financial statements march 31, 2020 - grosse ile

Y E O & Y E OCPAs & BUSINESS CONSULTANTS

Township of Grosse Ile

Financial Statements

March 31, 2020

Table of Contents

Section Page 1 List of Elected and Appointed Officials 1 – 1 2 Independent Auditors’ Report 2 – 1 3 Management’s Discussion and Analysis 3 – 1

4 Basic Financial Statements Government-wide Financial Statements Statement of Net Position 4 – 1 Statement of Activities 4 – 3 Fund Financial Statements Governmental Funds Balance Sheet 4 – 4 Reconciliation of Fund Balances of Governmental Funds to Net Position of

Governmental Activities

4 – 6 Statement of Revenues, Expenditures and Changes in Fund Balances 4 – 7 Reconciliation of the Statement of Revenues, Expenditures and Changes

in Fund Balances of Governmental Funds to the Statement of Activities

4 – 9

Proprietary Funds Statement of Net Position 4 – 10 Statement of Revenues, Expenses and Changes in Fund Net Position 4 – 12 Statement of Cash Flows 4 – 14 Fiduciary Funds Statement of Assets and Liabilities 4 – 16

Component Units Statement of Net position Statement of Activities

4 – 17 4 – 18

Notes to the Financial Statements 4 – 19

Section Page 5 Required Supplementary Information Budgetary Comparison Schedule General Fund 5 – 1 Recreation Fund 5 – 4 Fire Operating Fund 5 – 5

Drain and Storm Fund

Municipal Retirement System of Michigan – Schedule of Employer Contributions Municipal Retirement System of Michigan – Schedule of Changes in Net Pension Liability and Related Ratios Other Postemployment Benefits – Schedule of Employer Contributions Other Postemployment Benefits – Schedule of Changes in Net OPEB Liability and Related Ratios Other Postemployment Benefits – Schedule of investment Returns

5 – 6

5 – 7 5 – 8

5 – 9 5 – 10 5 – 11

6 Other Supplementary Information Nonmajor Governmental Funds Combining Balance Sheet 6 – 1 Combining Statement of Revenue, Expenditures and Changes in Fund Balance 6 – 2 Nonmajor Special Revenue Funds Combining Balance Sheet 6 – 4 Combining Statement of Revenue, Expenditures and Changes in Fund Balance

Nonmajor Debt Service Funds Combining Balance Sheet Combining Statement of Revenue, Expenditures and Changes in Fund Balance

6 – 8

6 – 12 6 – 13

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Township of Grosse Ile List of Elected and Appointed Officials

March 31, 2020

Board of Trustees

Brian Loftus – Supervisor

Ute O’Connor – Township Clerk

Ted Van Os – Treasurer

James Budny – Trustee

Thomas Malvesto – Trustee

Carl Bloetscher – Trustee

James Nelson – Trustee

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Independent Auditors’ Report

Board of Trustees Township of Grosse Ile Grosse Ile, Michigan

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Township of Grosse Ile, as of and for the year ended March 31, 2020, and the related notes to the financial statements, which collectively comprise the Township’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

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Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Township of Grosse Ile, as of March 31, 2020, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information, municipal employees’ retirement system schedules, and other post-employment benefit schedules, as identified in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information, because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Supplementary Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Township of Grosse Ile’s basic financial statements. The other supplementary information, as identified in the table of contents, is presented for purposes of additional analysis and is not a required part of the basic financial statements.

The other supplementary information, as identified in the table of contents, is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The other supplementary information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the other supplementary information, as identified in the table of contents, is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Ann Arbor, MI September 28, 2020

Township of Grosse Ile Management’s Discussion and Analysis

March 31, 2020

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Our discussion and analysis of the Township of Grosse Ile’s (the “Township”) financial performance provides an overview of the Township’s financial activities for the fiscal year ended March 31, 2020. Please read it in conjunction with the Township’s financial statements. Financial Highlights As discussed in further detail in this discussion and analysis, the following represents the most significant financial highlights for the year ended March 31, 2020:

• State-shared revenue, our second largest revenue source from governmental activities, was increased by the State of Michigan by $46,585 this year, which represents a 5.00% increase from the prior year. During the year, the Township has complied with each component of the State of Michigan’s Transparency and Accountability Initiative Program to preserve the Township’s portion of statutory revenue sharing .

• Property taxes are the Township’s single largest source of revenue. The Township’s taxable value for fiscal year 2019/2020 was $623,346,850 which represents an increase of $17,059,283, or 2.81%.

• During the current fiscal year, building permit revenue decreased by $99,392, which still included 12 new construction permits with an estimated value of $5,186,206. Covid-19 closed the Township in March for several months.

• In February 2020 the Township received $317,635 from Wayne County for the improvements of West River Road from Grosse Ile Parkway to Church Road.

• In 2019/2020 the Recreation Department paid off two separate loans that were previously borrowed internally from the General Fund for capital improvements.

• On October 2019, the Township purchased 1.82 acres of vacant land to preserve as Open Space in the amount of $92,187.

• On December 18, 2019 the Township issued Capital Improvement Bonds in the amount of $6,000,000 for watermain replacements on Parklane and Meridian and major improvements at the Waste Water Treatment Plant. In 2019/2020 the Township spent $1,700,000 to date on these projects.

• In 2019/2020 the Township loaned the Municipal Airport and Commerce Park $860,000 at 3.5% for 18 years for capital improvements. The Municipal Airport and Commerce Park spent over $1,000,000 to date on these projects. The renovations have resulted in tenant occupancy are revitalization.

• In 2019/2020, Township wide pension costs increased by $62,226 or 4.9% and health care costs decreased by $14,590 or 1%, however, unfunded liabilities continue to fluctuate annually due to actuarily calculations and assumptions and extreme changes in interest rates. The Township of Grosse Ile will continue to monitor these two major areas.


March 31, 2020

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Using this Annual Report This annual report consists of a series of financial statements. The Statement of Net Position and the Statement of Activities provide information about the activities of the Township as a whole and present a longer-term view of the Township’s finances. This longer-term view uses the accrual basis of accounting so that it can measure the cost of providing services during the current year, and whether the taxpayers have funded the full cost of providing government services. The fund financial statements present a short-term view; they tell us how the taxpayers’ resources were spent during the year, as well as how much is available for future spending. Fund financial statements also report the Township’s operations in more detail than the government-wide financial statements by providing information about the Township’s most significant funds. The fiduciary fund statements provide financial information about activities for which the Township acts solely as a trustee or agent for the benefit of those outside of the government.


March 31, 2020

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The Township as a Whole The following table shows, in condensed format, the net position as of March 31, 2020 and 2019 (in thousands of dollars):

Governmental Activities Business-type Activities Total

2020 2019 2020 2019 2020 2019

Assets

Current assets 7,276$ 7,619$ 6,831$ 7,205$ 14,107$ 14,824$

Noncurrent Assets 33,425 33,958 86,156 80,980 119,581 114,938

40,701 41,577 92,987 88,185 133,688 129,762

Deferred outflows of resources 1,314 1,906 174 247 1,488 2,153

Total assets and deferred outflows of resources 42,015 43,483 93,161 88,432 135,176 131,915

Liabilities

Current liabilities 296 306 664 610 960 916

Long-term liabilities 28,082 27,389 34,340 31,355 62,422 58,744

Total liabilities 28,378 27,695 35,004 31,965 63,382 59,660

Deferred inflows of resources 3,930 5,628 675 935 4,605 6,563

Total liabilities and deferred inflows of resources 32,308 33,323 35,679 32,900 67,987 66,223

Net assets

Net investment in -

capital assets 32,325 32,589 55,784 52,165 88,109 84,754

Restricted 4,612 3,444 - 1,287 4,612 4,731

Unrestricted (deficit) (27,230) (25,873) 1,698 2,080 (25,532) (23,793)

Total net position 9,707$ 10,160$ 57,482$ 55,532$ 67,189$ 65,692$

The Township has combined net position of $67.1 million. Business-type activities comprise $57.4 million of the total net position.


March 31, 2020

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The following table shows the changes of the net position during the years ended March 31, 2020 and 2019 (in thousands of dollars):

2020 2019 2020 2019 2020 2019

Revenue

Program revenue

Charges for services 1,846$ 1,932$ 6,468$ 6,452$ 8,314$ 8,384$

Capital grants and contributions - - 690 6,239 690 6,239

Operating grants and contributions 204 402 - - 204 402

General revenue

Property taxes 6,073 5,904 3,178 3,389 9,251 9,293

State-shared revenue 977 930 - - 977 930

Unrestricted investment earnings 153 185 101 120 254 305

Gain on sale of capital assets 2 - 1 5 3 5

Miscellaneous - - 106 25 106 25

Total revenue 9,255 9,353 10,544 16,230 19,799 25,583

Program expenses

General government 3,096 3,398 - - 3,096 3,398

Public safety 5,209 5,322 - - 5,209 5,322

Public works - - 7,259 7,121 7,259 7,121

Municipal airport and commerce park - - 1,336 1,240 1,336 1,240

Recreation and culture 1,354 1,339 - - 1,354 1,339

Interest on long-term debt 49 60 - - 49 60

Total program expenses 9,708 10,119 8,595 8,361 18,303 18,480

Change in net position (453)$ (766)$ 1,949$ 7,869$ 1,496$ 7,103$

Governmental Activities Business-type Activities Total

Governmental Activities The Township’s total governmental revenues decreased by approximately $125,148. Property taxes increased in the amount of $168,478, and an overall increase in taxable value of 2.81%. Licenses and Permits decreased in the amount of $99,392, including 12 new construction permits as compared to 9 in the previous year. However, there has been decreased activity with remodeling and home improvement permits. Interest income continues to decrease slowly in the amount of $32,231 due to economic downturn and an overall decline in rate of return of investments. Federal, State and County funding sources decreased by $96,090 due to less participating and activity. Several other sources of revenue have either increased slightly or stayed the same from the prior year including State-Shared Revenue. State-Shared Revenue increased $46,585. Expenses decreased by $499,851 during the year. This decrease, which represents 5%, was due primarily to decreased purchases and construction


March 31, 2020

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of capital assets in the current year than in the prior year. Last year, the Drainage Fund expended $517,534 for drainage improvements along West River Road. Last year as well, the Township purchased 30.083 acres of vacant land to preserve as Open Space in the amount of $304,365. Health care costs decreased $14,590 due to the restructuring of the employee’s healthcare benefits. Pension costs increased $62,226 or 4.9% due to additional normal funding requirements. The Township continues to take a conservative effort to reduce spending in all areas. Business-Type Activities The Township’s business-type activities consist of the Department of Public Works and the Municipal Airport and Commerce Park. The Department of Public Works Fund provides water to residents from the Detroit Water System. The Township provides sewage treatment through a Township-owned sewage treatment plant. Refuse collection and recycling services are provided by an outside commercial entity. The operating revenue of the Department of Public Works’ fund decreased by $ 94,328 or 1.7%. The Township imposed a 0% rate increase for water usage and a 15.6% rate increase for sewer usage, even though the Township received a 1.6% increase from the Great Lakes Water Authority for the fiscal year. Water usage was down over the past year. Therefore, in the future, water and sewer rates need to be continuously adjusted on an annual basis to absorb the increase from the Great Lakes Water Authority to pay for current and future capital improvement infrastructure needs. The operating expenses increased by $88,771 or 1.4% due to increasing water costs, increased repairs needed at the waste water treatment plant, and additional water main repairs. The current fiscal year resulted in an overall operating net loss of $868,260, as compared to the prior fiscal year loss of $685,161. Furthermore, the Department of Public Works will continue to make a conservative effort to reduce spending. The Municipal Airport and Commerce Park is used to account for the airport operations and the Commerce Park complex. The operating revenue for this fund increased by $110,423 or 13.77%. The increase resulted from major capital renovation improvements that attracted new tenants to the industrial park area. The Municipal Airport and Commerce Park Commission adjusts rents annually with CPI rate increases and tries to secure additional revenue generated by non-airport related activities such as commercial television shoots. The operating expenses increased by $90,227 or 7.3%. The increase was due to the recognition of future related pension and healthcare obligations, and an increase in depreciation expense associated with the additional capital improvements, furthermore, a conservative approach to reduce Airport related spending has been taken through minimal staffing. The operating loss was $417,564, less than the previous fiscal year loss of $437,761. The Township Funds Our analysis of the Township’s major funds begins on page 4 - 4, following the government-wide financial statements. The fund financial statements provide detail information about the most significant funds, not the Township as a whole. The Township Board creates funds to help manage money for specific purposes as well as to show accountability for certain activities, such as special property tax millages. The Township's major funds for 2020 include the General Fund, the Recreation Fund, the Fire Operating Fund, and the Drain and Storm Maintenance Fund. The General Fund pays for most of the Township’s governmental services. The most significant are general administration and police operations, which incurred expenses of approximately $2.1688 and $3.432 million, respectively, in the current year. The budget in the General Fund is basically a “maintenance” budget, which means it increases modestly from year to year.


March 31, 2020

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General Fund Budgetary Highlights Over the course of the year, the Township did not amend the budget. The Township Board’s policy regarding the budget is to avoid making adjustments during the year so that the budget can be used as a financial guide to make financial decisions, and to analyze and maintain the validity of the budget document. As a result, the actual revenues and expenses are usually within 10% of budgeted amounts. Overall, the Township departments were above the original budget amounts, resulting in total revenues less expenditures and transfers of $12,845 under the budgeted amount of $0 for operations. Capital Asset and Debt Administration As of March 31, 2020, the Township had approximately $114.4 million (net of depreciation) invested in a broad range of capital assets, including land, buildings, bike paths, roads, equipment, and water and sewer lines. Major capital improvements for the fiscal year included the purchase of public safety vehicles, police and fire equipment, various road repairs located township-wide, several major improvements to the Waste Water Treatment Plant and the continuation of water and sanitary sewer main replacements. Other capital improvements include various computer and equipment purchases by all departments. Economic Factors and Next Year’s Budgets and Rates Due to the extreme economic conditions that every local community is currently facing, the Township’s 2020-2021 budget was prepared with the following criteria. First, operating millage revenues increased slightly from the prior year with an estimated increase in taxable value of approximately 2.6% due to the slow recovery of the economy, however, stabling out in the future. The statewide Tax Reform Act limits growth in taxable value on any individual property to the lesser of inflation or 5%. Because of the impact of Proposal A, however, the Township needs to continue to watch its budget very closely. Further, the Township incorporated state-shared revenue to increase by 3%, a 3% increase in all employee health insurance premiums, and a 10% increase in liability insurance premiums, as well as, a variable increase for employee pension costs as determined by MERS. Employee wages increased by 1.013 for administrative personnel, 1.75% for police personnel employees, and 1.5% for those general employees who were under an existing union contract. By limiting other categories of discretionary spending and revisiting how certain services are delivered, the Township was able to adopt a balanced budget for the 2020-2021 fiscal year without using prior year resources for the General Fund. As of September 2020, water rates increased by 3.5% and sewer fixed charges increased 8.0% to provide for future bonding of major wastewater treatment capital improvements. Refuse rates remained the same to reflect actual costs. Rates need to be continuously raised and monitored to maintain operations and continue capital improvements with increases as stated above, most of which is driven by the State of Michigan unfunded mandates.


March 31, 2020

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Contacting the Township’s Management

This financial report is intended to provide our citizens, taxpayers, customers, and investors with a general overview of the Township’s finances and to show the Township’s accountability for the money it receives. If you have questions about this report or need additional information, we welcome you to contact the Finance Department.

Governmental Business-type ComponentActivities Activities Total Units

Assets

Cash and cash equivalents 5,524,744$ 5,943,246$ 11,467,990$ 369,400$

Receivables

Taxes 222,304 73,507 295,811 -

Customers 118,357 1,528,256 1,646,613 -

Special assessments 17,255 - 17,255 -

Due from other units of government 157,757 317,635 475,392 1,126

Due from fiduciary funds - - - 105,841

Internal balances 1,162,663 (1,162,663) - -

Due from component unit 325 - 325 -

Inventories 4,399 131,039 135,438 -

Prepaid items 68,750 - 68,750 -

Restricted assets

Cash and cash equivalents - 5,224,210 5,224,210 -

Capital assets not being depreciated 14,255,660 7,487,835 21,743,495 507,558

Capital assets, net of accumulated depreciation 19,169,415 73,443,855 92,613,270 766,862

Total assets 40,701,629 92,986,920 133,688,549 1,750,787

Deferred Outflows of Resources

Deferred amount relating to net pension liability 1,203,710 156,260 1,359,970 -

Deferred amount relating to net OPEB liability 109,289 17,987 127,276 -

Total deferred outflows of resources 1,312,999 174,247 1,487,246 -

Township of Grosse IleStatement of Net Position

March 31, 2020

Primary Government

See Accompanying Notes to the Financial Statements

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Governmental Business-type ComponentActivities Activities Total Units

Township of Grosse IleStatement of Net Position

March 31, 2020

Primary Government

Liabilities

Accounts payable 175,653$ 297,683$ 473,336$ 7,872$

Accrued and other liabilities 102,183 280,257 382,440 1,251

Due to component unit 62 - 62 -

Due to other units of government - - - 325

Unearned revenue 18,030 56,771 74,801 -

Customer deposits - 29,282 29,282 -

Noncurrent liabilities

Debt due within one year 250,125 3,561,652 3,811,777 -

Debt due in more than one year 1,318,203 26,841,890 28,160,093 -

Net pension liability 13,656,749 1,772,862 15,429,611 -

Net OPEB liability 12,856,699 2,163,881 15,020,580 -

Total liabilities 28,377,704 35,004,278 63,381,982 9,448

Deferred Inflows of Resources

Deferred amount relating to net OPEB liability 3,929,597 674,795 4,604,392 -

Net Position

Net investment in capital assets 32,325,075 55,784,064 88,109,139 1,274,420

Restricted for

Debt service 342,245 - 342,245 -

Other purposes 4,269,803 - 4,269,803 -

Unrestricted (deficit) (27,229,796) 1,698,030 (25,531,766) 466,919

Total net position 9,707,327$ 57,482,094$ 67,189,421$ 1,741,339$


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Operating Capital

Charges for Grants and Grants and Governmental Business-type Component

Expenses Services Contributions Contributions Activities Activities Total Units

Functions/Programs

Primary government

Governmental activities

General government 3,095,900$ 986,082$ -$ -$ (2,109,818)$ -$ (2,109,818)$ -$

Public safety 5,208,915 311,274 159,647 - (4,737,994) - (4,737,994) -

Recreation and culture 1,354,308 549,084 44,415 - (760,809) - (760,809) -

Interest and fiscal charges on long-

term debt 49,313 - - - (49,313) - (49,313) -

Total governmental activities 9,708,436 1,846,440 204,062 - (7,657,934) - (7,657,934) -

Business-type activities

Department of public works 7,258,641 5,556,163 - 317,635 - (1,384,843) (1,384,843) -

Municipal airport and commerce park 1,335,752 912,188 - 372,400 - (51,164) (51,164) -

Total business-type activities 8,594,393 6,468,351 - 690,035 - (1,436,007) (1,436,007) -

Total primary government 18,302,829$ 8,314,791$ 204,062$ 690,035$ (7,657,934) (1,436,007) (9,093,941) -

Component unit

Brownfield Authority 200$ -$ -$ -$ - - - (200)

Downtown Development Authority 147,820 780 - - - - - (147,040)

Total component units 148,020$ 780$ -$ -$ - - - (147,240)

General revenues

Property taxes 6,072,800 3,177,608 9,250,408 159,365

State-shared revenue 977,049 - 977,049 -

Unrestricted investment earnings 152,812 100,570 253,382 5,209

Gain on sale of capital assets 2,455 950 3,405 -

Miscellaneous - 106,300 106,300 -

7,205,116 3,385,428 10,590,544 164,574

Change in net position (452,818) 1,949,421 1,496,603 17,334

Net position - beginning of year 10,160,145 55,532,673 65,692,818 1,724,005

Net position - end of year 9,707,327$ 57,482,094$ 67,189,421$ 1,741,339$

Total general revenues

Program Revenues Changes in Net Position

Primary Government

Township of Grosse IleStatement of Activities

For the Year Ended March 31, 2020

Net (Expense) Revenue and


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Fire Drain and Nonmajor Total

Recreation Operating Storm Governmental GovernmentalGeneral Fund Fund Maintenance Funds Funds

Assets

Cash and cash equivalents 930,520$ 144,098$ 528,985$ 809,441$ 3,111,700$ 5,524,744$

Receivables

Taxes 133,732 19,475 33,579 7,372 28,146 222,304

Customers 101,908 3,523 9,645 - 3,281 118,357

Special assessments - - - - 17,255 17,255

Due from other units of government 157,757 - - - - 157,757

Due from other funds 79,419 50,991 - - 54,317 184,727

Due from component unit 325 - - - - 325

Inventories 2,182 730 1,487 - - 4,399

Prepaid items 60,000 3,750 5,000 - - 68,750

Advances to other funds 1,132,603 - - - - 1,132,603

Total assets 2,598,446$ 222,567$ 578,696$ 816,813$ 3,214,699$ 7,431,221$

Special Revenue Funds

Township of Grosse IleGovernmental Funds

Balance SheetMarch 31, 2020


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Balance SheetMarch 31, 2020

Liabilities

Accounts payable 61,454$ 5,154$ 27,606$ -$ 81,439$ 175,653$

Accrued and other liabilities 61,978 9,279 8,193 - 1,988 81,438

Due to other funds 41,123 7,682 16,018 - 89,844 154,667

Due to component unit - - - - 62 62

Unearned revenue - 18,030 - - - 18,030

Total liabilities 164,555 40,145 51,817 - 173,333 429,850

Fund Balances

Non-spendable

Inventories 2,182 730 1,487 - - 4,399

Prepaid items 60,000 3,750 5,000 - - 68,750

Restricted for

Recreation - 177,942 - - - 177,942

Fire operating - - 520,392 - - 520,392

Drain and storm maintenance - - - 816,813 - 816,813

Other special revenue funds - - - - 2,563,208 2,563,208

Debt service - - - - 362,990 362,990

Construction code fees 362,903 - - - - 362,903

Committed - - - - 115,168 115,168

Unassigned 2,008,806 - - - - 2,008,806

Total fund balances 2,433,891 182,422 526,879 816,813 3,041,366 7,001,371

Total liabilities and fund balances 2,598,446$ 222,567$ 578,696$ 816,813$ 3,214,699$ 7,431,221$


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Total fund balances for governmental funds 7,001,371$

Total net position for governmental activities in the statement of net position is different because:

Capital assets net of accumulated depreciation used in governmental activities are not financial resources and

therefore are not reported in the funds. 19,169,415

Capital assets not being depreciated used in governmental activities are not financial resources and therefore

are not reported in the funds. 14,255,660

Certain liabilities are not due and payable in the current period and are not reported in the funds.

Accrued interest (20,745)

Compensated absences (468,328)

Deferred outflows (inflows) of resources.

Deferred outflow of resources related to the net pension liability 1,203,710

Deferred inflows of resources related to net OPEB liability (3,929,597)

Deferred outflow of resources related to the net OPEB liability 109,289

Long-term liabilities applicable to governmental activities are not due and payable in the current period and, accordingly,

are not reported as fund liabilities.

Long-term debt (1,100,000)

Net pension liability (13,656,749)

Net OPEB liability (12,856,699)

Net position of governmental activities 9,707,327$


Reconciliation of Fund Balances of Governmental Fundsto Net Position of Governmental Activities

March 31, 2020

Governmental Funds


4 - 6



Revenues

Taxes 3,652,994$ 535,303$ 917,242$ 202,316$ 764,945$ 6,072,800$

Licenses and permits 729,807 - - - - 729,807

Federal grants - - - - 196,668 196,668

State-shared revenue 977,049 - - - - 977,049

Other state grants 5,921 - - - 750 6,671

Charges for services - 347,056 - - - 347,056

Ambulance fees - - 185,454 - - 185,454

Fines and forfeitures 83,913 - - - - 83,913

Interest income 96,988 - 1,364 9,480 44,980 152,812

Rental income - 49,867 - - 111,513 161,380

Other revenue 267,937 82,555 - - 723 351,215

Total revenues 5,814,609 1,014,781 1,104,060 211,796 1,119,579 9,264,825



Governmental Funds

Statement of Revenues, Expenditures and Changes in Fund Balances



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Governmental Funds

Statement of Revenues, Expenditures and Changes in Fund Balances


Expenditures

Current

General government 2,092,271$ -$ -$ 141,202$ 645,797$ 2,879,270$

Public safety 3,432,173 - 1,131,246 - 525,243 5,088,662

33rd District Court 75,906 - - - - 75,906

Recreation and culture - 965,870 - - 269,575 1,235,445

Debt service

Principal retirement - 28,967 - - 240,000 268,967

Interest and fiscal charges - 579 - - 53,555 54,134

Total expenditures 5,600,350 995,416 1,131,246 141,202 1,734,170 9,602,384

Excess (deficiency) of revenues over expenditures 214,259 19,365 (27,186) 70,594 (614,591) (337,559)

Other financing sources (uses)

Transfers in 76,743 - - - 288,157 364,900

Transfers out (278,157) - (86,743) - - (364,900)

Total other financing sources and uses (201,414) - (86,743) - 288,157 -

Net change in fund balance 12,845 19,365 (113,929) 70,594 (326,434) (337,559)

Fund balance - beginning of year 2,421,046 163,057 640,808 746,219 3,367,800 7,338,930

Fund balance - end of year 2,433,891$ 182,422$ 526,879$ 816,813$ 3,041,366$ 7,001,371$


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Net change in fund balances - total governmental funds (337,559)$

Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those

assets is allocated over their estimated useful lives and reported as depreciation expense.

Depreciation expense (1,051,465)

Capital outlay 527,503

Sale of capital assets (net book value) (9,207)

Expenses are recorded when incurred in the statement of activities.

Accrued interest 4,821

Compensated absences (16,865)

The statement of net position reports the net pension liability and deferred outflows of resources and deferred inflows

related to the net pension liability and pension expense. However, the amount recorded on the governmental funds

equals actual pension contributions.

Net change in net pension liability (483,096)

Net change in the deferred inflows of resources related to the net pension liability 362,446

Net change in the deferred outflows of resources related to the net pension liability (641,476)

Net change in net OPEB liability (461,889)

Net change in the deferred inflows of resources related to the net OPEB liability 1,336,258

Net change in the deferred outflows of resources related to the net OPEB liability 48,744

Bond proceeds are reported as financing sources in the governmental funds and thus contribute to the change in

fund balance. In the statement of net position, however, issuing debt increases long-term liabilities and does not

affect the statement of activities. Similarly, repayment of principal is an expenditure in the governmental funds

but reduces the liability in the statement of net position.

Repayments of long-term debt 268,967

Change in net position of governmental activities (452,818)$

Total change in net position reported for governmental activities in the statement of activities is different because:



Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balancesof Governmental Funds to the Statement of Activities


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Municipal

Department Airport and

of Public CommerceWorks Park Total

Assets

Current assets

Cash and cash equivalents 5,400,940$ 542,306$ 5,943,246$

Receivables

Taxes 73,507 - 73,507

Customers, net 1,493,046 35,210 1,528,256

Due from other units of government 317,635 - 317,635

Due from other funds 16,936 - 16,936

Inventories 101,478 29,561 131,039

Total current assets 7,403,542 607,077 8,010,619

Noncurrent assets

Restricted assets

Cash and cash equivalents 5,224,210 - 5,224,210

Capital assets, net of accumulated depreciation 61,044,881 12,398,974 73,443,855

Capital assets not being depreciated 1,952,933 5,534,902 7,487,835

Total noncurrent assets 68,222,024 17,933,876 86,155,900

Total assets 75,625,566 18,540,953 94,166,519

Deferred Outflows of Resources

Deferred amount relating to net pension liability 129,469 26,791 156,260

Deferred amount relating to net OPEB liability 13,453 4,534 17,987

Total deferred outflows of resources 142,922 31,325 174,247

Total assets and deferred outflows of resources 75,768,488 18,572,278 94,340,766

Enterprise Funds


Proprietary Funds

Statement of Net Position

March 31, 2020


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Municipal



Enterprise Funds


Proprietary Funds

Statement of Net Position

March 31, 2020

Liabilities

Current liabilities

Accounts payable 246,402$ 51,281$ 297,683$

Accrued and other liabilities 276,102 4,155 280,257

Due to other funds 24,182 22,814 46,996

Customer deposits - 29,282 29,282

Unearned revenue - 56,771 56,771

Current portion of noncurrent liabilities 3,541,769 19,883 3,561,652

Total current liabilities 4,088,455 184,186 4,272,641

Noncurrent liabilities

Advances from other funds - 1,132,603 1,132,603

Net pension liability 1,468,900 303,962 1,772,862

Net OPEB liability 1,609,780 554,101 2,163,881

Long-term debt net of current portion 26,841,890 - 26,841,890

Total noncurrent liabilities 29,920,570 1,990,666 31,911,236

Total liabilities 34,009,025 2,174,852 36,183,877

Deferred Inflows of Resources

Deferred amount relating to net OPEB liability 499,629 175,166 674,795

Net Position

Net investment in capital assets 37,850,188 17,933,876 55,784,064

Restricted for

Capital projects 5,224,210 - 5,224,210

Unrestricted (deficit) (1,814,564) (1,711,616) (3,526,180)

Total net position 41,259,834$ 16,222,260$ 57,482,094$


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Municipal



Operating revenue

Sale of water 3,006,322$ -$ 3,006,322$

Sewage disposal charges 1,811,600 - 1,811,600

Refuse charges 738,241 - 738,241

Airport related - 313,280 313,280

Commerce Park rent - 403,790 403,790

Fuel farm - 195,118 195,118

Total operating revenue 5,556,163 912,188 6,468,351

Operating expenses

Cost of water produced/purchased 2,059,228 - 2,059,228

Cost of sewage treatment 1,814,805 - 1,814,805

Cost of refuse disposal 859,416 - 859,416

Airport related - 324,614 324,614

Commerce Park rent - 155,754 155,754

Fuel farm - 182,479 182,479

Depreciation 1,690,974 666,905 2,357,879

Total operating expenses 6,424,423 1,329,752 7,754,175

Operating loss (868,260) (417,564) (1,285,824)

Enterprise Funds


Proprietary Funds

Statement of Revenues, Expenses and Changes in Fund Net Position



4 - 12

Municipal



Enterprise Funds


Proprietary Funds

Statement of Revenues, Expenses and Changes in Fund Net Position


Nonoperating revenue (expenses)

Property taxes 3,177,608$ -$ 3,177,608$

Interest income 91,835 8,735 100,570

Gain on sale of assets 950 - 950

Insurance reimbursement - 81,979 81,979

Bond issuance costs (86,355) - (86,355)

Premium amortization 24,321 - 24,321

Interest expense (747,863) (6,000) (753,863)

Total nonoperating revenues (expenses) 2,460,496 84,714 2,545,210

Income (loss) before contributions 1,592,236 (332,850) 1,259,386

Capital contributions 317,635 372,400 690,035

Change in net position 1,909,871 39,550 1,949,421

Net position - beginning of year 39,349,963 16,182,710 55,532,673

Net position - end of year 41,259,834$ 16,222,260$ 57,482,094$


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Municipal



Cash flows from operating activities

Receipts from customers 5,209,477$ 827,925$ 6,037,402$

Receipts from other funds 12,213 18,787 31,000

Payments to suppliers (2,545,667) (541,994) (3,087,661)

Payments to employees (2,063,109) (167,438) (2,230,547)

Net cash provided by operating activities 612,914 137,280 750,194

Cash flows from noncapital financing activities

Property taxes 3,178,876 - 3,178,876

Cash flows from capital and related financing activities

Proceeds from capital debt 6,000,000 - 6,000,000

Capital contributions 317,635 372,400 690,035

Advances from other funds - 832,601 832,601

Purchases/construction of capital assets (2,152,137) (1,452,714) (3,604,851)

Principal and interest paid on long-term debt (3,968,522) (6,000) (3,974,522)

Proceeds from sale of capital assets 950 - 950

Net cash provided (used) by capital and related financing activities 197,926 (253,713) (55,787)

Cash flows from investing activities

Proceeds from insurance - 81,979 81,979

Interest received 92,734 8,735 101,469

Net cash provided by investing activities 92,734 90,714 183,448

Net change in cash and cash equivalents 4,082,450 (25,719) 4,056,731

Cash and cash equivalents - beginning of year 6,542,700 568,025 7,110,725

Cash and cash equivalents - end of year 10,625,150$ 542,306$ 11,167,456$

Enterprise Funds


Proprietary Funds

Statement of Cash Flows



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Municipal



Enterprise Funds


Proprietary Funds

Statement of Cash Flows


Reconciliation of operating income (loss) to net cash

provided by operating activities

Operating loss (868,260)$ (417,564)$ (1,285,824)$

Adjustments to reconcile operating income to net cash

from operating activities

Depreciation and amortization expense 1,690,974 666,905 2,357,879

Changes in assets and liabilities

Receivables (net) (29,051) (19,866) (48,917)

Due from other units of government (317,635) - (317,635)

Due from other funds (11,688) - (11,688)

Inventories - (11,549) (11,549)

Prepaid items 5,850 - 5,850

Deferred outflows of resources 58,330 14,814 73,144

Accounts payable 89,821 (3,727) 86,094

Accrued and other liabilities 31,465 931 32,396


Deferred inflows of resources (198,720) (61,077) (259,797)

Other post employment benefits 55,540 18,156 73,696

Net pension liability 86,268 (6,757) 79,511

Unearned revenue - (72,047) (72,047)

Customer deposits payable - 7,650 7,650

Compensated absences (3,881) 2,624 (1,257)

Net cash provided by operating activities 612,914$ 137,280$ 750,194$


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TaxGeneral Collection Total

Assets

Cash and cash equivalents 504,296$ 297,026$ 801,322$

Liabilities

Accrued and other liabilities 504,296 118,429 622,725

Due to component unit - 105,841 105,841

Due to other units of government - 72,756 72,756

Total liabilities 504,296$ 297,026$ 801,322$

Held in trust for pension benefits and other purposes

Agency Funds

Township of Grosse IleFiduciary Funds

Statement of Assets and LiabilitiesMarch 31, 2020


4 - 16

Downtown

Brownfield DevelopmentAuthority Authority Total

Assets

Cash and cash equivalents 261,183$ 108,217$ 369,400$

Due from fiduciary funds 21,469 84,372 105,841

Due from other unit of government - 1,126 1,126

Capital assets not being depreciated - 507,558 507,558

Capital assets, net of accumulated depreciation - 766,862 766,862

Total assets 282,652 1,468,135 1,750,787

Liabilities

Accounts payable - 7,872 7,872

Accrued and other liabilities - 1,251 1,251

Due to primary government - 325 325

Total liabilities - 9,448 9,448

Net Position

Net investment in capital assets - 1,274,420 1,274,420

Unrestricted 282,652 184,267 466,919

Total net position 282,652$ 1,458,687$ 1,741,339$


Statement of Net PositionMarch 31, 2020

Component Units


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Downtown

Charges for Brownfield Development

Expenses Services Authority Authority Total

Brownfield Authority

Community and economic development 200$ -$ (200)$ -$ (200)$

Downtown Development Authority

Community and economic development 147,820 780 - (147,040) (147,040)

Total component units 148,020$ 780$ (200) (147,040) (147,240)

General revenues

Property taxes 11,288 148,077 159,365

Unrestricted investment earnings 4,356 853 5,209

15,644 148,930 164,574

Change in net position 15,444 1,890 17,334

Net position - beginning of year 267,208 1,456,797 1,724,005

Net position - end of year 282,652$ 1,458,687$ 1,741,339$

Total general revenues

Component Units


Statement of ActivitiesFor the Year Ended March 31, 2020

Net (Expense) Revenue and

Program Revenues Changes in Net Position


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Township of Grosse Ile Notes to the Financial Statements

March 31, 2020

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Note 1 - Summary of Significant Accounting Policies

The accounting policies of the Township of Grosse Ile (the “Township”) conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to governmental units. The following is a summary of the significant accounting policies used by the Township: Reporting entity The Township operates as a General Law Township under the laws of the State of Michigan. The Township is governed by an elected seven-member Board. The accompanying financial statements present the Township and its component units, entities for which the Township is considered to be financially accountable. Although blended component units are legal separate entities, in substance, they are part of the Township’s operations. Each discretely presented component unit is reported in a separate column in the government-wide financial statements to emphasize that it is legally separate from the Township (see discussion below for description). Blended Component Units - The Grosse Ile Building Authority (the “Authority”) is composed of a three-member board appointed by the Township’s Board of Trustees. Although it is a separate legal entity from the Township, the Authority is reported as if it were a part of the primary government because its sole purpose is to finance and construct the Township’s public buildings. Discretely Presented Component Units - The Downtown Development Authority (the “Authority”) was created under Act No. 197 of the Michigan State statutes to correct and prevent deterioration in the downtown district, encourage historical preservation, and to promote economic development within the downtown district. The supervisor, subject to the approval of the Township Board under the supervision and control of a Board consisting of the Township supervisor and eight members, appoints the Authority. A tax incremental financing plan was instituted to finance the activities of the Authority. In addition, the

Authority budget is subject to approval by the Township Board. It is reported within the component unit column in the combined financial statements to emphasize that it is legally separate from the Township. The Brownfield Authority (the "Authority") was created under Michigan Public Act 381 of 1997. Its purpose is to redevelop and reuse the Grosse Ile Airport Commerce Park through the capture of tax revenues generated within the Brownfield District. The tax revenues are used to remediate environmental problems (approved by the Township Board) and for land use and market studies (approved by the State of Michigan Department of Environmental Quality). The members consist of the Airport Commission appointed by the Township Board. A tax incremental financing plan was instituted to finance the activities of the Authority. In addition, the Authority’s budget is subject to approval by the Township Board. It is reported within the component unit column in the combined financial statements to emphasize that it is legally separate from the Township. Jointly Governed Organizations - Jointly governed organizations are discussed in Note 13. Government-wide and fund financial statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, normally supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program


March 31, 2020

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revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenue. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Measurement focus, basis of accounting, and financial statement presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period or 90 days for property taxes. Expenditures generally are recorded when a liability is

incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, sales taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. The Township reports the following major governmental funds:

General Fund - The General Fund is the Township’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Recreation Fund - The Recreation Fund is used to account for funds from a tax millage for public recreation programs and for fees generated. This Fund was authorized, in part, by a vote of the residents and by management to account for recreation program revenues. This fund also accounts for the Water’s Edge operations and maintenance of the golf course, pool, and marina facilities. The entire facility is open to the public for usage. Fire Operating Fund - The Fire Operating Fund is used to account for funds from a tax millage for the operations of the fire department. The fund was authorized by a vote of the residents approving a tax levy. Another source of funding for this fund is the collection of ambulance fees. Operations include firefighting services, as well as, basic emergency medical services for residents and visitors of the Township.


March 31, 2020

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Drain and Storm Maintenance Fund - The Drain and Storm Maintenance Fund is used to account for funds from a tax millage for the purpose of improving and maintaining drainage and storm water management projects throughout the Township. Another source of funding for this fund is the resident 50% matching of funds for drainage issues in residential areas.

The government reports the following major proprietary funds:

Department of Public Works Fund - The Department of Public Works Fund accounts for the activities of the water distribution system, sewage collection system, and refuse collection. The fund’s primary revenues are generated through user charges from those requesting water and sewer services. Municipal Airport and Commerce Park Fund - The Municipal Airport and Commerce Park Fund is used to account for the airport operations and the Commerce Park complex. Financing is provided by user charges for the airport and by rental income in Commerce Park. The airport was a naval aviation operation, transferred to the Township, and has some land use restrictions imposed by the FAA.

Additionally, the Township reports the following:

Agency Funds - Agency Funds account for assets held by the Township in a trustee capacity. Agency Funds are custodial in nature (assets equal liabilities) and do not involve the measurement of results of operations. Debt Service Funds - Debt Service Funds are used to account for the accumulation of resources and payment of general obligation bond principal and interest from special assessment levies when the government is obligated in some manner for the payment. Special Revenue Funds - Special Revenue Funds are used to account for specific revenues that are legally restricted to

expenditure for particular purposes or designated by management to be accounted for in another fund. These funds are classified as Special Revenue Funds due to the limited usage of their assets.

As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenue and expenses from nonoperating items. Operating revenue and expenses generally result from providing services in connection with a proprietary fund’s principal ongoing operations. The principal operating revenue of the proprietary funds relates to charges to customers for sales and services. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as nonoperating revenue and expenses. Property Tax Revenue - Property taxes are levied on each December 1 on the taxable valuation of property as of the preceding December 31. Taxes are considered delinquent on March 1 of the following year, at which time penalties and interest are assessed. The Township’s 2019 tax is levied and collectible on December 1, 2019 and is recognized as revenue in the year ended March 31, 2020, when the proceeds of the levy are budgeted and available for the financing of operations. The 2019 taxable valuation of the Township totaled $623.3 million (a portion of which is abated and a portion of which is captured by the


March 31, 2020

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Brownfield Authority and Downtown Development Authority), on which taxes levied consisted of 3.1551 mills for operating purposes, 2.7334 mills for police operations, 1.9832 mills for fire operations and equipment purchases, .8683 mills for recreation operations, .3966 for road improvement, .2000 mills for library use, .3282 mills for drainage improvements, .1489 mills for bike path maintenance, and 4.0000 mills for sewer-related debt. This resulted in $1.96 million for operating, $1.70 million for police operations, $1.22 million for fire operations and equipment purchases, $535,000 for recreation operations, $244,000 for road improvements, $123,000 for library use, $202,000 for drainage improvements, $92,000 for bike path maintenance, and $3.2 million for sewer-related debt. These amounts are recognized in the respective General Fund, Fire Operating Fund, Recreation Fund, Other Special Revenue Funds, Debt Service Funds, and Enterprise Funds financial statements as tax revenue. Assets, liabilities, and net position or equity Cash and Cash Equivalents - include cash on hand, demand deposits, and short-term investments with a maturity of three months or less when acquired. Investments are stated at fair value. To the extent that cash from various funds has been pooled, pooled investment income is generally allocated to each fund using a weighted average method. Receivables and Payables - In general, outstanding balances between funds are reported as “due to/from other funds”. Any residual balances outstanding between the governmental activities and the business-type activities are reported in the government-wide financial statements as “internal balances”. All trade and property tax receivables are shown as net of allowance for uncollectible amounts. Noncurrent receivables such as special assessments are recorded at full value, and a deferred inflow of resources is recorded for the portion not available for use to finance operations as of year end. Interest income on special assessments receivable is not accrued until its due date.

Inventories and Prepaid Items - Inventories are valued at cost, on a first-in, first-out basis. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future fiscal years and are recorded as prepaid items in both government-wide and fund financial statements. Capital Assets - Capital assets, which include property, plant, equipment, and infrastructure assets, are reported in the applicable governmental or business-type activities column in the government-wide financial statements. Capital assets are defined by the Township as assets with an initial individual cost of more than $1,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. Buildings, equipment, and vehicles are depreciated using the straight-line method over the following useful lives:

Roads and sidewalks 50 years

Bike paths 20 years

Drains 100 years

Water and sewer distribution systems 20 to 100 years

Water and sewer treatment facilities 40 to 50 years

Buildings and building improvements 20 to 50 years

Vehicles 5 to 30 years

Furniture and fixtures 7 to 10 years

Equipment and machines 7 to 20 years

Signs 20 years

Deferred Outflows of Resources - The Township reports deferred outflows of resources as a result of pension and OPEB earnings. This amount is the result of a difference between what the plan expected to earn from plan investments and what is actually earned. This amount


March 31, 2020

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will be amortized over the next four years and included in pension and OPEB expense. Changes in assumptions and experience differences relating to the net pension and OPEB liabilities are deferred and amortized over the expected remaining services lives of the employees and retirees in the plans. The Township also reported deferred outflows of resources for pension contributions made after the measurement date. This amount will reduce net pension liability in the following year. Compensated Absences (Vacation and Sick Leave) - It is the Township’s policy to permit employees to accumulate earned but unused sick and vacation pay benefits. All vacation pay is accrued when incurred in the government-wide and proprietary fund financial statements. A liability is reported in governmental funds where appropriate except in the General Fund, where it is only reported for employee terminations as of year end. Long-Term Obligations - In the government-wide financial statements and the proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund-type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs during the current period. The face value of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts are reported as other financing uses. Issuance costs are reported as debt service expenditures. Pensions - For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position the Municipal Employees Retirement System (MERS) of Michigan and additions to/deductions from MERS’ fiduciary net position

have been determined on the same basis as they are reported to MERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Other Postemployment Benefits (OPEB) – For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Township’s OPEB Plan and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by the Plan. For this purpose, the Plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investments are reported at fair value, except for money market investments and participating interest earning investment contracts that have a maturity at the time of purchase of one year or less, which are reported at cost. Deferred Inflows of Resources - A deferred inflow of resources is an acquisition of net position by the government that is applicable to a future reporting period. For governmental funds this includes unavailable revenue in connection with receivables for revenues that are not considered available to liquidate liabilities of the current period. The Township reports deferred inflows of resources as a result of changes in assumptions and experience differences relating to the net pension and OPEB liabilities, which are deferred and amortized over the expected remaining service lives of the employees and retirees in the plan.


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Fund Equity - In the fund financial statements, governmental funds report the following components of fund balance:

Nonspendable - amounts that are not in spendable form (such as inventory and prepaid items) or are required to be maintained intact. Restricted - amounts that are legally restricted by outside parties, constitutional provisions, or enabling legislation for use for a specific purpose. Committed - amounts that have been formally set aside by the Board of Trustees for use for specific purposes. Commitments are made and can be rescinded only via resolution of the Board of Trustees. Assigned - intent to spend resources on specific purposes expressed by the Township’s Finance Director, who is authorized and approved by the Township’s Board of Trustees to make assignments. Unassigned - amounts that do not fall into any other category above. This is the residual classification for amounts in the General Fund and represents fund balance that has not been assigned to other funds and has not been restricted, committed or assigned to specific purposes in the General Fund. In other governmental funds, only negative unassigned amounts are reported, if any, and represent expenditures incurred for specific purposes exceeding the amounts previously restricted, committed or assigned to those purposes.

When multiple classifications of fund balances are available, fund balance will be used first from the most restrictive category in order, to the least restrictive. Use of Estimates The preparation of 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, deferred outflows, liabilities, deferred inflows and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Adoption of New Accounting Standards Statement No. 92, Omnibus 2020 enhances comparability in accounting and financial reporting and improves the consistency of authoritative literature by addressing practice issues that have been identified during implementation and application of certain GASB Statements. This Statement addresses a variety of topics and includes specific provisions about the following: (1) The effective date of Statement No. 87, Leases, and Implementation Guide No. 2019-3, Leases, for interim financial reports (2) Reporting of intra-entity transfers of assets between a primary government employer and a component unit defined benefit pension plan or defined benefit other postemployment benefit (OPEB) plan. (3) The applicability of Statements No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68, as amended, and No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as amended, to reporting assets accumulated for postemployment benefits. (4) The applicability of certain requirements of Statement No. 84, Fiduciary Activities, to postemployment benefit arrangements. (5) Measurement of liabilities (and assets, if any) related to asset retirement obligations (AROs) in a government acquisition. (6) Reporting by public entity risk pools for amounts that are recoverable from reinsurers or excess insurers. (7) Reference to nonrecurring fair value measurements of assets or liabilities in authoritative literature. (8) Terminology used to refer to derivative instruments. Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance provides temporary relief to governments and other stakeholders in light of the COVID-19 pandemic and provides


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postponement of effective dates for certain GASB Statements. This statement was effective upon issuance in May of 2020. Upcoming Accounting and Reporting Changes In addition, the Governmental Accounting Standards Board has released the following Statements. Statement No. 84, Fiduciary Activities improves the guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. The criteria generally is on (1) is the government controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. The four fiduciary funds that should be reported, if applicable: (1) pension (and other employee benefit) trust funds, (2) investment trust funds, (3) private-purpose trust funds, and (4) custodial funds. Custodial funds generally will report fiduciary activities that are not held in a trust or similar arrangement that meets specific criteria. The requirements of this Statement are effective for the fiscal year ending March 31, 2021.

Statement No. 87, Leases increases the usefulness of the Township’s financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. A lessee will be required to recognize a lease liability and an intangible right-to-use a lease asset, and a lessor will be required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about the Township’s leasing activities. The requirements of this Statement are effective for the fiscal year ending March 31, 2023. Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period enhances the relevance and comparability of

information about capital assets and the cost of borrowing for a reporting period and to simplify accounting for interest cost incurred before the end of a construction period. It requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. As a result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset reporting in a business-type activity or enterprise fund. Interest cost incurred before the end of a construction period should be recognized as an expenditure for financial statements prepared using the current financial resources measurement. The requirements of this Statement are effective for the fiscal year ending March 31, 2022. Statement No. 90, Majority Equity Interests improves the consistency and comparability of reporting a government’s majority equity interest in a legally separate organization and improves the relevance of financial statement information for certain components. This statement is effective for the year ending March 31, 2021. Statement No. 91, Conduit Debt Obligations provides a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. This Statement achieves those objectives by clarifying the existing definition of a conduit debt obligation; establishing that a conduit debt obligation is not a liability of the issuer; establishing standards for accounting and financial reporting of additional commitments and voluntary commitments extended by issuers and arrangements associated with conduit debt obligations; and improving required note disclosures. This statement is effective for the year ending March 31, 2023. Statement No. 93, Replacement of Interbank Offered Rates establishes accounting and financial reporting requirements related to the replacement of IBORs in hedging derivative instruments and leases. It


March 31, 2020

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also identifies appropriate benchmark interest rates for hedging derivative instruments. The requirements of this Statement apply to the financial statements of all state and local governments. This statement is effective for the year ending March, 2023. Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements improves financial reporting by addressing issues related to public-private and public-public partnership arrangements (PPPs). As used in this Statement, a PPP is an arrangement in which a government (the transferor) contracts with an operator (a governmental or nongovernmental entity) to provide public services by conveying control of the right to operate or use a nonfinancial asset, such as infrastructure or other capital asset (the underlying PPP asset), for a period of time in an exchange or exchange-like transaction. Some PPPs meet the definition of a service concession arrangement (SCA), which the Board defines in this Statement as a PPP in which (1) the operator collects and is compensated by fees from third parties; (2) the transferor determines or has the ability to modify or approve which services the operator is required to provide, to whom the operator is required to provide the services, and the prices or rates that can be charged for the services; and (3) the transferor is entitled to significant residual interest in the service utility of the underlying PPP asset at the end of the arrangement. This Statement also provides guidance for accounting and financial reporting for availability payment arrangements (APAs). As defined in this Statement, an APA is an arrangement in which a government compensates an operator for services that may include designing, constructing, financing, maintaining, or operating an underlying nonfinancial asset for a period of time in an exchange or exchange-like transaction. This statement is effective for the year ending March 31, 2024. The Township is evaluating the impact that the above GASB Statements will have on its financial reporting.

Note 2 - Stewardship, Compliance, and Accountability

Budgetary information The annual budget is prepared by the Township Supervisor and adopted by the Township Board; subsequent amendments are approved by the Township Board. Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America for the General Fund and all Special Revenue Funds. Annual budgets are adopted for all funds. The budget represents a complete financial plan for all activities of the Township for the ensuing fiscal year. The budget document presents information by fund, function, department, and line items. The legal level of budgetary control adopted by the governing body is the department level. Expenditures at this level in excess of amounts budgeted are a violation of State law. Encumbrance accounting is employed in all funds. Encumbrances (e.g., purchase orders and contracts) outstanding at year end do not constitute expenditures or liabilities because the goods or services have not been received as of year-end; the commitments will be reappropriated and honored during the subsequent year. The budget process begins with a strategy meeting in December with the Township supervisor, Township manager, and finance director to plan and prioritize goals and objectives for the upcoming budget year. Each January, department heads receive workpapers to prepare their individual line item budgets. Upon completion, the department budgets are returned to the finance director for compilation and review. A public meeting with the department managers is held with the Township supervisor, Township manager, and finance director to provide justification of their budgets. A proposed, balanced budget is then developed and submitted to the


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Township Board for review. A public hearing on the budget is held before its final adoption. Upon review, and a subsequent public hearing, the Township Board adopts the proposed budget by resolution prior to the commencement of the next fiscal year. A comparison of actual results of operations to the General Fund and Major Special Revenue Funds budgets adopted by the Township Board is included as required supplementary information. The comparison includes expenditure budget overruns. A comparison of actual results of operations, including budget overruns to all the fund budgets as adopted by the Township Board, is available at the finance department’s office for inspection. Excess of Expenditures over Appropriations

Budget

Appropriations Actual Variance

General Fund

Manager 175,219$ 197,536$ 22,317$

Elections 15,800 27,424 11,624

Communications commission 85,904 101,491 15,587

Professional services 96,000 103,505 7,505

Animal control 14,900 21,640 6,740

Transfers out 10,000 278,157 268,157

Recreation Fund

Festival 62,500 71,065 8,565

Golf 214,841 226,201 11,360

Marina 77,980 82,508 4,528 Fund Deficits The Township has an accumulated fund balance deficit in the municipal airport and commerce park fund in the amount of $1,711,616 as of March 31, 2020.

Construction Code Fees The Township oversees building construction, in accordance with the State’s Construction Code Act, including inspection of building construction and renovation to ensure compliance with the building codes. The Township charges fees for these services. The law requires that collection of these fees be used only for construction code costs, including an allocation of estimated overhead costs. A summary of the current year activity and the cumulative surplus or shortfall generated since January 1, 2000 is as follows:

Cumulative Surplus at April 1, 2019 357,292$

Current Year Building Permit Revenue 311,814

Related Expenses (306,203)

Cumulative Surplus at March 31, 2020 362,903$

Note 3 - Deposits and Investments

Michigan Compiled Laws Section 129.91 (Public Act 20 of 1943, as amended) authorizes local governmental units to make deposits and invest in the accounts of federally insured banks, credit unions, and savings and loan associations that have offices in Michigan. The local unit is allowed to invest in bonds, securities, and other direct obligations of the United States or any agency or instrumentality of the United States; repurchase agreements; bankers’ acceptances of United States banks; commercial paper rated within the two highest classifications, which matures not more than 270 days after the date of purchase; obligations of the State of Michigan or its political subdivisions, which are rated as investment grade; and mutual funds composed of investment vehicles that are legal for direct investment by local units of government in Michigan. The Township has designated seven banks for the deposit of its funds. The investment policy adopted by the Board in accordance with Public Act 196 of 1997 has authorized investment in bonds and securities of the United States government, bank investment pools, and bank accounts and CDs, but not the remainder of State statutory authority as listed above.


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At year end the Township’s deposits and investments were reported in the financial statements in the following categories:

Cash and

Cash

Equivalents

Restricted

Cash and

Cash

Equivalents Total

Governmental activities 5,524,744$ -$ 5,524,744$

Business-type activities 5,943,246 5,224,210 11,167,456

Total 11,467,990 5,224,210 16,692,200

Fiduciary funds 801,322 - 801,322

Component unit 369,400 - 369,400

Total 12,638,712$ 5,224,210$ 17,862,922$

The breakdown between deposits and investments is as follows:

Primary

Government

Fiduciary

Funds

Component

Unit Total

Bank deposits (checking and

savings accounts, money

markets and certificates of

deposit) 2,943,750$ 801,322$ 369,400$ 4,114,472$

Investments in securities,

mutual funds and similar

vehicles 13,744,950 - - 13,744,950

Petty cash and cash on hand 3,500 - - 3,500

16,692,200$ 801,322$ 369,400$ 17,862,922$

As of year end, the government had the following investments:

Investment Fair Value Maturities Rating

Rating

Organization

MBIA Asset Management 13,744,950$ N/A AAA S&P

Below is the breakdown between cash and cash equivalents and restricted cash and cash equivalents:

Department of

Public Works

Cash and cash equivalents 5,400,940$

Restricted cash and cash equivalents 5,224,210

10,625,150$


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Interest rate risk – Interest rate risk is the risk that the value of investments will decrease as a result of a rise in interest rates. The Township’s investment policy does not restrict investment maturities, other than commercial paper which can only be purchased with a 270-day maturity. At year-end, the Township had no investment subjected to interest rate risk. Credit risk – State statutes and the Township’s investment policy authorize the government to make deposits and invest in the accounts of federally insured banks, credit unions, and savings and loan associations which have an office in Michigan. The local unit is allowed to invest in bonds, securities and other obligations of the United States, or any agency or instrumentality of the United States. United States government or federal agency obligations; repurchase agreements; bankers acceptance of United States Banks; commercial paper rated within the two highest classifications which mature not more than 270 days after the date of purchase; obligations of the State of Michigan or any of its political subdivisions, which are rated as investment grade; and mutual funds composed of investment vehicles that are legal for direct investment by local units of government in Michigan. Concentration of credit risk – The Township has no policy that would limit the amount that may be issued in any one issuer. Custodial credit risk - deposits – Custodial credit risk is the risk that in the event of a bank failure, the government’s deposits may not be returned to it. The government does not have a deposit policy for custodial credit risk. The bank balance of the Township’s deposits is $17,700,525, of which $1,238,244 is covered by federal depository insurance and $16,462,281 is uninsured and uncollateralized. The Township believes that due to the dollar amounts of cash deposits and the limits of FDIC insurance, it is impractical to insure all deposits. As a result, the Township evaluates each financial institution with which it deposits Township funds and assesses the level of risk of each institution; only those institutions with an acceptable estimated risk level are used as depositories.

The component units’ deposits had a bank balance of $370,621, of which $315,526 was covered by federal depository insurance and $55,095 was uninsured. Note 4 - Unearned Revenue

Governmental funds report unearned revenue in connection with resources that have been received but not yet earned. At the end of the current fiscal year, unearned revenue are as follows:

Primary government

Recreation - other 18,030$

Municipal Airport and Commerce Park 56,771

74,801$


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Note 5 - Capital Assets

Capital assets activity of the primary government for the current year is as follows:

Beginning Ending

Balance Increases Decreases Transfers Balance

Government al act ivit ies

Capital assets not being depreciated

Land 13,005,103$ 92,187$ -$ -$ 13,097,290$

Construct ion-in-progress 1,158,370 - - - 1,158,370

Total capital assets not being depreciated 14,163,473 92,187 - - 14,255,660

Capital assets being depreciated

Infrastructure 19,487,373 68,000 - - 19,555,373

Buildings, addit ions and improvements 11,294,823 134,599 24,953 - 11,404,469

M achinery and equipment 4,677,469 103,438 7,370 - 4,773,537

Vehicles 3,714,978 129,279 48,015 (182) 3,796,060

Total capital assets being depreciated 39,174,643 435,316 80,338 (182) 39,529,439

Less accumulated depreciat ion for

Infrastructure 8,809,550 338,249 - - 9,147,799

Buildings, addit ions and improvements 4,669,414 293,802 24,953 - 4,938,263

M achinery and equipment 3,785,789 181,613 7,370 - 3,960,032

Vehicles 2,115,119 237,801 39,990 1,000 2,313,930

Total accumulated depreciat ion 19,379,872 1,051,465 72,313 1,000 20,360,024

Net capital assets being depreciated 19,794,771 (616,149) 8,025 (1,182) 19,169,415

Governmental act ivit ies capital assets, net 33,958,244$ (523,962)$ 8,025$ (1,182)$ 33,425,075$

Beginning Ending

Balance Increases Decreases Transfers Balance

B usiness- t ype act ivit ies


Land 5,534,902$ -$ -$ -$ 5,534,902$

Construct ion-in-progress 4,449,672 1,803,169 4,291,883 (8,025) 1,952,933

Total capital assets not being depreciated 9,984,574 1,803,169 4,291,883 (8,025) 7,487,835


Buildings and building improvements 28,748,413 1,452,714 - (14,572) 30,186,555

Furniture, machinery and equipment 668,878 10,385 - (3,601) 675,662

Vehicles 341,464 - 37,342 (2,372) 301,750

Water and sewer distribut ion system 71,698,055 4,630,468 - (8,025) 76,320,498

Total capital assets being depreciated 101,456,810 6,093,567 37,342 (28,570) 107,484,465


Buildings and building improvements 14,776,465 784,825 - 53,400 15,614,690

Furniture, machinery and equipment 667,967 11,542 - (107,805) 571,704

Vehicles 233,322 29,708 37,342 25,835 251,523

Water and sewer distribut ion system 16,070,889 1,531,804 - - 17,602,693

Total accumulated depreciat ion 31,748,643 2,357,879 37,342 (28,570) 34,040,610

Net capital assets being depreciated 69,708,167 3,735,688 - - 73,443,855

Business-type capital assets, net 79,692,741$ 5,538,857$ 4,291,883$ (8,025)$ 80,931,690$


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Capital assets activity of the component unit for the current year is as follows:

Beginning Ending

Balance Increases Decreases Balance

C omponent U nit


Land 442,449$ -$ -$ 442,449$

Construct ion-in-progress 41,031 24,078 - 65,109

Total capital assets not being depreciated 483,480 24,078 - 507,558


Infrastructure 620,000 - - 620,000

Buildings, addit ions and improvements 557,081 - - 557,081

M achinery and equipment 5,252 - - 5,252

Total capital assets being depreciated 1,182,333 - - 1,182,333


Infrastructure 252,132 12,400 - 264,532

Buildings, addit ions and improvements 135,481 12,532 - 148,013

M achinery and equipment 1,876 1,050 - 2,926

Total accumulated depreciat ion 389,489 25,982 - 415,471

Net capital assets being depreciated 792,844 (25,982) - 766,862

Component unit capital assets, net 1,276,324$ (1,904)$ -$ 1,274,420$

Depreciation expense was charged to programs of the primary government as follows:


General government 525,733$

Public safety 368,013

Recreation and culture 157,719

Total governmental activities 1,051,465


Department of public works 1,690,974

Municipal airport and commerce park 666,905

Total business-type activities 2,357,879

Total primary government 3,409,344$

Depreciation expense was charged to the Township’s component units in the amount of $25,982.


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Note 6 - Interfund Receivables, Payables, and Transfers

The composition of interfund balances is as follows:

Receivable Fund Payable Fund Amount

General Fund Municipal Airport and Commerce Park 8,456$

General Fund Department of Public Works 24,182

General Fund Recreation Fund 3,892

General Fund Fire Operating Fund 16,018

General Fund Nonmajor funds 26,871

Department of Public Works General Fund 117

Department of Public Works Recreation Fund 2,461

Department of Public Works Municipal Airport and Commerce Park 14,358

Recreation Fund Nonmajor funds 50,991

Nonmajor funds General Fund 41,006

Nonmajor funds Recreation Fund 1,329

Nonmajor funds Nonmajor funds 11,982

201,663$ The outstanding balances between funds result mainly from the time lag between the dates that 1) interfund goods and services are provided or reimbursable expenditures occur, 2) transactions are recorded in the accounting system, and 3) payments between funds are made. Due to/from primary government and component units

Receivable Fund Payable Fund Amount

General Fund Downtown Development Authority 325$

Brownfield Redevelopment Authority Fiduciary Fund 21,469

Downtown Development Authority Fiduciary Fund 84,372

106,166$

Advances due to/from other funds

General Municipal Airport and Commerce Park 1,132,603$

The details for interfund transfers are as follows:

Funds Transferred From Funds Transferred To Amount

General Fund Nonmajor funds 278,157$

Fire Operating Fund Nonmajor funds 10,000

Fire Operating Fund General Fund 76,743

364,900$

The transfers from the general fund to the nonmajor funds, as well as, transfers from the Fire Operating Fund represent the use of unrestricted resources to finance those programs, in accordance with budgetary authorizations.


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Note 7 - Long-Term Debt

The Township issues bonds to provide for the acquisition and construction of major capital facilities. General obligation bonds are direct obligations and pledge the full faith and credit of the Township. State and county contractual agreements and installment purchase agreements are also general obligations of the government. Special assessment bonds provide for capital improvements that benefit specific properties, and will be repaid from amounts levied against those properties that benefited from the construction. In the event that a deficiency exists because of unpaid or delinquent special assessments at the time a debt service payment is due, the Township is obligated to provide resources to cover the deficiency until other resources (such as tax sale proceeds or a re-assessment of the Special Assessment District) are received. Long-term obligation activity is summarized as follows:

Interest Principal

Number Amount of Maturity Rate Maturity Beginning Ending Due Within

of Issues Issue Date Ranges Ranges Balance Additions Reductions Balance One Year


Bonds and notes payable

General obligation bonds

Grosse Ile building authority bond 1* 1,960,000$ 2025 2.0% - 4.0% $95,000 - $190,000 1,020,000$ -$ 150,000$ 870,000$ 150,000$

Grosse Ile building authority bond 1 575,000 2025 2.0% - 4.0% $30,000 - $55,000 280,000 - 50,000 230,000 50,000

Special assessment bonds 1 620,000 2019 3.5% - 4.5% $10,000 - $45,000 40,000 - 40,000 - -

Total bonds payable 1,340,000 - 240,000 1,100,000 200,000

Note payable 1 173,347 2020 2.00% $15,197 - $18,996 18,998 - 18,998 - -

Note payable 1 47,929 2019 2.00% $9,210 - $9,969 9,969 - 9,969 - -

Total notes payable 28,967 - 28,967 - -

Total bonds and notes payable 1,368,967 - 268,967 1,100,000 200,000

Compensated absences 451,463 201,607 184,742 468,328 50,125

Total governmental activities 1,820,430$ 201,607$ 453,709$ 1,568,328$ 250,125$


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Interest Principal

Number Amount of Maturity Rate Maturity Beginning Ending Due Within

of Issues Issue Date Ranges Ranges Balance Additions Reductions Balance One Year


Bonds and notes payable

General obligation bonds

Tax sew er system improvements 3 40,000,000$ 2025 2.125% - 2.5% $1,885,000 - $2,400,000 11,878,163$ -$ 2,165,000$ 9,713,163$ 2,215,000$

Refunding bond, series 2014 1* 4,970,000 2026 2.16% $15,000 - $250,000 2,545,000 - 370,000 2,175,000 365,000

Capital improvement bonds 1 3,000,000 2031 2.0% - 4.25% $75,000 - $250,000 2,300,000 - 125,000 2,175,000 125,000

Judgment bonds 1 6,855,000 2026 2.0% - 4.0% $325,000 - $575,000 4,065,000 - 455,000 3,610,000 465,000

Capital improvement bonds 1 6,500,000 2037 3% $50,000 - $625,000 6,450,000 - 75,000 6,375,000 125,000

Capital improvement bonds 1 6,000,000 2039 2.0% - 3.0% $230,000 - $390,000 - 6,000,000 - 6,000,000 250,000

Total general obligation bonds 27,238,163 6,000,000 3,190,000 30,048,163 3,545,000

Less deferred amounts

For issuance premiums 289,767 47,673 24,321 313,119 -

Total bonds payable 27,527,930 6,047,673 3,214,321 30,361,282 3,545,000

Compensated absences 43,517 47,014 48,271 42,260 16,652

Total business-type activities 27,571,447$ 6,094,687$ 3,262,592$ 30,403,542$ 3,561,652$

1* One issue: Amount of issue: $5,335,000


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Annual debt service requirements to maturity for the above obligations are as follows:

Year Ending

March 31, Principal Interest Principal Interest

2021 200,000$ 41,718$ 3,545,000$ 759,367$

2022 215,000 33,437 3,609,280 700,431

2023 215,000 24,665 3,460,000 607,728

2024 235,000 15,214 3,598,883 517,163

2025 235,000 5,083 2,505,000 437,344

2026-2030 - - 5,435,000 1,520,733

2031-2035 - - 4,810,000 752,078

2036-2040 - - 3,085,000 174,391

1,100,000$ 120,117$ 30,048,163$ 5,469,235$

Governmental Activities Business-type Activities

Note 8 - Risk Management

The Township is exposed to various risks of loss related to property loss, torts, errors and omissions, and employee injuries (workers’ compensation), as well as medical benefits provided to employees. The Township has purchased commercial insurance for medical claims as of March 1997; however, the Township still maintains a self insurance plan for dental claims only. The Township participates in the Michigan Municipal League risk pool for claims relating to workers’ compensation. The Township has purchased commercial insurance for property loss, torts, and errors and omissions. Settled claims relating to the commercial insurance have not exceeded the amount of insurance coverage in any of the past three fiscal years. The Michigan Municipal League risk pool program operates as a claims servicing pool for amounts up to member retention limits and operates as a common risk-sharing management program for local units of government in Michigan. Member premiums are used to purchase

excess insurance coverage and to pay member claims in excess of deductible amounts. Note 9 - Employee Retirement and Benefit Systems

Defined benefit pension plan Plan description – The Township participates in the Michigan Municipal Employees’ Retirement System (MERS), an agent multiple-employer, statewide public employee defined benefit pension plan that covers all employees of the government. The plan was established by the Michigan Legislature under Public Act 135 of 1945 and administered by a nine member Retirement Board. The system provides retirement, disability and death benefits to plan members and their beneficiaries. MERS issues a publicly available financial report that includes financial statements and required supplementary information for the system. That report may be obtained by writing to MERS at 1134 Municipal Way, Lansing, Michigan 48917 or on the web at http://www.mersofmich.com. Benefits provided – Benefits provided include plans with multipliers ranging from 1.5 to 2.8. The vesting period is 6 years. Normal retirement age is 60 with early retirement at 50 to 55 with 15 to 25 years of service. Final average compensation is calculated based on 3 years. Member contributions range from 0% to 3.25%. Employees covered by benefit terms – At the December 31, 2019 valuation date, the following employees were covered by benefit terms:

Inactive employees or beneficiaries

currently receiving benefits 49

Inactive employees entitled to, but not

yet receiving benefits 6

Active employees 47

102

http://www.mersofmich.com/


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Contributions – The employer is required to contribute amounts at least equal to the actuarially determined rate, as established by MERS Retirement Board. The actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer may establish contribution rates to be paid by its covered employees. Employer contributions range from 96.75% to 100% based on annual payroll for open divisions. Net pension liability – The employer’s net pension liability was measured as of December 31, 2019, and the total pension liability used to calculate the net pension liability was determined by an annual actuarial valuation as of that date. Actuarial assumptions – The total pension liability in the December 31, 2019 annual actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement include: 1) Inflation 2.5%; 2) Salary increases 3.75% in the long-term; 3) Investment rate of return of 7.75%, net of investment expense, including inflation. Although no specific price inflation assumptions are needed for the valuation, the 3.75% long-term wage inflation assumption would be consistent with a price inflation of 2.5%. Mortality rates used were based on the 2014 Group Annuity Mortality Table of a 50% male and 50% female blend. For disabled retirees, the regular mortality table is used with a 10-year set forward in ages to reflect the higher expected mortality rates of disabled members. The actuarial assumptions used in valuation were based on the results of the most recent actuarial experience study. The long-term expected rate of return on pension plan investments was determined using a model method in which the best-estimate ranges of expected future real rates of return (expected returns, net of investment

and administrative expenses and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates or arithmetic real rates of return for each major asset class are summarized in the following table:

Target Allocation Long-Term Long-term

Target Gross Rate Expected Gross Inflation Expected Real

Asset Class Allocation of Return Rate of Return Assumptions Rate of Return

Global equity 60.00% 8.65% 5.19% 2.50% 3.7%

Global fixed income 20.00% 3.76% 0.75% 2.50% 0.3%

Private investments 20.00% 9.06% 1.81% 2.50% 1.3%

Total 100.00% 7.75% 5.25%

Current Discount rate – The discount rate used to measure the total pension liability is 8.0%. The projection of cash flows used to determine the discount rate assumes that employer and employee contributions will be made at the rates agreed upon for employees and the actuarially determined rates for employers. Based on these assumptions, the pension plans fiduciary net position was projected to be available to pay all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.


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Changes in Net Pension Liability

Total Pension Liability

Service cost 444,946$

Interest on the total pension liability 2,726,481

Experience differences 74,431

Changes in actuarial assumptions 1,236,899

Benefit payments and refunds (1,848,177)

Net change in total pension liability 2,634,580

Total pension liability - beginning 34,782,629

Total pension liability - ending (a) 37,417,209$

Plan Fiduciary Net Position

Employer contributions 1,222,425$

Employee contributions 56,949

Pension plan net investment loss 2,687,072

Benefit payments and refunds (1,848,177)

Pension plan administrative expense (46,296)

Net change in plan fiduciary net position 2,071,973

Plan fiduciary net position - beginning 19,915,625

Plan fiduciary net position - ending (b) 21,987,598$

Net pension liability (a-b) 15,429,611$

Plan fiduciary net position as a percentage of

total pension liability 58.76%

Covered employee payroll 3,301,042$

Net pension liability as a percentage of covered

employee payroll 467.42%

Sensitivity of the net pension liability to changes in the discount rate – The following presents the net pension liability of the employer, calculated using the discount rate of 8.0%, as well as what the employer’s net pension liability would be using a discount rate that is 1% point lower (7%) or 1% higher (9%) than the current rate.

Current

1% Decrease Discount Rate 1% Increase

Net pension liability 19,747,033$ 15,429,611$ 11,782,093$

Pension expense and deferred outflows of resources and deferred inflows of resources related to pensions – For the year ended March 31, 2020 the employer recognized pension expense of $2,102,564. The employer reported deferred outflows and inflows of resources related to pensions from the following sources:

Deferred Deferred

Outflows of Inflows of Total to

Resources Resources Amortize

Differences in experience 141,872$ -$ 141,872$

Differences in assumptions 824,599 - 824,599

Net difference between projected and

actual earnings on plan investments 83,493 - 83,493

Contributions subsequent to the

measurement date* 310,006 - -

Total 1,359,970$ -$ 1,049,964$

*The amount reported as deferred outflows of resources resulting from contributions subsequent to the measurement date will be recognized as a reduction in the net pension liability for the year ending 2021.


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Amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ended March 31,

2021 483,916$

2022 512,561

2023 277,173

2024 (223,686)

1,049,964$

Note 10 - Other Postemployment Benefits Plan description – The Township provides postemployment health, dental, vision and life insurance benefits to all eligible full-time retired employees and their beneficiaries. The Township pays the full cost of coverage for these benefits. The Township includes pre-Medicare retirees and their dependents in its insured health care plan, with no contribution required by the participant (other than specific co-pays). The Township purchases Medicare supplemental insurance for retirees eligible for Medicare. The government obtains health care coverage through private insurers. This is a single-employer defined benefit plan administered by the Township. The benefits are provided under collective bargaining agreements. The plan does not issue a separate stand-alone financial statement. Administrative costs are paid by the employer.

Plan Membership – As of the latest valuation date of March 31, 2018, plan membership consisted of the following:

Inactive plan members or beneficiaries

currently receiving benefit payments 37

Active plan members 59

96

Benefits provided – The Plan provides healthcare and vision benefits for retirees and their dependents. Non-Union members hired after August 25, 2008 and who retire with health care spouse coverage will contribute 50% of spouse coverage cost of the retiree health insurance premium. Union TPOAM members hired after April 1, 2003 and who retire with health care spouse coverage will contribute 50% of spouse coverage cost of the retiree health insurance premium. Current and Future Retirees until Medicare eligible are subject to Act 152 Section 3, Public Acts of 2011. The effective dates are as follows:

• January 1, 2012 for Management, full-time Non-Union, and Firefighters

• April 1, 2012 for Police Officers and Dispatchers (POAM)

• April 1, 2013 for TPOAM Union Members The Township will pay up to the maximum of $6,561 for single coverage, $13,720 for double coverage and $17,892 for family coverage during 2018. Beginning January 1, 2019, the maximums are increased to $6,685 for single coverage, $13,981 for double coverage and $18,232 for family coverage. Retirees may choose a lesser coverage plan each year at renewal in order to minimize payments for costs over the cap. The Township Board has the authority to amend benefit terms. Contributions – The Township Board has the authority to establish and amend the contribution requirements of the Township and plan


March 31, 2020

4 - 39

members. The Board establishes rates based on an actuarially determined rate. For the year ended March 31, 2020, the Township’s average contribution rate was 17 percent of covered-employee payroll. Plan members are not required to contribute to the plan, except as noted above for covered spouses. Investment policy – The Plans policy in regard to the allocation of invested assets is established and may be amended by the Township Board by a majority vote of its members. It is the policy of the Township Board to pursue an investment strategy that reduces risk through the prudent diversification of the portfolio across a broad selection of distinct asset classes. The Plans investment policy discourages the use of cash equivalents, except for liquidity purposes, and aims to refrain from dramatically shifting asset class allocations over short time spans. The long-term expected rate of return on OPEB plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best-estimate of arithmetic real rates of return for each major class included in the target asset allocation as of March 31, 2020 are summarized below along with the Boards adopted asset allocation policy:

Long-term

Target expected real

Asset class Allocation rate of return

Global Equity 55.5% 6.15%

Global Fixed Income 18.5% 1.26%

Real Assets 13.5% 7.22%

Diversifying Strategies 12.5% 5.00%

100.0%

Rate of return – For the year ended March 31, 2020, the annual money-weighted rate of return on investments, net of investment expense, was -1.61%. The money-weighted rate of return expresses investment performance, net of investment expenses, adjusted for the changing amounts actually invested. Net OPEB liability – the components of the net OPEB liability as of March 31, 2020 were as follows:

Total OPEB liability 15,109,770$

Plan fiduciary net position 89,190

Net OPEB liability 15,020,580$

Plan fiduciary net position as a percentage of the total OPEB liability is .23%.


March 31, 2020

4 - 40

Actuarial assumptions – The total OPEB liability was determined by an actuarial valuation as of March 31, 2018, using the following actuarial assumptions, applied to all periods included in the measurement. Actuarial valuation date March 31, 2018

Actuarial cost method Entry age normal

Amortization method Level dollar for Fire

Level percent of payroll for Non-Union,

Union TPOAM, and Police POAM

Remaining amortization period 28 years, closed

Asset valuation method Market value of assets

Actuarial assumptions:

Inflation 2.5%

Salary increases 3.75% to 14.75%, including inflation

Investment rate of return 6.5%, net of OPEB plan investment expense.

Retirement age Experience-based table of rates that are

specific to the type of eligibility condition.

Mortality The mortality tables used to project the mortality

experience of non-disabled plan members is a

50% Male - 50% Female blend of the following tables:

The RP-2014 Healthy Annuitant Mortality Tables,

with rates multiplied by 105%

The RP-2014 Employee Mortality Tables

The RP-2014 Juvenile Mortality Tables

Health care trend rates Initial trend of 8.5% gradually decreasing to an

ultimate trend of 4.5% in 10 years.

Aging factors Based on 2013 SOA Study "Health Care Costs -

From Birth to Death"

Excise Tax No load was applied in connection with the

"Cadillac" tax. The actuarial assumptions used in the March 31, 2018 valuation were based on the results of an actuarial experience study for the 5-year experienced study for the period January 1, 2009 to December 31, 2013. Discount rate – A Single Discount Rate of 6.50% was used to measure the total OPEB liability. This Single Discount Rate was based on the expected rate of return on OPEB plan investments of 6.50%. The projection of cash flows used to determine this Single Discount Rate

assumed that employer contributions will be made at rates greater than pay-as-you-go costs. Based on these assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.


March 31, 2020

4 - 41

Changes in Net OPEB Liability

Total OPEB Liability

Service cost 171,952$

Interest on the total OPEB liability 930,048

Experience differences 81,536

Benefit payments and refunds (592,435)

Net change in total OPEB liability 591,101

Total OPEB liability - beginning 14,518,669

Total OPEB liability - ending (a) 15,109,770$


Employer contributions 655,218$

OPEB plan net investment loss (7,267)

Benefit payments and refunds (592,435)

Net change in plan fiduciary net position 55,516

Plan fiduciary net position - beginning 33,674

Plan fiduciary net position - ending (b) 89,190

Net OPEB liability (a-b) 15,020,580$

Plan fiduciary net position as a percentage of

total OPEB liability 0.59%

Covered employee payroll 3,494,577$

Net OPEB liability as a percentage of covered

employee payroll 429.83%

Sensitivity of the net OPEB liability to changes in the discount rate – The following presents the net OPEB liability of the Township, as well as what the Township’s net OPEB liability would be if it were calculated using a discount rate that is 1% lower (5.5%) or 1% higher (7.5%) than the current discount rate.

Current

1% Decrease Discount Rate 1% Increase

Net OPEB liability 17,213,578$ 15,020,580$ 13,217,931$

Sensitivity of the net OPEB liability to changes in the healthcare cost trend rates – The following presents the net OPEB liability of the Township, as well as what the Township’s net OPEB liability would be if were calculated using healthcare cost trend rates that are 1% lower (8.5%) or 1% higher (10.5%) than the current healthcare cost trend rates:

Healthcare

1% Decrease Cost Trend Rates 1% Increase

Net OPEB liability 12,925,396$ 15,020,580$ 17,598,550$

OPEB expense and deferred outflows of resources and deferred inflows of resources related to OPEB – For the year ended March 31, 2020 the employer recognized OPEB expense of ($415,183). The employer reported deferred outflows and inflows of resources related to OPEB from the following sources:

Deferred Deferred

Outflows of Inflows of Total to

Resources Resources Amortize

Differences in experience 116,446$ -$ 116,446$

Differences in assumptions - (4,604,392) (4,604,392)

Net difference between projected and

actual earnings on plan investments 10,830 - 10,830

Total 127,276$ (4,604,392)$ (4,477,116)$


March 31, 2020

4 - 42

Amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year Ended March 31,

2021 (1,512,954)$

2022 (1,512,954)

2023 (1,469,444)

2024 18,236

(4,477,116)$

Note 11 - Restricted and Committed Fund Balances

Restricted net position at March 31, 2020 consists of the following:

Construction code fees 362,903$

Fire operating 526,879

Drain and storm maintenance 816,813

Nonmajor special revenue funds 2,563,208

Total restricted for other purposes 4,269,803$

Fund balances of the governmental activities have been restricted for the following:

General Fund

Construction code fees 362,903$

Debt service funds 362,990

Special revenue funds

Recreation fund 177,942

Fire operating 520,392

Drain and storm maintenance 816,813

Drug law enforcement 439,912

Fire equipment 1,339,317

Library 74,494

Block grant 668

Bicycle path 255,735

Road improvements 73,867

Open space 379,215

Total special revenue funds 4,078,355

Total restricted fund balances 4,804,248$

Fund balances of the governmental activities have been committed for the following:

Special revenue funds

Public safety building maintenance 80,088$

Historical farm 35,080

Total special revenue funds 115,168$


March 31, 2020

4 - 43

Note 12 - Lawsuit Settlements

During the ordinary course of its operation, the Township is a party to various claims, legal actions, and complaints. In accordance with Administrative Consent Order ACO-SWOl-004 (ACO), issued by the State of Michigan Department of Natural Resources and Environment, Water Resources Division, now the Michigan Department of Environmental Quality (MDEQ), the Township was ordered to commence a Sanitary Sewer Overflow (SSO) correction program starting in 2001 to rehabilitate and upgrade its sanitary sewerage system, so that infiltration and inflow (I/I) would be reduced, and that the wastewater treatment plant (WWTP) would meet its National Pollution Discharge Elimination System (NPDES) permit effluent event and to provide adequate storage to avoid SSOs or WWTP bypasses. That ACO included stipulated penalty provisions for each failure to comply with the terms of the ACO (e.g., failure to meet specific deadlines or failure to comply with effluent limitations outlined in the ACO). Over the years, the Township has made many upgrades to its WWTP in an effort to meet its NPDES permit effluent limits and address SSOs or WWTP bypasses. This has included 1/1 removal activities, such as removal of inflow sources, lining of sewer pipes, and manhole rehabilitation. Capital improvements included construction of the North-South Interceptor System and a 6.5 million gallon (MG) sewage retention basin to handle excess peak flows in the system. Implementation of these projects required five amendments to the original AOC to adjust the compliance schedule. After completion of the construction activities, a Project Performance Certification (PPC) study was conducted. It was determined that the transport facilities were adequate, however the storage and treatment system could not be certified as meeting the MDEQ's SSO Policy Statement during heavy rainfall events, saturated ground, and snowmelt events. The Township remains unable to certify compliance with the MDEQ's SSO Policy Statement.

As a result, the Township negotiated the terms of a new NPDES permit to better address current WWTP operations and effluent, and the Township and MDEQ entered into a Sixth Amendment to the ACO (ACO-SWl 0-008), which became effective on July 27, 2017. The Sixth Amendment to the ACO includes an implementation schedule that requires the Township to proceed with the design and implementation/construction of improvements to increase the WWTP's treatment capacity in order to meet the MDEQ's SSO Policy Statement. The Township's conceptual cost estimate to increase the WWTP storage capacity is approximately $1.9 million. The Sixth Amendment to the ACO also includes an obligation to pay stipulated penalties for any failure to comply with the terms of the ACO. The Township is obligated under the Sixth Amendment to the ACO to certify compliance with the MDEQ's SSO Policy Statement by January 1, 2027. At this time we are unable to state whether the Township will be able to certify compliance by that date, or whether an outcome unfavorable to the Township is either probable or remote within the meaning of the Statement of Policy or the amount or range of any loss in the event of an unfavorable outcome.

Note 13 - Jointly Governed Organization

The Township is a member of the 33rd District Court (the “Court”), which provides judicial services to the member communities. The Court receives its operating revenue principally from fines and fees, in addition to annual funding contributions from member communities. During the current year, the Township paid approximately $75,906 to the Court, representing the Township’s share of the Court’s net activity. The Township is unaware of any circumstances that would cause an additional benefit or burden to the participating communities in the near future, other than the fluctuation of caseloads, which impacts the Township’s share of the Court debt. Complete financial statements for the Court can be obtained from the administrative offices at: 19000 Van Horn Road, Woodhaven, MI 48183.


March 31, 2020

4 - 44

Note 14 - COVID-19 Pandemic

As result of the global coronavirus pandemic of 2020, many organizations’ financial picture has seen an unanticipated change. The duration and full effects of the outbreak are currently unknown, as the global picture continues to change daily. While management is hopeful that the impact is temporary in nature, a description of known and anticipated circumstances expected to have a significant impact on the Township as of the date of management’s review is as follows: Investments – The Township currently has no immediate plans to liquidate investments and remains focused on long term appreciation. Revenues and Liquidity – The Township does not foresee significant liquidity issues at this time, however, the effect the pandemic may have on revenues is unknown. As of August 2020 month-end, State of Michigan sales tax collections are down 0.6% year-over-year. The State has indicated that revenue sharing is likely to be flat over the next fiscal year. Accounts Receivable – The Township has not experienced any material delays in collection of accounts receivable. However, if the pandemic leads to a protracted recession and such delays occur, the Township has sufficient liquidity to effectively mitigate any cash flow issues that could arise. Additional Expenditures – The Township expects to experience increased expenditures during 2021 as a result of covering shifts of symptomatic employees who are unable to report for work, purchasing personal protective equipment and implementing additional safety measures during the pandemic. Grants – The Township expects to receive grant revenues from the CARES Act through the State of Michigan in the amount of approximately $12,000 in Fiscal Year 2021. Potential grant funds resulting from future Federal aid legislation is also unknown.

Actual

Over (Under)

Final

Original Final Actual Budget

Revenues

Property taxes 3,691,744$ 3,691,744$ 3,652,994$ (38,750)$

Licenses and permits 760,700 760,700 729,807 (30,893)

State-shared revenue 951,250 951,250 977,049 25,799

Intergovernmental revenue 5,400 5,400 5,921 521

Charges for services 125 125 - (125)

Fines and forfeitures 79,256 79,256 83,913 4,657

Interest income 85,000 85,000 96,988 11,988

Other revenue 278,550 278,550 267,937 (10,613)

Transfers in 76,743 76,743 76,743 -

Total revenues 5,928,768 5,928,768 5,891,352 (37,416)

Budgeted Amounts


Township of Grosse IleRequired Supplementary Information

Budgetary Comparison Schedule

General Fund

5 - 1

Actual

Over (Under)

Final


Budgeted Amounts




General Fund

Expenditures

General government

Township board 47,190$ 47,190$ 43,685$ (3,505)$

Supervisor 23,880 23,880 20,247 (3,633)

Manager 175,219 175,219 197,536 22,317

Finance department 265,881 265,881 260,272 (5,609)

Clerk 198,233 198,233 192,036 (6,197)

Property tax administration 137,920 137,920 133,819 (4,101)

Board of review 1,000 1,000 - (1,000)

Treasurer 241,638 241,638 228,886 (12,752)

Elections 15,800 15,800 27,424 11,624

Buildings and grounds 424,850 424,850 197,209 (227,641)

Community development 347,680 347,680 306,551 (41,129)

Communications commission 85,904 85,904 101,491 15,587

Professional services 96,000 96,000 103,505 7,505

General expenditures 283,434 283,434 279,610 (3,824)

Total general government 2,344,629 2,344,629 2,092,271 (252,358)

5 - 2

Actual

Over (Under)

Final


Budgeted Amounts




General Fund

Public safety

Police 3,472,383$ 3,472,383$ 3,409,207$ (63,176)$

Animal control 14,900 14,900 21,640 6,740

Auxiliary police 8,600 8,600 1,326 (7,274)

Total public safety 3,495,883 3,495,883 3,432,173 (63,710)

33rd District Court 78,256 78,256 75,906 (2,350)

Transfers out 10,000 10,000 278,157 268,157

Total expenditures 5,928,768 5,928,768 5,878,507 (50,261)

Excess (deficiency) of revenues over expenditures - - 12,845 12,845

Fund balance - beginning of year 2,421,046 2,421,046 2,421,046 -

Fund balance - end of year 2,421,046$ 2,421,046$ 2,433,891$ 12,845$

5 - 3

Actual

Over (Under)

Final


Revenues

Property taxes 540,083$ 540,083$ 535,303$ (4,780)$

Charges for services 123,600 123,600 111,720 (11,880)

Rental income 36,000 36,000 49,867 13,867

Other revenue 62,500 62,500 82,555 20,055

Golf 108,600 108,600 102,647 (5,953)

Marina 106,300 106,300 97,727 (8,573)

Pool 34,500 34,500 34,962 462

Total revenues 1,011,583 1,011,583 1,014,781 3,198

Expenditures

Recreational 450,921 450,921 435,949 (14,972)

Festival 62,500 62,500 71,065 8,565

Grounds and maintenance 96,100 96,100 89,963 (6,137)

Golf 214,841 214,841 226,201 11,360

Marina 77,980 77,980 82,508 4,528

Pool 79,697 79,697 60,184 (19,513)

Debt service -

Principal retirement 28,965 28,965 28,967 2

Interest and fiscal charges 579 579 579 -

Total expenditures 1,011,583 1,011,583 995,416 (16,167)


Fund balance - beginning of year 163,057 163,057 163,057 -

Fund balance - end of year 163,057$ 163,057$ 182,422$ 19,365$

Budgeted Amounts



Budgetary Comparison ScheduleMajor Special Revenue Funds - Recreation Fund

5 - 4

Actual

Over (Under)

Final


Revenues

Taxes 925,412$ 925,412$ 917,242$ (8,170)$

Ambulance fees 370,000 370,000 185,454 (184,546)

Interest income 1,000 1,000 1,364 364

Transfers in 132,273 132,273 - (132,273)

Total revenues 1,428,685 1,428,685 1,104,060 (324,625)

Expenditures

Current

Public safety 1,209,669 1,209,669 1,131,246 (78,423)

Transfers out 219,016 219,016 86,743 (132,273)

Total expenditures 1,428,685 1,428,685 1,217,989 (210,696)

Excess (deficiency) of revenues over expenditures - - (113,929) (113,929)


Fund balance - end of year 640,808$ 640,808$ 526,879$ (113,929)$

Budgeted Amounts



Budgetary Comparison ScheduleMajor Special Revenue Funds - Fire Operating Fund

5 - 5

Actual

Over (Under)

Final


Revenues

Property taxes 204,140$ 204,140$ 202,316$ (1,824)$

Interest income - - 9,480 9,480

Total revenues 204,140 204,140 211,796 7,656

Expenditures

Current

General government 204,140 204,140 141,202 (62,938)



Fund balance - end of year 746,219$ 746,219$ 816,813$ 70,594$

Budgeted Amounts



Budgetary Comparison ScheduleMajor Special Revenue Funds - Drain and Storm Maintenance

5 - 6

Actual

Fiscal Actuarially Contribution Contribution

Year Determined Actual Deficiency Covered as a % of

Ended Contribution Contribution (Excess) Payroll Covered Payroll

3/31/2014 860,586$ 860,586$ -$ 2,988,937$ 28.79%

3/31/2015 955,471 955,471 - 3,076,838 31.05%

3/31/2016 948,535 948,535 - 3,079,052 30.81%

3/31/2017 1,037,698 1,037,698 - 3,116,401 33.30%

3/31/2018 1,118,604 1,118,604 - 3,157,710 35.42%

3/31/2019 1,208,597 1,208,597 - 3,402,527 35.52%

3/31/2020 1,208,598 1,208,598 - 3,352,724 36.05%

Notes: Actuarially determined contribution amounts are calculated as of December 31 each year, which is

15 months prior to the beginning of the fiscal year in which contributions are reported.

Methods and assumptions used to determine contribution rates:

Actuarial cost method Individual entry-age

Amortization method Level-dollar closed

Remaining amortization period 14-20 years

Asset valuation method 5-year smoothed value of assets

Inflation 2.50%

Salary increases 3.75%

Investment rate of return 8.00%

Retirement age 60

Mortality RP-2014 Healthy Annuitant Mortality Tables - 50% male and 50% female blend

RP-2014 Employee Mortality Tables - 50% male and 50% female blend

RP-2014 Juvenile Mortality Tables - 50% male and 50% female blend

RP-2014 Disabled Retiree Mortality Tables - 50% male and 50% female blend

March 31, 2020


Municipal Employees Retirement System of Michigan

Schedule of Employer Contributions

5 - 7

Fiscal year ended March 31, 2020 2019 2018 2017 2016

Total Pension Liability

Service cost 444,946$ 425,986$ 432,869$ 436,208$ 416,060$

Interest on the total pension liability 2,726,481 2,601,978 2,586,373 2,444,837 2,231,640

Experience differences 74,431 276,755 (1,227,106) 375,640 (590,522)

Changes in actuarial assumptions 1,236,899 - - - 1,929,557

Other changes - - (1) (12,517) 69,740

Benefit payments and refunds (1,848,177) (1,667,641) (1,519,625) (1,426,976) (1,376,202)

Net change in total pension liability 2,634,580 1,637,078 272,510 1,817,192 2,680,273

Total pension liability - beginning 34,782,629 33,145,551 32,873,041 31,055,849 28,375,576

Total pension liability - ending (a) 37,417,209$ 34,782,629$ 33,145,551$ 32,873,041$ 31,055,849$


Employer contributions 1,222,425 1,185,669 1,092,334 1,037,700 948,535

Employee contributions 56,949 56,701 56,707 62,419 52,933

Pension plan net investment income 2,687,072 (826,293) 2,520,085 1,987,978 (271,774)

Benefit payments and refunds (1,848,177) (1,667,641) (1,519,625) (1,426,976) (1,376,202)

Pension plan administrative expense (46,296) (41,018) (39,890) (39,237) (39,663)

Other - - (1) - -

Net change in plan fiduciary net position 2,071,973 (1,292,582) 2,109,610 1,621,884 (686,171)

Plan fiduciary net position - beginning 19,915,625 21,208,207 19,098,597 17,476,713 18,162,884

Plan fiduciary net position - ending (b) 21,987,598$ 19,915,625$ 21,208,207$ 19,098,597$ 17,476,713$

Net pension liability (a-b) 15,429,611$ 14,867,004$ 11,937,344$ 13,774,444$ 13,579,136$

Plan fiduciary net position as a percentage of total pension liability 58.76% 57.26% 63.99% 58.10% 56.28%

Covered employee payroll 3,301,042$ 3,137,601$ 3,157,710$ 3,116,401$ 3,079,052$

Net pension liability as a percentage of covered employee payroll 467.42% 473.83% 378.04% 442.00% 441.02%

Data will be added as information is available until 10 years of such data is available.


Municipal Employees Retirement System of Michigan

Schedule of Changes in Net Pension Liability and Related Ratios

Last Five Fiscal Years

*GASB Statement No. 68 was implemented for the fiscal year ended March 31, 2016 and does not require retroactive implementation.

5 - 8

Actual

Fiscal Actuarially Contribution Contribution

Year Determined Actual Deficiency Covered as a % of

Ended Contribution Contribution (Excess) Payroll Covered Payroll

2019 1,557,208$ 614,409$ 942,799$ 3,538,391$ 17.36%

2020 1,047,227 655,218 392,009 3,494,577 18.75%

Notes: Actuarially determined contribution amounts are calculated as of March 31 each year, which is

12 months prior to the beginning of the fiscal year in which contributions are reported.

Methods and assumptions used to determine contribution rates:

Actuarial valuation date March 31, 2018

Actuarial cost method Entry age normal

Amortization method Level dollar for Fire

Level percent of payroll for Non-Union, Union TPOAM, and Police POAM

Remaining amortization period 28 years, closed

Asset valuation method Market value of assets

Actuarial assumptions:

Inflation 2.5%

Salary increases 3.75% to 14.75%, including inflation

Investment rate of return 6.5%, net of OPEB plan investment expense.

Retirement age Experience-based table of rates that are specific to the type of eligibility condition.

Mortality The mortality tables used to project the mortality experience of non-disabled plan

members is a 50% Male - 50% Female blend of the following tables:

1. The RP-2014 Healthy Annuitant Mortality Tables, with rates multiplied by 105%

2. The RP-2014 Employee Mortality Tables

3. The RP-2014 Juvenile Mortality Tables

Health care trend rates Initial trend of 8.5% gradually decreasing to an ultimate trend of 4.5% for Non-Medicare (Pre-65).

Initial trend of 7.0% gradually decreasing to an ultimate trend of 4.5% for Medicare (Post-65).

Aging factors Based on 2013 SOA Study "Health Care Costs - From Birth to Death"

Excise Tax No load was applied in connection with the "Cadillac" tax.


Other Postemployment Benefits

Schedule of Employer Contributions

Last Two Fiscal Years

5 - 9

Fiscal year ended March 31, 2020 2019

Total OPEB Liability

Service cost 171,952$ 442,520$

Interest 930,048 773,644

Differences between expected and actual experience 81,536 85,844

Changes in assumptions - (7,703,322)

Benefit payments (592,435) (578,657)

Net change in total OPEB liability 591,101 (6,979,971)

Total OPEB liability - beginning 14,518,669 21,498,640

Total OPEB liability - ending (a) 15,109,770$ 14,518,669$


Employer contributions 655,218$ 614,409$

Net investment loss (7,267) (2,078)

Benefit payments and refunds (592,435) (578,657)

Net change in plan fiduciary net position 55,516 33,674

Plan fiduciary net position - beginning 33,674 -

Plan fiduciary net position - ending (b) 89,190$ 33,674$

Net OPEB liability (a-b) 15,020,580$ 14,484,995$

Plan fiduciary net position as a percentage of total OPEB liability 0.59% 0.23%

Covered employee payroll 3,494,577$ 3,538,391$

Net OPEB liability as a percentage of covered employee payroll 429.83% 409.37%

the first year the Township had a qualified trust) and does not require retroactive implementation.




Schedule of Changes in Net OPEB Liability and Related Ratios

Last Two Fiscal Years

*GASB Statements No. 74 and 75 were implemented for the fiscal year ended March 31, 2019 (the first year GASB 75 was required and

5 - 10

Fiscal Year

Ended Annual

March 31, Return % *

2019 0.00%

2020 -1.61%

the first year the Township had a qualified trust) and does not require retroactive implementation.


* Annual money-weighted rate of return, net of investment expenses

Schedule of Investment Returns



March 31, 2020

*GASB Statements No. 74 and 75 were implemented for the fiscal year ended March 31, 2019 (the first year GASB 75 was required and

5 - 11

Total

Special Debt Nonmajor

Revenue Service GovernmentalFunds Funds Funds

Assets

Cash and cash equivalents 2,756,006$ 355,694$ 3,111,700$

Receivables

Taxes 28,045 101 28,146

Customers 3,281 - 3,281

Special assessments, net - 17,255 17,255

Due from other funds 37,165 17,152 54,317

Total assets 2,824,497$ 390,202$ 3,214,699$

Liabilities

Accounts payable 64,287$ 17,152$ 81,439$

Accrued and other liabilities 1,988 - 1,988


Due to component unit 62 - 62

Total liabilities 146,121 27,212 173,333

Fund Balances

Restricted 2,563,208 362,990 2,926,198

Committed 115,168 - 115,168

Total fund balances 2,678,376 362,990 3,041,366

Total liabilities and fund balance 2,824,497$ 390,202$ 3,214,699$

Township of Grosse IleOther Supplementary Information

Combining Balance Sheet

Nonmajor Governmental Funds

March 31, 2020

6 - 1

Total



Revenues

Taxes 764,945$ -$ 764,945$

Federal grants 196,668 - 196,668

Other state grants 750 - 750

Interest income 39,713 5,267 44,980

Rental income 111,513 - 111,513

Other revenue 723 - 723

Total revenues 1,114,312 5,267 1,119,579


Combining Statement of Revenues, Expenditures and Changes in Fund Balances



6 - 2

Total







Expenditures

Current

General government 645,797$ -$ 645,797$

Public safety 525,243 - 525,243

Recreation and culture 269,575 - 269,575

Debt service

Principal retirement - 240,000 240,000

Interest and fiscal charges - 53,555 53,555

Total expenditures 1,440,615 293,555 1,734,170

Excess (deficiency) of revenues

over expenditures (326,303) (288,288) (614,591)

Other financing sources

Transfers in 20,000 268,157 288,157

Net change in fund balance (306,303) (20,131) (326,434)

Fund balance - beginning of year 2,984,679 383,121 3,367,800

Fund balance - end of year 2,678,376$ 362,990$ 3,041,366$

6 - 3

Public Federal

Safety Drug Grant

Building Law Pass Fire Historical LibraryMaintenance Enforcement Through Equipment Farm Fund

Assets

Cash and cash equivalents 83,925$ 458,261$ -$ 1,336,611$ 15,669$ 106,614$

Receivables

Taxes - - - 10,902 - 4,485

Customers 2,281 - - - 1,000 -

Due from other funds 5,582 - - - 25,183 -

Total assets 91,788$ 458,261$ -$ 1,347,513$ 41,852$ 111,099$


March 31, 2020

Nonmajor Special Revenue Funds



6 - 4

Public Federal

Safety Drug Grant

Building Law Pass Fire Historical LibraryMaintenance Enforcement Through Equipment Farm Fund


March 31, 2020




Liabilities

Accounts payable 11,700$ 2,875$ -$ 8,196$ 1,190$ 36,605$

Accrued and other liabilities - 1,988 - - - -

Due to other funds - 13,486 - - 5,582 -

Due to component unit - - - - - -

Total liabilities 11,700 18,349 - 8,196 6,772 36,605

Fund Balances

Restricted - 439,912 - 1,339,317 - 74,494

Committed 80,088 - - - 35,080 -

Total fund balances 80,088 439,912 - 1,339,317 35,080 74,494

Total liabilities and fund

balances 91,788$ 458,261$ -$ 1,347,513$ 41,852$ 111,099$

6 - 5

Total

Block Road Open Nonmajor

Grant Bicycle Improvement Space Special Fund Path Fund Fund Revenue Funds

Assets

Cash and cash equivalents 54,984$ 246,080$ 66,352$ 387,510$ 2,756,006$

Receivables

Taxes - 3,541 8,950 167 28,045

Customers - - - - 3,281

Due from other funds - 6,400 - - 37,165

Total assets 54,984$ 256,021$ 75,302$ 387,677$ 2,824,497$

March 31, 2020




6 - 6

Total

Block Road Open Nonmajor

Grant Bicycle Improvement Space Special Fund Path Fund Fund Revenue Funds

March 31, 2020




Liabilities

Accounts payable -$ 286$ 1,435$ 2,000$ 64,287$

Accrued and other liabilities - - - - 1,988

Due to other funds 54,316 - - 6,400 79,784

Due to component unit - - - 62 62

Total liabilities 54,316 286 1,435 8,462 146,121

Fund Balances

Restricted 668 255,735 73,867 379,215 2,563,208

Committed - - - - 115,168

Total fund balances 668 255,735 73,867 379,215 2,678,376

Total liabilities and fund

balances 54,984$ 256,021$ 75,302$ 387,677$ 2,824,497$

6 - 7

Public Federal

Safety Drug Grant

Building Law Pass- Fire Historical LibraryMaintenance Enforcement Through Equipment Farm Fund

Revenues

Taxes -$ -$ -$ 305,399$ -$ 123,285$

Federal grants - 152,976 - - - -

Other state grants - 750 - - - -

Interest income 549 9,755 - 17,455 167 306

Rental income 41,907 - - - 69,606 -

Other revenue - - - - - -

Total revenues 42,456 163,481 - 322,854 69,773 123,591





6 - 8

Public Federal

Safety Drug Grant

Building Law Pass- Fire Historical LibraryMaintenance Enforcement Through Equipment Farm Fund





Expenditures

Current

General government -$ -$ -$ -$ -$ -$

Public safety 65,636 259,080 - 200,527 - -

Recreation and culture - - - - 74,931 150,773

Total expenditures 65,636 259,080 - 200,527 74,931 150,773


over expenditures (23,180) (95,599) - 122,327 (5,158) (27,182)


Transfers in 20,000 - - - - -

Net change in fund balance (3,180) (95,599) - 122,327 (5,158) (27,182)

Fund balance - beginning of year 83,268 535,511 - 1,216,990 40,238 101,676

Fund balance - end of year 80,088$ 439,912$ -$ 1,339,317$ 35,080$ 74,494$

6 - 9

Total

Road Open Nonmajor

Block Grant Bicycle Improvement Space SpecialFund Path Fund Fund Revenue Funds

Revenues

Taxes -$ 91,773$ 244,488$ -$ 764,945$

Federal grants 43,692 - - - 196,668

Other state grants - - - - 750

Interest income 225 1,900 303 9,053 39,713

Rental income - - - - 111,513

Other revenue - - - 723 723

Total revenues 43,917 93,673 244,791 9,776 1,114,312





6 - 10

Total

Road Open Nonmajor

Block Grant Bicycle Improvement Space SpecialFund Path Fund Fund Revenue Funds





Expenditures

Current

General government -$ 87,076$ 425,493$ 133,228$ 645,797$

Public safety - - - - 525,243

Recreation and culture 43,871 - - - 269,575

Total expenditures 43,871 87,076 425,493 133,228 1,440,615


over expenditures 46 6,597 (180,702) (123,452) (326,303)


Transfers in - - - - 20,000

Net change in fund balance 46 6,597 (180,702) (123,452) (306,303)

Fund balance - beginning of year 622 249,138 254,569 502,667 2,984,679

Fund balance - end of year 668$ 255,735$ 73,867$ 379,215$ 2,678,376$

6 - 11

Total

Oak River Nonmajor

1998 SAD 1999 SAD 2004 SAD SAD Building Debt ServiceDebt Debt Debt Debt Authority Funds

Assets

Cash and cash equivalents 137,347$ 215,919$ -$ 2,428$ -$ 355,694$

Receivables

Taxes - - - 101 - 101

Special assessments, net - - - 17,255 - 17,255

Due from other funds - - 17,152 - - 17,152

Total assets 137,347$ 215,919$ 17,152$ 19,784$ -$ 390,202$

Liabilities

Accounts payable -$ -$ 17,152$ -$ -$ 17,152$

Due to other funds - - - 10,060 - 10,060

Total liabilities - - 17,152 10,060 - 27,212

Fund Balances

Restricted for

Debt service 137,347 215,919 - 9,724 - 362,990

Total liabilities and fund balance 137,347$ 215,919$ 17,152$ 19,784$ -$ 390,202$



Nonmajor Debt Service Funds

March 31, 2020

6 - 12

Total

Oak River Nonmajor

1998 SAD 1999 SAD 2004 SAD SAD Building Debt ServiceDebt Debt Debt Debt Authority Funds

Revenues

Special assessments -$ -$ -$ -$ -$ -$

Interest income 1,687 2,408 235 937 - 5,267

Total revenues 1,687 2,408 235 937 - 5,267

Expenditures

Debt service

Principal retirement - - 40,000 - 200,000 240,000

Interest and fiscal charges - - 2,550 - 51,005 53,555

Total expenditures - - 42,550 - 251,005 293,555


over expenditures 1,687 2,408 (42,315) 937 (251,005) (288,288)


Transfers in - - 17,152 - 251,005 268,157

Net change in fund balance 1,687 2,408 (25,163) 937 - (20,131)

Fund balance - beginning of year 135,660 213,511 25,163 8,787 - 383,121

Fund balance - end of year 137,347$ 215,919$ -$ 9,724$ -$ 362,990$



Nonmajor Debt Service Funds


6 - 13

financial statements march 31, 2020 - grosse ile

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