Document Middleton_doc_a7643c044d

CITY OF MIDDLETON, WISCONSIN Dane County, Wisconsin FINANCIAL STATEMENTS December 31, 2011 ---PAGE BREAK--- TABLE OF CONTENTS PAGE Independent Auditor's Report 1 Basic Financial Statements Statement of Net 3 Statement of Activities 4 Balance Sheet - Governmental 5 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental 6 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 7 Statement of Net Assets - Proprietary 8 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary 9 Statement of Cash Flows - Proprietary Funds 10 Statement of Fiduciary Net Assets - Fiduciary Funds 12 Notes to Financial Statements 13 Required Supplementary Information Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund 53 Supplementary Information Detailed Schedule of Revenues - Actual and Budget - General 55 Detailed Schedule of Expenditures - Actual and Budget - General 57 Combining Balance Sheet - Nonmajor Governmental 59 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental 60 Combining Balance Sheet - Capital Projects Funds 61 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Capital Projects Funds 62 ---PAGE BREAK--- INDEPENDENT AUDITOR’S REPORT ---PAGE BREAK--- CliftonLarsonAllen LLP www.cliftonlarsonallen.com Independent Auditor’s Report Common Council City of Middleton, Wisconsin Dane County, Wisconsin 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, 2011, which collectively comprise the City of Middleton, Wisconsin’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Middleton, Wisconsin’s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the 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, 2011, and the respective changes in financial position and cash flows, where applicable, thereof, for the year then ended in conformity with accounting principles generally accepted in the United States of America. ---PAGE BREAK--- 2 Accounting principles generally accepted in the United States of America require 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. However, we did not audit the information and express no opinion on it. The City of Middleton has not presented 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 financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of the financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the financial statements is not affected by this missing information. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Middleton’s basic financial statements. The supplementary information as listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The 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 financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. a Middleton, Wisconsin September 27, 2012 ---PAGE BREAK--- BASIC FINANCIAL STATEMENTS ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 13 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. 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 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, 2011 14 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Government-Wide and Fund Financial Statements Government-Wide Financial Statements The statement of net assets 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, liabilities, net assets/fund equity, 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. 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, liabilities, 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 ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 15 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Government-Wide and Fund Financial Statements (Continued) 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 TIF or enterprise fund debt. Tax Incremental Financing District (TIF) No. 3 Capital Projects Funds - accounts 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, 2011 16 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 Tourism Commission Lost and Damaged Books Safety Impact Fee and Other Library Gift Police Special Revenue and Activities Library Endowment EMS Special Revenue and Activities Library Public Land Special Revenue and Activities Airport Senior Center Special Revenue and Activities Economic Development Grant 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 ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 17 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation Government-Wide Financial Statements The government-wide statement of net assets 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 unearned revenue. 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. 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 revenues. 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 revenues. Amounts received prior to the entitlement period are also recorded as deferred revenues. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 18 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) 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 revenues. Delinquent special assessments being held for collection by the county are reported as receivables and nonspendable fund balance 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. The City reports deferred revenues on its governmental funds balance sheet. Deferred revenues arise from taxes levied in the current year which are for the subsequent year’s operations. For governmental fund financial statements, deferred revenues arise when a potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. Deferred 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 deferred revenue 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 and liabilities 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, 2011 19 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Assets 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 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, 2011 20 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Assets 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, 2011, 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 assets. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 21 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Assets or Equity (Continued) 2. Receivables (Continued) Property tax calendar - 2011 tax roll: Lien date and levy date December 2011 Tax bills mailed December 2011 Payment in full, or January 31, 2012 First installment due January 31, 2012 Second installment due July 31, 2012 Personal property taxes in full January 31, 2012 Tax deed - 2011 delinquent real estate taxes October 2014 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 assets. 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 governmental 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 revenue 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, 2011 22 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Assets 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 assets. The excess of restricted assets over current liabilities payable from restricted assets will be used first for retirement of related long-term debt. 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, 2011 23 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Assets 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 assets. 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 30-100 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. 6. Other Assets In governmental funds, debt issuance costs are recognized as expenditures in the current period. For the government-wide and the proprietary fund type financial statements, debt issuance costs are deferred and amortized over the term of the debt issue. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 24 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Assets or Equity (Continued) 7. 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. 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, an employee benefit policies. Employees may convert their accumulated sick leave to pay for health care premiums. Total expenditures for retirees’ medical premiums during the year were $59,487. The number of participants currently eligible to receive benefits is 19. 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, 2011 are determined on the basis of current salary rates and include salary related payments. 8. 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 (plus any premiums) are reported as other financing sources 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 governmental-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 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/discounts and gains/losses, as applicable, is shown as an increase or decrease in the liability section of the statement of net assets. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 25 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Assets or Equity (Continued) 8. 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. 9. 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. 10. Equity Classifications Government-Wide Statements Equity is classified as net assets and displayed in three components: a. Invested in capital assets, net of related debt - 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 assets - Consists of net assets 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 assets - All other net assets 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, 2011 26 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Assets or Equity (Continued) 10. 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. 11. 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, 2011. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 27 NOTE 2 - RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The governmental fund balance sheet includes a reconciliation between fund balance - total governmental funds and net assets - governmental activities as reported in the government- wide statement of net assets. One element of that reconciliation explains that some liabilities, including long-term debt are not due and payable in the current period and, therefore, are not reported in the funds. The details of this difference are as follows: Bonds and notes payable 49,038,304 $ Compensated absences 3,153,059 Capital leases payable 1,010,000 Accrued interest 522,549 Accrued interest due to component unit 24,167 Unamortized debt discount and premium 79,530 Unamortized loss on refunding (535,878) Unamortized debt issuance costs (107,246) Combined adjustment for long-term liabilities 53,184,485 $ NOTE 3 - 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 council action. Appropriations lapse at year end unless specifically carried over. Budgets are adopted at the departmental level of expenditure. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 28 NOTE 3 - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued) Excess Expenditures over Appropriations The following individual funds experienced excess expenditures over appropriations: Excess Budgeted Actual Expenditures Expenditures Expenditures Over Budget Safety impact fee fund - $ 181,464 $ 181,464 $ Youth commission donations fund - 459 459 Subdividers' deposits fund 50,000 99,654 49,654 Public land special revenue and activities fund 10,000 15,951 5,951 Senior center special revenue and activities fund 15,000 23,883 8,883 TIF District No. 3 8,227,138 9,010,572 783,434 2008 Capital construction fund - 4,089 4,089 2010 Capital construction fund - 430,378 430,378 TIF District No. 5 - 1,903,503 1,903,503 The City controls expenditures at the departmental level. Some individual departments experienced expenditures which exceeded appropriations. 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. Deficit Balances Generally accepted accounting principles require disclosure of individual funds that have deficit balances at year-end. As of December 31, 2011, the TIF District No. 5 fund had a deficit balance of $2,246,580. The TIF district deficit is anticipated to be funded with future incremental taxes levied over the life of the district. Beginning October 1, 2004, the life of new districts varies by type of district (20-27 years) and may be extended in some cases. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 29 NOTE 3 - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued) 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 2011 levy collected in 2012 and thereafter. Changes in debt service from one year to the next are generally exempt from this limit, with certain exceptions. NOTE 4 - 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 475 $ Demand deposits Noninterest bearing 21,986,634 19,722,534 $ Custodial credit Certificates of deposit 5,032,290 5,032,290 Custodial credit Money market 4,787,977 4,787,977 Custodial credit Total deposits 31,806,901 29,542,801 Investments Goldman Sachs Treasury Instruments Fund 1,589,708 1,589,708 Credit, interest rate Madison Community Foundation 191,654 191,654 Credit, interest rate Local Government Investment Pool (LGIP) 5,667,309 5,667,309 Credit, interest rate Total investments 7,448,671 7,448,671 Total cash and investments 39,256,047 $ 36,991,472 $ Reconciliation to the statement of net assets: Unrestricted cash and investments 16,409,953 $ Restricted cash and investments 55,165 Fiduciary funds - Agency Fund 20,956,522 37,421,640 Cash and investments held for component unit Unrestricted 244,699 Restricted 1,589,708 Total cash and investments 39,256,047 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 30 NOTE 4 - DETAILED NOTES ON ALL FUNDS (Continued) A. Cash and Investments (Continued) Deposits in each local and area bank are insured by the FDIC in the amount of $250,000 for interest bearing accounts and unlimited coverage for noninterest-bearing accounts. 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. The Madison Community Foundation (“Foundation”) is a community endowment fund. The Foundation is not registered with the Securities and Exchange Commission. It constitutes a contractual agreement between the City and Foundation with respect to investment of City assets. The Foundation reports the fair value of its underlying assets annually. At December 31, 2011, the fair value of the Foundation’s assets was substantially equal to the City’s share as reported above. 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, 2011, $8,538,871 of the City’s total bank balances 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 Madison Community Foundation Interest Rate Risk The City also had $5,667,309 invested in the local government investment pool, which had a weighted average maturity of 97 days. In addition, the City had $191,654 in the Madison Community Foundation, which is made up primarily of equity securities that do not have a determinable maturity date. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 31 NOTE 4 - DETAILED NOTES ON ALL FUNDS (Continued) B. Receivables All receivables on the balance sheet are expected to be collected within one year except for the following: TIF District Nonmajor No. 3 Sewer Funds Total Amounts not expected to be collected within one year 2,848,156 $ 2,124,122 $ 42,812 $ 5,015,090 $ Revenues of the City are reported net of uncollectible amounts. Total uncollectible amounts are as follows: Delinquent personal property taxes 38,039 $ Other receivables 12,252 EMS receivables 1,008,556 1,058,847 $ C. Deferred Revenue Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Property taxes levied for the subsequent year are not earned and cannot be used to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows: Unavailable Unearned Totals Property taxes receivable - $ 19,375,668 $ 19,375,668 $ Special assessments not yet due 1,586,769 - 1,586,769 Loan receivable 1,271,250 - 1,271,250 EMS receivable 434,361 - 434,361 3,292,380 $ 19,375,668 $ 22,668,048 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 32 NOTE 4 - DETAILED NOTES ON ALL FUNDS (Continued) C. Deferred Revenue (Continued) For economic development loans, the City is limited by the Wisconsin Department of Commerce 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, 2011, 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, 2011 was $55,165. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 33 NOTE 4 - DETAILED NOTES ON ALL FUNDS (Continued) E. Capital Assets Capital asset activity for the year ended December 31, 2011 was as follows: Beginning Ending Balance Additions Deletions Balance Governmental activities Capital assets not being depreciated Land 7,439,100 $ - $ 103,503 $ 7,335,597 $ Right of way 18,751,280 - - 18,751,280 Construction in progress 222,123 332,682 222,123 332,682 Total capital assets not being depreciated 26,412,503 332,682 325,626 26,419,559 Capital assets being depreciated Land improvements 6,805,668 218,268 - 7,023,936 Buildings 18,093,525 95,576 - 18,189,101 Machinery and equipment 4,368,878 699,468 117,370 4,950,976 Streets-infrastructure 19,513,740 557,104 - 20,070,844 Storm sewers-infrastructure 8,750,194 98,486 - 8,848,680 Traffic signals-infrastructure 1,311,022 - - 1,311,022 Sidewalks-infrastructure 3,079,676 - - 3,079,676 Bridges-infrastructure 3,278,231 - - 3,278,231 Rail spur-infrastructure 482,163 - - 482,163 Total capital assets being depreciated 65,683,097 1,668,902 117,370 67,234,629 Less: accumulated depreciation for Land improvements 1,864,060 314,468 - 2,178,528 Buildings 3,037,192 448,509 - 3,485,701 Machinery and equipment 2,548,598 383,245 117,370 2,814,473 Streets-infrastructure 2,951,484 299,565 - 3,251,049 Storm sewers-infrastructure 1,862,487 176,974 - 2,039,461 Traffic signals-infrastructure 505,558 52,441 - 557,999 Sidewalks-infrastructure 1,211,209 61,594 - 1,272,803 Bridges-infrastructure 311,425 43,710 - 355,135 Rail spur-infrastructure 86,887 16,072 - 102,959 Total accumulated depreciation 14,378,900 1,796,578 117,370 16,058,108 Capital assets being depreciated, net of depreciation 51,304,197 (127,676) - 51,176,521 Total capital assets, net of depreciation 77,716,700 $ 205,006 $ 325,626 $ 77,596,080 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 34 NOTE 4 - 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 2,767,225 7,221 - 2,774,446 Treatment 343,242 - - 343,242 Transmission and distribution 19,206,704 596,833 16,490 19,787,047 Administrative and general assets 614,508 8,779 - 623,287 Total capital assets being depreciated 23,713,188 612,833 16,490 24,309,531 Less: accumulated depreciation for Source of supply 289,471 25,790 - 315,261 Pumping 1,116,164 97,410 - 1,213,574 Treatment 336,804 1,922 - 338,726 Transmission and distribution 4,508,167 353,425 16,490 4,845,102 Administrative and general assets 528,605 21,119 - 549,724 Total accumulated depreciation 6,779,211 499,666 16,490 7,262,387 Capital assets being depreciated, net of depreciation 16,933,977 113,167 - 17,047,144 Total capital assets, net of depreciation 17,156,254 $ 113,167 $ - $ 17,269,421 $ Sewer Utility Capital assets not being depreciated Land and land rights 66,830 $ - $ - $ 66,830 $ Capital assets being depreciated Collection system 12,680,947 58,811 - 12,739,758 Collection system pumping 1,317,850 - - 1,317,850 Administrative and general assets 410,488 284,064 162,000 532,552 Total capital assets being depreciated 14,409,285 342,875 162,000 14,590,160 Less: accumulated depreciation 3,728,725 273,525 162,000 3,840,250 Capital assets being depreciated, net of depreciation 10,680,560 69,350 - 10,749,910 Total capital assets, net of depreciation 10,747,390 $ 69,350 $ - $ 10,816,740 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 35 NOTE 4 - 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 - - 7,291,981 Buildings 1,325,553 - - 1,325,553 Equipment 684,770 29,342 156,685 557,427 Total capital assets being depreciated 9,302,304 29,342 156,685 9,174,961 Less: accumulated depreciation for Land improvements 228,816 42,445 - 271,261 Buildings 172,122 19,125 - 191,247 Equipment 457,480 48,095 152,266 353,309 Total accumulated depreciation 858,418 109,665 152,266 815,817 Capital assets being depreciated, net of depreciation 8,443,886 (80,323) 4,419 8,359,144 Total capital assets, net of depreciation 10,659,886 $ (80,323) $ 4,419 $ 10,575,144 $ Total net capital assets- business-type activities 38,563,530 $ 102,194 $ 4,419 $ 38,661,305 $ Depreciation expense was charged to functions as follows: Governmental activities General government 37,923 $ Public safety 480,812 Public works, which includes the depreciation of streets, storm sewers, traffic signals, sidewalks, bridges, and rail spur 803,979 Conservation and development 10,913 Leisure activities 462,951 Total governmental activities depreciation expense 1,796,578 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 36 NOTE 4 - DETAILED NOTES ON ALL FUNDS (Continued) E. Capital Assets (Continued) Depreciation expense was charged to functions as follows: Business-type activities Water utility Depreciation 499,666 $ Depreciation charged to Water utility operation and maintenance expenses (43,274) 456,392 Sewer utility 273,525 Pleasant View Golf Course 109,665 Total business-type activities depreciation expense 839,582 $ 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 56,846 $ Sewer Utility General fund 67,174 Total fund financial statements 124,020 $ For the statement of net assets, 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. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 37 NOTE 4 - DETAILED NOTES ON ALL FUNDS (Continued) F. Interfund Receivables/Payables and Transfers (Continued) The General Fund advanced funds to TIF District No. 5. This advance was repaid during 2012. Interest on the interfund advance is recorded as a deferred revenue in the General Fund until paid by the TIF District. Interest costs on the advance are recorded as an expenditure of the TIF District when the expenditures is incurred. The General Fund has also advanced funds to the Pleasant View Golf Course. No repayment schedules have been established on the advances to the Pleasant View Golf Course. TIF District No. 3 advanced funds to TIF District No. 5. No repayment schedule has been established. TIF District No. 3 has also advanced funds to the Pleasant View Golf Course. No repayment schedules have been established on the advances to the Pleasant View Golf Course. The principal purpose of these advances is to finance costs incurred in these funds rather than borrowing externally. For the statement of net assets, 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. Amount Not Due Within Receivable Fund Payable Fund Amount One Year General fund Pleasant View Golf Course 2,364,780 $ 2,364,780 $ TIF District No. 3 TIF District No. 5 1,812,911 - TIF District No. 3 Pleasant View Golf Course 433,150 433,150 General fund TIF District No. 5 431,897 - Total fund financial statements 5,042,738 2,797,930 $ Eliminations (2,244,808) Total government-wide financial statements 2,797,930 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 38 NOTE 4 - DETAILED NOTES ON ALL FUNDS (Continued) F. Interfund Receivables/Payables and Transfers (Continued) The amount due from the component unit to the primary government represents the unspent debt proceeds by the CDA that is intended to be spent on capital projects within TIF District No. 3 or used for debt repayments. The following is a schedule of interfund transfers: Nonmajor Debt Capital Special Transfer Out Fund General Service Projects Revenue Total General - $ 2,775,790 $ 4,090 $ 1,043,814 $ 3,823,694 $ TIF District No. 3 - 5,342,569 - - 5,342,569 Capital Projects - 856,628 - - 856,628 Water Utility - - - - - Nonmajor Special Revenue Funds 9,677 167,223 - - 176,900 Water Utility 381,498 - - - 381,498 Totals 391,175 $ 9,142,210 $ 4,090 $ 1,043,814 $ 10,581,289 $ 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. In connection with the implementation of GASB Statement No. 54, the City closed certain funds. As a result, $9,677 was transferred into the General Fund from nonmajor special revenue funds and $4,090 was transferred out of the General Fund to the Capital Projects Fund. The General Fund levied taxes for operation of the Library, a nonmajor fund, of $1,043,814. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 39 NOTE 4 - DETAILED NOTES ON ALL FUNDS (Continued) G. Long-Term Obligations Long-term obligations activity for the year ended December 31, 2011 was as follows: Amounts Beginning Ending Due Within Balance Increases Decreases Balance One Year Governmental activities Bonds and notes payable General obligation debt 53,551,919 $ 2,500,000 $ 7,013,615 $ 49,038,304 $ 7,912,143 $ Loss on refunding (1,071,757) - (535,879) (535,878) (535,878) Debt premium and discount 42,991 49,084 12,545 79,530 14,590 52,523,153 2,549,084 6,490,281 48,581,956 7,390,855 Other liabilities: Vested compensated absences 2,461,828 1,622,556 931,325 3,153,059 526,196 Capital leases 1,975,000 - 965,000 1,010,000 1,010,000 Total other liabilities 4,436,828 1,622,556 1,896,325 4,163,059 1,536,196 Total governmental activities long-term liabilities 56,959,981 $ 4,171,640 $ 8,386,606 $ 52,745,015 $ 8,927,051 $ Business-type activities Bonds and notes payable General obligation debt 7,810,000 $ - $ 925,000 $ 6,885,000 $ 1,000,000 $ Other liabilities: Vested compensated absences 164,203 187,052 124,144 227,111 48,926 Total business-type activities long-term liabilities 7,974,203 $ 187,052 $ 1,049,144 $ 7,112,111 $ 1,048,926 $ 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, 2011, was $132,632,900. Total general obligation debt outstanding at year was $55,923,304. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 40 NOTE 4 - 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 12/31/11 Governmental Activities General Obligation Debt 2002 General obligation promissory notes 03/15/02 03/01/12 2.125%-4.5% 6,250,000 $ 2,200,000 $ 2002 State trust fund loan 11/06/02 03/15/19 5.00% 2,170,000 1,316,014 2003 General obligation promissory notes 05/01/03 09/01/13 2.00%-3.40% 9,980,000 4,400,000 2003 State trust fund loan 01/30/03 03/15/19 5.00% 930,000 557,858 2004 General obligation refunding bond 06/15/04 03/01/12 2.00%-4.00% 4,540,000 220,000 2004 General obligation promissory notes 06/15/04 03/01/14 2.50%-4.25% 1,910,000 620,000 2006 General obligation promissory notes 06/01/06 12/01/13 4.00%-4.25% 2,000,000 800,000 2006 General obligation promissory notes 12/27/06 12/01/14 3.75%-4.00% 2,330,000 1,330,000 2008 General obligation refunding bonds 06/02/08 12/01/27 3.00%-4.00% 6,530,000 6,430,000 2008 General obligation promissory notes 06/09/08 12/01/17 3.50%-4.00% 2,000,000 1,900,000 2008 General obligation promissory notes 12/30/08 12/01/17 3.00%-4.25% 2,750,000 2,550,000 2009 State trust fund loan 08/11/09 03/15/13 3.50% 500,000 255,015 2009 State trust fund loan 10/26/09 03/15/13 3.50% 1,400,000 961,574 2010 General obligation refunding bonds 04/15/10 09/01/29 1.45%-8.5% 10,110,000 10,110,000 2010 General obligation promissory notes 04/15/10 09/01/17 1.20%-3.80% 2,010,000 1,860,000 2010 Taxable general obligation refunding bonds 11/23/10 09/01/20 .85%-3.75% 6,580,000 6,395,000 2010 General obligation refunding bonds 11/23/10 09/01/20 2.00%-4.00% 4,625,000 4,565,000 2010 State trust fund loan 03/09/10 03/15/13 3.50% 100,000 67,843 2011 General obligation promissory notes 05/09/11 09/01/19 2.00%-3.00% 2,500,000 2,500,000 Total governmental activities- general obligation debt 49,038,304 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 41 NOTE 4 - 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 12/31/11 Business-type Activities General Obligation Debt 2002 General obligation promissory notes 03/15/02 03/01/12 2.125%-4.50% 6,005,000 $ 3,595,000 $ 2004 General obligation refunding 06/15/04 03/01/12 2.00%-4.00% 2,040,000 390,000 2006 General obligation promissory notes 12/27/06 12/01/14 3.75%-4.00% 1,200,000 1,200,000 2008 General obligation refunding bonds 12/30/08 09/01/21 3.505%-4.45% 1,700,000 1,700,000 Total business-type activities - general obligation debt 6,885,000 $ Debt service requirements to maturity are as follows: Principal Interest Principal Interest Totals 2012 7,912,143 $ 1,573,501 $ 1,000,000 $ 284,564 $ 10,770,208 $ 2013 7,114,415 1,316,415 660,000 245,078 9,335,908 2014 4,196,397 1,138,212 1,915,000 213,783 7,463,392 2015 4,137,217 1,017,785 775,000 131,125 6,061,127 2016 4,118,436 898,442 835,000 93,081 5,944,959 2017-21 13,734,696 2,652,480 1,700,000 188,975 18,276,151 2022-26 5,230,000 1,089,599 - - 6,319,599 2027-29 2,595,000 180,826 - - 2,775,826 Totals $ 49,038,304 $ 9,867,260 $ 6,885,000 $ 1,156,606 $ 66,947,170 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. Also, the capital lease principal and interest requirements are not included. They are equal to the CDA’s lease revenue bonds required payments. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 42 NOTE 4 - DETAILED NOTES ON ALL FUNDS (Continued) G. Long-Term Obligations (Continued) Advance Refunding During the year ended December 31, 2010, the City issued $6,580,000 in taxable general obligation refunding bonds with an average interest rate of 2.96% to advance fund $5,790,000 of outstanding CDA bonds with an average interest of 6.325%. The net proceeds of $6,494,510 (after repayment of $84,122 in underwriting and other issuance costs) were used to purchase U.S. Government Securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for debt service payments occurring in 2013 and beyond of the 2002 Redevelopment Lease Revenue Bonds of the CDA. As a result, a portion of those bonds are considered to be defeased and the liability for that portion has been removed from the CDA financial statements. The amount of refunded debt still outstanding at December 31, 2011 is $5,790,000. During the year ended December 31, 2010, the City issued $4,625,000 in general obligation refunding bonds with an average interest rate of 2.54% to advance refund $4,450,000 of outstanding CDA bonds with an average interest rate of 4.375%. The net proceeds of $4,817,247 (after payment of $62,883 in underwriting and other issuance costs and a reoffering premium of $255,130) were used to purchase SLGS. Those securities were deposited in an irrevocable trust with an escrow agent to provide for debt service payments occurring in 2013 and beyond of the 2002 Redevelopment Lease Revenue Bonds of the CDA. As a result, a portion of those bonds are considered to be defeased and the liability for that portion has been removed from the CDA financial statements. The amount of refunded debt still outstanding at December 31, 2011 is $4,450,000. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 43 NOTE 4 - DETAILED NOTES ON ALL FUNDS (Continued) H. Lease Disclosures The Tax Increment District No. 3 (TIF District No. 3) is leasing land and other capital assets from the Community Development Authority (CDA). The CDA borrowed $16,475,000 in revenue bonds for these costs in 2002. The annual lease payments to be paid are the same as the CDA’s annual debt service payments on the bonds. See Note 4.J. for the repayment schedule. Tax increment revenues generated by TIF District No. 3 are expected to be used to pay the capital lease payments to the CDA. I. Governmental Activities Net Assets/Fund Balances Governmental Activities Governmental activities net assets reported on the government wide statement of net assets at December 31, 2011 including the following: Invested in capital assets, net of related debt Capital assets, net of accumulated depreciation $ 77,596,080 Less: related long-term debt (excluding unspent capital related debt proceeds) (45,811,646) Total invested in capital assets, net of related debt 31,784,434 Restricted Debt service 1,589,617 Community development 2,945,550 Library 221,915 Impact fees 269,466 5,026,548 Unrestricted 5,447,129 Total governmental activities net assets 42,258,111 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 44 NOTE 4 - DETAILED NOTES ON ALL FUNDS (Continued) I. Governmental Activities Net Assets/Fund Balances (Continued) Governmental Fund Balances Governmental fund balances reported on the fund financial statements at December 31, 2011 include the following: TIF Debt District Capital General Service No. 3 Projects Nonmajor Total Nonspendable Prepaid items 85,335 $ - $ - $ - $ - $ 85,335 $ Advances to other funds 2,796,677 - 433,150 - - 3,229,827 Noncurrent receivables 45,123 - - - 42,812 87,935 2,927,135 - 433,150 - 42,812 3,403,097 Restricted Debt service - 235,925 1,589,617 - - 1,825,542 Community development - - 2,257,207 - 255,193 2,512,400 Library - - - - 221,915 221,915 Capital improvements - - - 1,227,226 - 1,227,226 Impact fees - - - - 269,466 269,466 - 235,925 3,846,824 1,227,226 746,574 6,056,549 Assigned Subdividers' deposits - - - - 1,420,992 1,420,992 Library - - - - 111,577 111,577 Airport - - - - 435,235 435,235 Tourism - - - - 773,821 773,821 Public safety 96,000 - - - 16,926 112,926 Senior center - - - - 120,733 120,733 Post employment benefits 1,412,797 - - - - 1,412,797 Other - - - - 6,533 6,533 1,508,797 - - - 2,885,817 4,394,614 Unassigned 3,418,827 - - (2,246,580) - 1,172,247 Total fund balances 7,854,759 $ 235,925 $ 4,279,974 $ (1,019,354) $ 3,675,203 $ 15,026,507 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 45 NOTE 4 - DETAILED NOTES ON ALL FUNDS (Continued) I. Governmental Activities Net Assets/Fund Balances (Continued) Business-Type Activities Business-type activities net assets reported on the government-wide and proprietary funds statement of net assets at December 31, 2011 include the following: Pleasant View Golf Water Sewer Course Totals Capital assets 24,531,808 $ 14,656,990 $ 11,390,961 $ 50,579,759 $ Accumulated depreciation (7,262,387) (3,840,250) (815,817) (11,918,454) Subtotals 17,269,421 10,816,740 10,575,144 38,661,305 Less capital related long-term debt 255,000 135,000 6,495,000 6,885,000 Net assets invested in capital assets, net of related debt 17,014,421 10,681,740 4,080,144 31,776,305 Restricted for equipment replacement - 55,165 - 55,165 Unrestricted 3,832,125 4,491,113 (2,949,160) 5,374,078 Total business-type activities net assets 20,846,546 $ 15,228,018 $ 1,130,984 $ 37,205,548 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 46 NOTE 4 - DETAILED NOTES ON ALL FUNDS (Continued) J. 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 assets 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. Restricted Cash and Investments The bond ordinances relating to the CDA bonds requires the establishment of certain amounts. These are as follows: Debt reserve fund $ 1,589,708 The investments of the CDA in U.S. treasuries have associated risks of custodial credit risk and interest rate risk. For an investment, custodial credit risk that, in the event of the failure of the counterparty, the CDA will not be able to recover the value of its investments or collateral securities that are in possession of an outside party. As of December 31, 2011, the CDA’s investments were exposed to custodial credit risk as neither insured nor registered and held by counterparty. Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. As of December 31, 2011, the CDA’s investments were as follows: Maturity (In Months) Moody's Investment Type Fair Value Less than 6 Rating Goldman Sach Treasury Instruments Fund 1,589,708 $ 1,589,708 $ Aaa ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 47 NOTE 4 - DETAILED NOTES ON ALL FUNDS (Continued) J. Component Unit (Continued) 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 (603,547) (64,870) - (668,417) - Totals 2,425,145 $ (64,870) $ - $ 2,360,275 $ CDA Lease Revenue Bonds There are a number of limitations and restrictions contained in the various bond indentures and agreements. The City believes it is in compliance with all significant requirements. The balance of the debt is due on October 1, 2012, together with interest of $50,115. A summary of the debt is as follows: Amounts Due Beginning Ending in Less Than Balance Increases Decreases Balance One Year 2002 redevelopment lease revenue bonds dated August 15, 2002 with interest at 2.60%- 3.90%. Principal payments vary. Bonds mature October 1, 2012. 905,000 $ - $ 445,000 $ 460,000 $ 460,000 $ 2002 redevelopment lease revenue bonds dated August 15, 2002 with interest at 4.3%- 5.875%. Principal payments vary. Bonds mature October 1, 2012. 1,070,000 - 520,000 550,000 550,000 1,975,000 - 965,000 1,010,000 1,010,000 Less: Unamortized debt discounts (20,846) - (10,423) (10,423) (10,423) Totals 1,954,154 $ - $ 954,577 $ 999,577 $ 999,577 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 48 NOTE 5 - OTHER INFORMATION A. Employees’ Retirement System All 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 permanent employees expected to work over 1,200 hours (600 hours if hired prior to July 1, 2011) a year are eligible to participate in the System. Covered employees in the General category are required by statute to contribute 5.8% of their salary (3.2% for Executives and Elected Officials, 5.5% for Protective Occupations with Social Security, and 3.9% for Protective Occupations without Social Security) to the plan. Employers generally make these contributions to the plan on behalf of employees. Employees on military leave qualify to receive contributions. Employers are required to contribute an actuarially determined amount necessary to fund the remaining projected cost of future benefits. The payroll for City employees covered by the System for the year ended December 31, 2011 was $7,992,608; the employer’s total payroll was $8,794,247. The total required contribution for the year ended December 31, 2011 was $974,735 or 12.2% of covered payroll. Of this amount, $875,628 was contributed by the employer for the current year and $99,107 was contributed by the employees for the current year. Total contributions for the years ending December 31, 2010 and 2009 were $986,206 and $945,740, respectively, equal to the required contributions for each year. Employees who retire at or after age 65 (62 for elected officials and 55 for protective occupation employees) 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: 1) final average earnings, 2) years of creditable service, and 3) a formula factor. Final average earnings is the average of the employee’s three highest years’ 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. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 49 NOTE 5 - OTHER INFORMATION (Continued) C. 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. The City jointly operates the Metropolitan Refuse District, Inc. (District). The District’s fund balance at September 30, 2011 is a deficit of $828,721. 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 57%, which amounts to $472,371 of the District’s net deficit. The City’s share of the net deficit has been reported in the government-wide statement of net assets.. Tax Increment District Expenditures The City has allocated certain expenditures for administration, public safety, public lands administration, and transit services that may not be fully eligible for financing through the Tax Increment District. If these expenditures are ultimately determined to be ineligible, the City General Fund may be required to reimburse the Tax Increment District. For 2011, these costs amount to approximately $1,401,530. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 50 NOTE 5 - OTHER INFORMATION (Continued) D. Joint Ventures Metropolitan Refuse District, Inc. The City of Middleton and the Villages of Shorewood Hills and Waunakee jointly operate the local sanitary landfill, which is called the Metropolitan Refuse District, Inc. The landfill stopped accepting waste in 1997. The communities share in the operation of the District based on estimated population as follows: City of Middleton 57% Village of Shorewood Hills 6 Village of Waunakee 37 The governing body is made up of citizens from each community. Local representatives are appointed by each community. The governing body has authority to adopt its own budget and control of financial affairs of the District. The City made payments totaling $61,941 to the District in 2011. The City has an equity interest (deficit) of $(472,371) at year end. The City will continue to support the District’s postclosure care costs in the future. The District’s 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 three 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. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 51 NOTE 5 - OTHER INFORMATION (Continued) D. Joint Ventures (Continued) 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 $701,644 to the District in 2011 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. E. Restatement The City’s financial statements have been restated for the adoption of Governmental Accounting Standards Board Statement No. 54, Funding Balance Reporting and Governmental Fund Type Definition. The details of the restatement are as follows: Nonmajor Capital Special General Projects Revenue Fund Fund Funds Fund balance, December 31, 2010, as previously reported 3,274,675 $ 1,831,128 $ 4,063,622 $ Reclassification of fund balance TIF District No. 5 - (445,208) 445,208 Retirement benefits 1,472,285 - (1,472,285) Fund balance, December 31, 2010, as restated 4,746,960 $ 1,385,920 $ 3,036,545 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2011 52 NOTE 5 - OTHER INFORMATION (Continued) E. Restatement (continued) In addition, the governmental activities net assets have been restated to account for the loss on refunding and other related debt premium and issue costs incurred in 2010, as follows: Net assets, December 31, 2010, as previously reported 35,164,609 $ Adjustment for loss on refunding and premium and issue costs incurred in 2010 963,632 Net assets, December 31, 2010, as restated 36,128,241 $ F. Subsequent Events On February 27, 2012, the City issued $3,100,000 General Obligation Refunding Bonds with interest at 2% to currently refund Series 2002A General Obligation Refunding bonds. The bonds are due in 2016. On June 5, 2012, the City issued $2,015,000 General Obligation Promissory Notes with interest between 2% and 2.25% to finance capital projects. The notes are due in 2020. On June 5, 2012, the City issued $2,540,000 Taxable General Obligation Promissory Notes with interest between 0.46% and 1.85% for the purpose of refunding State Trust Fund loans and funding for TIF District No. 3 projects. On June 5, 2012, the City issued $5,000,000 Taxable Note Anticipation notes with interest at 0.95%. The notes are due June 1, 2013. The proceeds of these notes were used by TIF District No. 5 to repay advances from other funds and to finance capital expenditures. Management evaluated subsequent events through September 27, 2012, the date the financial statements were available to be issued. Events or transactions occurring after December 31, 2011, but prior to September 27, 2012 that provide additional evidence about conditions that existed at December 31, 2011, have been recognized in the financial statements for the year ended December 31, 2011. Events or transactions that provided evidence about conditions that did not exist at December 31, 2011 but arose before the financial statements were available to be issued have not been recognized in the financial statements for the year ended December 31, 2011. This information is an integral part of the accompanying financial statements. ---PAGE BREAK--- REQUIRED SUPPLEMENTARY INFORMATION ---PAGE BREAK--- ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended December 31, 2011 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 council action. Appropriations lapse at year end unless specifically carried over. Budgets are adopted at the departmental level of expenditure. NOTE 2 – EXCESS EXPENDITURES OVER APPROPRIATIONS The following individual funds experienced excess expenditures over appropriations: Excess Budgeted Actual Expenditures Expenditures Expenditures Over Budget Safety impact fee fund - $ 181,464 $ 181,464 $ Youth commission donations fund - 459 459 Subdividers' deposits fund 50,000 99,654 49,654 Public land special revenue and activities fund 10,000 15,951 5,951 Senior center special revenue and activities fund 15,000 23,883 8,883 TIF District No. 3 8,227,138 9,010,572 783,434 2008 Capital construction fund - 4,089 4,089 2010 Capital construction fund - 430,378 430,378 TIF District No. 5 - 1,903,503 1,903,503 The City controls expenditures at the departmental level. Some individual departments experienced expenditures which exceeded appropriations. 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--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK---