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CITY OF MIDDLETON, WISCONSIN Middleton, Wisconsin ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED December 31, 2014 Prepared by: Department of Finance ---PAGE BREAK--- TABLE OF CONTENTS PAGE FINANCIAL SECTION Independent Auditors’ Report 1 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position 4 Statement of Activities 5 Fund Financial Statements: Balance Sheet - Governmental Funds 6 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 7 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental 8 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 9 Statement of Net Position - Proprietary Funds 10 Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary 11 Statement of Cash Flows - Proprietary 12 Statement of Fiduciary Net Position - Fiduciary 14 Notes to Financial Statements 15 Required Supplementary Information Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund 53 Notes to Required Supplementary 54 Combining and Individual Fund Financial Statements and Schedules: Detailed Schedule of Revenues - Budget and Actual - General Fund 55 Detailed Schedule of Expenditures - Budget and Actual - General 57 Combining Balance Sheet - Nonmajor Governmental Funds 59 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental 60 Combining Balance Sheet - Capital Projects 61 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Capital Projects 62 ---PAGE BREAK--- 1 INDEPENDENT AUDITORS' REPORT Common Council City of Middleton, Wisconsin Middleton, Wisconsin Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Middleton, Wisconsin as of and for the year ended December 31, 2014, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. CliftonLarsonAllen LLP CLAconnect.com An independent member of Nexia International ---PAGE BREAK--- 2 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Middleton, Wisconsin as of December 31, 2014, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the budgetary comparison information on pages 53 and 54 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Management has omitted the management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by the missing information. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Middleton, Wisconsin’s basic financial statements. The supplementary information as listed in the table of contents is presented for purposes of additional analysis and are not a required part of the basic financial statements. ---PAGE BREAK--- 3 The supplementary information as listed in the table of contents is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information as listed in the table of contents is fairly stated, in all material respects, in relation to the basic financial statements as a whole. a Middleton, Wisconsin September 16, 2015 ---PAGE BREAK--- BASIC FINANCIAL STATEMENTS ---PAGE BREAK--- Business- Governmental type Component Activities Activities Total Unit ASSETS Cash and investments 20,951,932 $ 7,497,263 $ 28,449,195 $ 374,406 $ Receivables (net of allowance for uncollectible accounts) Taxes 25,325,080 - 25,325,080 - Delinquent taxes 29,366 - 29,366 - Accounts 977,476 894,888 1,872,364 - Interest 1,303 11,668 12,971 - Loans 896,710 - 896,710 397,296 Special assessments 1,026,677 2,041,995 3,068,672 - Due from other governments 28,000 - 28,000 - Internal balances 4,117,929 (4,117,929) - - Prepaid items 7,322 - 7,322 - Restricted assets - cash and investments - 60,820 60,820 - Property held for future use - 301,087 301,087 - Capital assets not being depreciated 38,999,694 2,511,163 41,510,857 154,000 Capital assets being depreciated 50,706,173 36,931,083 87,637,256 2,018,796 Total assets 143,067,662 46,132,038 189,199,700 2,944,498 LIABILITIES Accounts payable 2,904,358 423,326 3,327,684 8,125 Deposits 904,814 - 904,814 - Accrued liabilities 452,783 35,889 488,672 - Due to other governments 7,287 - 7,287 - Noncurrent liabilities: Due within one year 12,977,905 847,854 13,825,759 - Due in more than one year 45,134,509 3,059,344 48,193,853 - Total liabilities 62,381,656 4,366,413 66,748,069 8,125 DEFERRED INFLOWS OF RESOURCES Subsequent year tax levy 25,245,437 - 25,245,437 - NET POSITION Net investment in capital assets 40,190,979 35,939,954 76,130,933 - Restricted Community development 8,184,549 - 8,184,549 - Library 327,394 - 327,394 - Impact fees 823,193 - 823,193 - Tourism 1,296,451 - 1,296,451 - Public safety 28,756 - 28,756 - Senior center 162,111 - 162,111 - Equipment replacement - 60,820 60,820 - Unrestricted 4,427,136 5,764,851 10,191,987 2,936,373 TOTAL NET POSITION 55,440,569 $ 41,765,625 $ 97,206,194 $ 2,936,373 $ Primary Government CITY OF MIDDLETON, WISCONSIN STATEMENT OF NET POSITION December 31, 2014 The accompanying notes are an integral part of the financial statements. 4 ---PAGE BREAK--- Operating Capital Charges for Grants and Grants and Governmental Business Type Component FUNCTIONS/PROGRAMS Expenses Services Contributions Contributions Activities Activities Totals Unit Primary Government Governmental activities: General government 3,499,140 $ 241,434 $ 342,919 $ - $ (2,914,787) $ - $ (2,914,787) $ Public safety 8,857,148 1,906,784 209,608 - (6,740,756) - (6,740,756) Public works 5,387,692 45,414 998,827 281,622 (4,061,829) - (4,061,829) Health and human services 467,424 28,414 44,176 - (394,834) - (394,834) Leisure activities 5,105,093 374,183 841,141 314,044 (3,575,725) - (3,575,725) Conservation and economic development 1,843,956 499,054 4,250 - (1,340,652) - (1,340,652) Interest and fiscal charges 1,455,644 - - - (1,455,644) - (1,455,644) Total governmental activities 26,616,097 3,095,283 2,440,921 595,666 (20,484,227) - (20,484,227) Business-type activities: Water 1,663,981 2,225,334 - 593,153 - 1,154,506 1,154,506 Sewer 2,218,802 2,022,849 - - - (195,953) (195,953) Pleasant View Golf Course 1,651,439 1,860,169 - - - 208,730 208,730 Total business-type activities 5,534,222 6,108,352 - 593,153 - 1,167,283 1,167,283 Total primary government 32,150,319 $ 9,203,635 $ 2,440,921 $ 1,188,819 $ (20,484,227) 1,167,283 (19,316,944) Component Unit Community Development Authority 98,270 $ 27,854 $ - $ - $ (70,416) $ General revenues: Taxes: Property taxes, levied for general purposes 15,098,639 - 15,098,639 - Property taxes, levied for tax increment district 7,823,747 - 7,823,747 - Other taxes 1,530,158 - 1,530,158 - Cable television franchise fees 223,308 - 223,308 - Intergovernmental revenues not restricted to specific programs 821,534 - 821,534 - Investment income 108,978 23,708 132,686 17,937 Miscellaneous 154,809 - 154,809 - Total general revenues 25,761,173 23,708 25,784,881 17,937 Transfers (750,083) 750,083 - - Change in net position 4,526,863 1,941,074 6,467,937 (52,479) NET POSITION - BEGINNING OF YEAR 50,913,706 39,824,551 90,738,257 2,988,852 NET POSITION - END OF YEAR 55,440,569 $ 41,765,625 $ 97,206,194 $ 2,936,373 $ Primary Government Changes in Net Position Net (Expenses) Revenues and Program Revenues CITY OF MIDDLETON, WISCONSIN STATEMENT OF ACTIVITIES For the Year Ended December 31, 2014 The accompanying notes are an integral part of the financial statements. 5 ---PAGE BREAK--- Nonmajor Total Debt TIF District Capital Governmental Governmental General Service No. 3 Projects Funds Funds ASSETS Cash and investments 6,736,677 $ 131,591 $ 3,429,483 $ 5,473,383 $ 5,180,798 $ 20,951,932 $ Receivables (net) Taxes Tax levy 16,003,741 - 8,692,301 340,360 - 25,036,402 Special assessments on tax roll 7,547 - 189,008 - - 196,555 Other 92,123 - - - - 92,123 Delinquent taxes 29,366 - - - - 29,366 Accounts 509,267 - 177,890 - 290,319 977,476 Interest 1,303 - - - - 1,303 Loans - - 896,710 - - 896,710 Special assessments 16,793 - 1,009,884 - - 1,026,677 Due from other governments 28,000 - - - - 28,000 Due from other funds - - - 328,318 - 328,318 Advances to other funds 2,594,780 - 1,608,765 - - 4,203,545 Prepaid items 7,322 - - - - 7,322 TOTAL ASSETS 26,026,919 $ 131,591 $ 16,004,041 $ 6,142,061 $ 5,471,117 $ 53,775,729 $ LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES LIABILITIES Accounts payable 813,622 $ 1,815 $ 545,306 $ 1,166,329 $ 377,286 $ 2,904,358 $ Advances from other funds - - - 354,405 - 354,405 Deposits - - - - 904,814 904,814 Due to other funds 59,529 - - - - 59,529 Due to other governments 7,287 - - - - 7,287 Total liabilities 880,438 1,815 545,306 1,520,734 1,282,100 4,230,393 DEFERRED INFLOWS OF RESOURCES Subsequent year tax levy 16,003,741 - 8,692,301 549,395 - 25,245,437 Loans receivable - - 896,710 - - 896,710 Special assessments 16,793 - 1,198,892 - - 1,215,685 Other receivables 48,228 - - - - 48,228 16,068,762 - 10,787,903 549,395 - 27,406,060 FUND BALANCES Nonspendable Prepaid items 7,322 - - - - 7,322 Advances to other funds 2,594,780 - - - - 2,594,780 Noncurrent receivables 29,366 - - - - 29,366 Restricted Debt service - 129,776 - - - 129,776 Community development - - 4,670,832 - 1,418,115 6,088,947 Library - - - - 327,394 327,394 Capital improvements - - - 4,071,932 - 4,071,932 Impact fees - - - - 823,193 823,193 Tourism - - - - 1,296,451 1,296,451 Public safety - - - - 28,756 28,756 Senior center - - - - 162,111 162,111 Committed Library - - - - 37,485 37,485 Airport - - - - 95,512 95,512 Assigned Post employment benefits 1,123,373 - - - - 1,123,373 Public safety 732,661 - - - - 732,661 Debt service - - - - - - Unassigned 4,590,217 - - - - 4,590,217 Total fund balances 9,077,719 129,776 4,670,832 4,071,932 4,189,017 22,139,276 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES 26,026,919 $ 131,591 $ 16,004,041 $ 6,142,061 $ 5,471,117 $ 53,775,729 $ CITY OF MIDDLETON, WISCONSIN December 31, 2014 BALANCE SHEET GOVERNMENTAL FUNDS The accompanying notes are an integral part of the financial statements. 6 ---PAGE BREAK--- Fund balances - total governmental funds 22,139,276 $ Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental funds are not financial resources and therefore are not reported in the funds. 89,705,867 Some receivables that are not currently available are reported as deferred inflows of resources in the fund financial statements, but are recognized as revenue when earned in the government-wide statements. Loans 896,710 Special assessments 1,215,685 Other receivables 48,228 Some liabilities, including long-term debt, are not due and payable in the current period and therefore are not reported in the funds. Long-term debt (53,205,000) Landfill post-closure liability (614,652) Debt discount or premium (381,820) Compensated absences (3,910,942) Accrued interest payable (452,783) NET POSITION OF GOVERNMENTAL ACTIVITIES 55,440,569 $ CITY OF MIDDLETON, WISCONSIN RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION December 31, 2014 The accompanying notes are an integral part of the financial statements. 7 ---PAGE BREAK--- Nonmajor Total Debt TIF District Capital Governmental Governmental General Service No. 3 Projects Funds Funds REVENUES Taxes 15,652,647 $ - $ 7,823,747 $ - $ 1,270,653 $ 24,747,047 $ Intergovernmental 1,993,974 - 268,665 101,805 826,514 3,190,958 Licenses and permits 769,679 - - - 529,534 1,299,213 Fines, forfeitures, and penalties 266,264 - - - - 266,264 Public charges for services 1,373,312 - - - 425,970 1,799,282 Intergovernmental charges for services 1,933,130 - - - - 1,933,130 Special assessments 26,414 - 189,008 - - 215,422 Contributions - - - - 79,764 79,764 Investment and interest income 61,564 - 122,213 417 10,314 194,508 Miscellaneous 156,526 - 153,290 - 22,035 331,851 Total revenues 22,233,510 - 8,556,923 102,222 3,164,784 34,057,439 EXPENDITURES Current General government 2,628,619 - 2,033,434 86,990 - 4,749,043 Public safety 8,013,108 - - - 1,661 8,014,769 Public works 3,421,300 - - - - 3,421,300 Health and human services 467,424 - - - - 467,424 Leisure activities 1,353,485 - - - 3,502,415 4,855,900 Conservation and economic development 586,088 - - - 166,365 752,453 Debt service Principal - 5,280,000 - - - 5,280,000 Debt issuance costs - 74,875 - - - 74,875 Interest and fiscal charges - 1,408,082 - - - 1,408,082 Capital outlay - - 5,088,218 9,790,684 6,500 14,885,402 Total expenditures 16,470,024 6,762,957 7,121,652 9,877,674 3,676,941 43,909,248 Excess of revenues over (under) expenditures 5,763,486 (6,762,957) 1,435,271 (9,775,452) (512,157) (9,851,809) OTHER FINANCING SOURCES (USES) Long-term debt issued - - - 8,500,000 - 8,500,000 Premium on debt issued - 93,554 - - - 93,554 Proceeds from sale of capital assets 306 - - - - 306 Transfers in 453,917 6,693,433 - - 1,068,395 8,215,745 Transfers out (6,585,585) - (2,096,508) (139,735) (144,000) (8,965,828) Net change in fund balances (367,876) 24,030 (661,237) (1,415,187) 412,238 (2,008,032) FUND BALANCES - BEGINNING OF YEAR 9,445,595 105,746 5,332,069 5,487,119 3,776,779 24,147,308 FUND BALANCES - END OF YEAR 9,077,719 $ 129,776 $ 4,670,832 $ 4,071,932 $ 4,189,017 $ 22,139,276 $ For the Year Ended December 31, 2014 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES CITY OF MIDDLETON, WISCONSIN GOVERNMENTAL FUNDS The accompanying notes are an integral part of the financial statements. 8 ---PAGE BREAK--- Net change in fund balances - total governmental funds (2,008,032) $ Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However in the statement of activities, the cost of these assets is allocated over their estimated useful lives with depreciation expense reported in the statement of activities. Capital outlay is reported as an expenditure in the fund financial statements but is capitalized in the government-wide financial statements. 12,773,504 Depreciation is reported in the government-wide statements (2,063,211) Receivables not currently available are reported as deferred inflows in the fund financial statements but are recognized as revenue when earned in the government-wide financial statements. (387,866) Proceeds from the sale of capital assets are recorded as revenues in the governmental funds but are removed from revenues in the statement of activities $(306). The loss on the sale\disposal of capital assets is recognized in the statement of activities $(195,202). (195,508) Debt and lease proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets. Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. Debt issued (8,500,000) Premium on debt issued (93,554) Debt retired 5,280,000 Landfill post-closure liability (76,088) Some expenses in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. Compensated absences (229,695) Amortization of debt premium and discount 36,942 Accrued interest on debt (9,629) Change in net position of governmental activities 4,526,863 $ CITY OF MIDDLETON, WISCONSIN For the Year Ended December 31, 2014 TO THE STATEMENT OF ACTIVITIES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, The accompanying notes are an integral part of the financial statements. 9 ---PAGE BREAK--- Pleasant View Golf ASSETS Water Sewer Course Totals Current Assets Cash and investments 4,881,119 $ 2,616,144 $ - $ 7,497,263 $ Accounts receivable 422,993 471,895 - 894,888 Accrued interest 1,956 9,712 - 11,668 Due from other funds 24,769 34,760 - 59,529 Total current assets 5,330,837 3,132,511 - 8,463,348 Noncurrent Assets Restricted cash and investments - 60,820 - 60,820 Special assessments receivable - 2,041,995 - 2,041,995 Property held for future use 301,087 - - 301,087 Capital assets: Property and equipment 27,185,502 15,353,702 11,509,482 54,048,686 Less: Accumulated depreciation (8,742,550) (4,700,677) (1,163,213) (14,606,440) Total capital assets, net 18,442,952 10,653,025 10,346,269 39,442,246 Total noncurrent assets 18,744,039 12,755,840 10,346,269 41,846,148 Total assets 24,074,876 15,888,351 10,346,269 50,309,496 LIABILITIES Current Liabilities Accounts payable 7,151 355,229 60,946 423,326 Due to other funds 328,318 - - 328,318 Accrued interest - - 35,889 35,889 Accrued compensated absences 11,937 29,760 43,478 85,175 Current portion of long-term debt - - 762,679 762,679 Total current liabilities 347,406 384,989 902,992 1,635,387 Noncurrent Liabilities Accrued compensated absences 171,527 48,030 100,174 319,731 Advances from other funds - - 3,849,140 3,849,140 General obligation debt - - 2,739,613 2,739,613 Total noncurrent liabilities 171,527 48,030 6,688,927 6,908,484 Total liabilities 518,933 433,019 7,591,919 8,543,871 NET POSITION Net investment in capital assets 18,442,952 10,653,025 6,843,977 35,939,954 Restricted for equipment replacement - 60,820 - 60,820 Unrestricted 5,112,991 4,741,487 (4,089,627) 5,764,851 Total net position 23,555,943 $ 15,455,332 $ 2,754,350 $ 41,765,625 $ Business-type Activities Enterprise Funds December 31, 2014 CITY OF MIDDLETON, WISCONSIN PROPRIETARY FUNDS STATEMENT OF NET POSITION The accompanying notes are an integral part of the financial statements. 10 ---PAGE BREAK--- Pleasant View Golf Water Sewer Course Total OPERATING REVENUES Charges for services and sales 2,225,334 $ 2,022,849 $ 1,860,169 $ 6,108,352 $ OPERATING EXPENSES Operation and maintenance 1,146,377 1,886,153 1,408,295 4,440,825 Depreciation 517,604 332,649 116,051 966,304 Total operating expenses 1,663,981 2,218,802 1,524,346 5,407,129 Operating income (loss) 561,353 (195,953) 335,823 701,223 NONOPERATING REVENUES (EXPENSES) Investment income 13,038 10,670 - 23,708 Interest expense - - (127,093) (127,093) Total nonoperating revenues (expenses) 13,038 10,670 (127,093) (103,385) Income (loss) before capital contributions and transfers 574,391 (185,283) 208,730 597,838 CAPITAL CONTRIBUTIONS 593,153 - - 593,153 TRANSFERS IN - - 1,200,000 1,200,000 TRANSFERS OUT (449,917) - - (449,917) Change in net position 717,627 (185,283) 1,408,730 1,941,074 NET POSITION - BEGINNING OF YEAR 22,838,316 15,640,615 1,345,620 39,824,551 NET POSITION - END OF YEAR 23,555,943 $ 15,455,332 $ 2,754,350 $ 41,765,625 $ Enterprise Funds For the Year Ended December 31, 2014 PROPRIETARY FUNDS CITY OF MIDDLETON, WISCONSIN STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION Business-type Activities The accompanying notes are an integral part of the financial statements. 11 ---PAGE BREAK--- Pleasant View Golf Water Sewer Course Totals CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 2,205,306 $ 2,110,633 $ 1,860,169 $ 6,176,108 $ Payments to suppliers for goods and services (712,851) (1,710,871) (554,598) (2,978,320) Payments to employees for services (412,582) (227,449) (820,965) (1,460,996) Net cash provided by operating activities 1,079,873 172,313 484,606 1,736,792 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers to other funds (449,917) - - (449,917) Transfers from other funds - - 1,200,000 1,200,000 Advance from TIF No. 3 - - 461,180 461,180 Net cash provided by (used in) noncapital financing activities (449,917) - 1,661,180 1,211,263 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (175,870) (21,627) (46,786) (244,283) Principal paid on capital debt - - (1,935,000) (1,935,000) Interest paid on capital debt - - (164,000) (164,000) Net cash used in capital and related financing activities (175,870) (21,627) (2,145,786) (2,343,283) CASH FLOWS FROM INVESTING ACTIVITIES Interest income received 13,038 10,593 - 23,631 Net increase (decrease) in cash and cash equivalents 467,124 161,279 - 628,403 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 4,413,995 2,515,685 - 6,929,680 CASH AND CASH EQUIVALENTS - END OF YEAR 4,881,119 $ 2,676,964 $ - $ 7,558,083 $ Business-type Activities Enterprise Funds For the Year Ended December 31, 2014 CITY OF MIDDLETON, WISCONSIN STATEMENT OF CASH FLOWS PROPRIETARY FUNDS The accompanying notes are an integral part of the financial statements. 12 ---PAGE BREAK--- Pleasant View Golf Water Sewer Course Totals Reconciliation of operating income (loss) to net cash provided by operating activities: Operating income (loss) 561,353 $ (195,953) $ 335,823 $ 701,223 $ Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation expense 517,604 332,649 116,051 966,304 Depreciation charged to sewer utility 40,294 (40,294) - - Changes in noncash components of working capital Accounts receivable (20,028) 28,195 - 8,167 Special assessments receivable - 59,589 - 59,589 Due from other funds (11,869) (18,105) (1,519) (31,493) Accounts payable (35,544) (4,008) 32,837 (6,715) Accrued compensated absences 28,063 10,240 1,414 39,717 Net cash provided by operating activities 1,079,873 $ 172,313 $ 484,606 $ 1,736,792 $ Reconciliation of cash and cash equivalents to the statement of net position - proprietary funds Cash and investments 4,881,119 $ 2,616,144 $ - $ 7,497,263 $ Restricted cash and investments - 60,820 - 60,820 Cash and cash equivalents, end of year 4,881,119 $ 2,676,964 $ - $ 7,558,083 $ NONCASH INVESTING, CAPITAL, AND RELATED FINANCING ACTIVITIES Developer financed additions to Utility capital assets 593,153 $ - $ - $ 593,153 $ Business-type Activities Enterprise Funds CITY OF MIDDLETON, WISCONSIN STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2014 (Concluded) The accompanying notes are an integral part of the financial statements. 13 ---PAGE BREAK--- Total Fire Agency Tax Roll District Funds ASSETS Cash and investments 24,933,610 $ 302,196 $ 25,235,806 $ Taxes receivable 13,349,754 - 13,349,754 Total assets 38,283,364 $ 302,196 $ 38,585,560 $ LIABILITIES Accounts payable - $ 47,934 $ 47,934 $ Due to other governmental units 38,283,364 254,262 38,537,626 Total liabilities 38,283,364 $ 302,196 $ 38,585,560 $ CITY OF MIDDLETON, WISCONSIN STATEMENT OF FIDUCIARY NET POSITION December 31, 2014 FIDUCIARY FUNDS The accompanying notes are an integral part of the financial statements. 14 ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 15 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the City of Middleton, Wisconsin (the City) conform to generally accepted accounting principles as applicable to governmental units. The accepted standard- setting body for establishing governmental accounting and financial reporting principles is the Governmental Accounting Standards Board (GASB). A. Reporting Entity This report includes all of the funds of the City of Middleton, Wisconsin. The reporting entity for the City consists of the primary government, organizations for which the primary government is financially accountable, and other organizations for which the nature and significance of their relationship with the primary government are such that their exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. A legally separate organization should be reported as a component unit if the elected officials of the primary government are financially accountable to the organization. The primary government is financially accountable if it appoints a voting majority of the organization’s governing body and it is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to or burdens on the primary government. The primary government may be financially accountable if an organization is fiscally dependent on the primary government. A legally separate tax exempt organization should be reported as a component unit of the reporting entity if all of the following criteria are met: the economic resources received or held by the separate organization are entirely or almost entirely for the direct benefit of the primary government, its component units, or its constituents; and the primary government is entitled to, or has the ability to otherwise access, a majority of the economic resources received or held by an individual organization that the specific primary government, or its component units, is entitled to, or has the ability to otherwise access, are significant to that primary government. Blended component units, although legally separate entities, are, in substance, part of the government’s operations and are reported with similar funds of the primary government. Discretely presented component units are reported in a separate column in the government-wide financial statements to emphasize that they are legally separate from the primary government. Discretely Presented Component Unit - Community Development Authority of the City of Middleton, Wisconsin The government-wide financial statements include the Community Development Authority of the City of Middleton (CDA) as a component unit. The CDA is a legally separate organization. The board of the CDA is appointed by the mayor. Wisconsin Statutes provide for circumstances whereby the City can impose its will on the CDA and also create a potential financial benefit to or burden on the City. As a component unit, the CDA’s financial statements have been presented as a discrete column in the basic financial statements. Separately issued financial statements of the CDA are not prepared. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 16 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Government-Wide and Fund Financial Statements Government-Wide Financial Statements The statement of net position and statement of activities display information about the reporting government as a whole. They include all funds of the reporting entity except for fiduciary funds. The statements distinguish between governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or services. Likewise, the primary government is reported separately from the legally separate component unit for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. The City does not allocate indirect expenses to functions in the statement of activities. 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 included among program revenues are reported as general revenues. Internally dedicated resources are reported as general revenues rather than as program revenues. Fund Financial Statements Each fund is considered to be a separate accounting entity and is accounted for by providing a separate set of self-balancing accounts, which constitute its assets, deferred outflows of resources, liabilities, deferred inflows of resources, net position/fund balance, revenues, and expenditure/expenses. 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. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 17 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Government-Wide and Fund Financial Statements (Continued) Funds are organized as major funds or nonmajor funds within the governmental and enterprise fund financial statements. A fund is considered major if it is the primary operating fund of the City or meets the following criteria: a. Total assets and deferred outflows of resources, liabilities and deferred inflows of resources, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least 10% of the corresponding total for all funds of that category or type, and b. The same element of the individual governmental fund or enterprise fund that met the 10% test is at least 5% of the corresponding total for all governmental and enterprise funds combined. c. In addition, any other governmental or enterprise fund that the City believes is particularly important to financial statement users may be reported as a major fund. The City reports the following major governmental funds: General Fund - accounts for the City’s primary operating activities. It is used to account for all financial resources except those required to be accounted for in another fund. Debt Service Fund - accounts resources accumulated and payments made for principal and interest on long-term debt other than enterprise fund debt. Tax Incremental Financing District (TIF) No. 3 Capital Projects Funds - accounts for expenditures outlined in the TIF project plan and related revenues and proceeds from long- term borrowing. Capital Projects Fund - accounts for proceeds from long-term borrowing and other resources to be used for improvement projects originally initiated. The City reports the following major enterprise funds: Water Utility - accounts for operations of the water system. Sanitary Sewer - accounts for operations of the sewer system. Pleasant View Golf Course - accounts for operations of the Pleasant View Golf Course. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 18 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Government-Wide and Fund Financial Statements (Continued) The City reports the following nonmajor governmental funds: Special Revenue Funds - used to account for the proceeds of specific revenue sources (other than major capital projects) that are restricted to expenditures for specified purposes. Subdividers’ Deposits Economic Development Grant Lost and Damaged Books Tourism Commission Library Gift Police Activities Library Endowment EMS Activities Library Public Land Activities Airport Senior Center Activities Safety Impact Fee and Other In addition, the City reports the following fund types: Agency funds - used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, and/or other governmental units. Tax Roll Fire District C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation Government-Wide Financial Statements The government-wide statement of net position and statement of activities are reported using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Property taxes are recognized as revenues in the year for which they are levied. Taxes receivable for the following year are recorded as receivables and deferred inflows of resources. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider are met. Special assessments are recorded as revenue when earned. Unbilled receivables are recorded as revenues when services are provided. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 19 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the City’s Water and Sewer utility and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions. Fund Financial Statements Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recorded when they are both measurable and available. Available means collectible within the current period or soon enough thereafter to be used 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. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on long-term debt, claims, judgments, compensated absences, and pension expenditures, which are recorded as a fund liability when expected to be paid with expendable available financial resources. Property taxes are recorded in the year levied as receivables and deferred inflows of resources. They are recognized as revenues in the succeeding year when services financed by the levy are being provided. Intergovernmental aids and grants are recognized as revenues in the period the City is entitled to the resources and the amounts are available. Amounts owed to the City, which are not available, are recorded as receivables and deferred inflows of resources. Amounts received prior to the entitlement period are also recorded as deferred inflows. Special assessments are recorded as revenues when they become measurable and available as current assets. Amounts due in future years are reflected as receivables and deferred inflows of resources. Delinquent special assessments being held for collection by the county are reported as receivables and deferred inflows of resources in the General Fund. Revenues susceptible to accrual include property taxes, miscellaneous taxes, public charges for services, special assessments, and interest. Other general revenues such as fines and forfeitures, inspection fees, recreation fees, and miscellaneous revenues are recognized when received in cash or when measurable and available under the criteria described above. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 20 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) The City reports unearned revenues and deferred inflows of resources on its governmental funds balance sheet. Deferred inflows of resources arise from taxes levied in the current year which are for the subsequent year’s operations, special assessments to be collected in future years and loans receivable to be collected in future years. For governmental fund financial statements, deferred inflows of resources arise when a potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. Unearned revenues also arise when resources are received before the City has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the City has a legal claim to the resources, the liability for unearned revenue or deferred inflow of resources is removed from the balance sheet and revenue is recognized. Proprietary and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as described previously in this note. Agency funds follow the accrual basis of accounting and do not have a measurement basis. The proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Water Utility, Sewer Utility, and Pleasant View Golf Course are charges to customers for sales and services. Special assessments are recorded as receivables and contributions when levied. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. All Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America require management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities, deferred inflows of resources and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 21 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Position or Equity 1. Cash and Investments For purposes of the statement of cash flows, the City considers all highly liquid investments with an initial maturity of three months or less when acquired to be cash equivalents. Investment of City funds is restricted by state statutes. Available investments are limited to: 1. Time deposits in any credit union, bank, savings bank, or trust company authorized to transact business in the state maturing in three years or less. 2. Bonds or securities of any county, city, drainage district, technical college district, village, town, or school district of the state. Also, bonds issued by a local exposition district, a local professional baseball park district, a local professional football stadium district, a local cultural arts district, the University of Wisconsin Hospitals and Clinics Authority, or the Wisconsin Aerospace Authority. 3. Bonds or securities issued or guaranteed by the federal government. 4. The local government investment pool. 5. Any security maturing in seven years or less and having the highest or second highest rating category of a nationally recognized rating agency. 6. Securities of an open-end management investment company or investment trust, subject to various conditions and investment options. 7. Repurchase agreements with public depositories, with certain conditions. The City has adopted an investment policy that follows the state statute for allowable investments. The City is exposed to custodial credit risk and credit risk for deposits and investments, as well as interest rate risk for investments. The City’s policies with respect to these risks are as follows: Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations to the City. To minimize credit risk, investments are limited to government agencies, the highest rated commercial paper, AAA rated money market funds, and CD’s from Wisconsin’s highest rated banks. Custodial risk is the risk that, in the event of the failure of a depository financial institution, the City will not be able to recover deposits that are in possession of an outside party. Most institutions do not offer custodial/collateral services for CD’s; therefore, investments should be diversified among institutions avoiding concentrations of credit. In addition, investments should be placed only with Wisconsin financial institutions with current credit information kept on file for each institution. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 22 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Position or Equity (Continued) 1. Cash and Investments (Continued) Interest rate risk is the risk that changes in interest rates will adversely affect the fair market value of an investment resulting in losses if the investment was liquidated prior to maturity. The investment portfolio should be laddered over a three-year maturity schedule. Staggered investment maturities maximize liquidity to meet ongoing operations, and also allow the opportunity for reinvestment. Continual reinvestment allows City funds to ride the yield curve, minimizing interest rate risk for any given period. Investments should be held to maturity eliminating losses and risk from early liquidations. Investments are stated at fair value, which is the amount at which an investment could be exchanged in a current transaction between willing parties. Fair values are based on quoted market prices. No investments are reported at amortized cost. Adjustments necessary to record investments at fair value are recorded in the operating statement as increases or decreases in investment income. Investment income on commingled investments of municipal accounting funds is allocated based on average fund balance. The difference between the bank balance and carrying value is due to outstanding checks and/or deposits in transit. The Wisconsin Local Government Investment Pool (LGIP) is part of the State Investment Fund (SIF), and is managed by the State of Wisconsin Investment Board. The SIF is not registered with the Securities and Exchange Commission, but operates under the statutory authority of Wisconsin Chapter 25. The SIF reports the fair value of its underlying assets annually. Participants in the LGIP have the right to withdraw their funds in total on one day’s notice. At December 31, 2014, the fair value of the City’s share of the LGIP’s assets was substantially equal to the amount as reported in these statements. 2. Receivables Property taxes are levied in December on the assessed value as of the prior January 1. In addition to property taxes for the City, taxes are collected for and remitted to the state and county governments as well as the local school district and technical college district. Taxes for all state and local governmental units billed in the current year for the succeeding year are reflected as receivables and due to other taxing units in the accompanying agency fund statement of fiduciary net position. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 23 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Position or Equity (Continued) 2. Receivables (Continued) Property tax calendar - 2014 tax roll: Lien date and levy date December 2014 Tax bills mailed December 2014 Payment in full, or January 31, 2015 First installment due January 31, 2015 Second installment due July 31, 2015 Personal property taxes in full January 31, 2015 Tax deed - 2014 delinquent real estate taxes October 2017 Accounts receivable have been shown net of an allowance for uncollectible accounts. Delinquent real estate taxes as of July 31 are paid in full by the county, which assumes the collection thereof. No provision for uncollectible accounts receivable has been made for the Water and Sewer Utilities because they have the right by law to place delinquent bills on the tax roll, and other delinquent bills are generally not significant. During the course of operations, transactions occur between individual funds that may result in amounts owed between funds. Short-term interfund loans are reported as “due to and from other funds.” Long-term interfund loans (noncurrent portion) are reported as “advances from and to other funds.” Interfund receivables and payables between funds within governmental activities are eliminated in the statement of net position. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances”. In the General Fund financial statements, advances to other funds are offset equally by a fund balance nonspendable account which indicates that they do not constitute expendable available resources and, therefore, are not available for appropriation. The City has received federal grant funds for economic development loan programs to various businesses. It is the City’s policy to record revenue and expenditure when the initial loan is made from the federal grant funds. The City records a loan receivable and deferred inflows of resources when the loan has been made and funds have been disbursed. As loans are repaid, the receivable is reduced and revenue is recorded. Interest received from loan repayments is recognized as revenue when received in cash. Any unspent loan repayments at year end are presented as restricted fund balance in the governmental fund balance sheet. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 24 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Position or Equity (Continued) 3. Inventories and Prepaid Items Governmental fund inventory items are charged to expenditure accounts when purchased. Year-end inventory was not significant. Proprietary fund inventories are generally used for construction and for operation and maintenance work. They are not for resale. They are valued at cost based on weighted average, and charged to construction and/or operation and maintenance expense when used. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 4. Restricted Assets Mandatory segregations of assets are presented as restricted assets. Such segregations are required by bond agreements and other external parties. Current liabilities payable from these restricted assets are so classified. The remainder, if generated from earnings, is shown as restricted net position. 5. Capital Assets Government-Wide Statements Capital assets, which include property, plant, and equipment, are reported in the government- wide financial statements. Capital assets are defined by the government as assets with an initial cost of more than $5,000 for general capital assets and $25,000 for infrastructure assets, and an estimated useful life in excess of one year. Capital assets are generally defined by the utilities as assets with an initial, individual cost of more than $1,000 and an estimated useful life in excess of one year. All capital assets are valued at historical cost or estimated historical cost if actual amounts are unavailable. Donated capital assets are recorded at their estimated fair value at the date of donation. Additions to and replacements of capital assets of business-type activities are recorded at original cost or the fair value at the time of construction, which includes material, labor, overhead, and an allowance for the cost of funds used during construction when significant. For tax-exempt debt, the amount of interest capitalized equals the interest expense incurred during construction netted against any interest revenue from temporary investment of borrowed funds. No net interest was capitalized during the current year. The cost of renewals and betterments relating to retirement units is added to plant accounts. The cost of property replaced, retired, or otherwise disposed of, is deducted from plant accounts and, generally, together with removal costs less salvage, is charged to accumulated depreciation. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 25 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Position or Equity (Continued) 5. Capital Assets (Continued) Government-Wide Statements (Continued) Depreciation of all exhaustible capital assets is recorded as an allocated expense in the statement of activities, with accumulated depreciation reflected in the statement of net position. Depreciation is provided over the assets’ estimated useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of asset is as follows: Buildings 40 Years Land improvements 30 Years Machinery and equipment 3-15 Years Infrastructure 20-50 Years Water Plant Source of supply 34 Years Pumping 22-31 Years Water treatment 22-30 Years Transmission and distribution 18-77 Years General 4-17 Years Sewer Plant Collecting system 30-77 Years Collecting system pumping 20-40 Years General 7-40 Years Fund Financial Statements In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for the same way as in the government-wide statements. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 26 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Position or Equity (Continued) 6. Compensated Absences Under terms of employment, employees are granted sick leave and vacations in varying amounts. Only benefits considered to be vested are disclosed in these statements. All vested vacation and sick leave pay is accrued when incurred in the government-wide and proprietary financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements, or are payable with expendable available resources. Payments for vacation and sick leave will be made at rates in effect when the benefits are used. Accumulated vacation and sick leave liabilities at December 31, 2014 are determined on the basis of current salary rates and include salary-related payments. The City provides postemployment health insurance benefits for all eligible employees. Eligibility is based on retiring from the City or becoming disabled and being eligible to receive social security benefits or Wisconsin Retirement benefits. The benefits are based on contractual agreements with employee groups, local ordinances, and employee benefit policies. 7. Long-Term Obligations/Conduit Debt All long-term obligations to be repaid from governmental and business-type resources are reported as liabilities in the government-wide statements. The long-term obligations consist primarily of notes and bonds payable, and accrued compensated absences. Long-term obligations for governmental funds are not reported as liabilities in the fund financial statements. The face-value of debts are reported as other financing sources, premium or discount on debt is reported as other financing sources or uses, and payments of principal and interest are reported as expenditures. The accounting in proprietary funds is the same as it is in the government-wide statements. For the government-wide statements and proprietary fund statements, bond premiums and discounts are deferred and amortized over the life of the issue. Gains or losses on prior debt refunding are amortized over the remaining life of the old debt, or the life of the new debt, whichever is shorter. The balance at year-end for both premiums and discounts is shown as an increase or decrease in the liability section of the statement of net position. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 27 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Position or Equity (Continued) 7. Long-Term Obligations/Conduit Debt (Continued) The City may approve the issuance of industrial revenue bonds (IRB) for the benefit of private business enterprises. IRB's are secured by mortgages or revenue agreements on the associated projects, and do not constitute indebtedness of the City. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. No industrial revenue bonds were outstanding as of the end of the year. 8. Claims and Judgments Claims and judgments are recorded as liabilities if all the conditions of Governmental Accounting Standards Board pronouncements are met. The liability and expenditure for claims and judgments is only reported in governmental fund types if it has matured. Claims and judgments are recorded in the government-wide statements and proprietary funds as expenses when the related liabilities are incurred. There were no significant claims or judgments at year-end. 9. Equity Classifications Government-Wide Statements Equity is classified as net position and displayed in three components: a. Net investment in capital assets - Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances (excluding unspent debt proceeds) of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. b. Restricted net position - Consists of net position with constraints placed on their use by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or, 2) law through constitutional provisions or enabling legislation. c. Unrestricted net position - All other net position that do not meet the definition of “restricted” or “invested in capital assets, net of related debt.” When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 28 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Position or Equity (Continued) 9. Equity Classifications (Continued) Fund Statements In the governmental fund financial statements, governmental funds report nonspendable fund balance for amounts that cannot be spent because they are either: Not in spendable form; or Legally or contractually required to be maintained intact. Restricted fund balance is reported when constraints placed on the use of resources are either: Externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments; or Imposed by law through constitutional provisions or enabling legislation Committed fund balance is reported for amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the Common Council. Assigned fund balance is reported for amounts that are constrained by the City management’s intent to be used for specific purposes, but is neither restricted nor committed. Unassigned fund balance is the residual classification for the General Fund or deficit balances in other funds. When committed, assigned, and unassigned amounts are available for use, it is the City’s policy to use committed resources first, then assigned resources, then unassigned resources as they are needed. 10. Basis for Existing Rates - Proprietary Funds Billings are rendered and recorded quarterly based on metered usage. The utilities do not accrue revenues beyond billing dates. Water rates were approved by the Public Service Commission of Wisconsin and became effective March 31, 2011. Sewer rates were approved by the Common Council effective January 1, 2013. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 29 NOTE 2 - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY Budgetary Information Budgetary information is derived from the annual operating budget and is presented using the same basis of accounting for each fund as described in Note 1. A budget has been adopted for the General Fund, Debt Service Fund, certain special revenue funds, and capital project funds. Wisconsin Statute Section 65.90 requires that an annual budget be adopted for all funds. The budgeted amounts presented include any amendments made. The City may authorize transfers of budgeted amounts between departments up to $1,000. Transfers exceeding $1,000 between departments and changes in the overall budget must be approved by a two-thirds vote of the City Council. Appropriations lapse at year-end unless specifically carried over. Excess Expenditures over Appropriations The following individual funds experienced excess expenditures over appropriations: Excess Budgeted Actual Expenditures Expenditures Expenditures Over Budget General Fund Health and human services 441,116 467,424 26,308 Police special revenue and activity 3,000 8,161 5,161 Public land special revenue and activities 40,000 329,254 289,254 Library Fund 1,881,395 1,925,992 44,597 The legal level of budget control is the function level in the General Fund and total expenditures in all other funds. The City controls expenditures at the departmental level for management purposes. TIF District No. 3 debt service was included in the Debt Service Fund, rather than TIF District No. 3. TIF District No. 3 debt service was funded by TIF. The detail of those items can be found in the City’s year-end budget to actual report. Limitations on the City’s Tax Levy As part of Wisconsin’s Act 32 (2011), legislation was passed that limits the City’s future tax levies. Generally, the City is limited to its prior tax levy dollar amount (excluding TIF Districts), increased by the greater of the percentage change in the City’s equalized value due to new construction or zero percent for the 2012 levy collected in 2013 and thereafter. Changes in debt service from one year to the next are generally exempt from this limit, with certain exceptions. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 30 NOTE 3 - DETAILED NOTES ON ALL FUNDS A. Cash and Investments The City's cash and investments at year-end were comprised of the following: Carrying Bank Associated Value Balance Risks Petty cash 4,582 $ - $ Demand deposits Noninterest bearing 29,658,023 25,650,092 $ Custodial credit Certificates of deposit 6,519,602 6,519,602 Custodial credit Money market 11,272,330 11,272,330 Custodial credit Total deposits 47,449,955 43,442,024 Investments Madison Community Foundation 241,422 241,422 Local Government Investment Pool (LGIP) 6,424,268 6,424,268 Credit, interest rate Total investments 6,665,690 6,665,690 Total cash and investments 54,120,227 $ 50,107,714 $ Reconciliation to the statement of net position: Unrestricted cash and investments 28,449,195 $ Restricted cash and investments 60,820 Fiduciary funds - Agency Fund 25,235,806 53,745,821 Cash and investments held for component unit: Unrestricted 374,406 Total cash and investments 54,120,227 $ The City’s library had $241,422 in an endowment fund at the Madison Community Foundation, which is pooled with all other investments of the Foundation. The Foundation has variance power over the funds in the endowment. Deposits in each local bank are insured by the FDIC in the amount of $250,000 for demand deposits and $250,000 for time and savings deposits. Bank accounts are also insured by the State Deposit Guarantee Fund in the amount of $400,000. However, due to the relatively small size of the Guarantee Fund in relationship to the total deposits covered and other legal implications, recovery of material principal losses may not be significant to individual municipalities. This coverage has not been considered in computing the custodial credit risk. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 31 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) A. Cash and Investments (Continued) Custodial Credit Risk Deposits - Custodial credit risk is the risk that in the event of a financial institution failure, the City’s deposits may not be returned to the City. As of December 31, 2014, $36,312,589 of the City’s total bank balances of $43,442,024 was exposed to custodial credit risk as uninsured and uncollateralized. Investments - For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investment or collateral securities that are in the possession of an outside party. The City had no investments exposed to custodial credit risk. Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The City had investments in the following external pools which are not rated: Local Government Investment Pool Interest Rate Risk The City had $6,424,268 invested in the local government investment pool, which had a weighted average maturity of 117 days. The City had $6,519,602 invested in certificate of deposits with a weighted average maturity of 204 days. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 32 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) B. Receivables Nonmajor TIF District Capital Governmental Water Sewer General No. 3 Projects Funds Utility Utility Total Taxes 16,125,230 $ 8,692,301 $ 340,360 $ - $ - $ - $ 25,157,891 $ Accounts 509,267 177,890 - 290,319 422,993 471,895 1,872,364 Interest 1,303 - - - 1,956 9,712 12,971 Loans - 896,710 - - - - 896,710 Special assessments 24,340 1,198,892 - - - 2,041,995 3,265,227 Other governments 28,000 - - - - - 28,000 Total receivables 16,688,140 10,965,793 340,360 290,319 424,949 2,523,602 31,233,163 Less allowance for uncollectibles - - - - - - - Net total receivables 16,688,140 $ 10,965,793 $ 340,360 $ 290,319 $ 424,949 $ 2,523,602 $ 31,233,163 $ All receivables on the balance sheet are expected to be collected within one year except for the following: TIF District Sewer No. 3 Utility Total Amounts not expected to be collected within one year 2,095,602 $ 2,041,995 $ 4,137,597 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 33 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) C. Deferred Inflows of Resources and Unearned Revenue Governmental funds report deferred inflows of resources in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds report deferred inflows of resources for the subsequent year’s tax levy. Governmental funds report a liability in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred inflows of resources reported in the governmental funds were as follows: Unavailable Tax Levy Total Property taxes - $ 25,245,437 25,245,437 Loan receivable 896,710 - 896,710 Special assessments not yet due 1,215,685 - 1,215,685 Other receivables 48,228 - 48,228 2,160,623 $ 25,245,437 $ 27,406,060 $ For economic development loans, the City is limited by the Wisconsin Economic Development Corporation to the amount of program income from economic development loans that it may retain and loan to other businesses. Program income includes the principal and interest received from economic development loans repayments. Based upon its current population, the City may retain $750,000. At December 31, 2014, the City has not exceeded its maximum retention cap. When it does, a liability to the state will be recorded. D. Restricted Assets Replacement Account The sewer utility establishes an equipment replacement account to be used for significant mechanical equipment replacement as required by the Wisconsin Department of Natural Resources. The balance in the equipment replacement fund at December 31, 2014 was $60,820. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 34 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) E. Capital Assets Capital asset activity for the year ended December 31, 2014 was as follows: Beginning Ending Balance Additions Deletions Balance Governmental activities Capital assets not being depreciated Land 7,859,229 $ - $ - $ 7,859,229 $ Right of way 18,751,280 - - 18,751,280 Construction in progress 1,625,432 12,245,882 1,482,129 12,389,185 Total capital assets not being depreciated 28,235,941 12,245,882 1,482,129 38,999,694 Capital assets being depreciated Land improvements 8,033,312 92,703 195,508 7,930,507 Buildings 18,506,158 1,353,131 - 19,859,289 Machinery and equipment 5,524,472 232,977 - 5,757,449 Streets-infrastructure 21,020,473 330,940 - 21,351,413 Storm sewers-infrastructure 8,995,968 - - 8,995,968 Traffic signals-infrastructure 1,331,766 - - 1,331,766 Sidewalks-infrastructure 3,275,357 - - 3,275,357 Bridges-infrastructure 3,278,231 - - 3,278,231 Rail spur-infrastructure 482,163 - - 482,163 Total capital assets being depreciated 70,447,900 2,009,751 195,508 72,262,143 Less: accumulated depreciation for Land improvements 2,798,335 359,628 - 3,157,963 Buildings 4,391,863 482,295 - 4,874,158 Machinery and equipment 3,395,443 544,131 - 3,939,574 Streets-infrastructure 3,867,838 318,678 - 4,186,516 Storm sewers-infrastructure 2,396,354 179,919 - 2,576,273 Traffic signals-infrastructure 664,541 53,271 - 717,812 Sidewalks-infrastructure 1,400,727 65,507 - 1,466,234 Bridges-infrastructure 442,555 43,710 - 486,265 Rail spur-infrastructure 135,103 16,072 - 151,175 Total accumulated depreciation 19,492,759 2,063,211 - 21,555,970 Capital assets being depreciated, net of depreciation 50,955,141 (53,460) 195,508 50,706,173 Total capital assets, net of depreciation 79,191,082 $ 12,192,422 $ 1,677,637 $ 89,705,867 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 35 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) E. Capital Assets (Continued) Beginning Ending Balance Additions Deletions Balance Water Utility Capital assets not being depreciated Land and land rights 222,277 $ - $ - $ 222,277 $ Construction in progress - - - - Total capital assets not being depreciated 222,277 - - 222,277 Capital assets being depreciated Source of supply 781,509 - - 781,509 Pumping 2,796,186 - - 2,796,186 Treatment 343,242 - - 343,242 Transmission and distribution 21,343,394 1,059,645 72,256 22,330,783 Administrative and general assets 673,809 37,696 - 711,505 Total capital assets being depreciated 25,938,140 1,097,341 72,256 26,963,225 Less: accumulated depreciation for Source of supply 366,841 25,790 - 392,631 Pumping 1,382,157 98,009 - 1,480,166 Treatment 342,570 672 - 343,242 Transmission and distribution 5,584,601 386,719 72,256 5,899,064 Administrative and general assets 580,739 46,708 - 627,447 Total accumulated depreciation 8,256,908 557,898 72,256 8,742,550 Capital assets being depreciated, net of depreciation 17,681,232 539,443 - 18,220,675 Total capital assets, net of depreciation 17,903,509 $ 539,443 $ - $ 18,442,952 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 36 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) E. Capital Assets (Continued) Beginning Ending Balance Additions Deletions Balance Sewer Utility Capital assets not being depreciated Land and land rights 66,830 $ - $ - $ 66,830 $ Capital assets being depreciated Collection system 13,405,522 - - 13,405,522 Collection system pumping 1,327,171 21,627 - 1,348,798 Administrative and general assets 532,552 - - 532,552 Total capital assets being depreciated 15,265,245 21,627 - 15,286,872 Less: accumulated depreciation 4,408,322 292,355 - 4,700,677 Capital assets being depreciated, net of depreciation 10,856,923 (270,728) - 10,586,195 Total capital assets, net of depreciation 10,923,753 $ (270,728) $ - $ 10,653,025 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 37 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) E. Capital Assets (Continued) Beginning Ending Balance Additions Deletions Balance Pleasant View Golf Course Capital assets not being depreciated Land and land rights 2,216,000 $ - $ - $ 2,216,000 $ Capital assets being depreciated Land improvements 7,291,981 23,255 - 7,315,236 Buildings 1,325,553 - - 1,325,553 Equipment 629,162 23,531 - 652,693 Total capital assets being depreciated 9,246,696 46,786 - 9,293,482 Less: accumulated depreciation for Land improvements 332,831 19,900 - 352,731 Buildings 252,817 42,445 - 295,262 Equipment 461,514 53,706 - 515,220 Total accumulated depreciation 1,047,162 116,051 - 1,163,213 Capital assets being depreciated, net of depreciation 8,199,534 (69,265) - 8,130,269 Total capital assets, net of depreciation 10,415,534 $ (69,265) $ - $ 10,346,269 $ Total net capital assets- business-type activities 39,242,796 $ 199,451 $ - $ 39,442,247 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 38 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) E. Capital Assets (Continued) Depreciation expense was charged to functions as follows: Governmental activities General government 34,396 $ Public safety 512,415 Public works, which includes the depreciation of streets, storm sewers, traffic signals, sidewalks, bridges, and rail spur 867,482 Conservation and development 157,208 Leisure activities 491,710 Total governmental activities depreciation expense 2,063,211 $ Business-type activities Water Utility Depreciation 557,898 $ Depreciation charged to Sewer Utility operation and maintenance expenses (40,294) 517,604 Sewer Utility Depreciation 292,355 Depreciation charged to Sewer Utility operation and maintenance expenses 40,294 332,649 Pleasant View Golf Course 116,051 Total business-type activities depreciation expense 1,298,953 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 39 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) F. Interfund Receivables/Payables and Transfers The following is a schedule of interfund receivables and payables reported in due to and due from other funds in the financial statements, including any overdrafts on pooled cash and investment accounts. Receivable Fund Payable Fund Amount Water Utility General Fund (24,769) $ Sewer Utility General Fund (34,760) Capital Projects Fund Water Utility 328,318 Total fund financial statements 268,789 $ For the statement of net position, interfund balances, which are owed within the governmental activities or business-type activities, are netted and eliminated. The balances resulted from the time lag between the dates that interfund goods and services are provided or reimbursable expenditures occur, transactions are recorded in the accounting system, and payments between funds are made. All amounts are due within one year. The General Fund and TIF District No. 3 have advanced funds to the Pleasant View Golf Course. No repayment schedules have been established on the advances to the Pleasant View Golf Course and these amounts are not expected to be paid within one year. The principal purpose of these advances is to finance costs internally rather than borrowing externally. For the statement of net position, interfund balances which are owed within the governmental activities or business-type activities are netted and eliminated. The following is a schedule of interfund advances. Receivable Fund Payable Fund Amount General Fund Pleasant View Golf Course 2,594,780 $ TIF District No. 3 Capital Projects fund 354,405 TIF District No. 3 Pleasant View Golf Course 1,254,360 Total fund financial statements 4,203,545 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 40 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) F. Interfund Receivables/Payables and Transfers (Continued) The following is a schedule of interfund transfers: Pleasant Nonmajor Debt View Golf Special Transfer Out Fund General Service Course Revenue Total General - $ 4,317,190 $ 1,200,000 $ 1,068,395 $ 6,585,585 $ TIF District No. 3 - 2,096,508 - - 2,096,508 Capital Projects Fund - 139,735 - - 139,735 Water Utility 449,917 - - - 449,917 Nonmajor Special Revenue Funds 4,000 140,000 - - 144,000 Totals 453,917 $ 6,693,433 $ 1,200,000 $ 1,068,395 $ 9,415,745 $ Transfer In Fund Generally, transfers are used to move revenues from the fund that collects them to the fund that the budget requires to expend them, move receipts to debt service from the funds collecting the receipts to the debt service fund, and use unrestricted revenue collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. The transfer from the Water Utility to the General Fund is for payment in lieu of property taxes. For the statement of activities, interfund transfers within the governmental activities or business-type activities are netted and eliminated. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 41 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) G. Long-Term Obligations Long-term obligations activity for the year ended December 31, 2014 was as follows: Amounts Beginning Ending Due Within Balance Increases Decreases Balance One Year Governmental activities Bonds and notes payable General obligation debt 49,985,000 $ 8,500,000 $ 5,280,000 $ 53,205,000 $ 12,000,000 $ Debt premium and discount 325,208 93,554 36,942 381,820 - Landfill post-closure liability 538,564 76,088 - 614,652 - 50,848,772 8,669,642 5,316,942 54,201,472 12,000,000 Other liabilities: Vested compensated absences 3,681,247 1,207,600 977,905 3,910,942 977,905 Total other liabilities 3,681,247 1,207,600 977,905 3,910,942 977,905 Total governmental activities long-term liabilities 54,530,019 $ 9,877,242 $ 6,294,847 $ 58,112,414 $ 12,977,905 $ Business-type activities Bonds and notes payable General obligation debt 5,405,000 $ - $ 1,935,000 $ 3,470,000 $ 825,000 $ Debt premium 59,971 - 27,679 32,292 - 5,464,971 - 1,962,679 3,502,292 825,000 Other liabilities: Vested compensated absences 365,189 122,811 83,094 404,906 83,094 Total business-type activities long-term liabilities 5,830,160 $ 122,811 $ 2,045,773 $ 3,907,198 $ 908,094 $ General Obligation Debt All general obligation notes and bonds payable are backed by the full faith and credit of the City. Notes and bonds in the governmental funds will be retired by future property tax levies or tax increments. Business-type activities debt is payable by revenues from user fees of those funds or, if the revenues are not sufficient, by future tax levies. In accordance with Wisconsin Statutes, total general obligation indebtedness of the City may not exceed 5% of the equalized value of taxable property within the City’s jurisdiction. The debt limit as of December 31, 2014, was $141,867,215. Total general obligation debt outstanding at year end was $56,675,000. The City was in compliance with the legal debt limitation as of December 31, 2014. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 42 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) G. Long-Term Obligations (Continued) General Obligation Debt (Continued) Date of Final Interest Original Balance Type Issue Maturity Rates Amount 12/31/14 Governmental Activities General Obligation Debt 2008 General obligation refunding bonds 06/02/08 12/01/27 3.00%-4.00% 6,530,000 $ 5,560,000 $ 2008 General obligation promissory notes 06/09/08 12/01/17 3.50%-4.00% 2,000,000 1,100,000 2008 General obligation promissory notes 12/30/08 12/01/17 3.00%-4.25% 2,750,000 1,500,000 2010 General obligation refunding bonds 04/15/10 09/01/29 1.45%-8.5% 10,110,000 8,820,000 2010 General obligation promissory notes 04/15/10 09/01/17 1.20%-3.80% 2,010,000 960,000 2010 Taxable general obligation refunding bonds 11/23/10 09/01/20 .85%-3.75% 6,580,000 4,775,000 2010 General obligation refunding bonds 11/23/10 09/01/20 2.00%-4.00% 4,625,000 3,495,000 2011 General obligation promissory notes 05/09/11 09/01/19 2.00%-3.00% 2,500,000 2,350,000 2012 Taxable general obligation promissory notes 05/12/12 03/01/19 .46%-1.85% 2,540,000 1,840,000 2012 General obligation promissory notes 05/12/12 09/01/20 2.00%-2.25% 2,015,000 1,540,000 2012 General obligation promissory notes 12/28/12 09/01/21 1.00%-2.00% 4,500,000 3,910,000 2012 General obligation refunding bonds 12/28/12 09/01/32 1.05%-3.80% 5,110,000 5,110,000 2013 General obligation promissory notes 12/23/13 02/01/23 2.00%-3.00% 4,000,000 3,745,000 2014 General obligation promissory notes 12/09/14 08/01/22 2.00%-3.00% 2,000,000 2,000,000 2014 General obligation note anticipation note 12/09/14 12/15/15 2.00% 6,500,000 6,500,000 Total governmental activities- general obligation debt 53,205,000 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 43 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) G. Long-Term Obligations (Continued) General Obligation Debt (Continued) Date of Final Interest Original Balance Type Issue Maturity Rates Indebtedness 12/31/14 Business-type Activities General Obligation Debt 2008 General obligation refunding bonds 12/30/08 09/01/21 3.505%-4.45% 1,700,000 $ 1,700,000 $ 2012 General obligation refunding bonds 02/27/12 03/01/16 2.00% 3,100,000 1,770,000 Total business-type activities - general obligation debt 3,470,000 $ Debt service requirements to maturity are as follows: Principal Interest Principal Interest Totals 2015 12,000,000 $ 1,630,839 $ 825,000 $ 100,400 $ 14,556,239 $ 2016 5,420,000 1,379,039 945,000 82,700 7,826,739 2017 5,635,000 1,225,602 300,000 66,875 7,227,477 2018 5,145,000 1,059,104 300,000 54,125 6,558,229 2019 4,980,000 915,454 400,000 39,250 6,334,704 2020-2024 12,410,000 2,800,843 700,000 28,725 15,939,568 2025-2029 6,470,000 1,092,956 - - 7,562,956 2030-2032 1,145,000 86,470 - - 1,231,470 Totals $ 53,205,000 $10,190,307 $3,470,000 $ 372,075 $ 67,237,382 Governmental Business-type Long-Term Debt Long-Term Debt Estimated payments of accumulated employee benefits and other commitments are not included in the above schedule. The compensated absences liability attributable to governmental activities will be liquidated primarily by the General Fund. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 44 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) H. Governmental Activities Net Position/Fund Balances Governmental Activities Governmental activities net position reported on the government wide Statement of Net Position at December 31, 2014 include the following: Net investment in capital assets Capital assets, net of accumulated depreciation $ 89,705,867 Less: related long-term debt (excluding unspent capital related debt proceeds) (49,514,888) Total invested in capital assets, net of related debt 40,190,979 Restricted Community development 8,184,549 Library 327,394 Impact fees 823,193 Tourism 1,296,451 Public safety 28,756 Senior center 162,111 10,822,454 Unrestricted 4,427,136 Total governmental activities net position 55,440,569 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 45 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) H. Governmental Activities Net Position/Fund Balances (Continued) Governmental Fund Balances Governmental fund balances reported on the fund financial statements at December 31, 2014 include the following: TIF Debt District Capital General Service No. 3 Projects Nonmajor Total Nonspendable Prepaid items 7,322 $ - $ - $ - $ - $ 7,322 $ Advances to other funds 2,594,780 - - - - 2,594,780 Noncurrent receivables 29,366 - - - - 29,366 2,631,468 - - - - 2,631,468 Restricted Debt service - 129,776 - - - 129,776 Community development - - 4,670,832 - 1,418,115 6,088,947 Library - - - - 327,394 327,394 Capital improvements - - - 4,071,932 - 4,071,932 Impact fees - - - - 823,193 823,193 Tourism - - - - 1,296,451 1,296,451 Public safety - - - - 28,756 28,756 Senior center - - - - 162,111 162,111 - 129,776 4,670,832 4,071,932 4,056,020 12,928,560 Committed Library - - - - 37,485 37,485 Airport - - - - 95,512 95,512 - - - - 132,997 132,997 Assigned Post employment benefits 1,123,373 - - - - 1,123,373 Public safety Reserve for fire 492,661 - - - - 492,661 Reserve for EMS 240,000 - - - - 240,000 Debt service - - - - - - 1,856,034 - - - - 1,856,034 Unassigned 4,590,217 - - - - 4,590,217 Total fund balances 9,077,719 $ 129,776 $ 4,670,832 $ 4,071,932 $ 4,189,017 $ 22,139,276 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 46 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) H. Governmental Activities Net Position/Fund Balances (Continued) Business-Type Activities Business-type activities net position reported on the government-wide and proprietary funds statement of net position at December 31, 2014 include the following: Pleasant View Golf Water Sewer Course Totals Capital assets 27,185,502 $ 15,353,702 $ 11,509,482 $ 54,048,686 $ Accumulated depreciation (8,742,550) (4,700,677) (1,163,213) (14,606,440) Subtotals 18,442,952 10,653,025 10,346,269 39,442,246 Less capital related long-term debt - - 3,502,292 3,502,292 Net investment in capital assets 18,442,952 10,653,025 6,843,977 35,939,954 Restricted for equipment replacement - 60,820 - 60,820 Unrestricted (deficit) 5,112,991 4,741,487 (4,089,627) 5,764,851 Total business-type activities net position 23,555,943 $ 15,455,332 $ 2,754,350 $ 41,765,625 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 47 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) I. Component Unit This report contains the Community Development Authority (CDA), which is included as a component unit. Financial information is presented as a discrete column in the statement of net position and statement of activities. In addition to the basic financial statements and the preceding notes to financial statements which apply, the following additional disclosures are considered necessary for a fair presentation. Basis of Accounting/Measurement Focus The CDA follows the full accrual basis of accounting and the flow of economic resources measurement focus. Capital Assets Beginning Ending Useful Balance Additions Deletions Balance Lives Land 154,000 $ - $ - $ 154,000 $ - Buildings 2,874,692 - - 2,874,692 40 years Less: Accumulated depreciation (793,403) (62,493) - (855,896) - Totals 2,235,289 $ (62,493) $ - $ 2,172,796 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 48 NOTE 4 - OTHER INFORMATION A. Employees’ Retirement System Eligible City of Middleton employees participate in the Wisconsin Retirement System (System), a cost sharing multiple-employer defined benefit public employee retirement system (PERS). All employees, initially employed by a participating WRS employer prior to July 1, 2011, expected to work at least 600 hours a year and expected to be employed for at least one year from employee’s date of hire are eligible to participate in the System. All employees, initially employed by a participating WRS employer on or after July 1, 2011, and expected to work at least 1200 hours a year and expected to be employed for at least one year from the employee’s date of hire are eligible to participate in the System. Covered employees are required to contribute one-half of the actuarially determined contribution rate for general category employees, and executives and elected officials. Required contributions for protective employees are the same rate as general employees. Employers are required to contribute the remainder of the actuarially determined contribution rate. The employer may not pay the employee required contribution unless provided for by an existing collective bargaining agreement. Contribution rates for 2014 are: Employee Employer General 6.65% 6.65% Executives & Elected Officials 7.00% 7.00% Protective with Social Security 6.65% 9.75% Protective without Social Security 6.65% 12.35% The payroll for City employees covered by the System for the year ended December 31, 2014 was $9,162,017; the employer’s total payroll was $9,756,621. The total required contribution for the year ended December 31, 2014 was $1,394,694 or 15.22% of covered payroll. Of this amount, $753,137 was contributed by the employer for the current year and $641,557 was contributed by the employees for the current year. Total contributions for the years ending December 31, 2013 and 2012 were $1,386,896 and $1,181,687, respectively, equal to the required contributions for each year. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 49 NOTE 4 - OTHER INFORMATION (Continued) A. Employees’ Retirement System (Continued) Employees who retire at or after age 65, (62 for elected officials, 54 for protective occupation employees with less than 25 years of service, 53 for protective occupation employees with more than 25 years of service), are entitled to receive a retirement benefit. Employees may retire at age 55, (50 for protective occupation employees), and receive actuarially reduced benefits. The factors influencing the benefit are: final average earnings, years of creditable service, and a formula factor. The final average earnings are the average of the employee's three highest year's earnings. Employees terminating covered employment before becoming eligible for a retirement benefit may withdraw their contributions and, by doing so, forfeit all rights to any subsequent benefit. For employees beginning participation on or after January 1, 1990 and no longer actively employed on or after April 24, 1998, creditable service in each of five years is required for eligibility for a retirement annuity. Participants employed prior to 1990 and on or after April 24, 1998 through June 30, 2011 are immediately vested. For participants employed after July 1, 2011, five years of creditable service is required for eligibility. The System also provides death and disability benefits for employees. Eligibility for and the amount of all benefits is determined under Chapter 40 of Wisconsin Statutes. The System issues an annual financial report which may be obtained by writing to the Department of Employee Trust Funds, P.O. Box 7931, Madison, WI 53707-7931. B. Risk Management The City is exposed to various risks of loss related to torts, theft of, damage to, or destruction of assets; errors, and omissions; worker’s compensation; and health care of its employees. All of these risks are covered through the purchase of commercial insurance, with minimal deductibles. Settled claims have not exceeded the commercial coverage in any of the past three years. There have been no significant reductions in insurance coverage to the prior year. C. Other Postemployment Benefits The City provides other postemployment benefits (OPEB) to its retirees for health insurance. Prior to January 1, 2013, the City participated in a community rated plan, and accordingly, did not have an OPEB liability. Plan Description The City provides a single-employer defined benefit healthcare plan administered by Unity Health Insurance. Eligibility is based on retiring from the City or becoming disabled and being eligible to receive social security benefits or Wisconsin Retirement benefits. The benefits are based on contractual agreements with employee groups, local ordinances, and employee benefit policies. Retirees pay the full premium cost for health insurance. Employees may convert their accumulated sick leave to pay for health care premiums. The plan does not issue stand-alone financial statements. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 50 NOTE 4 - OTHER INFORMATION (Continued) C. Other Postemployment Benefits (Continued) Funding Policy The contribution of plan members and the employer are established and may be amended by the City Common Council. The required contribution is based on pay-as-you-go financing. For 2014, total expenditures for retirees’ medical premiums during the year were $162,924. The number of participants currently eligible to receive benefits is 21. Annual OPEB Costs and Net OPEB Obligation The City’s annual OPEB cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The City did not obtain an actuarial valuation for 2014, but rather estimated the implicit rate subsidy liability using an alternative method. The City intends to obtain an actuarial valuation in 2015. The City’s estimated net unfunded actuarial accrued liability (UAAL) at December 31, 2014 is $2,862,888 and the ratio of the UAAL to covered payroll was 32%. 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, and are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. Calculations are based on the types of benefits provided under the terms of the substantive plan at the time of each valuation and on the pattern of sharing of costs between the employer and plan members to that point. In addition, the projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the employer and plan members in the future. Actuarial calculations reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 51 NOTE 4 - OTHER INFORMATION (Continued) D. Commitments and Contingencies From time to time, the City becomes party to claims and legal proceedings. Although, the outcome of such matters cannot be forecasted with certainty, it is the opinion of management and the City’s legal counsel that the likelihood is remote that most of such claims or proceedings will not have a material adverse effect on the City’s financial position. Expenditures of the City’s Tax Increment Districts are subject to review and audit by the Wisconsin Department of Revenue and the overlapping taxation districts. The City has allocated certain expenditures for administration, public safety, public lands administration, and transit services which were reimbursed to the City’s General Fund. For 2014, these costs amount to approximately $1.8 million. Review by the Wisconsin Department of Revenue or the overlapping taxation districts could result in a portion of these expenditures being disallowed. The City has entered into various development agreements in connection with the Tax Increment Districts. Under the terms of these agreements, the City has made commitments for development incentives or reimbursements. Commitments for projects undertaken through 2014 totaled $9.4 million of which $1.3 million has been paid. The remaining commitment is $8.1 million. E. Joint Ventures Metropolitan Refuse District, Inc. The City of Middleton and the Villages of Shorewood Hills and Waunakee are members of the Metropolitan Refuse District, Inc. (District), which owns and operates the closed local sanitary landfill. The landfill stopped accepting waste at the end of 1996. The three member communities share in the operational costs of the District based on estimated population, with the 2014 percentages as follows: City of Middleton 56% Village of Shorewood Hills 5% Village of Waunakee 39% The District is made up of member from each community. For the City, the corporate member is the Mayor or the Mayor’s appointed designee. For each of the Villages, the corporate member is the Village President or the Village President’s appointed designee. At the annual meeting, members appoint directors and officers as the governing body. The governing body has authority to adopt its own budget and control of financial affairs of the District. The District’s fund balance at December 31, 2014 is a deficit of $1,097,592. Reporting standards require the City to report its share of the net deficit. The City’s proportionate share in the operations of the District is 56%, which amounts to $614,652 of the District’s net deficit. The City’s share of the net deficit has been reported in the government-wide statement of net position as landfill post- closure cost. The City made payments totaling $49,330 to the District in 2014. The City will continue to support the District’s postclosure care costs in the future. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2014 52 NOTE 4 - OTHER INFORMATION (Continued) E. Joint Ventures (Continued) Metropolitan Refuse District, Inc. (Continued) The District’s closed landfill is being monitored for possible groundwater contamination as required by the Wisconsin Department of Natural Resources. The costs for groundwater monitoring are being budgeted for on an annual basis. At the current time, it is not possible to determine if extensive contamination has occurred and the effects, if any, on the District. Separately issued financial statements of the District are not prepared. Multijurisdictional Public Safety Information System Commission (MJPISC) The City of Fitchburg, City of Sun Prairie, City of Middleton, and City of Verona jointly operate the Multijurisdictional Public Safety Information System Commission. On March 20, 2003, the City of Middleton, City of Fitchburg, and the City of Sun Prairie executed an intergovernmental agreement under authority of Section 66.0301 of the Wisconsin Statutes. The City of Verona joined the Commission in 2009. The Commission adopts its own budget. Net operating costs including debt service are shared by the four communities equally. The department is governed by the Intermunicipal Commission. The Commission consists of one representative from each community. The transactions of the Commission are not reflected in these financial statements. Separately issued financial statements of the Commission can be obtained from the City of Sun Prairie at 300 East Main Street, Sun Prairie, Wisconsin 53590. The City does not have an equity interest in this joint venture. Middleton Fire District The City of Middleton and the Towns of Springfield, Westport, and Middleton jointly operate the local fire district, which is called the Middleton Fire District, which provides fire protection. The communities share in the operations of the District based on the ratio of equalized values of each member. The governing body is made up of elected officials from each community. Local representatives are appointed by the municipalities. The governing body has authority to adopt its own budget and control the financial affairs of the District. The City has made payments totaling $782,044 to the District in 2014 for operating expenses. The transactions of the District are not reflected in these financial statements. The City does not have an equity interest in the joint venture. Separately issued financials statements of the District are not prepared. This information is an integral part of the accompanying financial statements. ---PAGE BREAK--- REQUIRED SUPPLEMENTARY INFORMATION ---PAGE BREAK--- SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND For the Year Ended December 31, 2014 Variance with Original Final Actual Final Budget REVENUES Taxes 15,498,843 $ 15,498,843 $ 15,652,647 $ 153,804 $ Intergovernmental 1,845,156 1,845,156 1,993,974 148,818 Licenses and permits 540,000 540,000 769,679 229,679 Fines, forfeitures, and penalties 310,000 310,000 266,264 (43,736) Public charges for services 1,325,500 1,325,500 1,373,312 47,812 Interdepartmental charges for services 1,933,130 1,933,130 1,933,130 - Special assessments 90,000 90,000 26,414 (63,586) Investment income 48,500 48,500 61,564 13,064 Miscellaneous 143,124 143,124 156,526 13,402 Total revenues 21,734,253 21,734,253 22,233,510 499,257 EXPENDITURES Current General government 2,766,796 2,766,796 2,628,619 138,177 Public safety 8,118,299 8,118,299 8,013,108 105,191 Public works 3,436,987 3,436,987 3,421,300 15,687 Health and human services 441,116 441,116 467,424 (26,308) Leisure activities 1,370,613 1,370,613 1,353,485 17,128 Conservation and development 614,857 614,857 586,088 28,769 Total expenditures 16,748,668 16,748,668 16,470,024 278,644 Excess of revenues over expenditures 4,985,585 4,985,585 5,763,486 777,901 OTHER FINANCING SOURCES (USES) Sale of capital assets - - 306 306 Transfers in 400,000 400,000 453,917 53,917 Transfers out (5,385,585) (6,585,585) (6,585,585) - Total other financing sources (uses) (4,985,585) (6,185,585) (6,131,362) 54,223 Net change in fund balance - (1,200,000) (367,876) 832,124 FUND BALANCE - Beginning 9,445,595 9,445,595 9,445,595 - FUND BALANCE - Ending 9,445,595 $ 8,245,595 $ 9,077,719 $ 832,124 $ CITY OF MIDDLETON, WISCONSIN Budgeted Amounts 53 ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended December 31, 2014 54 NOTE 1 - BUDGETARY INFORMATION Budgetary information is derived from the annual operating budget and is presented using the same basis of accounting for each fund as described in the notes to the financial statements. A budget has been adopted for the General Fund, Debt Service Fund, certain special revenue funds, and capital project funds. Wisconsin Statute Section 65.90 requires that an annual budget be adopted for all funds. The budgeted amounts presented include any amendments made. The City may authorize transfers of budgeted amounts between departments up to $1,000. Transfers exceeding $1,000 between departments and changes in the overall budget must be approved by a two-thirds vote of the City Council. Appropriations lapse at year-end unless specifically carried over. NOTE 2 - EXCESS EXPENDITURES OVER APPROPRIATIONS The following functions experienced excess expenditures over appropriations: Excess Budgeted Actual Expenditures Expenditures Expenditures Over Budget General Fund Health and human services 441,116 467,424 26,308 Police special revenue and activity 3,000 8,161 5,161 Public land special revenue and activities 40,000 329,254 289,254 Library Fund 1,881,395 1,925,992 44,597 The legal level of budget control is the function level in the General Fund and total expenditures in all other funds. The City controls expenditures at the departmental level for management purposes. TIF District No. 3 debt service was included in the Debt Service Fund, rather than TIF District No. 3. TIF District No. 3 debt service was funded by TIF. The detail of those items can be found in the City’s year-end budget to actual report. ---PAGE BREAK--- SUPPLEMENTARY INFORMATION ---PAGE BREAK--- DETAILED SCHEDULE OF REVENUES - BUDGET AND ACTUAL GENERAL FUND For the Year Ended December 31, 2014 Variance with Original Final Actual Final Budget TAXES General property tax 15,046,560 $ 15,046,560 $ 15,054,539 $ 7,979 $ Fees in lieu of taxes 44,100 44,100 44,100 - Business taxes - - 2,358 2,358 Room tax 407,183 407,183 544,566 137,383 Interest and penalties on taxes 1,000 1,000 7,084 6,084 Total taxes 15,498,843 15,498,843 15,652,647 153,804 INTERGOVERNMENTAL Shared taxes from state 435,086 435,086 417,863 (17,223) State aid - road allotment 943,444 943,444 943,502 58 State aid - exempt computer aid 185,000 185,000 339,169 154,169 State aid - fire insurance dues 89,000 89,000 103,343 14,343 State aid - law enforcement 75,000 75,000 79,138 4,138 Federal and state aid - other 55,250 55,250 59,575 4,325 County aid - signals 9,500 9,500 - (9,500) County aid - senior citizens 44,176 44,176 44,176 - County aid - youth center 8,700 8,700 7,208 (1,492) Total intergovernmental 1,845,156 1,845,156 1,993,974 148,818 LICENSES AND PERMITS Liquor and malt beverage licenses 33,000 33,000 36,758 3,758 Operators' licenses 10,000 10,000 15,711 5,711 Contractors' licenses 500 500 - (500) Alarm licenses 9,000 9,000 10,973 1,973 Cigarette licenses 500 500 600 100 Bicycle licenses - - - - Dog and cat licenses 5,000 5,000 4,344 (656) Cable TV franchise license 200,000 200,000 223,308 23,308 Other miscellaneous licenses 2,500 2,500 2,350 (150) Building permits 160,000 160,000 251,551 91,551 Electrical permits 35,000 35,000 59,564 24,564 Plumbing permits 35,000 35,000 63,531 28,531 Erosion control permits 15,000 15,000 30,077 15,077 Other public land fees - - 800 800 Zoning permits 14,500 14,500 24,625 10,125 Park reservation permits 20,000 20,000 45,487 25,487 Total licenses and permits 540,000 540,000 769,679 229,679 FINES, FORFEITURES, AND PENALTIES Court penalties 190,000 190,000 146,208 (43,792) Parking violations 45,000 45,000 44,467 (533) Court costs 75,000 75,000 75,589 589 Total fines, forfeitures, and penalties 310,000 310,000 266,264 (43,736) Budgeted Amounts CITY OF MIDDLETON, WISCONSIN 55 ---PAGE BREAK--- DETAILED SCHEDULE OF REVENUES - BUDGET AND ACTUAL GENERAL FUND For the Year Ended December 31, 2014 Variance with Original Final Actual Final Budget Budgeted Amounts CITY OF MIDDLETON, WISCONSIN PUBLIC CHARGES FOR SERVICES Clerk fees 8,000 $ 8,000 $ 17,298 $ 9,298 $ Vehicle registration fees 1,000 1,000 1,168 168 Police special services - - 379 379 Police department fees 10,000 10,000 8,630 (1,370) Ambulance services 726,000 726,000 787,363 61,363 EMS fixed cost abatement 197,000 197,000 196,261 (739) Plan commission charges 15,000 15,000 20,930 5,930 Senior citizens 15,500 15,500 28,414 12,914 Swimming pool 199,000 199,000 179,818 (19,182) Summer recreation 99,000 99,000 82,084 (16,916) Fall-Winter-Spring recreation 38,000 38,000 14,748 (23,252) Hubbard Art Center Program 15,000 15,000 24,854 9,854 Public works charges 1,000 1,000 - (1,000) Other recreation 1,000 1,000 11,365 10,365 Total public charges for services 1,325,500 1,325,500 1,373,312 47,812 INTERDEPARTMENTAL CHARGES FOR SERVICES Administration reimbursements - Utilities 135,000 135,000 135,000 - Administration reimbursements - Airport 14,000 14,000 14,000 - Administration reimbursements - TIF 1,776,530 1,776,530 1,776,530 - Administration reimbursements - Landfill 5,000 5,000 5,000 - Administration reimbursements - Fire District 2,600 2,600 2,600 - Total interdepartmental charges for services 1,933,130 1,933,130 1,933,130 - SPECIAL ASSESSMENTS Curb, gutter, and sidewalks 90,000 90,000 26,039 (63,961) Interest on special assessments - - 375 375 Total special assessments 90,000 90,000 26,414 (63,586) INVESTMENT INCOME 48,500 48,500 61,564 13,064 COMMERCIAL REVENUES Rent of City buildings and offices 48,000 48,000 23,210 (24,790) Donations 15,000 15,000 17,747 2,747 Sale of materials 2,000 2,000 10,686 8,686 Miscellaneous 45,000 45,000 71,304 26,304 Annual environmental impact fee 32,624 32,624 32,624 - Interlocking ignition device 500 500 955 455 Total commercial revenues 143,124 143,124 156,526 13,402 OTHER FINANCING SOURCES Sale of City property - - 306 306 Transfer in - Water Utility 400,000 400,000 449,917 49,917 Transfer in - Nonmajor Funds - - 4,000 4,000 Total other financing sources 400,000 400,000 454,223 54,223 TOTAL REVENUES AND OTHER FINANCING SOURCES 22,134,253 $ 22,134,253 $ 22,687,733 $ 553,480 $ 56 ---PAGE BREAK--- Variance with Original Final Actual Final Budget GENERAL GOVERNMENT Council 66,873 $ 66,873 $ 66,367 $ 506 $ Police commission 4,848 4,848 6,530 (1,682) Landmarks commission 350 350 138 212 Middleton youth commission 40,700 40,700 41,245 (545) Art committee 3,000 3,000 3,127 (127) Sustainability committee 7,000 7,000 5,100 1,900 Municipal court 109,049 109,049 99,227 9,822 General administration 767,123 767,123 914,344 (147,221) Information technology 653,660 653,660 650,138 3,522 Elections 62,800 62,800 34,266 28,534 Board of review 300 300 - 300 Independent auditing 48,000 48,000 45,020 2,980 Legal counseling 210,000 210,000 191,688 18,312 Special legal counsel 5,000 5,000 26,870 (21,870) Buildings and grounds 140,427 140,427 134,118 6,309 Illegal taxes and tax refunds 15,000 15,000 18,532 (3,532) Property and liability insurance 414,966 414,966 320,670 94,296 Income continuation insurance 15,000 15,000 - 15,000 Contingency 100,000 100,000 - 100,000 Group life insurance 35,000 35,000 18,591 16,409 Bank fees 500 500 84 416 Miscellaneous 67,200 67,200 52,564 14,636 Total general government 2,766,796 2,766,796 2,628,619 138,177 PUBLIC SAFETY Police administration 729,470 729,470 831,100 (101,630) Police patrol 3,738,201 3,738,201 3,574,830 163,371 Code compliance 80,026 80,026 87,033 (7,007) Training - - - - School patrol 14,766 14,766 14,061 705 Fire suppression 782,044 782,044 782,044 - Public fire protection 460,000 460,000 437,391 22,609 EMS 1,479,297 1,479,297 1,451,788 27,509 Building inspector 122,586 122,586 119,249 3,337 Electrical inspector 101,309 101,309 98,825 2,484 Plumbing inspection 70,678 70,678 70,509 169 Emergency preparedness 43,109 43,109 38,197 4,912 Sealer of weights and measures 4,400 4,400 4,400 - Erosion control enforcement 16,000 16,000 20,951 (4,951) Communications 476,413 476,413 482,730 (6,317) Total public safety 8,118,299 8,118,299 8,013,108 105,191 CITY OF MIDDLETON, WISCONSIN DETAILED SCHEDULE OF EXPENDITURES - ACTUAL AND BUDGET For the Year Ended December 31, 2014 Budgeted Amounts GENERAL FUND 57 ---PAGE BREAK--- Variance with Original Final Actual Final Budget CITY OF MIDDLETON, WISCONSIN DETAILED SCHEDULE OF EXPENDITURES - ACTUAL AND BUDGET For the Year Ended December 31, 2014 Budgeted Amounts GENERAL FUND PUBLIC WORKS Machinery 333,934 $ 333,934 $ 355,793 $ (21,859) $ Garage 44,000 44,000 57,777 (13,777) Public works salaries and fringes 621,266 621,266 654,829 (33,563) Protective equipment 3,000 3,000 2,839 161 Engineering 712,301 712,301 713,796 (1,495) Street maintenance 44,175 44,175 52,939 (8,764) Street cleaning 9,900 9,900 7,438 2,462 Snow and ice control 73,950 73,950 112,266 (38,316) Traffic signals 20,000 20,000 4,263 15,737 Traffic signs and markings 30,244 30,244 25,509 4,735 Street lighting 118,000 118,000 111,722 6,278 Tree and brush 2,000 2,000 1,515 485 Storm sewers 10,000 10,000 16,707 (6,707) Mass transit 391,517 391,517 383,499 8,018 Garbage collection 560,000 560,000 540,039 19,961 Sanitary landfill 55,000 55,000 49,330 5,670 Recycling 257,700 257,700 251,127 6,573 Sidewalk maintenance 150,000 150,000 79,912 70,088 Total public works 3,436,987 3,436,987 3,421,300 15,687 HEALTH AND HUMAN SERVICES Aging 441,116 441,116 467,424 (26,308) LEISURE ACTIVITIES Cable television 8,000 8,000 4,165 3,835 Hubbard arts center 18,765 18,765 30,443 (11,678) Recreation programs and events 29,224 29,224 31,983 (2,759) Recreation administration 144,888 144,888 143,628 1,260 Swimming pool 280,979 280,979 267,128 13,851 Summer recreation 64,093 64,093 80,542 (16,449) Parks 824,664 824,664 795,596 29,068 Total leisure activities 1,370,613 1,370,613 1,353,485 17,128 CONSERVATION AND DEVELOPMENT Water resources 30,459 30,459 20,378 10,081 Conservancy land commission 123,968 123,968 134,791 (10,823) Planning commission 324,947 324,947 319,962 4,985 Other - - 9,755 (9,755) Forestry 135,483 135,483 101,202 34,281 Total conservation and development 614,857 614,857 586,088 28,769 OTHER FINANCING USES Transfers out - Nonmajor Funds - Other - 1,200,000 1,200,000 - Transfers out - Library Fund 1,068,395 1,068,395 1,068,395 - Transfers out - Debt Service Fund 4,317,190 4,317,190 4,317,190 - Total other financing uses 5,385,585 6,585,585 6,585,585 - TOTAL EXPENDITURES AND OTHER FINANCING USES 22,134,253 $ 23,334,253 $ 23,055,609 $ 278,644 $ 58 ---PAGE BREAK--- Total Lost and Safety Economic Nonmajor Subdividers' Damaged Library Library Library Impact Fee Development Tourism Police EMS Public Land Senior Center Governmental Deposits Books Gift Endowment Fund Airport and Other Grant Commission Activities Activities Activities Activities Funds ASSETS Cash and investments 2,263,258 $ 37,928 $ 40,989 $ 264,424 $ 29,377 $ 105,630 $ 448,514 $ 182,175 $ 1,230,899 $ 29,556 $ 63,720 $ 320,835 $ 163,493 $ 5,180,798 $ Accounts receivable - - - - - - - - 290,319 - - - - 290,319 TOTAL ASSETS 2,263,258 $ 37,928 $ 40,989 $ 264,424 $ 29,377 $ 105,630 $ 448,514 $ 182,175 $ 1,521,218 $ 29,556 $ 63,720 $ 320,835 $ 163,493 $ 5,471,117 $ LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable 122,504 $ 443 $ - $ - $ 7,396 $ 10,118 $ - $ - $ 224,767 $ 800 $ - $ 9,876 $ 1,382 $ 377,286 $ Deposits 904,814 - - - - - - - - - - - - 904,814 Total liabilities 1,027,318 443 - - 7,396 10,118 - - 224,767 800 - 9,876 1,382 1,282,100 FUND BALANCES Restricted 1,235,940 - 40,989 264,424 21,981 - 448,514 182,175 1,296,451 28,756 63,720 310,959 162,111 4,056,020 Committed - 37,485 - - - 95,512 - - - - - - - 132,997 Total fund balances 1,235,940 37,485 40,989 264,424 21,981 95,512 448,514 182,175 1,296,451 28,756 63,720 310,959 162,111 4,189,017 TOTAL LIABILITIES AND FUND BALANCES 2,263,258 $ 37,928 $ 40,989 $ 264,424 $ 29,377 $ 105,630 $ 448,514 $ 182,175 $ 1,521,218 $ 29,556 $ 63,720 $ 320,835 $ 163,493 $ 5,471,117 $ CITY OF MIDDLETON, WISCONSIN COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2014 59 ---PAGE BREAK--- Total Lost and Safety Economic Nonmajor Subdividers' Damaged Library Library Library Impact Fee Development Tourism Police EMS Public Land Senior Center Governmental Deposits Books Gift Endowment Fund Airport and Other Grant Commission Activities Activities Activities Activities Funds REVENUES Taxes - $ - $ - $ - $ - $ - $ - $ - $ 1,270,653 $ - $ - $ - $ - $ 1,270,653 $ Intergovernmental - - - - 783,629 - - - - - 27,127 - 15,758 826,514 Licenses and permits 333,704 - - - - - 195,830 - - - - - - 529,534 Public charges for services - 18,721 4,787 - 13,512 124,276 - - - - - 264,674 - 425,970 Contributions - - - 28,837 - - - - - 1,661 - 37,467 11,799 79,764 Investment income - - - 9,958 - - - 356 - - - - - 10,314 Miscellaneous - - - - 16,984 - - 1,339 1,736 1,276 - 700 - 22,035 Total revenues 333,704 18,721 4,787 38,795 814,125 124,276 195,830 1,695 1,272,389 2,937 27,127 302,841 27,557 3,164,784 EXPENDITURES Current: Public safety - - - - - - - - - 1,661 - - - 1,661 Leisure activities - 19,490 4,853 24,116 1,925,992 - - - 1,171,067 - - 329,254 27,643 3,502,415 Conservation and development 28,952 - - - - 135,793 - 1,620 - - - - - 166,365 Capital outlay - - - - - - - - - 6,500 - - - 6,500 Total expenditures 28,952 19,490 4,853 24,116 1,925,992 135,793 - 1,620 1,171,067 8,161 - 329,254 27,643 3,676,941 Excess of revenues over (under) expenditures 304,752 (769) (66) 14,679 (1,111,867) (11,517) 195,830 75 101,322 (5,224) 27,127 (26,413) (86) (512,157) OTHER FINANCING SOURCES (USES) Transfers in - - - - 1,068,395 - - - - - - - - 1,068,395 Transfers out - - - - - - - (94,000) - - (50,000) - - (144,000) Net change in fund balances 304,752 (769) (66) 14,679 (43,472) (11,517) 195,830 (93,925) 101,322 (5,224) (22,873) (26,413) (86) 412,238 FUND BALANCES - BEGINNING OF YEAR 931,188 38,254 41,055 249,745 65,453 107,029 252,684 276,100 1,195,129 33,980 86,593 337,372 162,197 3,776,779 FUND BALANCES - END OF YEAR 1,235,940 $ 37,485 $ 40,989 $ 264,424 $ 21,981 $ 95,512 $ 448,514 $ 182,175 $ 1,296,451 $ 28,756 $ 63,720 $ 310,959 $ 162,111 $ 4,189,017 $ CITY OF MIDDLETON, WISCONSIN COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES For the Year Ended December 31, 2014 NONMAJOR GOVERNMENTAL FUNDS 60 ---PAGE BREAK--- Public Works Public Lands TIF District Capital Capital General No. 5 Construction Construction Capital Projects Total ASSETS Cash and investments 672,438 $ 3,718,803 $ 651,689 $ 430,453 $ 5,473,383 $ Taxes receivable 340,360 - - - 340,360 Receivables - - - - - Due from other funds - 328,318 - - 328,318 Total assets 1,012,798 $ 4,047,121 $ 651,689 $ 430,453 $ 6,142,061 $ LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES LIABILITIES Accounts payable 100,559 $ 1,045,959 $ 16,594 $ 3,217 $ 1,166,329 $ Advances from other funds 354,405 - - - 354,405 Total liabilities 454,964 1,045,959 16,594 3,217 1,520,734 DEFERRED INFLOWS OF RESOURCES Subsequent year tax levy 549,395 - - - 549,395 FUND BALANCES Restricted 8,439 3,001,162 635,095 427,236 4,071,932 TOTAL LIABILITIES DEFERRED INFLOWS AND FUND BALANCES 1,012,798 $ 4,047,121 $ 651,689 $ 430,453 $ 6,142,061 $ CITY OF MIDDLETON, WISCONSIN COMBINING BALANCE SHEET CAPITAL PROJECTS FUND December 31, 2014 61 ---PAGE BREAK--- Public Works Public Lands TIF District Capital Capital General Intrafund No. 5 Construction Construction Capital Projects Eliminations Total REVENUES Intergovernmental 30,602 $ 60,000 $ 11,203 $ - $ - $ 101,805 $ Investment and interest income - 372 26 19 - 417 Total revenues 30,602 60,372 11,229 19 - 102,222 EXPENDITURES Current: General government 86,990 - - - - 86,990 Capital outlay 356,640 8,655,848 349,170 429,026 - 9,790,684 Total expenditures 443,630 8,655,848 349,170 429,026 - 9,877,674 Excess of revenues over (under) expenditures (413,028) (8,595,476) (337,941) (429,007) - (9,775,452) OTHER FINANCING SOURCES (USES) Long-term debt issued - 7,807,000 398,765 294,235 - 8,500,000 Transfers in 0 - 52,016 5,084 (57,100) - Transfers out (139,735) (57,100) - - 57,100 (139,735) Net change in fund balances (552,763) (845,576) 112,840 (129,688) - (1,415,187) FUND BALANCES - BEGINNING OF YEAR 561,202 3,846,738 522,255 556,924 - 5,487,119 FUND BALANCES - END OF YEAR 8,439 $ 3,001,162 $ 635,095 $ 427,236 $ - $ 4,071,932 $ CITY OF MIDDLETON, WISCONSIN COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES CAPITAL PROJECTS FUND For the Year Ended December 31, 2014 62