Use the Same Comprehensive Annual Financial Report for All 4 Chapters/see the CAFR attached below

Chapter 2

2-1 Obtain a Comprehensive Annual Financial Report and answer the following questions.

1. From the MD&A in your report, write a short summary of (1) the financial condition of your government, (2) a comparison of revenues compared with the prior year, (3) a comparison of expenses compared with the prior year, and (4) a comparison of budgeted and actual activity.
2. From the statement of Net Position, write down the following: (1) unrestricted net positiongovernment activities; (2) unrestricted net positionbusiness type activities; (3) restricted net position by restrictiongovernmental activities; (4) restricted net position by restrictionbusiness type activities; and (5) unrestricted and restricted net positioncomponent units (if any)
3. From the Statement of Activities, write down the following; (1) net program expense (or revenue)governmental activities; (2) net program expense (or revenue) == business-type activities; (3) net program expense (or revenue)component units; (4) change in net positiongovernmental activities; (5) change in net positionbusiness type activities; and (6) change in net positioncomponent units. Does the ending net position in this statement agree with the net position figures in the Statement of Net Position?
4. From the Statement of Revenues, Expenditures, and Changes in Fund Balances for Governmental Funds, identify the names of the major governmental funds. Write down the net change in fund balance for each major fund.
5. From the governmental fund statements, take one major fund (other than the General Fund) and prove, using the 10 percent and 5 percent criteria described in this chapter, that the fund is required to be reported as a major fund.
6. From the Statement of Revenues, Expenses, and Changes in Fund Net Position list the major enterprise funds. For each, write down: (1) the operating income, (2) the income (loss) before contributions and transfers and (3) the change in net position.

Chapter 3

3-1 Obtain a Comprehensive Annual Financial Report and answer the following questions.

1. Look at the Statement of Revenues, Expenditures, and Changes in Fund Balances for the governmental funds. List the revenue source classes. Are expenditures reported by character? List the functional classifications under the current character classification. Are Other Financing Sources and Uses presented separately? Does your report show transfers in? Transfers out? Capital leases? Proceeds of bonds?
2. Look at budgetary Comparison Schedule in the RSI section of your annual Report (or Budgetary Comparison Statement, if that is used by your government) for the General Fund. Is the budgetary format used, or is the schedule in the format used for the Statement of Revenues, Expenditures, and Changes in Fund Balances? Does the report reflect the original budget, revised budget, and actual figures? Are variance columns presented comparing the actual with the revised budget and comparing the original with the revised budget? Is a reconciliation between the budgetary basis of accounting and GAAP presented on the budgetary comparison schedule or in a separate schedule? What are the major differences, if any? Are budgetary comparison schedules (or statements) presented for special revenue funds? Are all special revenue funds included?
3. Look at the note that describes the basis of budgeting (usually in the Summary of Significant Accounting Policies). Is the budget prepared of the GAAP basis or some other basis? Are the differences, if any, between the budgetary basis and GAAP clearly explained?

Chapter 4

4-1 Obtain a Comprehensive Annual Financial Report and answer the following questions.

1. Look at the General Fund column of the Balance Sheet for governmental funds. What are the major assets? Liabilities? What categories of Fund Balances are reported?
2. Look at the General Fund column of the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances. Prepare a schedule showing percentages of revenues by source. Prepare a schedule showing percentages of expenditures by function. Does your government have significant transfers in or out? Can you identify the fund that provides or receives these resources? Does your government have any other financing sources or uses? Special and/or extraordinary items?
3. Does your government report any special revenue funds as major in the governmental fund statements? What are they? What are the major revenue sources? Expenditure functions?
4. Review the notes to the financial statements to determine the measurement focus and basis of accounting used to prepare the governmental fund financial statements. Do the notes describe modified accrual accounting in a manner consistent with this book? Which revenue sources are subject to accrual? Are expenditures generally recognized when goods and services are received? Which specific modifications to accrual accounting are mentioned in the notes?
5. Look at the General Fund column of the governmental fund statements from the point of view of a financial analyst. Is the Fund Balance as of the balance sheet date larger or smaller than at the beginning of the year? Are reasons for the change apparent from the statements? Compute a ratio of Fund balance/General Fund Revenues and compare it with your class members ratio.

Chapter 5

5-1 Obtain a Comprehensive Annual Financial Report and answer the following questions.

1. Examine the governmental fund financial statements. Are any major capital projects funds included? If so, list the,. Attempt to find out thenature and purpose of the projects from the letter of transmittal, the notes, or MD&A. What are the major sources of funding, such as bond sales, intergovernmental grants, and transfers from other funds? Were the projects completed during the year?
2. Again looking at the governmental fund financial statements, are any major debt service funds included? If so, list them. What are the sources of funding for these debt service payments?
3. Does your report included supplemental information including combining statements for nonmajor funds? If so, are any capital projects and debt service funds included? If so, list them. Indicate the major revenue and other financing source categories for these funds.
4. Look at the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances, specifically the expenditure the expenditure classification. Compute a ratio of capital outlay/total expenditures. Again, compute a ratio of debt service/ total expenditures. Compare those with your classmates ratios. Comment on the possible meaning of the ratios.
5. Look at the ratios to the financial statements, specifically the note (in the summary of significant accounting policies) regarding the definition of modified accrual accounting. Does the note specifically indicate that modified accrual accounting is used for capital projects and debt service funds? Does the note indicate that debt service payments, both principal and interest, are recorded as an expenditure when due?
6. Does your government report capital leases payable in the government-wide Statement of Net Position? If so, can you determine if new capital leases were initiated during the year? Can you trace the payments related to capital leases?
7. Doesyourgovernmentreportanypermanentfunds,eithermajorornonmajor?Ifso,listthem.Whataretheamountsofthepermanentresourcesavailableforgovernmentalpurposes?Whatis/arethegovernmentalpurpose(s)?

COMPREHENSIVE ANNUAL FINANCIAL REPORT

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT LOUISVILLE, KENTUCKY

Fiscal Year Ended June 30, 2014

GREG FISCHER Mayor

Prepared by: Office of Management & Budget

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2014

TABLE OF CONTENTS

INTRODUCTORY SECTION

Letters of Transmittal................................................................................................................. i Government Finance Officers Association Certificates of Achievement................................ vi Organization Chart.................................................................................................................. vii Mayor, Metro Council, and Office of Management and Budget Officials ............................ viii

FINANCIAL SECTION

Independent Auditors Report....................................................................................................1

Managements Discussion and Analysis ...................................................................................5

Basic Financial Statements: Government-wide Financial Statements:

Statement of Net Position ............................................................................................17

Statement of Activities.................................................................................................18 Fund Financial Statements:

Balance Sheet - Governmental Funds..........................................................................20 Statement of Revenues, Expenditures, and Changes in Fund Balances -

Governmental Funds........................................................................................22 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the

Statement of Activities.....................................................................................24 Proprietary Funds:

Statement of Fund Net Position ...................................................................................25 Statement of Revenues, Expenses, and Changes in Fund Net Position.......................26 Statement of Cash Flows .............................................................................................27

Fiduciary Funds: Statement of Fiduciary Net Position ............................................................................28 Statement of Changes in Fiduciary Net Position .........................................................29

Component Units: Combining Statement of Net Position .........................................................................30 Combining Statement of Activities..............................................................................32

Notes to the Financial Statements......................................................................................35

Required Supplementary Information: Schedule of Revenues, Expenditures, and Changes in Fund Balance -

Budget and Actual General Fund on Basis of Budgeting .................................100 Pensions Schedules of Funding Progress and Schedules of Employer

Contributions........................................................................................................101

Other Supplementary Information: Combining and Individual Fund Statements and Schedules:

Combining Balance Sheet Nonmajor Governmental Funds...................................102 Combining Statement of Revenues, Expenditures, and Changes in

Fund Balances Nonmajor Governmental Funds .........................................104

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2014

TABLE OF CONTENTS

FINANCIAL SECTION (continued)

Combining Statement of Net Position Internal Service Funds ...............................105 Combining Statement of Revenues, Expenses, and Changes in Net

Position Internal Service Funds ..................................................................106 Combining Statement of Cash Flows Internal Service Funds ................................107 Combining Statement of Fiduciary Net Position Agency Funds............................108 Combining Statement of Changes in Assets and Libilities Agency

Funds ..............................................................................................................109

STATISTICAL SECTION

Summary of Net Position and Changes in Net Position ........................................................111 Fund Balance, Governmental Funds......................................................................................112 Changes in Fund Balance, Governmental Funds...................................................................113 General Government Revenues by Source ............................................................................114 General Fund Tax Revenues by Source.................................................................................115 Employment, Income and Occupational Tax Revenues ........................................................116 Principal Withholding Taxpayers ..........................................................................................117 Assessed and Estimated Actual Value of Taxable Property Metro Government............................................................................................................................118 Assessed and Estimated Actual Value of Taxable Property Urban Services District....................................................................................................................................119 Property Tax Rates Direct and Overlapping Governments ................................................120 Principal Property Tax Payers ...............................................................................................121 Property Tax Levies and Collections.....................................................................................122 Legal Debt Margin.................................................................................................................123 Direct and Overlapping Governmental Activities Debt.........................................................124 Ratios of Outstanding Debt by Type .....................................................................................125 Ratios of General Bonded Debt Outstanding.........................................................................126 Pledged Revenue Coverage ...................................................................................................127 Demographic & Economic Indicators - Population Growth.................................................128 Principal Employers...............................................................................................................129 Number of Government Employees by Function/Program ...................................................130 Miscellaneous Operating Indicators and Capital Asset Information .....................................131

Louisville Metro Government

Mayor

Office of Internal Audit

Louisville Metro Council

Chief of Staff

Deputy Chief of Staff/Chief of Strategic Initiatives

Human Resources

Metro Technology Services

Louisville Metro Police Department

Department of Corrections

Youth Detention Services

Criminal Justice Commission

Other Elected Officials

Chief of Public Services

Chief of Community Building

Chief of Economic Growth & Innovation

Chief Financial Officer

Chief of Performance Improvement

Jefferson County Attorney

Jefferson County Clerk

Louisville Fire

Human Relations Commission

Metro Animal Services

Economic Growth & Innovation

Office of Management & Budget

Office of Performance Improvement

Commonwealth Attorney

Emergency Medical Services

Emergency Management Agency/MetroSafe

Community Services & Revitalization

Related Agencies

Jefferson County Coroner

Property Valuation Administrator

Waterfront Development Corporation

Public Works & Assets

Public Health & Wellness

Codes & Regulations

Parks & Recreation

Kentucky Science Center

Louisville Free Public Library

Parking Authority of River City (PARC)

Other Statutory Obligations

Louisville Zoo

Transit Authority of River City (TARC)

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT

Fiscal Year Ended June 30, 2014

HONORABLE GREG FISCHER ....................................................... MAYOR

METRO COUNCIL MEMBERS ATTICA SCOTT ............................................................................................. DISTRICT 1 BARBARA SHANKLIN ................................................................................... DISTRICT 2 MARY C. WOOLRIDGE................................................................................. DISTRICT 3 DAVID TANDY ............................................................................................... DISTRICT 4 CHERI BRYANT HAMILTON......................................................................... DISTRICT 5 DAVID JAMES ............................................................................................... DISTRICT 6 KENNETH C. FLEMING ................................................................................ DISTRICT 7 TOM OWEN...................................................................................................DISTRICT 8 TINA WARD-PUGH ....................................................................................... DISTRICT 9 JIM KING ..................................................................................................... DISTRICT 10 KEVIN KRAMER.......................................................................................... DISTRICT 11 RICK BLACKWELL......................................................................................DISTRICT 12 VICKI AUBREY WELCH .............................................................................. DISTRICT 13 CINDI FOWLER...........................................................................................DISTRICT 14 MARIANNE BUTLER ................................................................................... DISTRICT 15 KELLY DOWNARD...................................................................................... DISTRICT 16 GLEN STUCKEL.......................................................................................... DISTRICT 17 MARILYN PARKER ..................................................................................... DISTRICT 18 JERRY MILLER ........................................................................................... DISTRICT 19 STUART BENSON ...................................................................................... DISTRICT 20 DAN JOHNSON...........................................................................................DISTRICT 21 ROBIN ENGEL ............................................................................................ DISTRICT 22 JAMES PEDEN............................................................................................ DISTRICT 23 MADONNA FLOOD ..................................................................................... DISTRICT 24 DAVID YATES ............................................................................................. DISTRICT 25 BRENT ACKERSON.................................................................................... DISTRICT 26

OFFICE OF MANAGEMENT AND BUDGET

STEVE ROWLAND............................................................ CHIEF FINANCIAL OFFICER STEPHANIE A. MOORE..................................................DIRECTOR OF ACCOUNTING

viii

Honorable Greg Fisher, Mayor, and The Louisville Metro Council Louisville, Kentucky

Report on the Financial Statements

INDEPENDENT AUDITOR'S REPORT

We have audited the accompanying financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Louisville/Jefferson County Metro Government (Metro Government), as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the Metro Governments basic financial statements as listed in the table of contents.

Managements 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 did not audit the financial statements of the Transit Authority of River City, Waterfront Development Corporation and the Kentucky Science Center, Inc., which represent approximately 3% of total component unit assets, 5% of total component unit net position and 20% of total component unit program revenues. Those statements were audited by other auditors whose reports thereon have been furnished to us, and our opinions, insofar as it relates to the amounts included for those entities, are based solely on the reports of the other auditors. 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 entitys 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 entitys 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.

1

Crowe Horwath LLP

Independent Member Crowe Horwath International

Opinions

In our opinion, based on our audit and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Metro Government, as of June 30, 2014 and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter

As discussed in Note 8 and Note 19 to the financial statements, Metro Government has adopted the provisions of Governmental Accounting Standards Board (GASB) Statement 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees. The implementation of GASB Statement 70 resulted in the recognition of a retroactively applied financial guarantee liability and reduction of beginning unrestricted net position of $103,446,383 on the Statement of Net Position at July 1, 2013. Our opinions are not modified with respect to this matter.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management Discussion and Analysis on pages 5 through 15, the required supplemental information including the budgetary comparison information on page 99, the pension information related to the schedule of funding progress on page 100 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by 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 managements 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 Metro Governments basic financial statements. The introductory section, combining and individual nonmajor fund financial statements, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining and individual nonmajor fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. This 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 financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America.

In our opinion, the combining and individual nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

The introductory section and statistical section has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.

Louisville, Kentucky December 19, 2014

2

Crowe Horwath LLP

3

4

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENTS DISCUSSION AND ANALYSIS (Unaudited) For the Year Ended June 30, 2014

Our discussion and analysis of Louisville/Jefferson County Metro Governments (Metro Government) financial performance provides an overview of Metro Governments financial activities for the fiscal year ended June 30, 2014. Please read it in conjunction with the Metro Governments financial statements, which begin on page 17.

Financial Highlights

• Total assets plus deferred outflows of resources of the primary government exceeded total liabilities and deferred inflows of resources by approximately $1.37 billion at the close of fiscal year 2014. This amount includes a surplus of approximately $673.3 million in unrestricted net position.
• Metro Governments net position includes an equity interest in Louisville Water Company of $855.6 million.
• Total net position increased by $34.9 million.
• At the end of fiscal year 2014, Metro Governments governmental funds reported a combined ending fund balance of approximately $186.4 million. This was a decrease of approximately $17.7 million for the year ending June 30, 2014.
• At the end of fiscal year 2014, unassigned general fund balance was $62.5 million or approximately 11.2% of total general fund expenditures. Overview of the Financial Statements Managements discussion and analysis (MD&A) are provided to serve as an introduction to the basic financial statements of the primary government that follow. Metro Governments basic financial statements consist of the following: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other required supplementary information in addition to the basic financial statements themselves. Government-Wide Financial Statements The government-wide financial statements provide information about the activities of Metro Government as a whole and present a longer-term view of the Metro Governments finances. One of the most important questions raised about the Metro Governments finances is whether the Metro Government as a whole is better off or worse off as a result of the years activities. The Statement of Net Position (page 17) and the Statement of Activities (pages 18-19) report information about the Metro Government as a whole and about its activities in a way that helps answer this question. These statements include all assets, deferred outflows of resources, liabilities, and deferred inflows of resources using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current years revenues and expenses are taken into account regardless of when cash is received or paid.

5

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENTS DISCUSSION AND ANALYSIS (Unaudited), continued For the Year Ended June 30, 2014

These two statements report the Metro Governments net position as of June 30, 2014 and the changes in net position during fiscal year 2014. Metro Governments net position, the difference between assets (what the citizens own), deferred outflows of resources, liabilities (what the citizens owe), and deferred inflows of resources is one way to measure the Metro Governments financial health, or financial position. Increases or decreases in the Metro Governments net position over time are one indicator of whether its financial health is improving or deteriorating. Additional non-financial factors should be considered in assessing the overall health of the Metro Government, such as changes in the Metro Governments property tax base and the condition of the Metro Governments capital assets (roads, buildings, etc.).

Metro Governments basic services are reported in the governmental activities section of the government-wide financial statements, including public safety, public works, community services, parks and general administration. Occupational taxes, property taxes, fines, and state and federal grants finance most of these activities.

If a fee is charged to customers to help the Metro Government cover all or most of the cost of certain services it provides, those activities are considered to be business-type activities in most cases. The primary government did not report any business-type activities in fiscal year 2014.

The Metro Government includes the Louisville Water Company, the Parking Authority of River City, Inc., the Transit Authority of River City, the Louisville and Jefferson County Riverport Authority, the Louisville and Jefferson County Metropolitan Sewer District, the Kentucky Science Center, Inc., and the Waterfront Development Corporation in its report as discretely presented component units. These legally separate component units are important because the Metro Government is financially accountable for them, and in the case of the Louisville Water Company, 100% of its stock is owned by the Metro Government. All of the component units separately issue their own respective financial statements, including MD&A, which should be read in conjunction with these statements.

Fund Financial Statements

The fund financial statements provide detailed information about Metro Governments most significant funds. Fund financial statements begin on page 20. For governmental activities, these statements tell how these services were financed in the short term as well as what remains for future spending. Some funds are required to be established by State law and by bond covenants. However, other funds are established, as needed, to help control and manage money for particular purposes or to show that Metro Government is meeting legal responsibilities for using certain taxes, grants, and other money.

The Metro Governments two kinds of funds, governmental and proprietary, use different accounting approaches (as discussed further in Note 1). The Metro Government also uses fiduciary funds, which are separate funds from the governmental and proprietary funds described below. Fiduciary funds are not included in the Metro Governments government-wide financial statements.

Governmental funds: Most of the Metro Governments basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash.

6

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENTS DISCUSSION AND ANALYSIS (Unaudited), continued For the Year Ended June 30, 2014

The governmental fund statements provide a detailed short-term view of the Metro Governments general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the Metro Governments programs. We describe the relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds in reconciliations within the governmental fund financial statements.

Proprietary funds: Proprietary funds are reported in the same way those business-type activities are reported in the Statement of Net Position and the Statement of Activities. Metro Governments proprietary funds only include internal service funds, such as the Metro Governments Insurance and Risk Management Fund and the Louisville/Jefferson County Revenue Commission, a blended component unit, to report activities that provide supplies and services to the Metro Governments other programs and activities. The ending balances in these funds are consolidated in the Governmental Activities column of the government-wide financial statements.

Fiduciary funds: Fiduciary funds are used to account for resources held for the benefit of parties outside the government. These funds are not reflected in the government-wide financial statements because the resources of these funds are not available to support the Metro Governments own activities or programs. The basis of accounting for fiduciary funds is similar to that of proprietary funds.

Notes to the Financial Statements

The notes provide additional information that is essential to a full understanding of the information provided in the government-wide and fund financial statements. The notes to the financial statements begin on page 35.

Other Information

In addition to the basic financial statements and accompanying notes, this report also presents certain required and other supplementary information. Required supplementary information includes a budgetary to actual comparison of Metro Governments general fund and a schedule of funding progress and employer contributions for Metro Governments pension and benefit trust fund. Required supplementary information begins on page 99. Metro Government presents combining financial statements for the non-major, internal service, and agency funds as other supplementary information. This information begins on page 102.

Government-wide Financial Analysis

Net position serves as a useful indicator of a governments financial condition over time. Metro Governments assets plus deferred outflows of resources exceeded liabilities plus deferred inflows of resources by approximately $1.37 billion at June 30, 2014. Metro Governments net position includes the equity interest in the Louisville Water Company of approximately $855.6 million.

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LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENTS DISCUSSION AND ANALYSIS (Unaudited), continued For the Year Ended June 30, 2014

Additional changes in Metro Governments Statement of Net Position include separate reporting elements for deferred outflows of resources and deferred inflows of resources to comply with GASB Statement Nos. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, and 65, Items Previously Reported as Assets and Liabilities.

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT STATEMENT OF NET POSITION June 30 (amounts in thousands)

Governmental Activities

Total Percentage Change 2013-2014

-5.6% 3.3% -1.4% -0.1%

-16.5%

-7.1% -0.4% -6.2%

10.5%

-2.2% -10.6% 9.9%

2.6%

Current and other assets Equity interest in component unit Capital assets

Total assets

Deferred Outflows of Resources

Long-term liabilities Other liabilities

Total liabilities

Deferred Inflows of Resources

Net invested in capital assets Res tricted Unres tricted

Total net position

2014

296,339 855,621 809,780

1,961,740 4,026 502,327

80,216

582,543

15,384

592,137 102,447 673,256

$ 1,367,840

2013

$ 313,895 828,252 820,903

$

$

1,963,050 4,823 540,467

80,528

620,995

13,919

605,615 114,535 612,809

1,332,959

Current assets decreased by 5.6% from fiscal year 2013 to fiscal year 2014. Cash and investments decreased by 6.2% primarily due to the spend down of $10 million of bond proceeds for construction of the new Southwest Regional Library. Receivables decreased by 15.1% which is primarily due to the decrease of $5.8 million of receivables related to amounts due from grant funding sources. In addition to the decrease in grants receivables a decrease in loans receivable due to the write off of bad debt against the reserve contributed to the decrease in receivables. Metro Governments equity interest in the LWC increased by approximately $27.4 million which directly correlates to the LWCs change in net position. Net capital assets declined by $11.1 million with three significant elements to this net decrease, 1) annual depreciation costs exceeded asset additions by $2.0 million (excluding CIP); 2) Metro Government sold properties with carrying values of $2.7 million; and 3) Metro Government retired obsolete assets with a net book value of $1.3 million.

Short-term liabilities, such as accounts payable, accrued payroll, and amounts due to other governments of $80.2 million remained relatively flat to the prior year. Long-term liabilities declined $38.1 million as Metro Government retired $51.1 million in general obligation debt, revenue bonds, and notes payable. This decrease was offset by the issuance of two bonds in fiscal year 2014 totaling $18.4 million.

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LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENTS DISCUSSION AND ANALYSIS (Unaudited), continued For the Year Ended June 30, 2014

Metro Governments net investment reports the amount invested in capital assets (e.g. land, buildings, and infrastructure) less any related debt outstanding used to acquire those assets. Metro Government uses these capital assets to provide services to its citizens. These assets are not available for future spending and cannot be liquidated to repay the related debt.

Metro Government reviews third-party restrictions to determine amounts that will be classified as restricted net position each year. In fiscal year 2014, the capital projects restricted net position decreased $12.1 million primarily due to the decrease of funds with grant restrictions in place and the spend down of funds restricted for capital purposes. The resources set aside for capital and other projects will provide critical investments for the continued economic recovery in Jefferson County.

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LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENTS DISCUSSION AND ANALYSIS (Unaudited), continued For the Year Ended June 30, 2014

This is a summary of the Metro Governments changes in net position:

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT CHANGES IN NET POSITION For the Year Ended June 30 (amounts in thousands)

Governmental Activities

Total Percentage Change 2013-2014

Amount change 2013-2014

2014

84,840 89,354 18,033

140,252 342,161 27,369 42,127

744,136

71,109 178,458 166,544

36,586 12,689 35,382 33,277 29,052 97,489 18,478 15,758 14,434

709,256 34,880 1,332,959 $1,367,839

2013

Revenues

Program revenues: Charges for services Operating grants and contributions Capital grants and contributions

General revenues: Property taxes Othertaxes Gain on equity interest in LWC Other

Total revenues

Ex pe n s e s

General Government & Administrative Functions

Public Safety Police Economic Growth & Innovation Codes & Regulations Parks & Recreation Community Services & Revitalization Public Health & Wellness Public Works & Assets Louisville Free Library Louisville Zoological Gardens Interest on long-term debt

Total expenses Increase (decrease) in net position Net positionbeginning, restated Net positionending

$

$

83,168 2.0% 94,956 -5.9% 30,620 -41.1%

146,224 -4.1% 332,642 2.9% 27,768 -1.4% 39,844 5.7%

755,222 -1.5%

71,981 -1.2% 173,164 3.1% 154,391 7.9%

39,022 -6.2% 13,204 -3.9% 32,020 10.5% 38,239 -13.0% 30,903 -6.0%

107,057 -8.9% 18,130 1.9% 15,217 3.6% 16,133 -10.5%

709,461 0.0% 45,761

$

1,672 (5,602) (12,587)

(5,972) 9,519

(399) 2,283

(11,086)

(872) 5,294 12,153

(2,436) (515)

3,362 (4,962) (1,851) (9,568)

348

541 (1,699)

(205) (10,881)

45,761 34,880

1,287,198 $1,332,959

$

10

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENTS DISCUSSION AND ANALYSIS (Unaudited), continued For the Year Ended June 30, 2014

Government-wide net position increased $34.9 million in fiscal year 2014 versus an increase of $45.8 million in the prior fiscal year. Property tax collections decreased over the prior year due to the sale and subsequent tax appeal of two large property holders during fiscal year 2014. Metro Government collected an additional $9.5 million, or 2.9%, in occupational license fees over the prior year. Charges for services increased a modest 2.0% over the prior year. Operating grants and contributions declined by $5.6 million in fiscal year 2014 as compared to fiscal year 2013. Capital grants and contributions significantly declined by $12.6 million over the prior year. This decrease is primarily related to a decrease of $5.3 million of Federal funding received by Community Services & Revitalization for construction projects as well as a decrease of $2.2 million of Federal fund received by Emergency Management Agency/MetroSafe, which was used for the purchase of equipment in 2013. Grants and contributions are often inconsistent from one year to another as competition gets stiffer for federal and state shared revenues.

Operating expenses were $0.2 million lower in fiscal year 2014 as compared to 2013. Metro Government continued its efforts to streamline the enterprise operating model and improve efficiency. This was accomplished even while dealing with a large number of snow incidents during the harsh winter of 2014 and an increase of police overtime to address patrol issues around Waterfront Park.

Other income increased $5.3 million which is primarily the result of the increase in occupational taxes and temporary decrease in property tax collections discussed above.

The following charts provide more information on Metro Governments operating results. Expenses and Program Revenue Governmental Activities For the Year Ended June 30, 2014:

200,000

180,000

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0

Expenses

Program Revenues

General Governement & Administrative Functions

Public Protection

Police

Economic Growth & Innovation

Codes & Regulations

Parks & Recreation

Community Services & Revitalization

Public Health &Public Works & Louisville Free

Louisville Zoological Gardens

Interest on long- term debt

11

Wellness Assets

Public Library

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENTS DISCUSSION AND ANALYSIS (Unaudited), continued For the Year Ended June 30, 2014

Revenues by Source Governmental Activities For the Year Ended June 30, 2014:

Operating grants and contributions 12%

Charges for services 11%

Dividend and other 6%

Gain on equity interest in LWC 4%

Capital grants and contributions 2%

Property taxes 19%

Financial Analysis of Governmental Funds

Occupational taxes 46%

At the close of fiscal year 2014, Metro Governments governmental funds reported a combined ending fund balance of approximately $186.4 million. This is a decrease of $17.7 million from fiscal year 2013. Metro Government reports fund balance as nonspendable, restricted, committed, assigned, or unassigned (refer to Note 1 for detailed information on the fund balance classifications). Metro Government had $62.5 million of unassigned fund balance available in the General Fund at June 30, 2014 Unassigned fund balance of the General Fund (Metro Governments main operating fund) represents approximately 11.2% of total general fund expenditures for fiscal year 2014.

The General Funds fund balance increased $3.1 million during fiscal year 2014 as compared to an increase of $445,502 in fiscal year 2013. Overall, the General Fund benefitted from the same operating factors and higher occupational tax revenues ($10.3 million) we noted for the government as a whole. Fiscal year 2014 expenses were $25.9 million, or 4.9%, higher than 2013. This increase is primarily due to employee salary increases as well as increased in Police overtime.

The Special Revenue Funds fund balance decreased $8.2 million during fiscal year 2014 as compared to an increase of $12.1 million in fiscal year 2013. Grant programs are the primary activity in Special Revenue Fund and grant awards can vary significantly from one year to the next. Revenues from intergovernmental sources were significantly lower than 2013 as a result of the operating factors we noted for the government as a whole

12

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENTS DISCUSSION AND ANALYSIS (Unaudited), continued For the Year Ended June 30, 2014

The Capital Projects Funds fund balance decreased $11.2 million during fiscal year 2014 as compared to a $14.7 million increase in fiscal year 2013. Compared to 2013, revenues in the Capital Project Fund increased by 7.5% which is primarily due to an increase in charges for services related to loan collections. Capital expenditures increased significantly by $9.9 million over 2013 due to the construction of the new Southwest Regional Library.

General Fund Budgetary Highlights

The Budgetary Comparison schedule presented on page 101 in the Required Supplementary Information section of this report highlights the original and final adopted budgets for Metro Government as compared to the actual revenues and expenditures. Metro Government uses the cash basis for budgeting, so this schedule also includes adjustments to convert the modified accrual reporting in the governmental funds to the cash basis reporting in the Budgetary Comparison Schedule.

Revenues exceeded budget by $21.1 million while total expenditures were $24.0 million less than the final adopted budget. The largest variances between budget and actual amounts relate to interdepartmental adjustments that are eliminated in the financial statements. These amounts are included in budgeted recoveries, within charges for services, and as budgeted departmental expenditures but are not reflected in the actual totals presented in the financial statements. Transfers out include amounts required for debt service and grant matches in the other governmental funds.

Capital Asset And Debt Administration

Capital Assets

Metro Government held $809.8 million of capital assets, net of accumulated depreciation at June 30, 2014. Depreciation charges for fiscal year 2014 totaled $34.6 million.

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT CAPITAL ASSETS (net of accumulated depreciation)

2014

La n d Land improvements Bu ild in g s Machinery and equipment Vehicles 24,507,389 Collections and works of art 1,042,799 Infrastructure 81,881,207 Construction in progress 55,629,738

Total $ 809,780,510

2013

$ 311,955,979 58,973,639 255,016,388 35,493,599 26,899,247 1,159,420 81,807,455 49,597,619

Total Percentage Change 2013-2014

-0.1% -4.9% -3.1%

-10.1% -8.9% -10.1% 0.1% 12.2% -1.4%

$

311,648,044 56,074,033 247,073,649 31,923,651

$

820,903,346

13

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENTS DISCUSSION AND ANALYSIS (Unaudited), continued For the Year Ended June 30, 2014

Metro Government purchased approximately $8.6 million of various heavy machinery and vehicles for Public Works & Assets, Louisville Metro EMS, and Louisville Metro Police. The majority of these purchases were financed through notes payable issued during the year totaling $7.0 million. Additional detail on the notes can be found in Note 8.

As of June 30, 2014, Metro Government has several major construction projects in the works. In addition to the Southwest Regional Library construction, additional capital improvements are occurring at Fourth Street Live, various projects in Metro Governments parks to improve the infrastructure and connectivity of the Louisville Loop, and improvements to the infrastructure of Metro Government through additional funds dedicated to various street paving projects and the addition of bike lanes to many major thoroughfares.

Debt Administration At year-end, the Metro Government has outstanding debt as shown in the following table:

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT OUTSTANDING DEBT ADMINISTRATION (amounts in thousands)

2014

General obligation debt $ 269,260 Revenue bonds 70,561 Note 8,618

Total $ 348,439

$ $

2013

292,735 78,146 11,282

382,163

Total Percentage Change 2013-2014

-8.0%

-9.7% -23.6% -8.8%

During the year, total debt of the Metro Government decreased by $33.7 million. During fiscal year 2014 new debt of $7.0 million was issued to fund the purchase of vehicles and machinery and general obligation bonds of $9.4 million were issued to refund bonds issued in 2000 and 2002. This refunding achieved a net present value of savings in interest costs of approximately $790,800 over the life of the bonds or 8.4% of the refunded bonds. With the annual debt service payments, Metro Government reduced the outstanding bonds and notes payable by $41.7 million in addition to the refunded bonds during fiscal year 2014. Additional information on the Metro Governments long-term debt activity can be found in Note 8 of this report.

Future Economic Factors

The most recent unemployment rate for Metro Louisville (September 2014) was 5.5% compared to the national unemployment rate of 5.9% for the same period. The Louisville Metropolitan Statistical Area includes eight surrounding counties in Kentucky and 4 additional counties in southern Indiana. In September 2014, the MSA had a civilian labor force of 626,201 compared to 640,135 in September 2013. Metro Governments fiscal year 2015 budget projects a modest growth rate of only 1.7% of overall revenue with a higher increase of 4.0% growth in General Fund revenues, with 0.5% of that growth the result of the enactment of the franchise fee on natural gas in the Urban Services District and unincorporated areas of Jefferson County.

14

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT MANAGEMENTS DISCUSSION AND ANALYSIS (Unaudited), continued For the Year Ended June 30, 2014

Employment and wage growth is anticipated to continue a positive trend and employee withholdings are estimated to grow by 4.5% in fiscal year 2015, which would be the sixth straight year of wage growth. Local corporate profits and insurance premium fees are expected to grow 10.0% and 2.0%, respectively, in fiscal year 2015. Modest growth is also anticipated for real and personal property taxes based on initial property assessments and the assumption of flat tax rates adopted in fiscal year 2015 at 1.3%.

Contacting Metro Governments Financial Management

This financial report is designed to provide citizens, taxpayers, customers, investors and creditors with a general overview of Metro Governments finances and to show Metro Governments accountability for the money it receives. If you have questions about this report or need additional information, contact Metro Governments Office of Management & Budget, 611 West Jefferson Street, Louisville, Kentucky, 40202.

15

BASIC FINANCIAL STATEMENTS

16

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT STATEMENT OF NET POSITION June 30, 2014

ASSETS

Cash and cash equivalents Investments Receivables, net of allowance for

uncollectible amounts Inventories

Prepaid items Assets restricted by bond indentures and

other legal provisions Non-utility property Equity interest in LWC Capital assets:

Land and improvements Construction in progress Works of art Infrastructure

Other capital assets Less accumulated depreciation

Capital assets, net Total assets

DEFERRED OUTFLOWS OF RESOURCES

Unamortized loss on refundings Unamortized amount on transfer of assets

and future revenues Total deferred outflows of resources

LIABILITIES

Accounts payable and accrued payroll Accrued interest payable Due to other government agencies Notes payable

Unearned revenue Other liabilities Long-term liabilities:

Due within one year Due in more than one year

Total liabilities

DEFERRED INFLOWS OF RESOURCES

Unamortized amount on transfer of assets and future revenues

Deferred tax credit receipts Deferred inflows on swap agreements

Total deferred inflows of resources

NET POSITION

Net investment in capital assets Restricted for:

$

Primary Government Governmental

Activities

133,404,829 68,051,028

66,849,410 679,174 3,270,299

24,083,793 -

855,620,600

422,713,246 55,629,738 2,793,513 964,365,904 598,972,990

(1,234,694,881) 809,780,510 1,961,739,643

4,025,704

- 4,025,704

57,086,289 1,867,219 20,623,338

- 41,667

597,561

59,363,155 442,963,845 582,543,074

10,591,630 4,791,994

- 15,383,624

592,136,882

$

Component Units

133,669,220 7,910,442

80,593,216 20,143,457 28,333,593

237,395,073 2,785,726

-

43,256,018 510,445,433

- 2,691,393,336 1,779,472,410

(1,545,713,126) 3,478,854,071 3,989,684,798

21,448,471

10,591,630 32,040,101

42,863,439 14,589,308 22,984,803

2,583,214

2,427,466 10,364,107

58,799,674 1,930,294,029 2,313,507,040

-

- 82,293,000 82,293,000

1,253,889,630

- 57,887,325 160,578,415

- 153,569,489 1,625,924,859

49,417,934 33,625,187 1,874,159 17,529,738 Unrestricted 673,254,749 Total net position $ 1,367,838,649

Grant programs Capital projects Debt service Other purposes

$

The accompanying notes are an integral part of the financial statements. 17

Functions/Programs Primary government: Governmental activities:

Expenses

Charges for Services

Operating Grants and Contributions

Capital Grants and Contributions

Net (Expense) Revenue

Metro Council Mayor's Office County Attorney Other Elected Officials Fire 55,254,698 Emergency Medical Services 26,407,981 Emergency Management/MetroSafe 23,424,686 Corrections 53,694,554

Youth Detention Services Metro Animal Services Criminal Justice Commission Firefighters' Pension Fund Policemen's Retirement Fund Police

9,523,585 3,373,423 637,591 3,725,267 2,416,050 166,543,751 30,980,499 5,605,793 12,689,355 35,381,854 33,276,562 29,051,919 97,489,191 12,049,036 28,003,568 786,196 3,838,145 922,280 18,477,994 15,758,425 551,445 14,433,550 709,256,738

490 1,040,330

- 2,539 69,689 - -

(9,433,119) (2,283,595) (333,202) (3,725,267) (2,416,050) (150,459,602) (12,909,746) (271,214)

Economic Growth & Innovation Air Pollution Control Codes & Regulations Parks & Recreation

5,020,572 4,965,184 4,087,680

- 8,411,305 12,591,545 1,018,183 1,667,998 590,739 14,872,065 11,878,677 23,550,885

2,652,272 514,024 228,716

Community Services & Revitalization Public Health & Wellness Public Works & Assets Information Technology

15,050,262 5,219,716 430,793 1,326,148 9,874,237 1,363,003 5,223,706

- 1,323,824 4,514,950

4,028,905 (28,247,575) (13,458,754) (15,847,094) (59,926,777) (10,686,033) (22,635,181)

Office of Management & Budget Office of Performance Improvement Human Resources Human Relations Commission Louisville Free Public Library Louisville Zoological Gardens Internal Audit

- 144,681

- - - - -

Interest expense Total governmental activities

$ $

$ $

- 84,839,934

$ $

- 89,354,359

$ $

- 18,032,712

$ $

Component units:

Louisville Water Company Parking Authority of River City, Inc. Transit Authority of River City Louisville and Jefferson County Riverport Authority Metropolitan Sewer District Kentucky Science Center, Inc. Waterfront Development Corporation

138,958,521 17,174,697 81,000,645

158,824,309 17,738,367 13,151,751

- 299,601

6,171,487 -

26,037,275 863,271 12,774,929

Total component units

$

$

$

95,153,397

$

- 14,274,487

$

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT STATEMENT OF ACTIVITIES For the Year Ended June 30, 2014

$

6,034,184 2,435,569 7,573,326 8,916,261

$

- $ 15,437 --

$

- - - -

$

(6,018,747) (2,435,569) (7,452,764) (8,631,168)

1,412,961 206,667,000 5,119,045 2,452,835 452,785,704

554,945 216,632,000 2,639,895 955,752 410,497,019

10,096,000 1,776,932 2,357,041

- 8,103,000

(858,016) 28,164,000

(Continued)

The accompanying notes are an integral part of the financial statements. 18

100,000 285,093 676,379

20,562 -

15,016,285 2,326,503 2,240,336

1,974,109 47,869 701,527 9,196,522 89,976 46,959 234,700

112,922 -

(52,491,288) (11,343,827) (18,177,421) (42,257,696)

534,058 10,055,819

1,355,709 655,904

2,055,047 202,202

- - -

-

-

-

(786,196) (3,838,145) (629,933) (14,533,180) (4,844,500) (551,445) (14,433,550) (517,029,733)

- 3,340

- 289,007

-

-

-

Program Revenues

80,623,823 -

-

2,219,235 -

- 4,137,292

-

(702,218) 859,958 67,139,199

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT STATEMENT OF ACTIVITIES (continued) For the Year Ended June 30, 2014

Primary Government Governmental Activities

Component Units

67,139,199

-

- 9,166,718

- - - - 3,200 -

176,161 9,346,079 76,485,278 1,549,439,581 1,625,924,859

Net (expense) revenue (from preceding page) General revenues:

Taxes: Property taxes, levied for general purposes Occupational taxes

$

(517,029,733)

$

140,252,274 342,160,707 866,649 27,368,502 Dividends 20,055,060

Investment income Gain on equity interest in LWC

Amortization of intra-entity transfer Other intergovernmental revenue Gain on sale of assets Other taxes

Miscellaneous Total general revenues

Change in net position Net position--beginning, as restated Net position--ending

$

532,020 13,961,702 3,994,793 299,836 2,417,254 551,908,797 34,879,064 1,332,959,585 1,367,838,649

$

The accompanying notes are an integral part of the financial statements. 19

General Fund

Cash and cash equivalents Investments 31,834,333 Receivables, net of allowance for uncollectible amounts:

Taxes receivable 1,926,088 Accounts receivable and

accrued interest 11,464,193 Loans receivable 952,353 Notes receivable -

Due from federal government 3,660,604 Due from state government - Due from other funds 31,092,346 Inventories 679,174

Special Revenue Fund

Capital Projects Fund

Nonmajor Governmental Funds

$ 4,154,176 4,176,215

Total Governmental Funds

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2014

ASSETS

Prepaid items Restricted assets:

Cash and cash equivalents Total assets

LIABILITIES

Accounts payable Accrued payroll and withholdings Matured bonds and interest payable Other liabilities

Total liabilities

$ $

196,408

- 114,148,537

14,812,215 17,848,983

- 597,561

33,258,759

2,377,345 2,377,345

1,827,935

-

- 9,121,441

- 5,075,503 62,487,554

78,512,433

$ $

$ $

$ $

-

- 200,000

599,760 -

- 140,760

- -

1,871,659 11,142,570

470,553 67 140,760

- 611,380

- -

200,000

1,874,159 -

599,760

7,857,271 -

- 10,531,190

11,142,570

$ $

$ 32,343,038

$

5,963,351 6,639,001

-

4,794,799 33,373,346

- 5,267,185 1,956,898