see in later pages. Expenditures are the costs of the City and are divided into three main types: operating, debt service and capital outlay. Operating expenditures are the costs for salaries and supplies needed to provide the ser- vices. These expenditures are ongoing, in that they will be incurred year after year as the City performs its services, but the amounts may change significantly based upon the level of services the City admin- istration chooses to provide. Debt Service comprises the principal and interest payments made to repay the City’s debt obligations. Be- fore the City can apply for any new debt, it must be able to prove that it will be able to repay that debt along with any prior debt still outstanding. These expenditures are ongoing as well, but the amounts are stable, based on the repayment schedules negotiated at the time the debt was incurred. Capital outlay expenditures can be either large, one-time expenditures, such as a new building, or smaller annual expenditures such as new vehicle purchases within a fleet maintenance program. These expendi- tures can vary widely year to year, based on current requirements. With these broad definitions in mind, we hope that you’ll find the foregoing reports meaningful and interesting. For more informaƟon, please visit: hƩps://www.southbendin.gov/ 5 Our Organizational Chart Mayor Pete Buttigieg Chief Executive Officer, 4-year term Common Council 1st District Tim Scott 2nd District Regina Williams-Preston 3rd District Randy Kelly 4th District Jo M. Broden 5th District Dr. David Varner 6th District Oliver Davis At Large John Voorde Gavin Ferlic Karen White Legislative Authority, 4 years each City Clerk Kareemah Fowler Maintain Council records, ordinance violation collections, 4-year term For more informaƟon, please visit: hƩps://www.southbendin.gov/ 6 We Are South Bend Population (2014 Estimate) 101,190 % Female (2010 Census) 51.6% % Male (2010 Census) 48.4% Persons Per Household 2.45 (2010 – 2014) Median Household Income $34,656 (2010 – 2014) Persons Below Poverty Level 27.8% (2014 Estimate) Educational Attainment (2010 - 2014) High school graduate or higher 84.5% Bachelor’s degree or higher 23.5% People Quick Facts White 60.5% Black or African American 26.6% American Indian/Alaska Native 0.5% Asian 1.3% Native American and Other Pacific Islander 0.1% Two or more races 4.2% Veterans (2014 Estimate) 5,759 The City Administration’s Mission “We deliver services that empower everyone to thrive.” The City Administration’s Values Excellence Goal: best in state and/or top 25% nationally Accountability Goal: offer services with the greatest value to the taxpayer Innovation Goal: deliver services more effi- ciently through creativity Inclusion Goal: include diverse voices in decision-making Empowerment Goal: establish a work environ- ment that allows employees to contribute richly Population Statistics For more informaƟon, please visit: hƩps://www.southbendin.gov/ 7 South Bend Education and Business University of Notre Dame Indiana University South Bend Holy Cross College Saint Mary’s College Ivy Tech Community College Colleges and Universities AM General 1st Source Bank Tire Rack Fulton Industries, Inc. ABRO Data Realty The Indiana Whiskey Company Local Businesses Headquarters Largest Employers University of Notre Dame Beacon Health System South Bend Community Schools AM General The City of South Bend For more informaƟon, please visit: hƩps://www.southbendin.gov/ 8 South Bend Culture & Recreation Studebaker National Museum South Bend Symphony Orchestra at the Morris Performing Arts Center Byers Softball Complex at St. Clair Park Joseph D. Oliver House Museum, “Copshaholm” SB150 River Lights Celebration, May 22, 2015 For more informaƟon, please visit: hƩps://www.southbendin.gov/ 9 South Bend Events Spring “Greening of the Race”, St. Patrick’s Day celebration St. Patrick’s Day parade River Lights Music Festival—New for 2016! Mayors’ Ride—New for 2016! Bike to Work Week Summer South Bend Cubs baseball Seitz & Sounds music series Memorial Day Parade First Fridays Downtown Art Beat Outdoor film series Red Table Plaza Fridays by the Fountain Fall/Winter Downtown for the Holidays Restaurant Week For more informaƟon, please visit: hƩps://www.southbendin.gov/ 10 The City’s Revenues Governmental Funds’ revenues totaled $142.7 million in 2015. Revenues from Business-Type Activities totaled $75.0 million in 2015. New this year, the Emergency Medical Services (EMS) program was separated from the rest of the Fire Department to become its own business-type activity, responsible for its own revenues. Change, 2015 from 2014 Small declines in revenues within govern- ment funds were more than offset by in- creases in Wastewater revenues due to rate increases, and the transfer of the EMS pro- gram to a business-type activity. For more informaƟon, please visit: hƩps://www.southbendin.gov/ 11 The Cost of City Services Total Expenses for Governmental activities was $164.3 million in 2015 Total Expenses for Business-Type Activities was $61.9 mil- lion in 2015. The largest business-type activities are the Wastewater and Water Works operations which charge fees for services rendered. For 2015, the City’s Net Position was $335.6 million. “Net Position” is the difference between the City’s assets and its liabilities. It represents resources currently available to the City for future services and eco- nomic safety buffers. The majority of Net Position consists of investment in capital assets. Please refer to the 2015 Comprehensive Annual Financial Report (CAFR) for more detail, found at www.southbendin.gov/2015_CAFR For more informaƟon, please visit: hƩps://www.southbendin.gov/ 12 The City’s Debt Burden The City’s total debt obligation at the end of 2015 was $459.1 million. The City’s use of debt allows it to leverage current resources to buy or construct assets to be used in the future, such as the lease of police cars or the construction of infrastructure. These arrangements allow the City to pay for the vehicles or infrastructure during the periods in which the residents receive the benefits of the services. The largest segment of the City’s debt is its pension and other employment liability. In 2015, the City’s Net Pension Lia- bility was $191.2 million. The City is required to contribute 11.2% of annual payroll for non-bargaining and Teamster employees, and 19.7% for Police and Fire department employees. Most Capital Leases require a 5-year repayment schedule. The goal is to pay off the lease in less time than the expected useful life of the asset being leased. Bonds and other loans have a longer repayment period, averaging 20-30 years; this is appropriate since they are used to pay for longer-lasting assets such as buildings, roads, and other infrastructure. In 2015, 10.8% of the City’s expenditures went toward debt repayment. The City obtained 3 major new debt instruments in 2015: The “Smart Streets” Bond of $25 million, used to revert the City’s main one-way streets back to two-way as well as other related roadwork A Parks Bond of $5.6 million, to enhance the City’s parks network The Century Center Energy Conservation Bond of $4.1 million, to upgrade the building systems of the City’s convention center to state-of-the-art energy efficiency. The cost of this bond is being partially offset by energy re- bates on the interest, available through the federal government. For more informaƟon, please visit: hƩps://www.southbendin.gov/ 13 Full-Time Employees (FTE’s) Full-Time Department Positions General Government Mayor's Office 7 City Clerk's Office 5 Common Council (elected officials, part-time) 9 Administration and Finance 18 Legal Department 12 Engineering 16 311 Call Center 7 Safety and Risk 2 Human Rights 6 Public Safety Police Department 300 Fire Department 259 Culture & Recreation Parks and Recreation 88 Convention and Events Management 14 Community Investment Dept of Community Investment 25 Highways and Streets Street Department 53 Enterprise Funds Water Works 67 Wastewater 43 Organic Resources 6 Sewer 30 Solid Waste 21 Building Department 13 Code Enforcement 23 Internal Services Central Services 36 For more informaƟon, please visit: hƩps://www.southbendin.gov/ 14 We hope that you found this report useful. We also hope to continually improve this report and look forward to your participa- tion in doing so. Please feel free to CONTACT US: John H. Murphy, City Controller City of South Bend 227 W. Jefferson Blvd., Suite 1200 South Bend, IN 46601 574/235-7678 jmurphy@southbendin.gov www.southbendin.gov