Comprehensive Annual Financial Report - Fiscal Year ended 6/30/2017

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, 2017. 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 2016-17, 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. The following are summary financial highlights: • The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $2,366.7 million ( net position ). • This amount represents a $181.2 million increase in operating results from the prior year, or 8.1% • Of this amount, $473.0 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 $600.1 million. • $342.7 million, or 57.1% is assigned for specific purposes as identified by the City, with the largest assigned amount being $104.7 million for future debt service • $76.8 million, or 12.8% is unassigned in the general fund and is available for spending at the City’s discretion • $77.3 million, or 12.9% is considered nonspendable • $99.4 million, or 16.6% is restricted by outside agencies • $3.9 million, or 0.6% 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 $274.5 million. • Highlights of financing issues and activities for the City during 2016-17 are as follows: • The City issued $110.0 million in new water and sewer revenue bonds for the construction of various utility projects • The City issued $92.2 million in water and sewer revenue refunding bonds to refund prior revenue bond issues which will reduce gross future debt service payments by $11.9 million • The City issued $68.0 million in general obligation bonds to finance capital projects for Street Improvement ($59.9 million) and Parks ($8.1 million) • The City entered into a new installment financing agreement of $42.3 million for the purchase of rolling stock equipment, parking deck equipment and street meters, and police vehicle equipment • The City maintained its AAA/Aaa general obligation bond rating from all three major rating agencies. City of Raleigh _____________________________________________________________ Management's Discussion and Analysis ____________________________________________________________ ________________________________________________________ MD&A-1 ________________________________________________________