RubinBrown Public Sector Stats 2016

A Publication of RubinBrown LLP ’16 PUBLIC SECTOR STATS

Welcome

RubinBrown is pleased to present our 2016 Public Sector Statistical Analysis , our tenth annual survey of municipal statistical and financial information. This analysis has been created in order to provide a comprehensive report of key government-wide, governmental and general fund financial statistics for the regions we serve so that cities may compare how they are doing relative to other municipal governments in their region and identify trends occurring in their communities.

If you have questions about this publication, please contact us (see page 17 for contact information).

Contents 1 Executive Summary 6 St. Louis Metropolitan Area 8 Kansas City Metropolitan Area 10 Denver Metropolitan Area 12 State of Tennessee 14 Financial Ratio Interpretations 17 RubinBrown Public Sector Services Group

Executive Summary

RubinBrown is a national leader in providing accounting and auditing services to governments with offices in St. Louis, Kansas City, Denver and Nashville. This study includes results for municipalities in the St. Louis, Kansas City and Denver Front Range metropolitan areas. Additionally, for the first time, cities throughout the state of Tennessee have been included in our survey. All cities included in the data have populations greater than 5,000. Additionally, the cities of St. Louis, Kansas City, Nashville, Memphis and Denver are excluded from the study due to their size relative to the other municipalities. Finally, for purposes of this study, metropolitan St. Louis includes municipalities in both Missouri and Illinois, and metropolitan Kansas City includes municipalities in both Kansas and Missouri. Denver results consist of municipalities primarily in the Front Range region. Tennessee municipalities are located throughout the state with the majority of them in middle Tennessee. Methodology Financial information was collected from the 2015 fiscal or calendar year Comprehensive Annual Financial Report (CAFR), or from the 2015 audited financial statements if no CAFR was prepared. All municipalities included in the study prepare financial statements in accordance with generally accepted accounting principles. Key financial ratios were calculated in three categories: government-wide (governmental activities only), governmental funds and general fund information. Each participant in the survey received customized financial statistics to use as an analysis tool. This year, participation in all three previously included regions remained consistent. A total of 41 St. Louis municipalities, 24 Kansas City municipalities and 31 Denver Front Range municipalities were included. First time participants included 32 Tennessee municipalities. Format of the Report The ratios are presented separately for the St. Louis, Kansas City, Denver and Tennessee regions. The average population of the cities included in the St. Louis region was 22,000. This compares to the average population of 47,000 for cities surveyed in the Kansas City region, 82,000 for those in the Denver region and 53,000 for Tennessee. For each ratio presented, the report presents information both by quartile with focus on the median. In prior years the focus was on the average. We determined that, although the results are different, the median is a better representation of the center of the results for each region and eliminates the distortion caused by any outliers. The computed values for each ratio were also sorted from more favorable to less favorable and quartiles were determined. The quartile information is presented by displaying the ratio value that separates each quartile. For a description and interpretation of the ratios, please refer to the “Financial Ratio Interpretations” on page 14. The conclusions reached as to which results are more or less favorable are based upon what is most commonly accepted in the industry while taking into consideration what the majority of cities are likely to believe.

RubinBrown Public Sector Stats 2016 | 1

Executive Summary

Participating Municipalities by Region

St. Louis Region Alton

Kansas City Region Belton Blue Springs Gardner Gladstone Grandview Harrisonville Independence Lawrence Leavenworth Leawood Lee’s Summit Lenexa Liberty Merrian Mission North Kansas City Olathe

Denver Region Arvada Aurora

State of Tennessee Bartlett Brentwood Bristol Chattanooga

Arnold Ballwin Brentwood Bridgeton Chesterfield Clayton

Boulder Brighton

Broomfield Canon City Castle Rock Centennial

Clarksville Cleveland Collierville Columbia Cookeville East Ridge Farragut

Collinsville Crestwood Creve Coeur Des Peres Edwardsville Ellisville Fairview Heights Fenton Ferguson Festus

Cherry Hills Village Colorado Springs Commerce City Englewood Erie Evans Golden Greeley Greenwood Village Lakewood Littleton Ft. Collins Fountain

Franklin Gallatin

Germantown Goodlettsville Greeneville Hendersonville Jackson Johnson City

Florissant Glendale Hazelwood Kirkwood Ladue

Overland Park Prairie Village

Raymore Raytown

Kingsport Knoxville Lebanon Maryville Morristown

Richmond Shawnee Warrensburg

Lone Tree Longmont

Lake St. Louis Manchester Maplewood Maryland Heights O’Fallon Olivette Richmond Heights Rock Hill Saint John Shrewsbury St. Charles St. Peters Sunset Hills Town and Country University City Webster Groves Weldon Spring

Louisville Loveland Northglenn Parker Thorton Westminster Wheat Ridge Windsor

Mount Juliet Murfreesboro Oak Ridge Sevierville Smyrna Springfield

Spring Hill Tullahoma

Wentzville Wildwood

2 | RubinBrown Public Sector Stats 2016

How the Regions Compare

St. Louis

| Kansas City | Denver | Tennessee

MEDIAN CHANGE IN NET POSITION

MUNICIPALITY’S ABILITY TO PAY CURRENT LIABILITIES (median liquidity)

9%

8.1%

7%

5%

4.0%

4.4% 2.5% 4.0%

3.8% 1.3% 2.9%

3%

3.3%

2.4%

1%

2013

2014

2015

0 lower

5

higher

AVERAGE POPULATION OF MUNICIPALITY

MUNICIPALITY’S RISK OF DEFAULTING ON DEBT (median debt to assets leverage ratio) higher

22,000

47,000

82,000

53,000

50%

RELIANCE ON EXTERNAL REVENUE SOURCES OUTSIDE OF MUNICIPALITY’S CONTROL (median total grants, contributions and other intergovernmental revenue as a percent of total revenue)

0%

50%

less reliant

more reliant

OPERATING CUSHION OF MUNICIPALITY’S GENERAL FUND (median unrestricted fund balance as a percent of total expenditures net of transfers)

50%

25%

0%

MINIMUM GFOA RECOMMENDS

lower

0%

RubinBrown Public Sector Stats 2016 | 3

Executive Summary

Each statistic may be viewed differently or may be more or less meaningful based upon each city’s situation. For example, a small city may view a large amount of funding being spent on public safety as favorable, whereas our analysis places this in a less favorable quartile. In addition, per capita ratios may be adversely affected if a city serves a large non-resident population due to a significant daily influx of workers. Analysis The results of this year’s survey indicate that 2015 was another year of continued growth, but only marginal growth and at a continued slow pace as compared to the growth experienced in 2011 and 2012. After several years of decreases in revenues, these amounts increased as the economy began to rebound in 2011. Since 2013, revenue continues to slowly grow in most regions while costs continue to grow but generally at a faster pace than revenues. This has resulted in continued steady net position growth as discussed in more detail in the regional analysis that follows. Use of the Study Finance officers may use the study to determine how their cities compare to others of similar size and geographic area in key financial ratio measurements. Both quartile and median ratio values are provided for comparison. The finance officer may wish to share the results of the analysis with the municipality’s chief executive officer and governing body to help key officials understand the impact of decisions on the financial condition of municipality.

4 | RubinBrown Public Sector Stats 2016

St. Louis Metropolitan Area

41 NUMBER OF

22,000 AVERAGE POPULATION

4.4% MEDIAN CHANGE IN NET POSITION

32

MUNICIPALITIES

unrestricted General Fund balance as % of expenditures (median – all cities)

unrestricted General Fund balance as % of expenditures (median – all cities) The results for the St. Louis area prior to 2015 reflected a significant slowing down of the economic recovery and related revenue growth. The median change in et position for St. Louis municipalities went from 6.3% to 3.3% from 2012 to 2014. This was a time of growth but at a very slow pace. In 2015 the median change in net position was a much healthier 4.4%. Still, 10 of the 41 St. Louis municipalities (or 24%) reported a decrease in government-wide net position in 2015, as compared with 22% in 2014. The cause of this increased growth in net position is evident when revenue per capita and expenses per capita are examined. As indicated in the chart below, median revenue per capita for St. Louis municipalities increased significantly in 2015. This is a strong reflection of an improving economy and tax revenue growth. Expenses also increased per capita but at a slower pace than revenues as compared to prior years. Another important metric is the amount of debt governments are taking on. Long- term debt per capita in the St. Louis region (which excludes pension or other non- bonded debt) has been decreasing since 2011. New issuances have not been very strong except for refundings which do not increase total debt outstanding. Finally, the most scrutinized ratio is the general fund’s unrestricted fund balance as compared to operating expenditures. Although decreasing, this shows a very strong financial position for the St. Louis city governments with close to 50% of annual expenditures in unrestricted fund balance. ST. LOUIS KANSAS CITY DENVER TENNESSEE

55.1%

2011

56.1%

2012

56.9%

2013

48.3%

2014

46.1%

2015

45% 50% 55% 60%

median Dollars Per capita

$1,250

$1,017

$1,008

$1,008

$996

$923

$1,000

Tax Revenue Expenses Total Debt

$840

$780

$760

$745

$738

$750

$734

$680

$620

$500

$539

$480

$250

2011

2012

2013

2014

2015

6 | RubinBrown Public Sector Stats 2016

Financial Ratio Study for St. Louis Metropolitan Area Municipalities Fiscal Years Ending in 2015

◀ More Favorable

Less Favorable ▶

Quartile Breakpoint

Quartile Breakpoint

2015 Median

2014 Median

Q1

Q2 Median Q3

Q4

GOVERNMENT-WIDE RATIOS

General Ratios Change in net position as a percent of prior year net position (%)

8.6%

4.4%

1.0%

4.4%

3.3%

Revenue coverage ratio (times)

1.21

1.15

1.04

1.15

1.10

Accumulated depreciation as a percent of depreciable capital assets (%)

38.1%

45.5%

52.6%

45.5%

45.5%

Liquidity Ratio Liquidity ratio (times)

4.17

2.70

1.88

2.70

3.52

Debt Ratios Debt to assets leverage ratio (%)

3.0%

15.8%

33.9%

15.8%

18.9%

Total debt per capita ($ per citizen)

$127.25

$480.26

$1,289.53

$480.26

$539.22

Revenue Ratios Tax revenue per capita ($ per citizen)

$624.60

$840.26

$1,074.02

$840.26

$759.62

Total grants, contributions & other intergovernmental revenue as a percent of total revenue (%)

6.7%

8.7%

12.4%

8.7%

9.0%

Expense Ratios Total expense per capita ($ per citizen)

$820.84

$1,017.18

$1,335.10

$1,017.18 $1,007.59

Total general government (administration) expense per capita ($ per citizen)

$104.84

$158.73

$208.17

$158.73

$162.10

Total public safety expense per capita ($ per citizen)

$244.23

$432.45

$665.04

$432.45

$404.65

Total interest expense per capita ($ per citizen)

$7.21

$25.26

$73.59

$25.26

$27.38

GOVERNMENTAL FUND RATIOS

Expenditure Ratios Total debt service expenditures as a percent of total revenue (%)

3.9%

9.2%

14.3%

9.2%

9.1%

Capital outlay expenditures as a percent of total expenditures (%)

26.4%

17.0%

12.2%

17.0%

17.0%

GENERAL FUND RATIOS

Financial Position Ratio Unrestricted fund balance (assigned and unassigned) as a percent of total expenditures net of transfers (%)

71.6%

46.1%

29.7%

46.1%

48.3%

Revenue Ratios Operating margin (%)

5.3%

2.6%

-3.1%

2.6%

2.7%

Intergovernmental revenue as a percent of total revenue (%)

0.0%

3.5%

9.9%

3.5%

2.2%

Transfers in as a percent of total revenue and transfers in (%)

0.0%

0.2%

2.6%

0.2%

0.3%

RubinBrown Public Sector Stats 2016 | 7

Kansas City Metropolitan Area

24 NUMBER OF

47,000 AVERAGE POPULATION

41

2.5% MEDIAN CHANGE IN NET POSITION

MUNICIPALITIES

unrestricted General Fund balance as % of expenditures (median – all cities)

2013 unrestricted General Fund balance as % of expenditures (median – all cities) The grow h experienced by Kansas City area in 2014 continues into 2015. The median increase in et position for Kansas City municipalities was 2.5% in 2015 compared to 2.4% in 2014. Much of this was caused by increases in revenues of almost 3.8% with the majority of that in grants, contributions and other intergovernmental revenues as opposed to taxes. Although not illustrated in the tax revenue per capita chart, tax revenue for Kansas City municipalities increased in 2015 by 2.2%. However, the mix of that revenue increase was concentrated in the larger cities, thereby causing the median tax revenue per capita to actually decrease in 2015. Meanwhile, as illustrated by the expenses per capita chart below, median expenses per capita for Kansas City municipalities barely increased on a per capita basis. 2011 2012

47.1%

2011

41.5%

2012

37.8%

2013

As indicated below, long-term debt per capita in the Kansas City region (which excludes pension or other non-bonded debt) decreased in 2015.

41.1%

2014

2014

Finally, general fund unrestricted fund balance as compared to expenditures has fluctuated significantly over the past 5 years, but remains at a very healthy level.

40.3%

2015

2015

35% 45% 50% 40%

median Dollars Per capita

$1,500

$1,258

$1,201

$1,250

$1,144

$1,098

Tax Revenue Expenses Total Debt

$1,078

$955

$936

$1,000

$1,020

$1,011

$1,011

$750

$647

$637

$632

$699

$661

$500

2011

2012

2013

2014

2015

8 | RubinBrown Public Sector Stats 2016

Financial Ratio Study for Kansas City Metropolitan Area Municipalities Fiscal Years Ending in 2015

◀ More Favorable

Less Favorable ▶

Quartile Breakpoint

Quartile Breakpoint

2015 Median

2014 Median

Q1

Q2 Median Q3

Q4

GOVERNMENT-WIDE RATIOS

General Ratios Change in net position as a percent of prior year net position (%)

6.2%

2.5%

0.3%

2.5%

2.4%

Revenue coverage ratio (times)

1.15

1.06

1.01

1.06

1.05

Accumulated depreciation as a percent of depreciable capital assets (%)

35.3%

45.1%

49.8%

45.1%

43.6%

Liquidity Ratio Liquidity ratio (times)

2.98

1.81

0.93

1.81

1.40

Debt Ratios Debt to assets leverage ratio (%)

11.8%

27.4%

44.5%

27.4%

26.2%

Total debt per capita ($ per citizen)

$774.86

$1,078.26

$1,708.10

$1,078.26 $1,144.46

Revenue Ratios Tax revenue per capita ($ per citizen)

$584.75

$646.75

$845.40

$646.75

$698.87

Total grants, contributions & other intergovernmental revenue as a percent of total revenue (%)

3.1%

10.6%

17.7%

10.6%

7.6%

Expense Ratios Total expense per capita ($ per citizen)

$831.96

$1,019.59

$1,359.01

$1,019.59 $1,012.91

Total general government (administration) expense per capita ($ per citizen)

$121.82

$163.29

$229.83

$163.29

$152.05

Total public safety expense per capita ($ per citizen)

$287.05

$344.13

$436.17

$344.13

$350.74

Total interest expense per capita ($ per citizen)

$28.85

$38.74

$60.59

$38.74

$53.24

GOVERNMENTAL FUND RATIOS

Expenditure Ratios Total debt service expenditures as a percent of total revenue (%)

11.1%

14.0%

23.2%

14.0%

13.9%

Capital outlay expenditures as a percent of total expenditures (%)

27.7%

17.3%

10.4%

17.3%

21.5%

GENERAL FUND RATIOS

Financial Position Ratio Unrestricted fund balance (assigned and unassigned) as a percent of total expenditures net of transfers (%)

61.7%

40.3%

27.3%

40.3%

41.1%

Revenue Ratios Operating margin (%)

9.8%

1.7%

0.0%

1.7%

1.7%

Intergovernmental revenue as a percent of total revenue (%)

0.2%

1.1%

10.5%

1.1%

0.9%

Transfers in as a percent of total revenue and transfers in (%)

0.3%

2.1%

5.9%

2.1%

2.2%

RubinBrown Public Sector Stats 2016 | 9

Denver Metropolitan Area

31 NUMBER OF

82,000 AVERAGE POPULATION

24

4.0% MEDIAN CHANGE IN NET POSITION

MUNICIPALITIES

unrestricted General Fund balance as % of expenditures (median – all cities)

2014 unrestricted General Fund balance as % of expenditures (median – all cities) The 2015 and 2014 results for the municipalities surveyed in the Denver region indi ate conditions con inue to improve as they have since 2013. The median increas n net pos tion for Denver municipalities has grown to 4.0% from 2.9% in 2013. Median tax revenue per capita for Denver municipalities was $879 during the past year, as compared to $860 during 2014. Median expenses per capita increased by a similar percentage as revenues. The below chart indicates that long-term debt per capita in the Denver region (which excludes pension or other non-bonded debt) continued to decrease in 2015. Finally, median general fund unrestricted fund balance as compared to expenditures has fluctuated significantly over the past 5 years, with a considerable decline this past year. 2013 2011 2012

33.6%

2011

34.2%

2012

33.1%

2013

33.5%

2014

31.3%

2015

2015

25% 35% 40% 30%

median Dollars Per capita

$1,192

$1,250

$1,103

$1,100

$1,100

$1,041

$1,000

$879

$860

Tax Revenue Expenses Total Debt

$810

$783

$760

$750

$442

$500

$390

$388

$354

$354

$250

2011

2012

2013

2014

2015

10 | RubinBrown Public Sector Stats 2016

Financial Ratio Study for Denver Metropolitan Area Municipalities Fiscal Years Ending in 2015

◀ More Favorable

Less Favorable ▶

Quartile Breakpoint

Quartile Breakpoint

2015 Median

2014 Median

Q1

Q2 Median Q3

Q4

GOVERNMENT-WIDE RATIOS

General Ratios Change in net position as a percent of prior year net position (%)

7.5%

4.0%

2.4%

4.0%

4.0%

Revenue coverage ratio (times)

1.22

1.16

1.08

1.16

1.14

Accumulated depreciation as a percent of depreciable capital assets (%)

39.5%

44.8%

56.0%

44.8%

44.8%

Liquidity Ratio Liquidity ratio (times)

4.18

2.85

2.09

2.85

2.85

Debt Ratios Debt to assets leverage ratio (%)

3.5%

6.5%

14.8%

6.5%

7.4%

Total debt per capita ($ per citizen)

$122.97

$354.23

$876.02

$354.23

$390.16

Revenue Ratios Tax revenue per capita ($ per citizen)

$707.85

$879.45

$1,086.70

$879.45

$860.02

Total grants, contributions & other intergovernmental revenue as a percent of total revenue (%)

12.0%

18.9%

21.5%

18.9%

14.6%

Expense Ratios Total expense per capita ($ per citizen)

$913.48

$1,191.76

$1,521.38

$1,191.76 $1,132.09

Total general government (administration) expense per capita ($ per citizen)

$157.21

$256.14

$326.83

$256.14

$268.79

Total public safety expense per capita ($ per citizen)

$247.34

$352.91

$478.00

$352.91

$355.74

Total interest expense per capita ($ per citizen)

$2.95

$12.41

$43.94

$12.41

$13.46

GOVERNMENTAL FUND RATIOS

Expenditure Ratios Total debt service expenditures as a percent of total revenue (%)

1.9%

4.4%

7.6%

4.4%

5.0%

Capital outlay expenditures as a percent of total expenditures (%)

27.1%

18.9%

11.5%

18.9%

17.5%

GENERAL FUND RATIOS

Financial Position Ratio Unrestricted fund balance (assigned and unassigned) as a percent of total expenditures net of transfers (%)

54.3%

31.3%

17.5%

31.3%

33.5%

Revenue Ratios Operating margin (%)

11.8%

2.6%

-1.4%

2.6%

2.5%

Intergovernmental revenue as a percent of total revenue (%)

3.2%

6.7%

9.4%

6.7%

6.7%

Transfers in as a percent of total revenue and transfers in (%)

0.0%

0.9%

2.3%

0.9%

1.2%

RubinBrown Public Sector Stats 2016 | 11

State of Tennessee

53,000 AVERAGE POPULATION

8.1% MEDIAN CHANGE IN NET POSITION

32 NUMBER OF

MUNICIPALITIES

unrestricted General Fund balance as % of expenditures (median – all cities)

As this is the first year that Tennessee municipalities are included in the survey, trend information is not available. However, the financial ratios generally demonstrate that many cities have very healthy financial positions and have experienced positive results of operations.

46.1%

ST. LOUIS

For instance, the median change in net position was 8.1% in 2015. This is much higher than the results in the other regions surveyed.

KANSAS CITY

40.3%

The median liquidity ratio was 0.92. This is below 1.0, which means many governments might find it difficult to continue to pay off current liabilities as they become due. The survey also shows that at the median general fund level of unrestricted fund balance as a percent of expenditures is 37.2%. This is above average and also above what the GFOA recommends at 2 months’ reserves or approximately 16.7%.

31.3%

DENVER

37.2%

TENNESSEE

30% 40% 50%

median Dollars Per capita

$1,221

$1,192

$1,250

$1,078

$1,020

$1,017

St. Louis Kansas City

$1,000

$879

$840

$829

$720

$750

$647

Denver

$480

Tennessee

$500

$354

$250

TAX REVENUE

EXPENSES

TOTAL DEBT

12 | RubinBrown Public Sector Stats 2016

Financial Ratio Study for State of Tennessee Municipalities Fiscal Years Ending in 2015

◀ More Favorable

Less Favorable ▶

Quartile Breakpoint

Quartile Breakpoint

Q1

Q2 Median Q3

Q4

GOVERNMENT-WIDE RATIOS

General Ratios Change in net position as a percent of prior year net position (%)

12.8%

8.1%

3.2%

Revenue coverage ratio (times)

1.17

1.09

1.04

Accumulated depreciation as a percent of depreciable capital assets (%)

33.5%

46.0%

53.4%

Liquidity Ratio Liquidity ratio (times)

1.61

0.92

0.51

Debt Ratios Debt to assets leverage ratio (%)

11.3%

21.6%

30.7%

Total debt per capita ($ per citizen)

$437.85

$720.25

$1,813.39

Revenue Ratios Tax revenue per capita ($ per citizen)

$671.50

$828.87

$1,320.79

Total grants, contributions & other intergovernmental revenue as a percent of total revenue (%)

14.3%

28.8%

42.1%

Expense Ratios Total expense per capita ($ per citizen)

$851.67

$1,221.18

$2,266.28

Total general government (administration) expense per capita ($ per citizen)

$85.05

$142.05

$195.17

Total public safety expense per capita ($ per citizen)

$332.46

$401.78

$472.61

Total interest expense per capita ($ per citizen)

$11.98

$24.01

$52.58

GOVERNMENTAL FUND RATIOS

Expenditure Ratios Total debt service expenditures as a percent of total revenue (%)

4.1%

6.8%

9.8%

Capital outlay expenditures as a percent of total expenditures (%)

14.9%

10.5%

4.4%

GENERAL FUND RATIOS

Financial Position Ratio Unrestricted fund balance (assigned and unassigned) as a percent of total expenditures net of transfers (%)

60.5%

37.2%

24.1%

Revenue Ratios Operating margin (%)

9.4%

2.7%

-0.1%

Intergovernmental revenue as a percent of total revenue (%)

10.5%

13.6%

20.7%

Transfers in as a percent of total revenue and transfers in (%)

0.1%

2.2%

5.0%

RubinBrown Public Sector Stats 2016 | 13

Financial Ratio Interpretations

GOVERNMENT-WIDE RATIOS Government-wide financial statements report information on all of the nonfiduciary activity of the government and its component units. The study focuses on governmental activities that are normally supported by taxes and intergovernmental revenues. The government-wide financial statements utilize the economic measurement flow and accrual basis of accounting. The measurement and timing of recognition is similar to that of a business entity.

General Ratios –––––––––––––––––––––––––––––––––––––––––– Change in net position as a % of prior year net position Revenue coverage ratio

Liquidity Ratio ––––––––––– Liquidity ratio Formula: Governmental activities liquid assets* Governmental activities current liabilities * Cash and short-term investments, excluding any restricted assets. Interpretation: The ratio measures the municipality’s ability to meet current obligations from existing cash and short- term investment balances. A higher ratio is considered favorable indicating that the municipality will be able to pay current liabilities as they become due. Debt Ratios – –––––––––––––– Debt to assets leverage ratio Formula: Governmental activities total debt† Governmental activities total assets Interpretation: The ratio is a measure of the degree to which the municipality’s total assets have been funded with debt. A lower ratio is considered favorable indicating that the government does not have significant creditor claims against its assets and has less risk of default on debt. Formula: Governmental activities total debt† Population Interpretation: The ratio is a measure of the debt burden to citizens. A lower ratio is considered favorable indicating that the citizens are less heavily burdened. The municipality has the ability issue future debt at a lower cost. † Total long-term liabilities excluding operating liabilities such as accrued compensated absences, claims and judgments payable, and pension obligations. Short-term operating debt is also not included. Total debt per capita

Formula: Governmental activities current year revenue* Governmental activities current year expense

Formula: Increase (decrease) in governmental activities net position

Governmental activities net position, beginning of year

*Current revenue includes both program and general revenue but excludes gains, losses, contributions, special and extraordinary gains or losses and transfers. Interpretation: The ratio measures interperiod equity – whether current year revenue covers the cost including depreciation of providing current year services. A ratio greater than 1.00 indicates positive interperiod equity; current year taxpayers are providing adequately for current year services. When the ratio falls below 1.00, either prior year revenues were used to fund a portion of current year services or future citizens are being burdened with some of the cost for providing services consumed currently. A higher value for the ratio is usually considered favorable. However, an extremely high ratio may indicate that the municipality is not providing services commensurate with the current revenues being generated from its tax base.

Interpretation: The ratio measures the change in the municipality’s financial condition for the year. A positive ratio indicates that the financial condition has improved; a negative ratio indicates a deteriorating financial condition. Accumulated depreciation as a % of depreciable capital assets Formula: Governmental activities accumulated depreciation, end of year Governmental activities depreciable capital assets, end of year Interpretation: The ratio measures the relative age of depreciable capital assets compared to the assets’ economic lives. Lower ratios are considered more favorable; the municipality will not face significant replacement cost in the near future. Formula: Governmental activities tax revenue Population Interpretation: The ratio is a measure of the tax burden to citizens. A lower ratio is considered favorable indicating that current citizens are paying lower taxes. Therefore the municipality has greater ability to increase taxes to meet future needs.

Revenue Ratios ––––––––––––––––––––––––––––––––––––––––– Tax revenue per capita

Total grants, contributions & other intergovernmental revenue as a % of total revenue

Formula: (Governmental activities total

operating grants and contributions + total capital grants and contributions + other intergovernmental revenue) Governmental activities total revenue*

Interpretation: The ratio measures the municipality’s reliance on grants, contributions and other

intergovernmental revenue. A lower ratio is considered favorable indicating that the municipality is less reliant on external sources that are beyond its control.

14 | RubinBrown Public Sector Stats 2016

GOVERNMENT-WIDE RATIOS

Expense Ratios ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Expense ratios measure the current period cost of providing services to citizens or current-period financing cost. Functional expense categories include depreciation measuring the cost of using capital assets to provide current year services. Low ratios are depicted as favorable. However, the amount of expense incurred is not necessarily commensurate with the quality, efficiency or effectiveness of the service provided.

Total expense per capita

Total general government (administration) expense per capita Formula: Government-wide general government (administration) expense Population

Total interest expense per capita

Formula: Government-wide total expense Population

Formula: Government-wide interest expense Population Interpretation: The ratio is a measure of the interest expense incurred per citizen. A lower ratio is considered favorable, indicating that a municipality has minimized its debt obligations, and reduced the strain that debt service payments can place on current municipal resources.

Interpretation: The ratio is a measure of the expense necessary on average to provide services to a given citizen. A lower ratio is considered favorable indicating that a municipality is providing services to citizens at a comparatively lower cost. However, when comparing the results of this ratio between two different municipalities, one must consider whether the two municipalities provide comparable levels of police, fire, waste management, parks and recreation, and similar services. In addition, the amount of expense incurred is not necessarily commensurate with the quality, efficiency or effectiveness of the services provided.

Interpretation: See previous comments.

Total public safety expense per capita

Formula: Government-wide public safety expense Population

Interpretation: See previous comments.

GOVERNMENTAL FUND RATIOS Governmental funds are used to account for the basic activities of the municipality that are not supported by user charges or characterized by the municipality acting in a fiduciary capacity. Governmental funds account for operations, acquisition of capital assets related to basic operations, and the debt service requirements for related debt. Primary resources are taxes, intergovernmental revenues and for capital asset acquisition long-term debt proceeds. Governmental funds report using the current financial resource measurement flow and the modified accrual basis of accounting. Expenditures are often controlled by annual budgets.

Expenditure Ratios ––––––––––––––––––––––––––––––––––––– Total debt service expenditures as a % of total revenue Capital outlay expenditures as a % of total expenditures

Formula: Governmental fund debt service expenditures Governmental fund total revenues Interpretation: This ratio measures the amount of current revenue that is devoted to meeting the year’s debt service requirements. Significant debt service requirements potentially lower the amount that can be used for providing current services. A low ratio is considered favorable.

Formula: Governmental fund capital outlay expenditures Governmental fund total expenditures Interpretation: The ratio measures whether the municipality is adequately providing for capital asset additions and improvements. A high ratio is considered favorable indicating that the municipality is providing adequately for its capital asset needs.

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Financial Ratio Interpretations

GENERAL FUND RATIOS The general fund is the primary operating fund of a municipality. It accounts for the revenues that are not restricted for specific purposes and activities. Most of the basic operations of the municipality are accounted for in the general fund. The general fund, a governmental fund, reports using the current financial resource measurement focus and the modified accrual basis of accounting.

Financial Position Ratio –– Unrestricted fund balance (assigned & unassigned) as a % of total expenditures net of transfers Formula: General fund unrestricted fund balance General fund total expenditures (net of transfers) Interpretation: The ratio shows the relationship between available fund balance and expenditures and more specifically the amount of available fund balance there is to cover future expenditures without reliance on corresponding revenues. It also measures the ability of the general fund to continue operations if its revenue is temporarily interrupted or declines. This is a measure of the general fund operating cushion. Municipalities may set a target for this ratio. The GFOA recommends a minimum of 2 month’s reserves or a ratio of around 16.7%. A higher ratio is usually considered favorable. However, an extremely high ratio may indicate that the municipality is not providing the level of services commensurate with its revenue stream.

Revenue Ratios ––––––––––––––––––––––––––––––––––––––––– Operating margin Intergovernmental revenue as a % of total revenue

Formula: (General fund total revenue – General fund total expenditures (net of transfers)) General fund total revenue

Formula: General fund intergovernmental revenue General fund total revenue

Interpretation: This ratio indicates the amount contributed to the government’s change in fund balances (bottom line) for every $1 generated in revenue. This ratio is similar to the revenue coverage ratio above but just for the general fund. A positive ratio reflects revenues that are greater than expenditures (net of transfers) and is a measure of sustainability. There are many reasons a government may have a negative ratio meaning more expenditures than revenues so this ratio should be looked at over a period of time. Results should be positive more often than negative over time to reflect fiscal sustainability.

Interpretation: The ratio measures the general fund’s reliance on revenues from external sources to finance current operations. A low ratio is considered favorable indicating that the general fund is not overly reliant on revenue sources that are beyond its control.

Transfers in as a % of total revenue and transfers in Formula: General fund transfers in General fund total revenues and transfers in

Interpretation: The ratio measures the reliance of the general fund on transfers from other funds. To the extent the transfers are from enterprise funds, the users of enterprise services may be subsidizing general fund operations. A low ratio is considered favorable indicating that the general fund is not dependent on transfers.

16 | RubinBrown Public Sector Stats 2016

RubinBrown Public Sector Services Group

Consulting Services · Internal auditing · Operational reviews/efficiency analysis · Cyber security review · Strategic and long-range planning · Financial analysis and review · Benchmarking · Technology analysis and implementation

Through our extensive list of clients we serve as well as our involvement in associations and professional organizations at the local, regional and national levels, we understand the issues unique to the public sector. RubinBrown’s commitment to quality is demonstrated through our membership in the American Institute of Certified Public Accountants (AICPA) Governmental Audit Quality Center. This firm-based voluntary membership center is designed to help CPAs meet the challenges of performing quality audits in the unique and complex public sector industry. The Public Sector Services Group of RubinBrown provides services to a broad spectrum of government organizations, including municipal governments (cities and counties), institutions of higher education, local public school districts, state governments and political districts such as public libraries and municipal utility districts. Our public sector team includes experienced professionals all of whom are well trained in the financial reporting and audit requirements as promulgated in: · Government Accounting Standards Board · Government Audit Standards, issued by the Comptroller General of the United States · Single Audit Act Amendments of 1996 and Uniform Guidance Industry Involvement RubinBrown is committed to staying active within the industry, which helps us remain current on all new issues. We are active members of our regional and state Government Finance Officers Association (GFOA) chapters. Many team members are associate members of the national GFOA, including the Special Review Committee of the Certificate of Achievement for Excellence in Financial Reporting Program, the Association of Government Accountants and special industry related committees of the AICPA. Public Sector Specialized Services Assurance and Accounting Services · Financial statement audits · Single audits of federal financial assistance under Uniform Guidance · GFOA Certificate of Achievement for Excellence in Financial Reporting Program Expertise · Outsourced accounting and financial statement preparation · Agreed-upon procedures · Forensic auditing

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RubinBrown Public Sector Stats 2016 | 17

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