AUDITED FINANCIAL RESULTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 DECEMBER 11, 2018

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1 AUDITED FINANCIAL RESULTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 DECEMBER 11, 2018

2 AGENDA Comprehensive Annual Financial Report (CAFR) Clifton, Larson, Allen Comments FY 2018 Audited Financial Statements Entity Wide Statements GASB 34 General Fund School Operating Fund Enterprise Funds TIP Fund and TAP Fund Debt June 30, 2018 FY 2019 results through November 30, 2018 i

3 COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) Introductory Section Letter of Transmittal Financial Section Independent Auditor s Report Management s Discussion and Analysis Basic Financial Statements Government-Wide Financial Statements reports net position Governmental Fund Financial Statements reports fund balance Proprietary Fund Financial Statements Required Supplementary Information Combining and Individual Financial Statements (ISFs, SRFs, Fiduciary) Statistical Section Single Audit Continuing Disclosures ii

4 2018 CliftonLarsonAllen LLP WEALTH ADVISORY OUTSOURCING AUDIT, TAX, AND CONSULTING Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC registered investment advisor City of Virginia Beach 2018 Comprehensive Annual Financial Reporting (CAFR) Results

5 Audit Results 2018 CliftonLarsonAllen LLP Auditors Opinion on Financial Statements Unmodified 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 no material weaknesses or significant deficiencies noted

6 Audit Results continued 2018 CliftonLarsonAllen LLP Independent Auditors Report on Compliance for Each Major Federal Program, Report on Internal Control, and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance One Finding: Section 8 Voucher Rent reasonableness

7 Required Communications As described in Note 11, the City implemented GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. This statement required accrual of the OPEB liability, additional disclosures in the footnotes, and restatement of beginning net position. Accounting estimates Financial statement disclosures No difficulties encountered during the audit No disagreements with management 2018 CliftonLarsonAllen LLP

8 Required Communications continued 2018 CliftonLarsonAllen LLP No corrected or uncorrected misstatements Management representations Management consultations with other independent accountants Audit of group financial statements Other information in documents containing audited financial statements Required supplementary information Supplementary information Schedule of Expenditures of Federal Awards

CLAconnect.com 2018 CliftonLarsonAllen LLP Greg Bussink, CPA, CGFM, CGMA Principal Greg.Bussink@CLAconnect.

9 CLAconnect.com 2018 CliftonLarsonAllen LLP Greg Bussink, CPA, CGFM, CGMA Principal linkedin.com/company/ cliftonlarsonallen facebook.com/ cliftonlarsonallen twitter.com/claconnect youtube.com/cliftonlarsonallen

10 COMPARISON OF NET POSITION TO FUND BALANCE Net Position Total Economic Resources Measurement Long-Term operational accountability Fund Balance Current Financial Resources Measurement Near-Term fiscal accountability Budgetary Compliance Legal Compliance CoVB - 1

11 STATEMENT OF NET POSITION ALL CITY FUNDS JUNE 30, 2018 (IN MILLIONS) City Schools Total Community Development Corporation Current Assets $ 1,189.9 $ $ 1,389.0 $ 5.8 Capital Assets 4, , Deferred Outflows of Resources Total Assets and Deferred Outflows of Resources 5, , Current Liabilities Net Pension Liability Net OPEB Liability Other Long-Term Liabilities 1, , Deferred Inflows of Resources Total Liabilities and Deferred Inflows of Resources 2, , , Net Position: Net Investment in Capital Assets 3, , Restricted Unrestricted (758.5) (317.9) 5.5 Total Net Position $ 3,713.3 $ (195.4) $ 3,517.9 $ 11.1 CAFR Exhibit 1 CoVB - 2

12 GENERAL FUND BUDGET TO ACTUAL JUNE 30, 2018 (IN MILLIONS) % of BUDGET ACTUAL VARIANCE Budget LOCAL $ $ $ % STATE (0.1) -0.1% FEDERAL % TOTAL REVENUES $ 1,140.8 $ 1,147.1 $ % CITY $ $ $ % CITY CAPITAL PROJECTS SCHOOLS % SCHOOL RESERVE FUND % SCHOOLS CAPITAL PROJECTS TOTAL EXPENDITURES $ 1,216.7 $ 1,135.2 $ % REVENUES OVER (UNDER) $ (75.9) $ 11.9 $ 87.8 FUND BALANCE - JULY LESS: RESERVATIONS (115.8) UNASSIGNED FUND BALANCE - JUNE 30 $ General Fund Balance only as a percent of FY2019 Revenues is 9.87% CoVB - 3

13 TOTAL REVENUES GENERAL FUND JUNE 30, 2018 (IN MILLIONS) FY 2018 YTD FY 2017 YTD VARIANCES Budget Actual Variance % Actual Actual % * Real Estate Taxes $ $ $ $ $ % Personal Property Taxes Commonwealth - PPTRA General Sales Tax (1.6) (2.5) Utility Taxes Telecommunications Taxes (0.9) (3.6) Business Licenses * Hotel Taxes * Meal Taxes (1.6) (3.7) * Cigarette Taxes (0.5) (4.2) 11.1 (0.5) (4.1) Human Services Charges (1.4) (5.3) 25.8 (0.1) (0.2) Other Charge for Services (1.3) (3.2) Other Local Revenues (5.1) (12.0) Commonwealth - Maintenance of Roads (1.0) (2.0) 48.9 (0.3) (0.7) Commonwealth - Human Services Reimb (2.5) (7.9) * Commonwealth - Other State Revenues (0.2) (0.9) * Federal Revenues * Transfers from Other Funds (0.1) (0.7) 34.3 (25.0) (72.9) $ 1,140.7 $ 1,147.1 $ $ 1,098.4 $ % * GF portion only Green = Exceeded budget Red = Under budget Blue = Under Budget but exceeded Prior Year CoVB - 4

14 TOTAL FUND BALANCE RESERVATIONS JUNE 30, 2018 (IN MILLIONS) Total Fund Balance June 30, 2018 $ Less Reservations: Inventories & Loans Receivable 11.0 Community Services Board Restricted Funds 2.2 School True-Up 1.5 School Reversion 22.9 School Reserve Fund 17.3 Carryforwards and Encumbrances 11.6 Trust and Gift Funds 1.1 FY 2019 City CIP Budget 31.9 FY 2019 School Operating Budget 0.4 FY 2019 School CIP Budget 3.6 Risk Management 1.8 Human Services Electronic Implementation 4.0 Salary Compression for FY Increase CIP for Beach Replenishment Total Unassigned Fund Balance FY 2018 $ % of FY2019 Budgeted Revenues 9.87% CoVB - 5

15 UNASSIGNED GENERAL FUND BALANCE AS OF JUNE 30, 2009 THRU 2018 (IN MILLIONS) $ % 11.9% Dollars $150 $100 $50 8.9% $ % $102.1 $ % 10.4% 9.5% 9.3% $104.0 $102.4 $96.1 $ % 10.5% 9.9% $118.4 $114.3 $ % 8.0% 4.0% % of Budgeted GF Revenue $ % Unassigned GF Balance % of Budgeted GF Revenue CoVB - 6

16 SCHOOL OPERATING FUND REVENUES & EXPENDITURES BUDGET TO ACTUAL AT JUNE 30, 2018 (IN MILLIONS) Budget Actual Variance REVENUES: City - FY18 Contribution $ $ $ - City - School Reserve Fund State Share of Sales Tax Commonwealth (0.3) Federal Government Other Total Revenues $ $ $ 1.3 EXPENDITURES: Salaries $ $ $ 11.7 Fringe Benefits Operating Expenses Capital Outlay Debt Service Transfers Total Expenditures * $ $ $ 21.6 Total School Reversion $ 22.9 * Includes encumbrances of $7.0 million Per City Council policy, amount reverted back to City is reappropriated back to the schools. In addition to reversion, total revenue True-Up (34.11% of non-dedicated Local Taxes) of $1.5M was reappropriated to schools in FY2019. CoVB - 7

17 ENTERPRISE FUNDS AT JUNE 30, 2018 (IN MILLIONS) Water and Sewer Storm Water Waste Management Parking Cash and Investments $ $ 38.3 $ 7.1 $ 4.9 Cash and Investments Restricted Other Assets + Deferred Outflows Total Assets + Deferred Outflows Total Liabilities + Deferred Inflows Net Investment in Capital Assets Future Debt Services Unrestricted (deficit) Total Net Position Operating Revenues Operating Expenses (112.8) (32.8) (37.5) (4.0) Operating Income (Loss) (2.4) 2.0 Other (non operating and capital contributions) (1.7) Change in Net Position $ 16.6 $ 19.7 $ 3.5 $ 0.3 CoVB - 8

18 DEVELOPMENT AUTHORITY AT JUNE 30, 2018 (IN MILLIONS) Development Authority Cash and Investments $ 8.9 Cash and Investments Restricted 2.6 Other Assets + Deferred Outflows Total Assets + Deferred Outflows Total Liabilities + Deferred Inflows 80.3 Net Investment in Capital Assets 37.1 Future Debt Services 6.4 Unrestricted (deficit) 50.5 Total Net Position 94.0 Operating Revenues 4.2 Operating Expenses (14.9) Operating Income (Loss) (10.7) Other (non operating and capital contributions) 36.8 Change in Net Position $ 26.1 CoVB - 9

4 Liabilites 0.2 1.4 Fund Balance 20.4 1.0 Revenue 39.5 12.2 Expenses (31.4) (12.

19 TOURISM INVESTMENT PROGRAM (TIP) & TOURISM ADVERTISING PROGRAM (TAP) AT JUNE 30, 2018 (IN MILLIONS) Tourism Tourism Investment Advertising Program Program Assets $ 20.5 $ 2.4 Liabilites Fund Balance Revenue Expenses (31.4) (12.7) Change in Fund Balance $ 8.1 $ (0.5) OS 0.44% TAP 0.5% Meal Tax GF 3.5% Hotel Tax TIP 5% TIP 1.06% GF 2% TAP 1% CoVB - 10

20 OUTSTANDING DEBT BY PURPOSE AS OF JUNE 30, 2018 Total Debt - $1.222B General Government 51.69% Agriculture Reserve Program 3.76% Storm Water 3.54% Water and Sewer 17.19% Total Tax Supported Debt - $932.1M Total Self Supported Debt - $290.1M Schools 23.82% Net Debt per Capita $2,042 CoVB - 11

21 FY2018 SUMMARY Fund Balance of $114.3M within City Council Policy, Reservations for FY2019 operating budget include: School Reversion & Revenue Sharing - $24.4M FY2019 CIP Budget City-$31.9M and Schools-$3.6M General Fund revenues of $1.147B were 0.6% ($6.3M) over budget Increase of 4.4% ($48.7M) over prior year General Fund expenditures of $1.135B were 6.7% ($81.5M) under budget Increase of 6.5% ($69.0M) over prior year Net Pension Liabilities for City and Schools total $1.152B $162.6 M less than FY2017 Net OPEB Liabilities for City and Schools total $269.8M CoVB - 12

AUDITED FINANCIAL RESULTS FOR THE FISCAL YEAR ENDED JUNE 30, 2017 DECEMBER 12, 2017

AUDITED FINANCIAL RESULTS FOR THE FISCAL YEAR ENDED JUNE 30, 2017 DECEMBER 12, 2017 AGENDA CliftonLarsonAllen Comments FY 2017 Audited Financial Statements Entity Wide Statements GASB 34 General Fund School