Birmingham, AL Special Revenue Funds Balance Sheet 2008, Lecture notes of Finance

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CITY OF

BIRMINGHAM, ALABAMA

COMPREHENSIVE ANNUAL

FINANCIAL REPORT

FISCAL YEAR ENDED JUNE 30, 2008

COMPREHENSIVE ANNUAL FINANCIAL REPORT

OF THE

CITY OF BIRMINGHAM, ALABAMA

FOR THE FISCAL YEAR ENDED

JUNE 30, 2008

OFFICE OF THE DIRECTOR OF FINANCE

Steve F. Sayler

Director

City of Birmingham, Alabama

Comprehensive Annual Financial Report

For the Fiscal Year Ended June 30, 2008

TABLE OF CONTENTS

STATISTICAL SECTION

Financial Trends

Net Assets by Components for Last Seven Fiscal Years 99

Changes in Net Assets for Last Seven Fiscal Years 100

Fund Balances for Last Seven Fiscal Years 102

Changes in Fund Balances for Last Seven Fiscal Years 103

Revenue Capacity

Sales and Use Tax Revenues 104

Sales and Use Tax Revenues to Total Taxes 105

Debt Capacity

Ratios of Outstanding Debt by Type for Last Seven Fiscal Years 106

Ratios of General Bonded Debt Outstanding for Last Seven Fiscal Years 107

Assessed Value and Estimated True Value of All Taxable Property 108

Direct and Overlapping Debt for Last Seven Fiscal Years 109

Property Taxes-Direct and Overlapping Governments 110

Legal Debt Calculation for Last Seven Fiscal Years 111

Property Taxes Levied and Collected 112

Principal Property Taxpayers 113

Demographic and Economic Information

Demographic and Economic Statistics for Last Seven Fiscal Years 114

Principal Employers, Current Fiscal Year and Prior Nine Years Ago 115

Operating Information

Full-time Equivalent City Government Employees by Function/Program 116

Operating Indicators by Function/Program 117

Capital Asset Statistics by Function/Program 118

INTRODUCTORY SECTION

**- List of City Officials

• Finance Director’s Letter of Transmittal
• Certificate of Achievement-**

Government Finance Officers Association

- City of Birmingham Organization Chart

FINANCIAL SECTION

**- Independent Auditor’s Report

• Management’s Discussion and Analysis
• Basic Financial Statements
• Notes to the Financial Statements
• Required Supplementary Information**

MANAGEMENT’S DISCUSSION AND ANALYSIS

As management of the City of Birmingham, Alabama (City), we invite our readers to review this overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2008 (fiscal year 2008). Its purpose is to provide an introduction and overview readers should use to interpret and analyze the City’s basic financial statements and financial activities based upon currently known facts, decisions and conditions. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal at the front of this report and the City's financial statements, which follow this section.

FINANCIAL HIGHLIGHTS

• The City’s net assets were $273,276,000 for governmental activities and $437,000 for business-type activities at June 30,
  2008. This reflects an increase in governmental activities’ net assets of $19,173,000, or 7.5% from fiscal year 2007.
• During fiscal year 2008, the City received $436,480,000 in taxes and other revenues, which represents an increase of $34,364,000 from fiscal year 2007. This increase is attributable to increased revenues from business licenses and sales and use taxes.
• Total expenditures for the year were $417,307,000, which represent a decrease of $13,989,000 (3.2%) from fiscal year 2007. The major factor contributing to this overall decrease was due to the expending of most of the remainder of the Birmingham Water Works Proceeds to meet the obligation due to the Birmingham Board of Education. The expenditures in this non-major Special Revenue Fund decreased by approximately $14 million in FY
• General fund operating revenues exceeded operating expenditures by $53,957,000 for the fiscal year. Increases in sales and use tax,

business licenses, and property taxes accounted for the majority of the increase.

• The City has one business-type activity, the Emergency Management Communications District (E911). Revenues are generated through charges assessed for E911 services. Total revenues received were $3,376,000 and expenditures were $3,935,000, resulting in a net loss of $559, for fiscal year 2008.

OVERVIEW OF THE FINANCIAL STATEMENTS

The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, similar to that presented by private sector businesses. The City’s basic financial statements are comprised of the following:

Government-wide Financial Statements Government-wide financial statements provide the reader with both long-term and short-term information about the City’s financial condition. Changes in the City’s financial position may be measured over time by increases or decreases in net assets as shown on the Statement of Net Assets. The Statement of Activities shows how the City’s net assets changed during the fiscal year. Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, highways and streets, sanitation, economic development, and culture and recreation. The business-type activity of the City is the Emergency Management Communications District (E911).

Fund Financial Statements Fund financial statements report the City’s operations in more detail than what is presented in the government-wide financial statements. Fund financial statements

Table of Financial Statements

Fund Financial Statements

Government-wide Financial Statements

Governmental Funds

Proprietary Funds

Fiduciary Funds

Scope Entire City government (except fiduciary funds)

Activities of the City that are not proprietary or fiduciary

Activity of the City that operates similar to businesses

Activities for which the City acts as trustee for someone else’s resources Required financial statements

• Statement of net assets
• Statement of activities
  • Balance sheet
  • Statement of revenues, expenditures, and changes in fund balance
    • Statement of net assets
    • Statement of revenues, expenses, and changes in net assets
    • Statement of cash flows
      • Statement of fiduciary net assets
      • Statement of changes in fiduciary net assets

Accounting basis and measurement focus

Accrual accounting and economic resources focus

Modified accrual accounting and current financial resources focus

Accrual accounting and economic resources focus

Accrual accounting and economic resources focus

Type of asset/liability information

All assets and liabilities, both financial and capital, and short-term and long-term

Only assets expected to be liquidated and liabilities that come due during the year or soon thereafter; no capital assets nor long-term debt included

All assets and liabilities, both financial and capital, and short-term and long-term

All assets and liabilities, both short- term and long-term

Type of inflow/outflow information

All revenues and expenses during the year, regardless of when cash is received or paid

• Revenues for which cash is received during or soon after the end of the year
• Expenditures when goods or services have been received and payment is due during the year or soon thereafter

All revenues and expenses during the year, regardless of when cash is received or paid

All revenues and expenses during the year, regardless of when cash is received or paid

GOVERNMENT-WIDE CONDENSED

FINANCIAL INFORMATION

Net assets represent the difference between the City’s total assets and its total liabilities. Changes in the net assets can be a useful measuring tool for governments to gauge their performance over time. The City's net assets that are invested in capital assets net of related debt reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment), less any related debt used to acquire those assets that are still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other revenue sources, since the capital assets themselves cannot be liquidated to satisfy these liabilities.

The City’s restricted net assets of approximately $278 million are subject to bond and warrant covenants and by federal and state grant requirements. Overall, the City’s total net assets increased by approximately $19 million in fiscal year

2008. For additional details on the reconciliation between the two basis, see page xx of the report.

There was a decrease in net assets of $559,000 in the Emergency Management Communication District, Emergency Management Communication District, an enterprise fund, which is the City’s sole business-type fund. The increase in expenditures for the District occurred due to an increase in personnel costs to maintain the operations of the District.

Condensed Statement of Net Assets

The following table presents a condensed statement of the City’s net assets at June 30, 2008 and 2007: