Case #2 City of Detroit The city of Detroit, Michigan, filed for Chapter 9 bankruptcy on July 18, 2013, which was the largest municipal bankruptcy filing in U.S. history by the amount of the debt. It caused a big turbulence in the communities involved and questions rose as to how the management and accounting system could have helped the city to prevent or alleviate the financial tragedy. From the teaching perspective, the bankruptcy serves as a realistic example to discuss debt levels, property tax collections, dysfunctional city services and other related issues. For this purpose, two basic articles are assigned to the class for them to research the financial crisis and learn how the city has been trying to evolve from the crisis. Also, students are required to obtain copies of the 2012 and 2014 CAFR to compare the financial condition of the city before and after the bankruptcy. Other resources are allowed as they are pertinent to the research but need to be correctly cited. Finally, a research report and presentation are required to address the following questions comprehensively. 1) Describe and discuss five major factors that have led to the city's bankruptcy. How are the problems specifically related to our class contents? 2) How much total liabilities did the city have before and after the bankruptcy? What are the major types of liabilities? 3) Describe how the federal government, local governments, and the community are trying to save and revive the city. Are these actions working? 4) Describe the recent property tax issue faced by the city and how it impacts the city's budget and financial condition. 5) Study the 2014 financial statements carefully, then calculate the property tax revenue as a percentage of the total revenue in the governmental funds. What is the largest and second largest revenue sources for the city's general fund? 6) For fiscal year 2014, what are the three largest expenditures in the governmental funds? Calculate their percentages to the total expenditure of the govermental funds. 7) Both the governmental funds and enterprise funds have deficits (the difference between assets and liabilities is negative). How can you explain this, and what has the city done to improve these cumulative deficits? 8) Are there other observations and comments for the city that you would like to present