Document Middleton_doc_d58450bbea

CITY OF MIDDLETON, WISCONSIN Middleton, Wisconsin ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED December 31, 2015 Prepared by: Department of Finance ---PAGE BREAK--- TABLE OF CONTENTS PAGE FINANCIAL SECTION Independent Auditors’ Report 1 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position 4 Statement of Activities 5 Fund Financial Statements: Balance Sheet - Governmental Funds 6 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 7 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental 8 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 9 Statement of Net Position - Proprietary Funds 10 Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary 11 Statement of Cash Flows - Proprietary 12 Statement of Fiduciary Net Position - Fiduciary 14 Notes to Financial Statements 15 Required Supplementary Information Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund 60 Schedule OPEB Funding Progress 61 Schedule of City’s Proportionate Share of the Net Pension Liability 61 Schedule of the City’s 61 Notes to Required Supplementary 62 Supplementary Information: Detailed Schedule of Revenues - Budget and Actual - General Fund 63 Detailed Schedule of Expenditures - Budget and Actual - General 65 Combining Balance Sheet - Nonmajor Governmental Funds 67 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental 68 Combining Balance Sheet - Capital Projects 69 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Capital Projects Funds 70 Combining Statement of Net Position – Nonmajor Proprietary Funds 71 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position – Nonmajor Proprietary Funds 72 Combining Statement of Cash Flows – Nonmajor Proprietary 73 ---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, 2015, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. CliftonLarsonAllen LLP CLAconnect.com ---PAGE BREAK--- 2 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Middleton, Wisconsin as of December 31, 2015, 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. Emphasis-of-Matters As discussed in Note 5 to the financial statements, in 2015, City of Middleton, Wisconsin adopted new accounting guidance, GASB Statement No. 68 Accounting and Financial Reporting for Pensions – an Amendment of GASB Statement No. 27, and GASB Statement No. 71 Pension Transition for Contributions Made Subsequent to the Measurement Date – an Amendment of GASB Statement No. 68. As a result of the implementation, City of Middleton. Wisconsin reported a restatement for the change in accounting principle. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the budgetary comparison information, the schedule of OPEB funding progress, schedule of City’s proportionate share of the net pension liability (asset), and the schedule of the City’s contributions, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Management has omitted the management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by the missing information. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Middleton, Wisconsin’s basic financial statements. The supplementary information as listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. ---PAGE BREAK--- 3 The supplementary information as listed in the table of contents is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information as listed in the table of contents is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Middleton, Wisconsin August 19, 2016 a ---PAGE BREAK--- BASIC FINANCIAL STATEMENTS ---PAGE BREAK--- Business- Governmental type Component Activities Activities Total Unit ASSETS Cash and investments 19,379,619 $ 7,931,725 $ 27,311,344 $ 755,455 $ Receivables (net of allowance for uncollectible accounts) Taxes 26,263,035 - 26,263,035 - Delinquent taxes 42,836 - 42,836 - Accounts 750,229 1,074,390 1,824,619 3,300 Interest - 10,576 10,576 - Loans 896,710 - 896,710 208,653 Special assessments 816,992 2,041,995 2,858,987 - Internal balances 5,078,026 (5,078,026) - - Prepaid items 138,082 - 138,082 - Restricted assets - cash and investments - 60,820 60,820 - Restricted assets - net pension asset 1,718,300 182,320 1,900,620 - Property held for future use - 301,087 301,087 - Capital assets not being depreciated 26,256,598 2,511,163 28,767,761 154,000 Capital assets being depreciated 65,341,116 41,434,533 106,775,649 1,956,303 Total assets 146,681,543 50,470,583 197,152,126 3,077,711 Deferred outflows of resources Deferred amounts related to pension 1,773,436 188,170 1,961,606 - LIABILITIES Accounts payable and accrued liabilities 2,048,323 790,325 2,838,648 655 Deposits 1,264,454 - 1,264,454 - Accrued interest 415,152 30,717 445,869 - Due to other governments 14,106 - 14,106 - Noncurrent liabilities: Due within one year 6,539,747 1,032,169 7,571,916 - Due in more than one year 49,660,761 2,030,223 51,690,984 - Total liabilities 59,942,543 3,883,434 63,825,977 655 DEFERRED INFLOWS OF RESOURCES Subsequent year tax levy 25,964,287 - 25,964,287 - Deferred amounts related to pension 34,084 3,616 37,700 - Total deferred inflows 25,998,371 3,616 26,001,987 - NET POSITION Net investment in capital assets 42,289,738 41,296,083 83,585,821 - Restricted Community development 7,863,635 - 7,863,635 - Library 253,324 - 253,324 - Impact fees 1,054,213 - 1,054,213 - Tourism 1,550,745 - 1,550,745 - Public safety 23,236 - 23,236 - Senior center 165,042 - 165,042 - Equipment replacement - 60,820 60,820 - Pension 1,718,300 182,320 1,900,620 - Unrestricted 7,595,832 5,232,480 12,828,312 3,077,056 TOTAL NET POSITION 62,514,065 $ 46,771,703 $ 109,285,768 $ 3,077,056 $ Primary Government CITY OF MIDDLETON, WISCONSIN STATEMENT OF NET POSITION December 31, 2015 The accompanying notes are an integral part of the financial statements. 4 ---PAGE BREAK--- Operating Capital Charges for Grants and Grants and Governmental Business Type Component FUNCTIONS/PROGRAMS Expenses Services Contributions Contributions Activities Activities Totals Unit Primary Government Governmental activities: General government 3,576,763 $ 241,765 $ 297,432 $ - $ (3,037,566) $ - $ (3,037,566) $ Public safety 8,768,029 2,177,110 181,549 - (6,409,370) - (6,409,370) Public works 4,413,417 111,507 1,046,789 268,391 (2,986,730) - (2,986,730) Health and human services 458,109 28,453 47,981 - (381,675) - (381,675) Leisure activities 5,712,480 379,749 858,901 351,677 (4,122,153) - (4,122,153) Conservation and economic development 4,889,708 363,097 - - (4,526,611) - (4,526,611) Interest and fiscal charges 1,487,334 - - - (1,487,334) - (1,487,334) Total governmental activities 29,305,840 3,301,681 2,432,652 620,068 (22,951,439) - (22,951,439) Business-type activities: Water 1,665,644 2,317,608 - 534,755 - 1,186,719 1,186,719 Sewer 2,248,664 2,162,934 - 454,349 - 368,619 368,619 Pleasant View Golf Course 1,561,830 2,105,814 - - - 543,984 543,984 Nonmajor Enterprise Funds 259,955 136,580 - 382,128 - 258,753 258,753 Total business-type activities 5,736,093 6,722,936 - 1,371,232 - 2,358,075 2,358,075 Total primary government 35,041,933 $ 10,024,617 $ 2,432,652 $ 1,991,300 $ (22,951,439) 2,358,075 (20,593,364) Component Unit Community Development Authority 160,564 $ 300,391 $ - $ - $ 139,827 $ General revenues: Taxes: Property taxes, levied for general purposes 16,091,735 - 16,091,735 - Property taxes, levied for tax increment district 8,692,301 - 8,692,301 - Other taxes 1,715,156 - 1,715,156 - Cable television franchise fees 257,791 - 257,791 - Intergovernmental revenues not restricted to specific programs 1,602,903 - 1,602,903 - Investment income 106,838 12,521 119,359 856 Miscellaneous 433,314 - 433,314 - Total general revenues 28,900,038 12,521 28,912,559 856 Transfers (2,274,762) 2,274,762 - - Change in net position 3,673,837 4,645,358 8,319,195 140,683 NET POSITION - BEGINNING OF YEAR (RESTATED) 58,840,228 42,126,345 100,966,573 2,936,373 NET POSITION - END OF YEAR 62,514,065 $ 46,771,703 $ 109,285,768 $ 3,077,056 $ 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, 2015 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 8,745,023 $ 28,404 $ 561,832 $ 3,930,664 $ 6,113,696 $ 19,379,619 $ Receivables (net) Taxes Tax levy 16,389,838 - 9,126,295 448,154 - 25,964,287 Special assessments on tax roll - - 177,030 - - 177,030 Other 121,718 - - - - 121,718 Delinquent taxes 42,836 - - - - 42,836 Accounts 364,503 - 83,592 - 302,134 750,229 Loans - - 896,710 - - 896,710 Special assessments 44,027 - 772,965 - - 816,992 Due from other funds - - - 539,971 - 539,971 Advances to other funds 2,594,780 - 4,047,412 - - 6,642,192 Prepaid items 138,082 - - - - 138,082 TOTAL ASSETS 28,440,807 $ 28,404 $ 15,665,836 $ 4,918,789 $ 6,415,830 $ 55,469,666 $ LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES LIABILITIES Accounts payable and accrued liabilities 1,075,232 $ 726 $ 283,688 $ 316,725 $ 371,952 $ 2,048,323 $ Advances from other funds - - - 2,048,999 - 2,048,999 Deposits - - - - 1,264,454 1,264,454 Due to other funds 55,138 - - - - 55,138 Due to other governments 14,106 - - - - 14,106 Total liabilities 1,144,476 726 283,688 2,365,724 1,636,406 5,431,020 DEFERRED INFLOWS OF RESOURCES Subsequent year tax levy 16,389,838 - 9,126,295 448,154 - 25,964,287 Loans receivable - - 896,710 - - 896,710 Special assessments 44,027 - 1,009,883 - - 1,053,910 Other receivables 54,144 - - 12,000 - 66,144 16,488,009 - 11,032,888 460,154 - 27,981,051 FUND BALANCES Nonspendable Prepaid items 138,082 - - - - 138,082 Advances to other funds 2,594,780 - - - - 2,594,780 Noncurrent receivables 42,836 - - - - 42,836 Restricted Debt service - 27,678 - - - 27,678 Community development - - 4,349,260 - 1,563,755 5,913,015 Library - - - - 253,324 253,324 Capital improvements - - - 2,092,911 - 2,092,911 Impact fees - - - - 1,054,213 1,054,213 Tourism - - - - 1,550,745 1,550,745 Public safety - - - - 23,236 23,236 Senior center - - - - 165,042 165,042 Committed Library - - - - 26,613 26,613 Airport - - - - 142,496 142,496 Assigned Post employment benefits 1,156,843 - - - - 1,156,843 Public safety 971,311 - - - - 971,311 Capital improvements 751,107 751,107 Other 300,000 - - - - 300,000 Unassigned 4,853,363 - - - - 4,853,363 Total fund balances 10,808,322 27,678 4,349,260 2,092,911 4,779,424 22,057,595 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES 28,440,807 $ 28,404 $ 15,665,836 $ 4,918,789 $ 6,415,830 $ 55,469,666 $ CITY OF MIDDLETON, WISCONSIN December 31, 2015 BALANCE SHEET GOVERNMENTAL FUNDS The accompanying notes are an integral part of the financial statements. 6 ---PAGE BREAK--- Fund balances - total governmental funds 22,057,595 $ 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. 91,597,714 Some receivables that are not currently available are reported as deferred inflows of resources in the fund financial statements, but are recognized as revenue when earned in the government-wide statements. Loans 896,710 Special assessments 1,053,910 Other receivables 66,144 Long-term assets and deferred outflows are not related to the current period and, therefore, are not reported in the funds. Net pension asset 1,718,300 Deferred outflows of resources related to pension 1,773,436 Deferred inflows of resources related to pension (34,084) 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 (50,730,000) Landfill post-closure liability (612,584) Debt discount or premium (670,887) Compensated absences (4,114,625) Other postemployement benefits (72,412) Accrued interest payable (415,152) NET POSITION OF GOVERNMENTAL ACTIVITIES 62,514,065 $ CITY OF MIDDLETON, WISCONSIN RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION December 31, 2015 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 16,653,374 $ - $ 8,692,301 $ - $ 1,313,852 $ 26,659,527 $ Intergovernmental 2,197,028 - 297,432 939,939 807,020 4,241,419 Licenses and permits 843,742 - - - 518,509 1,362,251 Fines, forfeitures, and penalties 287,498 - - - - 287,498 Public charges for services 1,514,509 - - - 437,208 1,951,717 Intergovernmental charges for services 1,825,802 - - - - 1,825,802 Special assessments 98,979 - 189,008 - - 287,987 Contributions - - - - 72,150 72,150 Investment and interest income 102,875 - 79,422 8,062 (1,689) 188,670 Miscellaneous 160,320 - - 10,920 26,567 197,807 Total revenues 23,684,127 - 9,258,163 958,921 3,173,617 37,074,828 EXPENDITURES Current General government 2,681,988 - 1,954,780 50,298 - 4,687,066 Public safety 8,235,296 - - - - 8,235,296 Public works 3,418,670 - - - - 3,418,670 Health and human services 457,636 - - - - 457,636 Leisure activities 1,394,662 - - - 3,590,985 4,985,647 Conservation and economic development 632,986 - 2,903,296 1,101,000 129,017 4,766,299 Debt service Principal - 13,850,000 - - - 13,850,000 Debt issuance costs - 170,241 - - - 170,241 Interest and fiscal charges - 1,457,238 - - - 1,457,238 Capital outlay - - 2,615,855 4,734,212 8,000 7,358,067 Total expenditures 16,821,238 15,477,479 7,473,931 5,885,510 3,728,002 49,386,160 Excess of revenues over (under) expenditures 6,862,889 (15,477,479) 1,784,232 (4,926,589) (554,385) (12,311,332) OTHER FINANCING SOURCES (USES) Long-term debt issued - 8,375,000 - 3,000,000 - 11,375,000 Premium on debt issued - 391,581 - - - 391,581 Proceeds from sale of capital assets - - - - - - Transfers in 463,070 6,608,800 - 87,303 1,144,792 8,303,965 Transfers out (5,595,356) - (2,105,804) (139,735) - (7,840,895) Net change in fund balances 1,730,603 (102,098) (321,572) (1,979,021) 590,407 (81,681) FUND BALANCES - BEGINNING OF YEAR 9,077,719 129,776 4,670,832 4,071,932 4,189,017 22,139,276 FUND BALANCES - END OF YEAR 10,808,322 $ 27,678 $ 4,349,260 $ 2,092,911 $ 4,779,424 $ 22,057,595 $ For the Year Ended December 31, 2015 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 (81,681) $ 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. 7,331,316 Capital assets transferred to stormwater utility (2,737,832) Depreciation is reported in the government-wide statements (2,237,421) Receivables not currently available are reported as deferred inflows in the fund financial statements but are recognized as revenue when earned in the government-wide financial statements. (143,859) Proceeds from the sale of capital assets are recorded as revenues in the governmental funds but are removed from revenues in the statement of activities The loss on the sale\disposal of capital assets is recognized in the statement of activities $(464,216). (464,216) Debt and lease proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets. Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. Debt issued (11,375,000) Premium on debt issued (391,581) Debt retired 13,850,000 Landfill post-closure liability 2,068 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 (203,683) Other postemployment benefits (72,412) Pension activity 57,993 Amortization of debt premium and discount 102,514 Accrued interest on debt 37,631 Change in net position of governmental activities 3,673,837 $ CITY OF MIDDLETON, WISCONSIN For the Year Ended December 31, 2015 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 Nonmajor View Golf Enterprise ASSETS Water Sewer Course Funds Totals Current Assets Cash and investments 5,100,252 $ 2,450,093 $ - $ 381,380 $ 7,931,725 $ Accounts receivable 452,518 550,774 - 71,098 1,074,390 Accrued interest - 10,576 - - 10,576 Due from other funds 43,109 12,029 - - 55,138 Total current assets 5,595,879 3,023,472 - 452,478 9,071,829 Noncurrent Assets Restricted cash and investments - 60,820 - - 60,820 Restricted net pension asset 71,957 33,275 77,088 - 182,320 Special assessments receivable - 2,041,995 - - 2,041,995 Property held for future use 301,087 - - - 301,087 Capital assets: Property and equipment 28,337,761 16,329,791 11,568,337 3,179,614 59,415,503 Less: Accumulated depreciation (9,168,448) (4,969,896) (1,234,826) (96,637) (15,469,807) Total capital assets, net 19,169,313 11,359,895 10,333,511 3,082,977 43,945,696 Total noncurrent assets 19,542,357 13,495,985 10,410,599 3,082,977 46,531,918 Total assets 25,138,236 16,519,457 10,410,599 3,535,455 55,603,747 DEFERRED OUTFLOWS OF RESOURCES Deferred amounts related to pension 74,266 34,343 79,561 - 188,170 LIABILITIES Current Liabilities Accounts payable and accrued liabilities 110,909 476,802 63,744 138,870 790,325 Due to other funds 457,061 82,910 - - 539,971 Accrued interest - - 30,717 - 30,717 Accrued compensated absences 44,003 18,451 20,102 - 82,556 Current portion of long-term debt - - 949,613 - 949,613 Total current liabilities 611,973 578,163 1,064,176 138,870 2,393,182 Noncurrent Liabilities Accrued compensated absences 176,010 73,803 80,410 - 330,223 Advances from other funds - - 4,193,193 400,000 4,593,193 General obligation debt - - 1,700,000 - 1,700,000 Total noncurrent liabilities 176,010 73,803 5,973,603 400,000 6,623,416 Total liabilities 787,983 651,966 7,037,779 538,870 9,016,598 DEFERRED INFLOWS OF RESOURCES Deferred amounts related to pension 1,427 660 1,529 - 3,616 NET POSITION Net investment in capital assets 19,169,313 11,359,895 7,683,898 3,082,977 41,296,083 Restricted for equipment replacement - 60,820 - - 60,820 Restricted for pension 71,957 33,275 77,088 - 182,320 Unrestricted 5,181,822 4,447,184 (4,310,134) (86,392) 5,232,480 Total net position 24,423,092 $ 15,901,174 $ 3,450,852 $ 2,996,585 $ 46,771,703 $ Business-type Activities Enterprise Funds December 31, 2015 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 Nonmajor View Golf Enterprise Water Sewer Course Funds Total OPERATING REVENUES Charges for services and sales 2,317,608 $ 2,162,934 $ 2,105,814 $ 136,580 $ 6,722,936 $ OPERATING EXPENSES Operation and maintenance 1,150,506 1,941,663 1,366,839 222,972 4,681,980 Depreciation 515,138 307,001 118,670 36,983 977,792 Total operating expenses 1,665,644 2,248,664 1,485,509 259,955 5,659,772 Operating income (loss) 651,964 (85,730) 620,305 (123,375) 1,063,164 NONOPERATING REVENUES (EXPENSES) Loss on disposal of capital assets - - (8,772) - (8,772) Investment income 1,133 11,388 - - 12,521 Interest expense - - (67,549) - (67,549) Total nonoperating revenues (expenses) 1,133 11,388 (76,321) - (63,800) Income (loss) before capital contributions and transfers 653,097 (74,342) 543,984 (123,375) 999,364 CAPITAL CONTRIBUTIONS 534,755 454,349 - 3,119,960 4,109,064 TRANSFERS IN - - - - - TRANSFERS OUT (463,070) - - - (463,070) Change in net position 724,782 380,007 543,984 2,996,585 4,645,358 NET POSITION - BEGINNING OF YEAR (RESTATED) 23,698,310 15,521,167 2,906,868 - 42,126,345 NET POSITION - END OF YEAR 24,423,092 $ 15,901,174 $ 3,450,852 $ 2,996,585 $ 46,771,703 $ Enterprise Funds For the Year Ended December 31, 2015 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 Nonmajor View Golf Enterprise Water Sewer Course Funds Totals CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 2,288,083 $ 2,084,055 $ 2,105,814 $ 65,482 $ 6,543,434 $ Payments to suppliers for goods and services (573,013) (1,550,469) (654,525) (84,102) (2,862,109) Payments to employees for services (448,210) (243,294) (755,258) - (1,446,762) Net cash provided by operating activities 1,266,860 290,292 696,031 (18,620) 2,234,563 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers to other funds (463,070) - - - (463,070) Due from other funds - 82,910 - - 82,910 Advance from TIF No. 3 - - 344,053 400,000 744,053 Net cash provided by (used in) noncapital financing activities (463,070) 82,910 344,053 400,000 363,893 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (587,746) (549,777) (114,684) - (1,252,207) Principal paid on capital debt - - (825,000) - (825,000) Interest paid on capital debt - - (100,400) - (100,400) Net cash used in capital and related financing activities (587,746) (549,777) (1,040,084) - (2,177,607) CASH FLOWS FROM INVESTING ACTIVITIES Interest income received 3,089 10,524 - - 13,613 Net increase (decrease) in cash and cash equivalents 219,133 (166,051) - 381,380 434,462 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 4,881,119 2,676,964 - - 7,558,083 CASH AND CASH EQUIVALENTS - END OF YEAR 5,100,252 $ 2,510,913 $ - $ 381,380 $ 7,992,545 $ Business-type Activities Enterprise Funds For the Year Ended December 31, 2015 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 Nonmajor View Golf Enterprise Water Sewer Course Funds Totals Reconciliation of operating income (loss) to net cash provided by operating activities: Operating income (loss) 651,964 $ (85,730) $ 620,305 $ (123,375) $ 1,063,164 $ Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation expense 515,138 307,001 118,670 36,983 977,792 Depreciation charged to sewer utility 9,745 (9,745) - - - Changes in noncash components of working capital Accounts receivable (29,525) (78,879) - (71,098) (179,502) Special assessments receivable - - - - - Due from other funds (18,340) 22,731 - - 4,391 Accounts payable 103,758 121,573 2,798 138,870 366,999 Pension activity (2,429) (1,123) (2,602) - (6,154) Accrued compensated absences 36,549 14,464 (43,140) - 7,873 Net cash provided by operating activities 1,266,860 $ 290,292 $ 696,031 $ (18,620) $ 2,234,563 $ Reconciliation of cash and cash equivalents to the statement of net position - proprietary funds Cash and investments 5,100,252 $ 2,450,093 $ - $ 381,380 $ 7,931,725 $ Restricted cash and investments - 60,820 - - 60,820 Cash and cash equivalents, end of year 5,100,252 $ 2,510,913 $ - $ 381,380 $ 7,992,545 $ NONCASH INVESTING, CAPITAL, AND RELATED FINANCING ACTIVITIES Developer financed additions to Utility capital assets 534,755 $ 454,349 $ - $ 382,128 $ 1,371,232 $ City financed additions to Utility capital assets - - - 2,737,832 2,737,832 Business-type Activities Enterprise Funds CITY OF MIDDLETON, WISCONSIN STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2015 (Concluded) The accompanying notes are an integral part of the financial statements. 13 ---PAGE BREAK--- Total Fire Agency Tax Roll District Funds ASSETS Cash and investments 24,263,155 $ 207,701 $ 24,470,856 $ Taxes receivable 15,136,581 - 15,136,581 Total assets 39,399,736 $ 207,701 $ 39,607,437 $ LIABILITIES Accounts payable - $ 73,658 $ 73,658 $ Due to other governmental units 39,399,736 134,043 39,533,779 Total liabilities 39,399,736 $ 207,701 $ 39,607,437 $ CITY OF MIDDLETON, WISCONSIN STATEMENT OF FIDUCIARY NET POSITION December 31, 2015 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, 2015 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). The City adopted GASB Statement No. 68 Accounting and Financial Reporting for Pensions-an amendment of GASB Statement Number 27 and the related GASB Statement No. 71 Pension Transition for Contributions Made Subsequent to the Measurement Date-an amendment of GASB Statement No. 68 as of January 1, 2015. The standard revises and establishes new financial reporting requirements for most governments that provide their employees with pension benefits. As result of the implementation of these standards, the City reported a restatement for the change in accounting principle see Note 5. A. Reporting Entity This report includes all of the funds of the City of Middleton, Wisconsin. The reporting entity for the City consists of the primary government, organizations for which the primary government is financially accountable, and other organizations for which the nature and significance of their relationship with the primary government are such that their exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. A legally separate organization should be reported as a component unit if the elected officials of the primary government are financially accountable to the organization. The primary government is financially accountable if it appoints a voting majority of the organization’s governing body and it is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to or burdens on the primary government. The primary government may be financially accountable if an organization is fiscally dependent on the primary government. A legally separate tax exempt organization should be reported as a component unit of the reporting entity if all of the following criteria are met: the economic resources received or held by the separate organization are entirely or almost entirely for the direct benefit of the primary government, its component units, or its constituents; and the primary government is entitled to, or has the ability to otherwise access, a majority of the economic resources received or held by an individual organization that the specific primary government, or its component units, is entitled to, or has the ability to otherwise access, are significant to that primary government. Blended component units, although legally separate entities, are, in substance, part of the government’s operations and are reported with similar funds of the primary government. Discretely presented component units are reported in a separate column in the government-wide financial statements to emphasize that they are legally separate from the primary government. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 16 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Government-Wide and Fund Financial Statements Discretely Presented Component Unit - Community Development Authority of the City of Middleton, Wisconsin The government-wide financial statements include the Community Development Authority of the City of Middleton, Wisconsin (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. 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 is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. The City does not allocate indirect expenses to functions in the statement of activities. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not included among program revenues are reported as general revenues. Internally dedicated resources are reported as general revenues rather than as program revenues. Fund Financial Statements Each fund is considered to be a separate accounting entity and is accounted for by providing a separate set of self-balancing accounts, which constitute its assets, deferred outflows of resources, liabilities, deferred inflows of resources, net position/fund balance, revenues, and expenditure/expenses. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 17 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Government-Wide and Fund Financial Statements (Continued) Funds are organized as major funds or nonmajor funds within the governmental and enterprise fund financial statements. A fund is considered major if it is the primary operating fund of the City or meets the following criteria: a. Total assets and deferred outflows of resources, liabilities and deferred inflows of resources, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least 10% of the corresponding total for all funds of that category or type, and b. The same element of the individual governmental fund or enterprise fund that met the 10% test is at least 5% of the corresponding total for all governmental and enterprise funds combined. c. In addition, any other governmental or enterprise fund that the City believes is particularly important to financial statement users may be reported as a major fund. The City reports the following major governmental funds: General Fund - accounts for the City’s primary operating activities. It is used to account for all financial resources except those required to be accounted for in another fund. Debt Service Fund - accounts resources accumulated and payments made for principal and interest on long-term debt other than enterprise fund debt. Tax Incremental Financing District (TIF) No. 3 Capital Projects Funds - accounts for expenditures outlined in the TIF project plan and related revenues and proceeds from long- term borrowing. Capital Projects Fund - accounts for proceeds from long-term borrowing and other resources to be used for improvement projects originally initiated. The City reports the following major enterprise funds: Water Utility - accounts for operations of the water system. Sanitary Sewer - accounts for operations of the sewer system. Pleasant View Golf Course - accounts for operations of the Pleasant View Golf Course. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 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 Fund Public Land Activities Airport Senior Center Activities Safety Impact Fee and Other The City reports the following nonmajor enterprise funds: Stormwater Utility – used to account for the operations of stormwater system. Middleton Utility District – accounts for the operations of the utility district. In addition, the City reports the following fund types: Agency funds - used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, and/or other governmental units. Tax Roll Fire District C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation Government-Wide Financial Statements The government-wide statement of net position and statement of activities are reported using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Property taxes are recognized as revenues in the year for which they are levied. Taxes receivable for the following year are recorded as receivables and deferred inflows of resources. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider are met. Special assessments are recorded as revenue when earned. Unbilled receivables are recorded as revenues when services are provided. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 19 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the City’s Water and Sewer utility and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions. Fund Financial Statements Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recorded when they are both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on long-term debt, claims, judgments, compensated absences, and pension expenditures, which are recorded as a fund liability when expected to be paid with expendable available financial resources. Property taxes are recorded in the year levied as receivables and deferred inflows of resources. They are recognized as revenues in the succeeding year when services financed by the levy are being provided. Intergovernmental aids and grants are recognized as revenues in the period the City is entitled to the resources and the amounts are available. Amounts owed to the City, which are not available, are recorded as receivables and deferred inflows of resources. Amounts received prior to the entitlement period are 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 of resources. Delinquent special assessments being held for collection by the county are reported as receivables and deferred inflows of resources in the General Fund. Revenues susceptible to accrual include property taxes, miscellaneous taxes, public charges for services, special assessments, and interest. Other general revenues such as fines and forfeitures, inspection fees, recreation fees, and miscellaneous revenues are recognized when received in cash or when measurable and available under the criteria described above. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 20 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) The City reports unearned revenues and deferred inflows of resources on its governmental funds balance sheet. Deferred inflows of resources arise from taxes levied in the current year which are for the subsequent year’s operations, special assessments to be collected in future years and loans receivable to be collected in future years. For governmental fund financial statements, deferred inflows of resources arise when a potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. Unearned revenues also arise when resources are received before the City has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the City has a legal claim to the resources, the liability for unearned revenue or deferred inflow of resources is removed from the balance sheet and revenue is recognized. Proprietary and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as described previously in this note. Agency funds follow the accrual basis of accounting and do not have a measurement basis. The proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Water Utility, Sewer Utility, Stormwater Utility, the Middleton Utility District and Pleasant View Golf Course are charges to customers for sales and services. Special assessments are recorded as receivables and contributions when levied. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. All Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America require management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities, deferred inflows of resources and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 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, 2015 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, 2015, 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, 2015 23 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Position or Equity (Continued) 2. Receivables (Continued) Property tax calendar - 2015 tax roll: Lien date and levy date December 2015 Tax bills mailed December 2015 Payment in full, or January 31, 2016 First installment due January 31, 2016 Second installment due July 31, 2016 Personal property taxes in full January 31, 2016 Tax deed - 2015 delinquent real estate taxes October 2018 Accounts receivable have been shown net of an allowance for uncollectible accounts. Delinquent real estate taxes as of July 31 are paid in full by the county, which assumes the collection thereof. No provision for uncollectible accounts receivable has been made for the Water and Sewer Utilities because they have the right by law to place delinquent bills on the tax roll, and other delinquent bills are generally not significant. During the course of operations, transactions occur between individual funds that may result in amounts owed between funds. Short-term interfund loans are reported as “due to and from other funds.” Long-term interfund loans (noncurrent portion) are reported as “advances from and to other funds.” Interfund receivables and payables between funds within governmental activities are eliminated in the statement of net position. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances”. In the General Fund financial statements, advances to other funds are offset equally by a fund balance nonspendable account which indicates that they do not constitute expendable available resources and, therefore, are not available for appropriation. The City has received federal grant funds for economic development loan programs to various businesses. It is the City’s policy to record revenue and expenditure when the initial loan is made from the federal grant funds. The City records a loan receivable and deferred inflows of resources when the loan has been made and funds have been disbursed. As loans are repaid, the receivable is reduced and revenue is recorded. Interest received from loan repayments is recognized as revenue when received in cash. Any unspent loan repayments at year end are presented as restricted fund balance in the governmental fund balance sheet. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 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. Pensions For purposes of measuring the net pension liability (asset), deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Wisconsin Retirement System (WRS) and additions to/deductions from WRS’ fiduciary net position have been determined on the same basis as they are reported by WRS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 6. 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. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 25 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Position or Equity (Continued) 6. Capital Assets (Continued) Government-Wide Statements (Continued) 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. Depreciation of all exhaustible capital assets is recorded as an allocated expense in the statement of activities, with accumulated depreciation reflected in the statement of net position. Depreciation is provided over the assets’ estimated useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of asset is as follows: Buildings 40 Years Land improvements 30 Years Machinery and equipment 3-15 Years Infrastructure 20-50 Years Water Plant Source of supply 34 Years Pumping 22-31 Years Water treatment 22-30 Years Transmission and distribution 18-77 Years General 4-17 Years Sewer Plant Collecting system 30-77 Years Collecting system pumping 20-40 Years General 7-40 Years Fund Financial Statements In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for the same way as in the government-wide statements. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 26 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Position or Equity (Continued) 7. Compensated Absences Under terms of employment, employees are granted sick leave and vacations in varying amounts. Only benefits considered to be vested are disclosed in these statements. All vested vacation and sick leave pay is accrued when incurred in the government-wide and proprietary financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements, or are payable with expendable available resources. 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, 2015 are determined on the basis of current salary rates and include salary-related payments. The City provides postemployment health insurance benefits for all eligible employees. Eligibility is based on retiring from the City or becoming disabled and being eligible to receive social security benefits or Wisconsin Retirement benefits. The benefits are based on contractual agreements with employee groups, local ordinances, and employee benefit policies. 8. Long-Term Obligations/Conduit Debt All long-term obligations to be repaid from governmental and business-type resources are reported as liabilities in the government-wide statements. The long-term obligations consist primarily of notes and bonds payable, landfill post-closure liability, and accrued compensated absences. Long-term obligations for governmental funds are not reported as liabilities in the fund financial statements. The face-value of debts are reported as other financing sources, premium or discount on debt is reported as other financing sources or uses, and payments of principal and interest are reported as expenditures. The accounting in proprietary funds is the same as it is in the government-wide statements. For the government-wide statements and proprietary fund statements, bond premiums and discounts are deferred and amortized over the life of the issue. Gains or losses on prior debt refunding are amortized over the remaining life of the old debt, or the life of the new debt, whichever is shorter. The balance at year-end for both premiums and discounts is shown as an increase or decrease in the liability section of the statement of net position. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 27 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Position or Equity (Continued) 8. Long-Term Obligations/Conduit Debt (Continued) The City may approve the issuance of industrial revenue bonds (IRB) for the benefit of private business enterprises. IRB's are secured by mortgages or revenue agreements on the associated projects, and do not constitute indebtedness of the City. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. No industrial revenue bonds were outstanding as of the end of the year. 9. Claims and Judgments Claims and judgments are recorded as liabilities if all the conditions of Governmental Accounting Standards Board pronouncements are met. The liability and expenditure for claims and judgments is only reported in governmental fund types if it has matured. Claims and judgments are recorded in the government-wide statements and proprietary funds as expenses when the related liabilities are incurred. There were no significant claims or judgments at year-end. 10. Equity Classifications Government-Wide Statements Equity is classified as net 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, 2015 28 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Position or Equity (Continued) 10. Equity Classifications (Continued) Fund Statements In the governmental fund financial statements, governmental funds report nonspendable fund balance for amounts that cannot be spent because they are either: Not in spendable form; or Legally or contractually required to be maintained intact. Restricted fund balance is reported when constraints placed on the use of resources are either: Externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments; or Imposed by law through constitutional provisions or enabling legislation Committed fund balance is reported for amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the Common Council. Assigned fund balance is reported for amounts that are constrained by the City management’s intent to be used for specific purposes, but is neither restricted nor committed. Unassigned fund balance is the residual classification for the General Fund or deficit balances in other funds. When restricted, committed, assigned, and unassigned amounts are available for use, it is the City’s policy to use restricted resources first, then committed resources, then assigned resources, then unassigned resources as they are needed. 11. Basis for Existing Rates - Proprietary Funds Billings are rendered and recorded quarterly based on metered usage. The utilities do not accrue revenues beyond billing dates. Water rates were approved by the Public Service Commission of Wisconsin and became effective July 1, 2015. Sewer rates were approved by the Common Council effective December 15, 2015. Stormwater Utility rates were approved by the Common Council effective July 1, 2015. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 29 NOTE 2 - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY Budgetary Information Budgetary information is derived from the annual operating budget and is presented using the same basis of accounting for each fund as described in Note 1. A budget has been adopted for the General Fund, Debt Service Fund, certain special revenue funds, and capital project funds. Wisconsin Statute Section 65.90 requires that an annual budget be adopted for all funds. The budgeted amounts presented include any amendments made. The City may authorize transfers of budgeted amounts between departments up to $1,000. Transfers exceeding $1,000 between departments and changes in the overall budget must be approved by a two-thirds vote of the City Council. Appropriations lapse at year-end unless specifically carried over. Excess Expenditures over Appropriations The following individual funds experienced excess expenditures over appropriations: Excess Budgeted Actual Expenditures Expenditures Expenditures Over Budget General Fund Health and human services 445,825 457,636 11,811 Police Activities 5,000 8,000 3,000 Public Land Activities 100,000 417,778 317,778 Senior Center Activites 20,000 25,924 5,924 Library Fund 1,938,421 1,985,774 47,353 Public Works Capital Construction 3,656,225 3,669,000 12,775 TIF 5 Fund 723,015 1,431,998 708,983 The legal level of budget control is the function level in the General Fund and total expenditures in all other funds. The City controls expenditures at the departmental level for management purposes. TIF District No. 3 debt service was included in the Debt Service Fund, rather than TIF District No. 3. TIF District No. 3 debt service was funded by TIF. The detail of those items can be found in the City’s year-end budget to actual report. Limitations on the City’s Tax Levy As part of Wisconsin’s Act 32 (2011), legislation was passed that limits the City’s future tax levies. Generally, the City is limited to its prior tax levy dollar amount (excluding TIF Districts), increased by the greater of the percentage change in the City’s equalized value due to new construction or zero percent for the 2012 levy collected in 2013 and thereafter. Changes in debt service from one year to the next are generally exempt from this limit, with certain exceptions. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 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 3,558 $ - $ Demand deposits Noninterest bearing 5,396,340 3,147,294 $ Custodial credit Interest bearing 28,740,824 29,337,850 Custodial credit Certificates of deposit 5,540,956 5,540,956 Custodial credit Money market 12,190,491 12,190,491 Custodial credit Total deposits 51,868,611 50,216,591 Investments Madison Community Foundation 212,422 212,409 Custodial credit Local Government Investment Pool (LGIP) 513,884 513,884 Credit, interest rate Total investments 726,306 726,293 Total cash and investments 52,598,475 $ 50,942,884 $ Reconciliation to the statement of net position: Unrestricted cash and investments 27,311,344 $ Restricted cash and investments 60,820 Fiduciary funds - Agency Fund 24,470,856 51,843,020 Cash and investments held for component unit: Unrestricted 755,455 Total cash and investments 52,598,475 $ The City’s library had $212,422 in an endowment fund at the Madison Community Foundation, which is pooled with all other investments of the Foundation. The Foundation has variance power over the funds in the endowment. Deposits in each local bank are insured by the FDIC in the amount of $250,000 for demand deposits and $250,000 for time and savings deposits. Bank accounts are also insured by the State Deposit Guarantee Fund in the amount of $400,000. However, due to the relatively small size of the Guarantee Fund in relationship to the total deposits covered and other legal implications, recovery of material principal losses may not be significant to individual municipalities. This coverage has not been considered in computing the custodial credit risk. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 31 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) A. Cash and Investments (Continued) Custodial Credit Risk Deposits - Custodial credit risk is the risk that in the event of a financial institution failure, the City’s deposits may not be returned to the City. As of December 31, 2015, $10,194,954 of the City’s total bank balances of $50,216,591 was exposed to custodial credit risk as uninsured and uncollateralized. Investments - For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investment or collateral securities that are in the possession of an outside party. The City had no investments exposed to custodial credit risk. Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The City had investments in the following external pools which are not rated: Local Government Investment Pool Interest Rate Risk The City had $513,884 invested in the local government investment pool, which had a weighted average maturity of 49 days. The City had $5,540,956 invested in certificate of deposits with a weighted average maturity of 58 days. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 32 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) B. Receivables As of December 31, 2015, the City of Middleton, Wisconsin had the following receivables outstanding: Nonmajor Nonmajor TIF District Capital Governmental Water Sewer Enterprise General No. 3 Projects Funds Utility Utility Funds Total Taxes 16,554,392 $ 9,126,295 $ 448,154 $ - $ - $ - $ - $ 26,128,841 $ Accounts 364,503 83,592 - 302,134 452,518 550,774 71,098 1,824,619 Interest - - - - - 10,576 - 10,576 Loans - 896,710 - - - - - 896,710 Special assessments 44,027 949,995 - - - 2,041,995 - 3,036,017 Total receivables 16,962,922 $ 11,056,592 $ 448,154 $ 302,134 $ 452,518 $ 2,603,345 $ 71,098 $ 31,896,763 $ All receivables on the balance sheet are expected to be collected within one year except for the following: General TIF District Sewer Fund No. 3 Utility Total Amounts not expected to be collected within one year 44,027 $ 1,669,675 $ 2,041,995 $ 3,755,697 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 33 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) C. Deferred Inflows of Resources and Unearned Revenue Governmental funds report deferred inflows of resources in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds report deferred inflows of resources for the subsequent year’s tax levy. Governmental funds report a liability in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred inflows of resources reported in the governmental funds were as follows: Unavailable Tax Levy Total Property taxes - $ 25,964,287 25,964,287 Loan receivable 896,710 - 896,710 Special assessments not yet due 1,053,910 - 1,053,910 Other receivables 66,144 - 66,144 2,016,764 $ 25,964,287 $ 27,981,051 $ 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, 2015, 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, 2015 was $60,820. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 34 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) E. Capital Assets Capital asset activity for the year ended December 31, 2015 was as follows: Beginning Transfer to Ending Balance Additions Deletions Stormwater Balance Governmental activities Capital assets not being depreciated Land 7,859,229 $ 1,352,974 $ - $ 1,764,150 $ 7,448,053 $ Right of way 18,751,280 - - - 18,751,280 Construction in progress 12,389,185 57,265 12,095,507 293,678 57,265 Total capital assets not being depreciated 38,999,694 1,410,239 12,095,507 2,057,828 26,256,598 Capital assets being depreciated Land improvements 7,930,507 349,089 23,899 739,658 7,516,039 Buildings 19,859,289 9,833,173 1,077,450 - 28,615,012 Machinery and equipment 5,757,449 160,155 360,194 - 5,557,410 Streets-infrastructure 21,351,413 6,174,270 - - 27,525,683 Storm sewers-infrastructure 8,995,968 298,878 - - 9,294,846 Traffic signals-infrastructure 1,331,766 322,293 - - 1,654,059 Sidewalks-infrastructure 3,275,357 878,726 - - 4,154,083 Bridges-infrastructure 3,278,231 - - - 3,278,231 Rail spur-infrastructure 482,163 - - - 482,163 Total capital assets being depreciated 72,262,143 18,016,584 1,461,543 739,658 88,077,526 Less: accumulated depreciation for Land improvements 3,157,963 375,547 15,732 59,654 3,458,124 Buildings 4,874,158 715,377 623,893 - 4,965,642 Machinery and equipment 3,939,574 340,743 357,702 - 3,922,615 Streets-infrastructure 4,186,516 410,831 - - 4,597,347 Storm sewers-infrastructure 2,576,273 185,897 - - 2,762,170 Traffic signals-infrastructure 717,812 66,162 - - 783,974 Sidewalks-infrastructure 1,466,234 83,082 - - 1,549,316 Bridges-infrastructure 486,265 43,710 - - 529,975 Rail spur-infrastructure 151,175 16,072 - - 167,247 Total accumulated depreciation 21,555,970 2,237,421 997,327 59,654 22,736,410 Capital assets being depreciated, net of depreciation 50,706,173 15,779,163 464,216 680,004 65,341,116 Total capital assets, net of depreciation 89,705,867 $ 17,189,402 $ 12,559,723 $ 2,737,832 $ 91,597,714 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 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 $ Total capital assets not being depreciated 222,277 - - 222,277 Capital assets being depreciated Source of supply 781,509 - - 781,509 Pumping 2,796,186 4,712 - 2,800,898 Treatment 343,242 115,360 - 458,602 Transmission and distribution 22,330,783 932,524 98,985 23,164,322 Administrative and general assets 711,505 198,648 - 910,153 Total capital assets being depreciated 26,963,225 1,251,244 98,985 28,115,484 Less: accumulated depreciation for Source of supply 392,631 25,790 - 418,421 Pumping 1,480,166 98,815 - 1,578,981 Treatment 343,242 6,362 - 349,604 Transmission and distribution 5,899,064 337,366 98,985 6,137,445 Administrative and general assets 627,447 56,550 - 683,997 Total accumulated depreciation 8,742,550 524,883 98,985 9,168,448 Capital assets being depreciated, net of depreciation 18,220,675 726,361 - 18,947,036 Total capital assets, net of depreciation 18,442,952 $ 726,361 $ - $ 19,169,313 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 36 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) E. Capital Assets (Continued) Beginning Ending Balance Additions Deletions Balance Sewer Utility Capital assets not being depreciated Land and land rights 66,830 $ - $ - $ 66,830 $ Construction in progress - 305,353 - 305,353 Total capital assets not being depreciated 66,830 305,353 - 372,183 Capital assets being depreciated Collection system 13,405,522 698,773 28,037 14,076,258 Collection system pumping 1,348,798 - - 1,348,798 Administrative and general assets 532,552 - - 532,552 Total capital assets being depreciated 15,286,872 698,773 28,037 15,957,608 Less: accumulated depreciation 4,700,677 297,256 28,037 4,969,896 Capital assets being depreciated, net of depreciation 10,586,195 401,517 - 10,987,712 Total capital assets, net of depreciation 10,653,025 $ 401,517 $ - $ 11,359,895 $ 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 7,315,236 - - 7,315,236 Buildings 1,325,553 - - 1,325,553 Equipment 652,693 114,684 55,829 711,548 Total capital assets being depreciated 9,293,482 114,684 55,829 9,352,337 Less: accumulated depreciation for Land improvements 352,731 19,900 - 372,631 Buildings 295,262 42,445 - 337,707 Equipment 515,220 56,325 47,057 524,488 Total accumulated depreciation 1,163,213 118,670 47,057 1,234,826 Capital assets being depreciated, net of depreciation 8,130,269 (3,986) 8,772 8,117,511 Total capital assets, net of depreciation 10,346,269 $ (3,986) $ 8,772 $ 10,333,511 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 37 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) E. Capital Assets (Continued) Transfer From Beginning Governmental Ending Balance Activities Additions Deletions Balance Nonmajor Enterprise Funds Capital assets not being depreciated Land and land rights - $ 1,764,150 $ 170,999 $ - $ 1,935,149 $ Construction in progress - 293,678 211,129 - 504,807 Total capital assets not being depreciated - 2,057,828 382,128 - 2,439,956 Capital assets being depreciated Land improvements - 739,658 - - 739,658 Less: accumulated depreciation for Land improvements - 59,654 36,983 - 96,637 Capital assets being depreciated, net of depreciation - 680,004 (36,983) - 643,021 Total capital assets, net of depreciation - $ 2,737,832 $ 345,145 $ - $ 3,082,977 $ Total net capital assets- business-type activities 39,442,246 $ 2,737,832 $ 1,469,037 $ 8,772 $ 43,945,696 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 38 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) E. Capital Assets (Continued) Depreciation expense was charged to functions as follows: Governmental activities General government 52,049 $ Public safety 479,307 Public works, which includes the depreciation of streets, storm sewers, traffic signals, sidewalks, bridges, and rail spur 1,140,226 Conservation and development 115,325 Leisure activities 450,514 Total governmental activities depreciation expense 2,237,421 $ Business-type activities Water Utility Depreciation 524,883 $ Depreciation charged to Sewer Utility operation and maintenance expenses (9,745) 515,138 Sewer Utility Depreciation 297,256 Depreciation charged to Sewer Utility operation and maintenance expenses 9,745 307,001 Stormwater Utility 36,983 Pleasant View Golf Course 118,670 Total business-type activities depreciation expense 1,284,793 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 39 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) F. Interfund Receivables/Payables and Transfers The following is a schedule of interfund receivables and payables reported in due to and due from other funds in the financial statements, including any overdrafts on pooled cash and investment accounts. Receivable Fund Payable Fund Amount Water Utility General Fund 43,109 $ Sewer Utility General Fund 12,029 Public Works Capital Construction Water Utility 457,061 Public Works Capital Construction Sewer Utility 82,910 Total fund financial statements 595,109 $ 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 City of Middleton, Wisconsin General Fund and TIF District No. 3 have provided internal financing to the Pleasant View Golf Course, TIF District No. 5, and the Middleton Utility District. No repayment schedules have been established on the advances to the Pleasant View Golf Course and these amounts are not expected to be paid within one year. The principal purpose of these advances is to finance costs internally rather than borrowing externally. For the statement of net position, interfund balances which are owed within the governmental activities or business-type activities are netted and eliminated. The following is a schedule of interfund advances. Receivable Fund Payable Fund Amount General Fund Pleasant View Golf Course 2,594,780 $ TIF District No. 3 TIF District No. 5 2,048,999 TIF District No. 3 Pleasant View Golf Course 1,598,413 TIF District No. 3 Middleton Utility District 400,000 Total fund financial statements 6,642,192 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 40 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) F. Interfund Receivables/Payables and Transfers (Continued) The following is a schedule of interfund transfers: Nonmajor Debt Capital Special Transfer Out Fund General Service Projects Revenue Total General - $ 4,363,261 $ 87,303 $ 1,144,792 $ 5,595,356 $ TIF District No. 3 - 2,105,804 - - 2,105,804 Capital Projects Fund - 139,735 - - 139,735 Water Utility 463,070 - - - 463,070 Totals 463,070 $ 6,608,800 $ 87,303 $ 1,144,792 $ 8,303,965 $ 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. The City created a Stormwater Utility through action of the City Council. Capital assets were contributed from the Governmental Activities to the Stormwater Utility. On the Statement of Revenues, Expenses, and Changes in Net Position for the Stormwater Utility the assets were recognized as capital contributions in the amount of $2,737,832 from the City. The capital contribution from the City was eliminated of the Government-wide Statement of Activities as a transfer. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 41 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) G. Long-Term Obligations Long-term obligations activity for the year ended December 31, 2015 was as follows: Amounts Beginning Ending Due Within Balance Increases Decreases Balance One Year Governmental activities Bonds and notes payable General obligation debt 53,205,000 $ 11,375,000 $ 13,850,000 $ 50,730,000 $ 5,680,000 $ Debt premium and discount 381,820 391,581 102,514 670,887 - Landfill post-closure liability 614,652 - 2,068 612,584 - 54,201,472 11,766,581 13,954,582 52,013,471 5,680,000 Other liabilities: Other postemployment benefits - 117,453 45,041 72,412 45,000 Vested compensated absences 3,910,942 1,018,430 814,747 4,114,625 814,747 Total other liabilities 3,910,942 1,135,883 859,788 4,187,037 859,747 Total governmental activities long-term liabilities 58,112,414 $ 12,902,464 $ 14,814,370 $ 56,200,508 $ 6,539,747 $ Business-type activities Bonds and notes payable General obligation debt 3,470,000 $ - $ 825,000 $ 2,645,000 $ 945,000 $ Debt premium 32,292 - 27,679 4,613 4,613 3,502,292 - 852,679 2,649,613 949,613 Other liabilities: Vested compensated absences 404,906 85,549 77,676 412,779 77,676 Total other liabilities 404,906 85,549 77,676 412,779 77,676 Total business-type activities long-term liabilities 3,907,198 $ 85,549 $ 930,355 $ 3,062,392 $ 1,027,289 $ 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. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 42 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) G. Long-Term Obligations (Continued) General Obligation Debt (Continued) The following general obligation debt was issued in 2015: $6,500,000 General Obligation Refunding Bonds, Series 2015A On December 8, 2015, the City of Middleton, Wisconsin issued $6,500,000 General Obligation Refunding Bonds, Series 2015A. The proceeds of the bonds were used for the purpose of current refunding the $6,500,000 Note Anticipation Notes outstanding that were dated December 9, 2014. The refunding bonds will bear interest at rates ranging from 2.00% to 3.00%, with the final principal payment due September 1, 2030. The refunding of Note Anticipation Notes resulted in no economic gain (difference between the present values of the debt service payments on the old and new debt). $3,000,000 General Obligation Promissory Notes, Series 2015B On December 8, 2015, the City of Middleton, Wisconsin issued $3,000,000 General Obligation Promissory Notes, Series 2015B. The proceeds of the notes will be used for public purposes, including paying the cost of the 2016 capital improvement program participants. The notes will bear interest at a stated interest rate of 2.00%, with the final principal payment due February 1, 2023. $1,875,000 General Obligation Promissory Notes, Series 2015C On December 21, 2015, the City of Middleton, Wisconsin issued $1,875,000 General Obligation Promissory Notes, Series 2015C. The proceeds of the notes will be used for the purpose of current refunding $800,000 of the General Obligation Promissory Notes, Series 2008B, dated June 2, 2008; and $1,050,000 of the General Obligation Promissory Notes, Series 2008D, dated December 30, 2008. The promissory notes will bear interest at rates ranging from 2.00%, with the final principal payment being due August 1, 2017. The refunding resulted in a reduction of total debt service over 2 years by $66,183 and to obtain an economic gain (difference between the present values of the debt service payments on the old and new debt) of $18,024. Legal Debt Margin 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, 2015, was $145,366,755. Total general obligation debt outstanding at year end was $53,375,000. The City was in compliance with the legal debt limitation as of December 31, 2015. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 43 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) G. Long-Term Obligations (Continued) General Obligation Debt (Continued) Date of Final Interest Original Balance Type Issue Maturity Rates Amount 12/31/15 Governmental Activities General Obligation Debt 2008 General obligation refunding bonds 06/02/08 12/01/27 3.00%-4.00% 6,530,000 $ 5,060,000 $ 2010 General obligation refunding bonds 04/15/10 09/01/29 1.45%-8.5% 10,110,000 8,340,000 2010 General obligation promissory notes 04/15/10 09/01/17 1.20%-3.80% 2,010,000 560,000 2010 Taxable general obligation refunding bonds 11/23/10 09/01/20 .85%-3.75% 6,580,000 4,020,000 2010 General obligation refunding bonds 11/23/10 09/01/20 2.00%-4.00% 4,625,000 2,955,000 2011 General obligation promissory notes 05/09/11 09/01/19 2.00%-3.00% 2,500,000 1,865,000 2012 Taxable general obligation promissory notes 05/12/12 03/01/19 .46%-1.85% 2,540,000 1,485,000 2012 General obligation promissory notes 05/12/12 09/01/20 2.00%-2.25% 2,015,000 1,295,000 2012 General obligation promissory notes 12/28/12 09/01/21 1.00%-2.00% 4,500,000 3,450,000 2012 General obligation refunding bonds 12/28/12 09/01/32 1.05%-3.80% 5,110,000 5,110,000 2013 General obligation promissory notes 12/23/13 02/01/23 2.00%-3.00% 4,000,000 3,475,000 2014 General obligation promissory notes 12/09/14 08/01/22 2.00%-3.00% 2,000,000 1,740,000 2015 General obligation promissory notes 12/08/15 09/01/30 2.00%-3.00% 6,500,000 6,500,000 2015 General obligation promissory notes 12/08/15 02/01/23 2.00% 3,000,000 3,000,000 2015 General obligation promissory notes 12/21/15 08/01/17 2.00% 1,875,000 1,875,000 Total governmental activities- general obligation debt 50,730,000 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 44 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 12/31/15 Business-type Activities General Obligation Debt 2008 General obligation refunding bonds 12/30/08 09/01/21 3.505%-4.45% 1,700,000 $ 1,700,000 $ 2012 General obligation refunding bonds 02/27/12 03/01/16 2.00% 3,100,000 945,000 Total business-type activities - general obligation debt 2,645,000 $ Debt service requirements to maturity are as follows: Principal Interest Principal Interest Totals 2016 5,680,000 $ 1,490,567 $ 945,000 $ 82,700 $ 8,198,267 $ 2017 5,835,000 1,436,126 300,000 66,875 7,638,001 2018 5,550,000 1,293,204 300,000 54,125 7,197,329 2019 5,395,000 1,141,354 400,000 39,250 6,975,604 2020 4,880,000 983,447 400,000 22,050 6,285,497 2021-2025 13,200,000 3,275,621 300,000 6,675 16,782,296 2026-2030 8,475,000 1,201,420 - - 9,676,420 2031-2033 1,715,000 81,730 - - 1,796,730 Totals $ 50,730,000 $ 10,903,469 $ 2,645,000 $ 271,675 $ 64,550,144 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, 2015 45 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) H. Governmental Activities Net Position/Fund Balances Governmental Activities Governmental activities net position reported on the government wide Statement of Net Position at December 31, 2015 includes the following: Net investment in capital assets Capital assets, net of accumulated depreciation $ 91,597,714 Less: related long-term debt (excluding unspent capital related debt proceeds) (49,307,976) Total invested in capital assets, net of related debt 42,289,738 Restricted Community development 7,863,635 Library 253,324 Impact fees 1,054,213 Tourism 1,550,745 Public safety 23,236 Senior center 165,042 Pension 1,718,300 12,628,495 Unrestricted 7,595,832 Total governmental activities net position 62,514,065 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 46 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, 2015 include the following: TIF Debt District Capital General Service No. 3 Projects Nonmajor Total Nonspendable Prepaid items 138,082 $ - $ - $ - $ - $ 138,082 $ Advances to other funds 2,594,780 - - - - 2,594,780 Noncurrent receivables 42,836 - - - - 42,836 2,775,698 - - - - 2,775,698 Restricted Debt service - 27,678 - - - 27,678 Community development - - 4,349,260 - 1,563,755 5,913,015 Library - - - - 253,324 253,324 Capital improvements - - - 2,092,911 - 2,092,911 Impact fees - - - - 1,054,213 1,054,213 Tourism - - - - 1,550,745 1,550,745 Public safety - - - - 23,236 23,236 Senior center - - - - 165,042 165,042 - 27,678 4,349,260 2,092,911 4,610,315 11,080,164 Committed Library - - - - 26,613 26,613 Airport - - - - 142,496 142,496 - - - - 169,109 169,109 Assigned Post employment benefits 1,156,843 - - - - 1,156,843 Public safety - fire 683,311 - - - - 683,311 Public safety - EMS 288,000 - - - - 288,000 Capital improvements 751,107 - - - - 751,107 Other 300,000 - - - - 300,000 3,179,261 - - - - 3,179,261 Unassigned 4,853,363 - - - - 4,853,363 Total fund balances 10,808,322 $ 27,678 $ 4,349,260 $ 2,092,911 $ 4,779,424 $ 22,057,595 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 47 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, 2015 include the following: Pleasant Nonmajor View Golf Proprietary Water Sewer Course Funds Totals Capital assets 28,337,761 $ 16,329,791 $ 11,568,337 $ 3,179,614 $ 59,415,503 $ Accumulated depreciation (9,168,448) (4,969,896) (1,234,826) (96,637) (15,469,807) Subtotals 19,169,313 11,359,895 10,333,511 3,082,977 43,945,696 Less capital related long-term debt - - 2,649,613 - 2,649,613 Net investment in capital assets 19,169,313 11,359,895 7,683,898 3,082,977 41,296,083 Restricted for equipment replacement - 60,820 - - 60,820 Restricted for pension 71,957 33,275 77,088 - 182,320 Unrestricted (deficit) 5,181,822 4,447,184 (4,310,134) (86,392) 5,232,480 Total business-type activities net position 24,423,092 $ 15,901,174 $ 3,450,852 $ 2,996,585 $ 46,771,703 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 48 NOTE 3 - DETAILED NOTES ON ALL FUNDS (Continued) I. Component Unit This report contains the Community Development Authority (CDA), which is included as a component unit. Financial information is presented as a discrete column in the statement of net position and statement of activities. In addition to the basic financial statements and the preceding notes to financial statements which apply, the following additional disclosures are considered necessary for a fair presentation. Basis of Accounting/Measurement Focus The CDA follows the full accrual basis of accounting and the flow of economic resources measurement focus. Capital Assets Beginning Ending Useful Balance Additions Deletions Balance Lives Land 154,000 $ - $ - $ 154,000 $ - Buildings 2,874,692 - - 2,874,692 40 years Less: Accumulated depreciation (855,896) (62,493) - (918,389) - Totals 2,172,796 $ (62,493) $ - $ 2,110,303 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 49 NOTE 4 - OTHER INFORMATION A. Employees’ Retirement System General Information about the Pension Plan Plan Description - The WRS is a cost-sharing multiple-employer defined benefit pension plan. WRS benefits and other plan provisions are established by Chapter 40 of the Wisconsin Statutes. Benefit terms may only be modified by the legislature. The retirement system is administered by the Wisconsin Department of Employee Trust Funds (ETF). The system provides coverage to all eligible State of Wisconsin, local government and other public employees. 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 (880 hours for teachers and school district educational support employees) and expected to be employed for at least one year from employee’s date of hire are eligible to participate in the WRS. Vesting - 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, and prior to July 1, 2011, are immediately vested. Participants who initially became WRS eligible on or after July 1, 2011, must have five years of creditable service to be vested. Benefits Provided - Employees who retire at or after age 65 (54 for protective occupation employees, 62 for elected officials and State executive participants) are entitled to receive an unreduced retirement benefit. The factors influencing the benefit are: final average earnings, years of creditable service, and a formula factor. Final average earnings is the average of the participant's three highest years' earnings. Creditable service is the creditable current and prior service expressed in years or decimal equivalents of partial years for which a participant receives earnings and makes contributions as required. The formula factor is a standard percentage based on employment category. Employees may retire at age 55 (50 for protective occupation employees) and receive reduced benefits. Employees terminating covered employment before becoming eligible for a retirement benefit may withdraw their contributions and forfeit all rights to any subsequent benefits. The WRS also provides death and disability benefits for employees. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 50 NOTE 4 - OTHER INFORMATION (Continued) A. Employees’ Retirement System (Continued) General Information about the Pension Plan (Continued) Post-Retirement Adjustments - The Employee Trust Funds Board may periodically adjust annuity payments from the retirement system based on annual investment performance in accordance with s. 40.27, Wis. Stat. An increase (or decrease) in annuity payments may result when investment gains (losses), together with other actuarial experience factors, create a surplus (shortfall) in the reserves, as determined by the system’s consulting actuary. Annuity increases are not based on cost of living or other similar factors. For Core annuities, decreases may be applied only to previously granted increases. By law, Core annuities cannot be reduced to an amount below the original, guaranteed amount (the “floor”) set at retirement. The Core and Variable annuity adjustments granted during recent years are as follows: Year Core Fund Adjustment Variable Fund Adjustment 2005 2.6% 7.0% 2006 0.8 3.0 2007 3.0 10.0 2008 6.6 0.0 2009 (2.1) (42.0) 2010 (1.3) 22.0 2011 (1.2) 11.0 2012 (7.0) (7.0) 2013 (9.6) 9.0 2014 4.7 25.0 Contributions - Required contributions are determined by an annual actuarial valuation in accordance with Chapter 40 of the Wisconsin Statutes. The employee required contribution is one-half of the actuarially determined contribution rate for general category employees, including teachers, 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. During the reporting period, the WRS recognized $753,137 in contributions from the employer. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 51 NOTE 4 - OTHER INFORMATION (Continued) A. Employees’ Retirement System (Continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions Contribution rates as of December 31, 2015 are: Employee Category Employee Employer General 6.8% 6.8% Executive & Elected officials 7.7% 7.7% Protective with Social Security 6.8% 9.5% Protective without Social Security 6.8% 13.1% At December 31, 2015, the City reported a liability (asset) of ($1,900,620) for its proportionate share of the net pension liability (asset). The net pension liability (asset) was measured as of December 31, 2014, and the total pension liability used to calculate the net pension liability (asset) was determined by an actuarial valuation as of December 31, 2013 rolled forward to December 31, 2014. No material changes in assumptions or benefit terms occurred between the actuarial valuation date and the measurement date. The City’s proportion of the net pension liability (asset) was based on the City’s share of contributions to the pension plan relative to the contributions of all participating employers. The Water Utility, Sewer Utility and Wastewater Utility’s allocation of the City’s proportion was determined by the City. At December 31, 2014, the City’s proportion was 0.07737819%, which was a decrease of 0.00110062% from its proportion measured as of December 31, 2013. For the year ended December 31, 2015, the City recognized pension expense of $737,247. At December 31, 2015, the Utilities reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual experience 275,531 $ - $ Changes in assumptions - - Net differences between projected and actual earnings on pension plan investments 920,372 - Changes in proportion and differences between employer contributions and proportionate share of contributions - 37,700 Employer contributions subsequent to the measurement date 765,703 - Total 1,961,606 $ 37,700 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 52 NOTE 4 - OTHER INFORMATION (Continued) A. Employees’ Retirement System (Continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) The $765,703 reported as deferred outflows related to pension resulting from the WRS Employer’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability (asset) in the year ended December 31, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized in pension expense as follows: Deferred Outflows Deferred Inflows Year endedDecember 31: of Resources of Resources 2016 235,229 6,999 2017 235,229 6,999 2018 235,229 6,999 2019 235,229 6,999 2020 235,229 6,999 Thereafter 19,758 2,705 Actuarial Assumption - The total pension liability in the December 31, 2014, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Actuarial Valuation Date: December 31, 2013 Measurement Date of Net Pension Liability (Asset): December 31, 2014 Actuarial Cost Method: Entry Age Asset Valuation Method: Fair Market Value Long-Term Expected Rate of Return: 7.2% Discount Rate: 7.2% Salary Increases Inflation: 3.2% Seniority/Merit: 0.2% - 5.8% Mortality: Wisconsin 2012 Mortality Table Post-retirement Adjustments*: 2.1% * No post-retirement adjustment is guaranteed. Actual adjustments are based on recognized investment return, actuarial experience and other factors. 2.1% is the assumed annual adjustment based on the investment return assumption and the post-retirement discount rate. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 53 NOTE 4 - OTHER INFORMATION (Continued) A. Employees’ Retirement System (Continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) Actuarial assumptions are based upon an experience study conducted in 2012 using experience from 2009 – 2011. The total pension liability for December 31, 2014 is based upon a roll-forward of the liability calculated from the December 31, 2013 actuarial valuation. Long-term Expected Return on Plan Assets - The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Long-Term Real Asset Class Rate of Return Target Allocation US Equities 5.3% 21.0% International Equities 5.7 23.0 Fixed Income 1.7 36.0 Inflation Sensitive Assets 2.3 20.0 Real Estate 5.2 7.0 Private Equity/Debt 0.9 7.0 Multi-Asset 3.9 6.0 Cash 0.9 (20.0) Single Discount Rate - A single discount rate of 7.20% was used to measure the total pension liability. This single discount rate was based on the expected rate of return on pension plan investments of 7.20% and a long term bond rate of 3.56%. Because of the unique structure of WRS, the 7.20% expected rate of return implies that a dividend of approximately 2.1% will always be paid. For purposes of the single discount rate, it was assumed that the dividend would always be paid. The projection of cash flows used to determine this single discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments (including expected dividends) of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 54 NOTE 4 - OTHER INFORMATION (Continued) A. Employees’ Retirement System (Continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) Sensitivity of the Utilities’ allocation of the City’s Proportionate Share of the Net Pension Liability (Asset) - The following presents the City’s proportionate share of the net pension liability (asset) calculated using the discount rate of 7.20 percent, as well as what the City’s proportionate share of the net pension liability (asset) would be if it were calculated using a discount rate that is 1-percentage-point lower (6.20 percent) or 1-percentage-point higher (8.20 percent) than the current rate: 1% Decrease to Current Discount 1% Increase to Discount Rate Rate Discount Rate (6.20%) (7.20%) (8.20%) City's porportionate share of the net pension liabillity (asset) 5,361,976 $ (1,900,620) $ (7,636,325) $ Detailed information about the pension plan’s fiduciary net position is available in separately issued financial statements available at http://legis.wisconsin.gov/lab/ and reference report number 15-11. Payables to the Pension Plan The City reported payables to WRS of $198,295 for the City’s share. 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, 2015 55 NOTE 4 - OTHER INFORMATION (Continued) C. Other Postemployment Benefits The City provides a single-employer defined benefit healthcare plan. The plan allows eligible retirees to remain on the City’s health care plan which covers both active and retired members. Under the current arrangement the retiree is responsible for 100 percent of the medical and dental premiums. Benefit provisions were established through collective bargaining contracts for represented employees and by City policy for non-represented employees. To be eligible for these benefits the retiree must have retired under the provisions of the Wisconsin Retirement System, with 20 years of service to the City, not employed in another capacity that offers health insurance, and is not currently eligible for Medicare. The Plan does not issue stand-alone financial statements. The City pays these post-employment benefits on a pay-as-you-go basis; accordingly no liability is recognized within the fund financial statements. However, a liability is recorded for the unfunded liability on the government-wide financial statements on a go forward basis as allowed under Government Accounting Standards Board Statement No. 45. The City’s annual OPEB cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the City’s annual OPEB cost for the year, the amount actually contributed to the plan (pay-as-you-go basis), and the changes in the City’s net OPEB obligation: Annual Required Contribution 117,453 $ Interest on Net OPEB Obligation - Actuarial Adjustment to ARC - Annual OPEB Cost (expense) 117,453 Contributions made (45,041) Increase in net OPEB Obligation 72,412 Net OPEB Liability - beginning of the year - Net OPEB Liability - end of year 72,412 $ ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 56 NOTE 4 - OTHER INFORMATION (Continued) C. Other Postemployment Benefits (Continued) The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB liability for the current year and the two preceding years are as follows: Percentage of Fiscal Year Annual Annual OPEB Net OPEB Ended OPEB Cost Cost Contributed Liability 12/31/2015 117,453 $ 38.35% 72,412 $ The funded status as of December 31, 2015, the most recent actuarial valuation date, was zero percent funded. The actuarial accrued liability for benefits was $1,128,865 and the actuarial value of assets was resulting in an unfunded actuarial liability (UAAL) of $1,128,865. The covered payroll (annual payroll of active employees covered by the plan) was $7,030,820, and the ration of the UAAL to the covered payroll is 16.06%. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend amounts determined regarding the funded status of the plan and the annual required contributions of the Employer, and are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The retiree healthcare valuation was based on the level percentage amortization method. Calculations are based on the types of benefits provided under the terms of the substantive plan at the time of each valuation and on the pattern of sharing costs between the employer and plan members to that point. In addition, the projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the employer and plan members in the future. Actuarial calculations reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The OPEB valuation uses a discount rate assumption of 4.0 percent based on the City’s actuarial valuation. The healthcare cost trends rate is 7.5 percent initially, and reduced by decrements to the ultimate rate of 5.0 percent in 18 years. The actuarial accrued liability for the benefits is amortized over an open period of 30 years. ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO FINANCIAL STATEMENTS December 31, 2015 57 NOTE 4 - OTHER INFORMATION (Continued) D. Commitments and Contingencies From time to time, the City becomes party to claims and legal proceedings. Although, the outcome of such matters cannot be forecasted with certainty, it is the opinion of management and the City’s legal counsel that the likelihood is remote that most of such claims or proceedings will not have a material adverse effect on the City’s financial position. Expenditures of the City’s Tax Increment Districts are subject to review and audit by the Wisconsin Department of Revenue and the overlapping taxation districts. The City has allocated certain expenditures for administration, public safety, public lands administration, and transit services which were reimbursed to the City’s General Fund. For 2015, these costs amount to approximately $1.7 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. As of January 1, 2015, the City had outstanding commitments of $8.1 million. During the year, the City committed to an additional $7.2 million, and satisfied $2.9 million. As of December 31, 2015, the City has remaining commitments of $12.4 million pending satisfaction of the underlying agreements. E. Joint Ventures Metropolitan Refuse District, Inc. The City of Middleton and the Villages of Shorewood Hills and Waunakee are members of the Metropolitan Refuse District, Inc. (District), which owns and operates the closed local sanitary landfill. The landfill stopped accepting waste at the end of 1996. The three member communities share in the operational costs of the District based on estimated population, with the 2015 percentages as follows: City of Middleton 56% Village of Shorewood Hills 5% Village of Waunakee 39% The District is made up of member from each community. For the City, the corporate member is the Mayor or the Mayor’s appointed designee. For each of the Villages, the corporate member is the Village President or the Village President’s appointed designee. At the annual meeting, members appoint directors and officers as the governing body. The governing body has authority to adopt its own budget and control of financial affairs of the District. The District’s fund balance at December 31, 2015 is a deficit of $1,093,900. 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 $612,584 of the District’s net deficit. The City’s share of the net deficit has been reported in the government-wide statement of net position as landfill post- closure cost. The City made payments totaling $55,390 to the District in 2015. 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, 2015 58 NOTE 4 - OTHER INFORMATION (Continued) E. Joint Ventures (Continued) Metropolitan Refuse District, Inc. (Continued) The District’s closed landfill is being monitored for possible groundwater contamination as required by the Wisconsin Department of Natural Resources. The costs for groundwater monitoring are being budgeted for on an annual basis. At the current time, it is not possible to determine if extensive contamination has occurred and the effects, if any, on the District. Separately issued financial statements of the District are not prepared. Multijurisdictional Public Safety Information System Commission (MJPISC) The City of Fitchburg, City of Sun Prairie, City of Middleton, and City of Verona jointly operate the Multijurisdictional Public Safety Information System Commission. On March 20, 2003, the City of Middleton, City of Fitchburg, and the City of Sun Prairie executed an intergovernmental agreement under authority of Section 66.0301 of the Wisconsin Statutes. The City of Verona joined the Commission in 2009. The Commission adopts its own budget. Net operating costs including debt service are shared by the four communities equally. The department is governed by the Intermunicipal Commission. The Commission consists of one representative from each community. The transactions of the Commission are not reflected in these financial statements. Separately issued financial statements of the Commission can be obtained from the City of Sun Prairie at 300 East Main Street, Sun Prairie, Wisconsin 53590. The City does not have an equity interest in this joint venture. Middleton Fire District The City of Middleton and the Towns of Springfield, Westport, and Middleton jointly operate the local fire district, which is called the Middleton Fire District, which provides fire protection. The communities share in the operations of the District based on the ratio of equalized values of each member. The governing body is made up of elected officials from each community. Local representatives are appointed by the municipalities. The governing body has authority to adopt its own budget and control the financial affairs of the District. The City has made payments totaling $820,526 to the District in 2015 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, 2015 59 NOTE 5 - RESTATEMENT The City adopted GASB Statement No. 68 Accounting and Financial Reporting for Pensions-an amendment of GASB Statement Number 27 and the related GASB Statement No. 71 Pension Transition for Contributions Made Subsequent to the Measurement Date-an amendment of GASB Statement No. 68 as of January 1, 2015. The standard revises and establishes new financial reporting requirements for most governments that provide their employees with pension benefits. As a result, the City’s beginning of the year net position has been restated as follows: Governmental Business-Type Activities Activities Net position, December 31, 2014, as previously reported 55,440,569 $ 41,765,625 $ Adjustment to recognize the beginning balance of Net Pension Asset and Deferred Outlow of Resources 3,399,659 360,720 Net position, January 1, 2015, as restated 58,840,228 $ 42,126,345 $ Pleasant View Golf Water Sewer Course Net position, December 31, 2014, as previously reported 23,555,943 $ 15,455,332 $ 2,754,350 $ Adjustment to recognize the beginning balance of Net Pension Asset and Deferred Outlow of Resources 142,367 65,835 152,518 Net position, January 1, 2015, as restated 23,698,310 $ 15,521,167 $ 2,906,868 $ 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, 2015 Variance with Original Final Actual Final Budget REVENUES Taxes 16,456,098 $ 16,456,098 $ 16,653,374 $ 197,276 $ Intergovernmental 2,003,301 2,003,301 2,197,028 193,727 Licenses and permits 542,400 542,400 843,742 301,342 Fines, forfeitures, and penalties 290,000 290,000 287,498 (2,502) Public charges for services 1,428,372 1,428,372 1,514,509 86,137 Interdepartmental charges for services 1,819,130 1,819,130 1,825,802 6,672 Special assessments 90,000 90,000 98,979 8,979 Investment income 41,200 41,200 102,875 61,675 Miscellaneous 110,944 110,944 160,320 49,376 Total revenues 22,781,445 22,781,445 23,684,127 902,682 EXPENDITURES Current General government 2,837,811 2,989,755 2,681,988 307,767 Public safety 8,444,964 8,444,964 8,235,296 209,668 Public works 3,513,569 3,513,569 3,418,670 94,899 Health and human services 445,825 445,825 457,636 (11,811) Leisure activities 1,503,105 1,493,105 1,394,662 98,443 Conservation and development 688,871 708,871 632,986 75,885 Total expenditures 17,434,145 17,596,089 16,821,238 774,851 Excess of revenues over expenditures 5,347,300 5,185,356 6,862,889 1,677,533 OTHER FINANCING SOURCES (USES) Sale of capital assets - - - - Transfers in 400,000 400,000 463,070 63,070 Transfers out (5,747,300) (5,595,356) (5,595,356) - Total other financing sources (uses) (5,347,300) (5,195,356) (5,132,286) 63,070 Net change in fund balance - (10,000) 1,730,603 1,740,603 FUND BALANCE - Beginning 9,077,719 9,077,719 9,077,719 - FUND BALANCE - Ending 9,077,719 $ 9,067,719 $ 10,808,322 $ 1,740,603 $ CITY OF MIDDLETON, WISCONSIN Budgeted Amounts The accompanying notes are an integral part of the required supplementary information. 60 ---PAGE BREAK--- Actuarial UAAL as a Actuarial Accrued Unfunded Percentage Actuarial Value of Liability (ALL) AAL Funded Covered of Covered Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll Date (b-a) (a/b) 12/31/2015 - $ 1,128,865 $ 1,128,865 $ 0.00% 7,030,820 $ 16.06% 12/31/2014 - 2,862,888 2,862,888 0.00% 8,946,525 32.00% 12/31/2013 - 2,862,888 2,862,888 0.00% 8,946,525 32.00% 2015 City's proportion of the net pension liability (asset) 0.07737819% City's proportionate share of the net pension liability (asset) (1,900,620) $ City's covered - employee payroll 9,162,017 $ Plan fiduciary net position as a percentage of the total pension liability (asset) 102.74% 2015 Contractually required contributions 753,137 $ Contributions in relation to the contractually required contributions 753,137 $ Contribution deficiency (excess) - $ City's covered - employee payroll 9,162,017 $ Contributions as a percentage of covered - employee payroll 8.22% CITY OF MIDDLETON, WISCONSIN CITY OF MIDDLETON, WISCONSIN Schedule of the City's Proportionate Share of the Net Pension Liability (Asset) Wisconsin Retirement System December 31, 2015 December 31, 2015 December 31, 2015 Wisconsin Retirement System Schedule of the City's Contributions CITY OF MIDDLETON, WISCONSIN Schedule of OPEB Funding Progress The accompanying notes are an integral part of the required supplementary information. 61 ---PAGE BREAK--- CITY OF MIDDLETON, WISCONSIN NOTES TO REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended December 31, 2015 62 NOTE 1 - BUDGETARY INFORMATION Budgetary information is derived from the annual operating budget and is presented using the same basis of accounting for each fund as described in the notes to the financial statements. A budget has been adopted for the General Fund, Debt Service Fund, certain special revenue funds, and capital project funds. Wisconsin Statute Section 65.90 requires that an annual budget be adopted for all funds. The budgeted amounts presented include any amendments made. The City may authorize transfers of budgeted amounts between departments up to $1,000. Transfers exceeding $1,000 between departments and changes in the overall budget must be approved by a two-thirds vote of the City Council. Appropriations lapse at year-end unless specifically carried over. NOTE 2 - EXCESS EXPENDITURES OVER APPROPRIATIONS The following functions experienced excess expenditures over appropriations: Excess Budgeted Actual Expenditures Expenditures Expenditures Over Budget General Fund Health and human services 445,825 457,636 11,811 Police Activities 5,000 8,000 3,000 Public Land Activities 100,000 417,778 317,778 Senior Center Activites 20,000 25,924 5,924 Library Fund 1,938,421 1,985,774 47,353 Public Works Capital Construction 3,656,225 3,669,000 12,775 TIF 5 Fund 723,015 1,431,998 708,983 The legal level of budget control is the function level in the General Fund and total expenditures in all other funds. The City controls expenditures at the departmental level for management purposes. TIF District No. 3 debt service was included in the Debt Service Fund, rather than TIF District No. 3. TIF District No. 3 debt service was funded by TIF. The detail of those items can be found in the City’s year-end budget to actual report. NOTE 3 – WISCONSIN RETIREMENT SYSTEM Changes of Benefit Terms – There were no changes of benefit terms for any participating employer in WRS. Changes of Assumptions – There were no changes in the assumptions. This information is an integral part of the required supplementary information. ---PAGE BREAK--- SUPPLEMENTARY INFORMATION ---PAGE BREAK--- DETAILED SCHEDULE OF REVENUES - BUDGET AND ACTUAL GENERAL FUND For the Year Ended December 31, 2015 Variance with Original Final Actual Final Budget TAXES General property tax 16,002,815 $ 16,002,815 $ 16,047,635 $ 44,820 $ Fees in lieu of taxes 44,100 44,100 44,100 - Business taxes - - - - Room tax 407,183 407,183 563,079 155,896 Interest and penalties on taxes 2,000 2,000 (1,440) (3,440) Total taxes 16,456,098 16,456,098 16,653,374 197,276 INTERGOVERNMENTAL Shared taxes from state 511,983 511,983 510,648 (1,335) State aid - road allotment 982,692 982,692 980,791 (1,901) State aid - exempt computer aid 210,000 210,000 405,747 195,747 State aid - fire insurance dues 103,000 103,000 98,491 (4,509) State aid - law enforcement 78,000 78,000 78,722 722 Federal and state aid - other 55,250 55,250 55,316 66 County aid - signals 9,500 9,500 10,682 1,182 County aid - senior citizens 44,176 44,176 47,981 3,805 County aid - youth center 8,700 8,700 8,650 (50) Total intergovernmental 2,003,301 2,003,301 2,197,028 193,727 LICENSES AND PERMITS Liquor and malt beverage licenses 34,000 34,000 37,921 3,921 Operators' licenses 11,000 11,000 17,985 6,985 Contractors' licenses - - - - Alarm licenses 9,000 9,000 9,240 240 Cigarette licenses 500 500 600 100 Bicycle licenses - - - - Dog and cat licenses 3,000 3,000 3,459 459 Cable TV franchise license 200,000 200,000 257,791 57,791 Other miscellaneous licenses 2,400 2,400 1,430 (970) Building permits 160,000 160,000 293,246 133,246 Electrical permits 35,000 35,000 72,237 37,237 Plumbing permits 35,000 35,000 70,259 35,259 Erosion control permits 15,000 15,000 23,173 8,173 Other public land fees - - 980 980 Zoning permits 14,500 14,500 30,565 16,065 Park reservation permits 23,000 23,000 24,856 1,856 Total licenses and permits 542,400 542,400 843,742 301,342 FINES, FORFEITURES, AND PENALTIES Court penalties 180,000 180,000 148,091 (31,909) Parking violations 35,000 35,000 49,095 14,095 Court costs 75,000 75,000 90,312 15,312 Total fines, forfeitures, and penalties 290,000 290,000 287,498 (2,502) Budgeted Amounts CITY OF MIDDLETON, WISCONSIN 63 ---PAGE BREAK--- DETAILED SCHEDULE OF REVENUES - BUDGET AND ACTUAL GENERAL FUND For the Year Ended December 31, 2015 Variance with Original Final Actual Final Budget Budgeted Amounts CITY OF MIDDLETON, WISCONSIN PUBLIC CHARGES FOR SERVICES Clerk fees 13,000 $ 13,000 $ 17,550 $ 4,550 $ Vehicle registration fees 850 850 2,003 1,153 Police special services - - 8 8 Police department fees 9,500 9,500 8,411 (1,089) Ambulance services 792,000 792,000 880,188 88,188 EMS fixed cost abatement 197,522 197,522 199,205 1,683 Plan commission charges 15,000 15,000 24,356 9,356 Senior citizens 14,500 14,500 28,453 13,953 Swimming pool 199,000 199,000 185,444 (13,556) Summer recreation 99,000 99,000 78,504 (20,496) Fall-Winter-Spring recreation 40,000 40,000 28,533 (11,467) Hubbard Art Center Program 30,000.00 30,000 39,499 9,499 Public works charges - - 856 856 Other charges for services 18,000 18,000 21,499 3,499 Total public charges for services 1,428,372 1,428,372 1,514,509 86,137 INTERDEPARTMENTAL CHARGES FOR SERVICES Administration reimbursements - Utilities 135,000 135,000 135,000 - Administration reimbursements - Airport - - - - Administration reimbursements - Recycling - - 6,672 6,672 Administration reimbursements - TIF 1,676,530 1,676,530 1,676,530 - Administration reimbursements - Landfill 5,000 5,000 5,000 - Administration reimbursements - Fire District 2,600 2,600 2,600 - Total interdepartmental charges for services 1,819,130 1,819,130 1,825,802 6,672 SPECIAL ASSESSMENTS Curb, gutter, and sidewalks 90,000 90,000 99,015 9,015 Interest on special assessments - - (36) (36) Total special assessments 90,000 90,000 98,979 8,979 INVESTMENT INCOME 41,200 41,200 102,875 61,675 COMMERCIAL REVENUES Rent of City buildings and offices 25,320 25,320 10,972 (14,348) Donations 500 500 2,731 2,231 Sale of materials 2,000 2,000 2,137 137 Miscellaneous 50,000 50,000 111,006 61,006 Annual environmental impact fee 32,624 32,624 32,624 - Interlocking ignition device 500 500 850 350 Total commercial revenues 110,944 110,944 160,320 49,376 OTHER FINANCING SOURCES Sale of City property - - - - Transfer in - Water Utility 400,000 400,000 463,070 63,070 Transfer in - Nonmajor Funds - - - - Total other financing sources 400,000 400,000 463,070 63,070 TOTAL REVENUES AND OTHER FINANCING SOURCES 23,181,445 $ 23,181,445 $ 24,147,197 $ 965,752 $ 64 ---PAGE BREAK--- Variance with Original Final Actual Final Budget GENERAL GOVERNMENT Council 66,936 $ 66,936 $ 66,323 $ 613 $ Police commission 5,000 5,000 2,298 2,702 Landmarks commission 350 350 - 350 Middleton youth commission 53,632 53,632 49,591 4,041 Art committee 5,000 5,000 2,303 2,697 Sustainability committee 13,250 13,250 12,173 1,077 Municipal court 96,610 96,610 100,288 (3,678) General administration 762,328 762,328 772,065 (9,737) General administration - sick leave - - 186,530 (186,530) Information technology 667,286 667,286 674,970 (7,684) Elections 27,164 27,164 20,502 6,662 Board of review - - - - Independent auditing 46,380 46,380 62,880 (16,500) Legal counseling 205,060 205,060 195,998 9,062 Special legal counsel 7,000 7,000 7,000 - Buildings and grounds 140,716 140,716 138,747 1,969 Illegal taxes and tax refunds 15,080 15,080 (12,745) 27,825 Property and liability insurance 380,000 380,000 280,901 99,099 Income continuation insurance 15,000 - - - Contingency 221,419 373,363 - 373,363 Group life insurance 35,000 50,000 22,196 27,804 Bank fees - - 144 (144) Miscellaneous 74,600 74,600 99,824 (25,224) Total general government 2,837,811 2,989,755 2,681,988 307,767 PUBLIC SAFETY Police administration 711,901 711,901 724,358 (12,457) Police patrol 3,889,852 3,889,852 3,811,767 78,085 Code compliance 82,038 82,038 87,731 (5,693) Training - - 550 (550) School patrol 19,311 19,311 13,164 6,147 Fire suppression 820,526 820,526 820,526 - Public fire protection 485,000 485,000 437,391 47,609 EMS 1,536,724 1,536,724 1,473,359 63,365 Building inspector 119,516 119,516 128,738 (9,222) Electrical inspector 101,079 101,079 104,626 (3,547) Plumbing inspection 69,834 69,834 74,511 (4,677) Emergency preparedness 71,520 71,520 54,629 16,891 Sealer of weights and measures 4,400 4,400 4,400 - Erosion control enforcement 16,000 16,000 14,237 1,763 Communications 517,263 517,263 485,309 31,954 Total public safety 8,444,964 8,444,964 8,235,296 209,668 CITY OF MIDDLETON, WISCONSIN DETAILED SCHEDULE OF EXPENDITURES - ACTUAL AND BUDGET For the Year Ended December 31, 2015 Budgeted Amounts GENERAL FUND 65 ---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, 2015 Budgeted Amounts GENERAL FUND PUBLIC WORKS Machinery 341,156 $ 341,156 $ 272,264 $ 68,892 $ Garage 64,720 64,720 93,849 (29,129) Public works salaries and fringes 610,167 610,167 637,082 (26,915) Protective equipment 3,500 3,500 3,517 (17) Engineering 778,873 778,873 725,040 53,833 Street maintenance 40,500 40,500 41,021 (521) Street cleaning 9,700 9,700 5,584 4,116 Snow and ice control 92,000 92,000 111,473 (19,473) Traffic signals 15,500 15,500 3,378 12,122 Traffic signs and markings 38,700 38,700 49,367 (10,667) Street lighting 118,000 118,000 120,448 (2,448) Tree and brush 1,857 1,857 1,198 659 Storm sewers 50,000 50,000 34,192 15,808 Mass transit 404,896 404,896 391,283 13,613 Garbage collection 502,000 502,000 487,701 14,299 Sanitary landfill 55,000 55,000 55,380 (380) Recycling 247,000 247,000 247,768 (768) Sidewalk maintenance 140,000 140,000 138,125 1,875 Total public works 3,513,569 3,513,569 3,418,670 94,899 HEALTH AND HUMAN SERVICES Aging 445,825 445,825 457,636 (11,811) LEISURE ACTIVITIES Cable television 6,000 6,000 5,300 700 Hubbard arts center 30,000 30,000 29,949 51 Recreation programs and events 32,084 42,084 42,194 (110) Recreation administration 156,112 158,112 159,790 (1,678) Swimming pool 272,089 272,089 260,909 11,180 Summer recreation 82,388 82,388 80,521 1,867 Parks 924,432 902,432 815,999 86,433 Total leisure activities 1,503,105 1,493,105 1,394,662 98,443 CONSERVATION AND DEVELOPMENT Water resources 30,624 30,624 20,624 10,000 Conservancy land commission 155,789 175,789 123,972 51,817 Planning commission 332,290 332,290 325,278 7,012 Other 7,555 7,555 1,987 5,568 Forestry 162,613 162,613 161,125 1,488 Total conservation and development 688,871 708,871 632,986 75,885 OTHER FINANCING USES Transfers out - Nonmajor Funds - Other 18,303 87,303 87,303 - Transfers out - Library Fund 1,144,792 1,144,792 1,144,792 - Transfers out - Debt Service Fund 4,584,205 4,363,261 4,363,261 - Total other financing uses 5,747,300 5,595,356 5,595,356 - TOTAL EXPENDITURES AND OTHER FINANCING USES 23,181,445 $ 23,191,445 $ 22,416,594 $ 774,851 $ 66 ---PAGE BREAK--- Total Lost and Safety Economic Nonmajor Subdividers' Damaged Library Library Library Impact Fee Development Tourism Police EMS Public Land Senior Center Governmental Deposits Books Gift Endowment Fund Airport and Other Grant Commission Activities Activities Activities Activities Funds ASSETS Cash and investments 2,714,743 $ 26,613 $ 11,596 $ 240,256 $ 42,684 $ 145,452 $ 769,962 $ 182,657 $ 1,504,097 $ 23,236 $ 68,056 $ 219,302 $ 165,042 $ 6,113,696 $ Accounts receivable - - - - - 221 - - 301,913 - - - - 302,134 TOTAL ASSETS 2,714,743 $ 26,613 $ 11,596 $ 240,256 $ 42,684 $ 145,673 $ 769,962 $ 182,657 $ 1,806,010 $ 23,236 $ 68,056 $ 219,302 $ 165,042 $ 6,415,830 $ LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable 69,191 $ - $ - $ - $ 41,212 $ 3,177 $ - $ - $ 255,265 $ - $ - $ 3,107 $ - $ 371,952 $ Deposits 1,264,454 - - - - - - - - - - - - 1,264,454 Total liabilities 1,333,645 - - - 41,212 3,177 - - 255,265 - - 3,107 - 1,636,406 FUND BALANCES Restricted 1,381,098 - 11,596 240,256 1,472 - 769,962 182,657 1,550,745 23,236 68,056 216,195 165,042 4,610,315 Committed - 26,613 - - - 142,496 - - - - - - - 169,109 Total fund balances 1,381,098 26,613 11,596 240,256 1,472 142,496 769,962 182,657 1,550,745 23,236 68,056 216,195 165,042 4,779,424 TOTAL LIABILITIES AND FUND BALANCES 2,714,743 $ 26,613 $ 11,596 $ 240,256 $ 42,684 $ 145,673 $ 769,962 $ 182,657 $ 1,806,010 $ 23,236 $ 68,056 $ 219,302 $ 165,042 $ 6,415,830 $ CITY OF MIDDLETON, WISCONSIN COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2015 67 ---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 - $ - $ - $ - $ - $ - $ - $ - $ 1,313,852 $ - $ - $ - $ - $ 1,313,852 $ Intergovernmental - - - - 785,233 - - - - - 4,336 - 17,451 807,020 Licenses and permits 197,085 - - - - - 321,424 - - - - - - 518,509 Public charges for services - 21,606 2,753 - 15,625 124,074 - - - - - 273,150 - 437,208 Contributions - - - 8,482 - - - - - 2,400 - 49,864 11,404 72,150 Investment income - - - (2,171) - - - 482 - - - - - (1,689) Miscellaneous - - - - 19,615 - 135 - 6,737 80 - - - 26,567 Total revenues 197,085 21,606 2,753 6,311 820,473 124,074 321,559 482 1,320,589 2,480 4,336 323,014 28,855 3,173,617 EXPENDITURES Current: Public safety - - - - - - - - - - - - - - Leisure activities - 32,478 32,146 30,479 1,985,774 - 111 - 1,066,295 - - 417,778 25,924 3,590,985 Conservation and development 51,927 - - - - 77,090 - - - - - - - 129,017 Capital outlay - - - - - - - - - 8,000 - - - 8,000 Total expenditures 51,927 32,478 32,146 30,479 1,985,774 77,090 111 - 1,066,295 8,000 - 417,778 25,924 3,728,002 Excess of revenues over (under) expenditures 145,158 (10,872) (29,393) (24,168) (1,165,301) 46,984 321,448 482 254,294 (5,520) 4,336 (94,764) 2,931 (554,385) OTHER FINANCING SOURCES (USES) Transfers in - - - - 1,144,792 - - - - - - - - 1,144,792 Transfers out - - - - - - - - - - - - - - Net change in fund balances 145,158 (10,872) (29,393) (24,168) (20,509) 46,984 321,448 482 254,294 (5,520) 4,336 (94,764) 2,931 590,407 FUND BALANCES - BEGINNING OF YEAR 1,235,940 37,485 40,989 264,424 21,981 95,512 448,514 182,175 1,296,451 28,756 63,720 310,959 162,111 4,189,017 FUND BALANCES - END OF YEAR 1,381,098 $ 26,613 $ 11,596 $ 240,256 $ 1,472 $ 142,496 $ 769,962 $ 182,657 $ 1,550,745 $ 23,236 $ 68,056 $ 216,195 $ 165,042 $ 4,779,424 $ CITY OF MIDDLETON, WISCONSIN COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES For the Year Ended December 31, 2015 NONMAJOR GOVERNMENTAL FUNDS 68 ---PAGE BREAK--- Public Works Public Lands TIF District Capital Capital General No. 5 Construction Construction Capital Projects Total ASSETS Cash and investments 1,481,860 $ 481,009 $ 1,014,439 $ 953,356 $ 3,930,664 $ Taxes receivable 448,154 - - - 448,154 Receivables - - - - - Due from other funds - 539,971 - - 539,971 Total assets 1,930,014 $ 1,020,980 $ 1,014,439 $ 953,356 $ 4,918,789 $ LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES LIABILITIES Accounts payable 99,880 $ 195,362 $ 18,483 $ 3,000 $ 316,725 $ Advances from other funds 2,048,999 - - - 2,048,999 Total liabilities 2,148,879 195,362 18,483 3,000 2,365,724 DEFERRED INFLOWS OF RESOURCES Subsequent year tax levy 448,154 - - - 448,154 Other receivable - - 12,000 - 12,000 Total deferred inflows 448,154 - 12,000 - 460,154 FUND BALANCES Restricted (667,019) 825,618 983,956 950,356 2,092,911 TOTAL LIABILITIES DEFERRED INFLOWS AND FUND BALANCES 1,930,014 $ 1,020,980 $ 1,014,439 $ 953,356 $ 4,918,789 $ CITY OF MIDDLETON, WISCONSIN COMBINING BALANCE SHEET CAPITAL PROJECTS FUND December 31, 2015 69 ---PAGE BREAK--- Public Works Public Lands TIF District Capital Capital General No. 5 Construction Construction Capital Projects Total REVENUES Intergovernmental 896,276 $ - $ 43,663 $ - $ 939,939 $ Investment and interest income - 8,062 - - 8,062 Miscellaneous - - 10,920 - 10,920 Total revenues 896,276 8,062 54,583 - 958,921 EXPENDITURES Current: General government 50,298 - - - 50,298 Conservation and development 1,101,000 - - - 1,101,000 Capital outlay 280,700 3,669,000 390,722 393,790 4,734,212 Total expenditures 1,431,998 3,669,000 390,722 393,790 5,885,510 Excess of revenues over (under) expenditures (535,722) (3,660,938) (336,139) (393,790) (4,926,589) OTHER FINANCING SOURCES (USES) Long-term debt issued - 1,439,393 685,000 875,607 3,000,000 Transfers in - 46,000 - 41,303 87,303 Transfers out (139,735) - - - (139,735) Net change in fund balances (675,457) (2,175,545) 348,861 523,120 (1,979,021) FUND BALANCES - BEGINNING OF YEAR 8,438 3,001,163 635,095 427,236 4,071,932 FUND BALANCES - END OF YEAR (667,019) $ 825,618 $ 983,956 $ 950,356 $ 2,092,911 $ For the Year Ended December 31, 2015 CITY OF MIDDLETON, WISCONSIN COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES CAPITAL PROJECTS FUND 70 ---PAGE BREAK--- Middleton ASSETS Stormwater Utility District Totals Current Assets Cash and investments 65,482 $ 315,898 $ 381,380 $ Accounts receivable 71,098 - 71,098 Total current assets 136,580 315,898 452,478 Noncurrent Assets Capital assets: Property and equipment 3,179,614 - 3,179,614 Less: Accumulated depreciation (96,637) - (96,637) Total capital assets, net 3,082,977 - 3,082,977 Total noncurrent assets 3,082,977 - 3,082,977 Total assets 3,219,557 315,898 3,535,455 LIABILITIES Current Liabilities Accounts payable - 138,870 138,870 Total current liabilities - 138,870 138,870 Noncurrent Liabilities Advances from other funds - 400,000 400,000 Total noncurrent liabilities - 400,000 400,000 Total liabilities - 538,870 538,870 NET POSITION Net investment in capital assets 3,082,977 - 3,082,977 Unrestricted 136,580 (222,972) (86,392) Total net position 3,219,557 $ (222,972) $ 2,996,585 $ CITY OF MIDDLETON, WISCONSIN COMBINING STATEMENT OF NET POSITION NONMAJOR PROPRIETARY FUNDS December 31, 2015 71 ---PAGE BREAK--- Middleton Stormwater Utility District Total OPERATING REVENUES Charges for services and sales 136,580 $ - $ 136,580 $ OPERATING EXPENSES Operation and maintenance - 222,972 222,972 Depreciation 36,983 - 36,983 Total operating expenses 36,983 222,972 259,955 Operating income (loss) 99,597 (222,972) (123,375) CAPITAL CONTRIBUTIONS 3,119,960 - 3,119,960 Change in net position 3,219,557 (222,972) 2,996,585 NET POSITION - BEGINNING OF YEAR (RESTATED) - - - NET POSITION - END OF YEAR 3,219,557 $ (222,972) $ 2,996,585 $ CITY OF MIDDLETON, WISCONSIN COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION NONMAJOR PROPRIETARY FUNDS For the Year Ended December 31, 2015 72 ---PAGE BREAK--- Middleton Stormwater Utility District Totals CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 65,482 $ - $ 65,482 $ Payments to suppliers for goods and services - (84,102) (84,102) Net cash provided by operating activities 65,482 (84,102) (18,620) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Advance from TIF No. 3 - 400,000 400,000 Net cash provided by (used in) noncapital financing activities - 400,000 400,000 Net increase (decrease) in cash and cash equivalents 65,482 315,898 381,380 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR - - - CASH AND CASH EQUIVALENTS - END OF YEAR 65,482 $ 315,898 $ 381,380 $ CITY OF MIDDLETON, WISCONSIN COMBINING STATEMENT OF CASH FLOWS NONMAJOR PROPRIETARY FUNDS For the Year Ended December 31, 2015 73 ---PAGE BREAK--- Nonmajor Fund Middleton Stormwater Utility District Totals Reconciliation of operating income (loss) to net cash provided by operating activities: Operating income (loss) 99,597 $ (222,972) $ (123,375) $ Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation expense 36,983 - 36,983 Depreciation charged to sewer utility - - - Changes in noncash components of working capital Accounts receivable (71,098) - (71,098) Special assessments receivable - - - Due from other funds - - - Accounts payable - 138,870 138,870 Pension activity - - - Accrued compensated absences - - - Net cash provided by operating activities 65,482 $ (84,102) $ (18,620) $ Reconciliation of cash and cash equivalents to the statement of net position - proprietary funds Cash and investments 65,482 $ 315,898 $ 381,380 $ NONCASH INVESTING, CAPITAL, AND RELATED FINANCING ACTIVITIES Developer financed additions to Utility capital assets 382,128 $ - $ 382,128 $ City financed additions to Utility capital assets 2,737,832 - 2,737,832 CITY OF MIDDLETON, WISCONSIN STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Concluded) For the Year Ended December 31, 2015 74