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FC081021packetCITY OF MUSKEGO FINANCE COMMITTEE AGENDA 08/10/2021 5:00 PM Muskego City Hall, W182 S8200 Racine Avenue CALL TO ORDER PLEDGE OF ALLEGIANCE ROLL CALL PUBLIC MEETING NOTICE APPROVAL OF MINUTES July 27, 2021 FCM.2021.07.27.pdf 2020 AUDIT PRESENTATION Audit Presentation Muskego Audit Results 2020.pdf Muskego Financial Statements.pdf LICENSE APPROVALS Recommend Approval of Operator Licenses OPLIC20210810.pdf Recommend Approval of Amended Licensed Premise for AJ's Bar & Grill, S90 W13970 Boxhorn Drive, to Include Grass Area Immediately Surrounding Patio and Outside Dance Permit as follows: Tuesday, August 24, 2021 - 5 pm to 8:30 pm Sunday, September 12, 2021 - 12 pm to 3 pm Sunday, September 19, 2021 - 3:30 pm to 6:30 pm Sunday, September 26, 2021 - 3:30 pm to 6:30 pm NEW BUSINESS Recommend Approval of Memorandum of Understanding for Muskego-Norway School Resource Officer Program CCR2021070-MOU-SRO Program.docx CCR2021070- Attachment (SRO MOU 2021-2022).docx CCR2021070-SLO Agreement Schedule A 21-22.pdf 1 VOUCHER APPROVAL Voucher Reports Utility Vouchers - $90,341.94 Tax Vouchers - $3,319.31 General Fund Vouchers - $822,781.59 Wire Transfers for Payroll/Invoice Transmittals - $367,890.22 Vouchers - Total.pdf Vouchers Alpha Report.pdf FINANCE DIRECTOR'S REPORT Quarterly Report Qtrly FD Report - 8-10-21 FC.pdf COMMUNICATIONS AND ANY OTHER BUSINESS AS AUTHORIZED BY LAW ADJOURNMENT NOTICE IT IS POSSIBLE THAT MEMBERS OF AND POSSIBLY A QUORUM OF MEMBERS OF OTHER GOVERNMENTAL BODIES OF THE MUNICIPALITY MAY BE IN ATTENDANCE AT THE ABOVE-STATED MEETING TO GATHER INFORMATION; NO ACTION WILL BE TAKEN BY ANY GOVERNMENTAL BODY AT THE ABOVE-STATED MEETING OTHER THAN THE GOVERNMENTAL BODY SPECIFICALLY REFERRED TO ABOVE IN THIS NOTICE. ALSO, UPON REASONABLE NOTICE, EFFORTS WILL BE MADE TO ACCOMMODATE THE NEEDS OF DISABLED INDIVIDUALS THROUGH APPROPRIATE AIDS AND SERVICES. FOR ADDITIONAL INFORMATION OR TO REQUEST THIS SERVICE, CONTACT MUSKEGO CITY HALL, (262) 679-4100. 2 CITY OF MUSKEGO Unapproved FINANCE COMMITTEE MINUTES July 27, 2021 5:50 PM Muskego City Hall, W182 S8200 Racine Avenue CALL TO ORDER Mayor Petfalski called the meeting to order at 5:51 pm. PLEDGE OF ALLEGIANCE Those present recited the Pledge of Allegiance ROLL CALL Present: Committee Members Alderpersons Madden, Kubacki, and Wolfe. Also present: Alderpersons Engelhardt, Kapusta, Hammel; City Attorney Warchol, Public Works Director Kroeger, Lead Planner Trzebiatowski, and Assistant Deputy Clerk Roller. PUBLIC MEETING NOTICE The Assistant Deputy Clerk stated the meeting was noticed in accordance with the open meeting law. APPROVAL OF MINUTES Alderperson Kubucki moved to approve. Alderperson Wolfe seconded; motion carried. LICENSE APPROVALS Recommend Approval of Operator Licenses Alderperson Kubucki moved to recommend approval of an Operator License for: Arthur F. Benotti, Brian C. Calvert, Jessica C. Ciardo, Tracy K. De Angelis, Melissa A. Goode, Desirae S. Hamilton, Lauren A. Harrod-Wampfler, Roger F. Heinichen, Sierra L. Kisting, Nadine M. Lindenstruth, Steven D. Lindenstruth, Rachael A. Lowe, Claire N. McRoberts, Dayna A. Miller, Thomas H. Orlick, Christina A. Pechacek, Angela K. Rummelhoff, Alissa M. Tremmel and Kiley J. Wojnowski. Alde rperson Wolfe seconded; motion carried. Recommend Approval of Outside Dance Permit for AJ's Bar & Grill, S90 W13970 Boxhorn Drive, as follows: • Sunday, August 22, 2021 - 3:30 pm to 7:00 pm (Patio Music) Alderperson Madden moved to recommend approval. Alderperson Wolfe seconded; motion carried. Recommend Approval of Amended Licensed Premise for AJ's Bar & Grill, S90 W13970 Boxhorn Drive, as follows: • Sunday, August 22, 2021 - 3:30 pm to 7:00 pm to Include Grass Area Immediately Surrounding Patio Alderperson Madden moved to recommend approval. Alderperson Wolfe seconded; motion carried. 3 Recommend Approval of Outside Dance Permit for Eagle Park Brewing and Distilling Company, S64 W15640 Commerce Center Parkway, for Friday, July 30, 2021 - 4:00 pm to 10:30 pm. Alderperson Kubucki moved to recommend approval. Alderperson Wolfe seconded; motion carried. NEW BUSINESS Recommend Award of Bid - Reconstruction of Little Muskego Lake Access #9 Alderperson Wolfe moved to recommend approval. Alderperson Madden seconded; motion carried. Recommend Approval of a Joint Powers Agreement for the 911 Emergency System with Waukesha County Alderperson Madden moved to recommend approval. Alderperson Kubacki seconded; motion carried. Recommend Approval of Bond Reduction for Home Path Financial LP (Cobblestone) Alderperson Kubacki moved to recommend approval. Alderperson Madden seconded; motion carried. VOUCHER APPROVAL Utility Vouchers Alderperson Kubacki made a motion to recommend approval of Utility Vouchers in the amount of $409,160.70. Alderperson Wolfe seconded; motion carried. General Fund Vouchers Alderperson Kubacki made a motion to recommend approval of General Fund Vouchers in the amount of $439,202.03. Alderperson Madden seconded; motion carried. Wire Transfers for Payroll/Invoice Transmittals Alderperson Kubacki made a motion to recommend approval of Wire Transfers for Payroll / Invoice Transmittals in the amount of $780,778.93. Alderperson Wolfe seconded; motion carried. COMMUNICATIONS AND ANY OTHER BUSINESS AS AUTHORIZED BY LAW None ADJOURNMENT Alderperson Wolfe made a motion to adjourn at 5:55 pm. Alderperson Madden seconded; motion carried. Minutes taken and transcribed by Kerri Roller, Assistant Deputy Clerk. 4 Reporting and insights from 2020 audit: City of Muskego December 31, 2020 5 Executive summary July 26, 2021 To the Mayor and Common Council City of Muskego Muskego, Wisconsin We have completed our audit of the financial statements of the City of Muskego (the “City”) for the year ended December 31, 2020, and have issued our report thereon dated July 26, 2021, This letter presents communications required by our professional standards. Your audit should provide you with confidence in your financial statements. The audit was performed based on information obtained from meetings with management, data from your systems, knowledge of your City’s operating environment and our risk assessment procedures. We strive to provide you clear, concise communication throughout the audit process and of the final results of our audit. Additionally, we have included information on key risk areas the City of Muskego should be aware of in your strategic planning. We are available to discuss these risks as they relate to your organization’s financial stability and future planning. If you have questions at any point, please connect with us: -Wendi Unger, CPA, Partner: wendi.unger@bakertilly.com or +1 (414) 777 5423 Sincerely, Baker Tilly US, LLP Wendi M. Unger, CPA, Partner 6 Baker Tilly US, LLP, trading as Baker Tilly, is an independent member of Baker Tilly International. Baker Tilly International Limited is an English company. Baker Tilly International provides no professional services to clients. Each member firm is a separate and independent legal entity, and each describes itself as such. Baker Tilly US, LLP is not Baker Tilly International’s agent and does not have the authority to bind Baker Tilly International or act on Baker Tilly International’s behalf. None of Baker Tilly International, Baker Tilly US, LLP nor any of the other member firms of Baker Tilly International has any liability for each other’s acts or omissions. The name Baker Tilly and its associated logo is used under license from Baker Tilly International Limited. Table of contents Executive summary ....................................................................................................................................... 2 Responsibilities ............................................................................................................................................. 5 Audit status ................................................................................................................................................... 7 Audit approach and results ........................................................................................................................... 9 Accounting changes relevant to the City of Muskego ................................................................................. 16 Trending challenges and opportunities for organizations ........................................................................... 19 Appendix A: Client service team ............................................................................................................. 23 Appendix B: Management representation letter .................................................................................... 25 Appendix C: Two-way communication regarding your audit ............................................................... 31 THIS COMMUNICATION IS INTENDED SOLELY FOR THE INFORMATION AND USE OF THOSE CHARGED WITH GOVERNANCE, AND, IF APPROPRIATE, MANAGEMENT, AND IS NOT INTENDED TO BE AND SHOULD NOT BE USED BY ANYONE OTHER THAN THESE SPECIFIED PARTIES. 7 Responsibilities 8 City of Muskego | 2020 Audit 7/26/2021 © 2020 Baker Tilly US, LLP Page | 5 Responsibilities Our responsibilities As your independent auditor, our responsibilities include: - Planning and performing the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Reasonable assurance is a high level of assurance. - Assessing the risks of material misstatement of the financial statements, whether due to fraud or error. Included in that assessment is a consideration of the City’s internal control over financial reporting. - Performing appropriate procedures based upon our risk assessment. - Evaluating the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by management. - Forming and expressing an opinion based on our audit about whether the financial statements prepared by management, with the oversight of those charged with governance: - Are free from material misstatement - Present fairly, in all material respects and in accordance with accounting principles generally accepted in the United States of America We are also required to communicate significant matters related to our audit that are relevant to the responsibilities of those charged with governance, including: - Qualitative aspects of the City’s accounting practice including policies, accounting estimates and financial statement disclosures - Significant difficulties encountered - Disagreements with management - Corrected and uncorrected misstatements - Internal control matters - Significant estimates - Other findings or issues arising from the audit Management's responsibilities Management Auditor Prepare and fairly present the financial statements Our audit does not relieve management or those charged with governance of their responsibilities Establish and maintain effective internal control over financial reporting An audit includes consideration of internal control over financial reporting, but not an expression of an opinion on those controls Provide us with written representations at the conclusion of the audit See Appendix for a copy of management's representations 9 Audit status 10 City of Muskego | 2020 Audit 7/26/2021 © 2020 Baker Tilly US, LLP Page | 7 Audit status Significant changes to the audit plan There were no significant changes made to either our planned audit strategy or to the significant risks and other areas of emphasis identified during the performance of our risk assessment procedures. 11 Audit approach and results 12 City of Muskego | 2020 Audit 7/26/2021 © 2020 Baker Tilly US, LLP Page | 9 Audit approach and results Planned scope and timing Audit focus Based on our understanding of the City and environment in which you operate, we focused our audit on the following key areas: - Key transaction cycles - Areas with significant estimates - Areas of complexity including capital assets and debt Our areas of audit focus were informed by, among other things, our assessment of materiality. Materiality in the context of our audit was determined based on specific qualitative and quantitative factors combined with our expectations about the City’s current year results. Key areas of focus and significant findings Significant risks of material misstatement A significant risk is an identified and assessed risk of material misstatement that, in the auditor’s professional judgment, requires special audit consideration. Within our audit, we focused on the following areas below. Significant risk areas Testing approach Conclusion Management override of controls Incorporate unpredictability into audit procedures, emphasize professional skepticism and utilize audit team with industry expertise Procedures identified provided sufficient evidence for our audit opinion Improper revenue recognition due to fraud Confirmation or validation of certain revenues supplemented with detailed predictive analytics based on non-financial data and substantive testing of related receivables Procedures identified provided sufficient evidence for our audit opinion 13 City of Muskego | 2020 Audit 7/26/2021 © 2020 Baker Tilly US, LLP Page | 10 Other key areas of emphasis We also focused on other areas that did not meet the definition of a significant risk, but were determined to require specific awareness and a unique audit response. Other key areas of emphasis Cash and investments Revenues and receivables General disbursements Payroll Pension asset and OPEB liabilities Long-term debt Capital assets including infrastructure Net position calculations Financial reporting and required disclosures Internal control matters We considered the City’s internal control over financial reporting as a basis for designing our audit procedures for the purpose of expressing an opinion on the financial statements. We are not expressing an opinion on the effectiveness of the City’s internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that were not identified. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency or combination of deficiencies in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. We did not identify any deficiencies in internal control that we consider to be material weaknesses. 14 City of Muskego | 2020 Audit 7/26/2021 © 2020 Baker Tilly US, LLP Page | 11 Other comments and recommendations DECENTRALIZED CASH COLLECTIONS Many governments collect cash at numerous decentralized locations that are separate from the primary system of accounting procedures and controls. The opportunity for theft is often higher at those locations because one person is frequently involved in most, if not all, aspects of a transaction (i.e. lack of segregation of duties). Examples in your government that fit this situation include: police department/court, parks and recreation department. Management is responsible for designing and implementing controls and procedures to detect and prevent fraud. As a result, we recommend that management review its decentralized cash collection procedures and controls on a periodic basis and make changes as necessary to strengthen the internal control environment. Reviewing the adequacy of the controls is a responsibility of the governing body. Below are example procedures and controls to help mitigate the risk of loss at decentralized cash collection points: > Implement a centralized receipting process with adequate segregation of duties > For cash collections, ensure pre-numbered receipts are being used and all receipts in the sequence are being reviewed by someone other than the person receipting the cash and receipts tie to deposits > Perform surprise procedures at decentralized locations (cash counts, walkthrough of processes, etc.) > Require regular cash deposits to minimize collection on-hand > Limit the number of separate bank accounts > Segregate duties as much as possible – the person receipting cash should be separate from the person preparing deposits and the person reconciling bank accounts should be separate from the cash collection activity > Perform a month-to-month or year-to-year comparisons to look for unusual changes in collections > If collecting from a drop box site, consider sending two people to collect the funds, especially during peak times As always, the cost of controls and staffing must be weighed against the benefits of safeguarding your assets. 15 City of Muskego | 2020 Audit 7/26/2021 © 2020 Baker Tilly US, LLP Page | 12 Required communications Qualitative aspect of accounting practices - Accounting policies: Management is responsible for the selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we have advised management about the appropriateness of accounting policies and their application. The significant accounting policies used by the City are described in Note I to the financial statements. No new accounting policies were adopted and the application of existing accounting policies was not changed during 2020. We noted no transactions entered into by the City during the year for which accounting policies are controversial or for which there is a lack of authoritative guidance or consensus or diversity in practice. - Accounting estimates: Accounting estimates, including fair value estimates, are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements, the degree of subjectivity involved in their development and because of the possibility that future events affecting them may differ significantly from those expected. The following estimates are of most significance to the financial statements: Estimate Management’s process to determine Baker Tilly’s conclusions regarding reasonableness Accrued compensated absences Evaluation of hours earned and accumulated in accordance with employment policies and average wage per hour rates Reasonable in relation to the financial statements as a whole Net pension asset and related deferrals Evaluation of information provided by the Wisconsin Retirement System Reasonable in relation to the financial statements as a whole Net/Total OPEB liability and related deferrals Key assumptions set by management with the assistance of a third party actuary Reasonable in relation to the financial statements as a whole Depreciation Evaluate estimated useful life of the asset and original acquisition value Reasonable in relation to the financial statements as a whole There have been no significant changes made by management to either the processes used to develop the particularly sensitive accounting estimates, or to the significant assumptions used to develop the estimates, noted above. - Financial statement disclosures: The disclosures in the financial statements are neutral, consistent and clear. 16 City of Muskego | 2020 Audit 7/26/2021 © 2020 Baker Tilly US, LLP Page | 13 Significant difficulties encountered during the audit We encountered no significant difficulties in dealing with management and completing our audit. Other audit findings or issues We encountered no other audit findings or issues that require communication at this time. We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Disagreements with management Professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter that could be significant to the financial statements or the auditors' report. We are pleased to report that no such disagreements arose during the course of our audit. Uncorrected misstatements and corrected misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. There were no misstatements identified. Significant unusual transactions There have been no significant transactions that are outside the normal course of business for the City or that otherwise appear to be unusual due to their timing, size or nature. Management’s consultations with other accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing or accounting matters. Written communications between management and Baker Tilly The Appendix includes copies of other material written communications, including a copy of the management representation letter. Compliance with laws and regulations We did not identify any non-compliance with laws and regulations during our audit. Fraud We did not identify any known or suspected fraud during our audit. 17 City of Muskego | 2020 Audit 7/26/2021 © 2020 Baker Tilly US, LLP Page | 14 Going concern Pursuant to professional standards, we are required to communicate to you, when applicable, certain matters relating to our evaluation of the City’s ability to continue as a going concern for a reasonable period of time but no less than 12 months from the date the financial statements are issued or available to be issued, including the effects on the financial statements and the adequacy of the related disclosures, and the effects on the auditor's report. No such matters or conditions have come to our attention during our engagement. Independence We are not aware of any relationships between Baker Tilly and the City that, in our professional judgment, may reasonably be thought to bear on our independence. Related parties We did not have any significant findings or issues arise during the audit in connection with the City’s related parties. Other matters We applied certain limited procedures to the required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on the supplementary information which accompanies the financial statements but is not RSI. With respect to the supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. 18 Accounting changes relevant to the City of Muskego 19 City of Muskego | 2020 Audit 7/26/2021 © 2020 Baker Tilly US, LLP Page | 16 Accounting changes relevant to the City of Muskego Future accounting standards update GASB Statement Number Description Potentially Impacts you Effective Date 87 Leases 12/31/22* 89 Accounting for Interest Incurred before the End of a Construction Period 12/31/21* 91 Conduit Debt 12/31/22* 92 Omnibus 2020 12/31/22* 93 Replacement of Interfund Bank Offered Rates 12/31/22* 94 Public-Private and Public-Public Partnerships and Availability Payment Arrangements 12/31/23 96 Subscription-Based Information Technology Arrangements 12/31/23 97 Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans 12/31/22 *The statements listed above through Statement No. 93 had their required effective dates postponed by one year with the issuance of Statement No. 95, Postponement of Effective Dates of Certain Authoritative Guidance, with the exception of Statement No. 87 which was postponed by one and a half years. The effective date reflected above is the required revised implementation date. Further information on upcoming GASB pronouncements. 20 City of Muskego | 2020 Audit 7/26/2021 © 2020 Baker Tilly US, LLP Page | 17 Preparing for the new lease standard GASB’s new single model for lease accounting will be effective soon. This standard will require governments to identify and evaluate contracts that convey control of the right to use another entity’s nonfinancial asset as specified in the contract for a period of time in an exchange or exchange-like transaction. Contracts meeting the criteria for control, term and other items within the standard will result in recognizing a right to use asset and lease liability or a receivable and deferred inflow of resources. We recommend City review this standard and start planning now as to how this will affect your financial reporting. We recommend that you begin by completing an inventory of all contracts that might meet the definition of a lease. The contract listing should include key terms of the contracts such as: - Description of contract - Underlying asset - Contract term - Options for extensions and terminations - Service components, if any - Dollar amount of lease In addition, City should begin to establish a lease policy to address the treatment of common lease types, including a dollar threshold for each lease. We are available to discuss this further and help you develop an action plan. Learn more about GASB 87. 21 Trending challenges and opportunities for organizations 22 City of Muskego | 2020 Audit 7/26/2021 © 2020 Baker Tilly US, LLP Page | 19 Trending challenges and opportunities for organizations Management and governing bodies must keep the future in mind as they evaluate strategies to achieve future growth. Keeping a balance between risk and sustainability is key, and organizations need to think beyond their immediate needs to their long-term goals. Economic uncertainty, coupled with key risk areas and fast-paced technology change, make strategic planning complex. Begin the discussion with your management team to find your path to your future. Turning toward recovery and growth Many organizations are focusing on the strategic restart and ramp up of their operations. With great uncertainty about what recovery will look like–or how long it will take–it is essential for your organization to understand the scenarios you may face and plan your path back to growth. We can help you chart a way forward that will enhance and maximize your value, minimize further disruption and keep your workforce safe. Recommendation Follow our road map to reopen, recover and reset. Compliance with federal awards Challenge The COVID-19 crisis has had a significant effect on the nation, including recipients of federal awards resulting from various congressional acts. Federal funding adds an increased level of scrutiny and brings new challenges around compliance, reporting and administration. Finance and spending departments are operating in unprecedented times as they manage and administer these funds while also remaining economically viable, maintaining operations and adapting to the “new normal.” Recommendation Learn more about compliance for federal funds obtained for pandemic response efforts. 23 City of Muskego | 2020 Audit 7/26/2021 © 2020 Baker Tilly US, LLP Page | 20 Recession proofing measures Challenge Ever aware of the need to balance the needs of diverse constituents against constrained revenue streams and conflicting priorities, public leaders strive to effectively deploy scarce resources while maintaining the highest levels of accountability and transparency. In times of crisis, additional challenges emerge to maintain essential services, ensure citizen safety, protect their workforce and jumpstart programs to mitigate negative local economic impacts–all while focusing on planning for long-term effects of revenue shortages and the subsequent recovery. Developing strategic clarity, aligning resources with priorities, strengthening performance, optimizing processes and leveraging technology are imperative. Recommendation Learn about proactive measures to insulate your organization from financial hardship and to optimize your organization’s performance. Recruiting and hiring Challenge Public sector entities in need of key workforce personnel, such as city or county managers and administrators, city or county attorneys, fire chiefs, police chiefs and other departmental directors, may find themselves in an unenviable position during a pandemic. Organizations need the talent, but a pandemic can disrupt essential business processes and cause apprehension about access to desirable candidates. Hiring leaders should proactively discuss what-if scenarios, evaluate short-term and long-term hiring priorities, and plan for situations where immediate recruitment is imperative. Recommendation Learn the key considerations and actions for recruiting and hiring in a crisis. 24 City of Muskego | 2020 Audit 7/26/2021 © 2020 Baker Tilly US, LLP Page | 21 Risk assessment Challenge Organizations today manage ever-expanding priorities in a constantly evolving, disruptive risk environment. Undetected risks, insufficient internal controls and inefficient business processes may negatively impact not only the entity but also its workforce and the community at large. Risk assessment and internal audit prove essential to identifying top risks and the appropriateness of response in order to: – Manage risk and compliance – Enhance governance and strategy – Optimize operations – Gain assurance around key functions and processes that contribute toward meeting organizational goals Recommendation Learn about the key considerations for the risk assessment process and internal audit planning. Economic development Challenge In today’s complex economic landscape, communities face the daunting challenge of rebuilding their local economies. Restoring the momentum of economic expansion and investment to enhance quality of life for residents and produce long-term financial gain for the community is at the forefront of concerns. Whether attracting growth to maximize opportunity built around community strengths or accounting for the many unknowns caused by major disruptions, a robust economic development strategy is essential to recovery. Recommendation Learn about the advantages of creating an economic development strategic plan and the framework to follow. 25 City of Muskego | 2020 Audit 7/26/2021 © 2020 Baker Tilly US, LLP Page | 22 Harnessing data and analytics for strategic insight and decision-making Challenge In crisis and recovery, organizations are investing in advanced analytic solutions to help them not only make better decisions faster and more consistently, but also to improve operational efficiency and performance. Of all the business analytics available, advanced analytic solutions should be at the top of your priority list given the impact it can have on your business. Recommendation Learn more about data & analytics strategy and roadmaps, MDM and data process re-engineering, AI strategy, data visualization and other digital and analytic capabilities. Information technology and cybersecurity Challenge While return-to-work scenarios are being developed, it is likely that remote workforces will remain a reality for many organizations in the short- to mid-term. Though many organizations have been able to adapt on a short-term basis, some will not be prepared for long-term operation on a remote and virtual basis. Organizations should increase monitoring of invasive cyber events, given the likely increase in hackers sending out fake emails, website links and ransomware attacks – and also consider: ― Adequacy of IT controls and security ― Performance of remote infrastructure supporting operations ― Improvements to remote applications for communication, collaboration and workflow ― Alternatives for data entry, work and information flow Recommendation Learn more about information technology and cybersecurity, including System & Organization Controls reporting. 26 Appendix A: Client service team 27 City of Muskego | 2020 Audit 7/26/2021 © 2020 Baker Tilly US, LLP Page | 24 Client service team Wendi Unger, CPA Partner 777 East Wisconsin Ave 32nd Floor Milwaukee, WI 53202 United States T +1 (414) 777 5423 wendi.unger@bakertilly.com Michelle Walter, CPA Senior Manager 777 East Wisconsin Ave 32nd Floor Milwaukee, WI 53202 United States T +1 (414) 777 5576 michelle.walter@bakertilly.com 28 Appendix B: Management representation letter 29 July 26 , 2021 Baker Tilly US, LLP 777 E . Wisconsin Avenue , 32nd Floor Milwaukee , WI 53202 Dear Baker Tilly US , LLP : We are providing th is letter in connect ion with your audit of the financial statements of theCity of Muskego as of December 31, 2020 and for the year then ended for the purpose of express ing op inions as to whether the fi nancial statements present fa irly , in all material respects , the respect ive financial position of the governmental activities , the business-type activ iti es , the discretely presented component unit , each major fund and the aggregate rema ining fund information of the City of Muskego and the Big Muskego Lake -Bass Bay Protection and Rehabil iat ion District and the respective changes in financial posit ion and cash flows , where appl icable , in conform ity w ith accounting princ ip les generally accepted in the Un it ed States of America . We confirm that we are responsib le for the fa ir presentation of the previously mentioned financial statements in conformity with accounting principles generally accepted in t he United States of America . We are also responsible for adopting sound account ing policies, estab li sh in g and maintaining internal control over financial reporting, and preventing and detecting fraud . Certa in representations in this letter are described as being limited to matters that are material. Items are cons idered material , regardless of size , if they in volve an omission or m isstatement of accounting information that, in the light of surrounding circumstances , makes it probable that the judgment of a reasonable person relying on the information wou ld be changed or influenced by the omiss ion or m isstatement. An omission o r misstatement that is monetarily small in amount cou ld be cons id ered material as a result of qualitative factors . We confirm, to the best of our knowledge and bel ief, the following representations made to you during your aud it. Financial Statements 1) We have fulfilled our responsibilities , as set out in the terms of the audit engagemen t letter. 2) The financial statements referred to above are fairly presented in conform ity with accounting princip les generally accepted in the United States of America and include all properly classified funds and other financial information of t he primary government and all component units required by accounting princi ples generally accepted in the United States of America to be included in th e fi nancial reporting entity. 3) We acknowledge our respons ibility for the design , implementation, and maintenance of internal control relevant to the preparation and fair presentat ion of financial statements that are free from materia l misstatement , whether due to fraud or error. 30 4) We acknowledge our responsibility for the design , implementation , and maintenance of internal control to prevent and detect fraud . · 5) Significant assumptions we used in making accounting estimates , if any , are reasonable. 6) All events subsequent to the date of the financial statements and for which accounting principles generally accepted in the Un ited States of America require adjustment or disclosure have been adjusted or disclosed . No other events , including instances of noncompliance, have occurred subsequent to the financ ial statement date and through the date of th is lette r that would require adjustment to or disclosure in the aforement ioned financial statements . 7) All mate ri al transactions have been recorded in the accounting records and are reflected in the financial statements . 8) All known audit and bookkeeping adjustments have been included in our financial statements , and we are in agreement with those adjustments . 9) There are no known or possible litigation , claims , and assessments whose effects should be considered when preparing the financial statements . There are no unasserted claims or assessments that our lawyer has advised us are probable of assertion and must be disclosed in accordance with accounting principles generally accepted in the United States of America. 10) Guarantees , whether written or oral , under which the City is contingently liable, if any , have been properly recorded or disclosed . Information Provided 11) We have prov ided you with : a) Access to all information , of which we are aware , that is relevant to the preparation and fair presentation of the financial statements , such as financia l records and related data , documentation , and other matters. b) Additional information that you have requested from us for the purpose of the aud it. c) Unrestricted access to persons within the entity from whom you determined it necessary to obtain audit evidence. d) Minutes of the meetings of Common Council and Public Utilities Committee or summaries of actions of recent meetings for which minutes have not yet been prepared . 12) We have not completed an assessment of the risk that the financial statements may be materially misstated as a result of fraud. 13) We have no knowledge of any fraud or suspected fraud that affects the entity and involves: a) Management, b) Employees who have significant roles in internal control , or c) Others where the fraud could have a material effect on the financial statements . 31 14) We have no knowledge of any allegations of fraud or suspected fraud affecting the entity received in communications from employees , former employees , regulators , or others. 15) We have no knowledge of known instances of noncompl iance or suspected noncompl iance with provisions of laws , regu lations , contracts , or grant agreements , or abuse , whose effects should be considered when prepa ring f inancial statements . 16 ) There are no known related parties or related party relat ionsh ips and tra nsactions of which we are aware. Other 17 ) There have been no commun ications from regulatory agencies concerning noncompliance w ith , or deficiencies in , financial report ing pract ices. 18) We have a process to track the status of aud it f ind ings and recomme ndations. 19 ) We have iden t ified to you any prev ious financial audits , attestation engagements , and other stud ies related to the audit objectives and whether related recommendations have been implemented . 20) The City has no pla ns or inten ti ons t hat may materially affect the carrying value or class ification of assets , li ab ilities , or equity . 21 ) We are responsible fo r compl iance w it h fede ral, state , and local laws , regulations, and provisions of cont racts and grant agreements appl icable to us , inc lud ing tax or debt limits , debt contracts , and IRS arbitrage regulations ; and we have ide ntified and disclosed to you all federal , state , and local laws , regulations and provisions of contracts and grant agreements that we believe have a d irect and mate ria l effect on the determ inati on of financial statement amounts or other financ ial data sign ificant to the audit obj ectives , including legal and contract ual provisions for reporting specifi c activit ies in separate funds . 22 ) There are no : a) Violations or possib le v iolations of budget ordinances , f ederal, state, and local laws or regulat ions (including t hose perta ining to adopting , approving and amending budgets), provisions of contracts and grant agreements , tax or debt limits , and any related debt covenants whose effects should be considered for disclosure in the financ ial statements or as a bas is fo r record ing a loss cont ingency , or fo r report ing on noncompliance , except those al ready disclosed in t he financial statement, if any . b) Othe r li ab ilities or ga in or loss cont i ngen ci es t hat are required to be accrued or d isclosed by accounting principles generally accepted in the Uni ted States of America. c) Nonspendable , rest ri cted , comm itted , o r assigned fund balances that were not properly autho ri zed and approved . d) Rates be ing cha rged to customers other than the ra tes as authorized by the applicable authoritative body. e) Violati ons of restrict ions placed on revenues as a result of bond resolution covena nts such as revenue d istribu ti on or debt service f unding. 2 3) The City of Muskego has satisfactory t itle to all owned assets , and there are no liens or encumbrances on such assets nor has any asset been pledged as collateral. 32 24) The City of Muskego has complied w ith all aspects of contractual agreements that would have a material effect on the financ ial statement in the event of noncompliance. 25) The financ ial statemen t s include all component units as well as joint ventures with an equity interest, and properly disclose all other joint ventures and other related organizations , if any . Component units have been properly presented as either ble nded or disc rete. 26 ) The financial statements properly class ify all funds and act iviti es . 27 ) All funds t hat meet the quantitative cr iteria in GASS Statement No. 34 and No . 37 for presentation as major are identified and presented as such and all ot her funds that are presented as major are particular ly important to f inancial statement users. 28) Components of net pos ition (net investment in capital assets ; rest ri cted ; and unrestricted ) and componen t s of fund balance (nonspe ndable , restr icted , committed , ass igned and unassigned ) are properly classified and , if applicable , approved. 29 ) Prov isions fo r uncollecti b le receivab les , if any , have been properly ident ified and reco rded . 30 ) Expenses have been appropriately class ified in or allocated to funct ions and prog rams in the statement of act ivit ies , and allocations have been made on a reasonab le basis. 31) Revenues are appropriately classified in the statement of act ivities w ith in program revenues and general revenues . 32 ) lnterfund , in ternal , and intra-entity act iv ity and balances have been appropriately class ified and reported . 33 ) Deposits and investments are properly classified , valued , and d isclosed (i nclud ing risk disclosures , colla tera li zat ion agreements, valuation methods , and key inputs , as appl icable ). 34 ) Cap ital assets , includ ing i nfrastructure and intangible assets , are properly capitalized , reported , and , if applicable , depreciated/amortized . Any known impa irmen ts have been recorded and disclosed . 35 ) Tax-exempt bonds issued have reta ined the ir tax-exempt status . 36 ) We have appropriate ly disclosed theCity of Muskego's policy regard ing whether to firs t apply res t ricted or unrestricted resources when an expense is incurred fo r purposes for wh ich both res t ricted and unrestricted net position are ava ilable and have determ ined that net pos ition were properly recogn ized under the policy . We have also disclosed our policy regarding which resources (that is , restricted , comm itted , ass igned or unassigned) are considered to be spent firs t for expe nditures for which more than one resource class ifi cat ion is available . 37 ) We acknowledge our respons ibility for the required supplementary information (RSI ). The RSI is measured and presented w ithin prescribed guidelines and the methods of measurement and presentation have not changed from those used in the prior period . We have disclosed to you any significant assumptions and interpretations underlying the measu rement and presentation of the RSI. 38 ) W ith respect to the supplementary informat ion , (SI ): 33 a) We acknowledge our responsibility for p resenting t he SI in accordance with account ing principles generally accepted in the United States of America , and we believe the SI , including its form and content , is fairly p resented in accordance wit h acco un ting pr inciples generally accepted in the United States of A merica . The methods of meas u reme nt and p resentat ion of the SI have not changed fr om those used in the pr ior per iod , and we have disclosed to you any sign ificant assumptions or interp reta ti ons unde rl yin g the measurement and presentation of t he supplementary informat ion. b) If the SI is not p resen ted with the aud ited fi nancial statements , we will make the audited financ ial statements read ily ava ilable to the intended users of the supplementary information no later than the date we issue the supplementary information and t he auditor's report the reon . 39 ) We assume respons ib ility fo r, and ag ree with , the info rmation provided by the Wiscons i n Retirement System as aud ited by the Leg islative Audit Bureau relat ing to the net pension asset/liability and re lated deferred outflows and deferred inflows and have adeq uately cons ide red the reaso nableness of t he amounts and disclosures used in t he fi nancial statements and underly ing account ing records . We also assume responsibility for the census data that has been reported to t he plan . · 40) We assume responsib ili ty for , and ag re e w ith the information provided by t he Department of Employee Trust Funds for the Local Ret iree Life Ins u rance program as audited by t he Leg islat ive Audit Bureau relating to the net OPEB liabi lity and related deferred outflows and deferred inflows and have adequate ly co nside red the reasonable ness of the amounts and disclosures used in the financ ial statements and underly ing accounting reco rds . We also assume respo nsibil ity fo r t he cens us data that has been reported to the pla n. Sincerely, City of Muskego Signed : ~-t.cr11. rtu?. e/3-<..._ Ms . Sharon Mueller, Finance and Admin istration Director 34 Appendix C: Two-way communication regarding your audit 35 City of Muskego | 2020 Audit 7/26/2021 © 2020 Baker Tilly US, LLP Page | 32 As part of our audit of your financial statements, we are providing communications to you throughout the audit process. Auditing requirements provide for two-way communication and are important in assisting the auditor and you with more information relevant to the audit. As this past audit is concluded, we use what we have learned to begin the planning process for next year’s audit. It is important that you understand the following points about the scope and timing of our next audit: a. We address the significant risks of material misstatement, whether due to fraud or error, through our detailed audit procedures. b. We will obtain an understanding of the five components of internal control sufficient to assess the risk of material misstatement of the financial statements whether due to error or fraud, and to design the nature, timing and extent of further audit procedures. We will obtain a sufficient understanding by performing risk assessment procedures to evaluate the design of controls relevant to an audit of financial statements and to determine whether they have been implemented. We will use such knowledge to: - Identify types of potential misstatements. - Consider factors that affect the risks of material misstatement. - Design tests of controls, when applicable, and substantive procedures. c. We will not express an opinion on the effectiveness of internal control over financial reporting or compliance with laws, regulations and provisions of contracts or grant programs. d. The concept of materiality recognizes that some matters, either individually or in the aggregate, are important for fair presentation of financial statements in conformity with generally accepted accounting principles while other matters are not important. In performing the audit, we are concerned with matters that, either individually or in the aggregate, could be material to the financial statements. Our responsibility is to plan and perform the audit to obtain reasonable assurance that material misstatements, whether caused by errors or fraud, are detected. Our audit will be performed in accordance with auditing standards generally accepted in the United States of America. We are very interested in your views regarding certain matters. Those matters are listed here: a. We typically will communicate with your top level of management unless you tell us otherwise. b. We understand that the governing board has the responsibility to oversee the strategic direction of your organization, as well as the overall accountability of the entity. Management has the responsibility for achieving the objectives of the entity. c. We need to know your views about your organization’s objectives and strategies, and the related business risks that may result in material misstatements. d. Which matters do you consider warrant particular attention during the audit, and are there any areas where you request additional procedures to be undertaken? e. Have you had any significant communications with regulators or grantor agencies? f. Are there other matters that you believe are relevant to the audit of the financial statements? Also, is there anything that we need to know about the attitudes, awareness and actions of the governing body concerning: 36 City of Muskego | 2020 Audit 7/26/2021 © 2020 Baker Tilly US, LLP Page | 33 a. The entity’s internal control and its importance in the entity, including how those charged with governance oversee the effectiveness of internal control? b. The detection or the possibility of fraud? We also need to know if you have taken actions in response to developments in financial reporting, laws, accounting standards, governance practices, or other related matters, or in response to previous communications with us. With regard to the timing of our audit, here is some general information. If necessary, we may do preliminary financial audit work during the months of October-December, and sometimes early in January. Our final financial fieldwork is scheduled during the spring to best coincide with your readiness and report deadlines. After fieldwork, we wrap up our financial audit procedures at our office and may issue drafts of our report for your review. Final copies of our report and other communications are issued after approval by your staff. This is typically 6-12 weeks after final fieldwork, but may vary depending on a number of factors. Keep in mind that while this communication may assist us with planning the scope and timing of the audit, it does not change the auditor’s sole responsibility to determine the overall audit strategy and the audit plan, including the nature, timing and extent of procedures necessary to obtain sufficient appropriate audit evidence. We realize that you may have questions on what this all means, or wish to provide other feedback. We welcome the opportunity to hear from you. 37 CITY OF MUSKEGO Muskego, Wisconsin FINANCIAL STATEMENTS Including Independent Auditor’s Report As of and for the Year Ended December 31, 2020 38 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Independent Auditors' Report 1 – 2 Management's Discussion and Analysis (Required Supplementary Information) 3 – 12 Basic Financial Statements Statement of Net Position 13 Statement of Activities 14 Balance Sheet – Governmental Funds 15 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 16 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 17 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Special Revenue Fund – Tax Increment Districts 18 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund 19 Statement of Net Position – Proprietary Funds 20 Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds 21 Statement of Cash Flows – Proprietary Funds 22 – 23 Statement of Fiduciary Net Position – Fiduciary Funds 24 Statement of Changes in Fiduciary Net Position – Fiduciary Funds 25 Index to Notes to Financial Statements 26 Notes to Financial Statements 26 – 72 Required Supplementary Information Schedule of Proportionate Share of the Net Pension Liability (Asset) and Schedule of Employer Contributions – Wisconsin Retirement System 73 Schedule of Proportionate Share of the Net Pension Liability and Schedule of Employer Contributions – LRLIF 74 Notes to Required Supplementary Information 75 39 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Supplementary Information Combining Balance Sheet – Non-major Governmental Funds – Special Revenue Funds 76 – 77 Combining Balance Sheet – Non-major Governmental Funds – Capital Projects Funds 78 Combining Balance Sheet – Non-major Governmental Funds 79 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Non-major Governmental Funds – Special Revenue Funds 80 – 81 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Non-major Governmental Funds – Capital Projects Funds 82 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Non-major Governmental Fund 83 40 INDEPENDENT AUDITORS’ REPORT 41 Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. INDEPENDENT AUDITORS' REPORT To the Mayor and Common Council City of Muskego Muskego, Wisconsin Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Muskego, Wisconsin, as of and for the year ended December 31, 2020, and the related notes to the financial statements, which collectively comprise the City of Muskego'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 City of Muskego'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 City of Muskego'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. Page 1 42 To the Mayor and Common Council City of Muskego 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 discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Muskego, Wisconsin, as of December 31, 2020 and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the general and special revenue funds 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 required supplementary information as listed 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. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Muskego's basic financial statements. The supplementary information as listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information 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 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 supplementary information is fairly stated in all material respects, in relation to the basic financial statements as a whole. Milwaukee, Wisconsin July 26, 2021 Page 2 43 MANAGEMENT’S DISCUSSION AND ANALYSIS 44 Page 3 City of Muskego, Wisconsin Management Discussion and Analysis As of and for the Year Ended December 31, 2020 (Unaudited) As management of the City of Muskego, we offer readers of these financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2020. The discussion and analysis presents the highlights of financial activities and financial position for the City of Muskego (City). The analysis focuses on significant financial issues, major financial activities and resulting changes in financial position, budget changes and variances from the budget, and specific issues related to funds and the economic factors affecting the City. Financial Highlights  The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources by $148,177,832 as of December 31, 2020. Of this amount, $17,686,036 (unrestricted net position) may be used to meet the government’s ongoing obligations to citizens and creditors. Compared to the prior year, the City’s total net position increased by $5,786,635.  At the close of the 2020 fiscal year, the City’s governmental funds reported combined ending fund balances of $22,796,033, which is a decrease of $432,369 in comparison with the prior year. Of this total amount, approximately 65% or $14,839,310 is available for spending at the government’s discretion (committed, assigned and unassigned fund balances).  The City’s unassigned fund balance for the General Fund was $7,740,453 or 50% of the total general fund expenditures (including transfers out) for fiscal year 2020. Of this total, $2,794,933 is committed to meet the requirements of the City’s Fund Balance and Annual General Fund Budgeted Contingency policy.  The City of Muskego’s total long-term debt, excluding compensated absences, decreased by $4,741,361 (10.24%) during the 2020 fiscal year. In addition to net scheduled payments contributing to the decrease there was the issuance of $3,414,000 General Obligation Debt Refunding Bonds which increased the balance. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City of Muskego’s basic financial statements. The City’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the City of Muskego’s finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the City’s assets, deferred outflow of resources, liabilities, and deferred inflows of resources, with the difference reported as net position. Over time, increases or decreased in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation and sick leave). 45 City of Muskego Management Discussion and Analysis As of and for the Year Ended December 31, 2020 (Unaudited) Page 4 Government-wide Financial Statements (continued) Both the government-wide financial statements distinguish functions of the City of Muskego that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of Muskego include general government, protection of persons and property, highways and transportation, health and sanitation, recreation and education and conservation and development. Business-type activities of the City include the Sewer Utility and the Water Utility. The government-wide financial statements include the City of Muskego and the following component units: The Community Development Authority and the Big Muskego Lake Bass Bay Protection and Rehabilitation District. There are no other organizations or agencies whose financial statements should be combined and presented with the financial statements of the City. The government-wide financial statements can be found on pages 13 through 14 of this report. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Muskego, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. All of the funds of the City may be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental funds financial statements focus on the near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Muskego maintains twenty-four individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General Fund, Debt Service Fund, Capital Budget Fund and Tax Increment District Capital Project Funds, all of which are considered to be major funds. Individual fund data for each of the fifteen non-major governmental funds is provided in the form of combining statements and can be found on pages 76 through 83 of this report. The City of Muskego adopts an annual appropriated budget for its General Fund. A budgetary comparison statement has been provided for the General Fund to demonstrate compliance with its budget on page 19 this report. The basic governmental fund financial statements can be found on pages 15 through 19 of this report. 46 City of Muskego Management Discussion and Analysis As of and for the Year Ended December 31, 2020 (Unaudited) Page 5 Proprietary Funds The City of Muskego maintains one type of proprietary fund: Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City of Muskego maintains two enterprise funds. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the water and sewer operations, both of which are considered to be major funds of the City. The basic proprietary fund financial statements can be found on pages 20 through 23 of this report. Fiduciary Funds Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the City of Muskego’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The fiduciary funds for the City are private purpose trust funds and agency funds. Total assets of the fiduciary funds were $34,761,906. The basic fiduciary funds financial statements can be found on pages 24 and 25 of this report. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 26 through 72 of this report. Other Information The combining statements referred to earlier in connection with non-major governmental funds is presented immediately following the notes to the financial statements. Combining and individual fund statements and schedules can be found on pages 76 through 83 of this report. Required supplementary information for the Wisconsin Retirement System and Local Retiree Life Insurance Fund are included on pages 73 through 75. Government-Wide Financial Analysis As financial information is accumulated from year-to-year, changes in net position may serve as a useful indicator of a government’s financial position. In the case of the City of Muskego, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $148,177,832 as of December 31, 2020. The largest portion of the City of Muskego’s net position (73.6%) reflects its investment in capital assets (e.g., land, buildings, improvements, and machinery and equipment), less any debt used to acquire those assets that is still outstanding. The City of Muskego uses these capital assets to provide services to citizens. Consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 47 City of Muskego Management Discussion and Analysis As of and for the Year Ended December 31, 2020 (Unaudited) Page 6 The following provides a summary of the City’s net position: 2020 2019 2020 2019 2020 2019 Current and other assets $ 41,363,146 $ 39,451,995 22,502,168$ 20,611,474$ $ 63,865,314 $ 60,063,469 Capital assets 80,781,352 81,227,450 68,274,562 67,688,233 149,055,914 148,915,683 Total assets 122,144,498 120,679,445 90,776,730 88,299,707 212,921,228 208,979,152 Deferred outflows of resources 4,364,828 5,245,182 469,292 577,873 4,834,120 5,823,055 Total Assets and Deferred Outflows of Resources 126,509,326 125,924,627 91,246,022 88,877,580 217,755,348 214,802,207 Current liabilities 1,832,681 1,730,972 1,837,486 1,580,115 3,670,167 3,311,087 Noncurrent outstanding 41,869,342 47,957,828 2,379,275 2,812,565 44,248,617 50,770,393 Other liabilities - - 550,240 555,847 550,240 555,847 Total liabilities 43,702,023 49,688,800 4,767,001 4,948,527 48,469,024 54,637,327 Deferred inflows of resources 20,574,269 17,467,142 534,223 306,541 21,108,492 17,773,683 Net investment in capital assets 44,170,391 42,337,573 65,735,249 64,897,595 108,612,583 105,871,622 Restricted 8,321,906 6,921,323 13,181,693 11,050,142 21,503,599 17,971,465 Unrestricted 9,740,737 9,509,789 7,027,856 7,674,775 18,061,650 18,548,110 Total net position 62,233,034 58,768,685 85,944,798 83,622,512 148,177,832 142,391,197 Total Liabilities, Deferred Inflows of Resources, and Net Position $ 126,509,326 $ 125,924,627 $ 91,246,022 $ 88,877,580 $ 217,755,348 $ 214,802,207 City of Muskego - Net Position Governmental Activities Business - type Activities Total At the end of the 2020 fiscal year, the City is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business-type activities. Changes in Net position As of December 31, 2020, total net position of the City of Muskego amounted to $148,177,832, which is an increase of $5,786,635 as compared to the 2020 fiscal year end. The major items attributing to this increase is contributed capital from development and required financial reporting for pensions adjustments. Net position of the City’s governmental activities totaled $62,233,034, which is an increase of $3,464,349 as compared to the prior year. Of this total, $9,740,737 or 15.7% is classified as unrestricted assets and may be used to finance the City’s ongoing obligations to citizens and creditors. The restricted net position portion (13.4%) represents resources that are subject to external restrictions on how they may be used, which include financing for debt service. *The net position section includes an adjustment for capital assets owned by the business-type activities, but financed by the debt of the governmental activities. 48 City of Muskego Management Discussion and Analysis As of and for the Year Ended December 31, 2020 (Unaudited) Page 7 The business-type activities net position amounted to $85,944,798, an increase of $2,322,286. The unrestricted balance of $7,027,856 is used to finance the continued operations of the water and sewer utilities. The following schedule highlights the key elements of the City’s revenues and expenses for the 2020 and 2019 fiscal year ends. These two main components are subtracted to yield the change in net position and are summarized as follows: 2020 2019 2020 2019 2020 2019 Revenues: Program Revenues Charges for services $ 5,138,251 $ 5,412,894 $ 8,601,885 $ 8,144,775 $ 13,740,136 $ 13,557,669 Operating grants and contributions 1,809,570 1,582,723 - - 1,809,570 1,582,723 Capital grants and contributions 1,491,012 907,362 3,580,152 1,280,323 5,071,164 2,187,685 General Revenues Property taxes 14,719,325 14,819,266 - - 14,719,325 14,819,266 Other Taxes 117,853 113,142 -- 117,853 113,142 Grants and contributions not restricted to specific programs 958,429 506,081 - - 958,429 506,081 Unrestricted investment earnings 456,164 760,687 163,424 413,275 619,588 1,173,962 Miscellaneous 419 1,560 - - 419 1,560 Total Revenues 24,691,023 24,103,715 12,345,461 9,838,373 37,036,484 33,942,088 Expenses: General government 2,928,227 2,926,499 - - 2,928,227 2,926,499 Public safety 7,645,264 8,704,722 - - 7,645,264 8,704,722 Highway and transportation 5,167,163 5,280,103 - - 5,167,163 5,280,103 Health and sanitation 1,160,338 1,142,104 - - 1,160,338 1,142,104 Economic development 966,069 710,392 - - 966,069 710,392 Education and recreation 2,329,896 2,287,988 - - 2,329,896 2,287,988 Interest on long-term debt 1,504,344 1,811,691 - - 1,504,344 1,811,691 Sewer - - 7,719,851 8,250,085 7,719,851 8,250,085 Water - - 1,828,697 1,911,933 1,828,697 1,911,933 Total Expenses 21,701,301 22,863,499 9,548,548 10,162,018 31,249,849 33,025,517 Decrease in Net Position before transfers 2,989,722 1,240,216 2,796,913 (323,645) 5,786,635 916,571 Transfers 474,627 482,580 (474,627) (482,580) - - Change in Net Position 3,464,349 1,722,796 2,322,286 (806,225) 5,786,635 916,571 Net Position - Beginning 58,768,685 57,045,889 83,622,512 84,428,737 142,391,197 141,474,626 Net Position - Ending $ 62,233,034 $ 58,768,685 $ 85,944,798 $ 83,622,512 $ 148,177,832 $ 142,391,197 City of Muskego's Change in Net Position Governmental Activities Business-type Activities Total 49 City of Muskego Management Discussion and Analysis As of and for the Year Ended December 31, 2020 (Unaudited) Page 8 Governmental Activities The table below discloses cost of services for Governmental Activities. The total cost of services column contains all costs related to the programs. The net of services column shows how much of the total amount is not covered by program revenues. Succinctly put net costs that must be covered by local taxes or other general revenue or transfers. 2020 2019 2020 2019 General government 2,928,227$ 2,926,499$ (2,616,677)$ (2,579,580)$ Public safety 7,645,264 8,704,722 (6,360,073) (7,340,532) Public works 5,167,163 5,280,103 (2,442,323) (3,664,101) Health and sanitation 1,160,338 1,142,104 2,108,079 2,044,558 Conservation & development 966,069 710,392 (642,553) (50,139) Education and recreation 2,329,896 2,287,988 (1,804,577) (1,559,035) Interest and long-term debt 1,504,344 1,811,691 (1,504,344) (1,811,691) 21,701,301$ 22,863,499$ (13,262,468)$ (14,960,520)$ Net (Expenses) of Services Programs Total Services Total Cost of The increase in total cost of services is primarily attributed to the public safety building remodel and addition; as well as additional pension expense accounted for under GASB 68. Net cost of services is 61% of total cost of services in 2020. This reflects a continued reliance on taxes and other general revenue sources to fund the cost of services. The graph below shows the percentage of the total governmental activities revenues allocated by each revenue type. Charges for Services 20.81% Operating Grants and Contributions 7.33% Capital Grants and Contributions 6.04%Property taxes 60.09% Shared Revenue 3.88% Investment Earnings 1.85%Miscellaneous 0.00% Revenues by Source - Governmental Activities 50 City of Muskego Management Discussion and Analysis As of and for the Year Ended December 31, 2020 (Unaudited) Page 9 Business-Type Activities Total Business-type activities’ charges for service revenues for the year ending December 31, 2020 were $8,601,885, which is a slight increase of $457,110 over 2019 and primarily due to additional revenue generated from the sewer and water utility charges for services. The Business-type activities increased the City of Muskego’s net position by $2,322,286, which reflects the developer contributed capital. The following graph shows the relationship between revenues and expenses for the City of Muskego Sewer and Water Utilities. The graph below displays the breakdown of revenues by source for the business-type activities. - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 Sewer Utility Water Utility Expenses and Revenues - Business-type Activities Expenses Charges for Service Charges for Service 69.68% Investment Earnings 1.32% Capital Grants & Contributions 29.00% Revenues by Source - Business-type Activities Charges for Service Investment Earnings Capital Grants & Contributions 51 City of Muskego Management Discussion and Analysis As of and for the Year Ended December 31, 2020 (Unaudited) Page 10 Financial Analysis of the Government’s Funds As noted earlier, the City of Muskego uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. This section will discuss major developments within the City’s governmental funds and proprietary funds. Governmental Funds The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unrestricted fund balance (includes committed, assigned and unassigned fund balance) may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City’s governmental funds – General Fund, Debt Service Fund, Tax Increment District Capital Project Funds, and all Other Non-major Governmental Funds – reported a combined ending fund balances of $22,796,033, a decrease of $432,369 in comparison with the prior year. Approximately 65% of this total amount ($14,839,310) is available for spending at the government’s discretion. However, approximately 48% of this amount ($7,098,857) is classified as committed, assigned or reported in special revenue funds or capital projects funds. The remainder of the fund balance is non-spendable or restricted. General Fund The General Fund is the chief operating fund of the City. During 2020, the General Fund balance increased by $485,132. This was primarily due to various position vacancies, employee benefit reductions, and remaining contingency funds. At the end of the year, the committed and unassigned fund balance of the General Fund was $7,740,453, while total fund balance reached $7,760,175. As a measure of the general fund’s liquidity, it is useful to compare both unrestricted fund balance and total fund balance to total fund expenditures. The net committed and unassigned fund balance represents 50% of total general fund expenditures. Debt Service Fund Fund balance in the Debt Service Fund decreased by $1,253,936 during 2020. This decrease resulted from net principal retirements and interest payments resulting from the General Obligation Refunding Bond. Capital Projects – Capital Budget Fund Fund balance in the Capital Budget Fund decreased by $83,457 during 2020. This decrease reflects expenditures incurred for road reconstruction. Proprietary Funds The City’s proprietary fund statements provide the same type of information found in the government-wide financial statements, but in more detail. At year-end, net position of the Sewer Utility Fund amounted to $56,421,861 with the Water Fund totaling $29,522,937. The Sewer Utility Fund increased in net position by $770,162 and the Water Utility Fund increased in net position by $1,552,124. 52 City of Muskego Management Discussion and Analysis As of and for the Year Ended December 31, 2020 (Unaudited) Page 11 General Fund Budgetary Highlights The 2020 final budget of $15,949,346 included no amendments for the year. During the year, however, revenues were slightly lower than budgetary revenues and expenditures were significantly less than budgetary expenditures. Capital Assets and Debt Administration Capital Assets The City of Muskego’s investment in capital assets for its governmental and business-type activities as of December 31, 2020, amounts to $149,055,914 (net of accumulated depreciation). This investment in capital assets includes land, buildings and improvements, equipment, infrastructure and construction in progress. Major capital events during the current year included final construction of the of the Police Department facilities; road reconstruction and various public safety and public works equipment purchases. 2020 2019 2020 2019 2020 2019 Land $ 5,722,103 $ 5,722,103 $ 272,448 $ 272,448 $ 5,994,551 $ 5,994,551 Intangibles 715,392 652,782 36,500 36,500 751,892 689,282 Construction in progress 437,536 378,863 126,261 70,122 563,797 448,985 Land Improvements 4,337,081 4,337,081 - - 4,337,081 4,337,081 Buildings 32,870,539 32,694,551 21,334,183 21,334,183 54,204,722 54,028,734 Equipment 10,591,057 10,123,402 5,465,844 5,179,541 16,056,901 15,302,943 Library Collection 4,071,099 3,887,691 - - 4,071,099 3,887,691 Infrasturcture 88,797,671 86,380,252 82,005,580 80,270,142 170,803,251 166,650,394 Acc. Deprectiation (66,761,126) (62,949,275) (40,966,254) (39,474,703) (107,727,380) (102,423,978) Total $ 80,781,352 $ 81,227,450 $ 68,274,562 $ 67,688,233 $ 149,055,914 $ 148,915,683 City of Muskego's Capital Assets (net of depreciation) Governmental Activities Business-Type Activities Total Additional information on the City’s capital assets can be found in Note IV on pages 49 through 51 of this report. Long-term Debt As of December 31, 2020, the City of Muskego had general obligation bonds and notes outstanding totaling $39,010,564. The City’s business-type activities include revenue bonds and notes payable, which total $2,484,255. In the current year, the City paid $7,806,488 in principal and $1,525,646 in interest on outstanding debt. Business-Type Activities paid $236,955 in principal and $86,646 in interest on its outstanding debt. Of the total City debt, $3,029,189 will become due within one year. The City of Muskego has a Moody’s “Aa2” rating on its General Obligation Debt, and past Sewer Revenue Bonds; and a Moody’s “A1” on its Water Revenue Bonds. 53 City of Muskego Management Discussion and Analysis As of and for the Year Ended December 31, 2020 (Unaudited) Page 12 Long-term Debt (continued) 2020 2019 2020 2019 2020 2019 G.O. Bonds and Notes 38,083,237$ 42,475,725$ 2,234,786$ 2,447,499$ 40,318,023$ 44,923,224$ Unamortized premium 927,327 1,024,875 55,058 69,427 982,385 1,094,302 Revenue Refunding Bonds - - - - - - Wisconsin Safe Drinking Water Loan - - 249,469 273,712 249,469 273,712 Total 39,010,564$ 43,500,600$ 2,539,313$ 2,790,638$ 41,549,877$ 46,291,238$ Total City of Muskego's Outstanding Debt General Obligation and Revenue Bonds Activities Governmental Business-Type Activities Additional information about the City’s long-term debt can be found in Note IV on pages 52 through 54 of the financial statements. Economic Factors and Next Year’s Budgets and Rates The following economic factors are noteworthy:  The City of Muskego experienced a 5% increase in equalized valuation over the prior year, with a total value of $3.5 billion.  Current population estimates reached 25,271; with residential growth expected to continue on an upward trend.  The City’s 2020 tax rate of $4.55 per thousand reflected a slight increase of $0.08 as compared to the prior year.  A City-wide assessment revaluation will be conducted in 2021, with a projected value increase of 22%. Since the last revaluation in 2017, the level of assessment fell to 87.6% of fair market value.  Minimal debt service tax levy adjustments are anticipated in part due to an upcoming advance refunding and structured amortization schedules.  Despite the negative impact of COVID-19, the City’s financial position is expected to remain stable given prudent fiscal management, along with the State Routes to Recovery grant and Federal American Rescue Plan Act, which has resulted in positive operations and continued healthy reserve levels. All these factors were considered in preparing the City of Muskego’s budget for the year ending December 31, 2020. Requests for information This financial report is designed to provide a general overview of the City of Muskego’s finances for all those with an interest in the government’s finances. Readers having question about any of the information in this report or needing additional information should contact Director of Finance and Administration, City of Muskego, W182 S8200 Racine Ave, Muskego, WI 53150, direct contact at 262-679-5622 or e-mail smueller@cityofmuskego.org. 54 BASIC FINANCIAL STATEMENTS 55 See accompanying notes to financial statements. Page 13 Governmental Business-type Component Activities Activities Totals Unit ASSETS Cash and cash equivalents 22,584,392$ 5,349,362$ 27,933,754$ 190,355 Temporary investments - 896,815 896,815 - Receivables (net of allowance for uncollectibles) Accounts 1,536,100 2,986,710 4,522,810 - Loan 180,702 180,702 - Due from other governments 69,066 - 69,066 - Taxes 15,203,634 - 15,203,634 - Prepaid items 19,722 2,168 21,890 - Restricted Assets Cash and cash equivalents - 11,816,261 11,816,261 - RCA and WCA assessments receivable - 1,207,997 1,207,997 - Pension assets 1,769,530 174,001 1,943,531 - Special assessments receivable - 68,854 68,854 - Capital Assets Land and easements 5,722,103 308,948 6,031,051 - Construction in progress 437,536 126,261 563,797 - Other capital assets, net of depreciation 74,621,713 67,839,353 142,461,066 - Total Assets 122,144,498 90,776,730 212,921,228 190,355 DEFERRED OUTFLOWS OF RESOURCES Deferred outflow related to pension 4,148,182 424,750 4,572,932 - Deferred outflow related to OPEB - LRLIF 216,646 44,542 261,188 - Total Deferred Outflows of Resources 4,364,828 469,292 4,834,120 - LIABILITIES Accounts payable and other current liabilities 1,055,303 980,224 2,035,527 - Accrued interest payable 226,932 - 226,932 - Unearned revenue 1,180 536,157 537,337 - Special Deposits 549,266 - 549,266 - Liabilities payable from restricted assets Accounts payable - 40,509 40,509 - Accrued interest payable - 13,791 13,791 - Current portion of long-term debt - 266,805 266,805 - Noncurrent Liabilities: Due within one year 3,129,189 - 3,129,189 - Due in more than one year 38,219,258 2,272,508 40,491,766 - Net OPEB liability - LRLIF 520,895 106,767 627,662 - Unearned revenue - 550,240 550,240 - Total Liabilities 43,702,023 4,767,001 48,469,024 - DEFERRED INFLOWS OF RESOURCES Property taxes for the subsequent year 15,191,834 - 15,191,834 - Deferred inflow related to pension 5,302,058 517,443 5,819,501 - Deferred inflow related to OPEB - LRLIF 80,377 16,780 97,157 - Total Deferred Inflows of Resources 20,574,269 534,223 21,108,492 - NET POSITION Net investment in capital assets 44,170,391 65,735,249 108,988,197 - Restricted for: Depreciation and equipment and replacement funds - 1,405,976 1,405,976 - Water and sewer capacity assessment funds - 11,601,716 11,601,716 - Landfill 3,362,328 - 3,362,328 - Big Muskego Lake - Bass Bay Protection and Rehabilitation District 185,589 - 185,589 - Revolving loans 598,321 - 598,321 Library 37,335 - 37,335 - Tax increment district purposes 1,046,402 - 1,046,402 - Debt service 1,322,401 - 1,322,401 - Pension 1,769,530 174,001 1,943,531 - Unrestricted 9,740,737 7,027,856 17,686,036 190,355 TOTAL NET POSITION 62,233,034$ 85,944,798$ 148,177,832$ 190,355$ City of Muskego Statement of Net Position As of December 31, 2020 56 See accompanying notes to financial statements.Page 14 Operating Capital Charges for Grants and Grants and Governmental Business-type Component Functions/Programs Expenses Services Contributions Contributions Activities Activities Totals Unit Primary government Governmental Activities General government 2,928,227$ 311,550$ -$ -$ (2,616,677)$ -$ (2,616,677)$ -$ Public safety 7,645,264 1,033,211 251,980 - (6,360,073) - (6,360,073) - Public works 5,167,163 156,101 1,305,947 1,262,792 (2,442,323) - (2,442,323) - Health and sanitation 1,160,338 3,268,417 - - 2,108,079 - 2,108,079 - Conservation and development 966,069 44,166 51,130 228,220 (642,553) - (642,553) - Education and recreation 2,329,896 324,806 200,513 - (1,804,577) - (1,804,577) - Interest on long-term debt and fiscal charges 1,504,344 - - - (1,504,344) - (1,504,344) - Total Governmental Activities 21,701,301 5,138,251 1,809,570 1,491,012 (13,262,468) - (13,262,468) - Business-type activities Sewer Utility 7,719,851 6,347,715 - 2,009,267 - 637,131 637,131 - Water Utility 1,828,697 2,254,170 - 1,570,885 - 1,996,358 1,996,358 - Total Business-type Activities 9,548,548 8,601,885 - 3,580,152 - 2,633,489 2,633,489 - Total primary government 31,249,849$ 13,740,136$ 1,809,570$ 5,071,164$ (13,262,468) 2,633,489 (10,628,979) - Component Unit Community Development Authority -$ -$ -$ -$ -$ -$ -$ -$ General Revenues Taxes Property taxes, levied for general purposes 12,529,325 - 12,529,325 - Property taxes, levied for debt service 2,190,000 - 2,190,000 - Other taxes 117,853 - 117,853 - Intergovernmental revenues not restricted to specific programs 958,429 - 958,429 - Investment income 456,164 163,424 619,588 - Miscellaneous 419 - 419 - Total General Revenues 16,252,190 163,424 16,415,614 - Transfers 474,627 (474,627) - - Change in Net Position 3,464,349 2,322,286 5,786,635 - NET POSITION - Beginning of Year 58,768,685 83,622,512 142,391,197 190,355 NET POSITION - END OF YEAR 62,233,034$ 85,944,798$ 148,177,832$ 190,355$ Program Revenues Changes in Net Position Net (Expenses) Revenues and City of Muskego Statement of Activites For the Year Ended December 31, 2020 57 See accompanying notes to financial statements. Page 15 Capital Special Projects Revenue Tax Debt Capital Increment Nonmajor Total General Service Budget District Governmental Governmental Fund Fund Fund Funds Funds Funds ASSETS Cash and cash equivalents 8,402,965$ 1,549,333$ 1,157,932$ 1,042,375$ 10,431,787$ 22,584,392$ Receivables - net Accounts 546,039 - - - 990,061 1,536,100 Due from other governments 36,056 - - - 33,010 69,066 Taxes 11,065,070 2,240,000 - 1,852,184 46,380 15,203,634 Loan receivables - - - - 180,702 180,702 Prepaid items 19,722 - - - - 19,722 Total Assets 20,069,852$ 3,789,333$ 1,157,932$ 2,894,559$ 11,681,940$ 39,593,616$ LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities Accounts payable 498,162$ -$ 239$ -$ 394,303$ 892,704$ Accrued liabilities 162,599 - - - - 162,599 Deferred lease and other revenues - - - - 1,180 1,180 Special Deposits 549,266 - - - - 549,266 Total Liabilities 1,210,027 - 239 - 395,483 1,605,749 Deferred Inflows of Resources Property taxes for the subsequent year 11,099,650 2,240,000 - 1,852,184 - 15,191,834 Total Deferred Inflows of Resources 11,099,650 2,240,000 - 1,852,184 - 15,191,834 Fund Balances Nonspendable 19,722 - - - - 19,722 Restricted - 1,549,333 1,157,693 1,042,375 4,187,600 7,937,001 Committed - - - - 6,276,129 6,276,129 Assigned - - - - 822,728 822,728 Unassigned 7,740,453 - - - - 7,740,453 Total Fund Balances 7,760,175 1,549,333 1,157,693 1,042,375 11,286,457 22,796,033 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES 20,069,852$ 3,789,333$ 1,157,932$ 2,894,559$ 11,681,940$ Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental funds are not financial resources and therefore are not reported in the funds. See Note II.80,781,352 Net Pension asset does not relate to current financial resources and is not reported in the governmental funds 1,769,530 Net OPEB liability does not relate to current financial resources and is not reported in the governmental funds (520,895) Deferred outflow of resources related to pension and OPEB do not relate to current financial resources and is not reported in the governmental funds 4,364,828 Deferred inflow of resources related to pension and OPEB do not relate to current financial resources and is not reported in the governmental funds (5,382,435) Some liabilites, including long-term debt, are not due and payable in the current period and therefore are not reported in the funds. See Note II.(41,575,379) 62,233,034$ NET POSITION OF GOVERNMENTAL ACTIVITIES City of Muskego Governmental Funds As of December 31, 2020 Balance Sheet 58 See accompanying notes to financial statements.Page 16 Capital Special Projects Revenue Tax Debt Capital Increment Nonmajor Total General Service Budget District Governmental Governmental Fund Fund Fund Funds Funds Funds REVENUES Taxes 10,838,625$ 2,190,000$ -$ 1,760,563$ -$ 14,789,188$ Intergovernmental 2,593,355 - - 10,184 253,700 2,857,239 Licenses and permits 716,302 - - - 63,670 779,972 Fines, forfeitures and penalties 247,917 - - - - 247,917 Public charges for services 493,975 - - - 3,271,961 3,765,936 Commercial revenue 337,302 10,852 6,931 - 207,498 562,583 Intergovernmental charges for services 238,316 - - - - 238,316 Interdepartmental revenues 96,814 - - - - 96,814 Total Revenues 15,562,606 2,200,852 6,931 1,770,747 3,796,829 23,337,965 EXPENDITURES Current General government 2,381,328 - - 15,400 109,043 2,505,771 Public safety 7,144,324 - - - - 7,144,324 Public works 2,871,870 - - - 24,750 2,896,620 Health and sanitation 3,691 - - - 1,149,837 1,153,528 Conservation and development 421,367 - - 174,019 24,449 619,835 Education and recreation 1,707,316 - - - 61 1,707,377 Debt service Principal retirement - 7,806,488 - - - 7,806,488 Interest - 1,525,646 - - - 1,525,646 Bond issuance costs - 22,948 - - - 22,948 Capital outlay 876,495 - 90,388 - 1,309,541 2,276,424 Total Expenditures 15,406,391 9,355,082 90,388 189,419 2,617,681 27,658,961 Deficiency of revenues under expenditures 156,215 (7,154,230) (83,457) 1,581,328 1,179,148 (4,320,996) OTHER FINANCING SOURCES (USES) Long-term debt issued - 3,414,000 - - - 3,414,000 Transfers in 531,380 2,486,294 - 755 852,052 3,870,481 Transfers out (202,463) - - (2,385,883) (807,508) (3,395,854) Total Other Financing Sources (Uses)328,917 5,900,294 - (2,385,128) 44,544 3,888,627 Net Change in Fund Balance 485,132 (1,253,936) (83,457) (803,800) 1,223,692 (432,369) FUND BALANCES - Beginning of Year 7,275,043 2,803,269 1,241,150 1,846,175 10,062,765 23,228,402 FUND BALANCES - END OF YEAR 7,760,175$ 1,549,333$ 1,157,693$ 1,042,375$ 11,286,457$ 22,796,033$ City of Muskego Statement of Revenues, Expenditures, and Changes in Fund Balances For the Year Ended December 31, 2020 Governmental Funds 59 See accompanying notes to financial statements.Page 17 Net change in fund balances - total governmental funds (432,369)$ Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However in the statement of net position, the cost of these assets is capitalized and they are depreciated over their estimated useful lives and reported as deprecitaion expense in the statement of activities. Capital outlay reported as an expenditure in the fund financial statements but is capitalized in the government-wide financial statements 2,276,424 Some items capitalized were not reported as capital outlay 183,408 Some items reported as capital outlay were not capitalized (174,494) Contributed capital assets are reported as revenue in the government-wide statements 1,255,512 Depreciation is reported in the government-wide statements (3,955,859) Net book value of assets retired (31,089) Debt issued provides current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position Debt issued (3,414,000) Principal repaid 7,806,488 Amortization of premium on long term debt issues 97,548 Some expenses in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. Compensated absences (114,038) Accrued interest on debt 44,251 Net pension asset 1,769,530 Net pension liability 1,919,070 Net OPEB liability - LRLIF (206,582) Deferred outflows related to pension (1,043,828) Deferred outflows related to OPEB - LRLIF 163,474 Deferred inflows related to pension (2,682,780) Deferred inflows related OPEB - LRLIF 3,682 CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES 3,464,349$ To the Statement of Activities City of Muskego Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds For the Year Ended December 31, 2020 60 See accompanying notes to financial statements.Page 18 Variance with Final Budget - Budgeted Amounts Over Original and Final Actual (Under) REVENUES Taxes 2,010,000$ 1,760,563$ (249,437)$ Intergovernmental 10,934 10,184 (750) Total Revenues 2,020,934 1,770,747 (250,187) EXPENDITURES Current General government 20,600 15,400 (5,200) Conservation and development - 174,019 174,019 Total Expenditures 20,600 189,419 168,819 Excess (deficiency) of revenues over (under) expenditures 2,000,334 1,581,328 (419,006) OTHER FINANCING SOURCES (USES) Transfers in - 755 755 Transfers out (2,599,499) (2,385,883) 213,616 Total Other Financing Sources (Uses)(2,599,499) (2,385,128) 214,371 Net Change in Fund Balance (599,165)$ (803,800) (204,635)$ FUND BALANCES - Beginning of Year 1,846,175 FUND BALANCES - END OF YEAR 1,042,375$ City of Muskego Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Special Revenue Fund - Tax Increment District Funds For the Year Ended December 31, 2020 61 See accompanying notes to financial statements. Page 19 Variance with Final Budget - Budgeted Amounts Over Original and Final Actual (Under) REVENUES Taxes 10,839,012$ 10,838,625$ (387)$ Intergovernmental 2,048,453 2,593,355 544,902 Licenses and permits 769,235 716,302 (52,933) Fines, forfeitures and penalties 310,000 247,917 (62,083) Public charges for service 552,358 493,975 (58,383) Commercial revenues 369,285 337,302 (31,983) Intergovernmental charges for services 237,500 238,316 816 Interdepartmental revenues 266,750 96,814 (169,936) Total Revenues 15,392,593 15,562,606 170,013 EXPENDITURES Current General government 2,431,413 2,381,328 (50,085) Public safety 7,299,814 7,144,324 (155,490) Public works 3,010,692 2,871,870 (138,822) Health and sanitation 3,806 3,691 (115) Conservation and development 428,066 421,367 (6,699) Education and recreation 1,863,555 1,707,316 (156,239) Capital Outlay 832,000 876,495 44,495 Contigency 80,000 - (80,000) Total Expenditures 15,949,346 15,406,391 (542,955) Excess (deficiency) of revenues over (under) expenditures (556,753) 156,215 712,968 OTHER FINANCING SOURCES (USES) Transfers in 581,753 531,380 (50,373) Transfers out (50,000) (202,463) (152,463) Sale of property 25,000 - (25,000) Total Other Financing Sources (Uses)556,753 328,917 (227,836) Net Change in Fund Balance -$ 485,132 485,132$ FUND BALANCES - Beginning of Year 7,275,043 FUND BALANCES - END OF YEAR 7,760,175$ Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual City of Muskego General Fund For the Year Ended December 31, 2020 62 See accompanying notes to financial statements. Page 20 Business Type Activities Enterprise Funds Total Sewer Water Enterprise Utility Utility Funds ASSETS CURRENT ASSETS Cash and cash equivalents 4,690,687$ 658,675$ 5,349,362$ Temporary investments 896,815 - 896,815 Receivables, net 2,505,582 481,128 2,986,710 Prepaid Items 1,084 1,084 2,168 Restricted Assets Cash and cash equivalents - 5,258 5,258 Total Current Assets 8,094,168 1,146,145 9,240,313 NON-CURRENT ASSETS Restricted Assets Cash and cash equivalents 10,244,269 1,566,734 11,811,003 RCA and WCA assessments receivable 1,025,971 182,026 1,207,997 Pension asset 109,944 64,057 174,001 Capital Assets Land and easements 130,918 178,030 308,948 Construction work in progress - 126,261 126,261 Plant in service 65,218,742 43,586,865 108,805,607 Accumulated depreciation (26,564,142) (14,402,112) (40,966,254) Other assets Special assessments - 68,854 68,854 Total Non-Current Assets 50,165,702 31,370,715 81,536,417 Total Assets 58,259,870 32,516,860 90,776,730 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows related to pensions 266,816 157,934 424,750 Deferred outflows related to OPEB - LRLIF 28,721 15,821 44,542 Total Deferred Outflows of Resources 295,537 173,755 469,292 LIABILITIES AND NET POSITION CURRENT LIABILITIES Accounts payable 626,350 72,145 698,495 Accrued vacation, sick leave and compensatory time 188,761 92,968 281,729 Deferred lease and other revenue 435,759 100,398 536,157 Liabilities Payable From Restricted Assets Accounts payable - 40,509 40,509 Current portion of long-term debt - 266,805 266,805 Accrued interest - 13,791 13,791 Total Current Liabilities 1,250,870 586,616 1,837,486 NON-CURRENT LIABILITIES Long-term debt - 2,272,508 2,272,508 Net OPEB liability - LRLIF 69,452 37,315 106,767 Unearned revenue 483,858 66,382 550,240 Total Non-current Liabilities 553,310 2,376,205 2,929,515 Total Liabilities 1,804,180 2,962,821 4,767,001 DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pensions 318,454 198,989 517,443 Deferred inflows related to OPEB - LRLIF 10,912 5,868 16,780 Total Deferred Inflows of Resources 329,366 204,857 534,223 NET POSITION Net investment in capital assets 38,785,518 26,949,731 65,735,249 Restricted for RCA and WCA funds 10,333,029 1,268,687 11,601,716 Depreciation and equipment replacement funds 937,211 468,765 1,405,976 Pension 109,944 64,057 174,001 Unrestricted 6,256,159 771,697 7,027,856 TOTAL NET POSITION 56,421,861$ 29,522,937$ 85,944,798$ City of Muskego Statement of Net Position Proprietary Funds As of December 31, 2020 63 See accompanying notes to financial statements.Page 21 Business Type Activities Enterprise Funds Total Sewer Water Enterprise Utility Utility Funds OPERATING REVENUES Charges for services 6,333,824$ 2,126,962$ 8,460,786$ Other operating revenues 13,891 127,208 141,099 Total Operating Revenues 6,347,715 2,254,170 8,601,885 OPERATING EXPENSES Operation and maintenance 7,092,172 860,765 7,952,937 Depreciation 627,679 870,065 1,497,744 Taxes - 26,654 26,654 Total Operating Expenses 7,719,851 1,757,484 9,477,335 Operating Income (Loss)(1,372,136) 496,686 (875,450) NON-OPERATING REVENUES (EXPENSES) Investment income 95,817 15,960 111,777 Interest income on special assessments 37,214 14,433 51,647 Amortization of bond premium - 14,369 14,369 Interest on long term debt - (85,582) (85,582) Total Nonoperating Revenues (Expenses)133,031 (40,820) 92,211 Income (Loss) before Contributions and Transfers (1,239,105) 455,866 (783,239) CAPITAL CONTRIBUTIONS 2,009,267 1,570,885 3,580,152 TRANSFERS - TAX EQUIVALENT - (474,627) (474,627) Change in Net Position 770,162 1,552,124 2,322,286 NET POSITION - BEGINNING OF YEAR 55,651,699 27,970,813 83,622,512 NET POSITION - END OF YEAR 56,421,861$ 29,522,937$ 85,944,798$ For the Year Ended December 31, 2020 City of Muskego Statement of Revenues, Expenses And Changes in Fund Net Position Proprietary Funds 64 See accompanying notes to financial statements.Page 22 Business Type Activities Enterprise Funds Total Sewer Water Enterprise Utility Utility Funds CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 6,378,275$ 1,879,177$ 8,257,452$ Receipts from municipality for services - 337,653 337,653 Payments to other funds (48,198) - (48,198) Paid to vendor for goods and services (6,246,776) (461,845) (6,708,621) Paid to employees for services (821,557) (348,759) (1,170,316) Net Cash Flows From Operating Activities (738,256) 1,406,226 667,970 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Paid to municipality for tax equivalent - (474,627) (474,627) Net Cash Flows From Non-Capital Financing Activities - (474,627) (474,627) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal paid - (236,955) (236,955) Interest paid - (86,646) (86,646) Special assessments received 883,473 464,274 1,347,747 Acquisition and construction of capital assets (164,378) (313,140) (477,518) Connection fees received 21,500 - 21,500 Net Cash Flows From Capital and Related Financing Activities 740,595 (172,467) 568,128 CASH FLOWS FROM INVESTING ACTIVITIES Investment income Interest on investments 95,817 15,960 111,777 Interest on special assessments 37,214 14,433 51,647 Investments purchased 519,144 - 519,144 Net Cash Flows From Investing Activities 652,175 30,393 682,568 Net Change in Cash and Cash Equivalents 654,514 789,525 1,444,039 CASH AND CASH EQUIVALENTS - Beginning of Year 14,280,442 1,441,142 15,721,584 CASH AND CASH EQUIVALENTS - END OF YEAR 14,934,956$ 2,230,667$ 17,165,623$ City of Muskego Statement of Cash Flows Proprietary Funds For the Year Ended December 31, 2020 65 See accompanying notes to financial statements.Page 23 Total Sewer Water Enterprise Utility Utility Funds RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE STATEMENT OF NET POSITION - PROPRIETARY FUNDS Current: Cash and cash equivalents 4,690,687$ 658,675$ 5,349,362$ Temporary investments 896,815 - 896,815 Restricted cash and cash equivalents - 5,258 5,258 Non-current Restricted cash and cash equivaluents 10,244,269 1,566,734 11,811,003 Less: Non-cash equivalents (896,815) - (896,815) Cash and cash equivalents - end of year 14,934,956$ 2,230,667$ 17,165,623$ NON CASH INVESTING, CAPITAL AND RELATED FINANCING ACTIVITIES Capital additions contributed to the Utility by customers and developers 606,619$ 1,147,030$ 1,753,649$ Assessment of benefits for property owners for improvements 1,381,148$ 423,855$ 1,805,003$ Capital related accounts payable -$ 40,509$ 40,509$ Premium on debt issued for refunding -$ 14,369$ 14,369$ Reconciliation of operating income (loss) to net cash provided by operating activities: Operating Income (loss)(1,372,136)$ 496,686$ (875,450)$ Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation 627,679 870,065 1,497,744 Depreciation charged to other accounts - 31,624 31,624 Pension related expense 7,097 3,048 10,145 (Increase) decrease in assets/deferred outflows: Accounts receivable - other (276,370) (41,564) (317,934) Prepaid Items (1,084) (499) (1,583) Increase (decrease) in liabilities/deferred inflows: Accounts payable (30,411) 44,823 14,412 Accrued vacation, sick leave and compensatory time 39 550 589 Deferred contractual credit 306,930 - 306,930 Unearned revenue - (2,730) (2,730) Unearned lease revenue - 4,223 4,223 Total adjustments 633,880 909,540 1,543,420 Net Cash Flows From Operating Activities (738,256)$ 1,406,226$ 667,970$ Business Type Activities Enterprise Funds City of Muskego Statement of Cash Flows Proprietary Funds For the Year Ended December 31, 2020 (Concluded) 66 See accompanying notes to financial statements.Page 24 Volunteer Library Fire Co. Expansion Scholarship Tax Collection Trust Fund Fund Fund ASSETS Cash and cash equivalents 25,845$ 186,864$ 31,121,173$ Taxes receivable - - 3,428,024 Total Assets 25,845 186,864 34,549,197 LIABILITIES Accounts payable - - 90,386 Due to other taxing units - - 34,458,566 Other Deferred Credits - - 245 Total Liabilities - - 34,549,197 NET POSITION Restricted - held in trust 25,845 186,864 - TOTAL NET POSITION 25,845$ 186,864$ -$ Private Purpose Trust Funds City of Muskego As of December 31, 2020 Fiduciary Funds Statement of Fiduciary Net Position Custodial Fund 67 See accompanying notes to financial statements.Page 25 City of Muskego Statement of Changes in Fiduciary Net Position - Fiduciary Funds Custodial Fund Volunteer Library Fire Co. Expansion Scholarship Tax Collection Trust Fund Fund Fund ADDITIONS Investment income 236$ 930$ -$ Tax collections - - 34,263,593 Total additions 236 930 34,263,593 DEDUCTIONS Payments to overlying districts - - 34,263,593 Total deductions - - 34,263,593 Change in Net Position 236 930 - NET POSITION - Beginning 25,609 185,934 - NET POSITION - ENDING 25,845$ 186,864$ -$ For the Year Ended December 31, 2020 Private Purpose Trust Funds 68 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 26 NOTE Page I. Summary of Significant Accounting Policies 27 A. Reporting Entity 27 B. Government-Wide and Fund Financial Statements 28 C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation 31 D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position or Equity 33 1. Deposits and Investments 33 2. Receivables 35 3. Inventories and Prepaid Items 36 4. Restricted Assets 36 5. Capital Assets 36 6. Deferred Outflows of Resources 37 7. Compensated Absences 37 8. Long-Term Obligations 38 9. Utility Deferred Lease and Other Revenue 38 10. Deferred Inflows of Resources 38 11. Equity Classifications 39 12. Pension 41 13. Postemployment Benefits Other Than Pensions (OPEB) – LRLIF 41 E. Other Policies-Tax Incremental Districts 42 II. Reconciliation of Government-Wide and Fund Financial Statements 43 Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Statement of Net Position 43 III. Stewardship, Compliance, and Accountability 44 A. Budgetary Information 44 B. Excess Expenditures Over Appropriations 44 C. Limitations on the City’s Tax Levy 44 IV. Detailed Notes on All Funds 45 A. Deposits and Investments 45 B. Restricted Assets 47 C. Receivables 48 D. Capital Assets 49 E. Interfund Transfers 51 F. Long-Term Obligations 52 G. Net Position / Fund Balances 55 H. Component Unit 59 V. Other Information 60 A. Employees’ Retirement System 60 B. Risk Management 65 C. Commitments and Contingencies 65 D. Other Post-Employment Benefits - LRLIF 66 E. Water and Sewer Utility Rates 71 F. Antenna Lease Agreements 71 G. Effect of New Accounting Standards on Current Period Financial Statements 72 H. Subsequent Events 72 69 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 27 NOTE I – SUMMARY OF S IGNIFICANT A CCOUNTING POLICIES The accounting policies of the City of Muskego, Wisconsin (“city”) conform to accounting principles generally accepted in the United State of America as applicable to governmental units. The accepted standard-setting body for establishing governmental accounting and financial reporting principles is the Governmental Accounting Standards Board (GASB). A. REPORTING E NTITY This report includes all of the funds of the city. The reporting entity for the city consists of the primary government and its component units. Component units are legally separate organizations for which the primary government is financially accountable or other organizations for which the nature and significance of their relationship with the primary government are such that their exclusion would cause the reporting entity's financial statements to be misleading. The primary government is financially accountable if (1) it appoints a voting majority of the organization's governing body and it is able to impose its will on that organization, (2) it appoints a voting majority of the organization's governing body and there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government, (3) the organization is fiscally dependent on and there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government. Certain legally separate, tax exempt organizations should also be reported as a component unit if all of the following criteria are met: (1) the economic resources received or held by the separate organization are entirely or almost entirely for the direct benefit of the primary government, its component units, or its constituents; (2) the primary government or its component units, is entitled to, or has the ability to access, a majority of the economic resources received or held by the separate organization; and (3) the economic resources received or held by an individual organization that the primary government, or its component units, is entitled to, or has the ability to otherwise access, are significant to the primary government. Component units are reported using one of two methods, discrete presentation or blending. Generally, component units should be discretely presented in a separate column in the financial statements. A component unit should be reported as part of the primary government using the blending method if it meets any one of the following criteria: (1) the primary government and the component unit have substantively the same governing body and a financial benefit or burden relationship exists, (2) the primary government and the component unit have substantively the same governing body and management of the primary government has operational responsibility for the component unit, (3) the component unit serves or benefits, exclusively or almost exclusively, the primary government rather than its citizens, or (4) the total debt of the component unit will be paid entirely or almost entirely from resources of the primary government. Discretely Presented Component Unit Muskego Community Development Authority The government-wide financial statements include the Muskego Community Development Authority (“Authority”) as a component unit. The Authority is a legally separate organization. The board of the Authority is appointed by the mayor and city council of the City of Muskego. Wisconsin Statutes provide for circumstances whereby the city can impose their will on the Authority, and also create a potential financial benefit to or burden on the city. See Note IV. H. As a component unit, the Authority’s financial statements have been presented as a discrete column in the financial statements. The information presented is for the fiscal year ended December 31, 2020. The Authority does not issue separate financial statements. 70 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 28 NOTE I – SUMMARY OF S IGNIFICANT A CCOUNTING POLICIES (continued) A. REPORTING E NTITY (continued) Blended Component Unit Big Muskego Lake – Bass Bay Protection and Rehabilitation District The basic financial statements of the City also include the financial data of the City's component unit, Big Muskego Lake - Bass Bay Protection and Rehabilitation District (district). The City created the district under certain provisions of the Wisconsin Statutes in order to assist the City in undertaking programs of lake protection and rehabilitation. The district’s governing body is substantively the same as the City, with all members serving on the City common council and with the Mayor acting as chairman. Separately issued financial statements for the district may be obtained from the district’s office. The district is reported as part of the Non-Major Special Revenue Funds. B. GOVERNMENT-WIDE AND F UND FINANCIAL STATEMENTS Government-Wide Financial Statements The statement of net position and statement of activities display information about the reporting government as a whole. They include all funds of the reporting entity except for fiduciary funds. The statements distinguish between governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non- exchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or services. 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 is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. The City does not allocate indirect expenses to functions in the Statement of Activities. 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 included among program revenues are reported as general revenues. Internally dedicated resources are reported as general revenues rather than as program revenues. 71 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 29 NOTE I – SUMMARY OF S IGNIFICANT A CCOUNTING POLICIES (continued) B. GOVERNMENT-WIDE AND F UND FINANCIAL STATEMENTS (continued) Fund Financial Statements Financial statements of the City are organized into funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self- balancing accounts, which constitute its assets, liabilities, deferred inflows of resources, net position/fund balance, revenues, and expenditure/expenses. Funds are organized as major funds or non-major funds within the governmental and proprietary statements. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the City or meets the following criteria: a. Total assets, liabilities/deferred inflows of resources, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least 10 percent of the corresponding total for all funds of that category or type, and b. The same element of the individual governmental or enterprise fund that met the 10 percent test is at least 5 percent of the corresponding total for all governmental and enterprise funds combined. In addition, any other governmental or enterprise fund that the City believes is particularly important to financial statement users may be reported as a major fund. Separate financial statements are provided for governmental funds and 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. The City reports the following major governmental funds: General Fund – accounts for the City’s primary operating activities. It is used to account for and report all financial resources except those required to be accounted for and report in another fund. Debt Service Fund – used to account for and report financial resources that are restricted, committed, or assigned to expenditures for the payment of general long- term debt principal, interest, and related costs, other than TID or enterprise debt. Special Revenue Fund - Tax Increment District Funds – used to account for and report financial resources that are restricted for debt and administrative costs for the Tax Increment District #8, 9,10 and 11. Capital Projects - Capital Budget Fund - used to account for and report financial resources that are restricted, committed, or assigned to expenditures for capital outlay, including the acquisition or construction of capital facilities and other capital assets. 72 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 30 NOTE I – SUMMARY OF S IGNIFICANT A CCOUNTING POLICIES (continued) B. GOVERNMENT-WIDE AND F UND FINANCIAL STATEMENTS (continued) Fund Financial Statements (continued) The City reports the following major enterprise funds: Sewer Utility – accounts for operations of the sewer system Water Utility – accounts for operations of the water system The City reports the following non-major governmental funds: Special Revenue Funds – used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes (other than debt service or capital projects). Parks Land Open Space Conservation Compensated Absences Cable TV Refuse/Recycling Capital Improvements Revolving Loan Federated Library System Landfill Standing Committee Big Muskego Lake – Bass Bay Storm Water Management Protection and Rehabilitation District Well Testing Reserve Landfill Capital Projects Funds – used to account for and report financial resources that are restricted, committed, or assigned to expenditures for capital outlay, including the acquisition or construction of capital facilities and other capital assets. Capital Equipment Tax Increment District Capital Projects In addition, the City reports the following fund types: Private-purpose trust funds are used to account for and report any trust arrangement not properly reported in a pension trust fund under which principal and income benefit the expansion of the library or scholarships. Library Expansion Trust Volunteer Fire Co. Scholarship Custodial funds are used to account for and report assets held by the City in a trustee capacity or as an agent for individuals, private organizations, and/or other governmental units. Tax Collection 73 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 31 NOTE I – SUMMARY OF S IGNIFICANT A CCOUNTING POLICIES (continued) C. MEASUREMENT F OCUS, B ASIS OF A CCOUNTING, AND F INANCIAL S TATEMENT P RESENTATION Government-Wide Financial Statements The government-wide statement of net position and statement of activities are reported using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Property taxes are recognized as revenues in the year for which they are levied. Taxes receivable for the following year are recorded as receivables and deferred inflows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider are met. Special assessments are recorded as revenue when earned. Unbilled receivables are recorded as revenues when services are provided. As a general rule, the effect of inter-fund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the City’s water and sewer utilities and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Fund Financial Statements Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recorded when they are both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures are recorded when the related fund liability is incurred, except for un-matured interest on long-term debt, claims, judgments, compensated absences, and pension expenditures, which are recorded as a fund liability when expected to be paid with expendable available financial resources. Property taxes are recorded in the year levied as receivables and deferred inflows. They are recognized as revenues in the succeeding year when services financed by the levy are being provided. Intergovernmental aids and grants are recognized as revenues in the period the City is entitled to the resources and the amounts are available. Amounts owed to the City which are not available are recorded as receivables and unavailable revenues. Amounts received before eligibility requirements (excluding time requirements) are met and recorded as liabilities. Amounts received in advance of meeting time requirements are recorded as deferred inflows. Special assessments are recorded as revenues when they become measurable and available as current assets. Annual installments due in future years are reflected as receivables and unavailable revenues. At December 31, 2020, there are unrecorded future assessments of $652,035 in the Sewer Utility, which are not recorded as receivables because collection is subject to certain events occurring in the future. No formal repayment schedule has been established. 74 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 32 NOTE I – SUMMARY OF S IGNIFICANT A CCOUNTING POLICIES (continued) C. MEASUREMENT F OCUS, B ASIS OF A CCOUNTING, AND F INANCIAL S TATEMENT P RESENTATION (continued) Fund Financial Statements (continued) Revenues susceptible to accrual include property taxes, miscellaneous taxes, public charges for services, special assessments and interest. Other general revenues such as fines and forfeitures, inspection fees, recreation fees, and miscellaneous revenues are recognized when received in cash or when measurable and available under the criteria described above. Proprietary and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as described previously in this note. The proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the Water Utility and Sewer Utility are charges to customers for sales and services. Special assessments are recorded as receivables and contribution revenue when levied. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. All Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. 75 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 33 NOTE I – SUMMARY OF S IGNIFICANT A CCOUNTING POLICIES (continued) D. ASSETS, D EFERRED O UTFLOWS OF RESOURCES, LIABILITIES, D EFERRED INFLOWS OF RESOURCES AND NET P OSITION OR EQUITY 1. Deposits and Investments For purposes of the statement of cash flows, the City considers all highly liquid investments with an initial maturity of three months or less when acquired to be cash equivalents. Investment of City funds is restricted by Wisconsin state statutes. Available investments are limited to: 1. Time deposits in any credit union, bank, savings bank or trust company. 2. Bonds or securities of any county, city, drainage district, technical college district, village, town, or school district of the state. Also, bonds issued by a local exposition district, a local professional baseball park district, a local professional football stadium district, a local cultural arts district, the University of Wisconsin Hospitals and Clinics Authority, or the Wisconsin Aerospace Authority. 3. Bonds or securities issued or guaranteed by the federal government. 4. The local government investment pool. 5. Any security maturing in seven years or less and having the highest or second highest rating category of a nationally recognized rating agency. 6. Securities of an open-end management investment company or investment trust, subject to various conditions and investment options. 7. Repurchase agreements with public depositories, with certain conditions. The City’s investment of library trust funds is regulated by Chapter 112 of the Wisconsin state statutes. That section gives broad authority to use such funds to acquire various kinds of investments including stocks, bonds and debentures. The City has adopted an investment policy that follows state statues for allowable investments. The City is exposed to various risks related to their cash and investments. The City’s policy related to these risks is described below: Custodial Credit Risk The City’s policy indicates that to the extent possible bank balances should be maintained at amounts less than or equal to the amounts insured by FDIC or State of Wisconsin guaranteed amounts. (At year end the City had bank balances in excess of insured amounts as disclosed in Note IV. A.) Additionally, all certificates of deposit exceeding these coverage’s shall be collateralized with U.S. securities or Wisconsin municipal debt. Collateral shall be in the City’s name and held by a third party custodian. Credit Risk The City’s investment policy does not address this risk. 76 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 34 NOTE I – SUMMARY OF S IGNIFICANT A CCOUNTING POLICIES (continued) D. ASSETS, D EFERRED O UTFLOWS OF RESOURCES, LIABILITIES, D EFERRED INFLOWS OF RESOURCES AND NET P OSITION OR EQUITY (continued) 1. Deposits and Investments (continued) Interest Rate Risk The City investment policy only addresses interest rate risk on certificates of deposit and specifies that they must mature within three years or less from the date of investment. Investments are stated at fair value, which is the amount at which an investment could be exchanged in a current transaction between willing parties. No investments are reported at amortized cost. Adjustments necessary to record investments at fair value are recorded in the operating statement as increases or decreases in investment income. Investment income on commingled investments of municipal accounting funds is allocated based on the average investment balance. The difference between the bank balance and carrying value is due to outstanding checks and/or deposits in transit. The Wisconsin Local Government Investment Pool (LGIP) is part of the State Investment Fund (SIF), and is managed by the State of Wisconsin Investment Board. The SIF is not registered with the Securities and Exchange Commission, but operates under the statutory authority of Wisconsin Chapter 25. The SIF reports the fair value of its underlying assets annually. Participants in the LGIP have the right to withdraw their funds in total on one day’s notice. At December 31, 2020, the fair value of the City’s share of the LGIP’s assets was substantially equal to the amount as reported in these statements. Certificate of Deposit Account Registry Service (CDARS) is a member of a special network which offers access to multi-million dollar FDIC insurance coverage on CD investments through one bank. See Note IV.A. for further information. 77 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 35 NOTE I – SUMMARY OF S IGNIFICANT A CCOUNTING POLICIES (continued) D. ASSETS, DEFERRED O UTFLOWS OF RESOURCES, L IABILITIES, D EFERRED I NFLOWS OF RESOURCES AND NET P OSITION OR EQUITY (continued) 2. Receivables Property taxes are levied in December on the assessed value as of the prior January 1. In addition to property taxes for the City, taxes are collected for and remitted to the state and county governments as well as the local school district and technical college district. Taxes for all state and local governmental units billed in the current year for the succeeding year are reflected as receivables and due to other taxing units on the accompanying agency fund statement of fiduciary net position. Property tax calendar – 2020 tax roll: Lien date and levy date December 2020 Tax bills mailed December 2020 Payment in full, or January 31, 2021 First installment due January 31, 2021 Second installment due July 31, 2021 Personal property taxes in full January 31, 2021 Tax deed by county – 2020 delinquent Real estate taxes October 2023 Accounts receivable have been shown net of an allowance for uncollectible accounts. Delinquent real estate taxes as of July 31 are paid in full by the county, which assumes the collection thereof. No provision for uncollectible accounts receivable has been made for the water and sewer utilities because they have the right by law to place all delinquent bills on the tax roll, and other delinquent bills are generally not significant. During the course of operations, transactions occur between individual funds that may result in amounts owed between funds. Short-term interfund loans are reported as “due to and from other funds.” Long-term interfund loans (noncurrent portion) are reported as “advances from and to other funds.” Interfund receivables and payables between funds within governmental activities are eliminated in the Statement of Net Position. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. The City has received state grant funds for economic development loan programs to various businesses and individuals. The City records a loan receivable when the loan has been made and funds have been disbursed. The amount recorded as economic development loans receivable has not been reduced by an allowance for uncollectible accounts. The Water and Sewer Utilities provide services to customers within the municipal boundaries. Metered water sales to customers are billed on a quarterly basis at rates approved by the Public Service Commission of Wisconsin. Sewer customers are billed rates established by the Common Council. Bills are payable in 30 days. Delinquent balances at the time of the property tax lien date are placed on the customer’s tax bill and collected through the normal tax collection process. 78 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 36 NOTE I – SUMMARY OF S IGNIFICANT A CCOUNTING POLICIES (continued) D. ASSETS, D EFERRED O UTFLOWS OF RESOURCES, LIABILITIES, D EFERRED INFLOWS OF RESOURCES AND NET P OSITION OR EQUITY (continued) 3. Inventories and Prepaid Items Governmental fund inventory items are charged to expenditure accounts when purchased. Year- end inventory was not significant. Proprietary fund inventories are generally used for construction and for operation and maintenance work. They are not for resale. They are valued at cost based on weighted average, and charged to construction or operation and maintenance expense when used. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 4. Restricted Assets Mandatory segregations of assets are presented as restricted assets. Such segregations are required by bond agreements and other external parties. Current liabilities payable from these restricted assets are so classified. The excess of restricted assets over current liabilities payable from restricted assets will be used first for retirement of related long-term debt. The remainder, if generated from earning, is shown as restricted net position. Restricted net position principally represents Water and Sewer Reserve Capacity Assessment Funds, Special Redemption Funds, Pension Asset and Equipment Replacement Funds restricted assets, less related current liabilities payable from the restricted assets. 5. Capital Assets Government–Wide Statements Capital assets, which include property, plant and equipment, are reported in the government-wide financial statements. Capital assets are defined by the government as assets with an initial cost of more than $5,000 for general capital assets and $10,000 for infrastructure assets, and an estimated useful life in excess of one year. All capital assets are valued at historical cost or estimated historical cost if actual amounts are unavailable. Donated capital assets are recorded at their estimated fair value at the date of donation. Additions to and replacements of capital assets of business-type activities are recorded at original cost, which includes material, labor, overhead, and an allowance for the cost of funds used during construction when significant. For tax-exempt debt, the amount of interest capitalized equals the interest expense incurred during construction netted against any interest revenue from temporary investment of borrowed fund proceeds. No net interest was capitalized during the current year. The cost of renewals and betterments relating to retirement units is added to plant accounts. The cost of property replaced retired or otherwise disposed of, is deducted from plant accounts and, generally, together with removal costs less salvage, is charged to accumulated depreciation. 79 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 37 NOTE I – SUMMARY OF S IGNIFICANT A CCOUNTING POLICIES (continued) D. ASSETS, D EFERRED O UTFLOWS OF RESOURCES, LIABILITIES, D EFERRED INFLOWS OF RESOURCES AND NET P OSITION OR EQUITY (continued) 5. Capital Assets (continued) Government–Wide Statements (continued) Depreciation of all exhaustible capital assets is recorded as an allocated expense in the statement of activities, with accumulated depreciation reflected in the statement of net position. Depreciation is provided over the assets’ estimated useful lives using the straight-line method. The range of estimated useful lives by type of asset is as follows: Buildings 20-50 Years Land Improvements Other than Building 10-50 Years Machinery and Equipment 3-20 Years Utility System 19-125 Years Infrastructure Intangibles 10-50 5 Years Years Fund Financial Statements In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for the same way as in the government- wide statements. 6. Deferred Outflows of Resources A deferred outflow of resources represents a consumption of net position/fund balance that applies to a future period and will not be recognized as an outflow of resources (expense/expenditure) until that future time. 7. Compensated Absences Under terms of employment, employees are granted sick leave and vacations in varying amounts. Only benefits considered to be vested are disclosed in these statements. All vested vacation and sick leave pay are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements, and are payable with expendable resources. Payments for vacation and sick leave will be made at rates in effect when the benefits are used. Accumulated vacation and sick leave liabilities at December 31, 2020 are determined on the basis of current salary rates and include salary related payments. 80 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 38 NOTE I – SUMMARY OF S IGNIFICANT A CCOUNTING POLICIES (continued) D. ASSETS, D EFERRED O UTFLOWS OF RESOURCES, LIABILITIES, D EFERRED INFLOWS OF RESOURCES AND NET P OSITION OR EQUITY (continued) 8. Long-Term Obligations All long-term obligations to be repaid from governmental and business-type resources are reported as liabilities in the government-wide statements. The long-term obligations consist primarily of notes and bonds payable, and accrued compensated absences. Long-term obligations for governmental funds are not reported as liabilities in the fund financial statements. The face value of debts (plus any premiums) is reported as other financing sources and payments of principal and interest are reported as expenditures. The accounting in proprietary funds is the same as it is in the government-wide statements. For the government-wide statements and proprietary fund statements, bond premiums and discounts are amortized over the life of the issue using the effective interest method. The balance at year end is shown as an increase or decrease in the liability section of the statement of net position. 9. Utility Deferred Lease and Other Revenue Utility deferred lease and other revenue principally represents unearned special assessments which will be reported as contributed capital when and if the property owner connects to the water system and the assessment becomes due, and prepayments of reserve capacity assessments. 10. Deferred Inflows of Resources A deferred inflow of resources represents an acquisition of net position/fund balance that applies to a future period and therefore will not be recognized as an inflow of resources (revenue) until that future time. 81 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 39 NOTE I – SUMMARY OF S IGNIFICANT A CCOUNTING POLICIES (continued) D. ASSETS, D EFERRED O UTFLOWS OF RESOURCES, LIABILITIES, D EFERRED INFLOWS OF RESOURCES AND NET P OSITION OR EQUITY (continued) 11. Equity Classifications Government–Wide Statements Equity is classified as net position and displayed in three components: a. Net investment in capital assets – Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances (excluding unspent bond proceeds) of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. b. Restricted net position – Consists of net position with constraints placed on the use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or, 2) law through constitutional provisions or enabling legislation. c. Unrestricted net position – All other net positions that do not meet the definition of “restricted” or “net investment in capital assets.” The net position section includes an adjustment for capital assets owned by the business-type activities column, but financed by the debt of the governmental activities column. The amount is a reduction of "net investment in capital assets", and an increase in "unrestricted" net position, shown only in the total column. A reconciliation of this adjustment is as follows: Governmental Business-type Activities Activities Adjustment Total Net investment in capital assets $ 44,170,391 65,735,249$ (917,443)$ 108,988,197$ Unrestricted 9,740,737 7,027,856 917,443 17,686,036 When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. 82 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 40 NOTE I – SUMMARY OF S IGNIFICANT A CCOUNTING POLICIES (continued) C. ASSETS, D EFERRED O UTFLOWS OF RESOURCES, LIABILITIES, D EFERRED INFLOWS OF R ESOURCES AND N ET POSITION OR EQUITY (continued) 11. Equity Classifications (continued) Fund Statements Governmental fund balances are displayed as follows: a. Non-spendable – Includes fund balance amounts that cannot be spent either because they are not in spendable form or because legal or contractual requirements require them to be maintained intact. b. Restricted – Consists of fund balances with constraints place on their use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or 2) law through constitutional provisions or enabling legislation. c. Committed - Includes fund balance amounts that are constrained for specific purposes that are internally imposed by the government through formal action of the highest level of decision making authority. Fund balance amounts are committed through a formal action (resolution) of the city. This formal action must occur prior to the end of the reporting period, but the amount of the commitment, which will be subject to the constraints, may be determined in the subsequent period. Any changes to the constraints imposed require the same formal action of the city that originally created the commitment. d. Assigned - Includes spendable fund balance amounts that are intended to be used for specific purposes that are not considered restricted or committed. Fund balance may be assigned through the following; 1) The city has adopted a financial policy authorizing the Finance Committee to assign amounts for a specific purpose. 2) All remaining positive spendable amounts in governmental funds, other than the general fund, that are neither restricted nor committed. Assignments may take place after the end of the reporting period. e. Unassigned - Includes residual positive fund balance within the general fund which has not been classified within the other above mentioned categories. Unassigned fund balance may also include negative balances for any governmental fund if expenditures exceeds amounts restricted, committed, or assigned for those purposes. The City considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available unless there are legal documents / contracts that prohibit doing this, such as in grant agreements requiring dollar for dollar spending. Additionally, the City would first use committed, then assigned and lastly unassigned amounts of unrestricted fund balance when expenditures are made. The City has a formal minimum fund balance policy. That policy is to maintain an unassigned fund balance in the general fund of $2,794,933, or 17% of the ensuing year’s budgeted general fund expenditures. The balance at year end was $7,740,453 or 47% of 2021 budgeted general fund expenditures. Proprietary fund equity is classified the same as in the government-wide statements. 83 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 41 NOTE I – SUMMARY OF S IGNIFICANT A CCOUNTING POLICIES (continued) D. ASSETS, D EFERRED O UTFLOWS OF RESOURCES, LIABILITIES, D EFERRED INFLOWS OF RESOURCES AND NET P OSITION OR EQUITY (continued) 11. Equity Classifications (continued) Fund Statements (continued) Fiduciary fund equity is classified as held in trust for the Library Expansion Trust and the Volunteer Fire Co. Scholarship on the statement of fiduciary net position. Various donor restrictions apply, including authorizing and spending trust income, and the City believes it is in compliance with all significant restrictions. 12. Pension For purposes of measuring the net pension (asset), deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Wisconsin Retirement System (WRS) and additions to/deductions from WRS’ fiduciary net position have been determined on the same basis as they are reported by WRS. 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. 13. Postemployment Benefits Other Than Pensions (OPEB) - LRLIF The fiduciary net position of the Local Retiree Life Insurance Fund (LRLIF) has been determined using the flow of economic resources measurement focus and the accrual basis of accounting. This includes for purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to other post-employment benefits, OPEB expense, and information about the fiduciary net position of the LRLIF and additions to/deductions from LRLIFs fiduciary net position have been determined on the same basis as they are reported by LRLIF. 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. 84 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 42 NOTE I – SUMMARY OF S IGNIFICANT A CCOUNTING POLICIES (continued) E. OTHER POLICIES - TAX I NCREMENTAL D ISTRICTS The City has created a number of “City of Muskego Tax Incremental Districts” to encourage development of the City tax base, efficient use of land, buildings and public improvements and private investment in various specific areas of the City. Property taxes of each specific District generated in future years, measured by the increment in value of the property in the district over the base year, will be used to retire the interest and principal of the related debt incurred to finance the project costs. Below is a summary of each district: 1. District No. 8 was created in 2000 and is for the development of the City’s downtown area. Project costs were originally estimated at $2.7 million. In September, 2005 the City amended the project plan to include an additional $855,000 in project costs. 2. District No. 9 was created in 2003 for development in the City’s Community Development Authority Redevelopment District No. 1. Project costs were estimated at $1.5 million and have been financed with a $2.0 million Community Development Lease Revenue Bond. 3. District No. 10 was created in 2007 and is a mixed use tax increment district comprised of the east and west sides of Moorland Road from College Avenue on the north to one-half mile south. Project costs were estimated at $8.3 million and have been financed with $9.25 million bonds. 4. District No. 11 was created in 2016 and is a mixed use tax increment district located along Janesville Road near the northeast corner of Lannon Road. Project costs were estimated at $2.9 million and have been financed with $1.6 million of Taxable General Obligation Promissory Notes. 85 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 43 NOTE II – RECONCILIATION OF G OVERNMENT–WIDE AND FUND F INANCIAL STATEMENTS EXPLANATION OF CERTAIN D IFFERENCES B ETWEEN THE G OVERNMENTAL FUND B ALANCE S HEET AND THE S TATEMENT OF N ET P OSITION The governmental fund balance sheet includes reconciliation between fund balance – total governmental funds and net position – governmental activities as reported in the government-wide statement of net position. The details of this reconciliation include the following items. Capital assets used in governmental funds are not financial resources and, therefore, are not reported in the funds. Land 5,722,103$ Intangibles 715,392 Construction in progress 437,536 Land improvements 4,337,081 Buildings 32,870,539 Machinery and equipment 10,591,057 Library collection 4,071,099 Infrastructure 88,797,671 Less: Accumulated depreciation (66,761,126) Adjustment for Capital Assets 80,781,352$ Long-term liabilities applicable to the City’s governmental activities are not due and payable in the current period, and accordingly, are not reported as fund liabilities. Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. All liabilities–both current and long-term–are reported in the statement of net position. Bonds and notes payable $ 38,083,237 Compensated absences 2,337,883 Unamortized debt premium 927,327 Accrued interest 226,932 Combined Adjustment for Long-Term Liabilities $ 41,575,379 86 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 44 NOTE III – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. BUDGETARY I NFORMATION Budgetary information is derived from the annual operating budget and is presented using the same basis of accounting for each fund as described in Note I.C. A budget has been adopted for the General Fund, certain Special Revenue Funds, Debt Service Funds, certain Capital Project Funds, the Water Utility and Sewer Utility. Budgets have not been formally adopted for the Federated Library System Fund, and Fiduciary Funds. Wisconsin Statute 65.90 requires that an annual budget be adopted for all funds. Appropriations lapse at year end unless specifically carried over by the Common Council. There were no carryovers to the following year. Budgetary control is exercised at the fund level for all funds. B. EXCESS E XPENDITURES OVER APPROPRIATIONS Expenditures exceeded appropriations due to the unbudgeted costs in the following funds. The excess expenditures were covered by additional revenues received or use of available fund balance. Fund Budgeted Expenditures Actual Expenditures Excess Expenditures Over Budget Debt Service Fund Debt Service Budget 5,801,803$ 9,355,082$ 3,553,279$ Special Revenue Funds Land Open Space Conservation 159,858 177,624 17,766 Capital Projects Fund Capital Budget - 90,388 90,388 The City controls expenditures at the department and function level. Some individual departments/functions experienced expenditures which exceeded appropriations. The detail of those items can be found in the City’s year end budget to actual schedules. C. L IMITATIONS ON THE CITY’S TAX LEVY Wisconsin law limits the City’s future tax levies. Generally, the City is limited to its prior tax levy dollar amount (excluding TIF Districts), increased by the greater of the percentage change in the City’s equalized value due to new construction or zero percent. Changes in debt service from one year to the next are generally exempt from this limit with certain exceptions. The City is required to reduce its allowable levy by the estimated amount of fee revenue it collects for certain services, if those services were funded in 2013 by the property tax levy. Levies can be increased above the allowable limits if the amount is approved by referendum. 87 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 45 NOTE IV – DETAILED N OTES ON ALL F UNDS A. DEPOSITS AND I NVESTMENTS The City’s cash and investments at year end were comprised of the following: Carrying Bank Associated Value Balance Risks Deposits with banks 71,933,148$ 69,534,046$ Custodial Credit Risk LGIP 45,799 45,799 Credit Risk Petty cash 1,765 - None Total Cash and Investments 71,980,712$ 69,579,845$ Reconciliation to financial statements Per statement of net position Unrestricted cash and investments 27,933,754$ Temporary investments 896,815 Restricted cash and investments 11,816,261 Per statement of fiduciary net position Library expansion trust 25,845 Volunteer Fire-Co. Scholarship 186,864 Custodial 31,121,173 Total Cash and Investments 71,980,712$ Deposits in each local and area bank are insured by the FDIC in the amount of $250,000 for time and savings accounts (including NOW accounts) and $250,000 for demand deposit accounts (interest-bearing and noninterest-bearing). In addition, if deposits are held in an institution outside of the state in which the government is located, insured amounts are further limited to a total of $250,000 for the combined amount of all deposit accounts. Bank accounts are also insured by the State Deposit Guarantee Fund in the amount of $400,000. However, due to the nature of this fund, recovery of material principal losses may not be significant to individual municipalities. This coverage has been considered in computing custodial credit risk. 88 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 46 NOTE IV – DETAILED N OTES ON ALL F UNDS (continued) A. DEPOSITS AND I NVESTMENTS (continued) Custodial Credit Risk Deposits Custodial credit risk is the risk that in the event of a financial institution failure, the City’s deposits may not be returned to the City. The City does not have any deposits exposed to custodial credit risk. Investments For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City does not have any investments exposed to custodial credit risk. Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligation. The City had investments in the external Wisconsin Local Government Investment Pool and Wisconsin Investment Series Cooperative, which are not rated. See Note I.D.1. for further information on deposit and investment policies. 89 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 47 NOTE IV – DETAILED N OTES ON ALL F UNDS (continued) B. RESTRICTED A SSETS The following represent the balances of the restricted assets: Liabilities Payable from Restricted Restricted Assets and Restricted Assets Other Liabilities Net Position Sewer Utility Cash and investments Equipment replacement 937,211$ -$ 937,211$ Reserve capacity assessments 9,307,058 - 9,307,058 RCA assessments receivable 1,025,971 - 1,025,971 Net pension asset 109,944 - 109,944 Total Sewer Utility 11,380,184 - 11,380,184 Water Utility Cash and investments Redemption account 5,258 13,791 - Reserve account - 266,805 - (1) Depreciation account 468,765 - 468,765 Construction funds - 72,145 - (1) Reserve capacity assessments 1,097,969 - 1,097,969 WCA assessments receivable 182,026 11,308 170,718 Net pension asset 64,057 - 64,057 Total Water Utility 1,818,075 364,049 1,801,509 Total Business-type Activities 13,198,259$ 364,049$ 13,181,693$ (1) – Reserve accounts and Construction funds consist of bond proceeds and are not a component of net position. Below are descriptions of restricted assets: Long Term Debt Accounts Redemption – Used to segregate resources accumulated for debt service payments over the next twelve months. Reserve – Used to report resources set aside to make up potential future deficiencies in the redemption account. Depreciation – Used to report resources set aside to fund plant renewals and replacement or make up potential future deficiencies in the redemption account. Construction – Used to report proceeds of revenue bond issuances that are restricted for use in construction. 90 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 48 NOTE IV – D ETAILED N OTES ON ALL FUNDS (continued) B. RESTRICTED A SSETS (continued) Water and Sewer Capacity Assessments Account The water and sewer utilities established funds to account for capacity assessment levies that are restricted to finance certain system capital costs or related debt service costs. Equipment Replacement Account The sewer utility established an equipment replacement account to be used for significant mechanical equipment replacement as required by the Wisconsin Department of Natural Resources and debt covenants. Net Pension Asset Restricted assets have been reported in connection with the net pension asset balance since this balance must be used to fund employee benefits. C. R ECEIVABLES Governmental funds report unavailable or unearned revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Property taxes levied for the subsequent year are not earned and cannot be used to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components for unavailable revenue and unearned revenue reported in the governmental funds were as follows: Unearned Unavailable Total Property taxes receivable for subsequent year 15,191,834$ -$ 15,191,834$ Total Unearned/Unavailable Revenue for Governmental Funds $ 15,191,834 $ - $ 15,191,834 Significantly all governmental activities receivables are expected to be collected within one year. 91 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 49 NOTE IV – D ETAILED N OTES ON ALL FUNDS (continued) D. C APITAL ASSETS Capital asset activity for the year ended December 31, 2020 was as follows: Governmental Activities Beginning Ending Balance Additions Deletions Balance Capital assets not being depreciated/amortized Land $ 5,722,103 $ - $ - $ 5,722,103 Construction in progress 378,863 166,368 107,695 437,536 Total capital assets not being depreciated/amortized 6,100,966 166,368 107,695 6,159,639 Capital assets being depreciated/amortized Intangibles 652,782 62,610 - 715,392 Land improvements 4,337,081 - - 4,337,081 Buildings 32,694,551 175,988 - 32,870,539 Machinery and equipment 10,123,402 642,751 175,096 10,591,057 Library collection 3,887,691 183,408 - 4,071,099 Infrastructure 86,380,251 2,417,420 - 88,797,671 Total Capital Assets Being Depreciated/Amortized 138,075,758 3,482,177 175,096 141,382,839 Less: Accumulated depreciation/amortization for Intangibles (537,349) (49,241) - (586,590) Land improvements (2,829,239) (148,415) - (2,977,654) Buildings (7,492,647) (674,191) - (8,166,838) Machinery and equipment (7,091,970) (609,924) 144,007 (7,557,887) Library collection (3,197,018) (153,530) - (3,350,548) Infrastructure (41,801,051) (2,320,558) - (44,121,609) Total Accumulated Depreciation/Amortization (62,949,274) (3,955,859) 144,007 (66,761,126) Net Capital Assets Being Depreciated/Amortized 75,126,484 (473,682) 31,089 74,621,713 Total Governmental Activities Capital Assets, Net of Depreciation/Amortization 81,227,450$ (307,314)$ 138,784$ 80,781,352$ 92 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 50 NOTE IV – D ETAILED N OTES ON ALL FUNDS (continued) D.CAPITAL ASSETS (continued) Depreciation/Amortization expense was charged to functions as follows: Governmental Activities General government $ 307,453 Public safety 453,283 Public works, which includes the depreciation of infrastructure 2,364,728 Conservation and development 198,442 Education and recreation 631,953 Total Governmental Activities Depreciation/Amortization Expense $ 3,955,859 Business Type Activities Beginning Ending Balance Additions Deletions Balance Capital Assets not being depreciated Land and easements $ 308,948 $ - $ - $ 308,948 Construction in progress 70,122 56,139 - 126,261 Total Capital Assets Not Being Depreciated 379,070 56,139 - 435,209 Capital Assets being depreciated Buildings and improvements 21,334,183 - - 21,334,183 Improvements other than buildings 80,270,142 1,774,658 39,220 82,005,580 Machinery and equipment 5,179,541 287,705 1,402 5,465,844 Total Capital Assets Being Depreciated 106,783,866 2,062,363 40,622 108,805,607 Less: Accumulated Depreciation Buildings and improvements (13,847,992) (282,779) - (14,130,771) Improvements other than buildings (21,582,782) (1,033,916) - (22,616,698) Machinery and equipment (4,043,929) (212,671) 37,815 (4,218,785) Total Accumulated Depreciation (39,474,703) (1,529,366) 37,815 (40,966,254) Net Capital Assets Being Depreciated 67,309,163 532,997 2,807 67,839,353 Total Business Activities Capital Assets, Net of Depreciation $ 67,688,233 $ 589,136 $ 2,807 $ 68,274,562 93 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 51 NOTE IV – D ETAILED N OTES ON ALL FUNDS (continued) D. CAPITAL ASSETS (continued) Depreciation expense was charged to functions as follows: Sewer utility $ 627,679 Water utility 870,065 Total Business-Type Activities Depreciation Expense 1,497,744$ Depreciation expense may be different from business-type activity accumulated depreciation additions because of joint metering, salvage, cost of removal, internal allocations, or costs associated with the disposal of assets. E. INTERFUND T RANSFERS Transfers The following is a schedule of interfund transfers: Fund Transferred To Fund Transferred From Amount General Fund Water Utility $ 474,627 Nonmajor Governmental Funds General Fund 202,052 Special Revenue Fund - Tax Increment District Nonmajor Governmental Funds 755 Debt Service Fund General Fund 411 General Fund Nonmajor Governmental Funds 56,753 Debt Service Fund Special Revenue Fund - Tax Increment District Fund 2,385,883 Debt Service Fund Nonmajor Governmental Funds 100,000 Subtotal - Fund Financial Statements 3,870,482 Less: Fund eliminations (3,395,855) Total Transfers - Government-Wide Statement of Activities $ 474,627 Nonmajor Governmental Funds Nonmajor Governmental Funds 650,000 Generally, transfers are used to (1) move revenues from the fund that collects them to the fund that the budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund, and (3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. 94 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 52 NOTE IV – DETAILED N OTES ON ALL F UNDS (continued) F. L ONG-TERM O BLIGATIONS General Obligation Debt Long-term obligations activity for the year ended December 31, 2020 was as follows: Amounts Beginning Ending Due Within Balance Increases Decreases Balance One Year GOVERNMENTAL ACTIVITIES Bonds and Notes Payable General obligation debt 41,002,503$ 3,414,000$ 7,657,286$ 36,759,217$ 2,895,083$ General obligation notes from direct borrowings and direct placements 1,473,222 - 149,202 1,324,020 134,106 Unamortized debt premium 1,024,875 - 97,548 927,327 - Total Bonds and Notes Payable 43,500,600 3,414,000 7,904,037 39,010,564 3,029,189 Other Liabilities Accrued compensted absences - vacation and sick leave 2,223,845 213,049 99,011 2,337,883 100,000 Net pension liability 1,919,070 - 1,919,070 - - Net OPEB Liability - LRLIF 314,313 206,582 - 520,895 - Total Other Liabilities 2,538,158 419,631 99,011 2,858,778 100,000 Total Governmental Activities Long-Term Liabilities 47,957,828$ 3,833,631$ 9,922,117$ 41,869,343$ 3,129,189$ BUSINESS-TYPE ACTIVITIES Bonds and Notes Payable General obligation debt 2,447,498 - 212,712 2,234,786 241,915 Direct Debt - WI Safe Drinking Water Loan 273,712 - 24,243 249,469 24,890 Unamortized debt premium 69,427 - 14,369 55,058 - Total Bonds and Notes Payable 2,790,637 - 251,324 2,539,313 266,805 Other Liabilities Net pension liability 193,397 - 193,397 - - Net OPEB Liability - LRLIF 65,487 41,280 - 106,767 - Total Other Liabilities 258,884 41,280 193,397 106,767 - Total Business-type Activities Long-Term Liabilities 3,049,521$ 41,280$ 444,721$ 2,646,080$ 266,805$ All general obligation notes and bonds payable are backed by the full faith and credit of the City. Notes and bonds in the governmental funds will be retired by future property tax levies or tax increments accumulated by the debt service fund. Business-type activities debt is payable by revenues from user fees of those funds or, if the revenues are not sufficient, by future tax levies. In accordance with Wisconsin Statutes, total general obligation indebtedness of the City may not exceed 5% of the equalized value of taxable property within the City's jurisdiction. The debt limit as of December 31, 2020, was $173,994,990. Total general obligation debt outstanding at year end was $40,318,023. 95 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 53 NOTE IV – DETAILED N OTES ON ALL F UNDS (continued) F. L ONG-TERM OBLIGATIONS (continued) General Obligation Debt Date of Interest Principal Interest Original Balance Issue Rate Payable Payable Amount 12/31/20 Governmental Activities General Obligation Debt Refunding Debt 11/13/20 0.60-0.80% 4/1/21-24 4/1 & 10/1 3,414,000$ 3,414,000$ Refunding Debt 10/22/13 2.00-4.00 4/1/14-31 4/1 & 10/1 11,805,000 10,706,375 Promissory notes 10/22/13 2.00-3.125 4/1/14-23 4/1 & 10/1 885,000 458,842 Refunding Debt 11/26/13 1.00-3.00 4/1/14-22 4/1 & 10/1 9,550,000 400,000 Direct Borrowing Pomissory notes 12/31/14 N/A 2/15/15-22 - 76,082 19,022 Direct Debt Promissory notes 7/31/19 3.75 3/15/20-29 3/15 1,444,690 1,304,998 General obligation debt 8/01/18 2.00-4.00 6/1/19-38 6/1 & 12/1 22,780,000 21,780,000 Total Governmental Activities - General Obligation Debt 38,083,237$ Date of Interest Principal Interest Original Balance Issue Rate Payable Payable Amount 12/31/20 Business-type activities General obligation debt 10/22/13 2.00-4.00% 4/1/14-31 4/1 & 10/1 820,000$ 743,626$ General obligation debt 10/22/13 2.00-3.125 4/1/14-23 4/1 & 10/1 440,000 291,160 General obligation debt 8/01/18 2.00-4.00 6/1/19-28 6/1 & 12/1 1,450,000 1,200,000 2,234,786$ Total Business-Type Activities Debt service requirements to maturity are as follows: Principal Interest Principal Interest Principal Interest 2021 $ 2,895,083 $ 1,244,850 $ 134,106 $ 48,937 $ 241,915 $ 74,049 2022 2,593,148 1,190,516 138,779 44,265 280,847 67,964 2023 2,075,361 1,137,011 134,116 39,418 290,650 59,939 2024 2,218,750 1,081,623 139,051 34,482 213,250 49,458 2025 1,358,500 1,026,400 144,360 29,174 221,500 41,513 2026-2030 8,203,750 4,188,161 633,608 60,527 896,250 88,302 2031-2035 10,254,625 2,355,064 - - 90,375 1,820 2036-2038 7,160,000 429,828 - - - - Totals $ 36,759,217 $ 12,653,453 $ 1,324,020 $ 256,803 $ 2,234,786 $ 383,046 Business Type Long-Term DebtLong-Term Debt Governmental Type Direct Borrowing Long-Term Debt 96 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 54 NOTE IV – DETAILED N OTES ON ALL F UNDS (continued) F. LONG-TERM O BLIGATIONS (continued) Other Debt Information Estimated payments of compensated absences are not included in the debt service requirement schedules. The compensated absences liability attributable to governmental activities will be primarily liquidated by the general fund. Date of Interest Principal Interest Original Balance Issue Rate Payable Payable Amount 12/31/20 Business-type activities WI Safe Drinking Water Direct Loan 11/25/09 2.668% 5/1/10-29 5/1&11/1 453,974$ 249,469$ Total Business-Type Activities 249,469$ Debt service requirements to maturity are as follows: Principal Interest 2021 24,890$ 6,324$ 2022 25,554 5,651 2023 26,236 4,960 2024 26,936 4,251 2025 27,655 3,522 2026-2029 118,197 6,412 249,469$ 31,118$ Long-Term Debt Business-type Activities The City’s outstanding revenue bonds from direct borrowings and/or direct placement related to business type activities of $249,469 contain provisions that in an event of default, outstanding amounts are recoverable by the State by deducting those amounts from any State payments due the City, adding a special charge to the amount of taxes apportioned to and levied upon the county in which the City is located, or to collect user fees from the operations of the City’s water and sewer system. Current Refunding On November 13, 2020, the City issued a General Obligation Refunding Bonds in the amount of $3,414,000 with an average yield of 0.7332% to refund $3,375,000 of outstanding General Obligation Refunding Debt. The cash flow requirements on the refunded debt prior to the current refunding was $3,654,031 from 2020 through 2024. The cash flow requirements on the 2020 refunding bonds are $3,462,413 from 2021 through 2024. The current refunding resulted in an economic gain (difference between the present values of the debt service payments on the old and new debt) of $194,618. 97 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 55 NOTE IV – DETAILED N OTES ON ALL F UNDS (continued) G. NET P OSITION / F UND B ALANCES Governmental Activities Net position reported on the government wide statement of net position at December 31, 2020 includes the following: Net investment in capital assets Land $ 5,722,103 Other capital assets, net of accumulated depreciation 74,621,713 Construction in progress 437,536 Less: related long-term debt outstanding (38,083,237) Less: unamortized debt premium (927,327) Plus: unspent capital related debt proceeds 1,157,932 Plus: non-capital debt proceeds 1,241,671 Total Net investment in capital assets 44,170,391 Resticted for: Tax Increment District purposes 1,046,402 Library 37,335 Big Muskego Lake - Bass Bay Protection and Rehabilitation District 185,589 Revolving loans 598,321 Landfill 3,362,328 Other debt service 1,322,401 Pensions 1,769,530 Total Restricted Net Position 8,321,906 Unrestricted 9,740,737 Total Governmental Activities Net Position $ 62,233,034 98 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 56 NOTE IV – DETAILED N OTES ON ALL F UNDS (continued) G. NET P OSITION / F UND B ALANCES (continued) Governmental Funds Governmental fund balances reported on the fund financial statements at December 31, 2020 include the following: Nonspendable Major Fund General Fund Prepaid items 19,722$ Total Nonspendable Fund Balance 19,722$ Restricted Major Funds Debt Service Fund 1,549,333$ Capital Budget Fund 1,157,693 Tax Increment District Funds 1,042,375 Total Major Funds 3,749,401 Nonmajor Fund Special Revenue Fund Landfill Fund 3,362,328 Revolving Loan Fund 598,321 Big Muskego Lake - Bass Bay Protection and Rehabilitation District 185,589 Federated Library System Fund 37,335 Capital Projects Fund Tax Increment District Fund 4,027 Total Nonmajor Funds 4,187,600 Total Restricted Fund Balance 7,937,001$ 99 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 57 NOTE IV – DETAILED N OTES ON ALL F UNDS (continued) G. N ET POSITION / FUND B ALANCES (continued) Governmental Funds (continued) Committed Nonmajor Funds Special Revenue Funds Park Fund 617,403$ Refuse / Recycling Fund 1,195,596 Landfill Standing Committee Fund 116,835 Stormwater Management Fund 195,708 Well Testing Reserve Fund 709,367 Land Open Space Conservation Fund 414,398 Compensated Absences Fund 2,337,883 Capital Improvements Fund 688,939 Total Nonmajor Funds 6,276,129 Total Committed Fund Balance 6,276,129$ Assigned Nonmajor Fund Capital Projects Fund Capital Equipment Fund 822,728$ Unassigned Major Fund General Fund 7,740,453$ 100 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 58 NOTE IV – DETAILED N OTES ON ALL F UNDS (continued) G. NET P OSITION / F UND B ALANCES (continued) Net position reported on the government wide statement of net position at December 31, 2020 includes the following: Business-type Activities Net Investment in Capital Assets Land and easements $ 308,948 Other capital assets, net of accumulated depreciation 67,839,353 Construction in progress 126,261 Less: related long-term debt outstanding (2,484,255) Less: unamortized debt premium (55,058) Total Net Investment in Capital Assets 65,735,249 Resticted for: Depreciation and equipment replacement funds 1,405,976 Net Pension Asset 174,001 Water and sewer capacity assessment funds 11,601,716 Total Restricted Net Position 13,181,693 Unrestricted 7,027,856 Total Business-type Activities Net Position $ 85,944,798 101 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 59 NOTE IV – DETAILED N OTES ON ALL F UNDS (continued) H. COMPONENT U NIT This report contains the Muskego Community Development Authority (Authority), which is included as a component unit. In addition to the basic financial statements and the preceding notes to financial statements, which apply, the following additional disclosures are considered necessary for a fair presentation. a. Basis of Accounting/Measurement Focus The Authority follows the full accrual basis of accounting and the flow of economic resources measurement focus. b. Deposits and Investments At year-end, the carrying amount of the Authority’s deposits was $190,355 and the bank balance was $190,355. The Authority does not have any deposits exposed to custodial credit risk. c. Cash and Cash Equivalents The Authority considers all highly liquid investments with an initial maturity of three months or less when acquired to be cash equivalents. d. Capital Assets Capital assets used by the Authority are those assets owned by the City of Muskego. Consequently, the Authority does not report any capital assets. e. Employee Retirement System The Muskego Community Development Authority does not participate in a pension plan. 102 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 60 NOTE V – OTHER I NFORMATION A. E MPLOYEES’ RETIREMENT SYSTEM General Information About the Pension Plan Plan description. The WRS is a cost-sharing multiple-employer defined benefit pension plan. WRS benefits and other plan provisions are established by Chapter 40 of the Wisconsin Statutes. Benefit terms may only be modified by the legislature. The retirement system is administered by the Wisconsin Department of Employee Trust Funds (ETF). The system provides coverage to all eligible State of Wisconsin, local government and other public employees. All employees, initially employed by a participating WRS employer on or after July 1, 2011, and expected to work at least 1,200 hours a year (880 hours for teachers and school district educational support employees) and expected to be employed for at least one year from employee’s date of hire are eligible to participate in the WRS. ETF issues a standalone Comprehensive Annual Financial Report, which can be found at http://etf.wi.gov/about-etf/reports-and-studies/financial-reports-and-statements. Vesting. For employees beginning participation on or after January 1, 1990, and no longer actively employed on or after April 24, 1998, creditable service in each of five years is required for eligibility for a retirement annuity. Participants employed prior to 1990 and on or after April 24, 1998, and prior to July 1, 2011, are immediately vested. Participants who initially became WRS eligible on or after July 1, 2011, must have five years of creditable service to be vested. Benefits provided. Employees who retire at or after age 65 (54 for protective occupation employees, 62 for elected officials and executive service retirement plan participants, if hired on or before 12/31/2016) are entitled to receive a retirement benefit based on a formula factor, their final average earnings, and creditable service. Final average earnings is the average of the participant's three highest annual earnings periods. Creditable service includes current service and prior service for which a participant received earnings and made contributions as required. Creditable service also includes creditable military service. The retirement benefit will be calculated as a money purchase benefit based on the employee’s contributions plus matching employer’s contributions, with interest, if that benefit is higher than the formula benefit. Employees may retire at age 55 (50 for protective occupation employees) and receive reduced benefits. Employees terminating covered employment before becoming eligible for a retirement benefit may withdraw their contributions and forfeit all rights to any subsequent benefits. The WRS also provides death and disability benefits for employees. 103 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 61 NOTE V – OTHER I NFORMATION (continued) A. E MPLOYEES’ RETIREMENT SYSTEM (continued) Post-Retirement adjustments. The Employee Trust Funds Board may periodically adjust annuity payments from the retirement system based on annual investment performance in accordance with s. 40.27, Wis. Stat. An increase (or decrease) in annuity payments may result when investment gains (losses), together with other actuarial experience factors, create a surplus (shortfall) in the reserves, as determined by the system’s consulting actuary. Annuity increases are not based on cost of living or other similar factors. For Core annuities, decreases may be applied only to previously granted increases. By law, Core annuities cannot be reduced to an amount below the original, guaranteed amount (the “floor”) set at retirement. The Core and Variable annuity adjustments granted during recent years are as follows: Year Core Fund Adjustment Variable Fund Adjustment 2010 (1.3)% 22% 2011 (1.2) 11 2012 (7.0) (7) 2013 (9.6) 9 2014 2015 2016 4.7 2.9 0.5 25 2 (5) 2017 2.0 4 2018 2019 2.4 0.0 17 10 Contributions. Required contributions are determined by an annual actuarial valuation in accordance with Chapter 40 of the Wisconsin Statutes. The employee required contribution is one-half of the actuarially determined contribution rate for general category employees, including teachers, and Executives and Elected Officials. Required contributions for protective employees are the same rate as general employees. Employers are required to contribute the remainder of the actuarially determined contribution rate. The employer may not pay the employee required contribution unless provided for by an existing collective bargaining agreement. During the reporting period, the WRS recognized $635,901 in contributions from the City. Contribution rates for the plan year reported as of December 31, 2020: Employee Employer General (Executives & Elected Officials) 6.55% 6.55% Protective with Social Security 6.55% 10.55% Protective without Social Security 6.55% 14.95% 104 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 62 NOTE V – OTHER I NFORMATION (continued) A. E MPLOYEES’ RETIREMENT SYSTEM (continued) Pension Liability/(Asset), Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At December 31, 2019, the City reported an asset of $(1,943,531) for its proportionate share of the net pension asset. The net pension asset was measured as of December 31, 2019, and the total pension liability used to calculate the net pension asset was determined by an actuarial valuation as of December 31, 2018 rolled forward to December 31, 2019. No material changes in assumptions or benefit terms occurred between the actuarial valuation date and the measurement date. The city’s proportion of the net pension asset was based on the city’s share of contributions to the pension plan relative to the contributions of all participating employers. At December 31, 2019, the City of Muskego’s proportion was 0.06027470%, which was an increase of 0.00089713% from its proportion measured as of December 31, 2018. For the year ended December 31, 2020, the City recognized pension expense of $681,842. At December 31, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience $ 3,689,267 $ 1,846,231 Changes in actuarial assumptions 151,452 - Net differences between projected and actual earnings on pension plan investments - 3,973,270 Changes in proportion and differences between employer contributions and proportionate share of contributions 23,207 - Employer contributions subsequent to the measurement date 709,006 - Total $ 4,572,932 $ 5,819,501 $709,006 reported as deferred outflows related to pension resulting from the WRS Employer’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability (asset) in the year ended December 31, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized in pension expense as follows: Year ended June 30: Deferred Outflows of Resources and Deferred Inflows of Resources (net) 2021 $ (576,108) 2022 (431,246) 2023 73,063 2024 (1,021,284) 105 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 63 NOTE V – OTHER INFORMATION (continued) A. E MPLOYEES’ RETIREMENT SYSTEM (continued) Actuarial assumptions. The total pension liability in the December 31, 2019, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Actuarial Valuation Date: December 31, 2018 Measurement Date of Net Pension Liability (Asset) December 31, 2019 Actuarial Cost Method: Entry Age Asset Valuation Method: Fair Value Long-Term Expected Rate of Return: 7.0% Discount Rate: 7.0% Salary Increases: Inflation Seniority/Merit 3.0% 0.1% - 5.6% Mortality: Wisconsin 2018 Mortality Table Post-retirement Adjustments* 1.9% *No post-retirement adjustment is guaranteed. Actual adjustments are based on recognized investment return, actuarial experience and other factors. 1.9% is the assumed annual adjustment based on the investment return assumption and the post-retirement discount rate. Starting with 2015, this item includes the impact of known Market Recognition Account deferred gains/losses on the liability for dividend payments. Actuarial assumptions are based upon an experience study conducted in 2018 that covered a three-year period from January 1, 2015 to December 31, 2017. The Total Pension Liability for December 31, 2019, is based upon a roll-forward of the liability calculated from the December 31, 2018 actuarial valuation. 106 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 64 NOTE V – OTHER I NFORMATION (continued) A. E MPLOYEES’ RETIREMENT SYSTEM (continued) Long-term expected Return on Plan Assets. The long-term expected rate of return on pension 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 pension plan 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. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Description Current Asset Allocation % Long-Term Expected Normal Rate of Return % Long-Term Expected Real Rate of Return % Core Fund Asset Class: Global Equities 49 % 8.0 % 5.1 % Fixed Income 24.5 4.9 2.1 Inflation Sensitive Assets 15.5 4.0 1.2 Real Estate 9 6.3 3.5 Private Equity/Debt 8 10.6 7.6 Multi-Asset 4 6.9 4.0 Total Core Fund 110 % 7.5 % 4.6 % Variable Fund Asset Class: US Equities 70 7.5 4.6 International Equities 30 8.2 5.3 Total Variable Fund 100 % 7.8 % 4.9 % New England Pension Consultants Long Term US CPI (Inflation) Forecast 2.5%. Asset Allocations are managed within established ranges, target percentages may differ from actual monthly allocations. Single discount rate. A single discount rate of 7.00% was used to measure the Total Pension Liability for the current and prior year. This single discount rate is based on the expected rate of return on pension plan investments of 7.00% and a municipal bond rate of 2.75% (Source: Fixed-income municipal bonds with 20 years to maturity that include only federally tax-exempt municipal bonds as reported in Fidelity Index’s “20- year Municipal GO AA Index” as of December 31, 2019. In describing this index, Fidelity notes that the Municipal Curves are constructed using option-adjusted analytics of a diverse population of over 10,000 tax-exempt securities.). Because of the unique structure of WRS, the 7.00% expected rate of return implies that a dividend of approximately 1.9% will always be paid. For purposes of the single discount rate, it was assumed that the dividend would always be paid. The projection of cash flows used to determine this single discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments (including expected dividends) of current plan members. Therefore, the municipal bond rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 107 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 65 NOTE V – OTHER I NFORMATION (continued) A. E MPLOYEES’ R ETIREMENT SYSTEM (continued) Sensitivity of the City’s proportionate share of the net pension liability/(asset) to changes in the discount rate. The following presents the City’s proportionate share of the Net Pension Liability (Asset) calculated using the discount rate of 7.00 percent, as well as what the City’s proportionate share of the Net Pension Liability (Asset) would be if it were calculated using a discount rate that is 1-percentage-point lower (6.00 percent) or 1-percentage-point higher (8.00 percent) than the current rate: 1% Decrease to Discount Rate (6.0%) Current Single Discount Rate Assumption (7.0%) 1% Increase To Discount Rate (8.0%) City of Muskego’s proportionate share of the net pension liability (asset) $ 5,004,940 $ (1,943,531) ($ 7,138,313) Pension plan fiduciary net position. Detailed information about the pension plan’s fiduciary net position is available in separately issued financial statements available at http://etf.wi.gov/about-etf/reports-and-studies/financial-reports-and-statements. B. RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to, or destruction of assets; errors and omissions; workers compensation; health care of its employees; and environmental damages. All of these risks are covered through the purchase of commercial insurance, with minimal deductibles. Settled claims have not exceeded the commercial coverage in any of the past three years. There were no significant reductions in coverage compared to the prior year. C. Commitment and Contingencies Claims and judgments are recorded as liabilities if all the conditions of Governmental Accounting Standards Board pronouncements are met. The liability and expenditure for claims and judgments are only reported in the governmental funds if it has matured. Claims and judgments are recorded in the government-wide statements and proprietary funds as expenses when the related liabilities are incurred. From time to time, the City is party to various pending claims and legal proceedings. Although the outcome of such matters cannot be forecasted with certainty, it is the opinion of management that the likelihood is remote that any such claims or proceedings will have a material adverse effect on the City’s financial position or results of operations. The City has received federal and state grants for specific purposes that are subject to review and audit by the grantor agencies. Such audits could lead to the requests for reimbursements to the grantor agency for expenditures disallowed under terms of the grants. Management believes such disallowances, if any, would be immaterial. 108 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 66 NOTE V – OTHER I NFORMATION (continued) C. COMMITMENTS AND C ONTINGENCIES (continued) The City has active construction projects as of December 31, 2020. Work that has been completed on these projects but not yet paid for (including contract retainages) is reflected as accounts payable and expenditures. Environmental Protection Agency In 1983, the Environmental Protection Agency placed the Muskego Sanitary Landfill on the National Superfund list. This prompted an investigation into alleged ground water contamination emitting from the site. As a result of the initial investigation, the Environmental Protection Agency named the City of Muskego as one of approximately 30 potentially responsible parties, in the owner/operator group. Another potentially responsible party, Waste Management of Wisconsin, Inc., has headed the negotiations with the EPA relative to the preparation of a Remedial Investigation/Feasibility Study. The City of Muskego is not a party to this stipulation regarding payment for this Study, which has not yet been completed. At December 31, 2020, the nature and extent of a potential liability for payment for the study as well as payment for possible clean-up costs is unknown. The City has tendered the defense to its insurance carriers but has not been advised as to its carrier’s position with respect to the potential liability. In addition, the City has received Notices of Claims and Claims from other property owners alleging the City's involvement with ground water contamination. The Notices have been forwarded to the City's insurance carrier and the questions of coverage, liability and damages are, as yet, unresolved. The City has an agreement with Waste Management wherein Waste Management shall indemnify the City from any potential Superfund liability. D. O THER P OST-EMPLOYMENT B ENEFITS Local Retiree Life Insurance Fund (LRLIF) Plan description. The LRLIF is a multiple-employer defined benefit OPEB plan. LRLIF benefits and other plan provisions are established by Chapter 40 of the Wisconsin Statutes. The Wisconsin Department of Employee Trust Funds (ETF) and the Group Insurance Board have statutory authority for program administration and oversight. The plan provides post-employment life insurance benefits for all eligible employees. OPEB Plan Fiduciary Net Position. ETF issues a standalone Comprehensive Annual Financial Report, which can be found at http://etf.wi.gov/publications/cafr.htm. Additionally, ETF issued a standalone Retiree Life Insurance Financial Report, which can be found at https://etfonline.wi.gov/ETFGASBPublicWeb/gasb75Local.do. Benefits provided. The LRLIF plan provides fully paid up life insurance benefits for post-age 64 retired employees and pre-65 retirees who pay for their coverage. 109 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 67 NOTE V – OTHER I NFORMATION (continued) D. OTHER POST-EMPLOYMENT B ENEFITS (continued) Local Retiree Life Insurance Fund (LRLIF) (cont.) Contributions. The Group Insurance Board approves contribution rates annually, based on recommendations from the insurance carrier. Recommended rates are based on an annual valuation, taking into consideration an estimate of the present value of future benefits and the present value of future contributions. A portion of employer contributions made during a member's working lifetime funds a post-retirement benefit. Employers are required to pay the following contribution based on employee contributions for active members to provide them with Basic Coverage after age 65. There are no employer contributions required for pre-age 65 annuitant coverage. If a member retires prior to age 65, they must continue paying the employee premiums until age 65 in order to be eligible for the benefit after age 65. Contribution rates for the plan year reported as December 31, 2020 of are: Coverage Type Employer Contribution 50% Post Retirement Coverage 40% of employee contribution 25% Post Retirement Coverage 20% of employee contribution Employee contributions are based upon nine age bands through age 69 and an additional eight age bands for those age 70 and over. Participating employees must pay monthly contribution rates per $1,000 of coverage until the age of 65 (age 70 if active). The member contribution rates in effect for the plan year ended December 31, 2019 are as listed below: Attained Age Basic Supplemental Under 30 $0.05 $0.05 30-34 0.06 0.06 34-39 0.07 0.07 40-44 0.08 0.08 45-49 0.12 0.12 50-54 0.22 0.22 55-59 0.39 0.39 60-64 0.49 0.49 65-69 0.57 0.57 Life Insurance Member Contribution Rates For the Plan Year Ended December 31, 2019 During the reporting period, the LRLIF recognized $2,664 in contributions from the employer. 110 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 68 NOTE V – OTHER I NFORMATION (continued) D. OTHER POST-EMPLOYMENT B ENEFITS (continued) Local Retiree Life Insurance Fund (LRLIF) (cont.) OPEB Liability, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEBs At December 31, 2020 the City reported a liability of $627,662 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of December 31, 2019, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of December 31, 2018 rolled forward to December 31, 2019. No material changes in assumptions or benefit terms occurred between the actuarial valuation date and the measurement date. The City’s proportion of the net OPEB liability was based on the City’s share of contributions to the OPEB plan relative to the contributions of all participating employers. At December 31, 2019, the City’s proportion was 0.14740100%, which was an increase of 0.00021100% from its proportion measured as of December 31, 2018. For the year ended December 31, 2020, the City recognized OPEB expense of $46,639. At December 31, 2020 the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience $ - $ 28,119 Changes in assumptions 231,547 69,038 Net differences between projected and actual earnings on OPEB plan investments 11,840 - Changes in proportion and differences between employer contributions and proportionate share of contributions 14,031 - Employer contributions subsequent to the measurement date 3,770 - Total $ 261,188 $ 97,157 111 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 69 NOTE V – OTHER I NFORMATION (continued) D. OTHER POST-EMPLOYMENT B ENEFITS (continued) Local Retiree Life Insurance Fund (LRLIF) (cont.) $3,770 reported as deferred outflows related to OPEB resulting from the LRLIF Employer’s contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the year ended December 31, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year ended December 31: Deferred Outflow of Resources and Deferred Inflows of Resources (net) 2021 $ 27,779 2022 27,779 2023 26,502 2024 25,187 2025 20,982 Thereafter 32,032 Actuarial assumptions. The total OPEB liability in the January 1, 2019 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Actuarial Valuation Date: January 1, 2019 Measurement Date of Net OPEB Liability December 31, 2019 Actuarial Cost Method: Entry Age Normal 20 Year Tax-Exempt Municipal Bond Yield: 2.74% Long-Term Expected Rate of Return: 4.25% Discount Rate: 2.87% Salary Increases: Inflation Seniority/Merit 3.00% 0.10% - 5.60% Mortality: Wisconsin 2018 Mortality Table Actuarial assumptions are based upon an experience study conducted in 2018 that covered a three-year period from January 1, 2015 to December 31, 2017. The total OPEB liability for December 31, 2019 is based upon a roll-forward of the liability calculated from the January 1, 2019 actuarial valuation. 112 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 70 NOTE V – OTHER I NFORMATION (continued) D. OTHER POST-EMPLOYMENT B ENEFITS (continued) Local Retiree Life Insurance Fund (LRLIF) (cont.) Long-term expected return on plan assets. The long-term expected rate of return is determined by adding expected inflation to expected long-term real returns and reflecting expected volatility and correlation. Investments for the LRLIF are held with Securian, the insurance carrier. Interest is calculated and credited to the LRLIF based on the rate of return for a segment of the insurance carriers’ general fund, specifically 10-year A- Bonds (as a proxy, and not tied to any specific investments). The overall aggregate interest rate is calculated using a tiered approach based on the year the funds were originally invested and the rate of return for that year. Investment interest is credited based on the aggregate rate of return and assets are not adjusted to fair market value. Furthermore, the insurance carrier guarantees the principal amounts of the reserves, including all interest previously credited thereto. Long-Term Expected Geometric Real Rate Asset Class Index Target Allocation of Return % US Credit Bonds Barclays Credit 45% 2.12% US Long Credit Bonds Barclays Long Credit 5 2.9 US Mortgages Barclays MBS 50 1.53 Inflation 2.2 Long-Term Expected Rate of Return 4.25 Local OPEB Life Insurance Asset Allocation Targets and Expected Returns As of December 31, 2019 The long-term expected rate of return decreased slightly from 5.00% in the prior year to 4.25% in the current year. This change was primarily based on the target asset allocation and capital market expectations. The expected inflation rate also decreased slightly from 2.30% in the prior year to 2.20% in the current year. The long-term expected rate of return is determined by adding expected inflation to expected long-term real returns and reflecting expected volatility and correlation. Single Discount rate. A single discount rate of 2.87% was used to measure the Total OPEB Liability for the current year, as opposed to a discount rate of 4.22% for the prior year. The significant change in the discount rate was primarily caused by the decrease in the municipal bond rate from 4.10% as of December 31, 2018 to 2.74% as of December 31, 2019. The Plan’s fiduciary net position was projected to be insufficient to make all projected future benefit payments of current active and inactive members. Therefore, the discount rate for calculating the Total OPEB Liability is equal to the single equivalent rate that results in the same actuarial present value as the long-term expected rate of return applied to benefit payments, to the extent that the plan’s fiduciary net position is projected to be sufficient to make projected benefit payments, and the municipal bond rate applied to benefit payment to the extent that the plan’s fiduciary net position is projected to be insufficient. The plan’s fiduciary net position was projected to be available to make projected future benefit payments of current plan members through December 31, 2036. 113 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 71 NOTE V – OTHER I NFORMATION (continued) D. OTHER POST-EMPLOYMENT B ENEFITS (continued) Local Retiree Life Insurance Fund (LRLIF) (cont.) The projection of cash flows used to determine the single discount rate assumed that employer contributions will be made according to the current employer contribution schedule and that contributions are made by plan members retiring prior to age 65. Sensitivity of the City’s proportionate share of the net OPEB liability to changes in the discount rate. The following presents the City’s proportionate share of the net OPEB liability calculated using the discount rate of 2.87 percent, as well as what the City’s proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is one percentage point lower (1.87 percent) or one percentage point higher (3.87 percent) than the current rate: 1% Decrease to Discount Rate (1.87%) Current Discount Rate (2.87%) 1% Increase to Discount Rate (3.87%) City’s proportionate share of the net OPEB liability $866,696 $627,662 $445,804 E. WATER AND SEWER U TILITY RATES The Water Utility implemented current rates effective January 1, 2020. Effective January 1, 2010 the sewer rate for a single family residence is $167.66 per quarter or $670.64 per year. All industrial and commercial users were charge on actual metered use at $6.81 per 1,000 gallons plus a connection charge of $69.10 per quarter. F. A NTENNA LEASE A GREEMENTS The City has lease agreements with four cellular phone companies to lease a Utility water tower as a site for cellular antennas. The initial term of the leases was 5 years with the right to extend the leases for four additional 5-year terms. Rental income from rental of the water tower reported in other water revenues amounted to $114,037. Future minimum rentals related to these leases and expected future extensions are as follows: 2021 $119,739 2022 125,726 2023 132,012 Total $377,477 114 City of Muskego Notes to Financial Statements As of and for the Year Ended December 31, 2020 Page 72 NOTE V – OTHER I NFORMATION (continued) G. E FFECT OF NEW ACCOUNTING STANDARDS ON CURRENT-PERIOD FINANCIAL STATEMENTS The Governmental Accounting Standards Board (GASB) has approved the following:  Statement No. 87, Leases  Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period  Statement No. 91, Conduit Debt Obligations  Statement No. 92, Omnibus  Statement No. 93, Replacement of Interbank Offered Rates  Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements  Statement No. 96, Subscription Based Information Technology Arrangements  Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans – an amendment of GASB Statements No. 14 and No. 84, a Supersession of GASB Statement No. 32. The statements listed above through Statement No. 93 had their effective dates postponed by one year with the issuance of Statement No. 95, Postponement of Effective Dates of Certain Authoritative Guidance, with the exception of Statement No. 87 which was postponed by one and a half years. When they become effective, application of these standards may restate portions of these financial statements. H. S UBSEQUENT EVENTS Relief through the American Rescue Plan Act The federal government passed the American Rescue Plan Act on March 11, 2021 to respond to the COVID-19 public health emergency and its negative economic impacts. Amounts were appropriated for fiscal year 2021 to units of local government to mitigate the fiscal effects stemming from the public health emergency. The City’s estimated award is $2,630,007, which will be used to combat the negative effects of the public health emergency in the local economy. The City will receive 50% of the funds in 2021, with the remaining expected a year later. The funds are to cover costs incurred by December 31, 2024. 115 REQUIRED SUPPLEMENTARY INFORMATION 116 See independent auditors' report and accompanying notes to required supplementary information.Page 73 Proportionate Share of the Net Plan Fiduciary Proportion Proportionate Pension Liability Net Position Plan of the Net Share of the (Asset) as a as a Percentage Fiscal Pension Net Pension Covered Percentage of of the Total Year Ending Liability (Asset)Liability (Asset)Payroll Covered Payroll Pension Liability 12/31/14 0.06195031%(1,521,669)$ 7,320,021$ -20.79%102.74% 12/31/15 0.06157032%1,000,506$ 7,419,369$ 13.49%98.20% 12/31/16 0.06009865%495,356$ 7,115,805$ 6.96%99.12% 12/31/17 0.05926953%(1,759,782)$ 7,095,534$ -24.80%102.93% 12/31/18 0.05937757%2,112,467$ 7,473,478$ 28.27%96.45% 12/31/19 0.06027470%(1,943,531)$ 7,706,785$ -25.22%102.96% Contributions in Relation to the Contributions City Contractually Contractually Contribution as a Percentage Fiscal Required Required Deficiency Covered of Covered Year Ending Contributions Contributions (Excess)Payroll Payroll 12/31/15 565,424$ 565,424$ -$ 7,419,369$ 7.62% 12/31/16 566,173$ 566,173$ -$ 7,115,805$ 7.96% 12/31/17 621,541$ 621,541$ -$ 7,095,534$ 8.76% 12/31/18 630,846$ 630,846$ -$ 7,473,478$ 8.44% 12/31/19 640,490$ 640,490$ -$ 7,706,785$ 8.31% 12/31/20 709,006$ 709,006$ -$ 7,661,789$ 9.25% For the Year Ended December 31, 2020 SCHEDULE OF EMPLOYER CONTRIBUTIONS - WISCONSIN RETIREMENT SYSTEM City of Muskego SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY (ASSET) - WISCONSIN RETIREMENT SYSTEM For the Year Ended December 31, 2020 117 See independent auditors' report and accompanying notes to required supplementary information. Page 74 Proprotionate Share of the Net Plan Fiduciary Proportion Proportionate OPEB Liability Net Position ETF of the Net Share of the (Asset) as a as a Percentage Fiscal OPEB Net OPEB Covered Percentage of of the Total OPEB Year Ending Liability Liability Payroll Covered Payroll Liability 12/31/17 0.14145900%425,591$ 5,948,756$ 7.15%44.81% 12/31/18 0.14719000%379,800$ 7,304,000$ 5.20%48.69% 12/31/19 0.14740100%627,662$ 7,560,000$ 8.30%37.58% Contributions in City Relation to the Contributions Fiscal Contractually Contractually Contribution as a Percentage Year End Required Required Deficiency Covered of Covered Date Contributions Contributions (Excess)Payroll Payroll 12/31/18 2,836$ 2,836$ -$ 7,473,480$ 0.04% 12/31/19 2,910$ 2,910$ -$ 7,340,429$ 0.04% 12/31/20 3,770$ 3,770$ -$ 7,661,789$ 0.05% For the Year Ended December 31, 2020 City of Muskego SCHEDULE OF PROPORTIONATE SHARE OF THE NET OPEB LIABILITY - LRLIF For the Year Ended December 31, 2020 SCHEDULE OF EMPLOYER CONTRIBUTIONS - LRLIF 118 City of Muskego Notes to Required Supplementary Information As of and for the Year Ended December 31, 2020 See independent auditors’ report. Page 75 NOTE I – Wisconsin Retirement System The amounts determined for each fiscal year were determined as of the calendar year-end that occurred within the fiscal year. The City is required to present the last ten fiscal years of data; however accounting standards allow the presentation of as many years as are available until ten fiscal years are presented. Changes in benefit terms. There were no changes of benefit terms for any participating employer in the Wisconsin Retirement System. Changes in Assumptions. No significant change in assumptions were noted from the prior year. NOTE II – Local Retiree Life Insurance Fund The City is required to present the last ten fiscal years of data; however accounting standards allow the presentation of as many years as are available until ten fiscal years are presented. Changes in benefit terms. There were no changes of benefit terms for any participating employer in the LRLIF. Changes in Assumptions. Several actuarial assumptions changed from the prior year, including the single discount rate, long-term expected rate of return and expected inflation. Please refer to the Actuarial Assumptions Section in Note V. D. for additional details. 119 SUPPLEMENTARY INFORMATION 120 Page 76 Landfill W ell Land Refuse/Revolving Standing Stormwater Testing Open Space Park Recycling Loan Committee Management Reserve Conservation Fund Fund Fund Fund Fund Fund Fund ASSETS Cash and cash equivalents 443,136$ 1,096,144$ 467,336$ 116,835$ 257,564$ 709,367$ 424,285$ Accounts receivable - net 228,220 284,595 131,025 - - - - Loan receivables - - - - - - - Due from other governments - - - - - - - Taxes receivable - 46,380 - - - - - TOTAL ASSETS 671,356$ 1,427,119$ 598,361$ 116,835$ 257,564$ 709,367$ 424,285$ LIABILITIES AND FUND BALANCES Liabilities Accounts payable 53,953$ 231,523$ 40$ -$ 61,856$ -$ 9,887$ Deferred lease and other revenues - - - - - - - Total Liabilities 53,953 231,523 40 - 61,856 - 9,887 Fund Balances Restricted - - 598,321 - - - - Committed 617,403 1,195,596 - 116,835 195,708 709,367 414,398 Total Fund Balances 617,403 1,195,596 598,321 116,835 195,708 709,367 414,398 TOTAL LIABILITIES AND FUND BALANCES 671,356$ 1,427,119$ 598,361$ 116,835$ 257,564$ 709,367$ 424,285$ As of December 31, 2020 City of Muskego Combining Balance Sheet Non-major Governmental Funds Special Revenue Funds 121 Page 77 Big Muskego Lake-Non-Major Federated Bass Bay Special Compensated Cable Capital Library Protection and Revenue Absences TV Improvements System Rehabilitation Landfill Fund Fund Fund Fund Fund District Fund Total ASSETS Cash and cash equivalents 2,337,883$ -$ 509,417$ 37,335$ 152,659$ 3,018,911$ 9,570,872$ Accounts receivable - net - - - - - 346,221 990,061 Loan receivables - - 180,702 - - - 180,702 Due from other governments - - - - 33,010 - 33,010 Taxes receivable - - - - - - 46,380 TOTAL ASSETS 2,337,883$ -$ 690,119$ 37,335$ 185,669$ 3,365,132$ 10,821,025$ LIABILITIES AND FUND BALANCES Liabilities Accounts payable -$ -$ -$ -$ 80$ 2,804$ 360,143$ Deferred lease and other unearned revenues - - 1,180 - - - 1,180 Total Liabilities - - 1,180 - 80 2,804 361,323 Fund Balances Restricted - - - 37,335 185,589 3,362,328 4,183,573 Committed 2,337,883 - 688,939 - - - 6,276,129 Total Fund Balances 2,337,883 - 688,939 37,335 185,589 3,362,328 10,459,702 TOTAL LIABILITIES AND FUND BALANCES 2,337,883$ -$ 690,119$ 37,335$ 185,669$ 3,365,132$ 10,821,025$ (Concluded) As of December 31, 2020 City of Muskego Combining Balance Sheet Non-major Governmental Funds Special Revenue Funds 122 Page 78 Tax Non-Major Increment Capital Capital District Projects Equipment Capital Project Fund Fund Funds Total ASSETS Cash and cash equivalents 856,888$ 4,027$ 860,915$ TOTAL ASSETS 856,888$ 4,027$ 860,915$ LIABILITIES AND FUND BALANCES Liabilities Accounts payable 34,160$ -$ 34,160$ TOTAL LIABILITIES 34,160 - 34,160 Fund Balances Restricted - 4,027 4,027 Assigned 822,728 - 822,728 Total Fund Balances 822,728 4,027 826,755 TOTAL LIABILITIES AND FUND BALANCES 856,888$ 4,027$ 860,915$ As of December 31, 2020 City of Muskego Combining Balance Sheet Non-major Governmental Funds Capital Projects Funds 123 Page 79 Non-Major Non-Major Special Capital Non-major Revenue Projects Governmental Funds Funds Funds Total Total Total ASSETS Cash and cash equivalents 9,570,872$ 860,915$ 10,431,787$ Accounts receivable - net 990,061 - 990,061 Loan receivables 180,702 - 180,702 Due from other governments 33,010 - 33,010 Taxes receivable 46,380 - 46,380 TOTAL ASSETS 10,821,025$ 860,915$ 11,681,940$ LIABILITIES AND FUND BALANCES Liabilities Accounts payable 360,143$ 34,160$ 394,303$ Deferred lease and other revenues 1,180 - 1,180 Total Liabilities 361,323 34,160 395,483 Fund Balances Restricted 4,183,573 4,027 4,187,600 Committed 6,276,129 - 6,276,129 Assigned - 822,728 822,728 Total Fund Balances 10,459,702 826,755 11,286,457 TOTAL LIABILITIES, DEFFERED INFLOWS OF RESOURCES AND FUND BALANCES 10,821,025$ 860,915$ 11,681,940$ City of Muskego Non-major Governmental Funds As of December 31, 2020 Combining Balance Sheet 124 Page 80 City of Muskego Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds Special Revenue Funds For the Year Ended December 31, 2020 Landfill Well Land Refuse/Revolving Standing Stormwater Testing Open Space Park Recycling Loan Committee Management Reserve Conservation Fund Fund Fund Fund Fund Fund Fund REVENUES Taxes -$ -$ -$ -$ -$ -$ -$ Intergovernmental 228,220 - - - - - 18,200 Licenses and permits 6,470 - - - - - - Public charges for services 255,755 1,026,208 - 10,000 - - 234,817 Commercial revenue 70,556 94,182 4,157 111 1,373 3,529 1,906 Total Revenues 561,001 1,120,390 4,157 10,111 1,373 3,529 254,923 EXPENDITURES Current General government - - - - - - - Public works - - - - 24,750 - - Health and sanitation - 1,101,024 - - - - - Conservation and development - - 40 2,545 - - 21,864 Education and recreation - - - - - - Capital Outlay 416,849 - - - 74,062 - 55,760 Total Expenditures 416,849 1,101,024 40 2,545 98,812 - 77,624 Excess (deficiency) of revenues over expenditures 144,152 19,366 4,117 7,566 (97,439) 3,529 177,299 OTHER FINANCING SOURCES (USES) Transfers in 250,000 - - - - - - Transfers out - - - - - - (100,000) Total Other Financing Source (Uses)250,000 - - - - - (100,000) Net Change in Fund Balance 394,152 19,366 4,117 7,566 (97,439) 3,529 77,299 FUND BALANCES - Beginning of Year 223,251 1,176,230 594,204 109,269 293,147 705,838 337,099 FUND BALANCES - END OF YEAR 617,403$ 1,195,596$ 598,321$ 116,835$ 195,708$ 709,367$ 414,398$ 125 Page 81 City of Muskego Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds Special Revenue Funds For the Year Ended December 31, 2020 (Concluded) Big Muskego Lake-Non-Major Federated Bass Bay Special Compensated Capital Library Protection and Revenue Absences Cable TV Improvements System Rehabilitation Landfill Fund Fund Fund Fund Fund District Fund Total REVENUES Taxes -$ -$ -$ -$ -$ -$ -$ Intergovernmental - - - - - - 246,420 Licenses and permits - - - - - - 6,470 Public charges for services - - - - 32,930 1,712,251 3,271,961 Commercial revenue 10,997 - 6,188 1,360 101 12,869 207,329 Total Revenues 10,997 - 6,188 1,360 33,031 1,725,120 3,732,180 EXPENDITURES Current General government 99,011 - - - 10,032 - 109,043 Public works - - - - - - 24,750 Health and sanitation - - - - - 48,813 1,149,837 Conservation and development - - - - - - 24,449 Education and recreation - - - 61 - - 61 Capital Outlay - - - - - - 546,671 Total Expenditures 99,011 - - 61 10,032 48,813 1,854,811 Excess (deficiency) of revenues over expenditures (88,014) - 6,188 1,299 22,999 1,676,307 1,877,369 OTHER FINANCING SOURCES (USES) Transfers in 202,052 - - - - - 452,052 Transfers out - (2,253) (54,500) - - (650,000) (806,753) Total Other Financing Source (Uses)202,052 (2,253) (54,500) - - (650,000) (354,701) Net Change in Fund Balance 114,038 (2,253) (48,312) 1,299 22,999 1,026,307 1,522,668 FUND BALANCES - Beginning of Year 2,223,845 2,253 737,251 36,036 162,590 2,336,021 8,937,034 FUND BALANCES - END OF YEAR 2,337,883$ -$ 688,939$ 37,335$ 185,589$ 3,362,328$ 10,459,702$ 126 Page 82 Tax Non-Major Increment Capital Capital District Projects Equipment Capital Project Fund Fund Funds Total REVENUES Intergovernmental revenues 7,280$ -$ 7,280$ Licenses and permits 57,200 - 57,200 Commercial revenue - 169 169 Total Revenues 64,480 169 64,649 EXPENDITURES Capital Outlay General government 52,966 - 52,966 Public safety 212,792 - 212,792 Public works 430,125 - 430,125 Conservation and development 600 3,803 4,403 Education and recreation 62,584 - 62,584 Total Expenditures 759,067 3,803 762,870 Deficiency of revenues under expenditures (694,587) (3,634) (698,221) OTHER FINANCING SOURCES (USES) Transfers in 400,000 - 400,000 Transfers out - (755) (755) Total Other Financing Sources 400,000 (755) 399,245 Net Change in Fund Balance (294,587) (4,389) (298,976) FUND BALANCES - Beginning of Year 1,117,315 8,416 1,125,731 FUND BALANCES - END OF YEAR 822,728$ 4,027$ 826,755$ City of Muskego Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the Year Ended December 31, 2020 Capital Projects Funds 127 Page 83 Non-Major Non-Major Special Capital Non-major Revenue Projects Governmental Funds Funds Funds Total Total Total REVENUES Taxes -$ -$ -$ Intergovernmental 246,420 7,280 253,700 Licenses and permits 6,470 57,200 63,670 Public charges for services 3,271,961 - 3,271,961 Commercial revenue 207,329 169 207,498 Total Revenues 3,732,180 64,649 3,796,829 EXPENDITURES Current: General government 109,043 - 109,043 Public works 24,750 - 24,750 Health and sanitation 1,149,837 - 1,149,837 Conservation and development 24,449 - 24,449 Education and recreation 61 - 61 Capital Outlay 546,671 762,870 1,309,541 Total Expenditures 1,854,811 762,870 2,617,681 Deficiency of revenues under expenditures 1,877,369 (698,221) 1,179,148 OTHER FINANCING SOURCES (USES) Transfers in 452,052 400,000 852,052 Transfers out (806,753) (755) (807,508) Total Other Financing Source (Uses)(354,701) 399,245 44,544 Net Change in Fund Balance 1,522,668 (298,976) 1,223,692 FUND BALANCES - Beginning of Year 8,937,034 1,125,731 10,062,765 FUND BALANCES - END OF YEAR 10,459,702$ 826,755$ 11,286,457$ Non-Major Governmental Funds For the Year Ended December 31, 2020 City of Muskego Combining Statement of Revenues, Expenditures and Changes in Fund Balances 128 Finance Meeting Common Council Meeting August 10, 2021 Operator Licenses Applicant Name Employer Applying for License 1Page: 1.Vintage Grounds Operator's Regular NewAngela L. Bohmann 2.Hunter's Nest Operator's Regular NewAlison A. Frank 3.Leah's Italian Restaurant Operator's Regular NewChad T. Lugo 4.Kwik Trip #1080 Operator's Regular NewIsabella K. Seitz 5.Kwik Trip #664 Operator's Regular NewKelli M. Serchen 6.Crush Wine Bar Operator's Regular NewMallori K. Weiland 129 COMMON COUNCIL - CITY OF MUSKEGO RESOLUTION #070-2021 APPROVAL OF MEMORANDUM OF UNDERSTANDING FOR MUSKEGO-NORWAY SCHOOL RESOURCE OFFICER PROGRAM AND POLICE SECURITY SERVICES FOR MUSKEGO HIGH SCHOOL EXTRACURRICULAR ACTIVITIES 2021-2022 SCHOOL YEAR WHEREAS, The Muskego-Norway School District and the City of Muskego have established a School Resource Officer Program by Agreement, which sets forth guidelines to ensure that all parties involved have a shared understanding of the goals of the Program; and WHEREAS, The Parties, as part of said Agreement, have also established a payment method for Muskego Police Officers that provide security services for Muskego High School extracurricular activities; and WHEREAS, The Parties review and renew the Agreement on a yearly basis based upon the prior year’s resources and school activities; that the Agreement is up for renewal at this time; and WHEREAS, The Finance Committee reviewed the attached Memorandum of Understanding and recommended approval to the Common Council. NOW, THEREFORE, BE IT RESOLVED That the Common Council of the City of Muskego, upon the recommendation of the Finance Committee, does hereby approve the Memorandum of Understanding for Muskego-Norway School Resource Officer Program and Police Security Services for Muskego High School Extracurricular Activities for the 2021-2022 School Year. BE IT FURTHER RESOLVED That the Mayor and Police Chief are hereby authorized to sign the Agreement and the City Attorney is authorized to make substantive changes to it as may be necessary in order to preserve the general intent thereof. DATED THIS 10th DAY OF AUGUST 2021. SPONSORED BY: FINANCE COMMITTEE This is to certify that this is a true and accurate copy of Resolution #070-2021 which was adopted by the Common Council of the City of Muskego. Deputy Clerk 8/21cmc 130 1 MEMORANDUM OF UNDERSTANDING for Muskego-Norway School Resource Officer Program and Police Security Services for Muskego High School Extracurricular Activities 2021-2022 School Year The purpose of this document is to establish a School Resource Officer Program and to set forth guidelines to ensure that law enforcement, school officials, and the communities they serve have a shared understanding of the goals of the School Resource Officer Program. The parties agree that an effective School Resource Officer Program defines the role of the School Resource Officer (SRO) within the context of the educational mission of the school; draws distinctions between disciplinary misconduct to be handled by school officials and criminal offenses/civil forfeitures to be handled by law enforcement; information sharing; School Resource Officer training requirements; program assessment; and program structure. It is further understood that police officers are taken off of routine patrol services in support of the SRO Program. The parties further agree that School Resource Officers receive the necessary support and training to ensure a safe school environment while respecting the rights of students and improving the overall school climate. The purpose of this document is also to establish the payment method for Muskego police officers that provide security services for Muskego High School extracurricular activities. The parties agree to the following: I.School Resource Officer Program Role of the School Resource Officer within the Context of the Educational Mission of the School 1. The mission of the School Resource Officer program is to improve school safety and the educational climate at the school. 2. School Resource Officers are responsible for dealing with criminal/civil law issues only. Both parties agree that disciplining of students is a School District Responsibility and the SRO will take students violating the code of conduct to the school administration where school discipline can be meted out. In regards to poor behavior on student’s part, the SRO can counsel or educate the student in right behavior but if consequences are necessary, the school administration will be responsible for school discipline. 3. The SRO shall meet with building-level school administrators, teachers, parents, and student representatives at least annuallyto discuss issues of school safety. 4. The SRO shall be integrated into the school community through participation in faculty and student meetings and assemblies as appropriate. 131 2 5. The SRO shall maintain activity reports and submit summaries of these reports to building-level school administrators, district-level school administrators, and the Muskego Police Department. The summaries shall include, for each SRO, the numbers and descriptions of all incidents or calls for service; names of school officials involved (referring teachers, principals, etc.); student searches; student questioning; tickets, citations, or summonses; filing of delinquency petitions; referrals to a probation officer; actual arrests, and other referrals to the juvenile justice system. 6. Absent a real and immediate threat to student, teacher, or school safety, and absent the situations described herein, where formal law enforcement intervention is deemed appropriate, building-level school administrators shall have final authority in the building. 7. Students generally will not be taken into custody at school, except where a child poses a real and immediate threat to student, teacher, or public safety or pursuant to a warrant. a) School principals shall be consulted prior to a student being taken into custody where practicable. b) The student’s parent or guardian shall be notified of a child being taken into custody as soon as practicable. Information Sharing 8. The school district designates the SRO a “school district official” as provided in the Federal Educational Rights and Privacy Act (FERPA) 20 U.S.C. 1232g, and 118.125(2)(d) of the Wisconsin Statutes. A SRO may be provided access to student records information maintained by the school district only as needed by the SRO to perform his or her duties as SRO. A SRO may also be granted access to student records information in the event of an emergency situation threatening the health of safety of a student or other individual. The SRO may only re- disclose student records information consistent with FERPA and Wisconsin pupil records law. 9. Records created and maintained by a SRO for the purpose of ensuring the safety and security of persons or property in the school, district, or for the enforcement of local, state, or federal laws or ordinances shall not be considered student records - even when such records may serve the dual purpose of enforcing school rules - and are not subject to the same prohibitions of access or disclosure by the SRO. (This provision does not prohibit school personnel from complying with the notice and reporting requirements of seclusion or restraint of a student by the SRO as specified in 118.305(4) of the Wisconsin Statutes.) School Resource Officer Training Requirements 10. The SRO shall receive such training as is necessary to permit the SRO to effectively advance the school’s educational mission in the context of his or her 132 3 duties as SRO. Training topics, goals, and objectives shall be determined jointly by representatives of the school and the law enforcement agency. Training expenses for school related training shall be shared equally by the Muskego/Norway School District and the Muskego Police Department. Training topics to consider may include: school values and mission; child and adolescent development; cultural competency; positive behavioral supports, strategies, and interventions; federal and state anti-discrimination and special education laws; the provisions of Wisconsin law pertaining to the use of seclusion and restraint by school personnel; trauma informed practices; de-escalation techniques; compulsory attendance; suicide prevention; and school mental health. Program Assessment 11. The School Resource Officer Program will be assessed annually, and the evaluation will be conducted jointly between the Muskego Police Department and the Muskego-Norway School District. The following areas will be used to evaluate the program: a) Success of established goals and objectives. b) Police-citizen contacts (citations, arrests, community and school outreach activities, etc.). c) Community feedback. d) Accomplishment of tasks agreed upon as part of any work plan written in conjunction with the principal. Structure and Funding for School Resource Officer Program 12. The School Resource Officer positions shall be reimbursed by the school district for the salary and benefits of officers involved at the rate of 100% for 65% of the calendar year which is the time spent in the schools. 13. Terms of the School Resource Officer Agreement: a) That said above parties agree and contract for the sharing of the service of three School Resource Officer’s positions as hereinafter set forth. b) That the City of Muskego is to be the operator and fiscal agent for the School Resource Officer positions. c) That the School Resource Officers' work schedule will be coordinated between the Muskego-Norway Schools and the City of Muskego Police Department. SRO’s can be directed to serve any district building as needed. d) That this contract shall be effective from September 1 st of said school year through August 31st of the following year. e) That both parties will indicate their interest to continue this contract for the upcoming school year by informing the other party no later than August 1 st of the year the contract is set to expire. 133 4 f) That the Plan of Operation and Plan of Payments (Schedule A attached hereto) for this cooperative agreement shall be approved in advance of the contract signing by both the Muskego-Norway School District and the City of Muskego. g) That the School Resource Officers shall also serve as education instructors such as D.A.R.E. instructors. h) That the School Resource Officers' time will be spent in Muskego High School, Muskego Lakes Middle School, and the Lake Denoon Middle School, and the district elementary schools, the specific time for each to be mutually agreed upon between both the Muskego-Norway School District and the City of Muskego Police Department. i) That the School Resource Officers provide the Muskego-Norway School Board with a report regarding activities and actions taking place during the course of the school year. j) That work space will be provided by the Muskego-Norway School District. k) That clerical support will be provided by the City of Muskego Police Department. l) On or before August 1 st of each year, the Muskego-Norway School District will indicate their desire to continue with the present officer assigned to each school for the next school year. Any desired change in current personnel will be done in writing. m) When an SRO is absent due to illness or vacation, the other SRO’s will roam between their assigned school and the one left vacant due to the aforementioned absence. 14. The School Resource Officer shall report to the Special Services Lieutenant of the Police Department and the designated school administrator of their assigned school. Issues regarding the performance of the School Resource Officer shall be handled by the Special Services Lieutenant and the designated school administrator. 15. A signatory may terminate this Memorandum of Understanding by serving written notice to all other signatories at least thirty (30) days in advance of such termination. A termination by a signatory shall eliminate the presence of School Resource Officers at Muskego/Norway Schools. II.Security Services provided for Muskego High School Extracurricular Activities The parties agree that activities held within and run by the Muskego-Norway School District, which include high school football games, basketball games, school dances, graduation, and other activities mutually agreed to by the Police Chief and District staff, may be staffed with police personnel. Police hours shall be reimbursed by the School District at the rate of 50% of the salary and benefits rate (straight time). 134 5 By signing this agreement all parties agree to it in its entirety. ___________ President of Muskego-Norway School District Date ___________ Superintendent of Muskego-Norway School District Date ___________ Mayor Date ___________ Chief of Police Date T:\Departments\Mayor\Documents\SRO MOU 2021-2022.docx 135 CALCULATIONS SCHEDULE A 66.30 AGREEMENT 07/01/21 - 06/30/22 Officer Lange 130,624.49 Officer Sandretti 122,177.61 Officer Kristalidis 121,431.81 TOTAL 374,233.90 65% OF TOTAL 243,252.04 Payment Schedule: 12/01/21 121,626.02 06/01/22 121,626.02 * Total 243,252.04 *Subject to change - Health Insurance. 136 66.30 AGREEMENT - POLICE LIAISON OFFICERS 07/01/21 - 06/30/22 D. Lange J. Sandretti C. Kristalidis 2021 2022 2021 2022 2021 2022 Total Hourly Rate $39.34 $40.33 $39.34 $40.33 $39.34 $40.33 $39.84 Hours 1,040 1,040 1,040 1,040 1,040 1,040 6,240 Gross Pay* $40,913.60 $41,943.20 $40,913.60 $41,943.20 $40,913.60 $41,943.20 $248,570.40 Lump Sum Payment $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 FICA (7.65%) $3,129.89 $3,208.65 $3,129.89 $3,208.65 $3,129.89 $3,208.65 $19,015.64 Wisconsin Retirement (12.09%/12.17%)* $4,946.45 $5,104.49 $4,905.54 $5,070.93 $4,905.54 $5,070.93 $30,003.89 Life Insurance (based on $50,000)/Longevity $31.32 $31.32 $27.36 $27.36 $33.24 $33.24 $183.84 Health Insurance/Allowance* $15,031.98 $15,783.58 $10,951.74 $11,499.33 $10,582.20 $11,111.31 $74,960.14 Uniform Allowance $500.00 $0.00 $500.00 $0.00 $500.00 $0.00 $1,500.00 Total $64,553.24 $66,071.24 $60,428.13 $61,749.47 $60,064.47 $61,367.34 $374,233.90 Percentage of Total 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% Due from School District $41,959.61 $42,946.31 $39,278.29 $40,137.16 $39,041.91 $39,888.77 $243,252.04 *Subject to change. CITY OF MUSKEGO 137 Council Date August 10, 2021 $916,442.84 Total Voucher Approval $55,072.87 Total Water $55,072.87 35,269.07 Total Sewer $35,269.07 $ #1 - Utility Voucher Approval Tax Vouchers - Refunds & Tax Settlements (Approve Separately) $3,319.31 ( $ #2 - Tax Voucher Approval $822,781.59 ( Total General Fund Vouchers $ #3 - General Voucher Approval $ $ Debt Service $ $367,890.22 #4 - Wire Transfers Approval Check #Amount Check #Amount 162061 10,267.78$ Total *** Total 10,267.78 *Total *** Sewer Wire Transfers Total Vouchers All Funds Utility Vouchers (Approve Separately) Water Vouchers Water Wire Transfers Sewer Vouchers 822,781.59 Big Muskego Lake Vouchers Development Fund Vouchers Net Total Utility Vouchers 90,341.94 Tax Vouchers Tax Void Checks Total Tax Vouchers 3,319.31 Wire transfers (Approve Separately): Payroll/Invoice Transmittals Void Checks Since Last Report Total General Fund Vouchers (Approve Separately) General Fund Vouchers General Fund Prior Council Correction 138 CITY OF MUSKEGO Payment Approval Report - Board Report Alpha Page: 1 Report dates: 7/28/2021-8/10/2021 Aug 05, 2021 11:03AM Report Criteria: Detail report. Invoices with totals above $0 included. Paid and unpaid invoices included. [Report].Description = {<>} "1099 adjustment" Invoice Detail.Type = {>} "adjustments" [Report].Vendor Name = {<>} "KEIL ENTERPRISES" [Report].Vendor Name = {OR} {IS NULL} Invoice Number SeqNo Type Description Invoice Date Payment Due Date Total Cost GL Period GL Account Number ABRAHAM'S ON-SITE SHREDDING SERVICE 0005973 1 Invoice PD SHREDDING 07/27/2021 08/10/2021 45.00 821 100.02.20.01.5723 0005973 2 Invoice CH SHREDDING 07/27/2021 08/10/2021 54.00 821 100.01.06.00.5701 Total ABRAHAM'S ON-SITE SHREDDING SERVICE:99.00 AFLAC GROUP INSURANCE A163445300 1 Invoice SHORT TERM DISABILITY 07/31/2021 08/10/2021 1,412.28 721 100.00.00.00.2243 A163445300 2 Invoice ACCIDENT 07/31/2021 08/10/2021 317.00 721 100.00.00.00.2247 A163445300 3 Invoice CRITICAL ILLNESS 07/31/2021 08/10/2021 57.64 721 100.00.00.00.2248 Total AFLAC GROUP INSURANCE:1,786.92 ALLIANCE ELECTRICAL CONTRACTORS INC 20210620 1 Invoice REFUND OVERPAYMENT 07/22/2021 08/10/2021 102.84 721 100.02.25.00.4250 Total ALLIANCE ELECTRICAL CONTRACTORS INC:102.84 AM TOWING 047657 1 Invoice TOWHOOK 08/03/2021 08/10/2021 222.00 821 100.02.20.01.5722 Total AM TOWING:222.00 AMAZON CAPITAL SERVICES 1CMR-K1NK-1 1 Invoice PORTABLE EXTERNAL HARD DRI 07/25/2021 08/10/2021 47.02 821 100.02.20.01.5722 1K9Q-JTDW-9 1 Invoice PORTABLE EXTERNAL HARD DRI 08/01/2021 08/10/2021 64.99 821 100.02.20.01.5722 1LTP-9JXP-69 1 Invoice HP ALL-IN-ONE PC 07/28/2021 08/10/2021 1,221.99 721 100.07.01.06.6502 1TV9-GX6N-Q 1 Invoice 3-RING BINDERS 07/31/2021 08/10/2021 25.27 821 100.02.20.01.5701 1WTM-7CYT-G 1 Invoice PORTABLE EXTERNAL HARD DRI 07/20/2021 08/10/2021 59.99 821 100.02.20.01.5722 Total AMAZON CAPITAL SERVICES:1,419.26 AMERICAN STATE EQUIP INC P80701 1 Invoice PARTS 07/22/2021 08/10/2021 107.43 821 100.04.51.07.5405 P80798 1 Invoice PARTS 07/27/2021 08/10/2021 1,046.85 821 100.04.51.07.5405 Total AMERICAN STATE EQUIP INC:1,154.28 ANDY KRAATZ OVERHEAD DOORS, LLC 2402 1 Invoice SEWER 08/09/2021 08/10/2021 100.00 821 601.61.61.15.5415 Total ANDY KRAATZ OVERHEAD DOORS, LLC:100.00 ASSOCIATION OF PUBLIC TREASURERS 23976 1 Invoice MEMBRSHIP RENEWAL 08/01/2021 08/10/2021 199.00 821 100.01.03.00.5305 Total ASSOCIATION OF PUBLIC TREASURERS:199.00 139 CITY OF MUSKEGO Payment Approval Report - Board Report Alpha Page: 2 Report dates: 7/28/2021-8/10/2021 Aug 05, 2021 11:03AM Invoice Number SeqNo Type Description Invoice Date Payment Due Date Total Cost GL Period GL Account Number AT & T 2747075607 1 Invoice MONTHLY PRI-07/19/2021 08/10/2021 776.50 721 100.01.06.00.5601 Total AT & T:776.50 BAKER & TAYLOR COMPANY 2036087171 1 Invoice PRINT 07/15/2021 08/10/2021 322.29 821 100.05.71.01.5711 2036092401 1 Invoice PRINT 07/19/2021 08/10/2021 3,896.39 821 100.05.71.01.5711 Total BAKER & TAYLOR COMPANY:4,218.68 BAKER & TAYLOR ENTERTAINMENT H56152160 1 Invoice AV 07/13/2021 08/10/2021 124.47 821 100.05.71.02.5711 H56152161 1 Invoice AV 07/13/2021 08/10/2021 89.95 821 100.05.71.02.5711 H56162250 1 Invoice AV 07/13/2021 08/10/2021 43.18 821 100.05.71.02.5711 H56178300 1 Invoice AV 07/14/2021 08/10/2021 51.11 821 100.05.71.02.5711 H56187320 1 Invoice AV 07/14/2021 08/10/2021 53.99 821 100.05.71.02.5711 H56210640 1 Invoice AV 07/16/2021 08/10/2021 68.37 821 100.05.71.02.5711 H56229730 1 Invoice AV 07/19/2021 08/10/2021 186.30 821 100.05.71.02.5711 H56251400 1 Invoice AV 07/19/2021 08/10/2021 10.79 821 100.05.71.02.5711 H56251540 1 Invoice AV 07/19/2021 08/10/2021 10.79 821 100.05.71.02.5711 H56263700 1 Invoice AV 07/20/2021 08/10/2021 138.89 821 100.05.71.02.5711 H56263701 1 Invoice AV 07/20/2021 08/10/2021 7.91 821 100.05.71.02.5711 H56263702 1 Invoice AV 07/20/2021 08/10/2021 17.99 821 100.05.71.02.5711 H56278100 1 Invoice AV 07/20/2021 08/10/2021 21.56 821 100.05.71.02.5711 H56280120 1 Invoice AV 07/20/2021 08/10/2021 10.79 821 100.05.71.02.5711 H56297190 1 Invoice AV 07/21/2021 08/10/2021 89.10 821 100.05.71.02.5711 Total BAKER & TAYLOR ENTERTAINMENT:925.19 BUTTERS-FETTERING CO, INC 20210536 1 Invoice REFUND OVERPAYMENT 07/28/2021 08/10/2021 647.00 721 100.02.25.00.4250 Total BUTTERS-FETTERING CO, INC:647.00 CDW GOVERNMENT, INC G967315 1 Invoice COMP REPLACEMENT 07/15/2021 08/10/2021 1,860.00 721 100.07.01.06.6501 H182639 1 Invoice COMP REPLACEMENT 07/21/2021 08/10/2021 5,580.00 721 100.07.01.06.6501 Total CDW GOVERNMENT, INC:7,440.00 CEN-PE CO CE081021 1 Invoice DEISEL MAX 07/19/2021 08/10/2021 240.00 821 100.04.51.07.5735 Total CEN-PE CO:240.00 CITY PRESS, INC 202094 1 Invoice REPORT ROUTING FORM 07/15/2021 08/10/2021 142.74 821 100.02.20.01.5723 Total CITY PRESS, INC:142.74 COLOSSAL FOSSILS INC CF2021-025 1 Invoice COLOSSAL FOSSIL 07/01/2021 08/10/2021 505.00 821 100.05.71.00.6062 Total COLOSSAL FOSSILS INC:505.00 COMPLETE OFFICE OF WIS 133040 1 Invoice SIGNATURE STAMP 07/23/2021 08/10/2021 40.80 721 100.01.08.00.5701 140 CITY OF MUSKEGO Payment Approval Report - Board Report Alpha Page: 3 Report dates: 7/28/2021-8/10/2021 Aug 05, 2021 11:03AM Invoice Number SeqNo Type Description Invoice Date Payment Due Date Total Cost GL Period GL Account Number 135289 1 Invoice FIN SUPPLIES 07/28/2021 08/10/2021 67.35 721 100.01.03.00.5701 135855 1 Invoice FIN SUPPLIES 07/28/2021 08/10/2021 29.12 721 100.01.03.00.5701 Total COMPLETE OFFICE OF WIS:137.27 CORE & MAIN LP P210830 1 Invoice DRAIN PIPE 07/23/2021 08/10/2021 551.99 821 100.04.51.04.5745 Total CORE & MAIN LP:551.99 CUMMINS SALES AND SERVICE F6-12301 1 Invoice GENERATOR L/S 07/15/2021 08/10/2021 137.92 821 601.61.61.16.5411 Total CUMMINS SALES AND SERVICE:137.92 D & S FARMS DS081021 1 Invoice STRAW BALES 07/13/2021 08/10/2021 1,445.00 821 100.04.51.04.5744 Total D & S FARMS:1,445.00 DEEPNET SECURITY 10094526 1 Invoice SAFE ID CLASSIC 06/28/2021 08/10/2021 999.00 721 100.02.20.01.5504 Total DEEPNET SECURITY:999.00 DIVERSIFIED BENEFIT SERV INC. 333951 1 Invoice AUGUST HRA HEALTH REIMBURS 08/03/2021 08/10/2021 411.34 821 100.01.06.00.5203 Total DIVERSIFIED BENEFIT SERV INC.:411.34 EAGLE MEDIA, INC. 00132995 1 Invoice POLO - JOHNSON 07/28/2021 08/10/2021 59.96 821 100.02.20.10.5151 Total EAGLE MEDIA, INC.:59.96 ELM USA, INC. 41270 1 Invoice PADS FOR DISC CLEANER 07/21/2021 08/10/2021 174.49 821 100.05.71.00.5702 Total ELM USA, INC.:174.49 FAIRCHILD EQUIPMENT K83292 1 Invoice FORKLIFT 08/04/2021 08/10/2021 101.45 821 100.04.51.07.5405 Total FAIRCHILD EQUIPMENT:101.45 FASTENAL COMPANY WIMUK88699 1 Invoice FACE MASKS, SCREENS RESTRO 07/20/2021 08/10/2021 91.96 821 100.04.51.11.5415 Total FASTENAL COMPANY:91.96 FERGUSON WATERWORKS #1476 0327423 1 Invoice WATER METERS 07/14/2021 08/10/2021 35,464.50 821 605.54.06.53.5702 Total FERGUSON WATERWORKS #1476:35,464.50 FRANKLIN AGGREGATES, INC. 1749746 1 Invoice 1 1/4 COMMERCIAL GRADE 07/15/2021 08/10/2021 684.46 821 100.04.51.02.5741 141 CITY OF MUSKEGO Payment Approval Report - Board Report Alpha Page: 4 Report dates: 7/28/2021-8/10/2021 Aug 05, 2021 11:03AM Invoice Number SeqNo Type Description Invoice Date Payment Due Date Total Cost GL Period GL Account Number Total FRANKLIN AGGREGATES, INC.:684.46 GALLS, LLC,-DBA RED THE UNIFORM TAILOR BC1386818 1 Invoice WOMENS SHORT SLEEVE ARMOR 06/24/2021 08/10/2021 94.00 821 100.02.20.01.5151 Total GALLS, LLC,-DBA RED THE UNIFORM TAILOR:94.00 GFL ENVIRONMENTAL U80000059891 1 Invoice REFUSE 07/20/2021 08/10/2021 59,460.73 721 205.03.30.00.5820 U80000059891 2 Invoice RECYCLING 07/20/2021 08/10/2021 39,987.30 721 205.03.00.00.5820 U80000059891 3 Invoice YARD WASTE 07/20/2021 08/10/2021 1,166.67 721 205.03.00.00.6056 U80000066775 1 Invoice PARK ARTHUR - 2ND DUMPSTER 07/20/2021 08/10/2021 100.00 821 100.04.51.11.5820 Total GFL ENVIRONMENTAL:100,714.70 GRAEF INC 0116161 1 Invoice PROF SERVICES - MUSKEGO-ENE 07/14/2021 08/10/2021 610.00 721 507.00.00.00.2755 0116438 1 Invoice WATER UTILITY 07/30/2021 08/10/2021 5,522.30 821 605.56.09.23.5815 0116439 1 Invoice PROF SERVICES - GEN ENGINEE 07/30/2021 08/10/2021 2,407.72 821 100.04.19.00.5815 0116440 1 Invoice PROF SERVICES - DAM INSPECTI 07/30/2021 08/10/2021 315.00 821 100.04.51.09.5744 0116441 1 Invoice PROF SERVICES - MUSKEGO LAK 07/30/2021 08/10/2021 1,109.22 821 507.00.00.00.2761 Total GRAEF INC:9,964.24 GRAY'S INC. 37049 1 Invoice FDB MT BOLT ON AND SPL 07/20/2021 08/10/2021 958.26 821 100.04.51.07.5405 Total GRAY'S INC.:958.26 HAWKINS, INC. 4990252 1 Invoice AZONE 15 07/22/2021 08/10/2021 840.08 821 601.61.61.12.5750 4990252 2 Invoice AZONE 15 07/22/2021 08/10/2021 840.09 821 605.53.06.31.5702 Total HAWKINS, INC.:1,680.17 HEARTLAND BUSINESS SYSTEMS 456467-H 1 Invoice CONSULANT BLOCK OF TIME 07/21/2021 08/10/2021 2,500.00 721 100.01.14.00.5840 Total HEARTLAND BUSINESS SYSTEMS:2,500.00 HID GLOBAL CORPORATION 13402005518 1 Invoice CMT ADVANTAGE MAINTENANCE 07/28/2021 08/10/2021 2,063.04 821 100.02.20.01.5504 Total HID GLOBAL CORPORATION:2,063.04 HILLER FORD INC 469233 1 Invoice DPW VEHICLE MAINTENANCE 07/07/2021 08/10/2021 1,224.76 821 100.04.51.07.5405 Total HILLER FORD INC:1,224.76 HUMPHREY SERVICE PARTS 1246788 1 Invoice TRUCK #11 07/16/2021 08/10/2021 159.32 821 100.04.51.07.5405 Total HUMPHREY SERVICE PARTS:159.32 JAMES IMAGING SYSTEMS INC 1091668 1 Invoice COPIER CHARGES 07/20/2021 08/10/2021 67.07 821 100.04.51.01.5701 142 CITY OF MUSKEGO Payment Approval Report - Board Report Alpha Page: 5 Report dates: 7/28/2021-8/10/2021 Aug 05, 2021 11:03AM Invoice Number SeqNo Type Description Invoice Date Payment Due Date Total Cost GL Period GL Account Number 1091668 2 Invoice COPIER CHARGES 07/20/2021 08/10/2021 33.53 821 605.56.09.21.5401 1091668 3 Invoice COPIER CHARGES 07/20/2021 08/10/2021 33.53 821 601.61.63.42.5701 Total JAMES IMAGING SYSTEMS INC:134.13 JANI-KING INC- MILW REGION MIL08210116 1 Invoice CITY HALL-AUGUST 08/01/2021 08/10/2021 2,404.00 721 100.01.09.00.5835 MIL08210116 2 Invoice POLICE-AUGUST 08/01/2021 08/10/2021 2,500.00 721 100.02.20.01.5835 MIL08210116 3 Invoice LIBRARY-AUGUST 08/01/2021 08/10/2021 3,125.00 721 100.05.71.00.5835 MIL08210116 4 Invoice OLD TOWN HALL-AUGUST 08/01/2021 08/10/2021 381.00 721 100.05.72.03.5820 MIL08210116 5 Invoice PUBLIC WORKS//MERCURY-AUGU 08/01/2021 08/10/2021 437.90 721 100.04.51.08.5415 MIL08210116 6 Invoice PUBLIC WORKS//MERCURY-AUGU 08/01/2021 08/10/2021 175.55 721 601.61.61.15.5415 MIL08210116 7 Invoice PUBLIC WORKS//MERCURY-AUGU 08/01/2021 08/10/2021 175.55 721 605.54.06.41.5702 MIL08210116 8 Invoice PUBLIC WORKS/APOLLO-AUGUST 08/01/2021 08/10/2021 175.94 721 100.04.51.08.5415 MIL08210116 9 Invoice PUBLIC WORKS/APOLLO-AUGUST 08/01/2021 08/10/2021 70.53 721 605.54.06.41.5702 MIL08210116 10 Invoice PUBLIC WORKS/APOLLO-AUGUST 08/01/2021 08/10/2021 70.53 721 601.61.61.15.5415 MIL08210571 1 Invoice MONTHLY PARK CLEANING 08/02/2021 08/10/2021 2,000.00 821 100.04.51.11.5820 Total JANI-KING INC- MILW REGION:11,516.00 JM BRENNAN, INC. SALES000131 1 Invoice REPLACE TRANSFORMER 06/30/2021 08/10/2021 2,065.20 821 100.05.71.00.5415 SALES000131 1 Invoice REPAIR AC REFRIGERATION LEA 07/22/2021 08/10/2021 4,605.48 821 100.05.71.00.5415 Total JM BRENNAN, INC.:6,670.68 JOHN PAUL'S 220-2163CR 1 Invoice 10-21 4-PNW673251 10/31/2020 08/10/2021 32.14-821 100.02.20.01.5405 735405 1 Invoice ROTORS & PADS SQUAD 12 07/20/2021 08/10/2021 742.84 821 100.02.20.01.5405 Total JOHN PAUL'S:710.70 JSA ENVIRONMENTAL, INC. 2879 1 Invoice LANDFILL AUDIT - JULY 2021 08/04/2021 08/10/2021 2,448.93 821 210.03.00.00.5816 Total JSA ENVIRONMENTAL, INC.:2,448.93 KETTLE MORAINE LAND STEWARDS 22021 1 Invoice JUNE/JULY WORK 07/28/2021 08/10/2021 1,265.00 721 215.06.00.00.6009 Total KETTLE MORAINE LAND STEWARDS:1,265.00 KIDS KAMPUS 2 21-003976 1 Invoice COURT ORDERED RESTITUTION 07/23/2021 08/10/2021 787.00 721 100.01.08.00.4269 Total KIDS KAMPUS 2:787.00 LANG, LUANN LA081021 1 Invoice BLOOD DRIVE SUPPLIES 08/04/2021 08/10/2021 43.47 821 100.03.22.00.5704 Total LANG, LUANN:43.47 LANGHAMMER-DOLESHAL, KRISTEN 20-10648 1 Invoice COURT ORDERED REDSITUTION 07/23/2021 08/10/2021 100.00 721 100.01.08.00.4269 Total LANGHAMMER-DOLESHAL, KRISTEN:100.00 143 CITY OF MUSKEGO Payment Approval Report - Board Report Alpha Page: 6 Report dates: 7/28/2021-8/10/2021 Aug 05, 2021 11:03AM Invoice Number SeqNo Type Description Invoice Date Payment Due Date Total Cost GL Period GL Account Number LAWSON PRODUCTS, INC. 9308621861 1 Invoice VEHICLE MAINTENANCE 07/15/2021 08/10/2021 473.11 821 100.04.51.07.5405 Total LAWSON PRODUCTS, INC.:473.11 LERETA LLC 2201989001 1 Invoice TAX REFUNF #114 07/20/2021 08/10/2021 1,419.00 721 501.00.00.00.2120 Total LERETA LLC:1,419.00 LINCOLN CONTRACTORS SUPPLY INC N45242 1 Invoice HOSES 06/29/2021 08/10/2021 34.68 821 100.04.51.04.5745 Total LINCOLN CONTRACTORS SUPPLY INC:34.68 MADIA, JOSEPH 19-23645 1 Invoice COURT ORDERED RESTITUTION 07/23/2021 08/10/2021 500.00 721 100.01.08.00.4269 Total MADIA, JOSEPH:500.00 MICROMARKETING LLC 856130 1 Invoice AV 07/13/2021 08/10/2021 99.78 821 100.05.71.02.5711 Total MICROMARKETING LLC:99.78 MIDWEST TAPE 500704976 1 Invoice AV 07/12/2021 08/10/2021 39.99 821 100.05.71.02.5711 Total MIDWEST TAPE:39.99 MISS BECKY LLC 715 1 Invoice ZUMBINI SUMMER CLASS & CD/B 07/21/2021 08/10/2021 60.00 721 100.05.72.13.5110 720 1 Invoice SUMMER DANCE INSTR 08/02/2021 08/10/2021 918.75 821 100.05.72.13.5110 Total MISS BECKY LLC:978.75 MKE DESIGN BUILD MUSK LIB-1 1 Invoice YA DESIGN 07/29/2021 08/10/2021 830.00 821 410.08.90.71.6513 Total MKE DESIGN BUILD:830.00 MUSKEGO LAKES MIDDLE SCHOOL 21-7302 1 Invoice COURT ORDERED RESTITUTION 07/27/2021 08/10/2021 2,950.00 721 100.01.08.00.4269 Total MUSKEGO LAKES MIDDLE SCHOOL:2,950.00 NELSON SYSTEMS INCORPORATED 101808 1 Invoice SUPPORT SERVICE 07/20/2021 08/10/2021 3,408.94 821 100.02.20.01.5504 Total NELSON SYSTEMS INCORPORATED:3,408.94 NORD CONSTRUCTION LLC 331-21 1 Invoice KAYAK LAUNCE IDLE ISLE 07/26/2021 08/10/2021 3,338.00 821 202.08.94.74.6528 Total NORD CONSTRUCTION LLC:3,338.00 OLSON'S OUTDOOR POWER 163403 1 Invoice GRAVELY 07/12/2021 08/10/2021 99.95 821 100.04.51.11.5405 144 CITY OF MUSKEGO Payment Approval Report - Board Report Alpha Page: 7 Report dates: 7/28/2021-8/10/2021 Aug 05, 2021 11:03AM Invoice Number SeqNo Type Description Invoice Date Payment Due Date Total Cost GL Period GL Account Number 163888 1 Invoice GRAVELY 07/23/2021 08/10/2021 52.73 821 100.04.51.11.5405 Total OLSON'S OUTDOOR POWER:152.68 O'REILLY AUTOMOTIVE, INC. 3853-300548 1 Invoice GEORGE VAN 07/19/2021 08/10/2021 120.27 821 100.01.09.00.5405 Total O'REILLY AUTOMOTIVE, INC.:120.27 PAGEFREEZER SOFTWARE, INC. INV-10048 1 Invoice SOCIAL MEDIA / VIDEO ARCHIVIN 07/28/2021 08/10/2021 840.00 721 100.07.01.06.6504 Total PAGEFREEZER SOFTWARE, INC.:840.00 PAYNE & DOLAN OF WISCONSIN 1751657 1 Invoice ASPHALT 07/22/2021 08/10/2021 601.43 821 100.04.51.02.5740 1751658 1 Invoice ASPHALT 07/22/2021 08/10/2021 530.82 821 100.04.51.02.5740 1753262 1 Invoice ASPHALT 07/29/2021 08/10/2021 540.57 821 100.04.51.02.5740 1753263 1 Invoice ASPHALT 07/29/2021 08/10/2021 2,082.52 821 100.04.51.02.5740 2020-0920 24 1 Invoice 2021 ROAD PROGRAM 07/14/2021 08/10/2021 431,483.76 821 100.07.51.02.6502 Total PAYNE & DOLAN OF WISCONSIN:435,239.10 POSTMASTER OF MUSKEGO PO81021 1 Invoice CITY NEWSLETTER MAILING 07/29/2021 08/10/2021 1,806.53 721 100.01.06.00.5710 Total POSTMASTER OF MUSKEGO:1,806.53 PROHEALTH CARE 308948 1 Invoice PATTERSON 07/01/2021 08/10/2021 103.00 821 100.02.20.01.5845 Total PROHEALTH CARE:103.00 QUALITY AWARDS LLC 30786 1 Invoice ENGRAVED PLATES 07/20/2021 08/10/2021 56.00 721 100.01.08.00.5702 Total QUALITY AWARDS LLC:56.00 RCN TECHNOLOGIES 123448143 1 Invoice ROUTERS ETC 07/27/2021 08/10/2021 1,849.94 721 605.00.00.00.1961 Total RCN TECHNOLOGIES:1,849.94 RINDERLE TIRE INC. 140817 1 Invoice TIRE REPAIR 07/13/2021 08/10/2021 100.00 821 100.04.51.07.5735 Total RINDERLE TIRE INC.:100.00 ROZMAN TRUE VALUE/CH 21990/114715 1 Invoice CITY HALL MAINTENANCE 07/25/2021 08/10/2021 8.08 721 100.01.09.00.5415 Total ROZMAN TRUE VALUE/CH:8.08 ROZMAN TRUE VALUE/PD 23755/081021 1 Invoice UPS CHARGES 07/25/2021 08/10/2021 38.40 821 100.02.20.01.5722 Total ROZMAN TRUE VALUE/PD:38.40 145 CITY OF MUSKEGO Payment Approval Report - Board Report Alpha Page: 8 Report dates: 7/28/2021-8/10/2021 Aug 05, 2021 11:03AM Invoice Number SeqNo Type Description Invoice Date Payment Due Date Total Cost GL Period GL Account Number ROZMAN TRUE VALUE/UT 25000/081021 1 Invoice SHOP 07/25/2021 08/10/2021 108.01 821 601.61.61.15.5415 25000/081021 2 Invoice WELLS 07/25/2021 08/10/2021 43.53 821 605.51.06.02.5702 Total ROZMAN TRUE VALUE/UT:151.54 RUEKERT & MIELKE INC 137259 1 Invoice SCADA SERVICE - 5/22-6/18/21 07/13/2021 08/10/2021 46.00 821 601.61.63.42.5430 137259 2 Invoice SCADA SERVICE - 5/22-6/18/21 07/13/2021 08/10/2021 46.00 821 605.56.09.23.5620 Total RUEKERT & MIELKE INC:92.00 RUNDLE-SPENCE S2950035.002 1 Invoice CULVERT PIPE 07/14/2021 08/10/2021 67.45 821 100.04.51.04.5745 S2952008.001 1 Invoice CUILVERT PARTS 07/13/2021 08/10/2021 64.75 821 100.04.51.04.5745 Total RUNDLE-SPENCE :132.20 SAFEWAY PEST MANAGEMENT INC. 664798 1 Invoice PEST CONTROL OLD PD 07/19/2021 08/10/2021 38.00 721 100.02.20.01.5415 664799 1 Invoice JUL21 [EST CONTROL 07/19/2021 08/10/2021 35.00 821 100.05.71.00.5415 664800 1 Invoice PEST CONTROL-CH 07/20/2021 08/10/2021 40.00 721 100.01.09.00.5415 665924 1 Invoice PEST CONTROL-PD 07/19/2021 08/10/2021 45.00 721 100.02.20.01.5415 Total SAFEWAY PEST MANAGEMENT INC.:158.00 SARTORIUS, JEFF SA/072921 1 Invoice NNO-PETTY CASH 07/28/2021 08/10/2021 900.00 721 505.00.00.00.2638 Total SARTORIUS, JEFF:900.00 SERVICE SANITATION WISCONSIN INC 8221237-40 1 Invoice LAUNCH PORTABLE SITES AUGU 08/01/2021 08/10/2021 370.00 821 100.04.51.11.5820 8221243-44 1 Invoice CONSERVATION SITE PORTABLE 08/01/2021 08/10/2021 170.00 821 215.06.00.00.5801 8221245-49 1 Invoice PARK SITE PORTABLES AUGUST 08/01/2021 08/10/2021 510.00 821 100.04.51.11.5820 Total SERVICE SANITATION WISCONSIN INC:1,050.00 SHERWIN-WILLIAMS CO. 3497-5 1 Invoice SEWER I&I REDUCTION 07/20/2021 08/10/2021 590.00 821 601.61.61.16.5427 Total SHERWIN-WILLIAMS CO.:590.00 SMUKOWSKI-SOBCZAK, SHIRLEY 2167027002 1 Invoice TAX REFUND #122 - 2167.027.002 08/02/2021 08/10/2021 1,900.31 821 501.00.00.00.2120 Total SMUKOWSKI-SOBCZAK, SHIRLEY:1,900.31 SOMAR TEK LLC/ ENTERPRISES 102376 1 Invoice BADGE/ID HOLDER 08/02/2021 08/10/2021 225.00 821 100.02.20.01.5151 102378 1 Invoice CAPT BARS 08/02/2021 08/10/2021 13.89 821 100.02.20.01.5151 102380 1 Invoice BATTERY STINGER 08/03/2021 08/10/2021 22.99 821 100.02.20.01.5151 Total SOMAR TEK LLC/ ENTERPRISES:261.88 SPECTRUM 043858401/081 1 Invoice CABLE BOXES 07/17/2021 08/10/2021 25.65 721 100.02.20.01.5415 146 CITY OF MUSKEGO Payment Approval Report - Board Report Alpha Page: 9 Report dates: 7/28/2021-8/10/2021 Aug 05, 2021 11:03AM Invoice Number SeqNo Type Description Invoice Date Payment Due Date Total Cost GL Period GL Account Number Total SPECTRUM:25.65 STREICHER'S I1514491 1 Invoice AMMO 07/21/2021 08/10/2021 348.00 821 100.02.20.01.5720 Total STREICHER'S:348.00 SUPERIOR CHEMICAL 308032 1 Invoice NORTH WOODS 07/15/2021 08/10/2021 367.99 821 100.04.51.08.5415 Total SUPERIOR CHEMICAL:367.99 TAPCO INC. I703477 1 Invoice PARKFOLIO HOSTING FEE 07/28/2021 08/10/2021 100.00 821 100.04.51.11.5820 Total TAPCO INC.:100.00 TERRA-FIRMA LANDSCAPE, INC TE/081021 1 Invoice LAKE ACCESS #9 07/28/2021 08/10/2021 23,686.50 821 601.65.00.00.6514 Total TERRA-FIRMA LANDSCAPE, INC:23,686.50 TESS CORNERS VOL FIRE DEPT TC081021 1 Invoice 3RD QTR 2021 CONTRACT PAYME 08/03/2021 08/10/2021 124,513.00 821 100.02.21.00.5850 Total TESS CORNERS VOL FIRE DEPT:124,513.00 THE ALSTAR CO LLC 22885 1 Invoice BATTERY TRUCK 23 07/27/2021 08/10/2021 162.90 821 605.56.09.33.5405 Total THE ALSTAR CO LLC:162.90 THE HAPPY MOWER 2213 1 Invoice LAWN MOWING/WEEDS MONTHLY 08/01/2021 08/10/2021 7,250.00 821 100.04.51.11.5820 2213 2 Invoice MEDIANS/BOULEVARDS MONTHL 08/01/2021 08/10/2021 10,416.67 821 100.01.06.00.5820 Total THE HAPPY MOWER:17,666.67 TIME WARNER CABLE 717807501072 1 Invoice MONTHLY FIBER CONNECTION 07/25/2021 08/10/2021 1,620.00 821 100.01.14.00.5507 722585501072 1 Invoice PD-TV-911 07/24/2021 08/10/2021 203.75 821 100.02.20.01.5604 Total TIME WARNER CABLE:1,823.75 TRANSUNION RISK & ALTERNATIVE 911461/081021 1 Invoice REVERSE LOOKUP INVESTIGATIO 08/01/2021 08/10/2021 75.00 821 100.02.20.01.5722 Total TRANSUNION RISK & ALTERNATIVE:75.00 TYLER TECHNOLOGIES, INC 060-112496 1 Invoice ASSESSMENT SERVICES 07/09/2021 08/10/2021 6,422.42 821 100.01.04.00.5801 060-112497 1 Invoice ASSESSMENT REVAL 07/09/2021 08/10/2021 3,378.95 821 100.01.04.00.5830 Total TYLER TECHNOLOGIES, INC:9,801.37 US ALLIANCE FIRE PROTECTION 1046-F056802 1 Invoice MAY 21 QTRWET/ DRY SPRINKLE 05/27/2021 08/10/2021 190.00 721 100.01.09.00.5415 147 CITY OF MUSKEGO Payment Approval Report - Board Report Alpha Page: 10 Report dates: 7/28/2021-8/10/2021 Aug 05, 2021 11:03AM Invoice Number SeqNo Type Description Invoice Date Payment Due Date Total Cost GL Period GL Account Number 1046-F060031 1 Invoice FIX LEAKING PIPE 07/22/2021 08/10/2021 2,117.00 821 100.05.71.00.5415 Total US ALLIANCE FIRE PROTECTION:2,307.00 WAL-MART 1636694309 1 Invoice PLAYGROUND SUPPLIES 07/19/2021 08/10/2021 140.93 721 100.05.72.16.5702 1636694309 2 Invoice CONCESSIONS 07/19/2021 08/10/2021 410.87 721 100.05.72.19.5702 17-5830 1 Invoice COURT ORDERED RESTITUTION 07/23/2021 08/10/2021 67.13 721 100.01.08.00.4269 Total WAL-MART:618.93 WAUKESHA CO SHERIFF'S DEPT 20514 1 Invoice WARRANT - PATRICK HENRY 07/28/2021 08/10/2021 110.00 721 100.01.08.00.4272 Total WAUKESHA CO SHERIFF'S DEPT:110.00 WAUKESHA COUNTY TECH COLLEGE S0747524 1 Invoice K-9 MAINTENANCE TRAINING 07/26/2021 08/10/2021 32.70 821 100.02.20.01.5301 Total WAUKESHA COUNTY TECH COLLEGE:32.70 WAUKESHA COUNTY TREASURER 2021-1008002 1 Invoice MUSKEGO PARK - TREE CLIMBIN 07/20/2021 08/10/2021 259.00 721 100.05.72.18.5110 WA081021 1 Invoice COUNTY JAIL SURCHARGES-JULY 07/31/2021 08/10/2021 1,626.12 821 100.01.08.00.4269 WA081021 2 Invoice DRIVER SURCHARGE JULY 07/31/2021 08/10/2021 1,312.80 821 100.01.08.00.4269 WA081021 3 Invoice INTERLOCK SURCHARGE JULY 07/31/2021 08/10/2021 150.00 821 100.01.08.00.4269 Total WAUKESHA COUNTY TREASURER:3,347.92 WAUKESHA LIME & STONE 1752804 1 Invoice #1 STONE 07/29/2021 08/10/2021 355.41 821 100.04.51.02.5741 Total WAUKESHA LIME & STONE:355.41 WE ENERGIES 3794237865 1 Invoice SALT SHED SUBPANEL 07/27/2021 08/10/2021 17.33 821 100.04.51.08.5910 3795392381 1 Invoice LS GROUP 07/27/2021 08/10/2021 879.02 821 601.61.61.20.5910 3795395991 1 Invoice RANGE ELECTRICITY 07/27/2021 08/10/2021 23.31 821 100.02.20.01.6023 3799106814 1 Invoice LS GROUP 07/29/2021 08/10/2021 6,205.44 821 601.61.61.20.5910 3799801357 1 Invoice WATER/25%07/30/2021 08/10/2021 653.80 821 605.56.09.21.5910 3799801357 2 Invoice CITY GARAGE/50%07/30/2021 08/10/2021 1,307.60 821 100.04.51.08.5910 3799801357 3 Invoice CH 47%07/30/2021 08/10/2021 4,294.92 821 100.01.09.00.5910 3799801357 4 Invoice SEWER/25%07/30/2021 08/10/2021 653.80 821 601.61.61.20.5910 3799801357 5 Invoice PD/53%07/30/2021 08/10/2021 4,843.21 821 100.02.20.01.5910 3799801490 1 Invoice LIBRARY 07/30/2021 08/10/2021 4,156.15 821 100.05.71.00.5910 3799801490 2 Invoice AREA LIGHTING ACCT 07/30/2021 08/10/2021 226.90 821 100.04.51.11.5910 3799801490 3 Invoice HIST TOWN HALL 07/30/2021 08/10/2021 575.24 821 100.04.51.11.5910 3799802853 1 Invoice PD/53%07/30/2021 08/10/2021 534.11 821 100.02.20.01.5910 3799802853 2 Invoice CH 47%07/30/2021 08/10/2021 473.65 821 100.01.09.00.5910 3799802853 3 Invoice GARAGE/50%07/30/2021 08/10/2021 20.38 821 100.04.51.08.5910 3799802853 4 Invoice SEWER/25%07/30/2021 08/10/2021 10.19 821 601.61.61.20.5910 3799802853 5 Invoice WATER/25%07/30/2021 08/10/2021 10.19 821 605.56.09.21.5910 3799803007 1 Invoice GAS/ELECTRIC FOR PUMPS/WEL 07/30/2021 08/10/2021 8,467.51 821 605.52.06.22.5910 Total WE ENERGIES:33,352.75 WISCONSIN BUILDING INSPECTION, LLP 202 1 Invoice JULY INSPECTION SERVICES 08/03/2021 08/10/2021 17,087.12 821 100.02.25.00.5820 148 CITY OF MUSKEGO Payment Approval Report - Board Report Alpha Page: 11 Report dates: 7/28/2021-8/10/2021 Aug 05, 2021 11:03AM Invoice Number SeqNo Type Description Invoice Date Payment Due Date Total Cost GL Period GL Account Number Total WISCONSIN BUILDING INSPECTION, LLP:17,087.12 WISCONSIN DEPT OF ADMIN WI-JULY 2021 1 Invoice COURT FEES-JULY2021 07/31/2021 08/10/2021 13,659.85 821 100.01.08.00.4269 Total WISCONSIN DEPT OF ADMIN:13,659.85 WISCONSIN DEPT OF JUSTICE - CIB L6806T/08102 1 Invoice RECORD NAME SEARCHES 07/31/2021 08/10/2021 273.00 821 100.01.06.00.6002 Total WISCONSIN DEPT OF JUSTICE - CIB:273.00 WONDERWARE MIDWEST INV23582 1 Invoice SUPPORT RENEWAL 08/04/2021 08/10/2021 1,732.50 821 601.61.63.42.5509 INV23582 2 Invoice SUPPORT RENEWAL 08/04/2021 08/10/2021 1,732.50 821 605.56.09.23.5620 Total WONDERWARE MIDWEST:3,465.00 WOODLAND RESTORATION LLC 20210728-003 1 Invoice LABOR-PULL/SPRAY WEEDS 07/28/2021 08/10/2021 368.00 721 215.06.00.00.6009 Total WOODLAND RESTORATION LLC:368.00 Grand Totals: 916,442.84 Report Criteria: Detail report. Invoices with totals above $0 included. Paid and unpaid invoices included. [Report].Description = {<>} "1099 adjustment" Invoice Detail.Type = {>} "adjustments" [Report].Vendor Name = {<>} "KEIL ENTERPRISES" [Report].Vendor Name = {OR} {IS NULL} 149 OVER -> Finance & Administration Department Sharon Mueller Finance & Administration Director Finance & Administration Department Quarterly Report August 10th, 2021, Finance Committee Meeting Major Projects and Activities being worked on within the Finance & Administration Department: Elections/Redistricting – Staff have been responding to various open records requests pertaining to the prior year elections; cleaning up materials & supplies, and preparing for the upcoming four (4) elections in 2022. The statutory City Redistricting has also begun, which is the process of drawing electoral district boundaries and assists in providing census data. Tentative ward boundary plans will need to be provided to the County by October 18 th, with final Ordinance adoption of the aldermanic district plan by November 10 th. 2020 Tax Roll/Rates/Bills – As approved through the budget process, the City tax rate increased slightly by $0.08 from $4.47 to $4.55 per $1,000 assessed value. Approximately 25% of taxpayers opt for the installment plan, of which final payments are due July 31st. Effective with the 2021 tax roll, the collection payment plan will be reduced from three (3) to two (2) installments with the following due dates: January 31st & July 31st. In 2022, Waukesha County will become responsible for collection of the 2nd installment. This change was approved with adoption of Ordinance #39 on February 25th, 2020. 2020 Audit (Operating, Special Revenue, Capital, BML, Sewer & Water Utility) – Fieldwork began on May 3rd and was completed by May 7th. The State Financial Report (Form C) was completed and submitted to the Wisconsin Department of Revenue on a timely basis. Failure to submit this report by the due date will result in State Transportation Aid reductions. The draft Financial Statements and Management & Discussion Analysis (MD&A) were completed by staff on July 15th. As a result of the City’s population exceeding 25,000, all municipalities must send an auditor’s opinion of the Comprehensive Annual Financial Report (Tax 16.05) to the Department of Revenue, which was submitted on July 29th. The audit summary presentation will take place at the August 10th Finance meeting for Committee review. Preliminary results for all City funds have continued to remain positive. 2020 Workers Compensation Audit – Audit took place on March 11th, resulting in a $18,030 credit to the City. 2020 Budget Amendments – As in prior years, due to proper budgetary control being exercised at the General fund level, it appears no amendments will be required which will save the City in publishing costs as well as Committee, Council and staff time. Budgets – The tentative 2022 Budget Goals and Timeline was reviewed at the June 22nd Committee of the Whole meeting. Finance and Administrative staff have begun working with the Mayor and Department Heads in preparation of the proposed Operating, Debt Service, Special Revenues, Water and Sewer Utilities and Big Muskego Lake budgets. Investments – Savings yields are expected to stay relatively steady in an ultra-low rate environment; near zero percent. Although municipal investment opportunities are limited, staff have been working with financial advisors to seek the best rate of return. 150 FINANCE & ADMIN. DIRECTOR’S REPORT 08/10/21 PAGE 2 2 Financing/Debt Issuance – Long-term projections and financing options are under review for the anticipated 2022 Capital Budget projects. The potential refinancing of the 2013 $12,625,000 General Obligation Refunding Bond is being monitored on a monthly basis to determine the optimal timing to maximize interest cost savings. Payroll/Benefit Administration –  Employee W-2 Wage and Tax Statements were reconciled and distributed on December 29th, 2020. Annual State, Federal and Retirement reports were completed well before the due date with no adjustments to report.  1st & 2nd Quarter Federal and State payroll tax reports were reconciled and submitted to the IRS and DOR.  The City Wellness Program Health Risk Assessment took place the week of June 21st. Employee participation has declined to 80%. Staff will work on promoting participation for the 2022 assessment.  The dual health insurance options were implemented on July 1st with approximately 22% of staff opting for the alternative Arise plan. 1st & 2nd Quarter Utility Bills – The new Utility Accountant is to be commended for processing utility billings and collections in a timely manner during the financial system upgrade. Board of Review – Open book assessment examination took place the week of July 5th and continued on through July 30th. Approximately 200 residents or 2% had inquiries about the assessment revaluation. The contracted Assessor staff responded to all requests immediately with no issues to report. The meetings for property owners to file an objection will take place on September 1st & 2nd. Licensing – Various licenses and permits, including liquor and fireworks, were all processed and issued in a timely manner. Other Projects – The financial system upgrade was successful with only minor reporting issues that should be resolved by August 31st; document management system (Laserfiche) implementation is underway and will include the new accounts payable workflow; and alternative on-line payment processing and fee structures are being researched. All projects were delayed due to COVID-19. 2020 Annual Results & 2021 2nd Quarter General Fund Operating Results – See attached and below. The first three (3) attached worksheets recap the City’s annual operating results for the General Operating Fund. As of December 31st, 2020, revenues exceeded expenditures by $485,132. State grant funding more than offset lost revenue due to COVID-19; and several position vacancies allowed for a significant reduction in personnel costs. The remaining attachments summarize the City’s General Fund operating results for the first two quarters ending June 30st, 2021. Net revenues over expenditures reflect a ($193,020) decrease over the prior year mainly due to additional budgeted staff within the Public Works department. As compared to the budget, revenue results typically include significant variances within each category either because of economic factors or the timing of funds received and will become more proportionate with the budget by the 3rd and 4th quarters. The expenditures also vary due to seasonal events or the timing of transactions such as with recreational program activity, hydrant rental, vehicle replacements and road program costs. Total expenditures under budget amounted to (-) 54.22%, which is within 2% of the prior year. 151 December 31, 2020 Budget Actual Over/(Under) % Over/(Under)Revenue Comparison Taxes $10,839,012 $10,838,625 -$387 0.00% Intergovernmental $2,048,453 $2,186,933 $138,479 6.76% Licenses and Permits $769,235 $716,302 -$52,933 -6.88% Fines, Forfeits and Penalties $310,000 $247,917 -$62,083 -20.03% Public Charges for Services $552,358 $900,397 $348,039 63.01% Intergov. Charges for Services $237,500 $238,316 $816 0.34% Miscellaneous $369,285 $337,302 -$31,983 -8.66% Other Financing Sources $606,753 $531,380 -$75,373 -12.42% Interdepartmental $266,750 $96,814 -$169,936 -63.71% Total Revenue $15,999,346 $16,093,986 $94,640 0.59% 2020 Budget Quarter 4 Results: REVENUES General Fund - Annual Operating Results 67% 14%4% 2%6% 1% 2%3% 1% Taxes Intergovernmental Licenses and Permits Fines, Forfeits and Penalties Public Charges for Services Intergov. Charges for Services Miscellaneous Other Financing Sources Interdepartmental 152 December 31, 2020 General Government Budget Actual Over/(Under) % Over/(Under)Actual Cost Breakdown Common Council/Mayor $202,380 $208,363 $5,983 2.96% Finance & Administration $602,021 $634,115 $32,094 5.33% Assessor $104,300 $101,225 -$3,075 -2.95% Attorney $137,597 $137,860 $263 0.19% Non-Departmental $590,117 $563,544 -$26,573 -4.50% Municipal Court $222,740 $168,255 -$54,484 -24.46% Building Maintenance $204,862 $211,935 $7,073 3.45% Information Technology $362,397 $349,143 -$13,254 -3.66% Bank Service Charges $5,000 $6,887 $1,887 37.75% Total $2,431,413 $2,381,328 -$50,085 -2.06% Public Safety Budget Actual Over/(Under) % Over/(Under) Police - Sworn Officers $5,326,236 $5,234,022 -$92,213 -1.73% Police - Dispatch & Clerical $817,662 $787,958 -$29,703 -3.63% Volunteer Fire $835,703 $837,574 $1,871 0.22% Non-Departmental $21,102 $21,602 $500 2.37% Building Inspection $299,111 $263,166 -$35,945 -12.02% Total $7,299,813 $7,144,323 -$155,491 -2.13% Health & Human Services Budget Actual Over/(Under) % Over/(Under) Animal Warden $3,581 $3,581 $0 0.00% Public Safety Supplies & Expenses $225 $110 -$115 -51.06% Total $3,806 $3,691 -$115 -3.02% Public Works Budget Actual Over/(Under) % Over/(Under)Budget vs. Actual Engineering $226,316 $169,996 -$56,320 -24.89% Public Works $2,784,376 $2,701,874 -$82,502 -2.96% Total $3,010,692 $2,871,870 -$138,822 -4.61% Culture, Recreation & Education Budget Actual Over/(Under) % Over/(Under) Parade Fund & Little Lake District $57,470 $52,502 -$4,968 -8.65% Library $1,333,638 $1,293,266 -$40,372 -3.03% Parks $15,900 $10,515 -$5,385 -33.87% Recreation $456,547 $351,034 -$105,514 -23.11% Total $1,863,555 $1,707,316 -$156,239 -8.38% Conservation & Development Budget Actual Over/(Under) % Over/(Under) Planning, Conservation & Development $428,066 $421,367 -$6,699 -1.56% Total $428,066 $421,367 -$6,699 -1.56% Capital Outlay-Operations Budget Actual Over/(Under) % Over/(Under) Computer Replacements $18,000 $18,595 $595 3.31% Mobile Devices $5,000 $49,629 $44,629 892.59% Social Media Archive $4,500 $4,848 $348 7.73% Police Vehicle Replacements $54,500 $59,652 $5,152 9.45% Road Program $750,000 $743,769 -$6,231 -0.83% Public Works Vehicle Replacements $0 $0 $0 #DIV/0! Contingency $80,000 $0 -$80,000 -100.00% Trf to Comp Abs from GF $50,000 $202,052 $152,052 304.10% Trf to Debt Serv from GF $0 $411 $411 #DIV/0! Total $962,000 $1,078,958 $116,958 12.16% Total Expenditures Budget Actual Over/(Under) % Over/(Under) $15,999,346 $15,608,854 ($390,491)-2.44% 2020 Budget Quarter 4 Results: EXPENDITURES General Fund - Annual Operating Results $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 Budget Actual 15% 46%0%18% 11% 3%7% General Government Public Safety Health & Human Services Public Works Culture, Recreation & Education Conservation & Development Capital Outlay-Operations 153 December 31, 2020 2020 2019 Comparison Revenues vs. Expenditures Total Revenues $16,093,986 $15,672,802 $421,184 Total Expenditures $15,608,854 $15,170,026 $438,828 Total Surplus/(Deficit) $485,132 $502,775 ($17,643) General Fund - Annual Operating Results Quarter 4 Budget Results - 2020 vs. 2019 $14,600,000 $14,800,000 $15,000,000 $15,200,000 $15,400,000 $15,600,000 $15,800,000 $16,000,000 $16,200,000 2020 2019 154 June 30, 2021 Budget Actual Over/(Under) % Over/(Under)Revenue Comparison Taxes $11,129,052 $11,141,062 $12,010 0.11% Intergovernmental $2,218,725 $868,544 -$1,350,181 -60.85% Licenses and Permits $795,840 $366,190 -$429,650 -53.99% Fines, Forfeits and Penalties $310,000 $141,853 -$168,147 -54.24% Public Charges for Services $572,694 $316,430 -$256,264 -44.75% Intergov. Charges for Services $242,000 $119,724 -$122,276 -50.53% Miscellaneous $296,675 $51,415 -$245,260 -82.67% Other Financing Sources $549,550 $38,227 -$511,323 -93.04% Interdepartmental $326,250 $45,575 -$280,675 -86.03% Total Revenue $16,440,786 $13,089,020 ($3,351,767) -20.39% 2021 Budget Quarter 2 Results: REVENUES General Fund - Annual Operating Results 85% 7%3% 1%3% 1% 0% 0%0% Taxes Intergovernmental Licenses and Permits Fines, Forfeits and Penalties Public Charges for Services Intergov. Charges for Services Miscellaneous Other Financing Sources Interdepartmental 155 June 30, 2021 General Government Budget Actual Over/(Under) % Over/(Under)Actual Cost Breakdown Common Council/Mayor $235,346 $107,623 -$127,723 -54.27% Finance & Administration $574,081 $260,326 -$313,754 -54.65% Assessor $159,200 $64,555 -$94,645 -59.45% Attorney $145,338 $63,676 -$81,662 -56.19% Non-Departmental $593,195 $476,162 -$117,033 -19.73% Municipal Court $172,244 $83,062 -$89,181 -51.78% Building Maintenance $208,818 $104,797 -$104,021 -49.81% Information Technology $430,819 $194,611 -$236,208 -54.83% Bank Service Charges $6,000 $2,378 -$3,622 -60.36% Total $2,525,040 $1,357,191 -$1,167,849 -46.25% Public Safety Budget Actual Over/(Under) % Over/(Under) Police - Sworn Officers $5,410,028 $2,552,106 -$2,857,922 -52.83% Police - Dispatch & Clerical $822,355 $384,879 -$437,476 -53.20% Volunteer Fire $852,496 $249,451 -$603,045 -70.74% Non-Departmental $21,102 $22,401 $1,299 6.15% Building Inspection $318,018 $106,189 -$211,830 -66.61% Total $7,424,000 $3,315,025 -$4,108,975 -55.35% Health & Human Services Budget Actual Over/(Under) % Over/(Under) Animal Warden $3,600 $3,581 -$19 -0.53% Public Safety Supplies & Expenses $250 $117 -$133 -53.02% Total $3,850 $3,698 -$152 -3.94% Public Works Budget Actual Over/(Under) % Over/(Under)Budget vs. Actual Engineering $153,877 $65,279 -$88,598 -57.58% Public Works $2,910,718 $1,565,450 -$1,345,268 -46.22% Total $3,064,594 $1,630,729 -$1,433,866 -46.79% Culture, Recreation & Education Budget Actual Over/(Under) % Over/(Under) Parade Fund & Little Lake District $57,598 $57,296 -$302 -0.52% Library $1,340,888 $595,761 -$745,126 -55.57% Recreation $451,704 $160,118 -$291,587 -64.55% Total $1,850,190 $813,175 -$1,037,015 -56.05% Conservation & Development Budget Actual Over/(Under) % Over/(Under) Planning, Conservation & Development $434,485 $202,311 -$232,174 -53.44% Total $434,485 $202,311 -$232,174 -53.44% Capital Outlay-Operations Budget Actual Over/(Under) % Over/(Under) Computer Replacements $20,000 $9,692 -$10,308 -51.54% Mobile Devices $20,000 $16,760 -$3,240 -16.20% Social Media Archive $4,925 $4,308 -$617 -12.53% Police Vehicle Replacements $211,700 $88,110 -$123,591 -58.38% Road Program $750,000 $35,431 -$714,569 -95.28% Public Works Vehicle Replacements $0 $0 $0 #DIV/0! Contingency $82,000 $0 -$82,000 -100.00% Trf to Comp Abs from GF $50,000 $50,000 $0 0.00% Total $1,138,625 $204,301 -$934,324 -82.06% Total Expenditures Budget Actual Over/(Under) % Over/(Under) $16,440,785 $7,526,431 ($8,914,354)-54.22% 2021 Budget Quarter 2 Results: EXPENDITURES General Fund - Annual Operating Results $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 Budget Actual 18% 44% 0% 21% 11%3%3% General Government Public Safety Health & Human Services Public Works Culture, Recreation & Education Conservation & Development Capital Outlay-Operations 156 June 30, 2021 2021 2020 Comparison Revenues vs. Expenditures Total Revenues $13,089,020 $12,693,388 $395,632 Total Expenditures $7,526,431 $6,937,779 $588,652 Total Surplus/(Deficit) $5,562,589 $5,755,609 ($193,020) General Fund - Annual Operating Results Quarter 2 Budget Results - 2021 vs. 2020 $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 2021 2020 157