RubinBrown Public Sector Municipal Stats 2018

First page Table of contents I Next page Last page

This analysis has been created in order to provide a comprehensive report of key government-wide, governmental fund and general fund financial ratios for the regions we serve so that city governments may compare how they are doing relative to other municipal governments in their region and identify trends occurring in their respective communities.

’18 A publication by RubinBrown LLP

PUBLIC SECTOR MUNICIPAL STATS

Contents

RubinBrown is pleased to present our 2018 Public Sector Municipal Statistical Analysis, our twelfth 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 fund and general fund financial ratios for the regions we serve so that city governments may compare how they are doing relative to other municipal governments in their region and identify trends occurring in their respective communities. If you have questions about this publication, please contact us (see page 17 for contact information).

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

Disclaimer: Public Sector Stats, a publication of RubinBrown LLP, is designed to provide general information regarding the subject matter covered. Although prepared by professionals, its content should not be construed as the rendering of advice regarding specific situations. If accounting, legal, or other expert assistance is needed, consult with your professional business advisor. Please call RubinBrown with any questions.

www.RubinBrown.com

EXECUTIVE SUMMARY

RubinBrown has an extensive public sector practice and is a leader in providing accounting and auditing services to state and local governments with offices in Chicago, Denver, Kansas City, Las Vegas, Nashville and St. Louis. As a service to the local governments in the communities we serve, we have developed the Public Sector Municipal Stats. The study includes results for municipalities in the St. Louis, Kansas City, Denver Front Range metropolitan areas as well as cities throughout the state of Tennessee. 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, metropolitan Kansas City includes municipalities in both Kansas and Missouri, Denver consists of municipalities primarily in the Front Range region and Tennessee municipalities are throughout the state but with a focus on cities in middle Tennessee. Methodology Financial information is from the 2017 fiscal or calendar year Comprehensive Annual Financial Report (CAFR) or from audited financial statements if no CAFR was prepared. All municipalities included in the study prepare financial statements in accordance with generally accepted accounting principles. A total of 18 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 benchmark against other cities and use as an analysis tool. This year, 41 St. Louis municipalities, 24 Kansas City municipalities, 32 Denver Front Range municipalities and 33 Tennessee municipalities participated. The average population of the cities included in the St. Louis region was 22,000, compared to the average population of 48,000 for surveyed cities in the Kansas City region, 83,000 in the Denver region and 53,000 for Tennessee. The average population for all cities in each region experienced an increase except for the St. Louis region, which remained the same. Format of the Report The ratios are presented separately for the St. Louis, Kansas City, Denver and Tennessee regions. Each ratio was sorted from most favorable to less favorable and presented by quartile to be used to rate individual cities relative to others in their region. Presented also is three-year trend information to show prior results and associated increases or decreases. For a description and interpretation of the ratios, please refer to the Financial Ratio Interpretations section on page 14. The conclusions of whether results are more or less favorable are based upon what is most commonly accepted in the industry. Each statistic may be viewed differently or may be more or less meaningful based upon the situation of each city. 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 affected adversely if a city serves a large non- resident population due to a significant daily influx of workers.

Executive Summary

EXECUTIVE SUMMARY HOW THE REGIONS COMPARE

Participating Municipalities by Region

ST. LOUIS REGION

KANSAS CITY REGION

Alton, IL Arnold, MO Ballwin, MO

Fenton, MO Ferguson, MO Festus, MO Florissant, MO Glendale, MO Hazelwood, MO Kirkwood, MO Ladue, MO

Belton, MO Blue Springs, MO Gardner, KS

Mission, KS North Kansas City, MO Olathe, KS

Richmond Heights, MO Rock Hill, MO

Saint John, MO Shrewsbury, MO St. Charles, MO St. Peters, MO Sunset Hills, MO

Brentwood, MO Bridgeton, MO Chesterfield, MO Clayton, MO Collinsville, IL Crestwood, MO Creve Coeur, MO Des Peres, MO Edwardsville, IL Ellisville, MO Fairview Heights, IL

Gladstone, MO Grandview, MO Harrisonville, MO Independence, MO Lawrence, KS Leavenworth, KS Leawood, KS Lee’s Summit, MO

Overland Park, KS Praire Village, KS Raymore, MO Raytown, MO Richmond, MO Shawnee, KS Warrensburg, MO

Town andCountry, MO University City, MO Webster Groves, MO Weldon Spring, MO

Lake St. Louis, MO Manchester, MO Maplewood, MO Maryland Heights, MO

Wentzville, MO Wildwood, MO

Lenexa, KS Liberty, MO Merriam, KS

O’Fallon, MO Olivette, MO

Comparison of the Regions

MEDIAN CHANGE IN NET POSITION

10%

8.4%

8.2%

8.0%

5.5%

5.2%

4.5%

1.5% 3.1%

2.7%

4.0% 2.5%

0.4%

2015

2016

2017

MUNICIPALITY’S RISK OF CREDITOR CLAIMS ON ASSETS (median debt to assets leverage ratio)

AVERAGE POPULATION OF MUNICIPALITY

18.9% 16.8% 9.5%

30.5%

53,000

83,000

22,000 48,000

0% lower

35% higher

RubinBrown Public Sector Municipal Stats 2018

DENVER REGION

STATE OF TENNESSEE

Arvada Aurora Boulder Brighton

Fountain Ft. Collins

Thorton Westminster Wheat Ridge Windsor

Bartlett Brentwood Bristol Chattanooga

Goodlettsville Greeneville Hendersonville Jackson Johnson City

Sevierville Smyrna Springfield Spring Hill Tullahoma

Golden Greeley Greenwood Village Lafayette Lakewood Littleton

Broomfield Canon City Castle Rock Centennial

Clarksville Cleveland Collierville Columbia Cookeville East Ridge Farragut

Kingsport Knoxville La Vernge Lebanon Maryville Morristown

Lone Tree Longmont Louisville Loveland Northglenn Parker

Cherry Hills Village Colorado Springs Commerce City Englewood Erie Evans

Franklin Gallatin Germantown

Mount Juliet Murfreesboro Oak Ridge

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

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

60%

45%

30%

49.6%

42.7%

MINIMUM GFOA RECOMMENDS

38.4%

15%

28.2%

0 lower

higher

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

9.7% 8.1%

15.7%

27.4%

0% less reliant

30% more reliant

Executive Summary

EXECUTIVE SUMMARY

Analysis The overall results of this year’s survey indicate that 2017 was another year of moderate growth in the financial health of cities in most of the regions included in the survey. For most regions both net position and fund balances grew and at a slightly faster pace than previous years. On average in 2017, tax revenue remained flat, causing cities to rely more on intergovernmental revenues and other non-local revenue sources. The increases in intergovernmental revenue ratios reflected this trend. Costs continued to rise, and for most, at a pace faster than revenues. Regardless of the challenges, most regions were operating at a slight surplus on a government-wide basis as well as the general fund. In the analysis that follows, the results for each metropolitan area are examined with an emphasis placed on the development of financial ratio quartiles allowing cities to compare their results to other cities of similar size and geographic location. We encourage each finance officer to share the results of this analysis with the city’s chief executive officer and governing body to help key officials understand how their city compares to that of their peers.

DENVER METROPOLITAN AREA

32 NUMBER OF

83,000 AVERAGE POPULATION Unrestricted General Fund Balance as % of Expenditures (median – all cities)

5.5% MEDIAN CHANGE IN NET POSITION

MUNICIPALITIES

Municipalities surveyed in the Denver region over the past five years indicate co ditions c ntinu to improve and have been since 2013. Median tax revenue per capita for Denver municipalities rose 2.8% to $964 during the past year, as compared to $937 during 2016. Expense growth continues to out-pace revenues causing continued reliance on other sources of revenues. Long-term debt per capita in the Denver region (which excludes pension or other non-bonded debt) continues to increase due to increased debt activity in the region. This differs from St. Louis and Kansas City – possibly due to stronger population growth and increased capital activity. Finally, the median general fund unrestricted fund balance as compared to expenditures decreased significantly in 2017 as compared to the increase in 2016. Total expenditures plus net transfers out in the general fund increased 5.0% in 2017 and unrestricted fund balance for all cities decreased 2.0%.

Unrestricted General Fund Balance as % of Expenditures (median – all cities)

33.1%

2013

33.5%

2014

31.3%

2015

35.5%

2016

28.2%

2017

25% 35% 40% 30%

Median Dollars Per Capita

$1,500

$1,297

$1,235

$1,192

$1,132

$1,100

$1,200

Tax Revenue Expenses Total Debt

$964

$937

$879

$860

$810

$900

$625

$515

$600

$442

$390

$354

$300

2013

2014

2015

2016

2017

RubinBrown Public Sector Municipal Stats 2018

Financial Ratio Study for Denver Metropolitan Area Municipalities Fiscal Years Ending in 2017

◀ More Favorable

Less Favorable ▶

2016 Median

2015 Median

Q1 Quartile

Breakpoint Q2 Median Q3 Quartile

Breakpoint Q4 2017 Median

GOVERNMENT-WIDE RATIOS General Ratios Change in net position as a % of prior year net position

7.5%

5.5%

2.4%

5.5%

5.2%

4.0%

Revenue coverage ratio (times)

1.23

1.17

1.09

1.17

1.16

Accumulated depreciation as a % of depreciable capital assets

39.6%

46.8%

56.0%

46.8%

45.8%

44.8%

Liquidity Ratio Liquidity ratio (times)

3.21

2.74

2.05

2.74

2.73

2.85

Debt Ratios Debt to assets leverage ratio

3.7%

9.5%

16.0%

9.5%

7.5%

6.5%

Total debt per capita ($ per citizen) Revenue Ratios Tax revenue per capita ($ per citizen)

$171.06

$625.07

$1,188.26

$625.07

$514.75

$354.23

$765.07

$963.89

$1,245.56

$963.89

$937.03

$879.45

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

10.9%

15.7%

23.0%

15.7%

16.5%

18.9%

Expense Ratios Total expense per capita ($ per citizen)

$968.27

$1,296.57

$1,601.67

$1,296.57

$1,235.17

$1,191.76

Total general government (administration) expense per capita ($ per citizen) Total public safety expense per capita ($ per citizen) Total interest expense per capita ($ per citizen) GOVERNMENTAL FUND RATIOS Expenditure Ratios Total debt service expenditures as a % of total revenue Capital outlay expenditures as a % of total expenditures GENERAL FUND RATIOS Financial Position Ratio Unrestricted fund balance (assigned and unassigned) as a % of total expenditures net of transfers

$193.73

$250.95

$394.96

$250.95

$231.51

$256.14

$271.54

$399.87

$521.29

$399.87

$379.43

$352.91

$5.03

$22.58

$42.04

$22.58

$17.57

$12.41

2.0%

4.8%

6.7%

4.8%

4.4%

34.2%

21.1%

12.8%

21.1%

17.7%

18.9%

52.6%

28.2%

19.3%

28.2%

35.5%

31.3%

Revenue Ratios Operating margin

$0.09

$0.03

$(0.04)

$0.03

$0.01

$0.03

Intergovernmental revenue as a % of total revenue Transfers in as a % of total revenue and transfers in

2.7%

5.6%

8.6%

5.6%

6.1%

6.7%

0.0%

0.6%

3.0%

0.6%

0.8%

0.9%

*All numbers are listed as percent (%) unless otherwise noted

Denver Metropolitan Area

KANSAS CITY METROPOLITAN AREA

24 NUMBER OF

48,000 AVERAGE POPULATION

1.5% MEDIAN CHANGE IN NET POSITION

MUNICIPALITIES

2016 2013 Unrestricted General Fund Balance as % of Expenditures (median – all cities) The resul s for 2017 improved significantly with only nine cities reporting losses – additionally, the losses w re lower than seen in past years. The 2016 results for the Kansas City area indicated a drastic decline. Much of this was attributable to the fact that half of the cities operated at a deficit in 2016. Although the median tax revenue per capita decreased in 2017, tax revenues in total for the 24 cities increased approximately 2.3% in 2017. Average tax revenue also increased 3.0% in 2017 compared to 2016. Median expenses per capita for Kansas City municipalities continued to increase but at a slower pace than in 2016, which aided in improving the overall financial results in 2017. Median long-term debt per capita in the Kansas City region (which excludes pension or other non bonded debt) decreased in 2017. Finally, the general fund’s unrestricted fund balance as compared to expenditures has fluctuated significantly for Kansas City area municipalities over the past five years, averaging 37.8% or 4.4 months. This is considered a moderately healthy level. 2014 2017 2015

Unrestricted General Fund Balance as % of Expenditures (median – all cities)

37.8%

2013

41.1%

2014

36.0%

2015

35.7%

2016

38.4%

2017

30% 40% 45% 35%

Median Dollars Per Capita

$1,500

$1,231

$1,204

$1,250

$1,144

$1,141

$1,098

Tax Revenue Expenses Total Debt

$1,079

$1,000

$1,042

$1,083

$1,013

$1,011

$698

$661

$657

$750

$699

$655

$500

2013

2014

2015

2016

2017

RubinBrown Public Sector Municipal Stats 2018

Financial Ratio Study for Kansas City Metropolitan Area Municipalities Fiscal Years Ending in 2017

◀ More Favorable

Less Favorable ▶

2016 Median

2015 Median

Q1 Quartile

Breakpoint Q2 Median Q3 Quartile

Breakpoint Q4 2017 Median

GOVERNMENT-WIDE RATIOS General Ratios Change in net position as a % of prior year net position

6.1%

1.5%

-3.6%

1.5%

0.4%

2.5%

Revenue coverage ratio (times)

1.15

1.03

0.92

1.03

1.00

1.05

Accumulated depreciation as a % of depreciable capital assets

39.4%

46.9%

51.9%

46.9%

47.0%

45.3%

Liquidity Ratio Liquidity ratio (times)

2.33

1.47

1.16

1.47

1.45

1.66

Debt Ratios Debt to assets leverage ratio

14.0%

30.5%

36.4%

30.5%

29.3%

28.4%

Total debt per capita ($ per citizen) Revenue Ratios Tax revenue per capita ($ per citizen)

$702.59

$1,203.89

$1,618.02

$1,203.89

$1,231.06

$1,141.34

$622.41

$657.07

$928.79

$657.07

$696.93

$654.53

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

2.6%

8.1%

19.3%

8.1%

6.0%

10.8%

Expense Ratios Total expense per capita ($ per citizen)

$897.21

$1,082.57

$1,283.33

$1,082.57 $1,078.66 $1,041.56

$125.84

$165.74

$256.67

$165.74

$175.86

$167.83

$302.63

$371.14

$439.64

$371.14

$364.36

$346.22

$20.89

$36.05

$56.91

$36.05

$36.63

$39.52

10.7%

14.2%

16.7%

14.2%

16.9%

14.6%

30.1%

21.7%

11.1%

21.7%

16.6%

17.1%

43.8%

38.4%

30.3%

38.4%

35.7%

36.0%

Revenue Ratios Operating margin

4.7%

1.2%

-4.1%

1.2%

1.9%

1.6%

Intergovernmental revenue as a % of total revenue Transfers in as a % of total revenue and transfers in

0.4%

1.5%

9.4%

1.5%

1.3%

0.0%

1.8%

6.0%

1.8%

1.5%

2.2%

*All numbers are listed as percent (%) unless otherwise noted

Kansas City Metropolitan Area

ST. LOUIS METROPOLITAN AREA

41 NUMBER OF

Unrestricted General Fund Balance as % of Expenditures (median – all cities) 22,000 AVERAGE POPULATION

3.1% MEDIAN CHANGE IN NET POSITION

MUNICIPALITIES

Unrestricted General Fund Balance as % of Expenditures (median – all cities)

More cities in the St. Louis region ended the year with a surplus than in the past, with only ten cities (or 24.3%) reporting decreases in government-wide net position. In 2016, 11 of the 41 St. Louis municipalities (or 26.8%) reported a decrease in government-wide net position. However, the average loss of these cities with a decrease in net position decreased to 7.9% compared to over 30.9% in 2016. The cause of this increased growth in net position in 2017 is evident when we examine revenue per capita and expenses per capita. Median revenue per capita for St. Louis municipalities remained flat in 2017, but median expenses per capita decreased 5.9% to a more normal level compared to prior years. Another important indicator of financial strength is how much debt the region is assuming. Median long-term debt per capita in the St. Louis region (which excludes pension or other non-bonded debt) had been increasing up to 2015. During 2016 and 2017, there was less new debt activity due to higher interest rates. Finally, the most scrutinized ratio is the general fund’s unrestricted fund balance as compared to operating expenditures. This shows a very strong financial position for St. Louis area governments, which are maintaining unrestricted fund balance equal to almost half of annual expenditures.

56.9%

2015

2013

48.3%

2016

2014

45.9%

2017

2015

44.3%

2016

49.6%

2017

40% 50% 60%

Median Dollars Per Capita

$1,500

$1,183

$1,250

$1,113

Tax Revenue Expenses Total Debt

$1,059

$1,008

$1,000

$865

$862

$841

$775

$768

$750

$776

$738

$715

$682

2013 $620

$500

2014

2015

2016

2017

RubinBrown Public Sector Municipal Stats 2018

Financial Ratio Study for St. Louis Metropolitan Area Municipalities Fiscal Years Ending in 2017

◀ More Favorable

Less Favorable ▶

2016 Median

2015 Median

Q1 Quartile

Breakpoint Q2 Median Q3 Quartile

Breakpoint Q4 2017 Median

GOVERNMENT-WIDE RATIOS General Ratios Change in net position as a % of prior year net position

7.8%

3.1%

0.2%

3.1%

2.7%

4.3%

Revenue coverage ratio (times)

1.19

1.08

1.00

1.08

1.07

1.14

Accumulated depreciation as a % of depreciable capital assets

35.8%

47.8%

54.9%

47.8%

47.2%

46.6%

Liquidity Ratio Liquidity ratio (times)

4.59

2.81

1.53

2.81

3.23

2.29

Debt Ratios Debt to assets leverage ratio

5.5%

16.8%

39.8%

16.8%

15.9%

17.6%

Total debt per capita ($ per citizen) Revenue Ratios Tax revenue per capita ($ per citizen)

$204.98

$681.82

$1,705.08

$681.82

$737.67

$775.72

$643.58

$862.36

$1,149.64

$862.36

$865.26

$841.27

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

5.6%

9.7%

17.3%

9.7%

10.2%

8.8%

Expense Ratios Total expense per capita ($ per citizen)

$888.80

$1,112.65

$1,456.73

$1,112.65

$1,123.83

$1,058.74

$115.76

$166.79

$252.29

$166.79

$166.11

$161.65

$271.16

$437.25

$706.11

$437.25

$451.65

$440.77

$9.44

$29.57

$79.06

$29.57

$27.90

$28.51

3.1%

8.9%

14.5%

8.9%

11.3%

10.2%

29.5%

22.7%

15.9%

22.7%

17.7%

16.7%

75.8%

49.6%

33.1%

49.6%

44.3%

45.9%

Revenue Ratios Operating margin

2.1%

-1.2%

-3.0%

-1.2%

1.5%

1.6%

Intergovernmental revenue as a % of total revenue Transfers in as a % of total revenue and transfers in

0.1%

2.6%

9.6%

2.6%

3.6%

4.1%

0.0%

0.7%

4.4%

0.7%

0.1%

0.3%

*All numbers are listed as percent (%) unless otherwise noted

St. Louis Metropolitan Area

STATE OF TENNESSEE

53,000 AVERAGE POPULATION

8.2% MEDIAN CHANGE IN NET POSITION

33 NUMBER OF

MUNICIPALITIES

Our trend analysis is limited for Tennessee municipalities as we enter our third year of surveying cities in the region. However, most of the financial ratios show many cities have very healthy financial positions and have experienced positive results of operations. For instance, the median change in net position has averaged a healthy 8.2% over the past three years. This is much higher than results in other regions surveyed. The median liquidity ratio however is much lower than the other regions surveyed and was even below 1.0 for 2015 and 2016. Being below 1.0 means many governments have more current liabilities than liquid assets and may find it difficult to continue to pay off current liabilities as they become due. The median rose to 1.19 in 2017, which is a positive improvement from the prior two years. Median tax revenue per capita for Tennessee municipalities has averaged $823 over the past three years. Growth in tax revenues was comparable to growth in 2017 expenses, causing continued increases in net position. The median ratio for general fund unrestricted fund balance as a percent of expenditures rose significantly in 2016 from 35.7% in 2015 to 46.8% in 2016, with a slight decrease in 2017. This is above average and exceeds the GFOA recommendation of 20%. The 2016 and 2017 ratio reflects an unrestricted fund balance equivalent to over five months of operating expenditures in the general fund.

Unrestricted General Fund Balance as % of Expenditures (median – all cities)

35.7%

2015

46.8%

2016

42.7%

2017

35% 40% 45% 50%

Median Dollars Per Capita

$1,500

$1,279

$1,204

Tax Revenue Expenses Total Debt

$1,158

$1,250

$1,000

$892

$831

$805

$834

$750

$779

$790

$500

2015

2016

2017

RubinBrown Public Sector Municipal Stats 2018

Financial Ratio Study for State of Tennessee Municipalities Fiscal Years Ending in 2017

◀ More Favorable

Less Favorable ▶

2016 Median

2015 Median

Q1 Quartile

Breakpoint Q2 Median Q3 Quartile

Breakpoint Q4 2017 Median

GOVERNMENT-WIDE RATIOS General Ratios Change in net position as a % of prior year net position

14.0%

8.2%

3.4%

8.2%

8.4%

8.0%

Revenue coverage ratio (times)

1.26

1.10

1.05

1.10

1.13

1.09

Accumulated depreciation as a % of depreciable capital assets

36.5%

51.1%

58.1%

51.1%

50.1%

46.2%

Liquidity Ratio Liquidity ratio (times)

2.07

1.19

0.70

1.19

0.96

0.87

Debt Ratios Debt to assets leverage ratio

10.6%

18.9%

26.2%

18.9%

20.0%

22.0%

Total debt per capita ($ per citizen) Revenue Ratios Tax revenue per capita ($ per citizen)

$327.03

$778.88

$1,763.39

$778.88

$790.26

$891.79

$620.50

$834.37

$1,239.44

$834.37

$805.23

$831.00

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

11.6%

27.4%

39.8%

27.4%

27.9%

29.0%

Expense Ratios Total expense per capita ($ per citizen)

$785.26

$1,204.36

$2,400.12

$1,204.36 $1,158.92

$1,278.86

$91.13

$146.35

$215.91

$146.35

$149.90

$143.56

$330.41

$415.35

$472.42

$415.35

$402.96

$407.28

$9.68

$21.12

$54.59

$21.12

$20.82

$25.91

4.7%

6.6%

8.4%

6.6%

6.9%

18.8%

12.6%

7.4%

12.6%

12.1%

10.3%

80.6%

42.7%

28.0%

42.7%

46.8%

35.7%

Revenue Ratios Operating margin

0.07

0.02

0.00

0.02

0.03

2.60

Intergovernmental revenue as a % of total revenue Transfers in as a % of total revenue and transfers in

11.5%

15.0%

18.1%

15.0%

15.7%

14.1%

0.00%

2.2%

5.3%

2.2%

2.4%

3.2%

*All numbers are listed as percent (%) unless otherwise noted

State of Tennessee

FINANCIAL RATIO INTERPRETATIONS

GOVERNMENT-WIDE RATIOS Government-wide financial statements report information on all 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 Formula: Increase (decrease) in governmental activities net position Revenue coverage ratio Formula: Liquidity Ratio ––––––––––– Liquidity ratio Formula: Governmental activities liquid assets* Governmental activities current liabilities

Governmental activities current year revenue* Governmental activities current year expense

Governmental activities net position, beginning of year

* 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. Total debt per capita 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.

*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.

Revenue Ratios ––––––––––––––––––––––––––––––––––––––––– Tax revenue per capita Formula: Governmental activities tax revenue Population 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 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.

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.

RubinBrown Public Sector Municipal Stats 2018

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 Formula: Government-wide total expense Population

Total general government (administration) expense per capita Formula: Government-wide general government (administration) expense Population Total public safety expense per capita Formula: Government-wide public safety expense Population Interpretation: See previous comments.

Total interest expense per capita 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.

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 Formula: Governmental fund debt service expenditures Governmental fund total revenues Capital outlay expenditures as a % of total expenditures Formula: Governmental fund capital outlay expenditures Governmental fund total expenditures

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.

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.

Financial Ratio Interpretations

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 Revenue Ratios ––––––––––––––––––––––––––––––––––––––––– Operating margin Formula:

Intergovernmental revenue as a % of total revenue Formula: General fund intergovernmental revenue General fund total revenue 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.

(assigned & unassigned) as a % of total expenditures net of transfers Formula: General fund unrestricted fund balance* General fund total expenditures (net of transfers) * Includes both assigned and unassigned fund balance 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 two 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.

(General fund total revenue – General fund total expenditures (net of transfers)) 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.

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.

RubinBrown Public Sector Municipal Stats 2018

RUBINBROWN PUBLIC SECTOR SERVICES GROUP

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

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

RubinBrown also is equipped to help public sector clients with technology consulting, fringe benefit consulting and retirement plan administration, bookkeeping services, and placement of temporary and permanent accounting, bookkeeping and financial personnel.

Jeff Winter, CPA, CGMA Chairman 314.290.3408 jeff.winter@rubinbrown.com

Ted Williamson, CPA Partner & Vice Chair 314.678.3534 ted.williamson@rubinbrown.com Chester Moyer, CPA Partner & Vice Chair 816.859.7945 chester.moyer@rubinbrown.com

Cheryl Wallace, CPA Partner-In-Charge 303.952.1288 cheryl.wallace@rubinbrown.com

RubinBrown Public Sector Services Group

1.800.678.3134 www.RubinBrown.com

@RubinBrown RubinBrown LLP

Founded in 1952, RubinBrown’s team members establish best practices within specific industry segments and work to serve the community both inside and outside the workplace. RubinBrown’s mission is to help clients build and protect value, while at all times honoring the responsibility to serve the public interest.

RubinBrown is also an independent member of Baker Tilly International, a high-quality, dedicated network of 126 independent firms in 147 countries.

Page II Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18

Made with FlippingBook - Online Brochure Maker