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CITY OF MIDDLETON, WISCONSIN Middleton, Wisconsin FINANCIAL STATEMENTS December 31, 2012 ---PAGE BREAK--- TABLE OF CONTENTS PAGE Independent Auditors’ Report 1 Basic Financial Statements Statement of Net 4 Statement of Activities 5 Balance Sheet - Governmental 6 Reconciliation of the Balance 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 10 Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary 11 Statement of Cash Flows - Proprietary Funds 12 Statement of Fiduciary Net Position - Fiduciary Funds 14 Notes to Financial Statements 15 Required Supplementary Information Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund 50 Notes to Required Supplementary Information 51 Supplementary Information Detailed Schedule of Revenues - Budget and Actual - General 52 Detailed Schedule of Expenditures - Budget and Actual - General 54 Combining Balance Sheet - Nonmajor Governmental 56 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental 57 Combining Balance Sheet - Capital Projects Funds 58 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Capital Projects Funds 59 ---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, 2012, and the related notes to the financial statements, which collectively comprise the entity’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 entity’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 entity’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 www.cliftonlarsonallen.com An independent member of Nexia International ---PAGE BREAK--- 2 Opinion 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, 2012, 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 50 through 51 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 this 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 is not a required part of the basic financial statements. 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. ---PAGE BREAK--- 3 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 August 14, 2013 ---PAGE BREAK--- BASIC FINANCIAL STATEMENTS ---PAGE BREAK--- Business- Governmental type Component Activities Activities Total Unit ASSETS Cash and investments 23,804,174 $ 6,076,796 $ 29,880,970 $ 223,419 $ Receivables (net of allowance for uncollectible accounts) Taxes 22,193,114 - 22,193,114 - Delinquent taxes 17,975 - 17,975 - Accounts 804,319 912,756 1,717,075 - Interest 16,099 10,133 26,232 - Loans 1,161,250 - 1,161,250 562,697 Special assessments 1,713,470 2,101,584 3,815,054 - Other 33,878 - 33,878 - Due from other governments 58,000 - 58,000 - Internal balances 3,002,575 (3,002,575) - - Prepaid items 193,201 - 193,201 - Restricted assets - cash and investments - 55,165 55,165 - Property held for future use - 301,087 301,087 - Capital assets not being depreciated 28,024,895 2,511,163 30,536,058 154,000 Capital assets being depreciated 50,286,070 35,554,503 85,840,573 2,143,782 Total assets 131,309,020 44,520,612 175,829,632 3,083,898 LIABILITIES Accounts payable 1,374,697 336,633 1,711,330 13,632 Deposits 429,761 - 429,761 - Accrued liabilities 661,149 49,084 710,233 - Due to other governments 153 - 153 - Investment in joint venture 545,219 - 545,219 - Noncurrent liabilities: Due within one year 11,988,836 671,605 12,660,441 - Due in more than one year 49,719,284 5,750,308 55,469,592 - Total liabilities 64,719,099 6,807,630 71,526,729 13,632 DEFERRED INFLOWS OF RESOURCES Subsequent year tax levy 22,193,114 - 22,193,114 - NET POSITION Net investment in capital assets 25,305,516 31,978,016 57,283,532 2,297,782 Restricted Debt service 4,660,087 - 4,660,087 - Community development 3,643,124 - 3,643,124 - Library 235,150 - 235,150 - Impact fees 154,566 - 154,566 - Equipment replacement - 55,165 55,165 - Unrestricted 10,398,364 5,679,801 16,078,165 772,484 TOTAL NET POSITION 44,396,807 $ 37,712,982 $ 82,109,789 $ 3,070,266 $ Primary Government CITY OF MIDDLETON, WISCONSIN STATEMENT OF NET POSITION December 31, 2012 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 4,523,508 $ 1,640,879 $ 466,711 $ - $ (2,415,918) $ - $ (2,415,918) $ Health and human services 434,778 21,783 50,953 - (362,042) - (362,042) Public safety 8,370,063 1,508,641 176,075 - (6,685,347) - (6,685,347) Public works 4,412,170 120,161 1,228,025 776,756 (2,287,228) - (2,287,228) Leisure activities 4,806,093 439,759 798,206 131,788 (3,436,340) - (3,436,340) Conservation and economic development 2,890,340 208,504 226,506 - (2,455,330) - (2,455,330) Interest and fiscal charges 2,347,693 - - - (2,347,693) - (2,347,693) Total governmental activities 27,784,645 3,939,727 2,946,476 908,544 (19,989,898) - (19,989,898) Business-type activities: Water 1,656,283 2,290,946 - 118,692 - 753,355 753,355 Sewer 1,898,574 1,885,048 - 60,515 - 46,989 46,989 Pleasant View Golf Course 1,844,019 1,881,715 - - - 37,696 37,696 Total business-type activities 5,398,876 6,057,709 - 179,207 - 838,040 838,040 Total primary government 33,183,521 $ 9,997,436 $ 2,946,476 $ 1,087,751 $ (19,989,898) 838,040 (19,151,858) Component Unit Community Development Authority 178,653 $ 31,245 $ - $ - $ (147,408) $ General revenues: Taxes: Property taxes, levied for general purposes 13,482,661 - 13,482,661 - Property taxes, levied for tax increment district 5,525,247 - 5,525,247 - Other taxes 1,543,914 - 1,543,914 - Cable television franchise fees 197,355 - 197,355 - Intergovernmental revenues not restricted to specific programs 592,244 - 592,244 - Investment income 170,893 51,352 222,245 40,421 Gain on sale of City property 232,617 - 232,617 Miscellaneous 108,952 - 108,952 - Total general revenues 21,853,883 51,352 21,905,235 40,421 Transfers 381,958 (381,958) - - Change in net position 2,245,943 507,434 2,753,377 (106,987) NET POSITION - BEGINNING OF YEAR (restated) 42,150,864 37,205,548 79,356,412 3,177,253 NET POSITION - END OF YEAR 44,396,807 $ 37,712,982 $ 82,109,789 $ 3,070,266 $ 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, 2012 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 6,615,867 $ 5,321,962 $ 2,691,113 $ 5,190,211 $ 3,985,021 $ 23,804,174 $ Receivables (net) Taxes Tax levy 13,581,431 - 8,611,683 - - 22,193,114 Special assessments on tax roll 9,091 - 294,851 - - 303,942 Other 33,878 - - - - 33,878 Delinquent taxes 17,975 - - - - 17,975 Accounts 551,766 - - - 252,553 804,319 Interest 16,099 - - - - 16,099 Loans - - 1,161,250 - - 1,161,250 Special assessments 21,629 - 1,387,899 - - 1,409,528 Due from other governments 58,000 - - - - 58,000 Advances to other funds 2,594,780 - 433,150 - - 3,027,930 Prepaid items 193,201 - - - - 193,201 TOTAL ASSETS 23,693,717 $ 5,321,962 $ 14,579,946 $ 5,190,211 $ 4,237,574 $ 53,023,410 $ LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES LIABILITIES Accounts payable 1,012,607 $ 726 $ 32,872 $ 65,483 $ 263,009 $ 1,374,697 $ Deposits - - - - 429,761 429,761 Due to other funds 25,355 - - - - 25,355 Due to other governments 153 - - - - 153 Total liabilities 1,038,115 726 32,872 65,483 692,770 1,829,966 DEFERRED INFLOWS OF RESOURCES Subsequent year tax levy 13,581,431 - 8,611,683 - - 22,193,114 Loans receivable - - 1,161,250 - - 1,161,250 Special assessments 21,629 - 1,682,750 - - 1,704,379 Other receivables 156,379 - - - - 156,379 13,759,439 - 11,455,683 - - 25,215,122 FUND BALANCES Nonspendable 2,805,956 - 433,150 - - 3,239,106 Restricted Debt service - 5,321,236 - - - 5,321,236 Community development - - 2,658,241 - 276,133 2,934,374 Library - - - - 235,150 235,150 Capital improvements - - - 5,124,728 275,600 5,400,328 EMS Impact fees - - - - 154,566 154,566 Assigned Subdividers deposits - - - - 938,648 938,648 Library - - - - 71,953 71,953 Airport - - - - 63,522 63,522 Tourism - - - - 1,078,638 1,078,638 Public safety 534,000 - - - 18,692 552,692 Senior center - - - - 107,616 107,616 Post employment benefits 1,331,060 - - - - 1,331,060 Debt service 650,000 - - - - 650,000 Other 56,000 - - - 324,286 380,286 Unassigned 3,519,147 - - - - 3,519,147 Total fund balances 8,896,163 5,321,236 3,091,391 5,124,728 3,544,804 25,978,322 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES 23,693,717 $ 5,321,962 $ 14,579,946 $ 5,190,211 $ 4,237,574 $ 53,023,410 $ CITY OF MIDDLETON, WISCONSIN December 31, 2012 BALANCE SHEET GOVERNMENTAL FUNDS The accompanying notes are an integral part of the financial statements. 6 ---PAGE BREAK--- Fund balances - total governmental funds 25,978,322 $ 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. 78,310,965 Some receivables that are not currently available are reported as unearned revenue or deferred inflows of resources in the fund financial statements, but are recognized as revenue when earned in the government-wide statements. Loans 1,161,250 Special assessments 1,704,379 Other receivables 156,379 Investment (deficit) in joint venture is not a financial resource and, therefore, is not reported in the funds. (545,219) 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 (57,960,000) Debt discount or premium (170,177) Compensated absences (3,577,943) Accrued interest payable (661,149) NET POSITION OF GOVERNMENTAL ACTIVITIES 44,396,807 $ CITY OF MIDDLETON, WISCONSIN RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION December 31, 2012 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 13,942,219 $ - $ 5,525,247 $ - $ 1,080,740 $ 20,548,206 $ Intergovernmental 2,207,630 - 466,711 35,824 777,720 3,487,885 Licenses and permits 765,637 - - - 217,253 982,890 Fines, forfeitures, and penalties 280,513 - - - - 280,513 Public charges for services 1,343,732 - - - 261,183 1,604,915 Intergovernmental charges for services 1,537,130 - - - - 1,537,130 Special assessments 108,274 - 189,008 - - 297,282 Investment income 73,037 152 206,665 710 18,567 299,131 Miscellaneous 130,118 - 110,000 1,997 55,255 297,370 Total revenues 20,388,290 152 6,497,631 38,531 2,410,718 29,335,322 EXPENDITURES Current General government 2,643,610 - 1,680,274 51,113 - 4,374,997 Public safety 7,723,830 - - - 1,398 7,725,228 Public works 3,122,255 - - - - 3,122,255 Health and human services 434,778 - - - - 434,778 Leisure activities 1,341,157 - - - 2,839,480 4,180,637 Conservation and economic development 528,656 - - 1,229,751 534,123 2,292,530 Debt service Principal - 10,243,304 1,010,000 - - 11,253,304 Debt issuance costs - 35,200 3,924 18,475 - 57,599 Interest and fiscal charges - 1,592,065 56,195 - - 1,648,260 Capital outlay - - 543,537 2,659,146 - 3,202,683 Total expenditures 15,794,286 11,870,569 3,293,930 3,958,485 3,375,001 38,292,271 Excess of revenues over (under) expenditures 4,594,004 (11,870,417) 3,203,701 (3,919,954) (964,283) (8,956,949) OTHER FINANCING SOURCES (USES) Long-term debt issued - 6,837,955 2,312,045 10,015,000 - 19,165,000 Discount on debt issued - (128,155) (8,120) (35,900) - (172,175) Premium on debt issued - 189,063 - 82,236 - 271,299 Proceeds from sale of capital assets 232,617 - - - - 232,617 Transfers in 412,024 10,056,865 - 2,700 1,260,022 11,731,611 Transfers out (4,197,241) - (6,696,209) - (426,137) (11,319,587) Net change in fund balances 1,041,404 5,085,311 (1,188,583) 6,144,082 (130,398) 10,951,816 FUND BALANCES - BEGINNING OF YEAR 7,854,759 235,925 4,279,974 (1,019,354) 3,675,202 15,026,506 FUND BALANCES - END OF YEAR 8,896,163 $ 5,321,236 $ 3,091,391 $ 5,124,728 $ 3,544,804 $ 25,978,322 $ For the Year Ended December 31, 2012 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 10,951,816 $ 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. 3,202,683 Capital assets contributed by other governments 351,063 Less: Some items are reported as capital outlay but are not capitalized (1,015,035) Depreciation is reported in the government-wide statements (1,823,826) Receivables not currently available are reported as deferred revenue in the fund financial statements but are recognized as revenue when earned in the government-wide financial statements. (270,372) 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 assets. Debt issued (19,165,000) Debt and leases retired 11,253,304 The proportionate share of the change in net assets related to joint ventures reported in the statement of activities neither provides nor uses current financial resources and is not reported in the fund statements. (72,848) 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 (424,884) Debt premium and discount (90,647) Loss on refunding (535,878) Accrued interest on debt (114,433) Change in net position of governmental activities 2,245,943 $ CITY OF MIDDLETON, WISCONSIN For the Year Ended December 31, 2012 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 3,676,320 $ 2,397,327 $ 3,149 $ 6,076,796 $ Accounts receivable 434,534 478,222 - 912,756 Accrued interest 7,764 2,369 - 10,133 Due from other funds 11,538 13,817 - 25,355 Total current assets 4,130,156 2,891,735 3,149 7,025,040 NONCURRENT ASSETS Restricted cash and investments - 55,165 - 55,165 Special assessments receivable - 2,101,584 - 2,101,584 Property held for future use 301,087 - - 301,087 Capital assets: Property and equipment 24,712,131 14,724,275 11,436,027 50,872,433 Less: Accumulated depreciation (7,751,022) (4,121,506) (934,239) (12,806,767) Total capital assets, net 16,961,109 10,602,769 10,501,788 38,065,666 Total noncurrent assets 17,262,196 12,759,518 10,501,788 40,523,502 Total assets 21,392,352 15,651,253 10,504,937 47,548,542 LIABILITIES CURRENT LIABILITIES Accounts payable 7,478 300,181 28,974 336,633 Accrued interest - - 49,084 49,084 Accrued compensated absences 24,463 24,463 - 48,926 Current portion of long-term debt - - 622,679 622,679 Total current liabilities 31,941 324,644 700,737 1,057,322 NONCURRENT LIABILITIES Accrued compensated absences 130,803 41,981 112,553 285,337 Advances from other funds - - 3,027,930 3,027,930 General obligation debt - - 5,464,971 5,464,971 Total noncurrent liabilities 130,803 41,981 8,605,454 8,778,238 Total liabilities 162,744 366,625 9,306,191 9,835,560 NET POSITION Net investment in capital assets 16,961,109 10,602,769 4,414,138 31,978,016 Restricted for equipment replacement - 55,165 - 55,165 Unrestricted 4,268,499 4,626,694 (3,215,392) 5,679,801 Total net position 21,229,608 $ 15,284,628 $ 1,198,746 $ 37,712,982 $ Business-type Activities Enterprise Funds December 31, 2012 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 2,290,946 $ 1,885,048 $ 1,881,715 $ 6,057,709 $ OPERATING EXPENSES Operation and maintenance 1,181,980 1,614,103 1,544,160 4,340,243 Depreciation 472,008 283,256 118,422 873,686 Total operating expenses 1,653,988 1,897,359 1,662,582 5,213,929 Operating income (loss) 636,958 (12,311) 219,133 843,780 NONOPERATING REVENUES (EXPENSES) Investment income 41,731 9,621 - 51,352 Interest on long-term debt (2,295) (1,215) (181,437) (184,947) Total nonoperating revenues (expenses) 39,436 8,406 (181,437) (133,595) Income (loss) before capital contributions and transfers 676,394 (3,905) 37,696 710,185 CAPITAL CONTRIBUTIONS 118,692 60,515 30,066 209,273 TRANSFERS OUT (412,024) - - (412,024) Change in net position 383,062 56,610 67,762 507,434 NET POSITION - BEGINNING OF YEAR 20,846,546 15,228,018 1,130,984 37,205,548 NET POSITION - END OF YEAR 21,229,608 $ 15,284,628 $ 1,198,746 $ 37,712,982 $ Enterprise Funds For the Year Ended December 31, 2012 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 2,224,446 $ 1,917,374 $ 1,883,155 $ 6,024,975 $ Payments to suppliers for goods and services (837,202) (1,639,506) (982,114) (3,458,822) Payments to employees for services (269,582) (75,880) (490,061) (835,523) Net cash provided by operating activities 1,117,662 201,988 410,980 1,730,630 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers to other funds (412,024) - - (412,024) Advance from TIF No. 3 - - 230,000 230,000 Net cash provided by (used in) noncapital financing activities (412,024) - 230,000 (182,024) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (88,631) (8,770) (15,000) (112,401) Premium received on issuance of debt - - 110,716 110,716 Principal paid on capital debt (255,000) (135,000) (495,000) (885,000) Interest paid on capital debt (6,885) (3,645) (239,466) (249,996) Net cash used in capital and related financing activities (350,516) (147,415) (638,750) (1,136,681) CASH FLOWS FROM INVESTING ACTIVITIES Investments sold and matured 1,065,041 2,266 - 1,067,307 Investments purchased (1,533,588) - - (1,533,588) Interest income received 54,167 14,615 - 68,782 Net cash provided by (used in) investing activities (414,380) 16,881 - (397,499) Net increase (decrease) in cash and cash equivalents (59,258) 71,454 2,230 14,426 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 818,115 1,777,004 919 2,596,038 CASH AND CASH EQUIVALENTS - END OF YEAR 758,857 $ 1,848,458 $ 3,149 $ 2,610,464 $ Business-type Activities Enterprise Funds For the Year Ended December 31, 2012 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) 636,958 $ (12,311) $ 219,133 $ 843,780 $ Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation expense 472,008 283,256 118,422 873,686 Depreciation charged to sewer utility 43,627 - - 43,627 Changes in noncash components of working capital Accounts receivable (52,498) (65,768) 1,440 (116,826) Other accounts receivable - 75,556 - 75,556 Special assessments receivable - 22,538 - 22,538 Due from other funds 45,308 53,357 - 98,665 Accounts payable (60,240) (163,049) 5,741 (217,548) Accrued compensated absences 32,499 8,409 66,244 107,152 Net cash provided by operating activities 1,117,662 $ 201,988 $ 410,980 $ 1,730,630 $ Reconciliation of cash and cash equivalents to the statement of net assets - proprietary funds Cash and investments 3,676,320 $ 2,397,327 $ 3,149 $ 6,076,796 $ Restricted cash and investments - 55,165 - 55,165 Less: Noncash equivalents (2,917,463) (604,034) - (3,521,497) Cash and cash equivalents, end of year 758,857 $ 1,848,458 $ 3,149 $ 2,610,464 $ NONCASH INVESTING, CAPITAL, AND RELATED FINANCING ACTIVITIES Developer financed additions to Utility capital assets 118,692 $ 60,515 $ - 179,207 $ City financed additions to Golf Course capital assets - - 30,066 $ 30,066 $ Business-type Activities Enterprise Funds CITY OF MIDDLETON, WISCONSIN STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2012 (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 22,619,229 $ - $ 22,619,229 $ Taxes receivable 14,255,885 - 14,255,885 Due from other governmental units - 181,300 181,300 Total assets 36,875,114 $ 181,300 $ 37,056,414 $ LIABILITIES Accounts payable - $ 80,507 $ 80,507 $ Due to other governmental units 36,875,114 100,793 36,975,907 Total liabilities 36,875,114 $ 181,300 $ 37,056,414 $ CITY OF MIDDLETON, WISCONSIN STATEMENT OF FIDUCIARY NET POSITION December 31, 2012 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, 2012 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. 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, 2012 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, liabilities, deferred inflows, 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, 2012 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, liabilities and deferred inflows, 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 TIF or 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, 2012 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 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. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 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. 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 unearned revenues. Amounts received prior to the entitlement period are also recorded as unearned revenues. 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. Delinquent special assessments being held for collection by the county are reported as receivables and deferred inflows 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, 2012 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 on its governmental funds balance sheet. Deferred inflows 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, unearned revenues 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 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, liabilities, deferred inflows 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, 2012 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, 2012 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, 2012, 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, 2012 23 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Position or Equity (Continued) 2. Receivables (Continued) Property tax calendar - 2012 tax roll: Lien date and levy date December 2012 Tax bills mailed December 2012 Payment in full, or January 31, 2013 First installment due January 31, 2013 Second installment due July 31, 2013 Personal property taxes in full January 31, 2013 Tax deed - 2012 delinquent real estate taxes October 2015 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 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 inflows 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, 2012 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, 2012 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 30-100 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. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 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. 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. Employees may convert their accumulated sick leave to pay for health care premiums. Total expenditures for retirees’ medical premiums during the year were $106,904. The number of participants currently eligible to receive benefits is 21. 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, 2012 are determined on the basis of current salary rates and include salary-related payments. 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 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 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/discounts and gains/losses, as applicable, 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, 2012 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, 2012 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, 2012. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 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 council action. Appropriations lapse at year-end unless specifically carried over. Budgets are adopted at the departmental level of expenditure. Excess Expenditures over Appropriations The following individual funds experienced excess expenditures over appropriations: Excess Budgeted Actual Expenditures Expenditures Expenditures Over Budget General Fund General government 2,643,259 $ 2,643,610 $ 351 $ Leisure activities 1,339,790 1,341,157 1,367 Safety impact fee and other - 102,065 102,065 Economic development grant - 22,396 22,396 Lost and damaged books 39,000 57,995 18,995 Library endowment fund 8,000 8,975 975 Airport fund 87,700 489,606 401,906 Public land special revenue and activities fund 10,000 152,640 142,640 The legal level of budget control is the function level in the General Fund and the 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 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. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 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 1,000 $ Demand deposits Noninterest bearing 30,719,565 26,032,437 $ Custodial credit Certificates of deposit 5,857,365 5,857,365 Custodial credit Money market 9,313,303 9,313,303 Custodial credit Total deposits 45,890,233 41,203,105 Investments Madison Community Foundation 200,722 200,722 Credit, interest rate Local Government Investment Pool (LGIP) 6,686,928 6,686,928 Credit, interest rate Total investments 6,887,650 6,887,650 Total cash and investments 52,778,883 $ 48,090,755 $ Reconciliation to the statement of net assets: Unrestricted cash and investments 29,880,970 $ Restricted cash and investments 55,165 Fiduciary funds - Agency Fund 22,619,229 52,555,364 Cash and investments held for component unit: Unrestricted 223,419 Total cash and investments 52,778,783 $ 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. As of January 1, 2013, FDIC coverage was changed to $250,000 for demand deposits and $250,000 for time and savings deposits. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 31 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) A. Cash and Investments (Continued) 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, 2012, 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, 2012, $13,920,668 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 had $6,686,928 invested in the local government investment pool, which had a weighted average maturity of 73 days. In addition, the City had $200,722 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, 2012 32 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) B. Receivables Receivables Nonmajor TIF District Governmental Water Sewer General No. 3 Funds Utility Utility Total Taxes 13,642,375 $ 8,906,534 $ - $ - $ - $ 22,548,909 $ Accounts 1,902,134 - 252,553 434,534 478,222 3,067,443 Interest 16,099 - - 7,764 2,369 26,232 Loans - 1,161,250 22,442 - - 1,183,692 Special assessments 21,629 1,387,899 - - 2,101,584 3,511,112 Other governments 58,000 - - - - 58,000 Total receivables 15,640,237 11,455,683 274,995 442,298 2,582,175 30,395,388 Less allowance for uncollectibles (1,350,368) - (22,442) - - (1,372,810) Net total receivables 14,289,869 $ 11,455,683 $ 252,553 $ 442,298 $ 2,582,175 $ 29,022,578 $ All receivables on the balance sheet are expected to be collected within one year except for the following: TIF District No. 3 Sewer Total Amounts not expected to be collected within one year 2,549,149 $ 2,101,584 $ 4,650,733 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 33 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) C. Deferred Inflows and Unearned Revenue Governmental funds report deferred inflows and unearned revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds 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 inflows reported in the governmental funds were as follows: Unavailable Unearned Total Property taxes - $ 22,193,114 22,193,114 Loan receivable 1,161,250 - 1,161,250 Special assessments not yet due 1,704,379 - 1,704,379 EMS and other receivables 156,379 - 156,379 3,022,008 $ 22,193,114 $ 25,215,122 $ 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, 2012, 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, 2012 was $55,165. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 34 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) E. Capital Assets Capital asset activity for the year ended December 31, 2012 was as follows: Beginning Ending Balance Additions Deletions Balance Governmental activities Capital assets not being depreciated Land 7,335,597 $ - $ - $ 7,335,597 $ Right of way 18,751,280 - - 18,751,280 Construction in progress 332,682 1,605,336 - 1,938,018 Total capital assets not being depreciated 26,419,559 1,605,336 - 28,024,895 Capital assets being depreciated Land improvements 7,023,936 32,575 21,000 7,035,511 Buildings 18,189,101 263,914 - 18,453,015 Machinery and equipment 4,950,976 341,431 102,575 5,189,832 Streets-infrastructure 20,070,844 233,559 - 20,304,403 Storm sewers-infrastructure 8,848,680 - - 8,848,680 Traffic signals-infrastructure 1,311,022 20,744 - 1,331,766 Sidewalks-infrastructure 3,079,676 41,152 - 3,120,828 Bridges-infrastructure 3,278,231 - - 3,278,231 Rail spur-infrastructure 482,163 - - 482,163 Total capital assets being depreciated 67,234,629 933,375 123,575 68,044,429 Less: accumulated depreciation for Land improvements 2,178,528 315,047 21,000 2,472,575 Buildings 3,485,701 449,726 - 3,935,427 Machinery and equipment 2,814,473 403,558 102,575 3,115,456 Streets-infrastructure 3,251,049 303,051 - 3,554,100 Storm sewers-infrastructure 2,039,461 176,974 - 2,216,435 Traffic signals-infrastructure 557,999 53,271 - 611,270 Sidewalks-infrastructure 1,272,803 62,417 - 1,335,220 Bridges-infrastructure 355,135 43,710 - 398,845 Rail spur-infrastructure 102,959 16,072 - 119,031 Total accumulated depreciation 16,058,108 1,823,826 123,575 17,758,359 Capital assets being depreciated, net of depreciation 51,176,521 (890,451) - 50,286,070 Total capital assets, net of depreciation 77,596,080 $ 714,885 $ - $ 78,310,965 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 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 - 6,056 - 6,056 Total capital assets not being depreciated 222,277 6,056 - 228,333 Capital assets being depreciated Source of supply 781,509 - - 781,509 Pumping 2,774,446 48,740 27,000 2,796,186 Treatment 343,242 - - 343,242 Transmission and distribution 19,787,047 124,593 - 19,911,640 Administrative and general assets 623,287 27,934 - 651,221 Total capital assets being depreciated 24,309,531 201,267 27,000 24,483,798 Less: accumulated depreciation for Source of supply 315,261 25,790 - 341,051 Pumping 1,213,574 97,574 27,000 1,284,148 Treatment 338,726 1,922 - 340,648 Transmission and distribution 4,845,102 367,790 - 5,212,892 Administrative and general assets 549,724 22,559 - 572,283 Total accumulated depreciation 7,262,387 515,635 27,000 7,751,022 Capital assets being depreciated, net of depreciation 17,047,144 (314,368) - 16,732,776 Total capital assets, net of depreciation 17,269,421 $ (308,312) $ - $ 16,961,109 $ 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 12,739,758 60,515 - 12,800,273 Collection system pumping 1,317,850 8,770 2,000 1,324,620 Administrative and general assets 532,552 - - 532,552 Total capital assets being depreciated 14,590,160 69,285 2,000 14,657,445 Less: accumulated depreciation 3,840,250 283,256 2,000 4,121,506 Capital assets being depreciated, net of depreciation 10,749,910 (213,971) - 10,535,939 Total capital assets, net of depreciation 10,816,740 $ (213,971) $ - $ 10,602,769 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 36 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 - - 7,291,981 Buildings 1,325,553 - - 1,325,553 Equipment 557,427 45,066 - 602,493 Total capital assets being depreciated 9,174,961 45,066 - 9,220,027 Less: accumulated depreciation for Land improvements 271,261 42,445 - 313,706 Buildings 191,247 19,125 - 210,372 Equipment 353,309 56,852 - 410,161 Total accumulated depreciation 815,817 118,422 - 934,239 Capital assets being depreciated, net of depreciation 8,359,144 (73,356) - 8,285,788 Total capital assets, net of depreciation 10,575,144 $ (73,356) $ - $ 10,501,788 $ Total net capital assets- business-type activities 38,661,305 $ (595,639) $ - $ 38,065,666 $ Depreciation expense was charged to functions as follows: Governmental activities General government 37,923 $ Public safety 489,577 Public works, which includes the depreciation of streets, storm sewers, traffic signals, sidewalks, bridges, and rail spur 809,118 Conservation and development 12,542 Leisure activities 474,666 Total governmental activities depreciation expense 1,823,826 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 37 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) E. Capital Assets (Continued) Depreciation expense was charged to functions as follows: Business-type activities Water Utility Depreciation 515,635 $ Depreciation charged to Sewer Utility operation and maintenance expenses (43,627) 472,008 Sewer Utility 283,256 Pleasant View Golf Course 118,422 Total business-type activities depreciation expense 873,686 $ 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 11,538 $ Sewer Utility General Fund 13,817 Total fund financial statements 25,355 $ 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. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 38 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) F. Interfund Receivables/Payables and Transfers (Continued) 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 Pleasant View Golf Course 433,150 Total fund financial statements 3,027,930 $ The following is a schedule of interfund transfers: Nonmajor Debt Capital Special Transfer Out Fund General Service Projects Revenue Total General - $ 3,175,656 $ - $ 1,021,585 $ 4,197,241 $ TIF District No. 3 - 6,696,209 - - 6,696,209 Water Utility 412,024 - - - 412,024 Nonmajor Special Revenue Funds - 185,000 2,700 238,437 426,137 Totals 412,024 $ 10,056,865 $ 2,700 $ 1,260,022 $ 11,731,611 $ 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. In addition, capital assets transferred from governmental funds to enterprise funds are reported as transfers. Total interfund transfers - fund financial statements 11,731,611 $ Transfers within governmental activities (11,319,587) Capital assets transferred from governmental funds to the Pleasant View Golf Course (30,066) Transfers - government-wide financial statements 381,958 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 39 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) G. Long-Term Obligations Long-term obligations activity for the year ended December 31, 2012 was as follows: Amounts Beginning Ending Due Within Balance Increases Decreases Balance One Year Governmental activities Bonds and notes payable General obligation debt 49,038,304 $ 19,165,000 $ 10,243,304 $ 57,960,000 $ 11,975,000 $ Loss on refunding (535,878) - (535,878) - - Debt premium and discount 79,530 99,124 8,477 170,177 13,836 48,581,956 19,264,124 9,715,903 58,130,177 11,988,836 Other liabilities: Vested compensated absences 3,153,059 1,262,072 837,188 3,577,943 - Capital leases 1,010,000 - 1,010,000 - - Total other liabilities 4,163,059 1,262,072 1,847,188 3,577,943 - Total governmental activities long-term liabilities 52,745,015 $ 20,526,196 $ 11,563,091 $ 61,708,120 $ 11,988,836 $ Business-type activities Bonds and notes payable General obligation debt 6,885,000 $ 3,100,000 $ 3,985,000 $ 6,000,000 $ 595,000 $ Debt premium - 110,716 23,066 87,650 27,679 6,885,000 3,210,716 4,008,066 6,087,650 622,679 Other liabilities: Vested compensated absences 227,111 143,670 36,518 334,263 48,926 Total business-type activities long-term liabilities 7,112,111 $ 3,354,386 $ 4,044,584 $ 6,421,913 $ 671,605 $ 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, 2012, was $135,581,975. Total general obligation debt outstanding at year end was $63,960,000. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 40 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 12/31/12 Governmental Activities General Obligation Debt 2003 General obligation promissory notes 05/01/03 09/01/13 2.00%-3.40% 9,980,000 $ 2,400,000 $ 2004 General obligation promissory notes 06/15/04 03/01/14 2.50%-4.25% 1,910,000 420,000 2006 General obligation promissory notes 06/01/06 12/01/13 4.00%-4.25% 2,000,000 400,000 2006 General obligation promissory notes 12/27/06 12/01/16 3.75%-4.00% 2,330,000 930,000 2008 General obligation refunding bonds 06/02/08 12/01/27 3.00%-4.00% 6,530,000 6,150,000 2008 General obligation promissory notes 06/09/08 12/01/17 3.50%-4.00% 2,000,000 1,600,000 2008 General obligation promissory notes 12/30/08 12/01/17 3.00%-4.25% 2,750,000 2,300,000 2010 General obligation refunding bonds 04/15/10 09/01/29 1.45%-8.5% 10,110,000 9,760,000 2010 General obligation promissory notes 04/15/10 09/01/17 1.20%-3.80% 2,010,000 1,560,000 2010 Taxable general obligation refunding bonds 11/23/10 09/01/20 .85%-3.75% 6,580,000 6,245,000 2010 General obligation refunding bonds 11/23/10 09/01/20 2.00%-4.00% 4,625,000 4,530,000 2011 General obligation promissory notes 05/09/11 09/01/19 2.00%-3.00% 2,500,000 2,500,000 2012 Taxable note anticipation notes 05/12/12 06/01/13 0.95% 5,000,000 5,000,000 2012 Taxable general obligation promissory notes 05/12/12 03/01/19 .46%-1.85% 2,540,000 2,540,000 2012 General obligation promissory notes 05/12/12 09/01/20 2.00%-2.25% 2,015,000 2,015,000 2012 General obligation promissory notes 12/28/12 09/01/21 1.00%-2.00% 4,500,000 4,500,000 2012 General obligation refunding bonds 12/28/12 09/01/23 1.05%-3.80% 5,110,000 5,110,000 Total governmental activities- general obligation debt 57,960,000 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 41 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 12/31/12 Business-type Activities General Obligation Debt 2006 General obligation promissory notes 12/27/06 12/01/16 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 2012 General obligation refunding bonds 02/27/12 03/01/16 2.0% 3,100,000 3,100,000 Total business-type activities - general obligation debt 6,000,000 $ Debt service requirements to maturity are as follows: Principal Interest Principal Interest Totals 2013 11,975,000 $ 1,399,110 $ 595,000 $ 177,300 $ 14,146,410 $ 2014 5,025,000 1,223,785 735,000 164,000 7,147,785 2015 4,970,000 1,102,358 825,000 148,400 7,045,758 2016 4,955,000 1,016,041 2,145,000 130,700 8,246,741 2017 5,160,000 877,663 300,000 66,875 6,404,538 2018-22 15,605,000 2,720,825 1,400,000 122,100 19,847,925 2023-27 6,990,000 1,291,516 - - 8,281,516 2028-32 3,280,000 279,635 - - 3,559,635 Totals $ 57,960,000 $ 9,910,933 $ 6,000,000 $ 809,375 $ 74,680,308 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, 2012 42 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 assets at December 31, 2012 include the following: Net investment in capital assets Capital assets, net of accumulated depreciation $ 78,310,965 Less: related long-term debt (excluding unspent capital related debt proceeds) (53,005,449) Total invested in capital assets, net of related debt 25,305,516 Restricted Debt service 4,660,087 Community development 3,643,124 Library 235,150 Impact fees 154,566 8,692,927 Unrestricted 10,398,364 Total governmental activities net position 44,396,807 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 43 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, 2012 include the following: TIF Debt District Capital General Service No. 3 Projects Nonmajor Total Nonspendable Prepaid items 193,201 $ - $ - $ - $ - $ 193,201 $ Advances to other funds 2,594,780 - 433,150 - - 3,027,930 Noncurrent receivables 17,975 - - - - 17,975 2,805,956 - 433,150 - - 3,239,106 Restricted Debt service - 5,321,236 - - - 5,321,236 Community development - - 2,658,241 - 276,133 2,934,374 Library - - - - 235,150 235,150 Capital improvements - - - 5,124,728 275,600 5,400,328 Impact fees - - - - 154,566 154,566 - 5,321,236 2,658,241 5,124,728 941,449 14,045,654 Assigned Subdividers' deposits - - - - 938,648 938,648 Library - - - - 71,953 71,953 Airport - - - - 63,522 63,522 Tourism - - - - 1,078,638 1,078,638 Public safety 534,000 - - - 18,692 552,692 Senior center - - - - 107,616 107,616 Post employment benefits 1,331,060 - - - - 1,331,060 Debt service 650,000 - - - - 650,000 Other 56,000 - - - 324,286 380,286 2,571,060 - - - 2,603,355 5,174,415 Unassigned 3,519,147 - - - - 3,519,147 Total fund balances 8,896,163 $ 5,321,236 $ 3,091,391 $ 5,124,728 $ 3,544,804 $ 25,978,322 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 44 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, 2012 include the following: Pleasant View Golf Water Sewer Course Totals Capital assets 24,712,131 $ 14,724,275 $ 11,436,027 $ 50,872,433 $ Accumulated depreciation (7,751,022) (4,121,506) (934,239) (12,806,767) Subtotals 16,961,109 10,602,769 10,501,788 38,065,666 Less capital related long-term debt - - 6,087,650 6,087,650 Net investment in capital assets 16,961,109 10,602,769 4,414,138 31,978,016 Restricted for equipment replacement - 55,165 - 55,165 Unrestricted 4,268,499 4,626,694 (3,215,392) 5,679,801 Total business-type activities net position 21,229,608 $ 15,284,628 $ 1,198,746 $ 37,712,982 $ 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 (668,417) (62,493) - (730,910) - Totals 2,360,275 $ (62,493) $ - $ 2,297,782 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 45 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) I. Component Unit (Continued) 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. 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. 550,000 - 550,000 - - 1,010,000 - 1,010,000 - - Less: Unamortized debt discounts (10,423) - (10,423) - - Totals 999,577 $ - $ 999,577 $ - $ - $ 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. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 46 NOTE 4 - OTHER INFORMATION (Continued) A. Employees’ Retirement System (Continued) Contribution rates for 2012 are: Employee Employer General 5.90% 5.90% Executives & Elected Officials 7.05% 7.05% Protective with Social Security 5.90% 9.00% Protective without Social Security 5.90% 11.30% The payroll for City employees covered by the System for the year ended December 31, 2012 was $8,599,193; the employer’s total payroll was $9,409,117. The total required contribution for the year ended December 31, 2012 was $1,181,687 or 13.7% of covered payroll. Of this amount, $834,715 was contributed by the employer for the current year and $346,971 was contributed by the employees for the current year. Total contributions for the years ending December 31, 2011 and 2010 were $974,735 and 986,206, respectively, equal to the required contributions for each year. 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. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 47 NOTE 4 - 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. 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 2011 and 2012, these costs amount to approximately $2.8 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 2012 totaled $5,806,000 of which $4,343,625 has been paid. The remaining commitment is $1,462,375. D. 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 2012 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 September 30, 2012 is a deficit of $956,525. 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 $545,219 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. The City made payments totaling $51,412 to the District in 2012. 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, 2012 48 NOTE 4 - OTHER INFORMATION (Continued) D. 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 $1,224,340 to the District in 2012 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. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2012 49 NOTE 4 - OTHER INFORMATION (Continued) E. Restatement The City of Middleton adopted GASB Statement No. 63, Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position and GASB Statement No. 65 Items Previously Recognized as Assets and Liabilities as of January 1, 2012. GASB Statement No. 63 impacted financial reporting by standardizing the presentation of deferred outflows of resources and deferred inflows of resources and their effects on a government’s net position. GASB Statement No. 65 impacted financial reporting by establishing accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. The impact of adoptions of these statements resulted in the Statement of Net Assets becoming the Statement of Net Position. Additionally, certain items previously reported as assets or liabilities have been classified and reported as deferred inflows or outflows. The standard eliminates the provision for capitalizing and amortizing debt issue costs. Debt issue costs are considered expense at the time the debt is issued. Net position, December 31, 2011, as previously reported 42,258,111 $ Adjustment for debt issuance costs (107,246) Net position, December 31, 2011, as restated 42,150,865 $ F. Subsequent Events On January 4, 2013, the City paid off the 2012 Taxable Note Anticipation Notes of $5 million from the proceeds of the 2012 General Obligation Refunding Bonds of $5,110,000 which were recorded in the Debt Service Fund. Management evaluated subsequent events through August 14, 2013, the date the financial statements were available to be issued. Events or transactions occurring after December 31, 2012, but prior to August 14, 2013 that provide additional evidence about conditions that existed at December 31, 2012, have been recognized in the financial statements for the year ended December 31, 2012. Events or transactions that provided evidence about conditions that did not exist at December 31, 2012 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, 2012. 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, 2012 Variance with Original Final Actual Final Budget REVENUES Taxes 13,805,594 $ 13,805,594 $ 13,942,219 $ 136,625 $ Intergovernmental 1,850,349 1,850,349 2,207,630 357,281 Licenses and permits 577,400 564,400 765,637 201,237 Fines, forfeitures, and penalties 300,000 300,000 280,513 (19,487) Public charges for services 1,204,411 1,067,411 1,343,732 276,321 Interdepartmental charges for services 1,537,130 1,537,130 1,537,130 - Special assessments 130,000 121,000 108,274 (12,726) Investment income 170,000 170,000 73,037 (96,963) Miscellaneous 543,295 106,221 130,118 23,897 Total revenues 20,118,179 19,522,105 20,388,290 866,185 EXPENDITURES Current General government 2,580,261 2,643,259 2,643,610 (351) Public safety 7,768,437 7,746,397 7,723,830 22,567 Public works 3,227,084 3,221,700 3,122,255 99,445 Health and human services 437,024 437,024 434,778 2,246 Leisure activities 1,329,990 1,339,790 1,341,157 (1,367) Conservation and development 564,337 567,837 528,656 39,181 Total expenditures 15,907,133 15,956,007 15,794,286 161,721 Excess of revenues over expenditures 4,211,046 3,566,098 4,594,004 1,027,906 OTHER FINANCING SOURCES (USES) Sale of capital assets 25,000 25,000 232,617 207,617 Transfers in 390,000 390,000 412,024 22,024 Transfers out (4,626,046) (4,193,972) (4,197,241) (3,269) Total other financing sources (uses) (4,211,046) (3,778,972) (3,552,600) 226,372 Net change in fund balance - (212,874) 1,041,404 1,254,278 FUND BALANCE - Beginning 7,854,759 7,854,759 7,854,759 - FUND BALANCE - Ending 7,854,759 $ 7,641,885 $ 8,896,163 $ 1,254,278 $ CITY OF MIDDLETON, WISCONSIN Budgeted Amounts 50 ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended December 31, 2012 51 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 General Fund General government 2,643,259 $ 2,643,610 $ 351 $ Leisure activities 1,339,790 1,341,157 1,367 Safety impact fee and other - 102,065 102,065 Economic development grant - 22,396 22,396 Lost and damaged books 39,000 57,995 18,995 Library endowment fund 8,000 8,975 975 Airport fund 87,700 489,606 401,906 Public land special revenue and activities fund 10,000 152,640 142,640 The legal level of budget control is the function level in the General Fund and the 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, 2012 Variance with Original Final Actual Final Budget TAXES General property tax 13,403,494 $ 13,403,494 $ 13,438,561 $ 35,067 $ Fees in lieu of taxes 44,100 44,100 44,100 - Room tax 353,000 353,000 463,174 110,174 Interest and penalties on taxes 5,000 5,000 (3,616) (8,616) Total taxes 13,805,594 13,805,594 13,942,219 136,625 INTERGOVERNMENTAL Shared taxes from state 280,000 280,000 322,235 42,235 State aid - road allotment 1,164,746 1,164,746 1,164,746 - State aid - exempt computer aid 135,000 135,000 203,311 68,311 State aid - fire insurance dues 76,000 76,000 88,941 12,941 State aid - law enforcement 86,000 86,000 78,509 (7,491) Federal and state aid - other 55,250 55,250 281,814 226,564 County aid - signals 8,200 8,200 7,971 (229) County aid - senior citizens 45,153 45,153 50,953 5,800 County aid - youth center - - 9,150 9,150 Total intergovernmental 1,850,349 1,850,349 2,207,630 357,281 LICENSES AND PERMITS Liquor and malt beverage licenses 38,000 38,000 35,576 (2,424) Operators' licenses 12,000 12,000 15,010 3,010 Contractors' licenses 6,000 6,000 8,538 2,538 Alarm licenses 9,000 9,000 9,250 250 Cigarette licenses 300 300 1,260 960 Bicycle licenses 100 100 - (100) Dog and cat licenses 5,500 5,500 4,717 (783) Cable TV franchise license 200,000 200,000 197,355 (2,645) Other miscellaneous licenses 4,000 4,000 2,060 (1,940) Building permits 160,000 160,000 288,362 128,362 Electrical permits 35,000 35,000 58,500 23,500 Plumbing permits 35,000 35,000 64,131 29,131 Erosion control permits 5,000 5,000 34,735 29,735 Other public land fees 8,000 - - - Zoning permits 6,500 1,500 22,250 20,750 Park reservation permits 53,000 53,000 23,893 (29,107) Total licenses and permits 577,400 564,400 765,637 201,237 FINES, FORFEITURES, AND PENALTIES Court penalties 180,000 180,000 169,547 (10,453) Parking violations 40,000 40,000 37,207 (2,793) Court costs 80,000 80,000 73,759 (6,241) Total fines, forfeitures, and penalties 300,000 300,000 280,513 (19,487) Budgeted Amounts CITY OF MIDDLETON, WISCONSIN 52 ---PAGE BREAK--- DETAILED SCHEDULE OF REVENUES - BUDGET AND ACTUAL GENERAL FUND For the Year Ended December 31, 2012 Variance with Original Final Actual Final Budget Budgeted Amounts CITY OF MIDDLETON, WISCONSIN PUBLIC CHARGES FOR SERVICES Clerk fees 10,000 $ 10,000 $ 8,807 $ (1,193) $ Vehicle registration fees - - 468 468 Police special services 27,000 12,000 315 (11,685) Police department fees 25,000 25,000 7,947 (17,053) Ambulance services 567,253 567,253 700,826 133,573 EMS fixed cost abatement 184,158 184,158 195,687 11,529 Plan commission charges 11,000 11,000 25,785 14,785 Senior citizens 21,000 13,000 21,783 8,783 Swimming pool 234,000 234,000 243,737 9,737 Summer recreation 70,000 - 92,078 92,078 Fall-Winter-Spring recreation - - 37,723 37,723 Public works charges 11,000 11,000 6,887 (4,113) Other recreation 44,000 - 1,689 1,689 Total public charges for services 1,204,411 1,067,411 1,343,732 276,321 INTERDEPARTMENTAL CHARGES FOR SERVICES Administration reimbursements - Utilities 128,000 128,000 128,000 - Administration reimbursements - TIF 1,401,530 1,401,530 1,401,530 - Administration reimbursements - Landfill 5,000 5,000 5,000 - Administration reimbursements - Fire District 2,600 2,600 2,600 - Total interdepartmental charges for services 1,537,130 1,537,130 1,537,130 - SPECIAL ASSESSMENTS Curb, gutter, and sidewalks 120,000 120,000 108,274 (11,726) Street improvements 9,000 - - - Interest on special assessments 1,000 1,000 - (1,000) Total special assessments 130,000 121,000 108,274 (12,726) INVESTMENT INCOME 170,000 170,000 73,037 (96,963) COMMERCIAL REVENUES Rent of City buildings and offices 40,000 40,000 48,000 8,000 Erosion control and stormwater reimbursements 5,000 - - - Donations - - 1,246 1,246 Sale of materials 8,000 8,000 10,547 2,547 BAB subsidy 247,074 - - - Miscellaneous 57,471 57,471 36,826 (20,645) Annual environmental impact fee 185,000 - 32,624 32,624 Event/trip revenue - - 225 225 Interlocking ignition device 750 750 650 (100) Total commercial revenues 543,295 106,221 130,118 23,897 OTHER FINANCING SOURCES Sale of City property 25,000 25,000 232,617 207,617 Transfer in - Water Utility 390,000 390,000 412,024 22,024 Total other financing sources 415,000 415,000 644,641 229,641 TOTAL REVENUES AND OTHER FINANCING SOURCES 20,533,179 $ 19,937,105 $ 21,032,931 $ 1,095,826 $ 53 ---PAGE BREAK--- Variance with Original Final Actual Final Budget GENERAL GOVERNMENT Council 67,295 $ 68,210 $ 67,206 $ 1,004 $ Police commission 8,710 8,710 4,848 3,862 Landmarks commission 3,484 484 351 133 Middleton youth commission 18,035 18,035 29,644 (11,609) Art committee - 3,000 259 2,741 Sustainability committee 7,744 - 7,365 (7,365) Municipal court 109,766 109,766 99,428 10,338 General administration 717,733 764,117 832,022 (67,905) Information technology 614,630 659,004 639,675 19,329 Elections 83,430 85,430 77,057 8,373 Board of review 300 300 - 300 Independent auditing 45,000 50,000 42,005 7,995 Legal counseling 205,000 200,000 236,692 (36,692) Special legal counsel 4,500 9,500 6,862 2,638 Buildings and grounds 152,978 145,732 133,758 11,974 Illegal taxes and tax refunds 5,000 35,817 32,334 3,483 Property and liability insurance 400,000 369,183 369,183 - Income continuation insurance 16,000 16,000 (830) 16,830 Contingency 100,656 64,971 - 64,971 Group life insurance 20,000 20,000 15,842 4,158 Vision care - - 736 (736) Bank fees - 10,000 9,309 691 Miscellaneous - 5,000 39,998 (34,998) Additional expenditures-prior years - - (134) 134 Total general government 2,580,261 2,643,259 2,643,610 (351) PUBLIC SAFETY Police administration 691,334 691,334 683,321 8,013 Police patrol 3,572,657 3,572,657 3,541,215 31,442 Code compliance 76,400 78,400 78,839 (439) Training - - 1,072 (1,072) School patrol 13,285 13,285 14,335 (1,050) Fire suppression 740,948 740,948 783,389 (42,441) Public fire protection 437,391 437,391 437,391 - EMS 1,424,346 1,402,306 1,376,821 25,485 Building inspector 115,347 113,347 122,091 (8,744) Electrical inspector 102,131 102,131 99,114 3,017 Plumbing inspection 65,302 65,302 64,821 481 Emergency preparedness 12,903 12,903 20,930 (8,027) Sealer of weights and measures 5,000 5,000 4,400 600 Erosion control enforcement 16,000 16,000 23,370 (7,370) Communications 495,393 495,393 472,721 22,672 Total public safety 7,768,437 7,746,397 7,723,830 22,567 CITY OF MIDDLETON, WISCONSIN DETAILED SCHEDULE OF EXPENDITURES - ACTUAL AND BUDGET For the Year Ended December 31, 2012 Budgeted Amounts GENERAL FUND 54 ---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, 2012 Budgeted Amounts GENERAL FUND PUBLIC WORKS Machinery 341,306 $ 341,306 $ 319,944 $ 21,362 $ Garage 45,500 45,500 49,019 (3,519) Public works salaries and fringes 644,940 644,096 614,561 29,535 Protective equipment 3,500 3,500 3,513 (13) Engineering 694,961 699,383 685,622 13,761 Street maintenance 51,137 33,975 47,843 (13,868) Street cleaning 8,900 8,900 9,709 (809) Snow and ice control 75,000 68,000 69,770 (1,770) Traffic signals 22,850 29,550 20,169 9,381 Traffic signs and markings 28,200 45,000 27,608 17,392 Street lighting 123,800 107,000 106,234 766 Tree and brush 2,000 2,000 1,467 533 Storm sewers 13,000 13,000 18,556 (5,556) Mass transit 359,878 368,378 344,205 24,173 Garbage collection 525,000 525,000 520,487 4,513 Sanitary landfill 51,412 51,412 51,412 - Recycling 235,700 235,700 232,136 3,564 Total public works 3,227,084 3,221,700 3,122,255 99,445 HEALTH AND HUMAN SERVICES Aging 437,024 437,024 434,778 2,246 LEISURE ACTIVITIES Cable television 15,000 4,235 - 4,235 Recreation programs and events 56,654 67,419 37,499 29,920 Recreation administration 125,192 111,242 121,848 (10,606) Swimming pool 280,860 280,860 325,435 (44,575) Summer recreation 69,019 69,319 61,403 7,916 Parks 783,265 806,715 794,972 11,743 Total leisure activities 1,329,990 1,339,790 1,341,157 (1,367) CONSERVATION AND DEVELOPMENT Water resources 30,459 30,459 30,097 362 Conservancy land commission 75,250 75,250 39,496 35,754 Planning commission 307,632 320,632 315,077 5,555 Other 27,000 7,500 19,473 (11,973) Forestry 123,996 133,996 124,513 9,483 Total conservation and development 564,337 567,837 528,656 39,181 OTHER FINANCING USES Transfers out - nonmajor Special Revenue Funds - - 3,270 (3,270) Transfers out - Library Fund 1,018,315 1,018,315 1,018,315 - Transfers out - Debt Service Fund 3,607,731 3,175,657 3,175,656 1 Total other financing uses 4,626,046 4,193,972 4,197,241 (3,269) TOTAL EXPENDITURES AND OTHER FINANCING USES 20,533,179 $ 20,149,979 $ 19,991,527 $ 158,452 $ 55 ---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 1,658,454 $ 24,317 $ 34,428 $ 200,722 $ 79,430 $ 69,947 $ 105,966 $ 276,133 $ 1,008,467 $ 18,692 $ 154,566 $ 246,048 $ 107,851 $ 3,985,021 $ Accounts receivable - - - - - - - - 252,553 - - - - 252,553 TOTAL ASSETS 1,658,454 $ 24,317 $ 34,428 $ 200,722 $ 79,430 $ 69,947 $ 105,966 $ 276,133 $ 1,261,020 $ 18,692 $ 154,566 $ 246,048 $ 107,851 $ 4,237,574 $ LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable 14,445 $ - $ - $ - $ 31,794 $ 6,425 $ - $ - $ 182,382 $ - $ - $ 27,728 $ 235 $ 263,009 $ Deposits 429,761 - - - - - - - - - - - - 429,761 Total liabilities 444,206 - - - 31,794 6,425 - - 182,382 - - 27,728 235 692,770 FUND BALANCES Restricted 275,600 - 34,428 200,722 - - - 276,133 - - 154,566 - - 941,449 Assigned 938,648 24,317 - - 47,636 63,522 105,966 - 1,078,638 18,692 - 218,320 107,616 2,603,355 Total fund balances 1,214,248 24,317 34,428 200,722 47,636 63,522 105,966 276,133 1,078,638 18,692 154,566 218,320 107,616 3,544,804 TOTAL LIABILITIES AND FUND BALANCES 1,658,454 $ 24,317 $ 34,428 $ 200,722 $ 79,430 $ 69,947 $ 105,966 $ 276,133 $ 1,261,020 $ 18,692 $ 154,566 $ 246,048 $ 107,851 $ 4,237,574 $ CITY OF MIDDLETON, WISCONSIN COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2012 56 ---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 - $ - $ - $ - $ - $ - $ - $ - $ 1,080,740 $ - $ - $ - $ - $ 1,080,740 $ Intergovernmental - - - - 766,589 - - - - 230 8,625 - 2,276 777,720 Licenses and permits 53,813 - - - - - 163,440 - - - - - - 217,253 Public charges for services - 19,848 - - 16,607 117,894 - - - - - 106,834 - 261,183 Investment income - - - 18,043 - - - 524 - - - - - 18,567 Miscellaneous - - 7,901 - 12,755 - 1,683 - - - - 23,204 9,712 55,255 Total revenues 53,813 19,848 7,901 18,043 795,951 117,894 165,123 524 1,080,740 230 8,625 130,038 11,988 2,410,718 EXPENDITURES Current: Public safety - - - - - - - - - 1,398 - - - 1,398 Leisure activities - 57,995 3,734 8,975 1,813,043 - 2,065 - 775,923 - - 152,640 25,105 2,839,480 Conservation and development 22,120 - - - - 489,607 - 22,396 - - - - - 534,123 Total expenditures 22,120 57,995 3,734 8,975 1,813,043 489,607 2,065 22,396 775,923 1,398 - 152,640 25,105 3,375,001 Excess of revenues over (under) expenditures 31,693 (38,147) 4,167 9,068 (1,017,092) (371,713) 163,058 (21,872) 304,817 (1,168) 8,625 (22,602) (13,117) (964,283) OTHER FINANCING SOURCES (USES) Transfers in - - - - 1,018,315 - 335 - - 2,935 - 238,437 - 1,260,022 Transfers out (238,437) - - - (2,700) - (100,000) - - - (85,000) - - (426,137) Net change in fund balances (206,744) (38,147) 4,167 9,068 (1,477) (371,713) 63,393 (21,872) 304,817 1,767 (76,375) 215,835 (13,117) (130,398) FUND BALANCES - BEGINNING OF YEAR 1,420,992 62,464 30,261 191,654 49,113 435,235 42,573 298,005 773,821 16,925 230,941 2,485 120,733 3,675,202 FUND BALANCES - END OF YEAR 1,214,248 $ 24,317 $ 34,428 $ 200,722 $ 47,636 $ 63,522 $ 105,966 $ 276,133 $ 1,078,638 $ 18,692 $ 154,566 $ 218,320 $ 107,616 $ 3,544,804 $ CITY OF MIDDLETON, WISCONSIN COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES For the Year Ended December 31, 2012 NONMAJOR GOVERNMENTAL FUNDS 57 ---PAGE BREAK--- Public Works Public Lands TIF District Capital Capital General No. 5 Construction Construction Capital Projects Total ASSETS Cash and investments 1,488,295 $ 2,511,810 $ 608,576 $ 581,530 $ 5,190,211 $ LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable 1,635 $ 49,113 $ 14,600 $ 135 $ 65,483 $ Advance from other funds - - - - - Total liabilities 1,635 49,113 14,600 135 65,483 FUND BALANCES Restricted 1,486,660 2,462,697 593,976 581,395 5,124,728 TOTAL LIABILITIES AND FUND BALANCES 1,488,295 $ 2,511,810 $ 608,576 $ 581,530 $ 5,190,211 $ CITY OF MIDDLETON, WISCONSIN COMBINING BALANCE SHEET CAPITAL PROJECTS FUNDS December 31, 2012 58 ---PAGE BREAK--- Public Works Public Lands TIF District Capital Capital General No. 5 Construction Construction Capital Projects Total REVENUES Intergovernmental 34,074 $ - $ 1,750 $ - $ 35,824 $ Investment income 483 143 13 71 710 Miscellaneous 1,997 - - - 1,997 Total revenues 36,554 143 1,763 71 38,531 EXPENDITURES Current: General government 51,113 - - - 51,113 Conservation and development 1,229,751 - - - 1,229,751 Capital outlay - 956,751 791,864 910,531 2,659,146 Debt service - debt issuance costs 8,000 - - 10,475 18,475 Total expenditures 1,288,864 956,751 791,864 921,006 3,958,485 Excess of revenues over (under) expenditures (1,252,310) (956,608) (790,101) (920,935) (3,919,954) OTHER FINANCING SOURCES (USES) Long-term debt issued 5,000,000 2,881,085 903,530 1,230,385 10,015,000 Discount on debt issued (14,450) - - (21,450) (35,900) Premium on debt issued - - - 82,236 82,236 Transfers in - 75,613 237,502 (310,415) 2,700 Net change in fund balances 3,733,240 2,000,090 350,931 59,821 6,144,082 FUND BALANCES (DEFICIT) - BEGINNING OF YEAR (2,246,580) 462,607 243,045 521,574 (1,019,354) FUND BALANCES - END OF YEAR 1,486,660 $ 2,462,697 $ 593,976 $ 581,395 $ 5,124,728 $ CITY OF MIDDLETON, WISCONSIN COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES CAPITAL PROJECTS FUNDS For the Year Ended December 31, 2012 59