MACON-BIBB COUNTY TRANSIT AUTHORITY MACON, GEORGIA (A COMPONENT UNIT OF MACON-BIBB COUNTY, GEORGIA)

Transcription

1 MACON, GEORGIA (A COMPONENT UNIT OF MACON-BIBB COUNTY, GEORGIA) INDEPENDENT AUDITOR S REPORT AND FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2016

2 MACON, GEORGIA TABLE OF CONTENTS JUNE 30, 2016 Page INDEPENDENT AUDITOR S REPORT MANAGEMENT S DISCUSSION AND ANALYSIS BASIC FINANCIAL STATEMENTS Statement of Net Position Statement of Revenues, Expenses and Changes in Net Position Statement of Cash Flows Statement of Fiduciary Net Position Statement of Changes in Fiduciary Net Position Notes to the Financial Statements REQUIRED SUPPLEMENTARY INFORMATION Schedule of Net Pension Liability Schedule of Changes in Net Pension Liability and Related Ratios Schedule of Contributions Notes to the Required Supplementary Information SINGLE AUDIT SECTION Schedule of Expenditures of Federal Awards Notes to Schedule of Expenditures of Federal Awards Summary Schedule of Prior Audit Findings Corrective Action Plan Independent Auditor s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor s Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance Schedule of Findings and Questioned Costs

3 CLIFTON, LIPFORD, HARDISON & PARKER, LLC INDEPENDENT AUDITOR'S REPORT To the Board of Directors Macon-Bibb County Transit Authority Macon, Georgia Report on the Financial Statements We have audited the accompanying financial statements of the business-type activities and each major fund of the Macon-Bibb County Transit Authority, a component unit of Macon-Bibb County, Georgia, as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the Authority 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. Auditor s 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 and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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 auditor s 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 entity 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 entity 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. 1 Member of 1503 Bass Road American Institute of 468 South Houston Lake Road P.O. Box 6315 Macon, Georgia Certified Public Accountants Warner Robins, Georgia Phone Fax Phone Fax

4 Macon-Bibb County Transit Authority Macon, Georgia Page Two We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities and each major fund of the Macon- Bibb County Transit Authority, as of June 30, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in conformity 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 management s discussion and analysis, schedule of net pension liability, schedule of changes in the net pension liability and related ratios, schedule of contributions and the notes to the required supplementary information on pages 4 through 10 and pages 31 through 34 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Macon-Bibb County Transit Authority s basic financial statements. The schedule of expenditures of federal awards as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards is presented for purposes of additional analysis and is not a required part of the basic financial statements. The schedule of expenditures of federal awards 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. Such 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 themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated, in all material respects, in relation to the basic financial statements as a whole. 2

5 Macon-Bibb County Transit Authority Macon, Georgia Page Three Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 15, 2016, on our consideration of the Macon-Bibb County Transit Authority's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Macon-Bibb County Transit Authority s internal control over financial reporting and compliance. Macon, Georgia December 15,

6 MANAGEMENT'S DISCUSSION & ANALYSIS

7 MACON, GEORGIA MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2016 The management of the Macon-Bibb County Transit Authority offers readers of our financial statements the following narrative overview and analysis of the financial activities for the fiscal year ended June 30, Basic Financial Statements Our basic financial statements are prepared using proprietary fund (enterprise fund) accounting that uses the same basis of accounting as private-sector business enterprises. The Authority is operated under two enterprise funds. Under this method of accounting, an economic resources management focus and an accrual basis of accounting is used. Revenue is recorded when earned and expenses are recorded when incurred. The basic financial statements include a statement of net position, a statement of revenues, expenses and changes in net position, and a statement of cash flows. The basic financial statements also include a statement of fiduciary net position and a statement of changes in fiduciary net position for the Authority s pension plan. The basic financial statements are followed by notes to the financial statements. The statement of net position presents information on the assets and liabilities, with the difference between the two reported as net position. Over time increases or decreases in net position may serve as a useful indicator of whether the financial position of the Authority is improving or deteriorating. The statement of revenues, expenses and changes in net position reports the operating revenues and expenses and nonoperating revenues and expenses of the Authority for the fiscal year with the difference the net income or loss being combined with any capital grants to determine the net change in position for the fiscal year. That change combined with the previous years-end net position total reconciles to the net position total at the end of this fiscal year. The statement of cash flows reports cash and cash equivalents activities for the fiscal year resulting from operating activities, capital and related financing activities, noncapital and related financing activities and investment activities. The net result of these activities added to the beginning of the year cash balance reconciles to the cash and cash equivalents balance at the end of the current fiscal year. 4

8 Condensed Financial Information MACON, GEORGIA MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2016 (CONTINUED) Condensed financial information from the statements of net position and revenues, expenses and changes in net position is presented below. Net Position Assets Current and other assets $ 1,724,966 $ 2,660,855 Restricted assets 58, ,925 Capital assets 14,110,654 14,278,888 Total Assets 15,894,021 17,280,668 Deferred outflows of resources 2,387,667 1,364,349 Liabilities Current and other liabilities 1,250,761 2,281,001 Noncurrent liabilities 5,968,123 4,510,481 Total Liabilities 7,218,884 6,791,482 Deferred inflows of resources - 49,194 Net Position Investment in capital assets 14,110,654 14,278,888 Restricted 251, ,925 Unrestricted (3,299,226) (2,815,472) Total Net Position $ 11,062,804 $ 11,804,341 5

9 MACON, GEORGIA MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2016 (CONTINUED) Changes in Net Position Operating Revenues Passenger fees $ 915,160 $ 1,039,182 Advertising 35,390 14,711 Other income 78,178 65,760 Total Operating Revenues 1,028,728 1,119,653 Operating Expenses Salaries 2,694,004 2,821,006 Employee benefits 1,663,737 1,209,643 Materials and supplies 798, ,404 Fuel and power 529, ,865 Insurance 724, ,967 Contract services - 21,396 Grant expenses 192,367 25,773 Depreciation 1,521,443 1,331,733 Administration 650, ,530 Total Operating Expenses 8,774,977 8,230,317 Operating income (loss) (7,746,249) (7,110,664) Nonoperating Revenues and Expenses Operating assistance subsidies 5,412,906 5,538,533 Investment income Interest expense (31,723) (8,601) Terminal Station revenue 350, ,308 Terminal Station expenses (259,053) (192,817) Gain (loss) on disposal of capital assets (57,369) (7,196) Total Nonoperating Revenues and Expenses 5,415,807 5,591,382 Income (loss) before contributions (2,330,442) (1,519,282) Capital contributions 1,588,905 10,836,898 Change in net position (741,537) 9,317,616 Net position - beginning of year, restated 11,804,341 2,486,725 Net position - end of year $ 11,062,804 $ 11,804,341 The information contained in the condensed financial information table is used as the basis for the discussion presented below, surrounding the Authority s activities for the fiscal year ended June 30,

10 MACON, GEORGIA MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2016 (CONTINUED) Financial Highlights The Authority ended the year with a net position balance of $11,062,804, of which $14,110,654 represented the amount invested in capital assets, $58,401 represented the amount restricted for capital purchases, and $(3,106,251) was unrestricted. There was a $741,537 decrease in net position. Capital Assets The Authority s capital assets, as of June 30, 2016 were $14,110,654, net of accumulated depreciation. The investment in capital assets includes buses, machinery, equipment and building improvements Land and land improvements $ 390,831 $ 335,018 Buildings 10,253,270 10,246,270 Buses 8,681,568 7,875,807 Machinery and equipment 1,981,554 2,002,866 Accumulated depreciation (7,196,569) (6,181,073) Total net capital assets $ 14,110,654 $ 14,278,888 The Authority primarily acquires its assets with the proceeds from federal capital grants. More detailed information about the Authority s capital assets is presented in Note 7 of the financial statements. Long Term Debt As of June 30, 2016, the Authority s debt consisted of a net pension liability of $5,968,123 and a line of credit of $600,397. The Authority also had compensated absences of $38,029 as of June 30, More detailed information about the Authority s long-term debt is presented in Note 8 of the financial statements. Economic Factors During the fiscal year 2016, notable events were as follows: In 2016, Macon-Bibb County Transit Authority has seen a reduction in operating revenues of approximately 10%. Passenger fares declined by $124,022 or 12%, from Ridership declines, increases in insurance rates as well as increases to our vehicle parts inventory combined to reduce our budget performance this year. This year we also saw dramatic increases to interest expenses from the use of our credit line, caused by delays by the State of Georgia, DOT, in reimbursement of operations funding requests. With the acquisition of the Broadway Property, we have seen utility costs increase by over 20%. The Costs of Professional and other Services line item increased by 4% due to issues raised by the Georgia DOT. Even with these, decreases in fare box revenues and in the above mentioned line item cost increases, the net operating expenses (less depreciation) were $7,253,534, versus 2015 net operating expenses of $6,898,584, a net increase to the County of Bibb and to the Federal Transportation Administration of $354,950 or a net cost reduction of 5%. 7

11 MACON, GEORGIA MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2016 (CONTINUED) Service provisions continue to be excellent and several new buses have arrived and more are in the process of being ordered and delivered. The Consolidated Government of Macon-Bibb County has partnered with us and has agreed to cover the match dollars required for us to seek an FTA LONO Grant to pursue the purchase of All-Electric, non-emission buses that will cost approximately $800,000 each, 8 buses and charging stations were included. In addition funding from this grant would also support County efforts in completing the Second Street Corridor project. We have partnered this year with Mercer University to provide service to students and others along a specified route from the University into Downtown Macon. The University reimburses Macon Transit for the entire cost of the service and provides the rides free to its students. Ridership has been extremely high and will help MTA qualify for more funding opportunities from the FTA. This year Mercer has initiated dialogue to consider service to students to and from campus housing to classes on campus. On time performance continues to be high in both Fixed Route and Para Transit. We are still awaiting our 5307 Operations Grant application made in April of 2015 for the FTA 2017 fiscal year that begins in July of A portion of that grant includes computer tablets that will allow us to more effectively track ridership and thereby manage the service in such a way that we can redistribute buses to the routes that need them the most during the times that are critical. This not only services more passengers but also maximizes revenue while reducing costs. This grant also includes additional buses for both Fixed Route and Para Transit. Due to the reduction of Federal and State Funding levels and limits to funding levels from Bibb County, late in fiscal year 2016, Macon-Bibb County Transit Authority was forced to eliminate service to Robins Air Force Base and to the Geico Industrial Complex. With these reductions and continuing delays with funding requests from the State of Georgia DOT, Intermodal Division, the MTA Board has temporarily delayed implementation of pending Capital Grant expenditures. The State of Georgia has advised that the operating contract for 2017 will be delayed due to pending changes at the State level. As of June 30, 2016, that contract, due to begin July 1, 2016 has not been received. It is hoped that this delay will be short and funding will be received as billed. As of the end of the fiscal year 2016, funding for May and June had not been received. Expenditures for Capital Grants will be reopened as soon as funding and contract issues have been resolved. Initiatives that continue to produce positive results throughout 2016 include: Extension of student, senior, and disabled fares Creation of College Student passes Creation of 4 trip passes Mercer Downtown Shuttle Macon Historic Terminal Station MTA Maintenance/Administration facility 8

12 MACON, GEORGIA MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2016 (CONTINUED) Revenue The following chart shows the major sources of operating revenue for the year ended June 30, 2016: Other Income 11% Operating Revenues Passenger Revenues 89% Similar to previous years, the passenger revenues make up 89% of the total operating revenue. The Authority continues to work on increasing ridership through new equipment purchases, station upgrades and system expansion. Expenses The following chart shows the major sources of operating expenses for the year ended June 30, 2016: Operating Expenses Administration 8% Other 2% Depreciation 17% Insurance 8% Fuel and Power 6% Materials and Supplies 9% Salaries 31% Employee Benefits 19% 9

13 MACON, GEORGIA MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2016 (CONTINUED) As in previous years, salaries and benefits make up the largest portion of operating expenses. This is common in the public transportation industry as the provision of service is extremely labor intensive. Due to the large investment the Authority has in capital assets, depreciation continues to be a large operating expense. Unlike the other expenses listed, depreciation is not a cash expense. The Authority has continued to pursue ways to reduce costs without impacting service. Requests for Information This financial report is designed to provide a general overview of the Authority s finances for anyone with an interest in the government s finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to Mr. Rick Jones, General Manager, 200 Cherry Street, Macon, Georgia

14 BASIC FINANCIAL STATEMENTS

15 STATEMENT OF NET POSITION JUNE 30, 2016 Business-Type Activities- Enterprise Funds Operating Paratransit Fund Fund Total ASSETS Current Assets Cash and cash equivalents $ 284,619 $ 43,360 $ 327,979 Due from other funds 300, ,006 Due from other governments 493, ,841 Prepaid items 295, ,372 Inventories 307, ,768 Total Current Assets 1,681,606 43,360 1,724,966 Noncurrent Assets Restricted cash 58,401-58,401 Capital assets Land and land improvements 390, ,831 Buildings 10,253,270-10,253,270 Buses 7,715, ,487 8,681,568 Machinery and equipment 1,968,656 12,898 1,981,554 Less: accumulated depreciation (6,510,241) (686,328) (7,196,569) Total Capital Assets, Net 13,817, ,057 14,110,654 Total Noncurrent Assets 13,875, ,057 14,169,055 Total Assets 15,557, ,417 15,894,021 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources related to pensions 2,387,667-2,387,667 The notes to the financial statements are an integral part of this statement. 11

16 STATEMENT OF NET POSITION JUNE 30, 2016 (CONTINUED) Business-Type Activities- Enterprise Funds Operating Paratransit Fund Fund Total LIABILITIES Current Liabilities Accounts payable 175, ,853 Accrued expenses 76,372 12,171 88,543 Compensated absences 33,365 4,664 38,029 Due to other funds - 300, ,006 Deposits 47,933-47,933 Notes payable - line of credit 600, ,397 Total Current Liabilities 933, ,841 1,250,761 Noncurrent Liabilities Net pension liability 5,968,123-5,968,123 Total Noncurrent Liabilities 5,968,123-5,968,123 Total Liabilities 6,902, ,841 7,218,884 NET POSITION Investment in capital assets 13,817, ,057 14,110,654 Restricted for capital outlay 251, ,376 Unrestricted (Deficit) (3,025,745) (273,481) (3,299,226) Total Net Position $ 11,043,228 $ 19,576 $ 11,062,804 The notes to the financial statements are an integral part of this statement. 12

17 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION FOR THE FISCAL YEAR ENDED JUNE 30, 2016 Business-Type Activities- Enterprise Funds Operating Paratransit Operating Revenues Fund Fund Total Passenger fees $ 850,146 $ 65,014 $ 915,160 Advertising 35,390-35,390 Other income 78,178-78,178 Total operating revenues 963,714 65,014 1,028,728 Operating Expenses Salaries 2,347, ,944 2,694,004 Employee benefits 1,587,420 76,317 1,663,737 Materials and supplies 798, ,975 Fuel and power 433,713 96, ,807 Insurance 717,887 6, ,492 Grant expenses 192, ,367 Depreciation 1,444,503 76,940 1,521,443 Overhead allocation (59,728) 59,728 - Administration 643,231 6, ,152 Total operating expenses 8,105, ,549 8,774,977 Operating income (loss) (7,141,714) (604,535) (7,746,249) Nonoperating Revenue (Expenses) Operating assistance subsidies Macon-Bibb County Annual appropriation 2,113, ,427 2,616,435 Tri-party settlement 349, ,929 State of Georgia DOT 2,446,542-2,446,542 Investment income Interest expense (31,723) - (31,723) Terminal Station revenue 350, ,970 Terminal Station expenses (259,053) - (259,053) Gain (loss) on disposal of capital assets (57,369) - (57,369) Total nonoperating revenue (expenses) 4,912, ,427 5,415,807 Income (loss) before contributions and transfers (2,229,334) (101,108) (2,330,442) Capital contributions 1,320, ,445 1,588,905 Change in net position (908,874) 167,337 (741,537) Total net position (deficit)- beginning of year 11,952,102 (147,761) 11,804,341 Total net position - end of year $ 11,043,228 $ 19,576 $ 11,062,804 The notes to the financial statements are an integral part of this statement. 13

18 STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 Business-Type Activities- Enterprise Funds Operating Paratransit Fund Fund Total Cash Flows from Operating Activities Cash received from customers $ 850,146 $ 65,014 $ 915,160 Other operating receipts 108, ,619 Cash payments for payroll and related employee costs (3,549,350) (421,649) (3,970,999) Cash payments to other suppliers of goods or services (3,075,587) (148,577) (3,224,164) Net Cash Provided (Used) by Operating Activities (5,666,172) (505,212) (6,171,384) Cash Flows from Non Capital Financing Activities Proceeds from line of credit 6,952,543-6,952,543 Payment on line of credit (7,547,338) - (7,547,338) Terminal station 91,917-91,917 Subsidies received 5,893, ,427 6,397,060 Net Cash Provided by Non Capital Financing Activities 5,390, ,427 5,894,182 Cash Flows from Capital and Related Financing Activities Interest paid on long term debt (31,723) - (31,723) Acquisition of capital assets (1,324,006) (298,272) (1,622,278) Sale of capital assets 211, ,700 Capital contributions 1,320, ,445 1,588,905 Net Cash Provided (Used) by financing activities 176,431 (29,827) 146,604 Cash Flows from Investing Activities Interest received Net Cash Provided (Used) by Investing Activities Net Increase (Decrease) in Cash and Equivalents (98,910) (31,612) (130,522) Cash and Cash Equivalents - Beginning of the Year 441,930 74, ,902 Cash and Cash Equivalents - End of the Year $ 343,020 $ 43,360 $ 386,380 Classified as: Current Assets $ 284,619 $ 43,360 $ 327,979 Restricted Assets 58,401-58,401 Total $ 343,020 $ 43,360 $ 386,380 The notes to the financial statements are an integral part of this statement. 14

19 Reconciliation of Net Operating Income to Net Cash Provided by Operating Activities STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 (CONTINUED) Business-Type Activities- Enterprise Funds Operating Paratransit Fund Fund Total Operating Income (Loss) $ (7,141,714) $ (604,535) $ (7,746,249) Adjustments to Reconcile Operating Income (Loss) to net cash used in operating activities: Depreciation 1,444,503 76,940 1,521,443 Changes in Assets and Liabilities (Increase) decrease in prepaid expenses 18,266-18,266 (Increase) decrease in inventories 106, ,242 (Increase) decrease in due from other funds (20,771) - (20,771) (Increase) decrease in deferred outflows (1,023,318) - (1,023,318) Increase (decrease) in accounts payable (458,265) - (458,265) Increase (decrease) in accrued expenses 5,386 1,612 6,998 Increase (decrease) in net pension liability 1,457,642-1,457,642 Increase (decrease) in deposits (4,949) - (4,949) Increase (decrease) in due to other funds - 20,771 20,771 Increase (decrease) in deferred inflows (49,194) - (49,194) Total Adjustments 1,475,542 99,323 1,574,865 Net Cash Provided (Used) by operating activities $ (5,666,172) $ (505,212) $ (6,171,384) The notes to the financial statements are an integral part of this statement. 15

20 STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUND JUNE 30, 2016 ASSETS Contributions receivable $ 35,792 Accrued interest receivable 15,153 Investments, fair value Corporate bonds 896,657 Common stock 1,264,237 US Treasury bills and government bonds 693,094 Mutual funds 1,403,677 International bonds 21,467 Temporary investments 261,484 Total Assets 4,591,561 LIABILITIES Accounts payable - Total Liabilities - NET POSITION Held in trust for pension benefits 4,591,561 Total Net Position $ 4,591,561 The notes to the financial statements are an integral part of this statement. 16

21 STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2016 ADDITIONS Contributions Employer contributions $ 507,105 Investment Income Net appreciation (depreciation) in the fair value of plan investments (65,304) Interest earned on investments 230, ,021 Less investment expense Trustee fees and commissions 28,344 Net Investment Income 136,677 Total Additions 643,782 DEDUCTIONS Benefits paid retirees 784,370 Total Deductions 784,370 Change in Net Position (140,588) Net Position - Beginning of Year 4,732,149 Net Position - End of Year $ 4,591,561 The notes to the financial statements are an integral part of this statement. 17

22 NOTES TO THE FINANCIAL STATEMENTS

23 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Macon-Bibb County Transit Authority operates a bus transportation system for Macon-Bibb County, Georgia. The Authority is a public corporation of the State of Georgia, and is therefore exempt from federal and state income taxes. The accounting policies of the Authority conform to generally accepted accounting principles as applicable to governments. The following is a summary of the Authority's more significant policies applied in the preparation of the accompanying financial statements. A. Reporting Entity The financial statements of the reporting entity include those of the primary government and any component units. A component unit is a legally separate organization for which the elected officials of the primary government are financially accountable. In addition, a component unit can be another organization for which the nature and significance of its relationship with a primary government is such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. In conformity with generally accepted accounting principles, as set forth in Statement of Governmental Accounting Standards Board (GASB) No. 61 The Financial Reporting Entity: Omnibus, an amendment of GASB Statements No. 14 and 34, the Authority s relationships with other governments and agencies have been examined. As a result, no component units were identified which should be included in the reporting entity. However, the Authority is a component unit of Macon-Bibb County, Georgia. Certain financial information from the Authority is included in the financial statements of the Macon-Bibb County Reporting Entity. The governing board of the Transit Authority consists of seven members. The Mayor of the Macon-Bibb County Consolidated Government nominates all members. Confirmation and final approval of Macon-Bibb County Transit Authority board members is made by majority vote of the nine members of the Macon-Bibb County Consolidated Government Commissioners. Two of the members must be consumers of transit services. The Authority and Macon-Bibb County entered into a Bi-Party Agreement which provides that Macon-Bibb County will provide an amount equal to 1/12 of the Authority s estimated operating deficit. The Authority is required to provide Macon-Bibb County with a proposed operating budget each year and with monthly statements of Revenues and Expenditures. B. Basis of Presentation The accompanying financial statements have been prepared using the economic resources measurement focus and the accrual basis of accounting. Under this basis, revenues are recognized in the period in which they are earned, expenses are recognized in the period in which they are incurred, depreciation of assets is recognized and all assets and liabilities associated with the operation of the Authority are included in the Statement of Net Position. 18

24 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 (CONTINUED) The Authority accounts for its operations as an enterprise fund. The principal operating revenues of the Authority are passenger fares. The Authority also recognizes as operating revenue fees collected on advertisements on Authority property and miscellaneous operating revenues. Operating expenses for the Authority include the costs of operating the transit system, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. Those revenues susceptible to accrual are intergovernmental and interest revenue. Passenger fares and other revenues are not susceptible to accrual because generally they are not measurable until received in cash. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. When both restricted and unrestricted resources are available for use, it is the Authority s policy to use restricted resources first, and then unrestricted resources as they are needed. C. Fund Types and Major Funds The Authority reports the following major enterprise funds: Operating Fund reports as the primary fund of the Authority. This fund is used to account for the operating activities of the Authority. Paratransit Fund accounts for the operating activities of the Authority s paratransit system. The Authority also reports the following fund type: Pension Trust Fund reports fiduciary resources held in trust and the receipt, investment, and distribution of retirement contributions. D. Deposits and Investments The Authority's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. Investments are reported at fair value, which is determined using selected bases. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates, and investments that do not have an established market are reported at estimated fair value. Cash deposits are reported at carrying amount, which reasonably estimates fair value. 19

25 E. Receivables NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 (CONTINUED) All receivables have been reduced to their estimated net realizable value, and are shown net of an allowance for doubtful accounts. Estimated uncollectible amounts are based upon historical experience rates. Based upon management s experience, no allowance for doubtful accounts has been included in these financial statements. F. Interfund Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either due to/from other funds (i.e., the current portion of interfund loans) or advances to/from other funds (i.e., the noncurrent portion of interfund loans). All other outstanding balances between funds are reported as due to/from other funds. G. Inventories Inventories of expendable supplies held for consumption are not considered material and are recorded as expenditures, or expenses, as appropriate, when purchased. Inventory consists of other repair parts and supplies, which are recorded as assets at the time of purchase and as expenses as the supplies are used. These inventories are valued at cost using the first-in-first-out method. H. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. I. Capital Assets All capital assets are valued at cost or estimated historical cost if purchased or constructed. Donated capital assets are valued at acquisition value on the date donated. The threshold for capitalization is on a case-by-case basis but generally is $5,000. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives is charged to operations as incurred. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. 20

26 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 (CONTINUED) Depreciation of all exhaustible capital assets is charged as an expense against their operations. Accumulated depreciation is reported on the statement of net position. Depreciation has been provided over the estimated useful lives using the straight-line method. The estimated useful lives are as follows: Years Building improvements 15 Buses 5-12 Machinery and equipment 3-10 J. Deferred Outflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period or periods and so will not be recognized as an outflow of resources (expense/expenditure) until then. The Authority has one item that qualifies for reporting in this category. The item is the deferred outflow of resources relative to the pension plans change in assumptions. This amount is deferred and will be recognized as a reduction of the net pension liability in future years. K. Accumulated Unpaid Vacation and Sick Leave Costs Employees of the Authority are entitled to paid vacation, paid sick days and personal days off, depending on job classification, length of service, and other factors. Accumulated unpaid sick leave costs are not vested and are not accrued, but are recognized as expenditures or expenses, when paid. Accumulated unpaid vacation costs are accrued when incurred. L. Restricted Assets Certain cash and investments are segregated from operating cash due to certain internal or external restrictions. These funds are restricted for capital purchases. M. Risk Management The Authority is exposed to various risks of loss related to torts; theft of, damage to, or destruction of assets; and errors of omissions. The Authority purchases commercial insurance for these types of risk. Insurance coverage by major categories of risk has not changed significantly from the prior year. N. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 21

27 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 (CONTINUED) NOTE 2 BUDGETS AND BUDGETARY ACCOUNTING Budget Process The annual budget document is the financial plan for the operation of Macon-Bibb County Transit Authority. The budget exists for the purpose of providing a professional management approach to the establishment of priorities and the implementation of work programs while providing an orderly means for control and evaluation of the financial posture of the Authority. An annual operating budget is prepared for the Operating Fund. The Authority formulates and remits the budget to Macon-Bibb County, Georgia. NOTE 3 DEPOSITS AND INVESTMENTS Custodial credit risk deposits. The custodial credit risk for deposits is the risk that in the event of the failure of a bank, the government will not be able to recover deposits. State statue require banks holding public funds to secure these funds by FDIC insurance, securities pledged at par value, and surety bonds at face value in combined aggregate totaling not less than 110 percent of the public funds held. The Authority had deposit accounts which were under collateralized by $109,922 as of June 30, Custodial credit risk. For an investment, the custodial credit risk is the risk that in the event of the failure of the counter-party to a transaction, the Authority will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. State statutes require all investments (other than federal or state government instruments) to be collateralized by depository insurance, obligations of the U.S. government, or bonds of public authorities, counties, or municipalities. 22

28 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 (CONTINUED) Fiduciary Funds The Authority had investments of $4,540,616 at June 30, 2016, in a single-employer, defined benefit pension plan. The investments of the pension plan are as follows: Investment Maturities (Years) Investment Type Fair Value Less than Rating Common stock $ 1,264,237 N/A N/A N/A N/A Temporary investments 261,484 N/A N/A N/A N/A Mutual funds 1,403,677 N/A N/A N/A N/A U.S. government bonds 184,378 $ 36,556 $ 46,868 $ 100,954 AAA U.S. government bonds 25,032 25, N/A U.S. government notes 307,886 40, ,503 97,337 AAA Municipal bonds 51,172-51,172 - N/A Municipal bonds 26,456-26,456 - A1 to A3 Municipal bonds 52,402-52,402 - AA1 Municipal bonds 25,600-25,600 - AA2 Municipal bonds 41,635-41,635 - AA3 Corporate bonds 47, ,521 AAA Corporate bonds 99,538 31,042 42,282 26,214 AA1 to AA3 Corporate bonds 318, ,226 58,680 A1 to A3 Corporate bonds 430, , ,578 BAA1 to BAA3 Total $ 4,540,616 $ 132,676 $ 888,258 $ 590,284 Interest rate risk. Interest rate risk is the risk that changes in the interest rates will adversely affect the fair value of an investment. The Authority does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit risk. Credit risk exists when there is a possibility that the issuer or other counterparty to an investment may be unable to fulfill its obligations. The Authority s investment policy requires all plan assets to be invested in liquid securities, defined as securities that can be transacted quickly and efficiently for the plan, with minimal impact on market price. Allowable assets include cash equivalents, fixed income securities, equity securities, mutual funds and other assets, subject to investment restrictions imposed by the State Code of Georgia. Credit quality ratings are disclosed below for required investments. Fair value measurement. The Authority s investments are reported at fair value in the accompanying statement of fiduciary net position. The methods used to measure fair value may produce an amount that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Authority believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. 23

29 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 (CONTINUED) The fair value measurement establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobserved inputs (level 3 measurements). The three levels of the fair value hierarchy are as described below: Basis of Fair Value Measurement Level 1 Unadjusted quoted prices in markets that are accessible at the measurement date for the identical, unrestricted assets and liabilities; Level 2 Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly; Level 3 Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. The Authority has the following fair value measurements as of June 30, 2016: Investment Level 1 Level 2 Level 3 Fair Value Common stock $ 1,264,237 $ - $ - $ 1,264,237 Temporary investments 261, ,484 Mutual funds 1,403, ,403,677 US government bonds 517, ,296 Municipal bonds - 197, ,265 Corporate bonds - 896, ,657 Total $ 3,446,694 $ 1,093,922 $ - $ 4,540,616 NOTE 4 DUE FROM OTHER GOVERNMENTS Due from other governments represent Transportation for the following grants: amounts due from the Georgia Department of Operating assistance grant $ 492,950 Capital assistance grant 891 Total $ 493,841 NOTE 5 INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS The interfund receivables and payables at June 30, 2016, were as follows: Receivable Fund Payable Fund Amount Operating Paratransit $ 300,006 The outstanding balances between funds result mainly from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. 24

30 A reconciliation of transfers is as follows: NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 (CONTINUED) Transfer In: Transfer out: Paratransit Operating - overhead allocation $ 59,728 Transfers are used to allocate overhead expenses from the Operating Fund to the Paratransit Fund. NOTE 6 RESTRICTED ASSETS The restricted assets include cash in bank for the payment of capital purchases and maintenance and debt service. The balance in this account as of June 30, 2016, is $58,401. NOTE 7 CAPITAL ASSETS Capital assets at June 30, 2016, are as follows: Beginning Ending Balance Increases Decreases Balance Land and improvements $ 335,018 $ 55,813 $ - $ 390,831 Buildings 10,246,270 7,000-10,253,270 Buses 7,875,807 1,555,330 (749,569) 8,681,568 Machinery and equipment 2,002,866 4,135 (25,447) 1,981,554 Total capital assets 20,459,961 1,622,278 (775,016) 21,307,223 Less: accumulated depreciation for: Land improvements (1,343) (14,618) - (15,961) Buildings (244,160) (299,273) - (543,433) Buses (4,669,316) (920,984) 480,500 (5,109,800) Machinery and equipment (1,266,254) (286,568) 25,447 (1,527,375) Building improvements Total accumulated depreciation (6,181,073) (1,521,443) 505,947 (7,196,569) Capital assets, net $ 14,278,888 $ 100,835 $ (269,069) $ 14,110,654 Depreciation expense was charged to functions/programs of the primary government as follows: Business-type activities: Operating Fund $ 1,444,503 Paratransit Fund 76,940 Total depreciation expense $ 1,521,443 25

31 NOTE 8 LONG TERM DEBT NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 (CONTINUED) The following is a summary of long-term debt transactions of the Authority for the fiscal year ended June 30, 2016: Beginning Ending Due within Balance Additions Deductions Balance One Year Net pension liability $ 4,510,481 $ 1,457,642 $ - $ 5,968,123 $ - Compensated absences 37,334 22,436 (21,741) 38,029 38,029 Total $ 4,547,815 $ 1,480,078 $ (21,741) $ 6,006,152 $ 38,029 During 2010, the Authority adopted a policy which requires employees to use accrued vacation time within 12 months of being earned and available for use. At the end of the 12 month period, unused vacation time expires. NOTE 9 LINE OF CREDIT The Authority has a $1,300,000 line of credit with BB&T Bank to be drawn upon as needed with a rate of interest per annum equal to the sum obtained by adding the one month LIBOR plus 3.0% per annum, which shall be adjusted monthly on the first day of each LIBOR interest period. The line of credit is secured with all of the Authority s deposits and investments maintained with BB&T Bank. As of June 30, 2016, there was a balance $600,397. Short-term debt activity for the year ended June 30, 2016 was as follows: Beginning Ending Balance Issued Retired Balance Business-Type Activities Operating Fund $ 1,195,192 $ 6,952,543 $ (7,547,338) $ 600,397 NOTE 10 WORKING CAPITAL The Bi-Party Agreement (Note 1) requires that working capital (current assets minus current liabilities) be maintained at a level equal to 45 days of budgeted operating expenses based on a 365 day year. Any excess in the working capital level is to be refunded Macon-Bibb County. Any deficit in working capital is to be funded by Macon-Bibb County. As of June 30, 2016, the working capital totaled $474,205. This amount is $255,578 less than the 45 day level mandated by the agreement. Based on the agreement, the Macon-Bibb County owes $255,578 to the Authority. NOTE 11 EMPLOYEE RETIREMENT PLAN Plan Description The Authority participates in a single-employer, defined-benefit, and public employee retirement system Macon-Bibb County Transit Authority Pension Plan ( Pension Plan ) covering substantially all employees. The Plan provides retirement, disability and death benefits to plan members and beneficiaries. Assets are held separately and may be used only for the payment of benefits to the 26

32 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 (CONTINUED) members of the plan. The funds are managed by independent money managers at BB&T and administered by the Authority s board. The financial statements of the Pension Plan are included in this report. Actuarial valuations are performed bi-annually by Stanley, Hunt, Dupree & Rhine Benefit Consultants, a division of BB&T. There are no loans to any of the Authority s officials nor are there any other "party-in-interest" or prohibited transactions. As authorized by the Board of the Authority, the plan provides pension benefits and death and disability benefits for all full-time employees. Employees who were participants in the plan prior to January 1, 1989 who worked at least 30 hours per week may participate in the plan after they have completed one (1) year of continuous service. Benefits vest after 10 years of service. Early retirement is permitted provided the participant is at least 50 years of age and has completed ten (10) years of service. Plan Membership At January 1, 2014, the date of the most recent actuarial valuation, there were 73 participants consisting of the following: Inactive employees or beneficiaries currently receiving benefits 37 Inactive employees entitled to but not yet receiving benefits 0 Active employees 36 Total 73 Significant Accounting Policies Basis of Accounting. The accrual basis of accounting is used in the pension trust fund. The accrual basis of accounting recognizes revenues when earned. Expenses are recorded when incurred. Employer contributions to the plans are recognized when due and the Authority has made a formal commitment to provide the contribution. Plan members may voluntarily make contributions to the plan. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. Funding Policy The plan members are not required to contribute to the plan. The Authority s funding policy requires the Authority to contribute to the Pension Plan an amount at least equal to the employee contribution but not less than the minimum contribution required under Georgia Law for the fiscal year. The Authority is required to contribute at an actuarially determined rate; the current rate is 46.06% of annual covered payroll. The contribution requirements of the Authority are established and may be amended by the Authority. 27