HomeMy WebLinkAbout2008 Annual Financial ReportCity of Livonia, Michigan
Financial Report
with Supplemental Information
November 30, 2008
City of Livonia, Michigan
Contents
Report Letter
1-2
Management's Discussion and Analysis 35
Basic Financial Statements
Govemment-wide Financial Statements:
56
Statement of Net Assets
10
Statement of Activities
11-12
Fund Financial Statements:
56
Governmental Funds:
23
Balance Sheet
13
Reconciliation of Fund Balances of Governmental Funds to Net Assets
2655
of Governmental Activities
14
Statement of Revenue, Expenditures, and Changes in Fund Balances
15
Reconciliation of the Statement of Revenue, Expenditures, and Changes
in Fund Balances of Governmental Funds to the Statement of
Activities
16
Propnetary Funds:
Statement of Net Assets
17
Statement of Revenue, Expenses, and Changes in Net Assets
18
Statement of Cash Flows
19-20
Fiduciary Funds:
Statement of Net Assets
21
Statement of Changes in Net Assets - Pension and Other Employee
Benefits Trust Funds
22
Conponent Units:
56
Statement of Net Assets
23
Statement of Activities
24-25
Notes to Financial Statements
2655
Required Supplemental Information
56
Budgetary Companson Schedule - General Fund
5759
Budgetary Companson Schedule - Major Special Revenue Funds
60-61
City of Livonia, Michigan
Contents (Continued)
Required Supplemental Information (Continued)
Pension System:
Schedule of Funding Progress
62
Schedule of Employer Contributions
62
Retiree Health and Disability Benefits Plan:
Schedule of Funding Progress
63
Schedule of Employer Contributions
63
Actuarial Assumptions
64
Notes to Required Supplemental Information
65-66
Other Supplemental Information
67
Nonmajor Governmental Funds:
Combining Balance Sheet 68-71
Combining Statement of Revenue, Expenditures, and Changes in Fund
Balances 72-75
Fiduciary Funds:
Combining Statement of Net Assets 76-77
Combining Statement of Changes in Net Assets 78
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Independent Auditors Report
To the Honorable Mayor and
Members of the City Council
City of Livonia, Michigan
We have audited the accompanying financial statements of the governmental activities, the
business -type activities, the discretely presented component units, each major fund, and the
aggregate remaining fund information of the City of Livonia, Michigan (the "City") as of and for
the year ended November 30, 2008, which collectively comprise the City's basic financial
statements as listed in the table of contents. These financial statements are the responsibility of
the City of Livonia, Michigan's management Our responsibility is to express opinions on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of matenal 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 bass for our opinions.
In our opinion, the financial statements referred to above present fairy, in all material respects,
the respective financial position of the governmental activities, the business -type activities, the
discretely presented component units, each major fund, and the aggregate remaining fund
information of the City of Livonia, Michigan as of November 30, 2008 and the respective
changes in financial position and cash flows, where applicable, thereof for the year then ended, in
conformity with accounting principles generally accepted in the United States of America.
The management's discussion and analysis, pension system schedule of funding progress and
employer contributions, postemployment benefit plans schedule of funding progress and
employer contnbutions, and the budgetary comparison schedules, as identified in the table of
contents, are not required parts of the basic financial statements but are supplemental
information 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 presentation of the required supplemental information.
However, we did not audit the information and express no opinion on it
Praxitr:
To the Honorable Mayor and
Members of the City Council
City of Livonia, Michigan
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Livonia, Michigan's basic financial statements. The
accompanying other supplemental information, as identified in the table of contents, is presented
for the purpose of additional analysis and is not a required part of the basic financial statements.
The other supplemental information 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.
In accordance with Government Auditing Standards, we have also issued our report dated
March 20, 2009 on our consideration of the City's internal control over financial reporting and
on our tests of its compliance with certain provisions of laws, regulations, contacts, and grants.
The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion
on the internal control over financial reporting or on compliance. That report is an integral part
of an audit performed in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of our audit.
AV& 12' r PLL:
March 20, 2009
City of Livonia, Michigan
Management's Discussion and Analysis
Overview of the Financial Statements
The City of Livonia, Michigan's (the "City") 2008 annual report consists of four parts: (1)
management's discussion and analysis, (2) basic financial statements, (3) required supplemental
information, and (4) other supplemental information that presents combining statements for
nonmajor governmental funds, propnetary funds, and fiduciary funds. The basic financial
statements include two kinds of statements that present different views of the City. The first
two statements are government -wide financial statements that are intended to provide longer-
term information about the City's overall financial status. The remaining statements are fund
financial statements that focus on individual parts of the City's government, reporting the City's
operations in more detail than the government -wide financial statements.
Government -wide Financial Statements
The government -wide financial statements report information about the City as a whole using
accounting methods similar to those used by private sector companies. The statement of net
assets includes all of the government's assets and liabilities. All of the current year's revenues
and expenses are accounted for in the statement of activities regardless cf when cash is received
or paid.
The two government -wide statements report the City's net assets and how they have changed.
Net assets, the difference between the City's assets and liabilities, are one way to measure the
Citys financial health or position.
The government -wide financial statements of the City are divided into three categories:
0 Government Activities - Most of the City's basic services are included here, such as the
police, fire, public works, parks departments, and general administration. Property taxes,
state -shared revenue, and charges for services provide most of the funding for these
activities.
0 Business -type Activities - The City charges fees to customers to cover the costs of certain
services it provides. The City's water and sewer system, golf course operations, and non-
federal senior housing are treated as business -type activities.
0 Component Units - The City includes three other entities in its report, the Plymouth Road
Development Authonty, the Economic Development Corporation, and the Livonia
Brownfield Redevelopment Authonty. Although legally separate, these 'component units"
are important because the City is financially accountable for them, including debt, which is
issued on behalf of the authorities by the City.
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
Fund Financial Statements
The fund financial statements provide more detailed information about the City's most
significant funds - not the City as a whole. Funds are accounting tools that the City uses to keep
track of specific sources of funding and spending for particular purposes. Some funds are
required by state law and bond covenants. Other funds are established to control and manage
money for particular purposes.
The City has three kinds of funds:
0 Governmental Funds - Most of the City's basic services are included in governmental
funds, which focus on him cash and other financial assets that can be converted to cash, flan
in and out, and the balance left at year end that is available for spending. The governmental
fund statements provide a detailed short-term view that helps you determine if there are
more or fewer financial resources available to spend in the near future to finance the City's
program.
0 Proprietary Funds - Services that are intended to be entirely self-supporting by customer
fees are generally reported in proprietary funds. Proprietary fund statements, like
government -wide statements, provide both short- and long-term financial information.
0 Fiduciary Funds - The City is responsible for ensuring that the assets in these funds are
used for their intended purposes. We exclude these activities from the government -wide
financial statements because the City cannot use these assets to finance its operations.
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
The City as a Whole
In a condensed format, the table below shows a comparison of the net assets as of
November 30, 2008 to the prior year.
Net Assets (in millions of dollars)
Summary Condensed Statement of Net Assets
Governnanlal&hvilies Busiresslype PctiHties Total
2008 2007 2008 2007 2008 2007
Assets
Current and other assets $ 579 $ 576 $ 331 $ 345 $ 918 $ 92.1
Carnal assets 1683 1669 882 882 2485 2471
Total assets 2262 2245 1133 1147 3395 3392
LiaNlities
Current liabilities 7.1 129 29 59 180 188
Longterm liadlities 47.6 433 155 152 63.1 585
Total liabilities 547 562 184 211 731 71.3
Net Assts
Invested in carnal assets -
Not ofrelated! debit 1316 1288 669 676 1985 1964
Restricted 262 264 273 253 535 517
Unrestricted 136 131 87 87 143 138
Total net assets $ 171A $ 169.3 $ 94.9 $ 93.6 $ 266.3 $ 261.9
City of Livonia - Net Assets
The City's assets exceed its liabilities at the end of the fiscal year by $266.3 million (net assets).
However, a major portion (74.5 percent) of the City's net assets represents its investments in
capital assets (e.g., land, roads, infrastructure, buildings, and equipment) less any related debt
used to acquire or construct these assets. The City uses these physical assets to provide
services to its citizens. These assets are illiquid and not available for future spending.
Unrestricted net assets of the City increased from $13.8 million at November 30, 2007 to
$14.3 million at the end of this year. The amount represents the part of net assets that can be
used to finance day-to-day operations without constraints established by debt covenants,
enabling legislation, or other legal requirements.
Further, 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.
5
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
The following table shows the changes in net assets during the current year, and as compared to
the prior year
Changes in Net Assets (in millions of dollars)
Summary Condensed Income Statement
Gmemmental Activdies Businesstype Activdies Total
2008 2007 2008 2001 20M 2007
Revenue
Program revenue:
Charges for services $
160 $
165 $
279 $
279 $
439 $
444
Operating grants and
contributors
95
82
-
-
95
82
Capital grants and
contributors
82
82
82
81
84
03
Gereral revenue:
Property taxes
583
563
-
-
583
563
State -shared revenue
91
89
-
-
91
89
Rental income and tees
17
15
-
-
17
15
Interest
28
43
06
16
36
59
Transfer and
miscellaneous
(81)
03
84
84
83
81
Total revenue
981
962
29.3
380
1274
1262
Program Expenses
Gereral govemment
112
99
-
-
112
99
Public safety
381
35.0
-
-
381
35.0
Publicworks
268
259
-
-
268
259
Community and economic
development
14
11
-
-
14
11
Recreation and culture
155
146
-
-
155
146
Interest on longterm debt
14
26
-
-
14
26
Water and sewer
-
-
251
255
251
255
Gdtcoum
-
-
19
19
19
19
Housing
1 1
11
11
1 1
Total program
expenses
950
893
281
285
1231
1178
Chargein Net Assets
31
69
12
15
43
84
Net Assets- Beginning of year
1683
1614
93.6
921
2619
2535
Net Assets - EM of year $
171.4 $
168.3 $
94.8 $
93.6 $
266.2 $
261.9
fi
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
Governmental Activities
In reviewing the above table, it can be noted that revenues increased by $1.9 million and
expenses increased by $5.7 million. The significant factors impacting revenue include increases
in operating grants and contributions ($1.3 million) and property taxes ($2.0 million). The most
significant factor impacting the increases in expenses related to wage, benefit, and utility costs
for general government operations ($1.3 million) and public safety operations ($3.7 million).
Business -type Activities
Livonia has three business -type activities. These include the water and sewer system, the
operating fund for the Fox Creek, Idyl Wy1d, and Whispering Willows golf courses, and non-
federal senior housing at Silver Village, Newburgh Village, and 13 scattered site homes.
The following table shows the operating income (loss) before contributions, transfers, and
interest for each of these activities in the current and prior year:
(In tliouseMs a dol lars)
Water and Sewer Goll Courses Housing
2008 2007 2008 2007 20M 2007
Operating Revenue $ 25,167 $ 25,246 $
1,725 $
1,678 $
1,317 $
1,296
Operating Expenses (24,552) (24,780)
(1,939)
(1,825)
(1,004)
(960)
Operating Income(Lms) $ 615 $ 466 $
(214) $
(147) $
313 $
336
Capital Assets and Debt Distribution
At the end of fiscal year 2008, the City has $399.9 million invested, before depreciation, in a
wide range of capital assets, including land, buildings, infrastructure, public safety equipment,
computer equipment, and water and sewer lines.
Debt of $36.7 million related to the construction of the above-mentioned capital assets is
reported as a liability in the governmental activities in the statement of net assets.
Debt related to the water and sewer system totaling $11.7 million and debt related to the
housing and golf course activities of $3.0 million is recorded as a liability in the business -type
activities in the statement of net assets. This debt represents construction of and improvements
to existing water and sewer lines and improvements to the golf course and City residential rental
facilities.
7
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
Significant additions to capital assets during fiscal year 2008 include 53.2 million invested in the
construction of infrastructure and improvements to roads and $4.2 million invested in
equipment and vehicles. Significant disposals of capital assets during fiscal year 2008 included the
disposal of a fire pumper, two ambulances, and other vehides and equipment with a total cost of
$2.2 million.
The City's Funds
The fund financial statements begin on page 13 and provide detailed information on the most
significant governmental funds - not the City as a whole. Funds are created to help manage
money for special purposes, as well as to show accountability for certain activities, such as
special property tax millages. The Citys major governmental funds for 2008 include the General
Fund, Community Recreation Fund, and Refuse Disposal Fund.
The City's governmental funds reported a combined fund balance of $38.6 million. This is an
increase of approximately $0.7 million for the year. The increases were caused primarily by
ongoing cost containment efforts to restrain spending at a level below expected revenues.
General Fund Budgetary Highlights
Over the course of the year, the City administration and City Council monitor and amend the
budget, primarily to prevent expenditures in excess of budget, as required by the State of
Michigan Budget Act. The final amended budget included the same total revenues and
expenditures as the original adopted budget.
Actual General Fund revenues were approximately $1.0 million below the final budget.
Specifically, charges for services were $282,065 less than the final budget because of actual fee
collections being less than anticipated for many services. Permit revenue was $494,016 less than
the final budget because of reduced building activity, and interest income was $773,449 less than
the final budget because of reduced interest rates.
Actual General Fund expenditures were approximately $907,000 below the final budget. All
departments held expenditures below the final budget.
City of Livonia, Michigan
Management's Discussion and Analysis (Continued)
Current Economic Conditions
The City continues to maintain positive fund balances in each of its funds. However, concerns
arse when considering the revenues and expenses that the City is facing in upcoming years.
The majority of the City's revenue base is constrained by factors outside the City's control.
Property taxes, state -shared revenue, and interest income total 72 percent of the City's total
governmental activities revenue. Property tax revenue will actually decrease in coming years as
a result of decreased property values. The State of Michigan has experienced budget deficits
and has significantly reduced revenue-sharing payments to local governments to help reduce is
deficit Interest rates are dedining as a result of rate cuts from the Federal Reserve.
On the expense side, certain expenses continue to rise at a rate far in excess of inflation. In
particular, healthcare expenses have continued their trend of double-digit increases. Hiring and
capital outlay freezes, among other measures, have been implemented in previous years to
reduce expenses to the level of available revenue. We are committed to living within our
means, although the result may be diminished programs and service response capabilities.
Contacting the City's Financial Management
The financial report is designed to provide our citizens, taxpayers, customers, investors, and
creditors with a general overview of the City's finances and to show the City's accountability for
the money it receives. If you have questions about this report or need additional financial
information, contact the director of finance at the City of Livonia, 33000 Civic Center Drive,
Livonia, Michigan 48154.
City of Livonia, Michigan
Statement of Net Assets
November 30, 2008
The Notes to Financialstatements are an tp
Integral Part of this Statement.
GwemrreiUl
Bminaslypa
Aare%
Aare%
Taal
conpomN Lnm
a% e
1&17%171 lmr%irrem(Nae3)
s 1754$16 s
15wB2e s
6112x2
s 2125,512
Psewd%
Tara
21116
1x322
aen
et«r
11 M419
19 M4
11 mgd19
-
tpaddfmamam
39524
-
3KU4
-
mmrmennaon
40524
-
32521
-
DWaue
omrtomanen0o+arnrremalonrta
1811015011015
-
101 9,931
-
vE3A
01
1m 561
-
a nen
21MM
2169/1
]2630
21168]1
-
maaommanld %penidtu%ane dmo:ld
112631]
53753
213813
-
ImraOrmrrtmamaa
-
397965
31793
-
Paaladedallone4Y l
-
71x143
1120,117
-
GNondedsMaedM
Nmeepre®naptamld
3,296261
131421
MM714
1)1118
N
Carreoaele mplhl �'ds-Na
132 W122i
71 932491
2W %13]11
93112W
Taalaae6
22618!]5]
1133332
339@7019
1213,637
daenrti%
Acmarm paddla
500163
1395aa
6016103
100,318
Acouedard other lBduma
1417512
114251
151173
Mx3
oaerrm revenue Mae 14)
758321
512251
112517
-
Ditto adergwennrtwntwit
-
`11915
Ban 915
-
Bonds and titans
-
24714))
24714))
-
Nonni lathes Mae])
Due within we yaw
400 1
1anam
6flam
M
Due In more than one yam
Bonds and mplhl lama Made
3544442
1313393
41,120317
4316ao
Contented alien®' and lmumrce dalrta
721id951
412817
7Gm7flO
-
UacM11nmureledlllty
713M
-
]139)3
Tonal lathes
54T5227
18A33@
n 17156
4812871
Na Aash
mated lnmpltala'ds-NNardadddedt
131 m98a
x112
193,51263
51x,]12
Pathlae6
Comnnity mvamtbn
56533
-
56]5,333
-
Mumnpalydme
6440219
-
648,219
-
Armtrmds,andAdrvmlla
5wdo
-
5Wa22
-
LNmry
1116113
-
11161113
-
wducvletymrrrmmmoon
3,065342
-
3,06,342
-
Adfwlmtmmrtetura
1W210
-
1M210
-
Coandaudlmlrmrmennenm
1]dmx1
-
1790,991
-
oralnyaprofeda
131]23
131]23
-
Pmtidedfix adlmnmrewtenret5
-
3137M
3137x1
-
waenand aevmr
241MM
24194,121
U nrmtrlaed
13611469
657412
11265,831
2513854
Taal neaaeta
S 171.449531 S
91.872.993 $
N 322523
S 7xzd 6
The Notes to Financialstatements are an tp
Integral Part of this Statement.
City of Livonia, Michigan
The Notes to Financial Statements are an 11
Integral Part of this Statement.
Program Revenues
operating Grams
Charges
and
Gariel Grants antl
Exiaencses Senecas
Contributions
Contributions
Furctian9Ryrars
PliGrery9ovearent
Governmental adheres
General government
8 38,7212600 8 4.(65100ruled
33,]63219 S,Fd9,OFo
2,3088]5
-
PutlKwwk
Works
Ni,81],6]2 I,]61,]111
6,321;135
2W,B3
Comeation antlulture development
16110.90 226,02]
685902
-
Recrealionlongterm
15,652$79 6,331,5296
201,813
-
In@rest on tleN
1,621261
Total governmental activities
95,018601 16,011,662
951],]55
2W,M
Busnestype call:
Water antl serer
25,6111 26900,816
-
162,603
Cagcomse
1915,545 1,711,796
Housing
1,123,190 1,316,5]11
T otal Wsineslype activities
28,122,886 27,929,182
-
162,603
T otal purely government
$ iB,1]1,68] $ 63960,626
$ 9,51],]55
$ 370,386
Composed note:
Econom: Development corporation
s 3n s -
s -
s -
PlymodhR®aDevempmntAuthoriry
1,936,7eo
Total component iniis
$ 1,59],15] $
$
$
Genera'revenues .
Propenytaxas
state sharedrevenue
DnrasVoted%esantl other
Interest
Miscellaneous
Transkrs
Total general revenues and
tramkrs
Change in Net Agents
Net AssetsBeginningofyear
Net Asset- End ofyear
The Notes to Financial Statements are an 11
Integral Part of this Statement.
Statement of Activities
Year Ended November 30, 2008
Not (Er me) Revenue wd Chages in Net F ek
Prim C wrmmnt
Gw rnmenbl Busines[y
MADS Mullis ]ael Ca�neN Nngs
s (7.10750q s
- s (7,107500) s
(30,M,2695
(26692)
(18576,M0
- (18,516,a0o)
(sols6v
- (w1561)
(18919218)
- (10919218)
(1,421,24
(1,Q1241
(69J11,621) -
(69,311,621)
- (26692)
(26692)
- (283]89)
(M3]89)
193380
193380
1652928
_
- (31,181)
(31,181)
(69,311,621) (31,181)
(69,M2,]T1)
(377)
(1596]80)
(159],157)
58,3!5586
-
8,345586
15N,235
9,]2883E
-
9,M,M
-
1652928
-
1652,928
-
2812378
826588
3,618878
1216M
90,066
265221
355267
-
(12588ot
125,888
72586,866
1216,721
n,M,765
1655,&6
3;192623
1185628
6,3]8,80.3
58,68]
16825],18]
93,66],3]3
261,910,488
7,5658,4
S niA 9538 $
90,872,9,43 $
266322,43 $
],623,]66
12
City of Livonia, Michigan
Governmental Funds
Balance Sheet
November 30, 2008
baiaSpecial Revenue Funds
Other Nanarejw
Cwnmmiiy Refuse Dbiical Governmental Taul Goeemmenul
General Fund Recreation Seldom Fund Fund
Assess
Current area:
Dan and nv¢arena
$
4.i .113 $
6j .482 $
8615,826 $
20822,383 $
39.71],]20
Re Iwdes.
Tares
113,x£
10,691
06933
33,813
210,163
Stall assessment;
397,182
397,182
Workeas'<omremaiion
32520
32520
Due town other govemarenlal iiia
3,13l
-
-
1,712,396
0,849,968
WBH
1,815,831
-
-
-
1,815,831
Other
511
52
05878
365858
926968
Inventory, prepaid mpenss, and tlzpwia
ill
-
-
-
hill
Total area
$
9,533,812 $
6560225 $
8,701 $
T15M.742 $
07,336,888
Hai and Fund Balanced
Habililied
Hcmma pul
8
1;156538 $
137,018 $
1558213 $
2148.856 $
5,W1035
Hcauedandotherliablities
1,102838
37,101
26,021
81 Go
1,237,812
Defertedreverue(Note 10)
1,860,147
763,860
03yo
602600
2,073,811
Total fadliiis
3,39515
938,419
1627,854
2832600
8,]62688
Fund Balanced
ReservncIV preleidandinventory
90953
90953
Reservedfwaptalimproverrents
-
-
-
165609
765,019
Dnrserved-Bndsignated-Reported in
General Fund
6,W05V1
-
-
-
6,W05U
Specia' Revenue Fund
-
5621806
1,019,965
11
26,125,185
Captal Projects Fund
5,5b,359
5,510,359
Total Fund! Indian
6,169091
5,621806
1,019,605
19,182r52
38,5r0,120
Total fiat and Fund Induces
$
9,533,012 $
6561 $
8,701 $
71535102 $
01,336,808
The Notes to Financial Statements are an 13
Integral Part of th'e Statement.
City of Livonia, Michigan
Governmental Funds
Reconciliation of Fund Balances of Governmental Funds to Net Assets of
Governmental Activities
November 30, 2008
Total Fund Balances of Governmental Funds
$ 38,574,120
Amounts reported for governmental activities in the statement of net
assets are different because:
Capital assets used in governmental activities are not financial resources
and are not reported in the funds
168,337,486
Certain receivables are expected to be collected over several years
relating to special assessments and delinquent personal property taxes
1,723,513
Fines and fees are not available to pay for current year expenditures
1,257,013
The liabilities for accrued interest payable, compensated absences,
and general claims are recorded when incurred in the statement
of activities:
Compensated absences
(7,547,836)
Accrued interest payable
(129,690)
Landfill closure and postclosure liability is not due and payable in the
current period and is not reported in the funds
(713,976)
Long-term liabilities are not due and payable in the current period and
are not reported in the funds
(36,707,686)
A portion of the Internal Service Fund (self-insurance) is included as
part of governmental activities
6,656,586
Net Assets of Governmental Activities
$ 171,449,530
The Notes to Financialstatements are an 14
Integral Part of the Statement.
City of Livonia, Michigan
Governmental Funds
Statement of Revenue, Expenditures, and
Changes in Fund Balances
Year Ended November 30, 2008
Will sceaal Revenue Funds
Other Nomrejor Total
Consul Races Dista®I Gareminestal Goeelmnedal
General Fund Recreation Sstem Fund Fund
genera
Propzdytarss
8 3896,3217
8 3,941 8
11,9971
8 11511
8 58,361,619
F ersesandpermts
118215681
-
-
-
1,8!5,66!
Specialasessmenls
-
-
-
1,135,952
1135,952
Inter9u+ernmental revenue:
State sources
8913,031
78000
-
6$]6,1]1
15,259,202
Federal sources
281,5
-
-
2211581
2095,836
Charges M services
3,180075
3606,152
173,067
993022
7,953,116
Interst
1126551
258,826
268369
801
2075,059
Fins and brkiturs
3,769233
-
-
1,022,073
0,791,306
Miselaneous reuerue
209],]26
730
22,923
1030,057
3ji5,438
Tda'revenue
52515,300
1,903060
12,481,917
20,992927
97,893,212
Expenditures
General gwemmenl
8,820503
-
-
-
8,828503
Pubicskty
30012,]]5
-
-
2,1711
35589,803
Pubicwwks
3532,820
-
12291092
11859,063
27,663,399
Recreation andculWre
1586590
5,3fi],058
-
6'shi
10,155003
Commintyand ecommi<developnenl
759559
-
-
768399
1519,958
Entalorse renins, insurance, and other
2,097202
2,097,202
Cartel outlay
333526
-
-
3,073,E61
3007,389
Deal servKe
2,818271
2,818,271
Tad apenatares
51vs,025
5,867,558
12291,492
2]5680]3
97,o92058
Excess of Revenue Over (Under) Expenditures
0]02]9
2,015606
190,425
(2,375,106)
801,161
Other Financing Sources (Um)
T rarskrs in (Note 5)
510,000
-
-
102.97515
18837,515
T rarsks cut (Note 5)
(1060]82)
(22532]6)
(720805]1
(10962515)
Total other financing sources (uses)
(920,]82)
(y2532]6)
-
3,009,058
(1600
Net Change in Fund Balances
09,497
(237,670)
190,425
673912
Braver
Fund BaNnca- Beginning of year
6,128000
5,859,476
6,889510
19,026900
3],89],955
Fund BaNnca-Endofyear
$ 6,169,40]
$ 5,621 $
],0]9965
$ 19,70284
$ 36571
The Notes to Financial Statements are an 15
Integral Part of this Statement.
City of Livonia, Michigan
Governmental Funds
Reconciliation of the Statement of Revenue, Expenditures,
and Changes in Fund Balances of Governmental Funds
to the Statement of Activities
Year Ended November 30, 2008
Net Change in Fund Balances - Total Governmental Funds
$ 676,164
Amounts reported for governmental activities in the statement of
activities are different because:
Governmental funds report capital outlays as expenditures;
in the statement of activities, these costs are allocated over
their estimated useful lives as depreciation
8,713,008
Depreciation, net of disposals, is recorded as an expense in the
statement of activities but not in the governmental funds
(6,977,860)
Loss on disposal of fixed assets is recorded in the statement
of activities but not in the governmental funds
(309,018)
Certain revenue reported in the statement of activities is
recorded in the governmental funds as deferred revenue
826,647
Repayment of bond principal is an expenditure in the
governmental funds, but not in the statement of activities
(where it reduces long-term debt)
1,445,949
Interest expense is recorded when incurred in the statement
of activities
19,820
Net increase in accumulated employee sick and vacation pay is
recorded when incurred in the statement of activities
(785,016)
Increase in landfill liability is recorded when incurred in the
statement of activities
(17,892)
A portion of the Internal Service Fund (self-insurance) is also
included as governmental activities in the statement of activities
(399,379)
Change in Net Assets of Governmental Activities
$ 3,192,423
The Notes to Financial Statements are an 16
Integral Part of this Statement.
City of Livonia, Michigan
Proprietary Funds
Statement of Net Assets
November 30, 2008
&I
Current assets
rush andinvestirents
Accounts edemas
Customers
Other
Inventoric norma expenditure, and&P"to
Total current assets
Noncurrent aseete:
a¢tnded assets (Nae 8)
Nmdneaade assets
oeaeoiada assets Not
Total noncurrent assets
Total assets
NoumrePr
Major Enterprise Fund Enterprise Fun
Total Enterprise Internal serace
Walerand Serer Hmsim GdfCmrse Fund Fund
s 14,419,805 s
115,815 s
- s
14$35c20 s
Ssx,fiefi
11090619
-
-
11090619
-
711
-
12,311
YM9oo
-
810d52
1j95,868
-
810052
1'ws9w
11
I,Fd9
110250
-
Duetoothergosemmrentalunts
27,03526
115,815
12,311
27,163991
16,49,700
4,800,473
-
-
4,800,473
-
3,1972M
1581,908
3,W,488
8,361]26
-
65528,756
4,361661
1,950071
71832691
398966
6,170
1951
Total current liaidthes
0236363
]351851]
5,90.3612
5,532559
80,930688
IN occurred liablities- Loss term debt - Net of
100 'Fnaa
6,059627
5,5!0870
112,158,079
10,401
Habililies
Current III
Accounts re}aue
1288105
16290
90,H9
1j95,868
-
Accrued add other 0abltles
97,720
11
I,Fd9
110250
-
Duetoothergosemmrentalunts
591,915
-
-
591,915
-
Deterred revenue mote 10)
583251
-
-
583251
-
Bmdanddpaits
122,873
120$36
-
20],069
-
Current mutimoflost4ormoNgatom
1$52099
398966
6,170
1951
Total current liaidthes
0236363
550681
98688
0889$32
IN occurred liablities- Loss term debt - Net of
current port (Note 7)
10$]0,069
2,969$09
160.5
13208263
Z%6,406
Total !chilies
10810,372
3223,090
99,933
18,13],]95
286.006
Net Assets
boosted In cartel assets -N at of related debt
58606,719
2,903612
5,532$59
65,882898
-
Ratridedfor ordnance requirements
3,137,868
-
-
3,137,868
-
Uninitiated
20,190,823
(10]6]5)
(87622)
23,939$26
7,503,26
Total net assets
$ 85,739610
$ 2tri
$ 5"0,937
90,020284 $
7$09,295
Amounts reported for bushels brue aaivi0es in the statement
of net assets
are aRerent because a
portion of the Internal sella Fund is induced as
bisinesstype adiwies
9s2,]B9
Net Assets of Business I Audience
$ 90,872,9A3
The Notes to Firencialstatements are an 17
Integral Part of th's Statement.
City of Livonia, Michigan
Proprietary Funds
Statement of Revenue, Expenses, and Changes in Net Assets
Year Ended November 30, 2008
Nmmajmr
Major Enterlme Funds Enterprise Fund
Taal Enterprise Internal Samoa
Walerana Sewer Hmsig GofCourse Fund Fund
Operating Revenue
customer drifts
8 24217,539
8 -
8 -
8 stall 8
-
Finesandforfeitures
8!3833
-
-
w'mn
Samoa connections
24,053
-
-
24,0s3
-
Greem%es
-
-
15591665
15591665
-
Gi Gas
-
-
94524
94524
-
CitycmtriWtims
14,08],]66
Rental Income
-
131,813
3,000
1318,833
Other revenue
31,430
1,432
6],]38
414,600
T otal operating revenue
25,430,855
13151,35
1,724,947
28,4]3,06]
14,08],]66
Operating Expenm
Cost mfwater
7,281,791
-
-
]$81,]91
-
Costcremageasr®I
9,260,961
-
-
9$89961
-
systemmaintenanceanamperaom
4,26090
-
-
4250230
-
Generalandadmmistranve
1,036,006
-
-
1036,006
-
Beaeciatim
2723,074
deal
Many
3059261
-
Reinsurancecaargesanaaarm
-
-
-
-
14,721011
Salaries ana.ages
-
396,058
146]22
542,780
-
suppies
-
11,606
244,766
256374
-
Otherseravesaticharges
-
49,189
1358264
1,78],4]3
-
roadcperatingexpenses
24,5'Y,OR
1,003,832
1931989
27,494,863
14,721611
Operating Income (Loss)
873,793
313,433
(211
9]1,184
(6331505)
Nmoperating Revenue (Expense)
Li on me mfasets
(2611251)
-
(140131
(2]6,613)
Interest income
8068ffi
19,618
-
826500
337310
Interest expense
(5934911
(1314E)
-
(731 C46)
road nmmperaoiny revenue
(dransed
I%2671,
n11s30)
(14413(
ra321o)
337,310
Income(Loss) - Before cmtGWtms and transfers
821926
201,513
(221
794974
(66335)
Capital Contributed Bran Developers
and Grants
162,603
-
-
162,603
-
Trandersln(Nde5)
-
-
125800
125800
-
ChngeinNetAsets
98459
201,503
(103,455)
1,01257]
(296335)
Net Assets- Beginning of year
84.75,881
$631,431
5548392
92937,707
7,805,630
FBI -Enamfyear
$ 85,739,410
$ 2,835,937
S 5,41
$ 94.0gil 4 $
7,509,295
Net Change in Net Assets -Tata En@raise Fund
g 1,081
Armun6 reached M business Bre activities In the statement of activities
are afferent
comuse the Internal Service Fund lsallmatea
lertialy to marshy
ypz activities
103,043
Chngein Nel Ametsd Bminastyp ActwRm
$ 1,185,620
The Notes to Financial Statements are an 18
Integral Part of th'e Statement.
City of Livonia, Michigan
Proprietary Funds
Statement of Cash Flows
Year Ended November 30, 2008
Normajor
Wror Enterpise Fund Enlerpise Fund
Taal Enteraise Imemalserace
The Notes to Finamial Statements are an 19
Integral Part of this Statement.
Mterand Sewer
Housing
GdfCmrse
Fund
Fund
C6M1 Flwvs hon Operating Activities
Resins tom customers
8 26,796961 8
1,319,828 8
I.73aW
8 27,811 8
16,88],]6£
parmenlstosuirthers
(18,82],]86)
(691,3]8)
(1,618,787)
(211,YP,P55)
(16,822877)
parmentstonvoyees
(600,1,89T,
(367589)
(161,M3)
(6,913,516)
Other receiayFeYmenls
256,126
731
6,263
261,128
-
N et cash provided by (used in) operating
activities
1818087
661,612
(83,620)
z191,f69
66889
Cash Flaws iron Norcaatal Financing rltlirvilia- Net
vamfersmwherfand
-
-
12s,om
125,000
-
Cash noes, tam cartel and Natal Financial
Activities
ConNiWtiom ton customers
113,411
-
-
113,611
Craft reimbursements
69,192
-
-
49,192
-
Prmapilmdin@restuimn long term debt
(1,925.965)
(633230)
-
(zS 1175)
-
Purrnrseofcallarsets
(2,926,310)
(13],3]6)
(27,5
(3,089,250)
-
Netssh used In sptal and related
funding activities
(6,667,652)
(/78686)
(27,5566)
(5,685,822)
-
Cash Flwrs tan Investing Activities
Interest received on Investments
886,882
19,618
-
rai
337,318
N et(Wrchased sales of uveal adiMies
(3616]n
78116
(iM14b)
(M ]!](
(2j921M)
N et cash aaidd by (used In) Investing
activities
665,685
9],]32
(U,did)
523,713
(2,051,79,1)
Net Decrease in Cash and Cash Equivalents
(2023.81
Q11288)
-
(z635,818)
(1989985)
Cashand Cash Equivaents-Oecenber1,2887
17,681,322
295,798
-
1],]81,128
6,173936
Cashand Cash Equivaents-Narember382888
$ 15,868p82 $
86,598 S
$ 15,165,088 $
6,181,831
Balance Sheat CNsification of Cash ala Cash Equivaents
Cash and Investments
$ 14,419,805 $
115,815 $
-
$ 16,535,620 a
8,851
Restricted assets (Note 8)
6800673
6800673
T oel cash and investments
192202]a
115,815
-
19,336,033
81851
Les investments
(6159 T.16)
1
(6191013)
(6675615)
N et cash antl cash e4iwlents
$ 15060p82 $
all $
$ 15,165,080 $
6,181,031
The Notes to Finamial Statements are an 19
Integral Part of this Statement.
City of Livonia, Michigan
Proprietary Funds
Statement of Cash Flows (Continued)
Year Ended November 30, 2008
The Notes to Financial Statements are an 20
Integral Part of this Statement.
Nonmaior
all Enterprise Fina;
Enterprise F<na
]mal
Enterprise Internal Samoa
mterand Sever
Housing
C fcmrse
Fond
Find
Reconciliation of Operating Income (Eras) to Net Cash
from Operating Pool
Operating income ions)
$ 8]8.593 a
311
a (214,042) a
9713,1611 a
(633,645)
Htlystnermstm reconcile creating Income loss)
to net cash Tom operating activities
Depreciation
2,]83,8]4
16119]]
189,217
3,059,268
-
Changes In assets and falsities
Re<eil
ty55,6v1j
2.555
7,62D
(946492)
Inventory, yereid, and cepaits
411
-
a,M
50,639
M,805
a«wma fe}aNe
(161
(26,070)
(]3,]111)
038,669)
(9p32)
a«medandother lobliges
(18,496)
6,046
3,M
(6,]39)
414,761
Detailed reverse
(m,663,
-
-
(41,6113)
-
Bandamcepaits
-
731
-
]31
-
Net ash pwiRd by (wed m arsenal
a<tiraties
$ 1,818,407 $
461,68
S (&•30041 $
2,197,059 $
states
The Notes to Financial Statements are an 20
Integral Part of this Statement.
City of Livonia, Michigan
Fiduciary Funds
Statement of Net Assets
November 30, 2008
Liabilities
Accounts payable
Pension and Other
190,564
Employee Benefits Agency Funds
Assets
2,511,968
Cash and cash equivalents (Note 3)
$ 1,226,156 $ 10,411,325
Investments (Note 3):
-
U.S. government securities
34,229,696 -
Common stock
75,282,951 -
Corpoate bonds
48,828,068 -
Foreign stock
2,368,349 -
Mutual funds
26,346,288 -
Real estate investment trust
8,091,930 -
Securities lending short-term collateral bank
investment pool
9,552,100 -
Duefromothergovernmentalunits
67,278 -
Due from other agency funds
769,484
Total assets
206,762,300 $ 10,411,325
Liabilities
Accounts payable
1,373,373 $
190,564
Accrued and other liabilities
-
2,511,968
Due to other governmental units
-
6,939,309
Due to other trust funds
-
769,484
Amounts due to broker under securities lending
agreement
9,918,096
Total liabilities
11,291,469 $
10,411,325
Net Assets - Held in trnstfor pension and other
erployee benefits
$ 195,170,831
The Notes to Financial Statements are an 21
Integral Part of this Statement.
City of Livonia, Michigan
Fiduciary Funds
Statement of Changes in Net Assets
Pension and Other Employee Benefits Trust Funds
Year Ended November 30, 2008
Pension and Other
Deductions
Pension benefit payments
Employee Benefits
Additions
5,832,676
Investment income:
159,581
Interest and dividends
$ 12,024,881
Net change in fair value of investments
(84,671,155)
Less investment expenses
(557,999)
Net investment loss
(73,204,273)
Securities lending income:
Interest and fees
689,485
Less borrower rebates and bank fees
(476,760)
Total securities lending income
212,725
Contributions:
Employer
6,218,636
Employee
1,452,031
Total contributions
7,670,667
Total additions
(65,320,881)
Deductions
Pension benefit payments
11,879,146
Medical benefit payments
5,832,676
Administrative expenses
159,581
Refunds of contributions
483,396
Total deductions
18,354,799
Net Decrease
(83,675,680)
Net Assets Held in Trust for Pension and Other Employee
Benefits
Beginning of year
279,146,511
End ofyear
$ 195,170,831
The Notes to Financialstatements are an 22
Integral Part of this Statement.
City of Livonia, Michigan
Component Units
Statement of Net Assets
November 30, 2008
Assets
Cash and cash equivalents
Pccounls receivable
Capital assets (Note 4).
Nondepreciable capital assets
Depreciable capital assets- Net
Total assets
Liadlities
&count; payable
Accrued andother liabilities
Noncurrent liabilities:
Duewithamoneyear
Due in more than ore year
Total liadlities
Net Assts
Iniestetl in cegtal assets - Net of related debt
Unrestricted
Total net assets
The Notes to Financial Statements are an 23
Integral Part of this Statement.
Economic Plymou8i Road
Deielopment Deielopment Total Compownt
amender Authority Units
$ 22,899 $ 2,583,584 $ 2,525,683
- 125,322 125,322
- 474,448 414,448
9,311,264 9,311264
22,899 12,414,538 12, 436,63]
100,318 100,318
32,553 32,563
- 378,888 30,888
4,310,000 4,31888
4812,871 4,812,871
- 5,185,112 5,185,112
22,099 2,495,955 2,518,054
$ 22,099 $ ],601,66] $ ],623,]66
City of Livonia, Michigan
General revenues:
Taxes
Interest
Total general revenues
Charge in Net Assets
Net Assets- Beginning of year
Net Assets- End of year
The Notes to Financial Statements are an 24
Integral Part of this Statement.
Program Revenues
Operating
Captal Grants
Charges for Grants aM
and
Expenses
Services Contributions
Contributions
Economic Devebpment Corporation -General
govemmant
$ 3�
$ - $ -
$ -
Plymooth Road Devebpment Authority:
Community and economic devebpment
1384738
- -
-
Interest onlong-term debt
212,842
Total Plymoutii Road Deielopment
Authonfy
1 586 ]B6
Total gmernmantal activdies
$ 1,59],15]
$ $
$
General revenues:
Taxes
Interest
Total general revenues
Charge in Net Assets
Net Assets- Beginning of year
Net Assets- End of year
The Notes to Financial Statements are an 24
Integral Part of this Statement.
Net (Expense) Revenue and Changes in Net Assets
Emnomic Plymouth Road
Dowlopnent Dowlopnent
Corporation AuOmnty Total
$ (31) $ - $ (31)
- (1384,738) (1384,738)
(212,842) (212,842)
(1596,780) (1596,780)
(311) (1596,188) (1591,151)
- 1534,235 1534,235
138 120,811 121,689
138 1,655,106 1,655,844
361 58,326 58,681
21,738
1,543,341
7,565,079
$ 22,099
$
],601,66]
$
],623,]66
25
Component Units
Statement of Activities
Year Ended November 30, 2008
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 1 - Summary of Significant Accounting Policies
The accounting policies of the City of Livonia, Michigan (the "City") conform to
accounting principles generally accepted in the United States of America (GAAP) as
applicable to govemmental units. The folloxirg is a summary of the significant
accounting policies used by the City of Livonia, Michigan:
Reporting Entity
The City of Livonia, Michigan's legislative branch is governed by an elected seven -
member council. The City's administration operates under the overall direction of an
elected mayor. The accompanying financial statements present the City and its
component units. The component units are entities for which the City is considered to
be financially accountable. Although blended component units are legally separate
entities, in substance, they are part of the City's operations. The discretely presented
component units are aggregated and reported in a separate column in the government -
wide financial statements to emphasize that they are legally separate from the City (see
discussion below fordescription).
Blended Component Units - The Municipal Building Authority of Livonia is governed
by a board that is appointed by the mayor. Although it is legally separate from the City,
it is reported as if it were part of the primary government because its primary purpose is
to finance and construct the City's public buildings. The operations of the Municipal
Building Authority are reported as a non -major Debt Service Fund.
Discretely Presented Component Units - The Economic Development Corporation
(EDC) was created to provide means and methods for the encouragement and
assistance of industrial and commercial enterprises in relocating, purchasing,
constructing, improving, or expanding within the City so as to provide needed services
and facilities of such enterprises to the residents of the City. The EDC's governing
body, which consists of eight individuals, is selected by the mayor and approved by the
City Council. Internally prepared financial statements for the EDC can be obtained from
the City of Livonia Finance Department at 33000 Civic Center Drive, Livonia, MI 48154.
The Plymouth Road Development Authority was created to encourage additional
economic activity and growth in the Plymouth Road business district. The Plymouth
Road Development Authority's governing body, which consists of 12 individuals, is
selected by the mayor and approved by the City Council. Internally prepared financial
statements for the Plymouth Road Development Authority can be obtained from the
City of Livonia Finance Department at 33000 Civic Center Drive, Livonia, M148154.
26
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 1 - Summary of Significant Accounting Policies (Continued)
The Brownfield Redevelopment Authority was created, pursuant to Public Act 381 of
1996, to promote revitalization of environmentally distressed areas with the 36 -square
mile boundary of the City. The Brownfield Redevelopment Authority is funded
primarily by property tax revenue captures. The Brownfield Redevelopment Authority
is governed by a nine -member board that is designated by the mayor and appointed by
the City Council. The Brownfield Redevelopment Authority was established in
November2008 and had noactivity during the year.
The City has excluded the Housing Commission from this report. Even though the City
appoints the Housing Commission's directors, it does not have the ability to impose its
will.
Government -wide and Fund Financial Statements
The government -wide financial statements (i.e., the statement of net assets and the
statement of activities) report information on all of the nonfiduciary activities of the City
(the primary government, which includes the blended component unit) and its discretely
presented component units. The effect of interfund activity has been removed from
these statements. Governmental activities, normally 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 the direct expenses of a
given function (governmental activities) or segment (business -type activities) are offset
by program revenues. Direct expenses are those that are clearly identifiable with a
specific function or segment. Program revenues include (1) charges to customers or
applicants who purchase, use, or directly benefit from goods, services, or privileges
provided by a given function or segment and (2) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or
segment. Taxes and other items not applicable to specific programs are reported
instead as general revenue.
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.
27
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 1 - Summary of Significant Accounting Policies (Continued)
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,
fiduciary fund, and component unit financial statements. Revenue is recorded when
earned and expenses are recorded when a liability is incurred, regardless ofthe timing of
related cash flows. Property taxes are recognized as revenue in the year for which they
are levied. Gants 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 measurement focus and the modified accrual basis of accounting. Revenue is
recognized as soon as it is both measurable and available. Revenue is considered to be
available if it is collected within the current period or soon enough thereafter to pay
liabilities of the current period. For this purpose, the City considers revenues to be
available if they are collected within 60 days of the end of the current fiscal period. The
following major revenue sources meet the availability criterion: state -shared revenue,
state gas and weight tax revenue, district court fines, and interest associated with the
current fiscal period. Conversely, special assessments and certain federal grant
reirrbursements will be collected after the period of availability; receivables have been
recorded forthese, along with a "deferred revenue' liability.
Expenditures generally are recorded when a liability is incurred, as under accrual
accounting. However, debt service expenditures, expenditures relating to compensated
absences, and claims and judgments are recorded only when payment is due.
The City reports the following major governmental funds:
General Fund - The General Fund is the City's primary operating fund. It accounts for
all financial resources of the general government, except those required to be accounted
for in another fund.
Refuse Disposal Fund - The Refuse Disposal Fund amounts for the operations of the
refuse disposal activities of the City. Funding is provided primarily through a local
property tax levy.
Community Recreation Fund - The Community Recreation Fund accounts for the
activities of the Livonia Community Recreation Center, ice rinks, and certain other
recreation activities. Funding is provided primarily by a local property tax levy and user
charges.
IN
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 1 - Summary of Significant Accounting Policies (Continued)
The City reports the following major proprietary funds
Water and Sewer Fund- The Water and Sewer Fund accounts for the activities of the
water distribution system and sewage collection system. Funding is provided primarily
through u%rcharges.
Housing Fund - The Housing Fund amounts for the Newburgh and Silver Village
residential rental facilities. Funding is provided primarily through user charges.
Additionally, the City reports the following fund types:
Internal Service Fund - The Internal Service Fund is used to fund general, workers'
compensation, and employee healthcare liability claims and to purchase insurance that
provides excess general liability coverage for City employees and property. The fund is
finsnced primarily by charges to the various departments ofthe City.
Pension and Other Employee Benefits Trust Funds - The Pension and Other
Employee Benefits Trust Fund amounts for the activities of employee benefit plans that
accumulate resources for pension and other postemployment benefit payments to
qualified employees.
The City of Livonia Employees' Retirement System and the City of Livonia Health and
Disability Plan have been blended into the City's financial statements. These systems are
governed by a five -member pension board that includes three individuals chosen by the
City Council and/or the mayor. The systems are reported as if they were part of the
primary government because of the fiduciary responsibility that the City retains relative
to the operations of each system. The operations of the Employees' Retirement System
and the City of Livonia Health and Disability Plan are reported as a Pension and Other
Employee Benefits Fiduciary Fund.
Agency Funds - The Agency Funds account for assets held by the City in a trustee
capacity. Agency Funds are custodial in nature (assets equal liabilities) and do not
involve the measurement of results of operations.
Private sector standards of accounting issued prior to December 1, 1989 are generally
followed in both the government -wide and proprietary fund financial statements to the
extent that those standards do not conflict with the standards of the Governmental
Accounting Standards Board. The City has elected not to follow private sector standards
issued after November 30, 1989 for its business -type activities.
As a general rule, the effect of intedund activity has been eliminated from the
government -wide financial statements. Exceptions to this general rule are charges
between the City's water and sewer function and various other functions of the City.
29
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 1 - Summary of Significant Accounting Policies (Continued)
Eliminations of these charges would distort the direct costs and program revenues
reported for the various functions concemed.
Amounts reported as program revenue include (1) charges to customers or applicants
for goods, services, or privileges provided, (2) operating grants and contributions, and
(3) capital grants and contributions, including special assessments. Internally dedicated
resources are reported as general revenue rather than as program revenue. Likewise,
general revenue indudes all taxes.
When an expense is incurred for the purposes for which both restricted an unrestricted
net assets are available, the City's policy is to first apply restricted resources.
Proprietary funds distinguish operating revenue and expenses from nonoperating items.
Operating revenue and expenses generally result from providing services and producing
and delivering goods in connection with a proprietary fund's principal ongoing
operations. The principal operating revenue of the City's proprietary fund (Water and
Sewer Fund) relates to charges to customers for sales and services. The Water and
Sewer Fund also recognizes the portion of tap fees intended to recover current costs
(e.g., labor and materials to hook up new customers) as operating revenue. The portion
intended to recover the cost of the infrastructure is recognized as nonoperating
revenue. Operating expenses for proprietary funds include the cost of sales and
services, administrative expenses, and depreciation on capital assets. All revenue and
expenses not meeting this definition are reported as nonoperating revenue and
expenses.
30
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 1 - Summary of Significant Accounting Policies (Continued)
Property Tax Revenue
Properties are assessed as of December 31 and the related property taxes become a
lien when billed. These taxes are billed on July 1 and December 1 of the following year,
and are due on September 14 and February 14, respectively. After the final collection
on the last day of February, real property taxes are added to the county tax rolls. The
2007 taxable valuation of the City of Livonia totaled $5.209 billion (a portion of which is
abated and captured by the PRDA). The millages levied by the City and the resulting
revenues are as follows:
Approximate
Revenue
Purpose of Millage Millage Rate (in Millions)
Operating purposes 4.0447 $ 21.07
Police 0.8088 4.21
Police and fire 1.2134 6.32
Library 0.8088 4.09
Refuse and recycling 2.3746 12.37
Industrial development 0.0099 0.52
Debt service 0.0799 0.40
Roads, sidewalks, and trees 0.8893 4.63
Recreation 0.7855 4.09
Transit and capital improvement 0.5000 2.60
These amounts are recognized in the respective General, Special Revenue, and Debt
Service Funds financial statements as tax revenue.
The delinquent real property taxes of the City are purchased by Wayne County. The
county sells tax notes, the proceeds of which are used to pay the City for these
property taxa. Wayne County remitted its purchased delinquent real property taxes in
August 2008. Wayne County delinquent real property taxa have been recorded as
revenue in the current year.
Assets, Liabilities, and Net Assets or Equity
Bank Deposits and Investments - Cash and cash equivalents include cash on hand,
demand deposits, and short-term investments with a maturity of three months or less
when acquired. Investments are stated at fair value. Pooled investment income from
the Investment Agency Fund is generally allocated to each fund using a weighted average
balance for the principal held for each fund on a daily basis.
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 1 - Summary of Significant Accounting Policies (Continued)
Receivables and Payables - In general, outstanding balances between funds are
reported as "due to/from other funds." Any residual balances outstanding between the
governmental activities and the business -type activities are reported in the government -
wide financial statements as "internal balances." All trade and property tax receivables
are shown as net of allowance for uncollectible amounts.
Inventories and Prepaid Items - Inventories are valued at cost, on a first -in, first -out
basis. Inventories ofgovemmental funds are recorded as expenditures when consumed
rather than when purchased. Certain payments to vendors reflect costs applicable to
future fiscal years and are recorded as prepaid items in both government -wide and fund
financial statements.
Restricted Assets - The revenue bonds of the Enterprise Funds require amounts to be
set aside for construction, debt service principal and interest, operations and
maintenance, and a bond reserve. Unspent bond proceeds have also been set aside for
construction. These amounts have been classified as restricted assets, as well as
amounts on deposit at the county and the state being held for the construction and debt
service.
Capital Assets - Capital assets, which indude property, plant, equipment, and
infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in
the applicable governmental or business -type activities column in the government -wide
financial statements. Capital assets are defined by the City as assets with an initial
individual cost of more than $5,000 and an estimated useful life in excess of one year.
Such assets are recorded at historical cost or estimated historical cost if purchased or
constructed. Donated capital assets are recorded at estimated fair market value at the
date of donation.
Buildings, equipment, and vehicles are depreciated using the straight-line method over
the following useful lives:
Infrastructure 33 to 40 years
Road rights 33 years
Buildings and improvements 20 to 50 years
Machinery, equipment, and vehides 2 to 20 years
Water and sewer distribution systems 50 years
32
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 1 - Summary of Significant Accounting Policies (Continued)
Compensated Absences (Vacation and Sick Leave) - It is the City's policy to permit
employees to accumulate earned but unused sick and vacation pay benefits. Under the
Citys policy, employees earn benefits based on time of service with the City. All
vacation and sick pay is accrued when incurred in the government -wide and proprietary
fund financial statements. A liability for these amounts is reported in governmental
funds only for employee terminations as of year end.
Long-term Obligations - In the government -wide financial statements and the
proprietary fund types in the fund financial statements, long-term debt and other long-
term obligations are reported as liabilities in the applicable governmental activities,
business -type activities, or proprietary fund -type statement of net assets. Bond
premiums and discounts, as well as issuance costs, are deferred and amortized over the
life of the bonds using the effective interest method. Bonds payable are reported net of
the applicable bond premium or discount. Bond issuance costs are 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 discounts, as well as
bond issuance costs during the current period. The face amount of debt issued is
reported as other financing sources. Premiums received on debt issuances are reported
as other financing sources while discounts are reported as other financing uses. Issuance
costs are reported as debt service expenditures.
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.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disdosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the
period. Actual results could differ from those estimates.
33
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 2 - Stewardship, Compliance, and Accountability
Construction Code Fees - The City oversees building construction, in accordance
with the State's Construction Code Act, including inspection of building construction
and renovation, to ensure compliance with the building codes. The City charges fees for
these services. The law requires that collection of these fees be used only for
construction code costs, including an allocation of estimated overhead costs. A
summary of the current year activity and the cumulative surplus or shortfall generated
since January 1, 2000 is as follows:
Cumulative shortfall at December 1, 2007 $ (819,942)
Current year building permit revenue 1,796,823
Related expenses:
Direct costs 1,482,923
Estimated indirect costs 344,349
Total related expenses (1,827,272)
Current year net expenses (30,449)
Cumulative shortfall at November 30, 2008 $ (850,391)
Fund Deficits - The Golf Course Fund and Housing Fund had deficits of $87,622 and
$107,675, respectively, at November 30, 2008 in unrestricted net assets. The Gants
and SAD Streetiighting Fund had a deficit of $89,462 in unreserved fund balance. The
deficits in the Golf Course and Housing Funds will be eliminated by cost management
over several years. The deficit in the Grants and SAD Stmetlighting Fund will be
eliminated in by changing the timing of grant reimbursement requests in future years.
Note 3 - Deposits and Investments
Michigan Compiled Laws Section 129.91 (Public Act 20 of 1943, as amended) authorizes
local governmental units to make deposits and invest in the accounts of federally insured
banks, credit unions, and savings and loan associations that have offices in Michigan. A
local unit is allayed to invest in bonds, securities, and other direct obligations of the
United States or any agency or instrumentality of the United States; repurchase
agreements; bankers' acceptances of United States banks; commercial paper rated
within the two highest classifications, which matures not more than 270 days after the
date of purchase; obligations of the State of Michigan or its political subdivisions, which
are rated as investment grade; and mutual funds composed of investment vehicles that
are legal for direct investment by local units of government in Michigan.
34
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 3 - Deposits and Investments (Continued)
The Pension Trust Fund and Retiree Health Care Fund are also authorized by Michigan
Public Act 314 of 1965, as amended, to invest in certain reverse repurchase agreements,
stocks, diversified investment companies, annuity investment contacts, real estate
leased to public entities, mortgages, real estate (if the trust fund's assets exceed $250
million), debt or equity of certain small businesses, certain state and local government
obligations, and certain other specified investment vehicles.
The City has designated five banks for the deposit of its funds. The investment policy
adopted by the Council in accordance with Public Act 196 of 1997 has authorized
investment in bonds and securities of the United States government and bank accounts
and CDs, but not the remainder of state statutory authority as listed above. The City of
Livonia's deposits and investment policies are in accordance with statutory authority.
As permitted by state statutes and under the provisions of a securities lending
authorization agreement, the City of Livonia Employees' Retirement System (the
"System") (see Note 10) lends securities to broker-dealers and banks for collateral that
will be returned for the same securities in the future. The System's custodial bank
manages the securities lending program and receives cash as collateral. Borrowers are
required to deliver collateral for each loan equal to not less than 100 percent of the
market value of the loaned securities. During the year ended November 30, 2008, only
United States currency was received as collateral. The market value of one of the
investments was deemed impaired during the year ended November 30, 2008 resulting
in a recorded loss of 5365,996.
The System did not impose any restrictions during the fiscal year on the amount of loans
made on its behalf by the custodial bank. There were no failures by any borrowers to
return loaned securities or pay distributions thereon during the fiscal year. Moreover,
there were no losses during the fiscal year resulting from a default of the borrowers or
custodial bank.
The City of Livonia Employees' Retirement System and the borrower maintain the right
to terminate all securities lending transactions on demand. The cash collateral received
on each loan was invested, together with the cash collateral of other lenders, in an
investment pool. The average duration of such investment pools as of November 30,
2008 was 99 days. Because the loans are terminable on demand, their duration did not
generally match the duration of the investments made with cash collateral. On
November 30, 2008, the System had no credit risk exposure to borrowers. The
collateral held and the fair market value of the undedyirg securities on loan for the
System as of November 30, 2008 was $9,918,096 and $9,690,958, respectively.
35
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 3 - Deposits and Investments (Continued)
The City's cash and investments are subject to several types of risk, which are examined
in more detail below:
Custodial Credit Risk of Bank Deposits
Custodial credit risk is the risk that in the event of a bankfailure, the City's deposits may
not be returned to it. The City does not have a deposit policy for custodial credit risk.
At year end, the City of Livonia had $31,927,147 of bank deposits (certificates of
deposit, checking, and savings accounts) that were uninsured and uncollateralized. The
City of Livonia believes that due to the dollar amounts of cash deposits and the limits of
FDIC insurance, it is impractical to insure all deposits. As a result, the City of Livonia
evaluates each financial institution with which it deposits funds and assesses the level of
risk of each institution; only those institutions with an acceptable estimated risk level are
used as depositories.
Interest Rate Risk
Interest rate risk is the risk that the value of investments will decrease as a result of a
rise in interest rates. The City's investment policy does not restrict investment
maturities, other than commercial paper which can only be purchased with a 270 -day
maturity. At year end, the average maturities of investments are as follows:
Inveshnent Fair Value 0 to 5 Years 6 to 1 O Years Over l O Yea s
Primary Government
Bank investment pods
City of Livonia Employees
Rebrement System
Corporate bontls
Foreign bonds
US. agency sccuntnes
US. Treasury secunt es
City a Livonia Retime Health
are! Disability Benefits Plan
Corporate bonus
Foreign bonds
US. agency secunt es
US. Treasury secunt es
$ 22,466,753 $ 22,466,753 $
38,712,883
18,156,285
15,631 436
12,925,242
1867,553
733,838
-
1134,523
24531311
1,216
4,215,448
28,314,647
1829,516
-
1,465,526
163,998
18,115,185
2,636,232 4,215,843
3,263,918
580,796
201,198 -
299,598
7,127,781
- 646,300
6,481,481
941,088
- 656,577
284,511
36
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 3 - Deposits and Investments (Continued)
Credit Risk
State law limits investments in commercial paper to the top two ratings issued by
nationally recognized statistical rating organizations. The City has no investment policy
that would further lirrit its investment choices. As of year end, the credit quality ratings
of debt securities (other than the U.S. government) are as follows:
meshnent Fair Value Rating Rating Organization
Banklmeshnentpools $ 2,927,781
Aaa
Mmdlys
Bankinvestmentpods 42,010,704
Al
S&P
Corporate bond 16,617,000
AM
S&P
Corporate bond 1095,000
AA
S&P
Corporate bond 14,241000
A
S&P
Corporate bond 15,497,000
BBB
S&P
Corporate bond 346,000
BB
S&P
Corporate bond 521,000
B
S&P
Corporate bond 511,000
NR
S&P
Foreign bonds 1230,000
A
S&P
Foreign bonds 1138,000
BBB
S&P
US. agencies securdk:s 2,545,000
AM
S&P
US- agencies seconties 567,000
NR
S&P
US- agencies securities 28,547,000
NR
S&P
US. Treasury secunbes 2,571,000
AM
S&P
Component Unit- Bank
investment pools 2,503504
Aaa
Maxi
Concentration of Credit Risk
The City places no limit on the amount the City may invest
in any one issuer.
More than
5 percent of the City's investments are the following:
Percent
mestri
Fair Value
Invested
City a Livonia Employees Retirement System
Oakmark lntemabonal Mutual Fund
$ 8,030,438
54615%
City a Livonia Retiree HeaIN and Disability Benefits Plan
Oakmark lntematonal Mutual Fund
2,244568
54278%
Loomis Sayles Growth Mutual Fund
4,099520
991339'0
Loomis Saves Small Cap Mutual Fund
2,951 461
71371%
37
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 4 - Capital Assets
Capital asset activity of the City's governmental and business -type activities
was as
follows:
Balance
Balance
D ecenrber 1,
nationals and
November 30,
2107
Reclassifications
Addilions
Aclusbrents
2008
Guverri ARivites
Capital assets not being deprecated_
Land
$ 34,470,310
$ -
E 438,360
$ -
$ 34,908670
Constmdion in progress
1499,110
(1,412,:91)
1,301014
1,357,593
Subtotal
35969,421
(1,412,591)
1,733,434
-
X,298263
Capital aseb beingdegredated
Inketructure
HB:tB,985
1,412,:91
1,704,783
-
&1,654359
Read! nghts
17068,388
-
-
(11613)
17056,715
Buildings and i"rovenents
91,135275
-
1,3n,059
(328,057)
92,181087
Ecuipnent and vehicles
29,860,691
55,308
3,839,614
(2,238,510)
31,517,079
Subtotal
215,601,345
1,461,899
6,918,266
(2,578,210)
221409240
A nrulated depredation:
Inketructure
30257921
-
2,301562
-
32559,483
Read! nghts
5,217308
-
516,810
(15)
5,734,161
Buildings and i"rovenents
29,446571
-
1,943,052
(322,198)
31067431
Ecuipnent and vehicles
19,737605
43,857
2,172519
(1,947039)
21,(06942
Subtotal
84,659,403
43,857
6,934,013
(2,26),252)
83368017
Netcapital asets being deprecated
130,941936
1,424,W2
(15,737)
(3(P,018)
132,Otl223
Net gmernnental capital asets
$ 166,911,356
$ 11451
$ 1,723,6)7
$ (3(P,018)
$ 168,337486
38
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 4 - Capital Assets (Continued)
Accu nutted de preaaeon:
Balance
Balance
Buildings and builcing introvement
Decanter 1,
-
188,813
Disposals and
November 30,
Land improvement
2007
Reclassifications
AcIdgions
Adjustment
2"
Busimss-type Activities
1,142675
-
im' 0
88,706)
1,219373
Capdal asset not being retreaded
1,400972
(43,857)
243880
88,448)
1,502547
Land
$ 5,164,436
$ - $
-
$ -
$ 5,164,436
Construction in progress
561,657
(43,857)
2,748,440
(112,899)
3,191288
suttotal
5,n6,os3
-
2148,440
(112809)
8,361124
Capdal asset bein g retreaded
$ 80,164234 $
(11451) $
314,880 $
Qn,448) $
&1,194215
Buildings and Wilcing introvement
9,428596
-
14,888
-
9,443484
Land inproverrent
2880748
-
122,482
(81,184)
2916,044
Vehicles
1,961,441
-
125,694
88,106)
1,964,429
Machinery and equipmnt
2523,214
(55,308)
M41)0
(250,067)
2,,452,669
Water and sewer distribution
116,936316
118,854
111055,110
suttotal
M,n6J73
(59808)
625,108
(444,977)
133851196
Accu nutted de preaaeon:
Buildings and builcing introvement
3,711157
-
188,813
-
3,996030
Land improvement
2186,206
-
111,285
(81184)
2210,307
Vehicles
1,142675
-
im' 0
88,706)
1,219373
Machinery and equiprent
1,400972
(43,857)
243880
88,448)
1,502547
Water and sewer distribution
50841222
2,338,126
53lattm
suttotal
59,288232
(43,857)
3,0:9,268
(284,338)
0619,305
Net capdal asset being deprecated
74,438,141
(11451)
(2,433,560)
(169,09)
71632,491
Net governmental capilal asset
$ 80,164234 $
(11451) $
314,880 $
Qn,448) $
&1,194215
39
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 4 - Capital Assets (Continued)
Capital asset activity for the City of Livonia's component units for the year was as
follows:
Balance Balance
oecenber 1, November 30,
2107 Addilions 2"
Component Units
B eveiopme nt Auth unity
Capital assets not bein a depreciated - Land
$ 474,448 $
-
$ 474,448
Capital ase6 bein a depreciated- Land
i"rovenen6
15,284,316
149,928
15,434,304
Amu mdated depreciation -Land
i"rovenen6
5,354,509
764,531
6,123,040
Net capital assets being depreciated
9,925,867
(614,603)
9,311264
Net cmryonent unit capital assets
$ 10,400,315 $
(614,603)
$ 9,785712
Depreciation expense was charged to programs
of the pdrmrygovernment as follows:
Governmental activities:
General government
$
464,339
Public safety
1,194,481
Publicworks
3,443,993
Community and economic development
434
Recreation and culture
1,874,613
Total governmental activities
$
6,977,860
Business -type activities:
Water and sewer $ 2,703,074
Housing 166,977
Golfcourse 189,217
Total business -type activities $ 3,059,268
40
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 4 - Capital Assets (Continued)
Constmction Commitments - The City has active construction projects at year end.
At year end, the Citys commitments with contactors are as follows:
Spentto Remaining
Date Commitment
Street and sidewalkprojects $ 3,098,141 $ 579,572
Storm water retention project 511,973 137,988
Utility related projects 3,111,469 431,981
Total $ 6,721,583 $ 1,149,541
Note 5 - Interfund Receivables, Payables, and Transfers
The City of Livonia Retiree Health and Disability Benefits Plan (the "VEBA") has an
interfund receivable of $769,484 from the Investment Administration Fund for
contributions payable to the VEBA as of the end of the year.
Interfund transfers reported in the fund financial statements are comprised of the
following:
Fund Tansfarred Form Fund Tandfa ed To Amount
Gereal Fund Nonmajorgoiemmentalfunds $ 1335,782'
Goff course Fund 125,888'
Total General Fund 1,460,782
Community Recreation Fund Nonmajorgoiemmental Funds 2,253,276'
Nonmajorgovemmental Funds Gereral Fund 548,888 ....
Nonmajorgosemmental Funds 6,788,457 ...
Total nonmajor gmernmental Funds 7,248,457
Total $ 18,962515
Transfer of unrestricted resources to finance capital porjects andgereral obligation debt service in
accordaze with budgetary authorizations
" Transfer from a Community Recreation Fundfordebt service
... The majorilyof tramcars are forgas and weighttax ravines red the Major Streets Fund to the Loral
Streets Fund android these Fundstothe Road andSidewalk Fund in accordance Act51. Most
ofthe remaining tmnskrs relate to the Llys mmmunity transit program.
.... Pimanly transfer Ford Me Pudic Satety Communication Fund to the General Fund to pay for
eligible operation costs
41
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 6 - Leases
Capital Leases - The City has entered intoa lease agreement as lessee for financing the
purchase of a fire truck and buses. This lease agreement qualifies as a capital lease for
accounting purposes and, therefore, has been recorded at the present value of the
future minimum lease payments as of the inception date. The future minimum lease
obligations and the net present value are as follows:
Year; Ending
Governmental
November 30
Activities
2009
$ 229,690
2010
229,692
2011
229,691
Total minimum lease payments
689,073
Less amount representing interest
(41,387)
Present value at November 30, 2008
$ 647,686
These leases are included in the long-term debt schedules in Note 7.
Note 7 - Long-term Debt
The City issues bonds to provide for the acquisition and construction of major capital
facilities. General obligation bonds are direct obligations and pledge the full faith and
credit of the City. Capital lease obligations are also general obligations of the
government. Special assessment bonds provide for capital improvements that benefit
specific properties, and will be repaid from amounts levied against those properties
benefited from the construction. In the event that a deficiency exists because of unpaid
or delinquent special assessments at the time a debt service payment is due, the City is
obligated to provide resources to cover the deficiency until other resources (such as tax
sale proceeds or a re -assessment of the district) are received. Revenue bonds involve a
pledge of specific income derived from the acquired or constructed assets to pay debt
service.
42
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 7 - Long-term Debt (Continued)
Long-term obligation activity can be summarized as follows:
Imermt
emdml
Me
M1 nn
Bwmtg
QeWthn
Wigs
Ranges
Balance
Add3om
Fedml ¢ Ending Banns
OneV®r
Goya nrtenal adwited:
BUIIdIIg Author/ Bons
2000 Recreation Bonds
Arrwrams,ue-S3C0000
Maturlmthwgn2m0
5mn
31w"
s 3mmg s
-
s Ow") s
Blg,mg
s iwo
2W Recreation Bonds.
Arraamm9.oe-S9,50,03
m50m-
Manurinathwgn2009
5dm
VI dw
1wada]
-
(525,0])
1950]0
6259%
2L6 MBA PeNndlrg Bonds:
Amur[ lnsue-S37WM
329"-
3110
Manunry th man 2015
125%
520503
300O
-
(1650])
39503
110"
RLN MBA PeNndlrg Bonds:
Amur[ lnsue-S31i02503
4 08h-
MMUM-
Manunrythman 2O0
175%
51 An,0]
31 UO"
-
(115")
mm"
120"
so- eM and rugh„ey Gwerm Obugaolon
GnllmtedTax Bons
1913 Road lrrproverteM1 Bons
Art nnonsue-M3 M
Matumgihrg h2CK)0
125%
$CW W]
IN W]
-
(10,03)
QpI4l Ie eoblganora:
Elretrud pumper:
Ar nnnsue-W5o99
w3,27a-
h4Nhrythwgh2011
3P%
$51fi90
25]59
-
(61 175)
190108
0271
Trarapaatlon bmm:
A nnofewe-s 6912
MUM -
Maturlrgthagh2ml
358%
3155918Sd1062
(134 I44512781"M
Total gwernnnerGl admt dean
3 im5
-
(1 dol ,919)
WA m
1102"
Other long-erw obugealons
General ueallny dan woman
compersailon. and noanh lreaanm
Jan (Note 9)
23"275
25253
-
zmd6
-
IanQlll Jowre and pmtdmare lebnny
59601
17M
-
7139)5
-
Corrpersanedasomm
6mm1015"
�7L78%
29 n7
Totalgwam¢RnIa6IMIm
17956811
4285770
(4575222)
17%,R
400M1
43
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 7 - Long-term Debt (Continued)
44
Imerat
annopal
Me
Wtunty
BWlnnlrg
Qre Wthn
Parga
Bugs
Balance
Addnmm
Redeem Ending deduce
OneV®r
Bwlneatype adwites
BuIIdIIg Authority pence
1" MBA Be9n?nory Bon.
Amount dmoe-51210,099
hdNdry td man 2WG
IO196
S120 W]
s 120W] s
-
s (120") s
-
s -
RLN MBA ReNndlrg Bonds:
Arrwm masue-S33B13g99
538009
Maturlrp td wgd 2m5
90%
SaSiCDO
33sOgoB
-
(3BOmB)
3Mg3
NSBBB
WMA 5upply and tx.Ma4 ternBonds.
209 WMA 5upplyand N taMa4 ten
Revenue Bonds.
Amountddeue-.c,O99M
Wurlrgmrwgd2(u9
5Mae
SI25,"
RSgmB
-
(125,08)
125,"
idea"
204WMa5upplyandN twiner pten
Revenue RNndlm Bonds.
Arneum ddeue-aPe""
315% -
W10
Maturlrg inrngd 2012
em%
31(M
4MUM
-
M/g,mB)
3155,888
1um"
Fells delaredanwrton refndlry
(3884113)
-
Je!"
( 6(pr[O
2L6WMa SuppNendN tenMa4¢ten
Revenue pence
AnomM1onsue-5Q555i0]
359%-
U75i09-
WurngNrman MO
50%
5100]
43 "
-
(2135,03)
105,03
275"
2M WMA Su pay and N05@uMa S ten
Revenue RNndng pence
AnomnMasue-S 11010]
350%-
sIDi03
Worm Nrogd2020
50%
s uw
4M"(15"4UM03
Mum
Trtal belt®'-typea6Mty dM[
113523524
-
(1b]4,534)
14M
182003
cmulymmradal
and Lean
saneugeVale
ROmevMeyWuen514 comm saran
Wasitan-N.wron tarp
a3m9-
WurmMmae-s1a4z3703
Fd[udrg inragn2021
225%
5250]
2700]
-
0,mg1
2A` qp
RO W3
Older bM lermetA gapm
General laNMdalns mrka5
¢npeimllon, and deattd Imuran
carre(Nde 9)
11510
151,13
-
mul
-
Gnpeimledaeserces
15512
(2M 23J9197111713
Tomlbuda-typemmlda
172A�
®1
1 645
TMalgovernnN<Iand
bnameatypeadM9e3
s OM413 s
41`451
3 OM1 (0) 3
4MEC4
sS 6UNdiM
44
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 7 - Long-term Debt (Continued)
imerat Phnapal
Me Wtunty Bwlnnls QeWthn
Nmm 1Mm Mans AddQmm nets m Edits Balms OneYmr
Compone unL
Component Units
193A ew=m Da9oprt ft Bm6
Interest
Total
2009
$ 370,000
Arrwaamoe-�
566,353
2010
390,000
180,400
Wurlrgtrcwgh2am
470
V15BBB s 5&5"
s - s (35B,nu) s 215000
s 215000
2L6n==M ea9oprteIRn dMBart[
430,000
147,600
577,600
2013
Arr anwe-soma BBB
emn-
31xBm-
2014-2018
2,625,000
hffiurmtft gh2019
5B
usj" 4 4M"
41a5B1]
$ 1,131,816 $
Taal mnpmen unto mt
s 5m5Bm
s s ( M) s 463],000 s 3M"
Annual debt service requirements to matudty for the above bonds and note obligations
are as follows:
Govemmental
Mhmhes
Business type ActivIns
Pnmpal
Interest
Total
Pnwipal Interest
Total
2009 $ 1,163,244 $
1,515,347
$ 2,678,591 $
1]6],593 - $ 595,809 $
2,363,402
2010 1305,804
1,459,576
2,765,380
1]33990 - 522,296
2,256,286
2011 1,468,638
157],329
3,045,967
1]93990 - 459,439
2,253429
2012 1370,000
1342,726
2,712,726
1844,995 - 393,451
2,238,446
2013 1515,000
1285,026
2,800,026
1221845 - 324246
1545,291
2014-2018 8,975,000
5,406,958
14,381958
4,920,225 • 875,526
5,795,751
2019-2023 9,275,000
3,471855
12,746,655
1,692,092 - 102,036
1794,128
2024-2028 8,495,000
1,541,369
10,035,369
- -
-
2029-2030 3,140,000
133,025
3,273,025
Total $ 36,707,686 $
17,733,011
$ 54,440,697 $
14,973,930 $ 3,272,803 $
18,246,733
AmountisnxIum1bythedebe dcostoffinancing. Totaldeterralintheamount
d$316,072.
45
Component Units
Principal
Interest
Total
2009
$ 370,000
$ 196,353 $
566,353
2010
390,000
180,400
570,400
2011
410,000
164,400
574,400
2012
430,000
147,600
577,600
2013
455,000
129,331
584,331
2014-2018
2,625,000
313,732
2,938,732
Total
$ 4,680,000
$ 1,131,816 $
5,811,816
45
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 7 - Long-term Debt (Continued)
In prior years, the City defeased certain bonds by placing the proceeds of new bonds in
an irrevocable trust to provide for all future debt service payments on the old bonds.
Accordingly, the trust accounts' assets and liabilities for the defeased bonds are not
included in the basic financial statements. At November 30, 2008, $50,180,000 of
bonds outstanding are considered defeased.
No Commitment Debt - The City has issued Industrial Development Revenue Bonds
and Economic Development Corporation Bonds under state law which authorizes
municipalities under certain circumstances to acquire and lease industrial sites, buildings,
and equipment and lease them to third parties. The revenue bonds issued are payable
solely from the net revenue derived from the respective leases and are not a general
obligation of the City. After these bonds are issued, all financial activity is taken over by
the paying agent. The bonds and related lease contracts are not reflected in the City's
financial statements. Information regarding the status of each bond issue, including
possible default, must be obtained from the paying agent or other knowledgeable
source. The aggregate original issue amount was $81,422,000.
Note 8 - Restricted Assets
The balances of the restricted asset accounts are as follows:
Business -type
Activities -
Water and
Sewer Fund
Cash and cash equivalents
Revenue bond reserves
$ 2,871,342
Bond proceeds
1,662,605
Total cash and cash equivalents
4,533,947
Assets held by Wayne County
266,526
Total restricted assets
$ 4,800,473
Business -type Activities - In accordance with the provisions of the Water Supply and
Wastewater System Revenue bonds, the City is required to set aside monies in a bond
reserve account. At November 30, 2008, the City set aside $2,871,342 to comply with
these requirements.
46
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 8 - Restricted Assets (Continued)
Bond proceeds held in the amount of $1,662,605 in the Water and Sewer Fund relate to
excess funds from the 2006 Water Supply and Wastewater System Revenue bonds to be
used forfuture water and sewer obligations.
The City also has assets of $266,526 held at Wayne County that are restricted for future
water and sewer obligations.
Note 9 - Risk Management
The City is exposed to various risks of loss related to property loss, torts, errors and
omissions, and employee injuries (workers' compensation), as well as medical benefits
provided to employees. The City has purchased commercial insurance for medical
benefits and workers' compensation and participates in the Michigan Municipal Risk
Management Authority (the "Authority").
The Michigan Municipal Risk Management Authority risk pool program operates as a
claims servicing pool for amounts up to member retention limits, and operates as a
common risk -sharing management program for losses in excess of member retention
amounts. Although prerriums are paid annually to the Authority that the Authority uses
to pay claims up to the retention limits, the ultimate liability for those claims remains
with the City.
The City estimates the liability for general liability, workerscompensation, and medical
claims that have been incurred through the end of the fiscal year, including claims that
have been reported Be well as those that have not yet been reported. These estimates
are recorded in the Self-insurance Internal Service Fund. The estimated liability for
property loss, general liability, workers' compensation, and medical claims is recorded
within the governmental activities and business -type activities columns of the statement
of net assets. Changes in the estimated liability for the past two fiscal years were as
follows:
General Liability Workers' Compensation Medical Claims
2108 2081 2" 2" 2108 2081
Estimated oblity-
Beginning ofyear
$ 484,651
$ 523,488
$ 1,131,580
$ 959,762
$ 873,440
$ 1100,932
E:Bmmteddaimm
incurmfinduding
changesin estimates
2280,566
1745,559
616,326
6W,461
11824,519
11153,492
Claim payments
(1,721,769)
(1784,390)
(16p363)
(486,643)
(11833,551)
(11380,984)
Estimated oblity-
End ofyear
$ 1043,454
$ 484,657
$ 967,Sf3
$ 1,131580
$ 864,4cB
$ &13,440
47
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 10 - Pension Plans
Retirement System
Plan Description - The City of Livonia Employees' Retirement System (the "System")
is a single -employer defined benefit pension plan that is administered by the City of
Livonia Employees' Retirement System; this plan covers the following employees of the
City unless they elected to transfer to the City's 401(a) defined contribution pension
plan (see Note 11):
0 General employee members - All members hired prior to March 17, 1997 and their
beneficiaries
0 Police lieutenant and sergeant members - All members hired prior to December 8,
1997 and their beneficiaries
0 Police officer members - All members hired prior to November 24, 1998 and their
beneficiaries
0 Fire fighter members - All members hired prior to duly 1, 1998 and their
beneficiaries
The System provides retirement, disability, and death benefits to plan members and
their beneficiaries. At November 30, 2007, the date of the most recent actuarial
valuation, membership consisted of 573 retirees and beneficiaries currently receiving
benefits and terminated employees entitled to benefits but not yet receiving them, and
243 current active employees. The System does not issue a separate financial report.
Contributions - Plan member contributions are recognized in the period in which the
comtributionsaredue. Employer contributions to the plan are recognized when due and
the employer has made a formal commitment to provide the contributions. Benefits
and refunds are recognized when due and payable in accordance with the terms of the
plan. Please refer to Note 1 forfurther significant accounting policies.
The obligation to contribute to and maintain the System for these employees was
established by negotiation with the City's collective bargaining units and requires a
contribution from the employees from 2.55 percent to 5.21 percent. The funding policy
provides for periodic employer contributions at actuarially determined rates.
Administrative costs of the plan are financed through investment earnings.
48
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 10 - Pension Plans (Continued)
Annual Pension Cost - For the year ended November30, 2008, the City was not
required to and did not make a contribution. The annual required contribution was
determined as part of an actuarial valuation at November 30, 2006 using the entry age
actuarial cost method. Significant actuarial assumptions used include (a) an 8.25 percent
rate of return and (b) projected salary increases of 4.75 percent to 12.65 percent per
year. Both (a) and (b) include an inflation component of 4.75 percent The actuarial
value of assets was determined using techniques that smooth the effects of short-term
volatility over a five-year period. The unfunded actuarial liability is being amortized as a
level percentage of payroll on a dosed bass. The remaining amortization period is the
expected future working lifetime. The pension cost for the three most recent years is
as follows:
Fiscal Year Ended November 30
2006 2007 2008
Annual pension cost (APC) $ - $ - $ -
Percent ofAPC contributed 100% 100% 100%
Net pension obligation $ - $ - $ -
Reserves - As of November 30, 2008, the plan's reserves have been fully funded as
follows:
Legally required reserves:
Reserve for employees contributions $ 10,449,317
Reserve for retired benefit payments 59,511,530
Additional reserves - Reserve for employer contributions 84,419,219
Total reserves $ 154,380,066
Three-year trend information is as follows:
'Valuedusingthe Wry year'snoothedfundngnerletvalue
49
Actuarial
Actuarial
Unfunded
Funded
(Overfunded)
Actuarial
Value of
Aarued Liability
(Oveaunded)
Ratio
Covered
AAL as
Valuation
Assets
(AAL)Entry Age
AAL (UA )
(Percent)
Payroll
Percentage of
Date
(a)
(b)
(ba)
(alb)
(c)
Covered Payroll
11130105
$ 210,005 `
$ 167226
$ (32,779)
1196
$ 15,885
(2064)
11130106
215,101 `
169,506
(35.595)
1210
16,135
(2206)
11130107
215,675 `
173,486
(42,189)
1243
15,657
(2695)
'Valuedusingthe Wry year'snoothedfundngnerletvalue
49
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 11 - Defined Contribution Pension Plan
The City established a defined contribution pension plan under Section 401(a) of the
Internal Revenue Code for the following employees:
0 General employee merrbers -AII members hired on or after March 17, 1997
0 Police lieutenant and sergeant members - All members hired on or after
December 8, 1997
0 Police officer members - All members hired on or after November 24, 1998
0 Fire fighter members- All members hired on or after July 1, 1998
In addition, the plan covers all employees electing to transfer from the City's defined
benefit pension plan (see Note 10).
In a defined contribution plan, benefits depend solely on amounts contributed to the
plan plus investment earnings. As established by the City of Livonia through collective
bargaining agreements, the City contributes a percentage of employees' earnings as
follows:
Employees Transtarring
New Employees Hireel
form Me Detneel Benefit
After Me Effacbw Dates
Pension Plan
NoW Mow
Employer Employee
Employer Employee
Contribution Contntuhen
Contnbutian Contribution
General 13% 31%to 366% 8% 31%to 366%
Police lieulenants and sergeants 13% 521% 11% 521%
Police 13% 5% 11% 5%
Fire 13% 356% 11% 356%
The employee contribution percentages noted above represent the minimum required
contribution. Employees are permitted to contribute additional amounts up to the
maximum allowed by law.
The City's contributions for each employee (plus interest allocated to the employee's
account) are fully vested after four years of service and are vested immediately for
employees transferring from the existing defined benefit pension.
In accordance with the above requirements, the City contributed $2,095,530 during the
current year, and employees contributed $725,873.
50
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 12 - Other Postemployment Benefits
The Citv of Livonia Retiree Health and Disabilitv Benefits Plan
Plan Description - Effective November 4, 1998, the City created the City of Livonia
Retiree Health and Disability Benefits Plan (the "VERA"). The plan provides medical and
healthcare benefits, including hospitalization and disability benefits, for the welfare of all
retirees and their spouses and eligible dependents. At November 30, 2007, the date of
the most recent actuarial valuation, membership consisted of 635 active participants,
626 retired participants, and 36 inactive vested participants. After November 4, 1998,
all contributions related to postemployment beneFds for all members of the Defined
Benefit Pension Plan and Defined Contribution Pension Plan and their beneficiaries will
be recorded as revenue in the Citys Other Employee Benefits Trust Fund.
Eligibility - All retirees of the Defined Benefit Pension Plan and the Defined
Contribution Pension Plan and their beneficiaries and future retirees who complete
10 years or more of credited service are eligible.
Contributions - Employer contributions to the trust are recognized when due and the
employer has made a formal commitment to provide the contributions. Benefits are
recognized when due and payable in accordance with the terms of the plan.
The obligation to contribute to and maintain the System for these employees was
established by negotiation with certain bargaining units, including general and
administrative employees. These employees are required to make a contribution of
2.00 percent beginning December 1, 2006. The funding policy provides for periodic
employer contributions at actuarially determined rates. Administrative costs of the plan
are financed through investment earnings.
Annual Cost - For the year ended November30, 2008, the aty's annual
postemployment cost of $6,218,636 for the plan was equal to the Citys required and
actual contribution. The annual required contribution was determined as part of an
actuarial valuation at November 30, 2006, using the entry actual age cost method.
Significant actuarial assumptions used include (a) an 8.25 percent investment rate of
return and (b) a graduated projected annual inflation rate for medical care. A 6.00
percent annual rate for medical care inflation was assumed for the year following the
valuation, 5.50 percent for the next year, and 4.75 percent thereafter. The actuarial
value of assets was determined using techniques that smooth the effects of short-term
volatility over a five-year period. The unfunded actuarial liability is being amortized as a
level percentage of payroll on an open basis. The remaining amortization period is 50
years for health and 30 years for disability.
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 12 - Other Postemployment Benefits (Continued)
The funding progress of the plan as of the most recent valuation date is as follows:
Actuarial Actuarial Funded
Actuarial Value of A ued Liability Unfunded Ratio Covered UAAL as
Valuation Assets` (AAL)EntivAge AAL(UAAL) (Percent) Payroll Percentage of
Date (a) (b) (ba) (alb) (c) Covered Payroll
11130105 $ 41,957 $ 122,019 3 80,032 344 $ 33,312 240.3
11130106 47,673 122,267 74,591 390 34,313 2170
11130107 52,802 115,685 62,883 456 35,354 177.9
Reserves - As of November 30, 2008, the plan's reserves have been fully funded as
follows:
Reserve for health insurance $ 39,631,116
Reserve for disability insurance 1,459,649
Total reserves $ 41,090,765
Three-year Trend Information
Fiscal Year Ended November 30
2006 2007 2008
Annual OPEB cost $ 7,755,379 $ 6,455,607 $ 6,218,636
Percent of OPEB cost contributed 100% 100% 100%
Net OPEB obligation $ - $ - $ -
Actuarial Methods and Assumptions- Actuarial valuations of an ongoing plan involve
estimates of the value of reported amounts and assumptions about the probability of
occurrence of events far into the future. Examples include assumptions about future
employment, mortality, and the healthcare cost trend. Amounts determined regarding
the funded status of the plan and the annual required contributions of the employer are
subject to continual revision as actual results are compared with past expectations and
new estimates are made about the future. The schedule of funding progress, presented
as required supplementary information following the notes to the financial statements,
presents multiyear trend information about whether the actuarial value of plan assets is
increasing or decreasing overtime relative to the actuarial accrued liabilities for benefits.
52
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 12 - Other Postemployment Benefits (Continued)
Projections of benefits for financial reporting purposes are based on the substantive plan
(the plan as understood by the employer and the plan members) and include the types
of benefits provided at the time of each valuation and the historical pattern of sharing of
benefit costs between the employer and plan members to that point. The actuarial
methods and assumptions used include techniques that are designed to reduce the
effects of short-term volatility in actuarial accrued liabilities and the actuarial value of
assets, consistent with the long -tern perspective of the calculations.
In the November 30, 2007 actuarial valuation, the entry age actuarial cost method was
used. The actuarial assumptions included a 8.25 percent investment rate of return (net
of administrative expenses), which is a blended ate of the expected long-term
investment returns on plan assets and on the employers own investments calculated
based on the funded level ofthe plan at the valuation date, and an annual healthcare cost
trend ate of 12 percent initially, reduced by decrements to an ultimate ate of 5
percent after 10 years. Both rates included a 4.75 percent inflation assumption. The
actuarial value of assets was determined using techniques that spread the effects of
short-term volatility in the market value of investments over a five-year period. The
UAAL is being amortized as a level percentage of projected payroll on an open bass.
Upcoming Reporting Change - The Governmental Accounting Standards Board has
recently released Statement Number 45, Accounting and Reporting by Employers for
Postemployment Benefits Other Than Pensions. The new pronouncement provides
guidance for local units of government in recognizing the cost of retiree health care, as
well as any "other' postemployment benefits (other than pensions). The new rules will
cause the government -wide financial statements to recognize the cost of providing
retiree healthcare coverage over the working life of the employee, rather than at the
time the healthcare premiums are paid. The new pronouncement is effective for the
year ending November 30, 2009.
53
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 13 - Pension and Other Postemployment Benefits
The following are condensed financial statements for the City's defined benefit plan (see
Note 10) and the postemployment healthcare plan (see Note 12). The plans do not
issue separate financial statements.
Statement of Net Assets
Assets
Cash and investments
Other assets
Total assets
Liabilities
Net Assets
Statement of Changes in Net Assets
Investment loss
Contributions
Benefit payments
Other decreases
Change in Net Assets
54
Employees
Retirement System VERA
f 164,571,980 $ 41,353,558
67,278 769,484
164,639,258 42,123,042
10,259,192 1,032,277
$ 154,380,066 $ 41,090,765
$ (58,487,650) $ (14,503,898)
539,591 7,131,076
(11,908,880) (5,802,942)
(625,824) (17,153)
$ (70,482,763) $ (13,192,917)
City of Livonia, Michigan
Notes to Financial Statements
November 30, 2008
Note 14 - Deferred Revenue
Governmental funds report deferred revenue in connection with revenue that is not
considered to be available to liquidate liabilities of the current pedod. Governmental
funds and Enterprise Funds also defer revenue recognition in connection with resources
that have been received but not yet earned. At the end of the current fiscal year, the
vadous components of deferred revenue are as follows:
Property done, spedal assessrmnt,
and other receivables
corddunay re,re rbon renter
annual paeees
Interest receivable on sewer
connections
Assets held A Wayne County
Grant revenue not received
within fib days
Total
Note 15 - Subsequent Events
Gover nd ntal Businesstype
Gover nd ntal Funds Adrvdies AcbvRies
Unavailable Unearned Total Unearned Unearned
$ 1$03,139 $ - $ 1,W3,1W $ - $
7W,328 750,328 7W,328
323,fi
259,595
220,383 220,383
$ 1123,513 $ 7W,328 $ 2,473,841 $ 7W,328 $ W,251
Long-term Debt - In December2008, the City issued Building Authority (District Court
Facility) Bonds in the amount of $8,500,000. Interest rates range from 3.50 percent to
5.25 percent, bonds are payable through the year ending November 30, 2033. The
proceeds from the bond will be used to construct a new district court facility.
Declines in Investment Values - Subsequent to year end, the City's defined benefit
pension plan and the postemployment healthcare plan (see Note 10, Note 12, and Note
13) have incurred a significant decline in fair value, consistent with the general decline in
investment markets. However, because the values of individual investments fluctuate
with market conditions, the amount of losses that will be recognized in subsequent
periods, if any, cannot be determined.
55
Required Supplemental Information
56
City of Livonia, Michigan
Required Supplemental Information
Budgetary Comparison Schedule - General Fund
Year Ended November 30, 2008
Total human resources 18204 ]%1,201 ]l61ffi 4],086
57
W once one Fire
Origiml Budget
Full Budget
Actual
Budget
Reven
PrcgerlysTaxes
$ 38801k092 $
38801k032 8
36896}i]
8 97,255
Licemes and Permits
Business
I59,588
159,500
139825
(19,615)
Honwsiness
z1m,20o
z1m,2oo
1705,85)
(474341)
Totalganses and Parents
z:oP'no
231,760
is idid
(494,016)
Intergovernmental Revenue
Stale and loal
8,920,748
8,920,748
8913,831
(],]17)
Federal
10,102
11,18
264,255
165,153
Total intergovernmental revenue
9,838ffi8
9,838858
9,197,286
158,435
Changes kar Services
3,4d2,M0
3,41
3,188475
(262(K5)
Interest
1900.000
1,900,000
1;126,551
(713,449)
Fines and Forkilures
3.700.000
3,700.000
3,769,20
69zO
Miscellaneous Revenue
Rent and rotates
1184,16
1,184,386
1,366}43
ifil
.Gle of fixed assets
90,000
90,000
WORD
(3,000)
Other raceleneous
1.545.320
1,545,320
15til
36065
Total msaelanenm revenue
z82o,7oe
zeal
3037,726
21l
Total revenue
S 54,862888 S
54,862888 S
53,855,304
S (1.007,584)
Exnend'wres
General wmrnmem
Legislative:
City Cmmil
$ 414,10 $
414.880 $
390,319
$ 24,561
Cly Clerk
501,746
498746
41
38045
Electors
31882
321,622
328931
628
Total legislative
1,20,248
1,20,248
ill
tiaztt
Ldcel
z9®.45g
z9®.4'B
2?05,591
63,88
F eawvx Killoffice
4l
4v,6m
412874
70,817
Human resources
Human Relations Comusson
6,TI9
6,719
4,156
258
Labor relations
142,000
142,000
96431
43561
Coil service
749.485
634.485
633,525
96O
Total human resources 18204 ]%1,201 ]l61ffi 4],086
57
City of Livonia, Michigan
Required Supplemental Information
Budgetary Comparison Schedule - General Fund (Continued)
Year Ended November 30, 2008
Wirbn<e with Final
Original Budget Final Budget Rubel Bucket
Expenditures (Continued)
(3eeeral w.ernmem (Continued)
Tonal administration:
Recounting
s 473.412 s
479,412 s
458,3418 s
15,061
A¢esiig
590,631
55,681
595,96
142
Finance
2711,962
25,84
251,85
13,982
Intlzpendent audit
61,44
intact
57,836
4,6418
Board of Review
4,258
4,383
4,395
83
Treasurer
54,539
54,539
588639
58,84
Inbrimtim systerm
699.796
699.7E
63784
5293f
Total marcial acnnistraton
2,51
Zbad'dda
2513,59]
145735
Other activities:
Legal
681,998
]60,96]
713,35
1,520
Li add su fifrs
653812
591,842
516,M5
45696
M46iton of land
9,888
9.000
420
8,5@1
Research and instigation
13,000
18.000
18,060
-
Duesandsuidualiims
NAD
5],000
53,021
3,979
Total other a<GnTies
142742
1393742
1}3094
59]
Total general government
9'ai8,616
9,52I,6fb
9,0]1,14
458563
Public Safely
Police
Tragic bureau
821,918
92!,908
927,55
353
Administration
2]4]x8
24143,288
2,4422v
1,035
oetectwe bureau
25x.4189
274209
2,701
371
PLinmalre aervi<e
53,210
596,730
59635
335
Commin�tiordRecwd bureau
991,52
8Ig64
811
91
crdemg guard;
0,290
58,298
49,524
766
&Md liaison
601,112
623,112
627,693
413
Reserve Paris
239,013
256573
256,212
361
Patrol bureau
11,245,383
11,7z4383
11,724,833
358
Intelligence bureau
1.581
1,811,68]
1811,289
398
Total Ponce
21,441
21,960,852
21955,513
5,35
Fire
laministration
101
91
909,36]
439
Firefg Ming
9,3x,036
1834,886
1036226]
626
Fire lxevenlion
45l
413,339
488312
w
Total fire
18831
11,78L014
11]]9,932
1,142
Protective inspection:
talcum Code Board oflKpzab
1761
1761
1,102
659
Inspection
1335.618
1335,616
12orl
57,465
Total protective inspection
131]3]9
133]379
1273251
58,125
Omerlrotecfae:
Omna of
200,301
1w301
194321
480
TraRiccomnisim
6,394
6,391
6,174
220
Total other prntedive 2ll6,695 28115 200,45 ]BB
Total wli< safely ddFi 0 3 M'510 35215,191 65316
i
City of Livonia, Michigan
Required Supplemental Information
Budgetary Comparison Schedule - General Fund (Continued)
Year Ended November 30, 2008
59
variance with Final
Original Budget
Final Budget
Actual
Budget
Expenditures (Continuant
wacwark
Pudicserviss- Highways, streets, and
nerntenance
Engineering
$ 665j93 $
407,393 $
446989 $
0M
Park nuiderens
1,016,521
896521
896,698
431
Administration
17,639
18,139
081
11
Ecaipnent nandename
381,382
381,382
369,693
71,603
Building maintenance
1642600
1,400,100
1399738
362
Rest lighting
330068
330x68
297,763
32,697
Maintenance
Reels
111982
242,902
202519
383
TraRicserviss
119,369
119,369
90288
25,181
Forestry
01241
01241
7578
33Kil
Total who work
0,T26367
387],35]
3,690965
11
Rachel and Cultural
Parksand recreation:
Administration
411
0738M
071901
1853
Recreation halides
43,121
38,121
3],45]
6164
Recreation athletes
121
111,3B2
110,s99
483
Recreation prcyrairs
90510
60,014
59,70
385
Total Mildest recreation
683321
683,321
680896
3,315
Cultural:
Historic Preselaamn Cpnsmision
5,050
5,050
3,718
1,332
Historical Commission
89,37
89,37
]9244
10,193
Hbarycommisson
450,000
450,000
450,000
-
ArdCommision
23255
23,755
23282
070
Cenral reses
940855
946W£
92],340
19,622
You Uncomaisloc
18,613
18,113
16,393
1]28
Cnmmision on Aging
1682E
S,YM
5,715
3,811
Total cultural
154z048
1542,048
1505,696
36,352
T ohl recreation and cultural
2225369
2y .369
2,185,702
39,F5]
Con.ounity and Ecareamlc Be hWinnem
City Planning Corral
6£9,819
6£9,819
09,613
9,406
Zonng Board ofAlatxals
135,330
135,330
102,346
32,988
Total comminilyand economK
devebprent
SM 353
800353
761959
62,396
5npbyee BenelR; Insurance, and Other
3,063]8]
2203,]8]
2,076800
126,987
Total expencHures
$ 53,913,062 $
53,913,062 $
53,105,807 $
9111
59
City of Livonia, Michigan
Original Final Variance with
Bute1 Bute1 Actial Final Bud3e1
Revenues
Propzhyta es
$ 391 8
39]1]20 8
3,96],356
8 (0,351)
Charges Mservi<¢
3812,160
3812,160
3,6]6,152
(135008,
Interest
210,000
210,000
258,826
48,826
Miscellaneous revalue
730
730
T dal revenues
7,993880
7,993880
7,903061
(90816)
Expenailura
Sanitation
-
-
-
-
Recreation and cu8ure
6,368j35
6,998503
5,88],458
1;111,045
Transfers out
221,152
221,152
2253276
876
Total eyenMures
8,622687
9252,655
8,148731
1111921
Excess of aeaenues Over(Bnaep
Expenditures
(628807)
(12581n5)
(23],6M
1021105
FUN BalanceBeginningofyear
5,81
5,81
5,81
-
Fula BalanceEndofyear
$ 5,230,669 $
4,600,701 $
5,621,806
$ 1,021,105
60
Required Supplemental Information
Budgetary Comparison Schedule
Major Special Revenue Funds
Year Ended November 30, 2008
Rene Disp lByalem
Origiml
Fnal
190,425
Vran<e w1h
Bute1
Bu e1
Actwl
FinA Butet
S 6,760,886 $
6,760,886 $
7,OBy65 $
319,079
8 1zBW,m 8
12,BW,618 8
11997,58
8 (9,120)
12P,)D
120500
173,96!
5z5
MAD
256000
M,,3
36369
u'Wo
15,000
229133
7,M
1z3 ,M 12Az178 12,481917 89139
1z520,w 12520,632 12291492 2z9,310
1z5Z,332 12520,832 12291492 229,340
(12668)
(128,68)
190,425
319,079
6,M,MD
6,889540
6,8895!0
-
S 6,760,886 $
6,760,886 $
7,OBy65 $
319,079
61
City of Livonia, Michigan
Required Supplemental Information
Pension System
Schedule of Funding Progress
(000s omitted)
The schedule of funding progress presented above was determined as part of the actuarial
valuations at the dates indicated. Additional information as of November 30, 2007, the latest
actuarial valuation, follows:
Actuarial cost mathatl Aggregate (Employer Contribution)
Entry Age Normal (Schedule of Finding Progress)
Amort¢ation method Level percent, dosed
Remaining amortization period Expected future working lifetime
Asset valuation retreat Five-year smootued market
Actuarial assumptions:
Investment rate of retum 825%
PmWtetl salary increases, including inflation at 475% 475% 1265%
62
Unfunded
Actuarial
Actuarial
Unfunded Funded
(Overfunded)
Actuarial
Value of
xu,ued Liatilay
(Overturned) Ratio covered
AALua
Valuation
Assets
(AAD En"Age
AAL(UAAL) (Percent) Payroll
Percentage of
Date
(a)
R)
(ba) (alb) (c)
Covered Payroll
11130102
$ 199,621
` $ 159,2n
$ (40,355) 1253 $ 11285
(2335)
11130103
213,505
` 159,900
(43.6(5) 1273 1110)
(2549)
11130104
199,5]8
` 1":Rog
(35.200) 1214 16,0]0
(2190)
11130105
200,005
` 161226
(32,n9) 1196 15,885
(2064).
11130106
205,101
` 169,506
(35.595) 1210 16,135
(2206)
111301W
215,675
` 173,486
(42,189) 1243 15,65]
(2695)
'Valued usingroe tireyears000roed tunding
oorketvatue
Schedule of Employer Contributions
Annual
Year Ended
Actuarial
Required Percentage
November 30
Valuation Date
Contribution Contributed
2003
11/30/01
f 417,464 100
2004
11/30/02
392,639 100
2005
11/30/03
- 100
2006
11/30/04
- 100
2007
11/30/05
- 100
2008
11/30/06
- 100
The schedule of funding progress presented above was determined as part of the actuarial
valuations at the dates indicated. Additional information as of November 30, 2007, the latest
actuarial valuation, follows:
Actuarial cost mathatl Aggregate (Employer Contribution)
Entry Age Normal (Schedule of Finding Progress)
Amort¢ation method Level percent, dosed
Remaining amortization period Expected future working lifetime
Asset valuation retreat Five-year smootued market
Actuarial assumptions:
Investment rate of retum 825%
PmWtetl salary increases, including inflation at 475% 475% 1265%
62
City of Livonia, Michigan
Required Supplemental Information
Retiree Health and Disability Benefits Plan
Schedule of Funding Progress
(000s omitted)
"Information not available
Schedule of Employer Contributions
Year Ended
Actuarial
Actuarial
Percentage
Funded
Valuation Date
Contribution `
Actuarial
Value of
Accrued Lialulay
Unfunded
Ratio
Covered
UAAL as
Valuation
Assets`
(AAL)Entry Age
A uJAAL)
(Percent)
Payroll
Percentage of
(late
(a)
(b)
(ba)
(alb)
(c)
Covered Payroll
11130102
11/30/06
6,218,636
100
••
••
11130103
$ 30,4]5
$ 104386
$ 73,911
292
$ 34084
2168
11130104
37690
110,1Y
72,466
342
33,355
2173
11130105
41,981
122,019
80,032
34.4
33,312
2403
11130106
47673
122,261
74,594
390
34373
2170
11130107
52802
115685
62883
456
35354
1 H 9
"Information not available
Schedule of Employer Contributions
Year Ended
Actuarial
Annual Required
Percentage
Novenber 30
Valuation Date
Contribution `
Contributed
2003
11/30/01
$ 4,960,217
100
2004
11/30/02
5,859,287
100
2005
11/30/03
5,534,608
100
2006
11/30/04
7,755,379
100
2007
11/30/05
6,455,607
100
2008
11/30/06
6,218,636
100
`The required contribution is expressed to the City as a percentage of payroll.
63
City of Livonia, Michigan
Required Supplemental Information
Retiree Health and Disability Benefits Plan
Actuarial Assumptions
(000s omitted)
The information presented on the previous page was determined as part of the actuarial valuations
at the dates indicated. Additional information as of November 30, 2007, the latest actuarial
valuation, follows:
Amortization method
Remaining amortization period:
Health
Disability
Asset valuation method
Actuarial assumptions:
Investment rate of return
Projected annual premium increases
64
Level percent, open
40 years
30 years
Five-year smoothed market
8.25
6% for this year, 5.5% for next year,
4.75% thereafter
City of Livonia, Michigan
Notes to Required Supplemental Information
November 30, 2008
Note 1 - Reconciliation of Budgeted Amounts to Basic Financial Statements
The budgetary comparison schedules for the General and Major Special Revenue Funds are
presented on the same basis of accounting used in preparing the adopted budget.
Following is a reconciliation of the budgetary comparison schedule to the governmental
funds (statement of revenues, expenditures, and changes in fund balances):
Amounts per operating statement $ 52,515,304 $ 51,545,025 $ 5,887,458
Operating transfers budgeted as
revenue and expenditures 540,000 1,460,782 2,253,276
Amounts per budget statement $ 53,055,304 $ 53,005,807 $ 8,140,734
Note 2 - Budgetary Information
Budgetary Information - Annual budgets are adopted on a basis consistent with
accounting principles generally accepted in the United States of America for the General
Fund and all Special Revenue Funds except that operating transfers and debt proceeds have
been included in the 'revenue" and 'expenditures" categories, rather than as "other
financing sources (uses)." All annual appropriations lapse at fiscal year end; encumbrances
are not included as expenditures. During the year, the budget was amended in a legally
permissible manner, except that the General Fund, Community Transit Fund, Housing
Fund, Golf Course Fund, and Economic Development Corporation Component Unit were
amended after year end.
The City follows these procedures in establishing the budgetary data reflected in the
financial statements:
1. On or before September 15, the mayor submits to the City Council a proposed
operating budget for the fiscal year commencing the following December 1. The
operating budget includes proposed expenditures and the means of financing them.
2. Public hearings are conducted to obtain citizen comments.
3. As provided for by the City Charter, not later than November 1, the Council shall
adopt the budget through the passage of a budget resolution and transmit the budget to
the mayor. Not later than November 15, the mayor shall either approve or disapprove
the adopted budget, in whole or in part.
65
Community
General Fund
Recreation
Total Total
Total
Revenue Expenditures
Expenditures
Amounts per operating statement $ 52,515,304 $ 51,545,025 $ 5,887,458
Operating transfers budgeted as
revenue and expenditures 540,000 1,460,782 2,253,276
Amounts per budget statement $ 53,055,304 $ 53,005,807 $ 8,140,734
Note 2 - Budgetary Information
Budgetary Information - Annual budgets are adopted on a basis consistent with
accounting principles generally accepted in the United States of America for the General
Fund and all Special Revenue Funds except that operating transfers and debt proceeds have
been included in the 'revenue" and 'expenditures" categories, rather than as "other
financing sources (uses)." All annual appropriations lapse at fiscal year end; encumbrances
are not included as expenditures. During the year, the budget was amended in a legally
permissible manner, except that the General Fund, Community Transit Fund, Housing
Fund, Golf Course Fund, and Economic Development Corporation Component Unit were
amended after year end.
The City follows these procedures in establishing the budgetary data reflected in the
financial statements:
1. On or before September 15, the mayor submits to the City Council a proposed
operating budget for the fiscal year commencing the following December 1. The
operating budget includes proposed expenditures and the means of financing them.
2. Public hearings are conducted to obtain citizen comments.
3. As provided for by the City Charter, not later than November 1, the Council shall
adopt the budget through the passage of a budget resolution and transmit the budget to
the mayor. Not later than November 15, the mayor shall either approve or disapprove
the adopted budget, in whole or in part.
65
City of Livonia, Michigan
Notes to Required Supplemental Information
November 30, 2008
Note 2 - Budgetary Information (Continued)
4. The legislative budget is adopted at a functional level for the General Fund, and at the
fund level for other governmental and proprietary funds. The budget document
presents information by fund, function, department, and line items. Management may
amend the budget at the detail level within the legislative summary constraints.
Appropriations that exceed the summary budget constraints require City Council
approval.
Excess of Expenditures Over Appropriations in Budgeted Funds - The City did not
have significant expenditure budget variances.
0
Other Supplemental Information
67
City of Livonia, Michigan
Ell
Special Revenue Fund
Grande and SAD
Punas kly
boor Sheens
Leal Sheets
Street Lighting Cade Television
Libary
Cornmmiaion
Assets
Cash and nvestmene
8 1953,®5
8 642,136
8 V0610 8
1;169p86 8
10T1,762
8 3528,100
Rea v das:
Taxes
-
-
-
-
15,126
-
specialaasessmems
-
-
-
-
-
-
Other
6,996
-
4515
-
-
13],]12
Due horn other governmental undo
6!0 915
241,314
]00956
Total assets
$ 2,601,634
$ 883p50
$ 836,139 $
1,169,086 $
1,4R,888
$ 3,665852
Liabilities and Fund Balances
Lobilitias
Accounts peade
8 13,297
8 -
8 ®0,830 8
5,712 8
2693]2
8 10
Acauedand other
-
-
14388
6,629
60,403
-
Oekrredrevenue
220383
13933
Total liatehles
105,297
-
925601
12341
343,708
10
Fund Belanca
Reserved(oraptalimpmverrende
Unreserved dndsgnated
2496317
X3450
(89p52)
1156]0.5
1;169,18)
3,K5842
Total LM banes
2496,317
X3450
(89452)
1156 70.5
1169,180
3,665812
Total handles and
land Lances
$ 2,601,634
$ 883450
$ 836,139 $
1,169,086 $
1,492888
$ 3,665852
Ell
Other Supplemental Information
Combining Balance Sheet
Nonmajor Governmental Funds
November 30, 2008
Transit and
PQuciated CwnmmAy Rwdand Capial 19g8Slreel Special 2805 MBH 2007 MM
FwkiWres Transit SiRwalks Iinnarovement Iinnarovement Assessments ReLndng ReNndng
s
1.731571 s 6,1.408 s 2,7nne $ - $ - $ - $ - $
- - 28,697 3,050 - - -
215567 - - - - - - -
129,183
S 1,9,17,118 $ 193,591 $ 2,793,617 $ 3,&W $ S S S
$
80,908 8
35358 8
627582 8
241
11
2809
80,908
S,E o
6,166,16
3,050 - - - -
1 HE6210
168,161
2,166971
1 HE6210
168,161
2,11
S 1,9,17,118 $ 193591 $ 2,793,617 $ 3,&W $ $ $ $
69
City of Livonia, Michigan
70
Deal senee Fond
Capra Projects Fund
Drainage
cdrCarse
nnonbipal Burning
Preheats
1998arreet Capta
Capital
nwthmrtvaneother
Comvocttan
Imuovenrem Imuovemem
Imuovenrem
Assets
Cash and investments
$ -
$ 131,726
$ - $ 369,858
$ 3,5Pt,,19E
Ramadan
Taxes
sgeeasessmems
-
-
- -
-
Other
-
-
- -
mo
Doe from alhergovemmental inns
Total asek
5
$ 131,176
$ $ 369,858
$ 3588,T94
Liabilities aN Rural Balances
Hai
Hcmmk pat
8 -
8 -
8 - 8 893
8 151,511
ncaoeaanaother gadmia
-
-
- -
-
Derarrearevenoe
Total iadlities
-
-
- 893
151,511
Rural Balances
ReservetlMaplalimlxuuerrents
765,M
onraerved onRsgnatea
-
131,726
- 369,165
2581,A6
Total Nntl deduced
131,726
369,165
3,3A9,M
Total and
Nntl deduce
5
$ 131,176
$ 5 369,858
53588,790
70
Qpul argeae Fug
Trial Nw�jw
Sp CIA couN BUIUM C rnmedA
r 0%"Na imua "gs Fund:
$ 72,6 $ 1,M1,M $ M,Mi 03
M873
39],102 - D],102
355,066
I T12j96
$ 1,105,758 $ 1A41t 81 $ 7;535,742
s 120,070 s
50,9 s 2,u6,e55
81,42D
365,415
W26M
655,465
50,9 z,WM
765,079
639273 1,790,W B,Yi7,713
639273 1]90,931 19,MY 2
$ 1,105,758 $ 1,801y81 $ 22,55,762
Other Supplemental Information
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
November 30, 2008
71
City of Livonia, Michigan
72
Gants and
SAD Wee(
Cade
Funds kly
Major Streets
Local Sheets
Lighting
Fannon
Libary
Cwnmmialion
Revenue
Propztlytaa¢
8 -
8 -
8 -
8 -
8 0,432383
$ -
Specialasessments
881939
-
-
-
Intergovemimntalrevenue:
State andloal
0,369,965
? 655852
155863
Federal
295,3ffi
-
?F5o936
-
-
-
ClergesMservi<s
233516
565931
Interest
y8,]Zi
11
1088
00299
73,4'9
132,075
Fins atl MkAures
-
-
-
-
76,131
Miscellaneous revenue
12,0.37
623$£
Taal revenue
4,744,036
1,689,827
2,712,663
663865
4,475,491
689,474
Expenditures
Pudicati
-
-
1289,855
-
-
83,421
Puticwwks
2603,463
1,726352
908966
-
-
-
Reaeationandcu8ure
-
-
35984
5%6 i
4,942821
-
Corral and econwni< develogvi
-
-
760,39
-
-
-
CaptaloNlay
-
-
-
-
-
-
Bew- Principal reorenmm
-
-
-
-
-
-
Beht-Interestannumer
Tac espanatures
2,603463
1,736352
2,9137226
596561
4,9%2821
83,421
Excess at Reenueover(Unaer)
Expenditures
2,1465A3
(116,szs)
(274363)
67334
(461,330)
615,053
OIM1er Finarcing Sources (Uses)
Tenskrs In
187696
1,924,991
-
-
45gow
-
Tendrarsom
(2,124,991)
(1,925000)
-
(45,000)
Total other gnam ing sources Nses)
F,%73m)
(9)
(4030w
X0030
(s3o o3o)
Net change in Fund Balances
1532313
(116,em)
(274,563)
27,304
(17,330)
115,053
Fund Balance:- seginningoryear
256,0%
103323%
185,131
1129441
1llia to
3550.739
Fund Balances -End or year
$ 2A96}37
$ 833455
$ (89,4627
$ 1,156,745
$ I.M.180
$ 3,665,842
72
Other Supplemental Information
Combining Statement of Revenue, Expenditures,
and Changes in Fund Balances
Nonmajor Governmental Funds
Year Ended November 30, 2008
Transit and
HQutlated Commmily R®Bsand Captal 1998SIree1 Spe<al 2885 MBH 2007 MBH
FwkiWres Transit Sitlzrvalk Iwwement Imawenent Assessments Retndno Refundno
1MCK25
- -
- -
4,497.0(4 $
2520,78) s
488131
-
0,491
-
-
- - -
zss,m
-
-
-
- - -
&38 26,635
ID3Y
14$141
803,1 1'MCK25
6,T ,037
e,ud
19,52]
111M
-
7 203 -
52080
-
-
-
- - -
z,,310
921
(8 )
(26,635)
(250582)
(1411975)
- 81
2,T ,(00
870861
1a32v
4,08,462
2520,780
408,138 203
803792
-
-
-
- - -
6,T ,037
1MCK25
- -
- -
408,00
-
185,888
115,888
8,976
xtrit;
145582
1,D6,975
1]99119
17B' 3
1,539,136
&38 26,635
$ 1,866218 $
14$141
803,1 1'MCK25
6,T ,037
488976
26,838
258582
1,411,975
6],831 (93,732)
(1517,225) 2520,788
(8 )
(26,635)
(250582)
(1411975)
- 81
2,T ,(00
258582
1,411,975
(2520.71r))
73
81
2,v5,00
(2528788) 25o582 1,411975
6r,oa�
(38,7x)
07,775
- (0a) C2(3 3) - -
1]99119
17B' 3
1,539,136
&38 26,635
$ 1,866218 $
14$141
$ 2,146,671
$ $ $ $ $
73
City of Livonia, Michigan
74
oeetseMce Fmtl
Capta' Preheats Fund
cdfCa,rse
Municipal Bunking
Drainage Projects
1991
Captal
PNhwily, and Other
Construction
Impuuemen(
Iinterovement
Revenue
ProPetlytaa¢-
specialaesesemems
-
-
-
-
Intergawannantalrevenue:
State andlorul
-
-
-
-
Federal
-
-
-
-
ClargesMseneces
110553
Interest
-
6526
6,156
13976
Finn mtl MkAures
-
-
-
Miscellaneous revenue
Total revenue
-
6526
6,156
126527
Expenditures
Pudicsakty,
-
-
-
-
Pudicwwks
-
-
-
-
Recreationandcuiture
-
-
-
-
Communty, antl economic developrnent
capta otla2
-
-
201241
152,194
oeal Principal reorermm
¢5000
-
-
-
oeN-Intermtantlaher
94?00
Total expenaWres
T19900
201,241
152,194
Excess d Reymond Over(Under)
Expenditures
(Tlg?00)
4526
(19],0ffi)
(27.667)
OIM1er Financing Sources (Uses)
Trmskrs In
719900
-
-
Therefore not
-
-
(137,6%
-
Total other financing sources (uses)
719900
(1316
Net Change in Fund Balances
-
4526
(33,771)
(27,667)
Fund Balances- Beginning ofyear
-
U7200
33,771
395,832
Fund Balances -End of year
$
$ 131,86
$ $
mri
74
Other Supplemental Information
Combining Statement of Revenue, Expenditures,
and Changes in Fund Balances (Continued)
Nonmajor Governmental Funds
Year Ended November 30, 2008
CapU1 Prgecig Finan
Capin'
SPaal
Coun Buitlng
Tdal Nanrepr
IWmens
F e%menU
Impw "nU
Gw rnmenUl Fund
6, 9
11518}58
-
2 ,B13
-
1;135952
-
-
-
6276,1]1
2211581
2,150186
5]11,328
72 3
933022
1U115
383f7
56583
881,313
2,192381
-
025,132
1,822873
-
3T1.ffi3
-
1DN.857
75
642,A3
261,F
1016609890
6, 9
76 0,TA
2,153186
5]11,328
-
3,873,E61
-
-
-
127
15]32]13271
2,150186
5]11,328
72 3
2],3688]3
(2,888991)
s3,6e3
e,w2
(2375,176)
2,192381
-
210W8
18297515
-
-
-
(7278,as])
2,1923B1
218,W8
3,79,858
185398
93,863
279,W2
6]3912
3163893
5!5,718
I,R1919
19,828,978
S 3,379283 $
639ZI3 $
1,790991 $
19,782,852
75
City of Livonia, Michigan
76
Trust Finds
Pension and Other Employee Benefit
Plans
Investment
Emp'gre¢'
Hdnnstration
Retirmmnt Srstem
WBA
Total
Fund!
Asseb
Cash andicash eyfaamms
s 991ao s
021.8ofi s
1.M.156
s 1028380
Investments
us. goamment securities
X,1(30,82]
S,roaa69
u,2n,696
Common stock
63,636,503
11,Of6E00
75,242,951
Corporate bonds
33,TI2,563
1o115,is5
48,8?1
Foreign bonds
1,51,53
500]96
2,3683219
Mutual Time
15,7R8,836
1o,8],6v
26,386288
-
Realeatateinvestmentwst
s,nlivo
-
8,091930
-
Securities lending shor4arm<dlateral
bank Investment"
9,52,100
-
9,52,100
-
DueTomothergovemmrentalLnd
6]2]8
-
6]2]8
-
Duetomagencynnd
-
769486
769486
-
Tota assets
166639,X8
42,121
X6,X2,3oo
i oz8,38o
Liabiltian
Accounts parade
311096
1,0322]]
1,313373
vo,
Accrued and other 0adlties
-
-
-
68,332
Due to other governmental mud
-
-
-
-
DuemwstLind
-
-
-
769486
Amounts die to broker under securities
lending agreement
9,918,036
9,918,096
Total lablities
10,259,192
1 031
11b1469
1 028,380
NeU3seb-Reserved
Emporees Retirement System
1YA0,066
-
lKA0066
-
Emporeespostempby�mntheathmreand
all benefts
41,090,7(a5
61 090,]65
Total net assets
$ 15!,380,066 $
61,090,765 $
195,670,831
$
76
Other Supplemental Information
Combining Statement of Net Assets
Fiduciary Funds
Year Ended November 30, 2008
Historical
Spaal Trust LitddryTnst Commsion An Connmssion Commisimm UndsViMed Tax
Fund Funs Fund Fund !Hina Fina Fund Taal
$ 17FF6,2W $ 15235 $ 511161 $ 108.266 $ 27W $ 6939,309 10611,325
1,7F16,2W 15y 511261 103166 27W 6939,369 10011325
190 Yd
17FF6,2W 152}5 511261 103266 27W - 2511968
6939,369 6939,369
7e,4M
17FF6,2W 15235 511261 1@3216 27W 6939,369 10611,325
77
City of Livonia, Michigan
Other Supplemental Information
Combining Statement of Changes in Net Assets
Fiduciary Funds
Year Ended November 30, 2008
Additions
Imeshnentirxnme:
InlerestanddiH@iWs
Net change in lair value of inveshnents
Less inveshnent expenses
Netimeshnentloss
Secunties lording irxnme:
Inlerestanalkes
Less borrower rebates and bank lees
Total lording irxnme
C ntnbutions:
Emplo}er
EmploWe
Total contnbutians
Total additions
Deductions
Pension benefit payments
fvledical benefit payments
Administrative expenses
Refunds ofcontnbutions
Total deductions
Net Decrease
Net Assets Held in Trustfor Pension and Other
R nploWar Benefits
Beginning of year
End! of }ear
IN
EmploWe5
Retirement
System VEBA Total
$ 9,470,as7 $
2,554,424
$
12,024,831
(67,698833)
(16,972,322)
$
(84,671155)
(471999)
(86,000)
(557,999)
(58,700375)
(14,583898)
(/3,284,273)
689,485
-
689,485
(476,760)
(476,760)
212,725
-
212,725
-
6,218,636
6,218,636
53f)'591
912,448
1,452,01
539591
7,131076
7,67 667
(57,948,859)
(],3]2,822)
(65,32881)
11863,219
15,927
11879,146
46,661
5,787,015
6,83 ,676
142,428
17,153
159,581
483396
483396
12,534,704
5,82
D%
18,354,799
VD,482,763)
(13,192917)
(83,675,680)
224,862,829
54,283,682
279,146,511
$ 154,380,066
$ 41,090,765
$
195,470,831
City of Livonia, Michigan
Federal Awards
Supplemental Information
November 30, 2008
City of Livonia, Michigan
Contents
Independent Auditors Report
1
Report on Internal Control Over Financial Reporting and on Compliance and
Other Matters Based on an Audit of Financial Statements Performed in
Accordance with GovemmentAuditing Standard's
2J
Report on Compliance with Requirements Applicable to Each Major Program and
on Internal Control Over Compliance in Accordance with OMB Circular A-133
4-6
Schedule of Expenditures of Federal Awards
7
Reconciliation of Basic Financial Statements Federal Revenue with Schedule of
Expenditures of Federal Awards
a
Notes to Schedule of Expenditures of Federal Awards
Schedule of Findings and Questioned Costs 10.14
Summary Schedule of Prior Audit Findings 15
plante m"° "�""
POPO s,
moran "
f2
F�3� 8
m18
Independent Auditors Report
To the Honorable Mayor and
Members of the City Council
City of Livonia, Michigan
We have audited the financial statements of the governmental activities, the business -type
activities, the aggregate discretely presented component units, each major fund, and the
aggregate remaining fund information of the City of Livonia, Michigan (the "City") as of and for
the year ended November 30, 2008, which collectively comprise the City's basic financial
statements, and have issued our report thereon dated March 20, 2009. Those basic financial
statements are the responsibility of the management of the City. Our responsibility was to
express opinions on those basic financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
basic financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the basic 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 opinion.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City's basic financial statements. The accompanying schedule of
expenditures of federal awards and reconciliation of basic financial statements federal revenue
with schedule of expenditures of federal awards are presented for the purpose of additional
analysis and are not a required part of the basic financial statements. The information in these
schedules 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.
March 20, 2009
444& I v PLLC
Praxitr:
plante ZV�nYOA Yvon. AI
PO HAI
moran �M�,�,
�PameI 'm
Report on Internal Control Over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed
in Accordance with GovemmentAuditing Standards
To the Honorable Mayor and
Members of the City Council
City of Livonia, Michigan
We have audited the financial statements of the governmental activities, the business -type
activities, the aggregate discretely presented component units, each major fund, and the
aggregate remaining fund information of the City of Livonia, Michigan (the' City") as of and for
the year ended November 30, 2008, which collectively comprise the City's basic financial
statements, and have issued our report thereon dated March 20, 2009. We conducted our audit
in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the City's internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our
opinion on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the City's internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of City's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose
described in the preceding paragraph and would not necessarily identify all deficiencies in
internal control over financial reporting that might be significant deficiencies or material
weaknesses. However, as discussed below, we identified a certain deficiency in internal control
over financial reporting that we consider to be a significant deficiency and material weakness.
A control deficiency exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent or detect misstatements on a timely basis. A significant deficiency is a control
deficiency, or combination of control deficiencies, that adversely affects the entity's ability to
initiate, authorize, record, process, or report financial data reliably in accordance with generally
accepted accounting principles such that there is more than a remote likelihood that a
misstatement of entity's financial statements that is more than inconsequential will not be
prevented or detected by the entity's internal control. We consider the deficiency described in
the accompanying schedule of findings and questioned costs as finding 08-01 to be a significant
deficiency in internal control over financial reporting.
Praxitr
zSLODIAL INDEPENDENT IyLA
To the Honorable Mayor and
Members of the City Council
City of Livonia, Michigan
A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that a material misstatement of the financial statements
will not be prevented or detected by the City's internal control.
Our consideration of the internal control over financial reporting was for the lirrited purpose
described in the first paragraph of this section and would not necessarily identify all deficiencies
in internal control that might be significant deficiencies and, accordingly, would not necessarily
disclose all significant deficiencies that are also considered to be material weaknesses. However,
we consider the significant deficiency described above, item 08-01, to be a material weakness.
Compliance and Other Matters
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, contracts, and grant agreements, 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 or other matters that are required to be reported under Government Auditing
Standard's.
We noted certain matters that we reported to the management of the City in a separate letter
dated March 20, 2009.
The City's response to the material weakness identified in our audit and described in the
accompanying schedule of findings and questioned costs has not been subjected to the auditing
procedures applied in the audit of the financial statements and, accordingly, we express no
opinion on it.
This report is intended solely for the information and use of the City Council, management,
federal awarding agencies, and pass-through agencies and is not intended to be and should not
be used by anyone other than these specified parties.
q&& I r PLLC
March 20, 2009
plante 7, N6Morin,PLCO
ro IAI
moranM °�'�°'
1, 2' .uR PSN
p z.»"N„
Report on Compliance with Requirements Applicable to Each Major Program
and on Internal Control Over Compliance in Accordance
with OMB Circular A-133
To the Honorable Mayor and
Members of the City Council
City of Livonia, Michigan
Compliance
We have audited the compliance of the City of Livonia, Michigan (the "City") with the types of
compliance requirements described in the U.S. Office of Management and Budget (OMB)
Circular A-133 Compliance Supplement that are applicable to each of its major federal programs
for the year ended November 30, 2008. The majorfederal programs of the City are identified in
the summary of auditor's results section of the accompanying schedule 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 Citys management.
Our responsibility is toexpress an opinion on the City's compliance based on our audit.
We conducted our audit ofcompliance in accordance with auditing standards generally accepted
in the United States of America; 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 bass for our opinion. Our
audit does not provide a legal determination on 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 November
30, 2008. However, the results of our auditing procedures disclosed instances of
noncompliance with those requirements that are required to be reported in accordance with
OMB Circular A-133 and which are described in the accompanying schedule of findings and
questioned costs as items 08-02 through 08-04.
Praxity:
To the Honorable Mayor and
Members of the City Council
City of Livonia, Michigan
Internal Control Over Compliance
The management of the City is responsible for establishing and maintaining effective internal
control over compliance with the requirements of laws, regulations, contacts, and grants
applicable to federal programs. In planning and performing our audit, we considered the City's
internal control over compliance with the requirements that could have a direct and material
effect on a major federal program in order to determine our auditing procedures for the
purpose of expressing our opinion on compliance, but not for the purpose of expressing an
opinion on the effectiveness of internal control over compliance. Accordingly, we do not
express an opinion on the effectiveness of the City's internal control over compliance.
Our consideration of internal control over compliance was for the limited purpose described in
the preceding paragraph and would not necessarily identify all deficiencies in the City's internal
control that might be significant deficiencies or material weaknesses as defined below. However,
as discussed below, we identified certain deficiencies in internal control over compliance that we
consider to be significant deficiencies.
A control deficiency in a City's internal control over compliance exists when the design or
operation of a control does not allow management or employees, in the normal course of
performing their assigned functions, to prevent or detect noncompliance with a type of
compliance requirement of a federal program on a timely basis. A significant deficiency is a
control deficiency, or combination of control deficiencies, that adversely affects the City's ability
to administer a federal program such that there is more than a remote likelihood that
noncompliance with a type of compliance requirement of a federal program that is more than
inconsequential will not be prevented or detected by the City's internal control. We consider
the control deficiencies described in the accompanying schedule of findings and questioned costs
as items 08-02 through 08-04 to be significant deficiencies in internal control over compliance.
A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that material noncompliance with a type of compliance
requirement of a federal program will not be prevented or detected by the City's internal
control. We did not consider any of the deficiencies described in the accompanying schedule of
findings and questioned costs to be material weaknesses.
The City's response to the findings identified in our audit is described in the accompanying
schedule of findings and questioned costs. We did not audit the Citys response and,
accordingly, we express no opinion on it.
To the Honorable Mayor and
Members of the City Council
City of Livonia, Michigan
This report is intended solely for the information and use of the City Council, management,
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.
AV& I �s 044C
March 20, 2009
City of Livonia, Michigan
Schedule of Expenditures of Federal Awards
Year Ended November 30, 2008
Total Community Geveloperem Blw*Gram
Pasedmmugh the Michigan date IT orange Development ANedily-
HOhElmsiTrent Patlnership-Prcgramyear2003
Pesedthrogh Wgne County- Torre ComMum Fund
ToUIUSOeMn"ntof HoiiMand Nrrst Oerzb nt
NS.Oetedrrem or Health atl Hurrai Sanies -Paced
through State of Madigan Oetedrrem ofComnnityH®Ah-
sedwcemersarhrg
Tad u S OeraNarem of H®9handUnison Service
th S. Oeral of Tomeand security -Passed through
Md On Oeral of sate none:
Erreryenry Meragerrent Terbrll Grant
2035 Erreryenry Maharani Perfurmnce Gram
2W6Erreryencis Maurgement Perfurmnce Gram
2008Erreryencis Mmagement Perfurmnce Gram
OASI none Gram-E4iprl upgraded
LASI Pone cram-Taiorg fortemnioe reshotse t®m
LASS none cram- Eq,iprem uHgraae for TRT
LASS none cram- CBRNE Ler OPS
Is 33nmmraming
2002 FEMA- Hazard emergency cherahiav Owning
2006assance to freighters
2007assame to freighters
Total U S Department of HorrelandSecumy
LS. Lehedrrem cfL9ke:
Federal E4iade Slating Program
Internet Oirrm Agan9 CM1lden
Drag Enkusment PilnnsBmot Task Force
US. MNhAs Serdce Letrot FylyeAWehemm Tsk FwO
VestRepacerrem Gram
Tma u S Oeradmem of9a6re
LS.OeraNarem onanlmmo,-Peesedthrough the [nmgan
ORicecf Hgnsoa felt'-Lrve Mdagant sly Tsk Fors
LS. Natiwa' Enrtwrmm iuthe Hurnwities-LiharyGram
Total fedrzl aeard
12535E
16239
Ishmm 5053
Pzathrogh Entity
N0
16139
N/A
22,618
CFOA
ProyNGra9
Aeard
Fe@rzl
118,1@
Feral Ager /P thra hAgengRrNmmTitle
Number
Hurdier
Pmam
Expenditures
Project e30eoa
U S. Oeral ofHouaag and thirst Development
2,906
97va
3516
93,003
6/,068
Cnnm,mry Development Block cram:
Sym
161,003
163,647
97008
NONE
Programyear2008-B05 MC,26-0008
16218
N/A
$ 38l
$ 21918
(1)
Programyear2007-B05MC,26-0001
16218
N/A
101338
Agri
(1)
Total Community Geveloperem Blw*Gram
Pasedmmugh the Michigan date IT orange Development ANedily-
HOhElmsiTrent Patlnership-Prcgramyear2003
Pesedthrogh Wgne County- Torre ComMum Fund
ToUIUSOeMn"ntof HoiiMand Nrrst Oerzb nt
NS.Oetedrrem or Health atl Hurrai Sanies -Paced
through State of Madigan Oetedrrem ofComnnityH®Ah-
sedwcemersarhrg
Tad u S OeraNarem of H®9handUnison Service
th S. Oeral of Tomeand security -Passed through
Md On Oeral of sate none:
Erreryenry Meragerrent Terbrll Grant
2035 Erreryenry Maharani Perfurmnce Gram
2W6Erreryencis Maurgement Perfurmnce Gram
2008Erreryencis Mmagement Perfurmnce Gram
OASI none Gram-E4iprl upgraded
LASI Pone cram-Taiorg fortemnioe reshotse t®m
LASS none cram- Eq,iprem uHgraae for TRT
LASS none cram- CBRNE Ler OPS
Is 33nmmraming
2002 FEMA- Hazard emergency cherahiav Owning
2006assance to freighters
2007assame to freighters
Total U S Department of HorrelandSecumy
LS. Lehedrrem cfL9ke:
Federal E4iade Slating Program
Internet Oirrm Agan9 CM1lden
Drag Enkusment PilnnsBmot Task Force
US. MNhAs Serdce Letrot FylyeAWehemm Tsk FwO
VestRepacerrem Gram
Tma u S Oeradmem of9a6re
LS.OeraNarem onanlmmo,-Peesedthrough the [nmgan
ORicecf Hgnsoa felt'-Lrve Mdagant sly Tsk Fors
LS. Natiwa' Enrtwrmm iuthe Hurnwities-LiharyGram
Total fedrzl aeard
12535E
16239
Ishmm 5053
21!200
N0
16139
N/A
22,618
22618
91.012
NONE
13$16
118,1@
vas
ngecte30em
3133
532
vas
Project e30eoa
3,488
2,906
W0Q
NONE
a3132
13255
9!.067
NONE
6,592
2,639
91.012
NONE
13$16
13218
91.02
NONE
399353
399353
moxa
3518
lm,003
v,av2
97va
3516
93,003
6/,068
9708
Sym
161,003
163,647
97008
NONE
X;131
X;131
9/.unkmmn
NONE
26,131
10393
83.562
NONE
m,859
555
TW
Fart"
15,005
225
WW
W-03956
600,003
600,003
TSI
16003
WA
281,153
281,153
16513
N/A
15,003
7,533
16 uikmxn
N/A
29263
12,395
16 arsonist
WA
1353
1353
16 uakmxn
N/A
3,793
3793
321
m.633
all05-19239151
35826
AS Oh[
GL-50I)i
1003
7
(1) current ymr ex9endures ireude the we of program iacor.e torn forcing; relahhitmeen and "nedTowns
See Notes to Schedule of Expenditures 7
of Federal Awards.
$ 2,1761
City of Livonia, Michigan
Reconciliation of Basic Financial Statements
Federal Revenue with Schedule of Expenditures
of Federal Awards
Year Ended November 30, 2008
Revenue from federal sources- As reported on financial statements
(includes all funds)
$ 2,495,836
Add federal expenditures in excess of revenues
29,426
Less other nonfederal reimbursements recorded as grants
(273,441)
Less federal revenue received on prior year expenditures
(295,318)
Add amounts recorded as deferred revenue
220,383
Federal expenditures per the schedule of expenditures of federal awards $ 2,176,886
City of Livonia, Michigan
Notes to Schedule of Expenditures of Federal Awards
Year Ended November 30, 2008
Note 1 - Significant Accounting Policies
The accompanying schedule of expenditures of federal awards includes the federal
grant activity of the City of Livonia and is presented on the same basis of accounting
as the basic financial statements. The information in this schedule is presented in
accordance with the requirements of OMB Circular A-133, Audits of States, Local
Governments, and Non -Profit Organizations. 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 - Noncash Assistance
The value of the noncash assistance received was determined in accordance with the
provisions of OMB Circular A-133.
Summary of Noncash Assistance - The grantee received the following noncash
assistance during the year ended November 30, 2008 that is not included on the
schedule of expenditures of federal awards:
Note 3 - Subrecipient Awards
Of the federal expenditures presented in the schedule, federal awards were
provided to subrecipients as follows:
Federal
Community Development Block Grant
9
CFDA
Federal Program
Number Description Amount
U.S. Department of Agriculture- Passed
Subrecilowts
through the Wayne Metropolitan
USDA Food
Community Services Agency
10.569 Distribution $ 19,365
Note 3 - Subrecipient Awards
Of the federal expenditures presented in the schedule, federal awards were
provided to subrecipients as follows:
Federal
Community Development Block Grant
9
Amount
CFDA
Provided to
Number
Subrecilowts
14.218
$ 24,857
City of Livonia, Michigan
Schedule of Findings and Questioned Costs
Year Ended November 30, 2008
Section I - Summary of Auditor's Results
Financial Statements
Type of auditors report issued: Unqualified
Internal control over financial reporting:
0 Material weakness identified? X Ya No
0 Significant deficiency(ies) identified that are
not considered to be material weaknesses? Ya X None reported
Noncompliance material to financial
statements noted? Ya X No
Federal Awards
Internal control over major program:
0 Material weakness identified? Yes X No
0 Significant deficiency(ies) identified that are
not considered to be material weaknesses? X Yes None reported
Type of auditors 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? X Yes No
Identification of major programs:
CFDA Numbers Name of Federal Program or Cluster
14.218 Community Development Block Grant
97.044 Assistance to Firefighters
97.008 Urban Area Security Initiative
Dollar threshold used to distinguish between type A and type B programs: $300,000
Auditee qualified as low-dsk auditee? Yes X No
10
City of Livonia, Michigan
Schedule of Findings and Questioned Costs (Continued)
Year Ended November 30, 2008
Section II -Financial Statement Audit Findings
Reference
Number Findings
08-01 Adjustments related to fund level and government -wide level statements
Finding Type - Material weakness
Criteria - Management's goal was to accurately remrd all adjustments for the
fund level and government -wide level statements.
Condition - Journal entries were necessary to adjust various account balances
in order to properly state them as of November 30, 2008.
Context - These entries were made to various funds to reflect current year
activity. The adjustments affected capital assets, receivables, investments, and
deferred revenue.
Cause - For certain financial statement accounts, the City did not have a
system in place to ensure that year-end balances agree to detail and are
properly stated.
Effect - As a result of these transactions not being completely recorded,
several account balances required adjustments as of November 30, 2008.
Recommendation - The City should develop controls to ensure that all
appropriate journal entries are made so that ending balances are mmect.
Views of Responsible Officials and Planned Corrective Actions - The
City concurs with the recommendation and will put a process in place to
address the issue.
City of Livonia, Michigan
Schedule of Findings and Questioned Costs (Continued)
Year Ended November 30, 2008
Section III - Federal Program Audit Findings
Reference
Number Findings
08-02 Program Name- Community Development Block Grant- 14.218
Finding Type - Material noncompliance, significant deficiency
Criteria - The City is required to capitalize any assets purchased with federal
funds during the year that exceed the City's capitalization threshold. In
addition, these assets are to be added to the City's asset listing and earmarked
as being purchased with federal funds.
Condition - During testing, there was an asset identified that was not
capitalized nor included on the City's asset listing.
Questioned Costs - None
Context - The City has procedures in place to review expense accounts and
capitalize assets; however, this asset was not capitalized during this process.
Cause and Effect- The City does capitalize assets and identify them as assets
purchased with federal funds; however, this asset was missed and not
capitalized in the City's records.
Recommendation - It is recommended that the City put procedures in place
to ensure that all assets purchased with federal funds are appropriately
capitalized and earmarked as such in the asset listing.
Views of Responsible Officials and Planned Corrective Actions - As a
result of the audit, the City has capitalized the asset and appropriately
identified it as being purchased with federal funds. The City will strengthen
existing procedures to ensure all assets are properly capitalized and
earmarked.
12
City of Livonia, Michigan
Schedule of Findings and Questioned Costs (Continued)
Year Ended November 30, 2008
Section III - Federal Program Audit Findings (Continued)
Reference
Number Findings
08-03 Program Name- Community Development Block Grant -14.218
Finding Type - Immaterial noncompliance, significant deficiency
Criteria - The Davis -Bacon Act requires grantees to ensure that prevailing
wage rates are being paid to contractors receiving federal funds greater
than $2,000.
Condition - The City failed to ensure that a contractor was monitoring
and complying with Davis -Bacon requirements.
Questioned Costs - Unknown
Content - For a sidewalk repair project, approximately $4,000 in total, the
City did not ensure that prevailing wages per the Davis -Bann Act were
being paid.
Cause and Effect - The City is aware of the requirements of the Davis -
Bacon Act but did not realize that they were applicable to this type of
repair project. As such, they did not monitor the wages being paid by this
particular contractor.
Recommendation - It is recommended that the City review the
requirements of the Davis -Bacon Act and ensure that all future contracts
address this act as applicable.
Views of Responsible Officials and Planned Corrective Actions -The
City concurs with the recommendation and will put a process in place to
address the issue.
13
City of Livonia, Michigan
Schedule of Findings and Questioned Costs (Continued)
Year Ended November 30, 2008
Section III - Federal Program Audit Findings (Continued)
Reference
Number Findings
08-04 Program Name - Assistance to Firefighters- 97.044
Finding Type - Material noncompliance, significant deficiency
Criteria - The grant requires the grantee to verify for all contracts greater
than $25,000 that required suspension and debarment certifications were
received.
Condition - The City failed to verify for the one mntact entered into
greater than $25,000 that the required suspension and debarment
certifications were received.
Questioned Costs - None
Content - The City purchased a fire truck from American LaFrance, but
did not obtain the required suspension and debarment certification.
Cause and Effect - The City was not aware of the requirement. Upon
further review, the contactor, American LaFance, was not suspended or
debarred.
Recommendation - It is recommended that the City appoint an individual
to be responsible for pedorning all required compliance procedures for
each grant.
Views of Responsible Officials and Planned Corrective Actions - The
City concurs with the recommendation and will put a process in place to
address the issue.
14
City of Livonia, Michigan
Summary Schedule of Prior Audit Finding
Year Ended November 30, 2008
Fiscal Reference CFDA Questioned
Year Number Finding Number Costs Comments
2007 07-02 The City's Comprehensive Annual 14.218 None The CAPR was
Performance Report (CAPR) did not correctly reported
include all expenditures recorded in in 2008.
the general ledger. The
expenditures per the CAPR were
reported at $512,351, but should
have been $26,995 higher.
15
City of Livonia, Michigan
Report to the City Council
November 30, 2008
City of Livonia
Report to the City Council
November 30, 2008
Introduction
Results of the Audit
Other Recommendations
Informational
Page
1
2-5
6-8
9-12
plante "`�° °"°
„�� FFB
OFF BIOLOGICS
moran '�
M°�°'
,�z��0I
To the Mayorand Members
of the City Council
City of Livonia, Michigan
We have recently completed our audit of the basic financial statements of the City of Livonia,
Michigan (the "City") for the year ended November 30, 2008. Several additional audit standards
required implementation during the City's financial statement audit. These new rules - formally,
Statements on Auditing Standards Nos. 104 through 111 and known collectively as the new Risk
Assessment Standards - significantly changed the procedures auditors must perform in all
financial statement audits. These changes to auditing standards are a direct result of the major
corporate scandals (i.e., Enron, Woddcom) that happened several years ago and are designed to
strengthen the confidence of users in audited financial statements.
Under these new rules, we were required to do the following:
0 More thoroughly examine and evaluate the City's accountirg processes and controls,
including the overall control environment, key controls over significant transactions, the
quality of internal oversight of the financial reporting process, and information technology
general controls
0 More thoroughly assess and document conditions in the Citys systems and processes that
create risks of material misstatement in the financial statements, and perform additional
testing in response to these risks
0 Design and perform more analytical tests of accounting and financial data
0 Apply more stringent standards in identifying, assessing, and communicating internal control
deficiencies
0 Communicate more information about the results of the auditor's work to individuals
involved in overseeing strategic direction and accountability for operations
In addition, Statement on Auditing Standards No. 114, The Auditor's Communication With Those
Charged With Governance, requires additional communication to the City Council at various
times during the audit process. The Council received a report dated January 23, 2009 that
explained our planned scope and timing of the audit, in addition to other items. The letter titled
"Results of the Audit" beginning on page 2 is the final communication required by SAS 114 for
this year's audit. In addition, we are providing additional recommendations and information that
impacts the City.
We are grateful for the opportunity to be of service to the City. Should you have any questions
regarding the comments in this report, please do not hesitate too call.
r,�titL. f &tRi P Lt C
March 20, 2009 PCBXity i
Results of the Audit
Required SAS 114 Communication
` ""`�
"cplante E
PO ECONOMIC?
moranM °M'�°
ar441MM„
PIELEALOGGENI
March 20, 2009
To the Mayor and Members
of the City Council
City of Livonia, Michigan
We have audited the financial statements of the City of Livonia for the year ended November
30, 2008 and have issued our report thereon dated March 20, 2009. Professional standards
require that we provide you with the following information related to our audit.
Our Responsibility Under U.S. Generally Accepted Auditing Standards
As stated in our engagement letter dated January 12, 2009, our responsibility, as described by
professional standards, is to express an opinion about whether the financial statements prepared
by management with your oversight are fairy presented, in all material respects, in conformity
with U.S. generally accepted accounting principles. We are responsible for planning and
performing the audit to obtain reasonable, but not absolute, assurance that the financial
statements are free of material misstatement. As part of our audit, we considered the internal
control of the City of Livonia. Our consideration of internal control was solely for the purpose
of determining our audit procedures and not to provide any assurance concerning such internal
control.
We are responsible for communicating significant matters related to the audit that are, in our
professional judgment, relevant to your responsibilities in overseeing the financial reporting
process. However, we are not required to design procedures specifically to identify such
matters, and our audit of the financial statements does not relieve you or management of your
responsibilities.
Our audit of the City of Livonia's financial statements has also been conducted in accordance
with Government Auditing Standard's, issued by the Comptroller General of the United States.
Under Government Auditing Standard's, we have made some assessments of the City's compliance
with certain provisions of laws, regulations, contracts, and grant agreements. While those
assessments are not sufficient to identify all noncompliance with applicable laws, regulations, and
contract provisions, we are required to communicate all noncompliance conditions that come to
our attention. We have communicated those conditions in a separate letter dated March 20,
2009 included in your audit of federal awards (single audit report) regarding our consideration of
the City's internal control over financial reporting and on our tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements.
Praxitr;
To the Mayor and Members
of the City Council
City of Livonia, Michigan March 20, 2009
We also are obligated to communicate certain matters related to our audit to those responsible
for the governance of the City of Livonia, including certain instances of error or fraud and
significant deficiencies in internal control that we identify during our audit. In certain situations,
Government Auditing Standard's require disclosure of illegal acts to applicable government
agencies. If such illegal acts were detected during our audit, we would be required to make
disclosures regarding these acts to applicable government agencies. No such disclosures were
required.
Planned Scope and Timing of the Audit
We performed the audit according to the planned scope and timing previously communicated to
you in our letter about planning matters dated January 23, 2009.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. In
accordance with the terms of our engagement letter, we will advise management about the
appropriateness of accounting policies and their application. The significant accounting policies
used by the City are described in Note 1 to the financial statements. As described in Note 1,
the City changed accounting policies related to Other Postemployment Benefits by adopting
Governmental Accounting Standards Board No. 43, Financial Reporting for Postemployment
Benefit Plans Other Than Pension Plans, during the current year.
We noted no transactions entered into by the City during the year for which there is a lack of
authoritative guidance or consensus.
There are no significant transactions that have been recognized in the financial statements in a
different period than when the transaction occurred.
Accounting estimates are an integral part of the financial statements prepared by management
and are based on management's knowledge and experience about past and current events and
assumptions about future events. Certain accounting estimates are particularly sensitive because
of their significance to the financial statements and because of the possibility that future events
affecting them may differ significantly from those expected. The most sensitive estimates
affecting the financial statements are as follows:
0 Incurred but not reported amounts related to the City's self-insured medical claims,
workers' compensation, and general liability
0 Unbilled water and sewer receivables
0 In the Employees' Retirement System, the value of the MMA Realty Capital, LLC real estate
investment trust
0 The landfill closure and postclosure liability
To the Mayor and Members
of the City Council
City of Livonia, Michigan March 20, 2009
Management's estimate of the various incurred but not reported amounts and unbilled water
and sewer receivables is based on historical information. The value of the real estate investment
trust was provided by MMA Realty Capital and supported by third -party appraisals of the value
of the underlying real estate. The landfill liability is calculated by the City's engineering
department. We evaluated the key factors and assumptions used to develop the estimates in
determining that they are reasonable in relation to the financial statements taken as a whole.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and
completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified
during the audit, other than those that are trivial, and communicate them to the appropriate
level of management. Management has corrected all such rrisstatements identified during the
audit.
Disagreements with Management
For the purpose of this letter, professional standards define a disagreement with management as
a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction,
that could be significant to the financial statements or the auditor's report. We are pleased to
report that no such disagreements arose during the course of our audit.
Management's Representations
We have requested certain representations from management that are included in the
management representation letter dated March 20, 2009.
Management's Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a "second opinion" on certain situations. If a
consultation involves application of an accounting principle to the City's financial statements or a
determination of the type of auditors opinion that may be expressed on those statements, our
professional standards require the consulting accountant to check with us to determine that the
consultant has all the relevant facts. To our knowledge, there were no such consultations with
other accountants.
To the Mayor and Members
of the City Council
City of Livonia, Michigan March 20, 2009
Other Audit Findings or Issues
In the normal course of our professional association with the City, we generally discuss a variety
of matters, including the application of accounting principles and auditing standards, business
conditions affecting the City, and business plans and strategies that may affect the risks of
material misstatement. None ofthe matters discussed resulted in a condition of our retention as
the City's auditors.
In addition to the comments in this letter, our observations and comments regarding the City of
Livonia, Michigan's internal control, including any significant deficiencies or material weaknesses
that we identified, have been reported to you in the report on internal control over financial
reporting and on compliance and other matters based on an audit of financial statements
performed in accordance with Government Auditing Standards. This report is included in the
supplemental schedule of federal awards (single audit report), and we recommend that the
matters we have noted there receive your careful comideration.
This information is intended solely forthe use of the City Council and management ofthe City of
Livonia and is not intended to be and should not be used by anyone other than these specified
parties.
Very truly yours,
Plante & Moran, PLLC
Frank W. Audia /n//A
/4 �
Brian J. Camiller
Other Recommendations
City of Livonia, Michigan
Other Recommendations
Retiree Health Care and New Accounting Standards
The City implemented GASB No. 43 in fiscal year ended November 30, 2008 and will be
required to implement GASB No. 45 in fiscal year ending November 30, 2009. GASB Nos. 43
and 45 require a governmental unit to measure its retiree healthcare liability through actuarial
valuations that are to be performed at least biennially. These valuations compute an annual
required contribution (ARC). The annual required contribution is the amount the actuary
believes is necessary to fund the benefit over a period of 30 years or less.
The City has progressively gotten ahead of these new accounting standards. In past years, the
City already had its actuary perform the calculations required by these accounting standards and
has begun the process of actuarial funding. We compliment the City for the actions taken in this
regard. While the City is already having actuarial valuations prepared and making an annual
contribution, the VERA plan is currently using an amortization period (40 years) that is
somewhat longer than allowed under the new standards (30 years). Using this longer period will
likely result in the City's contribution being less than the annual required contribution and will
require the City to record a liability for the difference on the government -wide financial
statements at November 30, 2009.
At November 30, 2008, the VEBA fund currently has approximately $41 million set aside for
these costs. As of the date of the most recent actuarial valuation (November 30, 2007), the
liability for retiree health care was approximately $116 million (compared to $122 million at
November 30, 1998). These costs continue to be a very significant part of the City's budget (a
contribution ofapproximately $6.2 million for the year ended November 30, 2008).
Pension Contributions
As noted last year, the City's actuary has not recommended that the City make any contribution
to its defined benefit pension plan since 2003. There are a variety of factors that impact the
calculation and estimates made by the actuary, including investment performance, life
expectancy, etc. With the recent decline in investment markets, the actuarial accrued liability
will likely exceed the actuarial value of assets in the next valuation, resulting in a required
contribution. A contribution, if required, will need to be incorporated intofuture City budgets.
Police Central Services
During our testing, we performed procedures on the controls over cash at the central services
division of the police department. It came to our attention that a formal void report is not
printed from the cash register and reviewed. In addition, the void key is located in an unlocked
drawer under the cash register and is easily accessible. We recommend that the department
safeguard the void key so that it is only accessible to those who are required to use it. In
addition, we suggest that printing and reconciliation of the void report be incorporated into the
daily cash -out procedures.
City of Livonia, Michigan
Other Recommendations
Another item we noted during our testing was that several people enter cash receipts on a daily
bass into the register and unique codes are not assigned to each individual. The addition of this
control would allow any discrepancies that arise to be traced to the appropriate individual.
Lastly, cash is only taken to the treasurer's office to be deposited once a week We suggest that
this be done more frequently (i.e., daily). These recommendations are being made to enhance
the current control environment.
Compliance with Federal Grants
Because the City incurred in excess of $500,000 of federal expenditures, we were required to
perform an audit of the City's federal awards (A-133 or "single audit"). Although the grant
proceeds were spent in an appropriate manner and we found no instance of unallowable
activities, we did identify several instances related to technical compliance with certain federal
requirements. We recommend that departments who receive the proceeds from federal
awards work closely with the finance department to ensure that all aspects of compliance are
fulfilled on each grant.
In addition, the City is required to prepare and file a Comprehensive Annual Performance
Report (CAPR) each year. For the year ended November 30, 2007, the CAPR did not agree
with the City's general ledger. The CAPR prepared forthe year ended November 30, 2008 was
correct. However, we would still recommend that the City review and formalize the
reconciliation process between the CAPR and the City's general ledger to prevent any findings in
the future.
Housing Fund and Golf Course Fund Net Assets
The City's Gotf Course Fund has a remaining deficit in its unrestricted net assets of $87,622.
The City has submitted a deficit elimination plan in the past for the Golf Course Fund. At
November 30, 2008, the City's Housing Fund reported a deficit in unrestricted net assets of
approximately $108,000. It is the State's practice to require a deficit elimination plan for
Enterprise Funds reporting a deficit in unrestricted net assets.
Information Technology General Controls
As part of our testing related to the new auditing standards, we were required to review the
Citys information technology general controls. We have provided feedback to the City as a
result of our testing in this area for the City's review and consideration.
City of Livonia, Michigan
Other Recommendations
We would like to thank the mayor and the City Council for the opportunity to serve as auditors
for the City. We would also like to express our appreciation for the courtesy and cooperation
extended to us by the administration during the audit and, in particular, the City's finance
department staff. If any questions arse on reviewing the financial statements or on the above
comments, we would be happy to discuss them with you further.
Informational
City of Livonia, Michigan
Informational
Revenue Sharing
There was some relief when the governor, in mid-February 2009, released her proposed budget
for FY 2010. State -shared revenue has been spared any additional cuts from prior year levels, at
least for now. According to the governor's budget, local units of government should anticipate
receiving the same amount in state -shared revenue for 2009-2010 that they received in 2008-
2009. Approximately $1.1 billion is projected to be distributed to cities, villages, and townships
through both constitutional and statutory revenue sharing, and no unit is expected to we a
change in total dollars received. This is a positive development given the cuts to K-12 schools,
universities, prisons, and even the state government itself proposed as part of the governor's
budget.
The governor's FY 2010 budget also includes $49.1 million to qualifying counties that have
exhausted their revenue-sharing revenue funds. As you may remember, this reserve fund was
created for each county in 2005 when the State eliminated counties from the revenue-sharing
program (remember, counties only receive statutory revenue sharing, not constitutional). In
2005, counties were required to phase in the early collection of winter property tax payments
and to create a reserve fund with a portion of these monies. Counties have been drawing on
their reserve funds to replace lost statutory revenue sharing. When the reserve fund is
depleted, counties will look to the State to reenter the statutory portion ofthe revenue-sharing
program. Prior to their elimination from the revenue-sharing program in 2005, counties
statewide received apprommately $182 million annually.
For Livonia, the current estimate provided by the Michigan Department of Treasury is
$8.9 million for both the State's 2009 and 2010 fiscal years. This is a decrease of $2.3 million
annually from 2001 funding levels.
The State of Michigan is still facing a $1.4 billion shortfall in the next fiscal year. Nothing is likely
off the table. So, despite the positive news coming from the governor's proposed budget for
FY 2010, we continue to encourage you to budget this line item conservatively.
Property Tax Developments
Many communities in Michigan are continuing to face the challenges inherent in the real estate
market decline given the effects of Proposal A. Some communities are seeing a decline in overall
taxable value this year- many will see similar or greater declines in future years. The impact on
each community and over what period of time will vary. The one constant, however, is that
there will be an impact that each community will need to consider come budget time.
City of Livonia, Michigan
Informational
Many of the bills related to property taxes pending at the end of the 2008 Michigan legislative
session have subsequently died with the changeover in the legislature after the November 2008
election. However, a few of those bills have been reintroduced. One series of bills that is
worthy of specific mention is the reintroduction of the concept of the "supercap" legislation
from last year.
Many property owners continue to struggle with the concept that their individual taxable values
actually increased during a time that overall property values - and even their individual property
values - have fallen. As we all have been reminded, that is a constitutional requirement that
charged with Proposal A in 1994. It may be helpful to remember the pnnciple behind
Proposal A - its purpose was to disconnect taxable values from market value increases, and
instead limit the growth in taxable values to the lesser of 5 percent or inflation, until that point
that the property transfers ownership. Nov that the market values are declining in many areas,
Proposal A continues to stay disconnected, and allows the taxable value to increase by the lesser
of 5 percent or inflation (up until the point that it reconnects with market values).
Because many property owners feel it is unfair to see their taxable value increase in a declining
market, a third variable, called "change in market value," was proposed last year to be added to
the Proposal Aformula.
Under the legislation introduced last year, the Proposal A formula to determine annual increases
in taxable value (if property is not sold or transferred) would have been changed to the lesser of
three components: inflation, change in market value, or 5 percent Therefore, if the market
value of the parcel was either flat or declining - even if the taxable value of the particular parcel
was less than state equalized value - there would be no annual increase. This measure passed
the House in 2008 but did not advance further.
In January 2009, several versions of this legislation were introduced which reinstate a similar
constitutional amendment Such a change would ultimately need to be approved by the voters
before it can be enacted.
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City of Livonia, Michigan
Informational
State Transportation Funding Program
In the current instructions to the Act 51 reports, the Michigan Department of Transportation
(MDOT) has stipulated that transfers from the Major Street Fund to the Local Steet Fund will
not be allowed after December 31, 2008, except to the extent matched by local revenues
expended by the city or village of the major street system. We have received oral omfimation
from MOOT that, since the actual legislation (MCL Section 247.003(12) of PA 51 of 1951, as
amended) does not stipulate the expiration of these transfers, MOOT will not be enforcing this
provision as it reads in the current Act 51 instructions. The level of transportation funding
available from the State to local units continua to decline. The City is very fortunate to have a
tax levy to supplement its road activities. This levy remains a critical source of funding to the
Citygiven the declining resources available at the State level.
Other Legislative Items
0 PA 307 and 308 of 2008 make changes to investment laws governing Michigan communities
and schools. More specifically, this legislation allows governmental units in Michigan to invest
in CDARS - Certifications of Deposit Account Registry Service. The CDARS program is a
deposit placement service designed to alloy FDIC -insured depository institutions to accept
deposits of more than $100,000 ($250,000 for 2009) and obtain full coverage for the
depositor by spreading the funds among as many separate FDIC -insured institutions as
necessary in order to ensure full FDIC coverage.
0 PA 379 of 2008 was passed in late 2008, providing for an extension of 9-1-1 funding from the
previous sunset date of February 28, 2009 until December 31, 2014. The bill continues to
allow counties to assess a 9-1-1 charge, but the amount is limited to 42 cents per month,
unless approved by county voters, in which case the maximum is $3 per month. Counties
with current monthly charges over $.42 could maintain that assessment, but any future
increases would be subject to the voter approval requirement.
0 The Tax Increase Prevention and Reconciliation Act of 2005 enacted a new subsection of the
Internal Revenue Code requiring a 3 percent income tax withholding by governments on
payments for property and services made after December 31, 2010. These rules appy to
governmental units with annual payments of $100 million or more. In determining whether
governmental annual payments reach that $100 million threshold, the IRS has indicated that
wages (including fringes) or payments that are subject to other forms of mandatory or
optional withholding can be excluded. The amount also does not include payments for real
property, interest, payments made to other governments or exempt organizations, or
payments made on the basis of need or income. In eady January, the IRS sent out notices to
those governmental entities they believe will be impacted.
The American Recovery and Reinvestment Act that the president signed in February delays this
mandate until 2012. There have been attempts to repeal this mandate altogether.
City of Livonia, Michigan
Informational
SEC Disclosure Filings
The SEC announced late last year an amendment to Rule 15c2-12 that will, among other things,
replace the existing four nationally recognized Municipal Secunties Information Repositories
(NRMSIRs) with one cental NRMSIR at the Municipal Securities Rulemaking Board (MSRB),
called the Electronic Municipal Market Access (EMMA) system.
This system, available on the internet at emma.msrb.org, will be the means by which issuers, or
their agents, will submit continuing disclosure documents free of charge. Unlike investors in
corporate securities who have direct access to free company information through the SEC's
EDGAR system, average investors in municipal securities have had no free and convenient way
to get important information about the nunicipal bonds in which they invest After the
implementation of EMMA, these documents will be made available electronically to the general
public at no cost.
This change to using EMMA is required beginning duly 1, 2009. All continuing disclosure
documents submitted to MSRB will need to be made electronically in portable document format
(PDF) to facilitate this. Additionally, the MSRB has indicated that the submissions will need to be
made in word -searchable PDF beginning January 1, 2010. Until duly 1, 2009, issuers should
submit continuing disclosures as they have been doing as required by their outstanding
continuing disclosure agreements. The amended SEC rule does not, hovever, remove an
oblgatim to provide continuing disclosure documents to a SID if required by applicable state
law or by an outstanding continuing disclosure agreement in effect prior to July 1, 2009.
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