COG Comprehensive Annual Financial Report

MANAGEMENT’S DISCUSSION AND ANALYSIS As management of the City of Greensboro, we offer readers of our financial statements this narrative overview and analysis of the financial activities of the City of Greensboro for the fiscal year ended June 30, 2018. The Management Discussion and Analysis (MD&A) section is designed to assist the reader in focusing on significant financial issues, provide an overview of the City’s financial activity, identify changes in the City’s financial condition, identify material deviations from the financial budget, and identify individual fund issues or concerns. Since the MD&A is structured to focus on the current year’s activities, resulting changes and currently known facts, we encourage readers to consider the information presented here in conjunction with the transmittal letter, which can be found beginning on page I of this report, and the City’s financial statements, which follow this section. FINANCIAL HIGHLIGHTS  The assets and deferred outflows of the City of Greensboro exceeded its liabilities and deferred inflows at the close of the fiscal year by $977.1 million (net position) . The City’s net position increased by $25.4 million (2.7%) compared to FY 2017, restated. The prior year net position includes a prior period restatement reduction of $112.5 million due to implementation of Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions , recording a beginning net Other Postemployment Benefits (OPEB) liability among other OPEB adjustments. The governmental net position increased by $6.4 million (2.6%) and the business-type net position increased $19 million (2.7%) primarily due to increases in property tax revenue due to the 2017 reevaluation, water and sewer rate increases effective July 1, 2017, and cost containments.  The governmental activities program revenue was lower than last year’s results by approximately $6.6 million at $72 million. The difference is primarily related to the donation of LeBauer and Center City Parks in FY 2017. General governmental revenues increased by $10.9 million (4.5%) and primarily due to increased property tax collection related to the 2017 reevaluation. The property tax rate remained the same as last year at $.6235 per $100 of assessed valuation. Base property values are projected to grow at 1.5% in FY 2019. Sales tax receipts increased 4.7% or approximately $2.4 million due to improved economic conditions in the region and an expanded sales tax base. Investment earnings were the equivalent of 1.99 cents on the property tax rate compared to 1.40 cents last year. For budgeting purposes, management projects interest earnings to modestly increase for the near-term planning cycle for conservatism. In the City’s business-type activities, total revenues increased by about $770 thousand primarily due to increased water and sewer rates effective July 1, 2017 offset by increased debt service expense.  During the year, the City’s governmental expenses at the entity-wide level were $311.5 million, an increase of $12.5 million or 4.2% more than last year, primarily due to increased public safety, transportation, culture and recreation, and neighborhood development expenditures. In all, expenses increased $22.2 million or 4.9% citywide with approximately $9.7 million of the increase affecting business-type fund activity, or 6.4%. Increased expenditures in the proprietary funds were primarily due to water resources operations expense and interest expense as a result of no longer capitalizing interest as a part of the historical cost of a capital asset per GASB Statement No. 89.

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