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MD&A-1

MANAGEMENT’S DISCUSSION AND ANALYSIS

As management of the City of Raleigh (the

City

), we offer readers of the City’s financial statements this narrative

overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2016. Please read it in

conjunction with the transmittal letter at the front of this report and the City’s financial statements, which follow

this section.

FINANCIAL HIGHLIGHTS

In 2015-16, the City maintained its strong financial position for both its general governmental and business-type

funds. Key indicators of that were overall positive budget variances, increases in fund balance amounts, growth of

key general tax and business-type revenues, and continued funding of long-term pensions, risk management claims

and OPEB liabilities on an actuarial basis. Consistent with those indicators, the City’s general obligation ratings

remained AAA/Aaa. The following are summary financial highlights:

• The assets and deferred outflows of resources of the City of Raleigh exceeded its liabilities and deferred

inflows of resources at the close of the most recent fiscal year by $2,225.4 million

(net position)

.

• This amount represents a $146.9 million increase in operating results from the prior year, or 7.1%

• Of this amount, $483.1 million

(unrestricted net position)

may be used to meet the government’s

ongoing obligations to citizens and creditors

• As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund

balances of $559.3 million.

• $297.1 million, or 53.1% is assigned for specific purposes as identified by the City, with the largest

assigned amount being $101.3 million for future debt service

• $84.8 million, or 15.2% is unassigned in the general fund and is available for spending at the City’s

discretion

• $77.7 million, or 13.9% is considered nonspendable

• $96.9 million, or 17.3% is restricted by outside agencies

• $2.9 million of fund balance is committed for the law enforcement officers’ special separation

allowance fund

• At the end of the current fiscal year, fund balance for the general fund was $268.2 million.

• Highlights of financing issues and activities for the City during 2015-16 are as follows:

• The City obtained a loan of $52.0 million to finance the purchase of the Dorothea Dix property that

will be used as a destination park

• The City issued $11.5 million in limited obligation bonds to finance the construction of a fire station and

projects for the Duke Energy Center for the Performing Arts

• The City issued $6.0 million in taxable housing bonds

• The City issued $31.0 million in limited obligation bonds to refund the 2009 variable rate limited

obligation bonds

• The City issued $19.2 million in limited obligation bonds to refund remaining parking certificate of

participation obligations which will reduce gross future debt service payments by $3.8 million over

the next fifteen years

• The City issued $14.2 million in limited obligation bonds to refund an installment financing draw

program for improvements to the Duke Energy Center for the Performing Arts

City of Raleigh

Management’s Discussion and Analysis