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HomeMy WebLinkAboutDocument Submitted Into RecordCITY OF MIAMI, FLORIDA INTER -OFFICE MEMORANDUM TO FROM : The HonorablMayor and Members APR 7 2004 DATE the City mmission rriola f Administrator/City Manager SUBJECT: PREFERENCES: ENCLOSURES: Discussion Item FILE : In compliance with the requirements in Ordinance No. 12276 enacted in September 11, 2002, "the City Commission shall convenience a workshop meeting with the external auditors to review the findings and recommendations of the audit." JXLMH/SS/gmh • • • U 0 c c > o .c 0 a) c Q U O c Uu 111111111111111111 Fiscal Year ended September 30th, 2003 COMPREHENSIVE ANNUAL FINANCIAL REPORT City of Miami, Florida For the Year Ended September 30, 2003 Prepared by the Finance Department INTRODUCTORY SECTION PRINCIPAL CITY OFFICIALS TABLE OF CONTENTS LETTER OF TRANSMITTAL CERTIFICATE OF ACHIEVEMENT ORGANIZATIONAL CHART City of Miami, Florida Principal City Officials September 30, 2003 MAYOR Manuel A. Diaz CITY COMMISSION Arthur E. Teele, Jr, Chairman Joe Sanchez, Vice-Chaimian Angel Gonzalez, Commissioner Tomas Regalado, Commissioner Johnny L. Winton, Commissioner CITY MANAGER Joe Arriola CITY ATTORNEY Alejandro Vilarello This page intentionally left blank ii City of Miami, Florida Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2003 TABLE OF CONTENTS I. INTRODUCTORY SECTION PRINCIPAL CITY OFFICIALS i TABLE OF CONTENTS iii LETTER OF TRANSMITTAL vii CERTIFICATE OF ACHIEVEMENT xiv ORGANIZATIONAL CHART xvi II. FINANCIAL SECTION Independent Auditors' Report 1 Management's Discussion and Analysis - Required Supplementary Information (Unaudited) 3 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Assets 13 Statement of Activities 14 Fund Financial Statements: Balance Sheet — Governmental Funds 15 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets 16 Statement of Revenues, Expenditures and Changes in Fund Balances — Governmental Funds 17 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 18 Statement of Fiduciary Net Assets — Fiduciary Funds 19 Statement of Changes in Fiduciary Net Assets — Fiduciary Funds 20 Statement of Net Assets - Discretely Presented Component Units 21 Statement of Activities - Discretely Presented Component Units 22 iii Notes to the Financial Statements 25 Required Supplementary Information (Unaudited): Budget to Actual Comparison — Major Funds (General and Special Revenue): General Fund 61 Community Redevelopment Fund 62 Public Service Tax Fund 63 Notes to the Required Supplementary Information 64 Pension Schedules: Schedule of Funding Progress 65 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet — Nonmajor Governmental Funds 72 Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds 78 Combining Statement of Fiduciary Net Assets — Fiduciary Funds 86 Combining Statement of Changes in Fiduciary Net Assets — Fiduciary Funds 87 Supplementary Information: Budget to Actual Comparison — Nonmajor Governmental Funds: Community Redevelopment Agency (ORA) Fund 90 Community Redevelopment Agency (SEOPW) Fund 91 Convention Center Fund 92 Economic Development & Planning Services Fund 93 Fire Rescue Services Fund 94 Net Offices Fund 95 Parks and Recreations Fund 96 Police Services Fund 97 Law Enforcement Trust Fund 98 Public Works Fund 99 City Clerk Fund 100 Local Option Gas Tax Fund 101 Stormwater Utility Fund 102 Gusman and Olympia Fund 103 Department Improvement Initiatives 104 Transportation & Transit Fund 105 General Obligation Bond Fund 106 Other Special Obligation Bond Fund 107 Community Redevelopment Other Special Obligation Bond Fund 108 iv III. STATISTICAL SECTION (Unaudited) General Governmental Expenditures and Transfers By Function 109 General Governmental Revenues and Transfers By Source 110 Property Tax Levies and Collections 111 Assessed Value of All Taxable Property 112 Property Tax Rates and Tax Levies Direct and Overlapping Governments 112 Special Assessments Collections and Receivables 113 Ratio of Net General Bonded Debt To Net Assessed Value and Net Bonded Debt Per Capital 113 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures and Other Financing Uses 114 Schedule of Legal Debt Margin 114 Current Debt Ratios 115 Schedule of Direct and Overlapping General Obligation Debt 116 Ten Largest Tax Assessments 117 Bank Deposits — Last Ten Years 117 Building Permits — Last Ten Years 118 Demographic Statistics 118 General Statistical Data 119 Growth Factors Relative to Miami -Dade County, Florida 120 v This page intentionally left blank vi the administration of federal and state awards. These reports are available in the City's separately issued Single Audit Report. GAAP requires that management provides a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City's MD&A can be found immediately following the report of the independent auditors. ECONOMIC CONDITION AND OUTLOOK The City's diversified economic base is comprised of wholesale and retail trade, light manufacturing, commerce, and tourism. The City has made great gains in the areas of international banking, business, real estate and trans -shipment, which has diversified the economic base. Located in the center of a hemispheric market of more than 700 million people, and easily accessible to South and Central America, the Caribbean, Europe and Africa, Miami's strategic location and international commerce infrastructure make it the ideal location for international trade. As a result of expanding economies in several Latin American countries, international trade has been growing at double-digit rates in the Miami area. Airport. In 2003, the Miami International Airport served nearly 29 million passengers, with nearly half of those being international passengers. It has flights to nearly 200 cities on five continents with 90 scheduled and 32 non-scheduled carriers. The Miami International Airport also shipped 3.5 billion pounds of domestic and international cargo during the year. Sea Port. In 2003, the Port of Miami handled 9 million tons of cargo and over 3.9 million cruise passengers. Long considered the Cruise Capital of the World, boasting more home - ported cruise ships than any other seaport, the Port of Miami received another distinction in November 1999. It became the year-round home of Royal Caribbean International's 3,600-passenger Voyager of the Seas, the largest cruise liner ever built at that time. The Port of Miami is also the base for Royal Caribbean's newest ship the 3,800 passenger "Regency of the Seas". Arenas. The American Airlines arena, home of the Miami Heat basketball team, is one of the premier facilities that ushered in the City's Millennium celebration. The Miami Arena serves as a venue for concerts, and special events. Private Development. The City is experiencing a period of unprecedented private development. Projects recently completed, under construction, or in design will add over $10 billion in value to the property tax roll. Developments include four 5-star hotels, ten high-rise condominiums and five new office towers. Of specific note, is the number of residential units currently planned or under construction in downtown Miami, furthering the City's goal to transform its central business district to a 24 by 7 activity center. Currently, in excess of 18,000 downtown residential units are in the planning or construction phase. viii Public/Private Development Ventures. The City will continue to focus efforts on its waterfront properties. Projects such as the Dinner Key Marina, Virginia Key Beach, and Bicentennial Park are major projects, which fit prominently into the City's long-term economic growth and financial well being. A major change has begun on Watson Island; Parrot Jungle and the Miami Children's Museum opened in 2003 and the planning for the Island Gardens Development, which will contain two hotels, retail spaces and a mega - yacht marina is well under way. Additional land on Watson Island was one of two sites proposed for the permanent headquarters of the Free Trade Area of the Americas (FTAA) in 2004. Major Initiatives. With the improvement in the financial condition of the City, the emphasis has been redirected to improving the infrastructure within the City. The City has begun a program of major renovations and improvements to City parks, streets, sidewalks and drainage systems. Additionally, a major effort is underway to modify and improve the City's sanitation services. While the external improvements are critical to promote further economic development, the City has completed a strategic planning process to identify and plan for technology improvements internally within the administration. A major result of this study will be a shift in technology from a mainframe environment to a distributed network. The City will also be moving much of its services and information to the Internet. DEBT MANAGEMENT The City was very active in capital market during fiscal year 2003. In November 2000, the citizens of the City approved the issuance of $255 million in Limited Ad -Valorem General Obligation Bonds to be used for infrastructure improvements with approximately fifty percent of the proceeds to be used to expand and improve the City's park system. The City issued the first series of these bonds in July 2002, with an issuance of $153 million. The City was able to capitalize on the historic lows of both treasury and tax exempt rates available to provide significant savings to the City. In -March 2003, the City refunded approximately $18.7 million of General Obligation debt with a present value savings of approximately $1.41 million and a true interest cost of 2.41 %. The City was also able to take advantage of historically low fixed interest rates by converting its variable rate Sunshine State Commercial Paper Loan (Series 1995) to a fixed rate Special Obligation Bond. It is management's objective to adequately plan and meet the City's comprehensive construction demands for essential capital improvements and equipment needs, and, at the same time, ensure that the residents of the community are not overburdened with general obligation long-term debt payable from ad valorem taxes. ix The following chart indicates the principal amortization of the City's general obligation debt in five-year increments. As can be seen, approximately 44% of the City's outstanding debt will be retired within the next ten years. General Obligation Debt Principal Amortization For the Five Year Period Ending September 30, 2003 2008 $ 53,384,561 2013 53,132,938 2018 64,356,448 *2023 71,485,352 * The final maturity of GO debt will be retired in Fiscal Year 2022. Cash Management and Practices. In order to achieve maximum financial return on all available funds, the Finance Department pursues an aggressive cash management and investment program within the constraints imposed by Florida Statutes and local policies adopted by resolution by the City Commission. The City operates within established formal investment policies, which applies to all investment of public funds. Idle cash balances are invested on a daily basis at the best interest rates available in the markets. Investments consist primarily of United States treasuries and agencies securities, commercial paper, and money market funds. During the fiscal year the City received a certificate of excellence for its Investment Policy from the Association of Public Treasurers of United States and Canada (APT US&C). For purposes of maximizing the interest earning yield on short-term investments, cash balances of all funds are pooled. The primary objective of the City's policy is preservation of capital. It is the City's policy not to invest in highly leveraged derivatives. Investment income reported in these financial statements includes appreciation in the fair value of investments. Increases in fair value during the current year, however, do not necessarily represent trends that will continue, nor is it always possible to realize such amounts, especially in the case of temporary changes in the fair value of investments that the City intends to hold to maturity. A summary and comparison of investment activity for the three fiscal years, are as follows: 2003 2002 2001 Average Portfolio $ 508,369,707 $ 362,439,535 $ 301,356,555 Balance (End of Year) Average Investment Yield 2.55% 3.77% 5.72% Interest Earned on Investments managed by the Finance Department $ 12,985,760 $ 13,676,175 $ 16,804,173 x The following chart summarizes the City's investments, including cash equivalents, at September 30, 2003: Cash Equivalents and Investment Types Money Market 2% U.S Treasuries 8% Commercial Paper 13% U.S. Government Agencies 77% Risk Management. The City administers a self-insurance program for workers' compensation, tort liability, property, and group health and life insurance programs, subject to certain stop -loss provisions. The health and life insurance programs are administered by an independent administrator. The City funds the program on an annual payout basis. Insurance coverage is maintained with independent carriers for property damage to City facilities. The City maintains excess coverage with independent carriers for workers' compensation and general liability. At September 30, 2003, the estimated liability for insurance claims that are expected to be paid totaled $16,548,601. The estimated long-term liability for insurance claims, at September 30, 2003, is $65,190,000. The estimated liability for insurance claims is discounted at an interest rate of 5%. Pensions. The City maintains three separate single -employer defined benefit pension plans for its public safety employees, elected officials, and its general and sanitation employees. Each year, an independent actuary, engaged by the pension plans, calculates the amount of the annual contribution that the City must make to the pension plans to ensure that the plans will be able to fully meet their obligations to retired employees on a timely basis. As a matter of policy, the City is required to fully fund each year's annual required contribution to the pension plans as determined by the actuary. The City also provides to certain executive employees a single -employer, defined contribution pension plan administered by ICMA Retirement Trust. The City is required to contribute 8% of the employee's earnings to this plan. The City's contribution for the City Manager, Independent Auditor General and City Attorney is not limited to the 8% but is an amount stipulated per their respective contracts with the City. xi The pension plans for the Fire and Police (FIFO) and General and Sanitation Employees (GESE) experienced significant increases in the fair value of the plans assets in the fiscal year ending September 30, 2003. These increases were caused by appreciation in the fair value of the investments due to general market conditions. The City is continuing to work with both Boards to explore possible actuary assumption changes that will serve to minimize the large increases and decreases for the City's pension contribution from year to year. Additional information on the City's pension arrangements can be found in Note 10 in the notes to the financial statements. CERTIFICATE OF ACHIEVEMENT The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Miami, Florida for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended September 30, 2002. The Certificate of Achievement is the highest form of recognition in the area of governmental accounting and financial reporting. The attainment of this award represents a significant accomplishment by a government and its financial management. In order to be awarded a Certificate of Achievement, the City had to publish an easily readable and efficiently organized CAFR, whose contents conform to established program standards. Such comprehensive reports must satisfy both generally accepted accounting principles and applicable legal requirements. To earn a Certificate of Achievement, a government must demonstrate constructive spirit of full disclosure to clearly communicate its financial story while enhancing the understanding of the logic underlying the traditional governmental financial reporting model. The City's 2002 Comprehensive Annual Financial Report has been evaluated by an impartial Special Review Committee composed of other government officers, independent certified public accountants, educators and others with particular expertise in government accounting and financial reporting. We believe that the 2003 Comprehensive Annual Financial Report continues to conform to the high standards of the Certificate of Achievement Program and we are submitting it to the GFOA for consideration. xii ACKNOWLEDGEMENTS The Comprehensive Annual Financial Report's preparation was made possible through the efficient, dedicated and professional efforts of the entire staff in the Finance Department. The significant amount of year-end closing procedures required prior to the audit, could not have been accomplished without much hard work and personal sacrifice. Each member of the department has our sincere appreciation for the contributions made to assist in the in-house preparation of this report. The guidance and cooperation of the Mayor and City Commission in planning and conducting the financial affairs of the City is greatly appreciated. We also wish to express our appreciation to our Certified Public Accountants, KPMG LLP, in association with Sanson, Kline, Jacomino & Company, LLP, Sharpton, Brunson & Co. P.A., Watson & Company, P.A., and Briele and Echeverria, P.A., for their cooperation and assistance. Joe Arriola City Manager Linda M. Haskins, CPA Chief Financial Officer/ Deputy Administrator Scouimp os n, CPA, CPFO, CGFO, CGFM Finance Director CERTIFICATE OF ACHIEVEMENT The Government Finance Officers Association of the United Sates and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Miami, Florida for its Comprehensive Annual Financial Report for the fiscal year ended September 30, 2002. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reporting. In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, the contents of which conform to program standards. Such report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current report continues to conform to Certificate of Achievement Program requirements, and we are submitting it to GFOA to determine its eligibility for another certificate. xiv Certificate of Achievement for Excellence in Financial Reporting Presented to City of Miami, Florida For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2002 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. President Executive Director XV �c c FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT MANAGEMENT'S DISSCUSION AND ANALYSIS BASIC FINANCIAL STATEMENTS (Goverment -wide Financial Statements) (Fund Financial Statements) NOTES TO THE FINANCIAL STATEMENTS REQUIRED SUPPLEMENTAL INFORMATION COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES KPMG LLP Suite 2800 One Biscayne Tower Two South Biscayne Boulevard Miami, FL 33131 Independent Auditors' Report The Honorable Mayor and City Commissioners City of Miami, Florida: Telephone 305 358 2300 Fax 305 913 2692 We have audited the accompanying financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Miami, Florida (the City), as of and for the year ended September 30, 2003, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Southeast Overtown Park West Redevelopment Agency, the Omni Redevelopment Agency, and the Pension Trust Funds, which statements represent 87% and 81%, respectively, of the assets and revenue of the aggregate remaining fund information. We also did not audit the financial statements of the Downtown Development Authority of the City of Miami, Florida, the Miami Sports and Exhibition Authority, the Health Facilities Authority, and the Bayfront Park Management Trust of the City of Miami, Florida, which statements reflect 63% and 52% of the assets and revenue, respectively, of the aggregate discretely presented component units. Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amounts included for those entities, is based on the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the reports of other auditors provide a reasonable basis for our opinions. In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Miami, Florida as of September 30, 2003, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated February 27, 2004 on our consideration of the City's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. That report is an KPMG LLP, a U.S. limited liability partnership, is the U.S. member firm of KPMG International, a Swiss cooperative MANAGEMENT'S DISCUSSION AND ANALYSIS As management of the City of Miami, Florida (the "City"), we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, 2003. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages vii — xiii of this report. FINANCIAL HIGHLIGHTS • The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $697,877,182 (net assets). • The governmental activities revenue decreased $17,425,207 (or 33.5%) and the net results from activities decreased by $29,975,800 (or 94.9%). In both years (2003 and 2002), the results of activities produced an increase in net assets of $1,623,823 and $31,599,623, respectively. • The General Fund (the primary operating fund) reflected on a current financial resource basis, reflects an increase in fund balance of $334,483 (or 0.2%). • The City's total debt decreased by $16,374,712 (or 3.5%) during the current year. The key factors of this decrease were the refinancing of existing debt in favorable market conditions and making outstanding debt service payments. 3 USING THIS ANNUAL REPORT This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements comprise three components; 1) government -wide financial statements, 2) fund financials statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. In light of the fact that this is a very different presentation of the City's general purpose financial statements from previous years, the following graphic is provided for your review. Basic Financial Statements Management's Discussion and Analysis (required supplementary information) Government -wide Fund financial financial statements H statements (new) (refocused) (pages 13- 14) (pages 15 — 23) Notes to the financial statements (expanded / restructured) (naaec 75- 591 Required supplementary information (other than MD&A) (expanded) (pages 61- 65) The focus of the financial statements under the GASB 34 model (originally implemented by the City in 2001/2002) is on both the City as a whole (government -wide) and on the major individual funds. Both perspectives (government -wide and major fund) allow the user to address relevant questions, broaden a basis for comparison (year to year or government to government) and enhance the City's accountability. Government -Wide Financial Statements The government -wide financial statements (see pages 13— 14) are designed to be corporate -like, in that all governmental activities are presented in columns that add to a total for the Primary Government. The focus of the Statement of Net Assets (the "Unrestricted Net Assets") is designed to be similar to bottom line results for the City and its governmental activities. This statement reflects governmental fund's current financial resources (short-term spendable resources) with capital assets and long-term obligations. The City does not have any business -type activities for financial reporting purposes. The Statement of Activities (see page 14) is focused on both the gross and net cost of various functions (including governmental and component units), which are supported by the government's general tax and other revenues. This is intended to summarize and simplify the user's analysis of the cost of various governmental services and/or component units. 4 Component Units, which are other governmental units over which the City can exercise influence and/or may be obligated to provide financial subsidy, are presented as a separate column in the Government -wide Financial Statements. The focus of the statements is clearly on the Primary Government and the presentation allows the user to address the relative relationship with the Component Units. The Governmental Activities reflects the City's basic services, including Police, Fire, Solid Waste Collection, Parks and Cultural Activities, and general administration. Property taxes, other local taxes, and federal grants finance the majority of these activities. Fund Financial Statements Traditional users of governmental financial statements will find the Fund Financial Statements presentation more familiar. Their focus is on the City's major funds. The fund financial statements provide more information about the City's most significant funds — not the City as a whole. The City has two kinds of funds: Governmental Funds — Most of the City's basic services are included in governmental funds, which focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at year end that are available for spending. Consequently, the governmental funds statements provide a detailed short-term view that helps the reader determine whether there are more or fewer financial resources that can be spent in the near future to finance the City's programs. Because this information does not encompass the additional long-term focus of the government -wide statements, additional information is provided at the bottom of the governmental funds statement that explains the relationship (or differences) between them. The City maintains thirty-two individual governmental funds. Information is presented separately in the governmental fund balance sheets and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General Fund, Community Development Fund, Public Services Taxes Special Revenue Fund, and General Government Capital Projects Fund, which are considered to be major funds. Data from the other twenty-eight governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for its General Fund and certain Special Revenue Funds. Budgetary comparison schedules have been provided for the General Fund and each major Special Revenue Fund that adopts a budget to demonstrate compliance with the budget. Such information is presented as required supplementary information. The basic government fund statements can be found on pages 15 — 23 of this report. Fiduciary Funds — These funds are used to account for resources held for the benefit of parties outside the City. Fiduciary funds are not reflected in the government -wide financial statements because the resources of these funds are not available to support the City's own programs. The basic fiduciary fund financial statements can be found on pages 19 — 20 of this report. Notes to the Financial Statements — The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund statements. The notes to the financial statements can be found on pages 25 — 59 of this report. Other Information — In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning budgetary comparisons and the City's progress in funding its obligations to provide pension benefits to its employees. Required supplementary information can be found on pages 61 — 65 of this report. The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages 72 — 83 of this report. 5 GOVERNMENT -WIDE FINANCIAL ANALYSIS Net Assets As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the City, assets exceed liabilities by $697,877,182 at the close of the most recent fiscal year. The largest portion of the City's net assets (88.67%) reflects its investment in capital assets (e.g., land buildings, machinery and equipment), less any related debt used to acquire those assets that is 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 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 sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's net assets (16.38%) represents resources that are subject to external restrictions on how they may be used. The remaining unrestricted net assets deficit of $35,234,348 is primarily the result of the excess of unrestricted liabilities over unrestricted assets. The deficit in unrestricted net assets in government activities increased by $18,301,362. The primary reason for this deficit increase was the degree to which increases in ongoing expenditures exceed similar increases in ongoing revenues. Citywide unrealized gains in investments (excluding pension funds) amounted to $2,259,778 in fiscal year 2003. The following schedule reflects a summary of Net Assets compared to prior year. Summary of Net Assets as of September 30 Current and other assets Capital assets Total assets Other liabilities Long-term liabilities outstanding Total liabilities Governmental Activities 2003 2002 $ 572,120,755 $ 562,707,660 807,941,738 827,178,112 1,380,062,493 1,389,885,772 118,199,384 563,985,927 120,877,487 572,754,926 682,185,311 693,632,413 Net assets: Invested in capital assets, net of debt 618,784,135 598,154,380 Restricted 114,327,395 115,031,965 Unrestricted (Deficit) (35,234,348) (16,932,986) Total net assets $ 697,877,182 $ 696,253,359 For more detailed information see the Statement of Net Assets (page 13). 6 Changes In Net Assets The following schedule compares the revenues and expenses for the current and previous year. Changes in Net Assets Revenues: Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Property taxes Utility taxes Intergovernmental revenues Investment earnings Other Total revenues Expenses: General government Planning and development Community development Community redevelopment areas Public works Public safety Public facilities Parks and recreation Interest on long-term debt Unallocated depreciation Governmental Activities 2003 2002 $ 190,708,552 $ 34,441,899 9,646,560 191,519,487 51,137,825 23,053,287 166,770,291 151,614,600 58,900,480 58,314,804 31,825,518 29,307,924 8,833,535 10,645,639 1,077,289 4,035,765 502,204,124 519,629,331 85,176,588 94,349,348 13,579,968 13,289,988 32,088,517 47,186,103 6,477,916 6,125,242 60,708,046 53,950,238 226,580,865 200,727,361 10,561,373 9,832,601 20,152,074 19,550,960 19,489,387 17,252,301 25,765,567 25,765,566 Total expenses 500,580,301 488,029,708 Increase in net assets $ 1,623,823 $ 31,599,623 For more detailed information see the Statement of Activities (page 14). Governmental Activities — As noted earlier, governmental activities increased the City's net assets by $1,623,823. Key elements of this increase are as follows: The decrease in operating and capital grants contributions are primarily the result of a reduction in U.S. Department Housing and Urban Development awards ($15.8 million) and a decrease in grant awards from the U.S. Department of Justice ($12.7 million). Property taxes increased by 10% ($15.2 million) during the year. The increase was due to a 14.6% ($2.49 billion) increase of the net assessed value of taxable property. The City has decreased the overall millage rate for the last four years to the current rate of 10.068 (Operating: 8.850, Debt Service: 1.218). Investment Income for fiscal year 2003 was reduced by a decrease in interest rates that were reflective of general market conditions. General government expenditures decreased in fiscal 2003. This decrease reflects a one time charge in the prior year to recognize the liability for parking surcharge litigation ($14.2 million) that was partially offset by salary increases (cost of living, merit, and market adjustments) and increases in other expenses due to the overall inflation of certain consumer commodities. 7 Community Development was impacted by decreases in U.S. Housing and Urban Development grant revenues resulting in decreases for Community Development activities. Most of the block grant revenues are recognized when the expenditures are incurred. Public Safety experienced an increase of $26.1 million The primary reason for the increase was that expenditures reflected an increase of $19.9 million in the current year's pension plan contributions. Public Works expense allocations are subject to annual classification of either maintenance (shown as expenditures) or capital (capitalized and therefore not reflected as expenditures). There was a $5 4 million decrease in capital acquisitions resulting in a corresponding increase in the operating expenditures for the same amount. Expenses and Program Revenues - Governm ental Activities 250,000,000 200,000,000 150,000,000 100,000,000 50,000,000 0 Public Works 0 ■ Expenses ■ Program Revenues Public Facili Interest on Long -Term 8 Revenue by Source - Governmental Activities Public service taxes 12%0 Other 0% Investment earnings 2% State revenue sharing 6% Property taxes 33% Charges for services 38% Operating grants and contributions 7% Capital grants and contributions 2% FINANCIAL ANALYSIS OF THE CITY'S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. Governmental Funds — The focus of the City's governmental funds is to provide information on near -term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unreserved fund balance of the General Fund was $136,905,142, while the total fund balance reached $141,826,336. As a measure of the General Fund's liquidity, it may be helpful to compare both unreserved fund balance and total fund balance to the fund's total operational expenditures. Unreserved fund balance represents 35.1% of the total expenditures and transfers -out for recurring operational costs reported in other funds, while total fund balance represents 36.3% of that same total amount. The General Fund's fund balance increased by $334,483 during the current fiscal year. Key factors in this increase are as follows: • An increase in taxable property values resulted in an additional $9,228,392 in property tax revenue. • Budgeted expenditures were less than actual amounts resulting in a $14,689,891 favorable variance. • Fund balances were reduced by $22,323,072 as result of implementation of City-wide initiatives. 9 Financial highlights of the City's other major governmental funds are as follows: The Community Development Fund had a total fund balance of $6,834,470, of which $1,054,635 is reserved for the payment of purchase orders of the prior period. The decrease in fund balance during the current year was attributable to increased program activities as well as better grant management. The Public Services Tax Fund had a total fund balance of $6,803,934, all of which is unreserved and available for spending at the City's discretion. The State of Florida modified the Public Services Tax (PST) effective October 1, 2001, and it is now referred to as Communication Services Tax (CST). The General Government Capital Projects Fund had a fund balance of $90,317,575, of which $2,554,070 is reserved for the payment of purchase orders of the prior period. The $3,257,388 increase from the prior year can be attributed to the staging of various capital projects to be started in the subsequent fiscal year. GENERAL FUND BUDGETARY HIGHLIGHTS The final General Fund budget was increased by $19,234,057 from the original budget (an increase of 4.97%). This increase can be summarized as follows (please see budget to actual comparison on page 61): • $2,129,083 in miscellaneous increases in general government activities • $72,254 in increases allocated to the Planning and Development depaitnient • $2,322,819 in increases allocated to the Public Works department • $13,758,403 in increases allocated to public safety • $53,722 in decreases allocated to Public Facilities • $4,898 in increases allocated to Parks and Recreation • $1,000,322 in increases in transfers to other funds All of the increases were funded by revenues in excess of the original budget estimates. Charges for services were increased primarily due to recognition of $9,441,556 received under the provisions of Florida Statutes 175 and 185, to fund a separate non-contributory money purchase benefit plan for the public safety employees of the City. Additional information on the plan can be found in Note 10(F) on page 58 in the notes to the financial statements. The public safety function experienced a $9,441,556 increase in personnel costs due to the recognition of the Chapter 175 and 185 pension trust plans payments. 10 CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets As of year end, the City had $807,941,738 invested in a variety of capital assets, as reflected in the following schedule, which represents a net decrease (additions less retirements and depreciation) of $19,236,374 or 2.33% from the end of prior year. Capital Assets at Year End (Net of Depreciation) Land Buildings Improvements Other Than Buildings Building Improvements Machinery and Equipment Infrastructure Construction in Progress Total Governmental Activities 2003 2002 $ 64,372,141 84,190,700 5,429,933 1,866,036 47,833,421 551,791,045 52,458,462 $ 63,695,567 88,625,315 6,508,436 1,923,417 45,527,929 577,556,612 43,340,836 $ 807,941,738 $ 827,178,112 Major capital asset events during the current fiscal year included the following: • The City completed the renovation and construction of Jose Marti Park. The City spent approximately $1.9 million for renovation and new construction of facilities including a computer room, aerobic room, fitness center, classrooms and offices. • In an effort to restore and gain recognition of Virginia Key Beach Park, a once "colored only" beach, the City obtained a $500,000 grant award from the Department of Interior in order to enhance the rehabilitation and development of the park and its facilities. • Also, $5 million was invested in the replacement of various City vehicles, police cars, and fire and rescue apparatus. Additional information on the City's capital assets can be found in Note 1(L)(6) on page 33 and Note 5 on page 39 in the notes to the financial statements. 11 Long-term debt At the end of the current fiscal year, the City had total bonded debt outstanding of $453,059,485. Of this amount, $242,359,299 comprises debt backed by the full faith and credit of the City; the remainder represents bonds and loans secured solely by specific revenue sources (i.e., revenue bonds). Outstanding Debt General Obligation Bonds, Special Obligations, and Notes and Loans Governmental Activities 2003 2002 General Obligation Bonds $ 242,359,299 $ 252,876,553 Special Obligation Bonds, Notes and Loans 210,700,186 216,557,644 Total $ 453,059,485 $ 469,434,197 The City's total debt decreased $16,374,712 (or 3.5%) during the current fiscal year. During the current fiscal year, the City refinanced a portion of its existing debt to take advantage of prevailing market interest rates. This refinancing of the City's general obligation bonds resulted in a decrease in future debt service payments of $1.4 million The City received an improved bond rating on its general obligation debt from BBB+ to A+ from Standard & Poor's and an upgrade from Fitch Ratings from BBB+ to A- in February 2004. Additional information on the City's long-term liabilities can be found in Note 8 on pages 43 - 47 in the notes to the financial statements. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES The City's elected and appointed officials considered many factors when adopting the fiscal year 2003 budget. Included among these factors were uncertainties regarding the Parking Surcharge Tax, Communication Services Tax, and various economic indicators. On July 11, 2001, the Third District Court of Appeals ruled that the parking surcharge statute was unconstitutional. The City appealed the ruling to the Florida Supreme Court who has upheld the ruling of the lower court. The legislature has approved a bill that has been signed by the Governor that amends the parking surcharge statute and eliminates the constitutional problems that the court found. This bill became law on November 30, 2001. A tentative settlement has been reached in this action that calls for a refund of amounts paid by users of parking services in Miami. The settlement totaled $14 million and has been recorded as a liability in the accompanying basic financial statements. Per the U.S. Department of Labor, the unemployment rate for South Florida is currently 7.5%, which slightly increased from a rate of 7.4% a year ago. This rate is higher than the state's average unemployment rate of 5.3% and the national average rate of 6.0%. The region's inflation rate of 1.8% is comparable to the national indices of 1.9%. FINANCIAL CONTACT The City's financial statements are designed to present users (citizens, taxpayers, customers, investors and creditors) with a general overview of the City's finances and to demonstrate the City's accountability. If users have questions about the report or need additional financial information, they should contact Scott Simpson, Director of the City of Miami's Finance Department, 444 Southwest 2nd Avenue, 6th Floor Finance, Miami, Florida 33130, or visit the City's web site at www.ci.miami.fl.us. 12 City of Miami, Florida Statement of Net Assets As of September 30, 2003 Governmental Component Activities Units Assets Cash, Cash Equivalents and Investments $ 496,821,237 $ 12,215,849 Receivables - Net 22,975,408 3,734,817 Accrued Interest 4,310,155 16,867 Due From Other Governments 21,527,366 13 Due From Primary Government 888,855 Due From Component Units 563,725 Inventory 5,000 Prepaid and Other Assets 675,538 891,745 Net Pension Asset 3,382,512 Restricted Assets: Cash, Cash Equivalents and Investments 17,688,822 12,488,075 Capital Assets: Non -depreciable 668,621,648 20,906,944 Depreciable - Net 139,320,090 48,917,873 Other Assets: Unamortized Bond Issuance Costs 4,175,992 Total Assets 1,380,062,493 100,066,038 Liabilities Accounts Payable and Accrued Liabilities 49,704,567 2,545,006 Accrued Interest Payable 6,074,257 1,335,586 Due To Other Governments 3,023,664 Due To Primary Government 563,725 Due To Component Units 888,855 Deferred Revenue 11,547,876 625,621 Deposits 6,096,221 254,126 Non -Current Liabilities Due Within One Year: Bonds and Loans Payable 19,854,464 2,490,000 Compensated Absences 4,460,879 53,568 Claims Liability 16,548,601 Due In More Than One Year: Bonds and Loans Payable 445,108,580 43,220,357 Plus: Unamortized Bond Premium (7,742,263) 100,937 Less: Unamortized Bond Discount 14,696 Compensated Absences 61,414,914 23,177 Claims Liability 65,190,000 Total Liabilities 682,185,311 51,212,103 Net Assets Invested in Capital Assets - Net of Related Debt 618,784,135 24,293,934 Restricted for: Capital Projects 101,183,574 3,140,373 Debt Service 9,217,487 3,345,330 Law Enforcement 3,926,334 Unrestricted (Deficit) (35,234,348) 18,074,298 Total Net Assets $ 697,877,182 $ 48,853,935 13 The accompanying notes are an integral part of the financial statements. City of Miami, Florida Statement of Activities For the Year Ended September 30, 2003 Net (Expenses) Revenue and Program Revenues Changes in Net Assets Operating Capital Primary Government Functions/Programs Activities: Charges for Grants and Grants and Governmental Component Primary Government: Expenses Services Contributions Contributions Activities Units Governmental Activities: General Government $ 85,176,588 $ 69,668,568 $ $ 1,653,785 $ (13,854,235) $ Planning and Development 13,579,968 12,192,540 (1,387,428) Community Development 32,088,517 2,058,660 32,574,391 2,544,534 Community Redevelopment Areas 6,477,916 310,182 (6,167,734) Public Works 60,708,046 39,697,353 45,582 (20,965,111) Public Safety 226,580,865 48,061,754 2,703,902 (175,815,209) Public Facilities 10,561,373 16,273,110 367,223 6,078,960 Parks & Recreation 20,152,074 2,446,385 1,867,508 4,876,068 (10,962,113) Interest on Long -Term Debt 19,489,387 (19,489,387) Unallocated Depreciation 25,765,567 (25,765,567) Total primary government $ 500,580,301 $ 190,708,552 $ 34,441,899 $ 9,646,560 (265,783,290) Component Units: Miami Sports Exhibition Authority $ 7,540,291 $ 769,842 $ $ (6,770,449) Department of Off -Street Parking 12,677,473 12,150,345 (527,128) Downtown Development Authority 1,542,107 - 10,182 (1,531,925) Bayfront Park 2,626,681 2,095,137 (531, 544) Health Facilities Authority 116,479 - (116,479) Total component units $ 24,503,031 $ 15,015,324 $ 10,182 $ (9,477,525) General Revenues: Taxes: Property taxes, levied for general purposes 146,828,411 2,242,199 Property taxes, levied for debt service 19,941,880 Convention Development Taxes 6,884,324 State revenue sharing (sales tax and fuel tax) 31,825,518 - Public Service Taxes 58,900,480 - Investment Earnings 8,833,535 442,134 Other 1,077,289 1,200,290 Total General Revenues 267,407,113 10,768,947 Change in Net Assets 1,623,823 1,291,422 Net assets - Beginning 696,253,359 47,562,513 Net assets - Ending $ 697,877,182 $ 48,853,935 The accompanying notes are an integral part of the financial statements. 14 City of Miami, Florida Balance Sheet Governmental Funds September 30, 2003 Public Other Total Community Services General Governmental Governmental General Development Tax Government Funds Funds Assets Cash, Cash Equivalents and Investments $ 166,896,594 $ 6,737,281 $ 4,631,077 $ 90,472,044 $ 228,084,241 $ 496,821,237 Restricted Cash, Cash Equivalents and Investments 234,461 - - 17,454,361 17,688,822 Receivables (Net of Allowances for Uncollectibles): Accounts 10, 634,778 1,229,008 1,283,628 13,147, 414 Taxes 8,227,767 - 1,095,578 9,323,345 Special Assessments 504,649 - - 504,649 Due From Other Funds - 3,149,351 - 3,149,351 Due From Other Governments 6,200,000 3,802,131 7,690,902 3,834,333 21,527,366 Due From Component Units 563,725 - - - 563,725 Accrued Interest 2,712,312 44,535 363,002 1,190,306 4,310,155 Prepaid and Other Assets 598,312 - - 77,226 675,538 Total Assets $ 196,067,949 $ 12,317,604 $ 15,471,330 $ 90,835,046 $ 253,019,673 $ 567,711,602 Liabilities and Fund Balances Liabilities: Accounts Payable and Accrued Liabilities $ 32,826,606 $ 2,040,646 $ 8,667,396 $ 310,951 $ 5,858,968 $ 49,704,567 Due To Other Funds - - - - 3,149,351 3,149,351 Due To Other Governments 33,030 2,482,778 507,856 3,023,664 Due To Component Units - - 888,855 888,855 Deferred Revenue 16,600,178 417,134 - 2,203,885 19,221,197 Deposits 4,745,799 542,576 - 206,520 601,326 6,096,221 Total Liabilities 54,205,613 5,483,134 8,667,396 517,471 13,210,241 82,083,855 Fund Balances: Reserved for: Encumbrances 4,358,882 1,054,635 2,554,070 24,558,006 32,525,593 Debt Service - 15,291,744 15,291,744 Law Enforcement 3,926,334 3,926,334 Prepaid Items 598,312 77,226 675,538 Unreserved, reported in: General Fund 136,905,142 - - 136,905,142 Special Revenue Funds 5,779,835 6,803,934 - 30,306,625 42,890,394 Capital Projects Funds - 87,763,505 165,649,497 253,413,002 Total Fund Balances 141,862,336 6,834,470 6,803,934 90,317,575 239,809,432 485,627,747 Total Liabilities and Fund Balances $ 196,067,949 $ 12,317,604 $ 15,471,330 $ 90,835,046 $ 253,019,673 $ 567,711,602 The accompanying notes are an integral part of the financial statements. 15 City of Miami, Florida Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets September 30, 2003 Fund Balances - Total Governmental Funds Amounts reported for governmental activities in the Statement of Net Assets are different because: Cumulative over funding of annual required pension contribution. Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds. Governmental Capital Assets Less: Accumulated Depreciation Other long-term assets are not available to pay for current period expenditures and therefore are deferred in the funds. Other assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds: $ 485,627,747 3,382,512 $ 1,410,991,743 (603,050,005) 807,941,738 7,673,321 Bond Issuance Costs 4,175,992 Long-term liabilities, including bonds payable are not due and payable in the current period and therefore are not reported in the governmental funds. Governmental Bonds and Loans Payable (464,963,044) Premium 7,742,263 Discount (14,696) Accrued Interest (6,074,257) Compensated Absences (65,875,793) Claims Liability (81,738,601) (610,924,128) Net Assets of Governmental Activities $ 697,877,182 The accompanying notes are an integral part of the financial statements. 16 City of Miami, Florida Statement of Revenue, Expenditures, and Changes In Fund Balances Governmental Funds For The Year Ended September 30, 2003 Public Other Total General Community Services General Governmental Governmental Fund Development Tax Government Funds Funds Revenues Property Taxes $ 139,604,223 $ - $ - $ - $ 25,672,469 $ 165,276,692 Franchise Fees and Other Taxes 31,556,387 - 57,864,240 1,115,892 90,536,519 Licenses and Permits 21,469,973 - - 21,469,973 Fines and Forfeitures 5,049,412 - 1,122,127 6,171,539 Intergovernmental Revenues 44,071,524 30,425,562 21,099,219 95,596,305 Charges for Services 86,182,827 3,523,209 9,095,132 98,801,168 Interest 7,280,372 159,644 1,236,867 4,192,654 12,869,537 Impact Fees - - - 1,016,942 1,016,942 Other 3,688,147 523,562 645,540 4,661,100 9,518,349 Total Revenues 338,902,865 34,631,977 57,864,240 1,882,407 67,975,535 501,257,024 Expenditures Current Operating: General Government 70,335,134 - 8,814,648 79,149,782 Planning and Development 8,483,782 - 1,576,917 10,060,699 Community Development - 32,025,868 - 32,025,868 Community Redevelopment Areas - - 6,935,388 6,935,388 Public Works 50,591,533 - - 50,591,533 Public Safety 198,541,341 - 10,977,196 209,518,537 Public Facilities 5,173,926 - 2,693,475 7,867,401 Parks and Recreation 12,594,690 - 2,392,563 14,987,253 Debt Service: Principal - - 22,056,400 22,056,400 Interest and Other Charges - - 17,834,229 17,834,229 Capital Outlay - - 14,291,740 28,278,900 42,570,640 Total Expenditures 345,720,406 32,025,868 14,291,740 101,559,716 493,597,730 Excess (Deficiency) of Revenues Over (Under) Expenditures (6,817,541) 2,606,109 57,864,240 (12,409,333) (33,584,181) 7,659,294 Other Financing Sources (Uses) Transfers From Other Funds 51,282,877 - 40,518,175 71,144,341 162,945,393 Transfers To Other Funds (44,130,853) (3,385,477) (60,715,647) (24,851,454) (29,861,962) (162,945,393) Funded Debt Issuance - - 47,070,000 47,070,000 Payments To Escrow Agent - - (46,592,593) (46,592,593) Total Other Financing Sources (Uses) 7,152,024 (3,385,477) (60,715,647) 15,666,721 41,759,786 477,407 Net Changes in Fund Balances 334,483 (779,368) (2,851,407) 3,257,388 8,175,605 8,136,701 Fund Balances - Beginning 141,527,853 7,613,838 9,655,341 87,060,187 231,633,827 477,491,046 Fund Balances - Ending $ 141,862,336 $ 6,834,470 $ 6,803,934 $ 90,317,575 $ 239,809,432 $ 485,627,747 The accompanying notes are an integral part of the financial statements. 17 City of Miami, Florida Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended September 30, 2003 Net Changes in Fund Balances - Total Governmental Funds $ 8,136,701 Amounts reported for governmental act Activities are different because: vines n the Statement of Cumulative over funding of annual required pension contribution. Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of these assets is depreciated over their estimated useful lives. Expenditures for Capital Assets Less: Current Year Depreciation Bond proceeds provide current financial resources to governmental funds, but issuing debt increasing long-term liabilities in the Statement of Net Assets. Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Assets. This is the amount by which proceeds exceeded repayments. Bond Proceeds Accrued Interest Principal Payments Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. $ 19,572,931 (38,809,305) (18,680,000) (2,331,384) 34,853,273 Amortization of current year bond discount (663) Amortization of current year bond premium 447,492 Amortization of current year bond issuance costs (245,390) Change in Long-term Compensated Absences (706,346) Change in Long-term Claims Liability 788,847 (2,895,932) 1,493,599 (19,236,374) 13,841,889 283,940 Change in Net Assets of Governmental Activities $ 1,623,823 The accompanying notes are an integral part of the financial statements. City of Miami, Florida Statement of Fiduciary Net Assets Fiduciary Funds As of September 30, 2003 Assets Cash and Short -Term Investments Accounts Receivable Capital Assets Pension Trust Funds $ 26,854,616 14,089,102 3,831,710 44,775,428 Investments, at fair value U.S Government Obligations 245,508,540 Corporate Bonds 228,378,640 Corporate Stocks 972,054,568 Money Market Funds and Commercial Paper 25,401,400 Mutual Funds 42,893,957 Real Estate 31,300,235 Total Investments 1,545,537,340 Securities Lending Collateral 96,666,334 Total Assets 1,686,979,102 Liabilities Obligations Under Security Lending 96,666,334 Accounts Payable 1,302,934 Accrued Liabilities 6,871,394 Payable for Securities Purchased 23,418,634 Total Liabilities 128,259,296 Net Assets Held in Trust for Pension Benefits $ 1,558,719,806 The accompanying notes are an integral part of the financial statements. 19 City of Miami, Florida Statement of Changes in Fiduciary Net Assets Fiduciary Funds For the Year Ended September 30, 2003 Pension Trust Funds Additions Contributions: Employer $ 22,833,861 Plan Members 14,835,960 Total Contributions 37,669,821 Investment Earnings: Net Increase in Fair Value of Investments 183,595,118 Interest 28,974,700 Dividends 12,514,865 Rental and Other Income, net 2,570,528 Total Investment Earnings 227,655,211 Less Investment Expenses Investment Expenses Net Investment Gains Total Additions 5,557,253 222,097,958 259,767,779 Deductions Benefits 85,201,353 Refunds Upon Resignation, Death, etc. 1,586,227 Distribution to Retirees 9,332,318 Administrative and Other Expenses 1,927,686 Total Deductions 98,047,584 Change in Net Assets 161,720,195 Net Assets - Beginning of Year 1,396,999,611 Net Assets - End of Year $ 1,558,719,806 The accompanying notes are an integral part of the financial statements. 20 City of Miami, Florida Statement of Net Assets Discretely Presented Component Units For the Year Ended September 30, 2003 Miami Sports Department Downtown Health and Exhibition of Off -Street Development Bayfront Facilities Authority Parking Authority Park Authority Total Assets Cash, Cash Equivalents and Investments $ 865,929 $ 5,203,653 $ 2,814,968 $ 3,331,299 $ $ 12,215,849 Receivables - Net Accounts 106,380 1,039,117 11,120 159,597 1,316,214 Taxes 618,603 - - 618,603 Notes 1,800,000 1,800,000 Accrued Interest 16,867 - 16,867 Due From Other Governments 13 13 Due From Primary Government 888,855 - 888,855 Inventory - 5,000 5,000 Prepaid and Other Assets 340,378 541,283 10,084 891,745 Restricted Assets: Cash, Cash Equivalents and Investments 11,276,344 1,111,731 100,000 12,488,075 Capital Assets: Non -depreciable 7,080,662 13,310,153 516,129 20,906,944 Depreciable - Net 31,071,174 15,080,257 65,897 2,700,545 48,917,873 Total Assets 53,176,337 37,175,062 2,891,985 6,822,654 100,066,038 Liabilities Accounts Payable & Accrued Liabilities Accrued Interest Payable Due To Primary Government Deferred Revenue Deposits Non -Current Liabilities Due Within One Year: Bonds and Loans Payable Compensated Absences Due In More Than One Year: Bonds and Loans Payable Plus: Unamortized Bond Premium Compensated Absences Total Liabilities 249,917 2,195,380 1,077,457 258,129 560,466 254,434 355,111 92,544 1,835,000 655,000 32, 820, 000 10, 400,3 57 100,937 63,661 36,048 2,545,006 1,335,586 3,259 - 563,725 4,826 11,250 625,621 161,582 254,126 53,568 23,177 36,236,808 14,617,924 148,491 2,490,000 53,568 43,220,357 100,937 23,177 208,880 51,212,103 Net Assets Invested in Capital Assets - Net of Related Debt 3,496,836 17,514,527 65,897 3,216,674 24,293,934 Restricted for: Capital Projects 3,140,373 - 3,140,373 Debt Service 2,491,728 853,602 - 3,345,330 Unrestricted 7,810,592 4,189,009 2,677,597 3,397,100 18,074,298 Total Net Assets $ 16,939,529 $ 22,557,138 $ 2,743,494 $ 6,613,774 $ $ 48,853,935 The accompanying notes are an integral part of the financial statements. 21 City of Miami, Florida Statement of Activities Discretely Presented Component Units For the Year Ended September 30, 2003 Expenses Program Revenues Operating Charges for Grants and Services Contributions Miami Sports Exhibition Authority Economic Development $ 7,540,291 $ 769,842 $ Total Miami Sports Exhibition Authority 7,540,291 769,842 Department of Off -Street Parking Operations 12,677,473 12,150,345 Total Department of Off -Street Parking 12,677,473 12,150,345 Downtown Development Authority General and Administrative Community Development Total Downtown Development Authority 1,230,283 311,824 - 10,182 1,542,107 - 10,182 Bayfront Park Operations 2,626,681 2,095,137 Total Bayfront Park 2,626,681 2,095,137 Health Facilities Authority Operations Total Bayfront Park Total Component Units 116,479 116,479 $ 24,503,031 $ 15,015,324 $ 10,182 General Revenues: Taxes: Property taxes, levied for general purposes Convention Development Taxes Investment Earnings Miscellaneous Total General Revenues Change in Net Assets Net Assets - Beginning Net Assets - Ending The accompanying notes are an integral part of the financial statements. Net (Expense) Revenue and Changes in Net Assets Miami Sports Department Downtown Health and Exhibition of Off -Street Development Bayfront Facilities Authority Parking Authority Park Authority $ (6,770,449) $ (6,770,449) (6,770,449) 6,884,324 187,619 (494) 7,071,449 301,000 16,638,529 $ Totals - $ - $ - $ (6,770,449) - - - (6,770,449) (527,128) - - - (527,128) (527,128) - - - (527,128) (1,220,101) - - (1,220,101) (311,824) - - (311,824) (1,531,925) - - (1,531,925) (531,544) - (531,544) (531,544) - (531,544) - - (116,479) (116,479) - - (116,479) (116,479) (527,128) (1,531,925) (531,544) (116,479) (9,477,525) 2,242,199 - - 2,242,199 - - - 6,884,324 207,509 14,754 32,252 - 442,134 (70,908) 51,918 1,219,774 - 1,200,290 136,601 2,308,871 1,252,026 - 10,768,947 (390,527) 22,947,665 776,946 1,966,548 720,482 5,893,292 (116,479) 116,479 1,291,422 47,562,513 $ 16,939,529 $ 22,557,138 $ 2,743,494 $ 6,613,774 $ $ 48,853,935 23 This page intentionally left blank 24 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2003 NOTE 1. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Miami, Florida (the "City"), in the County of Miami -Dade, was incorporated in 1896, and has a population of approximately 362,000. The City is situated at the mouth of the Miami River on the western shores of Biscayne Bay and is a main port of entry into Florida and is the county seat of Miami -Dade County, Florida. The City comprises 34.3 square miles of land and 19.5 square miles of water. The accompanying financial statements of the City have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") as applied to governmental units. The Governmental Accounting Standards Board ("GASB") is the standard -setting body for governmental accounting and financial reporting. The GASB periodically updates its codification of the existing Governmental Accounting and Financial Reporting Standards which, along with subsequent GASB pronouncements (Statements and Interpretations), constitutes GAAP for governmental units. The more significant of these accounting policies are described below. The City has implemented portions of Governmental Accounting Standards Board No. 38, Certain Financial Statement Note Disclosure. Implementation of portions of Statement No. 38 resulted in certain note disclosures being added or amended, including disclosures regarding the disaggregation of payable balances and details about interfund balances and interfund transfers. Management's Discussion and Analysis — GASB Statement No. 34 requires that the financial statements be accompanied by a narrative introduction and analytical overview of the government's financial activities in the form of management's discussion and analysis (MD&A). This analysis is similar to analysis the private sector provides in their annual reports. Government -wide Financial Statements — The reporting model includes financial statements prepared using full accrual accounting for all of the government's activities. This approach includes not just current assets and liabilities (such as cash and accounts payable) but also capital assets and long- term liabilities (such as buildings and infrastructure, including bridges and roads, and general obligation debt). Accrual accounting also reports all of the revenues and cost of providing services each year, not just those received or paid in the current year or soon after. Statement of Net Assets — The Statement of Net Assets is designed to display the financial position of the primary government and its discretely presented component units. Governments will report all capital assets, including infrastructure, in the government -wide Statement of Net Assets and will report depreciation expense — the cost of "using up" capital assets — in the Statement of Activities. The net assets of a government will be broken down into three categories — 1) invested in capital assets, net of related debt; 2) restricted; and 3) unrestricted. Statement of Activities — The new government - wide statement of activities reports expenses and revenues in a format that focuses on the cost of each of the government's functions. The expenses of individual functions are compared to the revenues generated by the function (for instance, through user charges or intergovernmental grants). Budgetary Comparison Schedules Demonstrating compliance with the adopted budget is an important component of a government's accountability to the public. Many citizens participate in one way or another in the process of establishing the annual operating budgets of state and local governments, and have a keen interest in the following the actual financial progress of their government over the course of the year. Many governments revise their original budgets over the course of the year for a variety of reasons. Under the new reporting model, governments will continue to provide budgetary comparison information in 25 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS their annual reports. An important change, however, is a requirement to add the government's original budget to the current comparison of final budget and actual results. A. Reporting Entity The City Charter was adopted by the electors of the City of Miami at an election held May 17, 1921 and legalized and validated by Chapter 9024 of the laws of the State of Florida of 1921. During fiscal year 1997, the residents of the City voted on a referendum that created single -member districts and an Executive Mayor form of government. The City continues to operate under the Commission/City Manager form of government and provides the following services: police and fire protection, public works activities, solid waste collection, parks and recreational facilities, planning and development, community development, financial services and general administrative services. The Florida Legislature, in 1955, approved and submitted to a general election, a constitutional amendment designed to give a new form of government to Miami -Dade County, Florida (the "County"). The County is, in effect, a municipality with governmental powers affecting thirty cities and unincorporated areas, including the City. The County has not displaced nor replaced the cities' powers, but supplements them. The County can take over particular activities of the City's operations if (1) the services fall below minimum standards set by the County Commission, or (2) with the consent of the governing body of the City. Accordingly, the County's financial statements are not included in this report. The accompanying financial statements include those of the City (the primary government) and those of its component units. Component units are legally separate organizations for which the primary government is financially accountable or organizations which should be included in the City's financial statements because of the nature and significance of their relationship with the primary government. The decision to include a potential component unit in the City's reporting entity is based on the criteria stated in GASB Statement No. 14 - The Financial Reporting Entity, which includes the ability to appoint a voting majority of an organization's governing body and (1) the ability of the City to impose its will on that organization or (2) the potential for the organization to provide specific financial benefits to, or impose specific financial burden on the City. Based upon the application of the criteria in GASB Statement No. 14, the financial statements of the component units listed on the following pages have been included in the City's reporting entity as either blended or discretely presented component units. Blended component units, although legally separate entities, are, in substance, part of the City's operations. Accordingly, data from these component units are included with data of the primary government. Each discretely presented component unit, on the other hand, is reported in a separate column in the financial statements to emphasize that they are legally separate from the City. The financial activities and balances for each blended and discretely presented component unit are as of and for the period ended September 30, 2003. 1. Blended Component Units SOUTHEAST OVERTOWN PARK WEST REDEVELOPMENT AGENCY ("SEOPW")- SEOPW is an Agency established by the City in 1982 under the authority of Chapter 163, Florida Statutes and City Resolution No. 82-755. The City has entered into an interlocal agreement with Miami -Dade County approving the deposit of tax increments into the Redevelopment Trust Fund. The members of City Commission are also the Board of Directors of the SEOPW. The City has issued debt for SEOPW and is responsible under the interlocal agreement for disbursement, accountability, management and proper application of all monies paid into the Trust. SEOPW is included within the reporting entity as a special revenue fund. 26 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS OMNI REDEVELOPMENT AGENCY ("ORA")- ORA is an Agency established by the City in 1986 under the authority of Chapter 163, Florida Statutes and City Resolution No. 86-868. The City has entered into an interlocal agreement with Miami - Dade County approving the deposit of tax increments into the Redevelopment Trust Fund. The members of the City Commission are the Board of Directors of the ORA. The City is also responsible under the interlocal agreement for disbursement, accountability, management and proper application of all monies paid into the Trust. ORA is included within the reporting entity as a special revenue fund. VIRGINIA KEY BEACH PARK TRUST ("VKBPT") — On December 14, 2000 (and effective January 2001), via sections 38-230 through 38-242 of Chapter 38 of the Code of the City of Miami Ordinance 12003, the Trust was established and acts as a limited agency and instrumentality of the City of Miami. Its general purposes, in cooperation with City of Miami, are to preserve, restore, and maintain the Historic Virginia Key Beach Park in a manner consistent with environmental health, historical importance of the Park and the aspirations of the African American Community; make it accessible to the general public; propose policy, planning, and design to ensure maximum community utilization and enjoyment. The City Commission must approve VKBPT's board membership and operating budget. Therefore, the City is financially accountable and is presenting VKBPT in the reporting entity as a special revenue fund within the Parks and Recreations Special Revenue Fund. MODEL CITY COMMUNITY REVITALIZATION DISTRICT TRUST ("Model City") — On July 10, 2001, via section 2-892 of Chapter 2 of the Code of the City of Miami ordinance 12082, the Trust was established and acts as a limited agency and instrumentality of the City of Miami. The Trust, in cooperation with Department of Community Development and other City departments, is responsible for oversight and facilitating the City's revitalization efforts for the redevelopment of the Model City Community Revitalization District in a manner consistent with the strategy identified in the Five Year Consolidated Plan, adopted by the City Commission in August, 1999. The City Commission must approve Model City's board membership and operating budget. Therefore, the City is financially accountable and is presenting Model City in the reporting entity as a special revenue fund within the Economic Development Special Revenue Fund. Model City, does not issue stand-alone audited financial statements. NEIGHBORHOOD IMPROVEMENT DISTRICTS There are four neighborhood improvement districts. All four districts were inactive during fiscal year 2003. 2. Discretely Presented Component Units MIAMI SPORTS AND EXHIBITION AUTHORITY ("MESA") - MSEA was created by the City in 1983 pursuant to Chapter 212.0305, Florida Statutes and City Ordinance No. 9662 to promote the development of sports, convention and exhibition facilities within the City using the 3% Convention Development Tax collected by the County. The City Commission must approve MSEA's board membership and operating budget. Therefore, the City is financially accountable and is discretely presenting MSEA in the accompanying financial statements. DOWNTOWN DEVELOPMENT AUTHORITY ("DDA") - DDA was created by the City in 1965 pursuant to Chapter 65-1090 of the General Laws of Florida and City Code Section 14-25. DDA is governed by a board appointed by the City Commission and was established for the purpose of furthering the development of the Downtown Miami area. The City Commission must approve DDA's operating budget and the millage levied on the special taxing district established to fund DDA. Therefore, the City is financially accountable and is discretely presenting DDA in the accompanying financial statements. 27 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS DEPARTMENT OF OFF-STREET PARKING ("DOSP") - DOSP was originally created in 1955 by a special act of the Florida State Legislature and subsequently incorporated into the City's Charter in 1968. DOSP is an agency and instrumentality of the City, which owns and operates parking facilities within the City. The City Commission has reserved the right to confirm new members of the Off -Street Parking Board, to establish and fix rates and charges for parking services, to approve the DOSP operating budget and to authorize the issuance of revenue bonds. Therefore, the City is financially accountable and is discretely presenting DOSP in the accompanying financial statements. BAYFRONT MANAGEMENT TRUST ("BFP") — BFP was established by the City in 1987 under the authority City of Miami Resolution No. 10348. Bayfront was created for the purpose of managing and operating the events held at Bayfront and Bicentennial Park and the daily maintenance and upkeep of the grounds, and its various amenities including the amphitheater and the Mildred and Claude Pepper Fountain. The governing body of the Trust consists of nine appointed members serving initial terms of one to three years. Upon expiration of an initial term, each successor member may be appointed by the City Commission for terms of one to three years. The Trust has appointed an executive director to act as the chief executive officer, subject to policy directives. The Trust prepares and submits an annual budget request and master plan to the City Commission for its approval for each fiscal year. Therefore, the City is financially accountable and is discretely presenting BFP in the accompanying financial statements. HEALTH FACILITY AUTHORITY ("HFA") — The HFA is an agency established by the City in 1979 under the authority of Chapter 154, Florida Statutes and City Resolution No. 79-93 to serve as a conduit to issue revenue bonds. The City Commission must approve HFA's board membership and operating budget. Therefore, the City is financially accountable and is discretely presenting HFA in the accompanying financial statements. Debt obligations issued under the purview of the HFA do not constitute an indebtedness, liability or pledge of the faith or credit of the HFA or the City. The aggregate amount of conduit debt obligations totaled $132,195,000 at September 30, 2003. HFA, does not issue stand- alone audited financial statements. Complete financial information of the individual component units may be obtained at the entity's respective administrative offices as follows: SEOPW 49 NW 5th Street, Suite 100 Miami, Florida 33128 ORA 49 NW 5th Street, Suite 100 Miami, Florida 33128 MSEA 701 Arena Blvd. Miami, Florida 33136 DOSP 190 NE 3rd Street Miami, Florida 33132 DDA 330 North Biscayne Blvd. 11 th Floor Miami, Florida 33132 BFP 301 N. Biscayne Blvd. Miami, Florida 33132-2226 VKBPT 3550 Biscayne Blvd., Suite 510 Miami, Florida 33137-8311 28 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS B. Government -wide and Fund Financial Statements The basic financial statements include both government -wide (based on the City as a whole) and fund financial statements. While the previous financial reporting model emphasized fund types (the total of all funds of a particular type), in the new financial reporting model the focus is on either the City as a whole, or major individual funds (within the fund financial statements). Both the government -wide and fund financial statements (within the basic financial statements) categorize primary activities as governmental type. In the government -wide Statement of Net Assets, the governmental activities column is presented on a full accrual, economic resource basis, which incorporates long-term assets and receivables as well as long-term debt and obligations. The City does not have any business type activities for financial reporting purposes. The government -wide Statement of Activities reflects both the gross and net costs per functional category (Police, Fire, Public Works, etc.), which are otherwise being supported by general government revenues (property, sales and use taxes, certain intergovernmental revenues, etc.). The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants. The program revenues must be directly associated with the function (Police, Fire, Public Works, etc.). The City does not allocate indirect expenses. The operating grants include operating -specific and discretionary (either operating or capital) grants while the capital grants column reflects capital -specific grants. The net cost (by function) is normally covered by general revenue (property, sales or gas taxes, intergovernmental revenues, interest income, etc.). Historically, the previous financial reporting model did not summarize or present net cost by function or activity. This government -wide focus is more on the sustainability of the City as an entity and the change in the aggregate financial position resulting from the activities of the fiscal period. The fund financial statements are, in substance, very similar to the financial statements presented in the previous financial reporting model. Emphasis here is on the major funds. Non -major funds (by category) are summarized into a single column. The governmental funds major fund statements in the fund financial statements are presented on a current financial resource and modified accrual basis of accounting. This is the manner in which these funds are normally budgeted. This presentation is deemed most appropriate to (a) demonstrate legal and covenant compliance, (b) demonstrate the source and use of liquid resources, and (c) demonstrate how the City's actual experience conforms to the budget fiscal plan. Since the governmental fund statements are presented on a different measurement focus and basis of accounting than the government -wide statements' governmental column, a reconciliation is presented on the page following each statement, which briefly explains the adjustments necessary to transform the fund based financial statements into the governmental column of the government -wide presentation. The City's fiduciary funds are presented in the fund financial statements by type (pension, private purpose and agency). Since, by definition, these assets are being held for the benefit of a third party (other local governments, private parties, pension participants, etc.) and cannot be used to address activities or obligations of the government, these funds are not incorporated into the government - wide statements. The focus of the Statement No. 34 model is on the City as a whole. The focus of the fund financial statements is on the major individual funds of the governmental activities and the fiduciary funds. Each presentation provides valuable information that can be analyzed and compared (between years 29 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS and between governments) to enhance the usefulness of the information. C. Basis of Presentation Statement No. 34 sets forth minimum criteria (percentage of the assets, liabilities, revenues or expenditures/expenses of either fund category or the governmental and enterprise combined) for the determination of major funds. Funds that meet these criteria are labeled as such. The nonmajor funds are combined in a column in the fund financial statements and detailed in the combining section of this report. The City reports the following funds: 1. Major Governmental Funds The measurement focus of the governmental funds (in the Fund Financial Statements) is on the determination of financial position and changes in financial position (sources, uses, and balances of financial resources) rather than on net income. The following is a description of the major governmental funds of the City: a. General Fund — The General Fund is the general operating fund of the City. General Tax revenues and other receipts that are not allocated by law or contractual agreement to some other fund are accounted for in this fund. General operating expenses, fixed charges, and capital improvement costs not paid through other funds are paid from this fund. b. Community Development Fund — This Special Revenue Fund accounts for the proceeds from the Federal Government under the U. S. Department of Housing and Urban Development. c. Public Services Tax Fund — This Special Revenue Fund accounts for the utility service tax levied on purchases of public services. d. General Government Fund — This Capital Project Fund accounts for capital expenditures made for general government operations. 2. Fiduciary Funds Fiduciary Funds account for resources held by the City as a trustee or agent for individuals, private organizations, other governments, and/or other funds. These include pension trusts, and agency funds. The Pension Trust Funds, which include, City of Miami Fire Fighters' and Police Officers' Retirement Trust ("FIPO"), City of Miami General Employees' and Sanitation Employees' Retirement Trust ("GESE") and Elected Officers' Retirement Trust (`SORT"), measurement focus is on the determination of net income and financial position since capital maintenance is critical. 3. Non -Current Governmental Assets/ Liabilities GASB Statement No. 34 eliminates the presentation of Account Groups, but provides for these records to be maintained and incorporated in the governmental column in the government -wide Statement of Net Assets. D. Basis of Accounting The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using the current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet in the fund statements. Long- term assets and long-term liabilities are included in the government -wide statements. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. The government -wide statements of net assets, statements of activities, and pension trust funds are accounted for using the economic resources 30 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS measurement focus. With this measurement focus, all assets and all liabilities associated with the operation of these activities are either included on the balance sheet or on the statement of fiduciary net assets. The governmental fund financial statements are maintained on the modified accrual basis of accounting. Under this method of accounting, revenues are recognized in the period in which they become measurable and available. With respect to real and personal property tax revenue and other local taxes, the term "available" is limited to collection within sixty (60) days of the fiscal year end. Levies that are made prior to the fiscal year end, but are not available, are deferred. Interest income is recorded as earned. Federal and State reimbursement type grants are recorded as revenue when related eligible expenditures are met. Expenditures, other than accrued interest on long- term debt, are record when the fund liability is incurred. All other revenue items reported in the fund financial statements are considered "available" when the cash is received by the City one year after its fiscal year end. Franchise and utility taxes, state revenue sharing, charges for services, and fines and forfeitures associated with the current period are considered to be susceptible to accrual and therefore have been recognized as revenues of the current fiscal period. Expenditures are generally recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, claims, and judgments, are recorded only when payment is due. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, and then unrestricted resources as they are needed. E. Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates. F. Deferred Revenue Deferred revenues reported in the government -wide Statement of Net Assets and governmental funds Balance Sheet includes occupational licenses collected in advance as well as certain grants received prior to the City meeting all applicable grant eligible requirements. Deferred revenues reported in the governmental funds Balance Sheet also include delinquent property taxes that are not considered available. G. Elimination of Internal Activities Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund activities, payables and receivables. All internal balances in the Statement of Net Assets have been eliminated. The City currently does not have any internal service funds thus, there are no transactions between government and business -type activity to be eliminated. H. Unamortized Bond Premium and Discounts Premiums and discounts on the City's outstanding bonds issues reported in the government -wide Statement of Net Assets are amortized using the interest method, over the maturity of the related issues. 31 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS I. Fund Equity Reserves reported in the governmental funds Balance Sheet are used to indicate that a portion of the fund balance is not appropriable for expenditure or is legally segregated for a specific future use. Usage of reserves have been limited to the following items: 1. Reserve for encumbrances - This amount is equal to the outstanding purchase orders for goods and services at year end; 2. Reserve for debt service - This is the amount of fund equity in the Debt Service Funds, which is set aside for the repayment of outstanding debt; 3. Reserve for prepaids - This amount is equal to the amount of prepaids recorded as an asset, and; 4. Reserve for law enforcement trust fund - This is the amount of the outstanding commitments of the Law Enforcement Trust Fund. J. Excess of Expenditures Over Appropriations During 2003, General Fund expenditures exceeded appropriations in the Parks and Recreation Department in the amount of $12,202. The Community Development, Gusman and Olympia, Parks and Recreation and Transportation and Transit Special Revenue Funds exceeded appropriations in the amounts of $249,146, $1,740,848, $404,179 and $3,820, respectively. In addition, the General Obligation Bonds, Other Special Obligation Bonds, and CRA Other Special Obligations Debt Service Funds exceeded appropriations in the amounts of $19,406,007, $29,973,828, and $91,439, respectively. All of these expenditures were as a result of unanticipated refundings that were not budgeted for. The over expenditures for all funds were funded by available fund balances. K. Deficit Fund Equity The Gusman & Olympia Special Revenue Fund had a deficit fund balance of $336,809 as of September 30, 2003. This deficit is expected to be liquidated in fiscal year 2004 with appropriations from other governmental funds. L. Assets, Liabilities, and Fund Equity 1. Cash and Cash Equivalents The City has defined Cash and Cash Equivalents to include cash on hand, demand deposits, and cash with fiscal agents. Additionally, each fund's equity in the City's investment pool is considered to be a cash equivalent since the funds can be deposited or effectively withdrawn at any time without prior notice or penalty. 2. Investments All investments, including those of the Pension Funds are stated at fair value (quoted market price or the best available estimate thereof). 3. Accounts Receivable Accounts Receivable are reported in the government -wide Statement of Net Assets and governmental funds Balance Sheet net of allowance for doubtful accounts. 4. Due From/Due To To properly allocate daily interest earnings among funds, the Due From/Due To (interfund) accounts are not used. Instead, interfund transactions are entered directly to the cash accounts maintained in a central pooled cash account in which all funds participate. Interfund due from/due to accounts (both between funds and between the primary government and component units) are only used at year end. 32 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS 5. Restricted Net Assets Certain proceeds from bonds, notes, and loans, as well as resources for debt service payments, and law enforcement trust monies are classified as restricted net assets reported on the government -wide Statement of Net Assets because their use is limited by applicable bond covenants and restrictions. 6. Capital Assets Capital outlays are recorded as expenditures in the governmental fund financial statements and as assets in the government -wide financial statements to the extent the City's capitalization threshold of $750 and an estimated useful life in excess of two years is met. In accordance with GASB Statement No. 34, infrastructure has been capitalized. Depreciation is recorded on capital assets on a government -wide basis using the straight-line method and the following estimated useful lives: Years Classification 20 - 45 Buildings 10 - 30 Improvements other than buildings 3 - 10 Machinery and equipment 3 - 10 Vehicles (including heavy equipment) 15 - 50 Infrastructure All capital assets are valued at historical cost or estimated historical cost, if actual cost was not available. Donated capital assets are valued at their estimated fair market value on the date donated. Maintenance, repairs, and minor equipment are charged to operations when incurred. Expenses that materially change capacities or extend useful lives are capitalized. Upon sale or retirement of land, buildings, and equipment, the cost and related accumulated depreciation, if applicable, are eliminated from the respective accounts and any resulting gain or loss is included in the Statement of Activities. 7. Compensated Absences Under terms of Civil Service regulations, labor contracts and administrative policy, City employees are granted vacation and sick leave in varying amounts. Additionally, certain overtime hours can be accrued and carried forward as earned time off. Unused vacation and sick time is payable upon separation from service, subject to various limitations depending upon the employee's seniority and civil service classification. The total amount (the amount estimated to be used in subsequent fiscal years) for government funds is maintained separately and represents a reconciling item between the fund and government -wide presentations. NOTE 2. - DEPOSITS AND INVESTMENTS A. Deposits The City maintains a cash management pool for its cash and cash equivalents in which each fund and/or account or sub -account of a fund participates on a dollar equivalent and daily transaction basis. Interest income (which includes unrealized gains and losses) is distributed monthly based on a monthly average balance. The use of daily sweeps of zero balance accounts allows for the City's portfolio to be fully invested at all times. Although City investment practices avoid uninvested deposits, Florida Statutes provide established risk sharing collateral pooling by banks and savings and loans (which are qualified public depositories) that insure local government deposits and certificates of deposits (C.D.$) with participating "authorized depositories". The City's cash management pool is considered to be a cash equivalent for reporting purposes because it is an internally managed mutual fund which allows individual funds and subfunds to, at any time, deposit additional cash or make withdrawals without prior notice or penalty. The investment 33 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS earnings on the City's cash management pool are reported as part of the investing activity. All deposits are held in banking institutions approved by the State Treasurer of the State of Florida, to hold public funds. Under the Florida Statutes Chapter 280, "Florida Security for Public Deposits Act", the State Treasurer requires all qualified public depositories to deposit with the Treasurer or another banking institution eligible collateral equal to 50% to 125% of the average daily balance for each month of all public deposits in excess of any applicable deposit insurance held. The percentage of eligible collateral (generally, U.S. governmental and agency securities, state or local government debt, or corporate bonds) to public deposits is dependent upon the depository's financial history and its compliance with Chapter 280, Florida Statutes. In the event of a failure of a qualified public depository, the remaining public depositories would be responsible for covering any resulting loss. Accordingly, all cash and time deposits held by banks can be classified as category one credit risk as defined in GASB Statement No. 3, which means they are fully insured or collateralized. The bank deposits at September 30, 2003 of the City and it's discretely present component units are fully insured or collateralized in accordance with GASB Statement No. 3. B. Investments As required by Florida Statutes, the City has adopted a written investment policy, which may from time to time be amended by the City Commission. The City Code authorizes the Director of Finance to purchase and invest idle funds prudently in U. S. Treasuries and obligations of agencies of the United States, provided such are guaranteed by the United States or by the issuing agency; general obligations of states, municipalities, school districts, or other political subdivisions, revenue and excise tax bonds of the various municipalities of the State of Florida, provided none of such securities has been in default within five years prior to date of purchase, negotiable certificates of deposit, bankers acceptance drafts, money market investments, and prime commercial paper. The Local Government Surplus Funds Trust Fund is governed by Ch. 19-7 of the Florida Administrative Code, which identifies the Rules of the State Board of Administration. These rules provide guidance and establish the general operating procedures for the administration of the Local Government Surplus Funds Trust Fund. Additionally, the Office of the Auditor General performs the operational audit of the activities and investments of the State Board of Administration. The fair value of the position in the external investment pool is the same as the value of the pool shares. Investments are categorized to give an indication of the level of risk assumed by the entity at year end. The three categories of risk are as follows: 1 - Insured or collateralized with securities held by the entity or by its agent in the entity's name; 2 - Collateralized with securities held by the pledging financial institution's trust department or agent in the entity's name; and 3 - Uncollateralized, including any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the entity's name. 34 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS The City's non -pension investments consisted of the following at September 30, 2003 and are classified as follows: Primary Government Credit Risk Category 1 2 Fair Value U.S. Treasury Notes and Bills $ 39,380,110 $ 1,049,780 $ 40,429,890 U.S. Agencies Obligations 384,989,543 5,886,680 390,876,223 Short -Term Commercial Paper 64,986,800 - 64,986,800 Totals $ 489,356,453 $ 6,936,460 496,292,913 Money Market Investments 8,774,126 Totals $ 505,067,039 The City had other investments in the amount of $9,443,020 which consisted of short-term investment pools at September 30, 2003, which are not categorized because they are not evidenced by securities that exist in physical or book entry form. MSEA Money Market Investments Totals Credit Risk Category 2 Fair Value $ 11,276,344 $ 11,276,344 $ 11,276,344 $ 11,276,344 MSEA had other investments in the amount of $865,929 which consisted of short-term investment pools at September 30, 2003, which are not categorized because they are not evidenced by securities that exist in physical or book entry form. 35 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS DOSP Credit Risk Category 2 Fair Value U.S. Government Securities $ 3,825,712 $ 3,825,712 Short -Term Investment Pool 1,206,745 Florida State Board of Administration 898,290 Totals $ 3,825,712 $ 5,930,747 DOSP had other investments in the amount of $384,637 which consisted of short-term investment pools at September 30, 2003, which are not categorized because they are not evidenced by securities that exist in physical or book entry form. DDA DDA had investments of $2,814,968 that consisted of a jumbo commercial money market fund paying interest at a rate of 1.09% per annum. The money market investment is considered cash and is not categorized as a level of risk since it is deemed to be fully collateralized under the Florida Security for Public Deposit Act or covered under the FDIC insured. BFP BFP had investments of $3,431,299 that consisted of short-term investment pools at September 30, 2003, which are not categorized because they are not evidenced by securities that exist in physical or book entry form. PENSION TRUST FUNDS Credit Risk Category 1 Fair Value U.S. Government and Agency $ 244,843,479 $ 244,843,479 Corporate Stocks 972,054,568 972,054,568 Corporate Bonds 228,378,640 228,378,640 Totals Money Market Funds Mutual Funds Real Estate Total Pension Investments $ 1,445,276,687 1,445,276,687 26,066,461 42,893,957 31,300,235 $ 1,545,537,340 The investments of $26,854,616 in the short-term investment pools and mutual funds are not categorized to give an indication of the level of risk assumed by the entity at year end because they are not evidenced by securities that exist in physical or book entry form. 36 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS The following represents the balances relating to securities lending transactions at September 30, 2003: Securities lent: Lent for cash collateral: U.S government and agency obligations Domestic corporate stocks Domestic corporate bonds International corporate stocks Lent for securities collateral: U.S government and agency obligations Domestic corporate stocks Domestic corporate bonds International corporate stocks Total securities lent Fair Value Underlying Securities Cash Colleteral Received/Securities Cash Collateral Collateral Value Investment Value $ 37,930,368 39,972,746 13, 806,163 2,669,269 $ 38,601,117 41,151,109 14,104,549 2,809,559 $ 38,601,117 41,151,109 14,104,549 2,809,559 94,378,546 96,666,334 10,660,937 312,980 203,991 10,879,404 323,991 207,512 96,666,334 11,177,908 11,410,907 $ 105,556,454 $ 108,077,241 $ 96,666,334 The contract with the Trust's custodian requires the custodian to indemnify the Trust if the borrower fails to return the securities, due to the insolvency of a borrower, and the custodian has failed to live up to its contractual responsibilities relating to the lending of those securities. At year end, the Trust had no credit risk exposure to borrowers because the amounts of collateral held by the Trust exceeded the amounts the borrowers owe the Trust. There are no significant violations of legal or contractual provisions, no borrowers or lending agent default losses, and no recoveries of prior period losses during the year. Additionally, there are no income distributions owing on securities lent. NOTE 3. - RECEIVABLES A. Accounts Receivable Accounts Receivable at September 30, 2003 consisted of the following: Receivables Taxes Accounts Special Assessments Intergovernmental Loans Gross receivables Less: allowance for uncollectibles Net total receivables General $ 8,227,767 24,800,440 6,763,725 288,000 40,079,932 (14,453,662) $ 25,626,270 Community Development 2,330,211 504,649 3,802,131 53,664,020 60,301,011 (54,765,223) $ 5,535,788 $ Public Services Tax 7,690,902 7,690,902 7,690,902 $ - Nonmajor and Other General Governmental Government Funds Total $ - $ 1,095,578 $ 9,323,345 575,000 2,637,509 30,343,160 178,946 683,595 3,834,333 22,091,091 53,952,020 575,000 7,746,366 116,393,211 (575,000) (1,532,827) (71,326,712) $ 6,213,539 $ 45,066,499 37 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS As part of its Community Development block grant program, the City issues single and multi -family housing rehabilitation loans to qualified residents. All repayments of the loans, which carry low interest rates, remain in the loan program. As collection of the loans is not assured the loans are fully reserved. As of September 30, 2003, rehabilitation loans outstanding totaled approximately $53,664,020. Component Units Receivables Taxes Accounts Intergovernmental Loans Gross Receivables Less: allowance for uncollectibles MSEA DOSP DDA BFP Total $ 618,603 $ 106,380 1,172,474 888,868 1,800,000 2,524,983 2,061,342 (133,357) $ $ - $ 618,603 11,120 219,329 1,509,303 888,868 1,800,000 11,120 219,329 4,816,774 Net total receivables $ 2,524,983 $ 1,927,985 $ (59,732) (193,089) 11,120 $ 159,597 $ 4,623,685 NOTE 4. - PROPERTY TAXES Property taxes are levied on January 1st and are payable on November 1st, with discounts of one to four percent allowed if paid prior to March 1st of the following calendar year. Taxpayers also have the option of paying their taxes in advance in equal quarterly payments based on the prior year's tax assessment with quarterly discounts varying between 2% and 6%. All unpaid taxes on real and personal property become delinquent on April 1st and bear interest at 18% until a sale tax certificate is sold at auction. The County bills and collects all property taxes for the City, and sells tax certificates for delinquent taxes. The assessed value of property, as established by the Miami -Dade County Property Appraiser, at January 1, 2002, upon which the 2002-2003 levy was based, was approximately $16,635,930,755. The City is permitted by Article 7, Section 8 of the Florida Constitution to levy taxes up to $10 per $1,000 of assessed valuation for general governmental services other than the payment of principal and interest on general obligation long-term debt. In addition, unlimited amounts may be levied for the payment of principal and interest on general obligation long-term debt, subject to a limitation on the amount of debt outstanding. The tax rate to finance general governmental services (other than the payment of principal and interest on general obligation long-term debt) for the year ended September 30, 2003, was $8.850 per $1,000. The debt service tax rate for the same period was $1.218 per $1,000. Property taxes receivable reported in the government -wide Statement of Net Assets and the governmental funds Balance Sheet represent amounts due for unpaid delinquent property taxes at September 30, 2003. Property taxes that are not considered "available" have been reported as deferred revenues in the governmental funds Balance Sheet. 38 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS NOTE 5. - CAPITAL ASSETS The following is a summary of changes in capital assets during the year ended September 30, 2003: Primary Government Governmental Activities: Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings Improvements other than buildings Building improvements Machinery and equipment Infrastructure Total capital assets, being depreciated Less accumulated depreciation for: Buildings Improvements other than buildings Building improvements Machinery and equipment Infrastructure Total accumulated depreciation Governmental activities capital assets, net Beginning Balance Additions Retirements Ending Balance $ 63,695,567 $ 43,340,836 715,589 $ 9,117,626 (39,015) $ 64,372,14 52,458,46 107,036,403 9,833,215 (39,015) 116,830,60 168,737,839 24,061,858 2,160,121 115,484,864 1,005,399,496 1,315,844,178 (80,112,524) (17,553,422) (236,704) (69,956,935) (427,842,884) (595,702,469) $ 827,178,112 $ Depreciation expense was charged to government functions as follows: General Government $ Planning and Development Community Development Community Redevelopment Areas Public Works Public Safety Public Facilities Parks and Recreation Unallocated Total depreciation expense 168,737,83 24,061,85 158,268 2,318,38 14,185,543 (36,026,849) 93,643,55 - 1,005,399,49 14,343,811 (36,026,849) 1,294,161,14 (4,434,615) (84,547,13 (1,078,503) (18,631,92 (215,649) (452,35 (7,314,971) 31,461,769 (45,810,13 (25,765,567) (453,608,45 (38,809,305) 31,461,769 (603,050,00 (14,632,279) $ (4,604,095) $ 807,941,73 2,892,990 54,590 41,842 22,451 2,804,222 3,990,795 381,896 2,854,952 25,765,567 $ 38,809,305 39 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS Capital assets, not being depreciated: Land Parking lot/warehouse Total capital assets, not being depreciated Capital assets, being depreciated: Miami Arena Miami Arena equipment Office equipment Art in public places Vehicles Total capital assets, being depreciated Less accumulated depreciation for: Miami Arena Miami Arena equipment Office equipment Art in public places Vehicles Total accumulated depreciation MSEA capital assets, net Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Building and structures Leasehold improvements Furniture and fixtures Equipment Total capital assets, being depreciated Less accumulated depreciation for: Building and structures Leasehold improvements Furniture and fixtures Equipment Total accumulated depreciation MSEA Beginning Balance Additions Retirements Ending Balance $ 5,923,000 $ 1,157,662 7,080,662 - $ 5,923,000 1,157,662 49,069,692 2,113,259 235,790 187,587 10,184 48,612 22,058 23,853 51,616,512 94,523 (17,448,461) (1,547,277) (182,964) (62,453) (1,228,850) (137,327) (21,099) (7,503) (2,037) (19,241,155) (1,396,816) 7,080,662 49,118,304 2,135,317 (6,300) 253,343 187,587 10,184 (6,300) 51,704,735 (18,677,311) (1,684,604) 4,410 (199,653) (69,956) (2,037) 4,410 (20,633,561) $ 39,456,019 $ (1,302,293) $ (1,890) $ 38,151,836 DOSP Beginning Balance $ 12,076,353 $ 76,823 12,153,176 23,335,963 4,975,807 159,407 8,934,250 Ending Additions Retirements Balance 1,010,440 $ - $ 13,086,793 219,997 (73,460) 223,360 1,230,437 (73,460) 13,310,153 37,405,427 1,186,283 38,591,710 (11,292,016) (4,253,998) (148,821) (6,167,583) (21,862,418) DOSP capital assets, net $ 27,696,185 $ 120,386 23,456,349 460,962 5,436,769 10,089 169,496 594,846 9,529,096 (695,190) - (11,987,206) (136,663) - (4,390,661) (4,296) - (153,117) (812,886) - (6,980,469) (1,649,035) - (23,511,453) 767,685 $ (73,460) $ 28,390,410 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS DDA Beginning Ending Capital assets, being depreciated: Balance Additions Retirements Balance Leasehold improvements $ 300,656 $ 30,167 $ (95,790) $ 235,033 Total capital assets, being depreciated 300,656 30,167 (95,790) 235,033 Less accumulated depreciation for: Furniture and equipment Total accumulated depreciation DDA capital assets, net (247,772) (17,154) 95,790 (169,136) (247,772) (17,154) 95,790 (169,136) $ 52,884 $ 13,013 $ - $ 65,897 BFP Beginning Ending Balance Additions Retirements Balance Capital assets, not being depreciated: Land $ 516,129 $ - $ - $ 516,129 Total capital assets, not being depreciated 516,129 - - 516,129 Capital assets, being depreciated: Buildings 2,609,840 - 2,609,840 Public domain and system infrastructure 1,382,462 269,065 1,651,527 Machinery and equipment 478,968 29,755 - 508,723 Total capital assets, being depreciated 4,471,270 298,820 - 4,770,090 Less accumulated depreciation for: Buildings (756,853) . (52,197) - (809,050) Public domain and system infrastructure (904,093) (82,200) - (986,293) Machinery and equipment (248,593) (25,609) (274,202) Total accumulated depreciation (1,909,539) (160,006) - (2,069,545) BFP activities capital assets, net $ 3,077,860 $ 138,814 $ - $ 3,216,674 Depreciation expenses were charged to the discretely presented component units as follows: MSEA $ 1,396,816 DOSP 1,649,035 DDA 17,154 BFP 160,006 Total depreciation expense $ 3,223,011 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS NOTE 6. - Accounts Payable and Accrued Liabilities Accounts Payable & Accrued Liabilities at September 30, 2003 consisted of the Payables Vendors Salaries and Benefits Intergovernmental Other Total Payables General $ 18,650,795 7,455,822 33,030 6,719,989 $ 32,859,636 Community Public Development Services Tax $ 1,853,316 $ 187,330 2,482,778 8,667,396 $ 4,523,424 $ 8,667,396 $ 310,951 NOTE 7. - Interfund Receivable, Payables, and Transfers General Government $ 244,228 66,723 following: Nonmajor and Other Governmental Funds $ 5,653,054 205,914 1,396,711 $ 7,255,679 Total $ 26,401,393 7,915,789 3,912,519 15,387,385 $ 53,617,086 The balance of $3,149,351 due to the Public Services Tax Special Revenue fund from the General Obligation Debt Service Fund resulted from the time lag between the dates that (a) interfund goods and services are provided or reimbursable expenditures occur, (b) transactions are recorded in the accounting system, and (c) payments between funds are made. Due to/from primary government and component units at September 30, 2003 consisted of the following: Payable Entity Receivable Enity Primary Government DOSP Total Transfer Out General Fund Community Development Public Services Tax General Government Nonmajor and Other Funds Total Transfers Out Primary Government MSEA DOSP Total $ - $ 3,259 $ 560,466 $ 563,725 888,855 - - 888,855 $ 888,855 $ 3,259 $ 560,466 $ 1,452,580 General Fund 1,043,439 45,256,943 4,982,465 Transfer In General Government $ 30,922,342 Nonmaj or and Other Governmental Funds $ 13,208,511 Total Transfer In $ 44,130,853 96,940 2,245,098 3,385,477 15,458,674 60,715,617 9,498, 893 15,352,561 24,851,454 24,879,497 29,861,962 $ 51,282,847 $ 40,518,175 $ 71,144,341 $ 162,945,363 42 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS Transfers are used to (a) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, (b) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due, and (c) move unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. NOTE 8. - LONG-TERM OBLIGATIONS A. Changes in Long Term Obligations The following is a summary of changes in long-term obligations for the year ended September 30, 2003: Beginning Ending Balance Additions Reductions Balance General obligation bonds $ 252,876,553 $ 21,528,155 $ (32,045,409) $ 242,359,299 Special obligations bonds, notes and loans 216,557,644 32,054,971 (37,912,429) 210,700,186 Total bonds, notes, and loans 469,434,197 53,583,126 (69,957,838) 453,059,485 Other liabilities: Claims payable 82,527,448 17,316,124 (17,316,124) 82,527,448 Compensated absences 65,169,447 5,167,225 (4,460,879) 65,875,793 Total governmental activity long-term liabilities $ 617,131,092 $ 129,649,601 $ (161,692,679) $ 601,462,726 For governmental activities, claims and judgments and compensated absences are generally liquated by the General Fund. 43 Special Obligation and Revenue Bonds: Special Revenue Refunding Bonds Series 1987 Refunding $ 65,271,325 $ 46,125,757 5.25%-7.3% $ 5,900,000 Community Redevelopment Revenue Bonds Series 1990 Redevelopment 11,500,000 2,615,000 7.15%-8.5% 358,975 Special Obligation Non -Ad Valorem MRC Building 22,000,000 3,850,000 5%-6% 665,830 Series 1995 Special Obligation Non -Ad Valorem Revenue Series 1995 Pension 72,000,000 65,645,000 5.5%-7.25% 5,812,210 Special Revenue Refunding Bonds Series 2002A Refunding 27,895,000 27,895,000 2.5%-5.375% 3,353,539 Special Revenue Refunding Bonds Series2002B Refunding 13,170,000 9,160,000 2%-3.25% 2,109,338 Special Revenue Refunding Bonds Series 2002C Refunding 28,390,000 27,385,000 2%-4.375% 2,695,606 Sunshine State Govemment Financing Commission Loans Facility Improvements 27,630,900 14,856,900 (1) (2) Sunshine State Government Financing SEOPW - Section 108 HUD Loan Redevelopment 5,100,000 4,400,000 8.75% 737,563 Citadel - Section 108 HUD Loan Redevelopment 2,500,000 700,000 8.75% 748,440 Wynwood - Section 108 HUD Loan Redevelopment 5,500,000 4,220,000 (3) (3) Sunshine State Government Financing Commission -Secondary Loan SCI, Melreese 3,500,000 2,345,000 (1) (2) Gran Central Corporation Loan Redevelopment 1,708,864 1,708,864 0.00% 1,708,864 286,166,089 210,906,521 Total $ 599,717,495 $ 449,507,910 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS B. Description of Individual Bond Issues and Loans Outstanding — Summarized below are the City's bond and loan issues, which are outstanding at September 30, 2003: Maximum Purpose of Amount Outstanding Interest Rate Annual DESCRIPTION Issue Issued Balance Range Debt Service General Obligations: General Obligations Refunding Bonds Series 1992 Refunding $ 70,100,000 $ 32,625,000 4%-6% $ 8,678,920 Homeland Defense/Neighborhood CIP Series 2002A Homeland Defense 153,186,406 154,741,389 1.8%-5.5% 19,720,375 General Obligations Refunding Bonds Series 2002A Refunding 32,510,000 30,095,000 2.5%-5.375% 6,682,281 General Obligations Bonds Other Issues Housing 39,075,000 2,460,000 3%-11% 427,358 General Obligations Refunding Bonds Series 2003 Refunding 18,680,000 18,680,000 2%-5% 3,630,475 $ 313,551,406 $ 238,601,389 (1) These variable rate loans are subject to a 15% interest rate cap. The Commission loan had an average interest rate of 1.10% on September 30, 2003. (2) The amortization requirement of the covenant program (not the individual issues) variable rate obligation requires a minimum amortization offer the 1/3 (10 years) of the normal (30 years) maturity. (3) These variable rate loans are subject to Libor plus 0.2%. The interest is calculated monthly and paid to the trustee quarterly. 44 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS C. Summary of Annual Debt Service Requirements To Maturity — Annual Principal and Interest The annual debt service requirements for all bonds, notes, and loans outstanding as of September 30, 2003, are as follows: General Obligation Bonds Principal (1) Interest 2004 $ 10,740,000 $ 2005 10,195,000 2006 10,403,024 2007 10,352,523 2008 10,275,644 2009 - 2013 50,502,993 2014 - 2018 63,080,772 2019 - 2023 71,000,000 2024 - 2028 - 9,957,881 9,392,380 9,190,411 9,240,954 9,320,744 47,151,098 35,511,147 7,877,136 Special Obligation Bonds, Notes and Loans Principal (2) Interest $ 7,303,400 6,951,400 7,975,400 8,387,400 10,516,264 46,746,900 32,390,000 25,895,000 18,615,000 $ 8,516,615 8,220,686 7,941,091 7,617,262 7,278,315 30,472,013 19,618,581 11,073,504 1,969,840 Revenue Bonds Principal (3) $ 1,811,064 1,653,829 1,520,371 1,396,353 1,280,099 4,864,042 1,360,567 Interest $ 4,088,936 4,246,171 4,379,629 4,503,647 4,614,901 24,058,642 9,351,769 $ 236,549,956 $ 137,641,751 $ 164,780,764 $ 102,707,907 $ 13,886,325 $ 55,243,695 (1) Excludes $2,051,433 accretion on the Capital Appreciation Bonds and $3,757,910 of unamortized bond premium and issuance costs. (2) Excludes $1,708,864 Gran Central Loan, of unamortized premium $672,745, and $466,409 of unamortized bond discounts and issuance costs. (3) Excludes $32,239,433 accretion on the Capital Appreciation Bonds. D. Summary of New Debt Issuances $18,680,000 General Obligation Refunding Bonds, Series 2003 — On May 1, 2003, the City issued $18,680,000 in General Obligation Refunding Bonds, Series 2003 for the purpose of refunding on current basis a portion of the City's outstanding $31,860,000 General Obligation Bonds, Series 1993. The aggregate principal amount of the Refunding Bonds at the time of the refunding was $21,880,000. The Bonds were issued at rates ranging from 4.70% to 5.20% maturing through the year 2013. The net proceeds of $20,098,377 (after payments of $271,762 in underwriting fees, issuance and other costs) were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the old bonds. The economic gain or present value savings realized by this refunding was $1,407,484. $28,390,000 Special Obligation Non -Ad Valorem Revenue Refunding Bonds Series 2002C — On October 31, 2002, the City issued $28,390,000 in Special Obligation Refunding Bonds, Series 2002C to retire loans by the City from the Sunshine State Governmental Financing Commission Tax -Exempt Commercial Paper Revenue Notes (Governmental Financing Program) that were entered into on May 12, 1994 in the original aggregate principal amount of $15,190,000, and on October 25, 1995 in the original aggregate principal amount of $30,000,000 maturing through the year 2021. The Governmental Financing Program notes are variable rate notes. The City decided to reduce its variable rate exposure by issuing fixed rate bonds. 45 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS E. Synopsis of Bond Covenants A summary of major provisions and significant debt service requirements follows: Debt service for general obligation bonds is provided for by a tax levy on non-exempt property value. The total general obligation debt outstanding is limited by the City Charter to 15% of the assessed non-exempt property value. At September 30, 2003, the statutory limitation for the City amounted to $2,914,141,286 providing a debt margin of $2,676,558,525 after consideration of $236,549,956 of general obligation bonds outstanding at September 30, 2003 and adjusted for the deficit fund balance of $1,032,805 in the related Debt Service Fund. The various special obligation and revenue bonds are secured by pledges of specific revenue sources in accordance with their bond indentures. Their bond resolutions require that sufficient funds be available in reserve accounts to meet the largest debt service requirement in any ensuing fiscal year or that a surety bond be obtained in lieu of the reserve account. Loans obtained from the Sunshine State Governmental Financing Commission require a particular revenue pledge or a covenant to budget and appropriate non -ad valorem revenues. The City must maintain certain debt ratio requirements as specified under this loan requirement. The City believes it is in material compliance with its financial debt covenants. F. Escrow Agreement On March 17, 1997, an agreement was entered into by and among an Escrow Agent, the Oversight Board, acting through its committee Fiscal Sufficiency Advisory Board, and the City. The agreement directs the Escrow Agent to establish two (2) escrow accounts, and maintain appropriate balances to ensure the timely payment of debt service on outstanding General Obligation and Revenue Bonds. The City made an initial deposit of $9,700,000 with the escrow agent on March 17, 1997 to cover its debt service requirements on the General Obligation Bonds. The City has agreed that certain ad valorem tax revenues received will be deposited each month into the escrow account in an amount specified by the underlying agreement. If the ad valorem taxes received in any month are inadequate to make the required deposit, the City must use other sources of funds to supplement the required deposits. Also, the City made an initial deposit of approximately $5,000,000 with the Escrow Agent on March 17, 1997 to cover its debt service requirements on the Special Obligation Bonds and Loans. The City has agreed to deposit revenues each month in amounts specified in the underlying agreement. G. Long -Term Debt Authorized But Not Issued On November 13, 2001, a referendum election was held and the voters approved the issuance of $255,000,000 of Limited Ad Valorem Tax Bonds. As of September 30, 2003, the City has issued $153,186,405 of the approved bonds. H. Defeasance of Long -Term Debt In prior years, the City defeased certain outstanding general obligation, special obligation and revenue bonds. For those defeasances involving advance refundings, the proceeds of the new bonds were placed in an irrevocable trust to provide for all future debt service payment on the old bonds. At September 30, 2003, the following outstanding bonds are considered defeased: 46 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS Prior Years' Defeased Debt: $6,500,000 Special Obligation Bonds, Series 1989: Guarantee Entitlement Bonds $ 2,905,000 $4,290,000 Special Obligation Bonds, Series 1986-A: Housing Bonds $ 1,065,000 $22,000,000 Special Obligation Non -Ad Valorem Revenue Bonds, Series 1995: City Administration Building $15,765,000 $18,000,000 Special Obligation Non -Ad Valorem Revenue Bonds, Series 1994 Risk Management $12,095,000 $16,135,000 General Obligation Bonds Refunding Bonds, Series 1991 Sanitary Sewer $ 565,000 $10,000,000 General Obligation Bonds Refunding Bonds, Series 1992 Storm Sewer $ 7,380,000 $22,500,000 General Obligation Bonds Refunding Bonds, Series 1995 Sanitary Sewer $21,900,000 Total Prior Defeased Debt: $61,675,000 Current Years' Defeased Debt: $31,860,000 General Obligation Bonds Refunding Bonds, Series 1993: Storm & Sanitary Sewer $19,225,000 Total Current Defeased Debt: $19,225,000 Grand Total $80,900,000 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS I. Discretely Presented Component Units Long -Term Debt MSEA The changes in the general long-term obligations for MSEA for the year ended September 30, 2003 are summarized as follows: Balance, October 1, 2002 Principal Payments Balance, September 30, 2003 Due Within One Year 2004 $ 2005 2006 2007 2008 2008 - 2012 2013 - 2017 2018 - 2020 Series 1992A Principal Interest 1,040,000 1,110,000 1,180,000 1,260,000 1,335,000 6,230,000 12,780,000 8,075,000 $ 1,977,033 1,903,495 1,825,320 1,747,830 1,665,728 5,733,644 5,111,266 526,132 Special Obligation Refunding Bonds Series 1992A and 1992B $ 36,395,000 (1,740,000) $ 34,655,000 $ 1,835,000 Series 1992B Principal Interest Total $ 795,000 $ 850,000 108,981 $ 3,921,014 56,313 3,919,808 3,005,320 3,007,830 3,000,728 11,963,644 17,891,266 8,601,132 $ 33,010,000 $ 20,490,448 $ 1,645,000 $ Range of Rates 5.75%-7.2% 165,294 $ 55,310,742 2.95 %-6.625 % CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS DOSP The City has issued revenue bonds on behalf of DOSP. The principal and interest of the revenue bonds are payable solely from the revenues of the parking facilities and, accordingly, are included in the accounts of DOSP. DOSP's long-term debt activity during 2003 was as follows: Series 1998 Balance, October 1, 2002 $ 11,755,000 Principal payments (635,000) Balance, September 30, 2003 $ 11,120,000 Due Within One Year $ 655,000 Bonds payable as of September 30, 2003 also include an unamortized deferred loss on the advance refunding of the series 1992A bonds of approximately $65,000. The following summarizes the debt service to maturity of outstanding debt at September 30, 2003: Principal Interest Total 2004 $ 655,000 $ 503,000 $ 1,158,000 2005 685,000 476,000 1,161,000 2006 710,000 448,000 1,158,000 2007 740,000 419,000 1,159,000 2008 770,000 387,000 1,157,000 2009-2013 4,380,000 1,381,000 5,761,000 2014-2018 3,180,000 255,000 3,435,000 Total 11,120,000 3,869,000 14,989,000 Current Portion (655,000) (503,000) (1,158,000) Total debt $ 10,465,000 $ 3,366,000 $ 13,831,000 Range of Rates 3.75%-5.25% In prior years, DOSP defeased, in substance, its Parking Facilities Revenue Bonds 1993A and at September 30, 2003, the outstanding balance of defeased bonds was $7,800,000. Bonds payable as of September 30, 2003 include an unamortized deferred loss on the advanced refunding of the Series 1992A bonds of approximately $65,000. Balance Balance 9/30/2002 Additions Reductions 9/30/2003 Bonds payable $ 11,778,000 $ 13,000 $ (635,000) $ 11,156,000 Total long-term liabilities $ 11,778,000 $ 13,000 $ (635,000) $ 11,156,000 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS NOTE 9. - SELF-INSURANCE A. Risk Management The City is self insured for its liability program subject to, and in accordance with, the limitations set forth by Florida Statutes 768.28. The City has in place a commercial property program providing blanket real estate and personal property coverage on all City owned properties. There has not been a significant reduction in insurance coverage from the previous year. Settled claims have not exceeded reserves in the past three years. The General Fund accounts for all risks of loss to which the City is exposed, including public liability, property and casualty, and employee health and accident related losses. Claims expenditures and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated based on an independent actuarial valuation. Liabilities include an amount for claims that have been incurred but not reported. The process used in computing claims liability does not necessarily result in an exact amount because actual claims liabilities depend on such complex factors as inflation, changes in legal doctrines, and damage Fiscal Year Ended September 30, 2002 2003 B. Group Accident and Health Beginning of Fiscal Year Liability $ 88,200,355 82,527,448 awards. Claims liabilities are reevaluated periodically to take into consideration recently settled claims, frequency of claims, and other economic and social factors. The City maintains excess coverage with independent insurance carriers for the worker's compensation, police torts, auto liability, public officials liability, and general liability self-insurance programs. Premiums are charged to the Risk Management Department and are determined based on amounts necessary to provide funding for current losses and to meet the required annual payments during the fiscal year. The property insurance program provides coverage for windstorm and hail subject to a 5% deductible with no cap; multiple Loss limits apply. At September 30, 2003, the total estimated liability of $82,527,448 is discounted at an interest rate of 5% and recorded on the government -wide financial statements. Changes in claims liability amount in 2002 and 2003 were: Current Year Claims And Changes In estimates $ 15,119,019 17,316,124 Certain employees and retirees of the City contribute, through payroll deductions or deductions from pension payments, to the cost of group benefits. The remainder of the funds necessary are contributed by the City based upon the number of participants in the plan. As of September 30, 2003, the plan covered approximately 2,075 active employees, 1,030 retirees and 1,886 employee - retiree dependent units. Costs of the plan for the Claims Payments $ 20,791,926 17,316,124 Balance At Fiscal Year End $ 82,527,448 82,527,448 year then ended were approximately $24,861,000. The liability for the group accident and health program totaled approximately $3,176,000 at September 30, 2003 and is included in claims payable in the government -wide Statement of Net Assets. 50 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS NOTE 10. - PENSIONS A. Pension Plans The City sponsors two separate single employer defined benefit contributory pension plans under the administration and management of separate Boards of Trustees: The City of Miami Fire Fighters' and Police Officers' Retirement Trust ("FIPO") and the City of Miami General Employees and Sanitation Employees' Retirement Trust ("GESE"). The plans cover substantially all City employees who contribute a percentage of their base salary or wages on a bi-weekly basis. The City's elected officials participate in a single employer defined benefit non-contributory pension plan under the administration and management of a separate Board of Trustees, the City of Miami Elected Officers' Retirement Trust ("EORT"). This plan covers all elected officials with 7 or more years of elected service. The financial statements for all three Pension Plans are prepared using the accrual basis of accounting. Trust member's contributions for FIPO and GESE are recognized in the period which the contributions are due. Employer contributions are recognized when due. Benefits and refunds are recognized when due and payable in accordance with the terms of the plans. The payroll for employees covered by FIPO, GESE and EORT for the year ended September 30, 2003 was approximately $100.5 million, $72.6 million and $313 thousand, respectively; the City's total payroll was $214,334,929. At October 1, 2003, the date of the most recent actuarial valuation, membership in the FIPO, GESE and EORT consisted of the following: FIPO ( F EORT Retirees and berrficiaries ciurenity receiving benefits and terrrinated employees entitled to benefits but not yet receiveing them 1,495 1,926 5 Glued Employees 1,62? 1,565 6 Total Members 3,117 3,491 11 On or after October 4, 1991, and before January 9, 1994, FIPO Plan benefits were 2.75% of average final compensation for each year of creditable service. Since January 9, 1994, benefits are based on 3.0% of average final compensation for each year of creditable service for the first 15 years of creditable service and 3.5% of average final compensation for years of creditable service in excess of 15 years. Retirement benefits under the GESE Plan are generally based on 3.0% of the average final compensation for each year of creditable service. Provision for additional benefits for longevity are available. Early retirement after twenty years of service is available. Benefits for disability and death are also provided under the plans. Under the EORT Plan, eligibility requires 7 years of total service as an elected official of the City of Miami to be vested without requiring that such service be continuous. Benefits accrue for City Commissioners at the rate of 50% of the highest annual W-2 wages in the last three years of employment after 7 years of service as an elected official of the City plus 5% for each additional year up to 75% at 12 years of service. The Mayor's salary for pension calculations is limited to the base salary before additional taxable benefits (i.e., expense allowance, mobile phone allowance, automobile allowance, and term life insurance greater than $50,000). An active participant will be fully vested upon death and a single sum death benefit is payable. City employees in the FIPO Plan are required to contribute 7% of their salary and employees in the GESE Plan are required to contribute 10% of their salary. The EORT Plan is a non-contributory plan. 51 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS Contributions from employees are recorded in the period the City makes payroll deductions from participants. The City is required to contribute such amounts annually as necessary on an actuarial basis to provide FIPO and GESE with assets sufficient to meet the benefits to be paid. Contributions to FIPO and GESE are authorized pursuant to City of Miami Code Sections 40.196 (a) and (b) and 40.241 (a) and (b), respectively. Contributions to the FIPO Cost of Living Adjustment Accounts are authorized pursuant to Section 40.204 of the City of Miami Code. Contributions to EORT are authorized pursuant to Section 40.291 of the City of Miami Code. In Fiscal 2000, the City of Miami Commission, pursuant to applicable Internal Revenue Code provisions, established qualified governmental excess benefit plans to continue to cover the difference between the allowable pension to be paid, and the amount of the defined benefit, so the benefits for eligible members (GESE, FIPO and EORT) are not diminished by changes in the Internal Revenue Code. The Board of Trustees for GESE and FIPO and the Plan EORT Fiduciary, administers the excess benefit plan for each respective pension group. The FIPO plan also has a Cost of Living Adjustment (COLA) program for its members. Effective January 1, 1994, the FIPO Trust entered into an agreement with the City with regards to the funding methods, employee benefits, employee contributions and retiree COLA. Members no longer contribute to the original COLA account (COLA I); a new COLA account (COLA II) was established. The agreement included the following: (a) the funding method was changed to an aggregate cost method, (b) all accounts were combined for investment purposes (membership and benefit, COLA I, and COLA II), (c) retirees receive additional COLA benefits, and (d) active members no longer contribute 2% of pretax earnings to fund the original retiree COLA account (COLA I). The COLA II account is funded annually by a percentage of the excess investment return from the COLA I account assets. The excess earnings contributed to the COLA II account are used to fund a minimum annual payment of $2.5 million, increasing by 4% compounded annually. To the extent necessary, the City will fund the portion of the minimum annual payment not funded by the annual excess annual earnings no later than January 1 of the following year. Benefits payable from the COLA accounts are computed in accordance with an actuarially based formula as defined in Section 40.213 of the City of Miami Code. Benefits are subject to review and modification in accordance with City of Miami Code Section 40.213, which provides that all other matters regarding the COLA accounts shall be determined by negotiations between the City, the Board of Trustees and the bargaining representatives of the International Association of Fire Fighters (IAFF) and the Fraternal Order of Police (FOP). FIPO members who are eligible for service retirement of Rule of 64 after September 1998 may elect to enter the Deferred Retirement Option Plan (DROP) for a maximum of 36 months prior to October 1, 2001. Effective October 1, 2001, maximum participation in the DROP for firefighters shall be 48 full months and for police officers who elect DROP on October 1, 2003, or thereafter, maximum participation in the DROP shall be 48 full months. A member's creditable service, accrued benefit and compensation calculation is frozen upon commencement of participation in the DROP; the participant's and City's contribution to the FIPO Trust for that participant ceases as the participant will not earn further creditable service for pension purposes. Effective October 1, 2001, firefighter DROP participants may also continue City employment for up to 48 months (36 months prior to October 1, 2001). Police officers who elect DROP on or after October 1, 2003, may continue City employment for up to 48 full months (36 full months prior to October 1, 2003). No payment is made to or for the benefit of a DROP participant 52 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS beyond that period. For persons electing participation in the DROP, an individual DROP account is created. Payment is made by the FIPO Trust into the employee's DROP account in an amount equal to the regular monthly retirement benefit, which the participant would have received had the participant separated from service and commenced receipt of pension benefits. Payments received by participants in the DROP accounts are tax deferred. A series of investments vehicles, as established by FIPO's board of trustees, are made available to DROP participants to choose from. Any losses, charges, or expenses incurred by the participant in his or her respective drop account are borne solely by the participant. Upon termination of employment, a member may receive distribution from the DROP account in the following manner: 1) lump sum, 2) periodic payments, 3) annuity, or 4) rollover of the balance to another qualified retirement plan. Any member may defer distribution until the latest date authorized by Section 401(a)(9) of the Internal Revenue Code. DROP participants are not entitled to receive an ordinary or service disability retirement and in the event of death of a DROP participant, there is no accidental death benefit for pension purposes. DROP participation does not affect any other death or disability benefit provided to a member under federal law, state law, City ordinance, or any rights or benefits under any applicable collective bargaining agreement. The DROP of the FIPO Trust also consists of a Benefit Actuarially Calculated DROP (BACDROP). A member may elect to BACDROP to a date no further than the date of their retirement eligibility date. The BACDROP period must be in 12 months increments, beginning at the start of a pay period, not to exceed 48 full months for firefighters (36 months prior to October 1, 2001) and for police officers who elected DROP on October 1, 2003 (36 months prior to October 1, 2003). Participation in the BACDROP does not preclude participation in the forward DROP. The City of Miami General Employees' and Sanitation Employee's Retirement Trust made the DROP available to all Retirement Trust members effective May 1, 2002. The DROP is an enhancement to the GESE Retirement Trust that can provide a trust member with another way to save for retirement. It allows a participant to receive pension payments by depositing them into the DROP program while continuing to work and receive pay and benefits as an active employee. At the end of the DROP period, when the participant is officially required to retire, the participant receives monthly pension payments based on the years of service and salary at the time that the participant enrolled in the DROP. In addition, the participant also receives the accumulated DROP account balance. The DROP monies can also be rolled over into a tax -qualified plan such as an Individual Retirement Account (IRA) or 457(b) government sponsored deferred compensation plan that agrees to separately account for the rollover contribution. 53 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS The following table provides information concerning funding policies for FIPO, GESE and EORT: FIPO: Valuation date. Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Investment rate of return Salary increases: Inflation Merit, longevity, etc Mortality table Mortality, disability, retirements and turnover GESE: Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Investment rate of return Projected salary increases Includes inflation at Cost of living adjustments EORT: Valuation date. Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Investment rate of return Salary increases: Inflation Merit, longevity, etc Mortality table Disability, turnover and retirements October 1, 2001 (Revised) Aggregate Cost Method (this method does not identify or separately amortize unfunded actuarial liabilities) Not applicable under Aggregate Cost Method Not applicable under Aggregate Cost Method Average of ratios of market book values as of current and most recent September 30's. Average ratio is applied to book value at current September 30. The result cannot be greater than 120% or less than 80% of market value 7.75% 4.00% 5.1 % to 0% reducing by attained age Ga94 - Mortality table changed for current year Pension Benefit Guaranty Corporation ("PBGC") Non-OASDI basis rate tables October 1, 2002 Modified entry age normal Level dollar amount, closed 28 3 year smoothed market value of assets 8.1% 5.75% 3.5% 4% per year with $54 per year minimum and $400 per year maximum December 31, 2002 Individual Aggregate Cost Method (does not identify or separately amortize unfunded actuarial liabilities) Not applicable under Individual Aggregate Cost Method Not applicable under Individual Aggregate Cost Method Market Value 6.0% N/A N/A Ga94 - no pre -retirement mortality was assumed No disability or turnover assumed. Retirement is assumed at the end of the current term or 100% vested 54 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS B. Actuarially Determined Contribution Requirements and Contributions Made The funding policy for FIPO, GESE and EORT provides for periodic employer contributions at actuarially determined rates that, expressed as percentages of annual covered payroll, are sufficient to maintain the actuarial soundness of the plans and to accumulate sufficient assets to pay benefits when due. Significant actuarial assumptions used to compute the contribution requirements are described in the funding policy above. FIPO Contributions are determined applying the actuarially calculated aggregate cost method. The actuarial valuation of the Trust at October 1, 2000, for the fiscal year ended September 30, 2001 utilized an assumed investment rate of return of 7.625%. This resulted in a minimum required contribution of approximately $6,400,000. The City disputed the aforementioned assumption and had subjected it to arbitration. In compliance with the Trust ordinance, the City had contributed $5,400,784, the same amount as in the prior year, which would satisfy the September 30, 2001 required contribution until the issue was resolved. The contribution made to the trust pertaining to the year ending September 30, 2002 was also $5,400,784. The arbitration was subsequently resolved and the revised actuary valuation reports at October 1, 1999, 2000, 2001 were issued by the Trust's actuary. The revised rate of return of 7.75% resulted in an over funding of the City's annual required contributions of $1,371,422 and $4,907,022, for the fiscal years ended September 30, 2001 and 2002, respectively. Accordingly, a net pension asset of $6,278,444 and $3,382,512, for fiscal years ended September 30, 2002 and 2003, respectively, has been reported in the government - wide Statement of Net Assets. The annual required contribution for fiscal year 2003 of $18,163,588 was reduced by $3,139,222. The interest earnings attributable to the NPO were $243,290 (or 7.75%), which resulted in a net reduction to the NPO of $2,895,932. GESE GESE contributions are determined using the entry age normal cost method with frozen actuarial accrued liability. For the year ended September 30, 2003, contributions totaling $3,985,926 ($3,602,457 for the GESE Trust and $383,469 for the Excess Benefit Plan) was made in accordance with actuarially determined contribution requirements, . based on an actuarial valuation performed as of October 1, 2002. EORT Contributions are determined applying the actuarially calculated aggregate cost method. For the year ended September 30, 2003, contributions totaling $265,287 ($82,447 for the EORT Trust Plan and $182,840 for the Excess Benefit Plan) was made in accordance with actuarially determined contribution requirements, based on an actuarial valuation performed as of December 31, 2002. 55 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS The following represents condensed financial information for EORT: As of September 30, 2003 Assets Cash and Short Term Investments $ 175 Investments, at fair value 1,847,383 Total Assets $ 1,847,558 For the Year Ended September 30, 2003 Total Additions $ 293,773 Total Deductions 152,256 Change in Net Assets $ 141,517 C. Trend Information Trend information indicates the progress made in accumulating sufficient assets to pay benefits when due. An analysis of funding progress for the fiscal ended September 30, 2003 is a follows: Net Pension Year Ended Annual Required Percentage Obligation September 30, Contribution Contributed (Asset) FIPO 2003 $ 18,163,588 83% $ (3,382,512) 2002 1,051,629 514 (6,278,444) 2001 4,008,892 135 (1,371,422) 2000 5,400,784 100 1999 10,376,473 100 1998 14,155,472 100 GESE 2003 3,602,457 100 2002 2,090,701 100 2001 8,458,735 100 2000 8,216,415 100 1999 - 100 1998 12,617,377 100 EORT 2003 82,447 100 2002 82,447 100 - 2001 220,837 236 270,902 2000 449,086 111 451,159 1999 233,038 309,384 1998 145,053 250,738 56 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS D. Budget Advance From City Certain administrative costs of the FIPO and GESE Trusts are paid directly by the Pension Trusts from budget advance monies provided by the City. The Trusts provide the City with an accounting of how these funds are expended during the period. Deficits are funded by the City with any excess applied towards the following year together with the budget advance for that year. Funding for such administrative costs for the year ended September 30, 2003 is as follows: FIPO GESE Funding provided by the City - current year $ 1,793,303 $ 2,226,316 Budget advance (deficit)- beginning of year Administrative costs incurred, including custodian and consultants' fees, personnel and other office expenses (461,297) (990,791) 1,332,006 1,235,525 1,422,383 1,884,961 Budget deficit - end of year $ (90,377) $ (649,436) Since the above administrative costs are fully funded by the City, they are not record in the administrative expenses set forth in the fiduciary fund statements of Changes in Fiduciary Net Assets. E. Retirement Systems Financial Statements The FIPO and GESE Retirement Systems are audited separately; complete financial statements can be obtained at the following offices: FIPO, 1895 SW 3rd Avenue, Miami, FL 33129 GESE, 1000 Brickell Avenue, Suite 1010, Miami, FL 33131 EORT, does not issue stand-alone audited financial statements. 57 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS F. Special Benefit Plans Certain executive employees of the City are allowed to join the ICMA Retirement Trust's 401(a) plan. This defined contribution deferred compensation plan, which covers governmental employees throughout the country, is governed by a Board of Directors responsible for carrying out the overall management of the organization, including investment administration and regulatory compliance. Membership for City employees is limited by the City Code to specific members of the City Clerk, City Manager, and City Attorney's offices, Department Directors, Assistant Directors, and other executives. To participate in the plan a written trust agreement must be executed, which requires the City to contribute 8% of the individual's earnable compensation, and the employee to contribute 10% of their salary. Participants may withdraw funds at retirement or upon separation based on a variety of payout options. The following information relates to the City participation in this plan: Total current year's payroll for all employees $214,334,929 Current year's payroll for participating employees $3,990,664 Current year employer contributions $384,732 In addition to coverage under the FIPO Pension Plan, City of Miami fire fighters and police officers are members of two separate non-contributory money purchase benefit plans established under the provisions of Florida Statutes, Chapters 175 and 185, respectively. These two plans are funded solely from the proceeds of certain excise taxes levied by the City and imposed upon property and casualty insurance coverage within the City limits. This tax, which is collected from insurers by the State of Florida, is remitted directly to the plans' Boards of Trustees. The City is entitled to levy such excise taxes solely for the use of the money purchase benefit plans as long as the minimum benefit provisions of Florida Statutes, Chapters 175 and 185 are met by F1PO. The City is currently under no obligation to make further contributions to the plans. The total of such excise taxes received from the State of Florida and remitted to the plans was $9,441,555 for the year ended September 30, 2003. Accordingly these monies are recorded as pass through funds in the City's financial statements. Benefits are allocated to the participants based upon their service during the year and the level of funding received during said year. Participants are fully vested after nine years of service. Upon termination of service, a participant may elect to receive one of three options: 1) a lump sum payment, 2) five substantially equal payments, or 3) 10% or more in the first year and the remainder in any way over the next four years. The total must be paid out within five years. NOTE 11. - POST -EMPLOYMENT HEALTH CARE BENEFITS In addition to providing pension benefits, the City offers to its retiree's comprehensive medical coverage and life benefits through the City's self- insurance plan. This plan was established in accordance with Florida State Statute Section 112.0801 "Group Insurance: Participation by Retired Employees". Substantially all of the City's general employees and firefighters may become eligible for those benefits when they reach normal retirement age while working for the City (approximately 1,030 of the 3,105 covered participants are retirees). The City's cost of the post -employment health benefits, funded on a pay-as-you-go basis, was approximately $8,247,000 for the year ended September 30, 2003. The Fraternal Order of Police (FOP) sponsors a Health Insurance Trust that is partially self -insured, which provides life, health, and accidental death and dismemberment insurance to substantially all full- time sworn members of the City of Miami Police Department, eligible retirees, their families and beneficiaries. The Trust receives a significant source of its funding from the City, pursuant to the terms of a collective bargaining agreement. The agreement requires the City to reimburse the FOP Health Trust an amount that is required to bring the Trust's available fund balance to $2.35 million. The City funded its contribution under terms of the agreement in the amount of $1,794,503 for the current year. 58 CITY OF MIAMI, FLORIDA NOTES TO FINANCIAL STATEMENTS NOTE 12. - SUMMARY DISCLOSURE OF SIGNIFICANT CONTINGENCIES A. Litigation The City is subject to various disputes, legal proceedings and labor relations claims, which arise in the normal course of its operations. In the opinion of management, the liability with respect to these activities will not be material to the City's financial position. On July 11, 2001, the Third District Court of Appeals ruled that the parking surcharge statute was unconstitutional. The City has appealed the ruling to the Florida Supreme Court who has upheld the ruling of the lower court. The legislature has approved a bill that has been signed by the Governor that amends the parking surcharge statute and eliminates the constitutional problem that the court found. This bill became law on November 30, 2001. A tentative settlement has been reached in this action that calls for a refund of amounts paid by users of parking services in Miami. The settlement amount totaled $14 million and is recorded as a liability in the accompanying government -wide Statement of Net Assets and governmental fund Balance Sheet. A final fairness hearing to validate the settlement has been scheduled in April 2004. At September 30, 2003, the City had in process various uncompleted construction projects with remaining balances totaling $13,650,842. Funding of these projects is to be made primarily through the proceeds of the related bond issues, loans and future taxes. The City participates in a number of Federal and State assisted programs. These programs are subject to audit under the requirements of the Single Audit Act Amendment of 1996 and Chapter 10.650, Rules of the Auditor General. The City anticipates no material adverse findings. 59 This page intentionally left blank 60 City of Miami, Florida Budgetary Comparison Schedule General Fund For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) Resources (inflows): Property Taxes $ 142,881,576 $ 142,881,576 $ Franchise Fees and Other Taxes 31,912,242 31,912,242 Licenses and Permits 19,855,412 19,855,412 Fines and Forfeitures 4,077,600 4,077,600 Intergovernmental Revenues 33,858,106 43,299,661 Charges for Services 78,442,680 78,442,680 Interest 9,505,000 9,505,000 Other 3,912,526 3,912,526 Transfer from Other Funds 45,726,098 50,142,352 Amounts Available for Appropriation 370,171,240 384,029,049 Charges to Appropriations (outflows): General Govemment Planning and Development Public Works Public Safety Public Facilities Parks and Recreation Transfer to Other Funds Total Charges to Appropriations Excess (Deficiency) of Resources Over Charges to Appropriations 77,304,724 79,433,807 8,975,394 9,047,648 52,214,134 54,536,953 187,154,741 200,913,144 5,647,576 5,593,854 12,584,290 12,589,188 43,237,205 44,237,527 387,118,064 406,352,121 (16,946,824) (22,323,072) Fund Balance Allocation 16,946,824 139,604,223 $ 31,556,387 21,469,973 5,049,412 44,071,524 86,182,827 7,280,372 26,011,219 51,282,877 (3,277,353) (355,855) 1,614,561 971,812 771,863 7,740,147 (2,224,628) 22,098,693 1,140, 525 412,508,814 28,479,765 70,818,156 8,847,307 50,972,638 199,037,897 5,253,989 12,601,390 44,130, 853 8,615,651 200,341 3,564,315 1,875,247 339,865 (12,202) 106,674 391,662,230 14,689,891 20, 846, 584 43,169,656 22,323,072 - (22,323,072) Excess (Deficiency) of Resources Over Charges to Appropriations $ - $ - $ 20,846,584 $ 20,846,584 Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 412,508,814 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. (22,323,072) Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. (51,282,877) Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 338,902,865 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ 391,662,230 Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. (1,810,971) Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. (44,130,853) Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 345,720,406 The accompanying notes are an integral part of the required supplementary information. 61 City of Miami, Florida Budgetary Comparison Schedule Community Development For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) Resources (inflows): Intergovernmental Revenues $ 44,779,890 $ 44,779,890 $ 30,425,562 $ (14,354,328) Charges for Services - 3,523,209 3,523,209 Interest 159,644 159,644 Other 24,317,796 24,317,796 Amounts Available for Appropriation 44,779,890 44,779,890 58,426,211 13,646,321 Charges to Appropriations (outflows): Community Development Transfer to Other Funds Total Charges to Appropriations Excess (Deficiency) of Resources Over Charges to Appropriations 65,437,793 65,437,793 3,136,331 32,025,868 3,136,331 3,3 85,477 68,574,124 68,574,124 (23,794,234) (23,794,234) Fund Balance Allocation 23,794,234 33,411,925 (249,146) 35,411,345 33,162,779 23,014, 866 46, 809,100 23,794,234 (23,794,234) Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ 23,014,866 $ 23,014,866 Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 58,426,211 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. (23,794,234) Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 34,631,977 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ 35,411,345 Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. (3,385,477) Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 32,025,868 The accompanying notes are an integral part of the required supplementary information. 62 Resources (inflows): Franchise Fees and Other Taxes Amounts Available for Appropriation Charges to Appropriations (outflows): Transfer to Other Funds Total Charges to Appropriations City of Miami, Florida Budgetary Comparison Schedule Public Services Tax For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) $ 56,299,393 $ 60,715,647 $ 57,864,240 $ (2,851,407) 56,299,393 60,715,647 57,864,240 (2,851,407) 56,299,393 56,299,393 60,715,647 60,715,647 60,715,647 60,715,647 Excess (Deficiency) of Resources Over Charges to Appropriations (2,851,407) (2,851,407) Fund Balance Allocation Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ (2,851,407) $ (2,851,407) Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 57,864,240 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 57,864,240 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ 60,715,647 Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. (60,715,647) Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ The accompanying notes are an integral part of the required supplementary information. 63 CITY OF MIAMI, FLORIDA NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION SEPTEMBER 30, 2003 NOTE 1. - BUDGETARY POLICY A. BUDGET POLICY The City Commission annually adopts an operating budget ordinance for all governmental funds of the City, except for the Capital Projects Funds. Capital Project Funds are budgeted on a total project basis for which annual budgets are not available. For governmental funds, budgets are prepared using the modified accrual method. For the proprietary fund, the budget is prepared on a basis consistent with accounting principles generally accepted in the United States of America based upon estimates of revenue and expenses for the upcoming fiscal year. B. BUDGET -LEGAL COMPLIANCE The City follows these procedures in establishing the budgetary data reflected in the accompanying financial statements: - Prior to August 31st, the City Manager submits to the City Commission a proposed operating budget by fund, except for the General Fund, which is at the departmental level, for the fiscal year commencing the upcoming October 1st. The operating budget includes proposed expenditures and the means of financing them. - The Mayor prepares and delivers a budgetary address annually to the people of the City between July 1st and September 30th Such report is prepared after consultation with the City Manager. - Public hearings are conducted to taxpayer comments. obtain - Prior to October 1st, the budget is legally enacted through the passage of an ordinance and adoption of the budget report. - Management may not make changes to the adopted budget without the approval of a majority vote of the Commission. - The Commission may transfer among departments any part of an unencumbered balance of an appropriation to a purpose for which an appropriation for the current year has proved insufficient. At the close of each fiscal year, the unencumbered balance of each appropriation reverts to the fund from which it was appropriated and is subject to future appropriations. - Budgets are monitored at varying levels of classification detail, however, budgetary control is legally maintained at the fund level except for the General Fund, which is maintained at the departmental level. All budget amendments require City Commission approval. During Fiscal 2003, supplemental appropriations totaling $19,234,057 and $4,416,254 in the General Fund and Public Services Tax, respectively, were required to recognize unanticipated revenue including the award of federal and state grants and to provide funding for unanticipated program requirements. 64 City of Miami, Florida Pension Trust Funds Schedule of Funding Progress (a) (Dollar Amounts in Thousands) Actuarial Valuation Date FIPO(b,d): 10/01/02 10/01/01 10/01/00 10/01/99 10/01/98 10/01/97 GESE(c): 10/01/02 10/01/01 10/01/00 10/01/99 10/01/98 10/01/97 (2) (1) Actuarial Actuarial Accrued Value of Liability Assets (AAL) N/A N/A 828,900 884,700 994,600 823,100 932,800 820,200 857,700 774,500 835,300 702,100 561,300 617,800 597,100 579,400 594,800 577,700 539,000 571,100 522,900 557,300 505,400 471,100 EORT(e): 10/01/02 1,826 1,579 10/01/01 1,148 1,419 10/01/00 657 1,108 10/01/99 652 962 10/01/98 509 760 10/01/97 230 628 Unfunded (Overfunded) AAL (2) - (1) Funded Ratio (1)/(2) N/A N/A % 55,800 (171,500) (112,600) (83,200) (133,200) 94 121 114 111 119 (3) Covered Payroll N/A $ 89,700 84,300 77,700 74,300 69,600 56,500 91 70,400 (17,700) 103 66,700 (17,100) 103 63,800 32,100 94 59,100 34,400 94 55,100 (34,300) 107 52,000 (247) 116 271 81 451 59 310 68 251 67 398 37 237 228 249 300 164 124 Unfunded (Overfunded) as a Percentage of Covered Payroll ((2)-(1))/(3) N/A % 62 (203) (145) (112) (191) 80 (27) (27) 54 62 (66) (104) 119 181 103 153 321 a. For information regarding pension contribution percentage rates, assumptions, amortization, method (See Note 10). b. Aggregated Cost Method c. Entry Age Normal Actuarial Accrued Liability d. Actuary calculations will be available after March 5, 2004. e. Individual Aggregated Cost Method 65 This page intentionally left blank 66 Nonmajor Governmental Funds (continued) SPECIAL REVENUE FUNDS Special Revenue Funds are used to account for special revenues that are legally restricted to expenditures for particular purposes. Community Redevelopment Agency (ORA) - To account for revenues and expenditures to be used for general operations in the defined Community Redevelopment Area. Community Redevelopment Agency (SEOPW) - To account for revenues and expenditures to be used for special operations in the defined Community Redevelopment Area. Convention Center - To account for the operations of the City of Miami/ University of Miami James L. Knight International Center and Parking Garage. Economic Development & Planning Services - To account for the operations of the Economic Development & Planning Services. Rescue Services - To account for the proceeds of an excise tax that is restricted to expenditures which supplement the City's emergency Fire Rescue Operations. Net Offices - To account for the operations of the City of Miami's Neighborhood Enhancement Teams (Net Offices). Parks & Recreation Services - To account for the operations of the Parks & Recreation Services. Police Services - To account for the proceeds of various grants from Local, State, and Federal Agencies. 67 Nonmajor Governmental Funds (continued) SPECIAL REVENUE FUNDS Law Enforcement Fund - To account for confiscated monies awarded to the City for law enforcement related expenditures as stipulated by State Statutes. Public Works - To account for the proceeds granted from Local and State Agencies. City Clerk Services - To account for the operations of the Passport Facility, Municipal Archives & Records, and related Program. Local Gas Option Gas Tax - To account for the local option gas tax levied on the purchases of gasoline. Stormwater Utility Fund — To account for all the fees and charges collected for the operation and maintenance of the stormwater management system and the funding of pollution abatement devices of said system. Department Improvement Initiatives - To account for the funds designated for City of Miami initiatives related to quality of life and technology. Transportation and Transit - To account for the operations of the City of Miami's transit and transportation projects. Gusman and Olympia - To account for the activities of the Gusman and Olympia Facilities. 68 Nonmajor Governmental Funds (continued) DEBT SERVICE Debt Service Funds are used to account for the accumulation of resources, payment of general obligation bond principal, interest from government resources, special obligation bond principal and interest from pledged revenues when the government is obligated in some manner for the payment. General Obligation Bonds - To account for monies for payment of principal, interest, and other costs related to various issues of long -terra general obligation bonds. Debt Service is financed primarily by an ad valorem tax. Other Special Obligation Bonds — To account for monies for payment of principal, interest, and other costs related to various special bonds and loans. CRA Other Special Obligation Bonds — To account for monies for payment of principal, interest, and other costs related to various special bonds and loans. 69 Nonmajor Governmental Funds (continued) CAPITAL PROJECT FUNDS Capital Projects Funds are used to account for the acquisition and construction of major capital facilities. Community Redevelopment Agency - To account for the acquisition or construction of major capital facilities for community redevelopment in the defined Community Redevelopment Area. Public Safety - To account for the acquisition or construction of major capital facilities that support the City of Miami's Police and Fire operations. Street and Sidewalks - To account for expenditures made for street, sidewalks, and other traffic related projects. Sanitary Sewers - To account for expenditures for the construction of sanitary sewers. Storm Sewers - To account for expenditures for the construction of storm sewers. Solid Waste - To account for the acquisition of equipment or facility maintenance associated with the collection and removal of solid waste. Public Facilities - To account for the acquisition or construction of major capital facilities for public use such as marinas and stadiums. Parks and Recreation - To account for the acquisition, rehabilitation, or construction of major capital facilities for cultural and recreational activities such parks, elderly and youth day care centers. Disaster Recovery - To account for revenue received from the Federal Emergency Management Agency, insurance and other agencies as reimbursements for citywide disasters in the areas of debris removal, roads and bridges, buildings and equipment, parks, marinas, stadiums and other measures of relief. 70 This page intentionally left blank 71 City of Miami, Florida Combining Balance Sheet Other Governmental Funds September 30, 2003 Special Revenue Funds Economic Development Convention & Planning Fire Rescue Omni CRA SEPOW CRA Center Services Services Assets Cash, Cash Equivalents and Investments $ 1,517,572 $ 4,123,713 $ 429,363 $ 4,826,740 $ 6,231,169 Restricted Cash, Cash Equivalents and Investments - - 449,997 - - Receivables (Net of Allowances for Uncollectibles): Accounts - 41,600 - 23,388 61 Taxes - - - - - Due From Other Governments 50,000 - - - 460,420 Accrued Interest 21,659 43,654 - 17,505 11,172 Prepaid and Other Assets - - - - - Total Assets $ 1,589,231 $ 4,208,967 $ 879,360 $ 4,867,633 $ 6,702,822 Liabilities and Fund Balances Liabilities: Accounts Payable and Accrued Liabilities $ 67,861 $ 1,159,755 $ 41,675 $ 84,820 $ 246,989 Accrued Principal - - - - - Due To Other Funds - - - - - Due To Other Governments - 50,000 - - - Due To Component Units - - - - - Deferred Revenue - 554,148 - - 753,718 Deposits - - - 361,677 - Total Liabilities 67,861 1,763,903 41,675 446,497 1,000,707 Fund Balances: Reserved for: Encumbrances 989,500 1,747,050 5,658 294,294 414,288 Debt Service - - - - - Law Enforcement - - - - - Prepaid Items - - - - - Unreserved, Reported in: Special Revenue Funds 531,870 698,014 832,027 4,126,842 5,287,827 Capital Projects Funds - - - - - Total Fund Balances 1,521,370 2,445,064 837,685 4,421,136 5,702,115 Total Liabilities and Fund Balances $ 1,589,231 $ 4,208,967 $ 879,360 $ 4,867,633 $ 6,702,822 72 Special Revenue Funds Parks & Law Local Net Recreation Police Enforcement Public Works City Clerk Option Offfices Services Services Trust Fund Services Services Gas Tax $ 187,501 $ 1,955,946 $ 6,231,196 $ 4,715,851 $ 1,331,622 $ 146,181 $ 1,252,546 - 17,778 189,392 - - - 52,654 247,303 - 632,082 29 3,809 18,102 55,884 10,150 - - - 4,101 - - - - - $ 187,530 $ 2,034,288 $ 6,685,993 $ 4,771,735 $ 1,341,772 $ 146,181 $ 1,884,628 $ 183,422 $ 110,288 $ 393,330 $ 216,892 $ $ 3,815 $ - - 1,336 - - - 889 - - 112,413 - - 184,311 111,624 393,330 329,305 3,815 - 11,451 280,058 1,363,251 516,096 296 - - - 3,926,334 - (8,232) 4,101 - 1,638,505 4,929,412 1,341,772 142,070 1,884,628 3,219 1,922,664 6,292,663 4,442,430 1,341,772 142,366 1,884,628 $ 187,530 $ 2,034,288 $ 6,685,993 $ 4,771,735 $ 1,341,772 $ 146,181 $ 1,884,628 (continued) City of Miami, Florida Combining Balance Sheet Other Governmental Funds September 30, 2003 Special Revenue Funds Department Gusman Stormwater Improvement Transportation and Utility Initiatives & Transit Olympia Assets Cash and Cash Equivalents $ 651,357 $ 3,635,894 $ 4,595,019 $ 344,983 Restricted Cash, Cash Equivalents and Investments - - - - Receivables (Net of Allowances for Uncollectibles): Accounts - - - 883,902 Taxes - - - - Due From Other Governments 1,075,350 - - - Accrued Interest - - - - Prepaid and Other Assets - - - 21,165 Total Assets $ 1,726,707 $ 3,635,894 $ 4,595,019 $ 1,250,050 Liabilities and Fund Balances Liabilities: Accounts Payable and Accrued Liabilities $ - $ 299,838 $ 3,820 $ 455,138 Accrued Principal - - - - Due To Other Funds - - - - Due to Other Governments - - - 132,917 Due To Component Units - - - 888,855 Deposits - - - - Deferred Revenue - - - 109,949 Total Liabilities - 299,838 3,820 1,586,859 Fund Balances: Reserved for: Encumbrances - 394,098 - - Debt Service - - - - Law Enforcement - - - - Prepaid Items - - - 21,165 Unreserved, Reported in: Special Revenue Funds 1,726,707 2,941,958 4,591,199 (357,974) Capital Projects Funds - - - - Total Fund Balances 1,726,707 3,336,056 4,591,199 (336,809) Total Liabilities and Fund Balances $ 1,726,707 $ 3,635,894 $ 4,595,019 $ 1,250,050 Debt Service Funds Capital Projects Funds General Other Special CRA Community Obligation Obligation Other Special Redevelopment Bonds Bonds Obligation Agency Public Safety $ $ 1,353,936 $ 137,177 $ 2,630,931 $ 15,409,499 4,362,730 11,561,942 827,826 1,095,578 - 22,615 86,484 $ 5,458,308 $ 12,915,878 $ 965,003 $ 2,653,546 $ 15,495,983 $ 3,408 $ 3,149,351 894,683 4,047,442 3 $ $ $ 241,940 236,749 1,356 15,042 1,356 493,731 1,832,364 1,410,863 12,915,878 965,003 - 2,652,190 13,169,888 1,410,866 12,915,878 965,003 2,652,190 15,002,252 $ 5,458,308 $ 12,915,878 $ 965,003 $ 2,653,546 $ 15,495,983 (continued) City of Miami, Florida Combining Balance Sheet Other Governmental Funds September 30, 2003 Capital Projects Funds Street & Sanitary Storm Solid Public Sidewalks Sewers Sewers Waste Facilities Assets Cash and Cash Equivalents $ 46,940,172 $ 25,284,056 $ 28,911,776 $ 2,580,232 $ 22,398,622 Restricted Cash, Cash Equivalents and Investments - - - - - Receivables (Net of Allowances for Uncollectibles): Accounts 10 - - - 127,497 Taxes - - - - - Due From Other Governments - - - - 229,503 Accrued Interest 222,172 142,560 101,168 - 135,351 Prepaid and Other Assets - - - - - Total Assets $ 47,162,354 $ 25,426,616 $ 29,012,944 $ 2,580,232 $ 22,890,973 Liabilities and Fund Balances Liabilities: Accounts Payable and Accrued Liabilities $ 351,945 $ 134,180 $ 419,548 $ 9,719 $ 737,512 Accrued Principal - - - - - Due To Other Funds - - - - - Due To Other Governments - 12,000 76,190 - - Due To Component Units - - - - - Deposits - - - - - Deferred Revenue - - - - - Total Liabilities 351,945 146,180 495,738 9,719 737,512 Fund Balances: Reserved for: Encumbrances 5,298,419 270,292 1,452,080 133,616 3,312,709 Debt Service - - - - - Law Enforcement - - - - - Prepaid Items - - - - - Unreserved, Reported in: Special Revenue Funds - - - - - Capital Projects Funds 41,511,990 25,010,144 27,065,126 2,436,897 18,840,752 Total Fund Balances 46,810,409 25,280,436 28,517,206 2,570,513 22,153,461 Total Liabilities and Fund Balances $ 47,162,354 $ 25,426,616 $ 29,012,944 $ 2,580,232 $ 22,890,973 76 Total Other Parks & Disaster Governmental Recreation Recovery Funds $ 39,027,246 251,866 $ 1,233,941 $ 228,084,241 17,454,361 - 1,283,628 - 1,095,578 1,087,021 3,834,333 297,992 1,190,306 51,960 77,226 $ 40,716,085 $ 1,233,941 $ 253,019,673 $ 650,018 650,018 $ 43,055 $ 5,858,968 3,149,351 507,856 888,855 2,203,885 601,326 43,055 13,210,241 3,377,159 2,865,324 24,558,006 - 15,291,744 - 3,926,334 51,960 77,226 - 30,306,625 36,636,948 (1,674,438) 165,649,497 40,066,067 1,190,886 239,809,432 $ 40,716,085 $ 1,233,941 $ 253,019,673 77 City of Miami, Florida Combining Statement of Revenue, Expenditures, and Changes in Fund Balances Other Governmental Funds For The Year Ended September 30, 2003 Special Revenue Funds Economic Development Convention & Planning Fire Rescue Omni CRA SEPOW CRA Center Services Services Revenues Property Taxes $ 3,358,520 $ 2,557,955 $ $ $ Franchise Fees and Other Taxes - - Fines and Forfeitures - - Intergovernmental Revenues 479,924 1,124,422 - 1,119,682 Charges for Services - 57,150 3,605,262 469,041 4,287,527 Interest 74,327 129,414 31,566 46,145 36,461 Impact Fees - - - Other 49,291 409,255 2,500 Total Revenues 3,432,847 3,273,734 5,170,505 515,186 5,446,170 Expenditures Current Operating: General Government Planning and Development Community Redevelopment Areas Public Safety Public Facilities Parks and Recreation Debt Service: Principal Interest and Other Charges Capital Outlay Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures - - 1,576,917 2,915,734 4,019,654 - - - - 1,396,041 2,693,475 2,915,734 517,113 4,019,654 2,693,475 (745,920) 2,477,030 1,576,917 1,396, 041 (1,061,731) 4,050,129 Other Financing Sources (Uses) Transfers From Other Funds 556,541 1,584,059 581,245 109,022 Transfers To Other Funds (55,290) (4,039,274) - (422) Funded Debt Issuance - - Payments To Escrow Agent Total Other Financing Sources (Uses) 501,251 (2,455,215) 581,245 108,600 Net Changes in Fund Balances 517,113 (244,669) 21,815 (480,486) 4,158,729 Fund Balances - Beginning 1,004,257 2,689,733 815,870 4,901,622 1,543,386 Fund Balances - Ending $ 1,521,370 $ 2,445,064 $ 837,685 $ 4,421,136 $ 5,702,115 Special Revenue Funds Parks & Law Local Net Recreation Police Enforcement Public Works City Clerk Option Offlices Services Services Trust Fund Services Services Gas Tax $ 1,643,229 3,675,406 18,333 57,441 41 14,954 48,439 1,122,127 3,130 157,234 45,572 26,686 170 70,869 104,696 1,218,879 211 1,676,516 3,781,286 1,282,491 143,127 104,696 1,218,879 5,399,122 120,849 5,399,122 (5,398,911) 2,392, 563 4,875,973 4,705,182 2,392,563 4,875,973 (716,047) (1,094,687) 4,705,182 120,849 (3,422,691) 143,127 5,398,911 869,308 1,025,431 - (125,000) (388,074) (16,153) 1,218,879 5,398,911 869,308 900,431 (388,074) 153,261 (194,256) (3,810,765) 143,127 (16,153) 1,218,879 3,219 1,769,403 6,486,919 8,253,195 1,198,645 158,519 665,749 $ 3,219 $ 1,922,664 $ 6,292,663 $ 4,442,430 $ 1,341,772 $ 142,366 $ 1,884,628 (continued) City of Miami, Florida Combining Statement of Revenue, Expenditures, and Changes in Fund Balances Other Governmental Funds For The Year Ended September 30, 2003 Revenues Property Taxes Franchise Fees and Other Taxes Fines and Forfeitures Intergovernmental Revenues Charges for Services Interest Impact Fees Other Total Revenues Expenditures Current Operating: General Government Planning and Development Community Redevelopment Areas Public Safety Public Facilities Parks and Recreation Debt Service: Principal Interest and Other Charges Capital Outlay Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses) Transfers From Other Funds Transfers To Other Funds Proceeds Received From Refunded Debt Payments To Escrow Agent Total Other Financing Sources (Uses) Net Changes in Fund Balances Fund Balances - Beginning Fund Balances - Ending Special Revenue Funds Department Gusman Stormwater Improvement Transportation and Utility Initiatives & Transit Olympia $ - $ $ $ 1,115, 892 1,115, 892 722,498 722,498 1,115,892 (722,498) 4,595,019 1,653,785 492,552 36,209 4,595,019 2,182,546 3,820 2,568,359 3,820 2,568,359 4,591,199 (385,813) 4,058,554 176,400 4,058,554 176,400 1,115,892 3,336,056 4,591,199 (209,413) 610,815 (127,396) $ 1,726,707 $ 3,336,056 $ 4,591,199 $ (336,809) Debt Service Funds Capital Projects Funds General Other Special CRA Community Obligation Obligation Other Special Redevelopment Bonds Bonds Obligation Agency Public Safety $ 19,755,994 $ $ $ $ 300,000 43,349 68,178 2,611 59,468 296,137 19,799,343 160,000 41,400 228,178 302,611 12,620,000 9,311,400 125,000 10,413,061 7,094,426 326,742 23, 033,061 16,405, 826 (3,233,718) 59,468 337,537 4,294,039 451,742 4,294,039 (16,177, 648) (149,131) 17,049,908 (1,583,828) 18,680,000 28,390,000 (18,202,593) (28,390,000) 55,290 477,407 15,466,080 55,290 (2,756,311) (711,568) (93,841) 4,167,177 13,627, 446 1,058,844 59,468 (3,956,502) 59,468 2,592,722 4,371,139 (4,451,321) (80,182) (4,036,684) 19,038,936 $ 1,410,866 $ 12,915,878 $ 965,003 $ 2,652,190 $ 15,002,252 (continued) City of Miami, Florida Combining Statement of Revenue, Expenditures, and Changes in Fund Balances Other Governmental Funds For The Year Ended September 30, 2003 Capital Projects Funds Street & Sanitary Storm Solid Public Sidewalks Sewers Sewers Waste Facilities Revenues Property Taxes $ Franchise Fees and Other Taxes Fines and Forfeitures Intergovernmental Revenues 10 Charges for Services Interest 740,018 Impact Fees 1,016,942 Other - Total Revenues 1,756,970 Expenditures Current Operating: General Government Planning and Development Community Redevelopment Areas Public Safety Public Facilities Parks and Recreation Debt Service: Principal Interest and Other Charges Capital Outlay Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures $ $ $ 367,223 471,546 360,480 93,210 470,529 66,574 2,092,309 471,546 427,054 93,210 2,930,061 3,288,732 356,214 3,809,560 5,045,759 3,733,474 3,288,732 (1,531,762) 356,214 3,809,560 115,332 (3,382,506) 5,045,759 3,733,474 (4,952,549) (803,413) Other Financing Sources (Uses) Transfers From Other Funds 10,496,844 939,747 5,711,508 7,023,671 2,679,504 Transfers To Other Funds (4,178,926) (988,531) (2,912,365) (1,804,314) (2,777,801) Proceeds Received From Refunded Debt - - - Payments To Escrow Agent Total Other Financing Sources (Uses) 6,317,918 (48,784) 2,799,143 5,219,357 (98,297) Net Changes in Fund Balances 4,786,156 66,548 (583,363) 266,808 (901,710) Fund Balances - Beginning 42,024,253 25,213,888 29,100,569 2,303,705 23,055,171 Fund Balances - Ending $ 46,810,409 $ 25,280,436 $ 28,517,206 $ 2,570,513 $ 22,153,461 Capital Projects Funds Total Other Parks & Disaster Governmental Recreation Recovery Funds 4,876,068 1,021,861 5,897,929 1,732, 523 $ 25,672,469 1,115, 892 1,122,127 21,099,219 9,095,132 4,192, 654 1,016,942 4,661,100 1,732,523 67,975,535 8,814,648 1,576,917 6,935,388 10,977,196 2,693,475 2,392, 563 22,056,400 17,834,229 6,270,715 1,480,407 28,278,900 6,270,715 1,480,407 101, 559,716 (372,786) 252,116 (33,584,181) 8,084,568 372,691 71,144,341 (6,556,816) - (29,861,962) 47,070,000 (46, 592, 593) 1,527,752 372,691 41,759,786 1,154,966 624,807 8,175,605 38,911,101 566,079 231,633,827 $ 40,066,067 $ 1,190,886 $ 239,809,432 83 This page intentionally left blank 84 FIDUCIARY FUNDS Fiduciary Funds are used to account for assets held by the City in a trustee capacity. FIDUCIARY FUNDS General Employees' and Sanitation Employees' (GESE) and Firefighters' and Police Officers' (FIPO) — Both funds are used to account for the accumulation of resources to be used for retirement benefits to City employees. Resources are contributed by employees at rates fixed by law and by the City at amounts determined by annual actuarial valuations. City of Miami Elected Officers' Retirement Trust (EORT) — Funds are used to account for the accumulation of resources to be used for retirement benefits to elected officials. Resources are contributed by the City in amounts determined by annual actuarial valuations. 85 City of Miami, Florida Combining Statement of Fiduciary Net Assets Fiduciary Funds As of September 30, 2003 Pension Trust Funds Totals Elected Officers' Pension Firefighter and General and Retirement Trust Police (FIPO) Sanitation (GESE) (EORT) Funds Assets Cash and Short -Term Investments $ 26,545,908 $ 308,533 $ 175 $ 26,854,616 Accounts Receivable 6,242,736 7,846,366 - 14,089,102 Capital Assets 2,384,445 1,447,265 - 3,831,710 Investments, at fair value U.S Government Obligations Corporate Bonds Corporate Stocks Money Market Funds and Commerical Paper Mutual Funds Real Estate Total Investments Securities Lending Collateral Total Assets Liabilities Obligations Under Security Lending Accounts Payable Accrued Liabilities Payable for Securities Purchased Total Liabilities Net Assets Held in Trust for Pension Benefits and Other Purposes 35,173,089 9,602,164 175 44,775,428 169,816,711 157,341,344 644,018,864 6,871,394 42,893,957 73,844,446 71,037,296 328,035,704 18,530,006 31,300,235 1,020,942,270 522,747,687 1,847,383 245,508,540 228,378,640 972,054,568 25,401,400 42,893,957 31,300,235 1,847,383 1,545,537,340 96,666,334 - - 96,666,334 1,152,781,693 532,349,851 96,666,334 405,772 6,871,394 9,217,196 113,160,696 1,847, 558 1,686,979,102 - - 96,666,334 897,162 - 1,302,934 - - 6,871,394 14,201,438 - 23,418,634 15,098,600 - 128,259,296 $ 1,039,620,997 $ 517,251,251 $ 1,847,558 $ 1,558,719,806 86 City of Miami, Florida Combining Statement of Changes in Fiduciary Net Assets Fiduciary Funds For the Year Ended September 30, 2003 Pension Trust Funds Totals Elected Officers' Pension Firefighter and General and Retirement Trust Police (FIPO) Sanitation (GE SE) (EORT) Funds Additions Contributions: Employer $ 18,582,646 $ 3,985,928 $ 265,287 $ 22,833,861 Plan Members 7,193,936 7,642,024 - 14,835,960 Total Contributions 25,776,582 11,627,952 265,287 37,669,821 Investment Earnings: Net Decrease in Fair Value of Investments 116,332,856 67,262,262 - 183,595,118 Interest 21,045,010 7,887,954 41,736 28,974,700 Dividends 7,880,058 4,634,807 - 12,514,865 Rental and Other Income, net 653,272 1,917,256 - 2,570,528 Total Investment Earnings 145,911,196 81,702,279 41,736 227,655,211 Less Investment Expenses Investment Expenses 3,470,652 2,073,351 13,250 5,557,253 Net Investment Income 142,440,544 79,628,928 28,486 222,097,958 Total Additions 168,217,126 91,256,880 293,773 259,767,779 Deductions Benefits 46,083,206 38,965,891 152,256 85,201,353 Refunds Upon Resignation, Death, etc. 439,031 1,147,196 - 1,586,227 Distribution to Retirees 9,332,318 - - 9,332,318 Administrative and Other Expenses 42,725 1,884,961 - 1,927,686 Total Deductions 55,897,280 41,998,048 152,256 98,047,584 Change in Net Assets 112,319,846 49,258,832 141,517 161,720,195 Net Assets - Beginning of Year 927,301,151 467,992,419 1,706,041 1,396,999,611 Net Assets - End of Year $ 1,039,620,997 $ 517,251,251 $ 1,847,558 $ 1,558,719,806 87 This page intentionally left blank 88 SUPPLEMENTARY INFORMATION Supplemantary information is presented to provide greater detail than reported in the preceding financial statements. This information, in many cases, has been spread throughout the report and is brought together here for greater clarity. Financial schedules are not necessary for fair presentation, in order to be in conformity with accounting principles generally accepted in the United States of America. 89 City of Miami, Florida Budgetary Comparison Schedule Omni CRA For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) Resources (inflows): Property Taxes $ 3,302,369 $ 3,302,369 $ Interest 24,600 24,600 Amounts Available for Appropriation 3,326,969 3,326,969 Charges to Appropriations (outflows): Community Redevelopment Areas Total Charges to Appropriations 3,326,969 3,326,969 3,326,969 3,326,969 3,358,520 $ 56,151 74,327 49,727 3,432,847 105,878 2,915,734 411,235 2,915,734 411,235 Excess (Deficiency) of Resources Over Charges to Appropriations 517,113 517,113 Fund Balance Allocation Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ 517,113 $ 517,113 Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 3,432,847 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 3,432,847 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ 2,915,734 Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 2,915,734 90 Resources (inflows): Property Taxes Intergovernmental Revenues Charges for Services Interest Other Transfer from Other Funds Amounts Available for Appropriation Charges to Appropriations (outflows): Community Redevelopment Areas Transfer to Other Funds Total Charges to Appropriations City of Miami, Florida Budgetary Comparison Schedule SEOPW CRA For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) $ 2,602,413 $ 2,602,413 $ 67,300 67,300 1,682,484 1,682,484 4,352,197 4,352,197 3,809,025 6,806,338 543,172 543,172 4,352,197 7,349,510 Excess (Deficiency) of Resources Over Charges to Appropriations (2,997,313) Fund Balance Allocation 2,557,955 $ (44,458) 479,924 479,924 57,150 57,150 129,414 62,114 3,046,604 3,046,604 5 56, 541 (1,125,943) 6,827,588 2,475,391 4,019,654 2,786,684 55,290 487,882 4,074,944 3,274,566 2,752,644 5,749,957 2,997,313 (2,997,313) Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ 2,752,644 $ 2,752,644 Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 6,827,588 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. (2,997,313) Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. (556,541) Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 3,273,734 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ 4,074,944 Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. (55,290) Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 4,019,654 91 City of Miami, Florida Budgetary Comparison Schedule Convention Center For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) Resources (inflows): Intergovernmental Revenues $ 1,105,509 $ 1,105,510 $ 1,124,422 $ 18,912 Charges for Services 3,968,724 4,006,392 3,605,262 (401,130) Interest 100,000 100,000 31,566 (68,434) Other 303,121 303,121 409,255 106,134 Transfer from Other Funds 1,584,059 1,584,059 1,584,059 - Amounts Available for Appropriation 7,061,413 7,099,082 6,754,564 (344,518) Charges to Appropriations (outflows): Public Facilities Transfer to Other Funds Total Charges to Appropriations 2,692,689 2,730,358 4,368,724 4,368,724 7,061,413 7,099,082 2,696,597 33,761 4,039,274 329,450 6,735,871 363,211 Excess (Deficiency) of Resources Over Charges to Appropriations 18,693 18,693 Fund Balance Allocation Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ 18,693 $ 18,693 Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 6,754,564 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. (1,584,059) Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 5,170,505 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ 6,735,871 Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. (3,122) Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. (4,039,274) Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 2,693,475 92 City of Miami, Florida Budgetary Comparison Schedule Economic Development & Planning Services For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) Resources (inflows): Intergovernmental Revenues $ 543,114 $ 543,530 $ - $ (543,530) Charges for Services 261,886 469,041 207,155 Interest 7,929 - 46,145 46,145 Other 488,364 488,364 2,836,303 2,347,939 Transfer from Other Funds 200,000 1,800,000 581,245 (1,218,755) Amounts Available for Appropriation 1,239,407 3,093,780 3,932,734 838,954 Charges to Appropriations (outflows): Planning and Development Total Charges to Appropriations 1,239,407 5,930,083 1,239,407 5,930,083 Excess (Deficiency) of Resources Over Charges to Appropriations (2,836,303) Fund Balance Allocation 2,065,281 3,864,802 2,065,281 3,864,802 1,867,453 4,703,756 2,836,303 (2,836,303) Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ 1,867,453 $ 1,867,453 Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 3,932,734 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. (2,836,303) Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. (581,245) Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 515,186 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ 2,065,281 Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. (488,364) Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 1,576,917 93 City of Miami, Florida Budgetary Comparison Schedule Fire Rescue Services For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) Resources (inflows): Intergovernmental Revenues $ 42,001 $ 14,632,772 $ 1,119,682 $ (13,513,090) Charges for Services 4,272,183 4,272,183 4,287,527 15,344 Interest - - 36,461 36,461 Other 174,079 174,079 506,690 332,611 Transfer from Other Funds 303,217 303,217 109,022 (194,195) Amounts Available for Appropriation 4,791,480 19,382,251 6,059,382 (13,322,869) Charges to Appropriations (outflows): Public Safety 1,173,487 15,764,258 1,452,348 14,311,910 Transfer to Other Funds 4,122,183 4,122,183 422 4,121,761 Total Charges to Appropriations 5,295,670 19,886,441 1,452,770 18,433,671 Excess (Deficiency) of Resources Over Charges to Appropriations (504,190) (504,190) Fund Balance Allocation 504,190 4,606,612 5,110, 802 504,190 (504,190) Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ 4,606,612 $ 4,606,612 Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 6,059,382 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. (504,190) Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. (109,022) Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 5,446,170 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ 1,452,770 Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. (56,307) Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. (422) Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 1,396,041 94 City of Miami, Florida Budgetary Comparison Schedule NET Offices For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) Resources (inflows): Interest $ - $ - $ Other 50,406 50,406 Transfer from Other Funds 5,650,880 5,650,880 Amounts Available for Appropriation 5,701,286 5,701,286 Charges to Appropriations (outflows): General Government Total Charges to Appropriations 5,701,286 5,701,286 5,701,286 5,701,286 41 $ 41 170 (50,236) 5,398,911 (251,969) 5,399,122 (302,164) 5,449,528 251,758 5,449,528 251,758 Excess (Deficiency) of Resources Over Charges to Appropriations (50,406) (50,406) Fund Balance Allocation Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ (50,406) $ (50,406) Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 5,399,122 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. (5,398,911) Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 211 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ 5,449,528 Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. (50,406) Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 5,399,122 95 City of Miami, Florida Budgetary Comparison Schedule Parks & Recreation Services For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) Resources (inflows): Intergovernmental Revenues $ 844,889 $ 1,891,456 $ 1,643,229 $ (248,227) Charges for Services 97,651 97,651 18,333 (79,318) Interest - - 14,954 14,954 Other 347,486 347,486 - (347,486) Transfer from Other Funds - - 869,308 869,308 Amounts Available for Appropriation 1,290,026 2,336,593 2,545,824 209,231 Charges to Appropriations (outflows): Parks and Recreation Total Charges to Appropriations 1,290,026 2,336,593 1,290,026 2,336,593 2,740,772 (404,179) 2,740,772 (404,179) Excess (Deficiency) of Resources Over Charges to Appropriations (194,948) (194,948) Fund Balance Allocation Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ (194,948) $ (194,948) Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 2,545,824 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. (869,308) Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 1,676,516 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ 2,740,772 Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. (348,209) Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 2,392,563 96 City of Miami, Florida Budgetary Comparison Schedule Police Services For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) Resources (inflows): Intergovernmental Revenues $ 12,366,464 $ 16,252,005 $ 3,675,406 $ (12,576,599) Charges for Services 156,352 156,352 57,441 (98,911) Interest 50,503 50,503 48,439 (2,064) Other 312,385 312,385 3,515,308 3,202,923 Transfer from Other Funds 1,028,803 1,028,803 1,025,431 (3,372) Amounts Available for Appropriation 13,914,507 17,800,048 8,322,025 (9,478,023) Charges to Appropriations (outflows): Public Safety Transfer to Other Funds Total Charges to Appropriations Excess (Deficiency) of Resources Over Charges to Appropriations 17,429,815 21,190,356 5,188,358 16,001,998 125,000 125,000 17,429,815 21,315,356 (3,515,308) (3,515,308) Fund Balance Allocation 3,515,308 5,313,358 16,001,998 3,008,667 6,523,975 3,515,308 (3,515,308) Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ 3,008,667 $ 3,008,667 Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 8,322,025 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. (3,515,308) Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. (1,025,431) Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 3,781,286 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ 5,313,358 Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. (312,385) Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. (125,000) Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 4,875,973 97 Resources (inflows): Fines and Forfeitures Charges for Services Interest Other Amounts Available for Appropriation Charges to Appropriations (outflows): Public Safety Transfer to Other Funds Total Charges to Appropriations Excess (Deficiency) of Resources Over Charges to Appropriations City of Miami, Florida Budgetary Comparison Schedule Law Enforcement Trust Fund For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) $ $ 1,122,127 $ 1,122,127 3,130 3,130 157,234 157,234 8,950,376 8,950,376 8,727,958 8,487,302 33,321 463,074 8,761,279 8,950,376 (8,761,279) (8,950,376) Fund Balance Allocation 8,761,279 10,232,867 10,232,867 5,402,374 3,084,928 388,074 75,000 5,790,448 3,159,928 4,442,419 13,392,795 8,950,376 (8,950,376) Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ 4,442,419 $ 4,442,419 Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 10,232,867 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. (8,950,376) Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 1,282,491 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ 5,790,448 Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. (697,192) Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. (388,074) Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 4,705,182 98 Resources (inflows): Intergovernmental Revenues Interest Other Amounts Available for Appropriation Charges to Appropriations (outflows): Public Works Total Charges to Appropriations City of Miami, Florida Budgetary Comparison Schedule Public Works Services For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) $ $ 45,572 $ 45,572 26,686 26,686 1,159,837 1,159,837 1,232,095 1,232,095 1,088,968 1,088,968 1,088,968 1,088,968 1,088,968 1,088,968 Excess (Deficiency) of Resources Over Charges to Appropriations (1,088,968) (1,088,968) Fund Balance Allocation 1,088,968 1,232,095 2,321,063 1,088,968 (1,088,968) Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ 1,232,095 $ 1,232,095 Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 1,232,095 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. (1,088,968) Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 143,127 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. 99 Resources (inflows): Charges for Services Other Amounts Available for Appropriation Charges to Appropriations (outflows): General Government Total Charges to Appropriations City of Miami, Florida Budgetary Comparison Schedule City Clerk Services For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) $ 191,013 $ 191,013 $ 104,696 $ (86,317) - - 20,409 20,409 191,013 191,013 125,105 (65,908) 191,013 211,422 191,013 211,422 Excess (Deficiency) of Resources Over Charges to Appropriations (20,409) Fund Balance Allocation 120,849 90,573 120,849 90,573 4,256 24,665 20,409 (20,409) Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ 4,256 $ 4,256 Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 125,105 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. (20,409) Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 104,696 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ 120,849 Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 120,849 100 Resources (inflows): Intergovernmental Revenues Amounts Available for Appropriation City of Miami, Florida Budgetary Comparison Schedule Local Option Gas Tax For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) $ $ 1,218,879 $ 1,218,879 1,218,879 1,218,879 Excess (Deficiency) of Resources Over Charges to Appropriations 1,218,879 1,218,879 Fund Balance Allocation Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ 1,218,879 $ 1,218,879 Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 1,218,879 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 1,218,879 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. 101 Resources (inflows): Franchise Fees and Other Taxes Amounts Available for Appropriation City of Miami, Florida Budgetary Comparison Schedule Stormwater Utility Fund For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) $ $ 1,115,892 $ 1,115,892 1,115, 892 1,115, 892 Excess (Deficiency) of Resources Over Charges to Appropriations 1,115,892 1,115,892 Fund Balance Allocation Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ 1,115,892 $ 1,115,892 Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 1,115,892 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 1,115,892 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. 102 Resources (inflows): Transfer from Other Funds Amounts Available for Appropriation Charges to Appropriations (outflows): General Government Transfer to Other Funds Total Charges to Appropriations City of Miami, Florida Budgetary Comparison Schedule Department Improvement Initiatives For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) $ 4,261,213 $ 4,261,213 3,767,388 4,058,554 $ (202,659) 4,058,554 (202,659) 722,498 3,044,890 493,825 - 493,825 4,261,213 722,498 3,538,715 Excess (Deficiency) of Resources Over Charges to Appropriations 3,336,056 3,336,056 Fund Balance Allocation Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ 3,336,056 $ 3,336,056 Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 4,058,554 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. (4,058,554) Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ 722,498 Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 722,498 103 Resources (inflows): Intergovernmental Revenues Amounts Available for Appropriation Charges to Appropriations (outflows): General Government Total Charges to Appropriations City of Miami, Florida Budgetary Comparison Schedule Transportation & Transit For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) $ $ 4,595,019 $ 4,595,019 4,595,019 4,595,019 3,820 (3,820) 3,820 (3,820) Excess (Deficiency) of Resources Over Charges to Appropriations 4,591,199 4,591,199 Fund Balance Allocation Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ 4,591,199 $ 4,591,199 Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 4,595,019 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 4,595,019 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ 3,820 Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 3,820 104 City of Miami, Florida Budgetary Comparison Schedule Gusman & Olympia For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) Resources (inflows): Intergovernmental Revenues $ - $ - $ 1,653,785 $ 1,653,785 Charges for Services 651,111 651,111 492,552 (158,559) Other 36,209 36,209 Transfer from Other Funds 176,400 176,400 176,400 - Amounts Available for Appropriation 827,511 827,511 2,358,946 1,531,435 Charges to Appropriations (outflows): General Government Total Charges to Appropriations 827,511 827,511 827,511 827,511 2,568,359 (1,740,848) 2,568,359 (1,740,848) Excess (Deficiency) of Resources Over Charges to Appropriations (209,413) (209,413) Fund Balance Allocation Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ (209,413) $ (209,413) Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 2,358,946 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. (176,400) Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 2,182,546 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ 2,568,359 Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 2,568,359 105 City of Miami, Florida Budgetary Comparison Schedule General Obligation Bonds For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) Resources (inflows): Property Taxes $ 19,819,228 $ 19,819,228 $ 19,755,994 $ (63,234) Interest - 43,349 43,349 Other 2,798,909 2,798,909 Proceeds Received from Refunded Debt 18,680,000 18,680,000 Amounts Available for Appropriation 19,819,228 19,819,228 41,278,252 21,459,024 Charges to Appropriations (outflows): Debt Service: Principal Interest and Other Charges Payments to Escrow Agent Total Charges to Appropriations Excess (Deficiency) of Resources Over Charges to Appropriations 12,516,450 10,101,687 12,516,450 10,101,687 22,618,137 22,618,137 (2,798,909) (2,798,909) Fund Balance Allocation 2,798,909 12,620,000 10,413,061 18,202,593 (103,550) (311,374) (18,202,593) 41,235,654 (414,924) 42,598 21,044,100 2,798,909 (2,798,909) Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ 42,598 $ 18,245,191 Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 41,278,252 Differences - budget to GAAP: Loan proceeds are inflows of budgetary resources but are not revenues for financial reporting purposes. (18,680,000) The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. (2,798,909) Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 19,799,343 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ 41,235,654 Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. Payments to escrow agents are outflows of budgetary resources but are not expenditures for financial reporting purposes. (18,202,593) Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 23,033,061 106 City of Miami, Florida Budgetary Comparison Schedule Other Special Obligation Bonds For The Year Ended September 30, 2003 Variance with Budgeted Amounts Actual Amounts Final Budget Original Final (Budgetary Basis) Positive (Negative) Resources (inflows): Interest Other 1,066,078 1,226,078 Transfer from Other Funds 17,172,782 17,172,782 Proceeds Received from Refunded Debt - - Amounts Available for Appropriation 18,238,860 18,398,860 Charges to Appropriations (outflows): Debt Service: Principal Interest and Other Charges Transfer to Other Funds Payments to Escrow Agent Total Charges to Appropriations 9,316,400 8,922,460 9,316,400 9,082,460 18,238,860 18,398, 860 68,178 $ 68,178 160,000 (1,066,078) 17,049,908 (122,874) 28,390,000 28,390,000 45,668,086 27,269,226 9,311,400 7,094,426 1,583,828 28,390,000 5,000 1,988,034 (1,583,828) (28,390,000) 46,379,654 (27,980,794) Excess (Deficiency) of Resources Over Charges to Appropriations (711,568) (711,568) Fund Balance Allocation Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ (711,568) $ (711,568) Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 45,668,086 Differences - budget to GAAP: Loan proceeds are inflows of budgetary resources but are not revenues for financial reporting purposes. (28,390,000) The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. (17,049,908) Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 228,178 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ 46,379,654 Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. Payments to escrow agents are outflows of budgetary resources but are not expenditures for financial reporting purposes. (28,390,000) Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. (1,583,828) Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 16,405,826 107 Resources (inflows): Intergovernmental Revenues Interest Transfer from Other Funds Amounts Available for Appropriation Charges to Appropriations (outflows): Debt Service: Principal Interest and Other Charges Total Charges to Appropriations City of Miami, Florida Budgetary Comparison Schedule CRA Other Special Obligation Bonds For The Year Ended September 30, 2003 Budgeted Amounts Original Final Actual Amounts (Budgetary Basis) $ 302,403 $ 302,403 $ 57,900 57,900 360,303 360,303 125,000 125,000 235,303 235,303 360,303 360,303 Variance with Final Budget Positive (Negative) 300,000 $ 2,611 55,290 357,901 (2,403) 2,611 (2,610) (2,402) 125,000 - 326,742 (91,439) 451,742 (91,439) Excess (Deficiency) of Resources Over Charges to Appropriations (93,841) (93,841) Fund Balance Allocation Excess (Deficiency) of Resources Over Charges to Appropriations $ $ $ (93,841) $ (93,841) Explanation of Differences Between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 357,901 Differences - budget to GAAP: Loan proceeds are inflows of budgetary resources but are not revenues for financial reporting purposes. The fund balance at the beginning of the year is a budgetary resource but is not a current -year revenue for financial reporting purposes. Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. (55,290) Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 302,611 Uses/outflows of resources Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ 451,742 Differences - budget to GAAP: Encumbrances for supplies and equipment ordered but not received is reported in the year the order is placed for budgetary purposes, but in the year supplies are received for financial reporting purposes. Payments to escrow agents are outflows of budgetary resources but are not expenditures for financial reporting purposes. Transfers to other funds are outflows of budgetary resources but are not expenditures for financial reporting purposes. Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. $ 451,742 108 STATISTICAL SECTION Statistical tables differ from financial statements because they usually cover more than one fiscal year and may present nonaccounting data, financial trends and the fiscal capacity of the governments. CITY OF MIAMI, FLORIDA GENERAL GOVERNMENTAL EXPENDITURES AND TRANSFERS BY FUNCTION LAST TEN FISCAL YEARS (1) OTHER CULTURE EXPENDITURES FISCAL PUBLIC SOLID PUBLIC PUBLIC GENERAL AND OR FINANCING YEAR SAFETY WASTE FACILITIES IMPROVEMENTS GOVERNMENT RECREATION USES TOTAL 2003 $ 198,541,341 $ 21,091,455 $ 5,173,926 $ 29,500,078 $ 70,335,134 $ 12,594,690 $ 52,614,635 $ 389,851,259 2002 169,452,122 20,569,047 5,071,735 25,740,477 83,117,901 11,092,994 32,551,582 347,595,858 2001 132,844,965 18,798,645 4,547,020 22,176,806 24,592,817 9,358,344 121,693,516 334,012,113 2000 135,1'3,374 17,875,978 4,379,971 19,139,493 23,025,280 8,746,720 87,779,393 296,120,209 1999 126,287,513 17,730,332 3,819,893 21,068,901 20,509,297 8,221,325 90,639,155 288,2'6,416 1998. 116,894,329 16,755,266 3,556,522 18,973,481 44,984,243 6,994,947 89,206,561 297,365,349 1997 107,127,000 15,115,000 7,337,000 16,027,000 61,743,000 6,770,000 55,395,000 269,514,000 (2) 1996 113,050,000 16,334,000 7,507,000 9,893,000 69,542,000 12,583,000 131,880,000 (3) 360,789,000 1995 145,974,000 8,360,000 - 11,903,000 17,921,000 10,626,000 20,257,000 215,041,000 1994 134.722,000 16,831,000 - 11,046,000 16,846,000 9,636,000 23,262,000 212,343,000 (1) This schedule includes Expenditures of the General Fund only. (2) Begiming in FY 1996, the City discontinued the use of the Proprietary Funds and the Pension Adiniiustration Trust Fund. Accordingly, the activities of these funds are accounted for in the General Fmid. (3) Other expenditures and financing uses include employee benefits of $35,173,810 and operating transfers out of $22,926,859. CITY OF MIAMI, FLORIDA GENERAL FUND EXPENDITURES AND OTHER FINANCING USES BY FUNCTION Police & Fire Solid Waste Public Facilities Public Improvements General Government Culture Other 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00% 50.00% % of Total Fiscal Year Budget ❑ FY 03 ■ FY 02 ❑ FY 01 109 CITY OF MIAMI, FLORIDA GENERAL GOVERNMENTAL REVENUES AND TRANSFERS BY SOURCE LAST TEN FISCAL YEARS (1) CITY BUSINESS INTER- LICENSES CHARGES OTHER REVENUE FISCAL PROPERTY & EXCISE GOVERN- AND FOR AND FINANCING YEAR TAXES TAX (1) MENTAL PERMITS SERVICES SOURCES (2) TOTAL 2003 $ 139,604,223 $ 31,556,387 $ 44,071,524 $ 21,469,973 $ 86,182,827 $ 67,300,808 $ 390,185,742 2002 130,375,831 49,582,101 40,451,667 21,375,993 93,708,913 34,955,363 370,449,868 2001 119,683,851 42,215,651 33,688,246 20,333,532 84,334,277 45,469,115 345,724,672 2000 120,426,167 32,426,893 44,574,354 19,833,395 75,470,338 39,336,967 332,068,114 1999 120,781,649 30,441,973 34,032,189 16,050,883 54,241,929 35,419,431 290,968,054 1998 108,172,648 27,906,840 33,841,573 16,641,532 41,866,305 98,132,190 326,561,088 1997 105,493,000 48,854,000 45,575,000 9,816,000 41,586,000 41,841,000 293,165,000 (3) 1996 101,964,000 52,294,000 33,761,000 5,407,000 39,045,000 118,109,000 350,580,000 1995 99,178,000 44,874,000 28,789,000 4,361,000 5,938,000 55,393,000 238,533,000 1994 97,705,000 43,571,000 32,331,000 4,702,000 5,149,000 27,609,000 211,067,000 (1) This schedule includes Expenditures of the General Fund only. (2) Transfers fonn other funds representing public utilities service taxes are presented in this schedule as business and excise tax revenues, rather than as other financing sources, to more clearly depict sources of revenues. (3) Beginning in FY 1996, the City discontinued the use of the Proprietary Funds and the Pension Administration Trust Fund. Accordingly, the activities of these funds are accounted for in the General Fund. CITY OF MIAMI, FLORIDA GENERAL FUND REVENUES AND OTHER FINANCING SOURCES BY FUNCTION Property Taxes Business & Excise Tax Inter -Governmental Licenses & Permits Charges for Services Other 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00% % of Total Fiscal Year Budget ■ FY 03 ■ FY 02 ❑ FY 01 110 FISCAL YEAR 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 FISCAL YEAR 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 TOTAL TAX LEVY (1) $ 167,490,551 152,339,301 141,425,410 142,932,314 145,913,155 134,743,241 132,850,000 128,661,000 120,805,000 125,169,000 TOTAL TAX COLLECTIONS $ 158,814,018 148,629,526 136,827,422 138,283,717 143,485,898 130,407,000 131,773,000 123,464,000 119,643,000 119,720,000 CITY OF MIAMI, FLORIDA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN YEARS COLLECTION OF CURRENT YEAR'S TAXES $ 157,339,038 146,185,141 134,535,715 136,028,063 143,515,000 127,911,000 128,783,000 120,519,000 115,936,000 113,966,000 COLLECTIONS AS % OF CURRENT LEVY 94.82% 97.56 96.75 96.75 98.34 96.78 99.19 95.96 99.04 95.65 (1) Includes levies for general operations and debt service. (2) Net of reserves of approximately 5% of total tax levy. PERCENT OF LEVY COLLECTED 93.94% 95.96 95.13 95.17 98.36 94.93 96.94 93.67 95.97 91.05 TOTAL OUTSTANDING DELINQUENT TAXES (2) $ 2,444,385 2,291,707 2,255,654 3,633,429 2,427,257 1,666,079 4,067,000 1,552,000 2,683,000 1,673,000 COLLECTION OF DELINQUENT TAXES $ 1,474,980 2,444,385 2,291,707 2,255,654 2,522,000 2,496,000 2,990,000 2,945,000 3,707,000 5,754,000 OUTSTANDING DELINQUENT TAXES AS % OF CURRENT LEVY 1.46% 1.50 1.59 2.54 1.66 3.22 0.81 4.04 0.96 4.35 CITY MILLAGE (1) 10.0680 10.2130 10.2750 10.9000 11.7900 11.5195 11.7055 11.7055 11.7055 11.8121 111 CITY OF MIAMI, FLORIDA ASSESSED VALUE OF ALL TAXABLE PROPERTY LAST TEN FISCAL YEARS FISCAL REAL PERSONAL YEAR PROPERTY PROPERTY 2003 $ 18,849,243,365 $ 1,804,153,107 2002 16,269,856,061 1,878,266,085 2001 13, 282, 693, 560 1,657,551,519 2000 12,65 5,367,383 1,480,211,283 1999 12, 05 4,3 84,369 1,33 4,992,6 53 1998 11,383,265, 849 1,329,476,797 1997 11,039,083,007 1,323, 876,600 1996 10,702,353,382 1,301,197,462 1995 10,232,545,197 1,264,806,533 1994 9,991,788,807 1,241,431,753 SOURCE: Miami -Dade County Property Appraiser's Office TOTAL $ 20,653,396,472 18,148,122,146 14,940,245,079 14,13 5, 578,666 13,389,377,022 12,712,742,646 12,362,959,607 12,003,550,844 11,497,351,730 11,233,220,560 HOMESTEAD EXEMPTIONS $ 1,225,787,898 1,210,235,376 1,168,878,720 1,022,522,356 1,013,367,239 1,015,773,092 1,013,566,813 1,012,060,207 1,007,531,594 1,006,367,133 CITY OF MIAMI, FLORIDA PROPERTY TAX RATES AND TAX LEVIES DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS TAX RATES (1) YEAR CITY COUNTY 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 TAX LEVIES 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 10.0680 6.279 10.2130 6.265 10.2750 6.403 10.9000 6.625 11.7900 6.860 11.5195 7.268 11.7055 7.582 11.7055 7.946 11.7055 7.946 11.8121 9.236 $ 195,597,163 172,986,638 141,500,789 142,932,314 145,913,155 134,743,241 132,850,317 128,660,894 122,788,590 120,800,615 $ 121,985,954 106,115, 861 88,178,059 86,873,998 84,899,427 85,013,575 86,051,096 87,338,385 83,352,111 94,455,218 SCHOOLS (1) Property tax rates are based on each $1,000 of net assessed value. Additional information - Tax rate limits: County Schools State Tax assessed - January 1 Taxes levied - November 1 9.252 9.376 9.617 9.744 10.260 10.462 10.366 10.389 10.389 9.923 $ 179,744,235 158,809,626 132,439,230 127,773,621 126,977,860 122,373,695 117,647,806 114,190,596 108,978,741 101,481,067 STATE 0.7355 0.7355 0.738 0.641 0.644 0.747 0.710 0.687 0.687 0.698 $ 14,289,006 12,457,816 10,163,268 8,405,469 7,970,150 8,737,636 8,058,069 7,551,154 7,206,506 7,138,344 NET ASSESSED VALUE $ 19,427,608,574 16,937,886,770 13,771,366,359 13,113,056,310 12,376,009,783 11,696,969,554 11,349,392,794 10,991,490,637 10,489, 820,136 10,226,853,427 SPECIAL DISTRICTS 0.486 0.451 0.351 0.321 0.334 $ 9,441,818 7,638,987 4,833,750 4,209,291 4,133,587 Discount allowed: November -4% December -3% January -2% February -1% Taxes delinquent - April TOTAL 26.8205 27.0405 27.3840 28.2310 29.9965 30.3635 30.7275 30.7275 31.6691 31.6023 $ 521,058,176 449,843,886 370,194,693 369, 894,180 350,868,147 344,607,294 337,741,000 322,326,000 323,887,000 331,562,000 112 CITY OF MIAMI, FLORIDA SPECIAL ASSESSMENTS COLLECTIONS AND RECEIVABLES LAST TEN FISCAL YEARS FISCAL YEAR 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 COLLECTIONS $ 78,222 123,304 171,993 1,077,108 2,432,513 1,859,408 1,477,001 2,374,557 1,810,000 1,308,723 CURRENT ASSESSMENTS LIENS RECEIVABLE $ 178,946 257,168 380,742 552,735 814,758 877,875 499,371 157,921 139,263 229,315 NOTE: The City of Miami's Special Assessments consist of assessment liens for various capital projects such as sanitary and storm sewer improvements. The collections shown above are on a modified accrual basis and include interest, prior year delinquencies and full payoffs. The assessment liens receivables at year-end represents amounts susceptible to accrual provided that they pertain to liens assessed prior to year-end. Effective in 1991, assessment liens were accounted for in the municipal use capital projects funds; previously they were recorded in the general obligation debt service fund FISCAL YEAR 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 POPULATION (1) 362,470 362,470 362,470 365,548 365,548 365,548 365,548 383,402 (2) 383,402 (2) 383,402 (2) CITY OF MIAMI, FLORIDA RATIO OF NET GENERAL BONDED DEBT TO NET ASSESSED VALUE AND NET BONDED DEBT PER CAPITA LAST TEN FISCAL YEARS NET NET ASSESSED HOMESTEAD TAXABLE BONDED PER VALUE EXEMPTION VALUATION DEBT RATIO CAPITA S20,653,396,472 $ 1,225,787,898 S 19,427,608,574 $ 236,549,956 1.22% $ 652.61 18,148,122,146 1,210,235,376 16,937,886,770 249,711,407 1.50 688.92 14,940,245,079 1,168,878,720 13,771,366,359 103,824,851 0.62 286.44 14,135,578,666 1,022,522,356 13,113,056,310 114,914,079 0.88 314.36 13,389,377,022 1,013,367,239 12,376,009,783 127,927,234 1.03 349.96 12,712,742,646 1,015,773,092 11,696,969,554 139,360,000 1.19 381.24 12,362,959,607 1,013,566,813 11,349,392,794 153,629,000 1.35 420.27 12,003,550,844 1,012,060,207 10,991,490,637 168,161,000 1.53 438.60 11,497,351,730 1,007,531,594 10,489,820,136 180,879,000 1.72 471.77 11,233,220,560 1,006,367,133 10,226,853,427 170,368,000 1.67 444.36 (1) Estimates provided by the State of Florida, Division of Population Studies, Bureau of Business and Economic Research, University of Florida. (2) Based on City of Miami estimate. The 1995 U.S. Bureau of the Census preliminary population count of 365,548 is being challenged by the City and is expected to be adjusted. 113 CITY OF MIAMI, FLORIDA RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL BONDED DEBT TO TOTAL GENERAL GOVERNMENTAL EXPENDITURES AND OTHER FINANCING USES LAST TEN FISCAL YEARS TOTAL GENERAL GOVERNMENTAL EXPENDITURES GENERAL BONDED & OTHER FISCAL BOND BOND DEBT SERVICE FINANCING YEAR PRINCIPAL INTEREST EXPENDITURES USES RATIO 2003 $ 12,620,000 $ 10,827,693 $ 23,447,693 $ 389,851,259 6.01% 2002 11,635,000 6,858,848 18,493,848 347,595,858 5.32 2001 11,530,000 6,274,082 17,804,082 334,012,113 5.65 2000 11,055,000 6,885,334 17,940,334 296,120,209 6.06 1999 12,550,000 7,487,899 20,037,899 288,276,416 6.95 1998 14,249,815 8,328,223 22,578,038 297,365,349 7.59 1997 13,700,000 9,190,000 22,890,000 269,514,000 8.49 1996 12,530,000 10,197,000 22,727,000 360,789,000 6.30 1995 12,355,000 9,576,000 21,931,000 215,041,000 10.20 1994 11,980,000 9,917,000 21,897,000 212,343,000 10.31 CITY OF MIAMI, FLORIDA SCHEDULE OF LEGAL DEBT MARGIN SEPTEMBER 30, 2003 Assessed value less homestead exempt valuation Net taxable assessed valuation Debt limitation for bonds (15% of $19,427,608,574) (1) Present debt application to debt limitation General obligation debt Less amount available in debt service fund Legal debt margin (1) Section 58 of the City Charter limits the general obligation bonded debt of the City to 15% of the assessed valuation of all real and personal property within the City limits as determined by the preceding assessment roll of the City. $ 236,549,956 $ 20,653,396,472 1,225,787,898 $ 19,427,608,574 $ 2,914,141,286 236,549,956 $ 2,677,591,330 114 CITY OF MIAMI, FLORIDA CURRENT DEBT RATIOS SEPTEMBER 30, 2003 FACTORS: Assessed value (1) Net taxable valuation City of Miami debt, net of reserve funds General obligation Special obligation (2) Combined direct debt $ 236,549,956 166,707,930 $ 20,653,396,472 $ 19,427,608,574 403,257,886 Overlapping debt, net of reserve funds (3) General obligation $ 242,496,597 Combined overlapping debt $ 645,754,483 Total net direct and net overlapping debt Population of Miami Net assessed valuation per capita Net taxable valuation per capita DEBT RATIOS: Net direct general obligation debt as a percentage of taxable assessed valuation Combined net direct and overlapping general obligation debt as a percent of taxable assessed valuation 362,470 56,980 53,598 1.22% 2.47% Net direct general obligation debt per capita $ 652.61 Combined net direct general and special obligation debt per capita $ 1,112.53 Combined net direct and overlapping general obligation debt per capita $ 1,321.62 Combined net direct and overlapping general and special obligation per capita $ 1,781.54 (1) Assessed valuation as of the final tax roll from Metropolitan Dade County, using 100% of assessed value as mandated by Florida Law (2) Special obligation debt includes special obligation and revenue bonds. The revenue generated to pay these bonds and notes are from sources other than Ad Valorem Taxes. (3) Based upon the percentage of the County's tax roll valuation comprised of real and personal property situated in the City of Miami. 115 CITY OF MIAMI, FLORIDA SCHEDULE OF DIRECT AND OVERLAPPING GENERAL OBLIGATION DEBT SEPTEMBER 30, 2003 Direct Debt General obligation indebtness $ 236,549,956 (net of amount available) Overlapping Debt Miami -Dade County Total net debt net of reserves Percent applicable to the City - 19% (1) Miami -Dade County School Board (2) Total net debt net of reserves Percent applicable to the City - 19% (1) 242,086,726 1,034,211,151 45,996,478 196,500,119 $ 242,496,597 (1) Based upon the percentage of the County tax roll valuation comprised of real and personal property situated in the City of Miami. (2) The amounts provided by the school board are as of fiscal year ended June 30, 2003. 116 CITY OF MIAMI, FLORIDA TEN LARGEST TAX ASSESSMENTS 2003 ASSESSED VALUES NATURE OF ASSESSED PERCENT TAXPAYER ACTIVITY VALUE 1. SRI Miami Ventures, LP Real Estate Investments $ 242,800,000 1.61 2. Teachers Ins & Annuity Assoc of America Real Estate Investments 221,000,000 1.46 3. Florida Power & Light Utility 211,910,572 1.40 4. Prudential Insurance Co. Real Estate Investments 157,700,000 1.04 5. Swire Properities Real Estate Investments 138,667,229 0.92 6. 1111 Brickell Office LLC Real Estate Investments 119,400,000 0.79 7. NOP LLC Real Estate Investments 109,600,000 0.73 8. Biscayne Tower Group Office Building 87,000,000 0.58 9. Bellsouth Utility 85,562,693 0.57 10. Brickell Equities Corp Real Estate Investments 74,200,000 0.49 All others Various 13,665,220,947 90.42 Total $ 15,113,061,441 100.00 CITY OF MIAMI, FLORIDA BANK DEPOSITS LAST TEN YEARS Financial Institutions Miami -Dade County is second only to New York in the greatest concentration of intemational and Edge Act Banks in North America with 61 foreign bank agencies operating in the community. There are 11 Edge Act Banks that are located in Miami -Dade County. These include: HSBC Republic Intemational, Banco de Bogota International, Bancare Intemational, Banco Latino International, Banco Santander Intemational, Bank of Boston International, Citibank Intemational, Coutts & Company (U.S.A.) Intemational, Bank of Miami, American Express Bank Intemational and Riggs International Corp. The Federal Reserve Edge Act Amendment, adopted in 1979, permits banks to open international bank subsidiaries outside their home state. The Federal Reserve System has established a branch office in Miami -Dade County to assist the Atlanta office with financial transactios in the South Florida area. NUMBER OF JUNE 30 BANKS TOTAL DEPOSIT 2003 78 56,264,000,000 2002 75 51,297,297,000 2001 72 45,064,000,000 2000 72 40,543,000,000 1999 69 39,633,149,000 1998 67 28,996,024,000 (1) 1997 69 28,229,233,000 (1) 1996 72 26,748,125,000 (1) 1995 68 24,824,611,000 (1) 1994 66 22,463,569,000 (1) (1) F.D.I.C. was not available. This data was provided by the Florida Bankers Association. 117 CITY OF MIAMI, FLORIDA BUILDING PERMITS LAST TEN YEARS The dollar value of building peunits issued in the City of Miami and in unincorporated Miami -Dade areas since 1994 are as follows: UNINCORPORATED YEAR CITY OF MIAMI MIAMI-DADE COUNTY (1) 2003 $ 727,753,627 $ 1,516,853,000 2002 695,459,545 1,474,037,000 2001 635,696,950 1,461,565,000 2000 677,941,797 1,200,662,000 1999 744,979,437 1,271,087,000 1998 365,719,299 1,122,029,000 1997 339,897,000 969,286,000 1996 473,512,000 1,938,625,000 1995 302,898,000 1,317,936,000 1994 351,654,000 987,370,000 Source: Miami -Dade County Finance Department CITY OF MIAMI, FLORIDA DEMOGRAPHIC STATISTICS 'ITY OF MIAMI AND METROPOLITAN MIAMI-DADE COUNTY POPULATION 2000 CENSUS COUNT YEARS CITY OF MIAMI-DADE MIAMI COUNTY 0-4 21,222 145,752 5-9 21,962 157,871 10-14 22,182 160,754 15-19 22,339 154,989 20-24 23,023 144,721 25-34 54,264 337,433 35-44 55,682 361,966 45-54 44,287 282,766 55-59 17,983 109,141 60-64 17,758 97,417 65-74 32,233 162,257 75-84 21,140 99,827 85+ 8,395 38,468 Source: U.S. Bureau of Census 362,470 2,253,362 118 CITY OF MIAMI, FLORIDA GENERAL STATISTICAL DATA GEOGRAPHY The City of Miami encompasses 34 square miles of land and 20 square miles of water and is the County seat of Miami -Dade, which encompasses 2,000 square miles of Florida's southeastern region. Miami is situated at the mouth of the Miami River on the western shore of Biscayne Bay, the main port of entry in Florida. Miami is the southernmost major city and seaport in the continental United States. The nearest foreign territory is the Bahamian Island of Bimini, 50 miles from the Miami coast. Miami's climate is sub - tropical - marine, charcterized by long summers with abundant rain fall and mild, dry winters. The average temperature in the summer is 81.4 degrees Fahrenheit and 69.1 degrees Fahrenheit in the winter, with an average annual temperature of 75.3 degrees. ECONOMY The economic base of Greater Miami has diversified in recent years, shifting from reliance on the tourism industry to a combination of manufacturing, services industries and international trade. The area's advantages in terms of climate, geography, low taxes and skilled labor have combined to make the Miami area a prime relocation area for major manufacturing firms and international corporate headquarters. PORT OF MIAMI The Port of Miami is operated by the Seaport Department of Miami -Dade County. From 1994 to 2003, the number of passengers sailing from the Port increased from 2,967,081 to 3,960,614, an increase of 33%. The Port of Miami is currently the world's most active port in number of passengers and frequency of sailings. Cargo movement through the Port has increased by 61% in the last ten years of operation. The Port of Miami has almost doubled in size, from 325 acres to 600 acres, through a $250 million expansion program which began in 1980 designed to move 16 million tons of cargo and 4 million cruise passengers by the year 2004. The additional space is needed to accommodate the increasing number of shippers, buyers, importers, exporters, freight forwarders, and cruise passengers who wish to conduct business through the Port. A ten year summary of the growth in revenues, passengers, and cargo handled follows: TOTAL CARGO YEAR REVENUES PASSENGERS TONNAGE 2003 $ 83,152,554 3,960,614 9,002,359 2002 80,540,233 3,642,990 8,681,735 2001 76,207,522 3,391,091 8,247,004 2000 72,539,132 3,364,643 7,804,946 1999 64,549,647 3,112,355 6,930,372 1998 67,750,748 3,960,264 7,056,664 1997 60,638,678 3,191,885 6,735,388 1996 48,770,008 3,052,450 5,859,538 1995 45,214,988 2,974,703 5,840,815 1994 46,054,710 2,967,081 5,574,252 SOURCE: Miami -Dade Seaport Department MIAMI INTERNATIONAL AIRPORT Miami -Dade County owns and operates six airports in the Miami area. Miami International Airport ranks second in the nation and ninth in the world in passenger traffic through an airport The Airport ranks second in the nation and fourth in the world in tonnage of domestic and intemational cargo movement. In 2003 over 29 million air travelers were serviced by Miami Intemational Airport, and approximately 3.5 billion pounds of cargo were handled. Miami Intemational Airport is in the midst of a one billion dollar expansion planned to service over 45 million passangers by the year 2005. A ten year summary of the growth of both passengers served and cargo handled follows: TOTAL TOTAL CARGO YEAR PASSENGERS POUNDS 2003 29,532,000 3,550,170,000 2002 29,350,000 3,526,584,000 2001 33,049,000 3,681,872,000 2000 33,743,000 3,598,450,000 1999 34,004,000 3,718,886,000 1998 34,032,000 3,983,304,000 1997 34,376,000 3,868,266,000 1996 33,497,000 3,695,676,000 1995 33,200,000 3,406,734,000 1994 29,475,000 2,836,998,000 119 CITY OF MIAMI, FLORIDA GROWTH FACTORS RELATIVE TO MIAMI-DADE COUNTY, FLORIDA ELECTRICITY CUSTOMERS AND SALES RESIDENTIAL CUSTOMERS TOTAL KWH CUSTOMERS AVERAGE YEAR SALES AVERAGE NUMBER NUMBER 2003 26,379,216,033 827,544 111,320 2002 25,514,150,442 809,506 108,708 2001 24,324,685,945 800,858 107,970 2000 23,765,525,000 785,519 105,052 1999 23,447,742,000 772,845 103,870 1998 22,965,296,000 763,749 103,577 1997 22,298,295,000 756,522 102,278 1996 21,631,294,000 749,355 100,979 1995 21,416,207,000 746,887 107,799 1994 21,225,180,000 734,113 105,758 SOURCE: Florida Power & Light WATER CUSTOMERS AND SALES NUMBER CONSUMPTION YEAR WATER METERS (GALLONS) 2003 408,172 99,240,000,000 2002 398,073 96,113,000,000 2001 388,169 91,968,000,000 2000 372,973 99,053,000,000 1999 369,924 97,471,000,000 1998 366,992 97,312,000,000 1997 361,612 98,704,000,000 1996 353,525 98,911,000,000 1995 331,200 99,551,000,000 1994 330,956 100,784,000,000 SOURCE: Miami -Dade County Water & Sewer Department MOTOR VEHICLE REGISTRATION AND SALES TAX COLLECTION MOTOR VEHICLE SALES TAX YEAR REGISTRATION COLLECTIONS 2003 2,008,064 $ 1,774,213,626 2002 1,916,980 1,913,110,256 2001 2,533,220 1,835,007,261 2000 2,420,074 1,791,550,000 1999 2,392,339 1,683,191,000 1998 2,410,644 1,667,778,000 1997 2,418,549 1,588,189,000 1996 2,426,455 1,508,601,000 1995 2,204,356 1,442,623,000 1994 2,274,404 1,307,536,000 SOURCE: State of Florida Department of Revenue 120 • CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida Year ended September 30, 2003 SUBMITTED INTO THE PUBLIC RECORD FOR. ITEMor.�ON 5.6-0 . Executive Summary KPMG LLP (KPMG) hereby submits this management letter to the City of Miami, Florida (the City), for the fiscal year ending September 30, 2003. The management letter is presented in accordance with the Rules of the Auditor General of the State of Florida. In accordance with Government Auditing Standards, we are required to consider the City's internal control during our planning and performing of our audit of the basic financial statements in order to determine our auditing procedures for the purpose of expressing our opinion on the basic financial statements and not to provide assurance on the internal control. In fulfilling this responsibility, estimates and judgments made by management are required to assess the expected benefits and related costs of internal control policies and procedures. The objectives on internal control are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of its basic financial statements in accordance with accounting principles generally accepted in the United States of America. The management letter is organized in the following manner: • Executive summary; • Current year's observations, recommendations, and management's responses; and • Status of prior years' observations, recommendations, and management's responses. Only comments issued in the prior years that are still relevant are included in this management letter. We would be pleased to discuss these comments with you and, if desired, to assist you and management in implementing corrective action steps. KPMG appreciates the cooperation we received from the City's staff and management and is honored to serve the City as its external auditors. KPMG LLP Suite 2800 One Biscayne Tower Two South Biscayne Boulevard Miami. FL 33131 Management Letter in Accordance with the Rules of the Auditor General of the State of Florida To the Honorable Mayor, Members of the City of Miami Commission and City Manager City of Miami, Florida: Telephone 305 358 2300 Fax 305 913 2692 We have audited the basic financial statements of the City of Miami, Florida (the City), as of and for the fiscal year ended September 30, 2003, and have issued our report thereon dated February 27, 2004, which referred to our use of the reports of other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations. We have issued our Independent Auditors' Report on Compliance and Internal Control Over Financial Reporting, Independent Auditors' Report on Compliance and Internal Control Over Compliance Applicable to each Major Federal Program and State Project, and Schedule of Findings and Questioned Costs. Disclosures in those reports and schedule, which are dated February 27, 2004, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General. Those rules (Section 10.554(1)(g)1.a.) require that we address in the management letter, if not already addressed in the auditors' reports on compliance and internal controls or schedule of findings and questioned costs, whether or not inaccuracies, shortages, defalcations, fraud, and/or violations of laws, rules, regulations, and contractual provisions reported in the preceding annual financial audit report have been corrected. We noted no inaccuracies, irregularities, shortages, defalcations, and/or violations of laws, rules, regulations, and contractual provisions disclosed in the preceding annual report. The Rules of the Auditor General (Section 10.554(1)(g)1.b.) require that we disclose in the management letter, if not already disclosed in the auditors' reports on compliance and internal controls or schedule of findings and questioned costs, whether or not recommendations made in the preceding annual financial audit report have been followed. The recommendations made in the preceding annual financial audit report have been corrected, except for those reported below under the heading "Status of Prior Years' Observations, Recommendations and Management's Responses." The Rules of the Auditor General (Section 10.554(1)(g)2.), state that a management letter shall include a statement as to whether or not a local governmental entity complied with Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our audit, we determined that the City of Miami, Florida complied with Section 218.415, Florida Statutes, relating to local governmental investment policies. IMMO KPMG LLP, a U.S. limited liability partnership, Is the U.S. member firm of KPMG International, a Swiss cooperative. The Rules of the Auditor General (Section 10.554(1)(g) 3.) states that a management letter shall include recommendations to improve the local government entity's present financial management, accounting procedures and internal accounting controls. The recommendations made in the current year are listed in the section titled "Current Year's Observations, Recommendations and Management's Responses (see Appendix A)." The Rules of the Auditor General (Section 10.554(1)(g)4.) require disclosure in the management letter of the following matters if not already addressed in the auditors' reports on compliance and internal controls or schedule of findings and questioned costs: (a) violations of laws, rules, regulations, and contractual provisions that have occurred, or are likely to have occurred; (b) improper or illegal expenditures; (c) improper or inadequate accounting procedures (for example, the omission of required disclosures from the financial statements); (d) failures to properly record financial transactions; and (e) other inaccuracies, shortages, defalcations, and instances of fraud discovered by, or that come to the attention of, the auditor. No such conditions were noted during the audit. The Rules of the Auditor General (Section 10.554(1)g5.) also require that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in the management letter, unless disclosed in the notes to the financial statements. Disclosure is made in note 1 to the City's basic financial statements. The Rules of the Auditor General (Section 10.554(1)(g)6.a.), state that a management letter shall include a statement as to whether or not a unit of local government is in a state of financial emergency as a consequence of conditions described in Section 218.503(1), Florida Statutes. In connection with our audit, we determined that the City is not in a state of financial emergency as a consequence of the conditions described in Section 218.503(1), Florida Statutes. As required by the Rules of the Auditor General (Section 10.554(1)(g)6.b.), we determined that the annual financial report for the City for the fiscal year ended September 30, 2003, filed with the Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2003. As required by the Rules of the Auditor General (Sections 10.554(g)(6)c. and 10.556), we applied financial condition assessment procedures. It is management's responsibility to monitor the City's financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. This management letter is intended solely for the information and use of the Honorable Mayor, Members of the City of Miami Commission, the City Manager, management of the City, the State of Florida Office of the Auditor General, and federal and state awarding agencies and pass -through entities, and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, KePtv(c.- LLP February 27, 2004 Appendix A-1 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Current Year's Observations, Recommendations, and Management's Responses Summary No. Current year's observations 2003-1 Capital Assets 2003-2 Payroll Audit Trail Report 2003-3 Fraud Policies and Procedures CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Current Year's Observations, Recommendations, and Management's Responses 2003-1 Capital Assets Criteria Appendix A-2 The City should record capital assets at historical cost and depreciate them over their estimated useful lives unless they are inexhaustible. In order to properly record capital assets and related depreciation expense, the City must retain adequate records of all capital assets and update and record activity throughout the year. Additionally, assets purchased with federal or state grant funds should be specifically identified as being acquired with grant funds to help ensure compliance with the equipment and real property management requirements of the respective grant programs. Condition Found The City does not have an adequate accounting system for the capital assets subsidiary ledger and accounting information systems to help ensure that capital assets balances are accurately recorded, properly labeled and monitored. The conditions noted are as follows: • Balances recorded in the current capital assets subsidiary ledger did not include all balances that were inventoried and reported by the City's third -party consultant in fiscal year 2002. • The City's accounting information system for capital assets is not designed to report depreciation expense by functional activities, departments, or categories. • The City's accounting information system does not allow for significant modifications to enable updates, changes, and adjustments to previously recorded capital asset balances. • Capital assets purchased with federal and state funding are not specifically identifiable in the capital assets subsidiary ledger as required by Circular OMB A-133 and the State of Florida Single Audit Act. Perspective The finding is considered systemic in nature. Effect Failure to properly record, update and depreciate capital assets balances could result in misappropriations of assets or improper recording of capital assets balances and related depreciation expense for financial statement reporting and also violates federal and state granting requirements. Recommendation We recommend that the City improve the capital assets subsidiary ledger and accounting information systems to help ensure more accurate and complete recording of capital assets balances for financial reporting purposes. The Appendix A-3 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Current Year's Observations, Recommendations, and Management's Responses City should also consider upgrading its capital assets module to include depreciation calculation capabilities. Additionally, capital assets purchased with federal and state funds should be appropriately labeled to help ensure accurate identification of the assets. Management's Response The City's accounting information system went through a major upgrade, which was finalized subsequent to year-end. In preparation for this upgrade, information technology resources were limited, hence delaying updates and purges to the accounting information system of capital asset information. In addition, the City acknowledges the limitations of the current financial accounting system and a result plans to procure an Enterprise Resource Processing (ERP) system that will allow for a simplified and complete budget module in 2004. The ERP implementation is planned to start in Fiscal 2004 and to be completed in Fiscal 2005. Appendix A-4 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Current Year's Observations, Recommendations, and Management's Responses 2003-02 Payroll Audit Trail Report Criteria The City has formal policies and guidelines related to the safeguarding and processing of human resources information including the processing of changes to employee records. Condition Found The complete payroll audit trail reports are not reviewed each pay period to help ensure that no unauthorized changes were made to employee records. Perspective This finding is considered systemic in nature. Effect Failure to monitor and review the payroll audit trail reports could result in unauthorized changes made to employees' records without the knowledge of human resource management, resulting in inaccurate reporting of payroll expenses and the City's obligations to its employees. Recommendation We recommend that the City enhance its current policies and procedures to help ensure that all modifications to human resource records are reviewed and approved each pay period to help ensure that all changes to employee records are properly authorized. Management's Response The City has policies and procedures in place to help ensure that all changes to employee records that do not require the review of the payroll audit trail reports are properly authorized. These reports are not user friendly and would require excessive amounts of time to accurately review them each pay period. Due to system and time constraints already imposed on the payroll section to make the payroll deadlines, review of this lengthy report is not feasible. Additionally, all changes to the HR/Payroll system are monitored through the use of payroll action form which goes through a series of manual reviews from Employee Relations before it is received in the payroll section of the Finance Department. All payroll action forms are then reviewed again by the Finance Department before the changes are made in the Moore Payroll system. The City Plans to procure an ERP System that will produce payroll edit change reports in order to identify all payroll changes made thereby providing a mechanism of review for any unauthorized payroll changes. Appendix A-5 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Current Year's Observations, Recommendations, and Management's Responses 2003-03 Fraud Policies and Procedures Criteria In October 2002, the AICPA's Auditing Standards Board issued Statement on Auditing Standards (SAS 99), Consideration of Fraud in a Financial Statement Audit. This standard requires the establishment of effective policies and procedures to deter and detect fraud activities, which is designed to form the basis for an effective control environment to help ensure the integrity of financial statement reporting and the safekeeping of the entity's assets. Condition Found The City currently has no written formal policies and guidelines for employee training specifically related to fraud. Perspective This finding is considered systemic in nature. Effect The lack of clear and specific written policies and procedures related to intentional or unintentional fraud activities may leave the City susceptible to such activities and place the City at risk of misappropriation of assets. Recommendation We recommend that the City implement written fraud policies and procedures into its employee -training manual to communicate more effectively its no -tolerance policy on fraudulent activities. Management's Response The City concurs with this recommendation and will draft a written fraud policy and include it into the employee training manual to communicate more effectively its no -tolerance policy on fraudulent activities. Appendix 13-1 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Status of Prior Years' Observations, Recommendations, and Management's Responses Summary Observation Observation addressed or is still no longer No. Prior years' observations relevant relevant 2002 Risk Management — Workers' Compensation 2002-1 Claims 2002-2 Managing Critical Network Characteristics X X 2001 2001-1 Single Audit Compliance X 2001-2 Budgeting X 2001-3 Time Recording — Overtime X 2001-4 Vendor Master Files X 2001-5 Requisition vs. P.O. Encumbrance X 2001-6 Business Continuity X 2000 2000-2 Statement on Auditing Standards (SAS) 70 Report X 2000-5 Grant Accounting X 2000-6 Business Continuity Plan X 2000-7 Logical Security — User Termination X 1999 99-3 Financial Reporting X 99-5 Network Management and Security X 1998 98-7 Changes in the Government Reporting Model X 1997 97-4 IT Organization Structure X 97-5 Disaster Recovery and Business Continuity Plan X 97-6 User Access Codes X *See observation 2001-6 Appendix B-2 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Status of Prior Years' Observations, Recommendations, and Management's Responses 2002-1 Risk Management — Workers' Compensation Claims Criteria The City has formal polices and procedures over the processing and payment of workers' compensation claims. These policies and procedures have been developed to control the propriety of payments to claimants. Condition Found The City is not adhering to its policies and procedures for the processing and payment of workers' compensation claims. During our testing of workers' compensation claims in the Risk Management Department, we noted the following in several instances: • Forms were not properly filed (e.g., D-slip and Supervisor Report of Injury) in claimant files; • Proper endorsement or signatures were missing for processing and payment of claims; • Supplemental payments were incorrectly calculated; • Adjuster's stamp of approval or stamp indicating date received were missing on some invoices; • Payments were not made within the allowable 45 day time period; and • A claimant file we requested for review could not be located. Perspective This finding is considered systemic in nature. Effect Failure to properly process and pay workers' compensation claims in accordance with the City's policies and procedures could result in unauthorized and/or illegitimate payment of claims. Recommendation We recommend the City adhere to its policies and procedures for the processing and payment of workers' compensation claims. Prior Year's Management's Response We concur with these findings. During the fiscal year, the Risk Management workers' compensation division has implemented policies and procedures to mitigate these types of issued in the future. For example, a checklist has been implemented to assist the adjusters in ensuring that all forms are completed and placed in the files. In addition, all payments are reviewed and initialed by the workers' compensation claims supervisor and all documents are date stamped when received in the department. CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Current Years' Observations, Recommendations, and Management's Responses Current Year's Status Appendix B-3 This observation is still applicable in the current year. Current Year's Management's Response In fiscal year 2004 the functions covered by this audit were transferred to Gallagher Bassett, a third party administrator (TPA). The TPA has adequate internal controls in place to ensure that the worker's compensation payments are process according to policy and procedures as established by the City. Appendix B-4 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Status of Prior Years' Observations, Recommendations, and Management's Responses 2002-2 Managing Critical Network Characteristics Criteria The City currently has a citywide network in place that links many locations throughout the City. A network of this magnitude should have a mechanism to centrally manage critical network characteristics such as availability, responsiveness, resilience, and security. Condition Found The City currently does not have a mechanism to centrally manage critical network characteristics such as availability, responsiveness, resilience, and security. Perspective This finding is considered systemic in nature. Effect As the City network grows in size and complexity, IT will be unable to detect, diagnose, or troubleshoot network traffic problems that can affect the availability and integrity of City resources. Recommendation We recommend the City purchase a network management tool to configure, administer, and troubleshoot routed wide -area and local segment networks. Prior Year's Management's Response City staff concurs with the recommendation. An appropriate level of funding will be requested during the current budget planning cycle to implement an appropriate network management tool to configure, administer, and troubleshoot wide -area and local network segments during the 2003-2004 Fiscal Year. ITD is currently examining bandwidth utilization on a monthly basis and will use this information to ensure bandwidth is available when and where needed to meet City needs. Appendix B-5 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Status of Prior Years' Observations, Recommendations, and Management's Responses Current Year's Status This observation is still applicable in the current year. The City has approved the budget for the purchase and implementation of a centralized management tool. Current Year's Management's Response City staff concurs with the recommendations. The Information Technology Department received initial funding in last years budgetary process (FY03-04) to begin to address the implementation of the appropriate network management tools to address this observation. Current plans call for the evaluation of the appropriate tools to begin in the 4th Quarter of this Fiscal Year. Actual implementation of the selected tool will begin in the 1st Quarter of FY04-05. Additional funding to complete the implementation will be requested during the upcoming budgetary process. Appendix B-6 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Status of Prior Years' Observations, Recommendations, and Management's Responses 2001-2 Budgeting Observation The City currently utilizes two separate budget databases: the SCI financial management system for finalized budget and procurement purposes and the Access database within the Budget Department to create, track, monitor, forecast and finalize the budget. Numerous amounts of line items are entered into the Access database and reviewed during the budget process. The budget department has utilized the finalized budget of the prior year to start creating the basis for the development of the budget of the upcoming fiscal year. After the budget has been finalized and approved, the information is interfaced with the SCI system. On a monthly basis, data is downloaded from the SCI system into the Access database by the IT Department for forecasting purposes. Maintaining two separate budget databases may result in extensive manual review procedures that are required to verify and ensure the data being utilized by the City. Recommendation Management should consider implementing a budget module that would include the entire budgeting process from initiation through adoption, to reduce the amount of time required for the extensive manual reviews currently being performed. In addition, this would provide for up-to-date information when needed for forecasting purposes rather than waiting until the monthly download process occurs. Prior Year's Management's Response City staff concurs with the comment, however, current financial system limitations do not allow for a budget module that would include the entire budgeting process. The City is in the process of researching a new ERP system that will allow for a simplified and complete budget module. Current Year's Status This observation is still applicable in the current year. The City is still in the process of researching a new ERP system and has not implemented any new modules related to the budgeting process. Current Year's Management Response City plans to procure an ERP system that will allow for a simplified and complete budget module in 2004. The ERP implementation is planned to start in Fiscal 2004 and to be completed in Fiscal 2005. Appendix B-7 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Status of Prior Years' Observations, Recommendations, and Management's Responses 2001-3 Time Recording — Overtime Observation The City's GSA and Solid Waste Departments utilizes the KRONOS system for tracking, recording, and monitoring employee time and attendance. The other departments within the City rely on manually recorded, authorized, and submitted Time and Attendance reports. These reports are entered manually into the Moore Personnel/Payroll system. The system edit checks within the Moore Personnel /Payroll system related to overtime do not limit time entry of excessive overtime. Current policy requires approval for time and attendance prior to submission by the responsible departments. An exception report is utilized which indicates overtime hours that have been entered for employees not eligible for overtime. However, this report does not encompass overtime hours in excess of reasonable hours worked per day for all employees. In some instances it is necessary to enter hours worked for an employee retroactively. For this purpose, daily time parameters that could aid in identifying excessive overtime hours have not been set within the system. In addition, there are two different screens in the Moore Personnel/Payroll system where time can be entered. One is for mass entry of time the other for individual time entry. Predominantly, the screen for mass time entry is utilized, however, the individual time entry screen does not subject data entry to edit or validation checks, including overtime or invalid codes. Entry of time and attendance with limited or no online parameters for detecting the submission of excessive overtime and part-time hours may contribute in overpaying an employee. Although the system does generate a report that is manually reviewed by the payroll department, this report lists all overtime hours entered for those employees not eligible for overtime but does not indicate those entries that appear excessive or out of the ordinary. Recommendation Management should consider implementing time and entry edit and validation checks for total hours worked including full-time, part-time and overtime hours for both entry screens. A single exception report should be generated by the system based on submissions that are outside the set parameters. The parameters should factor into account employees who work permanent positions in addition to part-time position, as well as part-time employees who work multiple positions. This should enable a more accurate and efficient review, and allow payroll personnel to perform other payroll related functions. Prior Year's Management's Response City staff concurs with the comment, however, current financial system limitations do not allow for such an exception report. The City is in the process of researching a new ERP system that will allow for more accurate and efficient reviews of overtime hours. Appendix B-8 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Status of Prior Years' Observations, Recommendations, and Management's Responses Current Year's Status This observation is still applicable in the current year. The City is still in the process of researching a new ERP system and has not implemented any new modules for this system. Current Year's Management's Response This observation is still valid. The City Commission approved procurement of an ERP System April 8, 2004. The new Kronos system, which went into production on Feb 8, 2004, provides overtime reports that allow the departments of Solid Waste, General Services Administration and Parks and Recreation to monitor overtime hours more closely. The Police Department is currently in the process of defining the scope of work to implement Kronos. This will also allow them to monitor overtime more closely. Appendix B-9 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Status of Prior Years' Observations, Recommendations, and Management's Responses 2001-4 Vendor Master Files Observation There are two vendor master files currently being used by the City: one is updated and maintained by the accounts payable department in the SCI financial system, another is a database in the procurement department within the Advanced Procurement System (APS). A decision to utilize a separate procurement system initiated the development for maintaining two separate databases. Vendor master data changed or updated within the APS system is not interfaced with the SCI system during the nightly batch process, however changes within the SCI vendor master data updates the information within the APS system during the batch process. Consequently, changes that are made in either of the systems have to be manually reviewed within both systems. The two systems do not store the same informational content. For example, SCI has the capability to enter and store multiple addresses for a vendor. The APS system does not provide this functionality. The APS system, however, has the capability to enter commodity codes for the vendor whereas the SCI system does not. Consequently, for purchasing purposes reports by commodity codes are generated from the APS system. Maintaining vendor master data in two separate files may result in incomplete or inaccurate data being utilized by the City. Recommendation Management should evaluate other solutions to ensure that only one vendor master file is maintained and utilized on a regular basis in order to avoid inaccurate data from being used. Management should also ensure that all the data is centrally accessible. Prior Year's Management's Response City staff concurs with the comment, however, current financial system limitations do not allow for the use of only one vendor master file. The City is in the process of researching a new ERP system that will allow for a centralized vendor database. Current Year's Status This observation is still applicable in the current year. The City did not implement a centralized vendor database during fiscal year 2003. Appendix B-10 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Status of Prior Years' Observations, Recommendations, and Management's Responses Current Year's Management's Response In November 2003, the City moved the SCI (now named GEMS) system to an NT server. As a result of this migration Procurement decided to utilize the full functionality of the GEMS Purchasing module, thus eliminating the need for the APS system. Therefore, the City has retired the APS system and now maintains only the one vendor file within the GEMS application. Appendix B-11 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Status of Prior Years' Observations, Recommendations, and Management's Responses 2001-5 Requisition vs. Purchase Order Encumbrance Observation A purchase order entered into the APS system of the procurement department and interfaced with the SCI system will be accepted by the financial management system even if the purchase order is greater than the originally approved amount of the requisition, if sufficient funds are available. There are no systematic alerts to the user pertaining to a possible variation of amounts between the requisition and the final purchase order, although the procurement department does have compensating manual review procedures in place to detect such discrepancies before the purchase order is entered into the system. Any discrepancies will be followed -up with the respective department and, if necessary, with the budget department before proceeding. A manual review of the interfaced data into the SCI system is also conducted regularly. Instances have occurred where the dollar amount of the purchase order within the APS system and the dollar amount of the same purchase order within SCI after the interface have occurred are different. Although there are manual detective review procedures in place and the supervisor is notified to make the necessary adjustments in the system, the SCI system does not automatically alert the user to this discrepancy. Purchase orders that have been interfaced with the SCI system without automatically alerting the user when the purchase order is greater than the originally approved requisition may result in purchases of items in excess of authorized amounts, effecting the department's budget and go undetected. Purchase orders encumbered within the SCI system with a higher amount than entered into the APS system may cause inaccurate data within the SCI system which may go undetected. This may expose the department to unexpected and unmonitored expenses that could lead to exceeding funds, resulting in unexpected and unnecessary budget overruns. Recommendation Management should consider implementing automated controls that would alert the user when possible discrepancies exist between approved requisitions and purchase orders. Additionally, controls should either be implemented which would compare the data included in the finalized purchase orders entered into the APS system with the SCI system to enable early detection of possible variances in dollar amounts, or management should evaluate other solutions to ensure a seamless process to minimize the possibility of inaccurate and incomplete data from being utilized. Prior Year's Management's Response The City is in the process of migrating the SCI (GEMS Financial Accounting Software) System from the mainframe platform to the NT platform on an interim basis until an ERP solution is implemented. As part of the migration plan, Purchasing has agreed to use the SCI procurement module and retire the APS system Appendix B-12 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Status of Prior Years' Observations, Recommendations, and Management's Responses they are currently using. The migration of SCI to NT is scheduled to be completed by the end of this fiscal year Once the APS system is retired there will no longer be a need to interface two Purchasing files and this audit finding can be closed. Current Year's Status This observation is still applicable in the current year. The City is still in the process of researching a new ERP system and did not implement any new modules related to the purchasing system in fiscal 2003. Current Year's Management's Response As stated in the response to 2004-4 above, the APS system has been retired. With only the GEMS system maintaining requisitions and Purchase Orders there are no longer any discrepancies. Also, the GEMS application will alert the buyers when their changes cause the requisitions to exceed the budget. In this case the buyers do not issue a Purchase Orders until the Budget Department has transferred enough money into the account to cover the increase. Appendix B-13 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Status of Prior Years' Observations, Recommendations, and Management's Responses 2000-2 Statement on Auditing Standards (SAS) 70 Report Observation The City, which is self -insured for general liability, property and casualty, and workers' compensation claims, outsources the processing of its claims to a third -party administrator (TPA), which constitutes a significant amount of claims paid each year. In addition, the City outsources the processing of its Emergency Services billings and collections to a TPA. We noted that the TPA's do not have a service auditor's report (SAS 70 Report — Reports on the Processing of Transactions by Service Organizations from its TPA) issued on the internal controls over the administration of their respective services provided to the City. Recommendation We recommend the City request each TPA to obtain a SAS 70 report at least every two years. A SAS 70 report would provide the City and the City's external auditors' assurance, although not absolute, about whether or not the internal controls of the TPA are operating effectively with respect to the services provided to the City. Prior Year's Management's Response City staff concurs with the comment. Staff will implement procedures for future agreements with TPAs to contain language that will require them to provide a SAS 70 report to the City at least every two years. Current Year's Status This observation is still applicable in the current year. Currently, the City processes insurance claims in- house using software provided by Corporate Systems. However, a third -party administrator processes EMS billings and collections. Therefore, the City should request a SAS 70 report from this third -party administrator. Current Year's Management's Response City staff concurs with the comment. Staff will incorporate requirements into all new applicable contracts for TPAs to provide a SAS 70 report to the City at least every two years. Appendix B-14 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Status of Prior Years' Observations, Recommendations, and Management's Responses 2000-5 Grant Accounting Observation Each of the City's federal, state, and local grants are currently accounted for in the City's general ledger by project. However, each general ledger grant project does not identify only reimbursable expenditures related to the respective grants. As a result, we were unable to agree several grant program expenditures from the schedule of expenditures of federal awards, which were obtained from the general ledger grant project, to the reimbursement packages. Recommendation We recommend the City separately identify, in the general ledger grant projects, those expenditures that are reimbursable by the grantor and those expenditures that are not. This will ensure the accuracy of the schedule of expenditures of federal awards. Prior Year's Management's Response City staff concurs with the comment, however, current financial system limitations are such that grant expenditures are recorded on a project level and separately identifying those expenditures that are reimbursable by the grantor is not available. The Finance department is working in conjunction with the Budget department to ensure that the City's general ledger system, on a project level, correctly reflects only budgets for expenditures that are reimbursable under the grant agreement. Unallowed expenditures budgeted under the grant will require a separate budgeted dedicated revenue source. Current Year's Status This observation is still applicable in the current year. Current Year's Management's Response City plans to procure an ERP system that will allow for a fully functional grant accounting module in 2004. The ERP implementation is planned to start in Fiscal 2004 and to be completed in Fiscal 2005. Appendix B-15 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Status of Prior Years' Observations, Recommendations, and Management's Responses 2000-7 Logical Security — User Termination Observation The Human Resources department provides Information Technology department (ITD) with a list of monthly users that are no longer employed with the City. ITD relies on this list to ensure that terminated user system access is disabled. In addition, departments should immediately notify ITD of users that are no longer employed by the City. However, this policy is not well enforced. As a result, the possibility exists that users may remain active in the system for an extended period of time should departments not notify ITD. Recommendation Management should disable system users in a more timely manner. Sound practices indicate that users should be disabled on the last day of employment. The current policy should be recommunicated and enforced. Prior Year's Management's Response City staff concurs with the comment. Current City policies require that the director of the respective department notify ITD utilizing the "Security Access Termination Form" in the event that someone is transferred from their department or terminated from employment with the City. When these forms are received by ITD they are acted upon immediately. The "Monthly Separation Report" automatically produced by the City's automated payroll system acts as a secondary notification of staff changes. Additionally, in cases where urgency is dictated, an email from the respective department to the CIO of ITD is utilized to expedite security modification/termination requests. The primary policy, as has been noted in past years, is not always followed. ITD will draft a memo for the City Manager's signature reinforcing this policy. Additionally, the CIO of ITD will send an email to all organizational heads confirming the need for adherence to this policy. Moreover, a link to the "Security Access Termination Form" will be provided on the City's Intranet site (CITYNET) giving direct access to this form in electronic format. Current Year's Status This observation is still applicable in the current year. The user termination policy is being modified so that the system access privileges are removed upon user termination. Appendix B-16 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Status of Prior Years' Observations, Recommendations, and Management's Responses Current Year's Management Response City staff concurs with the comment. A link to the "Security Access Termination Form" is available on the City's intranet homepage; however, these forms are not always received in an expedited manner. The staff of the Information Technology Department does utilize the "Monthly Separation Report" as a secondary notification of these personnel actions; however, ITD will work directly with the Employee Relations Department to determine if a more effective and timely employee termination notification process can be implemented. Appendix B-17 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Status of Prior Years' Observations, Recommendations, and Management's Responses 1999-3 Financial Reporting Observation The Finance department has purchased computerized financial reporting software and developed certain procedures in an effort to assist in the compilation of the annual general purpose financial statements. However, we noted that the accounting software is not fully used for its intended purpose and, in fact, the financial statements are prepared manually on spreadsheets, which is very time consuming and prone to human error. Recommendation Although the City has purchased computerized financial reporting software in the prior year, we noted that the implementation process of such software has encountered some difficulties. We recommend that the City continue to aggressively implement the computerized financial reporting software. The use of a formal financial reporting system will improve the timeliness and accuracy of financial data and thereby assist management in meeting their reporting deadlines and provide them with a reliable tool for monitoring the City's progress and making informed decisions. Prior Year's Management's Response City staff concurs with the comment. The software provider has not yet delivered a working module. The City is willing to implement the module upon delivery. Additionally, the City is in the process of researching a new ERP system that will include a financial reporting module. Current Year's Status This observation is still applicable in the current year. The City is still in the process of researching a new ERP system and has not implemented any new modules related to the financial reporting process. Current Year's Management's Response City plans to procure an ERP system that will allow for a fully functional financial reporting module in 2004. The ERP implementation is planned to start in Fiscal 2004 and to be completed in Fiscal 2005. Appendix B-18 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Status of Prior Years' Observations, Recommendations, and Management's Responses 1997-6 User Access Codes Observation User access codes and Userlds (Personnel Identification Numbers) are in clear text, unencrypted/unmasked to users with security administrator level access within the SCI financial systems and the police systems (including the Police Accounting system). Security administrators of the SCI financial software and police systems have the capability to view and print out all access codes and Userlds for this system. Hence, these individuals have the capability to perform any type of transactions within the financial systems and remain undetected. Recommendation The City should evaluate whether or not it is feasible and cost beneficial to enable password encryption for the SCI financial systems and the police systems. Prior Year's Management's Response City staff concurs with the comment. Additionally, the City is in the process of researching a new ERP system that will include adequate security that enables password encryption Suggested Action in Prior Year The Finance Department should advise the security operators via memo (reminding them not to allow people to view these particular screens) and the Finance Department should amend their Departmental procedures to note this danger exists, and advise operators how to avoid same. The Police System is a very old legacy based system and would be prohibitively expensive to address. However, these considerations will be included in any forthcoming RFP for new systems. Appendix B-19 CITY OF MIAMI, FLORIDA Management Letter in Accordance with the Rules of the Auditor General of the State of Florida September 30, 2003 Status of Prior Years' Observations, Recommendations, and Management's Responses Current Year's Status This observation is still applicable in the current year. Current Year's Management's Response The SCI Financial System is a product that was developed and is supported by a third party (GEMS). GEMS has been asked by the City to modify the base system to provide for this level of security, however, they have consistently declined to do so. The Police Accounting System is over 20 years old and is not cost effective to modify at this time. The City plans to procure an ERP system in 2004; industry standard security will be a requirement.