City of Boston

City of Boston

Massachusetts

Comprehensive Annual Financial Report

Fiscal Year Ended June 30, 2014

Martin J. Walsh, Mayor David Sweeney, Chief Financial Officer & Collector Treasurer Sally D. Glora, City Auditor

Prepared by the City of Boston Auditing Department

Table of Contents

Page

INTRODUCTORY SECTION (Unaudited)

Transmittal Letter ............................................................................................................................... I GFOA Certificate of Achievement ....................................................................................................... IX Organizational Chart of City Government .......................................................................................... X List of Elected and Appointed Officials ............................................................................................... XII Organizational Chart of Auditing Department .................................................................................... XIII List of Auditing Department Personnel............................................................................................... XIV

FINANCIAL SECTION

Independent Auditors' Report .................................................................................................. 1 Management's Discussion and Analysis (Unaudited) .................................................................. 4 Basic Financial Statements: Government-wide Financial Statements

Statement of Net Position .................................................................................................................. 17 Statement of Activities........................................................................................................................ 18

Fund Financial Statements

Balance Sheet ? Governmental Funds ................................................................................................ 20 Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Position . 21 Statement of Revenues, Expenditures, and Changes in Fund Balances ? Governmental Funds.......................................................................................................................... 22 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of Governmental Funds to the Statement of Activities ..................................................................... 23 Statement of Revenues and Expenditures ? Budgetary Basis, General Fund ?

Budget and Actual ........................................................................................................................... 24 Statement of Net Position ? Proprietary Fund ................................................................................... 25 Statement of Revenues, Expenses, and Changes in Net Position ? Proprietary Fund........................ 26 Statement of Cash Flows ? Proprietary Fund ..................................................................................... 27 Statement of Fiduciary Net Position ? Fiduciary Funds ...................................................................... 28 Statement of Changes in Fiduciary Net Position ? Fiduciary Funds.................................................... 29

Notes to the Basic Financial Statements..................................................................................... 30

Required Supplementary Information (Unaudited):

Schedules of Funding Progress ........................................................................................................... 67 Schedules of Employer Contributions................................................................................................. 67

Combining, Individual Fund Statements and Schedules: General Fund

Fund Description ................................................................................................................................. 68 Comparative Balance Sheets .............................................................................................................. 70 Comparative Statements of Revenues, Expenditures and Changes in Fund Balance............................................................................................................................................... 71 Schedule of Revenues and Other Financing Sources Compared to Budget ....................................... 72 Schedule of Expenditures Compared to Budget ................................................................................. 75

Page Special Revenue Fund

Fund Description ................................................................................................................................. 78 Comparative Balance Sheets .............................................................................................................. 80 Comparative Statements of Revenues, Expenditures, and Changes in Fund Balance............................................................................................................................................... 81

Capital Projects Fund

Fund Description ................................................................................................................................. 82 Comparative Balance Sheets .............................................................................................................. 84 Comparative Statements of Revenues, Expenditures, and Changes in Fund Balance............................................................................................................................................... 85

Other Governmental Funds

Funds Descriptions.............................................................................................................................. 86 Combining Balance Sheet ................................................................................................................... 88 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance............................. 89

Internal Service Fund

Fund Description ................................................................................................................................. 90 Comparative Statements of Net Position ........................................................................................... 92 Comparative Statements of Revenues, Expenses, and Changes in Net Position................................ 93 Comparative Statements of Cash Flows ............................................................................................. 94

Fiduciary Funds

Funds Descriptions.............................................................................................................................. 96 Comparative Statements of Plan Net Position ? State-Boston Retirement System ........................... 98 Comparative Statements of Plan Net Position ? OPEB Trust Fund..................................................... 99 Combining Statements of Net Position ? Private Purpose Trust Funds.............................................. 100 Comparative Statements of Net Position ? Agency Fund ................................................................... 102 Comparative Statements of Changes in Plan Net Position ? State-Boston Retirement System......... 103 Comparative Statements of Changes in Plan Net Position ? OPEB Trust Fund .................................. 104 Combining Statements of Changes in Net Position ? Private Purpose Trust Funds ........................... 106 Statement of Changes in Net Position ? Agency Fund........................................................................ 108

STATISTICAL SECTION (Unaudited)

Page

Statistical Section Overview....................................................................................................................109 General Government Expenditures by Function (GAAP Basis) ...............................................................110 General Government Revenues by Source (GAAP Basis)........................................................................112 Net Position by Component ....................................................................................................................114 Changes in Net Position .........................................................................................................................116 Fund Balances of Governmental Funds .................................................................................................120 Changes in Fund Balances of Governmental Funds ................................................................................122 Assessed and Estimated Actual Value of All Taxable Property ...............................................................124 Property Tax Rates ? Direct and Overlapping Governments ..................................................................125 Largest Principal Taxpayers.....................................................................................................................126 Property Tax Levies and Collections .......................................................................................................127 Ratios of Outstanding Debt by Type .......................................................................................................128 Ratios of Net General Obligation Bonded Debt to Assessed Value and Net Bonded Debt per Capita ...130 Legal Debt Margin Information...............................................................................................................132 Demographic and Economic Statistics ....................................................................................................134 Principal Employers.................................................................................................................................135 Full-Time Equivalent City Government Employees by Department .......................................................136 Operating Indicators by Function ...........................................................................................................138 Capital Asset Statistics by Department ...................................................................................................140

December 23, 2014

The Honorable Mayor, Members of the City Council, and Citizens of Boston:

We are pleased to submit to you the Comprehensive Annual Financial Report (CAFR) of the City of Boston (City) for the fiscal year ended June 30, 2014. The CAFR is prepared by the City's Auditing Department, and is intended to provide information regarding the financial position of the City. This report is prepared in accordance with U.S. generally accepted accounting principles (GAAP), as established by the Governmental Accounting Standards Board (GASB), and meets all requirements of state finance law of the Commonwealth of Massachusetts, as well as the City Charter.

The responsibility for the accuracy, completeness, and fairness of the data presented, including disclosures, rests with the City. City management believes this report is accurate in all material respects and is presented in a manner which fairly sets forth the financial position and results of operations of the City. Management is also responsible for establishing and maintaining internal accounting controls designed to provide reasonable, but not absolute, assurance that these financial statements are complete and accurate in their presentation.

The Auditing Department uses an integrated financial and human resources management system referred to as the Boston Administrative Information System (BAIS). The system is designed to track and control daily activities and report the financial position of the City. This cutting edge software allows management to directly evaluate the financial status of individual programs as well as an entire department, and also supports the rigorous monitoring and reporting requirements enforced by the City.

The Commonwealth of Massachusetts, through Chapter 190 of the Acts of 1982, requires that the City undergo an annual audit performed by a firm of independent public accountants. The City has selected KPMG LLP to perform the June 30, 2014 audit. This audit is conducted in accordance with generally accepted government auditing standards (GAGAS) issued by the Comptroller General of the United States. The audit provides an independent review to help assure a fair presentation of the City's financial position and results of operations.

The City also undergoes an annual audit of its federal grant funds as required by the Single Audit Act and Office of Management and Budget Circular A-133. KPMG LLP issues separate reports on the City's internal control systems and compliance with applicable laws and regulations that meet the requirements of the Single Audit Act. A substantial focus of the Single Audit is to evaluate the City's internal control structure. The evaluation includes testing a significant number of the major federal

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