Description
The State Budget Office, Office of Financial Management, prepares the SOMCAFR and is responsible for both the accuracy of the data and the completeness and fairness of the presentation, including disclosures. To the best of our knowledge and belief, the information contained in the SOMCAFR is accurate in all material respects and reported in a manner that fairly presents the financial position and results of operations of the State primary government and component units for which it is financially accountable.
Fiscal Year Ended September 30, 2014
Governor Rick Snyder, CPA
Prepared by the State Budget Offce
State of
Michigan
Comprehensive Annual
Financial Report
Michigan
2014 Comprehensive Annual Financi al Report
State of Michigan
Comprehensive Annual Financial Report
Fiscal Year Ended September 30, 2014
RICK SNYDER, CPA
Governor
JOHN S. ROBERTS
State Budget Director
MICHAEL J. MOODY, CPA
Director
Office of Financial Management
1111
Michigan
TABLE OF CONTENTS
Page
Title page ......................................................................................................................................................................... 1
Table of Contents ............................................................................................................................................................. 2
INTRODUCTORY SECTION
Letter of Transmittal ......................................................................................................................................................... 6
Certificate of Achievement ............................................................................................................................................... 11
State Organizational Structure ......................................................................................................................................... 12
Principal State Officials .................................................................................................................................................... 13
FINANCIAL SECTION
Independent Auditor’s Report .......................................................................................................................................... 16
Management's Discussion and Analysis .......................................................................................................................... 21
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Position ....................................................................................................................................... 32
Statement of Activities ............................................................................................................................................. 34
Governmental Fund Financial Statements
Balance Sheet ......................................................................................................................................................... 38
Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position. .............................. 39
Statement of Revenues, Expenditures, and Changes in Fund Balances ................................................................ 40
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund
Balances - Governmental Funds to the Statement of Activities ........................................................................... 41
Proprietary Fund Financial Statements
Statement of Net Position ....................................................................................................................................... 44
Statement of Revenues, Expenses, and Changes in Fund Net Position................................................................. 45
Statement of Cash Flows ........................................................................................................................................ 46
Fiduciary Fund Financial Statements
Statement of Fiduciary Net Position ........................................................................................................................ 50
Statement of Changes in Fiduciary Net Position ..................................................................................................... 51
Component Unit Financial Statements
Statement of Net Position ....................................................................................................................................... 54
Statement of Activities ............................................................................................................................................. 56
Index for Notes to Financial Statements ....................................................................................................................... 58
Notes to Financial Statements ...................................................................................................................................... 59
Required Supplementary Information Other Than Management’s Discussion and Analysis
Budgetary Comparison Schedule - Major Governmental Funds .................................................................................. 124
Budgetary Comparison Schedule - Budget-to-GAAP Reconciliation ............................................................................ 126
Notes to Required Supplementary Information - Budgetary Reporting ......................................................................... 127
Information About Infrastructure Assets Reported Using the Modified Approach ......................................................... 128
Combining and Individual Fund Statements and Schedules - Non-Major Funds
Governmental Funds
Balance Sheet - By Fund Type ............................................................................................................................... 132
Statement of Revenues, Expenditures and Changes in Fund Balances - By Fund Type ....................................... 133
Special Revenue Funds – By Classification
Balance Sheet ......................................................................................................................................................... 134
Statement of Revenues, Expenditures, and Changes in Fund Balances ................................................................ 135
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual ................................. 136
2014 Comprehensive Annual Financi al Report
2222
Michigan
Page
Special Revenue Funds - Transportation Related
Combining Balance Sheet ....................................................................................................................................... 140
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .............................................. 141
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual .............. 142
Special Revenue Funds - Conservation, Environment, and Recreation Related
Combining Balance Sheet ....................................................................................................................................... 146
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .............................................. 148
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual .............. 150
Special Revenue Funds - Regulatory and Administrative Related
Combining Balance Sheet ....................................................................................................................................... 154
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .............................................. 156
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual .............. 158
Special Revenue Funds - Other State Funds
Combining Balance Sheet ....................................................................................................................................... 164
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .............................................. 166
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual .............. 168
Debt Service Funds
Combining Balance Sheet ....................................................................................................................................... 172
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .............................................. 174
Capital Projects Funds
Combining Balance Sheet ....................................................................................................................................... 178
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .............................................. 180
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual .............. 182
Permanent Funds
Combining Balance Sheet ....................................................................................................................................... 186
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .............................................. 187
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual ............... 188
Proprietary Funds
Enterprise Funds
Combining Statement of Net Position ..................................................................................................................... 192
Combining Statement of Revenues, Expenses, and Changes in Fund Net Position .............................................. 193
Combining Statement of Cash Flows ...................................................................................................................... 194
Internal Service Funds
Combining Statement of Net Position ..................................................................................................................... 196
Combining Statement of Revenues, Expenses, and Changes in Fund Net Position .............................................. 198
Combining Statement of Cash Flows ...................................................................................................................... 200
Fiduciary Funds
Pension (and Other Employee Benefit) Trust Funds
Combining Statement of Fiduciary Net Position ...................................................................................................... 204
Combining Statement of Changes in Fiduciary Net Position....................... ............................................................ 208
Private Purpose Trust Funds
Combining Statement of Fiduciary Net Position ...................................................................................................... 212
Combining Statement of Changes in Fiduciary Net Position....................... ............................................................ 213
Agency Funds
Combining Statement of Fiduciary Net Position ...................................................................................................... 215
Combining Statement of Changes in Assets and Liabilities .................................................................................... 216
Component Units
Authorities
Combining Statement of Net Position ..................................................................................................................... 220
Combining Statement of Activities .......................................................................................................................... 222
State Universities
Combining Statement of Net Position ..................................................................................................................... 226
Combining Statement of Activities .......................................................................................................................... 228
2014 Comprehensive Annual Financi al Report
3333
Michigan
Page
STATISTICAL SECTION
Index to Statistical Section ........................................................................................................................................ 233
Net Position by Component ...................................................................................................................................... 234
Changes in Net Position ........................................................................................................................................... 236
Fund Balances, Governmental Funds ....................................................................................................................... 240
Changes in Fund Balances, Governmental Funds ................................................................................................... 242
Personal Income by Industry .................................................................................................................................... 244
Taxable Sales by Industry ......................................................................................................................................... 246
Personal Income Tax Filers and Liability by Income Level ....................................................................................... 248
Sales Tax Payers by Industry ................................................................................................................................... 249
Ratios of Outstanding Debt by Type ......................................................................................................................... 250
Ratios of Net General Obligation Bonded Debt Outstanding .................................................................................... 253
Debt Service Coverage - Comprehensive Transportation Fund Related Bonds ....................................................... 254
Debt Service Coverage - State Trunkline Fund Related Bonds ................................................................................ 256
Debt Service Coverage - State Building Authority .................................................................................................... 258
Demographic and Economic Indicators .................................................................................................................... 260
Classified Employees by Function ............................................................................................................................ 262
Operating Indicators by Function .............................................................................................................................. 264
Capital Assets by Function ....................................................................................................................................... 268
OTHER INFORMATION
Combined Schedule of Revenue and Other Financing Sources - General and Special Revenue Funds ................. 272
Schedule of Revenue and Other Financing Sources - General Fund ....................................................................... 274
Source and Disposition of General Fund Authorizations ........................................................................................... 276
Source and Disposition of General Fund/General Purpose Authorizations ............................................................... 278
Revenue, Bond Proceeds, and Capital Lease Acquisitions - General and Special Revenue Funds ........................ 280
Schedule of Expenditures by Function - General and Special Revenue Funds - State Funds ................................. 282
Index of Funds and Component Units .............................................................................................................................. 284
2014 Comprehensive Annual Financi al Report
4444
Michigan
2014 Comprehensive Annual Financi al Report
5555
December 29, 2014
The Honorable Rick Snyder, Governor
Members of the Legislature
People of the State of Michigan
As required by Article 9, Section 21, of the State Constitution and Section 494, Public Act 431 of 1984, as
amended, we are pleased to submit the State of Michigan Comprehensive Annual Financial Report (SOMCAFR) for
the fiscal year ended September 30, 2014.
INTRODUCTION TO THE REPORT
Responsibility: The State Budget Office, Office of Financial Management, prepares the SOMCAFR and is
responsible for both the accuracy of the data and the completeness and fairness of the presentation, including
disclosures. To the best of our knowledge and belief, the information contained in the SOMCAFR is accurate in all
material respects and reported in a manner that fairly presents the financial position and results of operations of the
State primary government and component units for which it is financially accountable. All disclosures necessary to
enable the reader to gain a reasonable understanding of the State's financial affairs have been included.
Adherence to Generally Accepted Accounting Principles: As required by State statute, we have prepared the
financial statements contained in the SOMCAFR in accordance with generally accepted accounting principles (GAAP)
applicable to state and local governments, as promulgated by the Governmental Accounting Standards Board (GASB).
The State also voluntarily follows the recommendations of the Government Finance Officers Association of the United
States and Canada (GFOA) for the contents of government financial reports, and participates in the GFOA's review
program for the Certificate of Achievement for Excellence in Financial Reporting.
Report: The SOMCAFR is divided into four major sections: introductory, financial, statistical, and other information:
• The introductory section includes this letter, the State’s organization chart, and the list of principal officials.
• The financial section includes: the independent auditor’s report on the Basic Financial Statements;
Management’s Discussion and Analysis (MD&A) which provides an introduction, overview, and analysis to the
Basic Financial Statements; the Basic Financial Statements, which present the government-wide financial
statements and fund financial statements for governmental funds, proprietary funds, fiduciary funds, and
component units, together with footnotes to the Basic Financial Statements; Required Supplementary
Information other than MD&A, which presents budgetary comparison schedules and information about
infrastructure assets; and the supplemental financial data which includes the combining financial statements
and schedules.
• The statistical section includes such items as trend information, information on debt levels, and other selected
economic and statistical data.
• The other information section includes General Fund and Special Revenue Funds revenue and expenditure
schedules and General Fund source and disposition of spending authorization schedules.
Internal Control Structure: The State Budget Office is responsible for the overall operation of the State's central
accounting system and for establishing and maintaining the State's internal control structure. The system of internal
control has been designed to provide reasonable, rather than absolute, assurance that the financial statements are
free from material misstatement.
STATE OF MICHIGAN
RICK SNYDER STATE BUDGET OFFICE JOHN S. ROBERTS
GOVERNOR LANSING DIRECTOR
111 S. CAPITOL • P.O. BOX 30026 • LANSING, MICHIGAN 48909
.www.michigan.gov • (517) 373-7560
6666
All financial transactions of the State primary government are recorded in the central accounting system, except for
the Michigan Unemployment Compensation Funds, Attorney Discipline System, the State of Michigan Deferred
Compensation Funds, the State of Michigan Defined Contribution Retirement Fund, and the Michigan Education
Savings Program. Many of the essential control features are decentralized, such as the preparation and entry of
expenditure transactions into the central accounting system. Consequently, the State Budget Office relies upon the
controls in place at the various State departments and agencies.
Act 431 requires each principal department to maintain adequate internal control systems. Each department is also
required to periodically report to the Governor on the adequacy of its internal accounting and administrative control
systems and, if any material weaknesses exist, provide corrective action plans and time schedules for addressing such
weaknesses. This reporting is required on or before May 1 of each odd numbered year, effective as of the preceding
October 1.
The discretely presented component units generally operate outside the State's central accounting system and are
responsible for establishing and maintaining their own separate internal control structures.
Internal Auditors: Pursuant to Executive Order 2007-31, the Office of Internal Audit Services (OIAS) provides
internal audit services to executive branch departments and agencies. OIAS performs periodic financial, performance,
and compliance audits of department and agency programs and organizational units. In addition to periodic audits,
OIAS also reviews department and agency management’s processes for establishing, monitoring, and reporting on
internal controls; advises department and agency management on internal control matters; and assists department
and agency management with investigations of alleged fraud or other irregularities.
Independent Auditors: The Office of the Auditor General (OAG) is the principal auditor of the SOMCAFR. The
OAG also relies on the opinions of outside public accounting firms, particularly for component unit financial statements
(such as the Michigan State Housing Development Authority and ten of the State’s universities) and the
Unemployment Compensation funds. The purpose of the OAG’s audit is to provide reasonable assurance that the
Basic Financial Statements for the fiscal year ended September 30, 2014 are free of material misstatements. The
OAG concluded that the Basic Financial Statements for the fiscal year ended September 30, 2014 are fairly presented
in accordance with GAAP and issued unmodified opinions.
In addition to the annual audit of the SOMCAFR, the OAG also performs periodic financial statement and
performance audits of the various State departments, agencies, and institutions of higher education. The Auditor
General also has primary responsibility for conducting audits under the federal Single Audit Act Amendments of 1996.
Pursuant to Michigan Public Act 233 of 2012, an annual statewide single audit will be conducted for applicable State
departments, agencies and component unit authorities, and will result in a separately issued audit report.
Management’s Discussion and Analysis (MD&A): GAAP requires that management provide a narrative
introduction, overview, and analysis to accompany the Basic Financial Statements in the form of MD&A. This letter of
transmittal is intended to complement MD&A and should be read in conjunction with it. The MD&A immediately follows
the Independent Auditor’s Report.
PROFILE OF THE GOVERNMENT
Michigan was admitted to the Union as the 26
th
state in 1837. The State is governed under the Constitution of
1963, as amended.
Executive Branch: As of December 29, 2014, the Executive Branch consisted of 17 principal departments.
Fourteen principal departments are headed by commissions and/or directors appointed by the elected governor.
Elected officials head two principal departments, Attorney General and State, and one, Education, is headed by an
elected board.
111 S. CAPITOL • P.O. BOX 30026 • LANSING, MICHIGAN 48909
.www.michigan.gov • (517) 373-7560
7777
J udicial Branch: The J udicial Branch consists of the Supreme Court, Court of Appeals, Court of Claims, and the
State’s circuit, district, probate, and municipal courts. In addition to its judicial duties, the Supreme Court is
responsible for the general administrative supervision of all courts in the State. The Supreme Court also establishes
rules for practice and procedure in all courts.
Legislative Branch: The Legislative Branch consists of the Senate, House of Representatives, and Office of the
Auditor General. The Senate, which consists of 38 elected members, and House of Representatives, which consists of
110 elected members, enact the laws of Michigan. The Office of the Auditor General conducts post financial and
performance audits of state government operations.
Reporting Entity: The financial reporting entity of the State includes all of the funds of the primary government as
well as component units for which the State’s elected officials are financially accountable. The transmittal letter,
MD&A, and the financial statements focus on the primary government and its activities. Although information
pertaining to the component units is provided, their separately issued financial statements should be read to obtain a
complete overview of their financial position.
Budgetary Reporting and Control: For the State primary government operating funds (i.e., the General Fund and
annually appropriated special revenue, capital projects, and permanent funds), the State projects revenues and
expenditures and calculates fund balances for budgetary purposes in accordance with GAAP. Public Act 431 of 1984,
as amended, prohibits the State from budgeting for an ending fund balance deficit in an operating fund. If an actual
deficit is incurred, the Constitution and Act 431 require that it be addressed in the subsequent year's budget. If
accounting principles change, Act 431 requires the State to also implement such changes in its budgetary process.
Compliance with the final updated budget for the annually budgeted operating funds of the State primary
government is demonstrated in the budget and actual comparative schedules and notes in the SOMCAFR. In addition,
subsequent to the publication of the SOMCAFR, the State releases a Statewide Authorization Dispositions report that
provides line item appropriation details, the legal level of budgetary control, for the General Fund and budgeted
operating funds.
MAJOR INITIATIVES AND FUTURE PROJECTS
Economic Growth: Creating an environment that promotes growth in the Michigan economy remains a top priority
of the Snyder administration. To continue growing the Michigan economy, the fiscal year 2015 budget includes $344.2
million for economic development and $427.0 million for workforce development to assist Michigan businesses and
communities, with a continued emphasis on talent, business attraction, and community revitalization.
During fiscal year 2012, the administration reached an agreement with Canada that laid the groundwork for the New
International Trade Crossing (NITC). The NITC will provide a modern, strategically located bridge between Detroit and
Windsor that is vital to enhancing the trade relationship between Michigan and Canada. It is expected to generate
thousands of short and long-term jobs, open new trade markets, strengthen economic security, and ease traffic
congestion. During calendar year 2014, a major milestone was achieved when the U.S. Coast Guard granted a permit
that allows the project to move forward. In addition, appointments to the international authority that will govern the
NITC were announced and the clearing of land for construction has begun.
Detroit Bankruptcy Resolution: On J uly 18, 2013, the state-appointed Detroit emergency manager filed for Chapter
9 bankruptcy protection on behalf of the City of Detroit. Less than seventeen months later, on December 10, 2014,
Detroit successfully emerged from the nation’s largest municipal bankruptcy. The bankruptcy process included a
“Grand Bargain” where the philanthropic and business communities joined with the state to contribute over $800
million to the city to reduce the impact on pensions and extend vital services. The “Grand Bargain” also included
creation of a state oversight board that will oversee the city’s finances going forward. As a result of the overall
settlement, the city has shed $7 billion in debt and will invest at least $1.4 billion over ten years to improve services.
111 S. CAPITOL • P.O. BOX 30026 • LANSING, MICHIGAN 48909
.www.michigan.gov • (517) 373-7560
8888
Fiscal Stability: As Michigan continues to operate with a structurally balanced budget, Governor Snyder remains
committed to building the state’s savings and reducing the state’s long-term liabilities. During fiscal year 2014, $75.0
million was deposited into the Budget Stabilization Fund (or Rainy Day Fund). In addition, $194.8 million was
withdrawn to fund the state’s contribution to the Detroit bankruptcy “Grand Bargain”, resulting in a fiscal year 2014
ending fund balance of $386.2 million. Starting in fiscal year 2015, the withdrawal from the Rainy Day Fund will be
replenished by annual deposits of $17.5 million from tobacco settlement revenues. The fiscal year 2015 budget also
includes an additional deposit of $94.0 million. As a result, the Rainy Day Fund balance is projected to be $497.7
million at September 30, 2015.
During fiscal year 2012, the state began prefunding retiree health care benefits and implemented various pension
and retiree health care reforms for both state and public school employees. As a result, unfunded long-term liabilities
have been reduced by over $20 billion. Paying down these liabilities improves Michigan’s fiscal stability, while
ensuring that employees can count on promised benefits when they retire.
Improving Our Citizen’s Health: During fiscal year 2014, Michigan started a program to provide health insurance
administered through private and non-profit health insurance plans to low income families and individuals. Under the
Healthy Michigan Plan, previously uninsured Michigan residents now have a primary care physician through a market-
based approach to manage their health care. State costs are controlled through access to preventive health services,
keeping the newly insured out of emergency rooms, while improving their quality of care and access to affordable
health care. Individuals control their use of health care services and maintain healthy behaviors through financial
incentives. To date, more than 500,000 Michiganders have been enrolled and over $200 million in annual state
general fund savings have resulted from the Healthy Michigan Plan.
The fiscal year 2015 budget includes $5.4 million to add 100,000 children to the Healthy Kids Dental Program.
Currently, 510,000 Michigan children are enrolled in the program. This effort will bring the total number of children
receiving dental care to 610,000.
Education: Approximately $13.8 billion is appropriated for school aid in fiscal year 2015, $11.9 billion from state
dollars. This funding supports the educational efforts of approximately 850 local school districts and public school
academies, as well as 56 intermediate school districts. Over $800 million is provided to offset retirement system
legacy costs.
For fiscal year 2014, funding for early childhood education was increased by $65 million, resulting in 16,000 new
placements for children. The fiscal year 2015 budget includes an additional increase of $65 million, with the goal of
adding 15,000 more placements. Additionally, the fiscal year 2015 budget includes $3.7 million to improve the quality
of child day care.
State Infrastructure Investments: Investing in the State’s infrastructure, particularly roads and bridges, is a priority
for Governor Snyder, who has worked with the Legislature to negotiate and pass a comprehensive transportation
funding solution. The solution now goes to the voters in May 2015. If approved by the voters, the solution will provide
an additional $1.2 billion for roads and bridges.
In the interim, the fiscal year 2015 transportation budget includes $283 million in general funds to fully match
federal aid and provide for improvements to Michigan’s roads and bridges. In addition, progress continues on the
state’s significant investment in high-speed rail, with new passenger rail stations opening in Dearborn, Grand Rapids,
and Troy during calendar year 2014.
Information Technology Investments: Recognizing the increasingly critical role that information technology plays in
the delivery of services to citizens, public and private organizations, and State employees, the budgets for fiscal years
2013 and 2014 included $47 million each year for the Information Technology Investment Fund. For fiscal year 2015,
the budget for the Information Technology Investment Fund was increased to $63 million. This funding will bring
greater efficiency to state government, and also improve cybersecurity, system upgrades, and replacements of legacy
computer systems.
111 S. CAPITOL • P.O. BOX 30026 • LANSING, MICHIGAN 48909
.www.michigan.gov • (517) 373-7560
9999
10 10 10 10
11 11 11 11
* Includes Civil Service Commission appointed by Governor
** Has Commission appointed by Governor, confirmed by Senate
STATE OF MICHIGAN
ORGANIZATIONAL STRUCTURE
(As of December 29, 2014)
CITIZENS
OF
MICHIGAN
Court of
Appeals
Senate House
Auditor General
Governor
Secretary of
State
Supreme
Court
State Board of
Education
Attorney
General
Department of
Education
Department of
State
Department of
Attorney
General
JUDICIAL BRANCH LEGISLATIVE BRANCH EXECUTIVE BRANCH
Quality of Life Economic
Growth
People Public Safety Value For
Money
Government
Treasury
Department of
Agriculture &
Rural
Development**
Department of
Technology,
Management &
Budget*
Department of
Treasury
Department of
Insurance &
Financial
Services
Department of
Licensing &
Regulatory
Affairs
Department
of
Environmental
Quality
Department of
Natural
Resources**
Department
of
Civil Rights**
Department of
Community
Health
Department
of
Human Services
Department
of
Corrections
Department of
Military &
Veterans
Affairs
Department
of
State Police
Department
of
Transportation
**
12 12 12 12
STATE OF MICHIGAN
PRINCIPAL STATE OFFICIALS
(As of December 29, 2014)
JUDICIAL BRANCH LEGISLATIVE BRANCH
Supreme Court J ustices Honorable Randy Richardville
Honorable Robert P. Young, J r, Chief J ustice Majority Leader of the Senate
Honorable Michael F. Cavanagh, J ustice
Honorable Mary Beth Kelly, J ustice Honorable J ase Bolger
Honorable Stephen J . Markman, J ustice Speaker of the House of Representatives
Honorable Bridget Mary McCormack, J ustice
Honorable David F. Viviano, J ustice Doug Ringler, C.P.A., C.I.A
Honorable Brian K. Zahra, J ustice Legislative Auditor General
EXECUTIVE BRANCH
Honorable Rick Snyder, Governor
Honorable Brian Calley, Lt. Governor
Honorable Bill Schuette, Attorney General
Honorable Ruth J ohnson, Secretary of State
Group Executives Nick Lyon, Director
David B. Behen, Value for Money Government Department of Community Health
Kevin Clinton, Treasury
Michael A. Finney, Economic Growth Daniel H. Heyns, Director
Dan Wyant, Quality of Life Department of Corrections
Nick Lyon, People
Major General Gregory J . Vadnais, Public Safety Dan Wyant, Director
Department of Environmental Quality
State Board of Education
J ohn C. Austin, President Maura D. Corrigan, Director
Casandra E. Ulbrich, Vice President Department of Human Services
Daniel Varner, Secretary
Richard Zeile, Treasuer Annette E. Flood, Director
Michelle Fecteau Department of Insurance and Financial Services
Lupe Ramos-Montigny
Kathleen Straus Mike Zimmer, Director
Eileen Weiser Department of Licensing and Regulatory Affairs
Honorable Rick Snyder (Ex Officio)
Michael P. Flanagan Major General Gregory J . Vadnais, Director
Superintendent of Public Instruction Department of Military and Veterans Affairs
Michigan Commission of Agriculture & Rural Development Natural Resources Commission
Diane Hanson, Chair J R Richardson, Chair
Trever Meachum, Vice Chair J ohn Matonich, Vice Chair
Fred Walcott, Secretary Louise Klarr
Bob Kennedy Timothy L. Nichols
Dru Montri Vicki J . Pontz
J amie Clover Adams, Director Rex E. Schlaybaugh, J r.
Department of Agriculture & Rural Development Keith Creagh, Director
Department of Natural Resources
Civil Rights Commission
Arthur Horwitz, Chair Colonel Kriste Kibbey Etue, Director
Rasha Demashkieh, Vice Chair Department of State Police
J ared Rodriguez, Secretary
Agustin Arbulu David B. Behen, Director
Linda Gobler Department of Technology, Management and Budget
Deloris Hunt
Linda Lee Tarver J ohn S. Roberts, State Budget Director
Bradley Voss
Matthew J . Wesaw, Director Transportation Commission
Department of Civil Rights J errold M. J ung, Chair
Todd Wyett, Vice Chair
Civil Service Commission Lynn Afendoulis
Thomas M. Wardrop, Chair Ron Boji
J ames Barrett Michael D. Hayes
Charles Blockett, J r. Charles F. Moser
Robert W. Swanson Kirk T. Steudle, Director
J anet McClelland, Acting State Personnel Director Department of Transportation
Kevin Clinton, State Treasurer
13 13 13 13
Michigan
2014 Comprehensive Annual Financi al Report
14 14 14 14
Michigan
FINANCIAL SECTION
INDEPENDENT AUDITOR’S REPORT
MANAGEMENT’S DISCUSSION AND ANALYSIS
2014 Comprehensive Annual Financi al Report
15 15 15 15
OAG
Doug A. Rgler, C.P.A., C.I.A.
Auditor General
201 N. Washington Square, Sixth Flor • Lan?ing, Michigan 48913 • Phone: (517 334-8050 • http:/ /audgcn.michign.gov
Independent Auditor's Report
The Honorable Rick Snyder, Governor
Members of the Legislature
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, the aggregate discretely presented component units, each major fund, and the aggregate
remaining fund information of the State of Michigan principally as of and for the fiscal year ended
September 30, 2014 and the related notes to the financial statements, which collectively comprise the
State's basic financial statements as listed in the table of contents.
Management's Respons 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 Responsibity
Our responsibility is to express op1n1ons on these financial statements based on our audit. The financial
statements of the following component units and funds were audited by other auditors whose reports have
been furnished to us, and our opinions, insofar as they relate to the amounts included in these component
units and funds, are based solely on the reports of the other auditors:
•
State Lottery Fund (a major fund)
•
Michigan Unemployment Compensation Funds (a major fund)
•
Michigan Employment Security Act - Administration Fund
•
Unemployment Obligation Trust Fund
•
State Building Authority - Debt Service Fund
•
State Building Authority - Capital Projects Fund
•
Attorney Discipline System
•
State Sponsored Group Insurance Fund
•
Michigan Education Savings Program
•
Michigan State Housing Development Authority
•
Farm Produce Insurance Authority
•
Mackinac Bridge Authority
•
Mackinac Island State Park Commission
•
Michigan Early Childhood Investment
Corporation
•
State Bar of Michigan
• Western Michigan University
•
Central Michigan University
• Eastern Michigan University
•
Ferris State University
•
Grand Valley State University
•
Lake Superior State University
• Michigan Technological University
•
Northern Michigan University
•
Oakland University
•
Saginaw Valley State University
Those financial statements reflect total assets and total revenues or additions to the governmental activities,
the business-type activities, the aggregate discretely presented component units, each major fund, and the
aggregate remaining fund information as follows:
Opinion Unit
Governmental activities
Business-type activities
Aggregate discretely presented component units
State Lottery Fund
Michigan Unemployment Compensation Funds
Aggregate remaining fund information
Percent of
Total Assets
1.7%
97.7%
43.4%
100.0%
100.0%
6.0%
Percent of Total
Revenues/ Additions
2.9%
82.4%
68.9%
100.0%
100.0%
9.5%
16 16 16 16
OAG
The Honorable Rick Snyder, Governor
Members of the Legislature
Page 2
Doug A. Rgler, C.P.A., C.I.A.
Auditor General
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 Goverment 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 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 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.
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, based on our audit and the reports of other auditors, the financial statements referred to in
the first paragraph present fairly, in all material respects, the respective financial position of the
governmental activities, the business-type activities, the aggregate discretely presented component units,
each major fund, and the aggregate remaining fund information of the State of Michigan as of
September 30, 2014 and the respective changes in financial position and, where applicable, cash flows
thereof for the fiscal year then ended in accordance with accounting principles generally accepted in the
United States of America.
Emphasis of Matter
As discussed in Note 4 to the financial statements, the State of Michigan adopted Governmental Accounting
Standards Board Statement No. 65, Items Previously Reported as Assets and Liabiliti es, for the fiscal year
ended September 30, 2014. Our opinions are not modified with respect to this matter.
Other Matters
Required Supplementary Informati on
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis, budgetary comparison schedules and corresponding notes, and information about
infrastructure assets reported using the modified approach, as listed in the table of contents, 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 and other auditors 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.
17 17 17 17
OAG
The Honorable Rick Snyder, Governor
Members of the Legislature
Page 3
Other Informati on
Doug A. Rgler, C.P.A., C.I.A.
Auditor General
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the State's basic financial statements. The combining and individual fund statements and
schedules - nonmajor funds and the introductory, statistical, and other information sections listed in the table
of contents are presented for purposes of additional analysis and are not a required part of the basic financial
statements.
The combining and individual fund statements and schedules - nonmajor funds 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. 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 or to the basic financial statements themselves, and other additional procedures in
accordance with auditing standards generally accepted in the United States of America by us and other
auditors. In our opinion, based on our audit, the procedures performed as described above, and the reports
of the other auditors, the combining and individual fund statements and schedules - nonmajor funds are fairly
stated, in all material respects, in relation to the basic financial statements as a whole.
The introductory, statistical, and other information sections have 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.
Other Reporting Required by Goverment Auditing Standards
In accordance with Goverment Auditing Standards, we will also issue a report on our consideration of the
State'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 Goverment Audi ting Standards in
considering the State's internal control over financial reporting and compliance.
S
p
1k
Doug Ringler
Auditor General
December 29, 2014
18 18 18 18
Michigan
2014 Comprehensive Annual Financi al Report
19 19 19 19
Michigan
2014 Comprehensive Annual Financi al Report
20 20 20 20
Michigan
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following is a discussion and analysis of the State of Michigan’s (the State’s) financial performance, providing an
overview of the activities for the fiscal year ended September 30, 2014. Please read it in conjunction with the transmittal letter at
the front of this report and with the State's financial statements, which follow this section.
HIGHLIGHTS
Government-wide
• At September 30, 2014, the State's net position was $20.7 billion.
• The State’s unrestricted net position was negative $5.9 billion as of the close of the year. A positive balance in
unrestricted net position represents excess assets available to meet ongoing obligations. A negative balance means that
it would be necessary to convert restricted assets to unrestricted assets if all ongoing obligations were immediately due
and payable.
• Revenues of $52.0 billion supported expenses of $51.4 billion during fiscal year 2014. As a result, the State’s total net
position increased by $631.6 million (3.2 percent). The increase in net position primarily relates to the continuing increase
in the net position of the Michigan Unemployment Compensation Funds as a result of the elimination of federal debt
during fiscal year 2012.
Fund Level
• As of the close of the fiscal year, the State’s governmental funds reported combined ending fund balances of $5.8 billion.
Governmental fund balances decreased $565.9 million (8.9 percent) from the prior year.
• The State’s two major governmental funds, the General Fund and the School Aid Fund, closed the fiscal year with a
combined fund balance of $2.6 billion, a decrease of $758.6 million (22.5 percent) from the prior year. Of the total
General Fund balance of $2.1 billion, $306.4 million is unassigned and, therefore, available for appropriation in future
years. The remaining $1.8 billion is either non-spendable (e.g., consists of assets not easily converted to cash, such as
inventories); restricted for specific purposes by enabling legislation; committed to specific programs or projects by
legislative action; or assigned to fulfill contractual obligations. In the School Aid Fund, the entire fund balance of $522.5
million is restricted for education purposes.
• The State’s proprietary funds reported net position at year-end of $2.7 billion. This represents an increase of $611.2
million (29.4 percent) compared to the prior year-end, primarily the result of the continuing increase in the net position of
the Michigan Unemployment Compensation Funds related to the elimination of federal debt during fiscal year 2012.
Long-term Debt
• The State’s total long-term bonded debt as of September 30, 2014 was $7.0 billion, a decrease of $326.2 million from the
prior year. The decrease represents the net difference between new issuances, payments, and refundings of debt.
More detailed information regarding the government-wide, fund level, and long-term debt activities can be found beginning on
page 24.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is an introduction to the State’s basic financial statements, which are comprised of three
components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This
report also contains other supplementary information in addition to the basic financial statements.
Government-wide Statements (Reporting the State as a Whole)
The Statement of Net Position and the Statement of Activities are two financial statements that report information about the
State, as a whole, and about its activities that should help answer this question: How has the State‘s financial position, as a whole,
changed as a result of this year’s activities? These statements include all non-fiduciary assets and liabilities using the accrual
basis of accounting. The current year’s revenues and expenses are taken into account regardless of when cash is received or
paid.
The Statement of Net Position (pages 32 and 33) presents all of the State’s non-fiduciary assets, deferred outflows of
resources, liabilities, deferred inflows of resources, and net position. Over time, increases and decreases in net position measure
whether the State’s financial position is improving or declining.
2014 Comprehensive Annual Financi al Report
21 21
Michigan
The Statement of Activities (pages 34 and 35) presents information showing how the State’s net position changed during the
most recent fiscal year. All changes in net position are reported as soon as the underlying events giving rise to the change occur,
regardless of the timing of related cash flows. Therefore, revenues and expenses are reported in these statements for some items
that will result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave).
Both statements report three activities:
• Governmental Activities – Most of the State’s basic services are reported under this category. Taxes and
intergovernmental revenues generally fund these services. The Legislature, the J udiciary, and the general operations of
the Executive departments fall within governmental activities.
• Business-type Activities – The State charges fees to customers to help it cover all or most of the cost of certain services it
provides. Lottery tickets, liquor purchases, and the State’s unemployment compensation services are examples of
business-type activities.
• Discretely Presented Component Units – Component units are legally separate organizations for which the elected
officials of the primary government are financially accountable. The State has 11 authorities and 10 universities that are
reported as discretely presented component units of the State.
This report includes two schedules (pages 39 and 41) that reconcile the amounts reported on the governmental fund financial
statements, which are prepared using the modified accrual basis of accounting, with the governmental activities in the government-
wide statements, which are prepared using the accrual basis of accounting. The following table summarizes the differences
between modified accrual and full accrual accounting:
(e.g. land, buildings, and infrastructure)
Deferred inflows for unavailable resources
Assets and liabilities of internal service funds that
primarily serve governmental funds
Net pension assets in excess of the annual
required contribution
Asset for certain debt issuance costs (i.e., prepaid
insurance costs)
Unmatured long-term debt (e.g. bonds, notes, capital
lease obligations) net of unamortized premiums,
discounts, and similar items
Certain accrued obligations not normally expected
to be liquidated with expendable available financial
resources unless they are due for payment in the
current period (i.e. claims and adjustments,
compensated absences, and net pension
obligations)
Accrued interest on long-term debt
Liability for unearned revenue
Capital outlay spending
Debt service principal payments and refunding
payments
Other financial sources, uses, and expenditures
resulting from debt issuance
Reported in Governmental
Fund Financial Statements
(modified accrual basis)
No
Yes
Yes
Yes
Description
Capital asset of the general government
Yes
No
No
Yes
Yes
Yes
No
No
No
Yes
Yes
Reported in Government-
Wide Financial Statements
(accrual basis)
Yes
No
Yes
Yes
Yes
No
No
No
No
2014 Comprehensive Annual Financi al Report
22 22
Michigan
The Notes to the Basic Financial Statements provide additional information that is essential to a full understanding of the data
provided in the government-wide and fund financial statements. The notes can be found beginning on page 59 of this report.
Fund Financial Statements (Reporting the State's Major Funds)
The fund financial statements begin on page 38 and provide detailed information about the major individual funds. A fund is
a fiscal and accounting entity with a self-balancing set of accounts that the State uses to keep track of specific sources of funding
and spending for a particular purpose. In addition to the major funds, page 140 begins the individual fund data for the non-major
funds. The State's funds are divided into three categories – governmental, proprietary, and fiduciary – and use different
accounting approaches.
• Governmental funds - Most of the State's basic services are reported in the 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 future spending. The governmental fund
financial statements provide a detailed short-term view of the State's 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 State's programs. These funds are reported using modified accrual accounting, which measures
cash and all other financial assets that can readily be converted to cash. Governmental funds include the General Fund and
special revenue, capital project, debt service, and permanent funds.
• Proprietary funds - When the State charges customers for the services it provides, whether to outside customers or to other
agencies within the State, these services are generally reported in proprietary funds. Proprietary (enterprise and internal service)
funds utilize accrual accounting, the same method used by private sector businesses. Enterprise funds report activities that
provide supplies and services to the general public. An example is the State Lottery Fund. Internal service funds report
activities that provide supplies and services for the State's other programs - such as risk management and state sponsored
group insurance activities. Internal service funds are reported as governmental activities on the government-wide statements.
• Fiduciary funds - The State acts as a trustee or fiduciary for its employee pension plans. It is also responsible for other assets
that, because of a trust arrangement, can be used only for the trust beneficiaries. The State's fiduciary activities are reported in
separate Statements of Fiduciary Net Position and Changes in Fiduciary Net Position beginning on page 50. These funds,
which include pension (and other employee benefit), private-purpose, and agency funds, are reported using accrual accounting.
The government-wide statements exclude fiduciary fund activities and balances because these assets are restricted in purpose
and do not represent discretionary assets of the State to finance its operations.
Revenues earned during the period but not yet
available
Expenses incurred during the period, but not normally
expected to be liquidated with expendable available
financial resources unless they are due for
payment in the current period
Depreciation
Revenues and expenditures related to prior periods
Amortization of issuance costs, premiums, discounts
and similar items
Activities of internal service funds properly included
within governmental activities
No Yes
Yes
Sales of capital assets Yes, in the amount of the
proceeds of the sale
Yes, gain or loss on the
sale
No
No Yes
No Yes
No Yes
No Yes
Reported in Governmental Reported in Government-
Fund Financial Statements Wide Financial Statements
Description (modified accrual basis) (accrual basis)
2014 Comprehensive Annual Financi al Report
23 23
Michigan
Additional Required Supplementary Information (RSI)
Following the basic financial statements is additional Required Supplementary Information that further explains and supports
the information in the financial statements. The Required Supplementary Information includes budgetary comparison schedules
reconciling the statutory and generally accepted accounting principles fund balances at fiscal year-end, and condition and
maintenance data regarding certain portions of the State’s infrastructure.
Other Supplementary Information
Other supplementary information includes combining financial statements for non-major governmental, proprietary, and
fiduciary funds, and non-major discretely presented component units. These funds are added together, by fund type, and
presented in single columns in the basic financial statements, but are not reported individually, as with major funds, on the
governmental fund financial statements.
FINANCIAL ANALYSIS OF THE GOVERNMENT AS A WHOLE
The State’s combined net position increased $631.6 million (3.2 percent) over the course of this fiscal year’s operations. The
net position of the governmental activities increased by $33.0 million (.2 percent), and business-type activities had an increase of
$598.6 million (32.4 percent).
2014 2013* 2014 2013 2014 2013*
Assets:
Current and other $ 14,182.3 $ 14,296.0 $ 2,915.7 $ 2,368.7 $ 17,098.0 $ 16,664.7
non-current assets
Capital assets 22,541.4 22,202.2 0.6 0.8 22,542.0 22,203.0
Total assets 36,723.7 36,498.2 2,916.3 2,369.5 39,640.0 38,867.7
Deferred outflows
of resources 66.4 - - - 66.4 -
Liabilities:
Current liabilities 5,781.9 5,313.7 223.8 247.2 6,005.8 5,560.9
Long-term liabilities 12,768.8 12,989.5 243.5 272.0 13,012.3 13,254.8
Total liabilities 18,550.7 18,303.2 467.4 519.2 19,018.1 18,815.7
Deferred inflows
of resources 11.5 - - - 11.5 -
Net position
Net investment 20,279.6 19,648.3 0.6 0.8 20,280.2 19,649.1
in capital assets
Restricted 3,824.9 3,774.0 2,442.5 1,844.0 6,267.3 5,618.0
Unrestricted (5,876.5) (5,227.3) 5.8 5.5 (5,870.6) (5,221.8)
Total net position $ 18,228.0 $ 18,195.0 $ 2,448.9 $ 1,850.3 $ 20,676.9 $ 20,045.3
Statement of Net Position
For Fiscal Year Ending September 30
(In Millions)
Governmental
Activities
Business-type
Activities
Total
Primary Government
*Prior year columns have been restated. More detailed information regarding the restatement can be found on page 70.
During fiscal year 2014, the State implemented Governmental Accounting Standards Board (GASB) Statement No. 65, Items
Previously Reported as Assets and Liabilities. GASB Statement No. 65 establishes accounting and financial reporting standards
that reclassify certain items that were previously reported as assets and liabilities as deferred outflows of resources or deferred
inflows of resources. Examples of such items include refunding of debt and tobacco settlement receivables. Note 27 provides
further detail on the components of deferred outflows of resources and deferred inflows of resources as reported on the
government-wide Statement of Net Position and in the governmental funds.
2014 Comprehensive Annual Financi al Report
24 24
Michigan
The largest component of the State’s net position, at $20.3 billion, reflects its investment in capital assets (e.g. land,
buildings, equipment, infrastructure, and others), less any related debt outstanding that was needed to acquire or construct the
assets. Restricted net position is the next largest component, comprising $6.3 billion of the total. This represents resources that
are subject to external restrictions, constitutional provisions, or enabling legislation limiting how they can be used. The State’s
unrestricted net position was negative $5.9 billion as of the close of the year. A positive balance in unrestricted net position
represents excess assets available to meet ongoing obligations. A negative balance means that it would be necessary to convert
restricted assets to unrestricted assets if all ongoing obligations were immediately due and payable.
The following condensed financial information was derived from the government-wide Statement of Activities and reflects how
the State’s net position changed during the fiscal year:
2014 2013* 2014 2013 2014 2013*
Revenues
Program Revenues
Charges for services $ 2,161.2 $ 2,076.2 $ 5,380.7 $ 6,184.9 $ 7,541.9 $ 8,261.1
Operating grants 17,981.9 17,194.9 59.9 21.7 18,041.7 17,216.6
Capital grants 850.2 867.2 - - 850.2 867.2
General revenues
General taxes 12,286.8 13,106.1 - - 12,286.8 13,106.1
Taxes restricted for
educational purposes 10,792.8 10,641.5 - - 10,792.8 10,641.5
Taxes restricted for
transportation purposes 2,006.5 2,077.7 - - 2,006.5 2,077.7
Unrestricted investment
and interest earnings 1.0 1.2 0.1 0.1 1.1 1.3
Miscellaneous 517.3 637.2 - - 517.3 637.2
Total revenues 46,597.6 46,602.0 5,440.7 6,206.7 52,038.2 52,808.8
Expenses
General government 2,456.0 2,138.4 - - 2,456.0 2,138.4
Education 14,941.4 14,617.7 - - 14,941.4 14,617.7
Human services 5,508.0 5,931.4 - - 5,508.0 5,931.4
Public safety and corrections 2,638.3 2,663.4 - - 2,638.3 2,663.4
Conservation, environment, etc. 714.0 593.4 - - 714.0 593.4
Labor, commerce 956.3 965.7 - - 956.3 965.7
and regulatory
Health services 15,036.3 13,853.4 - - 15,036.3 13,853.4
Transportation 3,309.4 2,914.9 - - 3,309.4 2,914.9
Tax credits 676.5 689.9 - - 676.5 689.9
Intergovernmental-
revenue sharing 1,120.6 1,077.5 1,120.6 1,077.5
Interest on long-term debt 174.5 178.6 - - 174.5 178.6
Liquor Purchase - - 779.3 742.6 779.3 742.6
Revolving Fund
State Lottery Fund - - 1,868.6 1,758.7 1,868.6 1,758.7
Attorney Discipline System - - 4.8 4.8 4.8 4.8
Michigan Unemployment
Compensation Funds - - 1,246.5 2,188.1 1,246.5 2,188.1
Total expenses 47,531.3 45,624.4 3,899.2 4,694.3 51,430.5 50,318.7
Excess (deficiency) Before
Contributions and Transfers (933.7) 977.6 1,541.5 1,512.4 607.8 2,490.1
Contributions to permanent fund
principal 23.9 22.8 - - 23.9 22.8
Transfers 942.9 945.1 (942.9) (945.1) - -
Increase (decrease)
in net position 33.0 1,945.5 598.6 567.3 631.6 2,512.9
Net position - beginning (restated) 18,195.0 16,249.3 1,850.3 1,283.0 20,045.3 17,532.3
Net position - ending $ 18,228.0 $ 18,195.0 $ 2,448.9 $ 1,850.3 $ 20,676.9 $ 20,045.3
Activities Activities
Primary Government
Changes in Net Position
For Fiscal Year Ending September 30
(In Millions)
Governmental Business-type Total
*Prior year columns have been restated. More detailed information regarding the restatement can be found on page 70.
2014 Comprehensive Annual Financi al Report
25 25
Michigan
Governmental Activities
Revenues to fund governmental activities totaled $46.6 billion for fiscal year 2014. As shown in the accompanying chart,
38.6 percent of the governmental activities’ revenue came from operating grants, primarily from the federal government, and were
earmarked for specific uses, such as highway construction and health and human services programs. In addition, the State
Constitution and other statutory restrictions earmarked 27.4 percent for educational and transportation purposes. Only 26.4 percent
of the revenues were available for general use.
Expenses related to governmental activities totaled $47.5 billion during fiscal year 2014. The expenses include spending
appropriated in prior years, such as capital outlay and work project authorization. As evidenced by the accompanying chart,
education and health services represent the governmental activities’ largest spending categories, accounting for 63.0 percent of
the spending.
Miscellaneous
1.1%
Capital Grants
1.8%
Taxes Restricted for
Transportation
4.3%
Charges for
Services
4.6%
Taxes Restricted for
Education
23.1%
General Taxes
26.4%
Operating
Grants
38.6%
Revenues - Governmental Activities for
Fiscal Year Ending September 30, 2014
($46.6 billion)
Interest on
Long-term Debt,
0.4%
Conservation,
Recreation &
Agriculture,
1.5%
Labor, Commerce &
Regulatory,
2.0%
Revenue Sharing,
2.4%
Tax Credits,
1.4%
General
Government,
5.2%
Transportation,
7.0%
Public Safety &
Corrections,
5.6%
Human
Services,
11.6%
Health Services,
31.6%
Education,
31.4%
Expenses - Governmental Activities for
Fiscal Year Ending September 30, 2014
($47.5 billion)
2014 Comprehensive Annual Financi al Report
26 26
Michigan
Business-type Activities
The business-type activities’ net position increased $598.6 million (32.4 percent) during the fiscal year. Factors contributing
to these results included:
• The Michigan Unemployment Compensation Funds (MUCF) finished the fiscal year with an increase in net position of
$589.6 million (32.3 percent). The continuing increase in the net position of these funds is primarily related to the
elimination of federal debt during fiscal year 2012.
• The State Lottery Fund’s net position increased $8.9 million (49.5 percent). The increase in net position is attributable to
the changes in the market value of investments that the Lottery holds to fund future payments due on lottery prizes.
FINANCIAL ANALYSIS OF THE STATE’S FUNDS
As the State completed the year, its governmental funds reported fund balances of $5.8 billion. Of this amount, $306.4
million constitutes unassigned fund balance in the General Fund, which is available to appropriate in future years. Of the total
governmental fund balances, $1.2 billion is in nonspendable form made up of amounts legally or contractually required to be
maintained intact including permanent fund endowments and assets that will not be converted to cash in the short term including
consumable inventories. Another $2.6 billion of the governmental fund balances are restricted for specific purposes by enabling
legislation, the majority of which is legally restricted for capital projects. Committed governmental fund balances totaled $1.5 billion
as of the end of the fiscal year representing funding set aside for multi-year projects and earmarked revenue carried forward with
legislative authority for specific ongoing programs. Another $206.9 million of the governmental fund balances are assigned for
encumbered services and goods to be received after the end of the fiscal year. Two capital projects funds reported negative
unassigned fund balances totaling $106.1 million due to expenditures incurred in advance of bonding proceeds which will be
received after the end of the fiscal year.
General Fund
The General Fund is the chief operating fund of the State. At the end of fiscal year 2014, the General Fund total fund
balance was $2.1 billion, of which $306.4 million was unassigned and, therefore, available for appropriation. The $2.1 billion in
total fund balance represents a decrease of $727.5 million (25.9 percent) from the fiscal year 2013 ending total fund balance.
Lower than anticipated revenues and increased spending related to revenue sharing programs contributed to the decrease in total
fund balance. A one-time transfer of $194.8 million from the Counter-Cyclical Budget and Economic Stabilization Fund (which, for
accounting purposes, is reported as a component of the General Fund) to the Michigan Settlement Administration Authority also
contributed to the decrease. The one-time transfer was made to fund Michigan’s contribution to the “Grand Bargain” which was
part of the Detroit bankruptcy settlement.
Included within the General Fund’s committed fund balance is $386.2 million in the Counter-Cyclical Budget and Economic
Stabilization Fund. This fund, also referred to as the Rainy Day Fund, is used to stabilize government programs in times of
economic downturn.
General Fund Budgetary Highlights:
The original enacted fiscal year 2014 general fund budget was $30.7 billion. During the year, various positive and negative
supplemental appropriations were enacted, resulting in a final enacted budget of $30.8 billion. The difference between the final
enacted budget of $30.8 billion and actual spending and encumbrances of $30.5 billion resulted from appropriation year 2014
spending authority net lapses of $255.8 million and restricted revenue authorized, but not spent, totaling $27.5 million. At fiscal
year-end, excess restricted revenue of $1.1 billion was carried forward into fiscal year 2015 and is available for appropriation.
All agencies finished the year with net lapses. However, the Department of Community Health reported line item
overexpenditures of $4.9 million.
School Aid Fund
Fund balance at September 30, 2014, totaled $522.5 million, a decrease of $31.0 million from the prior year. Revenues and
transfers to the fund totaled $13.4 billion, up $177.2 million from the prior year. In fiscal year 2014, tax revenues deposited in the
fund increased $333.5 million. Federal funds collected by the School Aid fund were down $37.1 million over the prior year.
Expenditures and transfers to other funds totaled $13.4 billion, an increase of $276.4 million over the previous year. The School
Aid Stabilization Fund ended the year with $455.1 million in restricted fund balance.
2014 Comprehensive Annual Financi al Report
27 27
Michigan
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets: At the end of the fiscal year 2014, the State had invested $22.5 billion, net of accumulated depreciation, in a
broad range of capital assets (see the table below). Depreciation charges for this fiscal year totaled $274.3 million.
2014 2013* 2014 2013 2014 2013*
Land $ 3,495.4 $ 3,448.5 $ - $ - $ 3,495.4 $ 3,448.5
and other assets 152.8 140.6 - - 152.8 140.6
Land rights 65.1 62.6 - - 65.1 62.6
Buildings and 1,880.0 1,979.3 - - 1,880.0 1,979.3
improvements
Equipment 158.8 160.0 0.5 0.7 159.3 160.7
Computer software 440.8 325.6 0.1 0.1 440.9 325.7
Infrastructure 14,480.3 14,355.4 - - 14,480.3 14,355.4
Other 19.8 19.8 - - 19.8 19.8
Subtotal 20,693.0 20,491.8 0.6 0.8 20,693.6 20,492.6
Construction in
progress 1,848.5 1,710.4 - - 1,848.5 1,710.4
Total $ 22,541.4 $ 22,202.2 $ 0.6 $ 0.8 $ 22,542.0 $ 22,203.0
Land improvements
Activities Activities
Primary Government
Governmental Business-type Total
*Prior year columns have been restated. More detailed information regarding the restatement can be found on page 70.
As allowed by Governmental Accounting Standards Board (GASB) Statement No. 34, the State has adopted an alternative
process for recording depreciation expense on selected infrastructure assets. Under this alternative method, referred to as the
modified approach, the State expenses certain maintenance and preservation costs and does not report depreciation expense.
Assets accounted for under the modified approach include the State’s network of public transportation roads and bridges, including
ancillary assets, such as guard rails, signs, lighting, culverts, fencing, and the like. The State is responsible for maintaining
approximately 27,459 lane miles of roads and 4,807 bridges (spans in excess of 20 feet).
The State has maintained the assessed condition of roads over the past five years. The State’s goal is to have more than
70% of roads in fair to excellent condition. The most recent condition assessment, completed for calendar year 2013, indicated
that 78.1% of roads were considered fair or better.
The State’s bridges have assessed conditions that are better than the established benchmarks. The most recent assessment
(2014) indicated that the condition of the bridges improved from the prior year. For fiscal year 2014, 93.9% of the bridges were
assessed as structurally fair or better.
The Legislature passed capital outlay appropriations of $209.1 million for fiscal year 2014. More detailed information about
the State’s capital assets is presented in Note 9 to the financial statements.
Long-term Debt: The State, along with the State Building Authority (SBA), a blended component unit of the State, are
empowered by law to authorize, issue, and sell debt obligations. General obligation bonds, issued by the State, are backed by the
full faith and credit of the State. The State also issues revenue dedicated bonded debt, whose payment for principal and interest
comes solely out of funds that receive legally restricted revenues. The State is not legally obligated for the debt issued by SBA.
SBA’s bonds generate revenue to finance the construction of facilities used by the State and universities. Revenues derived from
leases on the facilities fund the debt service requirements. More detailed information regarding the State’s long-term obligations is
presented in Notes 13 and 15 to the financial statements.
The most significant impact on capital assets during the year resulted from partially completed road
and bridge construction and repair projects which are reported within construction in progress.
2014 Comprehensive Annual Financi al Report
28 28
Michigan
2014 2013 2014 2013 2014 2013
General obligation bonds
(backed by the State) $ 1,942.4 $ 2,047.5 $ - $ - $ 1,942.4 $ 2,047.5
Revenue bonds and notes
(backed by specific tax
and fee revenues) 5,075.0 5,296.1 - 5,075.0 5,296.1
Total $ 7,017.4 $ 7,343.6 $ - $ - $ 7,017.4 $ 7,343.6
Activities Activities
Primary Government
Outstanding Bonded Debt as of September 30
(In Millions)
Governmental Business-type Total
During the year, the State and SBA issued new bonds totaling $85.3
million and refunding bonds totaling $295.1 million. From the refunding bond
proceeds, the State paid $299.1 million to bond escrow agents to cover future
debt service payments. The proceeds from the new bonds will provide funding
for MDOT construction projects and state-owned and university-owned
buildings.
ECONOMIC CONDITION AND OUTLOOK
The U.S. economy has grown in each of the past five years as measured by real gross domestic product (GDP); however,
the rate of growth has not been as strong as it was prior to the Great Recession. Based on actual data from 2010 to 2013, along
with the estimated rate for 2014, the average rate during these five years was 2.2 percent, which is down from the 2.9 percent rate
of growth averaged from 2003-2007. U.S. employment increased an estimated 1.7 percent in 2014, the same rate of growth
experienced in 2012 and 2013. U.S. employment has increased an estimated 8.4 million jobs over the last four years, which has
pushed employment past the pre-recession peak level to a new all-time high level.
The light vehicle sector, which remains a key component of the Michigan economy, has recovered markedly. After falling to a
27-year low of 10.4 million units in 2009, light vehicle sales rose to an estimated 16.0 million units in 2014. Estimated 2014 light
vehicle sales remain 4.1 percent lower than average annual light vehicle sales in the ten years directly prior to the Great
Recession. The U.S. housing market has improved after collapsing during the Great Recession, but still remains at historically low
levels. In 2014, housing starts rose above 1.0 million units for the first time in seven years to a level nearly double their 2009
record low. Despite these increases, estimated 2014 housing starts remain almost 40 percent below average annual starts in the
ten years directly before the Great Recession.
In 2013, Michigan payroll employment increased by 71,200 jobs or 1.8 percent and, in 2014, it is estimated that employment
increased another 28,000 jobs or 0.7 percent. Over the past four years, State employment has risen by 269,700 jobs or 7.0
percent. While employment in Michigan has been increasing, it still remains well below the pre-recession peak level. Michigan’s
unemployment rate fell to an estimated 7.6 percent in 2014, which is down 1.2 percentage points from the 2013 level and 5.9
percentage points below the 26-year high level posted in 2009. Michigan personal income increased an estimated 3.3 percent in
2014 and wage and salary payments, the largest component of personal income, rose an estimated 3.2 percent. With overall
prices increasing an estimated 1.2 percent in 2014, as measured by the Detroit CPI, real (inflation adjusted) personal income
increased 2.0 percent.
In 2015, U.S. GDP is expected to increase 3.0 percent. Light vehicle sales are projected to increase to 16.3 million units in
2015, which would mark the sixth consecutive annual increase. In addition, housing starts are projected to total 1.32 million units,
which despite representing a strong 24.6 percent increase, would still reflect a historically low level. In 2015, Michigan personal
income is expected to increase by 4.3 percent while wages and salaries are expected to grow 3.7 percent. With inflation forecast
to be 1.6 percent, real personal income is projected to increase 2.6 percent in 2015. Michigan payroll employment is projected to
rise 1.2 percent in 2015, which would mark the State’s fifth straight annual employment increase. The Michigan unemployment
rate is forecast to fall to 7.1 percent in 2015. This would tie Michigan’s 2007 rate as the State’s lowest unemployment rate since
2006.
Bond Ratings
The State’s general obligations are rated
AA stable outlook by Fitch, AA- stable
outlook by Standard & Poor’s, and Aa2
positive outlook by Moody’s.
Limitations on Debt
The State Constitution authorizes general obligation long-term borrowing, with approval of the Legislature and a
majority of the voters, and general obligation short-term notes, of which the principal may not exceed 15% of undedicated
revenues received in the preceding year. In fiscal year 2014, the State did not issue any general obligation short-term
notes.
2014 Comprehensive Annual Financi al Report
29 29
Michigan
CONTACTING THE STATE’S OFFICE OF FINANCIAL MANAGEMENT
This financial report is designed to provide citizens, taxpayers, customers, investors, and creditors with a general overview of
the State’s finances and to demonstrate the State’s accountability for the money it receives. Additional financial information can be
obtained elsewhere on the Office of Financial Management website. You can also contact the office by phone at (517) 373-1010.
The State’s component units issue their own separately issued audited financial statements. These statements may be
obtained by directly contacting the component unit. To obtain their phone numbers, you may contact the Office of Financial
Management at (517) 373-1010.
2014 Comprehensive Annual Financi al Report
30 30
Michigan
FINANCIAL SECTION
BASIC FINANCIAL STATEMENTS
2014 Comprehensive Annual Financi al Report
31 31 31 31
STATEMENT OF NET POSITION
SEPTEMBER 30, 2014
(In Thousands)
GOVERNMENTAL BUSINESS-TYPE COMPONENT
ACTIVITIES ACTIVITIES UNITS
ASSETS
Current Assets:
Cash $ 5,358 $ 14,822 $ 20,180 $ 798,427
Equity in common cash (Note 5) 3,739,349 139,030 3,878,379 539,408
Taxes, interest, and penalties
receivable (Note 6) 4,401,770 - 4,401,770 -
Internal balances 12,074 (12,074) - -
Amounts due from component units 1,894 403 2,297 36,470
Amounts due from primary government - - - 294,447
Amounts due from federal government 1,339,512 886 1,340,399 45,376
Amounts due from local units 200,934 48,373 249,306 1,087,921
Inventories 25,922 16,328 42,250 19,896
Investments (Note 8) 250,240 2,100,410 2,350,649 1,765,723
Other current assets 944,748 356,379 1,301,127 528,508
Total Current Assets 10,921,800 2,664,556 13,586,356 5,116,176
Noncurrent Assets:
Restricted Assets:
Cash and cash equivalents - - - 81,317
Investments - - - 526,382
Mortgages and loans receivable - - - 26,229
Taxes, interest, and penalties
receivable (Note 6) 265,993 - 265,993 -
Advances to primary government - - - 1,452,291
Amounts due from federal government 10,508 - 10,508 -
Amounts due from local units 1,810,676 - 1,810,676 5,057,852
Mortgages and loans receivable - - - 3,118,383
Investments (Note 8) 1,113,370 203,197 1,316,567 4,040,966
Land and property held for resale - - - 13,571
Capital Assets (Note 9):
Land and other non-depreciable assets 3,596,380 - 3,596,380 248,283
Buildings, equipment, and other depreciable assets 6,534,609 5,187 6,539,795 5,894,915
Less accumulated depreciation (3,357,359) (4,581) (3,361,939) (2,482,740)
Infrastructure 13,919,336 - 13,919,336 163,218
Construction in progress 1,848,459 - 1,848,459 293,939
Total capital assets 22,541,425 606 22,542,031 4,117,616
Interest in joint ventures (Note 7) 34,658 - 34,658 -
Other noncurrent assets 25,266 47,935 73,201 468,731
Total Noncurrent Assets 25,801,897 251,738 26,053,635 18,903,337
Total Assets $ 36,723,697 $ 2,916,294 $ 39,639,991 $ 24,019,513
DEFERRED OUTFLOWS OF RESOURCES (Note 27) $ 66,447 $ - $ 66,447 $ 204,420
The accompanying notes are an integral part of the financial statements.
Michigan
PRIMARY GOVERNMENT
TOTALS
32 32 32 32
GOVERNMENTAL BUSINESS-TYPE COMPONENT
ACTIVITIES ACTIVITIES UNITS
LIABILITIES
Current Liabilities:
Warrants outstanding $ 80,028 $ 5,413 $ 85,441 $ 351
Accounts payable and other liabilities 3,302,969 216,460 3,519,429 524,590
Income tax refunds payable (Note 16) 926,884 - 926,884 -
Amounts due to component units 302,654 1 302,655 35,211
Amounts due to primary government - - - 5,416
Bonds and notes payable (Notes 13 and 14) 540,255 - 540,255 2,262,814
Interest payable 120,524 - 120,524 147,008
Unearned revenue 126,698 505 127,202 84,841
Current portion of other long-term
obligations (Note 15) 381,898 1,465 383,363 265,186
Total Current Liabilities 5,781,910 223,844 6,005,754 3,325,417
Noncurrent Liabilities:
Advances from component units 1,225,637 - 1,225,637 -
Prize awards payable (Note 15) - 187,548 187,548 -
Unearned revenue 209,271 - 209,271 8,221
Bonds and notes payable (Notes 13 and 14) 6,778,465 - 6,778,465 12,642,408
Noncurrent portion of other long-term
obligations (Note 15) 4,555,395 55,992 4,611,387 1,804,965
Total Noncurrent Liabilities 12,768,768 243,540 13,012,308 14,455,593
Total Liabilities $ 18,550,678 $ 467,384 $ 19,018,062 $ 17,781,010
DEFERRED INFLOWS OF RESOURCES (Note 27) $ 11,468 $ - $ 11,468 $ 34,070
NET POSITION
Net investment in capital assets $ 20,279,584 $ 606 $ 20,280,190 $ 2,364,014
Restricted For (Note 22):
Education 1,002,524 - 1,002,524 153,993
Construction and debt service - - - 4,047,748
Public safety and corrections 14,915 - 14,915 -
Conservation, environment,
recreation, and agriculture 292,215 - 292,215 -
Health and human services 40,575 - 40,575 -
Transportation 983,101 - 983,101 -
Unemployment compensation - 2,415,686 2,415,686 -
Labor, commerce, and regulatory 144,188 - 144,188 -
Other purposes 131,016 26,785 157,800 770,668
Funds Held as Permanent Investments:
Expendable 231,442 - 231,442 161,123
Nonexpendable 984,896 - 984,896 388,116
Unrestricted (5,876,457) 5,834 (5,870,623) (1,476,808)
Total Net Position $ 18,227,998 $ 2,448,910 $ 20,676,909 $ 6,408,854
TOTALS
Michigan
PRIMARY GOVERNMENT
33 33 33 33
STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
OPERATING CAPITAL
CHARGES FOR GRANTS AND GRANTS AND
EXPENSES SERVICES
Functions/Programs
Primary Government:
Governmental Activities:
General government $ 2,455,999 $ 688,044 $ 149,427 $ 976
Education 14,941,366 9,388 1,887,762 -
Human services 5,508,011 85,213 4,416,678 -
Public safety and corrections 2,638,272 161,447 169,092 15,324
Conservation, environment,
recreation, and agriculture 714,019 299,073 182,035 2,124
Labor, commerce, and regulatory 956,256 754,054 196,016 -
Health services 15,036,289 67,298 10,410,322 -
Transportation 3,309,442 96,727 570,520 831,750
Tax credits (Note 16) 676,500 - - -
Intergovernmental-revenue sharing 1,120,593 - - -
Interest on long-term debt 174,522 - - -
Total governmental activities 47,531,269 2,161,243 17,981,852 850,174
Business-type Activities:
Liquor Purchase Revolving Fund 779,276 957,054 - -
State Lottery Fund 1,868,607 2,608,920 18,081 -
Attorney Discipline System 4,798 4,867 - -
Michigan Unemployment
Compensation Funds 1,246,507 1,809,854 41,800 -
Total business-type activities 3,899,188 5,380,695 59,881 -
Total primary government $ 51,430,457 $ 7,541,938 $ 18,041,733 $ 850,174
Total component units $ 4,862,991 $ 2,924,229 $ 1,650,154 $ 50,407
General Revenues:
Taxes:
General:
Sales and use
Personal income
Single business, Michigan business, and corporate income
Tobacco products
Beer, wine, and liquor
Insurance company
Quality assurance assessment
Penalties and interest
Other
Restricted For Educational Purposes:
Sales and use
Personal income
Corporate income
Education, property, and real estate transfers
Tobacco products
Beer, wine, and liquor
Casino gaming wagering
Other
Restricted For Transportation Purposes:
Sales and use
Gasoline and diesel fuel
Motor vehicle weight
Other
Unrestricted investment and interest earnings
Miscellaneous
Contributions to permanent fund principal
Payments from State of Michigan
Transfers
Total general and other revenue, payments, and transfers
Change in net position
Net position-beginning-restated
Net position-ending
The accompanying notes are an integral part of the financial statements.
CONTRIBUTIONS CONTRIBUTIONS
PROGRAM REVENUES
Michigan
34 34 34 34
GOVERNMENTAL BUSINESS-TYPE COMPONENT
TOTALS UNITS
$ (1,617,552) $ - $ (1,617,552) $ -
(13,044,216) - (13,044,216) -
(1,006,121) - (1,006,121) -
(2,292,409) - (2,292,409) -
(230,787) - (230,787) -
(6,185) - (6,185) -
(4,558,669) - (4,558,669) -
(1,810,445) - (1,810,445) -
(676,500) - (676,500) -
(1,120,593) - (1,120,593) -
(174,522) - (174,522) -
(26,538,000) - (26,538,000) -
- 177,778 177,778 -
- 758,394 758,394 -
- 69 69 -
- 605,147 605,147 -
- 1,541,388 1,541,388 -
(26,538,000) 1,541,388 (24,996,612) -
- - - (238,201)
2,993,426 - 2,993,426 -
6,078,008 - 6,078,008 -
528,174 - 528,174 -
578,154 - 578,154 -
143,105 - 143,105 -
362,287 - 362,287 -
971,377 - 971,377 -
117,734 - 117,734 -
514,504 - 514,504 -
5,872,729 - 5,872,729 -
2,276,581 - 2,276,581 -
34,566 - 34,566 -
2,033,711 - 2,033,711 -
357,389 - 357,389 -
45,722 - 45,722 -
106,903 - 106,903 -
65,172 - 65,172 -
102,026 - 102,026 -
958,745 - 958,745 -
940,637 - 940,637 -
5,052 - 5,052 -
990 87 1,076 120,172
517,297 3 517,300 403,143
23,865 - 23,865 -
- - - 805,252
942,883 (942,883) - -
26,571,035 (942,793) 25,628,241 1,328,567
33,035 598,595 631,630 1,090,366
18,194,963 1,850,316 20,045,279 5,318,488
$ 18,227,998 $ 2,448,910 $ 20,676,909 $ 6,408,854
Michigan
ACTIVITIES ACTIVITIES
PRIMARY GOVERNMENT
CHANGES IN NET POSITION
NET (EXPENSE) REVENUES AND
35 35 35 35
Michigan
2014 Comprehensive Annual Financi al Report
36 36 36 36
Michigan
GOVERNMENTAL FUND FINANCIAL STATEMENTS
Major Funds
GENERAL FUND
This fund is the State’s operating fund. It accounts for the
financial resources and transactions not accounted for in other
funds.
SCHOOL AID FUND
An amendment to the 1908 State Constitution created this fund
in 1955. The 1963 State Constitution provided for the fund’s
continued existence. Its purpose is to aid in the support of the
public schools, intermediate school districts, higher education
and school employee’s retirement systems of the State. School
aid payments to school districts are based on a statutory
formula. Michigan Compiled Laws Section 388.1611a, effective
October 1, 2003, created the school aid stabilization fund as a
separate account within the School Aid Fund. Pursuant to this
act, any remaining unreserved fund balance in the School Aid
Fund at year-end is transferred to this account.
The fund receives State revenues restricted to local school
programs, including: the constitutionally dedicated 60% of the
collections of sales tax imposed at a rate of 4% and all of the
collections of sales tax imposed at the additional rate of 2%;
State Lottery Fund earnings; a percentage of the adjusted gross
receipts from casino gaming; the real estate transfer tax; and
portions of the personal income, cigarette, liquor, and industrial
and commercial facilities taxes. A constitutional amendment
approved by voters in 1994 made structural changes in the
method of financing local school districts. The amendment
authorized the levy of a statewide property tax, which is
deposited in the School Aid Fund. Appropriated transfers are
also made from the General Fund.
Non-Major Funds
Non-major governmental funds are presented, by fund type,
beginning on page 132.
2014 Comprehensive Annual Financi al Report
37 37 37 37
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2014
(In Thousands)
NON-MAJ OR
FUND FUND FUNDS
ASSETS
Current Assets:
Cash $ 5,069 $ - $ 289 $ 5,358
Equity in common cash (Note 5) 1,413,703 - 2,002,628 3,416,332
Taxes, interest, and penalties receivable (Note 6) 2,265,960 2,039,853 95,957 4,401,770
Amounts due from other funds (Note 18) 1,085,704 8,759 42,717 1,137,180
Amounts due from component units 90 - 1,777 1,867
Amounts due from federal agencies 963,579 81,733 294,200 1,339,512
Amounts due from local units 114,146 35,082 51,705 200,934
Inventories 7,318 - 8,113 15,431
Investments (Note 8) - - 250,240 250,240
Other current assets 674,092 84 246,986 921,163
Total Current Assets 6,529,662 2,165,511 2,994,612 11,689,785
Noncurrent Assets:
Taxes, interest, and penalties receivable (Note 6) 198,429 65,023 2,540 265,993
Advances to other funds (Note 18) 2,702 - - 2,702
Amounts due from federal agencies 10,508 - - 10,508
Amounts due from local units 1,758,703 4,107 47,866 1,810,676
Investments (Note 8) - - 1,113,370 1,113,370
Other noncurrent assets 17,978 - 4,226 22,204
Total Noncurrent Assets 1,988,322 69,131 1,168,001 3,225,454
Total Assets $ 8,517,984 $ 2,234,642 $ 4,162,613 $ 14,915,239
LIABILITIES
Current Liabilities:
Warrants outstanding $ 64,226 $ 459 $ 14,617 $ 79,303
Accounts payable and other liabilities (Note 23) 2,418,295 137,757 569,435 3,125,487
Income tax refunds payable (Note 16) 926,884 - - 926,884
Amounts due to other funds (Note 18) 59,420 1,069,244 62,509 1,191,172
Amounts due to component units 6,900 - 55,131 62,031
Bonds and notes payable - - 99,105 99,105
Interest payable - - 8 8
Unearned revenue 83,335 - 12,433 95,768
Total Current Liabilities 3,559,059 1,207,460 813,238 5,579,757
Long-Term Liabilities:
Advances from component units 1,225,637 - - 1,225,637
Unearned revenue 9,704 - 101 9,804
Total Long-Term Liabilities 1,235,341 - 101 1,235,441
Total Liabilities 4,794,400 1,207,460 813,338 6,815,199
DEFERRED INFLOWS OF RESOURCES (Note 27) 1,639,532 504,652 187,112 2,331,297
FUND BALANCES
Nonspendable 189,095 - 992,581 1,181,676
Restricted 383,025 522,529 1,728,244 2,633,798
Committed 998,674 - 547,466 1,546,140
Assigned 206,875 - - 206,875
Unassigned (Note 21) 306,382 - (106,128) 200,254
Total Fund Balances (Note 22) 2,084,052 522,529 3,162,162 5,768,743
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances $ 8,517,984 $ 2,234,642 $ 4,162,613 $ 14,915,239
The accompanying notes are an integral part of the financial statements.
Michigan
TOTALS
AID GENERAL
SCHOOL
38 38 38 38
RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
SEPTEMBER 30, 2014
(In Thousands)
Total fund balances for governmental funds $ 5,768,743
Amounts reported for governmental activities in the Statement of Net Position
are different because:
Capital assets used in governmental activities are not financial resources
and therefore are not reported in the funds. (Note 9)
Land and other non-depreciable assets 3,587,211
Buildings, equipment, and other depreciable assets 5,484,688
Infrastructure 13,919,336
Construction in progress 1,848,459
Interest in joint ventures 34,658
Accumulated depreciation (2,693,309) 22,181,044
Certain tax revenues are earned but not available and therefore
are reported as deferred inflows of resources in the funds. 1,774,804
Other long-term assets are not available to pay for
current period expenditures and therefore are
reported as deferred inflows of resources in the funds. 556,493
Amounts due to component units for long-term loans. (240,598)
Internal service funds are used by management to charge the costs of
certain activities, such as insurance and telecommunications, to
individual funds. The assets and liabilities of the internal service funds
are included in governmental activities in the Statement of Net Position. 243,105
Deferred outflows of resources related to refunding of debt are
not reported in the funds. 66,447
Debt issuance costs are reported as current expenditures in the funds.
However, certain debt issuance costs are amortized over the life of
the bonds and are included in the governmental activities in the
Statement of Net Position. 2,312
Long-term liabilities are not due and payable in the current period and
therefore are not reported in the funds. (Note 15)
Capital lease obligations (375,568)
Compensated absences (398,469)
Workers' compensation (79,396)
Litigation (287,271)
Net pension obligations (742,192)
Net other postemployment benefits (2,709,192)
Pollution remediation (163,186)
Pension supplement (19,629) (4,774,904)
Long-term bonded debt is not due and payable in the current period and
therefore is not reported in the funds. Unamortized premiums, unamortized
discounts, and accrued interest payable are not reported in the funds. However,
these amounts are included in the Statement of Net Position. This is the net
effect of these balances on the statement. (Note 13)
Bonds and notes payable (7,017,404)
Unamortized premiums (205,932)
Unamortized discounts 3,721
Accrued interest payable (118,366) (7,337,981)
Deferred inflows of resources related to refunding of debt are
not reported in the funds. (11,468)
Net position of governmental activities $ 18,227,998
The accompanying notes are an integral part of the financial statements.
Michigan
39 39 39 39
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
SCHOOL
AID NON-MAJ OR
FUND FUND FUNDS
REVENUES
Taxes $ 12,460,302 $ 10,868,783 $ 2,006,702 $ 25,335,788
From federal agencies 15,364,698 1,623,283 1,536,667 18,524,648
From local agencies 89,644 - 10,727 100,372
From services 318,480 - 8,080 326,560
From licenses and permits 310,644 - 200,772 511,416
Special Medicaid reimbursements 133,909 - - 133,909
Miscellaneous 690,409 31,227 992,941 1,714,576
Total Revenues 29,368,085 12,523,293 4,755,890 46,647,268
EXPENDITURES
Current:
General government 1,870,519 17,442 178,208 2,066,169
Education 1,606,455 13,303,446 63,203 14,973,104
Human services 5,504,345 - 32,883 5,537,228
Public safety and corrections 2,665,729 - 4,154 2,669,883
Conservation, environment,
recreation, and agriculture 435,069 - 246,003 681,072
Labor, commerce, and regulatory 298,032 - 663,902 961,934
Health services 14,977,620 - 85,835 15,063,455
Transportation 217,503 - 2,393,709 2,611,213
Tax credits (Note 16) 676,500 - - 676,500
Capital outlay 59,156 - 1,054,614 1,113,770
Intergovernmental-revenue sharing 1,120,593 - - 1,120,593
Debt service:
Bond principal retirement - - 452,631 452,631
Bond interest and fiscal charges - - 317,873 317,873
Capital lease payments 61,654 - 1,374 63,028
Total Expenditures 29,493,175 13,320,888 5,494,389 48,308,452
Excess of Revenues over (under)
Expenditures (125,089) (797,595) (738,500) (1,661,184)
OTHER FINANCING SOURCES (USES)
Bonds and notes issued 85,295 - - 85,295
Refunding bonds issued - - 295,085 295,085
Premium on bond issuance 12,356 - 35,223 47,579
Payment to refunded bond escrow agent - - (299,121) (299,121)
Capital lease acquisitions 18,371 - 475 18,846
Proceeds from sale of capital assets 1,626 - 1,840 3,466
Transfers from other funds (Note 20) 234,237 892,807 2,227,106 3,354,150
Transfers to other funds (Note 20) (954,325) (126,249) (1,329,488) (2,410,062)
Total Other Financing
Sources (Uses) (602,440) 766,559 931,120 1,095,238
Net changes in fund balances (727,530) (31,036) 192,621 (565,945)
Fund Balances - Beginning
of fiscal year - restated 2,811,581 553,565 2,969,542 6,334,689
Fund Balances - End of fiscal year $ 2,084,052 $ 522,529 $ 3,162,162 $ 5,768,743
The accompanying notes are an integral part of the financial statements.
TOTALS
Michigan
GENERAL
40 40 40 40
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
Net change in fund balance - total governmental funds $ (565,945)
Governmental funds report capital outlay as expenditures. However, in
the Statement of Activities, the cost of those assets is allocated over their
estimated useful lives as depreciation expense. This is the amount by
which capital outlays exceeded depreciation in the current period.
(Note 9)
Land and other non-depreciable assets 49,331
Buildings, equipment, and other depreciable assets 97,452
Infrastructure 163,811
Construction in progress 138,086
Gain on disposal of capital assets 3,466
Accumulated depreciation (195,335) 256,812
Certain revenues that were reported as resources in the funds but were
earned in prior fiscal years are not reported in the Statement of Activities. 48,230
Amount due to component units for long-term loans are
not reported in the funds as they are not due and payable. (60,174)
Increase in equity interest in joint ventures. (Note 7) 134
Tax revenues that were reported as resources in the funds but were earned
in prior fiscal years are not reported in the Statement of Activities. (245,535)
Internal service funds are used by management to charge the costs of
certain activities, such as insurance and telecommunications, to individual
funds. The net revenue (expense) of the internal service funds is
reported with governmental activities. 12,639
Bond proceeds provide current financial resources to governmental funds
by issuing debt which increases long-term bonded debt in the Statement
of Net Position. Repayment of bond principal is an expenditure in the
governmental funds, but the repayment reduces long-term bonded debt
in the Statement of Net Position. This is the amount proceeds exceed
repayments. (Note 13)
Bond proceeds and premiums received (427,959)
Repayment of bond principal 452,631
Payment to refunded bond escrow agent 299,121
Accrued interest and amortization (17,398) 306,395
Certain expenditures are reported in the funds. However, they either
increase or decrease long-term liabilities reported on the Statement of
Net Position and have been eliminated from the Statement of Activities.
(Note 15)
Net pension obligation 78,706
Net other postemployment benefit obligation 64,056
Capital lease payments 24,530
Compensated absences payments (1,474)
Litigation recoveries, settlements and payments 89,013
Pollution remediation obligations (2,396)
Workers' compensation 12,569
Pension supplement 15,475 280,480
Change in net position of governmental activities $ 33,035
The accompanying notes are an integral part of the financial statements.
Michigan
41 41 41 41
Michigan
2014 Comprehensive Annual Financi al Report
42 42 42 42
Michigan
PROPRIETARY FUND FINANCIAL STATEMENTS
Major Funds
STATE LOTTERY FUND
Michigan Compiled Laws (MCL) Section 432.41 established the
State Lottery Fund and MCL Section 432.5 created a Bureau of
State Lottery under authority of Article 5, Section 4, of the State
Constitution. This authority expired on August 1, 1974, at which
time the Bureau became an organizational entity in the Department
of Technology, Management and Budget. The Bureau was
transferred to the Department of Treasury during fiscal year 1991.
Net income of the fund related to lottery operations is transferred to
the School Aid Fund and the fund’s net income related to bingo and
charity games regulation is transferred to the General Fund. The
remaining net position balance represents the unrealized cumulative
gain or loss on investments, as required by Governmental
Accounting Standards Board Statement No. 31, Accounting and
Financial Reporting for Certain Investments and for External
Investment Pools.
In general, revenues and related expenses are recognized in the
period during which the related drawings are held. Because draw
games may be played on an advance wager basis, an associated
liability is recognized for all wagers received for drawings to be
conducted after the end of the reporting period. Deferred prize
awards are recorded as expenses and liabilities at their discounted
present value. The State Treasurer invests funds equivalent to the
discounted value of the installment payments and the Lottery Fund
is credited with the interest earnings.
MICHIGAN UNEMPLOYMENT COMPENSATION FUNDS
The columns for the Michigan Unemployment Compensation Funds
reflect the activity of two funds administered by the Unemployment
Insurance Agency within the Department of Licensing and
Regulatory Affairs: the Michigan Unemployment Compensation
Fund and the Michigan Employment Security Act Contingent Fund.
The Michigan Unemployment Compensation Fund receives
contributions from employers and provides for the payment of
benefits to eligible unemployed workers. The fund also makes
payments under certain federally funded programs. Administrative
costs of the fund are accounted for in the Michigan Employment
Security Act - Administration Fund, a special revenue fund.
The Michigan Employment Security Act Contingent Fund was
created by Michigan Compiled Laws (MCL) Section 421.10 to
receive a special temporary unemployment tax surcharge, known as
the solvency tax. The fund also receives interest and penalty
charges on late contributions. MCL Section 421.10 restricts use of
solvency taxes for payment of interest on the Michigan
Unemployment Compensation borrowings from the federal
government.
A portion of the asset “Amounts due from other funds” and the
liability “Amounts due to other funds” represent receivables and
payables between the Michigan Unemployment Compensation Fund
and the Michigan Employment Security Act Contingent Fund.
Non-Major Funds
Individual fund statements for the Enterprise Funds, whose
combined totals are presented on this statement, begin on page
192.
Individual fund statements for the Internal Service Funds, whose
combined totals are presented on this statement, begin on page 196.
2014 Comprehensive Annual Financi al Report
43 43 43 43
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
SEPTEMBER 30, 2014
(In Thousands)
FUND FUNDS
ASSETS
Current Assets:
Cash $ 2 $ 13,881 $ 940 $ 14,822 $ -
Equity in common cash (Note 5) 3,608 63,897 71,525 139,030 323,017
Amounts due from other funds (Note 18) - 6,227 - 6,227 9,215
Amounts due from component units - 403 - 403 27
Amounts due from federal agencies - 886 - 886 -
Amounts due from local units - 48,373 - 48,373 -
Inventories 8,389 - 7,939 16,328 10,492
Investments (Note 8) 29,264 2,065,900 5,246 2,100,410 -
Other current assets 96,320 253,412 6,647 356,379 23,340
Total Current Assets 137,581 2,452,979 92,296 2,682,857 366,091
Noncurrent Assets:
Investments (Note 8) 203,197 - - 203,197 -
Capital Assets (Note 9):
Land and other non depreciable assets - - - - 9,170
Buildings and equipment 4,638 - 548 5,187 1,049,920
Allowance for depreciation (4,066) - (514) (4,581) (664,050)
Total capital assets 572 - 34 606 395,040
Other noncurrent assets - 47,900 35 47,935 750
Total Noncurrent Assets 203,769 47,900 69 251,738 395,790
Total Assets $ 341,351 $ 2,500,879 $ 92,365 $ 2,934,595 $ 761,881
LIABILITIES
Current Liabilities:
Warrants outstanding $ 852 $ - $ 4,561 $ 5,413 $ 726
Accounts payable and
other liabilities (Note 23) 115,371 20,923 79,513 215,808 94,194
Amounts due to other funds (Note 18) 9,124 9,541 288 18,953 10,742
Amounts due to component units - 1 - 1 25
Interest payable - - - - 2,150
Unearned revenue - - 505 505 30,930
Current portion of other
long-term obligations (Note 15) 804 - 661 1,465 58,690
Total Current Liabilities 126,151 30,466 85,528 242,145 197,457
Long-Term Liabilities:
Advances from other funds (Note 18) - - - - 2,702
Amounts due to other funds (Note 18) 26 - 25 51 276
Prize awards payable 187,548 - - 187,548 -
Unearned revenue - - - - 199,467
Noncurrent portion of other
long-term obligations (Note 15) 840 54,728 373 55,941 118,873
Total Long-Term Liabilities 188,415 54,728 397 243,540 321,319
Total Liabilities 314,566 85,193 85,925 485,684 518,776
NET POSITION
Net investment in capital assets $ 572 $ - $ 34 $ 606 $ 377,010
Restricted For:
Unemployment compensation - 2,415,686 - 2,415,686 -
Other purposes 26,785 - - 26,785 6,786
Unrestricted (572) - 6,406 5,834 (140,691)
Total Net Position $ 26,785 $ 2,415,686 $ 6,440 $ 2,448,910 $ 243,105
The accompanying notes are an integral part of the financial statements.
FUNDS TOTALS
MAJ OR
ACTIVITIES --
GOVERNMENTAL
NON-MAJ OR
Michigan
INTERNAL STATE
LOTTERY
MICHIGAN
SERVICE
UNEMPLOYMENT
COMPENSATION
BUSINESS-TYPE ACTIVITIES -- ENTERPRISE FUNDS
44 44 44 44
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
PROPRIETARY FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
STATE
LOTTERY
OPERATING REVENUES
Operating revenues $ 2,608,920 $ 1,809,854 $ 961,921 $ 5,380,695 $ 1,600,430
Total Operating Revenues 2,608,920 1,809,854 961,921 5,380,695 1,600,430
OPERATING EXPENSES
Salaries, wages, and
other administrative 298,809 3 83,652 382,464 630,012
Interest expense 1 - - 1 3
Depreciation 212 - 37 249 78,009
Purchases for resale - - 698,828 698,828 90,341
Purchases for prison industries - - - - 10,138
Lottery prize awards 1,559,864 - - 1,559,864 -
Premiums and claims - - 24 24 716,545
Unemployment benefits - 1,080,710 - 1,080,710 -
Other operating expenses - 165,794 1,532 167,326 60,117
Total Operating Expenses 1,858,886 1,246,507 784,074 3,889,467 1,585,164
Operating Income (Loss) 750,035 563,347 177,846 1,491,228 15,265
NONOPERATING REVENUES (EXPENSES)
Interest revenue 79 - 87 166 230
Investment revenue (expense) - net 18,002 41,504 - 59,505 -
Other nonoperating revenues - 296 - 296 285
Amortization of prize award
obligation discount (9,715) - - (9,715) -
Interest expense (4) - - (4) (476)
Other nonoperating expense (1) - 3 2 (1,680)
Total Nonoperating
Revenues (Expenses) 8,360 41,800 90 50,250 (1,641)
Income (Loss) Before Transfers 758,394 605,147 177,936 1,541,478 13,625
CAPITAL CONTRIBUTIONS AND TRANSFERS
Transfers from other funds - - - - 2,500
Transfers To:
School Aid Fund (742,907) - - (742,907) -
Other funds (6,621) (15,508) (177,848) (199,976) (3,485)
Total transfers to other funds (749,528) (15,508) (177,848) (942,883) (985)
Change in net position 8,866 589,640 89 598,595 12,639
Total net position - Beginning
of fiscal year 17,919 1,826,046 6,351 1,850,316 230,466
Total net position - End of fiscal year $ 26,785 $ 2,415,686 $ 6,440 $ 2,448,910 $ 243,105
The accompanying notes are an integral part of the financial statements.
BUSINESS-TYPE ACTIVITIES -- ENTERPRISE FUNDS
Michigan
MAJ OR
GOVERNMENTAL
ACTIVITIES --
INTERNAL
SERVICE
UNEMPLOYMENT
MICHIGAN
COMPENSATION
FUND FUNDS TOTALS FUNDS NON-MAJ OR
45 45 45 45
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
STATE
LOTTERY
FUND FUNDS
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from federal and local agencies $ - $ 146,463 $ - $ 146,463 $ -
Receipts from customers 2,593,490 1,632,927 957,054 5,183,470 1,687,851
Membership dues - - 4,818 4,818 -
Payments to employees (22,118) - (24,743) (46,860) (231,822)
Payments to suppliers (46,140) - (765,637) (811,777) (894,837)
Payments to prize winners (1,591,609) - - (1,591,609) -
Payments for commissions to retailers (226,667) - - (226,667) -
Claims paid - (1,248,714) - (1,248,714) (375,873)
Other receipts - 28,011 (150) 27,861 96
Other payments - (1,553) (1,845) (3,398) (3,827)
Net cash provided (used)
by operating activities $ 706,956 $ 557,133 $ 169,498 $ 1,433,586 $ 181,588
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Repayment of federal advances $ - $ 296 $ - $ 296 $ -
Loans or loan repayments from other funds - - - - 20,362
Loans or loan repayments to other funds - - - - (20,751)
Transfers from other funds - - - - 2,500
Transfers to other funds (740,769) (45,020) (177,848) (963,637) (3,485)
Net cash provided (used)
by noncapital financing activities $ (740,769) $ (44,724) $ (177,848) $ (963,340) $ (1,374)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition and construction of capital assets $ (31) $ - $ (13) $ (43) $ (148,922)
Interest paid - - - - (7)
Capital lease payments
(including imputed interest expense) - - - - (13,083)
Proceeds from sale of capital assets - - - - 33
Net cash provided (used) by capital
and related financing activities $ (31) $ - $ (13) $ (43) $ (161,980)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales and maturities of
investment securities $ 33,775 $ - $ - $ 33,775 $ -
Purchases of investment securities (9,272) (527,387) (26) (536,686) -
Interest and dividends on investments 79 41,504 87 41,669 230
Expenses from securities lending activities (4) - - (4) -
Net cash provided (used)
by investing activities $ 24,577 $ (485,884) $ 61 $ (461,246) $ 230
Net cash provided (used) - all activities $ (9,267) $ 26,525 $ (8,302) $ 8,957 $ 18,465
Cash and cash equivalents
at beginning of year 12,024 51,253 76,206 139,482 303,827
Cash and cash equivalents
at end of year $ 2,757 $ 77,778 $ 67,904 $ 148,439 $ 322,292
The accompanying notes are an integral part of the financial statements.
TOTALS
INTERNAL
SERVICE
UNEMPLOYMENT
COMPENSATION
Michigan
MAJ OR
NON-MAJ OR FUNDS
MICHIGAN
BUSINESS-TYPE ACTIVITIES -- ENTERPRISE FUNDS
GOVERNMENTAL
ACTIVITIES --
46 46 46 46
STATE
LOTTERY
FUND FUNDS
RECONCILIATION OF CASH
AND CASH EQUIVALENTS
Per Statement of Net Position Classifications:
Cash $ 2 $ 13,881 $ 940 $ 14,822 $ -
Equity in common cash 3,608 63,897 71,525 139,030 323,017
Warrants outstanding (852) - (4,561) (5,413) (726)
Cash and cash equivalents at end of year $ 2,757 $ 77,778 $ 67,904 $ 148,439 $ 322,291
RECONCILIATION OF OPERATING INCOME
(LOSS) TO NET CASH PROVIDED
(USED) BY OPERATING ACTIVITIES
Operating income (loss) $ 750,035 $ 563,347 $ 177,846 $ 1,491,228 $ 15,265
Adjustments to Reconcile Operating Income
to Net Cash Provided (Used)
by Operating Activities:
Depreciation expense 212 - 37 249 78,009
Amortization of prize award
obligation discount (9,715) - - (9,715) -
Other nonoperating revenue - - 3 3 -
Other reconciling items 87 - - 87 -
Net Changes in Assets and Liabilities:
Inventories (540) - (725) (1,265) 2,124
Other assets (net) (15,430) 21,015 283 5,868 1,552
Accounts payable and other liabilities 4,339 (27,230) (8,021) (30,912) (3,742)
Prize awards payable (22,030) - - (22,030) -
Unearned revenue - - 73 73 88,380
Net cash provided (used)
by operating activities $ 706,956 $ 557,133 $ 169,498 $ 1,433,586 $ 181,588
SCHEDULE OF NONCASH INVESTING,
CAPITAL, AND FINANCING ACTIVITIES
Cost of capital assets acquisitions
financed by capital leases $ - $ - $ - $ - $ 7,653
Capital lease liabilities entered
into during the year - - - - (7,653)
Increase (decrease) in fair value
of investments 8,866 - - 8,866 -
Transfers to other funds (accrual) (8,759) (2,773) - (11,532) -
Gain (loss) on disposal of capital assets - - - - (1,680)
Total noncash investing, capital,
and financing activities $ 107 $ (2,773) $ - $ (2,666) $ (1,680)
BUSINESS-TYPE ACTIVITIES -- ENTERPRISE FUNDS
Michigan
TOTALS
MAJ OR
NON-MAJ OR
GOVERNMENTAL
MICHIGAN ACTIVITIES --
FUNDS
UNEMPLOYMENT INTERNAL
COMPENSATION SERVICE
47 47 47 47
Michigan
2014 Comprehensive Annual Financi al Report
48 48 48 48
Michigan
FIDUCIARY FUND FINANCIAL STATEMENTS
Individual fund financial statements begin on the following pages:
Pension (and Other Employee Benefit) Trust Funds, page 204.
Private Purpose Trust Funds, page 212.
Agency Funds, page 215.
2014 Comprehensive Annual Financi al Report
49 49 49 49
STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS
SEPTEMBER 30, 2014
(In Thousands)
PRIVATE
PURPOSE
TRUST AGENCY
FUNDS FUNDS FUNDS
ASSETS
Cash $ - $ 1,862 $ 40,217
Equity in common cash (Note 5) 407,460 102,716 6,646
Receivables:
From participants 252,912 - -
From employers 377,360 - -
Other 110,764 - -
Interest and dividends 7,880 2,275 -
Due from other funds (Note 18) 212 - -
Due from component unit 1,219 - -
Due from other governmental 34,389 - -
Sale of investments 268 - -
Investments at Fair Value (Note 8):
Short term investments 3,964,342 - -
Fixed income 7,013,635 20,330 -
Domestic equities 18,082,763 - -
Real estate 5,542,861 - -
Alternative investments 10,362,413 - -
International equities 9,186,635 - -
Absolute return 6,380,691 - -
Mutual funds 1,066,136 3,703,167 -
Pooled investment funds 2,802,860 - -
Separate accounts 2,372,289 - -
Guaranteed funding agreements - 531,036 -
Securities lending collateral (Note 8) 4,048,924 - -
Other current assets - 13,219 347
Other noncurrent assets - 550 419,228
Total assets $ 72,016,012 $ 4,375,156 $ 466,438
LIABILITIES
Warrants outstanding $ 694 $ 4,386 $ -
Accounts payable and other liabilities 292,669 8,351 47,024
Amounts due to other funds (Note 18) 4 - 186
Obligations under security lending 4,190,118 - -
Unearned revenue 2,598 - -
Other long-term liabilities - - 419,228
Total liabilities $ 4,486,084 $ 12,736 $ 466,438
NET POSITION
Restricted for pension,
postemployment health-care, deferred
compensation participants, and other purposes $ 67,529,928 $ 4,362,419
Reconciliation of Net Position:
Restricted for pension benefits (Note 10) 59,176,737 $ -
Restricted for postemployment health-care benefits (Note 11) 4,694,353 -
Restricted for deferred compensation participants (Note 17) 3,658,839 -
Restricted for other purposes - 4,362,419
Total net position restricted for benefits
and other purposes $ 67,529,928 $ 4,362,419
The accompanying notes are an integral part of the financial statements.
Michigan
TRUST
BENEFIT)
PENSION
(AND OTHER
EMPLOYEE
50 50 50 50
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
PRIVATE
PURPOSE
TRUST
FUNDS FUNDS
ADDITIONS
Contributions:
From participants $ 1,119,361 $ 475,135
From employers 4,286,163 -
From clients - 63,981
From gifts, bequests, and endowments - 42,200
From other governmental 57,076 -
From other systems 9,112 -
Investment Income:
Net increase (decrease) in the fair value of investments 7,849,708 244,969
Interest, dividends, and other 1,221,245 79,112
Securities lending income 102,377 -
Less Investment Expense:
Investment activity expense 178,747 -
Securities lending expense 68,527 -
Net investment income (loss) 8,926,055 324,082
Escheated property - 97,339
Miscellaneous income 9,701 1,276
Total Additions 14,407,469 1,004,013
DEDUCTIONS
Benefits paid to participants or beneficiaries 5,932,121 281,701
Medical, dental, and life insurance for retirants 1,194,920 -
Refunds and transfers to other systems 239,213 -
Amounts distributed to clients, claimants, or third parties - 204,661
Administrative and other expenses 212,790 13,210
Transfers to other funds 186 -
Total Deductions 7,579,229 499,573
Change in net position 6,828,239 504,440
Net position - Beginning of fiscal year - restated 60,701,689 3,857,979
Net position - End of fiscal year $ 67,529,928 $ 4,362,419
Reconciliation of change in net position:
Change in net position restricted for pension benefits $ 5,347,955 $ -
Change in net position restricted for postemployment benefits 1,362,528 -
Change in net position restricted for deferred compensation participants 117,757 -
Change in net position restricted for other purposes - 504,440
Change in net position $ 6,828,239 $ 504,440
The accompanying notes are an integral part of the financial statements.
Michigan
TRUST
(AND OTHER
EMPLOYEE
BENEFIT)
PENSION
51 51 51 51
Michigan
2014 Comprehensive Annual Financi al Report
52 52 52 52
Michigan
COMPONENT UNIT FINANCIAL STATEMENTS
Major Funds
MICHIGAN FINANCE AUTHORITY
Executive Order 2010-2 created the Michigan Finance Authority
(MFA) to consolidate certain Michigan public finance authorities.
Functions related to borrowing money or the issuance of bonds or
notes of the Michigan Strategic Fund, Michigan Forest Finance
Authority, and Land Bank Fast Track Authority were also
consolidated into MFA. A seven-member Board of Trustees,
consisting of the State Treasurer and six appointees of the Governor
with advice and consent of the State Senate, governs the Authority.
MFA provides sources of funding for loans to governmental units,
school districts, and nonpublic nonprofit institutions of higher
education, healthcare corporations and facilities. Additionally, MFA
assists governmental units in financing and marketing municipal
debt and tax-exempt bonds. The Authority also enhances the
student loan efforts of Michigan private lenders by making loans to
students and their parents, and acquiring loans previously made.
MFA may not create debt or liabilities on behalf of the State or
pledge the full faith and credit of the State.
MICHIGAN STATE HOUSING DEVELOPMENT
AUTHORITY
Michigan Compiled Laws Section 125.1421 created the Michigan
State Housing Development Authority (MSHDA) to issue notes and
bonds to finance housing for sale or rental to families with low or
moderate incomes and to finance home improvements. MSHDA is
also the administrator of various "Section 8" housing programs in
Michigan for the U.S. Department of Housing and Urban
Development. The Governor appoints MSHDA’s board members.
MICHIGAN STRATEGIC FUND
The Michigan Strategic Fund (MSF) is a public body corporation and
politic created by Michigan Compiled Laws (MCL) Section 125.2005
to help diversify the economy of the State and to provide for
economic development, primarily by assisting business enterprises
to obtain additional sources of financing. The Workforce
Development Agency resides within MSF and is a considerable
piece of MSF’s activities.
MSF is governed by a board of eleven members, which includes the
directors (or their designees) of the Departments of Licensing and
Regulatory Affairs and Treasury, and the Chief Executive Officer of
the Michigan Economic Development Corporation. The Governor,
with the advice and consent of the Senate, appoints the other eight
members; none of those eight may be an employee of the State.
WESTERN MICHIGAN UNIVERSITY
Of the ten universities included in this report, Western Michigan
University is reported as a major component unit. The universities
are legally separate entities whose governing boards are appointed
by the Governor and for which the State is therefore, defined as
legally accountable. Excluded from this report are three other
universities (University of Michigan, Michigan State University, and
Wayne State University) whose board members are elected by the
voters and, therefore, considered separate special purpose
governments.
Non-Major Funds
The non-major component unit - authorities are presented beginning
on page 220.
The non-major component unit - State universities are presented
beginning on page 226.
2014 Comprehensive Annual Financi al Report
53 53 53 53
STATEMENT OF NET POSITION
COMPONENT UNITS
SEPTEMBER 30, 2014
(In Thousands)
HOUSING MICHIGAN
FINANCE DEVELOPMENT STRATEGIC
AUTHORITY AUTHORITY FUND NON-MAJ OR
ASSETS
Current Assets:
Cash $ 222,885 $ 96,132 $ 85,220 $ 88,611
Equity in common cash (Note 5) 265,206 - 244,075 30,127
Amounts due from component units - - - 36,466
Amounts due from primary government 68,794 - - 6,333
Amounts due from federal government 1,643 - 28,499 1,269
Amounts due from local units 1,085,925 - 1,977 -
Inventories - - - 600
Investments (Note 8) 1,441,303 157,573 - 16,912
Other current assets 238,883 52,124 56,334 25,753
Total Current Assets 3,324,638 305,829 416,105 206,072
Restricted Assets:
Cash and cash equivalents - - 40,483 1,534
Investments - - - 2,157
Mortgages and loans receivable - - - -
Advances to primary government 1,452,291 - - -
Amounts due from local units 5,057,852 - - -
Mortgages and loans receivable 903,669 2,121,844 35,249 9,927
Investments (Note 8) 790,684 843,375 113,473 1,037,846
Land and property held for resale - - - 13,571
Capital Assets (Note 9):
Land and other non-depreciable assets - - - 943
Buildings, equipment, and other depreciable assets - - - 53,079
Less accumulated depreciation - - - (32,308)
Infrastructure - - - 102,950
Construction in progress - - - 80
Total capital assets - - - 124,743
Other noncurrent assets - 70,917 218,134 48,659
Total Assets $ 11,529,133 $ 3,341,964 $ 823,444 $ 1,444,508
DEFERRED OUTFLOWS OF RESOURCES (Note 27) $ 29,340 $ 143,367 $ - $ -
LIABILITIES
Current Liabilities:
Warrants outstanding $ - $ - $ 271 $ 80
Accounts payable and other liabilities 9,855 45,930 66,256 19,878
Amounts due to component units - - 34,591 621
Amounts due to primary government - - 1,068 2,132
Bonds and notes payable (Note 14) 2,088,616 87,655 7,305 50
Interest payable 119,667 10,903 4,519 18
Unearned revenue - - 876 2,365
Current portion of other long-term obligations 1,367 129,800 1,256 110,434
Total Current Liabilities 2,219,505 274,289 116,140 135,579
Unearned revenue - - 50 1,253
Bonds and notes payable (Note 14) 8,884,221 1,932,440 188,683 1,685
Noncurrent portion of other long-term obligations 31,189 501,085 7,120 897,384
Total Liabilities $ 11,134,915 $ 2,707,814 $ 311,993 $ 1,035,900
DEFERRED INFLOWS OF RESOURCES (Note 27) $ 2,560 $ 11,749 $ - $ -
NET POSITION
Net investment in capital assets $ - $ - $ - $ 123,008
Restricted For:
Education - - - -
Construction and debt service 3,532,780 471,554 1,046 2,871
Other purposes - 18,081 475,088 60,976
Funds Held as Permanent Investments:
Expendable - - - -
Nonexpendable - - - -
Unrestricted (3,111,783) 276,134 35,318 221,753
Total Net Position $ 420,997 $ 765,769 $ 511,451 $ 408,608
The accompanying notes are an integral part of the financial statements.
Michigan
MICHIGAN
MICHIGAN
STATE
AUTHORITIES
54 54 54 54
MICHIGAN
UNIVERSITY
$ 50,332 $ 255,247 $ 798,427
- - 539,408
- 4 36,470
17,821 201,500 294,447
2,688 11,277 45,376
3 16 1,087,921
2,671 16,625 19,896
12,896 137,040 1,765,723
53,685 101,729 528,508
140,097 723,437 5,116,176
- 39,300 81,317
321,419 202,806 526,382
- 26,229 26,229
- - 1,452,291
- - 5,057,852
8,960 38,735 3,118,383
216,063 1,039,525 4,040,966
- - 13,571
112,827 134,513 248,283
1,154,827 4,687,009 5,894,915
(482,157) (1,968,274) (2,482,740)
- 60,268 163,218
23,176 270,684 293,939
808,673 3,184,200 4,117,616
59,457 71,563 468,731
$ 1,554,668 $ 5,325,795 $ 24,019,513
$ - $ 31,713 $ 204,420
$ - $ - $ 351
88,333 294,338 524,590
- - 35,211
36 2,180 5,416
13,505 65,683 2,262,814
2,170 9,731 147,008
8,969 72,631 84,841
6,356 15,973 265,186
119,368 460,536 3,325,417
- 6,918 8,221
377,140 1,258,239 12,642,408
191,741 176,446 1,804,965
$ 688,249 $ 1,902,139 $ 17,781,010
$ 1,419 $ 18,341 $ 34,070
$ 421,162 $ 1,819,844 $ 2,364,014
11,281 142,713 153,993
- 39,497 4,047,748
177,195 39,328 770,668
- 161,123 161,123
71,680 316,435 388,116
183,683 918,088 (1,476,808)
$ 865,000 $ 3,437,028 $ 6,408,854
TOTALS NON-MAJ OR
WESTERN
Michigan
STATE UNIVERSITIES
55 55 55 55
STATEMENT OF ACTIVITIES
COMPONENT UNITS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
NET
(EXPENSE)
FUNCTIONS/PROGRAMS CONTRIBUTIONS CONTRIBUTIONS REVENUE
Authorities:
Michigan Finance Authority $ 373,799 $ 760,572 $ 270,999 $ - $ 657,772
Michigan State Housing
Development Authority 789,009 177,106 615,601 - 3,698
Michigan Strategic Fund 546,444 3,836 278,066 - (264,543)
Non-Major 171,434 39,311 183,745 2,035 53,658
State Universities:
Western Michigan University 629,206 396,176 65,964 7,262 (159,804)
Non-Major 2,353,098 1,547,228 235,778 41,110 (528,983)
Total $ 4,862,991 $ 2,924,229 $ 1,650,154 $ 50,407 $ (238,201)
The accompanying notes are an integral part of the financial statements.
Michigan
PROGRAM REVENUES
OPERATING CAPITAL
CHARGES FOR GRANTS/ GRANTS/
EXPENSES SERVICES
56 56 56 56
NET POSITION
$ - $ - $ - $ 657,772 $ (236,775) $ 420,997
18,180 - - 21,878 743,891 765,769
(1,133) 279,938 77,718 91,980 419,471 511,451
1,217 - 6,918 61,792 346,816 408,608
16,513 97,601 122,985 77,295 787,705 865,000
85,394 427,713 195,523 179,648 3,257,380 3,437,028
$ 120,172 $ 805,252 $ 403,143 $ 1,090,366 $ 5,318,488 $ 6,408,854
OF YEAR
INVESTMENT
END
Michigan
GENERAL REVENUES
INTEREST AND PAYMENTS
NET POSITION FROM BEGINNING
STATE OF CHANGE IN EARNINGS
RESTATED OF YEAR (LOSS) MICHIGAN OTHER NET POSITION
57 57 57 57
Michigan
Index
Notes to the Financial Statements
Page
NOTE 1 - Summary of Significant Accounting Policies ........................................................................ 59
NOTE 2 - Funds and Component Units by Classification .................................................................... 67
NOTE 3 - Budgeting, Budgetary Control, and Legal Compliance ........................................................ 68
NOTE 4 - Accounting Changes and Restatements.............................................................................. 70
NOTE 5 - Treasurer's Common Cash .................................................................................................. 70
NOTE 6 - Taxes Receivable ................................................................................................................ 73
NOTE 7 - J oint Ventures ...................................................................................................................... 74
NOTE 8 - Deposits and Investments ................................................................................................... 75
NOTE 9 - Capital Assets ...................................................................................................................... 85
NOTE 10 - Pension Benefits ................................................................................................................. 88
NOTE 11 - Other Postemployment Benefits ......................................................................................... 92
NOTE 12 - Leases ................................................................................................................................ 96
NOTE 13 - Bonds and Notes Payable – Primary Government ............................................................. 97
NOTE 14 - Bonds and Notes Payable - Discretely Presented Component Units ................................. 104
NOTE 15 - Other Long-Term Obligations ............................................................................................ 105
NOTE 16 - Income Tax Credits and Refunds ...................................................................................... 108
NOTE 17 - Deferred Compensation Plans ........................................................................................... 109
NOTE 18 - Interfund Receivables and Payables ................................................................................. 109
NOTE 19 - Interfund Commitments ..................................................................................................... 110
NOTE 20 - Transfers ........................................................................................................................... 110
NOTE 21 - Fund Deficits ...................................................................................................................... 110
NOTE 22 - Fund Balances and Net Position ........................................................................................ 111
NOTE 23 - Disaggregation of Payables ................................................................................................ 113
NOTE 24 - Contingencies and Commitments ....................................................................................... 113
NOTE 25 - Risk Management ............................................................................................................... 119
NOTE 26 - Pledged Revenues ............................................................................................................. 121
NOTE 27 – Deferred Outflows of Resources and Deferred Inflows of Resources ................................ 121
NOTE 28 - Subsequent Events ............................................................................................................ 122
2014 Comprehensive Annual Financi al Report
58 58 58 58
Michigan
Notes to the Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of the State conform in all material respects to generally accepted accounting principles
(GAAP) as applicable to governments. The Governmental Accounting Standards Board (GASB) is the standard setting body for
establishing governmental accounting and financial reporting principles, which are primarily set forth in the GASB’s Codification of
Governmental Accounting and Financial Reporting Standards. Following is a summary of the significant policies:
Reporting Entity
Michigan was admitted to the Union as the twenty-sixth state in 1837. The State of Michigan is governed under the
Constitution of 1963, as amended. The legislative power is vested in a 38-member senate and a 110-member house of
representatives; executive power is vested in a governor; and the judicial power is vested exclusively in one court of justice.
For financial reporting purposes, the State of Michigan’s reporting entity includes the “primary government” and its “component
units.” The primary government includes all funds, departments and agencies, bureaus, boards, commissions, and those
authorities that are considered an integral part of the primary government. Component units are legally separate
governmental organizations for which the State’s elected officials are financially accountable or other organizations for which
the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting
entity’s financial statements to be misleading or incomplete.
Financial accountability is defined in GASB Statement No. 14, The Financial Reporting Entity, as amended by GASB
Statement No. 61. The State is financially accountable for those entities in which the State appoints a voting majority of an
organization’s governing authority, and either is able to impose its will upon the entity or there exists a financial benefit or
burden relationship with the State. For those entities in which the State does not appoint a voting majority of the governing
authority, GASB standards require inclusion in the reporting entity if they are fiscally dependent on the State and there exists a
financial benefit or burden relationship with the State.
GASB Statement No. 39, Determining Whether Certain Organizations Are Component Units, an amendment of GASB
Statement No. 14, establishes criteria for legally separate, tax-exempt entities that should be reported as component units if
all of the criteria are met. Although the State has not identified any organizations that would qualify as direct component units
of the State by meeting all of the criteria of GASB Statement No. 39, most of the university component units described later in
this note have significant foundations that meet the criteria of GASB Statement No. 39.
Blended Component Units
The State Building Authority (SBA) is a legally separate organization that has a board appointed by the primary government
and provides services primarily to benefit the State. Therefore, SBA is reported as though it was part of the primary
government, using the blending method.
The Michigan Settlement Administration Authority (MSAA) is a legally separate organization with a three-member governing
board consisting of the State Treasurer, the State Budget Director, and one member appointed by the Governor. Since MSAA
was created to provide State funding to the retirement systems of the City of Detroit pursuant to certain requirements, it is
reported as though it was part of the primary government, using the blending method.
Discretel y Presented Component Units
These types of component units are reported in separate columns or rows in the government-wide financial statements to
emphasize that they are legally separate from the government.
The State has the ability to appoint a voting majority of each governing board and is able to impose its will upon these
discretely presented component units:
The Michigan Finance Authority provides sources of funding for loans to governmental units, school districts, and
nonpublic nonprofit institutions of higher education, healthcare corporations and facilities. The Authority also makes loans
and acquires loans made to students and their parents.
The Michigan State Housing Development Authority (MSHDA) finances loans for the construction of single and multi-family
housing and home improvement projects.
The Farm Produce Insurance Authority provides reimbursements to participating producers for losses suffered in the event
of a grain dealer’s financial failure.
The Land Bank Fast Track Authority (LBFTA) receives tax reverted properties, undertakes expedited action to clear their
titles, and then ensures the properties’ redevelopment. Executive Order 2014-8 abolished the LBFTA board of directors
and office of executive director and transferred all responsibilities and functions to the executive director of MSHDA.
Therefore, beginning in fiscal year 2015, LBFTA will be reported as a component unit of MSHDA.
2014 Comprehensive Annual Financial Report
59
Michigan
Notes to the Financial Statements
The Mackinac Bridge Authority accounts for the operation of the Mackinac Bridge.
The Mackinac Island State Park Commission operates the Mackinac Island and Michilimackinac State Parks.
The Michigan Early Childhood Investment Corporation participates with intermediate school districts to establish standards
and guidelines for early childhood development activities.
The Michigan Education Trust offers contracts, which, for actuarially determined amounts, provide plan participants with
future tuition at institutions of higher education.
The State has the ability to appoint a voting majority of each governing board and there is a financial burden/benefit
relationship between these entities and the State:
The Michigan Strategic Fund provides business enterprises with additional sources of financing.
The Michigan Economic Development Corporation manages programs to stimulate, coordinate, and advance economic
development in the State.
The following entity’s relationship with the State would be misleading if it were omitted from the State’s reporting entity:
The State Bar of Michigan is a public body corporate whose membership consists of persons licensed to practice law.
Ten of the State’s public universities are considered component units because they have boards appointed by the primary
government and there is a financial burden/benefit relationship with the State. Their balances and operating results are
included with the other discretely presented component units on the government-wide financial statements. The ten
universities included in these statements are: Central Michigan University, Eastern Michigan University, Ferris State
University, Grand Valley State University, Lake Superior State University, Michigan Technological University, Northern
Michigan University, Oakland University, Saginaw Valley State University, and Western Michigan University. Michigan State
University, the University of Michigan, and Wayne State University are not included in the State’s reporting entity because
they have separately elected governing boards and are legally separate. The State provides significant funding to support
these institutions; however, under GASB criteria, they are considered fiscally independent, special-purpose governments.
Included in the balances and operating results for most of the university component units is financial activity for fund-raising
foundations that contribute to these universities. Although the universities do not control the timing or amount of receipts from
their foundations, the majority of resources or income thereon that the foundations hold and invest are restricted to the
activities of the respective universities by the donors. Because these restricted resources held by the foundations can only be
used by, or for the benefit of, the specific universities, the foundations are considered component units of the universities and
are included in the universities’ financial statements.
Significant Transactions
The State’s significant transactions with its major discretely presented component units result primarily from providing
appropriations to the public universities, including $97.6 million to Western Michigan University.
Availability of Financial Statements
The State’s component units issue their own separately issued audited financial statements. These statements may be
obtained by directly contacting the various component units. To obtain their phone numbers, you may contact the State
Budget Office, Office of Financial Management at (517) 373-1010.
Related Organizations
The State’s Insurance Commissioner is responsible for appointing the members of the boards of the Michigan Catastrophic
Claims Association and the Michigan Property and Casualty Guaranty Association, but the State’s accountability for these
organizations does not extend beyond making the appointments.
The State’s Governor is responsible for appointing the members of the board of the Venture Michigan Fund, a private
nonprofit corporation. The State’s accountability for this organization does not extend beyond the Governor’s appointments.
The State’s Governor is responsible for appointing a majority of the members of the board of the Education Achievement
Authority established through an inter-local agreement between Eastern Michigan University and Detroit Public Schools. The
State’s accountability for this organization does not extend beyond the Governor’s appointments.
The State’s Governor is responsible for appointing the members of the board of the Michigan Health Endowment Fund, but
the State’s accountability does not extend beyond making the appointments.
2014 Comprehensive Annual Financial Report
60
Michigan
Notes to the Financial Statements
Joint Ventures
As discussed in more detail in Note 7, the State participates in two joint ventures. Their financial activities are not included in
the State’s fund financial statements, but the State’s equity interest is recorded as an asset in the Statement of Net Position.
Jointl y Governed Organizations
The State, the University of Michigan, Michigan State University, and Wayne State University appoint members of the board of
the Michigan Public Health Institute (MPHI), a nonprofit corporation. MPHI was established to plan, promote, and coordinate
health services research with a public university or a consortium of public universities in the State. The State does not appoint
a majority of the board, has no rights to the assets, and is not responsible for debts of MPHI. Therefore, the State’s
accountability for MPHI does not extend beyond making the appointments. During fiscal year 2014, the State awarded
contracts totaling $63.2 million to MPHI.
The City of Detroit, Charter County of Wayne, and the Department of Community Health of the State of Michigan appoint
members of the board of the Detroit Wayne County Health Authority (DWCHA), a public agency. The DWCHA was
established to plan, promote, and coordinate health services for at-risk population in the City of Detroit and Wayne County.
The State does not appoint a majority of the board, has no right to the assets, and is not responsible for debts of DWCHA;
therefore, the State’s accountability for DWCHA does not extend beyond making the appointments. During fiscal year 2014,
the State awarded contracts totaling $1.0 million to DWCHA.
Government-Wide and Fund Financial Statements
Government-Wide Financial Statements
The Statement of Net Position and Statement of Activities report information on all non-fiduciary activities of the primary
government and its component units. Primary government activities are distinguished between governmental and business-
type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non-
exchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or
services.
The Statement of Net Position presents the reporting entity’s non-fiduciary assets, deferred outflows of resources, liabilities,
deferred inflows of resources, and net position. Net position is reported in three categories:
Net investment in capital assets consists of capital assets, net of accumulated depreciation and reduced by outstanding
balances for bonds, notes, and other debt that are attributed to the acquisition, construction, or improvement of those
assets.
Restricted net position results when constraints placed on the use of net position are either externally imposed by
creditors, grantors, contributors, and the like, or imposed by law through constitutional provisions or enabling legislation.
Unrestricted net position consists of net position that does not meet the definition of the two preceding categories.
Unrestricted net position often has constraints on resources that are imposed by management, but can be removed or
modified.
The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset
by program revenues. Direct expenses are those that are clearly identifiable within a specific function. Program revenues
include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges
provided by a given function, and 2) grants and contributions that are restricted to meeting the operational or capital
requirements of a particular function. Taxes and other items not meeting the definition of program revenues are instead
reported as general revenue.
Fund Financial Statements
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the
latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual
proprietary funds are reported as separate columns in the fund financial statements, with non-major funds being combined
into a single column.
Measurement Focus, Basis of Accounting, and Financial Statement Presentation
Measurement Focus and Basis of Accounting
The government-wide financial statements are reported using the economic resources measurement focus and the accrual
basis of accounting, as are the proprietary and fiduciary fund financial statements except for agency funds which have no
measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless
of the timing of cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and
similar items are recognized as revenues as soon as all eligibility requirements imposed by the provider have been met.
2014 Comprehensive Annual Financial Report
61
Michigan
Notes to the Financial Statements
Governmental fund financial statements are reported using the current financial resources measurement focus and the
modified accrual basis of accounting. Revenues are recognized as they become susceptible to accrual; generally when they
are both measurable and available. Revenues are considered to be available when they are collected within the current
period or soon enough thereafter to pay liabilities of the current period, generally within 60 days. Significant revenues
susceptible to accrual include tax revenues and federal grants. Revenues that the State earns by incurring obligations are
recognized in the period when all applicable eligibility requirements have been met.
Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, expenditures related
to debt service, compensated absences, and claims and judgments, are recorded only when payment is due and payable.
Financial Statement Presentation
The State reports the following major governmental funds:
The General Fund is the State’s primary operating fund. It accounts for all financial resources except those required to be
accounted for in another fund.
The School Aid Fund’s purpose is to aid in the support of the public schools and the intermediate school districts. The fund
receives State revenues restricted to local school programs, including the state education (property) tax, portions of the
sales and personal income taxes, and State Lottery Fund earnings.
The State reports the following major enterprise funds:
The State Lottery Fund accounts for the operations of the State’s lottery, bingo, and charitable game operations.
The Michigan Unemployment Compensation Funds receive contributions from employers and provide benefits to eligible
unemployed workers.
Additionally, the State reports the following fund types:
Governmental Fund Types:
Special Revenue Funds – account for specific revenue sources that are restricted or committed to expenditure for
specified purposes other than debt service or capital projects.
Debt Service Funds – account for the accumulation of resources for, and the payment of, general long-term debt principal
and interest.
Capital Projects Funds – account for resources used for capital outlays, including the acquisition or construction of capital
facilities and other capital assets. Capital projects funds exclude capital-related outflows financed by proprietary or trust
funds.
Permanent Funds – report resources that are legally restricted to the extent that only earnings, and not principal, may be
used for purposes that benefit the government or its citizenry.
Proprietary Fund Types:
Enterprise Funds – report the activities for which fees are charged to external users for goods or services, such as the
State’s liquor sales. This fund type is also used when the activity is financed with debt that is secured by a pledge of the
net revenues from the fees.
Internal Service Funds – provide goods or services primarily to other agencies or funds of the State, rather than to the
general public. These goods and services include prisoner-built office furnishings; motor pool services; printing,
reproduction and mailing services; information technology; risk management; and health-related fringe benefits. In the
government-wide financial statements, internal service funds are included with governmental activities.
Fiduciary Fund Types:
Pension (and Other Employee Benefit) Trust Funds – report resources that are required to be held in trust for the
members and beneficiaries of the State’s defined benefit pension plans, defined contribution plans, and other
postemployment benefit plans.
Private Purpose Trust Funds – report resources of all other trust arrangements in which principal and income benefit
individuals, private organizations, or other governments. Examples include the State’s Escheats fund, gifts to the State,
and others.
Agency Funds – report assets and liabilities for deposits and investments entrusted to the State as an agent for others.
2014 Comprehensive Annual Financial Report
62
Michigan
Notes to the Financial Statements
Fiscal Year-Ends
All funds and discretely presented component units are reported using fiscal years which end on September 30, except for the
MSHDA and the ten State universities, which utilize J une 30 year-ends and the Farm Produce Insurance Authority which has
a December 31 year-end.
Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position/Fund Balance
Cash and Cash Equivalents
On the Statement of Cash Flows, the amount reported as “Cash and cash equivalents” is equal to the total of the amounts
reported on the Statement of Net Position as “Cash” and “Equity in Common Cash,” less the amount of “Warrants
outstanding.”
Cash
Cash reported on the Statement of Net Position and the Balance Sheet consists of petty cash, undeposited receipts, deposits
in transit to the Common Cash pool, and cash equivalents such as short-term investments with original maturities of less than
three months that are used for cash management, rather than investing activities.
Equity in Common Cash
The State Treasurer maintains centralized management of most State cash resources (not including component units). From
the perspective of the various State funds, the pool functions as both a cash management pool and a demand deposit
account. The operations and investments of the Common Cash pool are described in Note 5.
Taxes Receivable
Taxes receivable represent amounts due to the State at September 30, which will be collected sometime in the future. In the
government-wide financial statements, a corresponding amount is recorded as revenue. In the governmental fund financial
statements, the portion considered “available” (i.e., received by the State within approximately 60 days after year-end) is
recorded as revenue; the remainder is recorded as deferred inflows of resources. Application of the measurability and
availability criteria regarding taxes is described in Note 6.
Amounts Due From Federal Agencies
For most federally funded programs, revenue is accrued in the same period as related obligations are recorded. In certain
programs financed entirely by the federal government, expenditures and related revenues are recognized only to the extent of
billings received by fiscal year-end. This treatment, which is generally limited to certain programs within the Department of
Education, understates both assets and liabilities, and expenditures and revenues; however, there is no impact on net position
or fund balance.
Inventories
Inventories are valued at cost, primarily using the first-in, first-out flow method. Expenditures (governmental funds) and
expenses (proprietary funds) are recognized using the consumption method (i.e., when used or sold).
Investments
Generally, investments are reported at fair value, consistent with the provisions of GASB Statement No. 31, Accounting and
Financial Reporting for Certain Investments and for External Investment Pools. Short-term, highly liquid debt instruments
including commercial paper, banker’s acceptances, and U.S. Treasury obligations are reported at amortized cost. Additional
disclosures describing investments are provided in Note 8.
Security Lending Collateral
Securities on loan for cash collateral are reported in the Statement of Net Position. Liabilities resulting from the security
lending transactions are also reported. Additional disclosures describing security lending transactions are provided in Note 8.
Other Assets
Other assets include receivables, amounts held in escrow, and other types of assets not reported on other lines.
Mortgages and Loans Receivable
Mortgages and loans receivable are reported net of unamortized premiums, discounts, and allowances for possible losses.
2014 Comprehensive Annual Financial Report
63
Michigan
Notes to the Financial Statements
Capital Assets
Capital assets, which include land, buildings, equipment, intangibles, and infrastructure assets (i.e., roads, bridges, ramps,
and similar items), are reported in the government-wide financial statements and applicable fund financial statements. Capital
assets that are used for governmental activities are only reported in the government-wide financial statements. Capital assets
are reported at historical cost or, if donated, at the estimated fair market value at the date of acquisition. In some instances,
capital asset historical costs were not available; therefore, the costs of these assets at the dates of acquisitions have been
estimated.
Interest incurred during construction is only capitalized in proprietary funds. Most capital assets are depreciated over their
useful lives, using the straight-line depreciation method. However, the State’s significant infrastructure assets utilize an
alternative accounting treatment in which costs to maintain and preserve these assets are expensed and no depreciation
expense is recorded. This approach is discussed further in the Required Supplementary Information portion of this report.
Additional disclosures related to capital assets and assets acquired through capital leases are provided in Notes 9 and 12,
respectively.
Deferred Outflows of Resources
Deferred outflows of resources are defined as a consumption of net assets by the government that is applicable to a future
reporting period; they increase net position, similar to assets. Note 27 provides further detail on the components of deferred
outflows of resources.
Warrants Outstanding
Warrants outstanding represent drafts issued against the State Treasurer’s Common Cash pool, which have not yet cleared.
These are similar to outstanding checks; however, the issuing funds’ balances in the pool are not reduced until warrants are
redeemed.
Income Tax Refunds Payable
The amount of collected or accrued personal income tax revenues that will be refunded is estimated and accrued as a
General Fund liability. Note 16 more fully describes this liability.
Prize Awards Payable
The State Lottery Fund makes long-term prize awards for certain games, most notable the lotto games. At September 30,
2014, long-term prize awards of $280.4 million were reported at a present value of $187.5 million, using discount rates ranging
from 3.5% to 7.0%.
Non-installment prize awards and the portion of long-term awards payable during the next fiscal year, totaling $98.9 million,
are included with “Accounts payable and other liabilities” on the Statement of Net Position.
Unearned Revenue
Unearned revenue is recognized when cash, receivables, or other assets are received prior to their being earned.
Long-Term Liabilities
In the government-wide financial statements and proprietary fund financial statements, long-term debt and other long-term
obligations are reported as liabilities. Bond premiums and discounts are deferred and amortized over the life of the bonds
using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance
costs, during the current period. The face amount of the debt issued is reported as other financing sources. Premiums
received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other
financing uses. Issuance costs, whether or not withheld from the actual debt proceeds, are reported as debt service
expenditures.
Long-term liabilities are more fully described in Notes 13, 14, and 15.
Compensated Absences
In the government-wide financial statements and proprietary fund financial statements, compensated absences are reported
as liabilities as required by GASB.
Employees accumulate annual leave (vacation) balances to maximum amounts ranging from 296 to 356 hours. The
maximum accumulation that may be paid off is 40 hours less than the total hours that may be accumulated. Employees
receive a 100% termination payment upon separation based upon their final rate of pay. The liability for annual leave is
recorded at the maximum accumulation amounts in accordance with GAAP, as it is probable that the State will compensate
employees through paid time off, for the hours earned in excess of the total that may be paid off. The liability for annual leave
is valued at 100% of the balance plus the State’s share of social security and retirement contributions.
2014 Comprehensive Annual Financial Report
64
Michigan
Notes to the Financial Statements
Employee sick leave balances accumulate without limit. Termination payments are made only upon separation from State
service and only to employees hired prior to October 1, 1980. Payments at retirement or death are based on 50% of the
employee’s sick leave accumulation, times their last rate of pay. When separating for any other reason, employees are paid a
percentage of their unused sick leave that increases from 0 to 50%, depending upon the balance of their sick leave hours.
Sick leave is valued at 0 to 50% plus the State’s share of social security contributions, based on the pay rates in effect as of
September 30, 2014.
The State instituted a banked leave time program in fiscal year 2004 whereby eligible employees work a regular schedule but
receive pay for a reduced number of hours. The banked leave time program was utilized in fiscal years 2005, 2006, and
2010. The unpaid hours worked accrue to a banked leave time account. Upon an employee’s separation, death, or
retirement from State service, unused banked leave time hours shall be contributed by the State to the employee’s account
within the State’s 401k plans, and if applicable, to the State’s 457 plans. The banked leave liability is valued at the pay rates
in effect as of September 30, 2014.
In the governmental fund financial statements, liabilities for compensated absences are accrued when they are considered
“due and payable” and recorded in the fund only for separations or transfers that occur before year-end.
Deferred Inflows of Resources
Deferred inflows of resources are defined as an acquisition of net assets by the government that is applicable to a future
period; they decrease net position, similar to liabilities. Note 27 provides further detail on the components of deferred inflows
of resources.
Net Position/Fund Balance
The net amount of assets, deferred outflows of resources, liabilities, and deferred inflows of resources is “Net Position” on the
government-wide, proprietary, and fiduciary fund financial statements, and “Fund Balance” on governmental fund financial
statements.
Fund Balance Classifications
In the fund financial statements, governmental funds report fund balance classifications that comprise a hierarchy based
primarily on the extent to which the State is bound to honor constraints on the specific purposes for which amounts in those
funds can be spent.
Nonspendable fund balance includes amounts that cannot be spent because they are either not in spendable form, such as
inventories, prepaids, and long-term receivables, or legally or contractually required to be maintained intact.
Restricted fund balance includes amounts that are restricted when constraints placed on the use of the resources are either
externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or imposed by law through
constitutional provisions or enabling legislation.
Committed fund balance includes amounts that can only be used for specific purposes pursuant to constraints imposed by
formal action of the State Legislature through legislation passed into law.
Assigned fund balance includes amounts that are constrained by the State’s intent to be used for specific purposes, but are
neither restricted nor committed. Assignments of fund balance are created by the executive branch when criteria established
by the State Budget Office are met. In governmental funds other than the General Fund, assigned fund balance also
represents the remaining amount that is not restricted or committed.
Unassigned fund balance is the residual classification for the General Fund and represents fund balance that has not been
assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund.
Unassigned fund balance also includes negative residual balances in other funds.
The State’s policy is that restricted amounts are spent first when an expenditure is incurred for purposes for which both
restricted or unrestricted (committed, assigned, or unassigned) resources are available. When expenditures are incurred for
which only unrestricted resources are available, the intent is to use committed resources first, then assigned. Unassigned
amounts are generally used only after the other resources have been used.
Revenues and Expenditures/Expenses
Government-Wide Financial Statements
In the government-wide Statement of Activities, revenues and expenses are segregated by activity (governmental or
business-type), then further by function (i.e., general government, education, transportation, etc.). Additionally, revenues are
classified between program and general revenues. Program revenues include 1) charges to customers or applicants for
goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions.
Internally dedicated resources are reported as general revenues, rather than as program revenue. General revenues include
all taxes. Certain indirect costs are included in the program expenses reported for individual functions.
2014 Comprehensive Annual Financial Report
65
Michigan
Notes to the Financial Statements
Interest on Long-Term Debt
Interest charges on the State’s general long-term liabilities do not qualify as a direct expense of a function and are reported on
this line, unless the borrowing is essential to the creation or continuing existence of a program. During fiscal year 2014,
interest charges on general long-term liabilities totaling $109.8 million were reported as functional expenses.
Fund Financial Statements
In the governmental fund financial statements, revenues are reported by sources. For budgetary control purposes, revenues
are further classified as either “general purpose” or “restricted.” General purpose revenues are available to fund any activity
accounted for in the fund. Restricted revenues are, either by State law or by outside restriction (i.e., federal grants), available
only for specified purposes. When both general purpose and restricted funds are available for use, it is the State’s policy to
use restricted resources first.
In the governmental fund financial statements, expenditures are reported by character: “Current,” “Capital outlay,”
“Intergovernmental-revenue sharing,” or “Debt service.” Current expenditures are subclassified by function and are for items
such as salaries, grants, supplies, and services. Tax expenditures, which represent income tax credit programs that are in
substance grants, are also reported as current expenditures. These are described in more detail in Note 16.
Capital outlay includes expenditures for capital assets. Intergovernmental-revenue sharing accounts for the distribution of
certain tax revenues that are shared with local units based upon constitutional and statutory requirements. Debt service
includes both interest and principal outlays related to bonds and payments on capitalized leases.
Revenues and expenses of proprietary funds are classified as operating or nonoperating and are subclassified by object (i.e.,
salaries, depreciation, and purchases for resale). Operating revenues and expenses generally result from providing services
and producing and delivering goods. All other revenues and expenses are reported as nonoperating.
Other Financing Sources
These additions to governmental fund balances in the fund financial statements include resources and financing provided by
bond proceeds, capital leases, and transfers from other funds.
Reimbursements
Reimbursements result when a fund originally making a disbursement receives resources from another fund to which the
expenditure/expense is more properly attributable. For example, the State uses this method when the administrative costs of
proprietary funds, discretely presented component units, or pension (and other employee benefit) trust funds are appropriated
in the General Fund.
Interfund Services Provided and Used
When a sale or purchase of program-related goods and/or services between funds occurs, for a price approximating their
external exchange value, the seller reports revenue and the purchaser expenditure or expense, depending upon the fund
type.
Transactions between the primary government and a discretely presented component unit are generally classified as
revenues and expenses, unless they represent repayments of loans or similar activities.
Other Financing Uses
These reductions of governmental fund resources in fund financial statements normally result from transfers to other funds.
Interfund Activity and Balances
Interfund Activity
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements.
Exceptions to this rule are 1) activities between funds reported as governmental activities and funds reported as business-type
activities (examples include the transfers of profits from the Liquor Purchase Revolving Fund to the General Fund and the
State Lottery Fund to the School Aid Fund) and 2) activities between funds that are reported in different functional categories
in either the governmental or business-type activities column (examples include activities between the Department of Treasury
[general government line] and the Department of Education [education line]). Elimination of these activities would distort the
direct costs and program revenues for the functions concerned.
In the fund financial statements, transfers represent flows of assets (such as goods or cash) without equivalent flows of assets
in return or a requirement for repayment. In addition, transfers are recorded when a fund receiving revenue provides it to the
fund which expends the resources. An example is gas taxes collected by the Department of Transportation but expended by
the Department of Natural Resources.
Interfund Balances
Interfund receivables and payables have been eliminated from the Statement of Net Position, except for the residual amounts
due between governmental and business-type activities.
2014 Comprehensive Annual Financial Report
66
Michigan
Notes to the Financial Statements
NOTE 2 – FUNDS AND COMPONENT UNITS BY CLASSIFICATION
The following table lists all of the funds and component units whose balances are reflected in this financial report.
Operating funds which are subject to annual appropriation and for which budget and actual schedules are included in this report
are identified by an “*”. For each fund or component unit listed, the page number of the first financial statement for that fund or
component unit is shown in parenthesis.
PRIMARY GOVERNMENT:
MAJOR FUNDS
Governmental:
General Fund* (p. 38)
School Aid Fund* (p. 38)
Proprietary:
State Lottery Fund (p. 44)
Michigan Unemployment Compensation Funds (p. 44)
NON-MAJOR FUNDS
Governmental:
Special Revenue Funds:
Transportation Related:
Michigan Transportation Fund* (p. 140)
Comprehensive Transportation Fund* (p. 140)
Conservation, Environment, and Recreation Related:
Michigan Conservation and Recreation Legacy
Fund* (p. 146)
Michigan Game and Fish Protection Trust Fund (p. 146)
Michigan Nongame Fish and Wildlife Trust Fund* (p. 147)
Forest Development Fund* (p. 147)
Bottle Deposits Fund (p. 147)
Debt Service Funds:
Combined State Trunkline Bond and Interest
Redemption Fund (p. 172)
Combined Comprehensive Transportation Bond and
Interest Redemption Fund (p. 172)
Recreation and Environmental Protection Bond
Redemption Fund (p. 172)
School Loan Bond Redemption Fund (p. 173)
State Building Authority (p. 173)
Proprietary:
Enterprise Funds:
Attorney Discipline System (p.192)
Liquor Purchase Revolving Fund (p.192)
Regulatory and Administrative Related:
Homeowner Construction Lien Recovery Fund* (p. 154)
Michigan Employment Security Act – Administration
Fund* (p. 154)
Safety Education and Training Fund* (p. 154)
Second Injury Fund (p. 154)
Self-Insurers’ Security Fund (p. 154)
Silicosis, Dust Disease, and Logging Industry
Compensation Fund (p. 155)
State Construction Code Fund* (p. 155)
Utility Consumer Representation Fund (p. 155)
Unemployment Obligation Trust Fund (p. 155)
State Casino Gaming Fund* (p. 155)
Other State Funds:
21
st
Century J obs Trust Fund* (p. 164)
Michigan Merit Award Trust Fund* (p. 164)
Michigan Settlement Administration Authority (p. 164)
Children’s Trust Fund* (p. 165)
Military Family Relief Fund* (p. 165)
Miscellaneous Special Revenue Funds (p. 165)
Capital Project Funds:
State Trunkline Fund* (p. 178)
State Aeronautics Fund* (p. 178)
Combined State Trunkline Bond Proceeds Fund (p. 178)
Combined Comprehensive Transportation Bond Proceeds
Fund (p. 178)
Transportation Related Trust Funds (p. 179)
Combined Recreation Bond Fund (p. 179)
State Building Authority (p. 179)
Advance Financing Funds (p. 179)
Permanent Funds:
Michigan Natural Resources Trust Fund* (p. 186)
Michigan State Parks Endowment Fund* (p. 186)
Michigan Veterans’ Trust Fund* (p. 186)
Internal Service Funds:
Correctional Industries Revolving Fund (p. 196)
State Sponsored Group Insurance Fund (p. 196)
Information Technology Fund (p. 196)
Office Services Revolving Fund (p. 197)
Motor Transport Fund (p. 197)
Risk Management Fund (p. 197)
2014 Comprehensive Annual Financial Report
67
Michigan
Notes to the Financial Statements
Fiduciary:
Pension (and other employee benefit) Trust Funds:
State of Michigan Deferred Compensation Funds (p. 204)
Legislative Pension Benefits Fund (p. 204)
Legislative Other Postemployment Benefits Fund (p. 204)
State Police Pension Benefits Fund (p. 204)
State Police Other Postemployment Benefits Fund (p. 205)
State Employees’ Pension Benefits Fund (p. 205)
State Employees’ Other Postemployment Benefits
Fund (p. 205)
Public School Employees’ Pension Benefits Fund (p. 205)
Public School Employees’ Other Postemployment
Benefits Fund (p. 205)
J udges’ Pension Benefits Fund (p. 205)
J udges’ Other Postemployment Benefits Fund (p. 206)
State of Michigan Defined Contribution Retirement
Fund (p. 206)
DISCRETELY PRESENTED COMPONENT UNITS:
Authorities:
Major Funds:
Michigan Finance Authority (p. 54)
Michigan State Housing Development Authority (p. 54)
Michigan Strategic Fund (p. 54)
Non-Major Funds:
Farm Produce Insurance Authority (p. 220)
Land Bank Fast Track Authority (p. 220)
Mackinac Bridge Authority (p. 220)
Mackinac Island State Park Commission (p. 220)
Michigan Early Childhood Investment Corporation (p. 221)
Michigan Economic Development Corporation (p. 221)
Michigan Education Trust (p. 221)
State Bar of Michigan (p. 221)
Private Purpose Trust Funds:
Michigan Education Savings Program (p. 212)
Escheats Fund (p. 212)
Gifts, Bequests, and Deposits Investment Fund (p. 212)
Hospital Patients’ Trust Fund (p. 212)
Agency Funds:
Environmental Quality Deposits Fund (p. 215)
Insurance Carrier Deposits Fund (p. 215)
Child Support Collection Fund (p. 215)
Social Welfare Fund (p. 215)
State Universities (1):
Major Funds:
Western Michigan University (p. 55)
Non-Major Funds:
Central Michigan University (p. 226)
Eastern Michigan University (p. 226)
Ferris State University (p. 226)
Grand Valley State University (p. 226)
Lake Superior State University (p. 227)
Michigan Technological University (p. 227)
Northern Michigan University (p. 227)
Oakland University (p. 227)
Saginaw Valley State University (p. 227)
(1) Michigan State University, the University of Michigan, and Wayne State University are not included in the State’s reporting entity
because they have separately elected governing boards and are legally separate from the State. The State provides significant
funding to support these institutions; however, under GASB Statement No. 14, The Financial Reporting Entity, as amended by
GASB Statement No. 61, criteria, they are considered fiscally independent special-purpose governments.
NOTE 3 – BUDGETING, BUDGETARY CONTROL, AND LEGAL COMPLIANCE
Major Constitutional and Statutory Provisions
Balanced Budget Requirements
Article 5 of the State Constitution mandates that the executive budget recommend spending limits for operating funds to the
Legislature that are within available resources. Compliance with this is demonstrated in the executive budget and budget bills
for each fiscal year.
Article 4 of the State Constitution mandates the Legislature to enact appropriations for each operating fund that do not exceed
that fund’s revenue estimates, including beginning fund balance.
Compliance with this requirement is demonstrated in schedules included in the annual appropriation acts, usually the “General
Government” appropriation act. When it appears that revenue will fall below the estimates on which the appropriations are
based, the Governor is required to recommend spending reductions as necessary to avoid a year-end deficit.
2014 Comprehensive Annual Financial Report
68
Michigan
Notes to the Financial Statements
Local Spending Requirements
Article 9, Section 30, of the State Constitution requires that State spending to, or on behalf of, local units of government shall
not fall below a specified percentage of total State spending. The percentage, recalculated effective with fiscal year 1993, is
48.97%.
Final calculations establishing the State’s compliance with this constitutional provision for fiscal year 2014 are not yet complete.
For fiscal year 2013, the most recent year for which final calculations are available, the proportion of total State spending paid
to local units of government was determined to be 56.27%, reflecting payments that exceeded the minimum required by $2.0
billion. The State expects that payments to local units of government will exceed the minimum requirement for fiscal year 2014.
Revenue Limits
Article 9, Section 26, of the State Constitution restricts State revenues to a ceiling that is based upon revenues as a proportion
of total personal income for the State. The base year ratio, determined in fiscal year 1979, in relation to calendar year 1977
personal income, is 9.49%. Both the constitutional language and implementing statutes provide for other adjustments to the
revenue and personal income calculations. If revenues exceed the limit by 1% or more, the amount in excess must be
refunded to personal income tax payers and payers of the State’s Michigan Business Tax. If the limit is exceeded by an
amount less than 1%, the excess may be deposited into the State’s Budget Stabilization Fund. The calculations determining
the State’s compliance with this constitutional provision for fiscal year 2014 are not final. For fiscal year 2013, the most recent
year for which final calculations are available, total State revenues subject to this limitation were beneath the constitutional limit
by $6.5 billion. The State expects that total State revenues subject to the limitation will not exceed the limit for fiscal year 2014.
Budget Stabilization Fund
The Counter-Cyclical Budget and Economic Stabilization Fund (“Budget Stabilization Fund” or “Rainy Day Fund”) was created
in 1977 to assist in stabilizing revenue during periods of economic recession. This fund currently operates under Sections
18.1351 - 18.1359 of the Michigan Compiled Laws, as amended. In general, the law requires payments into the fund when real
economic growth exceeds 2% and allows withdrawals from the fund when real economic growth is less than 0%. Funds can
also be withdrawn when the State’s unemployment rate exceeds 8% or upon appropriation to finance capital outlay or other
projects, or for other purposes designated by the Legislature. The Counter-Cyclical Budget and Economic Stabilization Fund is
accounted for as a subfund of the General Fund where its fund balance is committed.
The following table summarizes the transactions for the fund at September 30 (in millions):
Beginning committed fund balance $ 505.6
Interest income 0.4
Deposits 75.0
Withdrawals (194.8)
Ending committed fund balance $ 386.2
The withdrawal during the year represents the transfer of funds to the Michigan Settlement Administration Authority to support
the Detroit bankruptcy settlement. That withdrawal will be repaid to the fund in the amount of $17.5 million annually from
tobacco settlement funds.
School Aid Fund Budgetary Provisions
The School Aid Stabilization Fund is a separate account within the School Aid Fund. Any unexpended or unencumbered state
school aid fund revenue is deposited into this fund at the end of each fiscal year. The amounts accumulated in this fund are
carried forward and shall be expended only for purposes for which state school aid money may be expended. The School Aid
Stabilization Fund ending restricted fund balance is $455.1 million for fiscal year 2014.
Budgetary Overexpenditures
In the event that expenditures exceed authorization during a year, the department must request a supplemental appropriation
for the amount overspent, if that amount exceeds their lapses or if they expect to make payments from prior year authorization
in the next fiscal year. There were the following line-item overexpenditures of State departments incurred during the year,
which represent noncompliance with State budget laws (in millions):
Community Health $ 4.9
$ 4.9 General Fund Total
General Fund
2014 Comprehensive Annual Financial Report
69
Michigan
Notes to the Financial Statements
NOTE 4 – ACCOUNTING CHANGES AND RESTATEMENTS
Implementation of GASB Statement No. 65
During fiscal year 2014, the State implemented Governmental Accounting Standards Board (GASB) Statement No. 65, Items
Previously Reported as Assets and Liabilities, which establishes accounting and financial reporting standards that reclassify,
as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and
liabilities. Note 27 provides further detail on the components of deferred outflows of resources and deferred inflows of
resources as reported on the government-wide Statement of Net Position and in the governmental funds.
GASB Statement No. 65 also recognizes, as outflows of resources or inflows of resources, certain items that were previously
reported as assets and liabilities. As a result, beginning net position for governmental activities in the government-wide
statements was decreased by $34.7 million for certain bond issuance costs that were previously classified as assets.
The implementation of GASB Statement No. 65 also resulted in a decrease in beginning net position for the discretely
presented component units totaling $52.4 million, including a restatement of $44.5 million for the Michigan Finance Authority.
Capital Assets and Capital Leases
Beginning balances for capital assets and capital lease liabilities were restated to correct prior period errors as follows:
equipment and the related accumulated depreciation were increased by $12.8 million and $3.9 million, respectively, and the
capital lease liability was increased by $10.3 million. This restatement resulted in a decrease in beginning net investment in
capital assets of $1.4 million in the government-wide statements.
General Fund and School Aid Fund
Beginning fund balance was decreased in the General Fund and increased in the School Aid Fund by $45.3 million for a prior
period adjustment.
Michigan Education Savings Program
The Michigan Education Savings Program, a private purpose trust fund, implemented an accounting change in fiscal year
2014 that excluded transfers and exchanges within the Program that were previously included in additions and deductions in
the Statement of Changes in Fiduciary Net Position. The amount excluded in fiscal year 2014 was approximately $1.6 billion
and had no impact on net position.
Discretely Presented Component Units
Beginning net position was increased for Central Michigan University by $5.7 million to reflect the inclusion of a component
unit not previously reported. Other prior period adjustments resulted in a net increase of $1.0 million for the discretely
presented component units.
NOTE 5 – TREASURER’S COMMON CASH
General Accounting Policies
The State Treasurer (Treasurer) manages the State’s Common Cash pool, which is used by most State funds. The pooling of
cash allows the Treasurer to invest monies not needed to pay immediate obligations so that investment earnings on available
cash are maximized. Investments of the pool are not segregated by fund; rather, each contributing fund’s balance is treated
as equity in the pool, and presented in this report as “Equity in common cash.” Many funds, including pension (and other
employee benefit) trust funds, use their equity in the pool as a short-term investment vehicle.
All negative balances in the pool are reclassified at year-end as interfund liabilities. If the negative balance is considered long-
term, the reclassification is recorded as an advance.
Statute or administrative policy determines whether a particular fund receives or pays interest on its balances in the pool. If a
fund does not receive or pay interest, the General Fund receives or absorbs such amounts. The Treasurer has placed a
“cap,” or limit, on the amount of interest that can be earned by some State funds. These “capped” funds are limited to a
maximum rate determined by the Treasurer. For the remaining “uncapped” funds, earnings on positive balances and charges
on negative balances are allocated quarterly based upon the average daily balances of the various funds and the average
investment earnings rate for the quarter. Accrued earnings of the pool are recorded as assets, with the accrual allocated to
the various funds’ equity in the pool.
Interest revenues on positive balances and interest charges on negative balances are reflected as revenues or expenditures/
expenses of each of the participating funds.
2014 Comprehensive Annual Financial Report
70
Michigan
Notes to the Financial Statements
Investments and Deposits
The investment authority for the Common Cash pool is found in Sections 21.141 - 21.147 of the Michigan Compiled Laws
(MCL). The Treasurer may invest surplus funds belonging to the State in bonds, notes, and other evidences of indebtedness
of the United States Government and its agencies and in prime commercial paper. Certificates of deposit are permitted in
financial institutions whose principal office is located in the State.
The Treasurer invests excess cash in short-term investments or cash equivalents. The law does not prohibit the Treasurer
from entering into repurchase agreements; however, the Treasurer did not use these agreements in managing the pool in
fiscal year 2014.
Statutes provide for certain special State investment programs for which the General Fund is credited (charged) for earnings
in excess of (under) those achieved by regular pool investments. To date, these programs have not resulted in any principal
losses.
Emergency Financial Assistance Loan Program: This program provides for emergency loans to local units of government,
and is the most significant of the special investment programs. The Emergency Financial Assistance Loan Board, established
by MCL Section 141.932, administers the program.
Loan authorization limits are established in MCL Section 141.933. For the period beginning October 1, 2011, and ending on
September 30, 2018, the board may authorize loans to municipalities other than school districts totaling up to a combined
$35.0 million, and to school districts totaling up to a combine $50.0 million; loans to a single municipality under each
respective subdivision shall not total more than $20.0 million of the applicable cap. For fiscal years beginning after October 1,
2018, the board may authorize loans to municipalities other than school districts that total up to $10.0 million in any given
fiscal year, but a loan to a single municipality shall not exceed $4.0 million in that fiscal year.
In fiscal year 2000, the Emergency Financial Assistance Loan Board was authorized to approve the lending of up to $159.9
million to Wayne County to finance the payment of certain obligations to the State. The outstanding balance at September 30,
2014, was $54.7 million. The interest rate is reset J uly 1 of each year in accordance with the loan agreement. Effective
November 1, 2009, the Wayne County emergency loan was reclassified from an interest-bearing loan to a zero percent loan.
The change in interest terms for the loan will be in effect until the debt obligations for the Detroit Regional Convention Facility
Authority are retired, or 2039, whichever comes first. Loan repayments by the County are supported by provisions of the loan
agreement and legislation that pledge the County’s share of a portion of the State taxes collected on cigarette sales. There
were no principal repayments made on the loan in fiscal year 2014.
Assets and equities of the Common Cash pool as of September 30 were as follows (in millions):
Assets
Cash on hand $ -
Demand deposits 2,599.7
Time deposits - regular -
Prime commercial paper - at cost 2,209.5
Interest receivable 0.6
Emergency loans to local units - at cost 124.7
Total assets $ 4,934.6
Equities
Fund equities (net) in common cash (1):
Governmental activities $ 3,739.3
Business-type activities 139.0
Fiduciary funds 516.8
Discretely presented component units 539.4
Net fund equities $ 4,934.6
(1) Negative equity balances in the pool are reclassified at year-end as interfund receivables and liabilities. Current balances
are included with “Amounts due from other funds” and “Amounts due to other funds” and long-term amounts are classified
as interfund advances. Note 18 summarizes interfund receivables and liabilities.
The following paragraphs provide disclosures about deposits and investments of the Common Cash pool, as required by
Governmental Accounting Standards Board (GASB) Statement No. 3, Deposits with Financial Institutions, Investments
(including Repurchase Agreements), and Reverse Repurchase Agreements as amended by GASB Statement No. 40, Deposit
and Investment Risk Disclosures. Please see Note 8 for information about deposits and investments that are not part of the
Common Cash pool.
2014 Comprehensive Annual Financial Report
71
Michigan
Notes to the Financial Statements
Common Cash Deposits
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the State’s
deposits may not be recovered.
Deposits are exposed to custodial credit risk if they are not covered by depository insurance and the deposits are:
Uncollateralized
Collateralized with securities held by the pledging financial institution, or
Collateralized with securities held by the pledging financial institution’s trust department or agent but not in the depositor-
government’s name.
The Treasurer’s policy requires the following criteria to lessen custodial credit risk: all financial institutions holding the State’s
money must pledge collateral equal to the amount of the account balance for all demand and time deposits, to secure the
State’s funds; a bank, savings and loan association, or credit union holding State funds must be organized under the laws of
Michigan or federal law and maintain a principal office or branch office in the State of Michigan; no deposit in any financial
organization may be in excess of 50% of the net worth of the organization.
At September 30, 2014, the carrying amount of deposits, including time and demand deposits, was $2.6 billion. The deposits
were reflected in the accounts of the banks at $2.6 billion. Of the bank balance, $5.0 million was covered by federal
depository insurance and $2.6 billion was collateralized with securities held by the State’s agent in the State’s name. There
were no demand deposits exposed to custodial credit risk that were uninsured and uncollateralized. Compensating balances
kept in demand deposit accounts to avoid service charges totaled $1.7 billion at September 30, 2014.
Foreign Currency Risk
Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of deposits.
MCL Section 487.714 requires State deposits be held in a financial institution which maintains a principal office or branch
office located in the State. The State had no Common Cash deposits subject to foreign currency risk at September 30, 2014.
Common Cash Investments
Types of Investments
Common Cash investments include prime commercial paper, certificates of deposit, and emergency municipal loans.
Risk
In accordance with GASB Statement No. 40, investments also require certain disclosures regarding policies and practices with
respect to the risks associated with them. Custodial credit risk, credit risk, and interest rate risk are discussed in the following
paragraphs.
Custodial Credit Risk
Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty, the State will not be able to
recover the value of the investment or collateral securities that are in the possession of an outside party.
Investment securities are exposed to custodial credit risk if the securities are uninsured, are not registered in the name of the
government, and are held by either:
The counterparty, or
The counterparty’s trust department or agent but not in the government’s name.
The Treasurer does not have an investment policy for managing custodial credit risk. At September 30, 2014, Common Cash
investments were not exposed to custodial credit risk.
Credit Risk
Credit risk is the risk that an issuer or another counterparty to an investment will not fulfill its obligations.
Prime commercial paper investments must be rated A-1 or P-1 at the time of purchase as rated by the two major rating
services: Standard and Poor’s (A-1), and Moody’s (P-1). Borrowers must have at least $400.0 million in commercial paper
outstanding, and the Treasurer may not invest in more than 10% of a borrower’s outstanding debt. The investments are
further limited to $200.0 million in any borrower, unless the borrower has an A-1+rating, in which case the investment is not to
exceed $300.0 million.
2014 Comprehensive Annual Financial Report
72
Michigan
Notes to the Financial Statements
Emergency municipal loans are evidenced by unrated notes held by the State in the State’s name. At September 30, 2014,
prime commercial paper investments were rated at A-1 or P-1.
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment.
The Treasurer’s policy states that cash equivalents are invested in short-term fixed income securities with an average
weighted maturity of less than one year to provide liquidity and safety of principal from capital market and default risk. At
September 30, 2014, the fair value of cash equivalents was $2.2 billion; the weighted average maturity was 34 days.
The Treasurer does not have a policy for controlling interest rate risk regarding the Common Cash special loan programs
described earlier. These loan programs are investments created through legislation. Although some interest rate risk
exposure exists, this risk is not a consideration when entering into these loan programs.
NOTE 6 – TAXES RECEIVABLE
Taxes receivable represent amounts due to the State at September 30, 2014, for revenues earned during the fiscal year that will
be collected sometime in the future. Amounts expected to be collected in the next fiscal year are classified as “current” and
amounts expected to be collected beyond the next fiscal year are classified as “noncurrent.” The receivables have been recorded
net of allowances for uncollectibles.
Sales, use, Michigan business, and income taxes are accrued to the extent that the related sales, wage, or activity being taxed
occurred prior to October 1. Property taxes are accrued if the levy date occurred prior to October 1.
Local units of government, as agents for the State, assess the state education tax, which is a statewide property tax. The state
education tax is levied on J uly 1 and is due and payable at the same time as local unit taxes levied on J uly 1. The State accrues
state education tax revenue received by the State or the local units, on its behalf, during October and November. The accrued
telephone and telegraph taxes are due December 1 and were received at approximately that time.
In the government-wide financial statements, a corresponding amount is recorded as revenue using the accrual basis of
accounting. In the governmental fund financial statements, revenue is recorded using the modified accrual basis of accounting for
amounts due to the State at September 30 (as stated above), that are considered “available” (e.g. received by the State within
approximately 60 days after that date). Delinquent taxes are recognized to the extent that they are collected within 12 months.
The remainder is recorded as a deferred inflow or resources.
Effective J anuary 1, 2008, the State replaced the Single Business Tax (SBT) with the Michigan Business Tax (MBT). Effective
J anuary 1, 2012, the MBT was replaced by the Corporate Income Tax (CIT). A small number of taxpayers with certificated credits
may continue to file under the MBT provisions until their credits expire. Additionally, the Health Insurance Claims Assessment
(HICA) was created effective J anuary 1, 2012. Because the CIT and the HICA are relatively new and the MBT has drastically
changed, historical information is not available to calculate full-accrual receivable amounts. Therefore the accrual and related
revenue expected to be collected beyond the 60-day period is not measurable and has not been recorded in this fiscal year for
these types of taxes.
2014 Comprehensive Annual Financial Report
73
Michigan
Notes to the Financial Statements
Taxes receivable as of September 30, consisted of the following (in millions):
Tax
Sales & use $ 370.3 $ 762.3 $ 1,132.5
Individual Income 2,299.1 345.8 2,644.9
SBT/MBT/CIT 649.2 - 649.2
State education (property) - 1,312.8 1,312.8
Telephone & telegraph 19.5 - 19.5
Motor fuel - 161.8 161.8
Insurance - retaliatory 92.0 - 92.0
Tobacco products 74.4 45.1 119.5
Quality assurance assessment 75.5 - 75.5
Health insurance claims assessment 63.3 - 63.3
Other 25.1 16.1 41.2
Penalties & Interest 1,026.0 - 1,026.0
Gross taxes receivable 4,694.3 2,643.9 7,338.1
Less allowances for uncollectibles 2,229.9 440.5 2,670.4
Total taxes receivable (net) $ 2,464.4 $ 2,203.4 $ 4,667.8
As reported on the Statement of Net Position
Current taxes, interest, and penalties receivable $ 2,266.0 $ 2,135.8 $ 4,401.8
Noncurrent taxes, interest and penalties receivable 198.4 67.6 266.0
Total taxes, interest, and penalties receivable $ 2,464.4 $ 2,203.4 $ 4,667.8
Total
General
Fund
Other
Funds
Governmental
NOTE 7 – J OINT VENTURES
The State participates in two joint ventures as described below. J oint ventures are not reflected as component units within this
report because they do not meet the generally accepted accounting principles criteria for inclusion. Their separately issued
financial statements may be obtained by directly contacting the applicable organizations. To obtain their phone numbers, you may
contact the State Budget Office, Office of Financial Management, Financial Reporting Section at (517) 373-1010.
Great Lakes Protection Fund
The Great Lakes Protection Fund (GLPF) is a not-for-profit corporation located in Evanston, Illinois. Its purpose is to finance and
support research with respect to water quality of the Great Lakes. The eight states bordering the Great Lakes are eligible to
become members if they make a required contribution to the endowment of GLPF.
Contribution requirements were established based upon water consumption and usage. Contributions to GLPF are permanently
restricted and are not available for disbursement. Michigan is the largest contributor, having made a contribution of $25.0 million,
constituting approximately 31% of the total. Michigan made its required contribution by issuing GLPF a general obligation bond
authorized as part of the State’s environmental protection bond program. No additional contributions from Michigan will be
required.
Two members on GLPF’s board of directors represent each of the participating seven member states. The states’ respective
governors select the board members. Directors control GLPF’s financing and budgeting operations, within requirements
established by the Articles of Incorporation. One-third of the net earnings on total contributions (after operating expenses) is
granted to the respective states in proportion to their contributions to GLPF. Two-thirds of the net earnings are available to GLPF
to make other grants. The State’s equity interest in GLPF of $25.0 million is reflected as an asset in the government-wide financial
statements.
Sault Ste. Marie Bridge Authority
The International Bridge in Sault Ste. Marie, Michigan is a joint venture of the State and Canadian governments. Effective
September 1, 2009, the Sault Ste. Marie Bridge Authority (SSMBA) replaced the J oint International Bridge Authority. SSMBA
consists of eight people, four appointed by each government. SSMBA oversees the operations and maintenance of the Bridge.
The International Bridge Administration, an administrative entity within the Michigan Department of Transportation, is responsible
for the day-to-day operations of the Bridge. SSMBA reimburses the State for costs incurred to provide these services.
For the period ending December 31, 2013 (SSMBA’s most recently audited financial statements), its net position increased by
approximately $0.8 million. The Bridge and one-half of the ancillary assets on Michigan’s side of the Bridge, and in addition one-
half of the joint funds not required to pay liabilities, and all funds reserved for capital projects on the Michigan half of the Bridge,
represent the State’s equity interest. The State is obligated to pay one-half of any claims incurred by SSMBA that are not covered
by insurance or existing resources. The State’s equity interest of $9.7 million is reflected as an asset in the government-wide
financial statements.
2014 Comprehensive Annual Financial Report
74
Michigan
Notes to the Financial Statements
NOTE 8 – DEPOSITS AND INVESTMENTS
This note provides information for all deposits and investments except those of the Common Cash pool, which are described in
Note 5.
Deposits – Primary Government
Custodial Credit Risk
In addition to equity in the Common Cash pool, some State funds maintain deposits with financial institutions. At present, only
the Michigan Unemployment Compensation Funds (MUCF), the Attorney Discipline System (ADS), and the Michigan
Education Savings Plan (MESP) maintain these deposits and are potentially exposed to custodial credit risk.
The Unemployment Insurance Agency administers, under the auspices of the federal government, the deposits of the MUCF.
Tax collections are deposited in a clearing account as required by the Michigan Employment Security Act. Refunds are paid
from that account; after the clearance of vouchers for refunds, all other money remaining in the fund, less amounts needed for
refunds and judgments, must be deposited with the Secretary of the Treasury of the United States of America to the credit of
the State in the Unemployment Trust Fund, established and maintained pursuant to Section 904 of the Social Security Act, 42
USC 1104. These deposits are maintained in the Federal Reserve Bank. At year-end, the carrying amount of these deposits,
excluding those classified as investments, was $7.2 million. The bank balance of the deposits was $18.8 million; these
deposits were either covered by federal depository insurance or were collateralized.
The bank deposits of the ADS were $5.3 million; these deposits were covered by Federal Deposit Insurance Corporation
(FDIC) insurance or were collateralized. ADS has no policy to address custodial credit risk. It assesses financial institutions’
risk levels; only those with acceptable levels of risk are used as depositories.
The deposits of the MESP were reflected in bank accounts at $0.5 million; of these deposits, $0.3 million were covered by
depository insurance. The remaining balance of $0.2 million was uninsured and uncollateralized. The level of risk for each
financial institution is evaluated and assessed; only those with an acceptable estimated risk level are used as depositories.
MESP has no other policy for controlling this risk.
2014 Comprehensive Annual Financial Report
75
Michigan
Notes to the Financial Statements
Investments – Primary Government
The following table shows the carrying amounts and fair values of investments of the primary government by investment type
and in total at September 30:
Commercial paper $ 4,280.3 $ - $ - $ 4,280.3
Money market funds - - 250.2 250.2
Other short-term 526.3 - 5.2 531.5
Separate accounts - 2,372.3 - 2,372.3
Absolute return 6,323.1 - - 6,323.1
Fixed income 6,864.3 - 3,019.6 9,883.8
Mutual funds 85.2 980.9 3,992.0 5,058.2
Pooled investment funds - 2,802.9 - 2,802.9
Equities 17,828.4 - - 17,828.4
Funding agreements - - 531.0 531.0
International 8,776.4 - - 8,776.4
Real estate 5,480.2 - - 5,480.2
Alternative 10,377.2 - 123.6 10,500.8
Accrued income 64.8 - - 64.8
Cash collateral 5.3 - - 5.3
Unsettled investments 7.1 - - 7.1
Total $ 60,618.6 $ 6,156.1 $ 7,921.7 $ 74,696.4
As reported on the Statement of Net Position
Current investments $ 2,350.6
Noncurrent investments 1,316.6
Total investments $ 3,667.2
As reported on the Statement of Net Position and Statement of Fiduciary Net Position
Governmental activities $ 250.2 $ 1,113.4 $ 1,363.6
Business-type activities 2,100.4 203.2 2,303.6
Fiduciary funds 3,964.3 67,064.8 71,029.2
Total Investments $ 6,315.0 $ 68,381.4 $ 74,696.4
Primary Government Total Investments (In millions)
Systems
Retirement
Funds Funds Total
Other Contribution
Defined
Deferred
Investment Types
Compensation/
Total Investments Investments
Current Noncurrent
Authority
Investment authority for the State’s pension (and other employee benefit) trust funds is found in Michigan Compiled Laws
(MCL) Section 38.1133. This law allows the State Treasurer, as investment fiduciary, to make diverse investments in stocks,
corporate and government bonds and notes, mortgages, real estate, venture capital, and other investments. The law has
prudence standards and requires that the assets of a retirement system shall: be invested solely in the interest of the
participants and beneficiaries; be made for the exclusive purpose of providing benefits to the participants and the participants’
beneficiaries; and defray reasonable expenses of investing the assets of the State system.
The investment authority for other State funds is found in their enabling statutes and/or their bond resolutions where
applicable. Except as noted below, the investments of the non-pension (and other employee benefit) trust funds are
comprised mostly of United States government securities.
2014 Comprehensive Annual Financial Report
76
Michigan
Notes to the Financial Statements
The State Building Authority makes diverse investments as allowed by State statute and/or bond resolutions.
Investments of MUCF represent their interest in a U.S. Treasury trust fund managed by the Secretary of the Treasury
pursuant to Title IX of the Social Security Act, which includes deposits from the unemployment compensation funds of various
states. MUCF is credited quarterly with trust fund investment earnings, as computed on a daily basis.
The deferred compensation plans are invested in mutual funds, U.S. Treasury strips, money market funds, and pooled
investment funds. During fiscal year 2014, the deferred compensation plans’ investment activities were managed by a private
investment firm, which invests as directed by members of the plan.
Derivatives
The State Treasurer is also authorized to invest a limited amount of pension (and other employee benefit) trust funds in
derivatives to provide additional diversification. Derivatives are used in managing the trust fund portfolios, but uses do not
include speculation or leverage of investments. Less than 12% of the total trust funds’ portfolio has been invested from time
to time in future contracts, swap agreements, and option contracts. State investment statutes limit total derivative exposure to
15% of a fund’s total asset value, and restrict uses to replication of returns and hedging of assets. Option and future contracts
traded daily on an exchange and settling in cash daily or having a limited and fully defined risk profile at an identified fixed cost
are not subject to the derivative exposure limitation.
The State Treasurer has entered into swap agreements with investment grade counterparties with maturity dates ranging from
October 2014 to December 2015. Approximately one quarter of the notional amount tied to foreign stock market indices is
hedged against foreign currency fluctuations. The swap agreements provide that the System will pay quarterly, over the term
of the agreements, interest indexed to the three month London Inter Bank Offer Rate (LIBOR), adjusted for an interest rate
spread, on the notional amount stated in the agreements. At maturity the trust funds will receive either the increase in the
value of the equity indices from the level at the inception of the agreements, or pay the decrease in the value of the indices.
U.S. Domestic LIBOR based floating rate notes and other income earning investments are held to correspond with the
notional amount of the swap agreements. The State Treasurer maintains custody and control of these dedicated notes and
other investments.
The value of these synthetic equity structures is a combination of the value of the swap agreements and the value of the notes
and other investments. The book value represents the cost of the notes and other investments. The current value represents
the current value of the notes and other investments and the change in the value of the underlying indices from the inception
of the swap agreements. Current value is used as a representation of the fair value based on the intention to hold all swap
agreements until maturity.
Other derivative investments include structured notes, bond future contracts, forwards, and options. The structured notes are
with investment grade counterparties and are fully collateralized and pay cash rates on the underlying collateral, as well as
providing enhanced index return. Similar to a swap agreement with the prices changing with the underlying index fluctuations,
the notes differ due to their daily put option which allows the structure to end and settle before its final maturity. These notes
were sold in May 2014. Additional details about derivative investments are included in the following table:
2014 Comprehensive Annual Financial Report
77
Michigan
Notes to the Financial Statements
Investment and
Investment Type Objective
Structured notes -
real return
Enhance passive exposure to
the Dow J ones UBS
Commodity Total Return Index $ - $ - $ 43.6 $ - $ -
U.S. Treasury Bond
Future contracts -
fixed income
Enhance management
flexibility, manage duration
and yield curve exposure 1.8 - (0.5) - -
Options - real return
and equities
Use on single securities to
provide downside protection
and enhance current income (5.3) - 103.2 - -
Swap agreements -
International
investments equities
Diversify the trust funds'
portfolio by entering into swap
agreements that are tied to
stock market indices in forty-
four foreign countries 1,504.2 1,284.2 94.3 (1.3) 51.5
Swap agreements -
equity Investments
Diversify the trust funds'
portfolio by entering into swap
agreements that are tied to
stock market indices in the
domestic market 973.2 70.7 123.9 (3.6) 38.1
Totals $ 2,473.9 $ 1,354.9 $ 364.5 $ (4.8) $ 89.7
Pension (and Other Employee Benefit) Trust Funds Derivative Investments (In millions)
Fair Value
Subject to
Credit Risk Value At Fair Value* Fair Value**
Gain/loss
Investment
Income
Net Increase
(Decrease) in Investments Notional
*Located in Statement of Fiduciary Net Position - Investments at Fair Value
**Located in Net increase (decrease) in fair value of investments - Statement of Changes in Fiduciary Net Position
Investment Pools
In J uly 2004, four state retirement systems’ (State Employees’, State Police, Public School Employees’, and J udges’)
investments were contributed to an investment pool structure. A pro rata share of the entire pool represents each system’s
ownership of a portion of the investments in the State’s pool.
Repurchase Agreements
As a matter of administrative policy, the State Treasurer makes only limited use of investments in repurchase agreements. No
such investments were outstanding at year-end.
Risk
Governmental Accounting Standards Board Statement No. 40, Deposit and Investment Risk Disclosures, requires certain
disclosures regarding policies and practices with respect to the risks associated with investments. The custodial credit risk,
credit risk, interest rate risk, foreign currency risk and concentration of credit risk are discussed in the following paragraphs.
Custodial Credit Risk
Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the State will
not be able to recover the value of the investment or collateral securities that are in the possession of an outside party.
Investment securities are exposed to custodial credit risk if the securities are uninsured, are not registered in the name of the
government and are held by either the counterparty, or the counterparty’s trust department or agent, but not in the
government’s name. The State Treasurer does not have a policy for limiting custodial credit risk. As of September 30, 2014,
there were no securities exposed to custodial credit risk.
Credit Risk
Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Short-term investments
for the pension funds are in prime commercial paper and follow the same policy described in Note 5 for this type of
investment. The ratings at September 30 are included in the debt investments table.
2014 Comprehensive Annual Financial Report
78
Michigan
Notes to the Financial Statements
Investment grade and noninvestment grade securities may be acquired in compliance with parameters set forth in MCL
Sections 38.1132 – 38.1141, and the State Treasurer’s investment policy. Law defines investment grade as investments in
the top four major grades, rated by two national rating services, S&P (AAA, AA, A, BBB) and Moody’s (Aaa, Aa, A, Baa). At
September 30, 2014, the system was in compliance with the policy in all material aspects. The primary government’s debt
investments as of September 30, 2014, are presented below. Note that securities backed by the full faith and credit of the
United States Government are excluded.
Rating Rating
S & P Moody's
Pension (and Other Employee Benefit) Trust Funds:
Retirement Systems:
Commercial paper $ 3,727.8 A-1 $ 3,727.8 P-1
Government securities
U.S. agencies - sponsored - AAA 275.4 Aaa
275.4 AA - Aa
Corporate bonds & notes 63.1 AAA 124.1 Aaa
514.5 AA 415.6 Aa
1,621.9 A 1,354.5 A
1,690.1 BBB 1,976.2 Baa
416.6 BB 461.7 Ba
591.5 B 628.5 B
105.4 CCC 104.6 Caa
2.9 CC 45.9 Ca
- C 0.1 C
32.3 D - D
376.1 Unrated 303.3 Unrated
International - corporate bonds & notes* 175.2 AA 255.5 Aa
442.4 A 305.5 A
196.2 BBB 308.0 Baa
104.2 Unrated 49.1 Unrated
Mutual funds** 30.6 A 30.6 A
Total $ 10,366.2 $ 10,366.2
Deferred Compensation/Defined Contribution:
Common trust funds $ 456.4 Unavailable $ 456.4 Below Baa - Aaa
188.4 Unavailable 188.4 A-1+/P-1
Stable Value Funds 1,036.3 BBB - AAA 1,036.3 Unavailable
75.3 Unavailable 75.3 A1/P1
Mutual funds 152.0 Below B - AAA 152.0 Unavailable
244.4 Unrated 244.4 Unrated
Total $ 2,152.9 $ 2,152.9
Other Primary Government Funds:
Government securities
U.S. agencies - sponsored - AAA 7.0 Aaa
7.0 AA - Aa
1.0 Unrated 1.0 Unrated
Corporate bonds & notes 74.8 AA 63.1 Aa
348.6 A 288.8 A
139.6 BBB 208.7 Baa
- Unrated 2.3 Unrated
Municipal bonds 61.0 AA 61.0 Aa2
Mutual funds 1,365.3 Unrated 1,365.3 Unrated
Treasury trust fund pool 2,065.9 Unrated 2,065.9 Unrated
Total $ 4,063.2 $ 4,063.2
Total Primary Government $ 16,582.3 $ 16,582.3
Debt Investments (In millions)
Investment Type
Fair Fair
Value Value
*International investment types consist of domestic floating rate notes used as part of a swap strategy.
**Average rating
2014 Comprehensive Annual Financial Report
79
Michigan
Notes to the Financial Statements
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of those
investments.
The State Treasurer’s policy states that cash equivalents are invested in short-term fixed income securities with an average
weighted maturity of less than one year to provide liquidity and safety of principal from capital market and default risk. At
September 30, 2014, the fair value of prime commercial paper was $3.7 billion; the weighted average maturity was 25 days.
The State Treasurer does not have a policy regarding interest rate risk for long-term debt investments. However, the pension
trust funds are invested with a long-term strategy with no investments with a maturity of less than one year at the time of
purchase. The goal is to balance higher returns while accepting minimum risk for the return. Analyzing the yield curve on
individual securities as compared to U.S. Treasuries determines, in part, what is an acceptable risk for the return. Therefore,
market conditions such as lower interest rates result in shorter duration; higher interest rates result in longer duration.
As of September 30, the pension trust funds had the following long-term debt securities:
Duration
In Years
Retirement Systems:
Government securities
U.S. Treasury bonds $ 1,172.5 4.0
U.S. agencies - backed 530.8 4.8
U.S. agencies - sponsored 275.4 5.1
Total Governmental 1,978.7
Corporate bonds & notes 5,414.4 4.9
International - corporate bonds & notes* 918.0 0.2
Mutual fund - fixed income 30.6 3.0
Total $ 8,341.8
Deferred Compensation/Defined Contribution:
Common trust funds
SSgA bond market index fund $ 456.4 7.8
SSgA cash series Treasury fund 188.4 0.2
Total Common Trust Funds 644.8
Stable value funds
Synthetic guaranteed investment contracts 1,036.3 3.9
SSgA STIF 75.3 -
Total Stable Value Funds 1,111.6
Mutual funds
PIMCO total return fund 152.0 7.7
Total Mutual Funds 152.0
Total $ 1,908.4
Total Pension (and Other Employee Benefit) Trust Funds $ 10,250.2
Debt Securities (In millions)
Pension (and Other Employee Benefit) Trust Funds
Value
Fair
*International debt securities contain domestic government and corporate securities as a part of their derivative strategies. The
interest rates reset on a quarterly basis for these securities.
Synthetic Guaranteed Investment Contract (SGIC)
SGIC investment derivatives within the Stable Value Fund contain a portfolio of underlying securities and a benefit responsive
wrap contract. The wrap contract produces a floating rate of return that is adjusted periodically, but not below zero, to reflect the
underlying investment portfolio and generally provide for participant withdrawals at contract value (principal plus accrued
interest). As of September 30, 2014, the fair value of the SGIC’s underlying investments was $1.1 billion. The wrap contract
did not have a value because the market value of the SGIC's underlying investments was higher than the SGIC's contract
value; therefore, the wrap contract does not have a value.
2014 Comprehensive Annual Financial Report
80
Michigan
Notes to the Financial Statements
As of September 30, the primary government, excluding pension trust funds, had the following debt securities:
Investment Type
U.S. Treasury bonds $ 289.5 $ 56.3 $ 85.9 $ 90.4 $ 57.0
Municipal bonds 61.0 13.0 27.6 12.0 8.4
U.S. bonds - backed 22.6 - - 0.4 22.2
U.S. agency bonds - sponsored 17.5 - 7.1 9.5 0.9
Corporate bonds 563.0 62.7 164.3 331.2 4.9
Mutual funds 1,365.3 35.6 52.6 1,256.4 20.7
Total $ 2,319.0 $ 167.6 $ 337.5 $ 1,699.8 $ 114.1
Other Funds
Debt Securities (In millions)
Value Than 1 1 To 5 6 to 10 Than 10
Fair Less More
Investment Maturities (In years)
Foreign Currency Risk
Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of investments or deposits.
The pension trust funds invest in various global foreign securities. These investments are limited to 30% of the total assets of
the system, and are additionally limited to 5% of the outstanding foreign securities of any single issuer. No investment is
allowed in a country that has been identified by the United States State Department as engaging in or sponsoring terrorism.
These limits are set forth in MCL Sections 38.1133 and 38.1140. The types of foreign securities include equities, mutual funds,
real estate, and limited partnerships. At September 30, 2014, foreign investments were approximately 17.1% of total assets of
the systems; total foreign investments were $10.4 billion. As of September 30, 2014, the pension (and other employee
benefits) trust funds held the following investments subject to foreign currency risk:
2014 Comprehensive Annual Financial Report
81
Michigan
Notes to the Financial Statements
Country
Retirement Systems:
Americas
Dollar Canada $ - $ - $ 1.3 $ 1.4
Peso Argentina - - 0.2 -
Peso Mexico - 107.0 10.1 -
Real Brazil - 13.0 - -
Caribbean
Dollar Bermuda - - 14.9 -
Dollar Cayman Islands - - 10.5 -
Europe
Euro European Union 1,021.1 - 101.2 (0.3)
Franc Switzerland - - 36.5 0.7
Krona Sweden - - 11.9 -
Krone Denmark - - 3.6 -
Krone Norway - - 32.9 0.2
Sterling United Kingdom 10.4 - 68.6 (8.7)
Asia/Pacific
Dollar Australia - - 3.1 (2.2)
Dollar Hong Kong - - 2.7 1.3
Yen J apan - - 0.3 (0.3)
Dollar New Zealand - - - (0.5)
Peso Philippines - 66.2 - -
Dollar Singapore - - 12.7 0.4
Won South Korea - - 9.1 (1.7)
Middle East
Shekel Israel - - 1.5 -
World-wide
Various Various 1,346.9 - 7,509.3 (10.4)
Total $ 2,378.4 $ 186.2 $ 7,830.6 $ (20.0)
Deferred Compensation/Defined Contribution:
Various Various $ - $ - $ 2,142.2 $ -
Total $ 2,378.4 $ 186.2 $ 9,972.8 $ (20.0)
International
Pools Currency
Pension (and Other Employee Benefit) Trust Funds
Foreign Currency Risk (In Millions)
Fair Value (In U.S. Dollars)
Investments
Derivatives*
Fixed Income
Alternative
and
Real Estate
Equity
*International derivatives’ market value exposure to foreign currency risk is the net amount of unrealized gains and unrealized
losses. Maturity dates on these investments range from October 2014 through December 2015, with an average maturity of 0.5
years.
Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributable to the magnitude of a government’s investments with a single issuer.
Other than obligations issued that are assumed or guaranteed by the United States, its agencies, or United States government-
sponsored enterprises, the pension systems are prohibited by MCL Section 38.1137 from investing in more than 5% of the
outstanding obligations of any one issuer or investing more than 5% of a system’s assets in the obligations of any one issuer.
At September 30, 2014, there were no investments in any single issuer more than 5% of the system’s assets, nor were there
any investments totaling more than 5% of the obligations of any one issuer, other than U.S. Government Securities as
described above.
2014 Comprehensive Annual Financial Report
82
Michigan
Notes to the Financial Statements
Pension trust fund investments represent 89.4% of the total investments of the primary government. Other large holders of
investments were the State Lottery Fund (SLF), MESP, and the Michigan Natural Resources Trust Fund.
SLF investments, $232.5 million, are all in the form of zero coupon U.S. Treasury bonds and State of Michigan Municipal
bonds. These investments are held to provide funding for deferred prize awards.
Securities Lending Transactions
Under the authority of MCL Section 38.1133, the State lends securities to broker-dealers and other entities for collateral that will
be returned for the same securities in the future. The custodian is not liable for any losses unless there is negligence or willful
misconduct on its part. State statutes allow the State to participate in securities lending transactions and the State has, by way
of an Agreement, authorized Credit Suisse, the agent bank, to lend the State’s securities to broker-dealers and banks pursuant
to a form of loan agreement. During the fiscal year, the agent bank lent, at the direction of the State Treasurer, the State’s
securities and received cash (United States) as collateral. Borrowers were required to deliver collateral for each loan equal to
(i) in the case of loaned securities denominated in United States dollars or whose primary trading market was located in the
United States or sovereign debt issues by foreign governments, 102% of the market value of the loaned securities; and (ii) in
the case of loaned securities not denominated in United States dollars or whose primary trading market was not located in the
United States, 105% of the market value of the loaned securities.
The State Treasurer did not impose any restrictions during the fiscal year on the amount of the loans that the agent bank made
on its behalf. The agent bank indemnified the State by agreeing to purchase replacement securities, or return cash collateral in
the event the borrower failed to return the loaned securities or pay distributions thereon, due to the borrower’s insolvency.
Under Master Securities Lending Agreements between the State and each borrower, the State Treasurer and the borrowers
have the right to terminate all securities lending transactions on demand. The cash collateral received on each loan was
invested in assets held in a collateral account. As of September 30, 2014, the investments had an average weighted maturity
to next reset of 3.1 years and an average weighted maturity of 11.9 years. Because the loans were terminable at will, their
duration did not generally match the duration of the investments made with cash collateral. At September 30, 2014, the
retirement systems had no credit risk exposure to borrowers. The cash received for securities on loan for the State as of
September 30, 2014, was $4.2 billion. The fair market value of assets held in the dedicated collateral account managed by
Credit Suisse and held by the custodian for the State as of September 30, 2014, was $4.0 billion. The carrying amount, which
is the fair market value, of securities on loan for the State as of September 30, 2014, was $4.1 billion.
At September 30, the pension trust funds had the following debt investments made from cash received as collateral for
securities lent:
Rating Rating
Investment Type S & P Moody's
Securities Lending Collateral
Short term $ 150.0 A-1 $ 150.0 P - 1
402.8 AAA 570.1 Aaa
367.3 AA 251.5 Aa
51.5 A - A
- BBB 15.4 Baa
15.4 BB 2,911.7 Ba
150.1 CCC 134.6 Caa
- CC 15.5 Ca
2,911.7 Unrated - Unrated
Total $ 4,048.8 $ 4,048.8
Debt Investments (In millions)
Value Value
Fair Fair
Deposits and Investments – Discretely Presented Component Units
Deposits
At year-end, the carrying amount of discretely presented component unit deposits, excluding those classified as investments,
was $623.2 million. The deposits were reflected in the accounts of the banks at $507.8 million. Of the bank balance, $348.7
million was uninsured and uncollateralized and therefore exposed to custodial credit risk.
2014 Comprehensive Annual Financial Report
83
Michigan
Notes to the Financial Statements
Investments
The investment authority for most discretely presented component units is typically found in their enabling statutes and/or their
bond resolutions where applicable. Those component units that are financing authorities generally may invest in government or
government-backed securities and deposits. The Michigan Education Trust’s investments are subject to an investment
agreement with the State Treasurer that allows the Treasurer, acting as agent, to make diverse investments including stocks,
bonds, notes, and other investments. Investment policies for the State universities are typically set forth by their governing
boards and include a broad range of investment types.
Restricted Assets
Restricted investments on the government-wide Statement of Net Position, totaling $526.4 million, represent amounts that are
pledged toward the payment of outstanding bonds and notes.
The following table summarizes the investment maturities reported by the discretely presented component units (in millions):
Time deposits $ 131.6 $ 121.8 $ 9.6 $ 0.2 $ - $ -
Money market accounts 1,731.6 1,731.6 - - - -
Commercial paper 54.1 54.1 - - - -
Repurchase agreements 547.1 - - 72.3 474.8 -
Government securities 734.8 307.4 280.2 99.0 48.3 -
Insured mortgage backed securities 679.4 16.0 55.9 81.2 526.2 -
Government-backed securities 144.2 15.1 54.4 68.1 6.6 -
Investment agreements 0.2 0.2 - - - -
Corporate bonds and notes 362.5 36.0 208.1 118.2 0.1 -
Equities 162.2 103.7 - 10.7 9.0 38.8
Real estate 20.2 0.7 - - 19.5 -
Venture capital & leveraged buyouts 117.2 - - - 14.4 102.7
Mutual bond/equity funds 1,937.7 126.2 268.0 155.4 419.2 968.8
Pooled investment funds 56.2 56.2 - - - -
Other investments 255.4 1.5 32.3 22.6 155.4 43.5
Total Investments $ 6,934.4 $ 2,570.7 $ 908.5 $ 627.8 $ 1,673.5 $ 1,153.9
Less Investments Reported as
"Cash" on Statement of Net Position 601.3
Total Investments $ 6,333.1
As reported on the Statement of Net Position
Current investments $ 1,765.7
Noncurrent restricted investments 526.4
Noncurrent investments 4,041.0
Total Investments $ 6,333.1
N/A
Fair Less More
Investment Maturities (In years)
Value Than 1 1 To 5 6 To 10 Than 10
2014 Comprehensive Annual Financial Report
84
Michigan
Notes to the Financial Statements
NOTE 9 – CAPITAL ASSETS
Primary Government
Summary of Significant Accounting Policies
Methods used to value capital assets
Capital assets, which include property, plant, equipment, intangible items (mineral rights, land rights, and computer software)
and infrastructure items (e.g. roads, bridges, ramps, and similar items), are reported in the applicable governmental or
business-type activity columns of the government-wide financial statements. Such assets are recorded at historical cost or
estimated historical cost if purchased or constructed. Donated capital assets are recorded at fair market value at the date of
donation.
Capitalization policies
All land and non-depreciable land improvements are capitalized, regardless of cost. Equipment is capitalized when the cost of
individual items exceeds $5 thousand, computer software is capitalized when the cost exceeds $5 million, and all other capital
assets are capitalized when the cost of individual items or projects exceed $100 thousand.
The costs of normal maintenance and repairs that do not add to the value of assets or materially extend asset lives are not
capitalized.
Items not capitalized and depreciated
The State possesses certain capital assets that have not been capitalized and depreciated, because the assets are held for
public exhibition, education, or research in furtherance of public service, rather than financial gain. These assets include works
of art and historical treasures such as statues, monuments, historical documents, paintings, forts and lighthouses, rare library
books, miscellaneous capitol-related artifacts and furnishings, and the like.
Depreciation and useful lives
Applicable capital assets are depreciated using the straight-line method, with a half-year’s depreciation charged in the year of
acquisition and in the year of disposal. Agencies assigned useful lives that were most suitable for the particular assets.
Estimated useful lives generally were assigned as follows:
Asset Years
Equipment 2-25
Buildings 5-50
Infrastructure 3-40
Land Improvements 5-40
Intangibles 6-12
Modified approach for infrastructure
The State has elected to use the “modified approach” to account for certain infrastructure assets, as provided in Governmental
Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements - and Management’s Discussion and
Analysis - for State and Local Governments. Under this process, the State does not record depreciation expense nor are
amounts capitalized in connection with improvements to these assets, unless the improvements expand the capacity or
efficiency of an asset. Utilization of this approach requires the State to: 1) commit to maintaining and preserving affected
assets at or above a condition level established by the State, 2) maintain an inventory of the assets and perform periodic
condition assessments to ensure that the condition level is being maintained, and 3) make annual estimates of the amounts that
must be expended to maintain and preserve assets at the predetermined condition levels.
Roads and bridges maintained by the Department of Transportation are accounted for using the modified approach.
2014 Comprehensive Annual Financial Report
85
Michigan
Notes to the Financial Statements
Capital asset activities for the fiscal year ended September 30 were as follows (in millions):
Governmental Activities
Capital assets, not being depreciated:
Land $ 3,448.5 $ 47.7 $ (1.5) $ 0.6 $ 3,495.4
Land improvements and other assets 16.2 - - - 16.2
Land rights 62.6 2.5 - - 65.1
Mineral rights 19.8 - - - 19.8
Construction in progress (buildings) 38.0 39.8 (6.0) - 71.8
Construction in progress (infrastructure) 1,672.4 486.5 (363.9) (18.4) 1,776.7
Infrastructure 13,755.5 340.4 (197.9) 21.4 13,919.3
Total capital assets, not being depreciated 19,012.9 916.9 (569.3) 3.6 19,364.2
Capital assets, being depreciated
Land improvements and other assets 196.0 18.4 - 0.7 215.2
Equipment and vehicles 757.0 29.3 (12.0) 1.3 775.6
Computer software (includes projects in
progress) 532.1 180.7 - - 712.8
Buildings 3,633.0 37.5 (28.8) (12.1) 3,629.6
Infrastructure 1,197.7 3.6 (1.3) 1.6 1,201.5
Total capital assets, being depreciated 6,315.8 269.5 (42.1) (8.5) 6,534.6
Less accumulated depreciation for:
Land improvements and other assets (71.6) (6.9) - - (78.6)
Equipment and vehicles (597.1) (44.2) 11.3 13.1 (616.8)
Computer software (206.5) (66.1) - 0.6 (272.0)
Buildings (1,653.6) (113.5) 10.7 6.9 (1,749.6)
Infrastructure (597.8) (43.3) 0.6 - (640.5)
Total accumulated depreciation (3,126.6) (274.0) 22.7 20.6 (3,357.4)
Total capital assets, being depreciated, net 3,189.2 (4.5) (19.4) 12.1 3,177.3
Governmental activity capital assets, net $ 22,202.2 $ 912.4 $ (588.7) $ 15.6 $ 22,541.4
and
Adjustments
Ending
Balance
Balance
Additions Deletions ifications
Reclass-
Beginning
Restated*
*Beginning balances for equipment, as well as the related accumulated depreciation, were restated due to prior period errors.
See Note 4 for additional information on these restatements.
The Department of Corrections has temporarily closed one prison campus during fiscal year 2014. The temporary impairments
pertained to buildings. The Department has no definitive plans for the buildings. No impairment loss was reported for the
temporary impairment because the impairment is temporary in nature and the historical costs of the buildings were unchanged
in the above table.
2014 Comprehensive Annual Financial Report
86
Michigan
Notes to the Financial Statements
Adjustments
and Reclass-
Business - Type Activities
Capital assets, being depreciated:
Computer Software $ 0.4 $ - $ - $ - $ 0.4
Equipment 5.3 - (0.5) - 4.8
Total capital assets, being depreciated 5.7 - (0.5) - 5.2
Less accumulated depreciation for:
Computer Software (0.3) - - - (0.3)
Equipment (4.6) (0.2) 0.5 - (4.3)
Total accumulated depreciation (4.9) (0.2) 0.5 - (4.6)
Total capital assets, being depreciated, net 0.8 (0.2) - - 0.6
Business-type activity capital assets, net $ 0.8 $ (0.2) $ - $ - $ 0.6
Balance
Ending
Balance
Beginning
Additions Deletions ifications
Depreciation expense was charged to functions of the primary government as follows (in millions):
Governmental Activities
General government $ 32.7
Education 0.3
Human services 11.4
Public safety and corrections 51.4
Conservation, environment, recreation, and agriculture 12.3
Labor, commerce, and regulatory 2.5
Health services 30.7
Transportation 54.8
Depreciation on capital assets held by the State's internal service funds
charged to the various functions based on their use of the assets $ 78.0
Total Depreciation Expense - Governmental Activities $ 274.0
Business-type Activities:
Enterprise 0.2
Total Depreciation Expense - Business-type Activities $ 0.2
Amount
Discretely Presented Component Units
The following table summarizes net capital assets reported by the discretely presented component units (in millions):
State Universities and authorities:
Land and other non-depreciable assets $ 248.3
Buildings, equipment, and other depreciable assets 5,894.9
Infrastructure 163.2
Construction in progress 293.9
Total 6,600.4
Less accumulated depreciation (2,482.7)
Capital Assets, Net - Discretely Presented Component Units $ 4,117.6
Amount
2014 Comprehensive Annual Financial Report
87
Michigan
Notes to the Financial Statements
NOTE 10 – PENSION BENEFITS
Defined Benefit Pension Plans
PLAN DESCRIPTION
The State of Michigan administers the following defined benefit pension plans:
Participating
Name Type of Plan Employers
Legislative Retirement System (LRS) Single employer 1
State Police Retirement System (SPRS) Single employer 1
State Employees' Retirement System (SERS) Single employer 1
Public School Employees' Retirement System (PSERS) Cost sharing multi-employer 685
J udges' Retirement System (J RS) Cost sharing multi-employer 85
Military Retirement System (MRP) Single employer 1
Each plan, except MRP, is accounted for in a separate pension trust fund and also issues a publicly available financial report
that includes financial statements and required supplementary information for that plan. Those reports, except LRS, may be
obtained by visiting www.michigan.gov/ors or by calling the Customer Information Center at (517) 322-5103 or 1-800-381-5111.
The LRS report may be obtained by writing to the Michigan Legislative Retirement System, House Office Building, Suite S0927,
P.O. Box 30014, Lansing, MI 48909 or by calling (517) 373-0575.
As mandated by legislation, all new State of Michigan employees (except Michigan State Police officers) hired on or after March
31, 1997, are members of the State of Michigan Defined Contribution Retirement Plan (Plan) as opposed to the LRS, SERS,
and J RS defined benefit plans. Employees hired before that date were given the option of remaining in the defined benefit plan
or transferring to the defined contribution plan. The decision is irrevocable and transfers were completed by September 30,
1998. This was a one-time opportunity. With the passage of the legislation permitting the transfer, the LRS, SERS, and J RS
defined benefit plans became closed systems.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PLAN ASSETS MATTERS
Basis of Accounting
The financial statements are prepared using the accrual basis of accounting. Contributions from the State are recognized as
revenue when due and payable. Benefits and refunds are recognized when due and payable in accordance with the terms of
each plan.
Methods Used to Value Investments
Plan investments are reported at fair value. Securities traded on a national or international exchange are valued at the last
reported sales price at current exchange rates. Corporate bonds not traded on a national or international exchange are based
on equivalent values of comparable securities with similar yield and risk. The fair value of private investments is based on the
net assets value reported in the financial statements of the respective investment entity. The net asset value is determined in
accordance with governing documents of the investment entity, and is subject to an independent annual audit. Securities
purchased with cash collateral under securities lending activities are recorded at estimated fair value. Other investments not
having an established market are recorded at estimated fair value.
Description of Benefits
State statutes require that the State plans provide certain retirement, disability, death benefits, and annual cost-of-living
adjustments to plan members. LRS life insurance benefits are provided through the defined benefit pension plan and are
accounted for as pension benefits. The LRS life insurance benefits are paid on an advance-funded basis. The actuarial cost
method and actuarial assumptions are the same as for the pension plan.
Contributions and Reserves
SERS members are allowed to purchase service credits by entering into a contract with duration of up to 20 years. At
September 30, 2014, the short-term receivable was $3.8 million and the discounted long-term receivable was $16.0 million.
Significant Investments
No investment of any of the pension plans comprises 5% or more of the net position available for benefits. There are no
significant investments made in securities issued by the State, nor are there any loans made from the pension plans to the
State. Additional disclosures concerning investments are provided in Note 8 and, concerning State Treasurer’s Common Cash,
in Note 5.
2014 Comprehensive Annual Financial Report
88
Michigan
Notes to the Financial Statements
Funding Policy
The Legislature establishes the extent to which the employer and employees are required to make contributions and
establishes the benefit provisions for each plan.
Plan members for SPRS are required to contribute based on the following: Command officers currently participate in the
System on a noncontributory basis. Effective October 1, 2012, troopers and sergeants hired before J une 10, 2012, began
contributing 1% of their compensation. Troopers hired on or after J une 10, 2012, contribute 4% of their compensation.
Plan members for LRS are required to contribute based on the following: for participants prior to J anuary 1, 1995, the required
contribution rate is 9%; for participants after J anuary 1, 1995, the required contribution rate is 7%.
Plan members for J RS are required to contribute 5.82% (weighted average) of annual covered salary.
Plan members of MRP are not required to contribute to the plans and there is no underlying payroll of participants. Except for
five special duty members, retirants receive $600 in annual pension benefits. Accordingly, the annual required contribution
from the State is determined as a dollar amount, not as a percentage of payroll. For fiscal year ending September 30, 2014,
this amount was $6.3 million.
Plan members for SERS are required to contribute based on the changes made to the plan via Public Act 264 of 2011, effective
April 1, 2012. Participants who elected to remain in the plan are required to contribute 4% of their compensation.
For LRS, SERS, and SPRS, statute requires the employer to contribute to finance the benefits of plan members. These
employer contributions are determined annually by the system’s actuary and are based upon level-dollar value funding or a
level-percent-of-payroll principles so the contribution rates do not have to increase over time. The following are the required
contribution rates for the fiscal year ending September 30, 2014: SPRS, 53.8% of annual active payroll; SERS, $624.5 million;
LRS, $6.3 million.
For J RS, the State contributes annually the greater of 3.5% of the aggregate annual compensation of State paid base salaries,
or the difference between the total actuarial requirement of current service and unfunded accrued liabilities minus the revenues
from court filing fees and member contributions. The following table provides a schedule of annual required employer
contributions for J RS (amounts in millions):
Year Ended
September 30
2014 $ 3.2 101.3 %
2013 2.8 101.5
2012 1.1 104.0
(ARC)
Contribution
Required
Annual
Percentage
of ARC
Contributed
ANNUAL PENSION COST AND OTHER RELATED INFORMATION
Annual pension cost and related information for the current year for the State’s single employer defined benefit plans is as
follows (amounts in millions):
Annual Pension Cost and Net Pension Obligation:
Annual required contribution $ 6.33 $ 61.40 $ 624.47 $ 6.29
Interest on net pension (asset) obligation 0.88 6.38 57.20 0.54
Adjustment to annual required contribution (1.74) (5.53) (66.32) (0.90)
Annual pension cost 5.47 62.25 615.34 5.94
Contributions made - 58.39 705.10 4.22
Change in net pension asset/obligation 5.47 3.86 (89.76) 1.72
Net pension (asset) obligation at beginning of
fiscal year 12.63 79.70 714.99 13.57
Net pension (asset) obligation at end of fiscal year $ 18.10 $ 83.56 $ 625.24 $ 15.29
LRS SPRS SERS MRP*
*For MRP, information provided is based on most recent biennial actuarial valuation.
2014 Comprehensive Annual Financial Report
89
Michigan
Notes to the Financial Statements
Actuarial Valuations and Assumptions
Actuarial valuations for the pension plans involve estimates of the value of reported amounts and assumptions about the
probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and
the healthcare cost trend. Amounts determined regarding the funded status of the plan and the ARC are subject to continual
revision as actual results are compared with past expectations and new estimates are made about the future. The schedules of
funding progress present multi-year trend information about whether the actuarial value of plan assets for the pension plans is
increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the
employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern
of sharing of benefit costs between the employer and plan members to that point.
The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility
in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.
LRS SPRS SERS MRP
Lastest actuarial valuation date 9/30/2013 9/30/2013 9/30/2013 9/30/2013
Actuarial cost method Entry Age Entry Age Entry Age Entry Age
Amortization method Level dollar Level percent Level dollar Level dollar
open of payroll closed closed closed
Remaining amortization period 10 years 23 years 23 years 23 years
Asset valuation method 5-year 5-year 5-year Market value
smoothed market smoothed market smoothed market
Actuarial assumption:
Investment rate of return 7% 8% 8% 4%
Projected salary increases 4% 3.5-93.5% 3.5-12.5% 3.5%
Includes inflation at 4% 3.5% 3.5% 3.5%
Cost-of-living adjustments 4% annual compounded 2% annual non- 3% annual non- 3.5% for special
(non-compounded for compounded with compounded with duty retirants
legislators who first maximum annual maximum annual
became members increase $500 increase $300
after 1/1/95)
2014 Comprehensive Annual Financial Report
90
Michigan
Notes to the Financial Statements
THREE YEAR HISTORICAL TREND INFORMATION
The following table provides a schedule of funding progress for the State’s single employer defined benefit plans (amounts in
millions):
Actuarial
Valuation
Date
LRS* 9/30/13 $ 134.9 $ 180.9 $ 46.0 74.6 % $ 0.1 46,000.0 %
9/30/12 136.9 180.5 43.6 75.9 0.1 43,600.0
9/30/11 149.9 181.8 31.9 82.0 0.1 31,900.0
SPRS* 9/30/13 1,069.1 1,724.0 654.9 62.0 110.2 594.0
9/30/12 1,069.2 1,671.0 601.9 64.0 104.9 573.9
9/30/11 1,138.1 1,627.9 489.8 69.9 110.3 444.1
SERS* 9/30/13 9,437.6 15,647.7 6,210.1 60.3 1,081.7 574.1
9/30/12 9,447.1 15,654.1 6,207.1 60.3 1,155.6 537.1
9/30/11 10,212.0 15,597.0 5,384.9 65.5 1,276.1 422.0
MRP* 9/30/13 - 90.0 90.0 - 0.5 19,683.5
9/30/11 - 77.3 77.3 - 0.1 54,473.0
9/30/09 - 42.3 42.3 - 0.4 9,874.0
((b-a)/c)
Payroll
of Covered
Percentage
UAAL as a
(a)
of Assets
Value
Actuarial
(b)
(AAL)
Liability
Accrued
Unfunded
(c)
Payroll
Covered
Actuarial
(b-a)
(UAAL)
Liability
Accrued
(Overfunded)
(a/b)
Ratio
Funded
*The most recent actuarial valuations available were used to prepare this schedule.
The following table provides a schedule of annual pension cost and net pension obligation for the State’s single employer
defined benefit plans (amounts in millions):
Year Ended
September 30
LRS 2014 $ 5.5 - % $ 18.1
2013 5.5 - 12.6
2012 4.2 - 7.1
SPRS 2014 62.3 93.8 83.6
2013 58.5 83.7 79.7
2012 53.1 76.7 70.2
SERS 2014 615.3 114.6 625.2
2013 603.0 100.3 715.0
2012 585.0 71.8 716.9
MRP 2014 5.9 71.1 15.3
2013 5.1 78.5 13.6
2012 5.1 78.6 12.5
(Asset) Cost
Annual Obligation
Net Pension
Percentage
Contributed
2014 Comprehensive Annual Financial Report
91
Michigan
Notes to the Financial Statements
Defined Contribution Pension Plans
State of Michigan Defined Contribution Retirement Plan
The Plan was established to provide benefits at retirement to employees of the State who were hired after March 31, 1997,
Public School Reporting Units members hired after J uly 1, 2010, and to those members of the SERS (defined benefit), eligible
members of the Education Achievement Authority (EAA), J RS, and LRS who elected to transfer to this Plan. The Plan is
administered by the Department of Technology, Management and Budget. Public Act 264 of 2011 created the State of
Michigan Personal Healthcare Fund for State employees hired after J anuary 1, 2012, and those who elected to transfer to this
plan.
The State is required to contribute 4% of annual covered payroll. The State is also required to match employee contributions
up to 3% of annual covered payroll. The Plan further provides for eligible public school reporting units and the EAA to make a
mandatory contribution of 50% of participants’ voluntary contributions up to 1%. The Plan also provides a Personal Healthcare
Fund for employees hired on or after J anuary 1, 2012, with an employer match of up to 2% of compensation. Employees hired
prior to J anuary 1, 2012, that elected to transfer to this plan received an employer match up to 2% of future compensation plus
a monetized amount for existing years of service distributed on termination.
Plan provisions and contribution requirements are established and may be amended by the Legislature. Total employer
contributions to the plan were $170.8 million which consisted of State contributions of $141.0 million and Public School
Reporting Unit and EAA contributions of $29.8 million. Total Participant contributions to the Plan were $142.1 million which
consisted of State employee contributions of $109.0 million and Public School Reporting Unit and EAA employee contributions
of $33.1 million. The reports may be obtained by visiting www.michigan.gov/ors or by calling (517) 322-5103.
The following investments represent 5% or more of the plan net position at September 30, 2014: Stable Value fund, $174.0
million; SSgA Bond Market Index Fund, $202.7 million; SSgA S&P 500 Index Fund, $364.5 million, SSgA S&P MidCap Index
Fund, $208.5 million; SSgA EX US Fund, $137.7 million; Dodge & Cox Stock Fund, $210.5 million; American Funds Europacific
Growth Fund, $187.0 million.
Component Units
In addition to the PSERS, the State university component units participate in the Teachers’ Insurance and Annuity Association
and College Retirement Equities Fund (TIAA-CREF). The TIAA-CREF is a defined contribution multiple-employer pension plan.
The State university component units are required to contribute between 4% and 15% of annual covered payroll, as determined
by each institution’s employment agreements. The total contribution to the TIAA-CREF for all State university component units
was $91.6 million for the year ending J une 30, 2014.
Additional plan information may be found in the separately issued financial reports of the State university component units.
Effective J anuary 1, 2004, the State Bar of Michigan assumed responsibility for the retirement plans of State Bar employees
who participated in the Plan. All monies held in the Plan on behalf of participating State Bar employees were subsequently
transferred to the newly established State Bar 401(a) retirement plan and the 457(b) retirement plan. The State Bar of Michigan
is required to make minimum contributions and may establish other benefit provisions for their retirement plans. The State Bar
of Michigan’s contribution to the new plans was $0.3 million for the year ending September 30, 2014.
Additional information for the retirement plan can be obtained by contacting the State Bar at (517) 372-9030.
NOTE 11 – OTHER POSTEMPLOYMENT BENEFITS
Other Postemployment Benefit Plans
PLAN DESCRIPTION
The State of Michigan administers the following Other Postemployment Benefit (OPEB) plans:
Participating
Name Type of Plan Employers
Legislative Retirement System (LRS) Single employer 1
State Police Retirement System (SPRS) Single employer 1
State Employees' Retirement System (SERS) Single employer 1
Public School Employees' Retirement System (PSERS) Cost sharing multi-employer 685
J udges' Retirement System (J RS) Cost sharing multi-employer 85
Life Insurance Single employer 1
2014 Comprehensive Annual Financial Report
92
Michigan
Notes to the Financial Statements
Each plan, except for Life Insurance, is accounted for in a separate OPEB trust fund and also issues a publicly available
financial report that includes financial statements and required supplementary information for that plan. Those reports, except
LRS, may be obtained by visiting www.michigan.gov/ors or by calling the Customer Information Center at (517) 322-5103 or
1-800-381-5111. The LRS report may be obtained by writing to the Michigan Legislative Retirement System, House Office
Building, Suite S0927, P.O. Box 30014, Lansing, MI 48909 or by calling (517) 373-0575.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PLAN ASSETS MATTERS
Basis of Accounting
The financial statements are prepared using the accrual basis of accounting. Contributions from the State are recognized as
revenue when due and payable. Benefits and refunds are recognized when due and payable in accordance with the terms of
each plan.
Methods Used to Value Investments
Plan investments are reported at fair value. Securities traded on a national or international exchange are valued at the last
reported sales price at current exchange rates. Corporate bonds not traded on a national or international exchange are based
on equivalent values of comparable securities with similar yield and risk. The fair value of private investments is based on the
net assets value reported in the financial statements of the respective investment entity. The net asset value is determined in
accordance with governing documents of the investment entity, and is subject to an independent annual audit. Securities
purchased with cash collateral under securities lending activities are recorded at estimated fair value. Other investments not
having an established market are recorded at estimated fair value.
Description of Benefits
State statutes require that the State provide certain OPEB benefits to many of its retired employees. Health, dental, and vision
benefits as well as life insurance coverage are provided to retirees.
FUNDING POLICY
The Legislature establishes the extent to which the employer and employees are required to make contributions and
establishes the benefit provisions for each plan.
Plan members for SPRS are required to contribute 5% of the monthly premium amount for health coverage and 10% for dental
and vision coverage.
Plan members for SERS are required to contribute 20% of the monthly premium for health, dental, and vision.
Plan members for J RS are required to contribute 5% of health care premiums. J RS plan members can also enroll in the vision
and dental plans of which they are required to contribute 100% of the premium.
Plan members for LRS that are part of the defined benefit plan are not required to contribute and the members of the defined
contribution plan are required to contribute 10% of the premiums.
Life insurance is provided to retirees with the employer required to contribute 100% of the premiums.
Statute requires the employer to contribute to finance the benefits of plan members. These employer contributions are
determined annually by the system’s actuary and are based upon level-dollar value funding or a level-percent-of-payroll
principles so the contribution rates do not have to increase over time. The following are the required contribution amounts for
the fiscal year ending September 30, 2014 (in millions): $619.5, SERS; $46.4, SPRS; $9.4, LRS; $69.8, Life Insurance.
For the fiscal year ended September 30, 2014, the State contributed the following amounts (in millions): $755.9, SERS; $48.4,
SPRS; $4.5, LRS; $25.6, Life Insurance. Included in these amounts were (in millions): prefunding of $183.8, SERS; $13.8,
SPRS and federal on-behalf payments of $54.9, SERS; $1.8, SPRS; $0.2, LRS.
2014 Comprehensive Annual Financial Report
93
Michigan
Notes to the Financial Statements
ANNUAL OPEB COST AND OTHER RELATED INFORMATION
Annual OPEB cost and related information for the current year for the State’s single employer OPEB plans is as follows
(amounts in millions):
Annual OPEB Cost and Net OPEB Obligation:
Annual required contribution $ 9.38 $ 46.38 $ 619.51 $ 69.80
Interest on net OPEB (asset) obligation 1.16 12.17 188.79 9.42
Adjustment to annual required contribution (1.55) (10.55) (163.65) (10.57)
Annual OPEB cost 8.99 48.00 644.65 68.65
Contributions made 4.49 48.37 755.88 25.61
Change in net OPEB asset/obligation 4.50 (0.37) (111.23) 43.04
Net OPEB (asset) obligation at beginning of
fiscal year 25.84 152.08 2,359.86 235.47
Net OPEB (asset) obligation at end of fiscal year $ 30.35 $ 151.71 $ 2,248.62 $ 278.51
LRS SPRS SERS
Life
Insurance
Actuarial Valuations and Assumptions
Actuarial valuations for the OPEB plans involve estimates of the value of reported amounts and assumptions about the
probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and
the healthcare cost trend. Amounts determined regarding the funded status of the plan and the Annual Required Contributions
(ARC) are subject to continual revision as actual results are compared with past expectations and new estimates are made
about the future. The schedules of funding progress present multi-year trend information about whether the actuarial value of
plan assets for the OPEB plans is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the
employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern
of sharing of benefit costs between the employer and plan members to that point.
The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility
in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.
Because the State now prefunds post-employment health care benefits for SPRS and SERS, the actuarial assumption for
investment rate of return for the SPRS and SERS OPEB plans was increased from 4% for the September 30, 2011 actuarial
valuation to 8% for the September 30, 2012 actuarial valuation. The actuarial assumption was changed to reflect the State’s
projected long-term investment rate of return now that the benefits are prefunded.
Life
LRS SPRS SERS Insurance
Lastest actuarial valuation date 9/30/2013 9/30/2013 9/30/2013 9/30/2013
Actuarial cost method Projected Unit Credit Entry Age Entry Age Entry Age
Amortization method Level dollar Level percent Level percent Level percent
closed of payroll closed of payroll closed of payroll closed
Remaining amortization period 27 years 23 years 23 years 24 years
Asset valuation method Market Value Market Value Market Value Market Value
Actuarial assumption:
Investment rate of return 4% 8% 8% 4%
Includes inflation at 4% 3.5% 3.5% 3.5%
Healthcare cost trend rate 8.75% in 2014 9% Year 1 9% Year 1 N/A
grading to 4% graded to 3.5% graded to 3.5%
in 2023 Year 10 Year 10
2014 Comprehensive Annual Financial Report
94
Michigan
Notes to the Financial Statements
THREE YEAR HISTORICAL TREND INFORMATION
The following table provides a schedule of funding progress for the State’s single employer OPEB plans (amounts in millions):
Actuarial
Valuation
Date
LRS 9/30/13 $ 22.8 $ 153.7 $ 130.9 14.8 % $ 3.3 3,966.7 %
9/30/12 20.8 145.2 124.3 14.3 3.6 3,452.8
9/30/11 15.2 140.7 125.5 10.8 3.7 3,391.9
SPRS 9/30/13 52.2 603.0 550.7 8.7 110.2 499.6
9/30/12 33.0 599.1 566.1 5.5 104.9 539.8
9/30/11 - 994.7 994.7 - 110.3 902.0
SERS 9/30/13 663.5 8,199.2 7,535.8 8.1 2,881.1 261.6
9/30/12 344.3 8,756.9 8,412.6 3.9 2,895.2 290.6
9/30/11 - 14,251.1 14,251.1 - 3,039.9 468.8
Life Insurance 9/30/13 - 1,056.9 1,056.9 - 2,998.4 35.2
9/30/11 - 1,012.8 1,012.8 - 3,156.2 32.1
9/30/09 - 964.4 964.4 - 3,182.3 30.3
((b-a)/c)
Payroll
UAAL as a
Percentage
of Covered
(UAAL)
(b-a) (c)
Payroll
Covered
(a/b)
Ratio
Funded
Actuarial
Unfunded
(Overfunded)
Accrued
Liability
(a)
Value
Actuarial
of assets (AAL)
Liability
Accrued
(b)
The following table provides a schedule of annual OPEB cost and net OPEB obligation for the State’s single employer OPEB
plans (amounts in millions):
Year
Ended
September 30
LRS 2014 $ 9.0 49.9 % $ 30.3
2013 9.3 47.4 25.8
2012 9.4 86.5 20.9
SPRS 2014 48.0 100.8 151.7
2013 48.6 93.9 152.1
2012 67.9 69.6 149.1
SERS 2014 644.7 117.3 2,248.6
2013 708.1 103.1 2,359.9
2012 953.9 70.5 2,381.7
Life Insurance 2014 68.6 37.3 278.5
2013 67.7 36.3 235.5
2012 65.4 39.2 192.4
Cost
OPEB
Annual Net OPEB
Obligation
(Asset) Contributed
Percentage
2014 Comprehensive Annual Financial Report
95
Michigan
Notes to the Financial Statements
NOTE 12 – LEASES
Accounting Policy
The State leases various assets under non-cancelable leasing arrangements. Leases that constitute rental agreements are
classified as operating leases; the resulting expenditures are recognized as incurred over the lease term. Leases that are
comparable to purchases are classified as capital leases.
In the government-wide and proprietary fund financial statements, assets and liabilities resulting from capital leases are recorded
at lease inception. The principal portion of lease payments reduces the liability; the interest portion is expensed.
For capital leases in governmental funds, other financing sources and expenditures are recorded at lease inception. Lease
payments are recorded as debt service expenditures. For budgetary purposes, lease payments are only reported as expenditures
when paid.
Most leases have cancellation clauses with one to six month notice requirements in the event that funding is not available. For
reporting purposes, such cancellation clauses are not considered in the determination of whether a lease is cancelable, because
the likelihood that they will be exercised is considered remote. Some lease agreements include renewal or purchase options. The
effect of such options is reflected in the minimum lease payments only if it is considered reasonably assured that an option will be
exercised. Some lease agreements include escalation clauses or other contingent rentals.
The State has entered into a few installment purchase agreements. Because the amounts involved are immaterial, and the
accounting treatment is similar, such agreements are reported together with capital leases.
Leases that exist between the State and the State Building Authority (SBA), a blended component unit, are not recorded as leases
in this report. In their separately issued financial statements, SBA records a lease receivable from the State. Although payables
and receivables technically exist between these parties, when combined for government-wide reporting, they are eliminated. A
long-term liability exists on the government-wide financial statements for the bonds issued by SBA to construct the assets
associated with the leases. Future payments to SBA are, therefore, not included in the schedules of lease commitments below.
Note 13 provides information on the amount of SBA’s bonds outstanding and a schedule of debt service requirements.
During fiscal year 2008 and 2011, the State entered into building lease agreements with the Michigan Strategic Fund (MSF), a
discretely presented component unit. The leases were classified as capital leases and are included in the capital lease disclosures
below.
Primary Government – Governmental Activities
Rental expenditures incurred under operating leases totaled $50.6 million during the fiscal year. Payments for capital lease
principal, interest, and executory costs totaled $37.1 million, $39.0 million, and $19.0 million, respectively, during the fiscal year.
Included in these amounts were payments to MSF for principal, interest, and executory costs totaling $7.8 million, $9.3 million,
and $0.1 million, respectively.
A summary of the operating and noncancelable capital lease commitments to maturity follows (in millions):
Year Ended
September 30
2015 $ 16.0 $ 35.7 $ 36.9 $ 18.9 $ 91.5
2016 11.7 32.7 34.4 18.0 85.1
2017 6.9 31.1 31.8 16.8 79.7
2018 5.4 27.7 29.0 15.5 72.2
2019 4.2 26.3 26.2 13.7 66.2
2020-2024 3.1 117.9 91.9 52.1 261.9
2025-2029 0.3 83.8 40.4 32.0 156.3
2030-2034 0.3 27.4 7.9 7.4 42.7
2035-2039 0.3 8.8 2.8 2.4 14.0
Thereafter 1.0 2.3 0.1 0.4 2.9
Total $ 49.1 $ 393.6 $ 301.5 $ 177.3 $ 872.3
Total
Capital Leases
Operating Executory
Leases Principal Interest Costs
The above capital leases relate to governmental activities which include the General Fund, other governmental funds, and the
internal service funds. A liability of $393.6 million has been recorded in the government-wide financial statements for the capital
lease principal. Included in this liability are the capital leases between the State and MSF totaling $189.4 million.
2014 Comprehensive Annual Financial Report
96
Michigan
Notes to the Financial Statements
The historical cost of assets acquired under capital leases, which are included in capital assets on the government-wide
financial statements at September 30, follows (in millions):
Buildings $ 443.6
Equipment 86.2
Total 529.9
Accumulated Depreciation (212.0)
Net Buildings and Equipment $ 317.9
Included in the table above is the historical cost and accumulated depreciation for the capital leases between the State and
MSF of $208.3 million and $56.1 million, respectively.
Primary Government – Business-Type Activities
Rental expense incurred under operating leases totaled $0.5 million during the fiscal year. There were no capital lease
obligations.
A summary of operating lease commitments to maturity follows (in millions):
Year Ended
September 30
2015 $ 0.5
2016 0.4
2017 0.3
2018 0.2
2019 0.1
2020-2024 0.1
Total $ 1.7
Leases
Operating
Discretely Presented Component Units
Operating lease commitments for universities and authorities totaled $44.6 million. Total capital lease obligations were $26.7
million, $12.3 million, and $0 for principal, interest, and executory costs, respectively, during the fiscal year.
NOTE 13 – BONDS AND NOTES PAYABLE – PRIMARY GOVERNMENT
General Information
General Obligation Bonds and Notes
Article 9, Section 15, of the State Constitution authorizes general obligation long-term borrowing, subject to approval by the
Legislature and a majority of voters at a general election. In addition, debt may be incurred without voter approval for the
purpose of providing loans to school districts. General obligation notes to provide temporary financing for such loans are
recorded as liabilities in the School Bond Loan Fund, a subfund of the General Fund. General Fund appropriations are made to
finance debt principal and interest requirements for all general obligation issues. General obligation bonds are backed by the
full faith and credit of the State.
The State Constitution provides that the Legislature may also authorize the issuance of general obligation short-term notes, the
principal amount of which may not exceed 15% of undedicated revenues received in the preceding year. The State
Constitution also provides that such notes must be repaid within the fiscal year of the borrowing. In fiscal year 2014, the State
did not issue any general obligation short-term notes.
Revenue Dedicated Bonds and Notes
Long-term bonds have been issued periodically for specific purposes, with the stipulation that financing of debt requirements is
to come strictly from designated revenue sources. The transportation related debt is payable solely out of funds restricted for
transportation purposes by Article 9, Section 9, of the State Constitution. The State’s general credit does not support such
issues.
2014 Comprehensive Annual Financial Report
97
Michigan
Notes to the Financial Statements
Revenue bonds have been issued by the State Building Authority (SBA) to acquire and/or construct various facilities for use by
the State or institutions of higher education. Revenue bonds have also been issued to finance equipment capital lease
refinancings and acquisitions. In addition, SBA issues commercial paper notes to fund capital projects prior to bonding. Short-
term debt activity for the fiscal year ended September 30, 2014, follows (in millions):
Commercial Paper Notes $ 13.2 $ 85.9 $ - $ 99.1
Balance
Beginning
Draws Repayments Balance
Ending
Note 14 provides disclosures regarding the bonds and notes payable of the discretely presented component units.
Bonds Issued and Outstanding
General obligation and revenue dedicated bonds issued and outstanding (excluding defeased bonds) at September 30 (in
millions) are as follows:
First Last
General Obligation Bonded Debt Year Year
General Obligation Refunding Debt:
Series 2001 (Refunding) $ 183.3 $ 55.1 2002 2016 4.76 %
Series 2002 (Refunding) 300.7 99.6 2004 2017 4.41
Series 2005 A (Refunding) (3) 86.8 18.9 2017 2021 5.00
Series 2005 B (Refunding) (3) 82.8 35.8 2013 2021 5.00
Series 2008 A (Refunding) (3) 200.8 156.4 2011 2019 4.94
Series 2008 B (Refunding) (3)(5) 19.4 6.0 2011 2019 4.33
Series 2009 A (Refunding) (3) 64.1 64.1 2022 2026 5.65
Series 2010 A (Refunding) 46.6 39.4 2013 2021 4.00
Series 2010 B (Refunding) (3)(5) 89.0 61.4 2014 2016 2.21
Series 2011 A (Refunding) (3)(5) 44.0 44.0 2022 2026 3.83
Series 2011 B (Refunding) (3)(5) 65.4 29.5 2014 2021 2.56
Series 2012 (Refunding) (3)(5) 92.3 92.3 2017 2021 4.60
Series 2013 A (Refunding) (3) (5) 30.0 30.0 2016 2016 0.40
Series 2014 A (5) 65.1 65.1 2024 2029 5.00
Series 2014 B (5) 20.2 20.2 2027 2027 3.59
Recreation and Environmental Protection:
Series 2003 (5) 10.0 6.0 2054 2054 -
Series 2006 A (1)(3) 105.0 100.4 2014 2026 4.58
School Loan Bonds (4):
Series 2008 A (Refunding) 143.0 116.0 2010 2023 4.54
Series 2009 A (Refunding) 204.1 204.1 2016 2021 6.53
Series 2009 B (Refunding) (7) 193.7 50.5 2010 2030 5.58
Series 2010 B (Refunding) 83.8 83.8 2017 2021 3.67
Series 2011 A 150.0 142.2 2014 2023 3.72
Series 2011 B 30.1 30.1 2023 2023 3.70
Series 2012 A (Refunding) 225.0 191.4 2013 2026 2.39
Series 2013 A 200.0 200.0 2024 2033 3.30
Total General Obligation Bonded Debt 2,735.1 1,942.4
Percentage
Rate
Interest
Average Fiscal Year
Issued
Amounts Outstanding
9/30/2014
Maturities
2014 Comprehensive Annual Financial Report
98
Michigan
Notes to the Financial Statements
First Last
Revenue Dedicated Bonded Debt Year Year
State Park Related:
2002 - Gross Revenue Bonds 15.5 8.7 2004 2023 3.58 %
Total Revenue Dedicated Bonded Debt -
State Park Related 15.5 8.7
Transportation Related:
Tax Dedicated Bonds:
Comprehensive Transportation Fund Bonds:
Series 2005 (Refunding) 62.2 53.8 2009 2023 5.15
Series 2006 (Revenue and Refunding) 53.7 35.0 2007 2031 4.54
Series 2009 (Refunding) 42.3 36.9 2012 2019 4.11
Series 2011 (Refunding) 18.5 16.0 2013 2022 4.35
Series 2013 (Refunding) 10.1 9.1 2014 2023 4.67
State Trunkline Fund Bonds:
Series 1998 (Series A Refunding) 377.9 146.1 2006 2019 5.03
Series 2004 (Refunding) 103.5 82.4 2006 2022 4.13
Series 2005 (Refunding) 223.0 223.0 2010 2023 5.10
Series 2005 (Series B Refunding) 378.3 38.5 2010 2019 4.81
Series 2006 244.5 50.3 2008 2022 4.74
Series 2009 (Refunding) 146.2 146.2 2018 2027 4.76
Series 2011 91.0 88.8 2014 2037 4.58
Series 2012 (Refunding) 49.3 44.3 2014 2022 4.78
Series 2014 (Refunding) 265.1 265.1 2016 2022 4.36
Grant Anticipation Bonds:
Series 2007 485.1 443.1 2009 2027 4.87
Series 2009 (Series B) 281.9 281.9 2012 2027 7.63
Total Revenue Dedicated Bonded
Debt - Transportation Related 2,832.5 1,960.4
State Building Authority:
2005 Series I (Refunding) 293.4 171.1 2006 2034 4.85
2005 Series II (Revenue and Refunding) 242.8 219.9 2007 2037 4.68
2006 Series I A Serial 438.3 438.3 2014 2037 4.80
2006 Series I A Capital Appreciation 395.3 574.8 2014 2037 4.80
2007 Series I Multi-modal (6) 96.5 37.0 2009 2032 0.04
2008 Series I (Revenue and Refunding) 192.3 185.2 2010 2039 6.08
2009 Series I (Refunding) 222.1 172.1 2010 2027 4.88
2009 Series II 113.5 103.5 2011 2034 4.99
2011 Series I A (Revenue and Refunding) 409.6 392.7 2012 2046 5.16
2011 Series I B 12.2 11.4 2013 2032 5.69
2011 Series II A (Revenue and Refunding) 180.7 178.2 2012 2042 5.23
2011 Series II B (Refunding) (6) 45.8 45.3 2044 2044 0.04
2013 Series I A (Revenue and Refunding) 531.3 531.3 2015 2048 4.76
2013 Series I B (Refunding) 51.7 45.0 2014 2015 1.41
Total State Building Authority Bonded Debt 3,225.4 3,105.9
Total Revenue Dedicated Bonded Debt 6,073.4 5,075.0
Total General Obligation and Revenue
Dedicated Bonded Debt $ 8,808.5 $ 7,017.4
Percentage
Rate
Interest
Average
Issued 9/30/2014
Fiscal Year
Maturities
Amounts Outstanding
2014 Comprehensive Annual Financial Report
99
Michigan
Notes to the Financial Statements
(1) Sections 324.19301 and 324.71301 of the Michigan Compiled Laws (MCL) authorized the issuance of bonds totaling
$800.0 million. As of September 30, 2014, $791.5 million of such bond proceeds had been received, leaving remaining
authorization of $8.5 million. The sum of the amounts issued in the preceding table differs by the amount of bonds
refunded or redeemed, premiums and discounts, and other issuance costs.
(2) The $13.9 million Series 1992A and the $16.7 million Series 1993, Recreation and Environmental Protection General
Obligation Bonds, were used to provide a contribution of capital to the Michigan Finance Authority (MFA) Municipal Fund,
a discretely presented component unit. An outside trustee for MFA is holding the bonds as an investment of MFA; no
immediate cash proceeds were provided. The trustee receives the debt service payments on the bonds, which are
negotiable instruments held to subsidize water pollution control financing provided by MFA. Series 1992A reached final
maturity in fiscal year 2013, and Series 1993 reached final maturity in fiscal year 2014.
(3) MCL Section 324.95102 authorized the issuance of bonds totaling $675.0 million. As of September 30, 2014, $594.6
million of such bond proceeds had been received, leaving remaining authorization of $80.4 million. The sum of amounts
issued in the preceding table differs by the amount of bonds refunded or redeemed, premiums and discounts, and other
issuance costs.
(4) The Multi-Modal School Loan Bond Series bear interest at a commercial paper rate and are remarketed at each maturity.
For the future debt service requirements, interest is estimated at the interest rate in effect at year-end. There were no
Multi-Modal School Loan Bonds outstanding at September 30, 2014.
(5) November 2002, voters approved a ballot proposal in which the State would issue $1.0 billion in general obligations
bonds to provide capital, which is then loaned to local units of government for water quality improvement projects. As of
September 30, 2014, $312.5 million of such bond proceeds had been recognized as received, leaving remaining
authorization of $687.5 million. Included in the amount recognized as received is $100.0 million in bonds issued to a
discretely presented component unit, MFA. Although no cash traded hands, MFA (the registered owner of the bonds) is
holding the bond document as collateral and issuing their own revenue bonds to generate the capital. This transaction
allows the State’s General Fund to defer principal and interest costs until future years when the bond is
repurchased/redeemed. MFA will fund the principal and interest costs of the revenue bonds until such time that they
request the State to honor the general obligation bond document.
On December 18, 2003, the State issued $100.0 million in bonds ($10.0 million relating to Strategic Water Quality and
$90.0 million relating to the previously existing State Water Quality Revolving Fund). The $10.0 million bond relating to
Strategic Water Quality includes a repurchase provision that requires the State to repurchase all or any portion of this
bond upon 10 days prior written notice from the registered owner, MFA. The State anticipates at this time that if the bond
repurchase was acted on, the State would issue long-term debt to finance the repurchase. This bond is being used as
collateral by MFA for the Strategic Water Quality bonds being issued by MFA to local governments. The $10.0 million
bond was reduced to a net obligation of $6.0 million when $4.0 million of the proceeds from General Obligation Recreation
and Environmental Protection Series 2006B were used to refund a portion of the original obligation. For these reasons,
the State has recognized the $6.0 million bond related to Strategic Water Quality as a liability in the entity-wide
statements. The $90.0 million “bond” document issued for the State Water Quality Revolving Fund does not contain the
10 day repurchase provision that the $6.0 million bond does. Nor is the $90.0 million “bond” document being used as
collateral by MFA. For these reasons, the State has not recognized a liability for the $90.0 million “bond” document
related to the existing State Water Quality Revolving Fund.
(6) SBA Multi-Modal and variable rate bear interest at a remarketed weekly rate. Estimated interest was computed using the
weekly rates as of September 30, 2014.
(7) This issuance was acquired as an investment by the State Lottery Fund, an enterprise fund, through a public market
offering and is reported as part of investments in the fund’s statement of net position.
2014 Comprehensive Annual Financial Report
100
Michigan
Notes to the Financial Statements
Capital Appreciation Bonds
Capital appreciation and convertible capital appreciation bonds are recorded in the Bonds Issued and Outstanding table and the
Changes In Bonds and Notes Payable table at their accreted year-end book value. The table that follows summarizes capital
appreciation bonds (in millions):
First Last
Year Year
General Obligation Bonds
School Loan Bond - Series 2009 B $ 50.5 $ 76.2 2010 2030
Revenue Dedicated - State Building Authority:
2006 Series I A 574.8 888.7 2017 2031
Value Value
Fiscal Year
Maturities
Book Maturity
Accreted Ultimate
Refundings and Defeasances
The State has defeased certain bonds through advance refundings by placing the proceeds of new bonds (i.e., the “refunding”
bonds in the table of bonds issued and outstanding) in irrevocable trust to provide for all future debt service on the old bonds.
Accordingly, the trust account assets and the liability for the defeased bonds are not recorded as assets or liabilities in these
statements and are not included in the other debt tables in this note.
The State has defeased certain bonds through current refundings in which the proceeds of the refunding debt are applied
immediately to redeem the debt to be refunded.
The State has defeased certain bonds by placing cash with an escrow agent in a trust to be used for future payment on the
debt.
General Obligation
During the year, the State issued, as a current refunding, fixed rate General Obligation Environmental Program Refunding
Bonds Series 2013A in the amount of $30.0 million, maturing in the year 2016. The bonds were issued for the purpose of
refunding certain maturities. From the debt proceeds, $35.9 million was used to refund General Obligation Environmental
Program and Refunding Bonds Series 2011B.
Revenue Dedicated
During the year, the State issued as current and advanced refundings, fixed rate State Trunkline Fund Refunding Bonds Series
2014 in the amount of $265.1 million, maturing in years 2016 to 2022. The bonds were issued for the purpose of refunding
certain maturities. From the debt proceeds, $303.2 million was deposited with an escrow agent for a current refunding of State
Trunkline Fund Bonds Series 2004 and advance refundings of State Trunkline Fund Bonds Series 2005B and 2006. As a
result of these refundings, the State’s debt service decreased by $25.3 million over the next 8 years. The State achieved an
economic gain of $23.0 million through these refundings.
2014 Comprehensive Annual Financial Report
101
Michigan
Notes to the Financial Statements
The following table summarizes the defeased bonds outstanding at September 30 (in millions):
General Obligation Refunding:
$ 67.9
28.9
$ 96.8
State Trunkline Fund Bonds:
$ 173.0
102.0
Total Transportation Related $ 275.0
$ 45.5
Total State Building Authority $ 45.5
Amounts
Series 2005 A
Series 2005 B
Series 2006
2004 MPSCS
State Building Authority:
Series 2005 B
Total General Obligation Refunding
Outstanding
Debt Service Requirements
The following table summarizes debt service requirements for outstanding bonds (in millions):
Fiscal
Years
Ending
2015 $ 195.4 $ 79.4 $ 136.7 $ 114.0 $ 109.0 $ 121.7 $ 756.2
2016 233.6 72.0 142.8 102.3 105.9 117.8 774.3
2017 188.6 64.6 149.6 95.6 111.4 112.9 722.6
2018 169.2 55.9 156.4 82.8 116.2 108.1 688.6
2019 173.5 47.9 164.5 74.6 120.9 104.7 686.1
2020-2024 616.0 135.6 721.0 258.9 641.6 484.2 2,857.2
2025-2029 286.7 41.3 450.0 71.3 702.1 388.9 1,940.3
2030-2034 99.2 8.3 30.3 7.9 690.1 276.1 1,111.9
2035-2039 - - 17.9 1.4 519.8 128.7 667.8
2040-2044 - - - - 241.5 36.7 278.3
2045-2049 - - - - 61.3 6.6 67.9
2050-2054 6.0 - - - - - 6.0
Total $ 1,968.1 $ 505.0 $ 1,969.1 $ 808.6 $ 3,419.8 $ 1,886.5 $ 10,557.1
Principal Interest Principal Interest Principal Interest
And
Interest
Total
Principal
Transportation
State Park and
Authority
State Building
Fixed
General Obligation Related
Fixed
Interest to maturity for SBA may be significantly smaller than the amount shown in the above table because many of the bonds
will be called prior to the final scheduled maturity date. The retirement of these bonds varies from project to project, as each
bond issue is related to specific projects and any excess borrowing and accrued investment earnings are restricted to projects
and debt service on the related bonds.
2014 Comprehensive Annual Financial Report
102
Michigan
Notes to the Financial Statements
Changes in Bonds and Notes Payable
Changes in bonds and notes payable for the year ended September 30, was as follows (in millions):
Bonds Payable:
General obligation debt $ 2,047.5 $ 115.3 $ (224.2) $ 3.8 $ 1,942.4 $ 195.4 $ 1,747.0
Revenue bonds 2,114.5 265.1 (410.5) - 1,969.1 136.7 1,832.4
State Building Authority 3,181.6 - (102.2) 26.5 3,105.9 109.0 2,996.8
Unamortized Discounts:
General obligation debt (1.8) - 0.3 - (1.5) - (1.5)
Revenue dedicated debt (1.5) - 0.1 - (1.4) - (1.4)
State Building Authority (0.8) - - - (0.8) - (0.8)
Unamortized Premiums:
General obligation debt 43.2 12.4 (7.9) - 47.7 - 47.7
Revenue dedicated debt 84.2 35.2 (21.4) - 98.1 - 98.1
State Building Authority 63.6 - (3.5) - 60.1 - 60.1
Total bonds and
notes payable $ 7,530.6 $ 428.0 $ (769.2) $ 30.2 $ 7,219.6 $ 441.2 $ 6,778.5
Plus State Building Authority commercial paper notes reported as
"Current Liabilities: Bonds and Notes Payable" on the Statement
of Net Position 99.1 99.1 -
As reported on the Statement of Net Position $ 7,318.7 $ 540.3 $ 6,778.5
Amounts
Due
Thereafter Restated* Additions Reductions Balance One Year Accretion
Beginning
Governmental Activities
Amounts
Balance Ending Due Within
*The restatement of beginning balance is a result of the reclassification of deferred gains and losses on refundings as deferred
inflows and outflows of resources in accordance with GASB Statement No. 65. Further information can be found in Note 4.
2014 Comprehensive Annual Financial Report
103
Michigan
Notes to the Financial Statements
NOTE 14 – BONDS AND NOTES PAYABLE – DISCRETELY PRESENTED COMPONENT UNITS
Bonds and Notes Payable
Bonds Payable
Bonds payable of the discretely presented component units are legal obligations of the component units and are not general
obligations of the State.
The State universities and the Michigan State Housing Development Authority (MSHDA) utilize J une 30 fiscal year-ends. The
Farm Produce Insurance Authority utilizes a December 31 fiscal year-end, and the remaining discretely presented component
units have September 30 fiscal year-ends.
The following table summarizes debt service requirements of the discretely presented component units as reported in their
separately issued financial statements, utilizing their respective fiscal year-end (in millions):
Fiscal Years Ending In
2015 $ 1,190.6 $ 535.5 $ 14.6 $ 1,740.8
2016 645.8 524.9 10.5 1,181.2
2017 686.7 495.3 10.3 1,192.3
2018 709.8 463.3 10.2 1,183.3
2019 741.2 428.6 10.1 1,179.8
Total five years $ 3,974.0 $ 2,447.6 $ 55.7 $ 6,477.4
2020-2024 3,381.4 1,615.8 48.0 5,045.3
2025-2029 1,807.3 971.5 43.2 2,821.9
2030-2034 1,641.9 560.2 35.9 2,237.9
2035-2039 824.3 263.0 30.4 1,117.7
2040-2044 616.9 106.3 22.0 745.2
2045-2049 881.5 15.4 11.1 908.0
Thereafter 6,061.4 0.3 1.1 6,062.7
2020 - Thereafter: 15,214.6 3,532.6 191.5 18,938.7
Total $ 19,188.6 $ 5,980.2 $ 247.2 $ 25,416.0
Unamortized discount (30.4)
Unamortized premium 571.1
Off market borrowings 13.6
Unpaid accretion for Capital
Appreciation Bonds (5,941.8)
Total principal $ 13,801.1
Principal Interest Interest Total
Fixed Estimated
Included in the table above is $2.1 billion of demand bonds comprised of $1.1 billion issued by MSHDA, $753.5 million issued
by the Michigan Finance Authority (MFA), and $226.5 million issued by the State universities. Defeased bonds outstanding of
MFA and MSHDA are not reflected in the table above.
Notes Payable
As of September 30, 2014, MFA has short-term notes outstanding of $1.1 billion.
State universities have short-term notes outstanding of $17.1 million and long-term notes outstanding of $33.4 million as of
J une 30, 2014.
Unrecorded Limited Obligation Debt
Certain State financing authorities have issued limited obligation revenue bonds which are not recorded as liabilities in these
statements because the borrowings are, in substance, debts of other entities. The State has no obligation for this debt.
Typically, these borrowings are repayable only from the repayment of loans, unloaned proceeds and related interest earnings,
and any collateral which may be provided.
MFA issues limited obligations bonds to finance loans to private or nonpublic, nonprofit institutions of higher education, qualified
public or private educational facilities and healthcare providers for capital improvements. As of September 30, 2014, MFA had
bonds outstanding of $6.8 billion. Of this amount, $215.9 million of the bonds have been defeased in substance, leaving a
remaining undefeased balance of $6.6 billion.
2014 Comprehensive Annual Financial Report
104
Michigan
Notes to the Financial Statements
The Michigan Strategic Fund (MSF) issues taxable and tax exempt private activity bonds, formerly known as industrial
development revenue bonds, which are not recorded as liabilities. The total amount of private activity bonds issued by MSF
and its predecessor entity for the period J anuary 1, 1979, through September 30, 2014, was $9.9 billion. The amount of tax-
exempt bonds issued during fiscal year 2014 was $238.2 million. In fiscal year 2014, there were no taxable bonds issued by
MSF under the Taxable Bond Program. These borrowings are, in substance, debts of other entities and financial transactions
are handled by outside trustees.
MSHDA issues limited obligation bonds to finance multi-family housing projects. At J une 30, 2014, limited obligation bonds had
been issued totaling $855.3 million, of which 50 issues totaling $513.2 million had been retired. The aggregated principal of all
MSHDA outstanding debt may not exceed $4.2 billion.
MSHDA entered into several interest rate exchange agreements for a total of $1.0 billion as of J une 30, 2014, representing
several bond series. In accordance with the exchange agreements, MSHDA pays fixed rates ranging from 3.4% to 5.4%.
NOTE 15 – OTHER LONG-TERM OBLIGATIONS
Primary Government
Other Long-Term Obligations
In general, expenditures and fund liabilities are not recorded in governmental funds for long-term obligations until claims,
judgments, or amounts owed are “due and payable” at September 30. Expenses and liabilities for material claims and
judgment losses are recorded in the government-wide and proprietary fund financial statements when the loss is considered
probable.
Capital Leases
This liability is described in more detail in Note 12.
Compensated Absences
This liability is described in more detail in Note 1.
Workers’ Compensation
The gross amount of workers’ compensation liability, $118.2 million at September 30, 2014, has been recorded at its
discounted present value of $79.4 million, using a discount rate of approximately 8%. The present value of the current portion
of this liability is $17.7 million. In fiscal year 2014, State agencies paid reimbursement for actual workers’ compensation claims
and administrative fees totaling $30.0 million.
Net Pension Obligation
This liability is described in more detail in Note 10.
Net Other Postemployment Benefits (OPEB) Obligation
This liability is described in more detail in Note 11.
Pollution Remediation
This liability is measured in accordance with the obligating event criteria defined in Governmental Accounting Standards Boards
(GASB) Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations. The State’s pollution
remediation obligation at September 30, 2014, is $163.2 million ($12.2 million of which is the current portion). This estimate is
based on professional judgment, experience, and historical cost data. Recoveries from other responsible parties, which would
reduce the State’s remediation liability, are not anticipated. Remediation obligation estimates may change over time due to
changes in technology, prices, and regulations.
Superfund sites account for approximately $136.7 million of this total. The State has numerous instances of hazardous waste
contamination that qualify as Superfund sites. Superfund is the federal government’s program to clean up these hazardous
waste sites. Under this program, the State is required to pay or ensure payment of 10% of the cost of remediation action and
100% of the cost of operations and maintenance.
Other pollution obligations include funds committed for remediation activities for publicly-funded response activities and state-
liable sites. Not included in the liability is approximately $42.2 million for state-owned sites where a legal obligation exists but
the GASB Statement No. 49 criteria for accruing a liability has not been met.
Pension Supplement
This liability represents amounts due to the State Employees’ Pension Benefits Fund for supplemental pension payments
payable to retirees that retired under the provisions of Public Act 185 of 2010. That legislation authorized an incentivized
retirement option for members of the State Employees’ Retirement System defined benefit plan, with one of the provisions
being that those retirees would receive a supplement for 60 months equal to 1/60 of the compensated absences balances
forfeited under the act that would have otherwise been payable at retirement.
2014 Comprehensive Annual Financial Report
105
Michigan
Notes to the Financial Statements
Other Claims & Judgments
The governmental activities estimated liability for other claims and litigation losses, $384.7 million at September 30, 2014,
includes amounts for litigation, such as damages in tort cases and refund claims in cases involving State taxes, transportation
claims, natural resources and environmental quality claims, and other claims, in which it is considered probable that costs will
be incurred. Where a range of potential loss exists, the amount recorded is based upon the expected minimum amount that will
be lost if the State does, indeed, lose. The allowance also includes projections for highway related negligence cases based
upon historical loss ratios. The State continues to vigorously contest all of these claims and the State may incur no liability in
the individual cases involved. Therefore, the allowance for litigation losses may be overstated (to the extent that losses do not
occur) or understated (if the State losses exceed the projected minimums which have been recorded). The maximum potential
loss on the allowance for estimated litigation losses is not considered reasonably measurable.
The liability recorded for other claims and judgments within business-type activities includes overpayments by employers to the
Michigan Unemployment Compensation Funds totaling $54.7 million.
Durant Settlement
The reported estimated liability for litigation losses includes the Durant, et al v State of Michigan, et al consolidated cases,
which totaled $39.3 million at September 30, 2014. This amount will, over time, be paid to each “non-Durant” school district for
its underfunded State mandated program costs if certain requirements are met. See Note 24 for additional disclosure regarding
the Durant case and other contingencies.
2014 Comprehensive Annual Financial Report
106
Michigan
Notes to the Financial Statements
Changes in Other Long-Term Obligations
Changes in long-term liabilities for the year ended September 30, are summarized as follows (in millions):
Governmental Activities
Other Long-term Obligations:
Capital lease obligations:
Component units $ 197.2 $ - $ 7.8 $ 189.4 $ 8.6 $ 180.8
Others 220.5 26.5 42.8 204.2 27.0 177.1
Compensated absences 419.7 361.6 359.9 421.3 212.4 208.9
Workers' compensation 92.0 7.9 20.5 79.4 17.7 61.7
Net pension obligations 820.9 - 78.7 742.2 - 742.2
Net OPEB obligations 2,773.2 - 64.1 2,709.2 - 2,709.2
Pollution remediation 160.8 13.5 11.1 163.2 12.2 151.0
Pension supplement* 37.5 - 16.5 20.9 16.5 4.5
Other claims and judgments 443.8 14.8 73.9 384.7 64.7 319.9
Durant settlement 74.2 - 34.9 39.3 39.3 -
Total Governmental
Activities $ 5,239.7 $ 424.2 $ 710.2 $ 4,953.8 $ 398.4 $ 4,555.4
Business-type Activities
Other Long-term Obligations:
Lottery prize awards* $ 238.4 $ 12.9 $ 34.7 $ 216.5 $ 29.0 $ 187.5
Compensated absences 2.6 2.0 1.9 2.7 1.5 1.2
Pension supplement* 0.4 - 0.2 0.2 0.2 0.1
Other claims and judgments 65.9 - 11.2 54.7 - 54.7
Total Business-type
Activities $ 307.3 $ 14.9 $ 48.0 $ 274.2 $ 30.6 $ 243.5
Ending
Balance
Beginning
Additions Reductions Restated**
Balance
Amounts
Due Within
One Year Thereafter
Due
Amounts
*The amounts due within one year are included with “Accounts payable and other liabilities” on the Statement of Net Position.
**Beginning balance has been restated. More detailed information can be found in Note 4.
The General Fund, other governmental, and internal service funds in which the leases are recorded will liquidate the capital
lease obligations. The compensated absence and workers’ compensation liabilities will be liquidated by the applicable
governmental and internal service funds that account for the salaries and wages of the related employees. The net pension
obligations and net OPEB obligations will be liquidated by the State’s governmental and internal service funds that contribute
toward the pension funds, based on the statutorily required contribution rates. The pollution remediation obligation will be
liquidated by the General Fund. The School Aid Fund will liquidate the Durant settlement. The pension supplement attributable
to governmental activities will be liquidated by the applicable governmental and internal service funds that will be billed by the
pension fund. Other claims and judgments attributable to governmental activities will generally be liquidated by the General
Fund and transportation related governmental funds.
Discretely Presented Component Units
Michigan Education Trust
Michigan Education Trust (MET) offers contracts, which for actuarially determined amounts, provide future tuition at State
institutions of higher education. Contract provisions also allow the benefits to be used at private or out-of-state institutions, with
the amount provided being based upon rates charged by the State’s public institutions of higher education. The tuition
payments are made by MET as a separate legal entity and these contracts are not considered obligations of the State. The
Legislature is not obligated to provide appropriations should losses occur. The statutes and contracts provide for refunds to the
participants if MET becomes actuarially unsound. Liabilities have been recorded on the Statement of Net Position for the
actuarial present value of future tuition benefit obligations.
The 1988, 1989, and 1990 enrollments are known as Plans B and C. Enrollments after November 1995 are known as Plan D.
The actuarial report on the status of MET Plans B and C, as of September 30, 2014, shows the actuarial present value of future
tuition obligations to be $116.0 million, as compared to the actuarially determined market value of assets available of $142.0
million. The actuarial assumptions used include: a projected tuition increase rate of 7.1% for four years; and a discount rate of
1.15%.
2014 Comprehensive Annual Financial Report
107
Michigan
Notes to the Financial Statements
The actuarial report on the status of MET Plan D, as of September 30, 2014, shows the actuarial present value of future tuition
obligations to be $885.0 million, as compared to the actuarially determined market value of assets available of $916.0 million.
The actuarial assumptions used include: a projected tuition increase rate of 7.1% for four years; and a discount rate of 6.0%.
On November 8, 1994, the U.S. Court of Appeals for the Sixth Circuit ruled that MET is an integral part of the State of Michigan
and, thus, the investment income realized by MET is not currently subject to federal income tax. On August 20, 1996, the Small
Business J ob Protection Act of 1996 (the “1996 Tax Act”) was signed into law which included a provision adding a new section
to the Internal Revenue Code of 1986 defining “qualified state tuition programs.” A qualified State tuition program is generally
exempt from income tax, but is subject to unrelated business income tax. MET has no unrelated business income.
Distributions made in excess of qualified higher education expenses (whether to the refund designee, beneficiary, or to a
college on behalf of the beneficiary) are taxable income to the beneficiary or the refund designee. In May 1997, MET submitted
a request for ruling to the Internal Revenue Service (IRS) for verification that MET is in compliance with the 1996 Tax Act. On
December 23, 1997, the IRS issued a favorable ruling which confirms that MET is in compliance with the Act.
NOTE 16 – INCOME TAX CREDITS AND REFUNDS
Income Tax Credits
The Michigan Income Tax Act provides for several types of tax credits. Some credits are accounted for as revenue reductions
for financial reporting purposes while others are reported as expenditures. Revenue reductions are reported for those income
tax credits that are limited by the amount of an individual’s tax liability before considering such credits. To the extent these
nonrefundable credits will generate future year payments, they are accrued as income tax refund liabilities together with
estimated overwithholdings.
Expenditures are reported for those credits which can be received even if they exceed the individual’s tax liability. For these
refundable credits, the substance of the transaction is that the State is making a grant payment using the income tax system as
a filing and payment mechanism. The amount of credit received is not a part of the determination of tax liability. The State’s
property tax is the primary credit that falls into this category. Expenditures for this credit are recognized in the year the tax
returns are filed and recipients claim the credit.
The following table summarizes the various credits, reported on the “Tax credits” line as an expense in the government-wide
financial statements and as an expenditure in the fund financial statements at September 30 (in millions):
Property tax credits:
General homestead $ 281.0
Senior citizens 188.0
Blind and disabled 57.9
Farmland preservation 37.5
Veterans 0.5
Subtotal - property tax credits 564.9
Earned income tax credit 111.4
Historic preservation credit 0.1
Home heating (excluding federal share) 0.1
Total tax credits $ 676.5
Income Tax Refunds Payable
The $926.9 million reported as a liability on the “Income tax refunds payable” line in the government-wide and fund financial
statements includes: projected refund estimates for overwithholding and tax credits reported as revenue reductions, actual
refunds made in October and November, and accruals for known income tax litigation losses.
2014 Comprehensive Annual Financial Report
108
Michigan
Notes to the Financial Statements
NOTE 17 – DEFERRED COMPENSATION PLANS
The State participates in two deferred compensation plans that allow employees to defer a portion of their salary until future years.
Executive Order 1999-7 transferred administrative oversight of the plans, labeled 457 and 401k after sections of the Internal
Revenue Code, to the Department of Technology, Management and Budget. Day-to-day operations of the plans have been
contracted to a third-party; however, the State Treasurer oversees investment options. The 457 plan and the 401k plan are
combined for reporting purposes under the heading of “State of Michigan Deferred Compensation Funds.”
The Employer makes no contribution to the 457 plan. Generally, the Employer does not make matching contributions to the 401k
plan; however, the State of Michigan has occasionally made matching contributions to the 401k plan as part of certain State
employees’ compensation packages. To expand investment options, three investment tiers were developed and made available to
participants on J uly 1, 1997. Participants invest their contributions and accumulated earnings by selecting investments in one or
more of the investment tiers. Employees may, at any time, transfer accumulated balances and future contributions among the
investment tiers. Investment earnings, net of administrative charges, are credited to the participants proportionally, based upon
their balances in the plan.
The 457 and 401k plans include loan provisions for State of Michigan employees. Loans to participants are recorded as assets.
Net position available for plan benefits for the 457 plan and the 401k plan at September 30, 2014, was $1.9 and $1.9 billion,
respectively.
NOTE 18 – INTERFUND RECEIVABLES AND PAYABLES
Primary Government
The balances of current interfund receivables and payables as of September 30 were (in millions):
General Fund $ - $ - - $ 0.7 $ 2.2 $ 56.4 $ 59.4
School Aid Fund 1,069.2 - - - - 1,069.2
Non-Major Governmental Funds 16.3 - 38.6 - 0.3 7.3 62.5
State LotteryFund - 8.8 - - - 0.4 9.1
Unemployment Compensation Funds - - 4.1 5.4 - - 9.5
Non-Major Enterprise Funds - - - - - 0.3 0.3
Internal Service Funds - - - - 6.7 4.1 10.7
FiduciaryFunds 0.2 - - - - 0.1 0.3
Timing Difference Between FiduciaryFunds - - - - - 0.1 0.1
Governmental Funds - Long - Term* - - - - - 15.4 15.4
Total $ 1,085.7 $ 8.8 $ 42.7 $ 6.2 $ 9.2 $ 84.0 $ 1,236.6
Fund
Compensation
Unemployment
Total Due From
Due To
Fund
General
Non-Major
Governmental
Funds Funds Funds Funds
Service
Internal
Fiduciary School Aid
*This represents the current portion of the long-term liability recorded in the government-wide statements for amounts owed by
the governmental funds to the State Employees’ Pension Benefits Fund for supplemental pension payments. This liability is
further described in Note 15.
Interfund receivables and payables are recorded for borrowings to eliminate negative balances in the Common Cash pool, as
described in Note 5, payroll liabilities for group insurance and retirement, and tax accrual distributions for taxes collected in the
following fiscal year.
Not included in the table above are the following interfund advances, which are not expected to be repaid within one year: $2.7
million due from the Correctional Industries Revolving Fund (an internal service fund) to the General Fund for amounts loaned
for capital construction and related accrued interest of $2.2 million.
Discretely Presented Component Units
Receivables and related liabilities between the primary government and the discretely presented component units, do not agree
because the Michigan State Housing Development Authority and the ten State universities have a J une 30 fiscal year-end.
2014 Comprehensive Annual Financial Report
109
Michigan
Notes to the Financial Statements
NOTE 19 – INTERFUND COMMITMENTS
Mackinac Bridge Authority
Mackinac Bridge Authority (MBA), a discretely presented component unit, has over the years received $75.3 million of subsidies,
including $12.3 million for operations and $63.0 million for debt service. These subsidies were provided by the State Trunkline and
Michigan Transportation funds, respectively.
State statutes require that MBA continue charging bridge tolls and begin repaying the State funds for the subsidies provided.
These repayments are to continue until such time as the subsidies have been completely returned. MBA has not recorded a
liability and the State funds have not recorded receivables for these subsidies because: the reimbursements are contingent upon
future net revenues, there is no repayment schedule, and the repayment commitment is long-term and budgetary in nature.
Repayments may be authorized by MBA, after consideration of MBA’s annual needs for its operations and planned repairs and
improvements.
As of September 30, 2014, MBA has repaid a total of $13.3 million of the advance from the Michigan Transportation Fund, leaving
a balance of $49.8 million. No repayments have been made on the advance from the State Trunkline Fund.
NOTE 20 – TRANSFERS
Interfund transfers as of September 30, consisted of the following (in millions):
Internal
Service
Funds Total
General Fund $ - $ 149.9 $ 801.9 $ 2.5 $ 954.3
School Aid Fund - - 126.2 - 126.2
Non-Major Governmental Funds 48.4 - 1,281.1 - 1,329.5
State Lottery Fund 4.3 742.9 2.3 - 749.5
Unemployment Compensation Funds - - 15.5 - 15.5
Non-Major Enterprise Funds 177.8 - - - 177.8
Internal Service Funds 3.5 - - - 3.5
Fiduciary Funds 0.2 - - - 0.2
Total $ 234.2 $ 892.8 $ 2,227.1 $ 2.5 $ 3,356.6
Transferred From
Transferred To
General School Aid Governmental
Funds Fund Fund
Non-Major
Transfers are used to 1) move revenues from the fund that statute requires to collect them to the fund that statute requires to
expend them, 2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt
service payments become due, 3) use unrestricted revenues collected in the General Fund to finance various programs accounted
for in other funds in accordance with budgetary authorizations, 4) move profits from the Liquor Purchase Revolving Fund and the
State Lottery Fund as required by law, and 5) transfer accumulated surpluses from other funds to the General Fund when
authorized by statute.
NOTE 21 – FUND DEFICITS
Primary Government
Governmental Funds
The Advance Financing Funds, a capital projects fund, had a fund balance deficit of $2.7 million. The fund deficit was caused
by expenditures for projects for which bonds have not yet been issued and for expenditures incurred to improve State-owned
sites that have not been sold.
The State Building Authority, a capital projects fund, had a fund balance deficit of $103.4 million. The fund deficit resulted
because the issuance of commercial paper represents a fund liability and the corresponding construction projects are not
reported as assets in the fund.
2014 Comprehensive Annual Financial Report
110
Michigan
Notes to the Financial Statements
NOTE 22 – FUND BALANCES AND NET POSITION
Fund Balance Classifications – Governmental Funds
The following table provides additional detail regarding the fund balances reported on the Governmental Funds Balance Sheet
at September 30 (in millions):
Non-Spendable
Inventory and prepaids $ 10.2 $ - $ - $ - $ 7.7 $ - $ 17.9
Long term notes/receivables 178.9 - - - - - 178.9
Permanent fund principal - - 221.4 - - 763.5 984.9
Restricted
Education 1.7 522.5 - 156.2 - - 680.4
Public safety and corrections 12.5 - 2.4 - - 4.3 19.2
Conservation, environment,
recreation and agriculture 134.5 - 179.3 1.6 0.1 227.2 542.7
Health and human services 39.5 - 1.3 - - - 40.8
Transportation - - 128.6 - 904.8 - 1,033.4
Labor, commerce, and regulatory 100.6 - 45.2 - - - 145.8
Other purposes 94.3 - 10.3 66.9 - - 171.5
Committed
Education 0.6 - - - - - 0.6
Public safety and corrections 76.0 - - - - - 76.0
Conservation, environment,
recreation and agriculture 30.4 - - - - - 30.4
Health and human services 119.2 - - - - - 119.2
Labor, commerce, and regulatory 42.7 - - - - - 42.7
Other purposes 729.8 - 547.5 - - - 1,277.2
Assigned
Education 1.7 - - - - - 1.7
Public safety and corrections 63.5 - - - - - 63.5
Conservation, environment,
recreation and agriculture 6.4 - - - - - 6.4
Health and human services 28.6 - - - - - 28.6
Transportation 62.4 - - - - - 62.4
Labor, commerce, and regulatory 1.5 - - - - - 1.5
Other purposes 42.7 - - - - - 42.7
Unassigned 306.4 - - - (106.1) - 200.3
Total Fund Balances $ 2,084.1 $ 522.5 $ 1,136.1 $ 224.7 $ 806.4 $ 995.0 $ 5,768.7
Fund Fund Funds Funds Funds Funds Total
General Aid Revenue Service Projects Permanent
School Special Debt Capital
Other
2014 Comprehensive Annual Financial Report
111
Michigan
Notes to the Financial Statements
Restricted Net Position – Primary Government
The following table provides additional detail regarding the restricted net position reported for the primary government on the
government-wide Statement of Net Position at September 30 (in millions):
Governmental Activities:
Restricted For:
Education $ 1.6 $ 1,000.9 $ 1,002.5
Public safety and corrections 10.1 4.8 14.9
Conservation, environment, recreation and agriculture 190.9 101.3 292.2
Health and human services 23.5 17.1 40.6
Transportation - 983.1 983.1
Labor, commerce, and regulatory 144.2 - 144.2
Other purposes 103.8 27.2 131.0
Funds Held as Permanent Investments:
Expendable - 231.4 231.4
Nonexpendable 4.7 980.2 984.9
Total Restricted Net Position - Governmental $ 478.8 $ 3,346.0 $ 3,824.9
Business - Type Activities:
Restricted For:
Unemployment compensation $ 2,415.7 $ - $ 2,415.7
Other purposes 26.8 - 26.8
Total Restricted Net Position - Business - Type $ 2,442.5 $ - $ 2,442.5
Total Primary Government:
Restricted For:
Education $ 1.6 $ 1,000.9 $ 1,002.5
Public safety and corrections 10.1 4.8 14.9
Conservation, environment, recreation and agriculture 190.9 101.3 292.2
Health and human services 23.5 17.1 40.6
Transportation - 983.1 983.1
Unemployment compensation 2,415.7 - 2,415.7
Labor, commerce, and regulatory 144.2 - 144.2
Other purposes 130.6 27.2 157.8
Funds Held as Permanent Investments:
Expendable - 231.4 231.4
Nonexpendable 4.7 980.2 984.9
Total Restricted Net Position - Primary Government $ 2,921.3 $ 3,346.0 $ 6,267.3
Total
Consitutional
External or
Legislation
by Enabling
Restricted
Restrictions
2014 Comprehensive Annual Financial Report
112
Michigan
Notes to the Financial Statements
NOTE 23 – DISAGGREGATION OF PAYABLES
The line “Current Liabilities: Accounts payable and other liabilities,” as presented on the government-wide Statement of Net
Position as of September 30, consisted of the following (in millions):
Medicaid programs $ 883.2 $ - $ - $ - $ - $ - $ - $ 883.2
Non-Medicaid health programs 180.8 - - - - - - 180.8
Human Services programs 176.7 - 0.4 - - - - 177.1
Transportation programs - - 449.7 - - - - 449.7
School Aid programs - 129.8 - - - - - 129.8
Other state programs 255.8 - 23.5 - - - - 279.4
Merit Award scholarships - - 0.8 - - - - 0.8
Payroll and withholdings 138.5 - 17.7 - 0.6 - 0.4 157.3
Tax refunds other than income tax 683.3 7.8 9.3 - - - - 700.4
Unearned receipts 73.0 0.2 0.5 - - - - 73.6
Amounts held for others 26.9 - 42.0 - 4.7 - - 73.6
Capital Projects - Non Transportation - - 25.6 - - - - 25.6
Prize awards - - - - 99.0 - - 99.0
Liquor purchase - - - - - - 78.7 78.7
Unemployment payments - - - - - 20.9 - 20.9
Internal Service Fund liabilities - - - 94.2 - - - 94.2
Due to fiduciary funds* - - - 83.9 - - - 83.9
Miscellaneous - - - - 11.1 - 0.4 11.5
Total $ 2,418.3 $ 137.8 $ 569.4 $ 178.1 $ 115.4 $ 20.9 $ 79.5 $ 3,519.4
Fund Fund Fund Funds Funds
General Aid Governmental Other Lottery Enterprise
Funds Funds
State
Total
Compensation
Non-Major School
Michigan
Unemployment Non-Major
*This amount represents amounts due to fiduciary funds that are reclassified as external payables on the government-wide
Statement of Net Position.
Effective J anuary 1, 2008, the State replaced the Single Business Tax with the Michigan Business Tax (MBT). Effective J anuary 1,
2012, the MBT was replaced by the Corporate Income Tax (CIT). However, a small number of taxpayers with certificated credits
may continue to file under the MBT provisions until their credits expire. Beginning in fiscal year 2008, the State did not estimate a
business tax liability on the accrual basis of accounting due to the lack of information. The State is still unable to estimate an
accrual because the data needed to compare tax payments received to the total tax liability is not available. Therefore, any
potential tax refunded (payable), or tax overpayments that will be applied by taxpayers against subsequent tax liability periods
(carried forward), is not measurable and has not been recorded in this fiscal year.
NOTE 24 – CONTINGENCIES AND COMMITMENTS
Primary Government
Litigation
In the government-wide and proprietary fund financial statements, the State accrues liabilities related to significant legal
proceedings if a loss is probable and reasonably estimable. In the governmental fund financial statements, liabilities are
accrued when cases are settled and the amount is due and payable.
The State is a party to various legal proceedings seeking damages, injunctive, or other relief. In addition to routine litigation,
certain of these proceedings could, if unfavorably resolved from the point of view of the State, substantially affect State
programs or finances. These lawsuits involve programs generally in the areas of corrections; tax collection; commerce and
budgetary reductions to school districts and governmental units; and court funding. Relief sought generally includes damages
in tort cases; improvement of prison medical and mental health care and refund claims for State taxes. The State is also a
party to various legal proceedings that, if resolved in the State’s favor, would result in contingency gains to the State, but
without material effect upon fund balance/net position. The ultimate dispositions and consequences of all of these proceedings
are not presently determinable, but such ultimate dispositions and consequences of any single proceeding or all legal
proceedings collectively should not themselves, except as listed below, in the opinion of the Attorney General of the State and
the State Budget Office, have a material adverse effect on the State’s financial position. Those lawsuits pending which may
have a significant impact or substantial effect on State programs or finances, if resolved in a manner unfavorable to the State,
include the following:
Durant et al v State of Michigan: On November 15, 2000, more than 365 Michigan school districts and individuals filed two suits
in the Michigan Court of Appeals. The first suit, Durant et al v State et al (“Durant III”), asserts that the State School Aid
appropriation act, P.A. 297 of 2000, violates the State Constitution, Article 9, Sections 25-34 (the “Headlee Amendment”),
because it allegedly transfers per pupil revenue guaranteed to school districts under the Constitution of 1963, Article 9, Section
11, for unrestricted school operating purposes, in order to satisfy the State’s independent funding obligation to those school
districts under Article 9, Section 29. The State won this case in the Court of Appeals, and the Supreme Court denied the
plaintiffs’ application for leave to appeal.
2014 Comprehensive Annual Financial Report
113
Michigan
Notes to the Financial Statements
The second suit, Adair et al v State et al (“Adair”), was filed on November 15, 2000, by more than 400 school districts and
asserts that the State has, by operation of law, increased the level of various specified activities and services beyond that which
was required by State law as of December 23, 1978 and, subsequent to December 23, 1978, added various specified new
activities or services by State law, including mandatory increases in student instruction time, without providing funding for these
new activities and services, all in violation of the Headlee Amendment. The Adair plaintiffs sought an unspecified money
judgment equal to the reduction in the State financed proportion of necessary costs incurred by the plaintiff school districts for
each school year from 1997-1998 through the date of any judgment and for attorneys’ fees and litigation costs. The Adair
plaintiffs also sought a declaratory judgment that the State has failed to meet its funding responsibility under the Headlee
Amendment to provide the plaintiff school districts with revenues sufficient to pay for the necessary increased costs for activities
and services first required by State law after December 23, 1978, and to pay for increases in the level of required activities and
services beyond that which was required by State law as of December 23, 1978.
On J anuary 2, 2001, plaintiffs filed a first amended complaint in both Durant III and Adair increasing the number of school
district plaintiffs to 443. On February 22, 2001, plaintiffs filed a second amended complaint in Durant III increasing the number
of school district plaintiffs to 457. On April 16, 2001, plaintiffs filed a second amended complaint in Adair increasing the number
of school district plaintiffs to 463. The second amended complaint includes a request for declaratory relief, attorneys’ fees and
litigation costs but does not include a request for money judgment.
On April 23, 2002, the Court of Appeals dismissed the complaint in its entirety and with prejudice. Plaintiffs filed an application
for leave to appeal in the Michigan Supreme Court on May 14, 2002, which was granted on December 18, 2002.
On J une 9, 2004, the Michigan Supreme Court issued its opinion in Adair. The court held that, with three exceptions, all of the
plaintiffs’ claims were barred by the doctrines of res judicata and release. The court ruled that all but three of the claims that
plaintiffs alleged were new or increased activities could have been included in the Durant I litigation because the activities
existed during the time that the Durant I litigation was pending.
The other three claims involve statutes that were enacted after the court’s 1997 Durant I decision. The court ruled that two of
these post-Durant I statutes are not new mandates because the activities are either not new or are merely permissive. The
third claim involves the record keeping activities and the operation of the Center for Educational Performance and Information
(CEPI), which was created by executive order in 2000 (Michigan Compiled Laws (MCL) Section 388.1752; Executive Order
(EO) 2000-9). Plaintiffs alleged that the statute and executive order require districts to create and maintain student data
following State-specified data-gathering procedures and transmit the data electronically to the State. The Supreme Court ruled
that the plaintiffs’ allegation that districts had to now actively participate in maintaining data that the State requires for its own
purposes presents a colorable claim under the Headlee Amendment. The court reversed the Court of Appeals’ dismissal of the
claim and remanded the issue to the Court of Appeals to determine whether this claim constitutes a new State-mandated
activity in violation of the Headlee Amendment.
On August 4, 2005, the Court of Appeals held that the school districts failed to present documentary support from which it can
be inferred that either MCL Section 388.1752 or EO 2000-9 mandates the school districts to actively participate in the
maintenance of data that the State requires for its purposes. Further, the record keeping claim cannot survive summary
disposition in the absence of any factual support, either expressed or implied, demonstrating that a genuine issue of material
fact exists with regard to whether the dictates of the statute and the EO impermissibly shift a State obligation to the school
districts to avoid the costs of obligation. The Court of Appeals granted summary disposition in the State’s favor. Plaintiffs
estimated their claim to be $30 million plus ongoing costs. The plaintiff school districts filed an application for leave to appeal
with the Michigan Supreme Court. A brief in opposition was filed on October 11, 2005.
On March 8, 2006, the Supreme Court issued an order vacating the August 4, 2005, Court of Appeals decision and remanded
the issue to the Court of Appeals for reevaluation of the record keeping claim. The Court of Appeals appointed a Special
Master to oversee discovery and make proposed findings to the Court of Appeals. An evidentiary hearing before the Special
Master was held in the summer of 2007.
On J anuary 27, 2008, the Special Master issued her opinion. She found that the increased recordkeeping and reporting
requirements imposed upon the school districts by the State was an attempt to shift the burden to comply with additional
requirements to the districts without appropriating the necessary costs to comply. She concluded that this was a shifting of the
recordkeeping and reporting requirement burden from the State to the local units of government in violation of the Headlee
Amendment.
The State filed objections to the Special Master’s Opinion in the Court of Appeals. The school districts sought attorney fees in
the Court of Appeals.
2014 Comprehensive Annual Financial Report
114
Michigan
Notes to the Financial Statements
On J uly 3, 2008, the Court of Appeals issued its Opinion on Second Remand, essentially adopting the conclusions of law and
factual findings of the Special Master. The court entered a declaratory judgment in favor of the plaintiff school districts,
requiring the State to fund the “necessary costs associated with the data collection reporting mandates” associated with CEPI.
The court denied plaintiff’s request for attorney fees.
Both parties filed applications for leave to appeals in the Michigan Supreme Court. On April 3, 2009, the Michigan Supreme
Court granted leave on two issues: (1) whether the prohibition of unfunded mandates in Article 9, Section 29 of the State
Constitution, requires plaintiffs to prove specific costs, either through reallocation of funds or out-of-pocket expenses in order to
establish their entitlement to a declaratory judgment; and (2) whether plaintiffs are entitled to recover the “costs incurred in
maintaining” this suit pursuant to Article 9, Section 32, of the State Constitution.
Following the submission of briefs, the Michigan Supreme Court heard oral arguments on October 6, 2009.
On J uly 14, 2010, the Michigan Supreme Court issued a 4-3 decision in favor of the plaintiffs on both issues. The court held
that the school district record keeping requirements was an increase in the level of activities or services mandated by the State
and therefore, subject to Headlee. The court also held that in a declaratory judgment action under Headlee, where no
legislative appropriation is made, a plaintiff is not required to show a quantified dollar amount increase in necessary costs, and
the State has the burden to demonstrate that the school district’s costs were not necessary under one or more of the
exceptions in MCL 21.233(6) (a) through (d). In evaluating whether the costs from an increased level of activity were
necessary, the question is what would be the cost to the State if it performed the mandated activity. The court also held that
plaintiffs are entitled to attorney fees sustained in maintaining this action.
The case was remanded to the Court of Appeals to determine cost and attorney fees. An evidentiary hearing before the court-
appointed Special Master occurred in J une 2011. On November 6, 2012, the Court of Appeals declined to award attorney fees
for the original action concluding that Plaintiffs failed to carry their burden of proving the hours reasonably expended in litigating
the recordkeeping claim. The Court of Appeals also determined that Plaintiffs were not entitled to costs or attorney fees for
post-judgment proceedings. The Court of Appeals remanded to the Special Master for additional proofs and calculation of
other costs. On remand the parties stipulated that other costs incurred up to J uly 14, 2010, were $175,000. On May 24, 2013,
in lieu of granting leave to appeal, the Michigan Supreme Court reversed the portion of the Court of Appeals decision denying
all attorney fees for Phase II of the litigation (recordkeeping claim only) and remanded to the Court of Appeals to make findings
regarding the amount of attorney fees during that phase of the case. The Court denied leave to appeal the denial of attorney
fees for Phase I while the case involved multiple claims that were successfully defended, and Phase III for substantial post-trial
costs and attorney fees relating to the attorney fee proceedings.
On August 9, 2013, the Court of Appeals issued an Order awarding attorney fees in the amount of $1,348,677.60 for the Adair I
trial (Phase II). But, on August 28, 2013, before the Order was effective, the plaintiff school districts filed an application for
leave to appeal in the Michigan Supreme Court alleging that the Court of Appeals made several errors in its determination of
the reasonable attorney fees. Because the plaintiffs filed an application for leave to appeal, the attorney fee award did not
become effective. On November 4, 2013, the Adair plaintiffs filed a motion for immediate payment of the attorney fee award in
the Michigan Supreme Court. The Michigan Supreme Court denied plaintiffs’ application for leave. The Michigan Department of
Education processed the attorney fee payment on J anuary 21, 2014.
The Legislature allocated up to $1.0 million in Section 22b(6) of the State School Aid Act, MCL 388.1622b(6) for this anticipated
expense. The Legislature appropriated $25.6 million in fiscal year 2011, and $34 million in fiscal year 2012 to be used solely
for the purpose of paying necessary costs related to the state-mandated collection, maintenance, and reporting of data to this
state.
On J anuary 19, 2011, the Adair plaintiffs filed a new complaint seeking, among other things, a declaratory judgment that the
appropriation is insufficient to pay the full costs of the imposed record keeping requirements, and that the new requirements for
teacher and administrator evaluations enacted in the Race to the Top legislation, 2009 Public Acts 201-205, also violate the
Headlee Amendment. The complaint also sought compensable damages for the amount of costs incurred by the school
districts to provide required data and attorney fees, injunctive relief to cease requiring school districts from complying with the
record keeping requirements, and injunctive relief to enjoin Defendants from enforcing the Race to the Top legislation.
On October 10, 2011, plaintiffs filed a second amended complaint primarily based on the changes in the teacher and
administrator evaluation provisions contained in 2011 PA 100-102, the J uly 2011 amendments to Section 1249 of the School
Code, MCL 380.1249, as well as the changes to the Tenure Act. In addition, the districts added a count related to the Teacher
Student Data Link (TSDL) and allege that Section 94a of the School Aid Act mandates that schools collect and report new data
without an appropriation to pay the districts for costs of the new activity including: “costs incurred for their staff members
necessary to perform the required services for the purpose of TSDL data acquisition, maintenance and reporting to CEPI, to
acquire necessary software to track, record and report the required data, and to train school district staff in order to otherwise
implement the new TSDL reporting requirements, all of which have never before been required by the State.”
2014 Comprehensive Annual Financial Report
115
Michigan
Notes to the Financial Statements
On August 10, 2012, the Adair plaintiffs filed a new original action in the Court of Appeals seeking, among other things, a
declaratory judgment that the appropriation for 2012-13 in 2012 PA 201 is insufficient to pay the full costs of the imposed record
keeping requirements adding allegations concerning information collected or reported in the Michigan Electronic Information
System (MEIS). As with the 2011 case, the complaint again alleges that the current funding method improperly reduced aid to
districts. The complaint again alleges that the requirements for teacher and administrator evaluations enacted in the Race to
the Top legislation, 2009 Public Acts 201-205, and 2011 PA 100-102, the J uly 2011 amendments to section 1249 of the School
Code, MCL 380.1249, as well as the changes to the Tenure Act, violate the Headlee Amendment and alternatively that the
definitions of activity and service in the MCL 21.232(1) and MCL 21.234(1) are unconstitutional and contrary to the intent of the
voters. Plaintiffs allege this is occurring in direct violation of the provisions of the second sentence of the Constitution of
1963, Article 9, Section 29, the Headlee Amendment. The complaint seeks declaratory relief, injunctive relief to cease requiring
school districts from complying with the record keeping requirements, and injunctive relief to enjoin Defendants from enforcing
the educator evaluation provisions. The complaint also seeks compensatory damages related to the funding mechanism and
the educator evaluation claims. This case is held in abeyance pending the decision in the 2011 case.
On August 23, 2013, the Court rejected the Adair plaintiffs’ challenge to the funding scheme which reallocated funds to provide
a specific allocation for the recordkeeping requirements but did not provide a net increase in funding to districts. The Court of
Appeals also granted declaratory relief in favor of the State and determined the teacher evaluation claims did not implicate
Headlee. First, the Tenure Act changes merely modify existing protections and, thus, still provide a level of protection to
tenured public teachers against the arbitrary and capricious employment practices of administrators and school boards. Under
such circumstances, the new requirements imposed by the amended tenure act do not constitute activities under MCL
21.232(1) and, hence, the Prohibition of Unfunded Mandates (POUM) clause. Second, the Court determined that the revisions
to the School Code do not implicate the POUM. It rejected the districts’ facial challenge to the constitutionality of the
implementing definitions. Next, the Court determined that the revision in the Public Employment Relations Act merely modified
prohibited subjects of collective bargaining and did not impose any new requirements that implicate Headlee.
With regard to the adequacy of the funding appropriations, the Court remanded the case to the Special Master for further
hearing and findings. The Court acknowledge the plaintiffs higher burden once a mandated activity is funded, but concluded
that “the higher burden borne by plaintiffs is the burden to present evidence of a sufficient nature to allow the trier of fact to
conclude that the methodology employed by the Legislature to determine the amount of the appropriation was so flawed that it
fails to reflect the actual cost to the state if the state were to provide the activity or service mandated as a state requirement.”
Both parties filed applications for leave to appeal in the Michigan Supreme Court. On February 5, 2014, the Michigan Supreme
Court granted the State Defendants’ application for leave to appeal. The Michigan Supreme Court directed that the parties shall
include among the issues to be briefed: (1) which party has the burden of proving underfunding of a legislative mandate in a
challenge under Const 1963, art 9, § 29, (2) what elements of proof are necessary to sustain such a claim and, (3) whether
acceptance of a general appropriation from the Legislature which is specifically conditioned on compliance with reporting
requirements pursuant to MCL 388.1622b(1)(c) waives any challenge to the funding level for those requirements under Const
1963, art 9, § 29. At the same time, the Michigan Supreme Court denied the plaintiff school districts’ cross-application for leave
appeal dismissal of their remaining claims.
As a result, the Court of Appeals’ dismissal of the Plaintiffs’ claims that the State’s funding method violated the Headlee
Amendment and Proposal A because it merely shifted revenue from other school aid allocations, and that the State violated
Const 1963, art 9, § 29 by enacting changes to teacher and administrator evaluation requirements without an appropriation to
fund them, remains intact.
Subsequent to the fiscal year end, on December 22, 2014, the Michigan Supreme Court reversed the Court of Appeals and
reinstated the special master’s involuntary dismissal of the case. The Court concluded that in a case alleging underfunding of a
Headlee mandate that the plaintiff must allege and prove the specific amount of the funding shortfall i.e., the extent of the
necessary increased costs of the new or increased activity or service, in order to establish the extent of the harm caused by the
Legislature’s inadequate funding. The decision did not disturb the balance of the Court of Appeals’ holdings not addressed in
the decision.
The August 10, 2012, original action in the Court of Appeals remains in abeyance at this time. Plaintiffs allege this is occurring
in direct violation of the provisions of the second sentence of the Constitution of 1963, Article 9, Section 29, the Headlee
Amendment. Although this is a declaratory judgment action, if the suit is sustained plaintiffs are entitled to costs including
attorney fees estimated between $1.2 million and $4 million. Plaintiffs claim cost of compliance with the reporting is over $50
million annually.
2014 Comprehensive Annual Financial Report
116
Michigan
Notes to the Financial Statements
Federal Grants
The State receives significant financial assistance from the federal government in the form of grants and entitlements. The
receipt of federal grants is generally conditioned upon compliance with terms and conditions of the grant agreements and
applicable federal regulations. Substantially all federal grants are subject to either federal single audits or financial and
compliance audits by grantor agencies. Questioned costs as a result of these audits may become disallowances after the
appropriate review of federal agencies. Material disallowances are recognized as liabilities in the government-wide and
proprietary fund financial statements when the loss becomes probable and reasonably estimable. Disallowances are
recognized as liabilities in the governmental fund financial statements when the loss becomes due and payable. As of
September 30, 2014, the State had been notified of various disallowances and penalties totaling in excess of $100 million. The
State believes the possibility of full repayment of these disallowances and penalties is remote. In addition, the State estimates
that any additional disallowances of recognized revenue will not be material to the general purpose financial statements.
Gain Contingencies
Certain contingent receivables related to the Department of Human Services (DHS) are not recorded as assets in these
statements. Amounts recoverable from DHS grant recipients for grant overpayments or from responsible third parties are
recorded as receivables only if the amount is reasonably measurable, expected to be received within 12 months, and not
contingent upon future grants or the completion of major collection efforts by the State. If recoveries are accrued and the
program involves federal participation, a liability for the federal share of the recovery is also accrued. The unrecorded amount
of potential recoveries, which are ultimately collectible, cannot be reasonably determined.
In 1998, the major United States tobacco product manufacturers entered into the Master Settlement Agreement ("MSA" or
"Agreement") with the State of Michigan and separately with each of 51 other jurisdictions (the "Settling States") comprised of
46 states, the District of Columbia, Puerto Rico, and four U.S. territories. The MSA is the product of extensive negotiations
between the Settling States and Participating Manufacturers ("PMs"). The Ingham County Circuit Court approved the MSA by
entry of a Consent Decree on December 11, 1998. The Agreement releases the PMs from Michigan's claims that the PMs had
conspired to conceal from the public the health risks related to smoking, and had specifically targeted minors in their marketing
efforts. In return for the release, the MSA obligates the PMs to make annual payments to the states, and requires substantial
changes in the companies' advertising and marketing practices, with the intention of reducing underage smoking. The MSA
provides that an accounting firm ("Independent Auditor," or "Auditor") calculates the PMs' payments annually, using a specified
formula. The payment is computed as an aggregate figure, which is then divided among the states according to percentages
specified in the MSA. The Agreement requires the PMs to make their payments by April 15th of each year, in perpetuity, with
Michigan receiving an allocable share of 4.3519476% of the total.
In December 2012, the State of Michigan along with several other states signed a term sheet intending to settle litigation over
the application and interpretation of the market share adjustment and diligent enforcement provisions of the MSA. As a result of
the settlement, the uncertainty regarding the State's disputed payment account and whether the State was diligently enforcing
its collection legislation pursuant to the MSA during years 2003 through 2012 has been substantially eliminated. The State of
Michigan will avoid any further reduction of its tobacco payments for those years, and the State's share of those funds has been
released. The settlement provides a more definitive framework for avoiding any similar disputes for subsequent years, but
there is the potential for additional disputes concerning diligent enforcement. The settlement makes the MSA current,
eliminating approximately 10 years of disputed payment withholdings.
It is impossible to calculate with precision Michigan's share of this 2014 sales-based payment, but is expected to be in the
range of $250 million.
Contingent Liability for Local School District Bonds
Article 9, Section 16, of the Michigan Constitution resulted in a contingent liability for the bonds of any school district which are
“qualified” by the State Treasurer. If, for any reason, a qualified school district will be, or is, unable to pay the principal and
interest on its qualified bonds when due, the school district shall borrow, and the State shall lend to it, any amount necessary for
the school district to avoid a default on its qualified bonds. In the event that adequate funds are not available in the School
Loan Revolving Fund to make such a loan, the State is required to make loans from the General Fund. As of September 30,
2014, the principal amount of qualified bonds outstanding was $12.9 billion. Total debt service requirements on these bonds
including interest will be approximately $1.5 billion in 2015. The amount of loans by the State (related to local school district
bonds qualified under this program), outstanding to local school districts as of September 30, 2014, is $1.4 billion. Interest due
on these loans as of September 30, 2014, is $358.9 million.
Venture Michigan Fund Tax Vouchers
As of September 30, 2014, the State had issued $450 million in tax vouchers as collateral for loans to early stage venture
investment businesses as a mechanism to promote a healthy economic climate in Michigan. The vouchers are expected to be
sold and redeemed beginning in fiscal year 2015 with the expected sale and repayment of $50 million in fiscal year 2015; $50
million in fiscal year 2016; $40 million in fiscal year 2017; and the remainder in subsequent fiscal years.
2014 Comprehensive Annual Financial Report
117
Michigan
Notes to the Financial Statements
Other Contingent Liabilities
The State is involved in a number of court cases related to the apportionment formulas a taxpayer must use under the Michigan
Business Tax. These cases are in varying stages in the Court of Claims, the Michigan Tax Tribunal, or within the Department
of Treasury’s hearings division. The State believes there is a remote possibility of the decisions in these cases being
unfavorable to the State. However, if the decisions are unfavorable to the State, the potential liability related to these cases
could be in excess of $1 billion.
In addition, the State is involved in a court case challenging the requirement that active members of the State Employees
Retirement System (SERS) defined benefit pension plan contribute four percent of their compensation to SERS. The State
believes there is a remote possibility of an unfavorable decision in this case. However, if the decision is unfavorable to the
State, the amount that would be required to be refunded to SERS members was approximately $100 million as of September
30, 2014.
Commitments and Encumbrances
The Department of Transportation has construction and consultant commitments that will be paid with transportation related
funds. As of September 30, 2014, these commitments equaled $603.3 million; a portion of this balance, $90.5 million, has
been encumbered.
Encumbrance balances are comprised of grant agreements and other contracts the State of Michigan has entered into with
vendors for services or goods not yet performed or received as of year-end. A portion of these commitments will be funded with
current fund balances. These amounts are included on the face of the financial statements in the restricted, committed, and
assigned fund balance classifications. Resources provided by future bond proceeds, taxes, federal grants, and local and
private revenues will fund the remaining commitments. The following table shows total governmental fund encumbrances as of
September 30 (in millions):
Restricted
Education $ 0.6 $ 8.5 $ - $ 9.1
Public safety and corrections 17.8 - - 17.8
Conservation, environment,
recreation and agriculture 63.2 - 61.7 124.9
Health and human services 67.7 - - 67.7
Transportation - - 343.2 343.2
Labor, commerce, and regulatory 9.1 - 1.0 10.0
Other purposes 45.1 - 12.4 57.5
Committed
Education 0.1 - - 0.1
Public safety and corrections 10.4 - - 10.4
Conservation, environment,
recreation and agriculture 4.1 - - 4.1
Health and human services 22.5 - - 22.5
Transportation 0.2 - - 0.2
Labor, commerce, and regulatory 5.4 - - 5.4
Other purposes 30.1 - - 30.1
Assigned
Education 1.7 - - 1.7
Public safety and corrections 63.8 - - 63.8
Conservation, environment,
recreation and agriculture 8.7 - - 8.7
Health and human services 30.1 - - 30.1
Transportation 62.4 - - 62.4
Labor, commerce, and regulatory 1.6 - - 1.6
Other purposes 51.7 - - 51.7
Total Encumbrances $ 496.5 8.5 418.2 923.2
Total
General School Aid Other
Fund Fund Funds
2014 Comprehensive Annual Financial Report
118
Michigan
Notes to the Financial Statements
Discretely Presented Component Units
Student Loan Guarantees
The Michigan Guaranty Agency (MGA), a fiduciary fund of the Michigan Finance Authority, is contingently liable for student
loans made by financial institutions that qualify for guaranty. The State, other than MGA, is not liable for these loans. The
default ratio for loans guaranteed by MGA is below 5% for the fiscal year ended September 30, 2014. As a result, the federal
government’s reinsurance rate for defaults for the fiscal year ended September 30, 2014, is 100% for loans made prior to
October 1, 1993, 98% for loans made from October 1, 1993 to September 30, 1998, and 95% for loans made on or after
October 1, 1998. In the event of future adverse default experience, MGA could be liable for up to 25% of defaulted loans.
While management believes the MGA expected maximum contingent liability is less than 25% of outstanding guaranteed loans,
the maximum contingent liability at 25% is $562.6 million as of September 30, 2014. Management does not expect that all
guaranteed loans could default in one year.
The MGA has entered into commitment agreements with all lenders that provide, among other things, that the MGA will
maintain cash and marketable securities at an amount sufficient to guarantee loans in accordance with the Higher Education
Act of 1965, as amended. The MGA was in compliance with this requirement as of September 30, 2014.
Multi-Famil y Mortgage Loans
As of J une 30, 2014, the Michigan State Housing Development Authority (MSHDA) has commitments to issue multi-family
mortgage loans in the amount of $56.5 million and single-family mortgage loans in the amount of $13.7 million.
MSHDA has committed up to approximately $1.1 million per year for up to 30 years from the date of completion of the
respective developments (subject to three years advance notice of termination) from its accumulated reserves and future
income to subsidize operations or rents for certain tenants occupying units in certain developments funded under MSHDA’s
multi-family program.
NOTE 25 – RISK MANAGEMENT
Primary Government
General
The State has elected not to purchase commercial insurance for many of the risks of losses to which it is exposed. The State is
self-insured for most general liability and property losses, portions of its employee insurance benefit and employee bonding
programs, automobile liability, and workers’ compensation and unemployment compensation claims. Areas of risk where some
level of insurance coverage is purchased include: aircraft liability, property and loss rental insurance that may be required by
bond or lease agreements, portions of the State employee insurance benefits program, certain State artifacts, builder’s risk
coverage, boiler and machinery coverage, and employee bonding. Settled claims have not exceeded commercial coverage in
any of the past ten fiscal years.
The State has established two internal service funds, which are described below, to account for certain aspects of the risk
management program. Fund expenditures (expenses) are recognized in the paying funds in a manner similar to purchased
commercial insurance. For other uninsured losses not covered by an internal service fund program, such as general liability
and property losses, the State recognizes fund liabilities in the fund incurring the loss as follows: governmental funds record an
expenditure when a loss is due and payable; proprietary funds record an expense when it is probable that a loss has occurred
and the amount can be reasonably estimated. As explained more fully in Note 15, losses for workers’ compensation and
certain types of litigation losses have been recognized as liabilities in the government-wide financial statements.
For unemployment claims, the Unemployment Insurance Agency (UIA) bills the State for the actual amount of claims paid to
former State employees. The State accrues liabilities in the governmental fund financial statements for unemployment
compensation, only to the extent paid by UIA through September 30. During fiscal year 2014, expenditures for payments to
former State employees (not including university employees) totaled $10.3 million. The potential liability for future payments
cannot be estimated.
The State’s two internal service funds, which account for certain areas of risk management, such as portions of its employee
insurance benefits, employee bonding, and automobile liability, follow accounting standards established by the Governmental
Accounting Standards Board (GASB). This results in a reporting which is very similar to that used in the private insurance
industry. The various component programs within the two funds may incur deficits during a given year, but each program’s
surplus and unrestricted net position balance is considered in calculating future charges or benefit levels.
Risk Management Fund
This fund was established during fiscal year 1990 to account for insurance management activities implemented within the
Department of Technology, Management and Budget. The automobile liability and administrative functions are accounted for
as operating activities of this fund. Expenses and liabilities for claims, including incurred but not reported or not processed
claims, have been recorded in the amount of $7.7 million. This includes a long-term portion, which is recorded at $6.2 million.
2014 Comprehensive Annual Financial Report
119
Michigan
Notes to the Financial Statements
Changes in the Risk Management Fund’s claims for automobile liability for the fiscal years ending September 30, 2014 and
2013 are as follows (in millions):
Balance - beginning $ 7.5 $ 7.1
Current year claims and
changes in estimates 0.6 0.7
Claim payments (0.4) (0.3)
Balance - ending $ 7.7 $ 7.5
2013 2014
Workers’ compensation payments for State agencies are processed centrally through the Risk Management Fund. Changes in
Workers’ compensation claims for the fiscal years ending September 30, 2014 and 2013 are as follows (in millions):
Balance - beginning $ 92.0 $ 100.8
Current year claims and
changes in estimates 7.9 13.6
Claim payments (20.5) (22.4)
Balance - ending $ 79.4 $ 92.0
2014 2013
Workers’ compensation is further described in Note 15.
State Sponsored Group Insurance Fund
The Department of Technology, Management and Budget and the Civil Service Commission use this fund to account for
employee benefit programs, which are largely self-funded. In compliance with GASB Statement No. 45, Accounting and
Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, the retiree insurance benefits programs
are no longer reported in this fund. Expenses and liabilities for claims, which include incurred but not reported or not processed
benefit claims, based on preliminary estimates from the plan administrators, have been recorded as liabilities in the amount of
$129.0 million. This includes a long-term portion, which is recorded at a discounted present value of $91.0 million. For all
claims incurred prior to October 1, 2014, the discounted present value of the long-term disability liability was calculated over a
20-year period using a discount rate of approximately 0.80%.
Payments to the State Sponsored Group Insurance Fund are based on estimates of amounts needed to pay prior and current
year claims. In addition, a portion of the fund’s net position has been designated for catastrophic losses. The risk management
designation represents the level of reserves that should be maintained to ease large fluctuations in premium levels in years of
unexpected excessive claims. That designation was $39.7 million at September 30, 2014. Unrestricted net position totaled
$164.6 million at September 30, 2014.
Changes in the State Sponsored Group Insurance Fund’s claims liability for employee benefit programs for the fiscal years
ending September 30, 2014 and 2013 are as follows (in millions):
Balance - beginning $ 131.1 $ 132.9
Current year claims and
changes in estimates 705.6 689.2
Claim payments (707.7) (691.0)
Balance - ending $ 129.0 $ 131.1
2014 2013
Discretely Presented Component Units
State Universities
The State university component units participate with the other Michigan public universities in the Michigan Universities Self-
Insurance Corporation (MUSIC), which provides indemnity to its members against comprehensive general liability, errors and
omissions losses, and property damage commonly covered by insurance. Loss coverages for comprehensive general liability
and property are structured on a three-layer basis with each member retaining a portion of its losses, MUSIC covering the
second layer, and commercial carriers covering the third layer. For all policy years through J une 30, 1993, errors and
omissions coverage was structured on a two-layer basis with no excess insurance provided. Effective J uly 1, 1993, MUSIC
obtained excess insurance coverage from commercial carriers covering the third layer. For automobile liability there is no
member retention. Comprehensive general liability, property and automobile liability coverage is provided on an occurrence
basis; errors and omissions coverage is provided on a claims-made basis.
2014 Comprehensive Annual Financial Report
120
Michigan
Notes to the Financial Statements
NOTE 26 – PLEDGED REVENUES
As authorized by legislation, certain revenues of the primary government are pledged to secure debt of the State’s discretely
presented component units, and to pay the debt service on those bond issuances. In 2006, the Michigan Tobacco Settlement
Finance Authority (MTSFA) was created to issue tobacco settlement bonds, the proceeds of which were used to provide
funding for the 21st Century J obs Trust Fund, as well as the School Aid Fund, the General Fund, and a reserve fund. MTSFA
was reported as a blended component unit of the State; MTSFA subsequently was transferred by Executive Order 2010-2 to
the Michigan Finance Authority (MFA), a discretely presented component unit of the State. The bonds were securitized by a
portion of the State’s Tobacco Settlement Revenues (TSRs), which were payable to the State under the Master Settlement
Agreement entered into by participating cigarette manufacturers in 1998. Beginning April 1, 2008, 13.34% of the State’s share
of the TSRs was pledged to pay tobacco settlement bonds issued in 2006; beginning April 1, 2010, 10.77% of TSRs was
pledged to pay tobacco settlement bonds issued as part of the 2007 tobacco securitization. The State’s share of the settlement
is $310.9 million per year until 2017; from 2018-2025 the State’s share is $348.3 million per year. The actual amount received
by the State is less, and is affected by market and other factors related to cigarette manufacturing.
For the period ended September 30, 2014, the State’s pledged revenue to MFA was $61.1 million. Of that amount $60.9
million was received in MFA’s tobacco settlement debt service fund to contribute to annual debt service requirements of $63.8
million. Shortfalls in the receipt of pledged revenue are made up by investment income if available or other resources; debt
service on these bonds is payable solely from pledged TSRs.
The State Legislature issued Public Acts 267 and 268 of 2011, which permitted MFA to issue bonds to repay Federal advances
to the State’s Unemployment Trust Account, avoid additional advances, pay unemployment benefits, and minimize the impact
on unemployment insurance tax rates. This legislation also created the Unemployment Obligation Trust Fund to receive
unemployment obligation assessment revenue created by the legislation and assessed on employers as long as obligations are
outstanding. The assessment rate shall be an amount sufficient to ensure timely payment of debt service on the Unemployment
Obligation Trust bonds. All revenue collected or earned in the fund is pledged to MFA for payment of the bonds or for other
purposes specified in the legislation. During fiscal year 2014, $455.8 million was recognized as revenue in the State’s
Unemployment Obligation Trust Fund and $455.7 million was paid to MFA’s unemployment obligation assessment debt service
fund; debt service of $465.3 million was paid from the fund during the current fiscal year. Remaining principal and interest
requirements of the secured bonds totaled $2.9 billion at September 30, 2014.
NOTE 27 – DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES
The following table provides additional detail regarding deferred outflows of resources and deferred inflows of resources
reported on the government-wide Statement of Net Position (in millions):
Deferred outflows of resources:
Accumulated decrease in fair value of
hedging derivatives $ - $ - $ - $ 150.9
Refunding of debt 66.4 - 66.4 53.5
Total deferred outflows of resources $ 66.4 $ - $ 66.4 $ 204.4
Deferred inflows of resources:
Accumulated increase in fair value of
hedging derivatives $ - $ - $ - $ 18.3
Loan origination fees - - - 11.7
Refunding of debt 11.5 - 11.5 4.0
Total deferred inflows of resources $ 11.5 $ - $ 11.5 $ 34.1
Units
Component
Activities
Primary Government
Business-Type Governmental
Activities Totals
2014 Comprehensive Annual Financial Report
121
Michigan
Notes to the Financial Statements
The following table provides additional detail regarding deferred inflows of resources reported in the governmental funds (in
millions):
Taxes considered unavailable $ 1,259.1 $ 504.7 $ 11.0 $ - $ 1,774.8
Tobacco settlement receivables - - 159.6 - 159.6
School loan revolving program 358.9 - - - 358.9
Other 21.6 - 16.3 0.2 38.0
Total deferred inflows of resources $ 1,639.5 $ 504.7 $ 187.0 $ 0.2 $ 2,331.3
General School Aid
Non-Major
Fund Fund Funds Funds
Special
Revenue
Funds
Capital
Projects
Total
Governmental
NOTE 28 – SUBSEQUENT EVENTS
Short-Term Borrowing
On October 9, 2014, the State Building Authority (SBA) issued $114.1 million of commercial paper notes bearing an interest
rate of .07%. The notes matured on December 11, 2014.
On December 11, 2014, SBA issued $128.6 million of commercial paper notes bearing an interest rate of .07%. The notes will
mature on February 19, 2015.
On December 17, 2014, SBA entered into an alternative letter of credit for the 2007 Series I and 2011 Series IIB bonds. The
new stated expiration date for both issues is December 15, 2017.
Short-Term Borrowing – Discretely Presented Component Units
On December 4, 2014, the Michigan Finance Authority issued $13.7 million of tax anticipation revenue notes bearing an interest
rate of 3.185%. The notes will mature on October 6, 2015.
Long-Term Borrowing – Discretely Presented Component Units
Subsequent to their respective year-ends, the following discretely presented component units issued long-term debt, some of
which are for purposes of refinancing (in millions):
Central Michigan University $ 66.8
Eastern Michigan University 9.9
Ferris State University 12.9
Grand Valley State University 36.9
Michigan Finance Authority 1,580.5
Michigan State Housing Development Authority 38.4
Oakland University 28.1
Western Michigan University 30.0
Total $ 1,803.5
Bonds
Issued
Executive Reorganization
Executive Order 2014-12, effective March 2, 2015, will create the Department of Talent and Economic Development and the
Michigan Talent Investment Agency, as well as a restructuring that includes several State departments.
Michigan Settlement Administration Authority
On December 22, 2014, the Michigan Settlement Administration Authority approved the payment of $194.8 million from the
Michigan Settlement Administration Authority Fund to the City of Detroit’s two pension funds as part of the Detroit Bankruptcy
“Grand Bargain”. The funds were released for payment after the requirements set forth by Michigan Compiled Laws Section
141.1608 were met. The payment is expected to be made on February 9, 2015.
2014 Comprehensive Annual Financial Report
122
Michigan
FINANCIAL SECTION
REQUIRED SUPPLEMENTARY INFORMATION
2014 Comprehensive Annual Financi al Report
123 123 123 123
REQUIRED SUPPLEMENTARY INFORMATION
BUDGETARY COMPARISON SCHEDULE
MAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2014
(In Thousands)
Beginning Budgetary
Fund Balance Restated $ 2,464,395 $ 2,464,395 $ 2,464,395 $ -
Resources (inflows):
General Purpose Revenues:
Taxes 8,744,400 8,393,353 8,393,353 -
Federal 20,000 30,870 30,870 -
Local 1,000 99 99 -
Licenses and permits 20,000 14,359 14,359 -
Services 11,000 7,214 7,214 -
Miscellaneous 107,700 160,931 160,931 -
Transfers in 172,700 179,764 179,764 -
Restricted Revenues:
Taxes 3,455,510 4,066,949 4,066,949 -
Federal 15,554,822 15,333,828 15,333,828 -
Local 184,599 223,453 223,453 -
Licenses and permits 409,622 296,285 296,285 -
Services 330,327 311,266 311,266 -
Miscellaneous 1,074,393 529,478 529,478 -
Bonds issued - 85,295 85,295 -
Premium on bonds issued - 12,356 12,356 -
Proceeds from sale of capital assets - 1,626 1,626 -
Transfers in 79,274 54,473 54,473 -
Total Revenue Inflows 30,165,346 29,701,599 29,701,599 -
Amounts Available for Appropriation 32,629,742 32,165,994 32,165,994 -
Charges to Appropriations (outflows):
Legislative Branch 157,301 143,414 143,034 380
J udicial Branch 287,657 258,209 254,962 3,247
Executive Branch:
Agriculture and Rural Development 80,475 73,495 73,141 354
Attorney General 88,974 84,183 84,041 142
Civil Rights 15,198 14,315 14,124 191
Colleges and Universities Grants 1,365,810 1,361,129 1,360,857 272
Community Health 15,302,945 15,577,764 15,391,993 185,771
Corrections 2,048,021 2,003,741 1,991,722 12,018
Education 528,366 404,658 400,521 4,137
Environmental Quality 492,497 293,901 293,899 2
Executive Office 5,370 5,540 5,059 481
Human Services 5,985,970 5,542,553 5,529,222 13,332
Insurance and Financial Services 75,336 64,487 64,487 -
Licensing and Regulatory Affairs 305,727 263,505 258,319 5,185
Military and Veterans Affairs 169,592 159,882 158,785 1,097
Natural Resources 110,094 80,946 80,864 81
State 221,582 210,998 209,582 1,416
State Police 608,493 587,246 586,817 428
Technology, Management and Budget 699,803 1,298,455 1,290,819 7,637
Transportation 180,403 277,497 277,497 -
Treasury 1,950,014 3,018,634 2,971,475 47,159
Intrafund expenditure reimbursements - (911,029) (911,029) -
Total Charges to Appropriations 30,679,629 30,813,521 30,530,191 283,330
Reconciling Items:
Change in noncurrent assets - 30,589 30,589 -
Net Reconciling Items - 30,589 30,589 -
Ending Budgetary
Fund Balance $ 1,950,113 $ 1,383,063 $ 1,666,393 $ 283,330
GENERAL FUND
Michigan
ACTUAL
VARIANCE WITH
FINAL BUDGET
ORIGINAL
BUDGET
FINAL
BUDGET
124 124 124 124
$ 536,300 $ 536,300 $ 536,300 $ -
10,729,982 10,868,783 10,868,783 -
- - - -
- - - -
- - - -
- - - -
- 30,889 30,889 -
867,400 775,703 775,703 -
- - - -
1,764,421 1,623,283 1,623,283 -
- - - -
- - - -
- - - -
- 338 338 -
- - - -
- - - -
- - - -
- 117,104 117,104 -
13,361,804 13,416,100 13,416,100 -
13,898,104 13,952,400 13,952,400 -
- - - -
- - - -
- - - -
- - - -
- - - -
398,080 398,080 398,080 -
- - - -
- - - -
13,413,541 13,152,833 13,026,459 126,374
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- 17,442 17,442 -
- - - -
13,811,621 13,568,355 13,441,980 126,374
- (520) (520) -
- (520) (520) -
$ 86,483 $ 383,525 $ 509,899 $ 126,374
Michigan
BUDGET ACTUAL FINAL BUDGET
SCHOOL AID FUND
ORIGINAL FINAL VARIANCE WITH
BUDGET
125 125 125 125
REQUIRED SUPPLEMENTARY INFORMATION
BUDGETARY COMPARISON SCHEDULE
BUDGET-TO-GAAP RECONCILIATION
SEPTEMBER 30, 2014
(In Thousands)
FUND
Sources/inflows of resources
Actual amounts (budgetary basis) "available for appropriation"
from the budgetary comparison schedule. $ 32,165,994 $ 13,952,400
Differences - budget to GAAP:
Budgetary fund balance at the beginning of the year is a
budgetary resource but is not a current-year revenue for
financial reporting purposes. (2,464,395) (536,300)
Proceeds from sale of capital assets are inflows of budgetary
resources but are not revenues for financial reporting purposes. (1,626) -
Bonds issued are inflows of budgetary resources but are not
revenues for financial reporting purposes. (97,651) -
Transfers from other funds are inflows of budgetary resources
but are not revenues for financial reporting purposes. (234,237) (892,807)
Total revenues as reported on the Statement of Revenues,
Expenditures, and Changes in Fund Balances - Governmental
Funds. $ 29,368,085 $ 12,523,293
Uses/outflows of resources
Actual amounts (budgetary basis) "total charges to
appropriations" from the budgetary comparison schedule. $ 30,530,191 $ 13,441,980
Differences - budget to GAAP:
Encumbrances for supplies and equipment ordered but not
received are reported in the year the order is placed for
budgetary purposes, but in the year the supplies are
received for financial reporting purposes. (101,062) 5,156
Transfers to other funds are outflows of budgetary resources
but are not expenditures for financial reporting purposes. (954,325) (126,249)
Capital lease acquisitions are not outflows of budgetary
resources but are recorded as current expenditures
and other financing sources under GAAP. 18,371 -
Total expenditures as reported on the Statement of Revenues,
Expenditures, and Changes in Fund Balances - Governmental
Funds. $ 29,493,175 $ 13,320,888
SCHOOL
AID
Michigan
GENERAL
FUND
126 126 126 126
Michigan
Required Supplementary Information
Notes to Required Suppl ementary Information – Budgetary Reporting
Statutory/Budgetary Presentation
The various funds and programs within funds utilize a number of different budgetary control processes. Annual legislative appropriations
and revenue estimates are provided for most “operating” funds. Note 2 of the basic financial statements identifies the annually budgeted
operating funds.
The original executive budget and original legislative appropriations provide general purpose (unrestricted) revenue estimates in order to
demonstrate compliance with constitutional provisions. Revenues restricted by law or outside grantors to a specific program are estimated
at a level of detail consistent with controlling related expenditure accounts.
For programs financed from restricted revenues, spending authorization is generally contingent upon recognition of the related revenue.
Reductions of spending authority occur if revenues fall short of estimates. If revenues exceed the estimate, supplemental appropriations
are required before the additional resources can be spent.
The budgetary comparison schedule presented for the General Fund and the School Aid Fund presents both the original and final
appropriated budgets for fiscal year 2014, as well as the actual resource inflows, outflows, and fund balance stated on the budgetary
basis. The supplementary portion of this report includes a Combining Schedule of Revenues, Expenditures, and Changes in Fund
Balances – Budget and Actual, by fund type, for non-major special revenue and permanent funds with annual budgets. Those schedules
only include the final appropriated budget.
The original budget and related estimated revenues represent the spending authority enacted into law by the appropriation bills as of
October 1, 2013, and includes multi-year projects budgetary carry-forwards from the prior fiscal year.
The budgetary fund balance represents total fund balance, net of noncurrent assets and prior year encumbrances. Noncurrent assets do
not represent current financial resources available for appropriation and are removed for budgetary purposes. Prior year encumbrances
are considered uses of spending authority in the year the State incurs an obligation and are also removed.
Generally Accepted Accounting Principles (GAAP) require that the final legal budget be reflected in the “final budget” column, therefore
updated revenue estimates available for appropriations as of November 30, rather than the amounts shown in the original budget, are
reported. The November 30 date is used because P.A. 431 of 1984, as amended, permits budget adjustments by the Legislature through
60 days after year-end.
The final appropriations budget represents original and supplemental appropriations, carry-forwards, carry-backs (i.e., current year
appropriations for prior year overdrafts), approved transfers, executive order reductions, and timing differences. Expenditures, transfers
out, other financing uses, and encumbrances are combined and classified by department rather than being reported by character and
function as shown in the GAAP statements. This departmental classification is used to better reflect organizational responsibility and to be
more consistent with the budget process. Appropriations include interagency expenditure reimbursement, in which one agency provides
funding to another agency within the same fund. The final budget and actual amounts are adjusted to eliminate the duplication.
The timing differences result from unspent authorizations for multi-year projects, such as capital outlay and work projects, and from
restricted revenues that had not been appropriated for expenditure in the current year. Such authorization balances remaining at year-end
are removed from the final budget column to provide an “annualized” budget.
Positive “variances” reflect restricted revenues that were appropriated and available for expenditure in the current year and unused
general purpose spending authority (lapses); negative “variances” reflect budgetary overdrafts. If both positive and negative variances
exist for a particular line, the amount shown is the net variance.
Statutory/Budgetary Reconciliation
The statutory/budgetary basis presentation differs from GAAP in ways that do not affect ending fund balance.
For budgetary reporting purposes, expenditures and transfers out in the “Actual” column include recorded encumbrances, because they
are considered uses of spending authority in the year the State incurs an obligation. Therefore, the “Original” and “Final Budget” columns
do not include encumbrance authorization balances carried over from the prior fiscal year. In the GAAP basis statements, expenditures do
not include encumbrances. The effect of this difference is reflected as a reconciling item on the Budgetary Comparison Schedule for the
major funds and the Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual for the non-
major special revenue funds and permanent funds.
For budgetary purposes, capitalizable lease expenditures are recognized when payments are due, rather than upon lease inception as
required by GAAP. This difference does not affect fund balance because the “other financing sources” recorded under GAAP at lease
inception are not recorded on the statutory/budgetary basis.
Statewide Authorization Dispositions
Subsequent to the release of this report, the State publishes “Statewide Authorization Dispositions” to demonstrate its compliance with the
legal level of budgetary control. The report includes line-item appropriation details for the General Fund and budgeted operating funds,
and is available by contacting the Office of Financial Management at (517) 373-1010.
2014 Comprehensive Annual Financi al Report
127 127 127 127
Michigan
Required Supplementary Information
Information About Infrastructure Assets Reported Using the Modified Approach
As allowed by Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements – and Management’s Discussion and
Analysis - for State and Local Governments, the State has adopted an alternative process for recording depreciation expense on selected
infrastructure assets. Under this alternative method, referred to as the modified approach, the State expenses certain maintenance and
preservation costs and does not report depreciation expense. Assets accounted for under the modified approach include the State’s network of
public transportation roads and bridges, including ancillary assets, such as guard rails, signs, lighting, culverts, fencing, and the like. The State
is responsible for maintaining approximately 27,459 lane miles of roads and 4,807 bridges (spans in excess of 20 feet).
In order to utilize the modified approach, the State is required to:
• Maintain an asset management system that includes an up-to-date inventory of eligible infrastructure assets.
• Perform condition assessments of eligible assets and summarize the results using a measurement scale.
• Estimate each year the annual amount to maintain and preserve the assets at the condition level established and disclosed by the
State.
• Document that the assets are being preserved approximately at, or above, the established condition level.
Roads
Measurement Scale
The Michigan Department of Transportation (MDOT) uses numerous methods to determine the condition of roadway pavements; however, the
Sufficiency Rating serves as the State’s primary method to measure and monitor pavement conditions. In use since 1961, the Sufficiency
Rating is a visual analysis conducted by an engineer and includes a 5-point scale, as follows:
Rating Bituminous Surface Concrete Surface
1.0 =Excellent Pavement shows no visible deterioration. Distresses
are non-existent.
Same
2.0 =Good Some indication of initial deterioration, but not yet
requiring appreciable amounts of maintenance.
Distress items include the start of small transverse
and/or longitudinal cracks. Slight rutting may be
apparent in the wheel path.
Some indication of initial deterioration, but not yet
requiring appreciable amounts of maintenance.
Distress items may include the start of small
transverse and/or longitudinal cracks, or slight seam
and joint separation. J oints may show very small
amounts of deterioration.
3.0 =Fair Average deterioration requiring occasional routine
maintenance. Distresses may include minor
transverse and longitudinal cracking becoming
continuous throughout the segment. Severe cracking
is patched effectively. Rutting may be a little more
severe and hold small amounts of water.
Average deterioration requiring occasional routine
maintenance. Distresses may include minor
transverse and longitudinal cracking becoming
continuous throughout the segment. Severe cracking
is patched effectively. Through-lanes and shoulders
may begin to show separation from failing tie bars.
4.0 =Poor Excessive deterioration requiring frequent
maintenance and warrants resurfacing soon. Distress
may be evident in wide transverse and longitudinal
cracks. Severe “shallow cracking” could be evident if
the pavement is composite. If the segment has been
patched, the cracks may be showing through. Rutting
is severe and may effect driving.
Excessive deterioration requiring frequent
maintenance and warrants resurfacing soon.
Distress may be evident in wide transverse and
longitudinal cracks. If the segment has been
patched, cracks may be showing through. J oint
repairs could begin to fail. Shoulder and/or through-
lane separation may be apparent. Popouts or
spalling could also be present in the section.
5.0 =Very Poor/
Failed
Extreme deterioration requiring continuous
maintenance and warrants resurfacing or total cross-
section replacement. Distress items may include
severe transverse and longitudinal cracking or severe
alligator cracking. Shadow cracking in composite
pavement is wider than one inch. Rutting in wheel
path may be severe and patching is no longer
beneficial to pavement condition.
Extreme deterioration requiring continuous
maintenance and warrants resurfacing or total cross-
section replacement. Distress items may include
severe transverse and longitudinal cracking, joints
failing, and the patching is no longer beneficial to
pavement condition. Spalling and edge cracking
could also be severe.
Established Condition Level
No more than 30% of the pavements shall be rated as “Poor” or “Very Poor.”
Assessed Conditions
The State assesses condition on a calendar year basis. The following table reports the percentage of pavements meeting ratings of “Good” or
“Poor,” for the past three years. “Good” represents ratings of 1.0 through 3.0 above and “Poor” represents ratings of 4.0 and 5.0.
Rating 2013 2012 2011
Good 78.1% 78.8% 81.3%
Poor 21.9% 21.2% 18.7%
2014 Comprehensive Annual Financi al Report
128 128 128 128
Michigan
Bridges
Measurement Scale
MDOT utilizes the National Bridge Inventory (NBI) to monitor the condition of bridges (spans in excess of 20 feet) under its jurisdiction. The
inventory rates bridges, including the deck, superstructure and substructure, using a 10-point scale:
Rating Description
9 Excellent (no specific definition).
8 Very good. No problems noted.
7 Good. Some minor problems.
6 Satisfactory. Structural elements show some minor deterioration.
5 Fair. All primary structural elements are sound but may have minor section loss,
cracking, spalling, or scour.
4 Poor. Advanced section loss, deterioration, spalling, or scour.
3 Serious. Loss of section, deterioration, spalling, or scour have seriously affected
primary structural components. Local failures are possible. Fatigue cracks in steel
or shear cracks in concrete may be present.
2 Critical. Advanced deterioration of primary structural elements. Fatigue cracks in
steel or shear cracks in concrete may be present or scour may have removed
substructure support. Unless closely monitored it may be necessary to close the
bridge until corrective action is taken.
1 Imminent failure. Major deterioration or section loss present in critical structural
components or obvious vertical or horizontal movement affecting structure stability.
Bridge is closed to traffic, but corrective action may put it back in light service.
0 Failure. Out of service; beyond corrective action.
Established Condition Level
No more than 35% of the highway bridges shall be rated as “structurally deficient.”
Assessed Conditions
A highway bridge is classified as structurally deficient if the deck, superstructure, substructure, or culvert is rated in “poor” condition (0 to 4 on
the NBI rating scale). A bridge can also be classified as structurally deficient if its load carrying capacity is significantly below current design
standards or if a waterway below frequently overtops the bridge during floods. The following table reports the percentage of bridges whose
condition was assessed as “structurally deficient,”in the stated year:
Fiscal Structurally
Year Deficient
2014 6.1%
2013 6.0%
2012 6.4%
Bridges that are not intended to carry highway traffic are not included in MDOT’s condition assessment. As a result, the number of bridges that
were evaluated (4,462) in fiscal year 2014 is less than the total (4,807) maintained by the department.
Estimated and Actual Costs to Maintain
The following table presents the State’s estimate of spending necessary to preserve and maintain the roads and bridges at, or above, the
“Established Condition Levels” cited above, and the actual amount spent during the past five fiscal years (in millions):
Fiscal
Year
2015 $ 729.3 $ -
2014 689.0 784.5
2013 737.0 837.8
2012 719.0 772.4
2011 766.0 752.4
2010 1,162.0 829.6
Spending
Actual Estimated
Spending
2014 Comprehensive Annual Financi al Report
129 129 129 129
Michigan
2014 Comprehensive Annual Financi al Report
130 130 130 130
Michigan
FINANCIAL SECTION
COMBINING AND INDIVIDUAL FUND STATEMENTS
AND SCHEDULES – NON-MAJOR FUNDS
2014 Comprehensive Annual Financi al Report
131 131 131 131
BALANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS - BY FUND TYPE
SEPTEMBER 30, 2014
(In Thousands)
DEBT CAPITAL
FUNDS FUNDS FUNDS FUNDS
ASSETS
Current Assets:
Cash $ 197 $ - $ 91 $ - $ 289
Equity in common cash 975,365 1,869 902,935 122,458 2,002,628
Taxes, interest, and penalties receivable 95,491 - 466 - 95,957
Amounts due from other funds 5,881 - 36,837 - 42,717
Amounts due from component units - - 1,777 - 1,777
Amounts due from federal agencies 81,814 - 212,386 - 294,200
Amounts due from local units 2,259 - 49,153 293 51,705
Inventories 427 - 7,685 - 8,113
Investments - 223,664 26,576 - 250,240
Other current assets 234,997 1 3,472 8,516 246,986
Total Current Assets 1,396,432 225,535 1,241,378 131,267 2,994,612
Taxes, interest, and penalties receivable 2,540 - - - 2,540
Amounts due from local units 16,854 - 31,011 - 47,866
Investments 237,759 - - 875,611 1,113,370
Other noncurrent assets 4,167 - 58 - 4,226
Total Assets $ 1,657,753 $ 225,535 $ 1,272,448 $ 1,006,878 $ 4,162,613
LIABILITIES
Current Liabilities:
Warrants outstanding $ 5,461 $ - $ 9,129 $ 28 $ 14,617
Accounts payable and other liabilities 248,069 401 309,321 11,644 569,435
Amounts due to other funds 19,387 457 42,429 237 62,509
Amounts due to component units 54,925 - 206 - 55,131
Bonds and notes payable - - 99,105 - 99,105
Interest payable - - 8 - 8
Unearned revenue 6,819 - 5,614 - 12,433
Total Current Liabilities 334,661 858 465,811 11,908 813,238
Long-Term Liabilities:
Unearned revenue 67 - 34 - 101
Total Liabilities 334,727 858 465,845 11,908 813,338
DEFERRED INFLOWS OF RESOURCES 186,959 - 153 - 187,112
FUND BALANCES
Nonspendable 221,369 - 7,685 763,527 992,581
Restricted 367,232 224,677 904,892 231,442 1,728,244
Committed 547,466 - - - 547,466
Unassigned - - (106,128) - (106,128)
Total Fund Balances 1,136,066 224,677 806,449 994,970 3,162,162
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances $ 1,657,753 $ 225,535 $ 1,272,448 $ 1,006,878 $ 4,162,613
SPECIAL
TOTALS
Michigan
PERMANENT PROJ ECTS SERVICE REVENUE
132 132 132 132
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
NON-MAJOR GOVERNMENTAL FUNDS - BY FUND TYPE
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
SPECIAL DEBT CAPITAL
FUNDS FUNDS FUNDS FUNDS
REVENUES
Taxes $ 2,001,646 $ - $ 5,056 $ - $ 2,006,702
From federal agencies 271,687 - 1,264,974 6 1,536,667
From local agencies - - 10,727 - 10,727
From services 3,791 - 4,289 - 8,080
From licenses and permits 183,951 - 16,821 - 200,772
Miscellaneous 836,539 3,259 49,643 103,501 992,941
Total Revenues 3,297,613 3,259 1,351,511 103,506 4,755,890
EXPENDITURES
Current:
General government 176,055 256 - 1,898 178,208
Education - 1,128 62,075 - 63,203
Human services 32,883 - - - 32,883
Public safety and corrections 812 - - 3,342 4,154
Conservation, environment,
recreation, and agriculture 220,993 - 29 24,982 246,003
Labor, commerce, and regulatory 663,902 - - - 663,902
Health services 85,835 - - - 85,835
Transportation 1,314,724 1,188 1,077,797 - 2,393,709
Capital outlay 11,539 - 992,682 50,393 1,054,614
Debt Service:
Bond principal retirement - 452,631 - - 452,631
Bond interest and fiscal charges - 317,873 - - 317,873
Capital lease payments 583 - 791 - 1,374
Total Expenditures 2,507,326 773,075 2,133,373 80,615 5,494,389
Excess of Revenues over (under)
Expenditures 790,287 (769,817) (781,862) 22,891 (738,500)
OTHER FINANCING SOURCES (USES)
Refunding bonds issued - 295,085 - - 295,085
Premium on bond issuance - 35,223 - - 35,223
Payment to refunded bond escrow agent - (299,121) - - (299,121)
Capital lease acquisitions - - 475 - 475
Proceeds from sale of capital assets - - 1,820 20 1,840
Transfers from other funds 514,157 751,241 961,708 - 2,227,106
Transfers to other funds (1,049,558) - (279,617) (313) (1,329,488)
Total Other Financing Sources (Uses) (535,401) 782,428 684,385 (293) 931,120
Excess of Revenues and Other
Sources over (under)
Expenditures and Other Uses 254,886 12,612 (97,477) 22,599 192,621
Fund Balances - Beginning of fiscal year 881,180 212,065 903,926 972,371 2,969,542
Fund Balances - End of fiscal year $ 1,136,066 $ 224,677 $ 806,449 $ 994,970 $ 3,162,162
Michigan
TOTALS
REVENUE SERVICE PROJ ECTS PERMANENT
133 133 133 133
BALANCE SHEET
SPECIAL REVENUE FUNDS - BY CLASSIFICATION
SEPTEMBER 30, 2014
(In Thousands)
CONSERVATION,
ENVIRONMENT, REGULATORY
AND AND OTHER
TRANSPORTATION RECREATION ADMINISTRATIVE STATE
RELATED RELATED RELATED FUNDS
ASSETS
Current Assets:
Cash $ - $ 191 $ 6 $ - $ 197
Equity in common cash 195,899 153,132 74,300 552,034 975,365
Taxes, interest,
and penalties receivable 95,290 200 - - 95,491
Amounts due from other funds 1,788 - 4,093 - 5,881
Amounts due from federal agencies 68,995 3,847 8,973 - 81,814
Amounts due from local units 623 1,636 - - 2,259
Inventories - 427 - - 427
Other current assets 2,388 7,294 65,220 160,095 234,997
Total Current Assets 364,983 166,728 152,591 712,130 1,396,432
Taxes, interest,
and penalties receivable 2,527 13 - - 2,540
Amounts due from local units 938 15,917 - - 16,854
Investments - 214,364 - 23,395 237,759
Other noncurrent assets 316 309 - 3,542 4,167
Total Assets $ 368,764 $ 397,330 $ 152,591 $ 739,067 $ 1,657,753
LIABILITIES
Current Liabilities:
Warrants outstanding $ 4,650 $ 191 $ 421 $ 199 $ 5,461
Accounts payable and other liabilities 215,547 16,112 15,179 1,232 248,069
Amounts due to other funds 8,178 1,883 9,285 41 19,387
Amounts due to component units - - 54,925 - 54,925
Unearned revenue 336 1,332 5,151 - 6,819
Total Current Liabilities 228,710 19,518 84,961 1,472 334,661
Long-Term Liabilities:
Unearned revenue 67 - - - 67
Total Liabilities 228,777 19,518 84,961 1,472 334,727
DEFERRED INFLOWS OF RESOURCES 11,343 571 12,444 162,600 186,959
FUND BALANCES
Nonspendable - 197,945 - 23,424 221,369
Restricted 128,643 179,296 52,397 6,896 367,232
Committed - - 2,790 544,676 547,466
Total Fund Balances 128,643 377,241 55,186 574,995 1,136,066
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances $ 368,764 $ 397,330 $ 152,591 $ 739,067 $ 1,657,753
TOTALS
Michigan
134 134 134 134
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUNDS - BY CLASSIFICATION
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
CONSERVATION,
ENVIRONMENT, REGULATORY
AND AND OTHER
TRANSPORTATION RECREATION ADMINISTRATIVE STATE
RELATED RELATED RELATED FUNDS
REVENUES
Taxes $ 2,001,417 $ 229 $ - $ - $ 2,001,646
From federal agencies 123,939 6,896 140,080 772 271,687
From services 3,785 - 6 - 3,791
From licenses and permits 34,317 139,716 9,919 - 183,951
Miscellaneous 8,505 93,908 528,294 205,832 836,539
Total Revenues 2,171,961 240,749 678,299 206,604 3,297,613
EXPENDITURES
Current:
General government - 2,731 26,923 146,401 176,055
Human services - - - 32,883 32,883
Public safety and corrections - - - 812 812
Conservation, environment,
recreation, and agriculture - 220,993 - - 220,993
Labor, commerce, and regulatory - - 647,665 16,237 663,902
Health services - - - 85,835 85,835
Transportation 1,314,724 - - - 1,314,724
Capital outlay - 11,539 - - 11,539
Debt Service:
Capital lease payments - - 583 - 583
Total Expenditures 1,314,724 235,263 675,171 282,168 2,507,326
Excess of Revenues over
(under) Expenditures 857,237 5,486 3,128 (75,563) 790,287
OTHER FINANCING SOURCES (USES)
Transfers from other funds 167,315 30,374 19,167 297,300 514,157
Transfers to other funds (1,011,777) (20,343) (17,398) (40) (1,049,558)
Total Other Financing
Sources (Uses) (844,461) 10,031 1,768 297,260 (535,401)
Excess of Revenues and Other
Sources over (under)
Expenditures and Other Uses 12,776 15,517 4,896 221,697 254,886
Fund Balances - Beginning of
fiscal year 115,867 361,724 50,290 353,298 881,180
Fund Balances - End of fiscal year $ 128,643 $ 377,241 $ 55,186 $ 574,995 $ 1,136,066
TOTALS
Michigan
135 135 135 135
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
SPECIAL REVENUE FUNDS - BY CLASSIFICATION
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
TRANSPORTATION RELATED
BUDGET ACTUAL VARIANCE BUDGET ACTUAL VARIANCE
REVENUES AND OTHER SOURCES
Taxes $ 2,001,417 $ 2,001,417 $ - $ 229 $ 229 $ -
From federal agencies 123,939 123,939 - 6,509 6,509 -
From services 3,785 3,785 - - - -
From licenses and permits 34,317 34,317 - 139,716 139,716 -
Miscellaneous 8,505 8,505 - 45,974 45,974 -
Transfers in 167,315 167,315 - 30,374 30,374 -
Total Revenues and Other Sources 2,339,277 2,339,277 - 222,803 222,803 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Attorney General - - - - - -
Community Health - - - - - -
Human Services - - - - - -
Licensing and Regulatory Affairs - - - - - -
Military and Veterans Affairs - - - - - -
State Police - - - - - -
Natural Resources - - - 225,962 222,190 3,772
Transportation 2,421,330 2,415,991 5,339 - - -
Treasury - - - 2,668 2,643 25
Total Expenditures, Transfers
Out, and Encumbrances 2,421,330 2,415,991 5,339 228,631 224,833 3,798
Revenues and Other Sources over (under)
Expenditures, Encumbrances, and
Other Uses (Statutory/budgetary basis) $ (82,053) (76,714) $ 5,339 $ (5,828) (2,030) $ 3,798
Reconciling Items:
Encumbrances at September 30 89,490 7,259
Funds not annually budgeted - 10,288
Net Reconciling Items 89,490 17,547
Excess of Revenues and Other Sources over
(under) Expenditures and Other Uses
(GAAP Basis) 12,776 15,517
FUND BALANCES (GAAP BASIS)
Beginning balances 115,867 361,724
Ending balances (GAAP Basis) $ 128,643 $ 377,241
CONSERVATION, ENVIRONMENT,
AND RECREATION RELATED
Statutory/Budgetary Basis
Michigan
136 136 136 136
REGULATORY AND
ADMINISTRATIVE RELATED OTHER STATE FUNDS TOTALS
BUDGET ACTUAL VARIANCE BUDGET ACTUAL VARIANCE BUDGET ACTUAL VARIANCE
$ - $ - $ - $ - $ - $ - $ 2,001,646 $ 2,001,646 $ -
140,080 140,080 - 772 772 - 271,300 271,300 -
6 6 - - - - 3,791 3,791 -
9,919 9,919 - - - - 183,951 183,951 -
45,223 45,223 - 193,284 193,284 - 292,986 292,986 -
19,167 19,167 - 102,500 102,500 - 319,357 319,357 -
214,395 214,395 - 296,556 296,556 - 3,073,030 3,073,030 -
- - - 681 446 235 681 446 235
- - - 85,835 85,835 - 85,835 85,835 -
- - - 32,942 32,890 53 32,942 32,890 53
177,868 175,508 2,360 - - - 177,868 175,508 2,360
- - - 1,001 74 927 1,001 74 927
- - - 750 750 - 750 750 -
- - - - - - 225,962 222,190 3,772
- - - - - - 2,421,330 2,415,991 5,339
43,956 41,656 2,300 420,903 145,970 274,933 467,527 190,269 277,258
221,824 217,164 4,660 542,112 265,964 276,148 3,413,897 3,123,952 289,944
$ (7,429) (2,769) $ 4,660 $ (245,556) 30,592 $ 276,148 $ (340,866) (50,922) $ 289,944
518 2 97,269
7,148 191,103 208,539
7,666 191,105 305,808
4,896 221,697 254,886
50,290 353,298 881,180
$ 55,186 $ 574,995 $ 1,136,066
Michigan
137 137 137 137
Michigan
2014 Comprehensive Annual Financi al Report
138 138 138 138
Michigan
SPECIAL REVENUE FUNDS - TRANSPORTATION RELATED
MICHIGAN TRANSPORTATION FUND
Established pursuant to Michigan Compiled Laws Section 247.660,
this fund accounts for the receipt and distribution of several tax
revenues dedicated for highway purposes. Transfers are made to
the General Fund, State Trunkline Fund, and the Comprehensive
Transportation Fund. Expenditures include grants to counties,
cities, and villages for highway purposes.
COMPREHENSIVE TRANSPORTATION FUND
Established pursuant to Michigan Compiled Laws Section 247.660,
this fund accounts for the planning and development of public
transportation systems within the State. Federal revenues,
vehicle-related sales tax, and transfers from the Michigan
Transportation Fund provide financing for expenditures.
2014 Comprehensive Annual Financi al Report
139 139 139 139
COMBINING BALANCE SHEET
SPECIAL REVENUE FUNDS - TRANSPORTATION RELATED
SEPTEMBER 30, 2014
(In Thousands)
MICHIGAN COMPREHENSIVE
TRANSPORTATION TRANSPORTATION
ASSETS
Current Assets:
Equity in common cash $ 107,270 $ 88,629 $ 195,899
Taxes, interest, and penalties receivable 95,290 - 95,290
Amounts due from other funds - 1,788 1,788
Amounts due from federal agencies - 68,995 68,995
Amounts due from local units - 623 623
Other current assets 4 2,384 2,388
Total Current Assets 202,565 162,418 364,983
Taxes, interest, and penalties receivable 2,527 - 2,527
Amounts due from local units - 938 938
Other noncurrent assets - 316 316
Total Assets $ 205,092 $ 163,672 $ 368,764
LIABILITIES
Current Liabilities:
Warrants outstanding $ 3,854 $ 796 $ 4,650
Accounts payable and other liabilities 182,133 33,414 215,547
Amounts due to other funds 8,078 100 8,178
Unearned revenue - 336 336
Total Current Liabilities 194,065 34,645 228,710
Long-Term Liabilities:
Unearned revenue - 67 67
Total Liabilities 194,065 34,712 228,777
DEFERRED INFLOWS OF RESOURCES 11,027 316 11,343
FUND BALANCES
Restricted - 128,643 128,643
Total Fund Balances - 128,643 128,643
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances $ 205,092 $ 163,672 $ 368,764
TOTALS FUND FUND
Michigan
140 140 140 140
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUNDS - TRANSPORTATION RELATED
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
COMPREHENSIVE
TRANSPORTATION TRANSPORTATION
REVENUES
Taxes $ 1,899,391 $ 102,026 $ 2,001,417
From federal agencies - 123,939 123,939
From services 3,785 - 3,785
From licenses and permits 33,658 659 34,317
Miscellaneous 594 7,911 8,505
Total Revenues 1,937,427 234,534 2,171,961
EXPENDITURES
Current:
Transportation 945,334 369,390 1,314,724
Total Expenditures 945,334 369,390 1,314,724
Excess of Revenues over (under)
Expenditures 992,093 (134,855) 857,237
OTHER FINANCING SOURCES (USES)
Transfers from other funds 477 166,838 167,315
Transfers to other funds (992,570) (19,207) (1,011,777)
Total Other Financing Sources (Uses) (992,093) 147,631 (844,461)
Excess of Revenues and Other
Sources over (under) Expenditures
and Other Uses - 12,776 12,776
Fund Balances - Beginning of fiscal year - 115,867 115,867
Fund Balances - End of fiscal year $ - $ 128,643 $ 128,643
TOTALS
MICHIGAN
FUND FUND
Michigan
141 141 141 141
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
SPECIAL REVENUE FUNDS - TRANSPORTATION RELATED
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
MICHIGAN TRANSPORTATION FUND
Statutory/Budgetary Basis BUDGET ACTUAL
REVENUES AND OTHER SOURCES
Taxes $ 1,899,391 $ 1,899,391 $ -
From federal agencies - - -
From services 3,785 3,785 -
From licenses and permits 33,658 33,658 -
Miscellaneous 594 594 -
Transfers in 477 477 -
Total Revenues and Other Sources 1,937,904 1,937,904 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Transportation 1,940,084 1,937,904 2,180
Total Expenditures, Transfers
Out, and Encumbrances 1,940,084 1,937,904 2,180
Revenues and Other Sources
over (under) Expenditures,
Encumbrances, and Other Uses
(Statutory/budgetary basis) $ (2,180) - $ 2,180
Reconciling Items:
Encumbrances at September 30 -
Net Reconciling Items -
Excess of Revenues and Other
Sources over (under) Expenditures
and Other Uses (GAAP Basis) -
FUND BALANCES (GAAP BASIS)
Beginning balances -
Ending balances (GAAP Basis) $ -
VARIANCE
Michigan
142 142 142 142
COMPREHENSIVE TRANSPORTATION FUND TOTALS
BUDGET ACTUAL BUDGET ACTUAL
$ 102,026 $ 102,026 $ - $ 2,001,417 $ 2,001,417 $ -
123,939 123,939 - 123,939 123,939 -
- - - 3,785 3,785 -
659 659 - 34,317 34,317 -
7,911 7,911 - 8,505 8,505 -
166,838 166,838 - 167,315 167,315 -
401,373 401,373 - 2,339,277 2,339,277 -
481,246 478,087 3,159 2,421,330 2,415,991 5,339
481,246 478,087 3,159 2,421,330 2,415,991 5,339
$ (79,873) (76,714) $ 3,159 $ (82,053) (76,714) $ 5,339
89,490 89,490
89,490 89,490
12,776 12,776
115,867 115,867
$ 128,643 $ 128,643
VARIANCE VARIANCE
Michigan
143 143 143 143
Michigan
2014 Comprehensive Annual Financi al Report
144 144 144 144
Michigan
SPECIAL REVENUE FUNDS – CONSERVATION, ENVIRONMENT, AND
RECREATION RELATED
MICHIGAN CONSERVATION AND RECREATION LEGACY
FUND
This fund (“Legacy Fund”) was created by Article 9, Section 40, of
the State Constitution, an amendment approved by voters in
November 2006. The purpose of the amendment was to
constitutionally prevent the diversion of certain funds and revenues
for purposes other than those for which they were created. Section
40 created the following accounts within the Legacy Fund: Forest
Recreation, Game and Fish Protection, Off-Road Vehicle,
Recreation Improvement, Snowmobile, State Park Improvement,
and Waterways.
The implementing legislation related to this amendment, found in
Sections 324.2002 – 324.2035 of the Michigan Compiled Laws,
transferred a number of special revenue funds and certain
restrictively financed activities within the General Fund to the
Legacy Fund. The following special revenue funds were transferred
into the fund: Game and Fish Protection Fund, Michigan State
Waterways Fund, Marine Safety Fund, and State Park Improvement
Fund. The restrictively financed activities transferred into the fund
from the General Fund were related to various outdoor recreation
activities including snowmobiles, off-road vehicles, recreation trails,
and State forest recreation.
Financing consists primarily of hunting and fishing licenses; camping
and park entrance fees; 2% of gasoline taxes dedicated for boating,
snowmobiling, off-road vehicles and other trails; watercraft and
snowmobile registration fees; and trail use permits. The fund also
receives funding from the Michigan Game and Fish Protection Trust
Fund. Expenditures are limited to those activities specified in
Section 40 and include forest recreation activities, wildlife and
fisheries programs, off-road vehicle and snowmobile trails and
facilities, State parks and recreation areas, improvement of lake
harbors and inland waterways, and water safety education
programs.
MICHIGAN GAME AND FISH PROTECTION TRUST FUND
The former Game and Fish Protection Trust Fund was established
in 1986 to restrict certain assets for the purpose of generating
interest and earnings for transfer to the former Game and Fish
Protection Fund (now accounted for within the Michigan
Conservation and Recreation Legacy Fund). Article 9, Section 41,
of the State Constitution, an amendment approved by voters in
November 2006, further protected these assets by creating the
Michigan Game and Fish Protection Trust Fund.
The fund operates under Sections 324.43702 – 324.43704 of the
Michigan Compiled Laws. The Legislature may appropriate up to $6
million annually for use by the Game and Fish Protection Account of
the Michigan Conservation and Recreation Legacy Fund. Mineral
royalties from lands acquired by the Game and Fish Protection
Account; direct sale proceeds; and other revenues, which, by
statute, are retained for permanent investment, provide additional
investment funding.
MICHIGAN NONGAME FISH AND WILDLIFE TRUST FUND
The former Michigan Nongame Fish and Wildlife Fund was
established in 1983 to finance research and management of
nongame fish and wildlife, designated endangered species, and
designated plant species of this State. Article 9, Section 42, of the
State Constitution, an amendment approved by voters in November
2006, further protected these assets by creating the Michigan
Nongame Fish and Wildlife Trust Fund.
The fund operates under Sections 324.43902 – 324.43907 of the
Michigan Compiled Laws. The fund may receive transfers from
other funds, donations, investment income, and revenue from
specialty license plate sales.
FOREST DEVELOPMENT FUND
This fund was established in 1993, along with the Michigan Forest
Finance Authority, and operates under Michigan Compiled Laws
Section 324.50507. The primary revenue source of the fund is
timber revenue from State forest lands. Expenditures from the fund
are for forest management activities and forest fire protection. The
Authority is authorized to, but thus far has not, issued bonds.
BOTTLE DEPOSITS FUND
Michigan Compiled Laws (MCL) Section 445.573c created the Bottle
Deposits Fund to provide for the disposition of unredeemed bottle
deposits. The Department of Treasury and the Department of
Environmental Quality (DEQ) jointly administer the fund. The law
mandates that an annual distribution of the funds be made as
follows: 25% returned to the dealers and 75% to fund several sub-
funds.
The 75% distribution to DEQ is initially deposited into the Cleanup
and Redevelopment Trust Sub-Fund (CRTF), and if not further
distributed, remains there until the principal amount reaches $200
million. Of funds received annually by the CRTF, 80% is allocated
to the Cleanup and Redevelopment Sub-Fund (CRF) and 10% to
the Community Pollution Prevention Sub-Fund.
MCL Section 324.20108 moved the former Environmental Response
Fund (ERF) to a sub-fund of the CRF. The law mandates that
proceeds of all cost recovery actions taken and settlements entered
into pursuant to the ERF (excluding natural resource damages) by
DEQ or the Attorney General, or both, shall be credited to the ERF.
Several DEQ sub-funds are administratively housed within the Bottle
Deposits Fund, although they receive no bottle deposits revenue.
Included is the State Sites Cleanup Sub-Fund, established in
accordance with MCL Section 324.20108c to provide for response
activities at facilities where the State is liable as an owner or
operator. The following loan programs administered by DEQ are
also included: the Brownfield Revolving Loan Fund created by MCL
Section 324.19608a, the Revitalization Revolving Loan Fund
created by MCL Section 324.20108a, and the Federal Brownfield
Cleanup and Revolving Loan Fund.
2014 Comprehensive Annual Financi al Report
145 145 145 145
COMBINING BALANCE SHEET
SPECIAL REVENUE FUNDS - CONSERVATION, ENVIRONMENT, AND RECREATION RELATED
SEPTEMBER 30, 2014
(In Thousands)
GAME AND
FISH
PROTECTION
TRUST FUND
ASSETS
Current Assets:
Cash $ 73 $ 104
Equity in common cash 68,325 15,973
Taxes, interest, and
penalties receivable 200 -
Amounts due from federal agencies 3,831 -
Amounts due from local units 165 -
Inventories 427 -
Other current assets 5,353 1,348
Total Current Assets 78,375 17,425
Taxes, interest, and
penalties receivable 13 -
Amounts due from local units - -
Investments 1,514 206,652
Other noncurrent assets - -
Total Assets $ 79,901 $ 224,077
LIABILITIES
Current Liabilities:
Warrants outstanding $ 118 $ -
Accounts payable
and other liabilities 13,049 -
Amounts due to other funds 1,377 -
Unearned revenue 1,332 -
Total Current Liabilities 15,876 -
Total Liabilities 15,876 -
DEFERRED INFLOWS OF RESOURCES 13 -
FUND BALANCES
Nonspendable - 187,243
Restricted 64,012 36,833
Total Fund Balances 64,012 224,077
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances $ 79,901 $ 224,077
Michigan
MICHIGAN MICHIGAN
FUND
CONSERVATION
AND RECREATION
LEGACY
146 146 146 146
MICHIGAN
NONGAME
FISH AND BOTTLE
WILDLIFE DEPOSITS
TRUST FUND FUND
$ - $ 14 $ - $ 191
723 11,769 56,341 153,132
- - - 200
- 16 - 3,847
- - 1,471 1,636
- - - 427
45 35 514 7,294
768 11,834 58,326 166,728
- - - 13
- - 15,917 15,917
6,198 - - 214,364
- - 309 309
$ 6,966 $ 11,834 $ 74,552 $ 397,330
$ - $ 23 $ 50 $ 191
18 2,275 770 16,112
3 334 170 1,883
- - - 1,332
21 2,632 990 19,518
21 2,632 990 19,518
- - 558 571
6,000 - 4,702 197,945
946 9,203 68,302 179,296
6,946 9,203 73,004 377,241
$ 6,966 $ 11,834 $ 74,552 $ 397,330
Michigan
TOTALS FUND
DEVELOPMENT
FOREST
147 147 147 147
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUNDS - CONSERVATION, ENVIRONMENT, AND RECREATION RELATED
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
GAME AND
FISH
PROTECTION
FUND TRUST FUND
REVENUES
Taxes $ 229 $ -
From federal agencies 6,484 -
From licenses and permits 139,713 -
Miscellaneous 4,975 26,211
Total Revenues 151,401 26,211
EXPENDITURES
Current:
General government 2,643 88
Conservation, environment,
recreation, and agriculture 166,176 117
Capital outlay 11,505 -
Total Expenditures 180,324 204
Excess of Revenues over (under)
Expenditures (28,923) 26,007
OTHER FINANCING SOURCES (USES)
Transfers from other funds 30,374 -
Transfers to other funds (2,883) (13,855)
Total Other Financing
Sources (Uses) 27,492 (13,855)
Excess of Revenues and Other
Sources over (under)
Expenditures and Other Uses (1,432) 12,152
Fund Balances - Beginning of
fiscal year 65,444 211,925
Fund Balances - End of fiscal year $ 64,012 $ 224,077
AND RECREATION
LEGACY
MICHIGAN MICHIGAN
CONSERVATION
Michigan
148 148 148 148
MICHIGAN
NONGAME
FISH AND BOTTLE
DEPOSITS
TRUST FUND FUND FUND
$ - $ - $ - $ 229
- 25 387 6,896
- 3 - 139,716
603 40,396 21,722 93,908
603 40,424 22,109 240,749
- - - 2,731
420 33,449 20,831 220,993
- 35 - 11,539
420 33,483 20,831 235,263
183 6,941 1,278 5,486
- - - 30,374
(7) (457) (3,142) (20,343)
(7) (457) (3,142) 10,031
177 6,484 (1,864) 15,517
6,769 2,718 74,868 361,724
$ 6,946 $ 9,203 $ 73,004 $ 377,241
TOTALS
WILDLIFE DEVELOPMENT
FOREST
Michigan
149 149 149 149
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
SPECIAL REVENUE FUNDS - CONSERVATION, ENVIRONMENT, AND RECREATION RELATED
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
MICHIGAN NONGAME FISH
AND WILDLIFE TRUST FUND
Statutory/Budgetary Basis BUDGET ACTUAL VARIANCE BUDGET ACTUAL VARIANCE
REVENUES AND OTHER SOURCES
Taxes $ 229 $ 229 $ - $ - $ - $ -
From federal agencies 6,484 6,484 - - - -
From licenses and permits 139,713 139,713 - - - -
Miscellaneous 4,975 4,975 - 603 603 -
Transfers in 30,374 30,374 - - - -
Total Revenues and Other Sources 181,775 181,775 - 603 603 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Natural Resources 190,568 187,093 3,475 553 459 94
Treasury 2,668 2,643 25 - - -
Total Expenditures, Transfers Out
and Encumbrances 193,237 189,736 3,500 553 459 94
Revenues and Other Sources
over (under) Expenditures,
Encumbrances, and Other Uses
(Statutory/budgetary basis) $ (11,461) (7,961) $ 3,500 $ 51 144 $ 94
Reconciling Items:
Encumbrances at September 30 6,529 32
Funds not annually budgeted - -
Net Reconciling Items 6,529 32
Excess of Revenues and Other Sources
over (under) Expenditures and Other
Uses (GAAP Basis) (1,432) 177
FUND BALANCES (GAAP BASIS)
Beginning balances 65,444 6,769
Ending balances (GAAP Basis) $ 64,012 $ 6,946
Michigan
MICHIGAN CONSERVATION AND
RECREATION LEGACY FUND
150 150 150 150
BOTTLE
PROTECTION DEPOSITS
TRUST FUND FUND TOTALS
BUDGET ACTUAL BUDGET ACTUAL VARIANCE
$ - $ - $ - $ - $ - $ 229 $ 229 $ -
25 25 - - - 6,509 6,509 -
3 3 - - - 139,716 139,716 -
40,396 40,396 - - - 45,974 45,974 -
- - - - - 30,374 30,374 -
40,424 40,424 - - - 222,803 222,803 -
34,841 34,638 203 - - 225,962 222,190 3,772
- - - - - 2,668 2,643 25
34,841 34,638 203 - - 228,631 224,833 3,798
$ 5,583 5,786 $ 203 - - $ (5,828) (2,030) $ 3,798
698 - - 7,259
- 12,152 (1,864) 10,288
698 12,152 (1,864) 17,547
6,484 12,152 (1,864) 15,517
2,718 211,925 74,868 361,724
$ 9,203 $ 224,077 $ 73,004 $ 377,241
FUNDS NOT ANNUALLY BUDGETED
Michigan
ACTUAL VARIANCE
FOREST DEVELOPMENT FUND
MICHIGAN
GAME AND FISH
ACTUAL
151 151 151 151
Michigan
2014 Comprehensive Annual Financi al Report
152 152 152 152
Michigan
SPECIAL REVENUE FUNDS – REGULATORY AND ADMINISTRATIVE
RELATED
HOMEOWNER CONSTRUCTION LIEN RECOVERY FUND
Michigan Compiled Laws (MCL) Section 570.1201 created the
Homeowner Construction Lien Recovery Fund to allow contractors,
subcontractors, suppliers, and laborers to collect payments for work
done if they have not been paid, despite filing a residential lien.
MCL 570.1201 was repealed effective August 23, 2010 and as of
September 30, 2014, final disposition of the remaining fund balance
had not occurred as a result of pending litigation.
MICHIGAN EMPLOYMENT SECURITY ACT -
ADMINISTRATION FUND
Michigan Compiled Laws Section 421.10 created this fund to
account for administrative costs of the Unemployment Insurance
Agency, which is administered by the Department of Licensing and
Regulatory Affairs. The fund derives most of its revenue from
federal grants. It also receives transfers from the Michigan
Employment Security Act Contingent Fund (reported as part of the
Michigan Unemployment Compensation Funds, an enterprise fund).
Expenditures for administration are subject to legislative
appropriation.
Unemployment benefit payments to individuals are made directly
from funds accumulated from employer premiums. These activities
are reported in the Michigan Unemployment Compensation Funds.
SAFETY EDUCATION AND TRAINING FUND
Michigan Compiled Laws Section 408.1055 imposes an annual levy
on each insurance carrier licensed to write workers' disability
compensation business in the State and on each self-insured
employer. The Safety Education and Training Fund was established
to receive these assessments for support of the Department of
Licensing and Regulatory Affairs’ Consultation Education and
Training Division.
SECOND INJ URY FUND
Michigan Compiled Laws Section 418.501, created the Second
Injury Fund to insure carriers and self-insured employers against
certain workers' compensation losses. The administrator,
appointed by the fund's Board of Trustees, supervises the fund. The
fund's revenue consists of assessments, calculated under provisions
of the act, which are assessed to insurance carriers and self-insured
employers licensed or authorized in Michigan.
SELF-INSURERS’ SECURITY FUND
Established by Michigan Compiled Laws Section 418.501, the Self-
Insurers’ Security Fund pays workers’ compensation benefits to
injured employees of insolvent, private self-insured employers.
Revenues are generated through annual assessments of insurance
carriers.
Funds held in trust per court orders to pay obligations due under the
Michigan Workers’ Disability Compensation Act are reported as
liabilities of this fund.
SILICOSIS, DUST DISEASE, AND LOGGING INDUSTRY
COMPENSATION FUND
Established by Michigan Compiled Laws Section 418.501, the
Silicosis, Dust Disease, and Logging Industry Compensation Fund
reimburses insurance carriers who pay benefits to employees
injured from certain dust diseases, and employees who have
sustained personal injury or death while being employed in the
logging industry. Revenues are generated through annual
assessments of insurance carriers.
STATE CONSTRUCTION CODE FUND
Michigan Compiled Laws Section 125.1522 created the State
Construction Code Fund. Fees received for building permit
applications and other funds collected under this legislation are
appropriated by the Legislature for the operation of the Department
of Licensing and Regulatory Affairs’ Bureau of Construction Codes
and related indirect overhead expenditures.
UTILITY CONSUMER REPRESENTATION FUND
Established by Michigan Compiled Laws Section 460.6m, the Utility
Consumer Representation Fund provides funding, on behalf of
residential gas, fuel, and electric customers, for energy cost
recovery hearings before the Michigan Public Service Commission.
Revenues are generated through annual assessments of regulated
utility companies.
UNEMPLOYMENT OBLIGATION TRUST FUND
This fund was created by Michigan Compiled Laws (MCL) Section
421.10a to facilitate the repayment of debt incurred through a bond
issuance authorized under the Employment Security Financing Act
(MCL 12.271 et seq.) and MCL 421.26a. This debt was issued in
order to repay advances received from the Federal Government that
were provided to temporarily assist Michigan with unemployment
payments that exceeded current revenue collections. Revenues
within the Obligation Trust Fund are generated from annual
assessments on employers. Payments are made to the Michigan
Finance Authority, a discretely presented component unit, which
currently holds the bonds and makes regular payments to the bond
holders.
STATE CASINO GAMING FUND
Created by Michigan Compiled Laws (MCL) Section 432.212, this
fund provides the licensing, regulation, and control of casino gaming
activities in Michigan via the five-member gaming control board
created under MCL 432.204. Additional responsibilities include the
performance of authorized inspections of tribal Class III gaming
facilities and records pursuant to and in accordance with the
provisions of the various tribal/state compacts as delegated by the
Governor in November 2002; the regulation of live horse racing per
Executive Order 2009-45; and the licensing and regulation of
Millionaire Party charitable gaming events per Executive Order
2012-4.
2014 Comprehensive Annual Financi al Report
153 153 153 153
COMBINING BALANCE SHEET
SPECIAL REVENUE FUNDS - REGULATORY AND ADMINISTRATIVE RELATED
SEPTEMBER 30, 2014
(In Thousands)
CONSTRUCTION
LIEN SECOND
ASSETS
Current Assets:
Cash $ - $ - $ - $ - $ -
Equity in common cash 208 - 6,973 13,698 33,445
Amounts due from other funds - 2,773 - - -
Amounts due from
federal agencies - 8,973 - - -
Other current assets - 3 - 300 1,042
Total Current Assets 208 11,748 6,973 13,998 34,487
Total Assets $ 208 $ 11,748 $ 6,973 $ 13,998 $ 34,487
LIABILITIES
Current Liabilities:
Warrants outstanding $ - $ 7 $ 3 $ 289 $ 106
Accounts payable and
and other liabilities - 2,859 252 1,350 9,429
Amounts due to other funds - 8,882 89 16 9
Amounts due to component units - - - - -
Unearned revenue - - - 3,326 1,588
Total Current Liabilities - 11,748 344 4,980 11,132
Total Liabilities - 11,748 344 4,980 11,132
DEFERRED INFLOWS
OF RESOURCES - - - - -
FUND BALANCES
Restricted 208 - 6,630 9,018 23,355
Committed - - - - -
Total Fund Balances 208 - 6,630 9,018 23,355
Total Liabilities, Deferred
Inflows of Resources,
and Fund Balances $ 208 $ 11,748 $ 6,973 $ 13,998 $ 34,487
FUND FUND FUND FUND FUND
SAFETY
SELF-INSURERS'
INJ URY SECURITY
Michigan
HOMEOWNER
ADMINISTRATION
SECURITY ACT -
EMPLOYMENT
EDUCATION
RECOVERY AND TRAINING
MICHIGAN
154 154 154 154
GAMING FUND
$ - $ - $ - $ - $ 6 $ 6
1,573 2,574 2,328 2,502 11,000 74,300
- - - 1,320 - 4,093
- - - - - 8,973
130 130 - 63,546 68 65,220
1,704 2,704 2,328 67,369 11,073 152,591
$ 1,704 $ 2,704 $ 2,328 $ 67,369 $ 11,073 $ 152,591
$ 1 $ 2 $ 12 $ - $ 1 $ 421
345 226 94 - 625 15,179
4 89 7 - 189 9,285
- - - 54,925 - 54,925
226 - - - 11 5,151
576 317 113 54,925 826 84,961
576 317 113 54,925 826 84,961
- - - 12,444 - 12,444
1,128 2,387 2,215 - 7,457 52,397
- - - - 2,790 2,790
1,128 2,387 2,215 - 10,247 55,186
$ 1,704 $ 2,704 $ 2,328 $ 67,369 $ 11,073 $ 152,591
TOTALS FUND CODE FUND FUND TRUST FUND
LOGGING
INDUSTRY
STATE CASINO REPRESENTATION OBLIGATION CONSTRUCTION
Michigan
SILICOSIS, DUST
DISEASE, AND
COMPENSATION
UTILITY CONSUMER STATE UNEMPLOYMENT
155 155 155 155
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUNDS - REGULATORY AND ADMINISTRATIVE RELATED
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
MICHIGAN
CONSTRUCTION EMPLOYMENT
LIEN SECOND
FUND FUND FUND FUND
REVENUES
From federal agencies $ - $ 140,080 $ - $ - $ -
From services - - - - -
From licenses and permits - - - - -
Miscellaneous 30 - 9,831 13,082 11,829
Total Revenues 30 140,080 9,831 13,082 11,829
EXPENDITURES
Current:
General government - - - - -
Labor, commerce,
and regulatory - 153,403 9,645 12,522 4,968
Debt Service:
Capital lease payments - 583 - - -
Total Expenditures - 153,986 9,645 12,522 4,968
Excess of Revenues over
(under) Expenditures 30 (13,906) 186 560 6,861
OTHER FINANCING SOURCES (USES)
Transfers from other funds - 15,508 - - -
Transfers to other funds - (1,602) (133) (23) (13)
Total Other Financing
Sources (Uses) - 13,906 (133) (23) (13)
Excess of Revenues and Other
Sources over (under)
Expenditures and Other Uses 30 - 52 536 6,848
Fund Balances - Beginning of
fiscal year 178 - 6,577 8,481 16,507
Fund Balances - End of fiscal year $ 208 $ - $ 6,630 $ 9,018 $ 23,355
Michigan
HOMEOWNER
RECOVERY ADMINISTRATION
SAFETY
EDUCATION
INJ URY
SECURITY ACT -
AND TRAINING
FUND
SECURITY
SELF-INSURERS'
156 156 156 156
FUND FUND TRUST FUND
$ - $ - $ - $ - $ - $ 140,080
- 6 - - - 6
- 8,868 - - 1,050 9,919
1,201 2 1,207 455,751 35,360 528,294
1,201 8,877 1,207 455,751 36,410 678,299
- - 740 - 26,184 26,923
1,278 9,480 617 455,751 - 647,665
- - - - - 583
1,278 9,480 1,357 455,751 26,184 675,171
(77) (603) (149) - 10,226 3,128
- - - - 3,659 19,167
(6) (144) (5) - (15,472) (17,398)
(6) (144) (5) - (11,813) 1,768
(83) (747) (154) - (1,587) 4,896
1,211 3,134 2,369 - 11,833 50,290
$ 1,128 $ 2,387 $ 2,215 $ - $ 10,247 $ 55,186
TOTALS
CONSTRUCTION
STATE
Michigan
GAMING FUND CODE FUND
UTILITY CONSUMER
REPRESENTATION
SILICOSIS, DUST
DISEASE, AND
LOGGING
INDUSTRY
COMPENSATION STATE CASINO OBLIGATION
UNEMPLOYMENT
157 157 157 157
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
SPECIAL REVENUE FUNDS - REGULATORY AND ADMINISTRATIVE RELATED
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
MICHIGAN EMPLOYMENT
REVENUES AND OTHER SOURCES
From federal agencies $ - $ - $ - $ 140,080 $ 140,080 $ -
From services - - - - - -
From licenses and permits - - - - - -
Miscellaneous 30 30 - - - -
Transfers in - - - 15,508 15,508 -
Total Revenues and Other Sources 30 30 - 155,588 155,588 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Licensing and Regulatory Affairs - - - 155,588 155,588 -
Treasury - - - - - -
Total Expenditures, Transfers Out,
and Encumbrances - - - 155,588 155,588 -
Revenues and Other Sources over (under)
Expenditures, Encumbrances, and Other
Uses (Statutory/budgetary basis) $ 30 30 $ - $ - - $ -
Reconciling Items:
Encumbrances at September 30 - -
Funds not annually budgeted - -
Net Reconciling Items - -
Excess of Revenues and Other Sources
over (under) Expenditures
and Other Uses (GAAP Basis) 30 -
FUND BALANCES (GAAP BASIS)
Beginning balances 178 -
Ending balances (GAAP Basis) $ 208 $ -
Michigan
HOMEOWNER
CONSTRUCTION LIEN RECOVERY FUND SECURITY ACT - ADMINISTRATION FUND
BUDGET ACTUAL VARIANCE BUDGET ACTUAL Statutory/Budgetary Basis VARIANCE
158 158 158 158
$ - $ - $ - $ - $ - $ -
- - - 6 6 -
- - - 8,868 8,868 -
9,831 9,831 - 2 2 -
- - - - - -
9,831 9,831 - 8,877 8,877 -
11,019 9,869 1,151 11,260 10,051 1,209
- - - - - -
11,019 9,869 1,151 11,260 10,051 1,209
$ (1,189) (38) $ 1,151 $ (2,384) (1,174) $ 1,209
90 427
- -
90 427
52 (747)
6,577 3,134
$ 6,630 $ 2,387
This schedule continued on next page.
Michigan
SAFETY EDUCATION AND TRAINING FUND STATE CONSTRUCTION CODE FUND
ACTUAL VARIANCE BUDGET ACTUAL VARIANCE BUDGET
159 159 159 159
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
SPECIAL REVENUE FUNDS - REGULATORY AND ADMINISTRATIVE RELATED (Continued)
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
REVENUES AND OTHER SOURCES
From federal agencies $ - $ - $ -
From services - - -
From licenses and permits 1,050 1,050 -
Miscellaneous 35,360 35,360 -
Transfers in 3,659 3,659 -
Total Revenues and Other Sources 40,069 40,069 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Licensing and Regulatory Affairs - - -
Treasury 43,956 41,656 2,300
Total Expenditures, Transfers Out,
and Encumbrances 43,956 41,656 2,300
Revenues and Other Sources over (under)
Expenditures, Encumbrances, and Other
Uses (Statutory/budgetary basis) $ (3,887) (1,587) $ 2,300
Reconciling Items:
Encumbrances at September 30 -
Funds not annually budgeted -
Net Reconciling Items -
Excess of Revenues and Other Sources
over (under) Expenditures
and Other Uses (GAAP Basis) (1,587)
FUND BALANCES (GAAP BASIS)
Beginning balances 11,833
Ending balances (GAAP Basis) $ 10,247
Michigan
STATE CASINO GAMING FUND
ACTUAL VARIANCE Statutory/Budgetary Basis BUDGET
160 160 160 160
SECOND
INJ URY
$ - $ - $ - $ - $ - $ 140,080 $ 140,080 $ -
- - - - - 6 6 -
- - - - - 9,919 9,919 -
- - - - - 45,223 45,223 -
- - - - - 19,167 19,167 -
- - - - - 214,395 214,395 -
- - - - - 177,868 175,508 2,360
- - - - - 43,956 41,656 2,300
- - - - - 221,824 217,164 4,660
- - - - - $ (7,429) (2,769) $ 4,660
- - - - - 518
536 6,848 (83) (154) - 7,148
536 6,848 (83) (154) - 7,666
536 6,848 (83) (154) - 4,896
8,481 16,507 1,211 2,369 - 50,290
$ 9,018 $ 23,355 $ 1,128 $ 2,215 $ - $ 55,186
FUND
BUDGET ACTUAL
INDUSTRY
FUNDS NOT ANNUALLY BUDGETED
FUND TOTALS
COMPENSATION
UNEMPLOYMENT
OBLIGATION
UTILITY CONSUMER
REPRESENTATION
SILICOSIS, DUST
DISEASE, AND
LOGGING
Michigan
SECURITY
SELF-INSURERS'
FUND FUND
VARIANCE
TRUST FUND
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL
161 161 161 161
Michigan
2014 Comprehensive Annual Financi al Report
162 162 162 162
Michigan
SPECIAL REVENUE FUNDS – OTHER STATE FUNDS
21
st
CENTURY J OBS TRUST FUND
Michigan Compiled Laws Section 12.257 created the 21
st
Century
J obs Trust Fund to account for the transfer of the net bond proceeds
issued by the Michigan Tobacco Settlement Finance Authority.
Executive Order 2010-2 moved the Authority to the Michigan
Finance Authority. The bonds were issued to provide sufficient
funds to purchase all or a portion of the State’s receipts from the
master settlement agreement between tobacco manufacturers and
the State. Fund expenditures are used to reimburse the Michigan
Strategic Fund for expenses related to revitalizing Michigan’s
economy and for other programs as determined by the Legislature.
The fund may accept donations of money from any source; all
interest earned is deposited into the State’s General Fund.
Beginning in fiscal year 2008 through 2016, the fund will also
receive a portion of the tobacco settlement revenue received by the
State.
MICHIGAN MERIT AWARD TRUST FUND
This fund was created by Michigan Compiled Laws (MCL) Section
12.259 to account for a portion of the revenue from the master
settlement agreement between tobacco manufacturers and the
State. The settlement reimburses the State for health care costs,
which result from the use of tobacco products. The fund also
consists of interest and earnings from trust fund investments and
donations. Fund expenditures are used for the Michigan Merit
Award Scholarship, Michigan Promise Scholarship, and other
programs as determined by the Legislature.
All assets and liabilities of the Tobacco Settlement Trust Fund,
established by MCL Section 12.253 and repealed as part of tobacco
securitization legislation passed in November 2005, were
transferred to the Michigan Merit Award Trust Fund in fiscal year
2006.
MICHIGAN SETTLEMENT ADMINISTRATION AUTHORITY
Michigan Compiled Laws Section 141.1604 created the Michigan
Settlement Administration Authority (MSAA) as a public body
corporate. The purpose of the Authority is to provide funding to the
retirement systems of the City of Detroit pursuant to certain
requirements being fulfilled. If the requirements are not fulfilled by
May 1, 2015, then the money of the Authority will be returned to the
Counter-Cyclical Budget and Economic Stabilization Fund (a
subfund of the General Fund). The MSAA’s three-member
governing board consists of the State Treasurer, the State Budget
Director, and one member appointed by the Governor.
CHILDREN'S TRUST FUND
Michigan Compiled Laws (MCL) Section 21.171 established the
Children’s Trust Fund to support the State Child Abuse and Neglect
Prevention Board. The Board was established under MCL Section
722.603 to coordinate and fund activities for the prevention of child
abuse and neglect in the State. Not more than one-half the money
contributed to the trust fund each year, plus the interest and
earnings, excluding unrealized gains and losses, credited to the
trust fund during the previous fiscal year are available for
disbursement. Money received as gifts or donations to the trust
fund shall be available for disbursement upon appropriation. Funds
that are not available for disbursement are reported as
nonspendable fund balance.
This fund is also used to account for the Foster Care Trust Fund that
was established under MCL Section 722.1023 and transferred to the
State Child Abuse and Neglect Prevention Board with Executive
Order 2010-17. Funds in the Foster Care Trust Fund are not
expendable until the balance reaches $800 thousand.
MILITARY FAMILY RELIEF FUND
Michigan Compiled Laws Section 35.1213 created this fund to
provide assistance to families of certain members of the reserve
components of the United States armed forces on active duty. A
qualified individual or the individual’s family shall apply to the
Department of Military and Veterans Affairs for a grant from the
fund. Funds are received primarily from taxpayer contributions on
his or her annual State tax return designating $1 or more of his or
her refund to be credited to this fund.
MISCELLANEOUS SPECIAL REVENUE FUNDS
The miscellaneous special revenue funds column reflects the
activities of the following funds: Children’s Institute Trust, Special
Assessment Deferment, and Intrastate Switched Toll Restructuring.
2014 Comprehensive Annual Financi al Report
163 163 163 163
COMBINING BALANCE SHEET
SPECIAL REVENUE FUNDS - OTHER STATE FUNDS
SEPTEMBER 30, 2014
(In Thousands)
AUTHORITY
ASSETS
Current Assets:
Equity in common cash $ 274,682 $ 75,754 $ 194,803
Other current assets 56,250 103,599 -
Total Current Assets 330,932 179,353 194,803
Investments - - -
Other noncurrent assets - 2,683 -
Total Assets $ 330,932 $ 182,036 $ 194,803
LIABILITIES
Current Liabilities:
Warrants outstanding $ - $ - $ -
Accounts payable and other liabilities - 809 -
Amounts due to other funds - 24 -
Total Current Liabilities - 833 -
Total Liabilities - 833 -
DEFERRED INFLOWS OF RESOURCES 56,250 106,012 -
FUND BALANCES
Nonspendable - - -
Restricted - - -
Committed 274,682 75,191 194,803
Total Fund Balances 274,682 75,191 194,803
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances $ 330,932 $ 182,036 $ 194,803
TRUST FUND
21ST CENTURY
J OBS
TRUST FUND
MERIT AWARD ADMINISTRATION
SETTLEMENT MICHIGAN
MICHIGAN
Michigan
164 164 164 164
TRUST FUND RELIEF FUND FUNDS
$ 1,478 $ 2,446 $ 2,871 $ 552,034
166 - 80 160,095
1,644 2,446 2,952 712,130
23,395 - - 23,395
- - 859 3,542
25,039 $ 2,446 $ 3,811 $ 739,067
$ 2 $ 1 $ 196 $ 199
408 2 14 1,232
11 - 6 41
421 3 215 1,472
421 3 215 1,472
- - 338 162,600
23,424 - - 23,424
1,195 2,443 3,258 6,896
- - - 544,676
24,619 2,443 3,258 574,995
$ 25,039 $ 2,446 $ 3,811 $ 739,067
TOTALS
MILITARY FAMILY REVENUE
SPECIAL
CHILDREN'S
MISCELLANEOUS
Michigan
165 165 165 165
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUNDS - OTHER STATE FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
21ST CENTURY
J OBS
TRUST FUND TRUST FUND AUTHORITY
REVENUES
From federal agencies $ - $ - $ -
Miscellaneous 75,000 115,975 3
Total Revenues 75,000 115,975 3
EXPENDITURES
Current:
General government 145,097 1,303 -
Human services - 30,100 -
Public safety and corrections - 739 -
Labor, commerce, and regulatory - - -
Health services - 85,835 -
Total Expenditures 145,097 117,977 -
Excess of Revenues over (under)
Expenditures (70,097) (2,002) 3
OTHER FINANCING SOURCES (USES)
Transfers from other funds 102,500 - 194,800
Transfers to other funds - (26) -
Total Other Financing Sources (Uses) 102,500 (26) 194,800
Excess of Revenues and Other
Sources over (under) Expenditures
and Other Uses 32,403 (2,028) 194,803
Fund Balances - Beginning of fiscal year 242,279 77,219 -
Fund Balances - End of fiscal year $ 274,682 $ 75,191 $ 194,803
Michigan
MERIT AWARD
MICHIGAN
MICHIGAN
SETTLEMENT
ADMINISTRATION
166 166 166 166
TRUST FUND RELIEF FUND FUNDS
$ 772 $ - $ - $ 772
2,177 132 12,546 205,832
2,949 132 12,546 206,604
- - - 146,401
2,783 - - 32,883
- 73 - 812
- - 16,237 16,237
- - - 85,835
2,783 73 16,237 282,168
166 59 (3,692) (75,563)
- - - 297,300
(6) - (8) (40)
(6) - (8) 297,260
159 59 (3,699) 221,697
24,459 2,384 6,957 353,298
$ 24,619 $ 2,443 $ 3,258 $ 574,995
Michigan
MILITARY FAMILY CHILDREN'S
TOTALS
SPECIAL
REVENUE
MISCELLANEOUS
167 167 167 167
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
SPECIAL REVENUE FUNDS - OTHER STATE FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
Statutory/Budgetary Basis
REVENUES AND OTHER SOURCES
From federal agencies $ - $ - $ -
Miscellaneous 75,000 75,000 -
Transfers in 102,500 102,500 -
Total Revenues and Other Sources 177,500 177,500 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Attorney General - - -
Community Health - - -
Human Services - - -
Military and Veterans Affairs - - -
State Police - - -
Treasury 419,779 145,097 274,682
Total Expenditures, Transfers Out,
and Encumbrances 419,779 145,097 274,682
Revenues and Other Sources over (under)
Expenditures, Encumbrances, and Other
Uses (Statutory/budgetary basis) $ (242,279) 32,403 $ 274,682
Reconciling Items:
Encumbrances at September 30 -
Funds not annually budgeted -
Net Reconciling Items -
Excess of Revenues and Other Sources
over (under) Expenditures
and Other Uses (GAAP Basis) 32,403
FUND BALANCES (GAAP BASIS)
Beginning balances 242,279
Ending balances (GAAP Basis) $ 274,682
Michigan
ACTUAL VARIANCE
21ST CENTURY J OBS TRUST FUND
BUDGET
168 168 168 168
MILITARY FAMILY RELIEF FUND
BUDGET BUDGET ACTUAL VARIANCE
$ - $ - $ - $ 772 $ 772 $ - $ - $ - $ -
115,975 115,975 - 2,177 2,177 - 132 132 -
- - - - - - - - -
115,975 115,975 - 2,949 2,949 - 132 132 -
681 446 235 - - - - - -
85,835 85,835 - - - - - - -
30,100 30,100 - 2,842 2,790 53 - - -
- - - - - - 1,001 74 927
750 750 - - - - - - -
1,124 873 251 - - - - - -
118,489 118,003 486 2,842 2,790 53 1,001 74 927
$ (2,514) (2,028) $ 486 $ 107 159 $ 53 $ (870) 58 $ 927
1 - 1
- - -
1 - 1
(2,028) 159 59
77,219 24,459 2,384
$ 75,191 $ 24,619 $ 2,443
This schedule continued on next page.
Michigan
ACTUAL BUDGET VARIANCE
MICHIGAN MERIT AWARD TRUST FUND CHILDREN'S TRUST FUND
ACTUAL VARIANCE
169 169 169 169
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
SPECIAL REVENUE FUNDS - OTHER STATE FUNDS (Continued)
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
Statutory/Budgetary Basis ACTUAL ACTUAL BUDGET ACTUAL VARIANCE
REVENUES AND OTHER SOURCES
From federal agencies $ - $ - $ 772 $ 772 $ -
Miscellaneous - - 193,284 193,284 -
Transfers in - - 102,500 102,500 -
Total Revenues and Other Sources - - 296,556 296,556 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Attorney General - - 681 446 235
Community Health - - 85,835 85,835 -
Human Services - - 32,942 32,890 53
Military and Veterans Affairs - - 1,001 74 927
State Police - - 750 750 -
Treasury - - 420,903 145,970 274,933
Total Expenditures, Transfers Out,
and Encumbrances - - 542,112 265,964 276,148
Revenues and Other Sources over (under)
Expenditures, Encumbrances, and Other
Uses (Statutory/budgetary basis) - - $ (245,556) 30,592 $ 276,148
Reconciling Items:
Encumbrances at September 30 - - 2
Funds not annually budgeted 194,803 (3,699) 191,103
Net Reconciling Items 194,803 (3,699) 191,105
Excess of Revenues and Other Sources
over (under) Expenditures
and Other Uses (GAAP Basis) 194,803 (3,699) 221,697
FUND BALANCES (GAAP BASIS)
Beginning balances - 6,957 353,298
Ending balances (GAAP Basis) $ 194,803 $ 3,258 $ 574,995
TOTALS
MISCELLANEOUS MICHIGAN
ANNUALLY BUDGETED
FUNDS NOT
SETTLEMENT SPECIAL
Michigan
REVENUE ADMINISTRATION
AUTHORITY FUNDS
170 170 170 170
Michigan
DEBT SERVICE FUNDS
COMBINED STATE TRUNKLINE BOND AND INTEREST
REDEMPTION FUND
This fund was administratively established to account for the debt
service on all State Trunkline Fund (STF) related bond issues
allowed for under Michigan Compiled Laws Section 247.661. The
bonds are not general obligations of the State. The bonds are
payable solely out of funds restricted for transportation purposes by
Article 9, Section 9, of the State Constitution and irrevocably
pledged by law for deposit in STF. Debt service requirements are
funded by annual appropriations in STF.
COMBINED COMPREHENSIVE TRANSPORTATION
BOND AND INTEREST REDEMPTION FUND
This fund was administratively established to account for the debt
service on all Comprehensive Transportation Fund (CTF) related
bond issues allowed for under Michigan Compiled Laws Section
247.660b. The bonds are not general obligations of the State. The
bonds are payable solely out of funds restricted for comprehensive
transportation purposes by Article 9, Section 9, of the State
Constitution and irrevocably pledged by law for deposit in CTF.
Debt service requirements are funded by annual appropriations in
CTF.
RECREATION AND ENVIRONMENTAL PROTECTION
BOND REDEMPTION FUND
This fund was established pursuant to Michigan Compiled Laws
(MCL) Sections 324.19506, 324.71506, and 324.95102 to service
recreation and environmental protection bond issues. This fund also
reflects debt service transactions related to State Park Improvement
Fund (SPIF) revenue bonds, issued pursuant to MCL Section
324.74106.
Financing of debt retirement, interest expense, and paying agent
fees is provided by annual legislative appropriation from the General
Fund, transfers from SPIF representing state park revenues pledged
for the payment of State Park Gross Revenue Bonds, and transfers
from other funds as required by legislative appropriation or
executive order.
Included in the restricted fund balance on the balance sheet is a
$300 thousand reserve account required by the State Park Gross
Revenue Bonds document for additional security to pay bond
principal and interest.
SCHOOL LOAN BOND REDEMPTION FUND
Michigan Compiled Laws Section 388.922 created this fund to
account for debt service on general obligation bonds issued to
finance loans to local school districts. Financing of debt retirement,
interest expense, and paying agent fees is provided by annual
legislative appropriation from the General Fund or School Aid Fund.
STATE BUILDING AUTHORITY
The State Building Authority (SBA) was created pursuant to
Michigan Compiled Laws Section 830.412, to issue bonds to finance
the acquisition or renovation of buildings for use by the State or
public institutions of higher education, as well as State furnishings
and equipment.
SBA projects are financed by revenue bonds, the proceeds of which
can only be used for construction and debt service on projects
related to particular bond issues. During construction, debt service
requirements are financed by a portion of the bond proceeds that
are dedicated for that purpose. For completed projects, the
resources to finance bond interest and redemption are provided by
transfers from the General Fund and from investment earnings of
this fund. When a project is completed, the remaining assets are
transferred to this fund where they are invested and used for debt
service. Excess balances related to a particular bond series
remaining in the fund after the final payment on the bond series are
transferred to the General Fund.
2014 Comprehensive Annual Financi al Report
171 171 171 171
COMBINING BALANCE SHEET
DEBT SERVICE FUNDS
SEPTEMBER 30, 2014
(In Thousands)
COMBINED COMBINED RECREATION
STATE COMPREHENSIVE AND
TRUNKLINE TRANSPORTATION ENVIRONMENTAL
BOND AND BOND AND PROTECTION
INTEREST INTEREST BOND
REDEMPTION REDEMPTION REDEMPTION
FUND FUND FUND
ASSETS
Current Assets:
Equity in common cash $ 298 $ - $ 1,572
Investments - - -
Other current assets - - -
Total Current Assets 298 - 1,572
Total Assets $ 298 $ - $ 1,572
LIABILITIES
Current Liabilities:
Accounts payable and other liabilities $ 298 $ - $ -
Amounts due to other funds - - -
Total Current Liabilities 298 - -
Total Liabilities 298 - -
FUND BALANCES
Restricted - - 1,571
Total Fund Balances - - 1,571
Total Liabilities and Fund Balances $ 298 $ - $ 1,572
Michigan
172 172 172 172
$ - $ - $ 1,869
- 223,664 223,664
- 1 1
- 223,665 225,535
$ - $ 223,665 $ 225,535
$ - $ 103 $ 401
- 457 457
- 560 858
- 560 858
- 223,106 224,677
- 223,106 224,677
$ - $ 223,665 $ 225,535
REDEMPTION
FUND
Michigan
TOTALS
STATE
BUILDING
AUTHORITY
SCHOOL
LOAN BOND
173 173 173 173
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
DEBT SERVICE FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
COMBINED COMBINED RECREATION
STATE COMPREHENSIVE AND
TRUNKLINE TRANSPORTATION ENVIRONMENTAL
BOND AND BOND AND PROTECTION
INTEREST INTEREST BOND
REDEMPTION REDEMPTION REDEMPTION
FUND FUND FUND
REVENUES
Miscellaneous $ - $ - $ 1
Total Revenues - - 1
EXPENDITURES
Current:
General government - - 256
Education - - -
Transportation 1,187 - -
Debt Service:
Bond principal retirement 114,955 14,535 143,965
Bond interest and fiscal charges 104,155 7,877 38,135
Total Expenditures 220,297 22,412 182,356
Excess of Revenues over (under)
Expenditures (220,297) (22,412) (182,355)
OTHER FINANCING SOURCES (USES)
Refunding bonds issued 265,085 - 30,000
Premium on bond issuance 35,223 - -
Payment to refunded bond escrow agent (299,121) - -
Transfers from other funds 219,110 22,412 152,468
Total Other Financing Sources (Uses) 220,297 22,412 182,468
Excess of Revenues and Other
Sources over (under) Expenditures
and Other Uses - - 113
Fund Balances - Beginning of fiscal year - - 1,458
Fund Balances - End of fiscal year $ - $ - $ 1,571
Michigan
174 174 174 174
FUND
$ - $ 3,257 $ 3,259
- 3,257 3,259
- - 256
- 1,128 1,128
- - 1,188
77,006 102,170 452,631
49,243 118,463 317,873
126,249 221,761 773,075
(126,249) (218,503) (769,817)
- - 295,085
- - 35,223
- - (299,121)
126,249 231,002 751,241
126,249 231,002 782,428
- 12,499 12,612
- 210,607 212,065
$ - $ 223,106 $ 224,677
TOTALS
STATE
BUILDING
AUTHORITY
SCHOOL
LOAN BOND
REDEMPTION
Michigan
175 175 175 175
Michigan
CAPITAL PROJ ECTS FUNDS
STATE TRUNKLINE FUND
Established pursuant to Michigan Compiled Laws Section 247.661,
this fund accounts for highway construction and maintenance. Its
annual budget is subject to legislative review and appropriation, but
the Transportation Commission has significant discretion in
determining the funding of individual projects. The majority of
projects in this fund are owned by the State. Financing consists
primarily of federal aid, local participation, and transfers from the
Michigan Transportation Fund. Expenditures and transfers are for
administration, highway maintenance and construction, debt service,
and various contractual obligations.
This fund also is used to record loans made to local units of
government for reconstructing and resurfacing roadways. Activities
of the Blue Water Bridge program, segregated as a separate fund
within the accounting system, are also reported within the State
Trunkline Fund.
STATE AERONAUTICS FUND
Established pursuant to Michigan Compiled Laws Section 259.34,
this fund accounts for airport improvement projects, of which a
majority are locally owned. Financing consists primarily of aviation
fuel taxes and federal contributions.
COMBINED STATE TRUNKLINE BOND PROCEEDS FUND
Established pursuant to Michigan Compiled Laws Section 247.668b,
this fund accounts for the proceeds of State trunkline revenue
dedicated bonds. These bonds are used in part to finance the costs
of road and bridge construction. All projects accounted for by this
fund are owned by the State.
COMBINED COMPREHENSIVE TRANSPORTATION
BOND PROCEEDS FUND
Established pursuant to Michigan Compiled Laws Section 247.668b,
this fund accounts for the proceeds of comprehensive transportation
revenue dedicated bonds. These bonds are used in part to finance
the costs of locally owned comprehensive transportation projects.
TRANSPORTATION RELATED TRUST FUNDS
The Michigan Department of Transportation is recognized as the
legal representative of the State, including all governmental
subdivisions, in the administration of the Federal Highway
Administration programs. The financing accounted for in this fund
consists primarily of revenues from the federal Highway Trust Fund
utilized to reimburse municipalities for road and bridge program
activities with very little State funds. All projects accounted for in
this fund are locally owned.
COMBINED RECREATION BOND FUND
Established in 1988, this fund has operated under Michigan
Compiled Law Sections 324.19601 – 324.19616, 324.71303,
324.71501 – 324.71514, and 324.74106 – 324.74113. The balances
in the fund are derived from proceeds and investment earnings
remaining from $50 million of general obligation bonds approved by
voters in November 1998 as part of a $675 million bond package
known as the “Clean Michigan Initiative” for both State and local
projects. The balance retained in the fund is currently being
appropriated for post completion inspection of local projects.
A 1988 bond package, which has been fully expended, provided $70
million of general obligation bonds to finance State and local public
recreation projects to construct, expand, and develop recreational
facilities at State parks, provide grants and loans to local units of
government for recreation projects and to discourage development
of open space and underdeveloped lands. Proceeds from the 1998
bond package have been used to improve State parks with the
installation or upgrade of drinking water systems or restroom
facilities and provide grants and loans to local units of government
for recreation projects.
In fiscal year 2011, bond balances related to the 1998 bond
package used to improve State parks were transferred to the State
Park Improvement Account within the Michigan Conservation and
Recreation Legacy Fund pursuant to Public Act 50 of 2011, Section
303. A significant portion of the remaining bond balances related to
the 1998 bond package used for grants to local units of government
were transferred to the Michigan Natural Resources Trust Fund
pursuant to Public Act 50 of 2011, Section 302.
2014 Comprehensive Annual Financi al Report
176 176 176 176
Michigan
STATE BUILDING AUTHORITY
The State Building Authority (SBA) was created pursuant to
Michigan Compiled Laws Section 830.412, to issue bonds to finance
the acquisition or renovation of buildings for use by the State or
public institutions of higher education, as well as State furnishings
and equipment. The SBA’s five-member board is appointed by the
Governor.
This capital projects fund accounts for the construction of State
projects, certain equipment financing, and higher education related
projects. Transfers out reflect transfers to the debt service fund of
proceeds dedicated for debt service during construction,
reimbursements of expenditures to the SBA Advance Financing
Fund, and the transfer of assets remaining after the completion of a
project to the debt service fund. In the State's Government-wide
Financial Statements, accumulated expenditures for incomplete
projects are reflected as "construction in progress" and completed
projects are recorded as "buildings."
ADVANCE FINANCING FUNDS
The Advance Financing Funds reflects the activities of two sub-
funds: the State Building Authority (SBA) Advance Financing Fund
and the Site Preparation Economic Development Fund.
The SBA Advance Financing Fund was administratively established
to account for expenditures incurred for equipment, higher
education, and State projects prior to the issuance of SBA bonds.
Appropriation acts and concurrent resolutions provide temporary
financing of such expenditures for legislatively authorized projects.
Expenditures on behalf of SBA are recorded when incurred. At
year-end, any deficit in the common cash pool is reclassified as an
interfund liability. In addition to advance expenditures, expenditures
financed by the General Fund or other sources related to the SBA
projects are recorded in this fund.
SBA, in its separately issued statements, does not recognize
liabilities for these projects until bonds or commercial paper are
issued; therefore, no receivable from SBA is recognized in this fund
prior to bond or commercial paper issuance. This results in the fund
showing a year-end fund balance deficit. SBA will reimburse this
fund by recording a transfer and the deficit attributable to the
bonded projects will be eliminated when SBA issues bonds or
obtains commercial paper.
The Site Preparation Economic Development Fund is created
through the annual appropriations process to account for
expenditures incurred to prepare and sell State owned sites
declared as surplus that would provide economic benefit to the area
or State. Expenditures are recorded when incurred. Sale proceeds
of fund properties are deposited into the fund.
2014 Comprehensive Annual Financi al Report
177 177 177 177
COMBINING BALANCE SHEET
CAPITAL PROJECTS FUNDS
SEPTEMBER 30, 2014
(In Thousands)
ASSETS
Current Assets:
Cash $ 91 $ - $ - $ -
Equity in common cash 848,564 12,059 28,094 11,765
Taxes, interest, and penalties receivable - 466 - -
Amounts due from other funds 6,290 - - -
Amounts due from component units 1,777 - - -
Amounts due from federal agencies 140,461 26,455 4,015 -
Amounts due from local units 9,618 3,653 1,680 -
Inventories 7,685 - - -
Investments - - - -
Other current assets 3,341 130 - -
Total Current Assets 1,017,828 42,764 33,789 11,765
Amounts due from local units 30,868 144 - -
Other noncurrent assets 58 - - -
Total Assets $ 1,048,754 $ 42,908 $ 33,789 $ 11,765
LIABILITIES
Current Liabilities:
Warrants outstanding $ 4,252 $ 4,834 $ - $ 35
Accounts payable and other liabilities 184,772 18,387 3,645 1,818
Amounts due to other funds 3,802 74 - -
Amounts due to component units 206 - - -
Bonds and notes payable - - - -
Interest payable - - - -
Unearned revenue 2,562 - 174 -
Total Current Liabilities 195,594 23,295 3,819 1,854
Long-Term Liabilities:
Unearned revenue 34 - - -
Total Liabilities 195,628 23,295 3,819 1,854
DEFERRED INFLOWS OF RESOURCES 150 3 - -
FUND BALANCES
Nonspendable 7,685 - - -
Restricted 845,291 19,609 29,970 9,911
Unassigned - - - -
Total Fund Balances 852,976 19,609 29,970 9,911
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances $ 1,048,754 $ 42,908 $ 33,789 $ 11,765
STATE
Michigan
FUND FUND FUND FUND
BOND PROCEEDS
TRANSPORTATION
TRUNKLINE BOND PROCEEDS
STATE TRUNKLINE
COMPREHENSIVE
COMBINED
COMBINED
AERONAUTICS
STATE
178 178 178 178
$ - $ - $ - $ - $ 91
2,342 111 - - 902,935
- - - - 466
- - - 30,546 36,837
- - - - 1,777
41,455 - - - 212,386
34,202 - - - 49,153
- - - - 7,685
- - 26,576 - 26,576
- - - - 3,472
77,999 111 26,576 30,546 1,241,378
- - - - 31,011
- - - - 58
$ 77,999 $ 111 $ 26,576 $ 30,546 $ 1,272,448
$ 7 $ - $ - $ - $ 9,129
75,115 - 326 25,258 309,321
- - 30,569 7,984 42,429
- - - - 206
- - 99,105 - 99,105
- - 8 - 8
2,878 - - - 5,614
77,999 - 130,008 33,242 465,811
- - - - 34
77,999 - 130,008 33,242 465,845
- - - - 153
- - - - 7,685
- 111 - - 904,892
- - (103,432) (2,696) (106,128)
- 111 (103,432) (2,696) 806,449
$ 77,999 $ 111 $ 26,576 $ 30,546 $ 1,272,448
BOND FUND
COMBINED
TOTALS
FINANCING
ADVANCE
AUTHORITY
BUILDING
STATE
FUNDS TRUST FUNDS
RELATED
TRANSPORTATION
Michigan
RECREATION
179 179 179 179
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
COMPREHENSIVE
STATE STATE STATE TRUNKLINE TRANSPORTATION
TRUNKLINE AERONAUTICS BOND PROCEEDS BOND PROCEEDS
FUND
REVENUES
Taxes $ - $ 5,056 $ - $ -
From federal agencies 818,219 74,101 58,450 -
From local agencies 10,518 61 149 -
From services 3,501 789 - -
From licenses and permits 16,518 303 - -
Miscellaneous 42,767 646 4,608 366
Total Revenues 891,522 80,956 63,207 366
EXPENDITURES
Current:
Education - - - -
Conservation, environment,
recreation, and agriculture - - - -
Transportation 660,071 89,836 5,308 7,124
Capital outlay 889,858 371 71,371 250
Debt service:
Capital lease payments 791 - - -
Total Expenditures 1,550,719 90,207 76,679 7,374
Excess of Revenues over (under)
Expenditures (659,198) (9,250) (13,472) (7,009)
OTHER FINANCING SOURCES (USES)
Capital lease acquisitions 475 - - -
Proceeds from sale of capital assets 1,820 - - -
Transfers from other funds 950,012 6,000 - -
Transfers to other funds (224,650) (3,464) (45,799) -
Total Other Financing Sources (Uses) 727,657 2,536 (45,799) -
Excess of Revenues and Other
Sources over (under) Expenditures
and Other Uses 68,459 (6,715) (59,271) (7,009)
Fund Balances - Beginning of
fiscal year 784,517 26,324 89,242 16,920
Fund Balances - End of fiscal year $ 852,976 $ 19,609 $ 29,970 $ 9,911
FUND
Michigan
FUND
COMBINED
COMBINED
FUND
180 180 180 180
TRANSPORTATION STATE ADVANCE
BUILDING FINANCING
$ - $ - $ - $ - $ 5,056
314,204 - - - 1,264,974
- - - - 10,727
- - - - 4,289
- - - - 16,821
1,255 - 2 - 49,643
315,459 - 2 - 1,351,511
- - 61,145 930 62,075
- 29 - - 29
315,459 - - - 1,077,797
- - 29,255 1,576 992,682
- - - - 791
315,459 29 90,400 2,506 2,133,373
- (28) (90,398) (2,506) (781,862)
- - - - 475
- - - - 1,820
- - - 5,696 961,708
- - (5,704) - (279,617)
- - (5,704) 5,696 684,385
- (28) (96,102) 3,190 (97,477)
- 140 (7,330) (5,886) 903,926
$ - $ 111 $ (103,432) $ (2,696) $ 806,449
Michigan
TRUST FUNDS BOND FUND AUTHORITY FUNDS
COMBINED
RECREATION RELATED
TOTALS
181 181 181 181
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
CAPITAL PROJECTS FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
STATE TRUNKLINE FUND STATE AERONAUTICS FUND
Statutory/Budgetary Basis BUDGET ACTUAL BUDGET ACTUAL
REVENUES AND OTHER SOURCES
Taxes $ - $ - $ - $ 5,056 $ 5,056 $ -
From federal agencies 818,219 818,219 - 74,101 74,101 -
From local agencies 10,518 10,518 - 61 61 -
From services 3,501 3,501 - 789 789 -
From licenses and permits 16,518 16,518 - 303 303 -
Miscellaneous 42,767 42,767 - 646 646 -
Proceeds from sale of capital assets 1,820 1,820 - - - -
Transfers in 950,012 950,012 - 6,000 6,000 -
Total Revenues and Other Sources 1,843,353 1,843,353 - 86,956 86,956 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Transportation 1,852,524 1,807,297 45,227 98,242 95,858 2,384
Total Expenditures, Transfers
Out, and Encumbrances 1,852,524 1,807,297 45,227 98,242 95,858 2,384
Revenues and Other Sources
over (under) Expenditures,
Encumbrances, and Other Uses
(Statutory/budgetary basis) $ (9,171) 36,056 $ 45,227 $ (11,286) (8,901) $ 2,384
Reconciling Items:
Encumbrances at September 30 32,403 2,186
Funds not annually budgeted - -
Net Reconciling Items 32,403 2,186
Excess of Revenues and Other
Sources over (under) Expenditures
and Other Uses (GAAP Basis) 68,459 (6,715)
FUND BALANCES (GAAP BASIS)
Beginning balances 784,517 26,324
Ending balances (GAAP Basis) $ 852,976 $ 19,609
VARIANCE VARIANCE
Michigan
182 182 182 182
COMBINED
COMBINED COMPREHENSIVE
STATE TRUNKLINE TRANSPORTATION
BOND PROCEEDS BOND PROCEEDS
FUND FUND TRUST FUNDS
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL
$ - $ - $ - $ - $ - $ -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
(59,271) (7,009) - (28) (96,102) 3,190
(59,271) (7,009) - (28) (96,102) 3,190
(59,271) (7,009) - (28) (96,102) 3,190
89,242 16,920 - 140 (7,330) (5,886)
$ 29,970 $ 9,911 $ - $ 111 $ (103,432) $ (2,696)
This schedule continued on next page.
BOND FUND AUTHORITY FUNDS
Michigan
FUNDS NOT ANNUALLY BUDGETED
FINANCING
ADVANCE TRANSPORTATION
RELATED RECREATION
COMBINED
BUILDING
STATE
183 183 183 183
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
CAPITAL PROJECTS FUNDS (Continued)
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
TOTALS
Statutory/Budgetary Basis BUDGET ACTUAL
REVENUES AND OTHER SOURCES
Taxes $ 5,056 $ 5,056 $ -
From federal agencies 892,320 892,320 -
From local agencies 10,579 10,579 -
From services 4,289 4,289 -
From licenses and permits 16,821 16,821 -
Miscellaneous 43,413 43,413 -
Proceeds from sale of capital assets 1,820 1,820 -
Transfers in 956,012 956,012 -
Total Revenues and Other Sources 1,930,310 1,930,310 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Transportation 1,950,766 1,903,155 47,611
Total Expenditures, Transfers
Out, and Encumbrances 1,950,766 1,903,155 47,611
Revenues and Other Sources
over (under) Expenditures,
Encumbrances, and Other Uses
(Statutory/budgetary basis) $ (20,456) 27,155 $ 47,611
Reconciling Items:
Encumbrances at September 30 34,590
Funds not annually budgeted (159,221)
Net Reconciling Items (124,631)
Excess of Revenues and Other
Sources over (under) Expenditures
and Other Uses (GAAP Basis) (97,477)
FUND BALANCES (GAAP BASIS)
Beginning balances 903,926
Ending balances (GAAP Basis) $ 806,449
VARIANCE
Michigan
184 184 184 184
Michigan
PERMANENT FUNDS
MICHIGAN NATURAL RESOURCES TRUST FUND
Article 9, Section 35, of the State Constitution created the Michigan
Natural Resources Trust Fund (MNRTF). The fund, established in
1985, operates under Sections 324.1901 - 324.1908 of the Michigan
Compiled Laws. The State Treasurer directs fund investments,
which include fixed income and equity investments.
In May of 2011, the MNRTF reached the constitutional limit of $500
million on the investment corpus. As a result, the MNRTF no longer
receives revenue generated from oil and gas bonuses, rentals, and
royalties from State owned land. Constitutionally, these revenue
sources are now deposited into the Michigan State Parks
Endowment Fund.
Constitutional provisions limit all future MNRTF appropriations to
investment and other miscellaneous income of the fund.
Appropriations are used to fund grants to local units of government
as well as State agencies to acquire land or develop public
recreation facilities and to fund payments in lieu of property taxes on
State lands acquired by the fund.
MICHIGAN STATE PARKS ENDOWMENT FUND
Established in 1994, the Michigan State Parks Endowment Fund
(MSPEF) is governed by the provisions of Michigan Compiled Laws
Section 324.74119 to finance operations, maintenance, and capital
improvements at Michigan State parks. The voters approved a
constitutional amendment in August 2002 that changed the
distribution formula and allows the State Treasurer to invest in
equity securities and other types of investments.
The fund was established with a $40 million transfer from the sale of
the Accident Fund of Michigan to provide funds for permanent
investment. Currently all revenues previously attributable to the
Michigan Natural Resources Trust Fund from oil and gas bonuses,
rentals, and royalties from State-owned land are deposited in the
MSPEF until its accumulated principal is capped at $800 million.
The legislature is limited to appropriating no more than 50% of
revenues from oil and gas bonuses, rentals, and royalties from
State-owned land plus interest and earnings and any private
contributions or other revenue to the endowment fund. When the
endowment fund’s principal balance reaches $800 million, only the
interest and earnings in excess of the amount needed to maintain
the $800 million principal limit, annually adjusted for inflation, may
be expended.
MICHIGAN VETERANS' TRUST FUND
Article 9, Section 37 of the State Constitution created this fund to
finance programs to assist veterans and their beneficiaries. A
seven-member board of trustees governs the fund. Resources are
provided by investment and common cash earnings. Expenditures
and transfers out reflect grants to veterans and their widows or
dependents, and administrative costs at both the State and local
level. The fund is administered within the Department of Military
and Veterans Affairs.
2014 Comprehensive Annual Financi al Report
185 185 185 185
COMBINING BALANCE SHEET
PERMANENT FUNDS
SEPTEMBER 30, 2014
(In Thousands)
MICHIGAN
NATURAL
TRUST FUND TRUST FUND
ASSETS
Current Assets:
Equity in common cash $ 74,024 $ 46,914 $ 1,521 $ 122,458
Amounts due from local units - - 293 293
Other current assets 2,739 5,499 279 8,516
Total Current Assets 76,762 52,413 2,092 131,267
Investments 619,471 203,939 52,201 875,611
Total Assets $ 696,233 $ 256,351 $ 54,294 $ 1,006,878
LIABILITIES
Current Liabilities:
Warrants outstanding $ 4 $ 22 $ 1 $ 28
Accounts payable and other liabilities 9,606 2,022 15 11,644
Amounts due to other funds 15 216 6 237
Total Current Liabilities 9,625 2,261 22 11,908
Total Liabilities 9,625 2,261 22 11,908
FUND BALANCES
Nonspendable 500,000 213,527 50,000 763,527
Restricted 186,607 40,563 4,272 231,442
Total Fund Balances 686,607 254,090 54,272 994,970
Total Liabilities and Fund Balances $ 696,233 $ 256,351 $ 54,294 $ 1,006,878
Michigan
MICHIGAN
TOTALS
VETERANS' RESOURCES
FUND
STATE PARKS
ENDOWMENT
MICHIGAN
186 186 186 186
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
PERMANENT FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
MICHIGAN
NATURAL
TRUST FUND TRUST FUND
REVENUES
From federal agencies $ - $ 6 $ - $ 6
Miscellaneous 41,376 57,932 4,193 103,501
Total Revenues 41,376 57,938 4,193 103,506
EXPENDITURES
Current:
General government 1,814 82 1 1,898
Public safety and corrections - - 3,342 3,342
Conservation, environment,
recreation, and agriculture 2,372 22,610 - 24,982
Capital outlay 44,401 5,992 - 50,393
Total Expenditures 48,588 28,684 3,343 80,615
Excess of Revenues over (under)
Expenditures (7,212) 29,254 850 22,891
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets 20 - - 20
Transfers to other funds (17) (287) (9) (313)
Total Other Financing Sources (Uses) 3 (287) (9) (293)
Excess of Revenues and Other
Sources over (under) Expenditures
and Other Uses (7,209) 28,966 841 22,599
Fund Balances - Beginning
of fiscal year 693,816 225,124 53,430 972,371
Fund Balances - End of fiscal year $ 686,607 $ 254,090 $ 54,272 $ 994,970
TOTALS FUND
STATE PARKS
ENDOWMENT
Michigan
MICHIGAN
VETERANS' RESOURCES
MICHIGAN
187 187 187 187
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
PERMANENT FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
MICHIGAN NATURAL
RESOURCES TRUST FUND PARKS ENDOWMENT FUND
Statutory/Budgetary Basis BUDGET ACTUAL VARIANCE BUDGET ACTUAL VARIANCE
REVENUES AND OTHER SOURCES
From federal agencies $ - $ - $ - $ 6 $ 6 $ -
Miscellaneous 41,376 41,376 - 57,932 57,932 -
Proceeds from sale of capital assets 20 20 - - - -
Total Revenues and Other Sources 41,396 41,396 - 57,938 57,938 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Military and Veterans Affairs - - - - - -
Natural Resources 97,829 86,318 11,510 31,481 31,462 20
Treasury 1,842 1,814 28 82 82 -
Total Expenditures, Transfers Out,
and Encumbrances 99,671 88,132 11,538 31,564 31,544 20
Revenues and Other Sources over (under)
Expenditures, Encumbrances, and Other
Uses (Statutory/budgetary basis) $ (58,275) (46,736) $ 11,538 $ 26,374 26,394 $ 20
Reconciling Items:
Encumbrances at September 30 39,528 2,573
Net Reconciling Items 39,528 2,573
Excess of Revenues and Other Sources
over (under) Expenditures and
Other Uses (GAAP Basis) (7,209) 28,966
FUND BALANCES (GAAP BASIS)
Beginning balances 693,816 225,124
Ending balances (GAAP Basis) $ 686,607 $ 254,090
Michigan
MICHIGAN STATE
188 188 188 188
MICHIGAN VETERANS' TRUST FUND TOTALS
BUDGET ACTUAL VARIANCE BUDGET ACTUAL VARIANCE
$ - $ - $ - $ 6 $ 6 $ -
4,193 4,193 - 103,501 103,501 -
- - - 20 20 -
4,193 4,193 - 103,527 $ 103,527 $ -
5,195 3,353 1,842 5,195 3,353 1,842
- - - 129,310 117,780 11,530
1 1 - 1,925 1,898 28
5,196 3,354 1,842 136,430 123,030 13,400
$ (1,003) 839 $ 1,842 $ (32,904) (19,503) $ 13,400
2 42,102
2 42,102
841 22,599
53,430 972,371
$ 54,272 $ 994,970
Michigan
189 189 189 189
Michigan
2014 Comprehensive Annual Financi al Report
190 190 190 190
Michigan
ENTERPRISE FUNDS
ATTORNEY DISCIPLINE SYSTEM
The Attorney Discipline System (ADS) consists of the Attorney
Grievance Commission and the Attorney Discipline Board. This
system provides the courts, legal profession, and the general
public with a means to ensure that complaints against attorneys for
potential violations of the Court Rules and the Michigan Rules of
Professional Conduct are properly heard and investigated, and that
sanctions are imposed where required. ADS is under the
supervision of the Michigan Supreme Court which also approves
the two agencies’ budgets.
ADS receives revenue in the form of mandatory annual
assessments on members of the State Bar of Michigan, provided
for by Court Rules. This system also receives other revenue,
primarily through the assessment of administrative fees and the
recovery of costs, including subpoena fees and transcript costs.
LIQUOR PURCHASE REVOLVING FUND
Michigan Compiled Laws (MCL) Section 436.1221 authorized the
Liquor Control Commission, within the Department of Licensing and
Regulatory Affairs, to maintain a revolving fund that is to be derived
from the money deposited to the credit of the commission with the
State Treasurer. Under State monopoly, liquor is sold at wholesale
through a State controlled, privately operated distribution system.
The fund accounts for the sales of and the replenishing and
transporting of the liquor stock. Administrative, warehousing, and
delivery costs are paid for through the fund. At the end of each
fiscal year, the net income of the fund is transferred to the General
Fund in accordance with MCL Section 18.1435.
2014 Comprehensive Annual Financi al Report
191 191 191 191
COMBINING STATEMENT OF NET POSITION
ENTERPRISE FUNDS
SEPTEMBER 30, 2014
(In Thousands)
LIQUOR
ATTORNEY PURCHASE
DISCIPLINE REVOLVING
SYSTEM FUND
ASSETS
Current Assets:
Cash $ 939 $ - $ 940
Equity in common cash - 71,525 71,525
Inventories - 7,939 7,939
Investments 5,246 - 5,246
Other current assets 207 6,440 6,647
Total Current Assets 6,392 85,904 92,296
Capital Assets:
Buildings and equipment 548 - 548
Allowance for depreciation (514) - (514)
Total capital assets 34 - 34
Other noncurrent assets 35 - 35
Total Assets $ 6,461 $ 85,904 $ 92,365
LIABILITIES
Current Liabilities:
Warrants outstanding $ - $ 4,561 $ 4,561
Accounts payable and other liabilities 392 79,121 79,513
Amounts due to other funds - 288 288
Unearned revenue 505 - 505
Current portion of other long-term obligations - 661 661
Total Current Liabilities 897 84,631 85,528
Long-Term Liabilities:
Amounts due to other funds - 25 25
Noncurrent portion of other
long-term obligations - 373 373
Total Liabilities 897 85,029 85,925
NET POSITION
Net investment in capital assets $ 34 $ - $ 34
Unrestricted 5,530 876 6,406
Total Net Position $ 5,564 $ 876 $ 6,440
Michigan
TOTALS
192 192 192 192
COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
ENTERPRISE FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
LIQUOR
ATTORNEY PURCHASE
DISCIPLINE REVOLVING
SYSTEM FUND TOTALS
OPERATING REVENUES
Operating revenues $ 4,867 $ 957,054 $ 961,921
Total Operating Revenues 4,867 957,054 961,921
OPERATING EXPENSES
Salaries, wages, and other administrative 4,761 78,891 83,652
Depreciation 37 - 37
Purchases for resale - 698,828 698,828
Premiums and claims - 24 24
Other operating expenses - 1,532 1,532
Total Operating Expenses 4,798 779,276 784,074
Operating Income (Loss) 69 177,778 177,846
NONOPERATING REVENUES (EXPENSES)
Interest revenue 20 67 87
Other nonoperating expense - 3 3
Total Nonoperating
Revenues (Expenses) 20 70 90
Income (Loss) Before Transfers 89 177,848 177,936
TRANSFERS
Transfers to other funds - (177,848) (177,848)
Change in net position 89 - 89
Total net position - Beginning
of fiscal year 5,475 876 6,351
Total net position - End of fiscal year $ 5,564 $ 876 $ 6,440
Michigan
193 193 193 193
COMBINING STATEMENT OF CASH FLOWS
ENTERPRISE FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
LIQUOR
ATTORNEY PURCHASE
DISCIPLINE REVOLVING
SYSTEM FUND
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ - $ 957,054 $ 957,054
Membership dues 4,818 - 4,818
Payments to employees (3,692) (21,050) (24,743)
Payments to suppliers (869) (764,768) (765,637)
Other receipts 101 (251) (150)
Other payments (288) (1,557) (1,845)
Net cash provided (used)
by operating activities $ 70 $ 169,428 $ 169,498
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers to other funds $ - $ (177,848) $ (177,848)
Net cash provided (used)
by noncapital financing activities $ - $ (177,848) $ (177,848)
CASH FLOW FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition and construction of capital assets $ (13) $ - $ (13)
Net cash provided (used) by capital
and related financing activities $ (13) $ - $ (13)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment securities $ (26) $ - $ (26)
Interest and dividends on investments 20 67 87
Net cash provided (used)
by investing activities $ (6) $ 67 $ 61
Net cash provided (used) - all activities $ 51 $ (8,353) $ (8,302)
Cash and cash equivalents
at beginning of year 889 75,317 76,206
Cash and cash equivalents
at end of year $ 939 $ 66,964 $ 67,904
RECONCILIATION OF CASH
AND CASH EQUIVALENTS
Per Statement of Net Position Classifications:
Cash $ 939 $ - $ 940
Equity in common cash - 71,525 71,525
Warrants outstanding - (4,561) (4,561)
Cash and cash equivalents at end of year $ 939 $ 66,964 $ 67,904
RECONCILIATION OF OPERATING INCOME
(LOSS) TO NET CASH PROVIDED
(USED) BY OPERATING ACTIVITIES
Operating income (loss) $ 69 $ 177,778 $ 177,846
Adjustments to Reconcile Operating Income
to Net Cash Provided (Used)
by Operating Activities:
Depreciation expense 37 - 37
Other nonoperating revenue - 3 3
Net Changes in Assets and Liabilities:
Inventories - (725) (725)
Other assets (net) (73) 356 283
Accounts payable and other liabilities (37) (7,984) (8,021)
Unearned revenue 73 - 73
Net cash provided (used)
by operating activities $ 70 $ 169,428 $ 169,498
Michigan
TOTALS
194 194 194 194
Michigan
INTERNAL SERVICE FUNDS
CORRECTIONAL INDUSTRIES REVOLVING FUND
Authorized by Michigan Compiled Laws (MCL) Section 800.325, this
fund accounts for the financial transactions of a manufacturing and
processing industry, employing inmates incarcerated in Michigan’s
correctional institutions. MCL Section 800.326 expanded the fund's
sales market to include institutions of this or any other state or
political subdivision thereof, the federal government or its agencies,
a foreign government or agencies of a foreign government, a private
vendor that operates the youth correctional facility, and certain tax-
exempt organizations.
Executive Order 1992-13 stipulates that the fund repay the General
Fund for the cost of building and equipping prison factories included
as part of new prison construction. The costs of buildings and
equipment are to be repaid over 30 years and 10 years respectively.
The minimum required payment was made in fiscal year 2014.
STATE SPONSORED GROUP INSURANCE FUND
This fund was administratively established to reflect the financial
transactions of the State sponsored insurance plans that provide
health, long-term disability, life, vision, and dental coverage for
participating employees. The plans' funding methods range from
those where the State is fully self-insured to those where an
outside carrier assumes partial risk on a contracted basis. A note
to the financial statements entitled “Risk Management” provides
additional information about this fund.
The amounts reflected as amounts due from other funds include
reclassifications of other funds' negative balances in the common
cash pool.
INFORMATION TECHNOLOGY FUND
This fund was created by administrative decision to provide
telecommunication and information technology services for State
agencies. User agencies are billed for the cost of such services.
During fiscal year 2002, the use of this fund was expanded to
account for all information technology activities of the executive
branch as prescribed in Executive Order 2001-03.
OFFICE SERVICES REVOLVING FUND
Created in 1952, this fund operates under Michigan Compiled
Laws Section 18.1269 to provide services in the following areas:
printing, reproduction, microfilm, mailing, distribution of federal and
state surplus property, and materials management. The cost of the
services or supplies is charged to user departments and agencies.
Resultant revenue is credited to the revolving fund and is used for
administration and operation of the program, including purchase of
necessary equipment. During fiscal year 2002, the use of the fund
was expanded to account for the purchase of bulk gas used by
State agencies.
MOTOR TRANSPORT FUND
This fund was created by Michigan Compiled Laws Section 18.1213
to provide vehicle and travel services for State agencies. Activities
include lease, purchase, replacement, and maintenance of
automotive equipment. Vehicles are available to agencies on a
permanently assigned basis or through the motor pool for short-term
usage and are furnished to agencies at a rate sufficient to cover all
costs of operation and maintenance. Agencies are billed on a
monthly basis for services rendered.
RISK MANAGEMENT FUND
Administratively established, this fund accounts for certain
centralized risk management functions performed by the
Department of Technology, Management and Budget for other State
agencies. Currently, the fund has assumed a degree of risk for the
automotive liability. This activity and administrative functions are
recorded as operating activity of the fund. An activity of the fund for
which the fund assumes no risk is the centralized processing of
workers’ compensation payments for State agencies. Workers’
compensation long-term claim liabilities are recorded in the
Government-wide Financial Statements and the related current year
workers’ compensation expenditures are recorded in the applicable
funds.
2014 Comprehensive Annual Financi al Report
195 195 195 195
COMBINING STATEMENT OF NET POSITION
INTERNAL SERVICE FUNDS
SEPTEMBER 30, 2014
(In Thousands)
STATE
SPONSORED
GROUP INFORMATION
INSURANCE TECHNOLOGY
ASSETS
Current Assets:
Equity in common cash $ - $ 297,425 $ 4,953
Amounts due from other funds - 2,646 -
Amounts due from component units - 27 -
Inventories 7,531 - 365
Other current assets 358 7,192 7,520
Total Current Assets 7,889 307,290 12,838
Capital Assets:
Land and other non-depreciable assets - - 9,170
Buildings and equipment 28,370 - 996,572
Allowance for depreciation (15,625) - (628,718)
Total capital assets 12,745 - 377,023
Other noncurrent assets - 700 -
Total Assets $ 20,634 $ 307,990 $ 389,861
LIABILITIES
Current Liabilities:
Warrants outstanding $ 26 $ 2 $ 623
Accounts payable and other liabilities 1,086 14,243 67,394
Amounts due to other funds 6,691 - 3,684
Amounts due to component units - - 25
Interest payable 2,150 - -
Unearned revenue - 112 30,748
Current portion of other long-term obligations 466 38,083 17,850
Total Current Liabilities 10,419 52,441 120,323
Long-Term Liabilities:
Advances from other funds 2,702 - -
Amounts due to other funds 2 - 235
Unearned revenue - - 199,380
Noncurrent portion of other long-term obligations 227 90,953 20,684
Total Liabilities $ 13,351 $ 143,394 $ 340,621
NET POSITION
Net investment in capital assets $ 12,745 $ - $ 358,993
Restricted for other purposes - - -
Unrestricted (5,462) 164,596 (309,754)
Total Net Position $ 7,283 $ 164,596 $ 49,240
Michigan
FUND
CORRECTIONAL
INDUSTRIES
REVOLVING
FUND FUND
196 196 196 196
OFFICE
SERVICES RISK
REVOLVING MANAGEMENT
$ 6,588 $ 7,740 $ 6,311 $ 323,017
- - 6,569 9,215
- - - 27
2,234 362 - 10,492
5,210 1,560 1,500 23,340
14,032 9,662 14,380 366,091
- - - 9,170
16,053 8,926 - 1,049,920
(10,904) (8,803) - (664,050)
5,149 123 - 395,040
- - 50 750
$ 19,182 $ 9,785 $ 14,430 $ 761,881
$ 51 $ 7 $ 16 $ 726
8,235 2,411 825 94,194
301 55 10 10,742
- - - 25
- - - 2,150
70 - - 30,930
612 152 1,527 58,690
9,270 2,625 2,378 197,457
- - - 2,702
35 3 1 276
88 - - 199,467
578 247 6,185 118,873
$ 9,970 $ 2,876 $ 8,564 $ 518,776
$ 5,149 $ 123 $ - $ 377,010
- 6,786 - 6,786
4,062 - 5,866 (140,691)
$ 9,211 $ 6,909 $ 5,866 $ 243,105
Michigan
MOTOR
TRANSPORT
FUND TOTALS FUND FUND
197 197 197 197
Michigan
COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
INTERNAL SERVICE FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
STATE
SPONSORED
GROUP INFORMATION
INSURANCE TECHNOLOGY
OPERATING REVENUES
Operating revenues $ 24,442 $ 755,536 $ 628,547
Total Operating Revenues 24,442 755,536 628,547
OPERATING EXPENSES
Salaries, wages, and other administrative 13,121 22,398 557,464
Interest expense - - 3
Depreciation 920 - 75,890
Purchases for resale - - -
Purchases for prison industries 10,138 - -
Premiums and claims - 715,136 -
Other operating expenses:
Leased vehicles expense - - -
Vehicle maintenance expense - - -
Total other operating expenses - - -
Total Operating Expenses 24,178 737,534 633,358
Operating Income (Loss) 264 18,002 (4,810)
NONOPERATING REVENUES (EXPENSES)
Interest revenue - 230 -
Other nonoperating revenues - - 252
Interest expense (7) - (469)
Other nonoperating expense (1,680) - -
Total Nonoperating Revenues (Expenses) (1,687) 230 (217)
Income (Loss) Before Transfers (1,423) 18,233 (5,027)
CAPITAL CONTRIBUTIONS AND TRANSFERS
Transfers from other funds - - 2,500
Transfers to other funds (216) - (2,962)
Total Transfers In (Out) (216) - (462)
Change in net position (1,639) 18,233 (5,489)
Total net position - Beginning of fiscal year 8,922 146,363 54,729
Total net position - End of fiscal year $ 7,283 $ 164,596 $ 49,240
FUND
CORRECTIONAL
INDUSTRIES
REVOLVING
FUND FUND
198 198 198 198
OFFICE
SERVICES RISK
REVOLVING MANAGEMENT
$ 120,418 $ 66,667 $ 4,818 $ 1,600,430
120,418 66,667 4,818 1,600,430
27,792 6,320 2,917 630,012
- - - 3
1,171 29 - 78,009
90,341 - - 90,341
- - - 10,138
- 943 465 716,545
- 26,653 - 26,653
- 33,463 - 33,463
- 60,116 - 60,117
119,304 67,408 3,382 1,585,164
1,114 (741) 1,437 15,265
- - - 230
- 33 - 285
- - - (476)
- - - (1,680)
- 33 - (1,641)
1,114 (708) 1,437 13,625
- - - 2,500
(217) (60) (31) (3,485)
(217) (60) (31) (985)
897 (769) 1,406 12,639
8,314 7,678 4,461 230,466
$ 9,211 $ 6,909 $ 5,866 $ 243,105
FUND TOTALS
Michigan
MOTOR
TRANSPORT
FUND FUND
199 199 199 199
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 24,499 $ 756,036 $ 717,104
Payments to employees (9,746) - (206,546)
Payments to suppliers (8,660) (371,661) (339,478)
Claims paid - (375,544) -
Other receipts - - -
Other payments (3,827) - -
Net cash provided (used) by operating activities $ 2,266 $ 8,832 $ 171,080
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Loans or loan repayments from other funds $ 6,569 $ - $ -
Loans or loan repayments to other funds (8,518) - (5,664)
Transfers from other funds - - 2,500
Transfers to other funds (216) - (2,962)
Net cash provided (used) by noncapital
financing activities $ (2,165) $ - $ (6,125)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition and construction of capital assets $ (25) $ - $ (147,321)
Interest paid (7) - -
Capital lease payments (including imputed
interest expense) - - (13,083)
Proceeds from sale of capital assets - - -
Net cash provided (used) by capital and related
financing activities $ (32) $ - $ (160,404)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest and dividends on investments $ - $ 230 $ -
Net cash provided (used)
by investing activities $ - $ 230 $ -
Net cash provided (used) - all activities $ 69 $ 9,062 $ 4,551
Cash and cash equivalents at beginning of year (96) 288,360 (221)
Cash and cash equivalents at end of year $ (26) $ 297,422 $ 4,330
RECONCILIATION OF CASH AND CASH EQUIVALENTS
Per Statement of Net Position Classifications:
Equity in common cash $ - $ 297,425 $ 4,953
Warrants outstanding (26) (2) (623)
Cash and cash equivalents at end of year $ (26) $ 297,422 $ 4,330
RECONCILIATION OF OPERATING INCOME
(LOSS) TO NET CASH PROVIDED
(USED) BY OPERATING ACTIVITIES
Operating income (loss) $ 264 $ 18,002 $ (4,810)
Adjustments to Reconcile Operating Income to Net
Cash Provided (Used) by Operating Activities:
Depreciation expense 920 - 75,890
Net Changes in Assets and Liabilities:
Inventories 1,547 - (86)
Other assets (net) 57 4,133 (1,148)
Accounts payable and other liabilities (520) (13,270) 12,979
Unearned revenue - (33) 88,256
Net cash provided (used) by operating activities $ 2,266 $ 8,832 $ 171,080
SCHEDULE OF NONCASH INVESTING, CAPITAL,
AND FINANCING ACTIVITIES
Cost of capital assets acquisitions
financed by capital leases $ - $ - $ 7,653
Capital lease liabilities entered into during the year - - (7,653)
Gain (loss) on disposal of capital assets (1,680) - -
Total noncash investing, capital, and
financing activities $ (1,680) $ - $ -
Michigan
FUND FUND
CORRECTIONAL
INDUSTRIES
REVOLVING
FUND
STATE
SPONSORED
GROUP INFORMATION
INSURANCE TECHNOLOGY
200 200 200 200
OFFICE
SERVICES
REVOLVING
$ 118,824 $ 66,570 $ 4,818 $ 1,687,851
(11,711) (3,238) (582) (231,822)
(107,940) (64,550) (2,548) (894,837)
- - (329) (375,873)
- 96 - 96
- - - (3,827)
$ (827) $ (1,122) $ 1,359 $ 181,588
$ - $ 5,664 $ 8,130 $ 20,362
- - (6,569) (20,751)
- - - 2,500
(217) (60) (31) (3,485)
$ (217) $ 5,603 $ 1,530 $ (1,374)
(1,576) $ - $ - $ (148,922)
- - - (7)
- - - (13,083)
- 33 - 33
$ (1,576) $ 33 $ - $ (161,980)
$ - $ - $ - $ 230
$ - $ - $ - $ 230
$ (2,620) $ 4,514 $ 2,889 $ 18,465
9,158 3,220 3,406 303,827
$ 6,538 $ 7,733 $ 6,295 $ 322,292
$ 6,588 $ 7,740 $ 6,311 $ 323,017
(51) (7) (16) (726)
$ 6,537 $ 7,733 $ 6,295 $ 322,291
$ 1,114 $ (741) $ 1,437 $ 15,265
1,171 29 - 78,009
638 25 - 2,124
(1,574) 85 - 1,552
(2,333) (520) (77) (3,742)
158 - - 88,380
$ (827) $ (1,122) $ 1,359 $ 181,588
$ - $ - $ - $ 7,653
- - - (7,653)
- - - (1,680)
$ - $ - $ - $ (1,680)
Michigan
FUND
MOTOR
TRANSPORT
FUND FUND TOTALS
RISK
MANAGEMENT
201 201 201 201
Michigan
PENSION (AND OTHER EMPLOYEE BENEFIT) TRUST FUNDS
Notes to the financial statements, entitled "Deferred Compensation
Plans," "Pension Benefits,” and “Other Postemployment Benefits,"
include additional information regarding the following funds and
plans.
STATE OF MICHIGAN DEFERRED COMPENSATION
FUNDS
The State of Michigan 457 Plan and the State of Michigan 401k Plan
are combined for reporting purposes. Both funds were
administratively established to account for deferred compensation
plans that permit State employees to defer a portion of their income
until future years.
LEGISLATIVE PENSION BENEFITS FUND
This fund was established to account for pension benefits of the
Legislative Retirement System (LRS) created by Michigan Compiled
Laws (MCL) Section 38.1001. LRS’s pension plan provides benefits
for members of the Legislature, the presiding officers, and their
surviving spouses or children. Participants in the system have a
deduction from each salary payment to partially finance the fund.
Legislative appropriations, interest on fund investments, and court
fees complete the financing.
MCL Section 38.1018 amended LRS’s enabling legislation to
provide that individuals who first became a legislator or lieutenant
governor on or after March 31, 1997, participate in the State’s
defined contribution plan.
LEGISLATIVE OTHER POSTEMPLOYMENT BENEFITS
FUND
This fund was established to account for other postemployment
benefits of the Legislative Retirement System (LRS) created by
Michigan Compiled Laws Section 38.1001. LRS’s health plan
provides its members with health, dental, vision, and hearing
insurance coverage. This fund includes health coverage for
participants of both the defined benefit pension plan and the defined
contribution retirement plan.
STATE POLICE PENSION BENEFITS FUND
This fund was established to account for pension benefits of the
Michigan State Police Retirement System (MSPRS) created by
Michigan Compiled Laws Section 38.1605, which is administered by
a nine-member board under the direction of a chairperson elected
from the membership. MSPRS’s pension plan provides retirement,
survivor and disability benefits to Michigan State Police officers.
Financing is provided by investment income and by an annual
legislative appropriation.
As a result of contract negotiations, a pension plus plan was created
which pairs a guaranteed retirement income (Defined Benefit
pension) with a flexible and transferable retirement savings (Defined
Contribution) account for employees first hired on or after J une 10,
2012.
STATE POLICE OTHER POSTEMPLOYMENT BENEFITS
FUND
This fund was established to account for other postemployment
benefits of the Michigan State Police Retirement System (MSPRS)
created by Michigan Compiled Laws Section 38.1605. MSPRS’s
health plan provides retirees hired before J une 10, 2012 with the
option of receiving health, dental, and vision coverage. Employees
hired on or after J une 10, 2012 are accounted for within the State of
Michigan Defined Contribution Personal Health Care Fund.
STATE EMPLOYEES' PENSION BENEFITS FUND
This fund was established to account for pension benefits of the
State Employees’ Retirement System (SERS) created by Michigan
Compiled Laws (MCL) Section 38.2, which is administered by a
nine-member board under the direction of an Executive Secretary.
SERS’s pension plan provides retirement, survivor and disability
benefits to State employees.
Effective March 31, 1997, MCL Section 38.13 closed the plan to
new applicants. All new employees become members of the State’s
defined contribution plan. The law also allows returning employees
and members who left state employment on or before March 31,
1997, to elect the defined benefit plan instead of the defined
contribution plan.
STATE EMPLOYEES' OTHER POSTEMPLOYMENT
BENEFITS FUND
This fund was established to account for other postemployment
benefits of the State Employees’ Retirement System (SERS)
created by Michigan Compiled Laws Section 38.2. SERS’s health
plan provides all retirees with the option of receiving health, dental,
and vision coverage. This fund includes coverage for participants
of both the defined benefit pension plan and the defined contribution
retirement plan.
PUBLIC SCHOOL EMPLOYEES' PENSION BENEFITS
FUND
This fund was established to account for pension benefits of the
Michigan Public School Employees’ Retirement System (MPSERS)
created by Michigan Compiled Laws (MCL) Section 38.1321. An
eight-member board governs administrative policy. MPSERS’s
pension plan provides retirement, survivor and disability benefits to
the public school employees.
Employer contributions and investment earnings provide financing
for the fund. Under MCL Section 38.1343a, employees may
contribute additional amounts into a "member investment plan".
Various MCLs, beginning with Section 38.1304, were amended to
create a new “pension plus” plan which pairs a guaranteed
retirement income (defined benefit) with a flexible and transferable
retirement savings (defined contribution) account for employees first
hired after J une 30, 2010.
2014 Comprehensive Annual Financi al Report
202 202 202 202
Michigan
PUBLIC SCHOOL EMPLOYEES' OTHER
POSTEMPLOYMENT BENEFITS FUND
This fund was established to account for other postemployment
benefits of the Michigan Public School Employees’ Retirement
System (MPSERS) created by Michigan Compiled Laws Section
38.1321. MPSERS’s health plan provides all retirees with the option
of receiving health, dental, and vision coverage.
Effective J uly 1, 2010, MCL Section 38.1343e requires employees
to contribute a percentage of their compensation into a funding
account established under the public employee retirement health
care fund act.
J UDGES' PENSION BENEFITS FUND
This fund was established to account for pension benefits of the
Michigan J udges Retirement System (MJ RS) created by Michigan
Compiled Laws (MCL) Section 38.2201. MJ RS’s pension plan
provides retirement, survivor and disability benefits to judges in the
judicial branch of State government. Financing comes from member
contributions, court filing fees as provided under law, investment
earnings, and legislative appropriations.
MCL Section 38.2401a, effective March 31, 1997, closed the plan to
new entrants. J udges or state officials newly appointed or elected
on or after March 31, 1997, become members of the State’s defined
contribution plan.
J UDGES' OTHER POSTEMPLOYMENT BENEFITS FUND
This fund was established to account for other postemployment
benefits of the Michigan J udges Retirement System (MJ RS) created
by Michigan Compiled Laws Section 38.2201. MJ RS’s health plan
provides all retirees with the option of receiving health, dental, and
vision coverage. This fund includes health coverage for participants
of both the defined benefit pension plan and the defined contribution
retirement plan.
STATE OF MICHIGAN DEFINED CONTRIBUTION
RETIREMENT FUND
This fund was established by Michigan Compiled Laws Section
38.11 as a defined contribution pension plan. Membership within
the plan includes all State employees hired after March 31, 1997,
Public School Reporting Units members hired after J uly 1, 2010,
and for those members of the State Employees’ Retirement (defined
benefit) System, J udges’ Retirement System, and Legislative
Retirement System who elect to transfer to this plan. This fund also
includes the State of Michigan Personal Healthcare subfund created
by Public Act 264 of 2011 for all employees hired after J anuary 1,
2012, and those who elected to transfer to this plan.
2014 Comprehensive Annual Financi al Report
203 203 203 203
COMBINING STATEMENT OF FIDUCIARY NET POSITION
PENSION (AND OTHER EMPLOYEE BENEFIT) TRUST FUNDS
SEPTEMBER 30, 2014
(In Thousands)
STATE POLICE
PENSION POSTEMPLOYMENT PENSION
BENEFITS BENEFITS BENEFITS
FUNDS FUND FUND FUND
ASSETS
Equity in common cash $ 1,296 $ 1,237 $ 185 $ 10,485
Receivables:
From participants 73,030 - - 34
From employer - - - 2,751
Other 152 - - -
Interest and dividends - 41 - 160
Due from other funds - 82 - -
Due from component unit - - - -
Due from other governmental - - 161 -
Sale of investments - 268 - -
Investments at Fair Value:
Short-term investments - - - 68,598
Fixed Income - - - 145,482
Domestic equities - 60,984 9,277 370,466
Real estate - - - 114,796
Alternative investments - 16,870 2,556 214,743
International equities - 2,030 269 190,356
Absolute return - - - 135,299
Mutual funds 558,507 74,016 11,213 -
Pooled investment funds 1,275,615 - - -
Separate accounts 1,751,122 - - -
Securities lending collateral - - - 83,652
Total Assets $ 3,659,722 $ 155,527 $ 23,660 $ 1,336,822
LIABILITIES
Warrants outstanding $ - $ 31 $ - $ 25
Accounts payable and other liabilities 883 509 35 60
Amounts due to other funds - 4 - -
Obligations under security lending - - - 86,569
Unearned revenue - - - -
Total Liabilities $ 883 $ 544 $ 35 $ 86,654
NET POSITION
Restricted for pension,
postemployment health-care, and deferred
compensation participants $ 3,658,839 $ 154,983 $ 23,625 $ 1,250,168
Reconciliation of Net Position:
Restricted for pension benefits $ - $ 154,983 $ - $ 1,250,168
Restricted for postemployment health-care benefits - - 23,625 -
Restricted for deferred compensation participants 3,658,839 - - -
Total net position restricted for benefits $ 3,658,839 $ 154,983 $ 23,625 $ 1,250,168
COMPENSATION
Michigan
OF MICHIGAN
STATE
DEFERRED
LEGISLATIVE OTHER
LEGISLATIVE
204 204 204 204
PUBLIC SCHOOL
PUBLIC SCHOOL EMPLOYEES'
EMPLOYEES' EMPLOYEES' J UDGES'
POSTEMPLOYMENT PENSION POSTEMPLOYMENT PENSION POSTEMPLOYMENT PENSION
BENEFITS BENEFITS BENEFITS BENEFITS BENEFITS BENEFITS
FUND FUND FUND FUND FUND FUND
$ 3,640 $ 117,593 $ 16,698 $ 160,797 $ 85,878 $ 5,040
- 344 - 1,359 - 23
2,133 73,136 30,632 224,010 44,636 57
916 - 14,038 - 94,139 8
9 1,385 126 5,728 396 37
- 130 - - - -
- 739 480 - - -
1,152 - 33,056 - - -
- - - - - -
2,182 573,185 38,442 2,560,195 706,762 14,943
8,677 1,271,343 118,702 5,072,380 354,833 42,085
22,236 3,266,962 306,708 13,058,737 912,449 74,709
6,856 1,004,241 93,937 4,014,913 280,638 27,394
12,752 1,873,670 174,860 7,502,176 523,822 40,837
11,371 1,664,428 155,438 6,657,986 466,563 38,074
7,979 1,153,387 106,350 4,622,297 326,516 28,773
- - - - - -
- - - - - -
- - - - - -
4,746 725,740 66,014 2,946,448 202,650 19,613
$ 84,650 $ 11,726,282 $ 1,155,481 $ 46,827,027 $ 3,999,282 $ 291,594
$ - $ 32 $ 2 $ 603 $ 2 $ -
2,074 396 29,135 1,450 255,342 1
- - - - - -
4,912 751,048 68,316 3,049,197 209,717 20,297
- - 9 2,590 - -
$ 6,986 $ 751,476 $ 97,462 $ 3,053,838 $ 465,061 $ 20,298
$ 77,664 $ 10,974,806 $ 1,058,019 $ 43,773,189 $ 3,534,221 $ 271,296
$ - $ 10,974,806 $ - $ 43,773,189 $ - $ 271,296
77,664 - 1,058,019 - 3,534,221 -
- - - - - -
$ 77,664 $ 10,974,806 $ 1,058,019 $ 43,773,189 $ 3,534,221 $ 271,296
This statement continued on next page.
STATE POLICE
OTHER
STATE EMPLOYEES'
STATE
OTHER OTHER
Michigan
205 205 205 205
COMBINING STATEMENT OF FIDUCIARY NET POSITION
PENSION (AND OTHER EMPLOYEE BENEFIT) TRUST FUNDS (Continued)
SEPTEMBER 30, 2014
(In Thousands)
STATE
J UDGES' OF MICHIGAN
DEFINED
POSTEMPLOYMENT CONTRIBUTION
BENEFITS RETIREMENT
FUND FUND
ASSETS
Equity in common cash $ 1 $ 4,612 $ 407,460
Receivables:
From participants - 178,122 252,912
From employer 4 - 377,360
Other 16 1,495 110,764
Interest and dividends - - 7,880
Due from other funds - - 212
Due from component unit - - 1,219
Due from other governmental 20 - 34,389
Sale of investments - - 268
Investments at Fair Value:
Short-term investments 33 - 3,964,342
Fixed Income 132 - 7,013,635
Domestic equities 235 - 18,082,763
Real estate 86 - 5,542,861
Alternative investments 128 - 10,362,413
International equities 120 - 9,186,635
Absolute return 90 - 6,380,691
Mutual funds - 422,400 1,066,136
Pooled investment funds - 1,527,245 2,802,860
Separate accounts - 621,167 2,372,289
Securities lending collateral 60 - 4,048,924
Total Assets $ 925 $ 2,755,041 $ 72,016,012
LIABILITIES
Warrants outstanding $ - $ - $ 694
Accounts payable and other liabilities 39 2,746 292,669
Amounts due to other funds - - 4
Obligations under security lending 62 - 4,190,118
Unearned revenue - - 2,598
Total Liabilities $ 101 $ 2,746 $ 4,486,084
NET POSITION
Restricted for pension,
postemployment health-care, and deferred
compensation participants $ 824 $ 2,752,295 $ 67,529,928
Reconciliation of Net Position:
Restricted for pension benefits $ - $ 2,752,295 $ 59,176,737
Restricted for postemployment health-care benefits 824 - 4,694,353
Restricted for deferred compensation participants - - 3,658,839
Total net position restricted for benefits $ 824 $ 2,752,295 $ 67,529,928
OTHER
Michigan
TOTALS
206 206 206 206
Michigan
2014 Comprehensive Annual Financi al Report
207 207 207 207
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
PENSION (AND OTHER EMPLOYEE BENEFIT) TRUST FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
STATE POLICE
PENSION POSTEMPLOYMENT PENSION
BENEFITS BENEFITS BENEFITS
FUNDS FUND FUND FUND
ADDITIONS
Contributions:
From participants $ 88,081 $ 6 $ 118 $ 2,174
From employers 448 - 3,452 58,391
From other governmental - - 167 -
From other systems 1,530 - - -
Investment Income:
Net increase (decrease) in the
fair value of investments 221,479 12,322 1,824 153,425
Interest, dividends, and other 50,439 3,067 440 23,687
Securities lending income - - - 2,109
Less Investment Expense:
Investment activity expense - 521 77 3,719
Securities lending expense - - - 1,417
Net investment income (loss) 271,918 14,868 2,187 174,085
Miscellaneous income 1,280 105 1,072 0
Total Additions 363,257 14,979 6,997 234,650
DEDUCTIONS
Benefits paid to participants or beneficiaries 103,593 13,631 - 110,543
Medical, dental, and life insurance for retirants - - 6,114 -
Refunds and transfers to other systems 132,917 21 - 8
Administrative and other expenses 8,990 430 64 573
Transfers to other funds - - - 2
Total Deductions 245,500 14,082 6,178 111,126
Change in net position 117,757 897 819 123,524
Net position - Beginning of fiscal year 3,541,082 154,086 22,806 1,126,643
Net position - End of fiscal year $ 3,658,839 $ 154,983 $ 23,625 $ 1,250,168
Reconciliation of change in net position:
Change in net position restricted
for pension benefits $ - $ 897 $ - $ 123,524
Change in net position restricted
for postemployment benefits - - 819 -
Change in net position restricted for
deferred compensation participants 117,757 - - -
Change in net position $ 117,757 $ 897 $ 819 $ 123,524
STATE
OF MICHIGAN
DEFERRED
LEGISLATIVE
LEGISLATIVE
COMPENSATION
Michigan
OTHER
208 208 208 208
PUBLIC SCHOOL
STATE POLICE EMPLOYEES' PUBLIC SCHOOL EMPLOYEES'
EMPLOYEES' EMPLOYEES' J UDGES'
POSTEMPLOYMENT PENSION POSTEMPLOYMENT PENSION POSTEMPLOYMENT PENSION
BENEFITS BENEFITS BENEFITS BENEFITS BENEFITS BENEFITS
FUND FUND FUND FUND FUND FUND
$ 1,199 $ 47,527 $ 40,441 $ 405,444 $ 390,844 $ 1,025
46,615 705,100 700,938 1,600,375 1,000,032 -
1,758 - 54,945 - 138 -
- - - - - -
7,589 1,349,252 101,445 5,461,865 310,068 32,290
1,180 206,964 15,613 835,369 48,328 5,497
119 18,326 1,659 74,617 5,083 463
171 32,640 2,285 131,548 6,987 798
81 12,319 1,123 49,854 3,429 304
8,637 1,529,583 115,308 6,190,449 353,064 37,147
- 43 60 2,262 531 3,182
58,207 2,282,254 911,692 8,198,530 1,744,609 41,354
- 1,222,881 - 4,388,329 - 22,536
31,373 - 487,662 - 669,240 -
- 152 3,930 28,841 69 -
1,410 6,931 25,536 23,527 133,623 288
- - - 184 - -
32,783 1,229,964 517,128 4,440,880 802,932 22,825
25,424 1,052,290 394,564 3,757,649 941,676 18,530
52,240 9,922,516 663,455 40,015,540 2,592,545 252,766
$ 77,664 $ 10,974,806 $ 1,058,019 $ 43,773,189 $ 3,534,221 $ 271,296
$ - $ 1,052,290 $ - $ 3,757,649 $ - $ 18,530
25,424 - 394,564 - 941,676 -
- - - - - -
$ 25,424 $ 1,052,290 $ 394,564 $ 3,757,649 $ 941,676 $ 18,530
This statement continued on next page.
OTHER
STATE
Michigan
OTHER
STATE
OTHER
209 209 209 209
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
PENSION (AND OTHER EMPLOYEE BENEFIT) TRUST FUNDS (Continued)
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
STATE
J UDGES' OF MICHIGAN
DEFINED
POSTEMPLOYMENT
BENEFITS
FUND FUND
ADDITIONS
Contributions:
From participants $ 447 $ 142,055 $ 1,119,361
From employers - 170,811 4,286,163
From other governmental 69 - 57,076
From other systems - 7,582 9,112
Investment Income:
Net appreciation (depreciation)
in fair value of investments 101 198,048 7,849,708
Interest, dividends, and other 17 30,644 1,221,245
Securities lending income 1 - 102,377
Less Investment Expense:
Investment activity expense 2 - 178,747
Securities lending expense 1 - 68,527
Net investment income (loss) 116 228,692 8,926,055
Miscellaneous income 1 1,166 9,701
Total Additions 634 550,306 14,407,469
DEDUCTIONS
Benefits paid to participants or beneficiaries - 70,608 5,932,121
Medical, dental, and life insurance for retirants 530 - 1,194,920
Refunds and transfers to other systems - 73,275 239,213
Administrative and other expenses 59 11,358 212,790
Transfers to other funds - - 186
Total Deductions 589 155,241 7,579,229
Change in net position 44 395,065 6,828,239
Net position - Beginning of fiscal year 779 2,357,230 60,701,689
Net position - End of fiscal year $ 824 $ 2,752,295 $ 67,529,928
Reconciliation of change in net position:
Change in net position restricted
for pension benefits $ - $ 395,065 $ 5,347,955
Change in net position restricted
for postemployment benefits 44 - 1,362,528
Change in net position restricted for
deferred compensation participants - - 117,757
Change in net position $ 44 $ 395,065 $ 6,828,239
TOTALS
OTHER
CONTRIBUTION
RETIREMENT
Michigan
210 210 210 210
Michigan
PRIVATE PURPOSE TRUST FUNDS
MICHIGAN EDUCATION SAVINGS PROGRAM
Michigan Compiled Laws Section 390.1473 established the
Michigan Education Savings Program (MESP) as an entity within
the Department of Treasury. MESP is a college-tuition savings plan
that is designed to collect and invest deposits made by contributors,
for purposes of financing tuition on behalf of future students. The
State makes limited contributions into the program as prescribed by
law. Investment earnings, held in trust by MESP, are Federal and
State tax-deferred until the student is ready to attend college. The
State offers a tax deduction for contributions made each year.
ESCHEATS FUND
The Escheats Fund operates under the authority of Sections 567.221
– 567.265 of the Michigan Compiled Laws and is used to account for
unclaimed property held by the State until claimed by the rightful
owners. All property, including any income or increment derived
from the property, is subject to the custody of (escheated to) the
State when certain criteria contained within the laws are met.
Proceeds of the fund pay the administrative costs and prompt claims
allowed under the laws.
GIFTS, BEQUESTS, AND DEPOSITS INVESTMENT FUND
This fund was administratively established to account for gifts,
bequests, and deposits donated or entrusted to the State. Gifts and
donations to the State may only be expended in accordance with
applicable external restrictions. This fund earns interest quarterly for
its share of the equity in the State Treasurer’s Common Cash pool.
HOSPITAL PATIENTS’ TRUST FUND
The Hospital Patients’ Trust Fund operates under the authority of
Michigan Compiled Laws Section 330.1730 and is used to account
for funds of patients receiving services in State hospitals. The
Department of Community Health (DCH), in conjunction with the
State Treasury, acts as the trustee of this fund. This fund earns
interest quarterly for its share of the equity in the State Treasurer’s
Common Cash pool. DCH distributes interest on a monthly basis to
patients meeting minimum balance requirements.
2014 Comprehensive Annual Financi al Report
211 211 211 211
COMBINING STATEMENT OF FIDUCIARY NET POSITION
PRIVATE PURPOSE TRUST FUNDS
SEPTEMBER 30, 2014
(In Thousands)
ASSETS
Cash $ 509 $ - $ 1,342 $ 11 $ 1,862
Equity in common cash - 86,958 15,661 97 102,716
Receivables:
Interest and dividends 2,163 - 112 - 2,275
Investments at Fair Value:
Fixed income - - 20,330 - 20,330
Mutual funds 3,703,155 - 12 - 3,703,167
Guaranteed funding agreements 531,036 - - - 531,036
Other current assets 2,789 1,056 9,373 2 13,219
Other noncurrent assets - - 550 - 550
Total Assets $ 4,239,651 $ 88,014 $ 47,380 $ 110 $ 4,375,156
LIABILITIES
Warrants outstanding $ - $ 4,084 $ 294 $ 8 $ 4,386
Accounts payable and other liabilities 5,958 281 2,099 13 8,351
Total Liabilities $ 5,958 $ 4,364 $ 2,393 $ 21 $ 12,736
NET POSITION
Restricted for other purposes $ 4,233,693 $ 83,650 $ 44,987 $ 90 $ 4,362,419
Michigan
PATIENTS'
TRUST FUND PROGRAM FUND FUND
MICHIGAN GIFTS, BEQUESTS,
SAVINGS ESCHEATS INVESTMENT
TOTALS
HOSPITAL EDUCATION AND DEPOSITS
212 212 212 212
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
PRIVATE PURPOSE TRUST FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
ADDITIONS
Contributions:
From participants $ 475,135 $ - $ - $ - $ 475,135
From clients - - 63,252 729 63,981
From gifts, bequests,
and endowments - - 42,200 - 42,200
Investment Income:
Net increase (decrease) in the
fair value of investments 245,059 - (90) - 244,969
Interest, dividends, and other 78,593 - 519 - 79,112
Net investment income (loss) 323,652 - 429 - 324,082
Escheated property - 97,339 - - 97,339
Miscellaneous income - - 1,276 - 1,276
Total Additions 798,787 97,339 107,157 729 1,004,013
DEDUCTIONS
Benefits paid to participants
or beneficiaries 281,701 - - - 281,701
Amounts distributed to clients,
claimants, or third parties - 101,471 102,450 740 204,661
Administrative expense 6,764 6,433 14 - 13,210
Total Deductions 288,465 107,904 102,463 740 499,573
Change in net position 510,322 (10,565) 4,694 (11) 504,440
Net position -
Beginning of fiscal year - restated 3,723,371 94,215 40,292 101 3,857,979
Net position -
End of fiscal year $ 4,233,693 $ 83,650 $ 44,987 $ 90 $ 4,362,419
Reconciliation of change in net position:
Change in net position restricted
for other purposes $ 510,322 $ (10,565) $ 4,694 $ (11) $ 504,440
Change in net position $ 510,322 $ (10,565) $ 4,694 $ (11) $ 504,440
Michigan
TOTALS
MICHIGAN
EDUCATION
PROGRAM FUND
ESCHEATS SAVINGS
TRUST FUND
HOSPITAL
PATIENTS'
AND DEPOSITS
GIFTS, BEQUESTS,
FUND
INVESTMENT
213 213 213 213
Michigan
AGENCY FUNDS
ENVIRONMENTAL QUALITY DEPOSITS FUND
The Environmental Quality Deposits Fund accounts for deposits of
performance bonds for which the Department of Environmental
Quality has legal custody. The bonds held by this fund include bond
deposits from the hazardous waste program and the solid waste
program as provided by Sections 324.11141 and 324.11523 of the
Michigan Compiled Laws (MCL) and from the scrap tire program as
provided in MCL Section 324.16903.
INSURANCE CARRIER DEPOSITS FUND
This fund was administratively established to account for deposits
held by the State Treasurer on behalf of insurance carriers who are
licensed or authorized to write insurance in the State and are
required by Michigan Compiled Laws Section 500.411, to provide
such deposits. All deposits are in the form of various securities and
other acceptable assets.
CHILD SUPPORT COLLECTION FUND
This fund was administratively established to account for the activity
of the Michigan State Disbursement Unit (MISDU). The MISDU,
administered by the Department of Human Services, was created to
provide a single location within the State for the receipt and
disbursement of child support payments.
SOCIAL WELFARE FUND
This fund was administratively created to provide a single location
within the State for the receipts and disbursements related to county
child care funds and local county funds. Participating counties
provide funds to the Department of Human Services (DHS) on a
quarterly basis to pay for court ward youth under DHS supervision.
DHS uses the funds to pay for approved foster care individuals,
private agencies, institutions, in-home care, and independent living
based on receipt of child care invoices and supporting
documentation.
2014 Comprehensive Annual Financi al Report
214 214 214 214
COMBINING STATEMENT OF FIDUCIARY NET POSITION
AGENCY FUNDS
SEPTEMBER 30, 2014
(In Thousands)
INSURANCE
QUALITY CARRIER
DEPOSITS DEPOSITS COLLECTION
FUND FUND TOTALS
ASSETS
Cash $ - $ - $ 40,217 $ - $ 40,217
Equity in common cash 3,610 2,845 - 191 6,646
Other current assets - - 345 2 347
Other noncurrent assets - 419,228 - - 419,228
Total Assets $ 3,610 $ 422,073 $ 40,563 $ 193 $ 466,438
LIABILITIES
Accounts payable
and other liabilities $ 3,610 $ 2,845 $ 40,376 $ 193 $ 47,024
Amounts due to other funds - - 186 - 186
Other long-term liabilities - 419,228 - - 419,228
Total Liabilities $ 3,610 $ 422,073 $ 40,563 $ 193 $ 466,438
FUND
ENVIRONMENTAL
Michigan
CHILD SUPPORT
FUND
SOCIAL
WELFARE
215 215 215 215
COMBINING STATEMENT OF CHANGES IN ASSETS AND
LIABILITIES - AGENCY FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
BALANCE BALANCE
OCTOBER 1, SEPTEMBER 30,
2013 ADDITIONS DEDUCTIONS 2014
ENVIRONMENTAL QUALITY
DEPOSITS FUND
ASSETS
Equity in common cash $ 2,305 $ 3,758 $ 2,453 $ 3,610
Total Assets $ 2,305 $ 3,758 $ 2,453 $ 3,610
LIABILITIES
Accounts payable and other liabilities $ 2,305 $ 3,793 $ 2,489 $ 3,610
Total Liabilities $ 2,305 $ 3,793 $ 2,489 $ 3,610
ASSETS
Equity in common cash $ 369 $ 49,503 $ 47,027 $ 2,845
Other noncurrent assets 393,915 101,952 76,639 419,228
Total Assets $ 394,283 $ 151,455 $ 123,666 $ 422,073
LIABILITIES
Accounts payable and other liabilities $ 369 $ 49,503 $ 47,027 $ 2,845
Other long-term liabilities 393,915 101,952 76,639 419,228
Total Liabilities $ 394,283 $ 151,455 $ 123,666 $ 422,073
ASSETS
Cash $ 42,562 $ 1,466,626 $ 1,468,971 $ 40,217
Other current assets 2 344 - 345
Total Assets $ 42,564 $ 1,466,969 $ 1,468,971 $ 40,563
LIABILITIES
Accounts payable and other liabilities $ 41,797 $ 1,470,439 $ 1,471,859 $ 40,376
Amounts due to other funds 767 9,807 10,388 186
Total Liabilities $ 42,564 $ 1,480,246 $ 1,482,248 $ 40,563
Michigan
INSURANCE CARRIER
DEPOSITS FUND
CHILD SUPPORT
COLLECTION FUND
216 216 216 216
BALANCE BALANCE
OCTOBER 1, SEPTEMBER 30,
2013 ADDITIONS DEDUCTIONS 2014
ASSETS
Equity in common cash $ - $ 536 $ 345 $ 191
Other current assets - 2 - 2
Total Assets $ - $ 538 $ 345 $ 193
LIABILITIES
Accounts payable and other liabilities - 475 282 193
Total Liabilities $ - $ 475 $ 282 $ 193
ASSETS
Cash $ 42,562 $ 1,466,626 $ 1,468,971 $ 40,217
Equity in common cash 2,674 53,797 49,825 6,646
Other current assets 2 345 - 347
Other noncurrent assets 393,915 101,952 76,639 419,228
Total Assets $ 439,153 $ 1,622,720 $ 1,595,435 $ 466,438
LIABILITIES
Accounts payable and other liabilities $ 44,471 $ 1,524,210 $ 1,521,657 $ 47,024
Amounts due to other funds 767 9,807 10,388 186
Other long-term liabilities 393,915 101,952 76,639 419,228
Total Liabilities $ 439,153 $ 1,635,969 $ 1,608,684 $ 466,438
WELFARE FUND
Michigan
TOTALS - ALL AGENCY FUNDS
SOCIAL
217 217 217 217
Michigan
COMPONENT UNITS – AUTHORITIES
FARM PRODUCE INSURANCE AUTHORITY
Michigan Compiled Laws (MCL) Section 285.315 created the Farm
Produce Insurance Authority (FPIA) as a public body corporate.
Operating under Sections 285.311 – 285.331 of the MCL, FPIA is
governed and administered by a ten-member board of directors.
FPIA administers a program in which producers of dry beans, grain,
or corn may contribute to the Farm Produce Insurance Fund, a
percentage of their net proceeds from all farm produce sold by the
producer to a licensee in this State. Under this program the
producer may recover from the fund for losses caused by the
licensed grain dealer’s financial failure.
LAND BANK FAST TRACK AUTHORITY
Michigan Compiled Laws Section 124.765 created the Land Bank
Fast Track Authority (LBFTA) to assemble or dispose of public
property, including tax reverted property, in a coordinated manner to
foster the development of the property and to promote economic
growth within the State. LBFTA receives public properties,
undertakes expedited action to clear their titles, and then ensures
the properties’ redevelopment.
Executive Order 2014-8 abolished the LBFTA board of directors and
office of executive director and transferred all responsibilities and
functions to the executive director of the Michigan State Housing
Development Authority (MSHDA). Therefore, beginning in fiscal
year 2015, LBFTA will be reported as a component unit of MSHDA.
MACKINAC BRIDGE AUTHORITY
Michigan Compiled Laws (MCL) Section 254.302 created the
Mackinac Bridge Authority (MBA). MCL Section 254.314
empowered MBA to construct and operate a bridge between the
lower and upper peninsulas of Michigan. Fares and earnings on
investments finance the operation and maintenance of the bridge.
State statutes require that MBA continue charging bridge tolls and
repay State funds for all the subsidies provided in prior years.
MACKINAC ISLAND STATE PARK COMMISSION
Established in 1927, the Mackinac Island State Park Commission
currently operates under Sections 324.76701 – 324.76709 of the
Michigan Compiled Laws. The Governor, with the advice and
consent of the Senate, appoints the seven-member commission.
The Commission is responsible for the management of the
Mackinac Island and Michilimackinac State Parks and has the
authority to issue revenue-dedicated bonds.
MICHIGAN EARLY CHILDHOOD INVESTMENT
CORPORATION
The Michigan Early Childhood Investment Corporation was created
by an interlocal agreement between the Department of Human
Services and participating intermediate school districts. The
interlocal agreement was entered into pursuant to Sections 124.501
– 124.512 of the Michigan Compiled Laws. The Corporation’s
primary objective is to administer activities related to early childhood
development.
The governing body of each participant shall appoint one member of
the Corporation Board to serve at the will of the participant. For
each member of the Corporation Board appointed by the governing
body of a participant, the Governor shall appoint up to two members
of the Corporation Board representing the State to serve at the will
of the Governor. If there are fewer than five participants, the
Governor may appoint up to twelve additional members of the
Corporation Board representing the State to serve at the will of the
Governor or until there are five or more participants. In addition, the
Corporation shall have an Executive Committee of fifteen members,
all appointed by the Governor. The committee shall exercise the
powers of the Corporation.
MICHIGAN ECONOMIC DEVELOPMENT CORPORATION
The Michigan Economic Development Corporation (MEDC), under
Article 7, Section 28 of the State Constitution of 1963 and Sections
124.501 – 124.512 of the Michigan Compiled Laws (MCL), is a
public body corporate. Created by a ten-year contract (interlocal
agreement) between participating local economic development
corporations formed under Sections 125.1601 – 125.1636 of the
MCL and the Michigan Strategic Fund, MEDC is a separate legal
entity whose purpose is to stimulate, coordinate and advance
economic development in the State. Under the terms of the
agreement, the governance of MEDC resides in an executive
committee of 20 members appointed to eight-year, staggered terms.
2014 Comprehensive Annual Financi al Report
218 218 218 218
Michigan
MICHIGAN EDUCATION TRUST
The Michigan Education Trust (MET) operates a prepaid tuition
program. A purchaser enters into a contract with MET which
provides that in return for a specified actuarially determined
payment, MET will provide a Michigan child's undergraduate tuition
at any Michigan public university or community college. The amount
the purchaser is required to pay is based on several factors, among
them are tuition costs, the child's age and grade in school,
anticipated investment earnings, tuition rate increases, and the type
of contract purchased.
Michigan Compiled Laws Section 390.1425, the Michigan Education
Trust Act, created MET. MET is governed by a nine-member board
that consists of the State Treasurer and eight other individuals
appointed by the Governor with the advice and consent of the
Senate. Although MET is administratively located within the
Michigan Department of Treasury, the law provides its assets are
not to be considered assets of the State and are not to be loaned or
otherwise transferred or used by the State for any purpose other
than the purposes specified in the law. The law and contracts also
specifically provide that the State is not liable if MET becomes
actuarially unsound. In that event, the contracts provide for refunds
to participants.
STATE BAR OF MICHIGAN
The State Bar of Michigan is an association of lawyers who are
licensed to practice in Michigan. It is organized as a public body
corporate. Its operations are financed solely from member dues and
income from member services. The State Bar’s budget is the
responsibility of its Board of Commissioners, and it is not subject to
State of Michigan appropriation procedures.
2014 Comprehensive Annual Financi al Report
219 219 219 219
COMBINING STATEMENT OF NET POSITION
NON-MAJOR COMPONENT UNITS
AUTHORITIES
SEPTEMBER 30, 2014
(In Thousands)
PRODUCE LAND BANK MACKINAC
INSURANCE FAST TRACK BRIDGE
AUTHORITY AUTHORITY AUTHORITY
ASSETS
Current Assets:
Cash $ 708 $ - $ 936 $ 813
Equity in common cash - 7,235 - -
Amounts due from component units - - - -
Amounts due from primary government - - - -
Amounts due from federal government - 1,269 - -
Inventories - - - 576
Investments 1,349 - 5,005 213
Other current assets 176 - 70 119
Total Current Assets 2,233 8,504 6,011 1,721
Restricted Assets:
Cash and cash equivalents - - - 1,166
Investments - - - 2,157
Mortgages and loans receivable - 5,900 - -
Investments 3,972 - 60,436 -
Land and property held for resale - 13,571 - -
Capital Assets:
Land and other non-depreciable assets - - 125 337
Buildings, equipment, and other depreciable assets - - 9,231 14,001
Less accumulated depreciation - - (4,766) (9,582)
Infrastructure - - 102,950 -
Construction in progress - - - 80
Total capital assets - - 107,539 4,836
Other noncurrent assets - - - -
Total Assets $ 6,206 $ 27,975 $ 173,986 $ 9,879
LIABILITIES
Current Liabilities:
Warrants outstanding $ - $ - $ - $ -
Accounts payable and other liabilities 6 4,917 807 149
Amounts due to component units - - - -
Amounts due to primary government - 5 1,844 29
Bonds and notes payable - - - 50
Interest payable - - - 18
Unearned revenue - - 963 -
Current portion of other long-term obligations - 14 106 -
Total Current Liabilities 6 4,937 3,720 247
Unearned revenue - - 1,253 -
Bonds and notes payable - - - 1,685
Noncurrent portion of other long-term obligations - 21 375 -
Total Liabilities $ 6 $ 4,958 $ 5,348 $ 1,932
NET POSITION
Net investment in capital assets $ - $ - $ 107,539 $ 3,101
Restricted For:
Construction and debt service - - - 2,871
Other purposes - 6,473 - 1,022
Unrestricted 6,199 16,544 61,099 954
Total Net Position $ 6,199 $ 23,017 $ 168,638 $ 7,947
Michigan
FARM MACKINAC
ISLAND
STATE PARK
COMMISSION
220 220 220 220
DEVELOPMENT
CORPORATION
$ 58 $ 10,219 $ 73,329 $ 2,548 $ 88,611
- 22,892 - - 30,127
- 36,466 - - 36,466
3,567 689 2,077 - 6,333
- - - - 1,269
- - - 24 600
- 5,282 - 5,064 16,912
10 4,202 20,504 671 25,753
3,635 79,750 95,910 8,308 206,072
- 368 - - 1,534
- - - - 2,157
- 4,027 - - 9,927
- 52,418 913,939 7,081 1,037,846
- - - - 13,571
- 100 - 381 943
860 17,592 - 11,395 53,079
(446) (10,160) - (7,353) (32,308)
- - - - 102,950
- - - - 80
414 7,532 - 4,422 124,743
- - 48,560 99 48,659
$ 4,049 $ 144,095 $ 1,058,408 $ 19,910 $ 1,444,508
$ - $ 80 $ - $ - $ 80
2,484 10,166 - 1,348 19,878
- 621 - - 621
- 253 - - 2,132
- - - - 50
- - - - 18
- - - 1,402 2,365
59 1,212 109,043 - 110,434
2,543 12,333 109,043 2,750 135,579
- - - - 1,253
- - - - 1,685
- 1,104 895,884 - 897,384
$ 2,543 $ 13,436 $ 1,004,927 $ 2,750 $ 1,035,900
$ 414 $ 7,532 $ - $ 4,422 $ 123,008
- - - - 2,871
- - 53,481 - 60,976
1,093 123,126 - 12,738 221,753
$ 1,507 $ 130,658 $ 53,481 $ 17,160 $ 408,608
Michigan
MICHIGAN
INVESTMENT
CHILDHOOD
MICHIGAN EARLY
EDUCATION
MICHIGAN
ECONOMIC STATE
BAR OF
TRUST CORPORATION TOTALS MICHIGAN
221 221 221 221
COMBINING STATEMENT OF ACTIVITIES
NON-MAJOR COMPONENT UNITS - AUTHORITIES
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
NET
(EXPENSE)
FUNCTIONS/PROGRAMS CONTRIBUTIONS CONTRIBUTIONS REVENUE
Farm Produce Insurance Authority $ 242 $ 389 $ - $ - $ 147
Land Bank Fast Track Authority 30,010 - 42 2,035 (27,933)
Mackinac Bridge Authority 16,308 21,045 - - 4,737
Mackinac Island State Park Commission 4,731 4,316 284 - (131)
Michigan Early Childhood
Investment Corporation 13,290 - 13,593 - 303
Michigan Economic
Development Corporation 86,145 - 82,277 - (3,868)
Michigan Education Trust 9,201 1,768 87,550 - 80,117
State Bar of Michigan 11,508 11,794 - - 286
Total $ 171,434 $ 39,311 $ 183,745 $ 2,035 $ 53,658
Michigan
OPERATING
PROGRAM REVENUES
CAPITAL
CHARGES FOR GRANTS/ GRANTS/
EXPENSES SERVICES
222 222 222 222
$ (15) $ - $ - $ 131 $ 6,068 $ 6,199
12 - 1,750 (26,170) 49,188 23,017
1,176 - - 5,913 162,725 168,638
30 - - (102) 8,049 7,947
- - 26 329 1,177 1,507
(93) - 5,141 1,180 129,478 130,658
- - - 80,117 (26,636) 53,481
107 - - 393 16,767 17,160
$ 1,217 $ - $ 6,918 $ 61,792 $ 346,816 $ 408,608
OF YEAR
INVESTMENT FROM BEGINNING
GENERAL REVENUES
INTEREST AND
END CHANGE IN
PAYMENTS
Michigan
NET POSITION
STATE OF EARNINGS
NET POSITION
NET POSITION RESTATED OF YEAR OTHER (LOSS) MICHIGAN
223 223 223 223
Michigan
2014 Comprehensive Annual Financi al Report
224 224 224 224
Michigan
COMPONENT UNITS – STATE UNIVERSITIES
The State has 13 legally separate public universities, 10 of which
are included in this report as component units and 3 of which are
excluded. Included are the 10 universities whose governing boards
are appointed by the Governor and for which the State is legally
accountable, as prescribed by the Governmental Accounting
Standards Board Statement No. 14, The Financial Reporting Entity,
as amended by GASB Statement No. 61. Excluded are those 3 that
have governing boards whose members are elected by the voters
and, therefore, considered separate special purpose governments.
The 3 that are excluded are the largest public universities: Michigan
State University, University of Michigan, and Wayne State
University. Also excluded are the public community colleges, for
which local units of government are legally accountable.
The information presented in this report for the 10 universities is
based upon their separately issued financial statements for the fiscal
year ended on J une 30, 2014. The universities include Western
Michigan University presented as a major component unit and the
following non-major component units: Central Michigan University,
Eastern Michigan University, Ferris State University, Grand Valley
State University, Lake Superior State University, Michigan
Technological University, Northern Michigan University, Oakland
University, and Saginaw Valley State University.
2014 Comprehensive Annual Financi al Report
225 225 225 225
COMBINING STATEMENT OF NET POSITION
NON-MAJOR COMPONENT UNITS
STATE UNIVERSITIES
J UNE 30, 2014
(In Thousands)
GRAND
CENTRAL EASTERN FERRIS VALLEY
MICHIGAN MICHIGAN STATE STATE
UNIVERSITY UNIVERSITY UNIVERSITY UNIVERSITY
ASSETS
Current Assets:
Cash $ 43,431 $ 13,632 $ 56,740 $ 34,215
Amounts due from component units - - - -
Amounts due from primary government 52,517 17,084 8,530 57,244
Amounts due from federal government 946 1,628 106 2,510
Amounts due from local units - - - -
Inventories 6,910 847 904 2,353
Investments - 56,634 42,444 26,093
Other current assets 24,531 13,737 11,204 15,152
Total Current Assets 128,334 103,562 119,928 137,567
Restricted Assets:
Cash and cash equivalents - - 1,444 4,763
Investments - 9,119 21,262 -
Mortgages and loans receivable 6,225 - 18,537 -
Mortgages and loans receivable - 9,130 - 8,808
Investments 337,779 34,658 70,348 215,537
Capital Assets:
Land and other non-depreciable assets 13,574 11,654 6,597 69,703
Buildings, equipment, and other depreciable assets 810,682 767,888 423,921 835,775
Less accumulated depreciation (371,034) (316,569) (177,987) (271,436)
Infrastructure - - - -
Construction in progress 20,835 2,073 18,592 36,228
Total capital assets 474,057 465,046 271,123 670,269
Other noncurrent assets 436 13,460 757 22,235
Total Assets $ 946,830 $ 634,974 $ 503,400 $ 1,059,179
DEFERRED OUTFLOWS OF RESOURCES $ 8,120 $ - $ 808 $ 5,518
LIABILITIES
Current Liabilities:
Accounts payable and other liabilities $ 67,658 $ 38,041 $ 19,118 $ 72,031
Amounts due to primary government 430 221 - 53
Bonds and notes payable 24,064 2,475 4,996 12,910
Interest payable 1,218 2,404 1,197 1,466
Unearned revenue 12,998 6,607 8,237 12,400
Current portion of other long-term obligations 137 400 325 5,494
Total Current Liabilities 106,503 50,147 33,873 104,353
Unearned revenue 50 - 815 4,447
Bonds and notes payable 128,323 234,875 94,933 259,800
Noncurrent portion of other long-term obligations 21,260 52,140 33,329 28,257
Total Liabilities $ 256,136 $ 337,162 $ 162,950 $ 396,857
DEFERRED INFLOWS OF RESOURCES $ - $ 13,460 $ - $ -
NET POSITION
Net investment in capital assets $ 322,478 $ 184,803 $ 162,014 $ 388,131
Restricted For:
Education 19,020 - 9,687 9,701
Construction and debt service 9,043 146 - 27,823
Other purposes 19 34,690 - -
Funds Held as Permanent Investments:
Expendable 26,734 - 14,298 41,232
Nonexpendable 43,429 42,130 21,262 52,299
Unrestricted 278,091 22,583 133,996 148,652
Total Net Position $ 698,815 $ 284,352 $ 341,257 $ 667,839
Michigan
226 226 226 226
LAKE SAGINAW
SUPERIOR MICHIGAN NORTHERN VALLEY
STATE TECHNOLOGICAL MICHIGAN OAKLAND STATE
UNIVERSITY UNIVERSITY UNIVERSITY UNIVERSITY UNIVERSITY
$ 2,055 $ 8,475 $ 17,592 $ 28,509 $ 50,599 $ 255,247
- - 4 - - 4
2,244 8,542 19,203 19,180 16,955 201,500
277 2,472 124 2,350 864 11,277
- - 11 5 - 16
431 1,491 1,319 914 1,456 16,625
11,867 - - - 2 137,040
1,468 8,758 7,530 12,140 7,209 101,729
18,342 29,738 45,783 63,099 77,085 723,437
- 3,975 - 29,117 - 39,300
- 113,831 - 58,594 - 202,806
- - - 1,467 - 26,229
2,328 11,865 6,584 - 19 38,735
19,278 14,404 112,662 156,848 78,013 1,039,525
2,717 15,835 7,304 4,625 2,506 134,513
146,278 406,740 384,857 463,386 447,482 4,687,009
(102,023) (178,096) (166,913) (218,865) (165,352) (1,968,274)
- - - 60,268 - 60,268
- 1,607 29,392 141,229 20,727 270,684
46,973 246,085 254,640 450,643 305,364 3,184,200
752 17,395 2,806 6,882 6,842 71,563
$ 87,672 $ 437,293 $ 422,475 $ 766,649 $ 467,323 $ 5,325,795
$ - $ - $ 3,527 $ 12,463 $ 1,277 $ 31,713
$ 1,860 $ 8,994 $ 21,911 $ 43,145 $ 21,580 $ 294,338
189 447 240 600 - 2,180
1,245 2,520 4,736 6,413 6,325 65,683
92 819 - 2,536 - 9,731
1,067 3,250 3,977 14,585 9,511 72,631
657 6,293 1,518 1,049 100 15,973
5,110 22,323 32,382 68,328 37,516 460,536
- - - 115 1,491 6,918
20,320 79,298 96,869 228,510 115,310 1,258,239
2,077 6,646 10,166 18,439 4,132 176,446
$ 27,507 $ 108,268 $ 139,417 $ 315,391 $ 158,449 $ 1,902,139
$ - $ - $ - $ 4,881 $ - $ 18,341
$ 25,754 $ 164,400 $ 154,802 $ 236,419 $ 181,041 $ 1,819,844
17,936 39,551 2,861 27,233 16,724 142,713
1,568 - 633 - 283 39,497
3,019 - - - 1,600 39,328
- 36,714 24,588 17,557 - 161,123
6,226 72,488 4,846 23,430 50,325 316,435
5,662 15,873 98,854 154,199 60,177 918,088
$ 60,165 $ 329,025 $ 286,585 $ 458,839 $ 310,151 $ 3,437,028
TOTALS
Michigan
227 227 227 227
COMBINING STATEMENT OF ACTIVITIES
NON-MAJOR COMPONENT UNITS - STATE UNIVERSITIES
FISCAL YEAR ENDED J UNE 30, 2014
(In Thousands)
NET
(EXPENSE)
FUNCTIONS/PROGRAMS CONTRIBUTIONS CONTRIBUTIONS REVENUE
Central Michigan University $ 477,420 $ 335,125 $ 37,159 $ 1,955 $ (103,181)
Eastern Michigan University 349,301 217,523 23,328 925 (107,524)
Ferris State University 235,987 158,125 7,960 - (69,902)
Grand Valley State University 414,826 302,288 34,714 12,007 (65,816)
Lake Superior State University 49,664 25,743 13,403 646 (9,872)
Michigan Technological University 230,838 114,968 67,152 5,152 (43,565)
Northern Michigan University 166,855 96,256 10,211 20,208 (40,181)
Oakland University 286,978 198,798 32,173 216 (55,791)
Saginaw Valley State University 141,229 98,401 9,678 - (33,150)
Total $ 2,353,098 $ 1,547,228 $ 235,778 $ 41,110 $ (528,983)
Michigan
PROGRAM REVENUES
OPERATING CAPITAL
EXPENSES SERVICES
CHARGES FOR GRANTS/ GRANTS/
228 228 228 228
$ 21,598 $ 73,993 $ 27,347 $ 19,756 $ 679,059 $ 698,815
4,333 69,381 39,116 5,306 279,046 284,352
10,400 46,085 33,813 20,397 320,861 341,257
8,184 57,824 39,393 39,585 628,254 667,839
935 12,222 - 3,285 56,880 60,165
7,342 43,786 180 7,743 321,283 329,025
8,390 42,011 13,542 23,762 262,823 286,585
16,839 56,421 22,082 39,551 419,288 458,839
7,373 25,991 20,051 20,265 289,886 310,151
$ 85,394 $ 427,713 $ 195,523 $ 179,648 $ 3,257,380 $ 3,437,028
Michigan
BEGINNING NET POSITION
GENERAL REVENUES
INTEREST AND
INVESTMENT
PAYMENTS
FROM
NET POSITION
OF YEAR
END
OTHER
CHANGE IN
NET POSITION
OF YEAR STATE OF
MICHIGAN
EARNINGS
(LOSS) RESTATED
229 229 229 229
Michigan
2014 Comprehensive Annual Financi al Report
230 230 230 230
Michigan
STATISTICAL SECTION
2014 Comprehensive Annual Financi al Report
231 231 231 231
Michigan
2014 Comprehensive Annual Financi al Report
232 232 232 232
Michigan
Index
STATISTICAL SECTION
This part of the State of Michigan’s comprehensive annual financial report presents detailed information as a context for
understanding what the information in the financial statements, note disclosures, and required supplementary information says
about the State’s overall financial health.
CONTENTS: Page
Financial Trends
These schedules contain trend information to help the reader understand how the State’s financial
performance and well-being have changed over time.
Net Position by Component ...................................................................................................................................... 234
Changes in Net Position ........................................................................................................................................... 236
Fund Balances – Governmental Funds .................................................................................................................... 240
Changes in Fund Balances – Governmental Funds ................................................................................................. 242
Revenue Capacity
These schedules contain information to help the reader assess the State’s most significant revenue
sources: personal income and sales taxes.
Personal Income by Industry .................................................................................................................................... 244
Taxable Sales by Industry ........................................................................................................................................ 246
Personal Income Tax Filers and Liability by Income Level ....................................................................................... 248
Sales Tax Payers by Industry ................................................................................................................................... 249
Debt Capacity
These schedules present information to help the reader assess the affordability of the State’s current
levels of outstanding debt and the State’s ability to issue additional debt in the future. The State has
no statutory limit on the amount of general obligation debt that may be authorized.
Ratios of Outstanding Debt by Type ......................................................................................................................... 250
Ratios of Net General Obligation Bonded Debt Outstanding .................................................................................... 253
Debt Service Coverage – Comprehensive Transportation Fund Related Bonds ...................................................... 254
Debt Service Coverage – State Trunkline Fund Related Bonds ............................................................................... 256
Debt Service Coverage – State Building Authority ................................................................................................... 258
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand the
environment within which the State’s financial activities take place.
Demographic and Economic Indicators .................................................................................................................... 260
Operating Information
These schedules contain information about the State’s operations and resources to help the reader
understand how the information in the State’s financial report relates to the services the State provides
and the activities it performs.
Classified Employees by Function ............................................................................................................................ 262
Operating Indicators by Function .............................................................................................................................. 264
Capital Assets by Function ....................................................................................................................................... 268
SOURCES:
Unless otherwise noted, the information in these schedules is derived from the financial statements presented in the
comprehensive annual financial reports for the relevant years.
2014 Comprehensive Annual Financi al Report
233 233 233 233
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(In Thousands)
(Accrual Basis of Accounting)
Governmental activities
Net investment in capital assets $ 15,245,452 $ 15,827,600 $ 15,739,094 $ 15,909,317
Restricted 2,086,764 2,064,965 2,292,779 2,599,760
Unrestricted (932,221) (1,313,574) (1,337,824) (1,868,935)
Total governmental activities net position $ 16,399,994 $ 16,578,992 $ 16,694,049 $ 16,640,142
Business-type activities
Net investment in capital assets $ 582 $ 412 $ 367 $ 807
Restricted 894,513 621,982 358,712 72,672
Unrestricted 6,891 7,827 4,798 (121,773)
Total business-type activities net position $ 901,986 $ 630,220 $ 363,877 $ (48,294)
Primary government
Net investment in capital assets $ 15,246,033 $ 15,828,012 $ 15,739,461 $ 15,910,124
Restricted 2,981,277 2,686,947 2,651,490 2,672,432
Unrestricted (925,330) (1,305,747) (1,333,025) (1,990,708)
Total primary government net position $ 17,301,980 $ 17,209,212 $ 17,057,926 $ 16,591,848
Reconciliation of net position
Beginning net position $ 17,166,569 $ 17,301,980 $ 17,209,212 $ 17,057,926
Restatement of beginning net position 75,489 188,188 - (54,373)
Beginning net position - restated 17,242,058 17,490,168 17,209,212 17,003,554
Statement of Activities - changes in net position 59,922 (692,181) (575,518) (495,759)
Change in reporting entity - 411,225 424,232 84,053
Ending net position $ 17,301,980 $ 17,209,212 $ 17,057,926 $ 16,591,848
2008 2007
Michigan
2006 2005
234 234 234 234
$ 16,313,696 $ 16,859,070 $ 17,782,073 $ 18,198,345 $ 19,649,694 $ 20,279,584
2,577,249 2,691,477 3,552,062 3,394,212 3,773,962 3,824,871
(3,928,376) (4,860,007) (5,325,636) (5,349,668) (5,192,624) (5,876,457)
$ 14,962,570 $ 14,690,540 $ 16,008,499 $ 16,242,889 $ 18,231,031 $ 18,227,998
$ 735 $ 603 $ 578 $ 355 $ 813 $ 606
137,064 145,056 131,453 1,276,713 1,843,965 2,442,471
(2,425,221) (3,163,457) (2,911,176) 5,926 5,538 5,834
$ (2,287,423) $ (3,017,798) $ (2,779,145) $ 1,282,994 $ 1,850,316 $ 2,448,910
$ 16,314,431 $ 16,859,673 $ 17,782,652 $ 18,198,700 $ 19,650,507 $ 20,280,190
2,714,313 2,836,533 3,683,515 4,670,926 5,617,926 6,267,342
(6,353,597) (8,023,463) (8,236,812) (5,343,743) (5,187,086) (5,870,623)
$ 12,675,147 $ 11,672,743 $ 13,229,354 $ 17,525,883 $ 20,081,347 $ 20,676,909
$ 16,591,848 $ 12,675,147 $ 11,672,743 $ 13,229,354 $ 17,525,883 $ 20,081,347
(176,594) - (5,377) (2,954) 6,459 (36,068)
16,415,254 12,675,147 11,667,366 13,226,400 17,532,342 20,045,279
(3,757,816) (1,002,404) 1,561,989 4,299,483 2,549,005 631,630
17,709 - - - - -
$ 12,675,147 $ 11,672,743 $ 13,229,354 $ 17,525,883 $ 20,081,347 $ 20,676,909
Michigan
2013 2012 2011 2014 2009 2010
235 235 235 235
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(In Thousands)
(Accrual Basis of Accounting)
Expenses
Governmental activities:
General government $ 1,877,410 $ 2,289,294 $ 2,205,613 $ 1,671,584
Education 14,531,388 14,695,186 14,660,163 15,080,883
Human services 4,154,811 4,384,311 4,453,497 4,699,046
Public safety and corrections 2,320,406 2,541,630 2,583,916 2,895,133
Conservation, environment,
recreation, and agriculture 652,326 688,407 596,972 572,755
Labor, commerce, and regulatory 936,467 951,519 963,444 995,714
Health services 10,179,705 9,963,373 10,832,862 11,622,966
Transportation 3,106,993 3,133,137 3,191,784 3,235,394
Tax credits (Note 16) 815,300 834,000 883,400 931,600
Intergovernmental-revenue sharing 1,112,931 1,103,625 1,071,104 1,076,445
Interest on long-term debt 287,519 293,128 304,702 318,654
Total governmental activities 39,975,258 40,877,610 41,747,457 43,100,174
Business-type activities:
Liquor Purchase Revolving Fund 557,377 582,982 602,280 621,991
State Lottery Fund 1,447,285 1,584,186 1,654,823 1,636,858
Attorney Discipline System 3,856 4,122 4,282 4,976
Michigan Unemployment
Compensation Funds 1,892,486 1,990,197 2,012,082 2,403,043
Total business-type activities 3,901,003 4,161,487 4,273,467 4,666,868
Total primary government expenses $ 43,876,261 $ 45,039,097 $ 46,020,924 $ 47,767,042
Program Revenues
Governmental activities:
Charges for services:
General government $ 983,124 $ 1,087,877 $ 1,195,965 $ 737,401
Education 4,858 9,306 10,377 6,616
Human services 53,400 56,367 59,285 57,963
Public safety and corrections 155,683 160,829 164,345 168,789
Conservation, environment,
recreation, and agriculture 269,035 251,591 185,978 282,008
Labor, commerce, and regulatory 238,229 262,021 312,983 304,145
Health services 72,062 72,564 72,338 79,683
Transportation 201,598 84,280 79,459 72,651
Operating grants and contributions 11,792,127 11,623,141 12,295,825 12,956,983
Capital grants and contributions 805,580 779,269 627,057 719,518
Total governmental activities program revenues $ 14,575,696 $ 14,387,246 $ 15,003,612 $ 15,385,756
Business-type activities:
Charges for services:
Liquor Purchase Revolving Fund $ 688,928 $ 718,085 $ 742,959 $ 768,085
State Lottery Fund 2,082,229 2,232,204 2,363,001 2,351,082
Attorney Discipline System 4,588 4,631 4,782 4,885
Michigan Unemployment
Compensation Funds 1,646,311 1,727,761 1,765,871 1,998,292
Operating grants and contributions 54,148 53,932 55,783 44,262
Total business-type activities program revenues 4,476,205 4,736,614 4,932,397 5,166,606
Total primary government program revenues $ 19,051,901 $ 19,123,860 $ 19,936,008 $ 20,552,362
Net (Expenses)/Revenues
Governmental activities $ (25,399,562) $ (26,490,364) $ (26,743,845) $ (27,714,418)
Business-type activities 575,202 575,127 658,929 499,738
Total primary government net expenses $ (24,824,360) $ (25,915,237) $ (26,084,916) $ (27,214,680)
Michigan
2005 2007 2008 2006
236 236 236 236
$ 1,753,403 $ 1,752,504 $ 2,286,436 $ 2,491,270 $ 2,093,352 $ 2,455,999
15,251,821 14,989,964 15,269,638 14,601,171 14,617,662 14,941,366
5,410,078 6,136,852 6,423,345 5,953,946 5,931,424 5,508,011
2,994,466 2,859,301 2,863,890 2,816,575 2,663,440 2,638,272
617,768 577,952 575,118 657,527 593,446 714,019
1,187,368 1,261,908 1,178,970 956,357 965,696 956,256
12,334,951 13,250,231 13,917,219 13,722,762 13,853,422 15,036,289
3,244,824 2,947,845 2,460,553 2,840,961 2,914,884 3,309,442
963,500 1,351,500 1,271,900 1,226,300 689,900 676,500
1,040,031 994,196 1,091,527 1,032,243 1,077,514 1,120,593
350,421 362,626 217,014 196,040 178,561 174,522
45,148,632 46,484,880 47,555,610 46,495,152 45,579,303 47,531,269
633,093 634,925 660,861 696,723 742,611 779,276
1,710,718 1,676,994 1,631,489 1,654,234 1,758,718 1,868,607
5,026 4,733 4,941 4,818 4,846 4,798
6,215,392 6,803,393 4,350,158 2,991,500 2,188,132 1,246,507
8,564,229 9,120,044 6,647,450 5,347,275 4,694,307 3,899,188
$ 53,712,861 $ 55,604,924 $ 54,203,060 $ 51,842,428 $ 50,273,610 $ 51,430,457
$ 768,411 $ 775,018 $ 790,054 $ 844,661 $ 678,845 $ 688,044
5,790 5,320 5,491 15,688 7,206 9,388
46,903 38,797 34,810 69,219 38,648 85,213
157,751 168,141 166,034 158,707 164,019 161,447
254,128 360,261 266,062 269,307 271,119 299,073
306,657 313,368 316,941 548,543 750,517 754,054
84,647 72,036 90,558 59,850 69,009 67,298
69,685 75,466 92,045 91,690 96,842 96,727
16,755,408 19,150,043 19,608,970 17,373,332 17,194,905 17,981,852
921,847 964,605 1,061,715 845,873 867,155 850,174
$ 19,371,229 $ 21,923,056 $ 22,432,679 $ 20,276,870 $ 20,138,265 $ 20,993,270
$ 781,896 $ 780,265 $ 812,140 $ 856,717 $ 912,112 $ 957,054
2,398,995 2,379,975 2,357,417 2,430,281 2,491,131 2,608,920
4,943 4,977 5,114 5,166 4,887 4,867
3,922,144 6,012,375 4,441,664 3,529,515 2,776,790 1,809,854
104,154 79,966 172,038 251,786 21,710 59,881
7,212,131 9,257,558 7,788,373 7,073,466 6,206,631 5,440,576
$ 26,583,360 $ 31,180,614 $ 30,221,052 $ 27,350,336 $ 26,344,896 $ 26,433,845
$ (25,777,403) $ (24,561,824) $ (25,122,932) $ (26,218,282) $ (25,441,038) $ (26,538,000)
(1,352,097) 137,514 1,140,924 1,726,190 1,512,324 1,541,388
$ (27,129,501) $ (24,424,311) $ (23,982,008) $ (24,492,092) $ (23,928,714) $ (24,996,612)
Michigan
2010 2014 2009 2013 2012 2011
237 237 237 237
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS (Continued)
(In Thousands)
(Accrual Basis of Accounting)
General Revenues and Other Changes in Net Position
Governmental activities:
Taxes:
General:
Sales and use $ 2,663,226 $ 2,665,614 $ 2,635,341 $ 2,701,052
Personal income 5,036,282 5,123,885 5,321,169 6,229,339
Single business, Michigan business,
and corporate income 1,934,003 1,926,884 1,771,854 1,715,861
Tobacco products 712,218 690,234 678,826 652,609
Beer, wine, and liquor 117,990 119,429 123,592 126,040
Insurance company 250,966 218,104 223,753 223,398
Quality assurance assessment 509,857 676,923 832,562 1,026,698
Penalties and interest 173,290 146,807 155,789 167,297
Other 444,732 337,920 334,097 320,484
Restricted For Educational Purposes:
Sales and use 5,283,583 5,240,334 5,230,217 5,424,253
Personal income 2,019,932 2,069,435 2,142,251 2,174,393
Michigan business - - - 341,000
Corporate income - - - -
Education, property, and real estate transfers 2,236,159 2,320,578 2,336,474 2,266,377
Tobacco products 471,734 466,985 449,912 427,303
Beer, wine, and liquor 33,169 34,212 35,730 37,120
Casino Gaming Wagering 97,609 104,069 106,681 112,067
Other 151,918 154,173 154,917 101,666
Restricted For Transportation Purposes:
Sales and use 56,924 66,405 67,678 82,114
Gasoline and diesel fuel 1,068,565 1,054,766 1,016,957 992,502
Motor vehicle weight 863,367 867,663 874,287 854,736
Other 6,719 5,974 6,339 5,675
Unrestricted investment and interest earnings 14,141 9,991 12,097 7,595
Miscellaneous 681,837 1,281,229 1,378,751 739,602
Contributions to permanent fund principal 41,033 35,153 26,165 57,937
Transfers 859,260 864,406 943,460 927,763
Total governmental activities $ 25,728,514 $ 26,481,174 $ 26,858,903 $ 27,714,884
Business-type activities:
Taxes 12,194 12,654 13,133 13,663
Investment earnings 2,784 4,861 5,055 2,192
Miscellaneous 50 - - -
Transfers (859,260) (864,406) (943,460) (927,763)
Total business-type activities (844,232) (846,892) (925,273) (911,909)
Total primary government $ 24,884,282 $ 25,634,282 $ 25,933,630 $ 26,802,975
Changes in Net Position
Governmental activities $ 328,952 $ (9,190) $ 115,057 $ 466
Business-type activities (269,030) (271,766) (266,343) (412,171)
Total primary government $ 59,922 $ (280,956) $ (151,286) $ (411,705)
NOTES: In years prior to fiscal year 2012 a portion of the Michigan Business Tax was restricted for educational purposes.
Tax law changes enacted during fiscal year 2012 eliminated that restriction.
Beginning in fiscal year 2012, a portion of the Corporate Income Tax was restricted for educational purposes.
2007 2008
Michigan
2005 2006
238 238 238 238
$ 2,439,220 $ 2,651,757 $ 2,784,245 $ 2,735,674 $ 2,620,176 $ 2,993,426
4,639,740 4,931,508 5,822,443 6,119,213 6,946,947 6,078,008
1,372,597 1,107,589 1,456,727 1,283,584 825,044 528,174
631,339 612,414 593,462 586,108 587,598 578,154
126,475 126,269 128,574 133,276 139,728 143,105
261,006 257,359 271,198 290,383 302,015 362,287
858,512 845,612 884,412 955,029 974,563 971,377
145,675 135,939 132,724 163,496 172,049 117,734
244,166 239,425 239,306 412,904 503,413 514,504
4,848,489 5,006,696 5,399,478 5,515,083 5,668,592 5,872,729
1,855,533 1,756,587 1,999,556 2,121,630 2,479,897 2,276,581
669,341 604,395 611,433 - - -
- - - 10,703 34,568 34,566
2,163,883 2,047,056 2,015,369 1,939,493 1,908,481 2,033,711
410,590 392,113 377,288 371,774 373,296 357,389
37,717 37,476 39,165 41,065 44,069 45,722
108,080 101,816 114,017 115,753 110,667 106,903
55,764 74,083 66,231 59,568 56,503 65,172
82,887 76,778 90,025 98,101 212,970 102,026
970,794 956,999 959,479 940,099 953,108 958,745
839,648 841,840 859,783 875,952 906,633 940,637
5,591 5,188 5,621 5,027 5,034 5,052
4,911 1,464 696 710 1,204 990
568,855 495,556 648,297 659,801 628,204 517,297
30,091 101,587 28,773 20,359 22,847 23,865
905,523 882,287 917,966 1,000,841 945,115 942,883
$ 24,276,425 $ 24,289,795 $ 26,446,268 $ 26,455,626 $ 27,422,722 $ 26,571,035
14,093 14,107 14,855 15,737 - -
763 276 191 139 112 87
3,636 16 649 3,320,915 - 3
(905,523) (882,287) (917,966) (1,000,841) (945,115) (942,883)
(887,031) (867,889) (902,271) 2,335,949 (945,003) (942,793)
$ 23,389,393 $ 23,421,906 $ 25,543,997 $ 28,791,575 $ 26,477,719 $ 25,628,241
$ (1,500,979) $ (272,029) $ 1,323,336 $ 237,344 $ 1,981,683 $ 33,035
(2,239,129) (730,375) 238,653 4,062,139 567,322 598,595
$ (3,740,107) $ (1,002,404) $ 1,561,989 $ 4,299,483 $ 2,549,005 $ 631,630
Michigan
2011 2010 2013 2012 2009 2014
239 239 239 239
FUND BALANCES, GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(In Thousands)
(Modified Accrual Basis of Accounting)
General Fund
Nonspendable $ - $ - $ - $ -
Restricted - - - -
Committed - - - -
Assigned - - - -
Unassigned - - - -
Total general fund $ - $ - $ - $ -
All Other Governmental Funds
Nonspendable $ - $ - $ - $ -
Restricted - - - -
Committed - - - -
Unassigned - - - -
Total all other governmental funds $ - $ - $ - $ -
General Fund
Reserved $ 1,232,856 $ 1,066,757 $ 722,948 $ 833,104
Unreserved 220,537 2,482 259,080 457,870
Total general fund $ 1,453,393 $ 1,069,240 $ 982,028 $ 1,290,974
All Other Governmental Funds
Reserved $ 1,759,462 $ 1,657,248 $ 1,945,448 $ 1,968,781
Unreserved, reported in:
Special revenue funds 303,226 779,910 689,356 483,130
Debt service funds 194,586 189,851 208,868 220,517
Capital projects funds (349,643) (87,918) (239,869) (238,718)
Permanent funds 43,259 43,791 41,361 54,791
Total all other governmental funds $ 1,950,891 $ 2,582,883 $ 2,645,164 $ 2,488,501
Reconciliation of governmental fund balances
Beginning fund balances $ 3,330,844 $ 3,404,284 $ 3,652,123 $ 3,627,192
Restatement of beginning fund balances - - - -
Beginning fund balances - restated 3,330,844 3,404,284 3,652,123 3,627,192
Excess of revenues and other sources over
(under) expenditures and other uses 73,440 336,067 35,653 131,789
Change in accounting entity - (88,228) (60,583) 20,494
Ending fund balances $ 3,404,284 $ 3,652,123 $ 3,627,192 $ 3,779,475
NOTE: Beginning in fiscal year 2011, the fund balance categories were reclassified as a result of implementing
Governmental Accounting Standards Board Statement No. 54. Fund balance has not been restated for
prior years.
Michigan
2005 2006 2007 2008
240 240 240 240
$ - $ - $ 267,289 $ 237,955 $ 221,614 $ 189,095
- - 351,551 364,497 376,977 383,025
- - 463,685 805,402 933,666 998,674
- - 67,021 68,583 137,947 206,875
- - 553,746 979,205 1,186,647 306,382
$ - $ - $ 1,703,292 $ 2,455,642 $ 2,856,852 $ 2,084,052
$ - $ - $ 929,077 $ 951,453 $ 968,433 $ 992,581
- - 2,269,086 2,086,927 2,200,564 2,250,773
- - 137,910 196,931 322,056 547,466
- - (41,126) (144,804) (13,216) (106,128)
$ - $ - $ 3,294,948 $ 3,090,508 $ 3,477,837 $ 3,684,691
$ 794,464 $ 828,553 $ - $ - $ - $ -
177,244 187,220 - - - -
$ 971,708 $ 1,015,773 $ - $ - $ - $ -
$ 1,941,203 $ 2,048,256 $ - $ - $ - $ -
605,513 379,140 - - - -
207,916 222,322 - - - -
(182,786) (161,980) - - - -
40,473 75,486 - - - -
$ 2,612,318 $ 2,563,224 $ - $ - $ - $ -
$ 3,779,475 $ 3,584,026 $ 3,578,997 $ 4,998,240 $ 5,546,150 $ 6,334,689
- - - (15,602) - -
3,779,475 3,584,026 3,578,997 4,982,638 5,546,150 6,334,689
(220,414) (5,029) 1,419,243 563,512 788,538 (565,945)
24,965 - - - - -
$ 3,584,026 $ 3,578,997 $ 4,998,240 $ 5,546,150 $ 6,334,689 $ 5,768,743
2009 2010
Michigan
2011 2012 2013 2014
241 241 241 241
CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(In Thousands)
(Modified Accrual Basis of Accounting)
Revenues
Taxes $ 23,936,964 $ 24,198,924 $ 24,370,884 $ 26,075,135
From federal agencies 11,974,006 12,160,022 12,655,930 13,432,638
From local agencies 262,875 124,101 139,429 126,550
From services 264,956 269,593 284,370 291,380
From licenses and permits 423,501 437,560 444,841 441,407
Special Medicaid reimbursements 467,970 93,621 102,670 115,797
Miscellaneous 1,475,377 1,948,214 2,271,059 1,667,798
Total revenues 38,805,648 39,232,034 40,269,182 42,150,705
Expenditures
General government 1,307,448 1,631,483 1,590,733 1,553,671
Education 14,557,032 14,758,992 14,664,715 15,094,266
Human services 4,122,779 4,341,774 4,447,992 4,609,481
Public safety and corrections 2,287,452 2,455,145 2,467,512 2,617,048
Conservation, environment,
recreation, and agriculture 614,939 642,815 568,398 597,267
Labor, commerce, and regulatory 924,876 952,921 957,023 966,091
Health services 10,126,544 9,958,104 10,741,285 11,588,207
Transportation 2,167,888 2,082,847 2,178,923 2,338,907
Tax credits 815,300 834,000 883,400 931,600
Capital outlay 1,274,247 1,462,405 1,376,891 1,234,427
Intergovernmental - revenue sharing 1,112,931 1,103,625 1,071,104 1,076,445
Debt service:
Bond principal retirement 354,711 773,826 238,789 228,261
Bond interest and fiscal charges 276,216 294,093 295,878 285,333
Capital lease payments 49,530 49,183 46,074 50,176
Total expenditures 39,991,894 41,341,213 41,528,716 43,171,179
Excess of revenues over (under) expenditures (1,186,245) (2,109,179) (1,259,534) (1,020,474)
Other Financing Sources (Uses)
Bonds and notes issued 365,164 963,105 485,115 121,500
Refunding bonds issued 1,528,539 1,494,050 - 208,780
Premium on bond issuance 97,857 46,234 18,662 16,811
Discount on bond issuance - (496,444) - -
Payment to refunded bond escrow agent (1,609,886) (563,776) (240,280) (223,319)
Capital lease acquisitions 6,778 34,059 20,906 110,838
Proceeds from sale of capital assets 10,643 13,974 5,347 30,505
Transfers from other funds 2,924,083 2,736,772 2,826,854 2,697,131
Transfers to other funds (2,063,492) (1,870,956) (1,882,002) (1,789,489)
Total other financing sources (uses) 1,259,686 2,357,018 1,234,604 1,172,757
Net change in fund balances $ 73,440 $ 247,839 $ (24,930) $ 152,283
Debt service as a percentage of
noncapital expenditures 2% 3% 1% 1%
Michigan
2005 2006 2007 2008
242 242 242 242
$ 23,348,354 $ 23,174,824 $ 24,691,957 $ 24,769,943 $ 25,239,420 $ 25,335,788
17,377,416 19,832,846 20,401,399 17,830,166 17,800,913 18,524,648
118,190 106,172 102,979 102,776 109,771 100,372
288,877 300,992 321,799 314,059 322,553 326,560
454,981 458,303 464,756 481,994 501,581 511,416
135,667 123,205 155,059 186,194 134,353 133,909
1,524,220 1,575,643 1,523,221 1,896,663 1,721,838 1,714,576
43,247,704 45,571,986 47,661,170 45,581,795 45,830,430 46,647,268
1,587,314 1,464,412 1,857,989 1,937,876 1,870,041 2,066,169
15,249,946 15,051,983 15,297,255 14,636,439 14,652,527 14,973,104
5,334,263 6,042,987 6,346,672 5,886,563 5,925,320 5,537,228
2,591,858 2,573,093 2,549,993 2,567,504 2,604,520 2,669,883
557,602 546,510 516,098 582,955 571,371 681,072
1,145,954 1,223,197 1,143,962 923,059 961,279 961,934
12,450,287 13,218,598 13,905,003 13,698,746 13,862,531 15,063,455
2,195,721 2,279,890 2,069,572 2,149,628 2,362,335 2,611,213
963,500 1,351,500 1,271,900 1,226,300 689,900 676,500
1,279,372 1,322,304 1,169,458 1,045,060 1,013,461 1,113,770
1,040,031 994,196 1,091,527 1,032,243 1,077,514 1,120,593
215,380 247,532 231,577 342,241 404,396 452,631
341,194 316,163 311,955 346,861 339,908 317,873
50,107 50,982 56,146 56,327 58,990 63,028
45,002,530 46,683,346 47,819,108 46,431,804 46,394,092 48,308,452
(1,754,825) (1,111,361) (157,938) (850,008) (563,662) (1,661,184)
601,500 177,480 474,278 360,260 377,326 85,295
775,640 142,190 543,367 163,035 508,109 295,085
10,748 10,569 12,216 22,071 38,495 47,579
(4,263) - (150) (1,339) (14) -
(777,179) (150,488) (549,296) (172,223) (537,743) (299,121)
41,205 39,101 172,111 34,567 18,285 18,846
3,027 1,895 1,797 3,160 4,148 3,466
2,603,766 2,834,719 2,616,900 2,956,635 3,115,335 3,354,150
(1,695,068) (1,949,134) (1,694,043) (1,952,646) (2,171,741) (2,410,062)
1,559,376 1,106,331 1,577,181 1,413,520 1,352,200 1,095,238
$ (195,449) $ (5,029) $ 1,419,243 $ 563,512 $ 788,538 $ (565,945)
1% 1% 1% 2% 2% 2%
2013 2014
Michigan
2009 2010 2011 2012
243 243 243 243
PERSONAL INCOME BY INDUSTRY
LAST TEN FISCAL YEARS
(In Millions)
2005 2006
Farm earnings $ 1,080 $ 1,087 $ 1,067
Forestry, fishing, and related activities 315 295 359
Mining 717 791 930
Utilities 2,163 2,234 2,482
Construction 15,211 15,286 15,256
Manufacturing 52,015 50,968 50,243
Wholesale trade 11,876 12,394 12,837
Retail trade 16,373 16,461 16,396
Transportation and warehousing 7,001 7,264 7,201
Information 4,898 4,803 4,714
Finance and insurance 11,417 12,047 12,168
Real estate and rental and leasing 3,485 3,353 3,064
Professional, scientific, and technical services 22,095 22,845 23,744
Management of companies and enterprises 7,271 7,289 6,997
Administrative and waste services 10,506 11,441 11,888
Educational services 2,249 2,323 2,472
Health care and social assistance 24,414 25,735 27,413
Arts, entertainment, and recreation 2,296 2,224 2,299
Accommodation and food services 6,104 6,190 6,256
Other services, except public administration 8,517 8,802 9,172
Government and government enterprises 36,830 38,256 38,931
Total earnings by place of work 246,831 252,084 255,888
Total earnings by place of work 246,831 252,084 255,888
less: Contributions for government social insurance 28,073 28,945 29,754
plus: Adjustment for residence 1,341 1,435 1,559
Net earnings by place of residence 220,099 224,574 227,693
Net earnings by place of residence 220,099 224,574 227,693
plus: Dividends, interest, and rent 51,782 53,625 55,468
plus: Personal current transfer receipts 48,798 51,530 54,807
Total Personal Income $ 320,678 $ 329,730 $ 337,968
Statutory Tax Rate (blended rate) 3.98% 3.90% 3.90%
NOTES: Earnings presented are blended averages. Due to the use of averages
and blended amounts, the totals may not equal the sum of the industry
amounts presented.
Earnings includes wages and salaries, supplements to wages and
proprietors' income.
Industries categorized using the North American Industry Classification System.
Fiscal year 2013 is the most recent year for which data is available.
SOURCES: U.S. Bureau of Economic Analysis, U.S. Department of Commerce.
Office of Revenue and Tax Analysis, Michigan Department of Treasury.
Michigan
2004
244 244 244 244
2007 2008 2009 2010 2011 2012 2013
$ 1,174 $ 1,761 $ 1,350 $ 1,641 $ 2,639 $ 2,184 $ 2,188
330 305 342 394 383 452 437
799 1,119 789 765 1,040 1,052 1,067
2,611 2,734 2,720 2,724 2,723 2,707 2,771
13,762 12,418 10,717 10,100 10,569 11,557 12,469
49,087 45,999 37,700 36,656 40,071 43,382 45,045
13,160 13,324 12,379 12,181 13,148 13,910 14,445
16,425 16,127 15,565 15,547 15,858 16,149 16,446
7,426 7,201 6,612 6,623 7,287 7,719 8,040
4,851 4,714 4,666 4,431 4,480 4,566 4,737
12,488 12,136 12,038 12,318 11,545 12,357 13,351
2,771 2,661 2,644 2,713 2,957 3,703 4,207
24,395 25,293 23,088 22,216 23,820 25,298 26,492
7,043 6,790 6,079 5,890 6,612 6,920 7,184
11,672 11,496 10,506 10,588 11,564 12,310 12,632
2,614 2,714 2,855 2,916 2,924 3,083 3,151
28,555 29,944 31,024 31,826 32,443 33,224 33,637
2,164 2,226 2,085 2,050 1,930 1,952 2,089
6,608 6,589 6,308 6,342 6,689 7,213 7,380
9,172 8,818 8,691 8,778 8,988 9,509 9,864
39,767 40,784 41,199 42,412 41,656 40,832 40,685
256,870 255,150 239,356 239,108 249,323 260,076 268,318
256,870 255,150 239,356 239,108 249,323 260,076 268,318
30,191 30,239 28,739 28,527 27,141 27,520 31,179
1,653 1,630 1,568 1,610 1,797 1,918 2,042
228,333 226,542 212,185 212,191 223,979 234,473 239,180
228,333 226,542 212,185 212,191 223,979 234,473 239,180
58,530 61,245 54,707 50,461 57,427 61,039 64,405
59,667 65,551 74,818 80,437 80,729 81,281 83,126
$ 346,530 $ 353,337 $ 341,710 $ 343,088 $ 362,135 $ 376,793 $ 386,711
3.90% 4.35% 4.35% 4.35% 4.35% 4.35% 4.25%
Michigan
245 245 245 245
TAXABLE SALES BY INDUSTRY
LAST TEN FISCAL YEARS
(In Millions)
2004 2005 2006 2007
Farming $ 77.2 $ 78.9 $ 78.5 $ 73.6
Agricultural 275.3 277.5 270.7 250.3
Mining 159.9 181.0 192.5 183.4
Construction 768.8 788.3 782.3 706.4
Manufacturing 3,315.5 3,577.2 3,424.2 3,283.3
Transportation and utilities 9,369.3 10,359.4 11,715.5 12,091.0
Wholesale trade 3,127.9 3,270.5 3,400.5 2,881.0
Retail trade 83,135.4 84,719.4 83,382.5 83,464.8
Finance, insurance, and real estate 472.3 460.8 435.6 333.3
Services 7,686.8 7,121.3 6,215.0 6,483.1
State and local government 162.0 184.3 197.7 202.6
Other classifications 951.9 1,021.3 806.4 1,091.1
Total $ 109,502.2 $ 112,040.0 $ 110,901.4 $ 111,043.7
Direct Sales Tax Rate 6% 6% 6% 6%
NOTES: Taxable sales were imputed from fiscal year sales tax cash collections by industry.
Industries categorized by using the Standard Industrial Classification.
Fiscal year 2013 is the most recent year for which data is available.
SOURCE: Michigan Department of Treasury.
Michigan
246 246 246 246
2008 2009 2010 2011 2012 2013
$ 70.4 $ 57.1 $ 56.1 $ 58.5 $ 61.7 $ 69.4
240.4 226.6 211.8 216.2 238.1 254.3
180.2 118.8 116.2 145.7 156.1 136.2
695.9 565.0 497.3 534.1 601.6 617.9
3,331.8 2,608.5 2,645.7 2,738.4 3,131.6 3,514.0
12,650.3 12,708.7 12,041.1 12,860.4 12,412.4 12,763.8
3,031.4 2,516.5 2,426.9 2,861.1 2,727.9 2,652.0
86,572.7 78,680.5 80,195.7 85,484.6 90,639.0 94,582.1
323.9 356.8 193.0 254.6 263.4 355.8
6,426.7 5,696.8 5,405.8 5,831.0 6,092.7 6,223.3
166.7 154.6 240.0 93.3 178.5 187.3
943.9 1,802.9 1,007.5 1,048.7 1,290.4 1,255.7
$ 114,634.3 $ 105,492.7 $ 105,036.9 $ 112,126.5 $ 117,793.5 $ 122,611.9
6% 6% 6% 6% 6% 6%
Michigan
247 247 247 247
PERSONAL INCOME TAX FILERS AND LIABILITY BY INCOME LEVEL
TAX YEARS 2003 AND 2012
Number Percentage Percentage Number Percentage Percentage
of Filers of Total (In Millions) of Total of Filers of Total (In Millions) of Total
$50,000 and under 2,930,459 67.1% $ 650 12.4% 2,903,305 64.3% $ 672 9.6%
$50,001 - $100,000 1,023,715 23.4% 2,053 39.2% 996,144 22.1% 2,122 30.3%
$100,001 - $250,000 363,748 8.3% 1,609 30.7% 523,246 11.6% 2,452 35.1%
$250,001 - $1,000,000 45,506 1.0% 598 11.4% 79,076 1.8% 1,097 15.7%
$1,000,001 and higher 6,567 0.2% 322 6.2% 13,000 0.3% 651 9.3%
Total 4,369,995 100.0% $ 5,233 100.0% 4,514,771 100.0% $ 6,995 100.0%
NOTES: Due to confidentiality issues, the names of the ten largest revenue payers are not available. These categories are
intended to provide alternative information regarding the sources of the State's personal income tax revenue.
Tax year 2012 is the most recent year for which data is available.
Tax year 2003 personal income tax amount refers to tax amount net of nonrefundable credits, and net of Home
Heating Credits (HHC), Homestead Property Tax Credits (HPTC), Farmland Preservation, and Adoption Credits.
Tax year 2012 personal income tax amount refers to tax amount net of nonrefundable credits, and net of HHC, HPTC,
Michigan Earned Income Tax, Farmland Preservation, and Historic Preservation Credits.
SOURCE: Michigan Department of Treasury.
Michigan
Personal
Tax Year 2003 Tax Year 2012
Income (AGI) Group
Adjusted Gross Income Tax Income Tax
Personal
248 248 248 248
SALES TAX PAYERS BY INDUSTRY
FISCAL YEARS 2004 AND 2013
Number Percentage Percentage Number Percentage Percentage
of Filers of Total (In Millions) of Total of Filers of Total (In Millions) of Total
Farming 1,007 0.94% $ 4.5 0.07% 581 0.61% $ 3.7 0.05%
Agricultural 2,341 2.19% 16.5 0.26% 1,634 1.72% 14.3 0.21%
Mining 249 0.23% 10.5 0.16% 239 0.25% 9.4 0.14%
Construction 2,048 1.91% 44.5 0.69% 2,190 2.30% 36.1 0.52%
Manufacturing 4,928 4.60% 193.5 3.02% 6,008 6.31% 187.9 2.72%
Transportation
and utilities 1,172 1.09% 433.0 6.76% 1,290 1.35% 592.3 8.57%
Wholesale trade 2,169 2.03% 187.3 2.93% 1,864 1.96% 163.7 2.37%
Retail trade 65,630 61.29% 4,945.1 77.23% 54,580 57.33% 5,438.3 78.64%
Finance, insurance,
and real estate 401 0.37% 37.3 0.58% 432 0.45% 15.8 0.23%
Services 24,541 22.92% 484.6 7.57% 24,572 25.81% 365.6 5.29%
State and local
government 340 0.32% 9.1 0.14% 362 0.38% 10.7 0.15%
Other classifications 2,247 2.10% 37.1 0.58% 1,451 1.52% 77.4 1.12%
Total 107,073 100.00% $ 6,402.9 100.00% 95,203 100.00% $ 6,915.2 100.00%
NOTES: Due to confidentiality issues, the names of the ten largest revenue payers are not available. These categories are
intended to provide alternative information regarding the sources of the State's sales tax revenue.
Fiscal year 2013 is the most recent year for which data is available.
Industries categorized using the Standard Industrial Classification.
SOURCE: Michigan Department of Treasury.
Michigan
Tax
Liability Liability
2004 2013
Tax
249 249 249 249
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(In Millions)
FISCAL
YEAR
2005 $ 1,645 $ 15 $ 1,652
2006 1,794 14 1,889
2007 1,488 13 2,328
2008 1,487 13 2,257
2009 1,673 12 2,474
2010 1,680 12 2,369
2011 1,889 11 2,261
2012 2,018 10 2,226
2013 2,048 9 2,105
2014 1,942 9 1,960
NOTES: Article 9, Section 15 of the State Constitution allows for
long-term borrowing by the State for specific purposes in
amounts as may be provided by acts of the Legislature
adopted by a vote of two-thirds of the members in each
house, and approved by a majority of the bodies people
voting at a general election. The debts of public bodies
corporate and politic created by law are not general
obligation debts and liabilities of the State of Michigan.
Details regarding the State's debt can be found in the
bonds and notes payable note of the financial statements.
U.S. Census Bureau, Population Division.
Department of Technology, Management and Budget.
U.S. Department of Commerce, Bureau of Economic
Analysis.
Department of Treasury.
REVENUE
BONDS
TRANSPORTATION
BONDS
GOVERNMENTAL ACTIVITIES
Michigan
STATE PARK
REVENUE
SOURCES:
BONDS
GENERAL
OBLIGATION
250 250 250 250
PERCENTAGE
OF PERSONAL
INCOME
$ 2,615 $ 406 $ 6,333 1.91% $ 630
3,449 252 7,398 2.18% 737
3,366 248 7,443 2.14% 744
3,375 320 7,452 2.10% 789
2,969 330 7,458 2.20% 753
3,008 345 7,414 2.14% 751
3,175 407 7,743 2.11% 784
3,103 416 7,773 2.04% 787
3,182 407 7,751 2.01% 783
3,106 394 7,411 Unavailable Unavailable
AUTHORITY
LEASES BONDS
CAPITAL
ACTIVITIES
GOVERNMENTAL
Michigan
CAPITA
TOTAL
PRIMARY
GOVERNMENT
PER
STATE
BUILDING
251 251 251 251
Michigan
2014 Comprehensive Annual Financi al Report
252 252 252 252
RATIOS OF NET GENERAL OBLIGATION BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
(In Millions)
OF PERSONAL
FISCAL YEAR INCOME
2005 $ 1,645 $ 1 $ 1,644 0.50% $ 164
2006 1,794 1 1,793 0.53% 179
2007 1,487 1 1,486 0.43% 149
2008 1,487 1 1,486 0.42% 149
2009 1,673 1 1,672 0.49% 169
2010 1,680 1 1,678 0.48% 170
2011 1,889 1 1,888 0.51% 191
2012 2,018 1 2,017 0.53% 204
2013 2,048 1 2,046 0.53% 207
2014 1,942 2 1,941 Unavailable Unavailable
SOURCES: U.S. Census Bureau, Population Division.
Department of Technology, Management and Budget.
U.S. Department of Commerce, Bureau of Economic Analysis.
Department of Treasury.
Michigan
CAPITA
GENERAL
OBLIGATION
BONDS
PERCENTAGE
PER
LESS DEBT
NET BONDED
BONDS
GENERAL
OBLIGATION SERVICE
FUNDS
253 253 253 253
DEBT SERVICE COVERAGE
COMPREHENSIVE TRANSPORTATION FUND RELATED BONDS
LAST TEN FISCAL YEARS
(In Millions)
Constitutionally Restricted
Transportation Fund Revenues:
Motor Fuel Taxes $ 1,069.1 $ 1,055.3 $ 1,027.8 $ 989.3
Registration Taxes 863.4 867.7 871.7 855.0
Miscellaneous Fees 37.3 36.0 35.7 36.2
Total 1,969.8 1,959.0 1,935.3 1,880.6
Less Deductions 125.4 149.5 137.9 138.3
Remaining Balance 1,844.4 1,809.5 1,797.4 1,742.3
Portion of Balance Credited to Comprehensive
Transportation Fund (excluding interest) 167.3 165.4 164.7 159.9
Motor Vehicle Related Sales Tax Revenues $ 1,115.4 $ 1,111.2 $ 1,117.5 $ 1,249.0
Allocation to Comprehensive Transportation Fund 56.9 66.4 67.7 82.1
Constitutionally Restricted Revenues Credited to
Comprehensive Transportation Fund $ 224.3 $ 231.8 $ 232.4 $ 242.0
Plus Other Revenues (primarily interest) 5.0 0.5 5.9 1.4
Money Available for Debt Service $ 229.3 $ 232.3 $ 238.3 $ 243.5
Debt Service:
Principal $ 15.6 $ 19.1 $ 20.2 $ 21.3
Interest 13.4 12.0 12.9 12.0
Actual Annual Debt Service (1) 28.9 31.1 33.2 33.3
Debt Service Coverage 7.9 x 7.5 x 7.2 x 7.3 x
NOTE: (1) The table above does not include debt service on refunded bonds.
SOURCE: Michigan Department of Transportation.
Michigan
2005 2008 2007 2006
254 254 254 254
$ 964.0 $ 962.1 $ 957.7 $ 945.9 $ 950.9 $ 958.8
839.7 842.1 859.7 876.1 906.5 940.6
33.0 33.8 34.2 35.0 36.1 37.4
1,836.7 1,837.9 1,851.5 1,857.0 1,893.5 1,936.8
137.2 138.1 137.4 138.0 133.2 135.3
1,699.5 1,699.9 1,714.1 1,719.0 1,760.4 1,801.5
155.3 155.2 156.7 157.0 161.4 165.5
$ 1,188.3 $ 1,182.5 $ 1,290.7 $ 1,406.5 $ 1,476.3 $ 1,462.7
82.9 76.8 90.0 98.1 103.0 102.0
$ 238.2 $ 232.0 $ 246.7 $ 255.1 $ 264.4 $ 267.5
0.9 1.2 1.0 0.6 1.1 1.1
$ 239.1 $ 233.2 $ 247.8 $ 255.8 $ 265.4 $ 268.6
$ 7.5 $ 10.1 $ 10.2 $ 14.0 $ 13.9 $ 14.5
10.4 10.5 10.0 9.3 8.6 7.9
17.9 20.6 20.1 23.4 22.4 22.4
13.3 x 11.3 x 12.3 x 10.9 x 11.8 x 12.0 x
Michigan
2014 2013 2009 2010 2011 2012
255 255 255 255
DEBT SERVICE COVERAGE
STATE TRUNKLINE FUND RELATED BONDS
LAST TEN FISCAL YEARS
(In Millions)
2005 2006 2007 2008
Constitutionally Restricted
Transportation Fund Revenues:
Motor Fuel Taxes $ 1,069.1 $ 1,055.3 $ 1,027.8 $ 989.3
Registration Taxes 863.4 867.7 871.7 855.0
Miscellaneous Fees 37.3 36.0 35.7 36.2
Total 1,969.8 1,959.0 1,935.3 1,880.6
Less Deductions:
Critical Bridge Debt Service 2.2 2.5 2.8 2.8
Legally Dedicated State Trunkline Fund Debt Service 43.0 43.0 43.0 43.0
Collection Costs 44.5 57.1 46.2 48.1
Waterways/Recreational Improvement Fund 18.4 18.0 17.6 16.9
Comprehensive Transportation Fund (excluding interest) 167.3 165.4 164.7 159.9
Local Program Fund 33.0 33.0 33.0 33.0
Critical Bridge Fund 17.2 28.9 28.3 27.5
Economic Development Fund 40.3 40.3 40.3 40.3
Total Deductions 366.0 388.2 375.9 371.5
Constitutionally Restricted Revenues
Available for Distribution 1,603.8 1,570.8 1,559.4 1,509.1
Plus Other Revenues (primarily interest) 7.0 8.9 8.2 9.0
Total Money Available for Distribution 1,610.8 1,579.7 1,567.5 1,518.0
Distributions to:
Cities and Villages 348.7 344.8 342.8 332.1
County Road Commissions 611.6 603.3 599.7 580.9
State Trunkline Fund 650.5 631.5 625.0 605.0
Money Available for Debt Service:
State Trunkline Fund 650.5 631.5 625.0 605.0
Legally Dedicated State Trunkline Fund Debt Service 43.0 43.0 43.0 43.0
Economic Development Fund 40.3 40.3 40.3 40.3
Local Program Fund 33.0 33.0 33.0 33.0
Critical Bridge Fund 2.2 2.5 2.8 2.8
Miscellaneous (1) - - - 40.5
Total Available for Debt Service 769.0 750.3 744.1 764.6
Debt Service:
Principal $ 25.0 $ 19.9 $ 20.0 $ 43.5
Interest 49.5 74.7 84.8 91.5
Actual Annual Debt Service (2) 74.5 94.6 104.8 135.0
Debt Service Coverage 10.3 x 7.9 x 7.1 x 5.7 x
NOTES:
(1) Beginning fiscal year 2008, miscellaneous revenues were available for debt service.
(2) The table above excludes amounts related to refunded bonds and federally funded debt.
SOURCE: Michigan Department of Transportation.
Michigan
256 256 256 256
2009 2010 2011 2012 2013 2014
$ 964.0 $ 962.1 $ 957.7 $ 945.9 $ 950.9 $ 958.8
839.7 842.1 859.7 876.1 906.5 940.6
33.0 33.8 34.2 35.0 36.1 37.4
1,836.7 1,838.0 1,851.5 1,857.0 1,893.5 1,936.8
2.8 3.3 3.3 3.3 3.0 2.4
43.0 43.0 43.0 43.0 43.0 43.0
47.8 47.9 47.8 48.6 43.9 46.4
16.6 16.7 16.5 16.4 16.4 16.5
155.3 155.2 156.7 157.0 161.4 165.5
33.0 33.0 33.0 33.0 33.0 33.0
27.0 27.2 26.9 26.8 26.8 26.9
40.3 40.3 40.3 40.3 40.3 40.3
365.7 366.6 367.4 368.4 367.8 374.1
1,471.0 1,471.4 1,484.1 1,488.6 1,525.7 1,562.8
2.3 2.2 0.6 1.2 1.1 1.1
1,473.3 1,473.6 1,484.7 1,489.8 1,526.8 1,563.8
322.4 322.4 324.6 326.0 334.2 342.3
563.7 563.8 568.4 569.3 584.5 598.9
587.2 587.4 591.7 592.5 607.7 622.6
587.2 587.4 591.7 592.5 607.7 622.6
43.0 43.0 43.0 43.0 43.0 43.0
40.3 40.3 40.3 40.3 40.3 40.3
33.0 33.0 33.0 33.0 33.0 33.0
2.8 3.3 3.3 3.3 3.0 2.4
27.1 36.4 39.5 35.4 133.0 35.7
733.3 743.4 750.7 747.4 860.1 777.0
$ 45.6 $ 79.2 $ 82.6 $ 86.3 $ 88.5 $ 106.5
90.1 80.9 77.5 75.6 73.2 59.8
135.7 160.1 160.1 161.9 161.8 166.3
5.4 x 4.6 x 4.7 x 4.6 x 5.3 x 4.7 x
Michigan
257 257 257 257
DEBT SERVICE COVERAGE
STATE BUILDING AUTHORITY
LAST TEN FISCAL YEARS
(In Millions)
Revenue - Lease and Rental Payments $ 246.9 $ 255.5 $ 213.2 $ 219.4
Less: Operating Expenses 3.2 9.9 0.8 0.8
Net Available Revenue 243.7 245.6 212.4 218.6
Debt Service:
Principal 119.9 82.1 83.6 87.1
Interest 128.7 140.8 117.5 123.4
Actual Annual Debt Service (1) 248.6 222.9 201.1 210.5
Debt Service Coverage 1.0 x 1.1 x 1.1 x 1.0 x
NOTE:
(1) The table above excludes amounts related to refunded bonds.
2008
Michigan
2007 2006 2005
258 258 258 258
$ 230.4 $ 230.1 $ 233.1 $ 234.3 $ 234.4 $ 231.0
1.1 1.6 1.4 1.6 1.3 1.1
229.3 228.5 231.7 232.7 233.1 229.9
100.5 96.1 128.9 96.2 126.6 102.2
122.2 120.0 122.5 121.0 124.8 118.5
222.7 216.1 251.4 217.2 251.4 220.6
1.0 x 1.1 x 0.9 x 1.1 x 0.9 x 1.0 x
2009 2010 2011
Michigan
2014 2013 2012
259 259 259 259
DEMOGRAPHIC AND ECONOMIC INDICATORS
LAST TEN CALENDAR YEARS
Population (a)
(in thousands)
Michigan 10,055 10,051 10,036 10,001
United States 292,805 295,517 298,380 301,231
Total Personal Income (b)
(in billions)
Michigan $ 323.0 $ 331.2 $ 339.7 $ 348.6
United States $ 10,043.3 $ 10,605.6 $ 11,376.4 $ 11,990.1
Per Capita Income (b)
Michigan $ 32,119 $ 32,952 $ 33,851 $ 34,853
United States $ 34,300 $ 35,888 $ 38,127 $ 39,804
Unemployment Rate (c)
Michigan 7.1% 6.8% 6.9% 7.1%
United States 5.5% 5.1% 4.6% 4.6%
Michigan estimated wage and salary employees (c)
(in thousands)
Goods Producing:
Mining and Logging 8.2 8.4 8.0 7.7
Construction 191.8 189.5 178.4 166.7
Manufacturing 698.3 677.5 648.2 617.3
Total Goods Producing 898.3 875.4 834.6 791.7
Service-Providing:
Private Service-Providing
Trade, Transportation, and Utilities:
Wholesale Trade 170.5 170.7 170.6 169.0
Retail Trade 513.6 506.0 496.0 489.7
Transportation and Utilities 125.7 128.3 128.4 128.3
Information 65.7 64.9 63.9 62.9
Financial Activities:
Finance and Insurance 159.6 159.9 158.9 156.2
Real Estate and Rental and Leasing 56.1 56.1 54.9 53.3
Professional and Business Services:
Professional, Scientific, and Technical Services 245.5 247.7 246.2 246.2
Management of Companies and Enterprises 70.7 67.9 64.9 60.0
Administrative, Support Services,
and Waste Management 270.1 277.5 275.1 274.5
Educational and Health Services:
Educational Services 70.6 74.8 76.1 78.7
Health Care and Social Assistance 490.3 501.0 507.2 518.0
Leisure and Hospitality:
Accommodation and Food Services 348.2 350.2 352.3 351.5
Other 54.9 55.4 54.5 55.5
Other Services 179.6 179.6 177.5 176.6
Total Private Service-Providing 2,821.0 2,840.2 2,826.6 2,820.4
Government 679.7 674.1 665.3 655.7
Total Service-Providing 3,500.7 3,514.3 3,491.9 3,476.1
Total Wage and Salary Employment
4,399.0 4,389.7 4,326.5 4,267.8
NOTES: Calendar year 2013 is the most recent year for which data is available.
Wage and Salary Employment based on North American Industry Classification System.
Components in Wage and Salary Employment may not total due to truncation.
SOURCES:
(a) U.S. Census Bureau, Population Division.
(b) U.S. Department of Commerce, Bureau of Economic Analysis.
(c) Michigan Department of Licensing and Regulatory Affairs
and U.S. Department of Labor, Bureau of Labor Statistics.
Michigan
2005 2004 2006 2007
260 260 260 260
9,947 9,902 9,876 9,875 9,883 9,896
304,094 306,772 309,326 311,583 313,874 316,129
$ 354.1 $ 338.5 $ 346.5 $ 367.0 $ 381.3 $ 386.5
$ 12,429.2 $ 12,080.2 $ 12,417.7 $ 13,189.9 $ 13,873.2 $ 14,151.4
$ 35,594 $ 34,190 $ 35,082 $ 37,163 $ 38,585 $ 39,055
$ 40,873 $ 39,379 $ 40,144 $ 42,332 $ 44,200 $ 44,765
8.3% 13.5% 12.7% 10.4% 9.1% 8.8%
5.8% 9.3% 9.6% 8.9% 8.1% 7.4%
7.9 6.9 7.1 7.4 7.8 8.0
153.5 127.6 121.6 125.3 128.2 132.4
572.0 463.1 473.9 509.7 537.6 555.1
733.3 597.6 602.6 642.4 673.6 695.4
167.8 152.9 150.7 155.0 159.5 163.6
478.1 451.4 446.5 448.6 449.3 455.2
124.5 112.9 113.5 118.2 121.5 125.1
60.2 56.3 54.8 53.2 53.3 55.3
149.9 142.6 139.8 144.2 148.3 152.4
52.0 48.8 48.3 48.9 48.2 49.6
243.9 220.9 222.6 235.0 247.9 260.2
56.9 51.1 51.0 53.6 55.3 57.7
262.8 229.5 242.4 265.7 277.7 284.0
80.5 79.2 77.3 73.5 73.3 74.1
526.9 530.1 534.5 548.2 559.0 563.4
345.6 330.8 329.0 332.8 341.9 350.3
54.3 50.9 48.6 47.7 46.9 47.2
175.6 168.8 166.3 167.3 169.3 171.5
2,778.8 2,626.2 2,625.1 2,691.9 2,751.2 2,809.5
650.0 646.8 635.6 617.4 608.5 599.6
3,428.8 3,272.9 3,260.7 3,309.3 3,359.7 3,409.1
4,162.1 3,870.5 3,863.3 3,951.8 4,033.3 4,104.5
2013 2009 2010 2011 2012
Michigan
2008
261 261 261 261
CLASSIFIED EMPLOYEES BY FUNCTION
LAST TEN FISCAL YEARS
2005 2006 2007 2008
General Government 7,138 7,144 7,264 7,347
Education 352 367 369 380
Human services 9,953 9,778 9,759 9,582
Public safety and corrections 20,175 20,060 19,948 19,451
Conservation, environment,
recreation, and agriculture 3,729 3,662 3,586 3,439
Labor, commerce, and regulatory 3,994 4,128 3,967 3,781
Health services 4,424 4,241 4,225 3,964
Transportation 2,849 2,880 2,895 2,854
Total 52,614 52,259 52,013 50,799
NOTES: This report reflects classified employees who are full-time, part-time,
permanent intermittent, limited term, seasonal, non-career, or on worker's
compensation in primary positions only, except for the following non career
appointments: student assistant, transportation aide, and state worker.
Each fiscal year in this schedule also includes approximately 2,000 classified
employees for the business type activities and discretely presented component
unit authorities. Although the expenses for the business type activities and
component unit authorities are reported separately in the government-wide
financial statements, the employee counts were combined in this schedule to
ensure consistency with the Civil Service Commission reports and for
administrative efficiency.
This schedule includes average employee counts. Employees who job share
are divided in half. For this reason, totals may not equal the sum of the
employee counts per function.
SOURCE: Michigan Civil Service Commission, Annual Work Force Report.
Michigan
262 262 262 262
2009 2010 2011 2012 2013 2014
7,328 6,995 6,645 7,026 7,273 7,377
405 445 446 476 518 518
10,168 10,414 10,365 11,052 11,772 11,388
19,310 18,388 17,508 16,689 16,561 16,154
3,466 3,359 3,041 3,049 3,033 3,050
4,056 4,298 3,727 3,756 2,899 2,817
4,075 3,873 3,448 3,003 3,113 3,128
2,892 2,844 2,639 2,632 2,570 2,573
51,699 50,615 47,818 47,683 47,739 47,003
Michigan
263 263 263 263
OPERATING INDICATORS BY FUNCTION
LAST TEN FISCAL YEARS
2005 2006 2007 2008
General government
Tax forms processed (7) 8,059,355 8,259,132 8,245,905 8,335,760
Passenger, commercial, and
recreational vehicle registrations 8,879,158 8,732,938 8,785,222 8,570,421
Driver licenses issued 1,913,530 1,724,108 1,875,932 1,915,459
Education
K-12 students 1,708,584 1,697,936 1,678,579 1,648,585
Public university students 250,030 253,020 253,576 254,231
Community college students 131,150 133,359 139,219 146,234
Human services
Food assistance program recipients (1) 1,047,594 1,133,793 1,204,409 1,262,951
Family independence program recipients (1) 212,252 217,318 237,102 210,181
Day care recipients (1) 118,939 114,758 106,062 97,856
Children in foster care 18,745 18,414 18,943 18,016
State disability assistance recipients (1) 10,560 10,591 11,015 10,427
Finalized adoptions (yearly total) (2) 2,910 2,621 2,638 2,899
J uvenile justice youth served 1,871 1,655 1,512 1,371
Open child support cases with support
orders established 777,188 764,500 754,511 755,004
Public safety and corrections
Inmates, parolees, and probationers (as of 9/30) 119,845 120,337 123,032 126,100
State police patrol miles driven 16,879,418 17,632,736 14,916,802 17,071,748
Criminal offender DNA samples entered into
federal indexing database (calendar year) 23,099 41,888 30,519 25,263
National Guard members (as of 9/30) 11,125 11,768 11,862 11,991
Veteran homes average daily census 909 902 896 891
Conservation, environment, recreation and agriculture
Hunting and/or fishing license holders (3) 2,004,577 1,950,676 1,981,382 1,964,480
Camping nights in State parks 1,005,437 956,030 929,753 891,607
Population impacted by water purification projects 3,994,970 (4) 1,046,379 (4) 490,298 (4) 1,331,867
Underground storage tank releases closed 265 320 233 159
Scrap tires collected (passenger tire equivalent) 5,942,164 6,081,447 3,736,086 3,772,376
Labor, commerce, and regulatory
Processed applications for new
and renewal occupational licenses 152,659 164,153 198,430 151,230
Building related permits issued 40,662 33,031 26,942 24,025
Building related safety inspections conducted 41,303 45,921 42,931 35,759
Occupational safety and health enforcement
inspections conducted 4,492 5,102 5,001 5,032
Alleged occupational safety and health violations
identified 17,621 17,311 16,712 15,781
Financial and insurance service providers chartered 281,668 297,662 323,791 334,685
Health services
Medicaid recipients (1) 1,424,831 1,490,384 1,524,299 1,536,853
Women, Infants, and Children Food
and Nutrition Program recipients (1) 226,601 229,770 232,280 239,145
Children's special health care services recipients (1) 30,232 30,449 30,898 31,452
Mentally ill/developmental
disability service recipients (1) 200,424 207,407 213,257 219,238
Substance abuse service recipients 69,808 71,175 69,564 70,978
NOTES:
(1) Monthly average.
(2) Total adoptions were completed by the Department of Human Services (DHS) and private agencies under contract with DHS.
(3) The licensing season runs April 1 through March 31. Amounts reported under fiscal year 2014 are for the licensing year
ending March 31, 2014.
(4) The increase in fiscal year 2005 resulted from a project benefiting users of the Detroit Water and Sewage Department.
(5) Amount estimated.
(6) Enhanced driver licenses were sold starting in fiscal year 2009.
(7) Numbers for fiscal years 2005 through 2008 are on a calendar year basis. Effective fiscal year 2009, the numbers are on
a fiscal year basis.
SOURCES: Various State departments.
Michigan
264 264 264 264
2009 2010 2011 2012 2013 2014
8,320,921 8,078,164 8,521,664 8,539,957 8,360,575 8,432,444
8,506,838 8,459,499 8,479,747 8,435,868 8,496,407 8,543,342
1,910,604 (6) 1,791,417 1,901,673 1,969,253 1,956,686 1,705,117
1,614,975 1,592,598 1,565,324 1,550,111 1,533,442 1,522,119
257,148 262,615 264,903 264,913 263,817 262,735
157,225 177,277 176,370 164,827 154,118 143,829
1,462,710 1,776,368 1,928,478 1,828,384 1,775,646 1,680,721
202,693 224,651 227,490 154,941 129,185 89,957
83,137 63,643 54,049 50,028 43,246 35,501
16,115 15,261 14,043 13,504 13,902 13,209
10,528 10,628 10,094 8,713 7,845 6,723
3,087 2,612 2,506 2,554 2,361 Unavailable
1,047 988 951 801 790 729
763,919 764,388 772,687 774,463 771,108 760,284 (5)
125,854 125,231 117,152 112,049 108,738 106,966
15,138,587 16,148,708 15,045,772 17,633,319 18,852,703 21,249,946
19,029 20,911 16,475 16,098 21,283 15,808 (5)
11,817 11,900 11,504 11,156 10,901 10,537
875 852 798 690 665 649
1,951,579 1,934,765 1,912,262 1,851,287 1,919,692 1,947,508
894,410 916,289 899,311 987,189 1,021,712 1,001,245 (5)
359,015 370,662 725,931 463,457 691,102 677,175
203 231 171 184 285 488
5,517,872 1,121,596 220,508 161,704 399,921 182,891 (5)
150,118 155,035 147,791 125,603 135,734 341,132
19,604 20,078 18,182 19,221 17,783 17,066
41,623 48,614 46,510 49,614 58,223 56,098
5,071 5,202 5,343 5,394 5,267 5,231
14,006 14,221 14,333 13,744 12,741 10,693
328,182 331,410 349,269 390,005 225,927 255,121
1,622,758 1,823,178 1,899,107 1,875,544 1,854,880 1,842,957
242,453 256,229 252,123 255,954 254,126 251,713
30,008 31,818 31,587 29,958 31,083 33,550
228,258 228,215 231,091 242,884 251,019 Unavailable
73,334 71,382 70,069 70,145 70,664 70,850 (5)
Michigan
265 265 265 265
OPERATING INDICATORS BY FUNCTION - (Continued)
LAST TEN FISCAL YEARS
2005 2006 2007 2008
Transportation
Annual vehicle miles of travel on
State Trunkline roads (12) 52,600,000,000 51,500,000,000 52,000,000,000 51,500,000,000
Miles of intercity bus travel receiving State funding 1,090,708 1,086,793 1,081,038 1,087,543
Miles of local bus travel receiving State funding 99,890,100 102,760,387 105,068,260 113,567,301
Railroad crossing maintenance/safety inspections 2,898 2,531 2,679 2,586
Tax credits
Taxpayers claiming refundable credits (9) (11) 1,497,900 1,525,500 1,581,700 2,322,600
Intergovernmental-revenue sharing
Township grants 1,241 1,241 1,241 1,241
City grants 274 274 274 274
Village grants 259 259 259 259
County grants (10) - - - 1
Liquor Purchase Revolving Fund
Annual retail liquor licenses issued 15,964 15,942 15,838 15,763
Liquor sales volume (cases) 6,110,122 6,293,797 6,464,739 6,611,415
Beer sales volume (barrels) 6,721,468 6,647,438 6,588,385 6,601,138
Wine sales volume (liters) 66,022,306 68,139,758 71,385,503 72,797,847
Pre-mixed spirit drink sales volume (liters) 1,065,146 871,900 1,008,073 811,286
State Lottery Fund
Retailers 11,076 10,880 10,973 10,969
Winners greater than $600 44,692 52,124 49,585 44,962
Millionaire prizewinners 21 17 42 37
Michigan Unemployment Compensation Funds
Individuals receiving benefits (calendar year) 547,376 569,721 547,950 633,558
NOTES:
(8) Amount estimated.
(9) Tax credits are reported based on the tax year. Credits claimed during tax year 2013, for example, are reported above in
fiscal year 2013.
(10) County grants were suspended beginning in fiscal year 2005. Instead, each county expends from its revenue sharing
reserve fund created by State statute in 2004. Each fiscal year, counties are allowed only to expend from the fund the
amount the Department of Treasury certifies them to spend. Once a county has exhausted its revenue sharing reserve fund,
the county will return to revenue sharing.
(11) Amount estimated and rounded to nearest hundred.
(12) Amount estimated and rounded to nearest one hundred million on a calendar-year basis.
SOURCES: Various State departments.
Michigan
266 266 266 266
2009 2010 2011 2012 2013 2014
48,700,000,000 48,700,000,000 49,800,000,000 48,700,000,000 49,400,000,000 50,000,000,000
1,080,543 1,080,444 1,086,022 1,094,911 1,110,733 1,112,793
112,642,720 108,426,363 105,267,567 104,317,459 101,203,565 108,188,216
1,932 1,454 2,563 2,644 1,970 1,624
2,566,100 2,454,200 2,363,800 1,899,300 1,854,300 Unavailable
1,240 1,240 1,240 1,240 1,240 1,240
275 277 277 277 277 277
258 256 256 256 256 256
7 20 36 50 62 63
15,771 15,898 15,870 15,961 16,026 15,989
6,734,253 6,877,873 7,117,299 7,373,714 7,532,846 7,709,480
6,465,495 6,448,197 6,250,673 6,318,295 6,206,452 6,221,433
73,200,249 79,440,328 81,504,221 84,253,865 88,096,394 92,044,380
787,948 983,029 954,712 1,076,369 1,058,511 1,074,364
10,680 10,797 10,746 10,879 10,848 10,684
53,986 60,543 48,567 44,904 52,365 56,735
40 39 28 31 36 39
913,568 825,858 636,493 527,507 449,388 375,000 (8)
Michigan
267 267 267 267
CAPITAL ASSETS BY FUNCTION
LAST TEN FISCAL YEARS
2005 2006 2007 2008
General Government:
Buildings Unavailable 281 280 296
Vehicles Unavailable 747 754 756
Education
Buildings Unavailable 27 27 27
Vehicles Unavailable 28 21 21
Human services
Buildings Unavailable 208 208 210
Vehicles Unavailable 838 844 931
Public safety and corrections
Buildings Unavailable 1,390 1,390 1,403
Vehicles Unavailable 3,401 3,548 3,605
Conservation, environment,
recreation, and agriculture
Buildings 229 249 300 314
Vehicles Unavailable 3,452 3,763 3,832
Environmental quality
air-monitoring instruments 170 188 194 195
Environmental quality
lab/analyzing equipment 127 131 153 147
Natural resources acres of land 4,557,246 4,562,444 4,566,708 4,574,274
Harbors 16 16 16 16
Hatcheries 6 6 6 6
State park & recreation areas 97 97 98 98
Labor, commerce, and regulatory
Buildings Unavailable 160 164 158
Vehicles Unavailable 482 482 509
Health services
Buildings Unavailable 239 239 241
Vehicles Unavailable 272 276 287
Transportation
Buildings Unavailable 437 437 439
Vehicles 1,448 1,841 1,872 1,777
Highway lane miles (calendar year) 27,557 27,521 27,514 27,478
Heavy equipment owned 2,117 2,162 2,184 2,164
NOTES: For years prior to 2006, capital assets information was not available by function.
Building and vehicle counts include both owned and leased assets with the exception of
transportation vehicles for years prior to fiscal year 2006. Transportation vehicle counts
for fiscal years prior to fiscal year 2006 include only owned vehicles.
Acres of land are on a tax year basis rather than a fiscal year basis.
Building counts for 2005 in the Conservation, environment, recreation, and agriculture
function represent only those buildings owned by the Department of Natural Resources.
SOURCES: Michigan Departments of Technology, Management and Budget, Natural Resources,
Environmental Quality, and Transportation.
Michigan
268 268 268 268
2009 2010 2011 2012 2013 2014
279 261 247 239 240 240
772 812 762 783 927 974
27 27 27 27 27 28
23 23 24 28 27 29
207 193 188 177 216 202
926 930 997 1,104 1,338 1,457
1,393 1,389 1,386 1,255 1,254 1,254
3,542 3,568 3,448 3,433 3,547 3,700
326 340 339 335 325 327
3,850 3,912 3,829 3,853 3,985 4,053
198 202 202 202 231 229
147 144 150 156 159 143
4,582,771 4,588,442 4,586,891 4,586,922 4,595,866 4,592,910
17 17 18 19 19 19
6 6 6 6 6 6
98 98 99 101 101 102
154 173 166 112 45 45
510 492 490 585 484 495
241 241 241 243 243 241
290 305 300 213 208 225
436 436 435 374 373 373
1,764 1,770 1,729 1,707 1,692 1,682
27,438 27,432 27,439 27,437 27,424 27,459
2,173 2,184 2,211 2,150 2,150 2,156
Michigan
269 269 269 269
Michigan
2014 Comprehensive Annual Financi al Report
270 270 270 270
Michigan
OTHER INFORMATION
2014 Comprehensive Annual Financi al Report
271 271 271 271
COMBINED SCHEDULE OF REVENUE AND OTHER FINANCING SOURCES
GENERAL AND SPECIAL REVENUE FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
SPECIAL
GENERAL REVENUE
SOURCE FUND FUNDS
TAXES
Sales $ 7,362,620 $ 1,910,694 $ 5,451,925
Personal income 8,696,554 6,338,838 2,357,716
Single business, Michigan business,
corporate income 419,554 419,554 -
Use 1,639,442 1,093,295 546,148
State education (property) 1,804,238 - 1,804,238
Real estate transfer 233,416 - 233,416
Tobacco products 940,337 580,954 359,383
Beer and wine 51,249 51,249 -
Liquor 138,543 92,591 45,952
Horse race wagering 4,253 4,253 -
Casino gaming wagering 106,903 - 106,903
Telephone and telegraph company 47,953 47,953 -
Commercial mobile radio service 28,412 28,412 -
Insurance company 362,397 362,397 -
Health insurance claims assessment 271,861 271,861 -
Motor vehicle registration 943,548 2,992 940,556
Gasoline 820,982 - 820,982
Diesel fuel 138,082 - 138,082
Gas and oil severance 62,225 62,225 -
Industrial facilities 33,459 - 33,459
Convention hotel accommodation 22,240 22,240 -
Airport parking 22,433 22,433 -
Quality assurance assessment 975,786 975,786 -
Penalties and interest 115,439 115,439 -
Other 88,807 57,137 31,670
25,330,732 12,460,302 12,870,429
FROM FEDERAL AGENCIES
Department of Health and Human Services 11,866,988 11,866,039 949
Department of Education 1,292,232 148,358 1,143,874
Department of Agriculture 3,423,066 2,944,326 478,740
Department of Labor 165,128 25,048 140,080
Department of Housing and Urban Development 12,988 12,988 -
Department of Energy 11,329 11,329 -
Department of Transportation 149,948 26,009 123,939
Department of Interior 36,447 30,177 6,270
Department of Defense 60,884 60,884 -
Department of J ustice 36,686 36,686 -
Environmental Protection Agency 48,874 48,459 415
Other 155,098 154,393 704
17,259,668 15,364,698 1,894,970
FROM LOCAL AGENCIES
Counties 65,717 65,717 -
Cities, villages, and townships 7,133 7,133 -
School districts 4,633 4,633 -
Other 12,162 12,162 -
89,644 89,644 -
SPECIAL MEDICAID REIMBURSEMENTS 133,909 133,909 -
133,909 133,909 -
TOTAL
Michigan
272 272 272 272
SPECIAL
GENERAL REVENUE
SOURCE TOTAL FUND FUNDS
FROM SERVICES
Charges for providing vehicle and driver services $ 135,745 $ 131,960 $ 3,785
Revenue for patient, ward, and inmate care 32,646 32,646 -
Other 153,879 153,873 6
322,271 318,480 3,791
FROM LICENSES AND PERMITS
Liquor retailer, manufacturer, and wholesaler
licenses 16,541 16,541 -
Motor vehicle operator and chauffeur licenses 44,819 44,160 659
Examination fees - financial institutions and
insurance industry 36,341 36,341 -
Concession and privilege fees - State parks 864 - 864
Motor vehicle related 35,513 2,582 32,931
Hunting, fishing, and trapping licenses 58,440 - 58,440
Public utility assessment fees 27,388 27,388 -
Regulatory licenses and permits 75,834 66,966 8,868
Auto repair facility and mechanic licenses and fees 3,552 3,552 -
Corporation franchise fees 22,622 22,622 -
Recreation user fees and permits 82,344 1,932 80,412
Other 90,338 88,561 1,776
494,595 310,644 183,951
MISCELLANEOUS
Income from investments 20,557 1,555 19,002
Tobacco settlement proceeds 192,192 - 192,192
Various fines, fees, and assessments 78,560 44,497 34,063
Court fines, fees, and assessments 253,260 242,256 11,004
Oil and gas royalties, fees, assignments, and rentals 15,724 11,263 4,461
Environmental pollution settlements 6,444 1,834 4,611
Child support 13,431 13,431 -
Unemployment obligation assessment 455,736 - 455,736
Other 522,269 375,573 146,695
1,558,174 690,409 867,765
Total Revenues 45,188,992 29,368,085 15,820,906
OTHER FINANCING SOURCES
Proceeds from bond issues and bond anticipation notes 97,651 97,651 -
Capital lease acquisitions 18,371 18,371 -
Proceeds from sale of capital assets 1,626 1,626 -
Transfers From Other Funds:
From Liquor Purchase Revolving Fund 177,848 177,848 -
From State Lottery Fund 740,769 6,621 734,148
From other funds 722,584 49,769 672,816
Total Other Financing Sources 1,758,849 351,885 1,406,964
Total Revenue and Other Financing
Sources (GAAP Basis) $ 46,947,840 $ 29,719,970 $ 17,227,870
Michigan
273 273 273 273
SCHEDULE OF REVENUE AND OTHER FINANCING SOURCES
GENERAL FUND
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
GENERAL RESTRICTED
SOURCE PURPOSE REVENUES
TAXES
Sales $ 1,910,694 $ 770,175 $ 1,140,519
Personal income 6,338,838 5,527,257 811,582
Single business, Michigan business,
and corporate income 419,554 137,357 282,197
Use 1,093,295 1,091,440 1,854
Tobacco products 580,954 192,887 388,067
Beer and wine 51,249 51,249 -
Liquor 92,591 46,414 46,177
Horse race wagering 4,253 - 4,253
Telephone and telegraph company 47,953 47,953 -
Commercial mobile radio service 28,412 - 28,412
Insurance company 362,397 362,208 189
Health insurance claims assessment 271,861 - 271,861
Motor vehicle registration 2,992 - 2,992
Gas and oil severance 62,225 60,986 1,240
Convention hotel accommodation 22,240 - 22,240
Airport parking 22,433 - 22,433
Quality assurance assessment 975,786 - 975,786
Penalties and interest 115,439 103,499 11,941
Other 57,137 1,930 55,207
12,460,302 8,393,353 4,066,949
FROM FEDERAL AGENCIES
Department of Health and Human Services 11,866,039 18,912 11,847,127
Department of Education 148,358 2,123 146,235
Department of Agriculture 2,944,326 2,095 2,942,231
Department of Labor 25,048 906 24,142
Department of Housing and Urban Development 12,988 143 12,845
Department of Energy 11,329 120 11,209
Department of Transportation 26,009 1,367 24,642
Department of Interior 30,177 662 29,515
Department of Defense 60,884 56 60,828
Department of J ustice 36,686 298 36,388
Environmental Protection Agency 48,459 2,197 46,262
Other 154,393 1,991 152,403
15,364,698 30,870 15,333,828
FROM LOCAL AGENCIES
Counties 65,717 - 65,717
Cities, villages, and townships 7,133 - 7,133
School districts 4,633 - 4,633
Other 12,162 99 12,062
89,644 99 89,545
SPECIAL MEDICAID REIMBURSEMENTS 133,909 - 133,909
133,909 - 133,909
TOTAL
Michigan
274 274 274 274
GENERAL RESTRICTED
SOURCE TOTAL PURPOSE REVENUES
FROM SERVICES
Charges for providing vehicle and driver services $ 131,960 $ 341 $ 131,619
Revenue for patient, ward, and inmate care 32,646 - 32,646
Other 153,873 6,872 147,001
318,480 7,214 311,266
FROM LICENSES AND PERMITS
Liquor retailer, manufacturer, and wholesaler
licenses 16,541 1,374 15,166
Motor vehicle operator and chauffeur licenses 44,160 137 44,023
Examination fees - financial institutions and
insurance industry 36,341 - 36,341
Motor vehicle related 2,582 13 2,568
Public utility assessment fees 27,388 - 27,388
Regulatory licenses and permits 66,966 11,620 55,346
Auto repair facility and mechanic licenses and fees 3,552 3 3,549
Corporation franchise fees 22,622 29 22,592
Recreation user fees and permits 1,932 337 1,595
Other 88,561 845 87,716
310,644 14,359 296,285
MISCELLANEOUS
Income from investments 1,555 291 1,264
Various fines, fees, and assessments 44,497 712 43,785
Court fines, fees, and assessments 242,256 82,514 159,742
Oil and gas royalties, fees, assignments, and rentals 11,263 - 11,263
Environmental pollution settlements 1,834 - 1,834
Child support 13,431 - 13,431
Other 375,573 77,414 298,160
690,409 160,931 529,478
Total Revenues 29,368,085 8,606,827 20,761,259
OTHER FINANCING SOURCES
Proceeds from bond issues
and bond anticipation notes 97,651 - 97,651
Capital lease acquisitions 18,371 - 18,371
Proceeds from sale of capital assets 1,626 - 1,626
Transfers From Other Funds:
From Liquor Purchase Revolving Fund 177,848 176,841 1,007
From State Lottery Fund 6,621 2,923 3,697
From other funds 49,769 - 49,769
Total Other Financing Sources 351,885 179,764 172,121
Total Revenue and Other Financing
Sources (GAAP Basis) 29,719,970 8,786,591 20,933,380
BUDGETARY BASIS ADJUSTMENTS
Capital lease acquisitions (18,371) - (18,371)
Total Revenue and Other Financing Sources
(Budgetary Basis) $ 29,701,599 $ 8,786,591 $ 20,915,008
Michigan
275 275 275 275
SOURCE AND DISPOSITION OF GENERAL FUND AUTHORIZATIONS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
LESS: TIMING
DIFFERENCES*
RESTRICTED
CURRENT BUDGETARY UNEXPENDED RESTRICTED REVENUE
LEGISLATIVE TRANSFERS BUDGETARY FROM REVENUE NOT
BRANCH AND DEPARTMENT APPROPRIATION IN/OUT ADJ USTMENT PRIOR YEAR ADDITIONS AUTHORIZED/USED
Legislative Branch $ 136,221 $ - $ 271 $ 11,485 $ 8,127 $ -
J udicial Branch 184,758 - - 19,333 73,417 (11,385)
Executive Branch:
Agriculture and Rural Development 40,580 - - 8,393 33,545 (7,573)
Attorney General 34,481 - - 11,161 47,842 (8,061)
Civil Rights 12,338 - - 1 1,977 -
Colleges and Universities Grants 1,268,654 - - 205 92,300 -
Community Health 2,992,783 - - 128,694 12,591,186 (121,685)
Corrections 1,972,725 - - 64,316 39,493 (32,161)
Education 220,794 - 10 4,981 182,643 (1,968)
Environmental Quality 29,155 - - 140,644 268,386 (138,251)
Executive Office 5,540 - - 17 - -
Human Services 992,197 - - 31,085 4,545,390 (5,521)
Insurance and Financial Services 11,000 - - 29,822 64,432 (40,768)
Licensing and Regulatory Affairs 25,005 - - 104,791 236,321 (101,592)
Military and Veterans Affairs 56,903 - - 14,847 105,996 (2,763)
Natural Resources 26,787 - - 16,246 53,546 (7,850)
State 15,871 - - 38,612 194,446 (33,258)
State Police 356,784 - - 32,127 229,814 (26,375)
Technology, Management and Budget 691,365 - - 588,974 582,602 (488,862)
Transportation 336,600 - - 11,218 - -
Treasury 500,645 - - 176,766 2,474,573 (83,880)
Intrafund expenditure reimbursements - - - - - -
TOTAL $ 9,911,186 $ - $ 281 $ 1,433,717 $ 21,826,037 $ (1,111,953)
* Timing differences are subtracted from Gross Spending Authority in order to show an annualized Budget that is comparable to the current
year's Actual uses. Timing differences consist of unused authorizations for multi-year projects (capital outlay and work projects)
and restricted revenue not authorized/used, which includes revenues that by statute, are restricted for use to a particular program or
activity. Generally, the expenditure of the restricted revenue is subject to annual legislative appropriation. However, the restricted revenue
may also be used in subsequent years to finance expenditures in multi-year appropriations and for encumbrances carried forward.
For budgetary purposes, encumbrance authorization are considered use of spending authority in the year the State incurs an obligation.
NOTE: This schedule was prepared on the Statutory/Budgetary basis.
Restricted revenue balances authorized in the Variances category represent restricted revenue carry-overs that could have been used in
the current period but were not.
Michigan
276 276 276 276
"BUDGET" "ACTUAL"
LESS: TIMING RESTRICTED
GROSS DIFFERENCES* ENCUMBERED REVENUE
SPENDING MULTI-YEAR AS PRESENTED EXPENDED/ BALANCES BALANCES
AUTHORITY PROJ ECTS IN STATEMENTS TRANSFERRED FORWARD AUTHORIZED LAPSES OVEREXPENDED
$ 156,104 $ (12,527) $ 143,577 $ 142,066 $ 1,130 $ 80 $ 300 $ -
266,123 (4,243) 261,880 252,508 6,126 - 3,247 -
74,945 (291) 74,654 71,534 2,765 - 354 -
85,423 (1,066) 84,357 83,727 489 - 142 -
14,316 - 14,316 14,118 7 - 191 -
1,361,159 (30) 1,361,129 1,360,307 550 - 272 -
15,590,978 (3,431) 15,587,547 15,376,525 25,251 - 190,691 (4,920)
2,044,373 (9,431) 2,034,942 1,962,759 60,165 573 11,445 -
406,460 - 406,460 401,222 1,101 267 3,870 -
299,934 (6,000) 293,934 293,926 6 - 2 -
5,557 - 5,557 5,075 - - 481 -
5,563,152 (948) 5,562,204 5,532,572 16,301 - 13,332 -
64,487 - 64,487 64,487 - - - -
264,526 (237) 264,289 257,366 1,738 400 4,785 -
174,983 (9,595) 165,388 158,362 5,928 - 1,097 -
88,728 (3,997) 84,731 80,042 4,607 - 81 -
215,671 (2,033) 213,638 209,782 2,440 91 1,325 -
592,350 (2,424) 589,926 586,879 2,619 - 428 -
1,374,078 (67,103) 1,306,975 1,282,528 16,810 376 7,261 -
347,818 (59,103) 288,715 226,040 62,674 - - -
3,068,104 (27,769) 3,040,335 2,978,332 14,843 25,719 21,440 -
- - (911,029) (911,029) - - - -
$ 32,059,268 $ (210,230) $ 30,938,009 $ 30,429,128 $ 225,551 $ 27,507 $ 260,744 $ (4,920)
Prior Year encumbrances (124,489) (124,489)
Amount reported on
Budgetary Comparison Schedule $ 30,813,521 $ 30,304,640 $ 225,551 $ 27,507 $ 260,744 $ (4,920)
Michigan
"VARIANCES"
277 277 277 277
SOURCE AND DISPOSITION OF
GENERAL FUND/GENERAL PURPOSE AUTHORIZATIONS
APPROPRIATION YEAR 2014
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
CURRENT BUDGETARY
LEGISLATIVE TRANSFERS BUDGETARY
APPROPRIATION* IN/OUT ADJ USTMENT
Legislative Branch $ 136,221 $ - $ 271
J udicial Branch 184,758 - -
Executive Branch:
Agriculture and Rural Development 40,580 - -
Attorney General 34,481 - -
Civil Rights 12,338 - -
Colleges and Universities Grants 1,268,654 - -
Community Health 2,992,783 - -
Corrections 1,972,725 - -
Education 220,794 - 10
Environmental Quality 29,155 - -
Executive Office 5,540 - -
Human Services 992,197 - -
Insurance and Financial Services 11,000 - -
Licensing and Regulatory Affairs 25,005 - -
Military and Veterans Affairs 56,903 - -
Natural Resources 26,787 - -
State 15,871 - -
State Police 356,784 - -
Technology, Management and Budget 691,365 - -
Transportation 336,600 - -
Treasury 500,645 - -
TOTAL $ 9,911,186 $ - $ 281
* The amounts in the "Current Legislative Appropriation" column include certain appropriations that
do not appear as line-item appropriations in the budget bills. These appropriations are authorized
in narrative "boilerplate" language in the budget bills. "Boilerplate" appropriations include interfund
borrowing, interest on general obligation notes and bonds, and certain interfund transfers.
"Boilerplate" appropriations accounted for $342.8 million of the "Current Legislative Appropriation"
for the Appropriation Year 2014.
BRANCH AND DEPARTMENT
Michigan
278 278 278 278
"ACTUAL"
MULTI-YEAR
GROSS ENCUMBERED PROJ ECT
SPENDING EXPENDED/ BALANCES BALANCES
AUTHORITY TRANSFERRED FORWARD FORWARD LAPSES
$ 136,492 $ 126,349 $ 748 $ 9,121 $ 274 $ -
184,758 173,245 5,530 2,742 3,243 -
40,580 37,556 2,680 - 344 -
34,481 33,030 488 837 127 -
12,338 12,140 7 - 190 -
1,268,654 1,267,833 550 1 271 -
2,992,783 2,783,704 20,199 3,133 190,667 (4,920)
1,972,725 1,913,949 40,078 8,396 10,303 -
220,804 216,412 555 - 3,837 -
29,155 29,149 6 - - -
5,540 5,059 - - 481 -
992,197 964,225 14,870 231 12,871 -
11,000 11,000 - - - -
25,005 21,727 1,550 237 1,491 -
56,903 42,013 5,173 9,117 600 -
26,787 23,965 1,531 1,290 1 -
15,871 13,851 10 1,051 959 -
356,784 352,599 1,425 2,424 337 -
691,365 624,897 11,926 48,935 5,607 -
336,600 223,562 53,935 59,103 - -
500,645 470,334 2,833 19,295 8,183 -
$ 9,911,467 $ 9,346,598 $ 164,094 $ 165,911 $ 239,784 $ (4,920)
Michigan
"VARIANCES"
OVEREXPENDED
279 279 279 279
REVENUE, BOND PROCEEDS, AND CAPITAL LEASE ACQUISITIONS
GENERAL AND SPECIAL REVENUE FUNDS
LAST TEN YEARS
SEPTEMBER 30, 2014
(In Thousands)
SOURCE
TAXES:
Sales $ 6,599,138 $ 6,638,110 $ 6,552,240 $ 6,773,276
Personal Income (net of tax credits) 6,108,924 6,226,304 6,442,678 7,226,049
Amount reported as tax credits 815,300 834,000 883,400 931,600
Single Business, Michigan Business,
and Corporate Income 1,907,190 1,886,168 1,786,213 2,482,035
Use 1,402,399 1,413,758 1,380,375 1,377,077
State Education (Property) 1,914,629 2,003,527 2,080,977 2,079,703
Real Estate Transfer 313,548 297,680 237,483 169,835
Tobacco Products 1,179,871 1,169,005 1,129,226 1,073,650
Beer, Wine, and Liquor 150,888 155,184 159,109 162,104
Casino Gaming Wagering 145,811 155,461 159,363 129,684
Insurance Company 249,524 219,538 223,754 223,198
Health Insurance Claims Assessment - - - -
Motor Vehicle and Fuel 1,935,732 1,926,069 1,902,811 1,847,540
Quality Assurance Assessment 509,857 676,923 827,776 1,023,766
Penalties and Interest 142,703 140,581 158,218 160,939
Other 554,732 450,642 440,925 409,333
TOTAL TAXES 23,930,245 24,192,949 24,364,549 26,069,791
FEDERAL AGENCIES 10,890,093 11,060,621 11,452,444 12,283,854
LOCAL AGENCIES 107,250 105,566 117,653 114,856
SPECIAL MEDICAID REIMBURSEMENTS 467,970 93,621 102,670 115,797
SERVICES 264,541 269,040 283,907 290,934
LICENSES AND PERMITS 407,862 419,753 427,915 435,108
MISCELLANEOUS 1,292,600 1,764,227 1,835,865 1,401,128
TOTAL REVENUE 37,360,562 37,905,776 38,585,002 40,711,468
PROCEEDS FROM BOND ISSUES
AND BOND ANTICIPATION NOTES 182,441 234,738 18,662 26,215
CAPITAL LEASE ACQUISITIONS 6,778 34,059 20,906 110,374
PROCEEDS FROM SALE OF CAPITAL ASSETS 3,037 1,339 2,478 27,381
TOTAL REVENUE, BOND PROCEEDS,
CAPITAL LEASE ACQUISITIONS, AND
PROCEEDS FROM SALE OF CAPITAL ASSETS $ 37,552,817 $ 38,175,912 $ 38,627,048 $ 40,875,439
NOTES: (1) Effective J anuary 1, 2008, the State replaced the single business tax with the Michigan business tax. Effective
J anuary 1, 2012, the State replaced the Michigan business tax with the Corporate income tax.
(2) Legislation established the Health Insurance Claims Assessment, effective J anuary 1, 2012.
2008
Michigan
2005 2006 2007
280 280 280 280
$ 6,089,106 $ 6,176,843 $ 6,710,882 $ 6,955,198 $ 7,050,204 $ 7,362,620
5,856,753 5,531,348 6,417,078 6,921,033 8,271,838 8,020,054
963,500 1,351,500 1,271,900 1,226,300 689,900 676,500
2,285,237 1,853,557 2,098,407 1,321,782 721,602 419,554
1,283,685 1,573,667 1,548,914 1,428,284 1,300,590 1,639,442
2,040,647 1,930,480 1,845,086 1,789,672 1,771,083 1,804,238
125,294 121,632 123,254 150,106 202,323 233,416
1,041,541 1,006,527 968,512 963,181 957,485 940,337
164,068 164,071 167,487 175,181 182,878 189,792
121,363 101,816 114,017 115,753 110,667 106,903
261,002 257,511 271,257 290,385 301,883 362,397
- - - 176,419 270,489 271,861
1,806,694 1,807,185 1,820,367 1,825,091 1,860,582 1,902,612
859,482 840,254 882,600 959,267 969,767 975,786
150,334 137,793 139,251 167,882 171,092 115,439
293,955 315,218 307,324 299,383 292,011 309,781
23,342,662 23,169,402 24,686,336 24,764,916 25,124,393 25,330,732
16,040,813 18,351,960 18,972,659 16,612,723 16,598,202 17,259,668
102,040 89,633 85,674 85,394 87,578 89,644
135,667 123,205 155,059 186,194 134,353 133,909
288,373 300,362 320,469 310,275 318,403 322,271
450,009 452,620 448,012 464,072 484,059 494,595
1,362,184 1,293,772 1,387,068 1,716,779 1,594,097 1,558,174
41,721,749 43,780,955 46,055,277 44,140,354 44,341,085 45,188,992
144,225 60,583 211,001 270,001 200,000 97,651
41,205 39,101 171,094 34,567 17,224 18,371
2,209 1,576 1,742 2,848 3,064 1,626
$ 41,909,387 $ 43,882,215 $ 46,439,114 $ 44,447,770 $ 44,561,373 $ 45,306,640
2009 2014 2010
Michigan
2012 2013 2011
281 281 281 281
SCHEDULE OF EXPENDITURES BY FUNCTION
GENERAL AND SPECIAL REVENUE FUNDS - STATE FUNDS
LAST TEN YEARS
SEPTEMBER 30, 2014
(In Thousands)
Current:
General government $ 1,303,020 $ 1,628,520 $ 1,580,973 $ 1,546,624
Education 14,488,870 14,710,682 14,572,261 15,029,489
Human services 4,122,779 4,341,774 4,447,992 4,609,481
Public safety and corrections 2,284,674 2,453,297 2,465,362 2,614,768
Conservation, environment,
recreation, and agriculture 597,928 626,802 552,992 580,246
Labor, commerce, and regulatory 924,876 952,921 957,023 966,091
Health services 10,126,544 9,958,104 10,741,285 11,588,207
Transportation 1,195,941 1,182,924 1,183,513 1,162,196
Tax credits 815,300 834,000 883,400 931,600
Capital outlay 47,403 58,365 42,290 31,978
Intergovernmental - revenue sharing 1,112,931 1,103,625 1,071,104 1,076,445
Debt service:
Bond interest and fiscal charges - 174 - -
Capital lease payments 49,370 49,032 45,997 50,086
Total Expenditures $ 37,069,635 $ 37,900,220 $ 38,544,191 $ 40,187,211
Michigan
2006 2005 2008 2007
282 282 282 282
$ 1,582,399 $ 1,463,926 $ 1,856,935 $ 1,935,857 $ 1,868,138 $ 2,064,016
15,195,462 14,995,595 15,216,151 14,540,137 14,604,622 14,909,901
5,334,263 6,042,987 6,346,672 5,886,563 5,925,320 5,537,228
2,589,942 2,571,390 2,547,868 2,564,921 2,601,307 2,666,541
539,796 528,387 501,050 563,310 545,565 656,061
1,145,954 1,223,197 1,143,962 923,059 961,279 961,934
12,450,287 13,218,598 13,905,003 13,698,746 13,862,531 15,063,455
1,137,584 1,154,659 1,149,640 1,180,615 1,395,444 1,532,228
963,500 1,351,500 1,271,900 1,226,300 689,900 676,500
38,429 38,136 21,659 26,765 35,676 70,695
1,040,031 994,196 1,091,527 1,032,243 1,077,514 1,120,593
- - - - - -
49,936 50,811 55,803 55,867 58,357 62,237
$ 42,067,585 $ 43,633,381 $ 45,108,168 $ 43,634,383 $ 43,625,653 $ 45,321,388
Michigan
2014 2013 2012 2011 2010 2009
283 283 283 283
Michigan
INDEX OF FUNDS AND COMPONENT UNITS
Page
21
st
Century J obs Trust Fund ..................................................................................... 164
Advance Financing Funds .......................................................................................... 179
Attorney Discipline System ......................................................................................... 192
Bottle Deposits Fund .................................................................................................. 147
Central Michigan University ........................................................................................ 226
Child Support Collection Fund .................................................................................... 215
Children’s Trust Fund ................................................................................................. 165
Combined Comprehensive Transportation Bond and Interest Redemption Fund ...... 172
Combined Comprehensive Transportation Bond Proceeds Fund .............................. 178
Combined Recreation Bond Fund .............................................................................. 179
Combined State Trunkline Bond and Interest Redemption Fund ............................... 172
Combined State Trunkline Bond Proceeds Fund ....................................................... 178
Comprehensive Transportation Fund ......................................................................... 140
Correctional Industries Revolving Fund ...................................................................... 196
Eastern Michigan University ....................................................................................... 226
Environmental Quality Deposits Fund ........................................................................ 215
Escheats Fund ........................................................................................................... 212
Farm Produce Insurance Authority ............................................................................. 220
Ferris State University ................................................................................................ 226
Forest Development Fund .......................................................................................... 147
General Fund ............................................................................................................. 38
Gifts, Bequests, and Deposits Investment Fund ........................................................ 212
Grand Valley State University .................................................................................... 226
Homeowner Construction Lien Recovery Fund .......................................................... 154
Hospital Patients’ Trust Fund ..................................................................................... 212
Information Technology Fund ..................................................................................... 196
Insurance Carrier Deposits Fund................................................................................ 215
J udges’ Other Postemployment Benefits Fund .......................................................... 206
J udges’ Pension Benefits Fund .................................................................................. 205
Lake Superior State University ................................................................................... 227
Land Bank Fast Track Authority ................................................................................. 220
Legislative Other Postemployment Benefits Fund ...................................................... 204
Legislative Pension Benefits Fund ............................................................................. 204
Liquor Purchase Revolving Fund ............................................................................... 192
Mackinac Bridge Authority .......................................................................................... 220
Mackinac Island State Park Commission ................................................................... 220
Michigan Conservation and Recreation Legacy Fund ................................................ 146
Michigan Early Childhood Investment Corporation .................................................... 221
Michigan Economic Development Corporation .......................................................... 221
Michigan Education Savings Program........................................................................ 212
Michigan Education Trust ........................................................................................... 221
Michigan Employment Security Act – Administration Fund ........................................ 154
Michigan Finance Authority ........................................................................................ 54
Michigan Game and Fish Protection Trust Fund ........................................................ 146
Michigan Merit Award Trust Fund............................................................................... 164
Michigan Natural Resources Trust Fund .................................................................... 186
2014 Comprehensive Annual Financi al Report
284 284 284 284
Michigan
INDEX OF FUNDS AND COMPONENT UNITS (Continued)
Page
Michigan Nongame Fish and Wildlife Trust Fund ....................................................... 147
Michigan Settlement Administration Authority ............................................................ 164
Michigan State Housing Development Authority ........................................................ 54
Michigan State Parks Endowment Fund .................................................................... 186
Michigan Strategic Fund ............................................................................................. 54
Michigan Technological University ............................................................................. 227
Michigan Transportation Fund .................................................................................... 140
Michigan Unemployment Compensation Funds ......................................................... 44
Michigan Veterans’ Trust Fund .................................................................................. 186
Military Family Relief Fund ......................................................................................... 165
Miscellaneous Special Revenue Funds ...................................................................... 165
Motor Transport Fund ................................................................................................. 197
Northern Michigan University ..................................................................................... 227
Oakland University ..................................................................................................... 227
Office Services Revolving Fund ................................................................................. 197
Public School Employees’ Other Postemployment Benefits Fund ............................. 205
Public School Employees’ Pension Benefits Fund ..................................................... 205
Recreation and Environmental Protection Bond Redemption Fund ........................... 172
Risk Management Fund ............................................................................................. 197
Safety Education and Training Fund .......................................................................... 154
Saginaw Valley State University ................................................................................. 227
School Aid Fund ......................................................................................................... 38
School Loan Bond Redemption Fund ........................................................................ 173
Second Injury Fund .................................................................................................... 154
Self-Insurers’ Security Fund ....................................................................................... 154
Silicosis, Dust Disease, and Logging Industry Compensation Fund .......................... 155
State Aeronautics Fund .............................................................................................. 178
State Bar of Michigan ................................................................................................. 221
State Building Authority .............................................................................................. 173 & 179
State Casino Gaming Fund ........................................................................................ 155
State Construction Code Fund ................................................................................... 155
State Employees’ Other Postemployment Benefits Fund ........................................... 205
State Employees’ Pension Benefits Fund .................................................................. 205
State Lottery Fund ...................................................................................................... 44
State of Michigan Deferred Compensation Funds ...................................................... 204
State of Michigan Defined Contribution Retirement Fund .......................................... 206
State Police Other Postemployment Benefits Fund.................................................... 205
State Police Pension Benefits Fund ........................................................................... 204
State Sponsored Group Insurance Fund .................................................................... 196
State Trunkline Fund .................................................................................................. 178
Social Welfare Fund ................................................................................................... 215
Transportation Related Trust Funds ........................................................................... 179
Utility Consumer Representation Fund ....................................................................... 155
Unemployment Obligation Trust Fund ........................................................................ 155
Western Michigan University ...................................................................................... 55
2014 Comprehensive Annual Financi al Report
285 285 285 285
ACKNOWLEDGMENTS
The State of Michigan Comprehensive Annual Financial Report is prepared by the Office of Financial
Management, Accounting and Financial Reporting Division. Staff of the division for the fiscal year 2014 report
included:
Management:
Lora J . Mikula, CPA, Director
Lisa S. Craft, CPA, Manager
Shawna M. Hessling, Manager
Daniel T. J aroche, CPA, Manager
Staff:
Cindy S. Bloomer
Eric M. Bolyard
Derek R. Childs, CPA
Lorraine C. Couchman
Matthew L. Engels
J ane E. Hallitt
Chelsea W. Holmberg
Anna C. Lewis
J ohn L. MacIntosh III
Angela K. McNulty
Alicia L. Paape
Kathleen R. Pietila
Tina L. Ray
Susan K. Ruff
Anthony J . Thelen
Special thanks are also extended to the State’s CFO Council; the Financial Management Users Group; financial
management personnel throughout Michigan State Government; and the staff of the Office of the Auditor
General. Preparation of this report would not have been possible without the efforts of these individuals.
286 286 286 286
Michigan
2014 Comprehensive Annual Financi al Report
Fiscal Year Ended September 30, 2014
Governor Rick Snyder, CPA
Prepared by the State Budget Offce
doc_182794806.pdf
The State Budget Office, Office of Financial Management, prepares the SOMCAFR and is responsible for both the accuracy of the data and the completeness and fairness of the presentation, including disclosures. To the best of our knowledge and belief, the information contained in the SOMCAFR is accurate in all material respects and reported in a manner that fairly presents the financial position and results of operations of the State primary government and component units for which it is financially accountable.
Fiscal Year Ended September 30, 2014
Governor Rick Snyder, CPA
Prepared by the State Budget Offce
State of
Michigan
Comprehensive Annual
Financial Report
Michigan
2014 Comprehensive Annual Financi al Report
State of Michigan
Comprehensive Annual Financial Report
Fiscal Year Ended September 30, 2014
RICK SNYDER, CPA
Governor
JOHN S. ROBERTS
State Budget Director
MICHAEL J. MOODY, CPA
Director
Office of Financial Management
1111
Michigan
TABLE OF CONTENTS
Page
Title page ......................................................................................................................................................................... 1
Table of Contents ............................................................................................................................................................. 2
INTRODUCTORY SECTION
Letter of Transmittal ......................................................................................................................................................... 6
Certificate of Achievement ............................................................................................................................................... 11
State Organizational Structure ......................................................................................................................................... 12
Principal State Officials .................................................................................................................................................... 13
FINANCIAL SECTION
Independent Auditor’s Report .......................................................................................................................................... 16
Management's Discussion and Analysis .......................................................................................................................... 21
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Position ....................................................................................................................................... 32
Statement of Activities ............................................................................................................................................. 34
Governmental Fund Financial Statements
Balance Sheet ......................................................................................................................................................... 38
Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position. .............................. 39
Statement of Revenues, Expenditures, and Changes in Fund Balances ................................................................ 40
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund
Balances - Governmental Funds to the Statement of Activities ........................................................................... 41
Proprietary Fund Financial Statements
Statement of Net Position ....................................................................................................................................... 44
Statement of Revenues, Expenses, and Changes in Fund Net Position................................................................. 45
Statement of Cash Flows ........................................................................................................................................ 46
Fiduciary Fund Financial Statements
Statement of Fiduciary Net Position ........................................................................................................................ 50
Statement of Changes in Fiduciary Net Position ..................................................................................................... 51
Component Unit Financial Statements
Statement of Net Position ....................................................................................................................................... 54
Statement of Activities ............................................................................................................................................. 56
Index for Notes to Financial Statements ....................................................................................................................... 58
Notes to Financial Statements ...................................................................................................................................... 59
Required Supplementary Information Other Than Management’s Discussion and Analysis
Budgetary Comparison Schedule - Major Governmental Funds .................................................................................. 124
Budgetary Comparison Schedule - Budget-to-GAAP Reconciliation ............................................................................ 126
Notes to Required Supplementary Information - Budgetary Reporting ......................................................................... 127
Information About Infrastructure Assets Reported Using the Modified Approach ......................................................... 128
Combining and Individual Fund Statements and Schedules - Non-Major Funds
Governmental Funds
Balance Sheet - By Fund Type ............................................................................................................................... 132
Statement of Revenues, Expenditures and Changes in Fund Balances - By Fund Type ....................................... 133
Special Revenue Funds – By Classification
Balance Sheet ......................................................................................................................................................... 134
Statement of Revenues, Expenditures, and Changes in Fund Balances ................................................................ 135
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual ................................. 136
2014 Comprehensive Annual Financi al Report
2222
Michigan
Page
Special Revenue Funds - Transportation Related
Combining Balance Sheet ....................................................................................................................................... 140
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .............................................. 141
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual .............. 142
Special Revenue Funds - Conservation, Environment, and Recreation Related
Combining Balance Sheet ....................................................................................................................................... 146
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .............................................. 148
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual .............. 150
Special Revenue Funds - Regulatory and Administrative Related
Combining Balance Sheet ....................................................................................................................................... 154
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .............................................. 156
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual .............. 158
Special Revenue Funds - Other State Funds
Combining Balance Sheet ....................................................................................................................................... 164
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .............................................. 166
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual .............. 168
Debt Service Funds
Combining Balance Sheet ....................................................................................................................................... 172
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .............................................. 174
Capital Projects Funds
Combining Balance Sheet ....................................................................................................................................... 178
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .............................................. 180
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual .............. 182
Permanent Funds
Combining Balance Sheet ....................................................................................................................................... 186
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .............................................. 187
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual ............... 188
Proprietary Funds
Enterprise Funds
Combining Statement of Net Position ..................................................................................................................... 192
Combining Statement of Revenues, Expenses, and Changes in Fund Net Position .............................................. 193
Combining Statement of Cash Flows ...................................................................................................................... 194
Internal Service Funds
Combining Statement of Net Position ..................................................................................................................... 196
Combining Statement of Revenues, Expenses, and Changes in Fund Net Position .............................................. 198
Combining Statement of Cash Flows ...................................................................................................................... 200
Fiduciary Funds
Pension (and Other Employee Benefit) Trust Funds
Combining Statement of Fiduciary Net Position ...................................................................................................... 204
Combining Statement of Changes in Fiduciary Net Position....................... ............................................................ 208
Private Purpose Trust Funds
Combining Statement of Fiduciary Net Position ...................................................................................................... 212
Combining Statement of Changes in Fiduciary Net Position....................... ............................................................ 213
Agency Funds
Combining Statement of Fiduciary Net Position ...................................................................................................... 215
Combining Statement of Changes in Assets and Liabilities .................................................................................... 216
Component Units
Authorities
Combining Statement of Net Position ..................................................................................................................... 220
Combining Statement of Activities .......................................................................................................................... 222
State Universities
Combining Statement of Net Position ..................................................................................................................... 226
Combining Statement of Activities .......................................................................................................................... 228
2014 Comprehensive Annual Financi al Report
3333
Michigan
Page
STATISTICAL SECTION
Index to Statistical Section ........................................................................................................................................ 233
Net Position by Component ...................................................................................................................................... 234
Changes in Net Position ........................................................................................................................................... 236
Fund Balances, Governmental Funds ....................................................................................................................... 240
Changes in Fund Balances, Governmental Funds ................................................................................................... 242
Personal Income by Industry .................................................................................................................................... 244
Taxable Sales by Industry ......................................................................................................................................... 246
Personal Income Tax Filers and Liability by Income Level ....................................................................................... 248
Sales Tax Payers by Industry ................................................................................................................................... 249
Ratios of Outstanding Debt by Type ......................................................................................................................... 250
Ratios of Net General Obligation Bonded Debt Outstanding .................................................................................... 253
Debt Service Coverage - Comprehensive Transportation Fund Related Bonds ....................................................... 254
Debt Service Coverage - State Trunkline Fund Related Bonds ................................................................................ 256
Debt Service Coverage - State Building Authority .................................................................................................... 258
Demographic and Economic Indicators .................................................................................................................... 260
Classified Employees by Function ............................................................................................................................ 262
Operating Indicators by Function .............................................................................................................................. 264
Capital Assets by Function ....................................................................................................................................... 268
OTHER INFORMATION
Combined Schedule of Revenue and Other Financing Sources - General and Special Revenue Funds ................. 272
Schedule of Revenue and Other Financing Sources - General Fund ....................................................................... 274
Source and Disposition of General Fund Authorizations ........................................................................................... 276
Source and Disposition of General Fund/General Purpose Authorizations ............................................................... 278
Revenue, Bond Proceeds, and Capital Lease Acquisitions - General and Special Revenue Funds ........................ 280
Schedule of Expenditures by Function - General and Special Revenue Funds - State Funds ................................. 282
Index of Funds and Component Units .............................................................................................................................. 284
2014 Comprehensive Annual Financi al Report
4444
Michigan
2014 Comprehensive Annual Financi al Report
5555
December 29, 2014
The Honorable Rick Snyder, Governor
Members of the Legislature
People of the State of Michigan
As required by Article 9, Section 21, of the State Constitution and Section 494, Public Act 431 of 1984, as
amended, we are pleased to submit the State of Michigan Comprehensive Annual Financial Report (SOMCAFR) for
the fiscal year ended September 30, 2014.
INTRODUCTION TO THE REPORT
Responsibility: The State Budget Office, Office of Financial Management, prepares the SOMCAFR and is
responsible for both the accuracy of the data and the completeness and fairness of the presentation, including
disclosures. To the best of our knowledge and belief, the information contained in the SOMCAFR is accurate in all
material respects and reported in a manner that fairly presents the financial position and results of operations of the
State primary government and component units for which it is financially accountable. All disclosures necessary to
enable the reader to gain a reasonable understanding of the State's financial affairs have been included.
Adherence to Generally Accepted Accounting Principles: As required by State statute, we have prepared the
financial statements contained in the SOMCAFR in accordance with generally accepted accounting principles (GAAP)
applicable to state and local governments, as promulgated by the Governmental Accounting Standards Board (GASB).
The State also voluntarily follows the recommendations of the Government Finance Officers Association of the United
States and Canada (GFOA) for the contents of government financial reports, and participates in the GFOA's review
program for the Certificate of Achievement for Excellence in Financial Reporting.
Report: The SOMCAFR is divided into four major sections: introductory, financial, statistical, and other information:
• The introductory section includes this letter, the State’s organization chart, and the list of principal officials.
• The financial section includes: the independent auditor’s report on the Basic Financial Statements;
Management’s Discussion and Analysis (MD&A) which provides an introduction, overview, and analysis to the
Basic Financial Statements; the Basic Financial Statements, which present the government-wide financial
statements and fund financial statements for governmental funds, proprietary funds, fiduciary funds, and
component units, together with footnotes to the Basic Financial Statements; Required Supplementary
Information other than MD&A, which presents budgetary comparison schedules and information about
infrastructure assets; and the supplemental financial data which includes the combining financial statements
and schedules.
• The statistical section includes such items as trend information, information on debt levels, and other selected
economic and statistical data.
• The other information section includes General Fund and Special Revenue Funds revenue and expenditure
schedules and General Fund source and disposition of spending authorization schedules.
Internal Control Structure: The State Budget Office is responsible for the overall operation of the State's central
accounting system and for establishing and maintaining the State's internal control structure. The system of internal
control has been designed to provide reasonable, rather than absolute, assurance that the financial statements are
free from material misstatement.
STATE OF MICHIGAN
RICK SNYDER STATE BUDGET OFFICE JOHN S. ROBERTS
GOVERNOR LANSING DIRECTOR
111 S. CAPITOL • P.O. BOX 30026 • LANSING, MICHIGAN 48909
.www.michigan.gov • (517) 373-7560
6666
All financial transactions of the State primary government are recorded in the central accounting system, except for
the Michigan Unemployment Compensation Funds, Attorney Discipline System, the State of Michigan Deferred
Compensation Funds, the State of Michigan Defined Contribution Retirement Fund, and the Michigan Education
Savings Program. Many of the essential control features are decentralized, such as the preparation and entry of
expenditure transactions into the central accounting system. Consequently, the State Budget Office relies upon the
controls in place at the various State departments and agencies.
Act 431 requires each principal department to maintain adequate internal control systems. Each department is also
required to periodically report to the Governor on the adequacy of its internal accounting and administrative control
systems and, if any material weaknesses exist, provide corrective action plans and time schedules for addressing such
weaknesses. This reporting is required on or before May 1 of each odd numbered year, effective as of the preceding
October 1.
The discretely presented component units generally operate outside the State's central accounting system and are
responsible for establishing and maintaining their own separate internal control structures.
Internal Auditors: Pursuant to Executive Order 2007-31, the Office of Internal Audit Services (OIAS) provides
internal audit services to executive branch departments and agencies. OIAS performs periodic financial, performance,
and compliance audits of department and agency programs and organizational units. In addition to periodic audits,
OIAS also reviews department and agency management’s processes for establishing, monitoring, and reporting on
internal controls; advises department and agency management on internal control matters; and assists department
and agency management with investigations of alleged fraud or other irregularities.
Independent Auditors: The Office of the Auditor General (OAG) is the principal auditor of the SOMCAFR. The
OAG also relies on the opinions of outside public accounting firms, particularly for component unit financial statements
(such as the Michigan State Housing Development Authority and ten of the State’s universities) and the
Unemployment Compensation funds. The purpose of the OAG’s audit is to provide reasonable assurance that the
Basic Financial Statements for the fiscal year ended September 30, 2014 are free of material misstatements. The
OAG concluded that the Basic Financial Statements for the fiscal year ended September 30, 2014 are fairly presented
in accordance with GAAP and issued unmodified opinions.
In addition to the annual audit of the SOMCAFR, the OAG also performs periodic financial statement and
performance audits of the various State departments, agencies, and institutions of higher education. The Auditor
General also has primary responsibility for conducting audits under the federal Single Audit Act Amendments of 1996.
Pursuant to Michigan Public Act 233 of 2012, an annual statewide single audit will be conducted for applicable State
departments, agencies and component unit authorities, and will result in a separately issued audit report.
Management’s Discussion and Analysis (MD&A): GAAP requires that management provide a narrative
introduction, overview, and analysis to accompany the Basic Financial Statements in the form of MD&A. This letter of
transmittal is intended to complement MD&A and should be read in conjunction with it. The MD&A immediately follows
the Independent Auditor’s Report.
PROFILE OF THE GOVERNMENT
Michigan was admitted to the Union as the 26
th
state in 1837. The State is governed under the Constitution of
1963, as amended.
Executive Branch: As of December 29, 2014, the Executive Branch consisted of 17 principal departments.
Fourteen principal departments are headed by commissions and/or directors appointed by the elected governor.
Elected officials head two principal departments, Attorney General and State, and one, Education, is headed by an
elected board.
111 S. CAPITOL • P.O. BOX 30026 • LANSING, MICHIGAN 48909
.www.michigan.gov • (517) 373-7560
7777
J udicial Branch: The J udicial Branch consists of the Supreme Court, Court of Appeals, Court of Claims, and the
State’s circuit, district, probate, and municipal courts. In addition to its judicial duties, the Supreme Court is
responsible for the general administrative supervision of all courts in the State. The Supreme Court also establishes
rules for practice and procedure in all courts.
Legislative Branch: The Legislative Branch consists of the Senate, House of Representatives, and Office of the
Auditor General. The Senate, which consists of 38 elected members, and House of Representatives, which consists of
110 elected members, enact the laws of Michigan. The Office of the Auditor General conducts post financial and
performance audits of state government operations.
Reporting Entity: The financial reporting entity of the State includes all of the funds of the primary government as
well as component units for which the State’s elected officials are financially accountable. The transmittal letter,
MD&A, and the financial statements focus on the primary government and its activities. Although information
pertaining to the component units is provided, their separately issued financial statements should be read to obtain a
complete overview of their financial position.
Budgetary Reporting and Control: For the State primary government operating funds (i.e., the General Fund and
annually appropriated special revenue, capital projects, and permanent funds), the State projects revenues and
expenditures and calculates fund balances for budgetary purposes in accordance with GAAP. Public Act 431 of 1984,
as amended, prohibits the State from budgeting for an ending fund balance deficit in an operating fund. If an actual
deficit is incurred, the Constitution and Act 431 require that it be addressed in the subsequent year's budget. If
accounting principles change, Act 431 requires the State to also implement such changes in its budgetary process.
Compliance with the final updated budget for the annually budgeted operating funds of the State primary
government is demonstrated in the budget and actual comparative schedules and notes in the SOMCAFR. In addition,
subsequent to the publication of the SOMCAFR, the State releases a Statewide Authorization Dispositions report that
provides line item appropriation details, the legal level of budgetary control, for the General Fund and budgeted
operating funds.
MAJOR INITIATIVES AND FUTURE PROJECTS
Economic Growth: Creating an environment that promotes growth in the Michigan economy remains a top priority
of the Snyder administration. To continue growing the Michigan economy, the fiscal year 2015 budget includes $344.2
million for economic development and $427.0 million for workforce development to assist Michigan businesses and
communities, with a continued emphasis on talent, business attraction, and community revitalization.
During fiscal year 2012, the administration reached an agreement with Canada that laid the groundwork for the New
International Trade Crossing (NITC). The NITC will provide a modern, strategically located bridge between Detroit and
Windsor that is vital to enhancing the trade relationship between Michigan and Canada. It is expected to generate
thousands of short and long-term jobs, open new trade markets, strengthen economic security, and ease traffic
congestion. During calendar year 2014, a major milestone was achieved when the U.S. Coast Guard granted a permit
that allows the project to move forward. In addition, appointments to the international authority that will govern the
NITC were announced and the clearing of land for construction has begun.
Detroit Bankruptcy Resolution: On J uly 18, 2013, the state-appointed Detroit emergency manager filed for Chapter
9 bankruptcy protection on behalf of the City of Detroit. Less than seventeen months later, on December 10, 2014,
Detroit successfully emerged from the nation’s largest municipal bankruptcy. The bankruptcy process included a
“Grand Bargain” where the philanthropic and business communities joined with the state to contribute over $800
million to the city to reduce the impact on pensions and extend vital services. The “Grand Bargain” also included
creation of a state oversight board that will oversee the city’s finances going forward. As a result of the overall
settlement, the city has shed $7 billion in debt and will invest at least $1.4 billion over ten years to improve services.
111 S. CAPITOL • P.O. BOX 30026 • LANSING, MICHIGAN 48909
.www.michigan.gov • (517) 373-7560
8888
Fiscal Stability: As Michigan continues to operate with a structurally balanced budget, Governor Snyder remains
committed to building the state’s savings and reducing the state’s long-term liabilities. During fiscal year 2014, $75.0
million was deposited into the Budget Stabilization Fund (or Rainy Day Fund). In addition, $194.8 million was
withdrawn to fund the state’s contribution to the Detroit bankruptcy “Grand Bargain”, resulting in a fiscal year 2014
ending fund balance of $386.2 million. Starting in fiscal year 2015, the withdrawal from the Rainy Day Fund will be
replenished by annual deposits of $17.5 million from tobacco settlement revenues. The fiscal year 2015 budget also
includes an additional deposit of $94.0 million. As a result, the Rainy Day Fund balance is projected to be $497.7
million at September 30, 2015.
During fiscal year 2012, the state began prefunding retiree health care benefits and implemented various pension
and retiree health care reforms for both state and public school employees. As a result, unfunded long-term liabilities
have been reduced by over $20 billion. Paying down these liabilities improves Michigan’s fiscal stability, while
ensuring that employees can count on promised benefits when they retire.
Improving Our Citizen’s Health: During fiscal year 2014, Michigan started a program to provide health insurance
administered through private and non-profit health insurance plans to low income families and individuals. Under the
Healthy Michigan Plan, previously uninsured Michigan residents now have a primary care physician through a market-
based approach to manage their health care. State costs are controlled through access to preventive health services,
keeping the newly insured out of emergency rooms, while improving their quality of care and access to affordable
health care. Individuals control their use of health care services and maintain healthy behaviors through financial
incentives. To date, more than 500,000 Michiganders have been enrolled and over $200 million in annual state
general fund savings have resulted from the Healthy Michigan Plan.
The fiscal year 2015 budget includes $5.4 million to add 100,000 children to the Healthy Kids Dental Program.
Currently, 510,000 Michigan children are enrolled in the program. This effort will bring the total number of children
receiving dental care to 610,000.
Education: Approximately $13.8 billion is appropriated for school aid in fiscal year 2015, $11.9 billion from state
dollars. This funding supports the educational efforts of approximately 850 local school districts and public school
academies, as well as 56 intermediate school districts. Over $800 million is provided to offset retirement system
legacy costs.
For fiscal year 2014, funding for early childhood education was increased by $65 million, resulting in 16,000 new
placements for children. The fiscal year 2015 budget includes an additional increase of $65 million, with the goal of
adding 15,000 more placements. Additionally, the fiscal year 2015 budget includes $3.7 million to improve the quality
of child day care.
State Infrastructure Investments: Investing in the State’s infrastructure, particularly roads and bridges, is a priority
for Governor Snyder, who has worked with the Legislature to negotiate and pass a comprehensive transportation
funding solution. The solution now goes to the voters in May 2015. If approved by the voters, the solution will provide
an additional $1.2 billion for roads and bridges.
In the interim, the fiscal year 2015 transportation budget includes $283 million in general funds to fully match
federal aid and provide for improvements to Michigan’s roads and bridges. In addition, progress continues on the
state’s significant investment in high-speed rail, with new passenger rail stations opening in Dearborn, Grand Rapids,
and Troy during calendar year 2014.
Information Technology Investments: Recognizing the increasingly critical role that information technology plays in
the delivery of services to citizens, public and private organizations, and State employees, the budgets for fiscal years
2013 and 2014 included $47 million each year for the Information Technology Investment Fund. For fiscal year 2015,
the budget for the Information Technology Investment Fund was increased to $63 million. This funding will bring
greater efficiency to state government, and also improve cybersecurity, system upgrades, and replacements of legacy
computer systems.
111 S. CAPITOL • P.O. BOX 30026 • LANSING, MICHIGAN 48909
.www.michigan.gov • (517) 373-7560
9999
10 10 10 10
11 11 11 11
* Includes Civil Service Commission appointed by Governor
** Has Commission appointed by Governor, confirmed by Senate
STATE OF MICHIGAN
ORGANIZATIONAL STRUCTURE
(As of December 29, 2014)
CITIZENS
OF
MICHIGAN
Court of
Appeals
Senate House
Auditor General
Governor
Secretary of
State
Supreme
Court
State Board of
Education
Attorney
General
Department of
Education
Department of
State
Department of
Attorney
General
JUDICIAL BRANCH LEGISLATIVE BRANCH EXECUTIVE BRANCH
Quality of Life Economic
Growth
People Public Safety Value For
Money
Government
Treasury
Department of
Agriculture &
Rural
Development**
Department of
Technology,
Management &
Budget*
Department of
Treasury
Department of
Insurance &
Financial
Services
Department of
Licensing &
Regulatory
Affairs
Department
of
Environmental
Quality
Department of
Natural
Resources**
Department
of
Civil Rights**
Department of
Community
Health
Department
of
Human Services
Department
of
Corrections
Department of
Military &
Veterans
Affairs
Department
of
State Police
Department
of
Transportation
**
12 12 12 12
STATE OF MICHIGAN
PRINCIPAL STATE OFFICIALS
(As of December 29, 2014)
JUDICIAL BRANCH LEGISLATIVE BRANCH
Supreme Court J ustices Honorable Randy Richardville
Honorable Robert P. Young, J r, Chief J ustice Majority Leader of the Senate
Honorable Michael F. Cavanagh, J ustice
Honorable Mary Beth Kelly, J ustice Honorable J ase Bolger
Honorable Stephen J . Markman, J ustice Speaker of the House of Representatives
Honorable Bridget Mary McCormack, J ustice
Honorable David F. Viviano, J ustice Doug Ringler, C.P.A., C.I.A
Honorable Brian K. Zahra, J ustice Legislative Auditor General
EXECUTIVE BRANCH
Honorable Rick Snyder, Governor
Honorable Brian Calley, Lt. Governor
Honorable Bill Schuette, Attorney General
Honorable Ruth J ohnson, Secretary of State
Group Executives Nick Lyon, Director
David B. Behen, Value for Money Government Department of Community Health
Kevin Clinton, Treasury
Michael A. Finney, Economic Growth Daniel H. Heyns, Director
Dan Wyant, Quality of Life Department of Corrections
Nick Lyon, People
Major General Gregory J . Vadnais, Public Safety Dan Wyant, Director
Department of Environmental Quality
State Board of Education
J ohn C. Austin, President Maura D. Corrigan, Director
Casandra E. Ulbrich, Vice President Department of Human Services
Daniel Varner, Secretary
Richard Zeile, Treasuer Annette E. Flood, Director
Michelle Fecteau Department of Insurance and Financial Services
Lupe Ramos-Montigny
Kathleen Straus Mike Zimmer, Director
Eileen Weiser Department of Licensing and Regulatory Affairs
Honorable Rick Snyder (Ex Officio)
Michael P. Flanagan Major General Gregory J . Vadnais, Director
Superintendent of Public Instruction Department of Military and Veterans Affairs
Michigan Commission of Agriculture & Rural Development Natural Resources Commission
Diane Hanson, Chair J R Richardson, Chair
Trever Meachum, Vice Chair J ohn Matonich, Vice Chair
Fred Walcott, Secretary Louise Klarr
Bob Kennedy Timothy L. Nichols
Dru Montri Vicki J . Pontz
J amie Clover Adams, Director Rex E. Schlaybaugh, J r.
Department of Agriculture & Rural Development Keith Creagh, Director
Department of Natural Resources
Civil Rights Commission
Arthur Horwitz, Chair Colonel Kriste Kibbey Etue, Director
Rasha Demashkieh, Vice Chair Department of State Police
J ared Rodriguez, Secretary
Agustin Arbulu David B. Behen, Director
Linda Gobler Department of Technology, Management and Budget
Deloris Hunt
Linda Lee Tarver J ohn S. Roberts, State Budget Director
Bradley Voss
Matthew J . Wesaw, Director Transportation Commission
Department of Civil Rights J errold M. J ung, Chair
Todd Wyett, Vice Chair
Civil Service Commission Lynn Afendoulis
Thomas M. Wardrop, Chair Ron Boji
J ames Barrett Michael D. Hayes
Charles Blockett, J r. Charles F. Moser
Robert W. Swanson Kirk T. Steudle, Director
J anet McClelland, Acting State Personnel Director Department of Transportation
Kevin Clinton, State Treasurer
13 13 13 13
Michigan
2014 Comprehensive Annual Financi al Report
14 14 14 14
Michigan
FINANCIAL SECTION
INDEPENDENT AUDITOR’S REPORT
MANAGEMENT’S DISCUSSION AND ANALYSIS
2014 Comprehensive Annual Financi al Report
15 15 15 15
OAG
Doug A. Rgler, C.P.A., C.I.A.
Auditor General
201 N. Washington Square, Sixth Flor • Lan?ing, Michigan 48913 • Phone: (517 334-8050 • http:/ /audgcn.michign.gov
Independent Auditor's Report
The Honorable Rick Snyder, Governor
Members of the Legislature
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, the aggregate discretely presented component units, each major fund, and the aggregate
remaining fund information of the State of Michigan principally as of and for the fiscal year ended
September 30, 2014 and the related notes to the financial statements, which collectively comprise the
State's basic financial statements as listed in the table of contents.
Management's Respons 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 Responsibity
Our responsibility is to express op1n1ons on these financial statements based on our audit. The financial
statements of the following component units and funds were audited by other auditors whose reports have
been furnished to us, and our opinions, insofar as they relate to the amounts included in these component
units and funds, are based solely on the reports of the other auditors:
•
State Lottery Fund (a major fund)
•
Michigan Unemployment Compensation Funds (a major fund)
•
Michigan Employment Security Act - Administration Fund
•
Unemployment Obligation Trust Fund
•
State Building Authority - Debt Service Fund
•
State Building Authority - Capital Projects Fund
•
Attorney Discipline System
•
State Sponsored Group Insurance Fund
•
Michigan Education Savings Program
•
Michigan State Housing Development Authority
•
Farm Produce Insurance Authority
•
Mackinac Bridge Authority
•
Mackinac Island State Park Commission
•
Michigan Early Childhood Investment
Corporation
•
State Bar of Michigan
• Western Michigan University
•
Central Michigan University
• Eastern Michigan University
•
Ferris State University
•
Grand Valley State University
•
Lake Superior State University
• Michigan Technological University
•
Northern Michigan University
•
Oakland University
•
Saginaw Valley State University
Those financial statements reflect total assets and total revenues or additions to the governmental activities,
the business-type activities, the aggregate discretely presented component units, each major fund, and the
aggregate remaining fund information as follows:
Opinion Unit
Governmental activities
Business-type activities
Aggregate discretely presented component units
State Lottery Fund
Michigan Unemployment Compensation Funds
Aggregate remaining fund information
Percent of
Total Assets
1.7%
97.7%
43.4%
100.0%
100.0%
6.0%
Percent of Total
Revenues/ Additions
2.9%
82.4%
68.9%
100.0%
100.0%
9.5%
16 16 16 16
OAG
The Honorable Rick Snyder, Governor
Members of the Legislature
Page 2
Doug A. Rgler, C.P.A., C.I.A.
Auditor General
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 Goverment 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 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 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.
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, based on our audit and the reports of other auditors, the financial statements referred to in
the first paragraph present fairly, in all material respects, the respective financial position of the
governmental activities, the business-type activities, the aggregate discretely presented component units,
each major fund, and the aggregate remaining fund information of the State of Michigan as of
September 30, 2014 and the respective changes in financial position and, where applicable, cash flows
thereof for the fiscal year then ended in accordance with accounting principles generally accepted in the
United States of America.
Emphasis of Matter
As discussed in Note 4 to the financial statements, the State of Michigan adopted Governmental Accounting
Standards Board Statement No. 65, Items Previously Reported as Assets and Liabiliti es, for the fiscal year
ended September 30, 2014. Our opinions are not modified with respect to this matter.
Other Matters
Required Supplementary Informati on
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis, budgetary comparison schedules and corresponding notes, and information about
infrastructure assets reported using the modified approach, as listed in the table of contents, 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 and other auditors 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.
17 17 17 17
OAG
The Honorable Rick Snyder, Governor
Members of the Legislature
Page 3
Other Informati on
Doug A. Rgler, C.P.A., C.I.A.
Auditor General
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the State's basic financial statements. The combining and individual fund statements and
schedules - nonmajor funds and the introductory, statistical, and other information sections listed in the table
of contents are presented for purposes of additional analysis and are not a required part of the basic financial
statements.
The combining and individual fund statements and schedules - nonmajor funds 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. 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 or to the basic financial statements themselves, and other additional procedures in
accordance with auditing standards generally accepted in the United States of America by us and other
auditors. In our opinion, based on our audit, the procedures performed as described above, and the reports
of the other auditors, the combining and individual fund statements and schedules - nonmajor funds are fairly
stated, in all material respects, in relation to the basic financial statements as a whole.
The introductory, statistical, and other information sections have 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.
Other Reporting Required by Goverment Auditing Standards
In accordance with Goverment Auditing Standards, we will also issue a report on our consideration of the
State'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 Goverment Audi ting Standards in
considering the State's internal control over financial reporting and compliance.
S
p
1k
Doug Ringler
Auditor General
December 29, 2014
18 18 18 18
Michigan
2014 Comprehensive Annual Financi al Report
19 19 19 19
Michigan
2014 Comprehensive Annual Financi al Report
20 20 20 20
Michigan
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following is a discussion and analysis of the State of Michigan’s (the State’s) financial performance, providing an
overview of the activities for the fiscal year ended September 30, 2014. Please read it in conjunction with the transmittal letter at
the front of this report and with the State's financial statements, which follow this section.
HIGHLIGHTS
Government-wide
• At September 30, 2014, the State's net position was $20.7 billion.
• The State’s unrestricted net position was negative $5.9 billion as of the close of the year. A positive balance in
unrestricted net position represents excess assets available to meet ongoing obligations. A negative balance means that
it would be necessary to convert restricted assets to unrestricted assets if all ongoing obligations were immediately due
and payable.
• Revenues of $52.0 billion supported expenses of $51.4 billion during fiscal year 2014. As a result, the State’s total net
position increased by $631.6 million (3.2 percent). The increase in net position primarily relates to the continuing increase
in the net position of the Michigan Unemployment Compensation Funds as a result of the elimination of federal debt
during fiscal year 2012.
Fund Level
• As of the close of the fiscal year, the State’s governmental funds reported combined ending fund balances of $5.8 billion.
Governmental fund balances decreased $565.9 million (8.9 percent) from the prior year.
• The State’s two major governmental funds, the General Fund and the School Aid Fund, closed the fiscal year with a
combined fund balance of $2.6 billion, a decrease of $758.6 million (22.5 percent) from the prior year. Of the total
General Fund balance of $2.1 billion, $306.4 million is unassigned and, therefore, available for appropriation in future
years. The remaining $1.8 billion is either non-spendable (e.g., consists of assets not easily converted to cash, such as
inventories); restricted for specific purposes by enabling legislation; committed to specific programs or projects by
legislative action; or assigned to fulfill contractual obligations. In the School Aid Fund, the entire fund balance of $522.5
million is restricted for education purposes.
• The State’s proprietary funds reported net position at year-end of $2.7 billion. This represents an increase of $611.2
million (29.4 percent) compared to the prior year-end, primarily the result of the continuing increase in the net position of
the Michigan Unemployment Compensation Funds related to the elimination of federal debt during fiscal year 2012.
Long-term Debt
• The State’s total long-term bonded debt as of September 30, 2014 was $7.0 billion, a decrease of $326.2 million from the
prior year. The decrease represents the net difference between new issuances, payments, and refundings of debt.
More detailed information regarding the government-wide, fund level, and long-term debt activities can be found beginning on
page 24.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is an introduction to the State’s basic financial statements, which are comprised of three
components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This
report also contains other supplementary information in addition to the basic financial statements.
Government-wide Statements (Reporting the State as a Whole)
The Statement of Net Position and the Statement of Activities are two financial statements that report information about the
State, as a whole, and about its activities that should help answer this question: How has the State‘s financial position, as a whole,
changed as a result of this year’s activities? These statements include all non-fiduciary assets and liabilities using the accrual
basis of accounting. The current year’s revenues and expenses are taken into account regardless of when cash is received or
paid.
The Statement of Net Position (pages 32 and 33) presents all of the State’s non-fiduciary assets, deferred outflows of
resources, liabilities, deferred inflows of resources, and net position. Over time, increases and decreases in net position measure
whether the State’s financial position is improving or declining.
2014 Comprehensive Annual Financi al Report
21 21
Michigan
The Statement of Activities (pages 34 and 35) presents information showing how the State’s net position changed during the
most recent fiscal year. All changes in net position are reported as soon as the underlying events giving rise to the change occur,
regardless of the timing of related cash flows. Therefore, revenues and expenses are reported in these statements for some items
that will result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave).
Both statements report three activities:
• Governmental Activities – Most of the State’s basic services are reported under this category. Taxes and
intergovernmental revenues generally fund these services. The Legislature, the J udiciary, and the general operations of
the Executive departments fall within governmental activities.
• Business-type Activities – The State charges fees to customers to help it cover all or most of the cost of certain services it
provides. Lottery tickets, liquor purchases, and the State’s unemployment compensation services are examples of
business-type activities.
• Discretely Presented Component Units – Component units are legally separate organizations for which the elected
officials of the primary government are financially accountable. The State has 11 authorities and 10 universities that are
reported as discretely presented component units of the State.
This report includes two schedules (pages 39 and 41) that reconcile the amounts reported on the governmental fund financial
statements, which are prepared using the modified accrual basis of accounting, with the governmental activities in the government-
wide statements, which are prepared using the accrual basis of accounting. The following table summarizes the differences
between modified accrual and full accrual accounting:
(e.g. land, buildings, and infrastructure)
Deferred inflows for unavailable resources
Assets and liabilities of internal service funds that
primarily serve governmental funds
Net pension assets in excess of the annual
required contribution
Asset for certain debt issuance costs (i.e., prepaid
insurance costs)
Unmatured long-term debt (e.g. bonds, notes, capital
lease obligations) net of unamortized premiums,
discounts, and similar items
Certain accrued obligations not normally expected
to be liquidated with expendable available financial
resources unless they are due for payment in the
current period (i.e. claims and adjustments,
compensated absences, and net pension
obligations)
Accrued interest on long-term debt
Liability for unearned revenue
Capital outlay spending
Debt service principal payments and refunding
payments
Other financial sources, uses, and expenditures
resulting from debt issuance
Reported in Governmental
Fund Financial Statements
(modified accrual basis)
No
Yes
Yes
Yes
Description
Capital asset of the general government
Yes
No
No
Yes
Yes
Yes
No
No
No
Yes
Yes
Reported in Government-
Wide Financial Statements
(accrual basis)
Yes
No
Yes
Yes
Yes
No
No
No
No
2014 Comprehensive Annual Financi al Report
22 22
Michigan
The Notes to the Basic Financial Statements provide additional information that is essential to a full understanding of the data
provided in the government-wide and fund financial statements. The notes can be found beginning on page 59 of this report.
Fund Financial Statements (Reporting the State's Major Funds)
The fund financial statements begin on page 38 and provide detailed information about the major individual funds. A fund is
a fiscal and accounting entity with a self-balancing set of accounts that the State uses to keep track of specific sources of funding
and spending for a particular purpose. In addition to the major funds, page 140 begins the individual fund data for the non-major
funds. The State's funds are divided into three categories – governmental, proprietary, and fiduciary – and use different
accounting approaches.
• Governmental funds - Most of the State's basic services are reported in the 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 future spending. The governmental fund
financial statements provide a detailed short-term view of the State's 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 State's programs. These funds are reported using modified accrual accounting, which measures
cash and all other financial assets that can readily be converted to cash. Governmental funds include the General Fund and
special revenue, capital project, debt service, and permanent funds.
• Proprietary funds - When the State charges customers for the services it provides, whether to outside customers or to other
agencies within the State, these services are generally reported in proprietary funds. Proprietary (enterprise and internal service)
funds utilize accrual accounting, the same method used by private sector businesses. Enterprise funds report activities that
provide supplies and services to the general public. An example is the State Lottery Fund. Internal service funds report
activities that provide supplies and services for the State's other programs - such as risk management and state sponsored
group insurance activities. Internal service funds are reported as governmental activities on the government-wide statements.
• Fiduciary funds - The State acts as a trustee or fiduciary for its employee pension plans. It is also responsible for other assets
that, because of a trust arrangement, can be used only for the trust beneficiaries. The State's fiduciary activities are reported in
separate Statements of Fiduciary Net Position and Changes in Fiduciary Net Position beginning on page 50. These funds,
which include pension (and other employee benefit), private-purpose, and agency funds, are reported using accrual accounting.
The government-wide statements exclude fiduciary fund activities and balances because these assets are restricted in purpose
and do not represent discretionary assets of the State to finance its operations.
Revenues earned during the period but not yet
available
Expenses incurred during the period, but not normally
expected to be liquidated with expendable available
financial resources unless they are due for
payment in the current period
Depreciation
Revenues and expenditures related to prior periods
Amortization of issuance costs, premiums, discounts
and similar items
Activities of internal service funds properly included
within governmental activities
No Yes
Yes
Sales of capital assets Yes, in the amount of the
proceeds of the sale
Yes, gain or loss on the
sale
No
No Yes
No Yes
No Yes
No Yes
Reported in Governmental Reported in Government-
Fund Financial Statements Wide Financial Statements
Description (modified accrual basis) (accrual basis)
2014 Comprehensive Annual Financi al Report
23 23
Michigan
Additional Required Supplementary Information (RSI)
Following the basic financial statements is additional Required Supplementary Information that further explains and supports
the information in the financial statements. The Required Supplementary Information includes budgetary comparison schedules
reconciling the statutory and generally accepted accounting principles fund balances at fiscal year-end, and condition and
maintenance data regarding certain portions of the State’s infrastructure.
Other Supplementary Information
Other supplementary information includes combining financial statements for non-major governmental, proprietary, and
fiduciary funds, and non-major discretely presented component units. These funds are added together, by fund type, and
presented in single columns in the basic financial statements, but are not reported individually, as with major funds, on the
governmental fund financial statements.
FINANCIAL ANALYSIS OF THE GOVERNMENT AS A WHOLE
The State’s combined net position increased $631.6 million (3.2 percent) over the course of this fiscal year’s operations. The
net position of the governmental activities increased by $33.0 million (.2 percent), and business-type activities had an increase of
$598.6 million (32.4 percent).
2014 2013* 2014 2013 2014 2013*
Assets:
Current and other $ 14,182.3 $ 14,296.0 $ 2,915.7 $ 2,368.7 $ 17,098.0 $ 16,664.7
non-current assets
Capital assets 22,541.4 22,202.2 0.6 0.8 22,542.0 22,203.0
Total assets 36,723.7 36,498.2 2,916.3 2,369.5 39,640.0 38,867.7
Deferred outflows
of resources 66.4 - - - 66.4 -
Liabilities:
Current liabilities 5,781.9 5,313.7 223.8 247.2 6,005.8 5,560.9
Long-term liabilities 12,768.8 12,989.5 243.5 272.0 13,012.3 13,254.8
Total liabilities 18,550.7 18,303.2 467.4 519.2 19,018.1 18,815.7
Deferred inflows
of resources 11.5 - - - 11.5 -
Net position
Net investment 20,279.6 19,648.3 0.6 0.8 20,280.2 19,649.1
in capital assets
Restricted 3,824.9 3,774.0 2,442.5 1,844.0 6,267.3 5,618.0
Unrestricted (5,876.5) (5,227.3) 5.8 5.5 (5,870.6) (5,221.8)
Total net position $ 18,228.0 $ 18,195.0 $ 2,448.9 $ 1,850.3 $ 20,676.9 $ 20,045.3
Statement of Net Position
For Fiscal Year Ending September 30
(In Millions)
Governmental
Activities
Business-type
Activities
Total
Primary Government
*Prior year columns have been restated. More detailed information regarding the restatement can be found on page 70.
During fiscal year 2014, the State implemented Governmental Accounting Standards Board (GASB) Statement No. 65, Items
Previously Reported as Assets and Liabilities. GASB Statement No. 65 establishes accounting and financial reporting standards
that reclassify certain items that were previously reported as assets and liabilities as deferred outflows of resources or deferred
inflows of resources. Examples of such items include refunding of debt and tobacco settlement receivables. Note 27 provides
further detail on the components of deferred outflows of resources and deferred inflows of resources as reported on the
government-wide Statement of Net Position and in the governmental funds.
2014 Comprehensive Annual Financi al Report
24 24
Michigan
The largest component of the State’s net position, at $20.3 billion, reflects its investment in capital assets (e.g. land,
buildings, equipment, infrastructure, and others), less any related debt outstanding that was needed to acquire or construct the
assets. Restricted net position is the next largest component, comprising $6.3 billion of the total. This represents resources that
are subject to external restrictions, constitutional provisions, or enabling legislation limiting how they can be used. The State’s
unrestricted net position was negative $5.9 billion as of the close of the year. A positive balance in unrestricted net position
represents excess assets available to meet ongoing obligations. A negative balance means that it would be necessary to convert
restricted assets to unrestricted assets if all ongoing obligations were immediately due and payable.
The following condensed financial information was derived from the government-wide Statement of Activities and reflects how
the State’s net position changed during the fiscal year:
2014 2013* 2014 2013 2014 2013*
Revenues
Program Revenues
Charges for services $ 2,161.2 $ 2,076.2 $ 5,380.7 $ 6,184.9 $ 7,541.9 $ 8,261.1
Operating grants 17,981.9 17,194.9 59.9 21.7 18,041.7 17,216.6
Capital grants 850.2 867.2 - - 850.2 867.2
General revenues
General taxes 12,286.8 13,106.1 - - 12,286.8 13,106.1
Taxes restricted for
educational purposes 10,792.8 10,641.5 - - 10,792.8 10,641.5
Taxes restricted for
transportation purposes 2,006.5 2,077.7 - - 2,006.5 2,077.7
Unrestricted investment
and interest earnings 1.0 1.2 0.1 0.1 1.1 1.3
Miscellaneous 517.3 637.2 - - 517.3 637.2
Total revenues 46,597.6 46,602.0 5,440.7 6,206.7 52,038.2 52,808.8
Expenses
General government 2,456.0 2,138.4 - - 2,456.0 2,138.4
Education 14,941.4 14,617.7 - - 14,941.4 14,617.7
Human services 5,508.0 5,931.4 - - 5,508.0 5,931.4
Public safety and corrections 2,638.3 2,663.4 - - 2,638.3 2,663.4
Conservation, environment, etc. 714.0 593.4 - - 714.0 593.4
Labor, commerce 956.3 965.7 - - 956.3 965.7
and regulatory
Health services 15,036.3 13,853.4 - - 15,036.3 13,853.4
Transportation 3,309.4 2,914.9 - - 3,309.4 2,914.9
Tax credits 676.5 689.9 - - 676.5 689.9
Intergovernmental-
revenue sharing 1,120.6 1,077.5 1,120.6 1,077.5
Interest on long-term debt 174.5 178.6 - - 174.5 178.6
Liquor Purchase - - 779.3 742.6 779.3 742.6
Revolving Fund
State Lottery Fund - - 1,868.6 1,758.7 1,868.6 1,758.7
Attorney Discipline System - - 4.8 4.8 4.8 4.8
Michigan Unemployment
Compensation Funds - - 1,246.5 2,188.1 1,246.5 2,188.1
Total expenses 47,531.3 45,624.4 3,899.2 4,694.3 51,430.5 50,318.7
Excess (deficiency) Before
Contributions and Transfers (933.7) 977.6 1,541.5 1,512.4 607.8 2,490.1
Contributions to permanent fund
principal 23.9 22.8 - - 23.9 22.8
Transfers 942.9 945.1 (942.9) (945.1) - -
Increase (decrease)
in net position 33.0 1,945.5 598.6 567.3 631.6 2,512.9
Net position - beginning (restated) 18,195.0 16,249.3 1,850.3 1,283.0 20,045.3 17,532.3
Net position - ending $ 18,228.0 $ 18,195.0 $ 2,448.9 $ 1,850.3 $ 20,676.9 $ 20,045.3
Activities Activities
Primary Government
Changes in Net Position
For Fiscal Year Ending September 30
(In Millions)
Governmental Business-type Total
*Prior year columns have been restated. More detailed information regarding the restatement can be found on page 70.
2014 Comprehensive Annual Financi al Report
25 25
Michigan
Governmental Activities
Revenues to fund governmental activities totaled $46.6 billion for fiscal year 2014. As shown in the accompanying chart,
38.6 percent of the governmental activities’ revenue came from operating grants, primarily from the federal government, and were
earmarked for specific uses, such as highway construction and health and human services programs. In addition, the State
Constitution and other statutory restrictions earmarked 27.4 percent for educational and transportation purposes. Only 26.4 percent
of the revenues were available for general use.
Expenses related to governmental activities totaled $47.5 billion during fiscal year 2014. The expenses include spending
appropriated in prior years, such as capital outlay and work project authorization. As evidenced by the accompanying chart,
education and health services represent the governmental activities’ largest spending categories, accounting for 63.0 percent of
the spending.
Miscellaneous
1.1%
Capital Grants
1.8%
Taxes Restricted for
Transportation
4.3%
Charges for
Services
4.6%
Taxes Restricted for
Education
23.1%
General Taxes
26.4%
Operating
Grants
38.6%
Revenues - Governmental Activities for
Fiscal Year Ending September 30, 2014
($46.6 billion)
Interest on
Long-term Debt,
0.4%
Conservation,
Recreation &
Agriculture,
1.5%
Labor, Commerce &
Regulatory,
2.0%
Revenue Sharing,
2.4%
Tax Credits,
1.4%
General
Government,
5.2%
Transportation,
7.0%
Public Safety &
Corrections,
5.6%
Human
Services,
11.6%
Health Services,
31.6%
Education,
31.4%
Expenses - Governmental Activities for
Fiscal Year Ending September 30, 2014
($47.5 billion)
2014 Comprehensive Annual Financi al Report
26 26
Michigan
Business-type Activities
The business-type activities’ net position increased $598.6 million (32.4 percent) during the fiscal year. Factors contributing
to these results included:
• The Michigan Unemployment Compensation Funds (MUCF) finished the fiscal year with an increase in net position of
$589.6 million (32.3 percent). The continuing increase in the net position of these funds is primarily related to the
elimination of federal debt during fiscal year 2012.
• The State Lottery Fund’s net position increased $8.9 million (49.5 percent). The increase in net position is attributable to
the changes in the market value of investments that the Lottery holds to fund future payments due on lottery prizes.
FINANCIAL ANALYSIS OF THE STATE’S FUNDS
As the State completed the year, its governmental funds reported fund balances of $5.8 billion. Of this amount, $306.4
million constitutes unassigned fund balance in the General Fund, which is available to appropriate in future years. Of the total
governmental fund balances, $1.2 billion is in nonspendable form made up of amounts legally or contractually required to be
maintained intact including permanent fund endowments and assets that will not be converted to cash in the short term including
consumable inventories. Another $2.6 billion of the governmental fund balances are restricted for specific purposes by enabling
legislation, the majority of which is legally restricted for capital projects. Committed governmental fund balances totaled $1.5 billion
as of the end of the fiscal year representing funding set aside for multi-year projects and earmarked revenue carried forward with
legislative authority for specific ongoing programs. Another $206.9 million of the governmental fund balances are assigned for
encumbered services and goods to be received after the end of the fiscal year. Two capital projects funds reported negative
unassigned fund balances totaling $106.1 million due to expenditures incurred in advance of bonding proceeds which will be
received after the end of the fiscal year.
General Fund
The General Fund is the chief operating fund of the State. At the end of fiscal year 2014, the General Fund total fund
balance was $2.1 billion, of which $306.4 million was unassigned and, therefore, available for appropriation. The $2.1 billion in
total fund balance represents a decrease of $727.5 million (25.9 percent) from the fiscal year 2013 ending total fund balance.
Lower than anticipated revenues and increased spending related to revenue sharing programs contributed to the decrease in total
fund balance. A one-time transfer of $194.8 million from the Counter-Cyclical Budget and Economic Stabilization Fund (which, for
accounting purposes, is reported as a component of the General Fund) to the Michigan Settlement Administration Authority also
contributed to the decrease. The one-time transfer was made to fund Michigan’s contribution to the “Grand Bargain” which was
part of the Detroit bankruptcy settlement.
Included within the General Fund’s committed fund balance is $386.2 million in the Counter-Cyclical Budget and Economic
Stabilization Fund. This fund, also referred to as the Rainy Day Fund, is used to stabilize government programs in times of
economic downturn.
General Fund Budgetary Highlights:
The original enacted fiscal year 2014 general fund budget was $30.7 billion. During the year, various positive and negative
supplemental appropriations were enacted, resulting in a final enacted budget of $30.8 billion. The difference between the final
enacted budget of $30.8 billion and actual spending and encumbrances of $30.5 billion resulted from appropriation year 2014
spending authority net lapses of $255.8 million and restricted revenue authorized, but not spent, totaling $27.5 million. At fiscal
year-end, excess restricted revenue of $1.1 billion was carried forward into fiscal year 2015 and is available for appropriation.
All agencies finished the year with net lapses. However, the Department of Community Health reported line item
overexpenditures of $4.9 million.
School Aid Fund
Fund balance at September 30, 2014, totaled $522.5 million, a decrease of $31.0 million from the prior year. Revenues and
transfers to the fund totaled $13.4 billion, up $177.2 million from the prior year. In fiscal year 2014, tax revenues deposited in the
fund increased $333.5 million. Federal funds collected by the School Aid fund were down $37.1 million over the prior year.
Expenditures and transfers to other funds totaled $13.4 billion, an increase of $276.4 million over the previous year. The School
Aid Stabilization Fund ended the year with $455.1 million in restricted fund balance.
2014 Comprehensive Annual Financi al Report
27 27
Michigan
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets: At the end of the fiscal year 2014, the State had invested $22.5 billion, net of accumulated depreciation, in a
broad range of capital assets (see the table below). Depreciation charges for this fiscal year totaled $274.3 million.
2014 2013* 2014 2013 2014 2013*
Land $ 3,495.4 $ 3,448.5 $ - $ - $ 3,495.4 $ 3,448.5
and other assets 152.8 140.6 - - 152.8 140.6
Land rights 65.1 62.6 - - 65.1 62.6
Buildings and 1,880.0 1,979.3 - - 1,880.0 1,979.3
improvements
Equipment 158.8 160.0 0.5 0.7 159.3 160.7
Computer software 440.8 325.6 0.1 0.1 440.9 325.7
Infrastructure 14,480.3 14,355.4 - - 14,480.3 14,355.4
Other 19.8 19.8 - - 19.8 19.8
Subtotal 20,693.0 20,491.8 0.6 0.8 20,693.6 20,492.6
Construction in
progress 1,848.5 1,710.4 - - 1,848.5 1,710.4
Total $ 22,541.4 $ 22,202.2 $ 0.6 $ 0.8 $ 22,542.0 $ 22,203.0
Land improvements
Activities Activities
Primary Government
Governmental Business-type Total
*Prior year columns have been restated. More detailed information regarding the restatement can be found on page 70.
As allowed by Governmental Accounting Standards Board (GASB) Statement No. 34, the State has adopted an alternative
process for recording depreciation expense on selected infrastructure assets. Under this alternative method, referred to as the
modified approach, the State expenses certain maintenance and preservation costs and does not report depreciation expense.
Assets accounted for under the modified approach include the State’s network of public transportation roads and bridges, including
ancillary assets, such as guard rails, signs, lighting, culverts, fencing, and the like. The State is responsible for maintaining
approximately 27,459 lane miles of roads and 4,807 bridges (spans in excess of 20 feet).
The State has maintained the assessed condition of roads over the past five years. The State’s goal is to have more than
70% of roads in fair to excellent condition. The most recent condition assessment, completed for calendar year 2013, indicated
that 78.1% of roads were considered fair or better.
The State’s bridges have assessed conditions that are better than the established benchmarks. The most recent assessment
(2014) indicated that the condition of the bridges improved from the prior year. For fiscal year 2014, 93.9% of the bridges were
assessed as structurally fair or better.
The Legislature passed capital outlay appropriations of $209.1 million for fiscal year 2014. More detailed information about
the State’s capital assets is presented in Note 9 to the financial statements.
Long-term Debt: The State, along with the State Building Authority (SBA), a blended component unit of the State, are
empowered by law to authorize, issue, and sell debt obligations. General obligation bonds, issued by the State, are backed by the
full faith and credit of the State. The State also issues revenue dedicated bonded debt, whose payment for principal and interest
comes solely out of funds that receive legally restricted revenues. The State is not legally obligated for the debt issued by SBA.
SBA’s bonds generate revenue to finance the construction of facilities used by the State and universities. Revenues derived from
leases on the facilities fund the debt service requirements. More detailed information regarding the State’s long-term obligations is
presented in Notes 13 and 15 to the financial statements.
The most significant impact on capital assets during the year resulted from partially completed road
and bridge construction and repair projects which are reported within construction in progress.
2014 Comprehensive Annual Financi al Report
28 28
Michigan
2014 2013 2014 2013 2014 2013
General obligation bonds
(backed by the State) $ 1,942.4 $ 2,047.5 $ - $ - $ 1,942.4 $ 2,047.5
Revenue bonds and notes
(backed by specific tax
and fee revenues) 5,075.0 5,296.1 - 5,075.0 5,296.1
Total $ 7,017.4 $ 7,343.6 $ - $ - $ 7,017.4 $ 7,343.6
Activities Activities
Primary Government
Outstanding Bonded Debt as of September 30
(In Millions)
Governmental Business-type Total
During the year, the State and SBA issued new bonds totaling $85.3
million and refunding bonds totaling $295.1 million. From the refunding bond
proceeds, the State paid $299.1 million to bond escrow agents to cover future
debt service payments. The proceeds from the new bonds will provide funding
for MDOT construction projects and state-owned and university-owned
buildings.
ECONOMIC CONDITION AND OUTLOOK
The U.S. economy has grown in each of the past five years as measured by real gross domestic product (GDP); however,
the rate of growth has not been as strong as it was prior to the Great Recession. Based on actual data from 2010 to 2013, along
with the estimated rate for 2014, the average rate during these five years was 2.2 percent, which is down from the 2.9 percent rate
of growth averaged from 2003-2007. U.S. employment increased an estimated 1.7 percent in 2014, the same rate of growth
experienced in 2012 and 2013. U.S. employment has increased an estimated 8.4 million jobs over the last four years, which has
pushed employment past the pre-recession peak level to a new all-time high level.
The light vehicle sector, which remains a key component of the Michigan economy, has recovered markedly. After falling to a
27-year low of 10.4 million units in 2009, light vehicle sales rose to an estimated 16.0 million units in 2014. Estimated 2014 light
vehicle sales remain 4.1 percent lower than average annual light vehicle sales in the ten years directly prior to the Great
Recession. The U.S. housing market has improved after collapsing during the Great Recession, but still remains at historically low
levels. In 2014, housing starts rose above 1.0 million units for the first time in seven years to a level nearly double their 2009
record low. Despite these increases, estimated 2014 housing starts remain almost 40 percent below average annual starts in the
ten years directly before the Great Recession.
In 2013, Michigan payroll employment increased by 71,200 jobs or 1.8 percent and, in 2014, it is estimated that employment
increased another 28,000 jobs or 0.7 percent. Over the past four years, State employment has risen by 269,700 jobs or 7.0
percent. While employment in Michigan has been increasing, it still remains well below the pre-recession peak level. Michigan’s
unemployment rate fell to an estimated 7.6 percent in 2014, which is down 1.2 percentage points from the 2013 level and 5.9
percentage points below the 26-year high level posted in 2009. Michigan personal income increased an estimated 3.3 percent in
2014 and wage and salary payments, the largest component of personal income, rose an estimated 3.2 percent. With overall
prices increasing an estimated 1.2 percent in 2014, as measured by the Detroit CPI, real (inflation adjusted) personal income
increased 2.0 percent.
In 2015, U.S. GDP is expected to increase 3.0 percent. Light vehicle sales are projected to increase to 16.3 million units in
2015, which would mark the sixth consecutive annual increase. In addition, housing starts are projected to total 1.32 million units,
which despite representing a strong 24.6 percent increase, would still reflect a historically low level. In 2015, Michigan personal
income is expected to increase by 4.3 percent while wages and salaries are expected to grow 3.7 percent. With inflation forecast
to be 1.6 percent, real personal income is projected to increase 2.6 percent in 2015. Michigan payroll employment is projected to
rise 1.2 percent in 2015, which would mark the State’s fifth straight annual employment increase. The Michigan unemployment
rate is forecast to fall to 7.1 percent in 2015. This would tie Michigan’s 2007 rate as the State’s lowest unemployment rate since
2006.
Bond Ratings
The State’s general obligations are rated
AA stable outlook by Fitch, AA- stable
outlook by Standard & Poor’s, and Aa2
positive outlook by Moody’s.
Limitations on Debt
The State Constitution authorizes general obligation long-term borrowing, with approval of the Legislature and a
majority of the voters, and general obligation short-term notes, of which the principal may not exceed 15% of undedicated
revenues received in the preceding year. In fiscal year 2014, the State did not issue any general obligation short-term
notes.
2014 Comprehensive Annual Financi al Report
29 29
Michigan
CONTACTING THE STATE’S OFFICE OF FINANCIAL MANAGEMENT
This financial report is designed to provide citizens, taxpayers, customers, investors, and creditors with a general overview of
the State’s finances and to demonstrate the State’s accountability for the money it receives. Additional financial information can be
obtained elsewhere on the Office of Financial Management website. You can also contact the office by phone at (517) 373-1010.
The State’s component units issue their own separately issued audited financial statements. These statements may be
obtained by directly contacting the component unit. To obtain their phone numbers, you may contact the Office of Financial
Management at (517) 373-1010.
2014 Comprehensive Annual Financi al Report
30 30
Michigan
FINANCIAL SECTION
BASIC FINANCIAL STATEMENTS
2014 Comprehensive Annual Financi al Report
31 31 31 31
STATEMENT OF NET POSITION
SEPTEMBER 30, 2014
(In Thousands)
GOVERNMENTAL BUSINESS-TYPE COMPONENT
ACTIVITIES ACTIVITIES UNITS
ASSETS
Current Assets:
Cash $ 5,358 $ 14,822 $ 20,180 $ 798,427
Equity in common cash (Note 5) 3,739,349 139,030 3,878,379 539,408
Taxes, interest, and penalties
receivable (Note 6) 4,401,770 - 4,401,770 -
Internal balances 12,074 (12,074) - -
Amounts due from component units 1,894 403 2,297 36,470
Amounts due from primary government - - - 294,447
Amounts due from federal government 1,339,512 886 1,340,399 45,376
Amounts due from local units 200,934 48,373 249,306 1,087,921
Inventories 25,922 16,328 42,250 19,896
Investments (Note 8) 250,240 2,100,410 2,350,649 1,765,723
Other current assets 944,748 356,379 1,301,127 528,508
Total Current Assets 10,921,800 2,664,556 13,586,356 5,116,176
Noncurrent Assets:
Restricted Assets:
Cash and cash equivalents - - - 81,317
Investments - - - 526,382
Mortgages and loans receivable - - - 26,229
Taxes, interest, and penalties
receivable (Note 6) 265,993 - 265,993 -
Advances to primary government - - - 1,452,291
Amounts due from federal government 10,508 - 10,508 -
Amounts due from local units 1,810,676 - 1,810,676 5,057,852
Mortgages and loans receivable - - - 3,118,383
Investments (Note 8) 1,113,370 203,197 1,316,567 4,040,966
Land and property held for resale - - - 13,571
Capital Assets (Note 9):
Land and other non-depreciable assets 3,596,380 - 3,596,380 248,283
Buildings, equipment, and other depreciable assets 6,534,609 5,187 6,539,795 5,894,915
Less accumulated depreciation (3,357,359) (4,581) (3,361,939) (2,482,740)
Infrastructure 13,919,336 - 13,919,336 163,218
Construction in progress 1,848,459 - 1,848,459 293,939
Total capital assets 22,541,425 606 22,542,031 4,117,616
Interest in joint ventures (Note 7) 34,658 - 34,658 -
Other noncurrent assets 25,266 47,935 73,201 468,731
Total Noncurrent Assets 25,801,897 251,738 26,053,635 18,903,337
Total Assets $ 36,723,697 $ 2,916,294 $ 39,639,991 $ 24,019,513
DEFERRED OUTFLOWS OF RESOURCES (Note 27) $ 66,447 $ - $ 66,447 $ 204,420
The accompanying notes are an integral part of the financial statements.
Michigan
PRIMARY GOVERNMENT
TOTALS
32 32 32 32
GOVERNMENTAL BUSINESS-TYPE COMPONENT
ACTIVITIES ACTIVITIES UNITS
LIABILITIES
Current Liabilities:
Warrants outstanding $ 80,028 $ 5,413 $ 85,441 $ 351
Accounts payable and other liabilities 3,302,969 216,460 3,519,429 524,590
Income tax refunds payable (Note 16) 926,884 - 926,884 -
Amounts due to component units 302,654 1 302,655 35,211
Amounts due to primary government - - - 5,416
Bonds and notes payable (Notes 13 and 14) 540,255 - 540,255 2,262,814
Interest payable 120,524 - 120,524 147,008
Unearned revenue 126,698 505 127,202 84,841
Current portion of other long-term
obligations (Note 15) 381,898 1,465 383,363 265,186
Total Current Liabilities 5,781,910 223,844 6,005,754 3,325,417
Noncurrent Liabilities:
Advances from component units 1,225,637 - 1,225,637 -
Prize awards payable (Note 15) - 187,548 187,548 -
Unearned revenue 209,271 - 209,271 8,221
Bonds and notes payable (Notes 13 and 14) 6,778,465 - 6,778,465 12,642,408
Noncurrent portion of other long-term
obligations (Note 15) 4,555,395 55,992 4,611,387 1,804,965
Total Noncurrent Liabilities 12,768,768 243,540 13,012,308 14,455,593
Total Liabilities $ 18,550,678 $ 467,384 $ 19,018,062 $ 17,781,010
DEFERRED INFLOWS OF RESOURCES (Note 27) $ 11,468 $ - $ 11,468 $ 34,070
NET POSITION
Net investment in capital assets $ 20,279,584 $ 606 $ 20,280,190 $ 2,364,014
Restricted For (Note 22):
Education 1,002,524 - 1,002,524 153,993
Construction and debt service - - - 4,047,748
Public safety and corrections 14,915 - 14,915 -
Conservation, environment,
recreation, and agriculture 292,215 - 292,215 -
Health and human services 40,575 - 40,575 -
Transportation 983,101 - 983,101 -
Unemployment compensation - 2,415,686 2,415,686 -
Labor, commerce, and regulatory 144,188 - 144,188 -
Other purposes 131,016 26,785 157,800 770,668
Funds Held as Permanent Investments:
Expendable 231,442 - 231,442 161,123
Nonexpendable 984,896 - 984,896 388,116
Unrestricted (5,876,457) 5,834 (5,870,623) (1,476,808)
Total Net Position $ 18,227,998 $ 2,448,910 $ 20,676,909 $ 6,408,854
TOTALS
Michigan
PRIMARY GOVERNMENT
33 33 33 33
STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
OPERATING CAPITAL
CHARGES FOR GRANTS AND GRANTS AND
EXPENSES SERVICES
Functions/Programs
Primary Government:
Governmental Activities:
General government $ 2,455,999 $ 688,044 $ 149,427 $ 976
Education 14,941,366 9,388 1,887,762 -
Human services 5,508,011 85,213 4,416,678 -
Public safety and corrections 2,638,272 161,447 169,092 15,324
Conservation, environment,
recreation, and agriculture 714,019 299,073 182,035 2,124
Labor, commerce, and regulatory 956,256 754,054 196,016 -
Health services 15,036,289 67,298 10,410,322 -
Transportation 3,309,442 96,727 570,520 831,750
Tax credits (Note 16) 676,500 - - -
Intergovernmental-revenue sharing 1,120,593 - - -
Interest on long-term debt 174,522 - - -
Total governmental activities 47,531,269 2,161,243 17,981,852 850,174
Business-type Activities:
Liquor Purchase Revolving Fund 779,276 957,054 - -
State Lottery Fund 1,868,607 2,608,920 18,081 -
Attorney Discipline System 4,798 4,867 - -
Michigan Unemployment
Compensation Funds 1,246,507 1,809,854 41,800 -
Total business-type activities 3,899,188 5,380,695 59,881 -
Total primary government $ 51,430,457 $ 7,541,938 $ 18,041,733 $ 850,174
Total component units $ 4,862,991 $ 2,924,229 $ 1,650,154 $ 50,407
General Revenues:
Taxes:
General:
Sales and use
Personal income
Single business, Michigan business, and corporate income
Tobacco products
Beer, wine, and liquor
Insurance company
Quality assurance assessment
Penalties and interest
Other
Restricted For Educational Purposes:
Sales and use
Personal income
Corporate income
Education, property, and real estate transfers
Tobacco products
Beer, wine, and liquor
Casino gaming wagering
Other
Restricted For Transportation Purposes:
Sales and use
Gasoline and diesel fuel
Motor vehicle weight
Other
Unrestricted investment and interest earnings
Miscellaneous
Contributions to permanent fund principal
Payments from State of Michigan
Transfers
Total general and other revenue, payments, and transfers
Change in net position
Net position-beginning-restated
Net position-ending
The accompanying notes are an integral part of the financial statements.
CONTRIBUTIONS CONTRIBUTIONS
PROGRAM REVENUES
Michigan
34 34 34 34
GOVERNMENTAL BUSINESS-TYPE COMPONENT
TOTALS UNITS
$ (1,617,552) $ - $ (1,617,552) $ -
(13,044,216) - (13,044,216) -
(1,006,121) - (1,006,121) -
(2,292,409) - (2,292,409) -
(230,787) - (230,787) -
(6,185) - (6,185) -
(4,558,669) - (4,558,669) -
(1,810,445) - (1,810,445) -
(676,500) - (676,500) -
(1,120,593) - (1,120,593) -
(174,522) - (174,522) -
(26,538,000) - (26,538,000) -
- 177,778 177,778 -
- 758,394 758,394 -
- 69 69 -
- 605,147 605,147 -
- 1,541,388 1,541,388 -
(26,538,000) 1,541,388 (24,996,612) -
- - - (238,201)
2,993,426 - 2,993,426 -
6,078,008 - 6,078,008 -
528,174 - 528,174 -
578,154 - 578,154 -
143,105 - 143,105 -
362,287 - 362,287 -
971,377 - 971,377 -
117,734 - 117,734 -
514,504 - 514,504 -
5,872,729 - 5,872,729 -
2,276,581 - 2,276,581 -
34,566 - 34,566 -
2,033,711 - 2,033,711 -
357,389 - 357,389 -
45,722 - 45,722 -
106,903 - 106,903 -
65,172 - 65,172 -
102,026 - 102,026 -
958,745 - 958,745 -
940,637 - 940,637 -
5,052 - 5,052 -
990 87 1,076 120,172
517,297 3 517,300 403,143
23,865 - 23,865 -
- - - 805,252
942,883 (942,883) - -
26,571,035 (942,793) 25,628,241 1,328,567
33,035 598,595 631,630 1,090,366
18,194,963 1,850,316 20,045,279 5,318,488
$ 18,227,998 $ 2,448,910 $ 20,676,909 $ 6,408,854
Michigan
ACTIVITIES ACTIVITIES
PRIMARY GOVERNMENT
CHANGES IN NET POSITION
NET (EXPENSE) REVENUES AND
35 35 35 35
Michigan
2014 Comprehensive Annual Financi al Report
36 36 36 36
Michigan
GOVERNMENTAL FUND FINANCIAL STATEMENTS
Major Funds
GENERAL FUND
This fund is the State’s operating fund. It accounts for the
financial resources and transactions not accounted for in other
funds.
SCHOOL AID FUND
An amendment to the 1908 State Constitution created this fund
in 1955. The 1963 State Constitution provided for the fund’s
continued existence. Its purpose is to aid in the support of the
public schools, intermediate school districts, higher education
and school employee’s retirement systems of the State. School
aid payments to school districts are based on a statutory
formula. Michigan Compiled Laws Section 388.1611a, effective
October 1, 2003, created the school aid stabilization fund as a
separate account within the School Aid Fund. Pursuant to this
act, any remaining unreserved fund balance in the School Aid
Fund at year-end is transferred to this account.
The fund receives State revenues restricted to local school
programs, including: the constitutionally dedicated 60% of the
collections of sales tax imposed at a rate of 4% and all of the
collections of sales tax imposed at the additional rate of 2%;
State Lottery Fund earnings; a percentage of the adjusted gross
receipts from casino gaming; the real estate transfer tax; and
portions of the personal income, cigarette, liquor, and industrial
and commercial facilities taxes. A constitutional amendment
approved by voters in 1994 made structural changes in the
method of financing local school districts. The amendment
authorized the levy of a statewide property tax, which is
deposited in the School Aid Fund. Appropriated transfers are
also made from the General Fund.
Non-Major Funds
Non-major governmental funds are presented, by fund type,
beginning on page 132.
2014 Comprehensive Annual Financi al Report
37 37 37 37
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2014
(In Thousands)
NON-MAJ OR
FUND FUND FUNDS
ASSETS
Current Assets:
Cash $ 5,069 $ - $ 289 $ 5,358
Equity in common cash (Note 5) 1,413,703 - 2,002,628 3,416,332
Taxes, interest, and penalties receivable (Note 6) 2,265,960 2,039,853 95,957 4,401,770
Amounts due from other funds (Note 18) 1,085,704 8,759 42,717 1,137,180
Amounts due from component units 90 - 1,777 1,867
Amounts due from federal agencies 963,579 81,733 294,200 1,339,512
Amounts due from local units 114,146 35,082 51,705 200,934
Inventories 7,318 - 8,113 15,431
Investments (Note 8) - - 250,240 250,240
Other current assets 674,092 84 246,986 921,163
Total Current Assets 6,529,662 2,165,511 2,994,612 11,689,785
Noncurrent Assets:
Taxes, interest, and penalties receivable (Note 6) 198,429 65,023 2,540 265,993
Advances to other funds (Note 18) 2,702 - - 2,702
Amounts due from federal agencies 10,508 - - 10,508
Amounts due from local units 1,758,703 4,107 47,866 1,810,676
Investments (Note 8) - - 1,113,370 1,113,370
Other noncurrent assets 17,978 - 4,226 22,204
Total Noncurrent Assets 1,988,322 69,131 1,168,001 3,225,454
Total Assets $ 8,517,984 $ 2,234,642 $ 4,162,613 $ 14,915,239
LIABILITIES
Current Liabilities:
Warrants outstanding $ 64,226 $ 459 $ 14,617 $ 79,303
Accounts payable and other liabilities (Note 23) 2,418,295 137,757 569,435 3,125,487
Income tax refunds payable (Note 16) 926,884 - - 926,884
Amounts due to other funds (Note 18) 59,420 1,069,244 62,509 1,191,172
Amounts due to component units 6,900 - 55,131 62,031
Bonds and notes payable - - 99,105 99,105
Interest payable - - 8 8
Unearned revenue 83,335 - 12,433 95,768
Total Current Liabilities 3,559,059 1,207,460 813,238 5,579,757
Long-Term Liabilities:
Advances from component units 1,225,637 - - 1,225,637
Unearned revenue 9,704 - 101 9,804
Total Long-Term Liabilities 1,235,341 - 101 1,235,441
Total Liabilities 4,794,400 1,207,460 813,338 6,815,199
DEFERRED INFLOWS OF RESOURCES (Note 27) 1,639,532 504,652 187,112 2,331,297
FUND BALANCES
Nonspendable 189,095 - 992,581 1,181,676
Restricted 383,025 522,529 1,728,244 2,633,798
Committed 998,674 - 547,466 1,546,140
Assigned 206,875 - - 206,875
Unassigned (Note 21) 306,382 - (106,128) 200,254
Total Fund Balances (Note 22) 2,084,052 522,529 3,162,162 5,768,743
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances $ 8,517,984 $ 2,234,642 $ 4,162,613 $ 14,915,239
The accompanying notes are an integral part of the financial statements.
Michigan
TOTALS
AID GENERAL
SCHOOL
38 38 38 38
RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
SEPTEMBER 30, 2014
(In Thousands)
Total fund balances for governmental funds $ 5,768,743
Amounts reported for governmental activities in the Statement of Net Position
are different because:
Capital assets used in governmental activities are not financial resources
and therefore are not reported in the funds. (Note 9)
Land and other non-depreciable assets 3,587,211
Buildings, equipment, and other depreciable assets 5,484,688
Infrastructure 13,919,336
Construction in progress 1,848,459
Interest in joint ventures 34,658
Accumulated depreciation (2,693,309) 22,181,044
Certain tax revenues are earned but not available and therefore
are reported as deferred inflows of resources in the funds. 1,774,804
Other long-term assets are not available to pay for
current period expenditures and therefore are
reported as deferred inflows of resources in the funds. 556,493
Amounts due to component units for long-term loans. (240,598)
Internal service funds are used by management to charge the costs of
certain activities, such as insurance and telecommunications, to
individual funds. The assets and liabilities of the internal service funds
are included in governmental activities in the Statement of Net Position. 243,105
Deferred outflows of resources related to refunding of debt are
not reported in the funds. 66,447
Debt issuance costs are reported as current expenditures in the funds.
However, certain debt issuance costs are amortized over the life of
the bonds and are included in the governmental activities in the
Statement of Net Position. 2,312
Long-term liabilities are not due and payable in the current period and
therefore are not reported in the funds. (Note 15)
Capital lease obligations (375,568)
Compensated absences (398,469)
Workers' compensation (79,396)
Litigation (287,271)
Net pension obligations (742,192)
Net other postemployment benefits (2,709,192)
Pollution remediation (163,186)
Pension supplement (19,629) (4,774,904)
Long-term bonded debt is not due and payable in the current period and
therefore is not reported in the funds. Unamortized premiums, unamortized
discounts, and accrued interest payable are not reported in the funds. However,
these amounts are included in the Statement of Net Position. This is the net
effect of these balances on the statement. (Note 13)
Bonds and notes payable (7,017,404)
Unamortized premiums (205,932)
Unamortized discounts 3,721
Accrued interest payable (118,366) (7,337,981)
Deferred inflows of resources related to refunding of debt are
not reported in the funds. (11,468)
Net position of governmental activities $ 18,227,998
The accompanying notes are an integral part of the financial statements.
Michigan
39 39 39 39
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
SCHOOL
AID NON-MAJ OR
FUND FUND FUNDS
REVENUES
Taxes $ 12,460,302 $ 10,868,783 $ 2,006,702 $ 25,335,788
From federal agencies 15,364,698 1,623,283 1,536,667 18,524,648
From local agencies 89,644 - 10,727 100,372
From services 318,480 - 8,080 326,560
From licenses and permits 310,644 - 200,772 511,416
Special Medicaid reimbursements 133,909 - - 133,909
Miscellaneous 690,409 31,227 992,941 1,714,576
Total Revenues 29,368,085 12,523,293 4,755,890 46,647,268
EXPENDITURES
Current:
General government 1,870,519 17,442 178,208 2,066,169
Education 1,606,455 13,303,446 63,203 14,973,104
Human services 5,504,345 - 32,883 5,537,228
Public safety and corrections 2,665,729 - 4,154 2,669,883
Conservation, environment,
recreation, and agriculture 435,069 - 246,003 681,072
Labor, commerce, and regulatory 298,032 - 663,902 961,934
Health services 14,977,620 - 85,835 15,063,455
Transportation 217,503 - 2,393,709 2,611,213
Tax credits (Note 16) 676,500 - - 676,500
Capital outlay 59,156 - 1,054,614 1,113,770
Intergovernmental-revenue sharing 1,120,593 - - 1,120,593
Debt service:
Bond principal retirement - - 452,631 452,631
Bond interest and fiscal charges - - 317,873 317,873
Capital lease payments 61,654 - 1,374 63,028
Total Expenditures 29,493,175 13,320,888 5,494,389 48,308,452
Excess of Revenues over (under)
Expenditures (125,089) (797,595) (738,500) (1,661,184)
OTHER FINANCING SOURCES (USES)
Bonds and notes issued 85,295 - - 85,295
Refunding bonds issued - - 295,085 295,085
Premium on bond issuance 12,356 - 35,223 47,579
Payment to refunded bond escrow agent - - (299,121) (299,121)
Capital lease acquisitions 18,371 - 475 18,846
Proceeds from sale of capital assets 1,626 - 1,840 3,466
Transfers from other funds (Note 20) 234,237 892,807 2,227,106 3,354,150
Transfers to other funds (Note 20) (954,325) (126,249) (1,329,488) (2,410,062)
Total Other Financing
Sources (Uses) (602,440) 766,559 931,120 1,095,238
Net changes in fund balances (727,530) (31,036) 192,621 (565,945)
Fund Balances - Beginning
of fiscal year - restated 2,811,581 553,565 2,969,542 6,334,689
Fund Balances - End of fiscal year $ 2,084,052 $ 522,529 $ 3,162,162 $ 5,768,743
The accompanying notes are an integral part of the financial statements.
TOTALS
Michigan
GENERAL
40 40 40 40
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
Net change in fund balance - total governmental funds $ (565,945)
Governmental funds report capital outlay as expenditures. However, in
the Statement of Activities, the cost of those assets is allocated over their
estimated useful lives as depreciation expense. This is the amount by
which capital outlays exceeded depreciation in the current period.
(Note 9)
Land and other non-depreciable assets 49,331
Buildings, equipment, and other depreciable assets 97,452
Infrastructure 163,811
Construction in progress 138,086
Gain on disposal of capital assets 3,466
Accumulated depreciation (195,335) 256,812
Certain revenues that were reported as resources in the funds but were
earned in prior fiscal years are not reported in the Statement of Activities. 48,230
Amount due to component units for long-term loans are
not reported in the funds as they are not due and payable. (60,174)
Increase in equity interest in joint ventures. (Note 7) 134
Tax revenues that were reported as resources in the funds but were earned
in prior fiscal years are not reported in the Statement of Activities. (245,535)
Internal service funds are used by management to charge the costs of
certain activities, such as insurance and telecommunications, to individual
funds. The net revenue (expense) of the internal service funds is
reported with governmental activities. 12,639
Bond proceeds provide current financial resources to governmental funds
by issuing debt which increases long-term bonded debt in the Statement
of Net Position. Repayment of bond principal is an expenditure in the
governmental funds, but the repayment reduces long-term bonded debt
in the Statement of Net Position. This is the amount proceeds exceed
repayments. (Note 13)
Bond proceeds and premiums received (427,959)
Repayment of bond principal 452,631
Payment to refunded bond escrow agent 299,121
Accrued interest and amortization (17,398) 306,395
Certain expenditures are reported in the funds. However, they either
increase or decrease long-term liabilities reported on the Statement of
Net Position and have been eliminated from the Statement of Activities.
(Note 15)
Net pension obligation 78,706
Net other postemployment benefit obligation 64,056
Capital lease payments 24,530
Compensated absences payments (1,474)
Litigation recoveries, settlements and payments 89,013
Pollution remediation obligations (2,396)
Workers' compensation 12,569
Pension supplement 15,475 280,480
Change in net position of governmental activities $ 33,035
The accompanying notes are an integral part of the financial statements.
Michigan
41 41 41 41
Michigan
2014 Comprehensive Annual Financi al Report
42 42 42 42
Michigan
PROPRIETARY FUND FINANCIAL STATEMENTS
Major Funds
STATE LOTTERY FUND
Michigan Compiled Laws (MCL) Section 432.41 established the
State Lottery Fund and MCL Section 432.5 created a Bureau of
State Lottery under authority of Article 5, Section 4, of the State
Constitution. This authority expired on August 1, 1974, at which
time the Bureau became an organizational entity in the Department
of Technology, Management and Budget. The Bureau was
transferred to the Department of Treasury during fiscal year 1991.
Net income of the fund related to lottery operations is transferred to
the School Aid Fund and the fund’s net income related to bingo and
charity games regulation is transferred to the General Fund. The
remaining net position balance represents the unrealized cumulative
gain or loss on investments, as required by Governmental
Accounting Standards Board Statement No. 31, Accounting and
Financial Reporting for Certain Investments and for External
Investment Pools.
In general, revenues and related expenses are recognized in the
period during which the related drawings are held. Because draw
games may be played on an advance wager basis, an associated
liability is recognized for all wagers received for drawings to be
conducted after the end of the reporting period. Deferred prize
awards are recorded as expenses and liabilities at their discounted
present value. The State Treasurer invests funds equivalent to the
discounted value of the installment payments and the Lottery Fund
is credited with the interest earnings.
MICHIGAN UNEMPLOYMENT COMPENSATION FUNDS
The columns for the Michigan Unemployment Compensation Funds
reflect the activity of two funds administered by the Unemployment
Insurance Agency within the Department of Licensing and
Regulatory Affairs: the Michigan Unemployment Compensation
Fund and the Michigan Employment Security Act Contingent Fund.
The Michigan Unemployment Compensation Fund receives
contributions from employers and provides for the payment of
benefits to eligible unemployed workers. The fund also makes
payments under certain federally funded programs. Administrative
costs of the fund are accounted for in the Michigan Employment
Security Act - Administration Fund, a special revenue fund.
The Michigan Employment Security Act Contingent Fund was
created by Michigan Compiled Laws (MCL) Section 421.10 to
receive a special temporary unemployment tax surcharge, known as
the solvency tax. The fund also receives interest and penalty
charges on late contributions. MCL Section 421.10 restricts use of
solvency taxes for payment of interest on the Michigan
Unemployment Compensation borrowings from the federal
government.
A portion of the asset “Amounts due from other funds” and the
liability “Amounts due to other funds” represent receivables and
payables between the Michigan Unemployment Compensation Fund
and the Michigan Employment Security Act Contingent Fund.
Non-Major Funds
Individual fund statements for the Enterprise Funds, whose
combined totals are presented on this statement, begin on page
192.
Individual fund statements for the Internal Service Funds, whose
combined totals are presented on this statement, begin on page 196.
2014 Comprehensive Annual Financi al Report
43 43 43 43
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
SEPTEMBER 30, 2014
(In Thousands)
FUND FUNDS
ASSETS
Current Assets:
Cash $ 2 $ 13,881 $ 940 $ 14,822 $ -
Equity in common cash (Note 5) 3,608 63,897 71,525 139,030 323,017
Amounts due from other funds (Note 18) - 6,227 - 6,227 9,215
Amounts due from component units - 403 - 403 27
Amounts due from federal agencies - 886 - 886 -
Amounts due from local units - 48,373 - 48,373 -
Inventories 8,389 - 7,939 16,328 10,492
Investments (Note 8) 29,264 2,065,900 5,246 2,100,410 -
Other current assets 96,320 253,412 6,647 356,379 23,340
Total Current Assets 137,581 2,452,979 92,296 2,682,857 366,091
Noncurrent Assets:
Investments (Note 8) 203,197 - - 203,197 -
Capital Assets (Note 9):
Land and other non depreciable assets - - - - 9,170
Buildings and equipment 4,638 - 548 5,187 1,049,920
Allowance for depreciation (4,066) - (514) (4,581) (664,050)
Total capital assets 572 - 34 606 395,040
Other noncurrent assets - 47,900 35 47,935 750
Total Noncurrent Assets 203,769 47,900 69 251,738 395,790
Total Assets $ 341,351 $ 2,500,879 $ 92,365 $ 2,934,595 $ 761,881
LIABILITIES
Current Liabilities:
Warrants outstanding $ 852 $ - $ 4,561 $ 5,413 $ 726
Accounts payable and
other liabilities (Note 23) 115,371 20,923 79,513 215,808 94,194
Amounts due to other funds (Note 18) 9,124 9,541 288 18,953 10,742
Amounts due to component units - 1 - 1 25
Interest payable - - - - 2,150
Unearned revenue - - 505 505 30,930
Current portion of other
long-term obligations (Note 15) 804 - 661 1,465 58,690
Total Current Liabilities 126,151 30,466 85,528 242,145 197,457
Long-Term Liabilities:
Advances from other funds (Note 18) - - - - 2,702
Amounts due to other funds (Note 18) 26 - 25 51 276
Prize awards payable 187,548 - - 187,548 -
Unearned revenue - - - - 199,467
Noncurrent portion of other
long-term obligations (Note 15) 840 54,728 373 55,941 118,873
Total Long-Term Liabilities 188,415 54,728 397 243,540 321,319
Total Liabilities 314,566 85,193 85,925 485,684 518,776
NET POSITION
Net investment in capital assets $ 572 $ - $ 34 $ 606 $ 377,010
Restricted For:
Unemployment compensation - 2,415,686 - 2,415,686 -
Other purposes 26,785 - - 26,785 6,786
Unrestricted (572) - 6,406 5,834 (140,691)
Total Net Position $ 26,785 $ 2,415,686 $ 6,440 $ 2,448,910 $ 243,105
The accompanying notes are an integral part of the financial statements.
FUNDS TOTALS
MAJ OR
ACTIVITIES --
GOVERNMENTAL
NON-MAJ OR
Michigan
INTERNAL STATE
LOTTERY
MICHIGAN
SERVICE
UNEMPLOYMENT
COMPENSATION
BUSINESS-TYPE ACTIVITIES -- ENTERPRISE FUNDS
44 44 44 44
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
PROPRIETARY FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
STATE
LOTTERY
OPERATING REVENUES
Operating revenues $ 2,608,920 $ 1,809,854 $ 961,921 $ 5,380,695 $ 1,600,430
Total Operating Revenues 2,608,920 1,809,854 961,921 5,380,695 1,600,430
OPERATING EXPENSES
Salaries, wages, and
other administrative 298,809 3 83,652 382,464 630,012
Interest expense 1 - - 1 3
Depreciation 212 - 37 249 78,009
Purchases for resale - - 698,828 698,828 90,341
Purchases for prison industries - - - - 10,138
Lottery prize awards 1,559,864 - - 1,559,864 -
Premiums and claims - - 24 24 716,545
Unemployment benefits - 1,080,710 - 1,080,710 -
Other operating expenses - 165,794 1,532 167,326 60,117
Total Operating Expenses 1,858,886 1,246,507 784,074 3,889,467 1,585,164
Operating Income (Loss) 750,035 563,347 177,846 1,491,228 15,265
NONOPERATING REVENUES (EXPENSES)
Interest revenue 79 - 87 166 230
Investment revenue (expense) - net 18,002 41,504 - 59,505 -
Other nonoperating revenues - 296 - 296 285
Amortization of prize award
obligation discount (9,715) - - (9,715) -
Interest expense (4) - - (4) (476)
Other nonoperating expense (1) - 3 2 (1,680)
Total Nonoperating
Revenues (Expenses) 8,360 41,800 90 50,250 (1,641)
Income (Loss) Before Transfers 758,394 605,147 177,936 1,541,478 13,625
CAPITAL CONTRIBUTIONS AND TRANSFERS
Transfers from other funds - - - - 2,500
Transfers To:
School Aid Fund (742,907) - - (742,907) -
Other funds (6,621) (15,508) (177,848) (199,976) (3,485)
Total transfers to other funds (749,528) (15,508) (177,848) (942,883) (985)
Change in net position 8,866 589,640 89 598,595 12,639
Total net position - Beginning
of fiscal year 17,919 1,826,046 6,351 1,850,316 230,466
Total net position - End of fiscal year $ 26,785 $ 2,415,686 $ 6,440 $ 2,448,910 $ 243,105
The accompanying notes are an integral part of the financial statements.
BUSINESS-TYPE ACTIVITIES -- ENTERPRISE FUNDS
Michigan
MAJ OR
GOVERNMENTAL
ACTIVITIES --
INTERNAL
SERVICE
UNEMPLOYMENT
MICHIGAN
COMPENSATION
FUND FUNDS TOTALS FUNDS NON-MAJ OR
45 45 45 45
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
STATE
LOTTERY
FUND FUNDS
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from federal and local agencies $ - $ 146,463 $ - $ 146,463 $ -
Receipts from customers 2,593,490 1,632,927 957,054 5,183,470 1,687,851
Membership dues - - 4,818 4,818 -
Payments to employees (22,118) - (24,743) (46,860) (231,822)
Payments to suppliers (46,140) - (765,637) (811,777) (894,837)
Payments to prize winners (1,591,609) - - (1,591,609) -
Payments for commissions to retailers (226,667) - - (226,667) -
Claims paid - (1,248,714) - (1,248,714) (375,873)
Other receipts - 28,011 (150) 27,861 96
Other payments - (1,553) (1,845) (3,398) (3,827)
Net cash provided (used)
by operating activities $ 706,956 $ 557,133 $ 169,498 $ 1,433,586 $ 181,588
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Repayment of federal advances $ - $ 296 $ - $ 296 $ -
Loans or loan repayments from other funds - - - - 20,362
Loans or loan repayments to other funds - - - - (20,751)
Transfers from other funds - - - - 2,500
Transfers to other funds (740,769) (45,020) (177,848) (963,637) (3,485)
Net cash provided (used)
by noncapital financing activities $ (740,769) $ (44,724) $ (177,848) $ (963,340) $ (1,374)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition and construction of capital assets $ (31) $ - $ (13) $ (43) $ (148,922)
Interest paid - - - - (7)
Capital lease payments
(including imputed interest expense) - - - - (13,083)
Proceeds from sale of capital assets - - - - 33
Net cash provided (used) by capital
and related financing activities $ (31) $ - $ (13) $ (43) $ (161,980)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales and maturities of
investment securities $ 33,775 $ - $ - $ 33,775 $ -
Purchases of investment securities (9,272) (527,387) (26) (536,686) -
Interest and dividends on investments 79 41,504 87 41,669 230
Expenses from securities lending activities (4) - - (4) -
Net cash provided (used)
by investing activities $ 24,577 $ (485,884) $ 61 $ (461,246) $ 230
Net cash provided (used) - all activities $ (9,267) $ 26,525 $ (8,302) $ 8,957 $ 18,465
Cash and cash equivalents
at beginning of year 12,024 51,253 76,206 139,482 303,827
Cash and cash equivalents
at end of year $ 2,757 $ 77,778 $ 67,904 $ 148,439 $ 322,292
The accompanying notes are an integral part of the financial statements.
TOTALS
INTERNAL
SERVICE
UNEMPLOYMENT
COMPENSATION
Michigan
MAJ OR
NON-MAJ OR FUNDS
MICHIGAN
BUSINESS-TYPE ACTIVITIES -- ENTERPRISE FUNDS
GOVERNMENTAL
ACTIVITIES --
46 46 46 46
STATE
LOTTERY
FUND FUNDS
RECONCILIATION OF CASH
AND CASH EQUIVALENTS
Per Statement of Net Position Classifications:
Cash $ 2 $ 13,881 $ 940 $ 14,822 $ -
Equity in common cash 3,608 63,897 71,525 139,030 323,017
Warrants outstanding (852) - (4,561) (5,413) (726)
Cash and cash equivalents at end of year $ 2,757 $ 77,778 $ 67,904 $ 148,439 $ 322,291
RECONCILIATION OF OPERATING INCOME
(LOSS) TO NET CASH PROVIDED
(USED) BY OPERATING ACTIVITIES
Operating income (loss) $ 750,035 $ 563,347 $ 177,846 $ 1,491,228 $ 15,265
Adjustments to Reconcile Operating Income
to Net Cash Provided (Used)
by Operating Activities:
Depreciation expense 212 - 37 249 78,009
Amortization of prize award
obligation discount (9,715) - - (9,715) -
Other nonoperating revenue - - 3 3 -
Other reconciling items 87 - - 87 -
Net Changes in Assets and Liabilities:
Inventories (540) - (725) (1,265) 2,124
Other assets (net) (15,430) 21,015 283 5,868 1,552
Accounts payable and other liabilities 4,339 (27,230) (8,021) (30,912) (3,742)
Prize awards payable (22,030) - - (22,030) -
Unearned revenue - - 73 73 88,380
Net cash provided (used)
by operating activities $ 706,956 $ 557,133 $ 169,498 $ 1,433,586 $ 181,588
SCHEDULE OF NONCASH INVESTING,
CAPITAL, AND FINANCING ACTIVITIES
Cost of capital assets acquisitions
financed by capital leases $ - $ - $ - $ - $ 7,653
Capital lease liabilities entered
into during the year - - - - (7,653)
Increase (decrease) in fair value
of investments 8,866 - - 8,866 -
Transfers to other funds (accrual) (8,759) (2,773) - (11,532) -
Gain (loss) on disposal of capital assets - - - - (1,680)
Total noncash investing, capital,
and financing activities $ 107 $ (2,773) $ - $ (2,666) $ (1,680)
BUSINESS-TYPE ACTIVITIES -- ENTERPRISE FUNDS
Michigan
TOTALS
MAJ OR
NON-MAJ OR
GOVERNMENTAL
MICHIGAN ACTIVITIES --
FUNDS
UNEMPLOYMENT INTERNAL
COMPENSATION SERVICE
47 47 47 47
Michigan
2014 Comprehensive Annual Financi al Report
48 48 48 48
Michigan
FIDUCIARY FUND FINANCIAL STATEMENTS
Individual fund financial statements begin on the following pages:
Pension (and Other Employee Benefit) Trust Funds, page 204.
Private Purpose Trust Funds, page 212.
Agency Funds, page 215.
2014 Comprehensive Annual Financi al Report
49 49 49 49
STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS
SEPTEMBER 30, 2014
(In Thousands)
PRIVATE
PURPOSE
TRUST AGENCY
FUNDS FUNDS FUNDS
ASSETS
Cash $ - $ 1,862 $ 40,217
Equity in common cash (Note 5) 407,460 102,716 6,646
Receivables:
From participants 252,912 - -
From employers 377,360 - -
Other 110,764 - -
Interest and dividends 7,880 2,275 -
Due from other funds (Note 18) 212 - -
Due from component unit 1,219 - -
Due from other governmental 34,389 - -
Sale of investments 268 - -
Investments at Fair Value (Note 8):
Short term investments 3,964,342 - -
Fixed income 7,013,635 20,330 -
Domestic equities 18,082,763 - -
Real estate 5,542,861 - -
Alternative investments 10,362,413 - -
International equities 9,186,635 - -
Absolute return 6,380,691 - -
Mutual funds 1,066,136 3,703,167 -
Pooled investment funds 2,802,860 - -
Separate accounts 2,372,289 - -
Guaranteed funding agreements - 531,036 -
Securities lending collateral (Note 8) 4,048,924 - -
Other current assets - 13,219 347
Other noncurrent assets - 550 419,228
Total assets $ 72,016,012 $ 4,375,156 $ 466,438
LIABILITIES
Warrants outstanding $ 694 $ 4,386 $ -
Accounts payable and other liabilities 292,669 8,351 47,024
Amounts due to other funds (Note 18) 4 - 186
Obligations under security lending 4,190,118 - -
Unearned revenue 2,598 - -
Other long-term liabilities - - 419,228
Total liabilities $ 4,486,084 $ 12,736 $ 466,438
NET POSITION
Restricted for pension,
postemployment health-care, deferred
compensation participants, and other purposes $ 67,529,928 $ 4,362,419
Reconciliation of Net Position:
Restricted for pension benefits (Note 10) 59,176,737 $ -
Restricted for postemployment health-care benefits (Note 11) 4,694,353 -
Restricted for deferred compensation participants (Note 17) 3,658,839 -
Restricted for other purposes - 4,362,419
Total net position restricted for benefits
and other purposes $ 67,529,928 $ 4,362,419
The accompanying notes are an integral part of the financial statements.
Michigan
TRUST
BENEFIT)
PENSION
(AND OTHER
EMPLOYEE
50 50 50 50
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
PRIVATE
PURPOSE
TRUST
FUNDS FUNDS
ADDITIONS
Contributions:
From participants $ 1,119,361 $ 475,135
From employers 4,286,163 -
From clients - 63,981
From gifts, bequests, and endowments - 42,200
From other governmental 57,076 -
From other systems 9,112 -
Investment Income:
Net increase (decrease) in the fair value of investments 7,849,708 244,969
Interest, dividends, and other 1,221,245 79,112
Securities lending income 102,377 -
Less Investment Expense:
Investment activity expense 178,747 -
Securities lending expense 68,527 -
Net investment income (loss) 8,926,055 324,082
Escheated property - 97,339
Miscellaneous income 9,701 1,276
Total Additions 14,407,469 1,004,013
DEDUCTIONS
Benefits paid to participants or beneficiaries 5,932,121 281,701
Medical, dental, and life insurance for retirants 1,194,920 -
Refunds and transfers to other systems 239,213 -
Amounts distributed to clients, claimants, or third parties - 204,661
Administrative and other expenses 212,790 13,210
Transfers to other funds 186 -
Total Deductions 7,579,229 499,573
Change in net position 6,828,239 504,440
Net position - Beginning of fiscal year - restated 60,701,689 3,857,979
Net position - End of fiscal year $ 67,529,928 $ 4,362,419
Reconciliation of change in net position:
Change in net position restricted for pension benefits $ 5,347,955 $ -
Change in net position restricted for postemployment benefits 1,362,528 -
Change in net position restricted for deferred compensation participants 117,757 -
Change in net position restricted for other purposes - 504,440
Change in net position $ 6,828,239 $ 504,440
The accompanying notes are an integral part of the financial statements.
Michigan
TRUST
(AND OTHER
EMPLOYEE
BENEFIT)
PENSION
51 51 51 51
Michigan
2014 Comprehensive Annual Financi al Report
52 52 52 52
Michigan
COMPONENT UNIT FINANCIAL STATEMENTS
Major Funds
MICHIGAN FINANCE AUTHORITY
Executive Order 2010-2 created the Michigan Finance Authority
(MFA) to consolidate certain Michigan public finance authorities.
Functions related to borrowing money or the issuance of bonds or
notes of the Michigan Strategic Fund, Michigan Forest Finance
Authority, and Land Bank Fast Track Authority were also
consolidated into MFA. A seven-member Board of Trustees,
consisting of the State Treasurer and six appointees of the Governor
with advice and consent of the State Senate, governs the Authority.
MFA provides sources of funding for loans to governmental units,
school districts, and nonpublic nonprofit institutions of higher
education, healthcare corporations and facilities. Additionally, MFA
assists governmental units in financing and marketing municipal
debt and tax-exempt bonds. The Authority also enhances the
student loan efforts of Michigan private lenders by making loans to
students and their parents, and acquiring loans previously made.
MFA may not create debt or liabilities on behalf of the State or
pledge the full faith and credit of the State.
MICHIGAN STATE HOUSING DEVELOPMENT
AUTHORITY
Michigan Compiled Laws Section 125.1421 created the Michigan
State Housing Development Authority (MSHDA) to issue notes and
bonds to finance housing for sale or rental to families with low or
moderate incomes and to finance home improvements. MSHDA is
also the administrator of various "Section 8" housing programs in
Michigan for the U.S. Department of Housing and Urban
Development. The Governor appoints MSHDA’s board members.
MICHIGAN STRATEGIC FUND
The Michigan Strategic Fund (MSF) is a public body corporation and
politic created by Michigan Compiled Laws (MCL) Section 125.2005
to help diversify the economy of the State and to provide for
economic development, primarily by assisting business enterprises
to obtain additional sources of financing. The Workforce
Development Agency resides within MSF and is a considerable
piece of MSF’s activities.
MSF is governed by a board of eleven members, which includes the
directors (or their designees) of the Departments of Licensing and
Regulatory Affairs and Treasury, and the Chief Executive Officer of
the Michigan Economic Development Corporation. The Governor,
with the advice and consent of the Senate, appoints the other eight
members; none of those eight may be an employee of the State.
WESTERN MICHIGAN UNIVERSITY
Of the ten universities included in this report, Western Michigan
University is reported as a major component unit. The universities
are legally separate entities whose governing boards are appointed
by the Governor and for which the State is therefore, defined as
legally accountable. Excluded from this report are three other
universities (University of Michigan, Michigan State University, and
Wayne State University) whose board members are elected by the
voters and, therefore, considered separate special purpose
governments.
Non-Major Funds
The non-major component unit - authorities are presented beginning
on page 220.
The non-major component unit - State universities are presented
beginning on page 226.
2014 Comprehensive Annual Financi al Report
53 53 53 53
STATEMENT OF NET POSITION
COMPONENT UNITS
SEPTEMBER 30, 2014
(In Thousands)
HOUSING MICHIGAN
FINANCE DEVELOPMENT STRATEGIC
AUTHORITY AUTHORITY FUND NON-MAJ OR
ASSETS
Current Assets:
Cash $ 222,885 $ 96,132 $ 85,220 $ 88,611
Equity in common cash (Note 5) 265,206 - 244,075 30,127
Amounts due from component units - - - 36,466
Amounts due from primary government 68,794 - - 6,333
Amounts due from federal government 1,643 - 28,499 1,269
Amounts due from local units 1,085,925 - 1,977 -
Inventories - - - 600
Investments (Note 8) 1,441,303 157,573 - 16,912
Other current assets 238,883 52,124 56,334 25,753
Total Current Assets 3,324,638 305,829 416,105 206,072
Restricted Assets:
Cash and cash equivalents - - 40,483 1,534
Investments - - - 2,157
Mortgages and loans receivable - - - -
Advances to primary government 1,452,291 - - -
Amounts due from local units 5,057,852 - - -
Mortgages and loans receivable 903,669 2,121,844 35,249 9,927
Investments (Note 8) 790,684 843,375 113,473 1,037,846
Land and property held for resale - - - 13,571
Capital Assets (Note 9):
Land and other non-depreciable assets - - - 943
Buildings, equipment, and other depreciable assets - - - 53,079
Less accumulated depreciation - - - (32,308)
Infrastructure - - - 102,950
Construction in progress - - - 80
Total capital assets - - - 124,743
Other noncurrent assets - 70,917 218,134 48,659
Total Assets $ 11,529,133 $ 3,341,964 $ 823,444 $ 1,444,508
DEFERRED OUTFLOWS OF RESOURCES (Note 27) $ 29,340 $ 143,367 $ - $ -
LIABILITIES
Current Liabilities:
Warrants outstanding $ - $ - $ 271 $ 80
Accounts payable and other liabilities 9,855 45,930 66,256 19,878
Amounts due to component units - - 34,591 621
Amounts due to primary government - - 1,068 2,132
Bonds and notes payable (Note 14) 2,088,616 87,655 7,305 50
Interest payable 119,667 10,903 4,519 18
Unearned revenue - - 876 2,365
Current portion of other long-term obligations 1,367 129,800 1,256 110,434
Total Current Liabilities 2,219,505 274,289 116,140 135,579
Unearned revenue - - 50 1,253
Bonds and notes payable (Note 14) 8,884,221 1,932,440 188,683 1,685
Noncurrent portion of other long-term obligations 31,189 501,085 7,120 897,384
Total Liabilities $ 11,134,915 $ 2,707,814 $ 311,993 $ 1,035,900
DEFERRED INFLOWS OF RESOURCES (Note 27) $ 2,560 $ 11,749 $ - $ -
NET POSITION
Net investment in capital assets $ - $ - $ - $ 123,008
Restricted For:
Education - - - -
Construction and debt service 3,532,780 471,554 1,046 2,871
Other purposes - 18,081 475,088 60,976
Funds Held as Permanent Investments:
Expendable - - - -
Nonexpendable - - - -
Unrestricted (3,111,783) 276,134 35,318 221,753
Total Net Position $ 420,997 $ 765,769 $ 511,451 $ 408,608
The accompanying notes are an integral part of the financial statements.
Michigan
MICHIGAN
MICHIGAN
STATE
AUTHORITIES
54 54 54 54
MICHIGAN
UNIVERSITY
$ 50,332 $ 255,247 $ 798,427
- - 539,408
- 4 36,470
17,821 201,500 294,447
2,688 11,277 45,376
3 16 1,087,921
2,671 16,625 19,896
12,896 137,040 1,765,723
53,685 101,729 528,508
140,097 723,437 5,116,176
- 39,300 81,317
321,419 202,806 526,382
- 26,229 26,229
- - 1,452,291
- - 5,057,852
8,960 38,735 3,118,383
216,063 1,039,525 4,040,966
- - 13,571
112,827 134,513 248,283
1,154,827 4,687,009 5,894,915
(482,157) (1,968,274) (2,482,740)
- 60,268 163,218
23,176 270,684 293,939
808,673 3,184,200 4,117,616
59,457 71,563 468,731
$ 1,554,668 $ 5,325,795 $ 24,019,513
$ - $ 31,713 $ 204,420
$ - $ - $ 351
88,333 294,338 524,590
- - 35,211
36 2,180 5,416
13,505 65,683 2,262,814
2,170 9,731 147,008
8,969 72,631 84,841
6,356 15,973 265,186
119,368 460,536 3,325,417
- 6,918 8,221
377,140 1,258,239 12,642,408
191,741 176,446 1,804,965
$ 688,249 $ 1,902,139 $ 17,781,010
$ 1,419 $ 18,341 $ 34,070
$ 421,162 $ 1,819,844 $ 2,364,014
11,281 142,713 153,993
- 39,497 4,047,748
177,195 39,328 770,668
- 161,123 161,123
71,680 316,435 388,116
183,683 918,088 (1,476,808)
$ 865,000 $ 3,437,028 $ 6,408,854
TOTALS NON-MAJ OR
WESTERN
Michigan
STATE UNIVERSITIES
55 55 55 55
STATEMENT OF ACTIVITIES
COMPONENT UNITS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
NET
(EXPENSE)
FUNCTIONS/PROGRAMS CONTRIBUTIONS CONTRIBUTIONS REVENUE
Authorities:
Michigan Finance Authority $ 373,799 $ 760,572 $ 270,999 $ - $ 657,772
Michigan State Housing
Development Authority 789,009 177,106 615,601 - 3,698
Michigan Strategic Fund 546,444 3,836 278,066 - (264,543)
Non-Major 171,434 39,311 183,745 2,035 53,658
State Universities:
Western Michigan University 629,206 396,176 65,964 7,262 (159,804)
Non-Major 2,353,098 1,547,228 235,778 41,110 (528,983)
Total $ 4,862,991 $ 2,924,229 $ 1,650,154 $ 50,407 $ (238,201)
The accompanying notes are an integral part of the financial statements.
Michigan
PROGRAM REVENUES
OPERATING CAPITAL
CHARGES FOR GRANTS/ GRANTS/
EXPENSES SERVICES
56 56 56 56
NET POSITION
$ - $ - $ - $ 657,772 $ (236,775) $ 420,997
18,180 - - 21,878 743,891 765,769
(1,133) 279,938 77,718 91,980 419,471 511,451
1,217 - 6,918 61,792 346,816 408,608
16,513 97,601 122,985 77,295 787,705 865,000
85,394 427,713 195,523 179,648 3,257,380 3,437,028
$ 120,172 $ 805,252 $ 403,143 $ 1,090,366 $ 5,318,488 $ 6,408,854
OF YEAR
INVESTMENT
END
Michigan
GENERAL REVENUES
INTEREST AND PAYMENTS
NET POSITION FROM BEGINNING
STATE OF CHANGE IN EARNINGS
RESTATED OF YEAR (LOSS) MICHIGAN OTHER NET POSITION
57 57 57 57
Michigan
Index
Notes to the Financial Statements
Page
NOTE 1 - Summary of Significant Accounting Policies ........................................................................ 59
NOTE 2 - Funds and Component Units by Classification .................................................................... 67
NOTE 3 - Budgeting, Budgetary Control, and Legal Compliance ........................................................ 68
NOTE 4 - Accounting Changes and Restatements.............................................................................. 70
NOTE 5 - Treasurer's Common Cash .................................................................................................. 70
NOTE 6 - Taxes Receivable ................................................................................................................ 73
NOTE 7 - J oint Ventures ...................................................................................................................... 74
NOTE 8 - Deposits and Investments ................................................................................................... 75
NOTE 9 - Capital Assets ...................................................................................................................... 85
NOTE 10 - Pension Benefits ................................................................................................................. 88
NOTE 11 - Other Postemployment Benefits ......................................................................................... 92
NOTE 12 - Leases ................................................................................................................................ 96
NOTE 13 - Bonds and Notes Payable – Primary Government ............................................................. 97
NOTE 14 - Bonds and Notes Payable - Discretely Presented Component Units ................................. 104
NOTE 15 - Other Long-Term Obligations ............................................................................................ 105
NOTE 16 - Income Tax Credits and Refunds ...................................................................................... 108
NOTE 17 - Deferred Compensation Plans ........................................................................................... 109
NOTE 18 - Interfund Receivables and Payables ................................................................................. 109
NOTE 19 - Interfund Commitments ..................................................................................................... 110
NOTE 20 - Transfers ........................................................................................................................... 110
NOTE 21 - Fund Deficits ...................................................................................................................... 110
NOTE 22 - Fund Balances and Net Position ........................................................................................ 111
NOTE 23 - Disaggregation of Payables ................................................................................................ 113
NOTE 24 - Contingencies and Commitments ....................................................................................... 113
NOTE 25 - Risk Management ............................................................................................................... 119
NOTE 26 - Pledged Revenues ............................................................................................................. 121
NOTE 27 – Deferred Outflows of Resources and Deferred Inflows of Resources ................................ 121
NOTE 28 - Subsequent Events ............................................................................................................ 122
2014 Comprehensive Annual Financi al Report
58 58 58 58
Michigan
Notes to the Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of the State conform in all material respects to generally accepted accounting principles
(GAAP) as applicable to governments. The Governmental Accounting Standards Board (GASB) is the standard setting body for
establishing governmental accounting and financial reporting principles, which are primarily set forth in the GASB’s Codification of
Governmental Accounting and Financial Reporting Standards. Following is a summary of the significant policies:
Reporting Entity
Michigan was admitted to the Union as the twenty-sixth state in 1837. The State of Michigan is governed under the
Constitution of 1963, as amended. The legislative power is vested in a 38-member senate and a 110-member house of
representatives; executive power is vested in a governor; and the judicial power is vested exclusively in one court of justice.
For financial reporting purposes, the State of Michigan’s reporting entity includes the “primary government” and its “component
units.” The primary government includes all funds, departments and agencies, bureaus, boards, commissions, and those
authorities that are considered an integral part of the primary government. Component units are legally separate
governmental organizations for which the State’s elected officials are financially accountable or other organizations for which
the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting
entity’s financial statements to be misleading or incomplete.
Financial accountability is defined in GASB Statement No. 14, The Financial Reporting Entity, as amended by GASB
Statement No. 61. The State is financially accountable for those entities in which the State appoints a voting majority of an
organization’s governing authority, and either is able to impose its will upon the entity or there exists a financial benefit or
burden relationship with the State. For those entities in which the State does not appoint a voting majority of the governing
authority, GASB standards require inclusion in the reporting entity if they are fiscally dependent on the State and there exists a
financial benefit or burden relationship with the State.
GASB Statement No. 39, Determining Whether Certain Organizations Are Component Units, an amendment of GASB
Statement No. 14, establishes criteria for legally separate, tax-exempt entities that should be reported as component units if
all of the criteria are met. Although the State has not identified any organizations that would qualify as direct component units
of the State by meeting all of the criteria of GASB Statement No. 39, most of the university component units described later in
this note have significant foundations that meet the criteria of GASB Statement No. 39.
Blended Component Units
The State Building Authority (SBA) is a legally separate organization that has a board appointed by the primary government
and provides services primarily to benefit the State. Therefore, SBA is reported as though it was part of the primary
government, using the blending method.
The Michigan Settlement Administration Authority (MSAA) is a legally separate organization with a three-member governing
board consisting of the State Treasurer, the State Budget Director, and one member appointed by the Governor. Since MSAA
was created to provide State funding to the retirement systems of the City of Detroit pursuant to certain requirements, it is
reported as though it was part of the primary government, using the blending method.
Discretel y Presented Component Units
These types of component units are reported in separate columns or rows in the government-wide financial statements to
emphasize that they are legally separate from the government.
The State has the ability to appoint a voting majority of each governing board and is able to impose its will upon these
discretely presented component units:
The Michigan Finance Authority provides sources of funding for loans to governmental units, school districts, and
nonpublic nonprofit institutions of higher education, healthcare corporations and facilities. The Authority also makes loans
and acquires loans made to students and their parents.
The Michigan State Housing Development Authority (MSHDA) finances loans for the construction of single and multi-family
housing and home improvement projects.
The Farm Produce Insurance Authority provides reimbursements to participating producers for losses suffered in the event
of a grain dealer’s financial failure.
The Land Bank Fast Track Authority (LBFTA) receives tax reverted properties, undertakes expedited action to clear their
titles, and then ensures the properties’ redevelopment. Executive Order 2014-8 abolished the LBFTA board of directors
and office of executive director and transferred all responsibilities and functions to the executive director of MSHDA.
Therefore, beginning in fiscal year 2015, LBFTA will be reported as a component unit of MSHDA.
2014 Comprehensive Annual Financial Report
59
Michigan
Notes to the Financial Statements
The Mackinac Bridge Authority accounts for the operation of the Mackinac Bridge.
The Mackinac Island State Park Commission operates the Mackinac Island and Michilimackinac State Parks.
The Michigan Early Childhood Investment Corporation participates with intermediate school districts to establish standards
and guidelines for early childhood development activities.
The Michigan Education Trust offers contracts, which, for actuarially determined amounts, provide plan participants with
future tuition at institutions of higher education.
The State has the ability to appoint a voting majority of each governing board and there is a financial burden/benefit
relationship between these entities and the State:
The Michigan Strategic Fund provides business enterprises with additional sources of financing.
The Michigan Economic Development Corporation manages programs to stimulate, coordinate, and advance economic
development in the State.
The following entity’s relationship with the State would be misleading if it were omitted from the State’s reporting entity:
The State Bar of Michigan is a public body corporate whose membership consists of persons licensed to practice law.
Ten of the State’s public universities are considered component units because they have boards appointed by the primary
government and there is a financial burden/benefit relationship with the State. Their balances and operating results are
included with the other discretely presented component units on the government-wide financial statements. The ten
universities included in these statements are: Central Michigan University, Eastern Michigan University, Ferris State
University, Grand Valley State University, Lake Superior State University, Michigan Technological University, Northern
Michigan University, Oakland University, Saginaw Valley State University, and Western Michigan University. Michigan State
University, the University of Michigan, and Wayne State University are not included in the State’s reporting entity because
they have separately elected governing boards and are legally separate. The State provides significant funding to support
these institutions; however, under GASB criteria, they are considered fiscally independent, special-purpose governments.
Included in the balances and operating results for most of the university component units is financial activity for fund-raising
foundations that contribute to these universities. Although the universities do not control the timing or amount of receipts from
their foundations, the majority of resources or income thereon that the foundations hold and invest are restricted to the
activities of the respective universities by the donors. Because these restricted resources held by the foundations can only be
used by, or for the benefit of, the specific universities, the foundations are considered component units of the universities and
are included in the universities’ financial statements.
Significant Transactions
The State’s significant transactions with its major discretely presented component units result primarily from providing
appropriations to the public universities, including $97.6 million to Western Michigan University.
Availability of Financial Statements
The State’s component units issue their own separately issued audited financial statements. These statements may be
obtained by directly contacting the various component units. To obtain their phone numbers, you may contact the State
Budget Office, Office of Financial Management at (517) 373-1010.
Related Organizations
The State’s Insurance Commissioner is responsible for appointing the members of the boards of the Michigan Catastrophic
Claims Association and the Michigan Property and Casualty Guaranty Association, but the State’s accountability for these
organizations does not extend beyond making the appointments.
The State’s Governor is responsible for appointing the members of the board of the Venture Michigan Fund, a private
nonprofit corporation. The State’s accountability for this organization does not extend beyond the Governor’s appointments.
The State’s Governor is responsible for appointing a majority of the members of the board of the Education Achievement
Authority established through an inter-local agreement between Eastern Michigan University and Detroit Public Schools. The
State’s accountability for this organization does not extend beyond the Governor’s appointments.
The State’s Governor is responsible for appointing the members of the board of the Michigan Health Endowment Fund, but
the State’s accountability does not extend beyond making the appointments.
2014 Comprehensive Annual Financial Report
60
Michigan
Notes to the Financial Statements
Joint Ventures
As discussed in more detail in Note 7, the State participates in two joint ventures. Their financial activities are not included in
the State’s fund financial statements, but the State’s equity interest is recorded as an asset in the Statement of Net Position.
Jointl y Governed Organizations
The State, the University of Michigan, Michigan State University, and Wayne State University appoint members of the board of
the Michigan Public Health Institute (MPHI), a nonprofit corporation. MPHI was established to plan, promote, and coordinate
health services research with a public university or a consortium of public universities in the State. The State does not appoint
a majority of the board, has no rights to the assets, and is not responsible for debts of MPHI. Therefore, the State’s
accountability for MPHI does not extend beyond making the appointments. During fiscal year 2014, the State awarded
contracts totaling $63.2 million to MPHI.
The City of Detroit, Charter County of Wayne, and the Department of Community Health of the State of Michigan appoint
members of the board of the Detroit Wayne County Health Authority (DWCHA), a public agency. The DWCHA was
established to plan, promote, and coordinate health services for at-risk population in the City of Detroit and Wayne County.
The State does not appoint a majority of the board, has no right to the assets, and is not responsible for debts of DWCHA;
therefore, the State’s accountability for DWCHA does not extend beyond making the appointments. During fiscal year 2014,
the State awarded contracts totaling $1.0 million to DWCHA.
Government-Wide and Fund Financial Statements
Government-Wide Financial Statements
The Statement of Net Position and Statement of Activities report information on all non-fiduciary activities of the primary
government and its component units. Primary government activities are distinguished between governmental and business-
type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non-
exchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or
services.
The Statement of Net Position presents the reporting entity’s non-fiduciary assets, deferred outflows of resources, liabilities,
deferred inflows of resources, and net position. Net position is reported in three categories:
Net investment in capital assets consists of capital assets, net of accumulated depreciation and reduced by outstanding
balances for bonds, notes, and other debt that are attributed to the acquisition, construction, or improvement of those
assets.
Restricted net position results when constraints placed on the use of net position are either externally imposed by
creditors, grantors, contributors, and the like, or imposed by law through constitutional provisions or enabling legislation.
Unrestricted net position consists of net position that does not meet the definition of the two preceding categories.
Unrestricted net position often has constraints on resources that are imposed by management, but can be removed or
modified.
The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset
by program revenues. Direct expenses are those that are clearly identifiable within a specific function. Program revenues
include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges
provided by a given function, and 2) grants and contributions that are restricted to meeting the operational or capital
requirements of a particular function. Taxes and other items not meeting the definition of program revenues are instead
reported as general revenue.
Fund Financial Statements
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the
latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual
proprietary funds are reported as separate columns in the fund financial statements, with non-major funds being combined
into a single column.
Measurement Focus, Basis of Accounting, and Financial Statement Presentation
Measurement Focus and Basis of Accounting
The government-wide financial statements are reported using the economic resources measurement focus and the accrual
basis of accounting, as are the proprietary and fiduciary fund financial statements except for agency funds which have no
measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless
of the timing of cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and
similar items are recognized as revenues as soon as all eligibility requirements imposed by the provider have been met.
2014 Comprehensive Annual Financial Report
61
Michigan
Notes to the Financial Statements
Governmental fund financial statements are reported using the current financial resources measurement focus and the
modified accrual basis of accounting. Revenues are recognized as they become susceptible to accrual; generally when they
are both measurable and available. Revenues are considered to be available when they are collected within the current
period or soon enough thereafter to pay liabilities of the current period, generally within 60 days. Significant revenues
susceptible to accrual include tax revenues and federal grants. Revenues that the State earns by incurring obligations are
recognized in the period when all applicable eligibility requirements have been met.
Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, expenditures related
to debt service, compensated absences, and claims and judgments, are recorded only when payment is due and payable.
Financial Statement Presentation
The State reports the following major governmental funds:
The General Fund is the State’s primary operating fund. It accounts for all financial resources except those required to be
accounted for in another fund.
The School Aid Fund’s purpose is to aid in the support of the public schools and the intermediate school districts. The fund
receives State revenues restricted to local school programs, including the state education (property) tax, portions of the
sales and personal income taxes, and State Lottery Fund earnings.
The State reports the following major enterprise funds:
The State Lottery Fund accounts for the operations of the State’s lottery, bingo, and charitable game operations.
The Michigan Unemployment Compensation Funds receive contributions from employers and provide benefits to eligible
unemployed workers.
Additionally, the State reports the following fund types:
Governmental Fund Types:
Special Revenue Funds – account for specific revenue sources that are restricted or committed to expenditure for
specified purposes other than debt service or capital projects.
Debt Service Funds – account for the accumulation of resources for, and the payment of, general long-term debt principal
and interest.
Capital Projects Funds – account for resources used for capital outlays, including the acquisition or construction of capital
facilities and other capital assets. Capital projects funds exclude capital-related outflows financed by proprietary or trust
funds.
Permanent Funds – report resources that are legally restricted to the extent that only earnings, and not principal, may be
used for purposes that benefit the government or its citizenry.
Proprietary Fund Types:
Enterprise Funds – report the activities for which fees are charged to external users for goods or services, such as the
State’s liquor sales. This fund type is also used when the activity is financed with debt that is secured by a pledge of the
net revenues from the fees.
Internal Service Funds – provide goods or services primarily to other agencies or funds of the State, rather than to the
general public. These goods and services include prisoner-built office furnishings; motor pool services; printing,
reproduction and mailing services; information technology; risk management; and health-related fringe benefits. In the
government-wide financial statements, internal service funds are included with governmental activities.
Fiduciary Fund Types:
Pension (and Other Employee Benefit) Trust Funds – report resources that are required to be held in trust for the
members and beneficiaries of the State’s defined benefit pension plans, defined contribution plans, and other
postemployment benefit plans.
Private Purpose Trust Funds – report resources of all other trust arrangements in which principal and income benefit
individuals, private organizations, or other governments. Examples include the State’s Escheats fund, gifts to the State,
and others.
Agency Funds – report assets and liabilities for deposits and investments entrusted to the State as an agent for others.
2014 Comprehensive Annual Financial Report
62
Michigan
Notes to the Financial Statements
Fiscal Year-Ends
All funds and discretely presented component units are reported using fiscal years which end on September 30, except for the
MSHDA and the ten State universities, which utilize J une 30 year-ends and the Farm Produce Insurance Authority which has
a December 31 year-end.
Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position/Fund Balance
Cash and Cash Equivalents
On the Statement of Cash Flows, the amount reported as “Cash and cash equivalents” is equal to the total of the amounts
reported on the Statement of Net Position as “Cash” and “Equity in Common Cash,” less the amount of “Warrants
outstanding.”
Cash
Cash reported on the Statement of Net Position and the Balance Sheet consists of petty cash, undeposited receipts, deposits
in transit to the Common Cash pool, and cash equivalents such as short-term investments with original maturities of less than
three months that are used for cash management, rather than investing activities.
Equity in Common Cash
The State Treasurer maintains centralized management of most State cash resources (not including component units). From
the perspective of the various State funds, the pool functions as both a cash management pool and a demand deposit
account. The operations and investments of the Common Cash pool are described in Note 5.
Taxes Receivable
Taxes receivable represent amounts due to the State at September 30, which will be collected sometime in the future. In the
government-wide financial statements, a corresponding amount is recorded as revenue. In the governmental fund financial
statements, the portion considered “available” (i.e., received by the State within approximately 60 days after year-end) is
recorded as revenue; the remainder is recorded as deferred inflows of resources. Application of the measurability and
availability criteria regarding taxes is described in Note 6.
Amounts Due From Federal Agencies
For most federally funded programs, revenue is accrued in the same period as related obligations are recorded. In certain
programs financed entirely by the federal government, expenditures and related revenues are recognized only to the extent of
billings received by fiscal year-end. This treatment, which is generally limited to certain programs within the Department of
Education, understates both assets and liabilities, and expenditures and revenues; however, there is no impact on net position
or fund balance.
Inventories
Inventories are valued at cost, primarily using the first-in, first-out flow method. Expenditures (governmental funds) and
expenses (proprietary funds) are recognized using the consumption method (i.e., when used or sold).
Investments
Generally, investments are reported at fair value, consistent with the provisions of GASB Statement No. 31, Accounting and
Financial Reporting for Certain Investments and for External Investment Pools. Short-term, highly liquid debt instruments
including commercial paper, banker’s acceptances, and U.S. Treasury obligations are reported at amortized cost. Additional
disclosures describing investments are provided in Note 8.
Security Lending Collateral
Securities on loan for cash collateral are reported in the Statement of Net Position. Liabilities resulting from the security
lending transactions are also reported. Additional disclosures describing security lending transactions are provided in Note 8.
Other Assets
Other assets include receivables, amounts held in escrow, and other types of assets not reported on other lines.
Mortgages and Loans Receivable
Mortgages and loans receivable are reported net of unamortized premiums, discounts, and allowances for possible losses.
2014 Comprehensive Annual Financial Report
63
Michigan
Notes to the Financial Statements
Capital Assets
Capital assets, which include land, buildings, equipment, intangibles, and infrastructure assets (i.e., roads, bridges, ramps,
and similar items), are reported in the government-wide financial statements and applicable fund financial statements. Capital
assets that are used for governmental activities are only reported in the government-wide financial statements. Capital assets
are reported at historical cost or, if donated, at the estimated fair market value at the date of acquisition. In some instances,
capital asset historical costs were not available; therefore, the costs of these assets at the dates of acquisitions have been
estimated.
Interest incurred during construction is only capitalized in proprietary funds. Most capital assets are depreciated over their
useful lives, using the straight-line depreciation method. However, the State’s significant infrastructure assets utilize an
alternative accounting treatment in which costs to maintain and preserve these assets are expensed and no depreciation
expense is recorded. This approach is discussed further in the Required Supplementary Information portion of this report.
Additional disclosures related to capital assets and assets acquired through capital leases are provided in Notes 9 and 12,
respectively.
Deferred Outflows of Resources
Deferred outflows of resources are defined as a consumption of net assets by the government that is applicable to a future
reporting period; they increase net position, similar to assets. Note 27 provides further detail on the components of deferred
outflows of resources.
Warrants Outstanding
Warrants outstanding represent drafts issued against the State Treasurer’s Common Cash pool, which have not yet cleared.
These are similar to outstanding checks; however, the issuing funds’ balances in the pool are not reduced until warrants are
redeemed.
Income Tax Refunds Payable
The amount of collected or accrued personal income tax revenues that will be refunded is estimated and accrued as a
General Fund liability. Note 16 more fully describes this liability.
Prize Awards Payable
The State Lottery Fund makes long-term prize awards for certain games, most notable the lotto games. At September 30,
2014, long-term prize awards of $280.4 million were reported at a present value of $187.5 million, using discount rates ranging
from 3.5% to 7.0%.
Non-installment prize awards and the portion of long-term awards payable during the next fiscal year, totaling $98.9 million,
are included with “Accounts payable and other liabilities” on the Statement of Net Position.
Unearned Revenue
Unearned revenue is recognized when cash, receivables, or other assets are received prior to their being earned.
Long-Term Liabilities
In the government-wide financial statements and proprietary fund financial statements, long-term debt and other long-term
obligations are reported as liabilities. Bond premiums and discounts are deferred and amortized over the life of the bonds
using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance
costs, during the current period. The face amount of the debt issued is reported as other financing sources. Premiums
received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other
financing uses. Issuance costs, whether or not withheld from the actual debt proceeds, are reported as debt service
expenditures.
Long-term liabilities are more fully described in Notes 13, 14, and 15.
Compensated Absences
In the government-wide financial statements and proprietary fund financial statements, compensated absences are reported
as liabilities as required by GASB.
Employees accumulate annual leave (vacation) balances to maximum amounts ranging from 296 to 356 hours. The
maximum accumulation that may be paid off is 40 hours less than the total hours that may be accumulated. Employees
receive a 100% termination payment upon separation based upon their final rate of pay. The liability for annual leave is
recorded at the maximum accumulation amounts in accordance with GAAP, as it is probable that the State will compensate
employees through paid time off, for the hours earned in excess of the total that may be paid off. The liability for annual leave
is valued at 100% of the balance plus the State’s share of social security and retirement contributions.
2014 Comprehensive Annual Financial Report
64
Michigan
Notes to the Financial Statements
Employee sick leave balances accumulate without limit. Termination payments are made only upon separation from State
service and only to employees hired prior to October 1, 1980. Payments at retirement or death are based on 50% of the
employee’s sick leave accumulation, times their last rate of pay. When separating for any other reason, employees are paid a
percentage of their unused sick leave that increases from 0 to 50%, depending upon the balance of their sick leave hours.
Sick leave is valued at 0 to 50% plus the State’s share of social security contributions, based on the pay rates in effect as of
September 30, 2014.
The State instituted a banked leave time program in fiscal year 2004 whereby eligible employees work a regular schedule but
receive pay for a reduced number of hours. The banked leave time program was utilized in fiscal years 2005, 2006, and
2010. The unpaid hours worked accrue to a banked leave time account. Upon an employee’s separation, death, or
retirement from State service, unused banked leave time hours shall be contributed by the State to the employee’s account
within the State’s 401k plans, and if applicable, to the State’s 457 plans. The banked leave liability is valued at the pay rates
in effect as of September 30, 2014.
In the governmental fund financial statements, liabilities for compensated absences are accrued when they are considered
“due and payable” and recorded in the fund only for separations or transfers that occur before year-end.
Deferred Inflows of Resources
Deferred inflows of resources are defined as an acquisition of net assets by the government that is applicable to a future
period; they decrease net position, similar to liabilities. Note 27 provides further detail on the components of deferred inflows
of resources.
Net Position/Fund Balance
The net amount of assets, deferred outflows of resources, liabilities, and deferred inflows of resources is “Net Position” on the
government-wide, proprietary, and fiduciary fund financial statements, and “Fund Balance” on governmental fund financial
statements.
Fund Balance Classifications
In the fund financial statements, governmental funds report fund balance classifications that comprise a hierarchy based
primarily on the extent to which the State is bound to honor constraints on the specific purposes for which amounts in those
funds can be spent.
Nonspendable fund balance includes amounts that cannot be spent because they are either not in spendable form, such as
inventories, prepaids, and long-term receivables, or legally or contractually required to be maintained intact.
Restricted fund balance includes amounts that are restricted when constraints placed on the use of the resources are either
externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or imposed by law through
constitutional provisions or enabling legislation.
Committed fund balance includes amounts that can only be used for specific purposes pursuant to constraints imposed by
formal action of the State Legislature through legislation passed into law.
Assigned fund balance includes amounts that are constrained by the State’s intent to be used for specific purposes, but are
neither restricted nor committed. Assignments of fund balance are created by the executive branch when criteria established
by the State Budget Office are met. In governmental funds other than the General Fund, assigned fund balance also
represents the remaining amount that is not restricted or committed.
Unassigned fund balance is the residual classification for the General Fund and represents fund balance that has not been
assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund.
Unassigned fund balance also includes negative residual balances in other funds.
The State’s policy is that restricted amounts are spent first when an expenditure is incurred for purposes for which both
restricted or unrestricted (committed, assigned, or unassigned) resources are available. When expenditures are incurred for
which only unrestricted resources are available, the intent is to use committed resources first, then assigned. Unassigned
amounts are generally used only after the other resources have been used.
Revenues and Expenditures/Expenses
Government-Wide Financial Statements
In the government-wide Statement of Activities, revenues and expenses are segregated by activity (governmental or
business-type), then further by function (i.e., general government, education, transportation, etc.). Additionally, revenues are
classified between program and general revenues. Program revenues include 1) charges to customers or applicants for
goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions.
Internally dedicated resources are reported as general revenues, rather than as program revenue. General revenues include
all taxes. Certain indirect costs are included in the program expenses reported for individual functions.
2014 Comprehensive Annual Financial Report
65
Michigan
Notes to the Financial Statements
Interest on Long-Term Debt
Interest charges on the State’s general long-term liabilities do not qualify as a direct expense of a function and are reported on
this line, unless the borrowing is essential to the creation or continuing existence of a program. During fiscal year 2014,
interest charges on general long-term liabilities totaling $109.8 million were reported as functional expenses.
Fund Financial Statements
In the governmental fund financial statements, revenues are reported by sources. For budgetary control purposes, revenues
are further classified as either “general purpose” or “restricted.” General purpose revenues are available to fund any activity
accounted for in the fund. Restricted revenues are, either by State law or by outside restriction (i.e., federal grants), available
only for specified purposes. When both general purpose and restricted funds are available for use, it is the State’s policy to
use restricted resources first.
In the governmental fund financial statements, expenditures are reported by character: “Current,” “Capital outlay,”
“Intergovernmental-revenue sharing,” or “Debt service.” Current expenditures are subclassified by function and are for items
such as salaries, grants, supplies, and services. Tax expenditures, which represent income tax credit programs that are in
substance grants, are also reported as current expenditures. These are described in more detail in Note 16.
Capital outlay includes expenditures for capital assets. Intergovernmental-revenue sharing accounts for the distribution of
certain tax revenues that are shared with local units based upon constitutional and statutory requirements. Debt service
includes both interest and principal outlays related to bonds and payments on capitalized leases.
Revenues and expenses of proprietary funds are classified as operating or nonoperating and are subclassified by object (i.e.,
salaries, depreciation, and purchases for resale). Operating revenues and expenses generally result from providing services
and producing and delivering goods. All other revenues and expenses are reported as nonoperating.
Other Financing Sources
These additions to governmental fund balances in the fund financial statements include resources and financing provided by
bond proceeds, capital leases, and transfers from other funds.
Reimbursements
Reimbursements result when a fund originally making a disbursement receives resources from another fund to which the
expenditure/expense is more properly attributable. For example, the State uses this method when the administrative costs of
proprietary funds, discretely presented component units, or pension (and other employee benefit) trust funds are appropriated
in the General Fund.
Interfund Services Provided and Used
When a sale or purchase of program-related goods and/or services between funds occurs, for a price approximating their
external exchange value, the seller reports revenue and the purchaser expenditure or expense, depending upon the fund
type.
Transactions between the primary government and a discretely presented component unit are generally classified as
revenues and expenses, unless they represent repayments of loans or similar activities.
Other Financing Uses
These reductions of governmental fund resources in fund financial statements normally result from transfers to other funds.
Interfund Activity and Balances
Interfund Activity
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements.
Exceptions to this rule are 1) activities between funds reported as governmental activities and funds reported as business-type
activities (examples include the transfers of profits from the Liquor Purchase Revolving Fund to the General Fund and the
State Lottery Fund to the School Aid Fund) and 2) activities between funds that are reported in different functional categories
in either the governmental or business-type activities column (examples include activities between the Department of Treasury
[general government line] and the Department of Education [education line]). Elimination of these activities would distort the
direct costs and program revenues for the functions concerned.
In the fund financial statements, transfers represent flows of assets (such as goods or cash) without equivalent flows of assets
in return or a requirement for repayment. In addition, transfers are recorded when a fund receiving revenue provides it to the
fund which expends the resources. An example is gas taxes collected by the Department of Transportation but expended by
the Department of Natural Resources.
Interfund Balances
Interfund receivables and payables have been eliminated from the Statement of Net Position, except for the residual amounts
due between governmental and business-type activities.
2014 Comprehensive Annual Financial Report
66
Michigan
Notes to the Financial Statements
NOTE 2 – FUNDS AND COMPONENT UNITS BY CLASSIFICATION
The following table lists all of the funds and component units whose balances are reflected in this financial report.
Operating funds which are subject to annual appropriation and for which budget and actual schedules are included in this report
are identified by an “*”. For each fund or component unit listed, the page number of the first financial statement for that fund or
component unit is shown in parenthesis.
PRIMARY GOVERNMENT:
MAJOR FUNDS
Governmental:
General Fund* (p. 38)
School Aid Fund* (p. 38)
Proprietary:
State Lottery Fund (p. 44)
Michigan Unemployment Compensation Funds (p. 44)
NON-MAJOR FUNDS
Governmental:
Special Revenue Funds:
Transportation Related:
Michigan Transportation Fund* (p. 140)
Comprehensive Transportation Fund* (p. 140)
Conservation, Environment, and Recreation Related:
Michigan Conservation and Recreation Legacy
Fund* (p. 146)
Michigan Game and Fish Protection Trust Fund (p. 146)
Michigan Nongame Fish and Wildlife Trust Fund* (p. 147)
Forest Development Fund* (p. 147)
Bottle Deposits Fund (p. 147)
Debt Service Funds:
Combined State Trunkline Bond and Interest
Redemption Fund (p. 172)
Combined Comprehensive Transportation Bond and
Interest Redemption Fund (p. 172)
Recreation and Environmental Protection Bond
Redemption Fund (p. 172)
School Loan Bond Redemption Fund (p. 173)
State Building Authority (p. 173)
Proprietary:
Enterprise Funds:
Attorney Discipline System (p.192)
Liquor Purchase Revolving Fund (p.192)
Regulatory and Administrative Related:
Homeowner Construction Lien Recovery Fund* (p. 154)
Michigan Employment Security Act – Administration
Fund* (p. 154)
Safety Education and Training Fund* (p. 154)
Second Injury Fund (p. 154)
Self-Insurers’ Security Fund (p. 154)
Silicosis, Dust Disease, and Logging Industry
Compensation Fund (p. 155)
State Construction Code Fund* (p. 155)
Utility Consumer Representation Fund (p. 155)
Unemployment Obligation Trust Fund (p. 155)
State Casino Gaming Fund* (p. 155)
Other State Funds:
21
st
Century J obs Trust Fund* (p. 164)
Michigan Merit Award Trust Fund* (p. 164)
Michigan Settlement Administration Authority (p. 164)
Children’s Trust Fund* (p. 165)
Military Family Relief Fund* (p. 165)
Miscellaneous Special Revenue Funds (p. 165)
Capital Project Funds:
State Trunkline Fund* (p. 178)
State Aeronautics Fund* (p. 178)
Combined State Trunkline Bond Proceeds Fund (p. 178)
Combined Comprehensive Transportation Bond Proceeds
Fund (p. 178)
Transportation Related Trust Funds (p. 179)
Combined Recreation Bond Fund (p. 179)
State Building Authority (p. 179)
Advance Financing Funds (p. 179)
Permanent Funds:
Michigan Natural Resources Trust Fund* (p. 186)
Michigan State Parks Endowment Fund* (p. 186)
Michigan Veterans’ Trust Fund* (p. 186)
Internal Service Funds:
Correctional Industries Revolving Fund (p. 196)
State Sponsored Group Insurance Fund (p. 196)
Information Technology Fund (p. 196)
Office Services Revolving Fund (p. 197)
Motor Transport Fund (p. 197)
Risk Management Fund (p. 197)
2014 Comprehensive Annual Financial Report
67
Michigan
Notes to the Financial Statements
Fiduciary:
Pension (and other employee benefit) Trust Funds:
State of Michigan Deferred Compensation Funds (p. 204)
Legislative Pension Benefits Fund (p. 204)
Legislative Other Postemployment Benefits Fund (p. 204)
State Police Pension Benefits Fund (p. 204)
State Police Other Postemployment Benefits Fund (p. 205)
State Employees’ Pension Benefits Fund (p. 205)
State Employees’ Other Postemployment Benefits
Fund (p. 205)
Public School Employees’ Pension Benefits Fund (p. 205)
Public School Employees’ Other Postemployment
Benefits Fund (p. 205)
J udges’ Pension Benefits Fund (p. 205)
J udges’ Other Postemployment Benefits Fund (p. 206)
State of Michigan Defined Contribution Retirement
Fund (p. 206)
DISCRETELY PRESENTED COMPONENT UNITS:
Authorities:
Major Funds:
Michigan Finance Authority (p. 54)
Michigan State Housing Development Authority (p. 54)
Michigan Strategic Fund (p. 54)
Non-Major Funds:
Farm Produce Insurance Authority (p. 220)
Land Bank Fast Track Authority (p. 220)
Mackinac Bridge Authority (p. 220)
Mackinac Island State Park Commission (p. 220)
Michigan Early Childhood Investment Corporation (p. 221)
Michigan Economic Development Corporation (p. 221)
Michigan Education Trust (p. 221)
State Bar of Michigan (p. 221)
Private Purpose Trust Funds:
Michigan Education Savings Program (p. 212)
Escheats Fund (p. 212)
Gifts, Bequests, and Deposits Investment Fund (p. 212)
Hospital Patients’ Trust Fund (p. 212)
Agency Funds:
Environmental Quality Deposits Fund (p. 215)
Insurance Carrier Deposits Fund (p. 215)
Child Support Collection Fund (p. 215)
Social Welfare Fund (p. 215)
State Universities (1):
Major Funds:
Western Michigan University (p. 55)
Non-Major Funds:
Central Michigan University (p. 226)
Eastern Michigan University (p. 226)
Ferris State University (p. 226)
Grand Valley State University (p. 226)
Lake Superior State University (p. 227)
Michigan Technological University (p. 227)
Northern Michigan University (p. 227)
Oakland University (p. 227)
Saginaw Valley State University (p. 227)
(1) Michigan State University, the University of Michigan, and Wayne State University are not included in the State’s reporting entity
because they have separately elected governing boards and are legally separate from the State. The State provides significant
funding to support these institutions; however, under GASB Statement No. 14, The Financial Reporting Entity, as amended by
GASB Statement No. 61, criteria, they are considered fiscally independent special-purpose governments.
NOTE 3 – BUDGETING, BUDGETARY CONTROL, AND LEGAL COMPLIANCE
Major Constitutional and Statutory Provisions
Balanced Budget Requirements
Article 5 of the State Constitution mandates that the executive budget recommend spending limits for operating funds to the
Legislature that are within available resources. Compliance with this is demonstrated in the executive budget and budget bills
for each fiscal year.
Article 4 of the State Constitution mandates the Legislature to enact appropriations for each operating fund that do not exceed
that fund’s revenue estimates, including beginning fund balance.
Compliance with this requirement is demonstrated in schedules included in the annual appropriation acts, usually the “General
Government” appropriation act. When it appears that revenue will fall below the estimates on which the appropriations are
based, the Governor is required to recommend spending reductions as necessary to avoid a year-end deficit.
2014 Comprehensive Annual Financial Report
68
Michigan
Notes to the Financial Statements
Local Spending Requirements
Article 9, Section 30, of the State Constitution requires that State spending to, or on behalf of, local units of government shall
not fall below a specified percentage of total State spending. The percentage, recalculated effective with fiscal year 1993, is
48.97%.
Final calculations establishing the State’s compliance with this constitutional provision for fiscal year 2014 are not yet complete.
For fiscal year 2013, the most recent year for which final calculations are available, the proportion of total State spending paid
to local units of government was determined to be 56.27%, reflecting payments that exceeded the minimum required by $2.0
billion. The State expects that payments to local units of government will exceed the minimum requirement for fiscal year 2014.
Revenue Limits
Article 9, Section 26, of the State Constitution restricts State revenues to a ceiling that is based upon revenues as a proportion
of total personal income for the State. The base year ratio, determined in fiscal year 1979, in relation to calendar year 1977
personal income, is 9.49%. Both the constitutional language and implementing statutes provide for other adjustments to the
revenue and personal income calculations. If revenues exceed the limit by 1% or more, the amount in excess must be
refunded to personal income tax payers and payers of the State’s Michigan Business Tax. If the limit is exceeded by an
amount less than 1%, the excess may be deposited into the State’s Budget Stabilization Fund. The calculations determining
the State’s compliance with this constitutional provision for fiscal year 2014 are not final. For fiscal year 2013, the most recent
year for which final calculations are available, total State revenues subject to this limitation were beneath the constitutional limit
by $6.5 billion. The State expects that total State revenues subject to the limitation will not exceed the limit for fiscal year 2014.
Budget Stabilization Fund
The Counter-Cyclical Budget and Economic Stabilization Fund (“Budget Stabilization Fund” or “Rainy Day Fund”) was created
in 1977 to assist in stabilizing revenue during periods of economic recession. This fund currently operates under Sections
18.1351 - 18.1359 of the Michigan Compiled Laws, as amended. In general, the law requires payments into the fund when real
economic growth exceeds 2% and allows withdrawals from the fund when real economic growth is less than 0%. Funds can
also be withdrawn when the State’s unemployment rate exceeds 8% or upon appropriation to finance capital outlay or other
projects, or for other purposes designated by the Legislature. The Counter-Cyclical Budget and Economic Stabilization Fund is
accounted for as a subfund of the General Fund where its fund balance is committed.
The following table summarizes the transactions for the fund at September 30 (in millions):
Beginning committed fund balance $ 505.6
Interest income 0.4
Deposits 75.0
Withdrawals (194.8)
Ending committed fund balance $ 386.2
The withdrawal during the year represents the transfer of funds to the Michigan Settlement Administration Authority to support
the Detroit bankruptcy settlement. That withdrawal will be repaid to the fund in the amount of $17.5 million annually from
tobacco settlement funds.
School Aid Fund Budgetary Provisions
The School Aid Stabilization Fund is a separate account within the School Aid Fund. Any unexpended or unencumbered state
school aid fund revenue is deposited into this fund at the end of each fiscal year. The amounts accumulated in this fund are
carried forward and shall be expended only for purposes for which state school aid money may be expended. The School Aid
Stabilization Fund ending restricted fund balance is $455.1 million for fiscal year 2014.
Budgetary Overexpenditures
In the event that expenditures exceed authorization during a year, the department must request a supplemental appropriation
for the amount overspent, if that amount exceeds their lapses or if they expect to make payments from prior year authorization
in the next fiscal year. There were the following line-item overexpenditures of State departments incurred during the year,
which represent noncompliance with State budget laws (in millions):
Community Health $ 4.9
$ 4.9 General Fund Total
General Fund
2014 Comprehensive Annual Financial Report
69
Michigan
Notes to the Financial Statements
NOTE 4 – ACCOUNTING CHANGES AND RESTATEMENTS
Implementation of GASB Statement No. 65
During fiscal year 2014, the State implemented Governmental Accounting Standards Board (GASB) Statement No. 65, Items
Previously Reported as Assets and Liabilities, which establishes accounting and financial reporting standards that reclassify,
as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and
liabilities. Note 27 provides further detail on the components of deferred outflows of resources and deferred inflows of
resources as reported on the government-wide Statement of Net Position and in the governmental funds.
GASB Statement No. 65 also recognizes, as outflows of resources or inflows of resources, certain items that were previously
reported as assets and liabilities. As a result, beginning net position for governmental activities in the government-wide
statements was decreased by $34.7 million for certain bond issuance costs that were previously classified as assets.
The implementation of GASB Statement No. 65 also resulted in a decrease in beginning net position for the discretely
presented component units totaling $52.4 million, including a restatement of $44.5 million for the Michigan Finance Authority.
Capital Assets and Capital Leases
Beginning balances for capital assets and capital lease liabilities were restated to correct prior period errors as follows:
equipment and the related accumulated depreciation were increased by $12.8 million and $3.9 million, respectively, and the
capital lease liability was increased by $10.3 million. This restatement resulted in a decrease in beginning net investment in
capital assets of $1.4 million in the government-wide statements.
General Fund and School Aid Fund
Beginning fund balance was decreased in the General Fund and increased in the School Aid Fund by $45.3 million for a prior
period adjustment.
Michigan Education Savings Program
The Michigan Education Savings Program, a private purpose trust fund, implemented an accounting change in fiscal year
2014 that excluded transfers and exchanges within the Program that were previously included in additions and deductions in
the Statement of Changes in Fiduciary Net Position. The amount excluded in fiscal year 2014 was approximately $1.6 billion
and had no impact on net position.
Discretely Presented Component Units
Beginning net position was increased for Central Michigan University by $5.7 million to reflect the inclusion of a component
unit not previously reported. Other prior period adjustments resulted in a net increase of $1.0 million for the discretely
presented component units.
NOTE 5 – TREASURER’S COMMON CASH
General Accounting Policies
The State Treasurer (Treasurer) manages the State’s Common Cash pool, which is used by most State funds. The pooling of
cash allows the Treasurer to invest monies not needed to pay immediate obligations so that investment earnings on available
cash are maximized. Investments of the pool are not segregated by fund; rather, each contributing fund’s balance is treated
as equity in the pool, and presented in this report as “Equity in common cash.” Many funds, including pension (and other
employee benefit) trust funds, use their equity in the pool as a short-term investment vehicle.
All negative balances in the pool are reclassified at year-end as interfund liabilities. If the negative balance is considered long-
term, the reclassification is recorded as an advance.
Statute or administrative policy determines whether a particular fund receives or pays interest on its balances in the pool. If a
fund does not receive or pay interest, the General Fund receives or absorbs such amounts. The Treasurer has placed a
“cap,” or limit, on the amount of interest that can be earned by some State funds. These “capped” funds are limited to a
maximum rate determined by the Treasurer. For the remaining “uncapped” funds, earnings on positive balances and charges
on negative balances are allocated quarterly based upon the average daily balances of the various funds and the average
investment earnings rate for the quarter. Accrued earnings of the pool are recorded as assets, with the accrual allocated to
the various funds’ equity in the pool.
Interest revenues on positive balances and interest charges on negative balances are reflected as revenues or expenditures/
expenses of each of the participating funds.
2014 Comprehensive Annual Financial Report
70
Michigan
Notes to the Financial Statements
Investments and Deposits
The investment authority for the Common Cash pool is found in Sections 21.141 - 21.147 of the Michigan Compiled Laws
(MCL). The Treasurer may invest surplus funds belonging to the State in bonds, notes, and other evidences of indebtedness
of the United States Government and its agencies and in prime commercial paper. Certificates of deposit are permitted in
financial institutions whose principal office is located in the State.
The Treasurer invests excess cash in short-term investments or cash equivalents. The law does not prohibit the Treasurer
from entering into repurchase agreements; however, the Treasurer did not use these agreements in managing the pool in
fiscal year 2014.
Statutes provide for certain special State investment programs for which the General Fund is credited (charged) for earnings
in excess of (under) those achieved by regular pool investments. To date, these programs have not resulted in any principal
losses.
Emergency Financial Assistance Loan Program: This program provides for emergency loans to local units of government,
and is the most significant of the special investment programs. The Emergency Financial Assistance Loan Board, established
by MCL Section 141.932, administers the program.
Loan authorization limits are established in MCL Section 141.933. For the period beginning October 1, 2011, and ending on
September 30, 2018, the board may authorize loans to municipalities other than school districts totaling up to a combined
$35.0 million, and to school districts totaling up to a combine $50.0 million; loans to a single municipality under each
respective subdivision shall not total more than $20.0 million of the applicable cap. For fiscal years beginning after October 1,
2018, the board may authorize loans to municipalities other than school districts that total up to $10.0 million in any given
fiscal year, but a loan to a single municipality shall not exceed $4.0 million in that fiscal year.
In fiscal year 2000, the Emergency Financial Assistance Loan Board was authorized to approve the lending of up to $159.9
million to Wayne County to finance the payment of certain obligations to the State. The outstanding balance at September 30,
2014, was $54.7 million. The interest rate is reset J uly 1 of each year in accordance with the loan agreement. Effective
November 1, 2009, the Wayne County emergency loan was reclassified from an interest-bearing loan to a zero percent loan.
The change in interest terms for the loan will be in effect until the debt obligations for the Detroit Regional Convention Facility
Authority are retired, or 2039, whichever comes first. Loan repayments by the County are supported by provisions of the loan
agreement and legislation that pledge the County’s share of a portion of the State taxes collected on cigarette sales. There
were no principal repayments made on the loan in fiscal year 2014.
Assets and equities of the Common Cash pool as of September 30 were as follows (in millions):
Assets
Cash on hand $ -
Demand deposits 2,599.7
Time deposits - regular -
Prime commercial paper - at cost 2,209.5
Interest receivable 0.6
Emergency loans to local units - at cost 124.7
Total assets $ 4,934.6
Equities
Fund equities (net) in common cash (1):
Governmental activities $ 3,739.3
Business-type activities 139.0
Fiduciary funds 516.8
Discretely presented component units 539.4
Net fund equities $ 4,934.6
(1) Negative equity balances in the pool are reclassified at year-end as interfund receivables and liabilities. Current balances
are included with “Amounts due from other funds” and “Amounts due to other funds” and long-term amounts are classified
as interfund advances. Note 18 summarizes interfund receivables and liabilities.
The following paragraphs provide disclosures about deposits and investments of the Common Cash pool, as required by
Governmental Accounting Standards Board (GASB) Statement No. 3, Deposits with Financial Institutions, Investments
(including Repurchase Agreements), and Reverse Repurchase Agreements as amended by GASB Statement No. 40, Deposit
and Investment Risk Disclosures. Please see Note 8 for information about deposits and investments that are not part of the
Common Cash pool.
2014 Comprehensive Annual Financial Report
71
Michigan
Notes to the Financial Statements
Common Cash Deposits
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the State’s
deposits may not be recovered.
Deposits are exposed to custodial credit risk if they are not covered by depository insurance and the deposits are:
Uncollateralized
Collateralized with securities held by the pledging financial institution, or
Collateralized with securities held by the pledging financial institution’s trust department or agent but not in the depositor-
government’s name.
The Treasurer’s policy requires the following criteria to lessen custodial credit risk: all financial institutions holding the State’s
money must pledge collateral equal to the amount of the account balance for all demand and time deposits, to secure the
State’s funds; a bank, savings and loan association, or credit union holding State funds must be organized under the laws of
Michigan or federal law and maintain a principal office or branch office in the State of Michigan; no deposit in any financial
organization may be in excess of 50% of the net worth of the organization.
At September 30, 2014, the carrying amount of deposits, including time and demand deposits, was $2.6 billion. The deposits
were reflected in the accounts of the banks at $2.6 billion. Of the bank balance, $5.0 million was covered by federal
depository insurance and $2.6 billion was collateralized with securities held by the State’s agent in the State’s name. There
were no demand deposits exposed to custodial credit risk that were uninsured and uncollateralized. Compensating balances
kept in demand deposit accounts to avoid service charges totaled $1.7 billion at September 30, 2014.
Foreign Currency Risk
Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of deposits.
MCL Section 487.714 requires State deposits be held in a financial institution which maintains a principal office or branch
office located in the State. The State had no Common Cash deposits subject to foreign currency risk at September 30, 2014.
Common Cash Investments
Types of Investments
Common Cash investments include prime commercial paper, certificates of deposit, and emergency municipal loans.
Risk
In accordance with GASB Statement No. 40, investments also require certain disclosures regarding policies and practices with
respect to the risks associated with them. Custodial credit risk, credit risk, and interest rate risk are discussed in the following
paragraphs.
Custodial Credit Risk
Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty, the State will not be able to
recover the value of the investment or collateral securities that are in the possession of an outside party.
Investment securities are exposed to custodial credit risk if the securities are uninsured, are not registered in the name of the
government, and are held by either:
The counterparty, or
The counterparty’s trust department or agent but not in the government’s name.
The Treasurer does not have an investment policy for managing custodial credit risk. At September 30, 2014, Common Cash
investments were not exposed to custodial credit risk.
Credit Risk
Credit risk is the risk that an issuer or another counterparty to an investment will not fulfill its obligations.
Prime commercial paper investments must be rated A-1 or P-1 at the time of purchase as rated by the two major rating
services: Standard and Poor’s (A-1), and Moody’s (P-1). Borrowers must have at least $400.0 million in commercial paper
outstanding, and the Treasurer may not invest in more than 10% of a borrower’s outstanding debt. The investments are
further limited to $200.0 million in any borrower, unless the borrower has an A-1+rating, in which case the investment is not to
exceed $300.0 million.
2014 Comprehensive Annual Financial Report
72
Michigan
Notes to the Financial Statements
Emergency municipal loans are evidenced by unrated notes held by the State in the State’s name. At September 30, 2014,
prime commercial paper investments were rated at A-1 or P-1.
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment.
The Treasurer’s policy states that cash equivalents are invested in short-term fixed income securities with an average
weighted maturity of less than one year to provide liquidity and safety of principal from capital market and default risk. At
September 30, 2014, the fair value of cash equivalents was $2.2 billion; the weighted average maturity was 34 days.
The Treasurer does not have a policy for controlling interest rate risk regarding the Common Cash special loan programs
described earlier. These loan programs are investments created through legislation. Although some interest rate risk
exposure exists, this risk is not a consideration when entering into these loan programs.
NOTE 6 – TAXES RECEIVABLE
Taxes receivable represent amounts due to the State at September 30, 2014, for revenues earned during the fiscal year that will
be collected sometime in the future. Amounts expected to be collected in the next fiscal year are classified as “current” and
amounts expected to be collected beyond the next fiscal year are classified as “noncurrent.” The receivables have been recorded
net of allowances for uncollectibles.
Sales, use, Michigan business, and income taxes are accrued to the extent that the related sales, wage, or activity being taxed
occurred prior to October 1. Property taxes are accrued if the levy date occurred prior to October 1.
Local units of government, as agents for the State, assess the state education tax, which is a statewide property tax. The state
education tax is levied on J uly 1 and is due and payable at the same time as local unit taxes levied on J uly 1. The State accrues
state education tax revenue received by the State or the local units, on its behalf, during October and November. The accrued
telephone and telegraph taxes are due December 1 and were received at approximately that time.
In the government-wide financial statements, a corresponding amount is recorded as revenue using the accrual basis of
accounting. In the governmental fund financial statements, revenue is recorded using the modified accrual basis of accounting for
amounts due to the State at September 30 (as stated above), that are considered “available” (e.g. received by the State within
approximately 60 days after that date). Delinquent taxes are recognized to the extent that they are collected within 12 months.
The remainder is recorded as a deferred inflow or resources.
Effective J anuary 1, 2008, the State replaced the Single Business Tax (SBT) with the Michigan Business Tax (MBT). Effective
J anuary 1, 2012, the MBT was replaced by the Corporate Income Tax (CIT). A small number of taxpayers with certificated credits
may continue to file under the MBT provisions until their credits expire. Additionally, the Health Insurance Claims Assessment
(HICA) was created effective J anuary 1, 2012. Because the CIT and the HICA are relatively new and the MBT has drastically
changed, historical information is not available to calculate full-accrual receivable amounts. Therefore the accrual and related
revenue expected to be collected beyond the 60-day period is not measurable and has not been recorded in this fiscal year for
these types of taxes.
2014 Comprehensive Annual Financial Report
73
Michigan
Notes to the Financial Statements
Taxes receivable as of September 30, consisted of the following (in millions):
Tax
Sales & use $ 370.3 $ 762.3 $ 1,132.5
Individual Income 2,299.1 345.8 2,644.9
SBT/MBT/CIT 649.2 - 649.2
State education (property) - 1,312.8 1,312.8
Telephone & telegraph 19.5 - 19.5
Motor fuel - 161.8 161.8
Insurance - retaliatory 92.0 - 92.0
Tobacco products 74.4 45.1 119.5
Quality assurance assessment 75.5 - 75.5
Health insurance claims assessment 63.3 - 63.3
Other 25.1 16.1 41.2
Penalties & Interest 1,026.0 - 1,026.0
Gross taxes receivable 4,694.3 2,643.9 7,338.1
Less allowances for uncollectibles 2,229.9 440.5 2,670.4
Total taxes receivable (net) $ 2,464.4 $ 2,203.4 $ 4,667.8
As reported on the Statement of Net Position
Current taxes, interest, and penalties receivable $ 2,266.0 $ 2,135.8 $ 4,401.8
Noncurrent taxes, interest and penalties receivable 198.4 67.6 266.0
Total taxes, interest, and penalties receivable $ 2,464.4 $ 2,203.4 $ 4,667.8
Total
General
Fund
Other
Funds
Governmental
NOTE 7 – J OINT VENTURES
The State participates in two joint ventures as described below. J oint ventures are not reflected as component units within this
report because they do not meet the generally accepted accounting principles criteria for inclusion. Their separately issued
financial statements may be obtained by directly contacting the applicable organizations. To obtain their phone numbers, you may
contact the State Budget Office, Office of Financial Management, Financial Reporting Section at (517) 373-1010.
Great Lakes Protection Fund
The Great Lakes Protection Fund (GLPF) is a not-for-profit corporation located in Evanston, Illinois. Its purpose is to finance and
support research with respect to water quality of the Great Lakes. The eight states bordering the Great Lakes are eligible to
become members if they make a required contribution to the endowment of GLPF.
Contribution requirements were established based upon water consumption and usage. Contributions to GLPF are permanently
restricted and are not available for disbursement. Michigan is the largest contributor, having made a contribution of $25.0 million,
constituting approximately 31% of the total. Michigan made its required contribution by issuing GLPF a general obligation bond
authorized as part of the State’s environmental protection bond program. No additional contributions from Michigan will be
required.
Two members on GLPF’s board of directors represent each of the participating seven member states. The states’ respective
governors select the board members. Directors control GLPF’s financing and budgeting operations, within requirements
established by the Articles of Incorporation. One-third of the net earnings on total contributions (after operating expenses) is
granted to the respective states in proportion to their contributions to GLPF. Two-thirds of the net earnings are available to GLPF
to make other grants. The State’s equity interest in GLPF of $25.0 million is reflected as an asset in the government-wide financial
statements.
Sault Ste. Marie Bridge Authority
The International Bridge in Sault Ste. Marie, Michigan is a joint venture of the State and Canadian governments. Effective
September 1, 2009, the Sault Ste. Marie Bridge Authority (SSMBA) replaced the J oint International Bridge Authority. SSMBA
consists of eight people, four appointed by each government. SSMBA oversees the operations and maintenance of the Bridge.
The International Bridge Administration, an administrative entity within the Michigan Department of Transportation, is responsible
for the day-to-day operations of the Bridge. SSMBA reimburses the State for costs incurred to provide these services.
For the period ending December 31, 2013 (SSMBA’s most recently audited financial statements), its net position increased by
approximately $0.8 million. The Bridge and one-half of the ancillary assets on Michigan’s side of the Bridge, and in addition one-
half of the joint funds not required to pay liabilities, and all funds reserved for capital projects on the Michigan half of the Bridge,
represent the State’s equity interest. The State is obligated to pay one-half of any claims incurred by SSMBA that are not covered
by insurance or existing resources. The State’s equity interest of $9.7 million is reflected as an asset in the government-wide
financial statements.
2014 Comprehensive Annual Financial Report
74
Michigan
Notes to the Financial Statements
NOTE 8 – DEPOSITS AND INVESTMENTS
This note provides information for all deposits and investments except those of the Common Cash pool, which are described in
Note 5.
Deposits – Primary Government
Custodial Credit Risk
In addition to equity in the Common Cash pool, some State funds maintain deposits with financial institutions. At present, only
the Michigan Unemployment Compensation Funds (MUCF), the Attorney Discipline System (ADS), and the Michigan
Education Savings Plan (MESP) maintain these deposits and are potentially exposed to custodial credit risk.
The Unemployment Insurance Agency administers, under the auspices of the federal government, the deposits of the MUCF.
Tax collections are deposited in a clearing account as required by the Michigan Employment Security Act. Refunds are paid
from that account; after the clearance of vouchers for refunds, all other money remaining in the fund, less amounts needed for
refunds and judgments, must be deposited with the Secretary of the Treasury of the United States of America to the credit of
the State in the Unemployment Trust Fund, established and maintained pursuant to Section 904 of the Social Security Act, 42
USC 1104. These deposits are maintained in the Federal Reserve Bank. At year-end, the carrying amount of these deposits,
excluding those classified as investments, was $7.2 million. The bank balance of the deposits was $18.8 million; these
deposits were either covered by federal depository insurance or were collateralized.
The bank deposits of the ADS were $5.3 million; these deposits were covered by Federal Deposit Insurance Corporation
(FDIC) insurance or were collateralized. ADS has no policy to address custodial credit risk. It assesses financial institutions’
risk levels; only those with acceptable levels of risk are used as depositories.
The deposits of the MESP were reflected in bank accounts at $0.5 million; of these deposits, $0.3 million were covered by
depository insurance. The remaining balance of $0.2 million was uninsured and uncollateralized. The level of risk for each
financial institution is evaluated and assessed; only those with an acceptable estimated risk level are used as depositories.
MESP has no other policy for controlling this risk.
2014 Comprehensive Annual Financial Report
75
Michigan
Notes to the Financial Statements
Investments – Primary Government
The following table shows the carrying amounts and fair values of investments of the primary government by investment type
and in total at September 30:
Commercial paper $ 4,280.3 $ - $ - $ 4,280.3
Money market funds - - 250.2 250.2
Other short-term 526.3 - 5.2 531.5
Separate accounts - 2,372.3 - 2,372.3
Absolute return 6,323.1 - - 6,323.1
Fixed income 6,864.3 - 3,019.6 9,883.8
Mutual funds 85.2 980.9 3,992.0 5,058.2
Pooled investment funds - 2,802.9 - 2,802.9
Equities 17,828.4 - - 17,828.4
Funding agreements - - 531.0 531.0
International 8,776.4 - - 8,776.4
Real estate 5,480.2 - - 5,480.2
Alternative 10,377.2 - 123.6 10,500.8
Accrued income 64.8 - - 64.8
Cash collateral 5.3 - - 5.3
Unsettled investments 7.1 - - 7.1
Total $ 60,618.6 $ 6,156.1 $ 7,921.7 $ 74,696.4
As reported on the Statement of Net Position
Current investments $ 2,350.6
Noncurrent investments 1,316.6
Total investments $ 3,667.2
As reported on the Statement of Net Position and Statement of Fiduciary Net Position
Governmental activities $ 250.2 $ 1,113.4 $ 1,363.6
Business-type activities 2,100.4 203.2 2,303.6
Fiduciary funds 3,964.3 67,064.8 71,029.2
Total Investments $ 6,315.0 $ 68,381.4 $ 74,696.4
Primary Government Total Investments (In millions)
Systems
Retirement
Funds Funds Total
Other Contribution
Defined
Deferred
Investment Types
Compensation/
Total Investments Investments
Current Noncurrent
Authority
Investment authority for the State’s pension (and other employee benefit) trust funds is found in Michigan Compiled Laws
(MCL) Section 38.1133. This law allows the State Treasurer, as investment fiduciary, to make diverse investments in stocks,
corporate and government bonds and notes, mortgages, real estate, venture capital, and other investments. The law has
prudence standards and requires that the assets of a retirement system shall: be invested solely in the interest of the
participants and beneficiaries; be made for the exclusive purpose of providing benefits to the participants and the participants’
beneficiaries; and defray reasonable expenses of investing the assets of the State system.
The investment authority for other State funds is found in their enabling statutes and/or their bond resolutions where
applicable. Except as noted below, the investments of the non-pension (and other employee benefit) trust funds are
comprised mostly of United States government securities.
2014 Comprehensive Annual Financial Report
76
Michigan
Notes to the Financial Statements
The State Building Authority makes diverse investments as allowed by State statute and/or bond resolutions.
Investments of MUCF represent their interest in a U.S. Treasury trust fund managed by the Secretary of the Treasury
pursuant to Title IX of the Social Security Act, which includes deposits from the unemployment compensation funds of various
states. MUCF is credited quarterly with trust fund investment earnings, as computed on a daily basis.
The deferred compensation plans are invested in mutual funds, U.S. Treasury strips, money market funds, and pooled
investment funds. During fiscal year 2014, the deferred compensation plans’ investment activities were managed by a private
investment firm, which invests as directed by members of the plan.
Derivatives
The State Treasurer is also authorized to invest a limited amount of pension (and other employee benefit) trust funds in
derivatives to provide additional diversification. Derivatives are used in managing the trust fund portfolios, but uses do not
include speculation or leverage of investments. Less than 12% of the total trust funds’ portfolio has been invested from time
to time in future contracts, swap agreements, and option contracts. State investment statutes limit total derivative exposure to
15% of a fund’s total asset value, and restrict uses to replication of returns and hedging of assets. Option and future contracts
traded daily on an exchange and settling in cash daily or having a limited and fully defined risk profile at an identified fixed cost
are not subject to the derivative exposure limitation.
The State Treasurer has entered into swap agreements with investment grade counterparties with maturity dates ranging from
October 2014 to December 2015. Approximately one quarter of the notional amount tied to foreign stock market indices is
hedged against foreign currency fluctuations. The swap agreements provide that the System will pay quarterly, over the term
of the agreements, interest indexed to the three month London Inter Bank Offer Rate (LIBOR), adjusted for an interest rate
spread, on the notional amount stated in the agreements. At maturity the trust funds will receive either the increase in the
value of the equity indices from the level at the inception of the agreements, or pay the decrease in the value of the indices.
U.S. Domestic LIBOR based floating rate notes and other income earning investments are held to correspond with the
notional amount of the swap agreements. The State Treasurer maintains custody and control of these dedicated notes and
other investments.
The value of these synthetic equity structures is a combination of the value of the swap agreements and the value of the notes
and other investments. The book value represents the cost of the notes and other investments. The current value represents
the current value of the notes and other investments and the change in the value of the underlying indices from the inception
of the swap agreements. Current value is used as a representation of the fair value based on the intention to hold all swap
agreements until maturity.
Other derivative investments include structured notes, bond future contracts, forwards, and options. The structured notes are
with investment grade counterparties and are fully collateralized and pay cash rates on the underlying collateral, as well as
providing enhanced index return. Similar to a swap agreement with the prices changing with the underlying index fluctuations,
the notes differ due to their daily put option which allows the structure to end and settle before its final maturity. These notes
were sold in May 2014. Additional details about derivative investments are included in the following table:
2014 Comprehensive Annual Financial Report
77
Michigan
Notes to the Financial Statements
Investment and
Investment Type Objective
Structured notes -
real return
Enhance passive exposure to
the Dow J ones UBS
Commodity Total Return Index $ - $ - $ 43.6 $ - $ -
U.S. Treasury Bond
Future contracts -
fixed income
Enhance management
flexibility, manage duration
and yield curve exposure 1.8 - (0.5) - -
Options - real return
and equities
Use on single securities to
provide downside protection
and enhance current income (5.3) - 103.2 - -
Swap agreements -
International
investments equities
Diversify the trust funds'
portfolio by entering into swap
agreements that are tied to
stock market indices in forty-
four foreign countries 1,504.2 1,284.2 94.3 (1.3) 51.5
Swap agreements -
equity Investments
Diversify the trust funds'
portfolio by entering into swap
agreements that are tied to
stock market indices in the
domestic market 973.2 70.7 123.9 (3.6) 38.1
Totals $ 2,473.9 $ 1,354.9 $ 364.5 $ (4.8) $ 89.7
Pension (and Other Employee Benefit) Trust Funds Derivative Investments (In millions)
Fair Value
Subject to
Credit Risk Value At Fair Value* Fair Value**
Gain/loss
Investment
Income
Net Increase
(Decrease) in Investments Notional
*Located in Statement of Fiduciary Net Position - Investments at Fair Value
**Located in Net increase (decrease) in fair value of investments - Statement of Changes in Fiduciary Net Position
Investment Pools
In J uly 2004, four state retirement systems’ (State Employees’, State Police, Public School Employees’, and J udges’)
investments were contributed to an investment pool structure. A pro rata share of the entire pool represents each system’s
ownership of a portion of the investments in the State’s pool.
Repurchase Agreements
As a matter of administrative policy, the State Treasurer makes only limited use of investments in repurchase agreements. No
such investments were outstanding at year-end.
Risk
Governmental Accounting Standards Board Statement No. 40, Deposit and Investment Risk Disclosures, requires certain
disclosures regarding policies and practices with respect to the risks associated with investments. The custodial credit risk,
credit risk, interest rate risk, foreign currency risk and concentration of credit risk are discussed in the following paragraphs.
Custodial Credit Risk
Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the State will
not be able to recover the value of the investment or collateral securities that are in the possession of an outside party.
Investment securities are exposed to custodial credit risk if the securities are uninsured, are not registered in the name of the
government and are held by either the counterparty, or the counterparty’s trust department or agent, but not in the
government’s name. The State Treasurer does not have a policy for limiting custodial credit risk. As of September 30, 2014,
there were no securities exposed to custodial credit risk.
Credit Risk
Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Short-term investments
for the pension funds are in prime commercial paper and follow the same policy described in Note 5 for this type of
investment. The ratings at September 30 are included in the debt investments table.
2014 Comprehensive Annual Financial Report
78
Michigan
Notes to the Financial Statements
Investment grade and noninvestment grade securities may be acquired in compliance with parameters set forth in MCL
Sections 38.1132 – 38.1141, and the State Treasurer’s investment policy. Law defines investment grade as investments in
the top four major grades, rated by two national rating services, S&P (AAA, AA, A, BBB) and Moody’s (Aaa, Aa, A, Baa). At
September 30, 2014, the system was in compliance with the policy in all material aspects. The primary government’s debt
investments as of September 30, 2014, are presented below. Note that securities backed by the full faith and credit of the
United States Government are excluded.
Rating Rating
S & P Moody's
Pension (and Other Employee Benefit) Trust Funds:
Retirement Systems:
Commercial paper $ 3,727.8 A-1 $ 3,727.8 P-1
Government securities
U.S. agencies - sponsored - AAA 275.4 Aaa
275.4 AA - Aa
Corporate bonds & notes 63.1 AAA 124.1 Aaa
514.5 AA 415.6 Aa
1,621.9 A 1,354.5 A
1,690.1 BBB 1,976.2 Baa
416.6 BB 461.7 Ba
591.5 B 628.5 B
105.4 CCC 104.6 Caa
2.9 CC 45.9 Ca
- C 0.1 C
32.3 D - D
376.1 Unrated 303.3 Unrated
International - corporate bonds & notes* 175.2 AA 255.5 Aa
442.4 A 305.5 A
196.2 BBB 308.0 Baa
104.2 Unrated 49.1 Unrated
Mutual funds** 30.6 A 30.6 A
Total $ 10,366.2 $ 10,366.2
Deferred Compensation/Defined Contribution:
Common trust funds $ 456.4 Unavailable $ 456.4 Below Baa - Aaa
188.4 Unavailable 188.4 A-1+/P-1
Stable Value Funds 1,036.3 BBB - AAA 1,036.3 Unavailable
75.3 Unavailable 75.3 A1/P1
Mutual funds 152.0 Below B - AAA 152.0 Unavailable
244.4 Unrated 244.4 Unrated
Total $ 2,152.9 $ 2,152.9
Other Primary Government Funds:
Government securities
U.S. agencies - sponsored - AAA 7.0 Aaa
7.0 AA - Aa
1.0 Unrated 1.0 Unrated
Corporate bonds & notes 74.8 AA 63.1 Aa
348.6 A 288.8 A
139.6 BBB 208.7 Baa
- Unrated 2.3 Unrated
Municipal bonds 61.0 AA 61.0 Aa2
Mutual funds 1,365.3 Unrated 1,365.3 Unrated
Treasury trust fund pool 2,065.9 Unrated 2,065.9 Unrated
Total $ 4,063.2 $ 4,063.2
Total Primary Government $ 16,582.3 $ 16,582.3
Debt Investments (In millions)
Investment Type
Fair Fair
Value Value
*International investment types consist of domestic floating rate notes used as part of a swap strategy.
**Average rating
2014 Comprehensive Annual Financial Report
79
Michigan
Notes to the Financial Statements
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of those
investments.
The State Treasurer’s policy states that cash equivalents are invested in short-term fixed income securities with an average
weighted maturity of less than one year to provide liquidity and safety of principal from capital market and default risk. At
September 30, 2014, the fair value of prime commercial paper was $3.7 billion; the weighted average maturity was 25 days.
The State Treasurer does not have a policy regarding interest rate risk for long-term debt investments. However, the pension
trust funds are invested with a long-term strategy with no investments with a maturity of less than one year at the time of
purchase. The goal is to balance higher returns while accepting minimum risk for the return. Analyzing the yield curve on
individual securities as compared to U.S. Treasuries determines, in part, what is an acceptable risk for the return. Therefore,
market conditions such as lower interest rates result in shorter duration; higher interest rates result in longer duration.
As of September 30, the pension trust funds had the following long-term debt securities:
Duration
In Years
Retirement Systems:
Government securities
U.S. Treasury bonds $ 1,172.5 4.0
U.S. agencies - backed 530.8 4.8
U.S. agencies - sponsored 275.4 5.1
Total Governmental 1,978.7
Corporate bonds & notes 5,414.4 4.9
International - corporate bonds & notes* 918.0 0.2
Mutual fund - fixed income 30.6 3.0
Total $ 8,341.8
Deferred Compensation/Defined Contribution:
Common trust funds
SSgA bond market index fund $ 456.4 7.8
SSgA cash series Treasury fund 188.4 0.2
Total Common Trust Funds 644.8
Stable value funds
Synthetic guaranteed investment contracts 1,036.3 3.9
SSgA STIF 75.3 -
Total Stable Value Funds 1,111.6
Mutual funds
PIMCO total return fund 152.0 7.7
Total Mutual Funds 152.0
Total $ 1,908.4
Total Pension (and Other Employee Benefit) Trust Funds $ 10,250.2
Debt Securities (In millions)
Pension (and Other Employee Benefit) Trust Funds
Value
Fair
*International debt securities contain domestic government and corporate securities as a part of their derivative strategies. The
interest rates reset on a quarterly basis for these securities.
Synthetic Guaranteed Investment Contract (SGIC)
SGIC investment derivatives within the Stable Value Fund contain a portfolio of underlying securities and a benefit responsive
wrap contract. The wrap contract produces a floating rate of return that is adjusted periodically, but not below zero, to reflect the
underlying investment portfolio and generally provide for participant withdrawals at contract value (principal plus accrued
interest). As of September 30, 2014, the fair value of the SGIC’s underlying investments was $1.1 billion. The wrap contract
did not have a value because the market value of the SGIC's underlying investments was higher than the SGIC's contract
value; therefore, the wrap contract does not have a value.
2014 Comprehensive Annual Financial Report
80
Michigan
Notes to the Financial Statements
As of September 30, the primary government, excluding pension trust funds, had the following debt securities:
Investment Type
U.S. Treasury bonds $ 289.5 $ 56.3 $ 85.9 $ 90.4 $ 57.0
Municipal bonds 61.0 13.0 27.6 12.0 8.4
U.S. bonds - backed 22.6 - - 0.4 22.2
U.S. agency bonds - sponsored 17.5 - 7.1 9.5 0.9
Corporate bonds 563.0 62.7 164.3 331.2 4.9
Mutual funds 1,365.3 35.6 52.6 1,256.4 20.7
Total $ 2,319.0 $ 167.6 $ 337.5 $ 1,699.8 $ 114.1
Other Funds
Debt Securities (In millions)
Value Than 1 1 To 5 6 to 10 Than 10
Fair Less More
Investment Maturities (In years)
Foreign Currency Risk
Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of investments or deposits.
The pension trust funds invest in various global foreign securities. These investments are limited to 30% of the total assets of
the system, and are additionally limited to 5% of the outstanding foreign securities of any single issuer. No investment is
allowed in a country that has been identified by the United States State Department as engaging in or sponsoring terrorism.
These limits are set forth in MCL Sections 38.1133 and 38.1140. The types of foreign securities include equities, mutual funds,
real estate, and limited partnerships. At September 30, 2014, foreign investments were approximately 17.1% of total assets of
the systems; total foreign investments were $10.4 billion. As of September 30, 2014, the pension (and other employee
benefits) trust funds held the following investments subject to foreign currency risk:
2014 Comprehensive Annual Financial Report
81
Michigan
Notes to the Financial Statements
Country
Retirement Systems:
Americas
Dollar Canada $ - $ - $ 1.3 $ 1.4
Peso Argentina - - 0.2 -
Peso Mexico - 107.0 10.1 -
Real Brazil - 13.0 - -
Caribbean
Dollar Bermuda - - 14.9 -
Dollar Cayman Islands - - 10.5 -
Europe
Euro European Union 1,021.1 - 101.2 (0.3)
Franc Switzerland - - 36.5 0.7
Krona Sweden - - 11.9 -
Krone Denmark - - 3.6 -
Krone Norway - - 32.9 0.2
Sterling United Kingdom 10.4 - 68.6 (8.7)
Asia/Pacific
Dollar Australia - - 3.1 (2.2)
Dollar Hong Kong - - 2.7 1.3
Yen J apan - - 0.3 (0.3)
Dollar New Zealand - - - (0.5)
Peso Philippines - 66.2 - -
Dollar Singapore - - 12.7 0.4
Won South Korea - - 9.1 (1.7)
Middle East
Shekel Israel - - 1.5 -
World-wide
Various Various 1,346.9 - 7,509.3 (10.4)
Total $ 2,378.4 $ 186.2 $ 7,830.6 $ (20.0)
Deferred Compensation/Defined Contribution:
Various Various $ - $ - $ 2,142.2 $ -
Total $ 2,378.4 $ 186.2 $ 9,972.8 $ (20.0)
International
Pools Currency
Pension (and Other Employee Benefit) Trust Funds
Foreign Currency Risk (In Millions)
Fair Value (In U.S. Dollars)
Investments
Derivatives*
Fixed Income
Alternative
and
Real Estate
Equity
*International derivatives’ market value exposure to foreign currency risk is the net amount of unrealized gains and unrealized
losses. Maturity dates on these investments range from October 2014 through December 2015, with an average maturity of 0.5
years.
Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributable to the magnitude of a government’s investments with a single issuer.
Other than obligations issued that are assumed or guaranteed by the United States, its agencies, or United States government-
sponsored enterprises, the pension systems are prohibited by MCL Section 38.1137 from investing in more than 5% of the
outstanding obligations of any one issuer or investing more than 5% of a system’s assets in the obligations of any one issuer.
At September 30, 2014, there were no investments in any single issuer more than 5% of the system’s assets, nor were there
any investments totaling more than 5% of the obligations of any one issuer, other than U.S. Government Securities as
described above.
2014 Comprehensive Annual Financial Report
82
Michigan
Notes to the Financial Statements
Pension trust fund investments represent 89.4% of the total investments of the primary government. Other large holders of
investments were the State Lottery Fund (SLF), MESP, and the Michigan Natural Resources Trust Fund.
SLF investments, $232.5 million, are all in the form of zero coupon U.S. Treasury bonds and State of Michigan Municipal
bonds. These investments are held to provide funding for deferred prize awards.
Securities Lending Transactions
Under the authority of MCL Section 38.1133, the State lends securities to broker-dealers and other entities for collateral that will
be returned for the same securities in the future. The custodian is not liable for any losses unless there is negligence or willful
misconduct on its part. State statutes allow the State to participate in securities lending transactions and the State has, by way
of an Agreement, authorized Credit Suisse, the agent bank, to lend the State’s securities to broker-dealers and banks pursuant
to a form of loan agreement. During the fiscal year, the agent bank lent, at the direction of the State Treasurer, the State’s
securities and received cash (United States) as collateral. Borrowers were required to deliver collateral for each loan equal to
(i) in the case of loaned securities denominated in United States dollars or whose primary trading market was located in the
United States or sovereign debt issues by foreign governments, 102% of the market value of the loaned securities; and (ii) in
the case of loaned securities not denominated in United States dollars or whose primary trading market was not located in the
United States, 105% of the market value of the loaned securities.
The State Treasurer did not impose any restrictions during the fiscal year on the amount of the loans that the agent bank made
on its behalf. The agent bank indemnified the State by agreeing to purchase replacement securities, or return cash collateral in
the event the borrower failed to return the loaned securities or pay distributions thereon, due to the borrower’s insolvency.
Under Master Securities Lending Agreements between the State and each borrower, the State Treasurer and the borrowers
have the right to terminate all securities lending transactions on demand. The cash collateral received on each loan was
invested in assets held in a collateral account. As of September 30, 2014, the investments had an average weighted maturity
to next reset of 3.1 years and an average weighted maturity of 11.9 years. Because the loans were terminable at will, their
duration did not generally match the duration of the investments made with cash collateral. At September 30, 2014, the
retirement systems had no credit risk exposure to borrowers. The cash received for securities on loan for the State as of
September 30, 2014, was $4.2 billion. The fair market value of assets held in the dedicated collateral account managed by
Credit Suisse and held by the custodian for the State as of September 30, 2014, was $4.0 billion. The carrying amount, which
is the fair market value, of securities on loan for the State as of September 30, 2014, was $4.1 billion.
At September 30, the pension trust funds had the following debt investments made from cash received as collateral for
securities lent:
Rating Rating
Investment Type S & P Moody's
Securities Lending Collateral
Short term $ 150.0 A-1 $ 150.0 P - 1
402.8 AAA 570.1 Aaa
367.3 AA 251.5 Aa
51.5 A - A
- BBB 15.4 Baa
15.4 BB 2,911.7 Ba
150.1 CCC 134.6 Caa
- CC 15.5 Ca
2,911.7 Unrated - Unrated
Total $ 4,048.8 $ 4,048.8
Debt Investments (In millions)
Value Value
Fair Fair
Deposits and Investments – Discretely Presented Component Units
Deposits
At year-end, the carrying amount of discretely presented component unit deposits, excluding those classified as investments,
was $623.2 million. The deposits were reflected in the accounts of the banks at $507.8 million. Of the bank balance, $348.7
million was uninsured and uncollateralized and therefore exposed to custodial credit risk.
2014 Comprehensive Annual Financial Report
83
Michigan
Notes to the Financial Statements
Investments
The investment authority for most discretely presented component units is typically found in their enabling statutes and/or their
bond resolutions where applicable. Those component units that are financing authorities generally may invest in government or
government-backed securities and deposits. The Michigan Education Trust’s investments are subject to an investment
agreement with the State Treasurer that allows the Treasurer, acting as agent, to make diverse investments including stocks,
bonds, notes, and other investments. Investment policies for the State universities are typically set forth by their governing
boards and include a broad range of investment types.
Restricted Assets
Restricted investments on the government-wide Statement of Net Position, totaling $526.4 million, represent amounts that are
pledged toward the payment of outstanding bonds and notes.
The following table summarizes the investment maturities reported by the discretely presented component units (in millions):
Time deposits $ 131.6 $ 121.8 $ 9.6 $ 0.2 $ - $ -
Money market accounts 1,731.6 1,731.6 - - - -
Commercial paper 54.1 54.1 - - - -
Repurchase agreements 547.1 - - 72.3 474.8 -
Government securities 734.8 307.4 280.2 99.0 48.3 -
Insured mortgage backed securities 679.4 16.0 55.9 81.2 526.2 -
Government-backed securities 144.2 15.1 54.4 68.1 6.6 -
Investment agreements 0.2 0.2 - - - -
Corporate bonds and notes 362.5 36.0 208.1 118.2 0.1 -
Equities 162.2 103.7 - 10.7 9.0 38.8
Real estate 20.2 0.7 - - 19.5 -
Venture capital & leveraged buyouts 117.2 - - - 14.4 102.7
Mutual bond/equity funds 1,937.7 126.2 268.0 155.4 419.2 968.8
Pooled investment funds 56.2 56.2 - - - -
Other investments 255.4 1.5 32.3 22.6 155.4 43.5
Total Investments $ 6,934.4 $ 2,570.7 $ 908.5 $ 627.8 $ 1,673.5 $ 1,153.9
Less Investments Reported as
"Cash" on Statement of Net Position 601.3
Total Investments $ 6,333.1
As reported on the Statement of Net Position
Current investments $ 1,765.7
Noncurrent restricted investments 526.4
Noncurrent investments 4,041.0
Total Investments $ 6,333.1
N/A
Fair Less More
Investment Maturities (In years)
Value Than 1 1 To 5 6 To 10 Than 10
2014 Comprehensive Annual Financial Report
84
Michigan
Notes to the Financial Statements
NOTE 9 – CAPITAL ASSETS
Primary Government
Summary of Significant Accounting Policies
Methods used to value capital assets
Capital assets, which include property, plant, equipment, intangible items (mineral rights, land rights, and computer software)
and infrastructure items (e.g. roads, bridges, ramps, and similar items), are reported in the applicable governmental or
business-type activity columns of the government-wide financial statements. Such assets are recorded at historical cost or
estimated historical cost if purchased or constructed. Donated capital assets are recorded at fair market value at the date of
donation.
Capitalization policies
All land and non-depreciable land improvements are capitalized, regardless of cost. Equipment is capitalized when the cost of
individual items exceeds $5 thousand, computer software is capitalized when the cost exceeds $5 million, and all other capital
assets are capitalized when the cost of individual items or projects exceed $100 thousand.
The costs of normal maintenance and repairs that do not add to the value of assets or materially extend asset lives are not
capitalized.
Items not capitalized and depreciated
The State possesses certain capital assets that have not been capitalized and depreciated, because the assets are held for
public exhibition, education, or research in furtherance of public service, rather than financial gain. These assets include works
of art and historical treasures such as statues, monuments, historical documents, paintings, forts and lighthouses, rare library
books, miscellaneous capitol-related artifacts and furnishings, and the like.
Depreciation and useful lives
Applicable capital assets are depreciated using the straight-line method, with a half-year’s depreciation charged in the year of
acquisition and in the year of disposal. Agencies assigned useful lives that were most suitable for the particular assets.
Estimated useful lives generally were assigned as follows:
Asset Years
Equipment 2-25
Buildings 5-50
Infrastructure 3-40
Land Improvements 5-40
Intangibles 6-12
Modified approach for infrastructure
The State has elected to use the “modified approach” to account for certain infrastructure assets, as provided in Governmental
Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements - and Management’s Discussion and
Analysis - for State and Local Governments. Under this process, the State does not record depreciation expense nor are
amounts capitalized in connection with improvements to these assets, unless the improvements expand the capacity or
efficiency of an asset. Utilization of this approach requires the State to: 1) commit to maintaining and preserving affected
assets at or above a condition level established by the State, 2) maintain an inventory of the assets and perform periodic
condition assessments to ensure that the condition level is being maintained, and 3) make annual estimates of the amounts that
must be expended to maintain and preserve assets at the predetermined condition levels.
Roads and bridges maintained by the Department of Transportation are accounted for using the modified approach.
2014 Comprehensive Annual Financial Report
85
Michigan
Notes to the Financial Statements
Capital asset activities for the fiscal year ended September 30 were as follows (in millions):
Governmental Activities
Capital assets, not being depreciated:
Land $ 3,448.5 $ 47.7 $ (1.5) $ 0.6 $ 3,495.4
Land improvements and other assets 16.2 - - - 16.2
Land rights 62.6 2.5 - - 65.1
Mineral rights 19.8 - - - 19.8
Construction in progress (buildings) 38.0 39.8 (6.0) - 71.8
Construction in progress (infrastructure) 1,672.4 486.5 (363.9) (18.4) 1,776.7
Infrastructure 13,755.5 340.4 (197.9) 21.4 13,919.3
Total capital assets, not being depreciated 19,012.9 916.9 (569.3) 3.6 19,364.2
Capital assets, being depreciated
Land improvements and other assets 196.0 18.4 - 0.7 215.2
Equipment and vehicles 757.0 29.3 (12.0) 1.3 775.6
Computer software (includes projects in
progress) 532.1 180.7 - - 712.8
Buildings 3,633.0 37.5 (28.8) (12.1) 3,629.6
Infrastructure 1,197.7 3.6 (1.3) 1.6 1,201.5
Total capital assets, being depreciated 6,315.8 269.5 (42.1) (8.5) 6,534.6
Less accumulated depreciation for:
Land improvements and other assets (71.6) (6.9) - - (78.6)
Equipment and vehicles (597.1) (44.2) 11.3 13.1 (616.8)
Computer software (206.5) (66.1) - 0.6 (272.0)
Buildings (1,653.6) (113.5) 10.7 6.9 (1,749.6)
Infrastructure (597.8) (43.3) 0.6 - (640.5)
Total accumulated depreciation (3,126.6) (274.0) 22.7 20.6 (3,357.4)
Total capital assets, being depreciated, net 3,189.2 (4.5) (19.4) 12.1 3,177.3
Governmental activity capital assets, net $ 22,202.2 $ 912.4 $ (588.7) $ 15.6 $ 22,541.4
and
Adjustments
Ending
Balance
Balance
Additions Deletions ifications
Reclass-
Beginning
Restated*
*Beginning balances for equipment, as well as the related accumulated depreciation, were restated due to prior period errors.
See Note 4 for additional information on these restatements.
The Department of Corrections has temporarily closed one prison campus during fiscal year 2014. The temporary impairments
pertained to buildings. The Department has no definitive plans for the buildings. No impairment loss was reported for the
temporary impairment because the impairment is temporary in nature and the historical costs of the buildings were unchanged
in the above table.
2014 Comprehensive Annual Financial Report
86
Michigan
Notes to the Financial Statements
Adjustments
and Reclass-
Business - Type Activities
Capital assets, being depreciated:
Computer Software $ 0.4 $ - $ - $ - $ 0.4
Equipment 5.3 - (0.5) - 4.8
Total capital assets, being depreciated 5.7 - (0.5) - 5.2
Less accumulated depreciation for:
Computer Software (0.3) - - - (0.3)
Equipment (4.6) (0.2) 0.5 - (4.3)
Total accumulated depreciation (4.9) (0.2) 0.5 - (4.6)
Total capital assets, being depreciated, net 0.8 (0.2) - - 0.6
Business-type activity capital assets, net $ 0.8 $ (0.2) $ - $ - $ 0.6
Balance
Ending
Balance
Beginning
Additions Deletions ifications
Depreciation expense was charged to functions of the primary government as follows (in millions):
Governmental Activities
General government $ 32.7
Education 0.3
Human services 11.4
Public safety and corrections 51.4
Conservation, environment, recreation, and agriculture 12.3
Labor, commerce, and regulatory 2.5
Health services 30.7
Transportation 54.8
Depreciation on capital assets held by the State's internal service funds
charged to the various functions based on their use of the assets $ 78.0
Total Depreciation Expense - Governmental Activities $ 274.0
Business-type Activities:
Enterprise 0.2
Total Depreciation Expense - Business-type Activities $ 0.2
Amount
Discretely Presented Component Units
The following table summarizes net capital assets reported by the discretely presented component units (in millions):
State Universities and authorities:
Land and other non-depreciable assets $ 248.3
Buildings, equipment, and other depreciable assets 5,894.9
Infrastructure 163.2
Construction in progress 293.9
Total 6,600.4
Less accumulated depreciation (2,482.7)
Capital Assets, Net - Discretely Presented Component Units $ 4,117.6
Amount
2014 Comprehensive Annual Financial Report
87
Michigan
Notes to the Financial Statements
NOTE 10 – PENSION BENEFITS
Defined Benefit Pension Plans
PLAN DESCRIPTION
The State of Michigan administers the following defined benefit pension plans:
Participating
Name Type of Plan Employers
Legislative Retirement System (LRS) Single employer 1
State Police Retirement System (SPRS) Single employer 1
State Employees' Retirement System (SERS) Single employer 1
Public School Employees' Retirement System (PSERS) Cost sharing multi-employer 685
J udges' Retirement System (J RS) Cost sharing multi-employer 85
Military Retirement System (MRP) Single employer 1
Each plan, except MRP, is accounted for in a separate pension trust fund and also issues a publicly available financial report
that includes financial statements and required supplementary information for that plan. Those reports, except LRS, may be
obtained by visiting www.michigan.gov/ors or by calling the Customer Information Center at (517) 322-5103 or 1-800-381-5111.
The LRS report may be obtained by writing to the Michigan Legislative Retirement System, House Office Building, Suite S0927,
P.O. Box 30014, Lansing, MI 48909 or by calling (517) 373-0575.
As mandated by legislation, all new State of Michigan employees (except Michigan State Police officers) hired on or after March
31, 1997, are members of the State of Michigan Defined Contribution Retirement Plan (Plan) as opposed to the LRS, SERS,
and J RS defined benefit plans. Employees hired before that date were given the option of remaining in the defined benefit plan
or transferring to the defined contribution plan. The decision is irrevocable and transfers were completed by September 30,
1998. This was a one-time opportunity. With the passage of the legislation permitting the transfer, the LRS, SERS, and J RS
defined benefit plans became closed systems.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PLAN ASSETS MATTERS
Basis of Accounting
The financial statements are prepared using the accrual basis of accounting. Contributions from the State are recognized as
revenue when due and payable. Benefits and refunds are recognized when due and payable in accordance with the terms of
each plan.
Methods Used to Value Investments
Plan investments are reported at fair value. Securities traded on a national or international exchange are valued at the last
reported sales price at current exchange rates. Corporate bonds not traded on a national or international exchange are based
on equivalent values of comparable securities with similar yield and risk. The fair value of private investments is based on the
net assets value reported in the financial statements of the respective investment entity. The net asset value is determined in
accordance with governing documents of the investment entity, and is subject to an independent annual audit. Securities
purchased with cash collateral under securities lending activities are recorded at estimated fair value. Other investments not
having an established market are recorded at estimated fair value.
Description of Benefits
State statutes require that the State plans provide certain retirement, disability, death benefits, and annual cost-of-living
adjustments to plan members. LRS life insurance benefits are provided through the defined benefit pension plan and are
accounted for as pension benefits. The LRS life insurance benefits are paid on an advance-funded basis. The actuarial cost
method and actuarial assumptions are the same as for the pension plan.
Contributions and Reserves
SERS members are allowed to purchase service credits by entering into a contract with duration of up to 20 years. At
September 30, 2014, the short-term receivable was $3.8 million and the discounted long-term receivable was $16.0 million.
Significant Investments
No investment of any of the pension plans comprises 5% or more of the net position available for benefits. There are no
significant investments made in securities issued by the State, nor are there any loans made from the pension plans to the
State. Additional disclosures concerning investments are provided in Note 8 and, concerning State Treasurer’s Common Cash,
in Note 5.
2014 Comprehensive Annual Financial Report
88
Michigan
Notes to the Financial Statements
Funding Policy
The Legislature establishes the extent to which the employer and employees are required to make contributions and
establishes the benefit provisions for each plan.
Plan members for SPRS are required to contribute based on the following: Command officers currently participate in the
System on a noncontributory basis. Effective October 1, 2012, troopers and sergeants hired before J une 10, 2012, began
contributing 1% of their compensation. Troopers hired on or after J une 10, 2012, contribute 4% of their compensation.
Plan members for LRS are required to contribute based on the following: for participants prior to J anuary 1, 1995, the required
contribution rate is 9%; for participants after J anuary 1, 1995, the required contribution rate is 7%.
Plan members for J RS are required to contribute 5.82% (weighted average) of annual covered salary.
Plan members of MRP are not required to contribute to the plans and there is no underlying payroll of participants. Except for
five special duty members, retirants receive $600 in annual pension benefits. Accordingly, the annual required contribution
from the State is determined as a dollar amount, not as a percentage of payroll. For fiscal year ending September 30, 2014,
this amount was $6.3 million.
Plan members for SERS are required to contribute based on the changes made to the plan via Public Act 264 of 2011, effective
April 1, 2012. Participants who elected to remain in the plan are required to contribute 4% of their compensation.
For LRS, SERS, and SPRS, statute requires the employer to contribute to finance the benefits of plan members. These
employer contributions are determined annually by the system’s actuary and are based upon level-dollar value funding or a
level-percent-of-payroll principles so the contribution rates do not have to increase over time. The following are the required
contribution rates for the fiscal year ending September 30, 2014: SPRS, 53.8% of annual active payroll; SERS, $624.5 million;
LRS, $6.3 million.
For J RS, the State contributes annually the greater of 3.5% of the aggregate annual compensation of State paid base salaries,
or the difference between the total actuarial requirement of current service and unfunded accrued liabilities minus the revenues
from court filing fees and member contributions. The following table provides a schedule of annual required employer
contributions for J RS (amounts in millions):
Year Ended
September 30
2014 $ 3.2 101.3 %
2013 2.8 101.5
2012 1.1 104.0
(ARC)
Contribution
Required
Annual
Percentage
of ARC
Contributed
ANNUAL PENSION COST AND OTHER RELATED INFORMATION
Annual pension cost and related information for the current year for the State’s single employer defined benefit plans is as
follows (amounts in millions):
Annual Pension Cost and Net Pension Obligation:
Annual required contribution $ 6.33 $ 61.40 $ 624.47 $ 6.29
Interest on net pension (asset) obligation 0.88 6.38 57.20 0.54
Adjustment to annual required contribution (1.74) (5.53) (66.32) (0.90)
Annual pension cost 5.47 62.25 615.34 5.94
Contributions made - 58.39 705.10 4.22
Change in net pension asset/obligation 5.47 3.86 (89.76) 1.72
Net pension (asset) obligation at beginning of
fiscal year 12.63 79.70 714.99 13.57
Net pension (asset) obligation at end of fiscal year $ 18.10 $ 83.56 $ 625.24 $ 15.29
LRS SPRS SERS MRP*
*For MRP, information provided is based on most recent biennial actuarial valuation.
2014 Comprehensive Annual Financial Report
89
Michigan
Notes to the Financial Statements
Actuarial Valuations and Assumptions
Actuarial valuations for the pension plans involve estimates of the value of reported amounts and assumptions about the
probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and
the healthcare cost trend. Amounts determined regarding the funded status of the plan and the ARC are subject to continual
revision as actual results are compared with past expectations and new estimates are made about the future. The schedules of
funding progress present multi-year trend information about whether the actuarial value of plan assets for the pension plans is
increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the
employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern
of sharing of benefit costs between the employer and plan members to that point.
The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility
in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.
LRS SPRS SERS MRP
Lastest actuarial valuation date 9/30/2013 9/30/2013 9/30/2013 9/30/2013
Actuarial cost method Entry Age Entry Age Entry Age Entry Age
Amortization method Level dollar Level percent Level dollar Level dollar
open of payroll closed closed closed
Remaining amortization period 10 years 23 years 23 years 23 years
Asset valuation method 5-year 5-year 5-year Market value
smoothed market smoothed market smoothed market
Actuarial assumption:
Investment rate of return 7% 8% 8% 4%
Projected salary increases 4% 3.5-93.5% 3.5-12.5% 3.5%
Includes inflation at 4% 3.5% 3.5% 3.5%
Cost-of-living adjustments 4% annual compounded 2% annual non- 3% annual non- 3.5% for special
(non-compounded for compounded with compounded with duty retirants
legislators who first maximum annual maximum annual
became members increase $500 increase $300
after 1/1/95)
2014 Comprehensive Annual Financial Report
90
Michigan
Notes to the Financial Statements
THREE YEAR HISTORICAL TREND INFORMATION
The following table provides a schedule of funding progress for the State’s single employer defined benefit plans (amounts in
millions):
Actuarial
Valuation
Date
LRS* 9/30/13 $ 134.9 $ 180.9 $ 46.0 74.6 % $ 0.1 46,000.0 %
9/30/12 136.9 180.5 43.6 75.9 0.1 43,600.0
9/30/11 149.9 181.8 31.9 82.0 0.1 31,900.0
SPRS* 9/30/13 1,069.1 1,724.0 654.9 62.0 110.2 594.0
9/30/12 1,069.2 1,671.0 601.9 64.0 104.9 573.9
9/30/11 1,138.1 1,627.9 489.8 69.9 110.3 444.1
SERS* 9/30/13 9,437.6 15,647.7 6,210.1 60.3 1,081.7 574.1
9/30/12 9,447.1 15,654.1 6,207.1 60.3 1,155.6 537.1
9/30/11 10,212.0 15,597.0 5,384.9 65.5 1,276.1 422.0
MRP* 9/30/13 - 90.0 90.0 - 0.5 19,683.5
9/30/11 - 77.3 77.3 - 0.1 54,473.0
9/30/09 - 42.3 42.3 - 0.4 9,874.0
((b-a)/c)
Payroll
of Covered
Percentage
UAAL as a
(a)
of Assets
Value
Actuarial
(b)
(AAL)
Liability
Accrued
Unfunded
(c)
Payroll
Covered
Actuarial
(b-a)
(UAAL)
Liability
Accrued
(Overfunded)
(a/b)
Ratio
Funded
*The most recent actuarial valuations available were used to prepare this schedule.
The following table provides a schedule of annual pension cost and net pension obligation for the State’s single employer
defined benefit plans (amounts in millions):
Year Ended
September 30
LRS 2014 $ 5.5 - % $ 18.1
2013 5.5 - 12.6
2012 4.2 - 7.1
SPRS 2014 62.3 93.8 83.6
2013 58.5 83.7 79.7
2012 53.1 76.7 70.2
SERS 2014 615.3 114.6 625.2
2013 603.0 100.3 715.0
2012 585.0 71.8 716.9
MRP 2014 5.9 71.1 15.3
2013 5.1 78.5 13.6
2012 5.1 78.6 12.5
(Asset) Cost
Annual Obligation
Net Pension
Percentage
Contributed
2014 Comprehensive Annual Financial Report
91
Michigan
Notes to the Financial Statements
Defined Contribution Pension Plans
State of Michigan Defined Contribution Retirement Plan
The Plan was established to provide benefits at retirement to employees of the State who were hired after March 31, 1997,
Public School Reporting Units members hired after J uly 1, 2010, and to those members of the SERS (defined benefit), eligible
members of the Education Achievement Authority (EAA), J RS, and LRS who elected to transfer to this Plan. The Plan is
administered by the Department of Technology, Management and Budget. Public Act 264 of 2011 created the State of
Michigan Personal Healthcare Fund for State employees hired after J anuary 1, 2012, and those who elected to transfer to this
plan.
The State is required to contribute 4% of annual covered payroll. The State is also required to match employee contributions
up to 3% of annual covered payroll. The Plan further provides for eligible public school reporting units and the EAA to make a
mandatory contribution of 50% of participants’ voluntary contributions up to 1%. The Plan also provides a Personal Healthcare
Fund for employees hired on or after J anuary 1, 2012, with an employer match of up to 2% of compensation. Employees hired
prior to J anuary 1, 2012, that elected to transfer to this plan received an employer match up to 2% of future compensation plus
a monetized amount for existing years of service distributed on termination.
Plan provisions and contribution requirements are established and may be amended by the Legislature. Total employer
contributions to the plan were $170.8 million which consisted of State contributions of $141.0 million and Public School
Reporting Unit and EAA contributions of $29.8 million. Total Participant contributions to the Plan were $142.1 million which
consisted of State employee contributions of $109.0 million and Public School Reporting Unit and EAA employee contributions
of $33.1 million. The reports may be obtained by visiting www.michigan.gov/ors or by calling (517) 322-5103.
The following investments represent 5% or more of the plan net position at September 30, 2014: Stable Value fund, $174.0
million; SSgA Bond Market Index Fund, $202.7 million; SSgA S&P 500 Index Fund, $364.5 million, SSgA S&P MidCap Index
Fund, $208.5 million; SSgA EX US Fund, $137.7 million; Dodge & Cox Stock Fund, $210.5 million; American Funds Europacific
Growth Fund, $187.0 million.
Component Units
In addition to the PSERS, the State university component units participate in the Teachers’ Insurance and Annuity Association
and College Retirement Equities Fund (TIAA-CREF). The TIAA-CREF is a defined contribution multiple-employer pension plan.
The State university component units are required to contribute between 4% and 15% of annual covered payroll, as determined
by each institution’s employment agreements. The total contribution to the TIAA-CREF for all State university component units
was $91.6 million for the year ending J une 30, 2014.
Additional plan information may be found in the separately issued financial reports of the State university component units.
Effective J anuary 1, 2004, the State Bar of Michigan assumed responsibility for the retirement plans of State Bar employees
who participated in the Plan. All monies held in the Plan on behalf of participating State Bar employees were subsequently
transferred to the newly established State Bar 401(a) retirement plan and the 457(b) retirement plan. The State Bar of Michigan
is required to make minimum contributions and may establish other benefit provisions for their retirement plans. The State Bar
of Michigan’s contribution to the new plans was $0.3 million for the year ending September 30, 2014.
Additional information for the retirement plan can be obtained by contacting the State Bar at (517) 372-9030.
NOTE 11 – OTHER POSTEMPLOYMENT BENEFITS
Other Postemployment Benefit Plans
PLAN DESCRIPTION
The State of Michigan administers the following Other Postemployment Benefit (OPEB) plans:
Participating
Name Type of Plan Employers
Legislative Retirement System (LRS) Single employer 1
State Police Retirement System (SPRS) Single employer 1
State Employees' Retirement System (SERS) Single employer 1
Public School Employees' Retirement System (PSERS) Cost sharing multi-employer 685
J udges' Retirement System (J RS) Cost sharing multi-employer 85
Life Insurance Single employer 1
2014 Comprehensive Annual Financial Report
92
Michigan
Notes to the Financial Statements
Each plan, except for Life Insurance, is accounted for in a separate OPEB trust fund and also issues a publicly available
financial report that includes financial statements and required supplementary information for that plan. Those reports, except
LRS, may be obtained by visiting www.michigan.gov/ors or by calling the Customer Information Center at (517) 322-5103 or
1-800-381-5111. The LRS report may be obtained by writing to the Michigan Legislative Retirement System, House Office
Building, Suite S0927, P.O. Box 30014, Lansing, MI 48909 or by calling (517) 373-0575.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PLAN ASSETS MATTERS
Basis of Accounting
The financial statements are prepared using the accrual basis of accounting. Contributions from the State are recognized as
revenue when due and payable. Benefits and refunds are recognized when due and payable in accordance with the terms of
each plan.
Methods Used to Value Investments
Plan investments are reported at fair value. Securities traded on a national or international exchange are valued at the last
reported sales price at current exchange rates. Corporate bonds not traded on a national or international exchange are based
on equivalent values of comparable securities with similar yield and risk. The fair value of private investments is based on the
net assets value reported in the financial statements of the respective investment entity. The net asset value is determined in
accordance with governing documents of the investment entity, and is subject to an independent annual audit. Securities
purchased with cash collateral under securities lending activities are recorded at estimated fair value. Other investments not
having an established market are recorded at estimated fair value.
Description of Benefits
State statutes require that the State provide certain OPEB benefits to many of its retired employees. Health, dental, and vision
benefits as well as life insurance coverage are provided to retirees.
FUNDING POLICY
The Legislature establishes the extent to which the employer and employees are required to make contributions and
establishes the benefit provisions for each plan.
Plan members for SPRS are required to contribute 5% of the monthly premium amount for health coverage and 10% for dental
and vision coverage.
Plan members for SERS are required to contribute 20% of the monthly premium for health, dental, and vision.
Plan members for J RS are required to contribute 5% of health care premiums. J RS plan members can also enroll in the vision
and dental plans of which they are required to contribute 100% of the premium.
Plan members for LRS that are part of the defined benefit plan are not required to contribute and the members of the defined
contribution plan are required to contribute 10% of the premiums.
Life insurance is provided to retirees with the employer required to contribute 100% of the premiums.
Statute requires the employer to contribute to finance the benefits of plan members. These employer contributions are
determined annually by the system’s actuary and are based upon level-dollar value funding or a level-percent-of-payroll
principles so the contribution rates do not have to increase over time. The following are the required contribution amounts for
the fiscal year ending September 30, 2014 (in millions): $619.5, SERS; $46.4, SPRS; $9.4, LRS; $69.8, Life Insurance.
For the fiscal year ended September 30, 2014, the State contributed the following amounts (in millions): $755.9, SERS; $48.4,
SPRS; $4.5, LRS; $25.6, Life Insurance. Included in these amounts were (in millions): prefunding of $183.8, SERS; $13.8,
SPRS and federal on-behalf payments of $54.9, SERS; $1.8, SPRS; $0.2, LRS.
2014 Comprehensive Annual Financial Report
93
Michigan
Notes to the Financial Statements
ANNUAL OPEB COST AND OTHER RELATED INFORMATION
Annual OPEB cost and related information for the current year for the State’s single employer OPEB plans is as follows
(amounts in millions):
Annual OPEB Cost and Net OPEB Obligation:
Annual required contribution $ 9.38 $ 46.38 $ 619.51 $ 69.80
Interest on net OPEB (asset) obligation 1.16 12.17 188.79 9.42
Adjustment to annual required contribution (1.55) (10.55) (163.65) (10.57)
Annual OPEB cost 8.99 48.00 644.65 68.65
Contributions made 4.49 48.37 755.88 25.61
Change in net OPEB asset/obligation 4.50 (0.37) (111.23) 43.04
Net OPEB (asset) obligation at beginning of
fiscal year 25.84 152.08 2,359.86 235.47
Net OPEB (asset) obligation at end of fiscal year $ 30.35 $ 151.71 $ 2,248.62 $ 278.51
LRS SPRS SERS
Life
Insurance
Actuarial Valuations and Assumptions
Actuarial valuations for the OPEB plans involve estimates of the value of reported amounts and assumptions about the
probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and
the healthcare cost trend. Amounts determined regarding the funded status of the plan and the Annual Required Contributions
(ARC) are subject to continual revision as actual results are compared with past expectations and new estimates are made
about the future. The schedules of funding progress present multi-year trend information about whether the actuarial value of
plan assets for the OPEB plans is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the
employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern
of sharing of benefit costs between the employer and plan members to that point.
The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility
in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.
Because the State now prefunds post-employment health care benefits for SPRS and SERS, the actuarial assumption for
investment rate of return for the SPRS and SERS OPEB plans was increased from 4% for the September 30, 2011 actuarial
valuation to 8% for the September 30, 2012 actuarial valuation. The actuarial assumption was changed to reflect the State’s
projected long-term investment rate of return now that the benefits are prefunded.
Life
LRS SPRS SERS Insurance
Lastest actuarial valuation date 9/30/2013 9/30/2013 9/30/2013 9/30/2013
Actuarial cost method Projected Unit Credit Entry Age Entry Age Entry Age
Amortization method Level dollar Level percent Level percent Level percent
closed of payroll closed of payroll closed of payroll closed
Remaining amortization period 27 years 23 years 23 years 24 years
Asset valuation method Market Value Market Value Market Value Market Value
Actuarial assumption:
Investment rate of return 4% 8% 8% 4%
Includes inflation at 4% 3.5% 3.5% 3.5%
Healthcare cost trend rate 8.75% in 2014 9% Year 1 9% Year 1 N/A
grading to 4% graded to 3.5% graded to 3.5%
in 2023 Year 10 Year 10
2014 Comprehensive Annual Financial Report
94
Michigan
Notes to the Financial Statements
THREE YEAR HISTORICAL TREND INFORMATION
The following table provides a schedule of funding progress for the State’s single employer OPEB plans (amounts in millions):
Actuarial
Valuation
Date
LRS 9/30/13 $ 22.8 $ 153.7 $ 130.9 14.8 % $ 3.3 3,966.7 %
9/30/12 20.8 145.2 124.3 14.3 3.6 3,452.8
9/30/11 15.2 140.7 125.5 10.8 3.7 3,391.9
SPRS 9/30/13 52.2 603.0 550.7 8.7 110.2 499.6
9/30/12 33.0 599.1 566.1 5.5 104.9 539.8
9/30/11 - 994.7 994.7 - 110.3 902.0
SERS 9/30/13 663.5 8,199.2 7,535.8 8.1 2,881.1 261.6
9/30/12 344.3 8,756.9 8,412.6 3.9 2,895.2 290.6
9/30/11 - 14,251.1 14,251.1 - 3,039.9 468.8
Life Insurance 9/30/13 - 1,056.9 1,056.9 - 2,998.4 35.2
9/30/11 - 1,012.8 1,012.8 - 3,156.2 32.1
9/30/09 - 964.4 964.4 - 3,182.3 30.3
((b-a)/c)
Payroll
UAAL as a
Percentage
of Covered
(UAAL)
(b-a) (c)
Payroll
Covered
(a/b)
Ratio
Funded
Actuarial
Unfunded
(Overfunded)
Accrued
Liability
(a)
Value
Actuarial
of assets (AAL)
Liability
Accrued
(b)
The following table provides a schedule of annual OPEB cost and net OPEB obligation for the State’s single employer OPEB
plans (amounts in millions):
Year
Ended
September 30
LRS 2014 $ 9.0 49.9 % $ 30.3
2013 9.3 47.4 25.8
2012 9.4 86.5 20.9
SPRS 2014 48.0 100.8 151.7
2013 48.6 93.9 152.1
2012 67.9 69.6 149.1
SERS 2014 644.7 117.3 2,248.6
2013 708.1 103.1 2,359.9
2012 953.9 70.5 2,381.7
Life Insurance 2014 68.6 37.3 278.5
2013 67.7 36.3 235.5
2012 65.4 39.2 192.4
Cost
OPEB
Annual Net OPEB
Obligation
(Asset) Contributed
Percentage
2014 Comprehensive Annual Financial Report
95
Michigan
Notes to the Financial Statements
NOTE 12 – LEASES
Accounting Policy
The State leases various assets under non-cancelable leasing arrangements. Leases that constitute rental agreements are
classified as operating leases; the resulting expenditures are recognized as incurred over the lease term. Leases that are
comparable to purchases are classified as capital leases.
In the government-wide and proprietary fund financial statements, assets and liabilities resulting from capital leases are recorded
at lease inception. The principal portion of lease payments reduces the liability; the interest portion is expensed.
For capital leases in governmental funds, other financing sources and expenditures are recorded at lease inception. Lease
payments are recorded as debt service expenditures. For budgetary purposes, lease payments are only reported as expenditures
when paid.
Most leases have cancellation clauses with one to six month notice requirements in the event that funding is not available. For
reporting purposes, such cancellation clauses are not considered in the determination of whether a lease is cancelable, because
the likelihood that they will be exercised is considered remote. Some lease agreements include renewal or purchase options. The
effect of such options is reflected in the minimum lease payments only if it is considered reasonably assured that an option will be
exercised. Some lease agreements include escalation clauses or other contingent rentals.
The State has entered into a few installment purchase agreements. Because the amounts involved are immaterial, and the
accounting treatment is similar, such agreements are reported together with capital leases.
Leases that exist between the State and the State Building Authority (SBA), a blended component unit, are not recorded as leases
in this report. In their separately issued financial statements, SBA records a lease receivable from the State. Although payables
and receivables technically exist between these parties, when combined for government-wide reporting, they are eliminated. A
long-term liability exists on the government-wide financial statements for the bonds issued by SBA to construct the assets
associated with the leases. Future payments to SBA are, therefore, not included in the schedules of lease commitments below.
Note 13 provides information on the amount of SBA’s bonds outstanding and a schedule of debt service requirements.
During fiscal year 2008 and 2011, the State entered into building lease agreements with the Michigan Strategic Fund (MSF), a
discretely presented component unit. The leases were classified as capital leases and are included in the capital lease disclosures
below.
Primary Government – Governmental Activities
Rental expenditures incurred under operating leases totaled $50.6 million during the fiscal year. Payments for capital lease
principal, interest, and executory costs totaled $37.1 million, $39.0 million, and $19.0 million, respectively, during the fiscal year.
Included in these amounts were payments to MSF for principal, interest, and executory costs totaling $7.8 million, $9.3 million,
and $0.1 million, respectively.
A summary of the operating and noncancelable capital lease commitments to maturity follows (in millions):
Year Ended
September 30
2015 $ 16.0 $ 35.7 $ 36.9 $ 18.9 $ 91.5
2016 11.7 32.7 34.4 18.0 85.1
2017 6.9 31.1 31.8 16.8 79.7
2018 5.4 27.7 29.0 15.5 72.2
2019 4.2 26.3 26.2 13.7 66.2
2020-2024 3.1 117.9 91.9 52.1 261.9
2025-2029 0.3 83.8 40.4 32.0 156.3
2030-2034 0.3 27.4 7.9 7.4 42.7
2035-2039 0.3 8.8 2.8 2.4 14.0
Thereafter 1.0 2.3 0.1 0.4 2.9
Total $ 49.1 $ 393.6 $ 301.5 $ 177.3 $ 872.3
Total
Capital Leases
Operating Executory
Leases Principal Interest Costs
The above capital leases relate to governmental activities which include the General Fund, other governmental funds, and the
internal service funds. A liability of $393.6 million has been recorded in the government-wide financial statements for the capital
lease principal. Included in this liability are the capital leases between the State and MSF totaling $189.4 million.
2014 Comprehensive Annual Financial Report
96
Michigan
Notes to the Financial Statements
The historical cost of assets acquired under capital leases, which are included in capital assets on the government-wide
financial statements at September 30, follows (in millions):
Buildings $ 443.6
Equipment 86.2
Total 529.9
Accumulated Depreciation (212.0)
Net Buildings and Equipment $ 317.9
Included in the table above is the historical cost and accumulated depreciation for the capital leases between the State and
MSF of $208.3 million and $56.1 million, respectively.
Primary Government – Business-Type Activities
Rental expense incurred under operating leases totaled $0.5 million during the fiscal year. There were no capital lease
obligations.
A summary of operating lease commitments to maturity follows (in millions):
Year Ended
September 30
2015 $ 0.5
2016 0.4
2017 0.3
2018 0.2
2019 0.1
2020-2024 0.1
Total $ 1.7
Leases
Operating
Discretely Presented Component Units
Operating lease commitments for universities and authorities totaled $44.6 million. Total capital lease obligations were $26.7
million, $12.3 million, and $0 for principal, interest, and executory costs, respectively, during the fiscal year.
NOTE 13 – BONDS AND NOTES PAYABLE – PRIMARY GOVERNMENT
General Information
General Obligation Bonds and Notes
Article 9, Section 15, of the State Constitution authorizes general obligation long-term borrowing, subject to approval by the
Legislature and a majority of voters at a general election. In addition, debt may be incurred without voter approval for the
purpose of providing loans to school districts. General obligation notes to provide temporary financing for such loans are
recorded as liabilities in the School Bond Loan Fund, a subfund of the General Fund. General Fund appropriations are made to
finance debt principal and interest requirements for all general obligation issues. General obligation bonds are backed by the
full faith and credit of the State.
The State Constitution provides that the Legislature may also authorize the issuance of general obligation short-term notes, the
principal amount of which may not exceed 15% of undedicated revenues received in the preceding year. The State
Constitution also provides that such notes must be repaid within the fiscal year of the borrowing. In fiscal year 2014, the State
did not issue any general obligation short-term notes.
Revenue Dedicated Bonds and Notes
Long-term bonds have been issued periodically for specific purposes, with the stipulation that financing of debt requirements is
to come strictly from designated revenue sources. The transportation related debt is payable solely out of funds restricted for
transportation purposes by Article 9, Section 9, of the State Constitution. The State’s general credit does not support such
issues.
2014 Comprehensive Annual Financial Report
97
Michigan
Notes to the Financial Statements
Revenue bonds have been issued by the State Building Authority (SBA) to acquire and/or construct various facilities for use by
the State or institutions of higher education. Revenue bonds have also been issued to finance equipment capital lease
refinancings and acquisitions. In addition, SBA issues commercial paper notes to fund capital projects prior to bonding. Short-
term debt activity for the fiscal year ended September 30, 2014, follows (in millions):
Commercial Paper Notes $ 13.2 $ 85.9 $ - $ 99.1
Balance
Beginning
Draws Repayments Balance
Ending
Note 14 provides disclosures regarding the bonds and notes payable of the discretely presented component units.
Bonds Issued and Outstanding
General obligation and revenue dedicated bonds issued and outstanding (excluding defeased bonds) at September 30 (in
millions) are as follows:
First Last
General Obligation Bonded Debt Year Year
General Obligation Refunding Debt:
Series 2001 (Refunding) $ 183.3 $ 55.1 2002 2016 4.76 %
Series 2002 (Refunding) 300.7 99.6 2004 2017 4.41
Series 2005 A (Refunding) (3) 86.8 18.9 2017 2021 5.00
Series 2005 B (Refunding) (3) 82.8 35.8 2013 2021 5.00
Series 2008 A (Refunding) (3) 200.8 156.4 2011 2019 4.94
Series 2008 B (Refunding) (3)(5) 19.4 6.0 2011 2019 4.33
Series 2009 A (Refunding) (3) 64.1 64.1 2022 2026 5.65
Series 2010 A (Refunding) 46.6 39.4 2013 2021 4.00
Series 2010 B (Refunding) (3)(5) 89.0 61.4 2014 2016 2.21
Series 2011 A (Refunding) (3)(5) 44.0 44.0 2022 2026 3.83
Series 2011 B (Refunding) (3)(5) 65.4 29.5 2014 2021 2.56
Series 2012 (Refunding) (3)(5) 92.3 92.3 2017 2021 4.60
Series 2013 A (Refunding) (3) (5) 30.0 30.0 2016 2016 0.40
Series 2014 A (5) 65.1 65.1 2024 2029 5.00
Series 2014 B (5) 20.2 20.2 2027 2027 3.59
Recreation and Environmental Protection:
Series 2003 (5) 10.0 6.0 2054 2054 -
Series 2006 A (1)(3) 105.0 100.4 2014 2026 4.58
School Loan Bonds (4):
Series 2008 A (Refunding) 143.0 116.0 2010 2023 4.54
Series 2009 A (Refunding) 204.1 204.1 2016 2021 6.53
Series 2009 B (Refunding) (7) 193.7 50.5 2010 2030 5.58
Series 2010 B (Refunding) 83.8 83.8 2017 2021 3.67
Series 2011 A 150.0 142.2 2014 2023 3.72
Series 2011 B 30.1 30.1 2023 2023 3.70
Series 2012 A (Refunding) 225.0 191.4 2013 2026 2.39
Series 2013 A 200.0 200.0 2024 2033 3.30
Total General Obligation Bonded Debt 2,735.1 1,942.4
Percentage
Rate
Interest
Average Fiscal Year
Issued
Amounts Outstanding
9/30/2014
Maturities
2014 Comprehensive Annual Financial Report
98
Michigan
Notes to the Financial Statements
First Last
Revenue Dedicated Bonded Debt Year Year
State Park Related:
2002 - Gross Revenue Bonds 15.5 8.7 2004 2023 3.58 %
Total Revenue Dedicated Bonded Debt -
State Park Related 15.5 8.7
Transportation Related:
Tax Dedicated Bonds:
Comprehensive Transportation Fund Bonds:
Series 2005 (Refunding) 62.2 53.8 2009 2023 5.15
Series 2006 (Revenue and Refunding) 53.7 35.0 2007 2031 4.54
Series 2009 (Refunding) 42.3 36.9 2012 2019 4.11
Series 2011 (Refunding) 18.5 16.0 2013 2022 4.35
Series 2013 (Refunding) 10.1 9.1 2014 2023 4.67
State Trunkline Fund Bonds:
Series 1998 (Series A Refunding) 377.9 146.1 2006 2019 5.03
Series 2004 (Refunding) 103.5 82.4 2006 2022 4.13
Series 2005 (Refunding) 223.0 223.0 2010 2023 5.10
Series 2005 (Series B Refunding) 378.3 38.5 2010 2019 4.81
Series 2006 244.5 50.3 2008 2022 4.74
Series 2009 (Refunding) 146.2 146.2 2018 2027 4.76
Series 2011 91.0 88.8 2014 2037 4.58
Series 2012 (Refunding) 49.3 44.3 2014 2022 4.78
Series 2014 (Refunding) 265.1 265.1 2016 2022 4.36
Grant Anticipation Bonds:
Series 2007 485.1 443.1 2009 2027 4.87
Series 2009 (Series B) 281.9 281.9 2012 2027 7.63
Total Revenue Dedicated Bonded
Debt - Transportation Related 2,832.5 1,960.4
State Building Authority:
2005 Series I (Refunding) 293.4 171.1 2006 2034 4.85
2005 Series II (Revenue and Refunding) 242.8 219.9 2007 2037 4.68
2006 Series I A Serial 438.3 438.3 2014 2037 4.80
2006 Series I A Capital Appreciation 395.3 574.8 2014 2037 4.80
2007 Series I Multi-modal (6) 96.5 37.0 2009 2032 0.04
2008 Series I (Revenue and Refunding) 192.3 185.2 2010 2039 6.08
2009 Series I (Refunding) 222.1 172.1 2010 2027 4.88
2009 Series II 113.5 103.5 2011 2034 4.99
2011 Series I A (Revenue and Refunding) 409.6 392.7 2012 2046 5.16
2011 Series I B 12.2 11.4 2013 2032 5.69
2011 Series II A (Revenue and Refunding) 180.7 178.2 2012 2042 5.23
2011 Series II B (Refunding) (6) 45.8 45.3 2044 2044 0.04
2013 Series I A (Revenue and Refunding) 531.3 531.3 2015 2048 4.76
2013 Series I B (Refunding) 51.7 45.0 2014 2015 1.41
Total State Building Authority Bonded Debt 3,225.4 3,105.9
Total Revenue Dedicated Bonded Debt 6,073.4 5,075.0
Total General Obligation and Revenue
Dedicated Bonded Debt $ 8,808.5 $ 7,017.4
Percentage
Rate
Interest
Average
Issued 9/30/2014
Fiscal Year
Maturities
Amounts Outstanding
2014 Comprehensive Annual Financial Report
99
Michigan
Notes to the Financial Statements
(1) Sections 324.19301 and 324.71301 of the Michigan Compiled Laws (MCL) authorized the issuance of bonds totaling
$800.0 million. As of September 30, 2014, $791.5 million of such bond proceeds had been received, leaving remaining
authorization of $8.5 million. The sum of the amounts issued in the preceding table differs by the amount of bonds
refunded or redeemed, premiums and discounts, and other issuance costs.
(2) The $13.9 million Series 1992A and the $16.7 million Series 1993, Recreation and Environmental Protection General
Obligation Bonds, were used to provide a contribution of capital to the Michigan Finance Authority (MFA) Municipal Fund,
a discretely presented component unit. An outside trustee for MFA is holding the bonds as an investment of MFA; no
immediate cash proceeds were provided. The trustee receives the debt service payments on the bonds, which are
negotiable instruments held to subsidize water pollution control financing provided by MFA. Series 1992A reached final
maturity in fiscal year 2013, and Series 1993 reached final maturity in fiscal year 2014.
(3) MCL Section 324.95102 authorized the issuance of bonds totaling $675.0 million. As of September 30, 2014, $594.6
million of such bond proceeds had been received, leaving remaining authorization of $80.4 million. The sum of amounts
issued in the preceding table differs by the amount of bonds refunded or redeemed, premiums and discounts, and other
issuance costs.
(4) The Multi-Modal School Loan Bond Series bear interest at a commercial paper rate and are remarketed at each maturity.
For the future debt service requirements, interest is estimated at the interest rate in effect at year-end. There were no
Multi-Modal School Loan Bonds outstanding at September 30, 2014.
(5) November 2002, voters approved a ballot proposal in which the State would issue $1.0 billion in general obligations
bonds to provide capital, which is then loaned to local units of government for water quality improvement projects. As of
September 30, 2014, $312.5 million of such bond proceeds had been recognized as received, leaving remaining
authorization of $687.5 million. Included in the amount recognized as received is $100.0 million in bonds issued to a
discretely presented component unit, MFA. Although no cash traded hands, MFA (the registered owner of the bonds) is
holding the bond document as collateral and issuing their own revenue bonds to generate the capital. This transaction
allows the State’s General Fund to defer principal and interest costs until future years when the bond is
repurchased/redeemed. MFA will fund the principal and interest costs of the revenue bonds until such time that they
request the State to honor the general obligation bond document.
On December 18, 2003, the State issued $100.0 million in bonds ($10.0 million relating to Strategic Water Quality and
$90.0 million relating to the previously existing State Water Quality Revolving Fund). The $10.0 million bond relating to
Strategic Water Quality includes a repurchase provision that requires the State to repurchase all or any portion of this
bond upon 10 days prior written notice from the registered owner, MFA. The State anticipates at this time that if the bond
repurchase was acted on, the State would issue long-term debt to finance the repurchase. This bond is being used as
collateral by MFA for the Strategic Water Quality bonds being issued by MFA to local governments. The $10.0 million
bond was reduced to a net obligation of $6.0 million when $4.0 million of the proceeds from General Obligation Recreation
and Environmental Protection Series 2006B were used to refund a portion of the original obligation. For these reasons,
the State has recognized the $6.0 million bond related to Strategic Water Quality as a liability in the entity-wide
statements. The $90.0 million “bond” document issued for the State Water Quality Revolving Fund does not contain the
10 day repurchase provision that the $6.0 million bond does. Nor is the $90.0 million “bond” document being used as
collateral by MFA. For these reasons, the State has not recognized a liability for the $90.0 million “bond” document
related to the existing State Water Quality Revolving Fund.
(6) SBA Multi-Modal and variable rate bear interest at a remarketed weekly rate. Estimated interest was computed using the
weekly rates as of September 30, 2014.
(7) This issuance was acquired as an investment by the State Lottery Fund, an enterprise fund, through a public market
offering and is reported as part of investments in the fund’s statement of net position.
2014 Comprehensive Annual Financial Report
100
Michigan
Notes to the Financial Statements
Capital Appreciation Bonds
Capital appreciation and convertible capital appreciation bonds are recorded in the Bonds Issued and Outstanding table and the
Changes In Bonds and Notes Payable table at their accreted year-end book value. The table that follows summarizes capital
appreciation bonds (in millions):
First Last
Year Year
General Obligation Bonds
School Loan Bond - Series 2009 B $ 50.5 $ 76.2 2010 2030
Revenue Dedicated - State Building Authority:
2006 Series I A 574.8 888.7 2017 2031
Value Value
Fiscal Year
Maturities
Book Maturity
Accreted Ultimate
Refundings and Defeasances
The State has defeased certain bonds through advance refundings by placing the proceeds of new bonds (i.e., the “refunding”
bonds in the table of bonds issued and outstanding) in irrevocable trust to provide for all future debt service on the old bonds.
Accordingly, the trust account assets and the liability for the defeased bonds are not recorded as assets or liabilities in these
statements and are not included in the other debt tables in this note.
The State has defeased certain bonds through current refundings in which the proceeds of the refunding debt are applied
immediately to redeem the debt to be refunded.
The State has defeased certain bonds by placing cash with an escrow agent in a trust to be used for future payment on the
debt.
General Obligation
During the year, the State issued, as a current refunding, fixed rate General Obligation Environmental Program Refunding
Bonds Series 2013A in the amount of $30.0 million, maturing in the year 2016. The bonds were issued for the purpose of
refunding certain maturities. From the debt proceeds, $35.9 million was used to refund General Obligation Environmental
Program and Refunding Bonds Series 2011B.
Revenue Dedicated
During the year, the State issued as current and advanced refundings, fixed rate State Trunkline Fund Refunding Bonds Series
2014 in the amount of $265.1 million, maturing in years 2016 to 2022. The bonds were issued for the purpose of refunding
certain maturities. From the debt proceeds, $303.2 million was deposited with an escrow agent for a current refunding of State
Trunkline Fund Bonds Series 2004 and advance refundings of State Trunkline Fund Bonds Series 2005B and 2006. As a
result of these refundings, the State’s debt service decreased by $25.3 million over the next 8 years. The State achieved an
economic gain of $23.0 million through these refundings.
2014 Comprehensive Annual Financial Report
101
Michigan
Notes to the Financial Statements
The following table summarizes the defeased bonds outstanding at September 30 (in millions):
General Obligation Refunding:
$ 67.9
28.9
$ 96.8
State Trunkline Fund Bonds:
$ 173.0
102.0
Total Transportation Related $ 275.0
$ 45.5
Total State Building Authority $ 45.5
Amounts
Series 2005 A
Series 2005 B
Series 2006
2004 MPSCS
State Building Authority:
Series 2005 B
Total General Obligation Refunding
Outstanding
Debt Service Requirements
The following table summarizes debt service requirements for outstanding bonds (in millions):
Fiscal
Years
Ending
2015 $ 195.4 $ 79.4 $ 136.7 $ 114.0 $ 109.0 $ 121.7 $ 756.2
2016 233.6 72.0 142.8 102.3 105.9 117.8 774.3
2017 188.6 64.6 149.6 95.6 111.4 112.9 722.6
2018 169.2 55.9 156.4 82.8 116.2 108.1 688.6
2019 173.5 47.9 164.5 74.6 120.9 104.7 686.1
2020-2024 616.0 135.6 721.0 258.9 641.6 484.2 2,857.2
2025-2029 286.7 41.3 450.0 71.3 702.1 388.9 1,940.3
2030-2034 99.2 8.3 30.3 7.9 690.1 276.1 1,111.9
2035-2039 - - 17.9 1.4 519.8 128.7 667.8
2040-2044 - - - - 241.5 36.7 278.3
2045-2049 - - - - 61.3 6.6 67.9
2050-2054 6.0 - - - - - 6.0
Total $ 1,968.1 $ 505.0 $ 1,969.1 $ 808.6 $ 3,419.8 $ 1,886.5 $ 10,557.1
Principal Interest Principal Interest Principal Interest
And
Interest
Total
Principal
Transportation
State Park and
Authority
State Building
Fixed
General Obligation Related
Fixed
Interest to maturity for SBA may be significantly smaller than the amount shown in the above table because many of the bonds
will be called prior to the final scheduled maturity date. The retirement of these bonds varies from project to project, as each
bond issue is related to specific projects and any excess borrowing and accrued investment earnings are restricted to projects
and debt service on the related bonds.
2014 Comprehensive Annual Financial Report
102
Michigan
Notes to the Financial Statements
Changes in Bonds and Notes Payable
Changes in bonds and notes payable for the year ended September 30, was as follows (in millions):
Bonds Payable:
General obligation debt $ 2,047.5 $ 115.3 $ (224.2) $ 3.8 $ 1,942.4 $ 195.4 $ 1,747.0
Revenue bonds 2,114.5 265.1 (410.5) - 1,969.1 136.7 1,832.4
State Building Authority 3,181.6 - (102.2) 26.5 3,105.9 109.0 2,996.8
Unamortized Discounts:
General obligation debt (1.8) - 0.3 - (1.5) - (1.5)
Revenue dedicated debt (1.5) - 0.1 - (1.4) - (1.4)
State Building Authority (0.8) - - - (0.8) - (0.8)
Unamortized Premiums:
General obligation debt 43.2 12.4 (7.9) - 47.7 - 47.7
Revenue dedicated debt 84.2 35.2 (21.4) - 98.1 - 98.1
State Building Authority 63.6 - (3.5) - 60.1 - 60.1
Total bonds and
notes payable $ 7,530.6 $ 428.0 $ (769.2) $ 30.2 $ 7,219.6 $ 441.2 $ 6,778.5
Plus State Building Authority commercial paper notes reported as
"Current Liabilities: Bonds and Notes Payable" on the Statement
of Net Position 99.1 99.1 -
As reported on the Statement of Net Position $ 7,318.7 $ 540.3 $ 6,778.5
Amounts
Due
Thereafter Restated* Additions Reductions Balance One Year Accretion
Beginning
Governmental Activities
Amounts
Balance Ending Due Within
*The restatement of beginning balance is a result of the reclassification of deferred gains and losses on refundings as deferred
inflows and outflows of resources in accordance with GASB Statement No. 65. Further information can be found in Note 4.
2014 Comprehensive Annual Financial Report
103
Michigan
Notes to the Financial Statements
NOTE 14 – BONDS AND NOTES PAYABLE – DISCRETELY PRESENTED COMPONENT UNITS
Bonds and Notes Payable
Bonds Payable
Bonds payable of the discretely presented component units are legal obligations of the component units and are not general
obligations of the State.
The State universities and the Michigan State Housing Development Authority (MSHDA) utilize J une 30 fiscal year-ends. The
Farm Produce Insurance Authority utilizes a December 31 fiscal year-end, and the remaining discretely presented component
units have September 30 fiscal year-ends.
The following table summarizes debt service requirements of the discretely presented component units as reported in their
separately issued financial statements, utilizing their respective fiscal year-end (in millions):
Fiscal Years Ending In
2015 $ 1,190.6 $ 535.5 $ 14.6 $ 1,740.8
2016 645.8 524.9 10.5 1,181.2
2017 686.7 495.3 10.3 1,192.3
2018 709.8 463.3 10.2 1,183.3
2019 741.2 428.6 10.1 1,179.8
Total five years $ 3,974.0 $ 2,447.6 $ 55.7 $ 6,477.4
2020-2024 3,381.4 1,615.8 48.0 5,045.3
2025-2029 1,807.3 971.5 43.2 2,821.9
2030-2034 1,641.9 560.2 35.9 2,237.9
2035-2039 824.3 263.0 30.4 1,117.7
2040-2044 616.9 106.3 22.0 745.2
2045-2049 881.5 15.4 11.1 908.0
Thereafter 6,061.4 0.3 1.1 6,062.7
2020 - Thereafter: 15,214.6 3,532.6 191.5 18,938.7
Total $ 19,188.6 $ 5,980.2 $ 247.2 $ 25,416.0
Unamortized discount (30.4)
Unamortized premium 571.1
Off market borrowings 13.6
Unpaid accretion for Capital
Appreciation Bonds (5,941.8)
Total principal $ 13,801.1
Principal Interest Interest Total
Fixed Estimated
Included in the table above is $2.1 billion of demand bonds comprised of $1.1 billion issued by MSHDA, $753.5 million issued
by the Michigan Finance Authority (MFA), and $226.5 million issued by the State universities. Defeased bonds outstanding of
MFA and MSHDA are not reflected in the table above.
Notes Payable
As of September 30, 2014, MFA has short-term notes outstanding of $1.1 billion.
State universities have short-term notes outstanding of $17.1 million and long-term notes outstanding of $33.4 million as of
J une 30, 2014.
Unrecorded Limited Obligation Debt
Certain State financing authorities have issued limited obligation revenue bonds which are not recorded as liabilities in these
statements because the borrowings are, in substance, debts of other entities. The State has no obligation for this debt.
Typically, these borrowings are repayable only from the repayment of loans, unloaned proceeds and related interest earnings,
and any collateral which may be provided.
MFA issues limited obligations bonds to finance loans to private or nonpublic, nonprofit institutions of higher education, qualified
public or private educational facilities and healthcare providers for capital improvements. As of September 30, 2014, MFA had
bonds outstanding of $6.8 billion. Of this amount, $215.9 million of the bonds have been defeased in substance, leaving a
remaining undefeased balance of $6.6 billion.
2014 Comprehensive Annual Financial Report
104
Michigan
Notes to the Financial Statements
The Michigan Strategic Fund (MSF) issues taxable and tax exempt private activity bonds, formerly known as industrial
development revenue bonds, which are not recorded as liabilities. The total amount of private activity bonds issued by MSF
and its predecessor entity for the period J anuary 1, 1979, through September 30, 2014, was $9.9 billion. The amount of tax-
exempt bonds issued during fiscal year 2014 was $238.2 million. In fiscal year 2014, there were no taxable bonds issued by
MSF under the Taxable Bond Program. These borrowings are, in substance, debts of other entities and financial transactions
are handled by outside trustees.
MSHDA issues limited obligation bonds to finance multi-family housing projects. At J une 30, 2014, limited obligation bonds had
been issued totaling $855.3 million, of which 50 issues totaling $513.2 million had been retired. The aggregated principal of all
MSHDA outstanding debt may not exceed $4.2 billion.
MSHDA entered into several interest rate exchange agreements for a total of $1.0 billion as of J une 30, 2014, representing
several bond series. In accordance with the exchange agreements, MSHDA pays fixed rates ranging from 3.4% to 5.4%.
NOTE 15 – OTHER LONG-TERM OBLIGATIONS
Primary Government
Other Long-Term Obligations
In general, expenditures and fund liabilities are not recorded in governmental funds for long-term obligations until claims,
judgments, or amounts owed are “due and payable” at September 30. Expenses and liabilities for material claims and
judgment losses are recorded in the government-wide and proprietary fund financial statements when the loss is considered
probable.
Capital Leases
This liability is described in more detail in Note 12.
Compensated Absences
This liability is described in more detail in Note 1.
Workers’ Compensation
The gross amount of workers’ compensation liability, $118.2 million at September 30, 2014, has been recorded at its
discounted present value of $79.4 million, using a discount rate of approximately 8%. The present value of the current portion
of this liability is $17.7 million. In fiscal year 2014, State agencies paid reimbursement for actual workers’ compensation claims
and administrative fees totaling $30.0 million.
Net Pension Obligation
This liability is described in more detail in Note 10.
Net Other Postemployment Benefits (OPEB) Obligation
This liability is described in more detail in Note 11.
Pollution Remediation
This liability is measured in accordance with the obligating event criteria defined in Governmental Accounting Standards Boards
(GASB) Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations. The State’s pollution
remediation obligation at September 30, 2014, is $163.2 million ($12.2 million of which is the current portion). This estimate is
based on professional judgment, experience, and historical cost data. Recoveries from other responsible parties, which would
reduce the State’s remediation liability, are not anticipated. Remediation obligation estimates may change over time due to
changes in technology, prices, and regulations.
Superfund sites account for approximately $136.7 million of this total. The State has numerous instances of hazardous waste
contamination that qualify as Superfund sites. Superfund is the federal government’s program to clean up these hazardous
waste sites. Under this program, the State is required to pay or ensure payment of 10% of the cost of remediation action and
100% of the cost of operations and maintenance.
Other pollution obligations include funds committed for remediation activities for publicly-funded response activities and state-
liable sites. Not included in the liability is approximately $42.2 million for state-owned sites where a legal obligation exists but
the GASB Statement No. 49 criteria for accruing a liability has not been met.
Pension Supplement
This liability represents amounts due to the State Employees’ Pension Benefits Fund for supplemental pension payments
payable to retirees that retired under the provisions of Public Act 185 of 2010. That legislation authorized an incentivized
retirement option for members of the State Employees’ Retirement System defined benefit plan, with one of the provisions
being that those retirees would receive a supplement for 60 months equal to 1/60 of the compensated absences balances
forfeited under the act that would have otherwise been payable at retirement.
2014 Comprehensive Annual Financial Report
105
Michigan
Notes to the Financial Statements
Other Claims & Judgments
The governmental activities estimated liability for other claims and litigation losses, $384.7 million at September 30, 2014,
includes amounts for litigation, such as damages in tort cases and refund claims in cases involving State taxes, transportation
claims, natural resources and environmental quality claims, and other claims, in which it is considered probable that costs will
be incurred. Where a range of potential loss exists, the amount recorded is based upon the expected minimum amount that will
be lost if the State does, indeed, lose. The allowance also includes projections for highway related negligence cases based
upon historical loss ratios. The State continues to vigorously contest all of these claims and the State may incur no liability in
the individual cases involved. Therefore, the allowance for litigation losses may be overstated (to the extent that losses do not
occur) or understated (if the State losses exceed the projected minimums which have been recorded). The maximum potential
loss on the allowance for estimated litigation losses is not considered reasonably measurable.
The liability recorded for other claims and judgments within business-type activities includes overpayments by employers to the
Michigan Unemployment Compensation Funds totaling $54.7 million.
Durant Settlement
The reported estimated liability for litigation losses includes the Durant, et al v State of Michigan, et al consolidated cases,
which totaled $39.3 million at September 30, 2014. This amount will, over time, be paid to each “non-Durant” school district for
its underfunded State mandated program costs if certain requirements are met. See Note 24 for additional disclosure regarding
the Durant case and other contingencies.
2014 Comprehensive Annual Financial Report
106
Michigan
Notes to the Financial Statements
Changes in Other Long-Term Obligations
Changes in long-term liabilities for the year ended September 30, are summarized as follows (in millions):
Governmental Activities
Other Long-term Obligations:
Capital lease obligations:
Component units $ 197.2 $ - $ 7.8 $ 189.4 $ 8.6 $ 180.8
Others 220.5 26.5 42.8 204.2 27.0 177.1
Compensated absences 419.7 361.6 359.9 421.3 212.4 208.9
Workers' compensation 92.0 7.9 20.5 79.4 17.7 61.7
Net pension obligations 820.9 - 78.7 742.2 - 742.2
Net OPEB obligations 2,773.2 - 64.1 2,709.2 - 2,709.2
Pollution remediation 160.8 13.5 11.1 163.2 12.2 151.0
Pension supplement* 37.5 - 16.5 20.9 16.5 4.5
Other claims and judgments 443.8 14.8 73.9 384.7 64.7 319.9
Durant settlement 74.2 - 34.9 39.3 39.3 -
Total Governmental
Activities $ 5,239.7 $ 424.2 $ 710.2 $ 4,953.8 $ 398.4 $ 4,555.4
Business-type Activities
Other Long-term Obligations:
Lottery prize awards* $ 238.4 $ 12.9 $ 34.7 $ 216.5 $ 29.0 $ 187.5
Compensated absences 2.6 2.0 1.9 2.7 1.5 1.2
Pension supplement* 0.4 - 0.2 0.2 0.2 0.1
Other claims and judgments 65.9 - 11.2 54.7 - 54.7
Total Business-type
Activities $ 307.3 $ 14.9 $ 48.0 $ 274.2 $ 30.6 $ 243.5
Ending
Balance
Beginning
Additions Reductions Restated**
Balance
Amounts
Due Within
One Year Thereafter
Due
Amounts
*The amounts due within one year are included with “Accounts payable and other liabilities” on the Statement of Net Position.
**Beginning balance has been restated. More detailed information can be found in Note 4.
The General Fund, other governmental, and internal service funds in which the leases are recorded will liquidate the capital
lease obligations. The compensated absence and workers’ compensation liabilities will be liquidated by the applicable
governmental and internal service funds that account for the salaries and wages of the related employees. The net pension
obligations and net OPEB obligations will be liquidated by the State’s governmental and internal service funds that contribute
toward the pension funds, based on the statutorily required contribution rates. The pollution remediation obligation will be
liquidated by the General Fund. The School Aid Fund will liquidate the Durant settlement. The pension supplement attributable
to governmental activities will be liquidated by the applicable governmental and internal service funds that will be billed by the
pension fund. Other claims and judgments attributable to governmental activities will generally be liquidated by the General
Fund and transportation related governmental funds.
Discretely Presented Component Units
Michigan Education Trust
Michigan Education Trust (MET) offers contracts, which for actuarially determined amounts, provide future tuition at State
institutions of higher education. Contract provisions also allow the benefits to be used at private or out-of-state institutions, with
the amount provided being based upon rates charged by the State’s public institutions of higher education. The tuition
payments are made by MET as a separate legal entity and these contracts are not considered obligations of the State. The
Legislature is not obligated to provide appropriations should losses occur. The statutes and contracts provide for refunds to the
participants if MET becomes actuarially unsound. Liabilities have been recorded on the Statement of Net Position for the
actuarial present value of future tuition benefit obligations.
The 1988, 1989, and 1990 enrollments are known as Plans B and C. Enrollments after November 1995 are known as Plan D.
The actuarial report on the status of MET Plans B and C, as of September 30, 2014, shows the actuarial present value of future
tuition obligations to be $116.0 million, as compared to the actuarially determined market value of assets available of $142.0
million. The actuarial assumptions used include: a projected tuition increase rate of 7.1% for four years; and a discount rate of
1.15%.
2014 Comprehensive Annual Financial Report
107
Michigan
Notes to the Financial Statements
The actuarial report on the status of MET Plan D, as of September 30, 2014, shows the actuarial present value of future tuition
obligations to be $885.0 million, as compared to the actuarially determined market value of assets available of $916.0 million.
The actuarial assumptions used include: a projected tuition increase rate of 7.1% for four years; and a discount rate of 6.0%.
On November 8, 1994, the U.S. Court of Appeals for the Sixth Circuit ruled that MET is an integral part of the State of Michigan
and, thus, the investment income realized by MET is not currently subject to federal income tax. On August 20, 1996, the Small
Business J ob Protection Act of 1996 (the “1996 Tax Act”) was signed into law which included a provision adding a new section
to the Internal Revenue Code of 1986 defining “qualified state tuition programs.” A qualified State tuition program is generally
exempt from income tax, but is subject to unrelated business income tax. MET has no unrelated business income.
Distributions made in excess of qualified higher education expenses (whether to the refund designee, beneficiary, or to a
college on behalf of the beneficiary) are taxable income to the beneficiary or the refund designee. In May 1997, MET submitted
a request for ruling to the Internal Revenue Service (IRS) for verification that MET is in compliance with the 1996 Tax Act. On
December 23, 1997, the IRS issued a favorable ruling which confirms that MET is in compliance with the Act.
NOTE 16 – INCOME TAX CREDITS AND REFUNDS
Income Tax Credits
The Michigan Income Tax Act provides for several types of tax credits. Some credits are accounted for as revenue reductions
for financial reporting purposes while others are reported as expenditures. Revenue reductions are reported for those income
tax credits that are limited by the amount of an individual’s tax liability before considering such credits. To the extent these
nonrefundable credits will generate future year payments, they are accrued as income tax refund liabilities together with
estimated overwithholdings.
Expenditures are reported for those credits which can be received even if they exceed the individual’s tax liability. For these
refundable credits, the substance of the transaction is that the State is making a grant payment using the income tax system as
a filing and payment mechanism. The amount of credit received is not a part of the determination of tax liability. The State’s
property tax is the primary credit that falls into this category. Expenditures for this credit are recognized in the year the tax
returns are filed and recipients claim the credit.
The following table summarizes the various credits, reported on the “Tax credits” line as an expense in the government-wide
financial statements and as an expenditure in the fund financial statements at September 30 (in millions):
Property tax credits:
General homestead $ 281.0
Senior citizens 188.0
Blind and disabled 57.9
Farmland preservation 37.5
Veterans 0.5
Subtotal - property tax credits 564.9
Earned income tax credit 111.4
Historic preservation credit 0.1
Home heating (excluding federal share) 0.1
Total tax credits $ 676.5
Income Tax Refunds Payable
The $926.9 million reported as a liability on the “Income tax refunds payable” line in the government-wide and fund financial
statements includes: projected refund estimates for overwithholding and tax credits reported as revenue reductions, actual
refunds made in October and November, and accruals for known income tax litigation losses.
2014 Comprehensive Annual Financial Report
108
Michigan
Notes to the Financial Statements
NOTE 17 – DEFERRED COMPENSATION PLANS
The State participates in two deferred compensation plans that allow employees to defer a portion of their salary until future years.
Executive Order 1999-7 transferred administrative oversight of the plans, labeled 457 and 401k after sections of the Internal
Revenue Code, to the Department of Technology, Management and Budget. Day-to-day operations of the plans have been
contracted to a third-party; however, the State Treasurer oversees investment options. The 457 plan and the 401k plan are
combined for reporting purposes under the heading of “State of Michigan Deferred Compensation Funds.”
The Employer makes no contribution to the 457 plan. Generally, the Employer does not make matching contributions to the 401k
plan; however, the State of Michigan has occasionally made matching contributions to the 401k plan as part of certain State
employees’ compensation packages. To expand investment options, three investment tiers were developed and made available to
participants on J uly 1, 1997. Participants invest their contributions and accumulated earnings by selecting investments in one or
more of the investment tiers. Employees may, at any time, transfer accumulated balances and future contributions among the
investment tiers. Investment earnings, net of administrative charges, are credited to the participants proportionally, based upon
their balances in the plan.
The 457 and 401k plans include loan provisions for State of Michigan employees. Loans to participants are recorded as assets.
Net position available for plan benefits for the 457 plan and the 401k plan at September 30, 2014, was $1.9 and $1.9 billion,
respectively.
NOTE 18 – INTERFUND RECEIVABLES AND PAYABLES
Primary Government
The balances of current interfund receivables and payables as of September 30 were (in millions):
General Fund $ - $ - - $ 0.7 $ 2.2 $ 56.4 $ 59.4
School Aid Fund 1,069.2 - - - - 1,069.2
Non-Major Governmental Funds 16.3 - 38.6 - 0.3 7.3 62.5
State LotteryFund - 8.8 - - - 0.4 9.1
Unemployment Compensation Funds - - 4.1 5.4 - - 9.5
Non-Major Enterprise Funds - - - - - 0.3 0.3
Internal Service Funds - - - - 6.7 4.1 10.7
FiduciaryFunds 0.2 - - - - 0.1 0.3
Timing Difference Between FiduciaryFunds - - - - - 0.1 0.1
Governmental Funds - Long - Term* - - - - - 15.4 15.4
Total $ 1,085.7 $ 8.8 $ 42.7 $ 6.2 $ 9.2 $ 84.0 $ 1,236.6
Fund
Compensation
Unemployment
Total Due From
Due To
Fund
General
Non-Major
Governmental
Funds Funds Funds Funds
Service
Internal
Fiduciary School Aid
*This represents the current portion of the long-term liability recorded in the government-wide statements for amounts owed by
the governmental funds to the State Employees’ Pension Benefits Fund for supplemental pension payments. This liability is
further described in Note 15.
Interfund receivables and payables are recorded for borrowings to eliminate negative balances in the Common Cash pool, as
described in Note 5, payroll liabilities for group insurance and retirement, and tax accrual distributions for taxes collected in the
following fiscal year.
Not included in the table above are the following interfund advances, which are not expected to be repaid within one year: $2.7
million due from the Correctional Industries Revolving Fund (an internal service fund) to the General Fund for amounts loaned
for capital construction and related accrued interest of $2.2 million.
Discretely Presented Component Units
Receivables and related liabilities between the primary government and the discretely presented component units, do not agree
because the Michigan State Housing Development Authority and the ten State universities have a J une 30 fiscal year-end.
2014 Comprehensive Annual Financial Report
109
Michigan
Notes to the Financial Statements
NOTE 19 – INTERFUND COMMITMENTS
Mackinac Bridge Authority
Mackinac Bridge Authority (MBA), a discretely presented component unit, has over the years received $75.3 million of subsidies,
including $12.3 million for operations and $63.0 million for debt service. These subsidies were provided by the State Trunkline and
Michigan Transportation funds, respectively.
State statutes require that MBA continue charging bridge tolls and begin repaying the State funds for the subsidies provided.
These repayments are to continue until such time as the subsidies have been completely returned. MBA has not recorded a
liability and the State funds have not recorded receivables for these subsidies because: the reimbursements are contingent upon
future net revenues, there is no repayment schedule, and the repayment commitment is long-term and budgetary in nature.
Repayments may be authorized by MBA, after consideration of MBA’s annual needs for its operations and planned repairs and
improvements.
As of September 30, 2014, MBA has repaid a total of $13.3 million of the advance from the Michigan Transportation Fund, leaving
a balance of $49.8 million. No repayments have been made on the advance from the State Trunkline Fund.
NOTE 20 – TRANSFERS
Interfund transfers as of September 30, consisted of the following (in millions):
Internal
Service
Funds Total
General Fund $ - $ 149.9 $ 801.9 $ 2.5 $ 954.3
School Aid Fund - - 126.2 - 126.2
Non-Major Governmental Funds 48.4 - 1,281.1 - 1,329.5
State Lottery Fund 4.3 742.9 2.3 - 749.5
Unemployment Compensation Funds - - 15.5 - 15.5
Non-Major Enterprise Funds 177.8 - - - 177.8
Internal Service Funds 3.5 - - - 3.5
Fiduciary Funds 0.2 - - - 0.2
Total $ 234.2 $ 892.8 $ 2,227.1 $ 2.5 $ 3,356.6
Transferred From
Transferred To
General School Aid Governmental
Funds Fund Fund
Non-Major
Transfers are used to 1) move revenues from the fund that statute requires to collect them to the fund that statute requires to
expend them, 2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt
service payments become due, 3) use unrestricted revenues collected in the General Fund to finance various programs accounted
for in other funds in accordance with budgetary authorizations, 4) move profits from the Liquor Purchase Revolving Fund and the
State Lottery Fund as required by law, and 5) transfer accumulated surpluses from other funds to the General Fund when
authorized by statute.
NOTE 21 – FUND DEFICITS
Primary Government
Governmental Funds
The Advance Financing Funds, a capital projects fund, had a fund balance deficit of $2.7 million. The fund deficit was caused
by expenditures for projects for which bonds have not yet been issued and for expenditures incurred to improve State-owned
sites that have not been sold.
The State Building Authority, a capital projects fund, had a fund balance deficit of $103.4 million. The fund deficit resulted
because the issuance of commercial paper represents a fund liability and the corresponding construction projects are not
reported as assets in the fund.
2014 Comprehensive Annual Financial Report
110
Michigan
Notes to the Financial Statements
NOTE 22 – FUND BALANCES AND NET POSITION
Fund Balance Classifications – Governmental Funds
The following table provides additional detail regarding the fund balances reported on the Governmental Funds Balance Sheet
at September 30 (in millions):
Non-Spendable
Inventory and prepaids $ 10.2 $ - $ - $ - $ 7.7 $ - $ 17.9
Long term notes/receivables 178.9 - - - - - 178.9
Permanent fund principal - - 221.4 - - 763.5 984.9
Restricted
Education 1.7 522.5 - 156.2 - - 680.4
Public safety and corrections 12.5 - 2.4 - - 4.3 19.2
Conservation, environment,
recreation and agriculture 134.5 - 179.3 1.6 0.1 227.2 542.7
Health and human services 39.5 - 1.3 - - - 40.8
Transportation - - 128.6 - 904.8 - 1,033.4
Labor, commerce, and regulatory 100.6 - 45.2 - - - 145.8
Other purposes 94.3 - 10.3 66.9 - - 171.5
Committed
Education 0.6 - - - - - 0.6
Public safety and corrections 76.0 - - - - - 76.0
Conservation, environment,
recreation and agriculture 30.4 - - - - - 30.4
Health and human services 119.2 - - - - - 119.2
Labor, commerce, and regulatory 42.7 - - - - - 42.7
Other purposes 729.8 - 547.5 - - - 1,277.2
Assigned
Education 1.7 - - - - - 1.7
Public safety and corrections 63.5 - - - - - 63.5
Conservation, environment,
recreation and agriculture 6.4 - - - - - 6.4
Health and human services 28.6 - - - - - 28.6
Transportation 62.4 - - - - - 62.4
Labor, commerce, and regulatory 1.5 - - - - - 1.5
Other purposes 42.7 - - - - - 42.7
Unassigned 306.4 - - - (106.1) - 200.3
Total Fund Balances $ 2,084.1 $ 522.5 $ 1,136.1 $ 224.7 $ 806.4 $ 995.0 $ 5,768.7
Fund Fund Funds Funds Funds Funds Total
General Aid Revenue Service Projects Permanent
School Special Debt Capital
Other
2014 Comprehensive Annual Financial Report
111
Michigan
Notes to the Financial Statements
Restricted Net Position – Primary Government
The following table provides additional detail regarding the restricted net position reported for the primary government on the
government-wide Statement of Net Position at September 30 (in millions):
Governmental Activities:
Restricted For:
Education $ 1.6 $ 1,000.9 $ 1,002.5
Public safety and corrections 10.1 4.8 14.9
Conservation, environment, recreation and agriculture 190.9 101.3 292.2
Health and human services 23.5 17.1 40.6
Transportation - 983.1 983.1
Labor, commerce, and regulatory 144.2 - 144.2
Other purposes 103.8 27.2 131.0
Funds Held as Permanent Investments:
Expendable - 231.4 231.4
Nonexpendable 4.7 980.2 984.9
Total Restricted Net Position - Governmental $ 478.8 $ 3,346.0 $ 3,824.9
Business - Type Activities:
Restricted For:
Unemployment compensation $ 2,415.7 $ - $ 2,415.7
Other purposes 26.8 - 26.8
Total Restricted Net Position - Business - Type $ 2,442.5 $ - $ 2,442.5
Total Primary Government:
Restricted For:
Education $ 1.6 $ 1,000.9 $ 1,002.5
Public safety and corrections 10.1 4.8 14.9
Conservation, environment, recreation and agriculture 190.9 101.3 292.2
Health and human services 23.5 17.1 40.6
Transportation - 983.1 983.1
Unemployment compensation 2,415.7 - 2,415.7
Labor, commerce, and regulatory 144.2 - 144.2
Other purposes 130.6 27.2 157.8
Funds Held as Permanent Investments:
Expendable - 231.4 231.4
Nonexpendable 4.7 980.2 984.9
Total Restricted Net Position - Primary Government $ 2,921.3 $ 3,346.0 $ 6,267.3
Total
Consitutional
External or
Legislation
by Enabling
Restricted
Restrictions
2014 Comprehensive Annual Financial Report
112
Michigan
Notes to the Financial Statements
NOTE 23 – DISAGGREGATION OF PAYABLES
The line “Current Liabilities: Accounts payable and other liabilities,” as presented on the government-wide Statement of Net
Position as of September 30, consisted of the following (in millions):
Medicaid programs $ 883.2 $ - $ - $ - $ - $ - $ - $ 883.2
Non-Medicaid health programs 180.8 - - - - - - 180.8
Human Services programs 176.7 - 0.4 - - - - 177.1
Transportation programs - - 449.7 - - - - 449.7
School Aid programs - 129.8 - - - - - 129.8
Other state programs 255.8 - 23.5 - - - - 279.4
Merit Award scholarships - - 0.8 - - - - 0.8
Payroll and withholdings 138.5 - 17.7 - 0.6 - 0.4 157.3
Tax refunds other than income tax 683.3 7.8 9.3 - - - - 700.4
Unearned receipts 73.0 0.2 0.5 - - - - 73.6
Amounts held for others 26.9 - 42.0 - 4.7 - - 73.6
Capital Projects - Non Transportation - - 25.6 - - - - 25.6
Prize awards - - - - 99.0 - - 99.0
Liquor purchase - - - - - - 78.7 78.7
Unemployment payments - - - - - 20.9 - 20.9
Internal Service Fund liabilities - - - 94.2 - - - 94.2
Due to fiduciary funds* - - - 83.9 - - - 83.9
Miscellaneous - - - - 11.1 - 0.4 11.5
Total $ 2,418.3 $ 137.8 $ 569.4 $ 178.1 $ 115.4 $ 20.9 $ 79.5 $ 3,519.4
Fund Fund Fund Funds Funds
General Aid Governmental Other Lottery Enterprise
Funds Funds
State
Total
Compensation
Non-Major School
Michigan
Unemployment Non-Major
*This amount represents amounts due to fiduciary funds that are reclassified as external payables on the government-wide
Statement of Net Position.
Effective J anuary 1, 2008, the State replaced the Single Business Tax with the Michigan Business Tax (MBT). Effective J anuary 1,
2012, the MBT was replaced by the Corporate Income Tax (CIT). However, a small number of taxpayers with certificated credits
may continue to file under the MBT provisions until their credits expire. Beginning in fiscal year 2008, the State did not estimate a
business tax liability on the accrual basis of accounting due to the lack of information. The State is still unable to estimate an
accrual because the data needed to compare tax payments received to the total tax liability is not available. Therefore, any
potential tax refunded (payable), or tax overpayments that will be applied by taxpayers against subsequent tax liability periods
(carried forward), is not measurable and has not been recorded in this fiscal year.
NOTE 24 – CONTINGENCIES AND COMMITMENTS
Primary Government
Litigation
In the government-wide and proprietary fund financial statements, the State accrues liabilities related to significant legal
proceedings if a loss is probable and reasonably estimable. In the governmental fund financial statements, liabilities are
accrued when cases are settled and the amount is due and payable.
The State is a party to various legal proceedings seeking damages, injunctive, or other relief. In addition to routine litigation,
certain of these proceedings could, if unfavorably resolved from the point of view of the State, substantially affect State
programs or finances. These lawsuits involve programs generally in the areas of corrections; tax collection; commerce and
budgetary reductions to school districts and governmental units; and court funding. Relief sought generally includes damages
in tort cases; improvement of prison medical and mental health care and refund claims for State taxes. The State is also a
party to various legal proceedings that, if resolved in the State’s favor, would result in contingency gains to the State, but
without material effect upon fund balance/net position. The ultimate dispositions and consequences of all of these proceedings
are not presently determinable, but such ultimate dispositions and consequences of any single proceeding or all legal
proceedings collectively should not themselves, except as listed below, in the opinion of the Attorney General of the State and
the State Budget Office, have a material adverse effect on the State’s financial position. Those lawsuits pending which may
have a significant impact or substantial effect on State programs or finances, if resolved in a manner unfavorable to the State,
include the following:
Durant et al v State of Michigan: On November 15, 2000, more than 365 Michigan school districts and individuals filed two suits
in the Michigan Court of Appeals. The first suit, Durant et al v State et al (“Durant III”), asserts that the State School Aid
appropriation act, P.A. 297 of 2000, violates the State Constitution, Article 9, Sections 25-34 (the “Headlee Amendment”),
because it allegedly transfers per pupil revenue guaranteed to school districts under the Constitution of 1963, Article 9, Section
11, for unrestricted school operating purposes, in order to satisfy the State’s independent funding obligation to those school
districts under Article 9, Section 29. The State won this case in the Court of Appeals, and the Supreme Court denied the
plaintiffs’ application for leave to appeal.
2014 Comprehensive Annual Financial Report
113
Michigan
Notes to the Financial Statements
The second suit, Adair et al v State et al (“Adair”), was filed on November 15, 2000, by more than 400 school districts and
asserts that the State has, by operation of law, increased the level of various specified activities and services beyond that which
was required by State law as of December 23, 1978 and, subsequent to December 23, 1978, added various specified new
activities or services by State law, including mandatory increases in student instruction time, without providing funding for these
new activities and services, all in violation of the Headlee Amendment. The Adair plaintiffs sought an unspecified money
judgment equal to the reduction in the State financed proportion of necessary costs incurred by the plaintiff school districts for
each school year from 1997-1998 through the date of any judgment and for attorneys’ fees and litigation costs. The Adair
plaintiffs also sought a declaratory judgment that the State has failed to meet its funding responsibility under the Headlee
Amendment to provide the plaintiff school districts with revenues sufficient to pay for the necessary increased costs for activities
and services first required by State law after December 23, 1978, and to pay for increases in the level of required activities and
services beyond that which was required by State law as of December 23, 1978.
On J anuary 2, 2001, plaintiffs filed a first amended complaint in both Durant III and Adair increasing the number of school
district plaintiffs to 443. On February 22, 2001, plaintiffs filed a second amended complaint in Durant III increasing the number
of school district plaintiffs to 457. On April 16, 2001, plaintiffs filed a second amended complaint in Adair increasing the number
of school district plaintiffs to 463. The second amended complaint includes a request for declaratory relief, attorneys’ fees and
litigation costs but does not include a request for money judgment.
On April 23, 2002, the Court of Appeals dismissed the complaint in its entirety and with prejudice. Plaintiffs filed an application
for leave to appeal in the Michigan Supreme Court on May 14, 2002, which was granted on December 18, 2002.
On J une 9, 2004, the Michigan Supreme Court issued its opinion in Adair. The court held that, with three exceptions, all of the
plaintiffs’ claims were barred by the doctrines of res judicata and release. The court ruled that all but three of the claims that
plaintiffs alleged were new or increased activities could have been included in the Durant I litigation because the activities
existed during the time that the Durant I litigation was pending.
The other three claims involve statutes that were enacted after the court’s 1997 Durant I decision. The court ruled that two of
these post-Durant I statutes are not new mandates because the activities are either not new or are merely permissive. The
third claim involves the record keeping activities and the operation of the Center for Educational Performance and Information
(CEPI), which was created by executive order in 2000 (Michigan Compiled Laws (MCL) Section 388.1752; Executive Order
(EO) 2000-9). Plaintiffs alleged that the statute and executive order require districts to create and maintain student data
following State-specified data-gathering procedures and transmit the data electronically to the State. The Supreme Court ruled
that the plaintiffs’ allegation that districts had to now actively participate in maintaining data that the State requires for its own
purposes presents a colorable claim under the Headlee Amendment. The court reversed the Court of Appeals’ dismissal of the
claim and remanded the issue to the Court of Appeals to determine whether this claim constitutes a new State-mandated
activity in violation of the Headlee Amendment.
On August 4, 2005, the Court of Appeals held that the school districts failed to present documentary support from which it can
be inferred that either MCL Section 388.1752 or EO 2000-9 mandates the school districts to actively participate in the
maintenance of data that the State requires for its purposes. Further, the record keeping claim cannot survive summary
disposition in the absence of any factual support, either expressed or implied, demonstrating that a genuine issue of material
fact exists with regard to whether the dictates of the statute and the EO impermissibly shift a State obligation to the school
districts to avoid the costs of obligation. The Court of Appeals granted summary disposition in the State’s favor. Plaintiffs
estimated their claim to be $30 million plus ongoing costs. The plaintiff school districts filed an application for leave to appeal
with the Michigan Supreme Court. A brief in opposition was filed on October 11, 2005.
On March 8, 2006, the Supreme Court issued an order vacating the August 4, 2005, Court of Appeals decision and remanded
the issue to the Court of Appeals for reevaluation of the record keeping claim. The Court of Appeals appointed a Special
Master to oversee discovery and make proposed findings to the Court of Appeals. An evidentiary hearing before the Special
Master was held in the summer of 2007.
On J anuary 27, 2008, the Special Master issued her opinion. She found that the increased recordkeeping and reporting
requirements imposed upon the school districts by the State was an attempt to shift the burden to comply with additional
requirements to the districts without appropriating the necessary costs to comply. She concluded that this was a shifting of the
recordkeeping and reporting requirement burden from the State to the local units of government in violation of the Headlee
Amendment.
The State filed objections to the Special Master’s Opinion in the Court of Appeals. The school districts sought attorney fees in
the Court of Appeals.
2014 Comprehensive Annual Financial Report
114
Michigan
Notes to the Financial Statements
On J uly 3, 2008, the Court of Appeals issued its Opinion on Second Remand, essentially adopting the conclusions of law and
factual findings of the Special Master. The court entered a declaratory judgment in favor of the plaintiff school districts,
requiring the State to fund the “necessary costs associated with the data collection reporting mandates” associated with CEPI.
The court denied plaintiff’s request for attorney fees.
Both parties filed applications for leave to appeals in the Michigan Supreme Court. On April 3, 2009, the Michigan Supreme
Court granted leave on two issues: (1) whether the prohibition of unfunded mandates in Article 9, Section 29 of the State
Constitution, requires plaintiffs to prove specific costs, either through reallocation of funds or out-of-pocket expenses in order to
establish their entitlement to a declaratory judgment; and (2) whether plaintiffs are entitled to recover the “costs incurred in
maintaining” this suit pursuant to Article 9, Section 32, of the State Constitution.
Following the submission of briefs, the Michigan Supreme Court heard oral arguments on October 6, 2009.
On J uly 14, 2010, the Michigan Supreme Court issued a 4-3 decision in favor of the plaintiffs on both issues. The court held
that the school district record keeping requirements was an increase in the level of activities or services mandated by the State
and therefore, subject to Headlee. The court also held that in a declaratory judgment action under Headlee, where no
legislative appropriation is made, a plaintiff is not required to show a quantified dollar amount increase in necessary costs, and
the State has the burden to demonstrate that the school district’s costs were not necessary under one or more of the
exceptions in MCL 21.233(6) (a) through (d). In evaluating whether the costs from an increased level of activity were
necessary, the question is what would be the cost to the State if it performed the mandated activity. The court also held that
plaintiffs are entitled to attorney fees sustained in maintaining this action.
The case was remanded to the Court of Appeals to determine cost and attorney fees. An evidentiary hearing before the court-
appointed Special Master occurred in J une 2011. On November 6, 2012, the Court of Appeals declined to award attorney fees
for the original action concluding that Plaintiffs failed to carry their burden of proving the hours reasonably expended in litigating
the recordkeeping claim. The Court of Appeals also determined that Plaintiffs were not entitled to costs or attorney fees for
post-judgment proceedings. The Court of Appeals remanded to the Special Master for additional proofs and calculation of
other costs. On remand the parties stipulated that other costs incurred up to J uly 14, 2010, were $175,000. On May 24, 2013,
in lieu of granting leave to appeal, the Michigan Supreme Court reversed the portion of the Court of Appeals decision denying
all attorney fees for Phase II of the litigation (recordkeeping claim only) and remanded to the Court of Appeals to make findings
regarding the amount of attorney fees during that phase of the case. The Court denied leave to appeal the denial of attorney
fees for Phase I while the case involved multiple claims that were successfully defended, and Phase III for substantial post-trial
costs and attorney fees relating to the attorney fee proceedings.
On August 9, 2013, the Court of Appeals issued an Order awarding attorney fees in the amount of $1,348,677.60 for the Adair I
trial (Phase II). But, on August 28, 2013, before the Order was effective, the plaintiff school districts filed an application for
leave to appeal in the Michigan Supreme Court alleging that the Court of Appeals made several errors in its determination of
the reasonable attorney fees. Because the plaintiffs filed an application for leave to appeal, the attorney fee award did not
become effective. On November 4, 2013, the Adair plaintiffs filed a motion for immediate payment of the attorney fee award in
the Michigan Supreme Court. The Michigan Supreme Court denied plaintiffs’ application for leave. The Michigan Department of
Education processed the attorney fee payment on J anuary 21, 2014.
The Legislature allocated up to $1.0 million in Section 22b(6) of the State School Aid Act, MCL 388.1622b(6) for this anticipated
expense. The Legislature appropriated $25.6 million in fiscal year 2011, and $34 million in fiscal year 2012 to be used solely
for the purpose of paying necessary costs related to the state-mandated collection, maintenance, and reporting of data to this
state.
On J anuary 19, 2011, the Adair plaintiffs filed a new complaint seeking, among other things, a declaratory judgment that the
appropriation is insufficient to pay the full costs of the imposed record keeping requirements, and that the new requirements for
teacher and administrator evaluations enacted in the Race to the Top legislation, 2009 Public Acts 201-205, also violate the
Headlee Amendment. The complaint also sought compensable damages for the amount of costs incurred by the school
districts to provide required data and attorney fees, injunctive relief to cease requiring school districts from complying with the
record keeping requirements, and injunctive relief to enjoin Defendants from enforcing the Race to the Top legislation.
On October 10, 2011, plaintiffs filed a second amended complaint primarily based on the changes in the teacher and
administrator evaluation provisions contained in 2011 PA 100-102, the J uly 2011 amendments to Section 1249 of the School
Code, MCL 380.1249, as well as the changes to the Tenure Act. In addition, the districts added a count related to the Teacher
Student Data Link (TSDL) and allege that Section 94a of the School Aid Act mandates that schools collect and report new data
without an appropriation to pay the districts for costs of the new activity including: “costs incurred for their staff members
necessary to perform the required services for the purpose of TSDL data acquisition, maintenance and reporting to CEPI, to
acquire necessary software to track, record and report the required data, and to train school district staff in order to otherwise
implement the new TSDL reporting requirements, all of which have never before been required by the State.”
2014 Comprehensive Annual Financial Report
115
Michigan
Notes to the Financial Statements
On August 10, 2012, the Adair plaintiffs filed a new original action in the Court of Appeals seeking, among other things, a
declaratory judgment that the appropriation for 2012-13 in 2012 PA 201 is insufficient to pay the full costs of the imposed record
keeping requirements adding allegations concerning information collected or reported in the Michigan Electronic Information
System (MEIS). As with the 2011 case, the complaint again alleges that the current funding method improperly reduced aid to
districts. The complaint again alleges that the requirements for teacher and administrator evaluations enacted in the Race to
the Top legislation, 2009 Public Acts 201-205, and 2011 PA 100-102, the J uly 2011 amendments to section 1249 of the School
Code, MCL 380.1249, as well as the changes to the Tenure Act, violate the Headlee Amendment and alternatively that the
definitions of activity and service in the MCL 21.232(1) and MCL 21.234(1) are unconstitutional and contrary to the intent of the
voters. Plaintiffs allege this is occurring in direct violation of the provisions of the second sentence of the Constitution of
1963, Article 9, Section 29, the Headlee Amendment. The complaint seeks declaratory relief, injunctive relief to cease requiring
school districts from complying with the record keeping requirements, and injunctive relief to enjoin Defendants from enforcing
the educator evaluation provisions. The complaint also seeks compensatory damages related to the funding mechanism and
the educator evaluation claims. This case is held in abeyance pending the decision in the 2011 case.
On August 23, 2013, the Court rejected the Adair plaintiffs’ challenge to the funding scheme which reallocated funds to provide
a specific allocation for the recordkeeping requirements but did not provide a net increase in funding to districts. The Court of
Appeals also granted declaratory relief in favor of the State and determined the teacher evaluation claims did not implicate
Headlee. First, the Tenure Act changes merely modify existing protections and, thus, still provide a level of protection to
tenured public teachers against the arbitrary and capricious employment practices of administrators and school boards. Under
such circumstances, the new requirements imposed by the amended tenure act do not constitute activities under MCL
21.232(1) and, hence, the Prohibition of Unfunded Mandates (POUM) clause. Second, the Court determined that the revisions
to the School Code do not implicate the POUM. It rejected the districts’ facial challenge to the constitutionality of the
implementing definitions. Next, the Court determined that the revision in the Public Employment Relations Act merely modified
prohibited subjects of collective bargaining and did not impose any new requirements that implicate Headlee.
With regard to the adequacy of the funding appropriations, the Court remanded the case to the Special Master for further
hearing and findings. The Court acknowledge the plaintiffs higher burden once a mandated activity is funded, but concluded
that “the higher burden borne by plaintiffs is the burden to present evidence of a sufficient nature to allow the trier of fact to
conclude that the methodology employed by the Legislature to determine the amount of the appropriation was so flawed that it
fails to reflect the actual cost to the state if the state were to provide the activity or service mandated as a state requirement.”
Both parties filed applications for leave to appeal in the Michigan Supreme Court. On February 5, 2014, the Michigan Supreme
Court granted the State Defendants’ application for leave to appeal. The Michigan Supreme Court directed that the parties shall
include among the issues to be briefed: (1) which party has the burden of proving underfunding of a legislative mandate in a
challenge under Const 1963, art 9, § 29, (2) what elements of proof are necessary to sustain such a claim and, (3) whether
acceptance of a general appropriation from the Legislature which is specifically conditioned on compliance with reporting
requirements pursuant to MCL 388.1622b(1)(c) waives any challenge to the funding level for those requirements under Const
1963, art 9, § 29. At the same time, the Michigan Supreme Court denied the plaintiff school districts’ cross-application for leave
appeal dismissal of their remaining claims.
As a result, the Court of Appeals’ dismissal of the Plaintiffs’ claims that the State’s funding method violated the Headlee
Amendment and Proposal A because it merely shifted revenue from other school aid allocations, and that the State violated
Const 1963, art 9, § 29 by enacting changes to teacher and administrator evaluation requirements without an appropriation to
fund them, remains intact.
Subsequent to the fiscal year end, on December 22, 2014, the Michigan Supreme Court reversed the Court of Appeals and
reinstated the special master’s involuntary dismissal of the case. The Court concluded that in a case alleging underfunding of a
Headlee mandate that the plaintiff must allege and prove the specific amount of the funding shortfall i.e., the extent of the
necessary increased costs of the new or increased activity or service, in order to establish the extent of the harm caused by the
Legislature’s inadequate funding. The decision did not disturb the balance of the Court of Appeals’ holdings not addressed in
the decision.
The August 10, 2012, original action in the Court of Appeals remains in abeyance at this time. Plaintiffs allege this is occurring
in direct violation of the provisions of the second sentence of the Constitution of 1963, Article 9, Section 29, the Headlee
Amendment. Although this is a declaratory judgment action, if the suit is sustained plaintiffs are entitled to costs including
attorney fees estimated between $1.2 million and $4 million. Plaintiffs claim cost of compliance with the reporting is over $50
million annually.
2014 Comprehensive Annual Financial Report
116
Michigan
Notes to the Financial Statements
Federal Grants
The State receives significant financial assistance from the federal government in the form of grants and entitlements. The
receipt of federal grants is generally conditioned upon compliance with terms and conditions of the grant agreements and
applicable federal regulations. Substantially all federal grants are subject to either federal single audits or financial and
compliance audits by grantor agencies. Questioned costs as a result of these audits may become disallowances after the
appropriate review of federal agencies. Material disallowances are recognized as liabilities in the government-wide and
proprietary fund financial statements when the loss becomes probable and reasonably estimable. Disallowances are
recognized as liabilities in the governmental fund financial statements when the loss becomes due and payable. As of
September 30, 2014, the State had been notified of various disallowances and penalties totaling in excess of $100 million. The
State believes the possibility of full repayment of these disallowances and penalties is remote. In addition, the State estimates
that any additional disallowances of recognized revenue will not be material to the general purpose financial statements.
Gain Contingencies
Certain contingent receivables related to the Department of Human Services (DHS) are not recorded as assets in these
statements. Amounts recoverable from DHS grant recipients for grant overpayments or from responsible third parties are
recorded as receivables only if the amount is reasonably measurable, expected to be received within 12 months, and not
contingent upon future grants or the completion of major collection efforts by the State. If recoveries are accrued and the
program involves federal participation, a liability for the federal share of the recovery is also accrued. The unrecorded amount
of potential recoveries, which are ultimately collectible, cannot be reasonably determined.
In 1998, the major United States tobacco product manufacturers entered into the Master Settlement Agreement ("MSA" or
"Agreement") with the State of Michigan and separately with each of 51 other jurisdictions (the "Settling States") comprised of
46 states, the District of Columbia, Puerto Rico, and four U.S. territories. The MSA is the product of extensive negotiations
between the Settling States and Participating Manufacturers ("PMs"). The Ingham County Circuit Court approved the MSA by
entry of a Consent Decree on December 11, 1998. The Agreement releases the PMs from Michigan's claims that the PMs had
conspired to conceal from the public the health risks related to smoking, and had specifically targeted minors in their marketing
efforts. In return for the release, the MSA obligates the PMs to make annual payments to the states, and requires substantial
changes in the companies' advertising and marketing practices, with the intention of reducing underage smoking. The MSA
provides that an accounting firm ("Independent Auditor," or "Auditor") calculates the PMs' payments annually, using a specified
formula. The payment is computed as an aggregate figure, which is then divided among the states according to percentages
specified in the MSA. The Agreement requires the PMs to make their payments by April 15th of each year, in perpetuity, with
Michigan receiving an allocable share of 4.3519476% of the total.
In December 2012, the State of Michigan along with several other states signed a term sheet intending to settle litigation over
the application and interpretation of the market share adjustment and diligent enforcement provisions of the MSA. As a result of
the settlement, the uncertainty regarding the State's disputed payment account and whether the State was diligently enforcing
its collection legislation pursuant to the MSA during years 2003 through 2012 has been substantially eliminated. The State of
Michigan will avoid any further reduction of its tobacco payments for those years, and the State's share of those funds has been
released. The settlement provides a more definitive framework for avoiding any similar disputes for subsequent years, but
there is the potential for additional disputes concerning diligent enforcement. The settlement makes the MSA current,
eliminating approximately 10 years of disputed payment withholdings.
It is impossible to calculate with precision Michigan's share of this 2014 sales-based payment, but is expected to be in the
range of $250 million.
Contingent Liability for Local School District Bonds
Article 9, Section 16, of the Michigan Constitution resulted in a contingent liability for the bonds of any school district which are
“qualified” by the State Treasurer. If, for any reason, a qualified school district will be, or is, unable to pay the principal and
interest on its qualified bonds when due, the school district shall borrow, and the State shall lend to it, any amount necessary for
the school district to avoid a default on its qualified bonds. In the event that adequate funds are not available in the School
Loan Revolving Fund to make such a loan, the State is required to make loans from the General Fund. As of September 30,
2014, the principal amount of qualified bonds outstanding was $12.9 billion. Total debt service requirements on these bonds
including interest will be approximately $1.5 billion in 2015. The amount of loans by the State (related to local school district
bonds qualified under this program), outstanding to local school districts as of September 30, 2014, is $1.4 billion. Interest due
on these loans as of September 30, 2014, is $358.9 million.
Venture Michigan Fund Tax Vouchers
As of September 30, 2014, the State had issued $450 million in tax vouchers as collateral for loans to early stage venture
investment businesses as a mechanism to promote a healthy economic climate in Michigan. The vouchers are expected to be
sold and redeemed beginning in fiscal year 2015 with the expected sale and repayment of $50 million in fiscal year 2015; $50
million in fiscal year 2016; $40 million in fiscal year 2017; and the remainder in subsequent fiscal years.
2014 Comprehensive Annual Financial Report
117
Michigan
Notes to the Financial Statements
Other Contingent Liabilities
The State is involved in a number of court cases related to the apportionment formulas a taxpayer must use under the Michigan
Business Tax. These cases are in varying stages in the Court of Claims, the Michigan Tax Tribunal, or within the Department
of Treasury’s hearings division. The State believes there is a remote possibility of the decisions in these cases being
unfavorable to the State. However, if the decisions are unfavorable to the State, the potential liability related to these cases
could be in excess of $1 billion.
In addition, the State is involved in a court case challenging the requirement that active members of the State Employees
Retirement System (SERS) defined benefit pension plan contribute four percent of their compensation to SERS. The State
believes there is a remote possibility of an unfavorable decision in this case. However, if the decision is unfavorable to the
State, the amount that would be required to be refunded to SERS members was approximately $100 million as of September
30, 2014.
Commitments and Encumbrances
The Department of Transportation has construction and consultant commitments that will be paid with transportation related
funds. As of September 30, 2014, these commitments equaled $603.3 million; a portion of this balance, $90.5 million, has
been encumbered.
Encumbrance balances are comprised of grant agreements and other contracts the State of Michigan has entered into with
vendors for services or goods not yet performed or received as of year-end. A portion of these commitments will be funded with
current fund balances. These amounts are included on the face of the financial statements in the restricted, committed, and
assigned fund balance classifications. Resources provided by future bond proceeds, taxes, federal grants, and local and
private revenues will fund the remaining commitments. The following table shows total governmental fund encumbrances as of
September 30 (in millions):
Restricted
Education $ 0.6 $ 8.5 $ - $ 9.1
Public safety and corrections 17.8 - - 17.8
Conservation, environment,
recreation and agriculture 63.2 - 61.7 124.9
Health and human services 67.7 - - 67.7
Transportation - - 343.2 343.2
Labor, commerce, and regulatory 9.1 - 1.0 10.0
Other purposes 45.1 - 12.4 57.5
Committed
Education 0.1 - - 0.1
Public safety and corrections 10.4 - - 10.4
Conservation, environment,
recreation and agriculture 4.1 - - 4.1
Health and human services 22.5 - - 22.5
Transportation 0.2 - - 0.2
Labor, commerce, and regulatory 5.4 - - 5.4
Other purposes 30.1 - - 30.1
Assigned
Education 1.7 - - 1.7
Public safety and corrections 63.8 - - 63.8
Conservation, environment,
recreation and agriculture 8.7 - - 8.7
Health and human services 30.1 - - 30.1
Transportation 62.4 - - 62.4
Labor, commerce, and regulatory 1.6 - - 1.6
Other purposes 51.7 - - 51.7
Total Encumbrances $ 496.5 8.5 418.2 923.2
Total
General School Aid Other
Fund Fund Funds
2014 Comprehensive Annual Financial Report
118
Michigan
Notes to the Financial Statements
Discretely Presented Component Units
Student Loan Guarantees
The Michigan Guaranty Agency (MGA), a fiduciary fund of the Michigan Finance Authority, is contingently liable for student
loans made by financial institutions that qualify for guaranty. The State, other than MGA, is not liable for these loans. The
default ratio for loans guaranteed by MGA is below 5% for the fiscal year ended September 30, 2014. As a result, the federal
government’s reinsurance rate for defaults for the fiscal year ended September 30, 2014, is 100% for loans made prior to
October 1, 1993, 98% for loans made from October 1, 1993 to September 30, 1998, and 95% for loans made on or after
October 1, 1998. In the event of future adverse default experience, MGA could be liable for up to 25% of defaulted loans.
While management believes the MGA expected maximum contingent liability is less than 25% of outstanding guaranteed loans,
the maximum contingent liability at 25% is $562.6 million as of September 30, 2014. Management does not expect that all
guaranteed loans could default in one year.
The MGA has entered into commitment agreements with all lenders that provide, among other things, that the MGA will
maintain cash and marketable securities at an amount sufficient to guarantee loans in accordance with the Higher Education
Act of 1965, as amended. The MGA was in compliance with this requirement as of September 30, 2014.
Multi-Famil y Mortgage Loans
As of J une 30, 2014, the Michigan State Housing Development Authority (MSHDA) has commitments to issue multi-family
mortgage loans in the amount of $56.5 million and single-family mortgage loans in the amount of $13.7 million.
MSHDA has committed up to approximately $1.1 million per year for up to 30 years from the date of completion of the
respective developments (subject to three years advance notice of termination) from its accumulated reserves and future
income to subsidize operations or rents for certain tenants occupying units in certain developments funded under MSHDA’s
multi-family program.
NOTE 25 – RISK MANAGEMENT
Primary Government
General
The State has elected not to purchase commercial insurance for many of the risks of losses to which it is exposed. The State is
self-insured for most general liability and property losses, portions of its employee insurance benefit and employee bonding
programs, automobile liability, and workers’ compensation and unemployment compensation claims. Areas of risk where some
level of insurance coverage is purchased include: aircraft liability, property and loss rental insurance that may be required by
bond or lease agreements, portions of the State employee insurance benefits program, certain State artifacts, builder’s risk
coverage, boiler and machinery coverage, and employee bonding. Settled claims have not exceeded commercial coverage in
any of the past ten fiscal years.
The State has established two internal service funds, which are described below, to account for certain aspects of the risk
management program. Fund expenditures (expenses) are recognized in the paying funds in a manner similar to purchased
commercial insurance. For other uninsured losses not covered by an internal service fund program, such as general liability
and property losses, the State recognizes fund liabilities in the fund incurring the loss as follows: governmental funds record an
expenditure when a loss is due and payable; proprietary funds record an expense when it is probable that a loss has occurred
and the amount can be reasonably estimated. As explained more fully in Note 15, losses for workers’ compensation and
certain types of litigation losses have been recognized as liabilities in the government-wide financial statements.
For unemployment claims, the Unemployment Insurance Agency (UIA) bills the State for the actual amount of claims paid to
former State employees. The State accrues liabilities in the governmental fund financial statements for unemployment
compensation, only to the extent paid by UIA through September 30. During fiscal year 2014, expenditures for payments to
former State employees (not including university employees) totaled $10.3 million. The potential liability for future payments
cannot be estimated.
The State’s two internal service funds, which account for certain areas of risk management, such as portions of its employee
insurance benefits, employee bonding, and automobile liability, follow accounting standards established by the Governmental
Accounting Standards Board (GASB). This results in a reporting which is very similar to that used in the private insurance
industry. The various component programs within the two funds may incur deficits during a given year, but each program’s
surplus and unrestricted net position balance is considered in calculating future charges or benefit levels.
Risk Management Fund
This fund was established during fiscal year 1990 to account for insurance management activities implemented within the
Department of Technology, Management and Budget. The automobile liability and administrative functions are accounted for
as operating activities of this fund. Expenses and liabilities for claims, including incurred but not reported or not processed
claims, have been recorded in the amount of $7.7 million. This includes a long-term portion, which is recorded at $6.2 million.
2014 Comprehensive Annual Financial Report
119
Michigan
Notes to the Financial Statements
Changes in the Risk Management Fund’s claims for automobile liability for the fiscal years ending September 30, 2014 and
2013 are as follows (in millions):
Balance - beginning $ 7.5 $ 7.1
Current year claims and
changes in estimates 0.6 0.7
Claim payments (0.4) (0.3)
Balance - ending $ 7.7 $ 7.5
2013 2014
Workers’ compensation payments for State agencies are processed centrally through the Risk Management Fund. Changes in
Workers’ compensation claims for the fiscal years ending September 30, 2014 and 2013 are as follows (in millions):
Balance - beginning $ 92.0 $ 100.8
Current year claims and
changes in estimates 7.9 13.6
Claim payments (20.5) (22.4)
Balance - ending $ 79.4 $ 92.0
2014 2013
Workers’ compensation is further described in Note 15.
State Sponsored Group Insurance Fund
The Department of Technology, Management and Budget and the Civil Service Commission use this fund to account for
employee benefit programs, which are largely self-funded. In compliance with GASB Statement No. 45, Accounting and
Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, the retiree insurance benefits programs
are no longer reported in this fund. Expenses and liabilities for claims, which include incurred but not reported or not processed
benefit claims, based on preliminary estimates from the plan administrators, have been recorded as liabilities in the amount of
$129.0 million. This includes a long-term portion, which is recorded at a discounted present value of $91.0 million. For all
claims incurred prior to October 1, 2014, the discounted present value of the long-term disability liability was calculated over a
20-year period using a discount rate of approximately 0.80%.
Payments to the State Sponsored Group Insurance Fund are based on estimates of amounts needed to pay prior and current
year claims. In addition, a portion of the fund’s net position has been designated for catastrophic losses. The risk management
designation represents the level of reserves that should be maintained to ease large fluctuations in premium levels in years of
unexpected excessive claims. That designation was $39.7 million at September 30, 2014. Unrestricted net position totaled
$164.6 million at September 30, 2014.
Changes in the State Sponsored Group Insurance Fund’s claims liability for employee benefit programs for the fiscal years
ending September 30, 2014 and 2013 are as follows (in millions):
Balance - beginning $ 131.1 $ 132.9
Current year claims and
changes in estimates 705.6 689.2
Claim payments (707.7) (691.0)
Balance - ending $ 129.0 $ 131.1
2014 2013
Discretely Presented Component Units
State Universities
The State university component units participate with the other Michigan public universities in the Michigan Universities Self-
Insurance Corporation (MUSIC), which provides indemnity to its members against comprehensive general liability, errors and
omissions losses, and property damage commonly covered by insurance. Loss coverages for comprehensive general liability
and property are structured on a three-layer basis with each member retaining a portion of its losses, MUSIC covering the
second layer, and commercial carriers covering the third layer. For all policy years through J une 30, 1993, errors and
omissions coverage was structured on a two-layer basis with no excess insurance provided. Effective J uly 1, 1993, MUSIC
obtained excess insurance coverage from commercial carriers covering the third layer. For automobile liability there is no
member retention. Comprehensive general liability, property and automobile liability coverage is provided on an occurrence
basis; errors and omissions coverage is provided on a claims-made basis.
2014 Comprehensive Annual Financial Report
120
Michigan
Notes to the Financial Statements
NOTE 26 – PLEDGED REVENUES
As authorized by legislation, certain revenues of the primary government are pledged to secure debt of the State’s discretely
presented component units, and to pay the debt service on those bond issuances. In 2006, the Michigan Tobacco Settlement
Finance Authority (MTSFA) was created to issue tobacco settlement bonds, the proceeds of which were used to provide
funding for the 21st Century J obs Trust Fund, as well as the School Aid Fund, the General Fund, and a reserve fund. MTSFA
was reported as a blended component unit of the State; MTSFA subsequently was transferred by Executive Order 2010-2 to
the Michigan Finance Authority (MFA), a discretely presented component unit of the State. The bonds were securitized by a
portion of the State’s Tobacco Settlement Revenues (TSRs), which were payable to the State under the Master Settlement
Agreement entered into by participating cigarette manufacturers in 1998. Beginning April 1, 2008, 13.34% of the State’s share
of the TSRs was pledged to pay tobacco settlement bonds issued in 2006; beginning April 1, 2010, 10.77% of TSRs was
pledged to pay tobacco settlement bonds issued as part of the 2007 tobacco securitization. The State’s share of the settlement
is $310.9 million per year until 2017; from 2018-2025 the State’s share is $348.3 million per year. The actual amount received
by the State is less, and is affected by market and other factors related to cigarette manufacturing.
For the period ended September 30, 2014, the State’s pledged revenue to MFA was $61.1 million. Of that amount $60.9
million was received in MFA’s tobacco settlement debt service fund to contribute to annual debt service requirements of $63.8
million. Shortfalls in the receipt of pledged revenue are made up by investment income if available or other resources; debt
service on these bonds is payable solely from pledged TSRs.
The State Legislature issued Public Acts 267 and 268 of 2011, which permitted MFA to issue bonds to repay Federal advances
to the State’s Unemployment Trust Account, avoid additional advances, pay unemployment benefits, and minimize the impact
on unemployment insurance tax rates. This legislation also created the Unemployment Obligation Trust Fund to receive
unemployment obligation assessment revenue created by the legislation and assessed on employers as long as obligations are
outstanding. The assessment rate shall be an amount sufficient to ensure timely payment of debt service on the Unemployment
Obligation Trust bonds. All revenue collected or earned in the fund is pledged to MFA for payment of the bonds or for other
purposes specified in the legislation. During fiscal year 2014, $455.8 million was recognized as revenue in the State’s
Unemployment Obligation Trust Fund and $455.7 million was paid to MFA’s unemployment obligation assessment debt service
fund; debt service of $465.3 million was paid from the fund during the current fiscal year. Remaining principal and interest
requirements of the secured bonds totaled $2.9 billion at September 30, 2014.
NOTE 27 – DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES
The following table provides additional detail regarding deferred outflows of resources and deferred inflows of resources
reported on the government-wide Statement of Net Position (in millions):
Deferred outflows of resources:
Accumulated decrease in fair value of
hedging derivatives $ - $ - $ - $ 150.9
Refunding of debt 66.4 - 66.4 53.5
Total deferred outflows of resources $ 66.4 $ - $ 66.4 $ 204.4
Deferred inflows of resources:
Accumulated increase in fair value of
hedging derivatives $ - $ - $ - $ 18.3
Loan origination fees - - - 11.7
Refunding of debt 11.5 - 11.5 4.0
Total deferred inflows of resources $ 11.5 $ - $ 11.5 $ 34.1
Units
Component
Activities
Primary Government
Business-Type Governmental
Activities Totals
2014 Comprehensive Annual Financial Report
121
Michigan
Notes to the Financial Statements
The following table provides additional detail regarding deferred inflows of resources reported in the governmental funds (in
millions):
Taxes considered unavailable $ 1,259.1 $ 504.7 $ 11.0 $ - $ 1,774.8
Tobacco settlement receivables - - 159.6 - 159.6
School loan revolving program 358.9 - - - 358.9
Other 21.6 - 16.3 0.2 38.0
Total deferred inflows of resources $ 1,639.5 $ 504.7 $ 187.0 $ 0.2 $ 2,331.3
General School Aid
Non-Major
Fund Fund Funds Funds
Special
Revenue
Funds
Capital
Projects
Total
Governmental
NOTE 28 – SUBSEQUENT EVENTS
Short-Term Borrowing
On October 9, 2014, the State Building Authority (SBA) issued $114.1 million of commercial paper notes bearing an interest
rate of .07%. The notes matured on December 11, 2014.
On December 11, 2014, SBA issued $128.6 million of commercial paper notes bearing an interest rate of .07%. The notes will
mature on February 19, 2015.
On December 17, 2014, SBA entered into an alternative letter of credit for the 2007 Series I and 2011 Series IIB bonds. The
new stated expiration date for both issues is December 15, 2017.
Short-Term Borrowing – Discretely Presented Component Units
On December 4, 2014, the Michigan Finance Authority issued $13.7 million of tax anticipation revenue notes bearing an interest
rate of 3.185%. The notes will mature on October 6, 2015.
Long-Term Borrowing – Discretely Presented Component Units
Subsequent to their respective year-ends, the following discretely presented component units issued long-term debt, some of
which are for purposes of refinancing (in millions):
Central Michigan University $ 66.8
Eastern Michigan University 9.9
Ferris State University 12.9
Grand Valley State University 36.9
Michigan Finance Authority 1,580.5
Michigan State Housing Development Authority 38.4
Oakland University 28.1
Western Michigan University 30.0
Total $ 1,803.5
Bonds
Issued
Executive Reorganization
Executive Order 2014-12, effective March 2, 2015, will create the Department of Talent and Economic Development and the
Michigan Talent Investment Agency, as well as a restructuring that includes several State departments.
Michigan Settlement Administration Authority
On December 22, 2014, the Michigan Settlement Administration Authority approved the payment of $194.8 million from the
Michigan Settlement Administration Authority Fund to the City of Detroit’s two pension funds as part of the Detroit Bankruptcy
“Grand Bargain”. The funds were released for payment after the requirements set forth by Michigan Compiled Laws Section
141.1608 were met. The payment is expected to be made on February 9, 2015.
2014 Comprehensive Annual Financial Report
122
Michigan
FINANCIAL SECTION
REQUIRED SUPPLEMENTARY INFORMATION
2014 Comprehensive Annual Financi al Report
123 123 123 123
REQUIRED SUPPLEMENTARY INFORMATION
BUDGETARY COMPARISON SCHEDULE
MAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2014
(In Thousands)
Beginning Budgetary
Fund Balance Restated $ 2,464,395 $ 2,464,395 $ 2,464,395 $ -
Resources (inflows):
General Purpose Revenues:
Taxes 8,744,400 8,393,353 8,393,353 -
Federal 20,000 30,870 30,870 -
Local 1,000 99 99 -
Licenses and permits 20,000 14,359 14,359 -
Services 11,000 7,214 7,214 -
Miscellaneous 107,700 160,931 160,931 -
Transfers in 172,700 179,764 179,764 -
Restricted Revenues:
Taxes 3,455,510 4,066,949 4,066,949 -
Federal 15,554,822 15,333,828 15,333,828 -
Local 184,599 223,453 223,453 -
Licenses and permits 409,622 296,285 296,285 -
Services 330,327 311,266 311,266 -
Miscellaneous 1,074,393 529,478 529,478 -
Bonds issued - 85,295 85,295 -
Premium on bonds issued - 12,356 12,356 -
Proceeds from sale of capital assets - 1,626 1,626 -
Transfers in 79,274 54,473 54,473 -
Total Revenue Inflows 30,165,346 29,701,599 29,701,599 -
Amounts Available for Appropriation 32,629,742 32,165,994 32,165,994 -
Charges to Appropriations (outflows):
Legislative Branch 157,301 143,414 143,034 380
J udicial Branch 287,657 258,209 254,962 3,247
Executive Branch:
Agriculture and Rural Development 80,475 73,495 73,141 354
Attorney General 88,974 84,183 84,041 142
Civil Rights 15,198 14,315 14,124 191
Colleges and Universities Grants 1,365,810 1,361,129 1,360,857 272
Community Health 15,302,945 15,577,764 15,391,993 185,771
Corrections 2,048,021 2,003,741 1,991,722 12,018
Education 528,366 404,658 400,521 4,137
Environmental Quality 492,497 293,901 293,899 2
Executive Office 5,370 5,540 5,059 481
Human Services 5,985,970 5,542,553 5,529,222 13,332
Insurance and Financial Services 75,336 64,487 64,487 -
Licensing and Regulatory Affairs 305,727 263,505 258,319 5,185
Military and Veterans Affairs 169,592 159,882 158,785 1,097
Natural Resources 110,094 80,946 80,864 81
State 221,582 210,998 209,582 1,416
State Police 608,493 587,246 586,817 428
Technology, Management and Budget 699,803 1,298,455 1,290,819 7,637
Transportation 180,403 277,497 277,497 -
Treasury 1,950,014 3,018,634 2,971,475 47,159
Intrafund expenditure reimbursements - (911,029) (911,029) -
Total Charges to Appropriations 30,679,629 30,813,521 30,530,191 283,330
Reconciling Items:
Change in noncurrent assets - 30,589 30,589 -
Net Reconciling Items - 30,589 30,589 -
Ending Budgetary
Fund Balance $ 1,950,113 $ 1,383,063 $ 1,666,393 $ 283,330
GENERAL FUND
Michigan
ACTUAL
VARIANCE WITH
FINAL BUDGET
ORIGINAL
BUDGET
FINAL
BUDGET
124 124 124 124
$ 536,300 $ 536,300 $ 536,300 $ -
10,729,982 10,868,783 10,868,783 -
- - - -
- - - -
- - - -
- - - -
- 30,889 30,889 -
867,400 775,703 775,703 -
- - - -
1,764,421 1,623,283 1,623,283 -
- - - -
- - - -
- - - -
- 338 338 -
- - - -
- - - -
- - - -
- 117,104 117,104 -
13,361,804 13,416,100 13,416,100 -
13,898,104 13,952,400 13,952,400 -
- - - -
- - - -
- - - -
- - - -
- - - -
398,080 398,080 398,080 -
- - - -
- - - -
13,413,541 13,152,833 13,026,459 126,374
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- 17,442 17,442 -
- - - -
13,811,621 13,568,355 13,441,980 126,374
- (520) (520) -
- (520) (520) -
$ 86,483 $ 383,525 $ 509,899 $ 126,374
Michigan
BUDGET ACTUAL FINAL BUDGET
SCHOOL AID FUND
ORIGINAL FINAL VARIANCE WITH
BUDGET
125 125 125 125
REQUIRED SUPPLEMENTARY INFORMATION
BUDGETARY COMPARISON SCHEDULE
BUDGET-TO-GAAP RECONCILIATION
SEPTEMBER 30, 2014
(In Thousands)
FUND
Sources/inflows of resources
Actual amounts (budgetary basis) "available for appropriation"
from the budgetary comparison schedule. $ 32,165,994 $ 13,952,400
Differences - budget to GAAP:
Budgetary fund balance at the beginning of the year is a
budgetary resource but is not a current-year revenue for
financial reporting purposes. (2,464,395) (536,300)
Proceeds from sale of capital assets are inflows of budgetary
resources but are not revenues for financial reporting purposes. (1,626) -
Bonds issued are inflows of budgetary resources but are not
revenues for financial reporting purposes. (97,651) -
Transfers from other funds are inflows of budgetary resources
but are not revenues for financial reporting purposes. (234,237) (892,807)
Total revenues as reported on the Statement of Revenues,
Expenditures, and Changes in Fund Balances - Governmental
Funds. $ 29,368,085 $ 12,523,293
Uses/outflows of resources
Actual amounts (budgetary basis) "total charges to
appropriations" from the budgetary comparison schedule. $ 30,530,191 $ 13,441,980
Differences - budget to GAAP:
Encumbrances for supplies and equipment ordered but not
received are reported in the year the order is placed for
budgetary purposes, but in the year the supplies are
received for financial reporting purposes. (101,062) 5,156
Transfers to other funds are outflows of budgetary resources
but are not expenditures for financial reporting purposes. (954,325) (126,249)
Capital lease acquisitions are not outflows of budgetary
resources but are recorded as current expenditures
and other financing sources under GAAP. 18,371 -
Total expenditures as reported on the Statement of Revenues,
Expenditures, and Changes in Fund Balances - Governmental
Funds. $ 29,493,175 $ 13,320,888
SCHOOL
AID
Michigan
GENERAL
FUND
126 126 126 126
Michigan
Required Supplementary Information
Notes to Required Suppl ementary Information – Budgetary Reporting
Statutory/Budgetary Presentation
The various funds and programs within funds utilize a number of different budgetary control processes. Annual legislative appropriations
and revenue estimates are provided for most “operating” funds. Note 2 of the basic financial statements identifies the annually budgeted
operating funds.
The original executive budget and original legislative appropriations provide general purpose (unrestricted) revenue estimates in order to
demonstrate compliance with constitutional provisions. Revenues restricted by law or outside grantors to a specific program are estimated
at a level of detail consistent with controlling related expenditure accounts.
For programs financed from restricted revenues, spending authorization is generally contingent upon recognition of the related revenue.
Reductions of spending authority occur if revenues fall short of estimates. If revenues exceed the estimate, supplemental appropriations
are required before the additional resources can be spent.
The budgetary comparison schedule presented for the General Fund and the School Aid Fund presents both the original and final
appropriated budgets for fiscal year 2014, as well as the actual resource inflows, outflows, and fund balance stated on the budgetary
basis. The supplementary portion of this report includes a Combining Schedule of Revenues, Expenditures, and Changes in Fund
Balances – Budget and Actual, by fund type, for non-major special revenue and permanent funds with annual budgets. Those schedules
only include the final appropriated budget.
The original budget and related estimated revenues represent the spending authority enacted into law by the appropriation bills as of
October 1, 2013, and includes multi-year projects budgetary carry-forwards from the prior fiscal year.
The budgetary fund balance represents total fund balance, net of noncurrent assets and prior year encumbrances. Noncurrent assets do
not represent current financial resources available for appropriation and are removed for budgetary purposes. Prior year encumbrances
are considered uses of spending authority in the year the State incurs an obligation and are also removed.
Generally Accepted Accounting Principles (GAAP) require that the final legal budget be reflected in the “final budget” column, therefore
updated revenue estimates available for appropriations as of November 30, rather than the amounts shown in the original budget, are
reported. The November 30 date is used because P.A. 431 of 1984, as amended, permits budget adjustments by the Legislature through
60 days after year-end.
The final appropriations budget represents original and supplemental appropriations, carry-forwards, carry-backs (i.e., current year
appropriations for prior year overdrafts), approved transfers, executive order reductions, and timing differences. Expenditures, transfers
out, other financing uses, and encumbrances are combined and classified by department rather than being reported by character and
function as shown in the GAAP statements. This departmental classification is used to better reflect organizational responsibility and to be
more consistent with the budget process. Appropriations include interagency expenditure reimbursement, in which one agency provides
funding to another agency within the same fund. The final budget and actual amounts are adjusted to eliminate the duplication.
The timing differences result from unspent authorizations for multi-year projects, such as capital outlay and work projects, and from
restricted revenues that had not been appropriated for expenditure in the current year. Such authorization balances remaining at year-end
are removed from the final budget column to provide an “annualized” budget.
Positive “variances” reflect restricted revenues that were appropriated and available for expenditure in the current year and unused
general purpose spending authority (lapses); negative “variances” reflect budgetary overdrafts. If both positive and negative variances
exist for a particular line, the amount shown is the net variance.
Statutory/Budgetary Reconciliation
The statutory/budgetary basis presentation differs from GAAP in ways that do not affect ending fund balance.
For budgetary reporting purposes, expenditures and transfers out in the “Actual” column include recorded encumbrances, because they
are considered uses of spending authority in the year the State incurs an obligation. Therefore, the “Original” and “Final Budget” columns
do not include encumbrance authorization balances carried over from the prior fiscal year. In the GAAP basis statements, expenditures do
not include encumbrances. The effect of this difference is reflected as a reconciling item on the Budgetary Comparison Schedule for the
major funds and the Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual for the non-
major special revenue funds and permanent funds.
For budgetary purposes, capitalizable lease expenditures are recognized when payments are due, rather than upon lease inception as
required by GAAP. This difference does not affect fund balance because the “other financing sources” recorded under GAAP at lease
inception are not recorded on the statutory/budgetary basis.
Statewide Authorization Dispositions
Subsequent to the release of this report, the State publishes “Statewide Authorization Dispositions” to demonstrate its compliance with the
legal level of budgetary control. The report includes line-item appropriation details for the General Fund and budgeted operating funds,
and is available by contacting the Office of Financial Management at (517) 373-1010.
2014 Comprehensive Annual Financi al Report
127 127 127 127
Michigan
Required Supplementary Information
Information About Infrastructure Assets Reported Using the Modified Approach
As allowed by Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements – and Management’s Discussion and
Analysis - for State and Local Governments, the State has adopted an alternative process for recording depreciation expense on selected
infrastructure assets. Under this alternative method, referred to as the modified approach, the State expenses certain maintenance and
preservation costs and does not report depreciation expense. Assets accounted for under the modified approach include the State’s network of
public transportation roads and bridges, including ancillary assets, such as guard rails, signs, lighting, culverts, fencing, and the like. The State
is responsible for maintaining approximately 27,459 lane miles of roads and 4,807 bridges (spans in excess of 20 feet).
In order to utilize the modified approach, the State is required to:
• Maintain an asset management system that includes an up-to-date inventory of eligible infrastructure assets.
• Perform condition assessments of eligible assets and summarize the results using a measurement scale.
• Estimate each year the annual amount to maintain and preserve the assets at the condition level established and disclosed by the
State.
• Document that the assets are being preserved approximately at, or above, the established condition level.
Roads
Measurement Scale
The Michigan Department of Transportation (MDOT) uses numerous methods to determine the condition of roadway pavements; however, the
Sufficiency Rating serves as the State’s primary method to measure and monitor pavement conditions. In use since 1961, the Sufficiency
Rating is a visual analysis conducted by an engineer and includes a 5-point scale, as follows:
Rating Bituminous Surface Concrete Surface
1.0 =Excellent Pavement shows no visible deterioration. Distresses
are non-existent.
Same
2.0 =Good Some indication of initial deterioration, but not yet
requiring appreciable amounts of maintenance.
Distress items include the start of small transverse
and/or longitudinal cracks. Slight rutting may be
apparent in the wheel path.
Some indication of initial deterioration, but not yet
requiring appreciable amounts of maintenance.
Distress items may include the start of small
transverse and/or longitudinal cracks, or slight seam
and joint separation. J oints may show very small
amounts of deterioration.
3.0 =Fair Average deterioration requiring occasional routine
maintenance. Distresses may include minor
transverse and longitudinal cracking becoming
continuous throughout the segment. Severe cracking
is patched effectively. Rutting may be a little more
severe and hold small amounts of water.
Average deterioration requiring occasional routine
maintenance. Distresses may include minor
transverse and longitudinal cracking becoming
continuous throughout the segment. Severe cracking
is patched effectively. Through-lanes and shoulders
may begin to show separation from failing tie bars.
4.0 =Poor Excessive deterioration requiring frequent
maintenance and warrants resurfacing soon. Distress
may be evident in wide transverse and longitudinal
cracks. Severe “shallow cracking” could be evident if
the pavement is composite. If the segment has been
patched, the cracks may be showing through. Rutting
is severe and may effect driving.
Excessive deterioration requiring frequent
maintenance and warrants resurfacing soon.
Distress may be evident in wide transverse and
longitudinal cracks. If the segment has been
patched, cracks may be showing through. J oint
repairs could begin to fail. Shoulder and/or through-
lane separation may be apparent. Popouts or
spalling could also be present in the section.
5.0 =Very Poor/
Failed
Extreme deterioration requiring continuous
maintenance and warrants resurfacing or total cross-
section replacement. Distress items may include
severe transverse and longitudinal cracking or severe
alligator cracking. Shadow cracking in composite
pavement is wider than one inch. Rutting in wheel
path may be severe and patching is no longer
beneficial to pavement condition.
Extreme deterioration requiring continuous
maintenance and warrants resurfacing or total cross-
section replacement. Distress items may include
severe transverse and longitudinal cracking, joints
failing, and the patching is no longer beneficial to
pavement condition. Spalling and edge cracking
could also be severe.
Established Condition Level
No more than 30% of the pavements shall be rated as “Poor” or “Very Poor.”
Assessed Conditions
The State assesses condition on a calendar year basis. The following table reports the percentage of pavements meeting ratings of “Good” or
“Poor,” for the past three years. “Good” represents ratings of 1.0 through 3.0 above and “Poor” represents ratings of 4.0 and 5.0.
Rating 2013 2012 2011
Good 78.1% 78.8% 81.3%
Poor 21.9% 21.2% 18.7%
2014 Comprehensive Annual Financi al Report
128 128 128 128
Michigan
Bridges
Measurement Scale
MDOT utilizes the National Bridge Inventory (NBI) to monitor the condition of bridges (spans in excess of 20 feet) under its jurisdiction. The
inventory rates bridges, including the deck, superstructure and substructure, using a 10-point scale:
Rating Description
9 Excellent (no specific definition).
8 Very good. No problems noted.
7 Good. Some minor problems.
6 Satisfactory. Structural elements show some minor deterioration.
5 Fair. All primary structural elements are sound but may have minor section loss,
cracking, spalling, or scour.
4 Poor. Advanced section loss, deterioration, spalling, or scour.
3 Serious. Loss of section, deterioration, spalling, or scour have seriously affected
primary structural components. Local failures are possible. Fatigue cracks in steel
or shear cracks in concrete may be present.
2 Critical. Advanced deterioration of primary structural elements. Fatigue cracks in
steel or shear cracks in concrete may be present or scour may have removed
substructure support. Unless closely monitored it may be necessary to close the
bridge until corrective action is taken.
1 Imminent failure. Major deterioration or section loss present in critical structural
components or obvious vertical or horizontal movement affecting structure stability.
Bridge is closed to traffic, but corrective action may put it back in light service.
0 Failure. Out of service; beyond corrective action.
Established Condition Level
No more than 35% of the highway bridges shall be rated as “structurally deficient.”
Assessed Conditions
A highway bridge is classified as structurally deficient if the deck, superstructure, substructure, or culvert is rated in “poor” condition (0 to 4 on
the NBI rating scale). A bridge can also be classified as structurally deficient if its load carrying capacity is significantly below current design
standards or if a waterway below frequently overtops the bridge during floods. The following table reports the percentage of bridges whose
condition was assessed as “structurally deficient,”in the stated year:
Fiscal Structurally
Year Deficient
2014 6.1%
2013 6.0%
2012 6.4%
Bridges that are not intended to carry highway traffic are not included in MDOT’s condition assessment. As a result, the number of bridges that
were evaluated (4,462) in fiscal year 2014 is less than the total (4,807) maintained by the department.
Estimated and Actual Costs to Maintain
The following table presents the State’s estimate of spending necessary to preserve and maintain the roads and bridges at, or above, the
“Established Condition Levels” cited above, and the actual amount spent during the past five fiscal years (in millions):
Fiscal
Year
2015 $ 729.3 $ -
2014 689.0 784.5
2013 737.0 837.8
2012 719.0 772.4
2011 766.0 752.4
2010 1,162.0 829.6
Spending
Actual Estimated
Spending
2014 Comprehensive Annual Financi al Report
129 129 129 129
Michigan
2014 Comprehensive Annual Financi al Report
130 130 130 130
Michigan
FINANCIAL SECTION
COMBINING AND INDIVIDUAL FUND STATEMENTS
AND SCHEDULES – NON-MAJOR FUNDS
2014 Comprehensive Annual Financi al Report
131 131 131 131
BALANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS - BY FUND TYPE
SEPTEMBER 30, 2014
(In Thousands)
DEBT CAPITAL
FUNDS FUNDS FUNDS FUNDS
ASSETS
Current Assets:
Cash $ 197 $ - $ 91 $ - $ 289
Equity in common cash 975,365 1,869 902,935 122,458 2,002,628
Taxes, interest, and penalties receivable 95,491 - 466 - 95,957
Amounts due from other funds 5,881 - 36,837 - 42,717
Amounts due from component units - - 1,777 - 1,777
Amounts due from federal agencies 81,814 - 212,386 - 294,200
Amounts due from local units 2,259 - 49,153 293 51,705
Inventories 427 - 7,685 - 8,113
Investments - 223,664 26,576 - 250,240
Other current assets 234,997 1 3,472 8,516 246,986
Total Current Assets 1,396,432 225,535 1,241,378 131,267 2,994,612
Taxes, interest, and penalties receivable 2,540 - - - 2,540
Amounts due from local units 16,854 - 31,011 - 47,866
Investments 237,759 - - 875,611 1,113,370
Other noncurrent assets 4,167 - 58 - 4,226
Total Assets $ 1,657,753 $ 225,535 $ 1,272,448 $ 1,006,878 $ 4,162,613
LIABILITIES
Current Liabilities:
Warrants outstanding $ 5,461 $ - $ 9,129 $ 28 $ 14,617
Accounts payable and other liabilities 248,069 401 309,321 11,644 569,435
Amounts due to other funds 19,387 457 42,429 237 62,509
Amounts due to component units 54,925 - 206 - 55,131
Bonds and notes payable - - 99,105 - 99,105
Interest payable - - 8 - 8
Unearned revenue 6,819 - 5,614 - 12,433
Total Current Liabilities 334,661 858 465,811 11,908 813,238
Long-Term Liabilities:
Unearned revenue 67 - 34 - 101
Total Liabilities 334,727 858 465,845 11,908 813,338
DEFERRED INFLOWS OF RESOURCES 186,959 - 153 - 187,112
FUND BALANCES
Nonspendable 221,369 - 7,685 763,527 992,581
Restricted 367,232 224,677 904,892 231,442 1,728,244
Committed 547,466 - - - 547,466
Unassigned - - (106,128) - (106,128)
Total Fund Balances 1,136,066 224,677 806,449 994,970 3,162,162
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances $ 1,657,753 $ 225,535 $ 1,272,448 $ 1,006,878 $ 4,162,613
SPECIAL
TOTALS
Michigan
PERMANENT PROJ ECTS SERVICE REVENUE
132 132 132 132
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
NON-MAJOR GOVERNMENTAL FUNDS - BY FUND TYPE
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
SPECIAL DEBT CAPITAL
FUNDS FUNDS FUNDS FUNDS
REVENUES
Taxes $ 2,001,646 $ - $ 5,056 $ - $ 2,006,702
From federal agencies 271,687 - 1,264,974 6 1,536,667
From local agencies - - 10,727 - 10,727
From services 3,791 - 4,289 - 8,080
From licenses and permits 183,951 - 16,821 - 200,772
Miscellaneous 836,539 3,259 49,643 103,501 992,941
Total Revenues 3,297,613 3,259 1,351,511 103,506 4,755,890
EXPENDITURES
Current:
General government 176,055 256 - 1,898 178,208
Education - 1,128 62,075 - 63,203
Human services 32,883 - - - 32,883
Public safety and corrections 812 - - 3,342 4,154
Conservation, environment,
recreation, and agriculture 220,993 - 29 24,982 246,003
Labor, commerce, and regulatory 663,902 - - - 663,902
Health services 85,835 - - - 85,835
Transportation 1,314,724 1,188 1,077,797 - 2,393,709
Capital outlay 11,539 - 992,682 50,393 1,054,614
Debt Service:
Bond principal retirement - 452,631 - - 452,631
Bond interest and fiscal charges - 317,873 - - 317,873
Capital lease payments 583 - 791 - 1,374
Total Expenditures 2,507,326 773,075 2,133,373 80,615 5,494,389
Excess of Revenues over (under)
Expenditures 790,287 (769,817) (781,862) 22,891 (738,500)
OTHER FINANCING SOURCES (USES)
Refunding bonds issued - 295,085 - - 295,085
Premium on bond issuance - 35,223 - - 35,223
Payment to refunded bond escrow agent - (299,121) - - (299,121)
Capital lease acquisitions - - 475 - 475
Proceeds from sale of capital assets - - 1,820 20 1,840
Transfers from other funds 514,157 751,241 961,708 - 2,227,106
Transfers to other funds (1,049,558) - (279,617) (313) (1,329,488)
Total Other Financing Sources (Uses) (535,401) 782,428 684,385 (293) 931,120
Excess of Revenues and Other
Sources over (under)
Expenditures and Other Uses 254,886 12,612 (97,477) 22,599 192,621
Fund Balances - Beginning of fiscal year 881,180 212,065 903,926 972,371 2,969,542
Fund Balances - End of fiscal year $ 1,136,066 $ 224,677 $ 806,449 $ 994,970 $ 3,162,162
Michigan
TOTALS
REVENUE SERVICE PROJ ECTS PERMANENT
133 133 133 133
BALANCE SHEET
SPECIAL REVENUE FUNDS - BY CLASSIFICATION
SEPTEMBER 30, 2014
(In Thousands)
CONSERVATION,
ENVIRONMENT, REGULATORY
AND AND OTHER
TRANSPORTATION RECREATION ADMINISTRATIVE STATE
RELATED RELATED RELATED FUNDS
ASSETS
Current Assets:
Cash $ - $ 191 $ 6 $ - $ 197
Equity in common cash 195,899 153,132 74,300 552,034 975,365
Taxes, interest,
and penalties receivable 95,290 200 - - 95,491
Amounts due from other funds 1,788 - 4,093 - 5,881
Amounts due from federal agencies 68,995 3,847 8,973 - 81,814
Amounts due from local units 623 1,636 - - 2,259
Inventories - 427 - - 427
Other current assets 2,388 7,294 65,220 160,095 234,997
Total Current Assets 364,983 166,728 152,591 712,130 1,396,432
Taxes, interest,
and penalties receivable 2,527 13 - - 2,540
Amounts due from local units 938 15,917 - - 16,854
Investments - 214,364 - 23,395 237,759
Other noncurrent assets 316 309 - 3,542 4,167
Total Assets $ 368,764 $ 397,330 $ 152,591 $ 739,067 $ 1,657,753
LIABILITIES
Current Liabilities:
Warrants outstanding $ 4,650 $ 191 $ 421 $ 199 $ 5,461
Accounts payable and other liabilities 215,547 16,112 15,179 1,232 248,069
Amounts due to other funds 8,178 1,883 9,285 41 19,387
Amounts due to component units - - 54,925 - 54,925
Unearned revenue 336 1,332 5,151 - 6,819
Total Current Liabilities 228,710 19,518 84,961 1,472 334,661
Long-Term Liabilities:
Unearned revenue 67 - - - 67
Total Liabilities 228,777 19,518 84,961 1,472 334,727
DEFERRED INFLOWS OF RESOURCES 11,343 571 12,444 162,600 186,959
FUND BALANCES
Nonspendable - 197,945 - 23,424 221,369
Restricted 128,643 179,296 52,397 6,896 367,232
Committed - - 2,790 544,676 547,466
Total Fund Balances 128,643 377,241 55,186 574,995 1,136,066
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances $ 368,764 $ 397,330 $ 152,591 $ 739,067 $ 1,657,753
TOTALS
Michigan
134 134 134 134
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUNDS - BY CLASSIFICATION
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
CONSERVATION,
ENVIRONMENT, REGULATORY
AND AND OTHER
TRANSPORTATION RECREATION ADMINISTRATIVE STATE
RELATED RELATED RELATED FUNDS
REVENUES
Taxes $ 2,001,417 $ 229 $ - $ - $ 2,001,646
From federal agencies 123,939 6,896 140,080 772 271,687
From services 3,785 - 6 - 3,791
From licenses and permits 34,317 139,716 9,919 - 183,951
Miscellaneous 8,505 93,908 528,294 205,832 836,539
Total Revenues 2,171,961 240,749 678,299 206,604 3,297,613
EXPENDITURES
Current:
General government - 2,731 26,923 146,401 176,055
Human services - - - 32,883 32,883
Public safety and corrections - - - 812 812
Conservation, environment,
recreation, and agriculture - 220,993 - - 220,993
Labor, commerce, and regulatory - - 647,665 16,237 663,902
Health services - - - 85,835 85,835
Transportation 1,314,724 - - - 1,314,724
Capital outlay - 11,539 - - 11,539
Debt Service:
Capital lease payments - - 583 - 583
Total Expenditures 1,314,724 235,263 675,171 282,168 2,507,326
Excess of Revenues over
(under) Expenditures 857,237 5,486 3,128 (75,563) 790,287
OTHER FINANCING SOURCES (USES)
Transfers from other funds 167,315 30,374 19,167 297,300 514,157
Transfers to other funds (1,011,777) (20,343) (17,398) (40) (1,049,558)
Total Other Financing
Sources (Uses) (844,461) 10,031 1,768 297,260 (535,401)
Excess of Revenues and Other
Sources over (under)
Expenditures and Other Uses 12,776 15,517 4,896 221,697 254,886
Fund Balances - Beginning of
fiscal year 115,867 361,724 50,290 353,298 881,180
Fund Balances - End of fiscal year $ 128,643 $ 377,241 $ 55,186 $ 574,995 $ 1,136,066
TOTALS
Michigan
135 135 135 135
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
SPECIAL REVENUE FUNDS - BY CLASSIFICATION
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
TRANSPORTATION RELATED
BUDGET ACTUAL VARIANCE BUDGET ACTUAL VARIANCE
REVENUES AND OTHER SOURCES
Taxes $ 2,001,417 $ 2,001,417 $ - $ 229 $ 229 $ -
From federal agencies 123,939 123,939 - 6,509 6,509 -
From services 3,785 3,785 - - - -
From licenses and permits 34,317 34,317 - 139,716 139,716 -
Miscellaneous 8,505 8,505 - 45,974 45,974 -
Transfers in 167,315 167,315 - 30,374 30,374 -
Total Revenues and Other Sources 2,339,277 2,339,277 - 222,803 222,803 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Attorney General - - - - - -
Community Health - - - - - -
Human Services - - - - - -
Licensing and Regulatory Affairs - - - - - -
Military and Veterans Affairs - - - - - -
State Police - - - - - -
Natural Resources - - - 225,962 222,190 3,772
Transportation 2,421,330 2,415,991 5,339 - - -
Treasury - - - 2,668 2,643 25
Total Expenditures, Transfers
Out, and Encumbrances 2,421,330 2,415,991 5,339 228,631 224,833 3,798
Revenues and Other Sources over (under)
Expenditures, Encumbrances, and
Other Uses (Statutory/budgetary basis) $ (82,053) (76,714) $ 5,339 $ (5,828) (2,030) $ 3,798
Reconciling Items:
Encumbrances at September 30 89,490 7,259
Funds not annually budgeted - 10,288
Net Reconciling Items 89,490 17,547
Excess of Revenues and Other Sources over
(under) Expenditures and Other Uses
(GAAP Basis) 12,776 15,517
FUND BALANCES (GAAP BASIS)
Beginning balances 115,867 361,724
Ending balances (GAAP Basis) $ 128,643 $ 377,241
CONSERVATION, ENVIRONMENT,
AND RECREATION RELATED
Statutory/Budgetary Basis
Michigan
136 136 136 136
REGULATORY AND
ADMINISTRATIVE RELATED OTHER STATE FUNDS TOTALS
BUDGET ACTUAL VARIANCE BUDGET ACTUAL VARIANCE BUDGET ACTUAL VARIANCE
$ - $ - $ - $ - $ - $ - $ 2,001,646 $ 2,001,646 $ -
140,080 140,080 - 772 772 - 271,300 271,300 -
6 6 - - - - 3,791 3,791 -
9,919 9,919 - - - - 183,951 183,951 -
45,223 45,223 - 193,284 193,284 - 292,986 292,986 -
19,167 19,167 - 102,500 102,500 - 319,357 319,357 -
214,395 214,395 - 296,556 296,556 - 3,073,030 3,073,030 -
- - - 681 446 235 681 446 235
- - - 85,835 85,835 - 85,835 85,835 -
- - - 32,942 32,890 53 32,942 32,890 53
177,868 175,508 2,360 - - - 177,868 175,508 2,360
- - - 1,001 74 927 1,001 74 927
- - - 750 750 - 750 750 -
- - - - - - 225,962 222,190 3,772
- - - - - - 2,421,330 2,415,991 5,339
43,956 41,656 2,300 420,903 145,970 274,933 467,527 190,269 277,258
221,824 217,164 4,660 542,112 265,964 276,148 3,413,897 3,123,952 289,944
$ (7,429) (2,769) $ 4,660 $ (245,556) 30,592 $ 276,148 $ (340,866) (50,922) $ 289,944
518 2 97,269
7,148 191,103 208,539
7,666 191,105 305,808
4,896 221,697 254,886
50,290 353,298 881,180
$ 55,186 $ 574,995 $ 1,136,066
Michigan
137 137 137 137
Michigan
2014 Comprehensive Annual Financi al Report
138 138 138 138
Michigan
SPECIAL REVENUE FUNDS - TRANSPORTATION RELATED
MICHIGAN TRANSPORTATION FUND
Established pursuant to Michigan Compiled Laws Section 247.660,
this fund accounts for the receipt and distribution of several tax
revenues dedicated for highway purposes. Transfers are made to
the General Fund, State Trunkline Fund, and the Comprehensive
Transportation Fund. Expenditures include grants to counties,
cities, and villages for highway purposes.
COMPREHENSIVE TRANSPORTATION FUND
Established pursuant to Michigan Compiled Laws Section 247.660,
this fund accounts for the planning and development of public
transportation systems within the State. Federal revenues,
vehicle-related sales tax, and transfers from the Michigan
Transportation Fund provide financing for expenditures.
2014 Comprehensive Annual Financi al Report
139 139 139 139
COMBINING BALANCE SHEET
SPECIAL REVENUE FUNDS - TRANSPORTATION RELATED
SEPTEMBER 30, 2014
(In Thousands)
MICHIGAN COMPREHENSIVE
TRANSPORTATION TRANSPORTATION
ASSETS
Current Assets:
Equity in common cash $ 107,270 $ 88,629 $ 195,899
Taxes, interest, and penalties receivable 95,290 - 95,290
Amounts due from other funds - 1,788 1,788
Amounts due from federal agencies - 68,995 68,995
Amounts due from local units - 623 623
Other current assets 4 2,384 2,388
Total Current Assets 202,565 162,418 364,983
Taxes, interest, and penalties receivable 2,527 - 2,527
Amounts due from local units - 938 938
Other noncurrent assets - 316 316
Total Assets $ 205,092 $ 163,672 $ 368,764
LIABILITIES
Current Liabilities:
Warrants outstanding $ 3,854 $ 796 $ 4,650
Accounts payable and other liabilities 182,133 33,414 215,547
Amounts due to other funds 8,078 100 8,178
Unearned revenue - 336 336
Total Current Liabilities 194,065 34,645 228,710
Long-Term Liabilities:
Unearned revenue - 67 67
Total Liabilities 194,065 34,712 228,777
DEFERRED INFLOWS OF RESOURCES 11,027 316 11,343
FUND BALANCES
Restricted - 128,643 128,643
Total Fund Balances - 128,643 128,643
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances $ 205,092 $ 163,672 $ 368,764
TOTALS FUND FUND
Michigan
140 140 140 140
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUNDS - TRANSPORTATION RELATED
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
COMPREHENSIVE
TRANSPORTATION TRANSPORTATION
REVENUES
Taxes $ 1,899,391 $ 102,026 $ 2,001,417
From federal agencies - 123,939 123,939
From services 3,785 - 3,785
From licenses and permits 33,658 659 34,317
Miscellaneous 594 7,911 8,505
Total Revenues 1,937,427 234,534 2,171,961
EXPENDITURES
Current:
Transportation 945,334 369,390 1,314,724
Total Expenditures 945,334 369,390 1,314,724
Excess of Revenues over (under)
Expenditures 992,093 (134,855) 857,237
OTHER FINANCING SOURCES (USES)
Transfers from other funds 477 166,838 167,315
Transfers to other funds (992,570) (19,207) (1,011,777)
Total Other Financing Sources (Uses) (992,093) 147,631 (844,461)
Excess of Revenues and Other
Sources over (under) Expenditures
and Other Uses - 12,776 12,776
Fund Balances - Beginning of fiscal year - 115,867 115,867
Fund Balances - End of fiscal year $ - $ 128,643 $ 128,643
TOTALS
MICHIGAN
FUND FUND
Michigan
141 141 141 141
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
SPECIAL REVENUE FUNDS - TRANSPORTATION RELATED
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
MICHIGAN TRANSPORTATION FUND
Statutory/Budgetary Basis BUDGET ACTUAL
REVENUES AND OTHER SOURCES
Taxes $ 1,899,391 $ 1,899,391 $ -
From federal agencies - - -
From services 3,785 3,785 -
From licenses and permits 33,658 33,658 -
Miscellaneous 594 594 -
Transfers in 477 477 -
Total Revenues and Other Sources 1,937,904 1,937,904 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Transportation 1,940,084 1,937,904 2,180
Total Expenditures, Transfers
Out, and Encumbrances 1,940,084 1,937,904 2,180
Revenues and Other Sources
over (under) Expenditures,
Encumbrances, and Other Uses
(Statutory/budgetary basis) $ (2,180) - $ 2,180
Reconciling Items:
Encumbrances at September 30 -
Net Reconciling Items -
Excess of Revenues and Other
Sources over (under) Expenditures
and Other Uses (GAAP Basis) -
FUND BALANCES (GAAP BASIS)
Beginning balances -
Ending balances (GAAP Basis) $ -
VARIANCE
Michigan
142 142 142 142
COMPREHENSIVE TRANSPORTATION FUND TOTALS
BUDGET ACTUAL BUDGET ACTUAL
$ 102,026 $ 102,026 $ - $ 2,001,417 $ 2,001,417 $ -
123,939 123,939 - 123,939 123,939 -
- - - 3,785 3,785 -
659 659 - 34,317 34,317 -
7,911 7,911 - 8,505 8,505 -
166,838 166,838 - 167,315 167,315 -
401,373 401,373 - 2,339,277 2,339,277 -
481,246 478,087 3,159 2,421,330 2,415,991 5,339
481,246 478,087 3,159 2,421,330 2,415,991 5,339
$ (79,873) (76,714) $ 3,159 $ (82,053) (76,714) $ 5,339
89,490 89,490
89,490 89,490
12,776 12,776
115,867 115,867
$ 128,643 $ 128,643
VARIANCE VARIANCE
Michigan
143 143 143 143
Michigan
2014 Comprehensive Annual Financi al Report
144 144 144 144
Michigan
SPECIAL REVENUE FUNDS – CONSERVATION, ENVIRONMENT, AND
RECREATION RELATED
MICHIGAN CONSERVATION AND RECREATION LEGACY
FUND
This fund (“Legacy Fund”) was created by Article 9, Section 40, of
the State Constitution, an amendment approved by voters in
November 2006. The purpose of the amendment was to
constitutionally prevent the diversion of certain funds and revenues
for purposes other than those for which they were created. Section
40 created the following accounts within the Legacy Fund: Forest
Recreation, Game and Fish Protection, Off-Road Vehicle,
Recreation Improvement, Snowmobile, State Park Improvement,
and Waterways.
The implementing legislation related to this amendment, found in
Sections 324.2002 – 324.2035 of the Michigan Compiled Laws,
transferred a number of special revenue funds and certain
restrictively financed activities within the General Fund to the
Legacy Fund. The following special revenue funds were transferred
into the fund: Game and Fish Protection Fund, Michigan State
Waterways Fund, Marine Safety Fund, and State Park Improvement
Fund. The restrictively financed activities transferred into the fund
from the General Fund were related to various outdoor recreation
activities including snowmobiles, off-road vehicles, recreation trails,
and State forest recreation.
Financing consists primarily of hunting and fishing licenses; camping
and park entrance fees; 2% of gasoline taxes dedicated for boating,
snowmobiling, off-road vehicles and other trails; watercraft and
snowmobile registration fees; and trail use permits. The fund also
receives funding from the Michigan Game and Fish Protection Trust
Fund. Expenditures are limited to those activities specified in
Section 40 and include forest recreation activities, wildlife and
fisheries programs, off-road vehicle and snowmobile trails and
facilities, State parks and recreation areas, improvement of lake
harbors and inland waterways, and water safety education
programs.
MICHIGAN GAME AND FISH PROTECTION TRUST FUND
The former Game and Fish Protection Trust Fund was established
in 1986 to restrict certain assets for the purpose of generating
interest and earnings for transfer to the former Game and Fish
Protection Fund (now accounted for within the Michigan
Conservation and Recreation Legacy Fund). Article 9, Section 41,
of the State Constitution, an amendment approved by voters in
November 2006, further protected these assets by creating the
Michigan Game and Fish Protection Trust Fund.
The fund operates under Sections 324.43702 – 324.43704 of the
Michigan Compiled Laws. The Legislature may appropriate up to $6
million annually for use by the Game and Fish Protection Account of
the Michigan Conservation and Recreation Legacy Fund. Mineral
royalties from lands acquired by the Game and Fish Protection
Account; direct sale proceeds; and other revenues, which, by
statute, are retained for permanent investment, provide additional
investment funding.
MICHIGAN NONGAME FISH AND WILDLIFE TRUST FUND
The former Michigan Nongame Fish and Wildlife Fund was
established in 1983 to finance research and management of
nongame fish and wildlife, designated endangered species, and
designated plant species of this State. Article 9, Section 42, of the
State Constitution, an amendment approved by voters in November
2006, further protected these assets by creating the Michigan
Nongame Fish and Wildlife Trust Fund.
The fund operates under Sections 324.43902 – 324.43907 of the
Michigan Compiled Laws. The fund may receive transfers from
other funds, donations, investment income, and revenue from
specialty license plate sales.
FOREST DEVELOPMENT FUND
This fund was established in 1993, along with the Michigan Forest
Finance Authority, and operates under Michigan Compiled Laws
Section 324.50507. The primary revenue source of the fund is
timber revenue from State forest lands. Expenditures from the fund
are for forest management activities and forest fire protection. The
Authority is authorized to, but thus far has not, issued bonds.
BOTTLE DEPOSITS FUND
Michigan Compiled Laws (MCL) Section 445.573c created the Bottle
Deposits Fund to provide for the disposition of unredeemed bottle
deposits. The Department of Treasury and the Department of
Environmental Quality (DEQ) jointly administer the fund. The law
mandates that an annual distribution of the funds be made as
follows: 25% returned to the dealers and 75% to fund several sub-
funds.
The 75% distribution to DEQ is initially deposited into the Cleanup
and Redevelopment Trust Sub-Fund (CRTF), and if not further
distributed, remains there until the principal amount reaches $200
million. Of funds received annually by the CRTF, 80% is allocated
to the Cleanup and Redevelopment Sub-Fund (CRF) and 10% to
the Community Pollution Prevention Sub-Fund.
MCL Section 324.20108 moved the former Environmental Response
Fund (ERF) to a sub-fund of the CRF. The law mandates that
proceeds of all cost recovery actions taken and settlements entered
into pursuant to the ERF (excluding natural resource damages) by
DEQ or the Attorney General, or both, shall be credited to the ERF.
Several DEQ sub-funds are administratively housed within the Bottle
Deposits Fund, although they receive no bottle deposits revenue.
Included is the State Sites Cleanup Sub-Fund, established in
accordance with MCL Section 324.20108c to provide for response
activities at facilities where the State is liable as an owner or
operator. The following loan programs administered by DEQ are
also included: the Brownfield Revolving Loan Fund created by MCL
Section 324.19608a, the Revitalization Revolving Loan Fund
created by MCL Section 324.20108a, and the Federal Brownfield
Cleanup and Revolving Loan Fund.
2014 Comprehensive Annual Financi al Report
145 145 145 145
COMBINING BALANCE SHEET
SPECIAL REVENUE FUNDS - CONSERVATION, ENVIRONMENT, AND RECREATION RELATED
SEPTEMBER 30, 2014
(In Thousands)
GAME AND
FISH
PROTECTION
TRUST FUND
ASSETS
Current Assets:
Cash $ 73 $ 104
Equity in common cash 68,325 15,973
Taxes, interest, and
penalties receivable 200 -
Amounts due from federal agencies 3,831 -
Amounts due from local units 165 -
Inventories 427 -
Other current assets 5,353 1,348
Total Current Assets 78,375 17,425
Taxes, interest, and
penalties receivable 13 -
Amounts due from local units - -
Investments 1,514 206,652
Other noncurrent assets - -
Total Assets $ 79,901 $ 224,077
LIABILITIES
Current Liabilities:
Warrants outstanding $ 118 $ -
Accounts payable
and other liabilities 13,049 -
Amounts due to other funds 1,377 -
Unearned revenue 1,332 -
Total Current Liabilities 15,876 -
Total Liabilities 15,876 -
DEFERRED INFLOWS OF RESOURCES 13 -
FUND BALANCES
Nonspendable - 187,243
Restricted 64,012 36,833
Total Fund Balances 64,012 224,077
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances $ 79,901 $ 224,077
Michigan
MICHIGAN MICHIGAN
FUND
CONSERVATION
AND RECREATION
LEGACY
146 146 146 146
MICHIGAN
NONGAME
FISH AND BOTTLE
WILDLIFE DEPOSITS
TRUST FUND FUND
$ - $ 14 $ - $ 191
723 11,769 56,341 153,132
- - - 200
- 16 - 3,847
- - 1,471 1,636
- - - 427
45 35 514 7,294
768 11,834 58,326 166,728
- - - 13
- - 15,917 15,917
6,198 - - 214,364
- - 309 309
$ 6,966 $ 11,834 $ 74,552 $ 397,330
$ - $ 23 $ 50 $ 191
18 2,275 770 16,112
3 334 170 1,883
- - - 1,332
21 2,632 990 19,518
21 2,632 990 19,518
- - 558 571
6,000 - 4,702 197,945
946 9,203 68,302 179,296
6,946 9,203 73,004 377,241
$ 6,966 $ 11,834 $ 74,552 $ 397,330
Michigan
TOTALS FUND
DEVELOPMENT
FOREST
147 147 147 147
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUNDS - CONSERVATION, ENVIRONMENT, AND RECREATION RELATED
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
GAME AND
FISH
PROTECTION
FUND TRUST FUND
REVENUES
Taxes $ 229 $ -
From federal agencies 6,484 -
From licenses and permits 139,713 -
Miscellaneous 4,975 26,211
Total Revenues 151,401 26,211
EXPENDITURES
Current:
General government 2,643 88
Conservation, environment,
recreation, and agriculture 166,176 117
Capital outlay 11,505 -
Total Expenditures 180,324 204
Excess of Revenues over (under)
Expenditures (28,923) 26,007
OTHER FINANCING SOURCES (USES)
Transfers from other funds 30,374 -
Transfers to other funds (2,883) (13,855)
Total Other Financing
Sources (Uses) 27,492 (13,855)
Excess of Revenues and Other
Sources over (under)
Expenditures and Other Uses (1,432) 12,152
Fund Balances - Beginning of
fiscal year 65,444 211,925
Fund Balances - End of fiscal year $ 64,012 $ 224,077
AND RECREATION
LEGACY
MICHIGAN MICHIGAN
CONSERVATION
Michigan
148 148 148 148
MICHIGAN
NONGAME
FISH AND BOTTLE
DEPOSITS
TRUST FUND FUND FUND
$ - $ - $ - $ 229
- 25 387 6,896
- 3 - 139,716
603 40,396 21,722 93,908
603 40,424 22,109 240,749
- - - 2,731
420 33,449 20,831 220,993
- 35 - 11,539
420 33,483 20,831 235,263
183 6,941 1,278 5,486
- - - 30,374
(7) (457) (3,142) (20,343)
(7) (457) (3,142) 10,031
177 6,484 (1,864) 15,517
6,769 2,718 74,868 361,724
$ 6,946 $ 9,203 $ 73,004 $ 377,241
TOTALS
WILDLIFE DEVELOPMENT
FOREST
Michigan
149 149 149 149
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
SPECIAL REVENUE FUNDS - CONSERVATION, ENVIRONMENT, AND RECREATION RELATED
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
MICHIGAN NONGAME FISH
AND WILDLIFE TRUST FUND
Statutory/Budgetary Basis BUDGET ACTUAL VARIANCE BUDGET ACTUAL VARIANCE
REVENUES AND OTHER SOURCES
Taxes $ 229 $ 229 $ - $ - $ - $ -
From federal agencies 6,484 6,484 - - - -
From licenses and permits 139,713 139,713 - - - -
Miscellaneous 4,975 4,975 - 603 603 -
Transfers in 30,374 30,374 - - - -
Total Revenues and Other Sources 181,775 181,775 - 603 603 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Natural Resources 190,568 187,093 3,475 553 459 94
Treasury 2,668 2,643 25 - - -
Total Expenditures, Transfers Out
and Encumbrances 193,237 189,736 3,500 553 459 94
Revenues and Other Sources
over (under) Expenditures,
Encumbrances, and Other Uses
(Statutory/budgetary basis) $ (11,461) (7,961) $ 3,500 $ 51 144 $ 94
Reconciling Items:
Encumbrances at September 30 6,529 32
Funds not annually budgeted - -
Net Reconciling Items 6,529 32
Excess of Revenues and Other Sources
over (under) Expenditures and Other
Uses (GAAP Basis) (1,432) 177
FUND BALANCES (GAAP BASIS)
Beginning balances 65,444 6,769
Ending balances (GAAP Basis) $ 64,012 $ 6,946
Michigan
MICHIGAN CONSERVATION AND
RECREATION LEGACY FUND
150 150 150 150
BOTTLE
PROTECTION DEPOSITS
TRUST FUND FUND TOTALS
BUDGET ACTUAL BUDGET ACTUAL VARIANCE
$ - $ - $ - $ - $ - $ 229 $ 229 $ -
25 25 - - - 6,509 6,509 -
3 3 - - - 139,716 139,716 -
40,396 40,396 - - - 45,974 45,974 -
- - - - - 30,374 30,374 -
40,424 40,424 - - - 222,803 222,803 -
34,841 34,638 203 - - 225,962 222,190 3,772
- - - - - 2,668 2,643 25
34,841 34,638 203 - - 228,631 224,833 3,798
$ 5,583 5,786 $ 203 - - $ (5,828) (2,030) $ 3,798
698 - - 7,259
- 12,152 (1,864) 10,288
698 12,152 (1,864) 17,547
6,484 12,152 (1,864) 15,517
2,718 211,925 74,868 361,724
$ 9,203 $ 224,077 $ 73,004 $ 377,241
FUNDS NOT ANNUALLY BUDGETED
Michigan
ACTUAL VARIANCE
FOREST DEVELOPMENT FUND
MICHIGAN
GAME AND FISH
ACTUAL
151 151 151 151
Michigan
2014 Comprehensive Annual Financi al Report
152 152 152 152
Michigan
SPECIAL REVENUE FUNDS – REGULATORY AND ADMINISTRATIVE
RELATED
HOMEOWNER CONSTRUCTION LIEN RECOVERY FUND
Michigan Compiled Laws (MCL) Section 570.1201 created the
Homeowner Construction Lien Recovery Fund to allow contractors,
subcontractors, suppliers, and laborers to collect payments for work
done if they have not been paid, despite filing a residential lien.
MCL 570.1201 was repealed effective August 23, 2010 and as of
September 30, 2014, final disposition of the remaining fund balance
had not occurred as a result of pending litigation.
MICHIGAN EMPLOYMENT SECURITY ACT -
ADMINISTRATION FUND
Michigan Compiled Laws Section 421.10 created this fund to
account for administrative costs of the Unemployment Insurance
Agency, which is administered by the Department of Licensing and
Regulatory Affairs. The fund derives most of its revenue from
federal grants. It also receives transfers from the Michigan
Employment Security Act Contingent Fund (reported as part of the
Michigan Unemployment Compensation Funds, an enterprise fund).
Expenditures for administration are subject to legislative
appropriation.
Unemployment benefit payments to individuals are made directly
from funds accumulated from employer premiums. These activities
are reported in the Michigan Unemployment Compensation Funds.
SAFETY EDUCATION AND TRAINING FUND
Michigan Compiled Laws Section 408.1055 imposes an annual levy
on each insurance carrier licensed to write workers' disability
compensation business in the State and on each self-insured
employer. The Safety Education and Training Fund was established
to receive these assessments for support of the Department of
Licensing and Regulatory Affairs’ Consultation Education and
Training Division.
SECOND INJ URY FUND
Michigan Compiled Laws Section 418.501, created the Second
Injury Fund to insure carriers and self-insured employers against
certain workers' compensation losses. The administrator,
appointed by the fund's Board of Trustees, supervises the fund. The
fund's revenue consists of assessments, calculated under provisions
of the act, which are assessed to insurance carriers and self-insured
employers licensed or authorized in Michigan.
SELF-INSURERS’ SECURITY FUND
Established by Michigan Compiled Laws Section 418.501, the Self-
Insurers’ Security Fund pays workers’ compensation benefits to
injured employees of insolvent, private self-insured employers.
Revenues are generated through annual assessments of insurance
carriers.
Funds held in trust per court orders to pay obligations due under the
Michigan Workers’ Disability Compensation Act are reported as
liabilities of this fund.
SILICOSIS, DUST DISEASE, AND LOGGING INDUSTRY
COMPENSATION FUND
Established by Michigan Compiled Laws Section 418.501, the
Silicosis, Dust Disease, and Logging Industry Compensation Fund
reimburses insurance carriers who pay benefits to employees
injured from certain dust diseases, and employees who have
sustained personal injury or death while being employed in the
logging industry. Revenues are generated through annual
assessments of insurance carriers.
STATE CONSTRUCTION CODE FUND
Michigan Compiled Laws Section 125.1522 created the State
Construction Code Fund. Fees received for building permit
applications and other funds collected under this legislation are
appropriated by the Legislature for the operation of the Department
of Licensing and Regulatory Affairs’ Bureau of Construction Codes
and related indirect overhead expenditures.
UTILITY CONSUMER REPRESENTATION FUND
Established by Michigan Compiled Laws Section 460.6m, the Utility
Consumer Representation Fund provides funding, on behalf of
residential gas, fuel, and electric customers, for energy cost
recovery hearings before the Michigan Public Service Commission.
Revenues are generated through annual assessments of regulated
utility companies.
UNEMPLOYMENT OBLIGATION TRUST FUND
This fund was created by Michigan Compiled Laws (MCL) Section
421.10a to facilitate the repayment of debt incurred through a bond
issuance authorized under the Employment Security Financing Act
(MCL 12.271 et seq.) and MCL 421.26a. This debt was issued in
order to repay advances received from the Federal Government that
were provided to temporarily assist Michigan with unemployment
payments that exceeded current revenue collections. Revenues
within the Obligation Trust Fund are generated from annual
assessments on employers. Payments are made to the Michigan
Finance Authority, a discretely presented component unit, which
currently holds the bonds and makes regular payments to the bond
holders.
STATE CASINO GAMING FUND
Created by Michigan Compiled Laws (MCL) Section 432.212, this
fund provides the licensing, regulation, and control of casino gaming
activities in Michigan via the five-member gaming control board
created under MCL 432.204. Additional responsibilities include the
performance of authorized inspections of tribal Class III gaming
facilities and records pursuant to and in accordance with the
provisions of the various tribal/state compacts as delegated by the
Governor in November 2002; the regulation of live horse racing per
Executive Order 2009-45; and the licensing and regulation of
Millionaire Party charitable gaming events per Executive Order
2012-4.
2014 Comprehensive Annual Financi al Report
153 153 153 153
COMBINING BALANCE SHEET
SPECIAL REVENUE FUNDS - REGULATORY AND ADMINISTRATIVE RELATED
SEPTEMBER 30, 2014
(In Thousands)
CONSTRUCTION
LIEN SECOND
ASSETS
Current Assets:
Cash $ - $ - $ - $ - $ -
Equity in common cash 208 - 6,973 13,698 33,445
Amounts due from other funds - 2,773 - - -
Amounts due from
federal agencies - 8,973 - - -
Other current assets - 3 - 300 1,042
Total Current Assets 208 11,748 6,973 13,998 34,487
Total Assets $ 208 $ 11,748 $ 6,973 $ 13,998 $ 34,487
LIABILITIES
Current Liabilities:
Warrants outstanding $ - $ 7 $ 3 $ 289 $ 106
Accounts payable and
and other liabilities - 2,859 252 1,350 9,429
Amounts due to other funds - 8,882 89 16 9
Amounts due to component units - - - - -
Unearned revenue - - - 3,326 1,588
Total Current Liabilities - 11,748 344 4,980 11,132
Total Liabilities - 11,748 344 4,980 11,132
DEFERRED INFLOWS
OF RESOURCES - - - - -
FUND BALANCES
Restricted 208 - 6,630 9,018 23,355
Committed - - - - -
Total Fund Balances 208 - 6,630 9,018 23,355
Total Liabilities, Deferred
Inflows of Resources,
and Fund Balances $ 208 $ 11,748 $ 6,973 $ 13,998 $ 34,487
FUND FUND FUND FUND FUND
SAFETY
SELF-INSURERS'
INJ URY SECURITY
Michigan
HOMEOWNER
ADMINISTRATION
SECURITY ACT -
EMPLOYMENT
EDUCATION
RECOVERY AND TRAINING
MICHIGAN
154 154 154 154
GAMING FUND
$ - $ - $ - $ - $ 6 $ 6
1,573 2,574 2,328 2,502 11,000 74,300
- - - 1,320 - 4,093
- - - - - 8,973
130 130 - 63,546 68 65,220
1,704 2,704 2,328 67,369 11,073 152,591
$ 1,704 $ 2,704 $ 2,328 $ 67,369 $ 11,073 $ 152,591
$ 1 $ 2 $ 12 $ - $ 1 $ 421
345 226 94 - 625 15,179
4 89 7 - 189 9,285
- - - 54,925 - 54,925
226 - - - 11 5,151
576 317 113 54,925 826 84,961
576 317 113 54,925 826 84,961
- - - 12,444 - 12,444
1,128 2,387 2,215 - 7,457 52,397
- - - - 2,790 2,790
1,128 2,387 2,215 - 10,247 55,186
$ 1,704 $ 2,704 $ 2,328 $ 67,369 $ 11,073 $ 152,591
TOTALS FUND CODE FUND FUND TRUST FUND
LOGGING
INDUSTRY
STATE CASINO REPRESENTATION OBLIGATION CONSTRUCTION
Michigan
SILICOSIS, DUST
DISEASE, AND
COMPENSATION
UTILITY CONSUMER STATE UNEMPLOYMENT
155 155 155 155
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUNDS - REGULATORY AND ADMINISTRATIVE RELATED
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
MICHIGAN
CONSTRUCTION EMPLOYMENT
LIEN SECOND
FUND FUND FUND FUND
REVENUES
From federal agencies $ - $ 140,080 $ - $ - $ -
From services - - - - -
From licenses and permits - - - - -
Miscellaneous 30 - 9,831 13,082 11,829
Total Revenues 30 140,080 9,831 13,082 11,829
EXPENDITURES
Current:
General government - - - - -
Labor, commerce,
and regulatory - 153,403 9,645 12,522 4,968
Debt Service:
Capital lease payments - 583 - - -
Total Expenditures - 153,986 9,645 12,522 4,968
Excess of Revenues over
(under) Expenditures 30 (13,906) 186 560 6,861
OTHER FINANCING SOURCES (USES)
Transfers from other funds - 15,508 - - -
Transfers to other funds - (1,602) (133) (23) (13)
Total Other Financing
Sources (Uses) - 13,906 (133) (23) (13)
Excess of Revenues and Other
Sources over (under)
Expenditures and Other Uses 30 - 52 536 6,848
Fund Balances - Beginning of
fiscal year 178 - 6,577 8,481 16,507
Fund Balances - End of fiscal year $ 208 $ - $ 6,630 $ 9,018 $ 23,355
Michigan
HOMEOWNER
RECOVERY ADMINISTRATION
SAFETY
EDUCATION
INJ URY
SECURITY ACT -
AND TRAINING
FUND
SECURITY
SELF-INSURERS'
156 156 156 156
FUND FUND TRUST FUND
$ - $ - $ - $ - $ - $ 140,080
- 6 - - - 6
- 8,868 - - 1,050 9,919
1,201 2 1,207 455,751 35,360 528,294
1,201 8,877 1,207 455,751 36,410 678,299
- - 740 - 26,184 26,923
1,278 9,480 617 455,751 - 647,665
- - - - - 583
1,278 9,480 1,357 455,751 26,184 675,171
(77) (603) (149) - 10,226 3,128
- - - - 3,659 19,167
(6) (144) (5) - (15,472) (17,398)
(6) (144) (5) - (11,813) 1,768
(83) (747) (154) - (1,587) 4,896
1,211 3,134 2,369 - 11,833 50,290
$ 1,128 $ 2,387 $ 2,215 $ - $ 10,247 $ 55,186
TOTALS
CONSTRUCTION
STATE
Michigan
GAMING FUND CODE FUND
UTILITY CONSUMER
REPRESENTATION
SILICOSIS, DUST
DISEASE, AND
LOGGING
INDUSTRY
COMPENSATION STATE CASINO OBLIGATION
UNEMPLOYMENT
157 157 157 157
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
SPECIAL REVENUE FUNDS - REGULATORY AND ADMINISTRATIVE RELATED
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
MICHIGAN EMPLOYMENT
REVENUES AND OTHER SOURCES
From federal agencies $ - $ - $ - $ 140,080 $ 140,080 $ -
From services - - - - - -
From licenses and permits - - - - - -
Miscellaneous 30 30 - - - -
Transfers in - - - 15,508 15,508 -
Total Revenues and Other Sources 30 30 - 155,588 155,588 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Licensing and Regulatory Affairs - - - 155,588 155,588 -
Treasury - - - - - -
Total Expenditures, Transfers Out,
and Encumbrances - - - 155,588 155,588 -
Revenues and Other Sources over (under)
Expenditures, Encumbrances, and Other
Uses (Statutory/budgetary basis) $ 30 30 $ - $ - - $ -
Reconciling Items:
Encumbrances at September 30 - -
Funds not annually budgeted - -
Net Reconciling Items - -
Excess of Revenues and Other Sources
over (under) Expenditures
and Other Uses (GAAP Basis) 30 -
FUND BALANCES (GAAP BASIS)
Beginning balances 178 -
Ending balances (GAAP Basis) $ 208 $ -
Michigan
HOMEOWNER
CONSTRUCTION LIEN RECOVERY FUND SECURITY ACT - ADMINISTRATION FUND
BUDGET ACTUAL VARIANCE BUDGET ACTUAL Statutory/Budgetary Basis VARIANCE
158 158 158 158
$ - $ - $ - $ - $ - $ -
- - - 6 6 -
- - - 8,868 8,868 -
9,831 9,831 - 2 2 -
- - - - - -
9,831 9,831 - 8,877 8,877 -
11,019 9,869 1,151 11,260 10,051 1,209
- - - - - -
11,019 9,869 1,151 11,260 10,051 1,209
$ (1,189) (38) $ 1,151 $ (2,384) (1,174) $ 1,209
90 427
- -
90 427
52 (747)
6,577 3,134
$ 6,630 $ 2,387
This schedule continued on next page.
Michigan
SAFETY EDUCATION AND TRAINING FUND STATE CONSTRUCTION CODE FUND
ACTUAL VARIANCE BUDGET ACTUAL VARIANCE BUDGET
159 159 159 159
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
SPECIAL REVENUE FUNDS - REGULATORY AND ADMINISTRATIVE RELATED (Continued)
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
REVENUES AND OTHER SOURCES
From federal agencies $ - $ - $ -
From services - - -
From licenses and permits 1,050 1,050 -
Miscellaneous 35,360 35,360 -
Transfers in 3,659 3,659 -
Total Revenues and Other Sources 40,069 40,069 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Licensing and Regulatory Affairs - - -
Treasury 43,956 41,656 2,300
Total Expenditures, Transfers Out,
and Encumbrances 43,956 41,656 2,300
Revenues and Other Sources over (under)
Expenditures, Encumbrances, and Other
Uses (Statutory/budgetary basis) $ (3,887) (1,587) $ 2,300
Reconciling Items:
Encumbrances at September 30 -
Funds not annually budgeted -
Net Reconciling Items -
Excess of Revenues and Other Sources
over (under) Expenditures
and Other Uses (GAAP Basis) (1,587)
FUND BALANCES (GAAP BASIS)
Beginning balances 11,833
Ending balances (GAAP Basis) $ 10,247
Michigan
STATE CASINO GAMING FUND
ACTUAL VARIANCE Statutory/Budgetary Basis BUDGET
160 160 160 160
SECOND
INJ URY
$ - $ - $ - $ - $ - $ 140,080 $ 140,080 $ -
- - - - - 6 6 -
- - - - - 9,919 9,919 -
- - - - - 45,223 45,223 -
- - - - - 19,167 19,167 -
- - - - - 214,395 214,395 -
- - - - - 177,868 175,508 2,360
- - - - - 43,956 41,656 2,300
- - - - - 221,824 217,164 4,660
- - - - - $ (7,429) (2,769) $ 4,660
- - - - - 518
536 6,848 (83) (154) - 7,148
536 6,848 (83) (154) - 7,666
536 6,848 (83) (154) - 4,896
8,481 16,507 1,211 2,369 - 50,290
$ 9,018 $ 23,355 $ 1,128 $ 2,215 $ - $ 55,186
FUND
BUDGET ACTUAL
INDUSTRY
FUNDS NOT ANNUALLY BUDGETED
FUND TOTALS
COMPENSATION
UNEMPLOYMENT
OBLIGATION
UTILITY CONSUMER
REPRESENTATION
SILICOSIS, DUST
DISEASE, AND
LOGGING
Michigan
SECURITY
SELF-INSURERS'
FUND FUND
VARIANCE
TRUST FUND
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL
161 161 161 161
Michigan
2014 Comprehensive Annual Financi al Report
162 162 162 162
Michigan
SPECIAL REVENUE FUNDS – OTHER STATE FUNDS
21
st
CENTURY J OBS TRUST FUND
Michigan Compiled Laws Section 12.257 created the 21
st
Century
J obs Trust Fund to account for the transfer of the net bond proceeds
issued by the Michigan Tobacco Settlement Finance Authority.
Executive Order 2010-2 moved the Authority to the Michigan
Finance Authority. The bonds were issued to provide sufficient
funds to purchase all or a portion of the State’s receipts from the
master settlement agreement between tobacco manufacturers and
the State. Fund expenditures are used to reimburse the Michigan
Strategic Fund for expenses related to revitalizing Michigan’s
economy and for other programs as determined by the Legislature.
The fund may accept donations of money from any source; all
interest earned is deposited into the State’s General Fund.
Beginning in fiscal year 2008 through 2016, the fund will also
receive a portion of the tobacco settlement revenue received by the
State.
MICHIGAN MERIT AWARD TRUST FUND
This fund was created by Michigan Compiled Laws (MCL) Section
12.259 to account for a portion of the revenue from the master
settlement agreement between tobacco manufacturers and the
State. The settlement reimburses the State for health care costs,
which result from the use of tobacco products. The fund also
consists of interest and earnings from trust fund investments and
donations. Fund expenditures are used for the Michigan Merit
Award Scholarship, Michigan Promise Scholarship, and other
programs as determined by the Legislature.
All assets and liabilities of the Tobacco Settlement Trust Fund,
established by MCL Section 12.253 and repealed as part of tobacco
securitization legislation passed in November 2005, were
transferred to the Michigan Merit Award Trust Fund in fiscal year
2006.
MICHIGAN SETTLEMENT ADMINISTRATION AUTHORITY
Michigan Compiled Laws Section 141.1604 created the Michigan
Settlement Administration Authority (MSAA) as a public body
corporate. The purpose of the Authority is to provide funding to the
retirement systems of the City of Detroit pursuant to certain
requirements being fulfilled. If the requirements are not fulfilled by
May 1, 2015, then the money of the Authority will be returned to the
Counter-Cyclical Budget and Economic Stabilization Fund (a
subfund of the General Fund). The MSAA’s three-member
governing board consists of the State Treasurer, the State Budget
Director, and one member appointed by the Governor.
CHILDREN'S TRUST FUND
Michigan Compiled Laws (MCL) Section 21.171 established the
Children’s Trust Fund to support the State Child Abuse and Neglect
Prevention Board. The Board was established under MCL Section
722.603 to coordinate and fund activities for the prevention of child
abuse and neglect in the State. Not more than one-half the money
contributed to the trust fund each year, plus the interest and
earnings, excluding unrealized gains and losses, credited to the
trust fund during the previous fiscal year are available for
disbursement. Money received as gifts or donations to the trust
fund shall be available for disbursement upon appropriation. Funds
that are not available for disbursement are reported as
nonspendable fund balance.
This fund is also used to account for the Foster Care Trust Fund that
was established under MCL Section 722.1023 and transferred to the
State Child Abuse and Neglect Prevention Board with Executive
Order 2010-17. Funds in the Foster Care Trust Fund are not
expendable until the balance reaches $800 thousand.
MILITARY FAMILY RELIEF FUND
Michigan Compiled Laws Section 35.1213 created this fund to
provide assistance to families of certain members of the reserve
components of the United States armed forces on active duty. A
qualified individual or the individual’s family shall apply to the
Department of Military and Veterans Affairs for a grant from the
fund. Funds are received primarily from taxpayer contributions on
his or her annual State tax return designating $1 or more of his or
her refund to be credited to this fund.
MISCELLANEOUS SPECIAL REVENUE FUNDS
The miscellaneous special revenue funds column reflects the
activities of the following funds: Children’s Institute Trust, Special
Assessment Deferment, and Intrastate Switched Toll Restructuring.
2014 Comprehensive Annual Financi al Report
163 163 163 163
COMBINING BALANCE SHEET
SPECIAL REVENUE FUNDS - OTHER STATE FUNDS
SEPTEMBER 30, 2014
(In Thousands)
AUTHORITY
ASSETS
Current Assets:
Equity in common cash $ 274,682 $ 75,754 $ 194,803
Other current assets 56,250 103,599 -
Total Current Assets 330,932 179,353 194,803
Investments - - -
Other noncurrent assets - 2,683 -
Total Assets $ 330,932 $ 182,036 $ 194,803
LIABILITIES
Current Liabilities:
Warrants outstanding $ - $ - $ -
Accounts payable and other liabilities - 809 -
Amounts due to other funds - 24 -
Total Current Liabilities - 833 -
Total Liabilities - 833 -
DEFERRED INFLOWS OF RESOURCES 56,250 106,012 -
FUND BALANCES
Nonspendable - - -
Restricted - - -
Committed 274,682 75,191 194,803
Total Fund Balances 274,682 75,191 194,803
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances $ 330,932 $ 182,036 $ 194,803
TRUST FUND
21ST CENTURY
J OBS
TRUST FUND
MERIT AWARD ADMINISTRATION
SETTLEMENT MICHIGAN
MICHIGAN
Michigan
164 164 164 164
TRUST FUND RELIEF FUND FUNDS
$ 1,478 $ 2,446 $ 2,871 $ 552,034
166 - 80 160,095
1,644 2,446 2,952 712,130
23,395 - - 23,395
- - 859 3,542
25,039 $ 2,446 $ 3,811 $ 739,067
$ 2 $ 1 $ 196 $ 199
408 2 14 1,232
11 - 6 41
421 3 215 1,472
421 3 215 1,472
- - 338 162,600
23,424 - - 23,424
1,195 2,443 3,258 6,896
- - - 544,676
24,619 2,443 3,258 574,995
$ 25,039 $ 2,446 $ 3,811 $ 739,067
TOTALS
MILITARY FAMILY REVENUE
SPECIAL
CHILDREN'S
MISCELLANEOUS
Michigan
165 165 165 165
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUNDS - OTHER STATE FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
21ST CENTURY
J OBS
TRUST FUND TRUST FUND AUTHORITY
REVENUES
From federal agencies $ - $ - $ -
Miscellaneous 75,000 115,975 3
Total Revenues 75,000 115,975 3
EXPENDITURES
Current:
General government 145,097 1,303 -
Human services - 30,100 -
Public safety and corrections - 739 -
Labor, commerce, and regulatory - - -
Health services - 85,835 -
Total Expenditures 145,097 117,977 -
Excess of Revenues over (under)
Expenditures (70,097) (2,002) 3
OTHER FINANCING SOURCES (USES)
Transfers from other funds 102,500 - 194,800
Transfers to other funds - (26) -
Total Other Financing Sources (Uses) 102,500 (26) 194,800
Excess of Revenues and Other
Sources over (under) Expenditures
and Other Uses 32,403 (2,028) 194,803
Fund Balances - Beginning of fiscal year 242,279 77,219 -
Fund Balances - End of fiscal year $ 274,682 $ 75,191 $ 194,803
Michigan
MERIT AWARD
MICHIGAN
MICHIGAN
SETTLEMENT
ADMINISTRATION
166 166 166 166
TRUST FUND RELIEF FUND FUNDS
$ 772 $ - $ - $ 772
2,177 132 12,546 205,832
2,949 132 12,546 206,604
- - - 146,401
2,783 - - 32,883
- 73 - 812
- - 16,237 16,237
- - - 85,835
2,783 73 16,237 282,168
166 59 (3,692) (75,563)
- - - 297,300
(6) - (8) (40)
(6) - (8) 297,260
159 59 (3,699) 221,697
24,459 2,384 6,957 353,298
$ 24,619 $ 2,443 $ 3,258 $ 574,995
Michigan
MILITARY FAMILY CHILDREN'S
TOTALS
SPECIAL
REVENUE
MISCELLANEOUS
167 167 167 167
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
SPECIAL REVENUE FUNDS - OTHER STATE FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
Statutory/Budgetary Basis
REVENUES AND OTHER SOURCES
From federal agencies $ - $ - $ -
Miscellaneous 75,000 75,000 -
Transfers in 102,500 102,500 -
Total Revenues and Other Sources 177,500 177,500 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Attorney General - - -
Community Health - - -
Human Services - - -
Military and Veterans Affairs - - -
State Police - - -
Treasury 419,779 145,097 274,682
Total Expenditures, Transfers Out,
and Encumbrances 419,779 145,097 274,682
Revenues and Other Sources over (under)
Expenditures, Encumbrances, and Other
Uses (Statutory/budgetary basis) $ (242,279) 32,403 $ 274,682
Reconciling Items:
Encumbrances at September 30 -
Funds not annually budgeted -
Net Reconciling Items -
Excess of Revenues and Other Sources
over (under) Expenditures
and Other Uses (GAAP Basis) 32,403
FUND BALANCES (GAAP BASIS)
Beginning balances 242,279
Ending balances (GAAP Basis) $ 274,682
Michigan
ACTUAL VARIANCE
21ST CENTURY J OBS TRUST FUND
BUDGET
168 168 168 168
MILITARY FAMILY RELIEF FUND
BUDGET BUDGET ACTUAL VARIANCE
$ - $ - $ - $ 772 $ 772 $ - $ - $ - $ -
115,975 115,975 - 2,177 2,177 - 132 132 -
- - - - - - - - -
115,975 115,975 - 2,949 2,949 - 132 132 -
681 446 235 - - - - - -
85,835 85,835 - - - - - - -
30,100 30,100 - 2,842 2,790 53 - - -
- - - - - - 1,001 74 927
750 750 - - - - - - -
1,124 873 251 - - - - - -
118,489 118,003 486 2,842 2,790 53 1,001 74 927
$ (2,514) (2,028) $ 486 $ 107 159 $ 53 $ (870) 58 $ 927
1 - 1
- - -
1 - 1
(2,028) 159 59
77,219 24,459 2,384
$ 75,191 $ 24,619 $ 2,443
This schedule continued on next page.
Michigan
ACTUAL BUDGET VARIANCE
MICHIGAN MERIT AWARD TRUST FUND CHILDREN'S TRUST FUND
ACTUAL VARIANCE
169 169 169 169
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
SPECIAL REVENUE FUNDS - OTHER STATE FUNDS (Continued)
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
Statutory/Budgetary Basis ACTUAL ACTUAL BUDGET ACTUAL VARIANCE
REVENUES AND OTHER SOURCES
From federal agencies $ - $ - $ 772 $ 772 $ -
Miscellaneous - - 193,284 193,284 -
Transfers in - - 102,500 102,500 -
Total Revenues and Other Sources - - 296,556 296,556 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Attorney General - - 681 446 235
Community Health - - 85,835 85,835 -
Human Services - - 32,942 32,890 53
Military and Veterans Affairs - - 1,001 74 927
State Police - - 750 750 -
Treasury - - 420,903 145,970 274,933
Total Expenditures, Transfers Out,
and Encumbrances - - 542,112 265,964 276,148
Revenues and Other Sources over (under)
Expenditures, Encumbrances, and Other
Uses (Statutory/budgetary basis) - - $ (245,556) 30,592 $ 276,148
Reconciling Items:
Encumbrances at September 30 - - 2
Funds not annually budgeted 194,803 (3,699) 191,103
Net Reconciling Items 194,803 (3,699) 191,105
Excess of Revenues and Other Sources
over (under) Expenditures
and Other Uses (GAAP Basis) 194,803 (3,699) 221,697
FUND BALANCES (GAAP BASIS)
Beginning balances - 6,957 353,298
Ending balances (GAAP Basis) $ 194,803 $ 3,258 $ 574,995
TOTALS
MISCELLANEOUS MICHIGAN
ANNUALLY BUDGETED
FUNDS NOT
SETTLEMENT SPECIAL
Michigan
REVENUE ADMINISTRATION
AUTHORITY FUNDS
170 170 170 170
Michigan
DEBT SERVICE FUNDS
COMBINED STATE TRUNKLINE BOND AND INTEREST
REDEMPTION FUND
This fund was administratively established to account for the debt
service on all State Trunkline Fund (STF) related bond issues
allowed for under Michigan Compiled Laws Section 247.661. The
bonds are not general obligations of the State. The bonds are
payable solely out of funds restricted for transportation purposes by
Article 9, Section 9, of the State Constitution and irrevocably
pledged by law for deposit in STF. Debt service requirements are
funded by annual appropriations in STF.
COMBINED COMPREHENSIVE TRANSPORTATION
BOND AND INTEREST REDEMPTION FUND
This fund was administratively established to account for the debt
service on all Comprehensive Transportation Fund (CTF) related
bond issues allowed for under Michigan Compiled Laws Section
247.660b. The bonds are not general obligations of the State. The
bonds are payable solely out of funds restricted for comprehensive
transportation purposes by Article 9, Section 9, of the State
Constitution and irrevocably pledged by law for deposit in CTF.
Debt service requirements are funded by annual appropriations in
CTF.
RECREATION AND ENVIRONMENTAL PROTECTION
BOND REDEMPTION FUND
This fund was established pursuant to Michigan Compiled Laws
(MCL) Sections 324.19506, 324.71506, and 324.95102 to service
recreation and environmental protection bond issues. This fund also
reflects debt service transactions related to State Park Improvement
Fund (SPIF) revenue bonds, issued pursuant to MCL Section
324.74106.
Financing of debt retirement, interest expense, and paying agent
fees is provided by annual legislative appropriation from the General
Fund, transfers from SPIF representing state park revenues pledged
for the payment of State Park Gross Revenue Bonds, and transfers
from other funds as required by legislative appropriation or
executive order.
Included in the restricted fund balance on the balance sheet is a
$300 thousand reserve account required by the State Park Gross
Revenue Bonds document for additional security to pay bond
principal and interest.
SCHOOL LOAN BOND REDEMPTION FUND
Michigan Compiled Laws Section 388.922 created this fund to
account for debt service on general obligation bonds issued to
finance loans to local school districts. Financing of debt retirement,
interest expense, and paying agent fees is provided by annual
legislative appropriation from the General Fund or School Aid Fund.
STATE BUILDING AUTHORITY
The State Building Authority (SBA) was created pursuant to
Michigan Compiled Laws Section 830.412, to issue bonds to finance
the acquisition or renovation of buildings for use by the State or
public institutions of higher education, as well as State furnishings
and equipment.
SBA projects are financed by revenue bonds, the proceeds of which
can only be used for construction and debt service on projects
related to particular bond issues. During construction, debt service
requirements are financed by a portion of the bond proceeds that
are dedicated for that purpose. For completed projects, the
resources to finance bond interest and redemption are provided by
transfers from the General Fund and from investment earnings of
this fund. When a project is completed, the remaining assets are
transferred to this fund where they are invested and used for debt
service. Excess balances related to a particular bond series
remaining in the fund after the final payment on the bond series are
transferred to the General Fund.
2014 Comprehensive Annual Financi al Report
171 171 171 171
COMBINING BALANCE SHEET
DEBT SERVICE FUNDS
SEPTEMBER 30, 2014
(In Thousands)
COMBINED COMBINED RECREATION
STATE COMPREHENSIVE AND
TRUNKLINE TRANSPORTATION ENVIRONMENTAL
BOND AND BOND AND PROTECTION
INTEREST INTEREST BOND
REDEMPTION REDEMPTION REDEMPTION
FUND FUND FUND
ASSETS
Current Assets:
Equity in common cash $ 298 $ - $ 1,572
Investments - - -
Other current assets - - -
Total Current Assets 298 - 1,572
Total Assets $ 298 $ - $ 1,572
LIABILITIES
Current Liabilities:
Accounts payable and other liabilities $ 298 $ - $ -
Amounts due to other funds - - -
Total Current Liabilities 298 - -
Total Liabilities 298 - -
FUND BALANCES
Restricted - - 1,571
Total Fund Balances - - 1,571
Total Liabilities and Fund Balances $ 298 $ - $ 1,572
Michigan
172 172 172 172
$ - $ - $ 1,869
- 223,664 223,664
- 1 1
- 223,665 225,535
$ - $ 223,665 $ 225,535
$ - $ 103 $ 401
- 457 457
- 560 858
- 560 858
- 223,106 224,677
- 223,106 224,677
$ - $ 223,665 $ 225,535
REDEMPTION
FUND
Michigan
TOTALS
STATE
BUILDING
AUTHORITY
SCHOOL
LOAN BOND
173 173 173 173
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
DEBT SERVICE FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
COMBINED COMBINED RECREATION
STATE COMPREHENSIVE AND
TRUNKLINE TRANSPORTATION ENVIRONMENTAL
BOND AND BOND AND PROTECTION
INTEREST INTEREST BOND
REDEMPTION REDEMPTION REDEMPTION
FUND FUND FUND
REVENUES
Miscellaneous $ - $ - $ 1
Total Revenues - - 1
EXPENDITURES
Current:
General government - - 256
Education - - -
Transportation 1,187 - -
Debt Service:
Bond principal retirement 114,955 14,535 143,965
Bond interest and fiscal charges 104,155 7,877 38,135
Total Expenditures 220,297 22,412 182,356
Excess of Revenues over (under)
Expenditures (220,297) (22,412) (182,355)
OTHER FINANCING SOURCES (USES)
Refunding bonds issued 265,085 - 30,000
Premium on bond issuance 35,223 - -
Payment to refunded bond escrow agent (299,121) - -
Transfers from other funds 219,110 22,412 152,468
Total Other Financing Sources (Uses) 220,297 22,412 182,468
Excess of Revenues and Other
Sources over (under) Expenditures
and Other Uses - - 113
Fund Balances - Beginning of fiscal year - - 1,458
Fund Balances - End of fiscal year $ - $ - $ 1,571
Michigan
174 174 174 174
FUND
$ - $ 3,257 $ 3,259
- 3,257 3,259
- - 256
- 1,128 1,128
- - 1,188
77,006 102,170 452,631
49,243 118,463 317,873
126,249 221,761 773,075
(126,249) (218,503) (769,817)
- - 295,085
- - 35,223
- - (299,121)
126,249 231,002 751,241
126,249 231,002 782,428
- 12,499 12,612
- 210,607 212,065
$ - $ 223,106 $ 224,677
TOTALS
STATE
BUILDING
AUTHORITY
SCHOOL
LOAN BOND
REDEMPTION
Michigan
175 175 175 175
Michigan
CAPITAL PROJ ECTS FUNDS
STATE TRUNKLINE FUND
Established pursuant to Michigan Compiled Laws Section 247.661,
this fund accounts for highway construction and maintenance. Its
annual budget is subject to legislative review and appropriation, but
the Transportation Commission has significant discretion in
determining the funding of individual projects. The majority of
projects in this fund are owned by the State. Financing consists
primarily of federal aid, local participation, and transfers from the
Michigan Transportation Fund. Expenditures and transfers are for
administration, highway maintenance and construction, debt service,
and various contractual obligations.
This fund also is used to record loans made to local units of
government for reconstructing and resurfacing roadways. Activities
of the Blue Water Bridge program, segregated as a separate fund
within the accounting system, are also reported within the State
Trunkline Fund.
STATE AERONAUTICS FUND
Established pursuant to Michigan Compiled Laws Section 259.34,
this fund accounts for airport improvement projects, of which a
majority are locally owned. Financing consists primarily of aviation
fuel taxes and federal contributions.
COMBINED STATE TRUNKLINE BOND PROCEEDS FUND
Established pursuant to Michigan Compiled Laws Section 247.668b,
this fund accounts for the proceeds of State trunkline revenue
dedicated bonds. These bonds are used in part to finance the costs
of road and bridge construction. All projects accounted for by this
fund are owned by the State.
COMBINED COMPREHENSIVE TRANSPORTATION
BOND PROCEEDS FUND
Established pursuant to Michigan Compiled Laws Section 247.668b,
this fund accounts for the proceeds of comprehensive transportation
revenue dedicated bonds. These bonds are used in part to finance
the costs of locally owned comprehensive transportation projects.
TRANSPORTATION RELATED TRUST FUNDS
The Michigan Department of Transportation is recognized as the
legal representative of the State, including all governmental
subdivisions, in the administration of the Federal Highway
Administration programs. The financing accounted for in this fund
consists primarily of revenues from the federal Highway Trust Fund
utilized to reimburse municipalities for road and bridge program
activities with very little State funds. All projects accounted for in
this fund are locally owned.
COMBINED RECREATION BOND FUND
Established in 1988, this fund has operated under Michigan
Compiled Law Sections 324.19601 – 324.19616, 324.71303,
324.71501 – 324.71514, and 324.74106 – 324.74113. The balances
in the fund are derived from proceeds and investment earnings
remaining from $50 million of general obligation bonds approved by
voters in November 1998 as part of a $675 million bond package
known as the “Clean Michigan Initiative” for both State and local
projects. The balance retained in the fund is currently being
appropriated for post completion inspection of local projects.
A 1988 bond package, which has been fully expended, provided $70
million of general obligation bonds to finance State and local public
recreation projects to construct, expand, and develop recreational
facilities at State parks, provide grants and loans to local units of
government for recreation projects and to discourage development
of open space and underdeveloped lands. Proceeds from the 1998
bond package have been used to improve State parks with the
installation or upgrade of drinking water systems or restroom
facilities and provide grants and loans to local units of government
for recreation projects.
In fiscal year 2011, bond balances related to the 1998 bond
package used to improve State parks were transferred to the State
Park Improvement Account within the Michigan Conservation and
Recreation Legacy Fund pursuant to Public Act 50 of 2011, Section
303. A significant portion of the remaining bond balances related to
the 1998 bond package used for grants to local units of government
were transferred to the Michigan Natural Resources Trust Fund
pursuant to Public Act 50 of 2011, Section 302.
2014 Comprehensive Annual Financi al Report
176 176 176 176
Michigan
STATE BUILDING AUTHORITY
The State Building Authority (SBA) was created pursuant to
Michigan Compiled Laws Section 830.412, to issue bonds to finance
the acquisition or renovation of buildings for use by the State or
public institutions of higher education, as well as State furnishings
and equipment. The SBA’s five-member board is appointed by the
Governor.
This capital projects fund accounts for the construction of State
projects, certain equipment financing, and higher education related
projects. Transfers out reflect transfers to the debt service fund of
proceeds dedicated for debt service during construction,
reimbursements of expenditures to the SBA Advance Financing
Fund, and the transfer of assets remaining after the completion of a
project to the debt service fund. In the State's Government-wide
Financial Statements, accumulated expenditures for incomplete
projects are reflected as "construction in progress" and completed
projects are recorded as "buildings."
ADVANCE FINANCING FUNDS
The Advance Financing Funds reflects the activities of two sub-
funds: the State Building Authority (SBA) Advance Financing Fund
and the Site Preparation Economic Development Fund.
The SBA Advance Financing Fund was administratively established
to account for expenditures incurred for equipment, higher
education, and State projects prior to the issuance of SBA bonds.
Appropriation acts and concurrent resolutions provide temporary
financing of such expenditures for legislatively authorized projects.
Expenditures on behalf of SBA are recorded when incurred. At
year-end, any deficit in the common cash pool is reclassified as an
interfund liability. In addition to advance expenditures, expenditures
financed by the General Fund or other sources related to the SBA
projects are recorded in this fund.
SBA, in its separately issued statements, does not recognize
liabilities for these projects until bonds or commercial paper are
issued; therefore, no receivable from SBA is recognized in this fund
prior to bond or commercial paper issuance. This results in the fund
showing a year-end fund balance deficit. SBA will reimburse this
fund by recording a transfer and the deficit attributable to the
bonded projects will be eliminated when SBA issues bonds or
obtains commercial paper.
The Site Preparation Economic Development Fund is created
through the annual appropriations process to account for
expenditures incurred to prepare and sell State owned sites
declared as surplus that would provide economic benefit to the area
or State. Expenditures are recorded when incurred. Sale proceeds
of fund properties are deposited into the fund.
2014 Comprehensive Annual Financi al Report
177 177 177 177
COMBINING BALANCE SHEET
CAPITAL PROJECTS FUNDS
SEPTEMBER 30, 2014
(In Thousands)
ASSETS
Current Assets:
Cash $ 91 $ - $ - $ -
Equity in common cash 848,564 12,059 28,094 11,765
Taxes, interest, and penalties receivable - 466 - -
Amounts due from other funds 6,290 - - -
Amounts due from component units 1,777 - - -
Amounts due from federal agencies 140,461 26,455 4,015 -
Amounts due from local units 9,618 3,653 1,680 -
Inventories 7,685 - - -
Investments - - - -
Other current assets 3,341 130 - -
Total Current Assets 1,017,828 42,764 33,789 11,765
Amounts due from local units 30,868 144 - -
Other noncurrent assets 58 - - -
Total Assets $ 1,048,754 $ 42,908 $ 33,789 $ 11,765
LIABILITIES
Current Liabilities:
Warrants outstanding $ 4,252 $ 4,834 $ - $ 35
Accounts payable and other liabilities 184,772 18,387 3,645 1,818
Amounts due to other funds 3,802 74 - -
Amounts due to component units 206 - - -
Bonds and notes payable - - - -
Interest payable - - - -
Unearned revenue 2,562 - 174 -
Total Current Liabilities 195,594 23,295 3,819 1,854
Long-Term Liabilities:
Unearned revenue 34 - - -
Total Liabilities 195,628 23,295 3,819 1,854
DEFERRED INFLOWS OF RESOURCES 150 3 - -
FUND BALANCES
Nonspendable 7,685 - - -
Restricted 845,291 19,609 29,970 9,911
Unassigned - - - -
Total Fund Balances 852,976 19,609 29,970 9,911
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances $ 1,048,754 $ 42,908 $ 33,789 $ 11,765
STATE
Michigan
FUND FUND FUND FUND
BOND PROCEEDS
TRANSPORTATION
TRUNKLINE BOND PROCEEDS
STATE TRUNKLINE
COMPREHENSIVE
COMBINED
COMBINED
AERONAUTICS
STATE
178 178 178 178
$ - $ - $ - $ - $ 91
2,342 111 - - 902,935
- - - - 466
- - - 30,546 36,837
- - - - 1,777
41,455 - - - 212,386
34,202 - - - 49,153
- - - - 7,685
- - 26,576 - 26,576
- - - - 3,472
77,999 111 26,576 30,546 1,241,378
- - - - 31,011
- - - - 58
$ 77,999 $ 111 $ 26,576 $ 30,546 $ 1,272,448
$ 7 $ - $ - $ - $ 9,129
75,115 - 326 25,258 309,321
- - 30,569 7,984 42,429
- - - - 206
- - 99,105 - 99,105
- - 8 - 8
2,878 - - - 5,614
77,999 - 130,008 33,242 465,811
- - - - 34
77,999 - 130,008 33,242 465,845
- - - - 153
- - - - 7,685
- 111 - - 904,892
- - (103,432) (2,696) (106,128)
- 111 (103,432) (2,696) 806,449
$ 77,999 $ 111 $ 26,576 $ 30,546 $ 1,272,448
BOND FUND
COMBINED
TOTALS
FINANCING
ADVANCE
AUTHORITY
BUILDING
STATE
FUNDS TRUST FUNDS
RELATED
TRANSPORTATION
Michigan
RECREATION
179 179 179 179
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
COMPREHENSIVE
STATE STATE STATE TRUNKLINE TRANSPORTATION
TRUNKLINE AERONAUTICS BOND PROCEEDS BOND PROCEEDS
FUND
REVENUES
Taxes $ - $ 5,056 $ - $ -
From federal agencies 818,219 74,101 58,450 -
From local agencies 10,518 61 149 -
From services 3,501 789 - -
From licenses and permits 16,518 303 - -
Miscellaneous 42,767 646 4,608 366
Total Revenues 891,522 80,956 63,207 366
EXPENDITURES
Current:
Education - - - -
Conservation, environment,
recreation, and agriculture - - - -
Transportation 660,071 89,836 5,308 7,124
Capital outlay 889,858 371 71,371 250
Debt service:
Capital lease payments 791 - - -
Total Expenditures 1,550,719 90,207 76,679 7,374
Excess of Revenues over (under)
Expenditures (659,198) (9,250) (13,472) (7,009)
OTHER FINANCING SOURCES (USES)
Capital lease acquisitions 475 - - -
Proceeds from sale of capital assets 1,820 - - -
Transfers from other funds 950,012 6,000 - -
Transfers to other funds (224,650) (3,464) (45,799) -
Total Other Financing Sources (Uses) 727,657 2,536 (45,799) -
Excess of Revenues and Other
Sources over (under) Expenditures
and Other Uses 68,459 (6,715) (59,271) (7,009)
Fund Balances - Beginning of
fiscal year 784,517 26,324 89,242 16,920
Fund Balances - End of fiscal year $ 852,976 $ 19,609 $ 29,970 $ 9,911
FUND
Michigan
FUND
COMBINED
COMBINED
FUND
180 180 180 180
TRANSPORTATION STATE ADVANCE
BUILDING FINANCING
$ - $ - $ - $ - $ 5,056
314,204 - - - 1,264,974
- - - - 10,727
- - - - 4,289
- - - - 16,821
1,255 - 2 - 49,643
315,459 - 2 - 1,351,511
- - 61,145 930 62,075
- 29 - - 29
315,459 - - - 1,077,797
- - 29,255 1,576 992,682
- - - - 791
315,459 29 90,400 2,506 2,133,373
- (28) (90,398) (2,506) (781,862)
- - - - 475
- - - - 1,820
- - - 5,696 961,708
- - (5,704) - (279,617)
- - (5,704) 5,696 684,385
- (28) (96,102) 3,190 (97,477)
- 140 (7,330) (5,886) 903,926
$ - $ 111 $ (103,432) $ (2,696) $ 806,449
Michigan
TRUST FUNDS BOND FUND AUTHORITY FUNDS
COMBINED
RECREATION RELATED
TOTALS
181 181 181 181
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
CAPITAL PROJECTS FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
STATE TRUNKLINE FUND STATE AERONAUTICS FUND
Statutory/Budgetary Basis BUDGET ACTUAL BUDGET ACTUAL
REVENUES AND OTHER SOURCES
Taxes $ - $ - $ - $ 5,056 $ 5,056 $ -
From federal agencies 818,219 818,219 - 74,101 74,101 -
From local agencies 10,518 10,518 - 61 61 -
From services 3,501 3,501 - 789 789 -
From licenses and permits 16,518 16,518 - 303 303 -
Miscellaneous 42,767 42,767 - 646 646 -
Proceeds from sale of capital assets 1,820 1,820 - - - -
Transfers in 950,012 950,012 - 6,000 6,000 -
Total Revenues and Other Sources 1,843,353 1,843,353 - 86,956 86,956 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Transportation 1,852,524 1,807,297 45,227 98,242 95,858 2,384
Total Expenditures, Transfers
Out, and Encumbrances 1,852,524 1,807,297 45,227 98,242 95,858 2,384
Revenues and Other Sources
over (under) Expenditures,
Encumbrances, and Other Uses
(Statutory/budgetary basis) $ (9,171) 36,056 $ 45,227 $ (11,286) (8,901) $ 2,384
Reconciling Items:
Encumbrances at September 30 32,403 2,186
Funds not annually budgeted - -
Net Reconciling Items 32,403 2,186
Excess of Revenues and Other
Sources over (under) Expenditures
and Other Uses (GAAP Basis) 68,459 (6,715)
FUND BALANCES (GAAP BASIS)
Beginning balances 784,517 26,324
Ending balances (GAAP Basis) $ 852,976 $ 19,609
VARIANCE VARIANCE
Michigan
182 182 182 182
COMBINED
COMBINED COMPREHENSIVE
STATE TRUNKLINE TRANSPORTATION
BOND PROCEEDS BOND PROCEEDS
FUND FUND TRUST FUNDS
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL
$ - $ - $ - $ - $ - $ -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
(59,271) (7,009) - (28) (96,102) 3,190
(59,271) (7,009) - (28) (96,102) 3,190
(59,271) (7,009) - (28) (96,102) 3,190
89,242 16,920 - 140 (7,330) (5,886)
$ 29,970 $ 9,911 $ - $ 111 $ (103,432) $ (2,696)
This schedule continued on next page.
BOND FUND AUTHORITY FUNDS
Michigan
FUNDS NOT ANNUALLY BUDGETED
FINANCING
ADVANCE TRANSPORTATION
RELATED RECREATION
COMBINED
BUILDING
STATE
183 183 183 183
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
CAPITAL PROJECTS FUNDS (Continued)
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
TOTALS
Statutory/Budgetary Basis BUDGET ACTUAL
REVENUES AND OTHER SOURCES
Taxes $ 5,056 $ 5,056 $ -
From federal agencies 892,320 892,320 -
From local agencies 10,579 10,579 -
From services 4,289 4,289 -
From licenses and permits 16,821 16,821 -
Miscellaneous 43,413 43,413 -
Proceeds from sale of capital assets 1,820 1,820 -
Transfers in 956,012 956,012 -
Total Revenues and Other Sources 1,930,310 1,930,310 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Transportation 1,950,766 1,903,155 47,611
Total Expenditures, Transfers
Out, and Encumbrances 1,950,766 1,903,155 47,611
Revenues and Other Sources
over (under) Expenditures,
Encumbrances, and Other Uses
(Statutory/budgetary basis) $ (20,456) 27,155 $ 47,611
Reconciling Items:
Encumbrances at September 30 34,590
Funds not annually budgeted (159,221)
Net Reconciling Items (124,631)
Excess of Revenues and Other
Sources over (under) Expenditures
and Other Uses (GAAP Basis) (97,477)
FUND BALANCES (GAAP BASIS)
Beginning balances 903,926
Ending balances (GAAP Basis) $ 806,449
VARIANCE
Michigan
184 184 184 184
Michigan
PERMANENT FUNDS
MICHIGAN NATURAL RESOURCES TRUST FUND
Article 9, Section 35, of the State Constitution created the Michigan
Natural Resources Trust Fund (MNRTF). The fund, established in
1985, operates under Sections 324.1901 - 324.1908 of the Michigan
Compiled Laws. The State Treasurer directs fund investments,
which include fixed income and equity investments.
In May of 2011, the MNRTF reached the constitutional limit of $500
million on the investment corpus. As a result, the MNRTF no longer
receives revenue generated from oil and gas bonuses, rentals, and
royalties from State owned land. Constitutionally, these revenue
sources are now deposited into the Michigan State Parks
Endowment Fund.
Constitutional provisions limit all future MNRTF appropriations to
investment and other miscellaneous income of the fund.
Appropriations are used to fund grants to local units of government
as well as State agencies to acquire land or develop public
recreation facilities and to fund payments in lieu of property taxes on
State lands acquired by the fund.
MICHIGAN STATE PARKS ENDOWMENT FUND
Established in 1994, the Michigan State Parks Endowment Fund
(MSPEF) is governed by the provisions of Michigan Compiled Laws
Section 324.74119 to finance operations, maintenance, and capital
improvements at Michigan State parks. The voters approved a
constitutional amendment in August 2002 that changed the
distribution formula and allows the State Treasurer to invest in
equity securities and other types of investments.
The fund was established with a $40 million transfer from the sale of
the Accident Fund of Michigan to provide funds for permanent
investment. Currently all revenues previously attributable to the
Michigan Natural Resources Trust Fund from oil and gas bonuses,
rentals, and royalties from State-owned land are deposited in the
MSPEF until its accumulated principal is capped at $800 million.
The legislature is limited to appropriating no more than 50% of
revenues from oil and gas bonuses, rentals, and royalties from
State-owned land plus interest and earnings and any private
contributions or other revenue to the endowment fund. When the
endowment fund’s principal balance reaches $800 million, only the
interest and earnings in excess of the amount needed to maintain
the $800 million principal limit, annually adjusted for inflation, may
be expended.
MICHIGAN VETERANS' TRUST FUND
Article 9, Section 37 of the State Constitution created this fund to
finance programs to assist veterans and their beneficiaries. A
seven-member board of trustees governs the fund. Resources are
provided by investment and common cash earnings. Expenditures
and transfers out reflect grants to veterans and their widows or
dependents, and administrative costs at both the State and local
level. The fund is administered within the Department of Military
and Veterans Affairs.
2014 Comprehensive Annual Financi al Report
185 185 185 185
COMBINING BALANCE SHEET
PERMANENT FUNDS
SEPTEMBER 30, 2014
(In Thousands)
MICHIGAN
NATURAL
TRUST FUND TRUST FUND
ASSETS
Current Assets:
Equity in common cash $ 74,024 $ 46,914 $ 1,521 $ 122,458
Amounts due from local units - - 293 293
Other current assets 2,739 5,499 279 8,516
Total Current Assets 76,762 52,413 2,092 131,267
Investments 619,471 203,939 52,201 875,611
Total Assets $ 696,233 $ 256,351 $ 54,294 $ 1,006,878
LIABILITIES
Current Liabilities:
Warrants outstanding $ 4 $ 22 $ 1 $ 28
Accounts payable and other liabilities 9,606 2,022 15 11,644
Amounts due to other funds 15 216 6 237
Total Current Liabilities 9,625 2,261 22 11,908
Total Liabilities 9,625 2,261 22 11,908
FUND BALANCES
Nonspendable 500,000 213,527 50,000 763,527
Restricted 186,607 40,563 4,272 231,442
Total Fund Balances 686,607 254,090 54,272 994,970
Total Liabilities and Fund Balances $ 696,233 $ 256,351 $ 54,294 $ 1,006,878
Michigan
MICHIGAN
TOTALS
VETERANS' RESOURCES
FUND
STATE PARKS
ENDOWMENT
MICHIGAN
186 186 186 186
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
PERMANENT FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
MICHIGAN
NATURAL
TRUST FUND TRUST FUND
REVENUES
From federal agencies $ - $ 6 $ - $ 6
Miscellaneous 41,376 57,932 4,193 103,501
Total Revenues 41,376 57,938 4,193 103,506
EXPENDITURES
Current:
General government 1,814 82 1 1,898
Public safety and corrections - - 3,342 3,342
Conservation, environment,
recreation, and agriculture 2,372 22,610 - 24,982
Capital outlay 44,401 5,992 - 50,393
Total Expenditures 48,588 28,684 3,343 80,615
Excess of Revenues over (under)
Expenditures (7,212) 29,254 850 22,891
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets 20 - - 20
Transfers to other funds (17) (287) (9) (313)
Total Other Financing Sources (Uses) 3 (287) (9) (293)
Excess of Revenues and Other
Sources over (under) Expenditures
and Other Uses (7,209) 28,966 841 22,599
Fund Balances - Beginning
of fiscal year 693,816 225,124 53,430 972,371
Fund Balances - End of fiscal year $ 686,607 $ 254,090 $ 54,272 $ 994,970
TOTALS FUND
STATE PARKS
ENDOWMENT
Michigan
MICHIGAN
VETERANS' RESOURCES
MICHIGAN
187 187 187 187
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
PERMANENT FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
MICHIGAN NATURAL
RESOURCES TRUST FUND PARKS ENDOWMENT FUND
Statutory/Budgetary Basis BUDGET ACTUAL VARIANCE BUDGET ACTUAL VARIANCE
REVENUES AND OTHER SOURCES
From federal agencies $ - $ - $ - $ 6 $ 6 $ -
Miscellaneous 41,376 41,376 - 57,932 57,932 -
Proceeds from sale of capital assets 20 20 - - - -
Total Revenues and Other Sources 41,396 41,396 - 57,938 57,938 -
EXPENDITURES, TRANSFERS OUT,
AND ENCUMBRANCES - BY BRANCH,
DEPARTMENT/AGENCY
Military and Veterans Affairs - - - - - -
Natural Resources 97,829 86,318 11,510 31,481 31,462 20
Treasury 1,842 1,814 28 82 82 -
Total Expenditures, Transfers Out,
and Encumbrances 99,671 88,132 11,538 31,564 31,544 20
Revenues and Other Sources over (under)
Expenditures, Encumbrances, and Other
Uses (Statutory/budgetary basis) $ (58,275) (46,736) $ 11,538 $ 26,374 26,394 $ 20
Reconciling Items:
Encumbrances at September 30 39,528 2,573
Net Reconciling Items 39,528 2,573
Excess of Revenues and Other Sources
over (under) Expenditures and
Other Uses (GAAP Basis) (7,209) 28,966
FUND BALANCES (GAAP BASIS)
Beginning balances 693,816 225,124
Ending balances (GAAP Basis) $ 686,607 $ 254,090
Michigan
MICHIGAN STATE
188 188 188 188
MICHIGAN VETERANS' TRUST FUND TOTALS
BUDGET ACTUAL VARIANCE BUDGET ACTUAL VARIANCE
$ - $ - $ - $ 6 $ 6 $ -
4,193 4,193 - 103,501 103,501 -
- - - 20 20 -
4,193 4,193 - 103,527 $ 103,527 $ -
5,195 3,353 1,842 5,195 3,353 1,842
- - - 129,310 117,780 11,530
1 1 - 1,925 1,898 28
5,196 3,354 1,842 136,430 123,030 13,400
$ (1,003) 839 $ 1,842 $ (32,904) (19,503) $ 13,400
2 42,102
2 42,102
841 22,599
53,430 972,371
$ 54,272 $ 994,970
Michigan
189 189 189 189
Michigan
2014 Comprehensive Annual Financi al Report
190 190 190 190
Michigan
ENTERPRISE FUNDS
ATTORNEY DISCIPLINE SYSTEM
The Attorney Discipline System (ADS) consists of the Attorney
Grievance Commission and the Attorney Discipline Board. This
system provides the courts, legal profession, and the general
public with a means to ensure that complaints against attorneys for
potential violations of the Court Rules and the Michigan Rules of
Professional Conduct are properly heard and investigated, and that
sanctions are imposed where required. ADS is under the
supervision of the Michigan Supreme Court which also approves
the two agencies’ budgets.
ADS receives revenue in the form of mandatory annual
assessments on members of the State Bar of Michigan, provided
for by Court Rules. This system also receives other revenue,
primarily through the assessment of administrative fees and the
recovery of costs, including subpoena fees and transcript costs.
LIQUOR PURCHASE REVOLVING FUND
Michigan Compiled Laws (MCL) Section 436.1221 authorized the
Liquor Control Commission, within the Department of Licensing and
Regulatory Affairs, to maintain a revolving fund that is to be derived
from the money deposited to the credit of the commission with the
State Treasurer. Under State monopoly, liquor is sold at wholesale
through a State controlled, privately operated distribution system.
The fund accounts for the sales of and the replenishing and
transporting of the liquor stock. Administrative, warehousing, and
delivery costs are paid for through the fund. At the end of each
fiscal year, the net income of the fund is transferred to the General
Fund in accordance with MCL Section 18.1435.
2014 Comprehensive Annual Financi al Report
191 191 191 191
COMBINING STATEMENT OF NET POSITION
ENTERPRISE FUNDS
SEPTEMBER 30, 2014
(In Thousands)
LIQUOR
ATTORNEY PURCHASE
DISCIPLINE REVOLVING
SYSTEM FUND
ASSETS
Current Assets:
Cash $ 939 $ - $ 940
Equity in common cash - 71,525 71,525
Inventories - 7,939 7,939
Investments 5,246 - 5,246
Other current assets 207 6,440 6,647
Total Current Assets 6,392 85,904 92,296
Capital Assets:
Buildings and equipment 548 - 548
Allowance for depreciation (514) - (514)
Total capital assets 34 - 34
Other noncurrent assets 35 - 35
Total Assets $ 6,461 $ 85,904 $ 92,365
LIABILITIES
Current Liabilities:
Warrants outstanding $ - $ 4,561 $ 4,561
Accounts payable and other liabilities 392 79,121 79,513
Amounts due to other funds - 288 288
Unearned revenue 505 - 505
Current portion of other long-term obligations - 661 661
Total Current Liabilities 897 84,631 85,528
Long-Term Liabilities:
Amounts due to other funds - 25 25
Noncurrent portion of other
long-term obligations - 373 373
Total Liabilities 897 85,029 85,925
NET POSITION
Net investment in capital assets $ 34 $ - $ 34
Unrestricted 5,530 876 6,406
Total Net Position $ 5,564 $ 876 $ 6,440
Michigan
TOTALS
192 192 192 192
COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
ENTERPRISE FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
LIQUOR
ATTORNEY PURCHASE
DISCIPLINE REVOLVING
SYSTEM FUND TOTALS
OPERATING REVENUES
Operating revenues $ 4,867 $ 957,054 $ 961,921
Total Operating Revenues 4,867 957,054 961,921
OPERATING EXPENSES
Salaries, wages, and other administrative 4,761 78,891 83,652
Depreciation 37 - 37
Purchases for resale - 698,828 698,828
Premiums and claims - 24 24
Other operating expenses - 1,532 1,532
Total Operating Expenses 4,798 779,276 784,074
Operating Income (Loss) 69 177,778 177,846
NONOPERATING REVENUES (EXPENSES)
Interest revenue 20 67 87
Other nonoperating expense - 3 3
Total Nonoperating
Revenues (Expenses) 20 70 90
Income (Loss) Before Transfers 89 177,848 177,936
TRANSFERS
Transfers to other funds - (177,848) (177,848)
Change in net position 89 - 89
Total net position - Beginning
of fiscal year 5,475 876 6,351
Total net position - End of fiscal year $ 5,564 $ 876 $ 6,440
Michigan
193 193 193 193
COMBINING STATEMENT OF CASH FLOWS
ENTERPRISE FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
LIQUOR
ATTORNEY PURCHASE
DISCIPLINE REVOLVING
SYSTEM FUND
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ - $ 957,054 $ 957,054
Membership dues 4,818 - 4,818
Payments to employees (3,692) (21,050) (24,743)
Payments to suppliers (869) (764,768) (765,637)
Other receipts 101 (251) (150)
Other payments (288) (1,557) (1,845)
Net cash provided (used)
by operating activities $ 70 $ 169,428 $ 169,498
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers to other funds $ - $ (177,848) $ (177,848)
Net cash provided (used)
by noncapital financing activities $ - $ (177,848) $ (177,848)
CASH FLOW FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition and construction of capital assets $ (13) $ - $ (13)
Net cash provided (used) by capital
and related financing activities $ (13) $ - $ (13)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment securities $ (26) $ - $ (26)
Interest and dividends on investments 20 67 87
Net cash provided (used)
by investing activities $ (6) $ 67 $ 61
Net cash provided (used) - all activities $ 51 $ (8,353) $ (8,302)
Cash and cash equivalents
at beginning of year 889 75,317 76,206
Cash and cash equivalents
at end of year $ 939 $ 66,964 $ 67,904
RECONCILIATION OF CASH
AND CASH EQUIVALENTS
Per Statement of Net Position Classifications:
Cash $ 939 $ - $ 940
Equity in common cash - 71,525 71,525
Warrants outstanding - (4,561) (4,561)
Cash and cash equivalents at end of year $ 939 $ 66,964 $ 67,904
RECONCILIATION OF OPERATING INCOME
(LOSS) TO NET CASH PROVIDED
(USED) BY OPERATING ACTIVITIES
Operating income (loss) $ 69 $ 177,778 $ 177,846
Adjustments to Reconcile Operating Income
to Net Cash Provided (Used)
by Operating Activities:
Depreciation expense 37 - 37
Other nonoperating revenue - 3 3
Net Changes in Assets and Liabilities:
Inventories - (725) (725)
Other assets (net) (73) 356 283
Accounts payable and other liabilities (37) (7,984) (8,021)
Unearned revenue 73 - 73
Net cash provided (used)
by operating activities $ 70 $ 169,428 $ 169,498
Michigan
TOTALS
194 194 194 194
Michigan
INTERNAL SERVICE FUNDS
CORRECTIONAL INDUSTRIES REVOLVING FUND
Authorized by Michigan Compiled Laws (MCL) Section 800.325, this
fund accounts for the financial transactions of a manufacturing and
processing industry, employing inmates incarcerated in Michigan’s
correctional institutions. MCL Section 800.326 expanded the fund's
sales market to include institutions of this or any other state or
political subdivision thereof, the federal government or its agencies,
a foreign government or agencies of a foreign government, a private
vendor that operates the youth correctional facility, and certain tax-
exempt organizations.
Executive Order 1992-13 stipulates that the fund repay the General
Fund for the cost of building and equipping prison factories included
as part of new prison construction. The costs of buildings and
equipment are to be repaid over 30 years and 10 years respectively.
The minimum required payment was made in fiscal year 2014.
STATE SPONSORED GROUP INSURANCE FUND
This fund was administratively established to reflect the financial
transactions of the State sponsored insurance plans that provide
health, long-term disability, life, vision, and dental coverage for
participating employees. The plans' funding methods range from
those where the State is fully self-insured to those where an
outside carrier assumes partial risk on a contracted basis. A note
to the financial statements entitled “Risk Management” provides
additional information about this fund.
The amounts reflected as amounts due from other funds include
reclassifications of other funds' negative balances in the common
cash pool.
INFORMATION TECHNOLOGY FUND
This fund was created by administrative decision to provide
telecommunication and information technology services for State
agencies. User agencies are billed for the cost of such services.
During fiscal year 2002, the use of this fund was expanded to
account for all information technology activities of the executive
branch as prescribed in Executive Order 2001-03.
OFFICE SERVICES REVOLVING FUND
Created in 1952, this fund operates under Michigan Compiled
Laws Section 18.1269 to provide services in the following areas:
printing, reproduction, microfilm, mailing, distribution of federal and
state surplus property, and materials management. The cost of the
services or supplies is charged to user departments and agencies.
Resultant revenue is credited to the revolving fund and is used for
administration and operation of the program, including purchase of
necessary equipment. During fiscal year 2002, the use of the fund
was expanded to account for the purchase of bulk gas used by
State agencies.
MOTOR TRANSPORT FUND
This fund was created by Michigan Compiled Laws Section 18.1213
to provide vehicle and travel services for State agencies. Activities
include lease, purchase, replacement, and maintenance of
automotive equipment. Vehicles are available to agencies on a
permanently assigned basis or through the motor pool for short-term
usage and are furnished to agencies at a rate sufficient to cover all
costs of operation and maintenance. Agencies are billed on a
monthly basis for services rendered.
RISK MANAGEMENT FUND
Administratively established, this fund accounts for certain
centralized risk management functions performed by the
Department of Technology, Management and Budget for other State
agencies. Currently, the fund has assumed a degree of risk for the
automotive liability. This activity and administrative functions are
recorded as operating activity of the fund. An activity of the fund for
which the fund assumes no risk is the centralized processing of
workers’ compensation payments for State agencies. Workers’
compensation long-term claim liabilities are recorded in the
Government-wide Financial Statements and the related current year
workers’ compensation expenditures are recorded in the applicable
funds.
2014 Comprehensive Annual Financi al Report
195 195 195 195
COMBINING STATEMENT OF NET POSITION
INTERNAL SERVICE FUNDS
SEPTEMBER 30, 2014
(In Thousands)
STATE
SPONSORED
GROUP INFORMATION
INSURANCE TECHNOLOGY
ASSETS
Current Assets:
Equity in common cash $ - $ 297,425 $ 4,953
Amounts due from other funds - 2,646 -
Amounts due from component units - 27 -
Inventories 7,531 - 365
Other current assets 358 7,192 7,520
Total Current Assets 7,889 307,290 12,838
Capital Assets:
Land and other non-depreciable assets - - 9,170
Buildings and equipment 28,370 - 996,572
Allowance for depreciation (15,625) - (628,718)
Total capital assets 12,745 - 377,023
Other noncurrent assets - 700 -
Total Assets $ 20,634 $ 307,990 $ 389,861
LIABILITIES
Current Liabilities:
Warrants outstanding $ 26 $ 2 $ 623
Accounts payable and other liabilities 1,086 14,243 67,394
Amounts due to other funds 6,691 - 3,684
Amounts due to component units - - 25
Interest payable 2,150 - -
Unearned revenue - 112 30,748
Current portion of other long-term obligations 466 38,083 17,850
Total Current Liabilities 10,419 52,441 120,323
Long-Term Liabilities:
Advances from other funds 2,702 - -
Amounts due to other funds 2 - 235
Unearned revenue - - 199,380
Noncurrent portion of other long-term obligations 227 90,953 20,684
Total Liabilities $ 13,351 $ 143,394 $ 340,621
NET POSITION
Net investment in capital assets $ 12,745 $ - $ 358,993
Restricted for other purposes - - -
Unrestricted (5,462) 164,596 (309,754)
Total Net Position $ 7,283 $ 164,596 $ 49,240
Michigan
FUND
CORRECTIONAL
INDUSTRIES
REVOLVING
FUND FUND
196 196 196 196
OFFICE
SERVICES RISK
REVOLVING MANAGEMENT
$ 6,588 $ 7,740 $ 6,311 $ 323,017
- - 6,569 9,215
- - - 27
2,234 362 - 10,492
5,210 1,560 1,500 23,340
14,032 9,662 14,380 366,091
- - - 9,170
16,053 8,926 - 1,049,920
(10,904) (8,803) - (664,050)
5,149 123 - 395,040
- - 50 750
$ 19,182 $ 9,785 $ 14,430 $ 761,881
$ 51 $ 7 $ 16 $ 726
8,235 2,411 825 94,194
301 55 10 10,742
- - - 25
- - - 2,150
70 - - 30,930
612 152 1,527 58,690
9,270 2,625 2,378 197,457
- - - 2,702
35 3 1 276
88 - - 199,467
578 247 6,185 118,873
$ 9,970 $ 2,876 $ 8,564 $ 518,776
$ 5,149 $ 123 $ - $ 377,010
- 6,786 - 6,786
4,062 - 5,866 (140,691)
$ 9,211 $ 6,909 $ 5,866 $ 243,105
Michigan
MOTOR
TRANSPORT
FUND TOTALS FUND FUND
197 197 197 197
Michigan
COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
INTERNAL SERVICE FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
STATE
SPONSORED
GROUP INFORMATION
INSURANCE TECHNOLOGY
OPERATING REVENUES
Operating revenues $ 24,442 $ 755,536 $ 628,547
Total Operating Revenues 24,442 755,536 628,547
OPERATING EXPENSES
Salaries, wages, and other administrative 13,121 22,398 557,464
Interest expense - - 3
Depreciation 920 - 75,890
Purchases for resale - - -
Purchases for prison industries 10,138 - -
Premiums and claims - 715,136 -
Other operating expenses:
Leased vehicles expense - - -
Vehicle maintenance expense - - -
Total other operating expenses - - -
Total Operating Expenses 24,178 737,534 633,358
Operating Income (Loss) 264 18,002 (4,810)
NONOPERATING REVENUES (EXPENSES)
Interest revenue - 230 -
Other nonoperating revenues - - 252
Interest expense (7) - (469)
Other nonoperating expense (1,680) - -
Total Nonoperating Revenues (Expenses) (1,687) 230 (217)
Income (Loss) Before Transfers (1,423) 18,233 (5,027)
CAPITAL CONTRIBUTIONS AND TRANSFERS
Transfers from other funds - - 2,500
Transfers to other funds (216) - (2,962)
Total Transfers In (Out) (216) - (462)
Change in net position (1,639) 18,233 (5,489)
Total net position - Beginning of fiscal year 8,922 146,363 54,729
Total net position - End of fiscal year $ 7,283 $ 164,596 $ 49,240
FUND
CORRECTIONAL
INDUSTRIES
REVOLVING
FUND FUND
198 198 198 198
OFFICE
SERVICES RISK
REVOLVING MANAGEMENT
$ 120,418 $ 66,667 $ 4,818 $ 1,600,430
120,418 66,667 4,818 1,600,430
27,792 6,320 2,917 630,012
- - - 3
1,171 29 - 78,009
90,341 - - 90,341
- - - 10,138
- 943 465 716,545
- 26,653 - 26,653
- 33,463 - 33,463
- 60,116 - 60,117
119,304 67,408 3,382 1,585,164
1,114 (741) 1,437 15,265
- - - 230
- 33 - 285
- - - (476)
- - - (1,680)
- 33 - (1,641)
1,114 (708) 1,437 13,625
- - - 2,500
(217) (60) (31) (3,485)
(217) (60) (31) (985)
897 (769) 1,406 12,639
8,314 7,678 4,461 230,466
$ 9,211 $ 6,909 $ 5,866 $ 243,105
FUND TOTALS
Michigan
MOTOR
TRANSPORT
FUND FUND
199 199 199 199
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 24,499 $ 756,036 $ 717,104
Payments to employees (9,746) - (206,546)
Payments to suppliers (8,660) (371,661) (339,478)
Claims paid - (375,544) -
Other receipts - - -
Other payments (3,827) - -
Net cash provided (used) by operating activities $ 2,266 $ 8,832 $ 171,080
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Loans or loan repayments from other funds $ 6,569 $ - $ -
Loans or loan repayments to other funds (8,518) - (5,664)
Transfers from other funds - - 2,500
Transfers to other funds (216) - (2,962)
Net cash provided (used) by noncapital
financing activities $ (2,165) $ - $ (6,125)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition and construction of capital assets $ (25) $ - $ (147,321)
Interest paid (7) - -
Capital lease payments (including imputed
interest expense) - - (13,083)
Proceeds from sale of capital assets - - -
Net cash provided (used) by capital and related
financing activities $ (32) $ - $ (160,404)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest and dividends on investments $ - $ 230 $ -
Net cash provided (used)
by investing activities $ - $ 230 $ -
Net cash provided (used) - all activities $ 69 $ 9,062 $ 4,551
Cash and cash equivalents at beginning of year (96) 288,360 (221)
Cash and cash equivalents at end of year $ (26) $ 297,422 $ 4,330
RECONCILIATION OF CASH AND CASH EQUIVALENTS
Per Statement of Net Position Classifications:
Equity in common cash $ - $ 297,425 $ 4,953
Warrants outstanding (26) (2) (623)
Cash and cash equivalents at end of year $ (26) $ 297,422 $ 4,330
RECONCILIATION OF OPERATING INCOME
(LOSS) TO NET CASH PROVIDED
(USED) BY OPERATING ACTIVITIES
Operating income (loss) $ 264 $ 18,002 $ (4,810)
Adjustments to Reconcile Operating Income to Net
Cash Provided (Used) by Operating Activities:
Depreciation expense 920 - 75,890
Net Changes in Assets and Liabilities:
Inventories 1,547 - (86)
Other assets (net) 57 4,133 (1,148)
Accounts payable and other liabilities (520) (13,270) 12,979
Unearned revenue - (33) 88,256
Net cash provided (used) by operating activities $ 2,266 $ 8,832 $ 171,080
SCHEDULE OF NONCASH INVESTING, CAPITAL,
AND FINANCING ACTIVITIES
Cost of capital assets acquisitions
financed by capital leases $ - $ - $ 7,653
Capital lease liabilities entered into during the year - - (7,653)
Gain (loss) on disposal of capital assets (1,680) - -
Total noncash investing, capital, and
financing activities $ (1,680) $ - $ -
Michigan
FUND FUND
CORRECTIONAL
INDUSTRIES
REVOLVING
FUND
STATE
SPONSORED
GROUP INFORMATION
INSURANCE TECHNOLOGY
200 200 200 200
OFFICE
SERVICES
REVOLVING
$ 118,824 $ 66,570 $ 4,818 $ 1,687,851
(11,711) (3,238) (582) (231,822)
(107,940) (64,550) (2,548) (894,837)
- - (329) (375,873)
- 96 - 96
- - - (3,827)
$ (827) $ (1,122) $ 1,359 $ 181,588
$ - $ 5,664 $ 8,130 $ 20,362
- - (6,569) (20,751)
- - - 2,500
(217) (60) (31) (3,485)
$ (217) $ 5,603 $ 1,530 $ (1,374)
(1,576) $ - $ - $ (148,922)
- - - (7)
- - - (13,083)
- 33 - 33
$ (1,576) $ 33 $ - $ (161,980)
$ - $ - $ - $ 230
$ - $ - $ - $ 230
$ (2,620) $ 4,514 $ 2,889 $ 18,465
9,158 3,220 3,406 303,827
$ 6,538 $ 7,733 $ 6,295 $ 322,292
$ 6,588 $ 7,740 $ 6,311 $ 323,017
(51) (7) (16) (726)
$ 6,537 $ 7,733 $ 6,295 $ 322,291
$ 1,114 $ (741) $ 1,437 $ 15,265
1,171 29 - 78,009
638 25 - 2,124
(1,574) 85 - 1,552
(2,333) (520) (77) (3,742)
158 - - 88,380
$ (827) $ (1,122) $ 1,359 $ 181,588
$ - $ - $ - $ 7,653
- - - (7,653)
- - - (1,680)
$ - $ - $ - $ (1,680)
Michigan
FUND
MOTOR
TRANSPORT
FUND FUND TOTALS
RISK
MANAGEMENT
201 201 201 201
Michigan
PENSION (AND OTHER EMPLOYEE BENEFIT) TRUST FUNDS
Notes to the financial statements, entitled "Deferred Compensation
Plans," "Pension Benefits,” and “Other Postemployment Benefits,"
include additional information regarding the following funds and
plans.
STATE OF MICHIGAN DEFERRED COMPENSATION
FUNDS
The State of Michigan 457 Plan and the State of Michigan 401k Plan
are combined for reporting purposes. Both funds were
administratively established to account for deferred compensation
plans that permit State employees to defer a portion of their income
until future years.
LEGISLATIVE PENSION BENEFITS FUND
This fund was established to account for pension benefits of the
Legislative Retirement System (LRS) created by Michigan Compiled
Laws (MCL) Section 38.1001. LRS’s pension plan provides benefits
for members of the Legislature, the presiding officers, and their
surviving spouses or children. Participants in the system have a
deduction from each salary payment to partially finance the fund.
Legislative appropriations, interest on fund investments, and court
fees complete the financing.
MCL Section 38.1018 amended LRS’s enabling legislation to
provide that individuals who first became a legislator or lieutenant
governor on or after March 31, 1997, participate in the State’s
defined contribution plan.
LEGISLATIVE OTHER POSTEMPLOYMENT BENEFITS
FUND
This fund was established to account for other postemployment
benefits of the Legislative Retirement System (LRS) created by
Michigan Compiled Laws Section 38.1001. LRS’s health plan
provides its members with health, dental, vision, and hearing
insurance coverage. This fund includes health coverage for
participants of both the defined benefit pension plan and the defined
contribution retirement plan.
STATE POLICE PENSION BENEFITS FUND
This fund was established to account for pension benefits of the
Michigan State Police Retirement System (MSPRS) created by
Michigan Compiled Laws Section 38.1605, which is administered by
a nine-member board under the direction of a chairperson elected
from the membership. MSPRS’s pension plan provides retirement,
survivor and disability benefits to Michigan State Police officers.
Financing is provided by investment income and by an annual
legislative appropriation.
As a result of contract negotiations, a pension plus plan was created
which pairs a guaranteed retirement income (Defined Benefit
pension) with a flexible and transferable retirement savings (Defined
Contribution) account for employees first hired on or after J une 10,
2012.
STATE POLICE OTHER POSTEMPLOYMENT BENEFITS
FUND
This fund was established to account for other postemployment
benefits of the Michigan State Police Retirement System (MSPRS)
created by Michigan Compiled Laws Section 38.1605. MSPRS’s
health plan provides retirees hired before J une 10, 2012 with the
option of receiving health, dental, and vision coverage. Employees
hired on or after J une 10, 2012 are accounted for within the State of
Michigan Defined Contribution Personal Health Care Fund.
STATE EMPLOYEES' PENSION BENEFITS FUND
This fund was established to account for pension benefits of the
State Employees’ Retirement System (SERS) created by Michigan
Compiled Laws (MCL) Section 38.2, which is administered by a
nine-member board under the direction of an Executive Secretary.
SERS’s pension plan provides retirement, survivor and disability
benefits to State employees.
Effective March 31, 1997, MCL Section 38.13 closed the plan to
new applicants. All new employees become members of the State’s
defined contribution plan. The law also allows returning employees
and members who left state employment on or before March 31,
1997, to elect the defined benefit plan instead of the defined
contribution plan.
STATE EMPLOYEES' OTHER POSTEMPLOYMENT
BENEFITS FUND
This fund was established to account for other postemployment
benefits of the State Employees’ Retirement System (SERS)
created by Michigan Compiled Laws Section 38.2. SERS’s health
plan provides all retirees with the option of receiving health, dental,
and vision coverage. This fund includes coverage for participants
of both the defined benefit pension plan and the defined contribution
retirement plan.
PUBLIC SCHOOL EMPLOYEES' PENSION BENEFITS
FUND
This fund was established to account for pension benefits of the
Michigan Public School Employees’ Retirement System (MPSERS)
created by Michigan Compiled Laws (MCL) Section 38.1321. An
eight-member board governs administrative policy. MPSERS’s
pension plan provides retirement, survivor and disability benefits to
the public school employees.
Employer contributions and investment earnings provide financing
for the fund. Under MCL Section 38.1343a, employees may
contribute additional amounts into a "member investment plan".
Various MCLs, beginning with Section 38.1304, were amended to
create a new “pension plus” plan which pairs a guaranteed
retirement income (defined benefit) with a flexible and transferable
retirement savings (defined contribution) account for employees first
hired after J une 30, 2010.
2014 Comprehensive Annual Financi al Report
202 202 202 202
Michigan
PUBLIC SCHOOL EMPLOYEES' OTHER
POSTEMPLOYMENT BENEFITS FUND
This fund was established to account for other postemployment
benefits of the Michigan Public School Employees’ Retirement
System (MPSERS) created by Michigan Compiled Laws Section
38.1321. MPSERS’s health plan provides all retirees with the option
of receiving health, dental, and vision coverage.
Effective J uly 1, 2010, MCL Section 38.1343e requires employees
to contribute a percentage of their compensation into a funding
account established under the public employee retirement health
care fund act.
J UDGES' PENSION BENEFITS FUND
This fund was established to account for pension benefits of the
Michigan J udges Retirement System (MJ RS) created by Michigan
Compiled Laws (MCL) Section 38.2201. MJ RS’s pension plan
provides retirement, survivor and disability benefits to judges in the
judicial branch of State government. Financing comes from member
contributions, court filing fees as provided under law, investment
earnings, and legislative appropriations.
MCL Section 38.2401a, effective March 31, 1997, closed the plan to
new entrants. J udges or state officials newly appointed or elected
on or after March 31, 1997, become members of the State’s defined
contribution plan.
J UDGES' OTHER POSTEMPLOYMENT BENEFITS FUND
This fund was established to account for other postemployment
benefits of the Michigan J udges Retirement System (MJ RS) created
by Michigan Compiled Laws Section 38.2201. MJ RS’s health plan
provides all retirees with the option of receiving health, dental, and
vision coverage. This fund includes health coverage for participants
of both the defined benefit pension plan and the defined contribution
retirement plan.
STATE OF MICHIGAN DEFINED CONTRIBUTION
RETIREMENT FUND
This fund was established by Michigan Compiled Laws Section
38.11 as a defined contribution pension plan. Membership within
the plan includes all State employees hired after March 31, 1997,
Public School Reporting Units members hired after J uly 1, 2010,
and for those members of the State Employees’ Retirement (defined
benefit) System, J udges’ Retirement System, and Legislative
Retirement System who elect to transfer to this plan. This fund also
includes the State of Michigan Personal Healthcare subfund created
by Public Act 264 of 2011 for all employees hired after J anuary 1,
2012, and those who elected to transfer to this plan.
2014 Comprehensive Annual Financi al Report
203 203 203 203
COMBINING STATEMENT OF FIDUCIARY NET POSITION
PENSION (AND OTHER EMPLOYEE BENEFIT) TRUST FUNDS
SEPTEMBER 30, 2014
(In Thousands)
STATE POLICE
PENSION POSTEMPLOYMENT PENSION
BENEFITS BENEFITS BENEFITS
FUNDS FUND FUND FUND
ASSETS
Equity in common cash $ 1,296 $ 1,237 $ 185 $ 10,485
Receivables:
From participants 73,030 - - 34
From employer - - - 2,751
Other 152 - - -
Interest and dividends - 41 - 160
Due from other funds - 82 - -
Due from component unit - - - -
Due from other governmental - - 161 -
Sale of investments - 268 - -
Investments at Fair Value:
Short-term investments - - - 68,598
Fixed Income - - - 145,482
Domestic equities - 60,984 9,277 370,466
Real estate - - - 114,796
Alternative investments - 16,870 2,556 214,743
International equities - 2,030 269 190,356
Absolute return - - - 135,299
Mutual funds 558,507 74,016 11,213 -
Pooled investment funds 1,275,615 - - -
Separate accounts 1,751,122 - - -
Securities lending collateral - - - 83,652
Total Assets $ 3,659,722 $ 155,527 $ 23,660 $ 1,336,822
LIABILITIES
Warrants outstanding $ - $ 31 $ - $ 25
Accounts payable and other liabilities 883 509 35 60
Amounts due to other funds - 4 - -
Obligations under security lending - - - 86,569
Unearned revenue - - - -
Total Liabilities $ 883 $ 544 $ 35 $ 86,654
NET POSITION
Restricted for pension,
postemployment health-care, and deferred
compensation participants $ 3,658,839 $ 154,983 $ 23,625 $ 1,250,168
Reconciliation of Net Position:
Restricted for pension benefits $ - $ 154,983 $ - $ 1,250,168
Restricted for postemployment health-care benefits - - 23,625 -
Restricted for deferred compensation participants 3,658,839 - - -
Total net position restricted for benefits $ 3,658,839 $ 154,983 $ 23,625 $ 1,250,168
COMPENSATION
Michigan
OF MICHIGAN
STATE
DEFERRED
LEGISLATIVE OTHER
LEGISLATIVE
204 204 204 204
PUBLIC SCHOOL
PUBLIC SCHOOL EMPLOYEES'
EMPLOYEES' EMPLOYEES' J UDGES'
POSTEMPLOYMENT PENSION POSTEMPLOYMENT PENSION POSTEMPLOYMENT PENSION
BENEFITS BENEFITS BENEFITS BENEFITS BENEFITS BENEFITS
FUND FUND FUND FUND FUND FUND
$ 3,640 $ 117,593 $ 16,698 $ 160,797 $ 85,878 $ 5,040
- 344 - 1,359 - 23
2,133 73,136 30,632 224,010 44,636 57
916 - 14,038 - 94,139 8
9 1,385 126 5,728 396 37
- 130 - - - -
- 739 480 - - -
1,152 - 33,056 - - -
- - - - - -
2,182 573,185 38,442 2,560,195 706,762 14,943
8,677 1,271,343 118,702 5,072,380 354,833 42,085
22,236 3,266,962 306,708 13,058,737 912,449 74,709
6,856 1,004,241 93,937 4,014,913 280,638 27,394
12,752 1,873,670 174,860 7,502,176 523,822 40,837
11,371 1,664,428 155,438 6,657,986 466,563 38,074
7,979 1,153,387 106,350 4,622,297 326,516 28,773
- - - - - -
- - - - - -
- - - - - -
4,746 725,740 66,014 2,946,448 202,650 19,613
$ 84,650 $ 11,726,282 $ 1,155,481 $ 46,827,027 $ 3,999,282 $ 291,594
$ - $ 32 $ 2 $ 603 $ 2 $ -
2,074 396 29,135 1,450 255,342 1
- - - - - -
4,912 751,048 68,316 3,049,197 209,717 20,297
- - 9 2,590 - -
$ 6,986 $ 751,476 $ 97,462 $ 3,053,838 $ 465,061 $ 20,298
$ 77,664 $ 10,974,806 $ 1,058,019 $ 43,773,189 $ 3,534,221 $ 271,296
$ - $ 10,974,806 $ - $ 43,773,189 $ - $ 271,296
77,664 - 1,058,019 - 3,534,221 -
- - - - - -
$ 77,664 $ 10,974,806 $ 1,058,019 $ 43,773,189 $ 3,534,221 $ 271,296
This statement continued on next page.
STATE POLICE
OTHER
STATE EMPLOYEES'
STATE
OTHER OTHER
Michigan
205 205 205 205
COMBINING STATEMENT OF FIDUCIARY NET POSITION
PENSION (AND OTHER EMPLOYEE BENEFIT) TRUST FUNDS (Continued)
SEPTEMBER 30, 2014
(In Thousands)
STATE
J UDGES' OF MICHIGAN
DEFINED
POSTEMPLOYMENT CONTRIBUTION
BENEFITS RETIREMENT
FUND FUND
ASSETS
Equity in common cash $ 1 $ 4,612 $ 407,460
Receivables:
From participants - 178,122 252,912
From employer 4 - 377,360
Other 16 1,495 110,764
Interest and dividends - - 7,880
Due from other funds - - 212
Due from component unit - - 1,219
Due from other governmental 20 - 34,389
Sale of investments - - 268
Investments at Fair Value:
Short-term investments 33 - 3,964,342
Fixed Income 132 - 7,013,635
Domestic equities 235 - 18,082,763
Real estate 86 - 5,542,861
Alternative investments 128 - 10,362,413
International equities 120 - 9,186,635
Absolute return 90 - 6,380,691
Mutual funds - 422,400 1,066,136
Pooled investment funds - 1,527,245 2,802,860
Separate accounts - 621,167 2,372,289
Securities lending collateral 60 - 4,048,924
Total Assets $ 925 $ 2,755,041 $ 72,016,012
LIABILITIES
Warrants outstanding $ - $ - $ 694
Accounts payable and other liabilities 39 2,746 292,669
Amounts due to other funds - - 4
Obligations under security lending 62 - 4,190,118
Unearned revenue - - 2,598
Total Liabilities $ 101 $ 2,746 $ 4,486,084
NET POSITION
Restricted for pension,
postemployment health-care, and deferred
compensation participants $ 824 $ 2,752,295 $ 67,529,928
Reconciliation of Net Position:
Restricted for pension benefits $ - $ 2,752,295 $ 59,176,737
Restricted for postemployment health-care benefits 824 - 4,694,353
Restricted for deferred compensation participants - - 3,658,839
Total net position restricted for benefits $ 824 $ 2,752,295 $ 67,529,928
OTHER
Michigan
TOTALS
206 206 206 206
Michigan
2014 Comprehensive Annual Financi al Report
207 207 207 207
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
PENSION (AND OTHER EMPLOYEE BENEFIT) TRUST FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
STATE POLICE
PENSION POSTEMPLOYMENT PENSION
BENEFITS BENEFITS BENEFITS
FUNDS FUND FUND FUND
ADDITIONS
Contributions:
From participants $ 88,081 $ 6 $ 118 $ 2,174
From employers 448 - 3,452 58,391
From other governmental - - 167 -
From other systems 1,530 - - -
Investment Income:
Net increase (decrease) in the
fair value of investments 221,479 12,322 1,824 153,425
Interest, dividends, and other 50,439 3,067 440 23,687
Securities lending income - - - 2,109
Less Investment Expense:
Investment activity expense - 521 77 3,719
Securities lending expense - - - 1,417
Net investment income (loss) 271,918 14,868 2,187 174,085
Miscellaneous income 1,280 105 1,072 0
Total Additions 363,257 14,979 6,997 234,650
DEDUCTIONS
Benefits paid to participants or beneficiaries 103,593 13,631 - 110,543
Medical, dental, and life insurance for retirants - - 6,114 -
Refunds and transfers to other systems 132,917 21 - 8
Administrative and other expenses 8,990 430 64 573
Transfers to other funds - - - 2
Total Deductions 245,500 14,082 6,178 111,126
Change in net position 117,757 897 819 123,524
Net position - Beginning of fiscal year 3,541,082 154,086 22,806 1,126,643
Net position - End of fiscal year $ 3,658,839 $ 154,983 $ 23,625 $ 1,250,168
Reconciliation of change in net position:
Change in net position restricted
for pension benefits $ - $ 897 $ - $ 123,524
Change in net position restricted
for postemployment benefits - - 819 -
Change in net position restricted for
deferred compensation participants 117,757 - - -
Change in net position $ 117,757 $ 897 $ 819 $ 123,524
STATE
OF MICHIGAN
DEFERRED
LEGISLATIVE
LEGISLATIVE
COMPENSATION
Michigan
OTHER
208 208 208 208
PUBLIC SCHOOL
STATE POLICE EMPLOYEES' PUBLIC SCHOOL EMPLOYEES'
EMPLOYEES' EMPLOYEES' J UDGES'
POSTEMPLOYMENT PENSION POSTEMPLOYMENT PENSION POSTEMPLOYMENT PENSION
BENEFITS BENEFITS BENEFITS BENEFITS BENEFITS BENEFITS
FUND FUND FUND FUND FUND FUND
$ 1,199 $ 47,527 $ 40,441 $ 405,444 $ 390,844 $ 1,025
46,615 705,100 700,938 1,600,375 1,000,032 -
1,758 - 54,945 - 138 -
- - - - - -
7,589 1,349,252 101,445 5,461,865 310,068 32,290
1,180 206,964 15,613 835,369 48,328 5,497
119 18,326 1,659 74,617 5,083 463
171 32,640 2,285 131,548 6,987 798
81 12,319 1,123 49,854 3,429 304
8,637 1,529,583 115,308 6,190,449 353,064 37,147
- 43 60 2,262 531 3,182
58,207 2,282,254 911,692 8,198,530 1,744,609 41,354
- 1,222,881 - 4,388,329 - 22,536
31,373 - 487,662 - 669,240 -
- 152 3,930 28,841 69 -
1,410 6,931 25,536 23,527 133,623 288
- - - 184 - -
32,783 1,229,964 517,128 4,440,880 802,932 22,825
25,424 1,052,290 394,564 3,757,649 941,676 18,530
52,240 9,922,516 663,455 40,015,540 2,592,545 252,766
$ 77,664 $ 10,974,806 $ 1,058,019 $ 43,773,189 $ 3,534,221 $ 271,296
$ - $ 1,052,290 $ - $ 3,757,649 $ - $ 18,530
25,424 - 394,564 - 941,676 -
- - - - - -
$ 25,424 $ 1,052,290 $ 394,564 $ 3,757,649 $ 941,676 $ 18,530
This statement continued on next page.
OTHER
STATE
Michigan
OTHER
STATE
OTHER
209 209 209 209
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
PENSION (AND OTHER EMPLOYEE BENEFIT) TRUST FUNDS (Continued)
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
STATE
J UDGES' OF MICHIGAN
DEFINED
POSTEMPLOYMENT
BENEFITS
FUND FUND
ADDITIONS
Contributions:
From participants $ 447 $ 142,055 $ 1,119,361
From employers - 170,811 4,286,163
From other governmental 69 - 57,076
From other systems - 7,582 9,112
Investment Income:
Net appreciation (depreciation)
in fair value of investments 101 198,048 7,849,708
Interest, dividends, and other 17 30,644 1,221,245
Securities lending income 1 - 102,377
Less Investment Expense:
Investment activity expense 2 - 178,747
Securities lending expense 1 - 68,527
Net investment income (loss) 116 228,692 8,926,055
Miscellaneous income 1 1,166 9,701
Total Additions 634 550,306 14,407,469
DEDUCTIONS
Benefits paid to participants or beneficiaries - 70,608 5,932,121
Medical, dental, and life insurance for retirants 530 - 1,194,920
Refunds and transfers to other systems - 73,275 239,213
Administrative and other expenses 59 11,358 212,790
Transfers to other funds - - 186
Total Deductions 589 155,241 7,579,229
Change in net position 44 395,065 6,828,239
Net position - Beginning of fiscal year 779 2,357,230 60,701,689
Net position - End of fiscal year $ 824 $ 2,752,295 $ 67,529,928
Reconciliation of change in net position:
Change in net position restricted
for pension benefits $ - $ 395,065 $ 5,347,955
Change in net position restricted
for postemployment benefits 44 - 1,362,528
Change in net position restricted for
deferred compensation participants - - 117,757
Change in net position $ 44 $ 395,065 $ 6,828,239
TOTALS
OTHER
CONTRIBUTION
RETIREMENT
Michigan
210 210 210 210
Michigan
PRIVATE PURPOSE TRUST FUNDS
MICHIGAN EDUCATION SAVINGS PROGRAM
Michigan Compiled Laws Section 390.1473 established the
Michigan Education Savings Program (MESP) as an entity within
the Department of Treasury. MESP is a college-tuition savings plan
that is designed to collect and invest deposits made by contributors,
for purposes of financing tuition on behalf of future students. The
State makes limited contributions into the program as prescribed by
law. Investment earnings, held in trust by MESP, are Federal and
State tax-deferred until the student is ready to attend college. The
State offers a tax deduction for contributions made each year.
ESCHEATS FUND
The Escheats Fund operates under the authority of Sections 567.221
– 567.265 of the Michigan Compiled Laws and is used to account for
unclaimed property held by the State until claimed by the rightful
owners. All property, including any income or increment derived
from the property, is subject to the custody of (escheated to) the
State when certain criteria contained within the laws are met.
Proceeds of the fund pay the administrative costs and prompt claims
allowed under the laws.
GIFTS, BEQUESTS, AND DEPOSITS INVESTMENT FUND
This fund was administratively established to account for gifts,
bequests, and deposits donated or entrusted to the State. Gifts and
donations to the State may only be expended in accordance with
applicable external restrictions. This fund earns interest quarterly for
its share of the equity in the State Treasurer’s Common Cash pool.
HOSPITAL PATIENTS’ TRUST FUND
The Hospital Patients’ Trust Fund operates under the authority of
Michigan Compiled Laws Section 330.1730 and is used to account
for funds of patients receiving services in State hospitals. The
Department of Community Health (DCH), in conjunction with the
State Treasury, acts as the trustee of this fund. This fund earns
interest quarterly for its share of the equity in the State Treasurer’s
Common Cash pool. DCH distributes interest on a monthly basis to
patients meeting minimum balance requirements.
2014 Comprehensive Annual Financi al Report
211 211 211 211
COMBINING STATEMENT OF FIDUCIARY NET POSITION
PRIVATE PURPOSE TRUST FUNDS
SEPTEMBER 30, 2014
(In Thousands)
ASSETS
Cash $ 509 $ - $ 1,342 $ 11 $ 1,862
Equity in common cash - 86,958 15,661 97 102,716
Receivables:
Interest and dividends 2,163 - 112 - 2,275
Investments at Fair Value:
Fixed income - - 20,330 - 20,330
Mutual funds 3,703,155 - 12 - 3,703,167
Guaranteed funding agreements 531,036 - - - 531,036
Other current assets 2,789 1,056 9,373 2 13,219
Other noncurrent assets - - 550 - 550
Total Assets $ 4,239,651 $ 88,014 $ 47,380 $ 110 $ 4,375,156
LIABILITIES
Warrants outstanding $ - $ 4,084 $ 294 $ 8 $ 4,386
Accounts payable and other liabilities 5,958 281 2,099 13 8,351
Total Liabilities $ 5,958 $ 4,364 $ 2,393 $ 21 $ 12,736
NET POSITION
Restricted for other purposes $ 4,233,693 $ 83,650 $ 44,987 $ 90 $ 4,362,419
Michigan
PATIENTS'
TRUST FUND PROGRAM FUND FUND
MICHIGAN GIFTS, BEQUESTS,
SAVINGS ESCHEATS INVESTMENT
TOTALS
HOSPITAL EDUCATION AND DEPOSITS
212 212 212 212
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
PRIVATE PURPOSE TRUST FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
ADDITIONS
Contributions:
From participants $ 475,135 $ - $ - $ - $ 475,135
From clients - - 63,252 729 63,981
From gifts, bequests,
and endowments - - 42,200 - 42,200
Investment Income:
Net increase (decrease) in the
fair value of investments 245,059 - (90) - 244,969
Interest, dividends, and other 78,593 - 519 - 79,112
Net investment income (loss) 323,652 - 429 - 324,082
Escheated property - 97,339 - - 97,339
Miscellaneous income - - 1,276 - 1,276
Total Additions 798,787 97,339 107,157 729 1,004,013
DEDUCTIONS
Benefits paid to participants
or beneficiaries 281,701 - - - 281,701
Amounts distributed to clients,
claimants, or third parties - 101,471 102,450 740 204,661
Administrative expense 6,764 6,433 14 - 13,210
Total Deductions 288,465 107,904 102,463 740 499,573
Change in net position 510,322 (10,565) 4,694 (11) 504,440
Net position -
Beginning of fiscal year - restated 3,723,371 94,215 40,292 101 3,857,979
Net position -
End of fiscal year $ 4,233,693 $ 83,650 $ 44,987 $ 90 $ 4,362,419
Reconciliation of change in net position:
Change in net position restricted
for other purposes $ 510,322 $ (10,565) $ 4,694 $ (11) $ 504,440
Change in net position $ 510,322 $ (10,565) $ 4,694 $ (11) $ 504,440
Michigan
TOTALS
MICHIGAN
EDUCATION
PROGRAM FUND
ESCHEATS SAVINGS
TRUST FUND
HOSPITAL
PATIENTS'
AND DEPOSITS
GIFTS, BEQUESTS,
FUND
INVESTMENT
213 213 213 213
Michigan
AGENCY FUNDS
ENVIRONMENTAL QUALITY DEPOSITS FUND
The Environmental Quality Deposits Fund accounts for deposits of
performance bonds for which the Department of Environmental
Quality has legal custody. The bonds held by this fund include bond
deposits from the hazardous waste program and the solid waste
program as provided by Sections 324.11141 and 324.11523 of the
Michigan Compiled Laws (MCL) and from the scrap tire program as
provided in MCL Section 324.16903.
INSURANCE CARRIER DEPOSITS FUND
This fund was administratively established to account for deposits
held by the State Treasurer on behalf of insurance carriers who are
licensed or authorized to write insurance in the State and are
required by Michigan Compiled Laws Section 500.411, to provide
such deposits. All deposits are in the form of various securities and
other acceptable assets.
CHILD SUPPORT COLLECTION FUND
This fund was administratively established to account for the activity
of the Michigan State Disbursement Unit (MISDU). The MISDU,
administered by the Department of Human Services, was created to
provide a single location within the State for the receipt and
disbursement of child support payments.
SOCIAL WELFARE FUND
This fund was administratively created to provide a single location
within the State for the receipts and disbursements related to county
child care funds and local county funds. Participating counties
provide funds to the Department of Human Services (DHS) on a
quarterly basis to pay for court ward youth under DHS supervision.
DHS uses the funds to pay for approved foster care individuals,
private agencies, institutions, in-home care, and independent living
based on receipt of child care invoices and supporting
documentation.
2014 Comprehensive Annual Financi al Report
214 214 214 214
COMBINING STATEMENT OF FIDUCIARY NET POSITION
AGENCY FUNDS
SEPTEMBER 30, 2014
(In Thousands)
INSURANCE
QUALITY CARRIER
DEPOSITS DEPOSITS COLLECTION
FUND FUND TOTALS
ASSETS
Cash $ - $ - $ 40,217 $ - $ 40,217
Equity in common cash 3,610 2,845 - 191 6,646
Other current assets - - 345 2 347
Other noncurrent assets - 419,228 - - 419,228
Total Assets $ 3,610 $ 422,073 $ 40,563 $ 193 $ 466,438
LIABILITIES
Accounts payable
and other liabilities $ 3,610 $ 2,845 $ 40,376 $ 193 $ 47,024
Amounts due to other funds - - 186 - 186
Other long-term liabilities - 419,228 - - 419,228
Total Liabilities $ 3,610 $ 422,073 $ 40,563 $ 193 $ 466,438
FUND
ENVIRONMENTAL
Michigan
CHILD SUPPORT
FUND
SOCIAL
WELFARE
215 215 215 215
COMBINING STATEMENT OF CHANGES IN ASSETS AND
LIABILITIES - AGENCY FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
BALANCE BALANCE
OCTOBER 1, SEPTEMBER 30,
2013 ADDITIONS DEDUCTIONS 2014
ENVIRONMENTAL QUALITY
DEPOSITS FUND
ASSETS
Equity in common cash $ 2,305 $ 3,758 $ 2,453 $ 3,610
Total Assets $ 2,305 $ 3,758 $ 2,453 $ 3,610
LIABILITIES
Accounts payable and other liabilities $ 2,305 $ 3,793 $ 2,489 $ 3,610
Total Liabilities $ 2,305 $ 3,793 $ 2,489 $ 3,610
ASSETS
Equity in common cash $ 369 $ 49,503 $ 47,027 $ 2,845
Other noncurrent assets 393,915 101,952 76,639 419,228
Total Assets $ 394,283 $ 151,455 $ 123,666 $ 422,073
LIABILITIES
Accounts payable and other liabilities $ 369 $ 49,503 $ 47,027 $ 2,845
Other long-term liabilities 393,915 101,952 76,639 419,228
Total Liabilities $ 394,283 $ 151,455 $ 123,666 $ 422,073
ASSETS
Cash $ 42,562 $ 1,466,626 $ 1,468,971 $ 40,217
Other current assets 2 344 - 345
Total Assets $ 42,564 $ 1,466,969 $ 1,468,971 $ 40,563
LIABILITIES
Accounts payable and other liabilities $ 41,797 $ 1,470,439 $ 1,471,859 $ 40,376
Amounts due to other funds 767 9,807 10,388 186
Total Liabilities $ 42,564 $ 1,480,246 $ 1,482,248 $ 40,563
Michigan
INSURANCE CARRIER
DEPOSITS FUND
CHILD SUPPORT
COLLECTION FUND
216 216 216 216
BALANCE BALANCE
OCTOBER 1, SEPTEMBER 30,
2013 ADDITIONS DEDUCTIONS 2014
ASSETS
Equity in common cash $ - $ 536 $ 345 $ 191
Other current assets - 2 - 2
Total Assets $ - $ 538 $ 345 $ 193
LIABILITIES
Accounts payable and other liabilities - 475 282 193
Total Liabilities $ - $ 475 $ 282 $ 193
ASSETS
Cash $ 42,562 $ 1,466,626 $ 1,468,971 $ 40,217
Equity in common cash 2,674 53,797 49,825 6,646
Other current assets 2 345 - 347
Other noncurrent assets 393,915 101,952 76,639 419,228
Total Assets $ 439,153 $ 1,622,720 $ 1,595,435 $ 466,438
LIABILITIES
Accounts payable and other liabilities $ 44,471 $ 1,524,210 $ 1,521,657 $ 47,024
Amounts due to other funds 767 9,807 10,388 186
Other long-term liabilities 393,915 101,952 76,639 419,228
Total Liabilities $ 439,153 $ 1,635,969 $ 1,608,684 $ 466,438
WELFARE FUND
Michigan
TOTALS - ALL AGENCY FUNDS
SOCIAL
217 217 217 217
Michigan
COMPONENT UNITS – AUTHORITIES
FARM PRODUCE INSURANCE AUTHORITY
Michigan Compiled Laws (MCL) Section 285.315 created the Farm
Produce Insurance Authority (FPIA) as a public body corporate.
Operating under Sections 285.311 – 285.331 of the MCL, FPIA is
governed and administered by a ten-member board of directors.
FPIA administers a program in which producers of dry beans, grain,
or corn may contribute to the Farm Produce Insurance Fund, a
percentage of their net proceeds from all farm produce sold by the
producer to a licensee in this State. Under this program the
producer may recover from the fund for losses caused by the
licensed grain dealer’s financial failure.
LAND BANK FAST TRACK AUTHORITY
Michigan Compiled Laws Section 124.765 created the Land Bank
Fast Track Authority (LBFTA) to assemble or dispose of public
property, including tax reverted property, in a coordinated manner to
foster the development of the property and to promote economic
growth within the State. LBFTA receives public properties,
undertakes expedited action to clear their titles, and then ensures
the properties’ redevelopment.
Executive Order 2014-8 abolished the LBFTA board of directors and
office of executive director and transferred all responsibilities and
functions to the executive director of the Michigan State Housing
Development Authority (MSHDA). Therefore, beginning in fiscal
year 2015, LBFTA will be reported as a component unit of MSHDA.
MACKINAC BRIDGE AUTHORITY
Michigan Compiled Laws (MCL) Section 254.302 created the
Mackinac Bridge Authority (MBA). MCL Section 254.314
empowered MBA to construct and operate a bridge between the
lower and upper peninsulas of Michigan. Fares and earnings on
investments finance the operation and maintenance of the bridge.
State statutes require that MBA continue charging bridge tolls and
repay State funds for all the subsidies provided in prior years.
MACKINAC ISLAND STATE PARK COMMISSION
Established in 1927, the Mackinac Island State Park Commission
currently operates under Sections 324.76701 – 324.76709 of the
Michigan Compiled Laws. The Governor, with the advice and
consent of the Senate, appoints the seven-member commission.
The Commission is responsible for the management of the
Mackinac Island and Michilimackinac State Parks and has the
authority to issue revenue-dedicated bonds.
MICHIGAN EARLY CHILDHOOD INVESTMENT
CORPORATION
The Michigan Early Childhood Investment Corporation was created
by an interlocal agreement between the Department of Human
Services and participating intermediate school districts. The
interlocal agreement was entered into pursuant to Sections 124.501
– 124.512 of the Michigan Compiled Laws. The Corporation’s
primary objective is to administer activities related to early childhood
development.
The governing body of each participant shall appoint one member of
the Corporation Board to serve at the will of the participant. For
each member of the Corporation Board appointed by the governing
body of a participant, the Governor shall appoint up to two members
of the Corporation Board representing the State to serve at the will
of the Governor. If there are fewer than five participants, the
Governor may appoint up to twelve additional members of the
Corporation Board representing the State to serve at the will of the
Governor or until there are five or more participants. In addition, the
Corporation shall have an Executive Committee of fifteen members,
all appointed by the Governor. The committee shall exercise the
powers of the Corporation.
MICHIGAN ECONOMIC DEVELOPMENT CORPORATION
The Michigan Economic Development Corporation (MEDC), under
Article 7, Section 28 of the State Constitution of 1963 and Sections
124.501 – 124.512 of the Michigan Compiled Laws (MCL), is a
public body corporate. Created by a ten-year contract (interlocal
agreement) between participating local economic development
corporations formed under Sections 125.1601 – 125.1636 of the
MCL and the Michigan Strategic Fund, MEDC is a separate legal
entity whose purpose is to stimulate, coordinate and advance
economic development in the State. Under the terms of the
agreement, the governance of MEDC resides in an executive
committee of 20 members appointed to eight-year, staggered terms.
2014 Comprehensive Annual Financi al Report
218 218 218 218
Michigan
MICHIGAN EDUCATION TRUST
The Michigan Education Trust (MET) operates a prepaid tuition
program. A purchaser enters into a contract with MET which
provides that in return for a specified actuarially determined
payment, MET will provide a Michigan child's undergraduate tuition
at any Michigan public university or community college. The amount
the purchaser is required to pay is based on several factors, among
them are tuition costs, the child's age and grade in school,
anticipated investment earnings, tuition rate increases, and the type
of contract purchased.
Michigan Compiled Laws Section 390.1425, the Michigan Education
Trust Act, created MET. MET is governed by a nine-member board
that consists of the State Treasurer and eight other individuals
appointed by the Governor with the advice and consent of the
Senate. Although MET is administratively located within the
Michigan Department of Treasury, the law provides its assets are
not to be considered assets of the State and are not to be loaned or
otherwise transferred or used by the State for any purpose other
than the purposes specified in the law. The law and contracts also
specifically provide that the State is not liable if MET becomes
actuarially unsound. In that event, the contracts provide for refunds
to participants.
STATE BAR OF MICHIGAN
The State Bar of Michigan is an association of lawyers who are
licensed to practice in Michigan. It is organized as a public body
corporate. Its operations are financed solely from member dues and
income from member services. The State Bar’s budget is the
responsibility of its Board of Commissioners, and it is not subject to
State of Michigan appropriation procedures.
2014 Comprehensive Annual Financi al Report
219 219 219 219
COMBINING STATEMENT OF NET POSITION
NON-MAJOR COMPONENT UNITS
AUTHORITIES
SEPTEMBER 30, 2014
(In Thousands)
PRODUCE LAND BANK MACKINAC
INSURANCE FAST TRACK BRIDGE
AUTHORITY AUTHORITY AUTHORITY
ASSETS
Current Assets:
Cash $ 708 $ - $ 936 $ 813
Equity in common cash - 7,235 - -
Amounts due from component units - - - -
Amounts due from primary government - - - -
Amounts due from federal government - 1,269 - -
Inventories - - - 576
Investments 1,349 - 5,005 213
Other current assets 176 - 70 119
Total Current Assets 2,233 8,504 6,011 1,721
Restricted Assets:
Cash and cash equivalents - - - 1,166
Investments - - - 2,157
Mortgages and loans receivable - 5,900 - -
Investments 3,972 - 60,436 -
Land and property held for resale - 13,571 - -
Capital Assets:
Land and other non-depreciable assets - - 125 337
Buildings, equipment, and other depreciable assets - - 9,231 14,001
Less accumulated depreciation - - (4,766) (9,582)
Infrastructure - - 102,950 -
Construction in progress - - - 80
Total capital assets - - 107,539 4,836
Other noncurrent assets - - - -
Total Assets $ 6,206 $ 27,975 $ 173,986 $ 9,879
LIABILITIES
Current Liabilities:
Warrants outstanding $ - $ - $ - $ -
Accounts payable and other liabilities 6 4,917 807 149
Amounts due to component units - - - -
Amounts due to primary government - 5 1,844 29
Bonds and notes payable - - - 50
Interest payable - - - 18
Unearned revenue - - 963 -
Current portion of other long-term obligations - 14 106 -
Total Current Liabilities 6 4,937 3,720 247
Unearned revenue - - 1,253 -
Bonds and notes payable - - - 1,685
Noncurrent portion of other long-term obligations - 21 375 -
Total Liabilities $ 6 $ 4,958 $ 5,348 $ 1,932
NET POSITION
Net investment in capital assets $ - $ - $ 107,539 $ 3,101
Restricted For:
Construction and debt service - - - 2,871
Other purposes - 6,473 - 1,022
Unrestricted 6,199 16,544 61,099 954
Total Net Position $ 6,199 $ 23,017 $ 168,638 $ 7,947
Michigan
FARM MACKINAC
ISLAND
STATE PARK
COMMISSION
220 220 220 220
DEVELOPMENT
CORPORATION
$ 58 $ 10,219 $ 73,329 $ 2,548 $ 88,611
- 22,892 - - 30,127
- 36,466 - - 36,466
3,567 689 2,077 - 6,333
- - - - 1,269
- - - 24 600
- 5,282 - 5,064 16,912
10 4,202 20,504 671 25,753
3,635 79,750 95,910 8,308 206,072
- 368 - - 1,534
- - - - 2,157
- 4,027 - - 9,927
- 52,418 913,939 7,081 1,037,846
- - - - 13,571
- 100 - 381 943
860 17,592 - 11,395 53,079
(446) (10,160) - (7,353) (32,308)
- - - - 102,950
- - - - 80
414 7,532 - 4,422 124,743
- - 48,560 99 48,659
$ 4,049 $ 144,095 $ 1,058,408 $ 19,910 $ 1,444,508
$ - $ 80 $ - $ - $ 80
2,484 10,166 - 1,348 19,878
- 621 - - 621
- 253 - - 2,132
- - - - 50
- - - - 18
- - - 1,402 2,365
59 1,212 109,043 - 110,434
2,543 12,333 109,043 2,750 135,579
- - - - 1,253
- - - - 1,685
- 1,104 895,884 - 897,384
$ 2,543 $ 13,436 $ 1,004,927 $ 2,750 $ 1,035,900
$ 414 $ 7,532 $ - $ 4,422 $ 123,008
- - - - 2,871
- - 53,481 - 60,976
1,093 123,126 - 12,738 221,753
$ 1,507 $ 130,658 $ 53,481 $ 17,160 $ 408,608
Michigan
MICHIGAN
INVESTMENT
CHILDHOOD
MICHIGAN EARLY
EDUCATION
MICHIGAN
ECONOMIC STATE
BAR OF
TRUST CORPORATION TOTALS MICHIGAN
221 221 221 221
COMBINING STATEMENT OF ACTIVITIES
NON-MAJOR COMPONENT UNITS - AUTHORITIES
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
NET
(EXPENSE)
FUNCTIONS/PROGRAMS CONTRIBUTIONS CONTRIBUTIONS REVENUE
Farm Produce Insurance Authority $ 242 $ 389 $ - $ - $ 147
Land Bank Fast Track Authority 30,010 - 42 2,035 (27,933)
Mackinac Bridge Authority 16,308 21,045 - - 4,737
Mackinac Island State Park Commission 4,731 4,316 284 - (131)
Michigan Early Childhood
Investment Corporation 13,290 - 13,593 - 303
Michigan Economic
Development Corporation 86,145 - 82,277 - (3,868)
Michigan Education Trust 9,201 1,768 87,550 - 80,117
State Bar of Michigan 11,508 11,794 - - 286
Total $ 171,434 $ 39,311 $ 183,745 $ 2,035 $ 53,658
Michigan
OPERATING
PROGRAM REVENUES
CAPITAL
CHARGES FOR GRANTS/ GRANTS/
EXPENSES SERVICES
222 222 222 222
$ (15) $ - $ - $ 131 $ 6,068 $ 6,199
12 - 1,750 (26,170) 49,188 23,017
1,176 - - 5,913 162,725 168,638
30 - - (102) 8,049 7,947
- - 26 329 1,177 1,507
(93) - 5,141 1,180 129,478 130,658
- - - 80,117 (26,636) 53,481
107 - - 393 16,767 17,160
$ 1,217 $ - $ 6,918 $ 61,792 $ 346,816 $ 408,608
OF YEAR
INVESTMENT FROM BEGINNING
GENERAL REVENUES
INTEREST AND
END CHANGE IN
PAYMENTS
Michigan
NET POSITION
STATE OF EARNINGS
NET POSITION
NET POSITION RESTATED OF YEAR OTHER (LOSS) MICHIGAN
223 223 223 223
Michigan
2014 Comprehensive Annual Financi al Report
224 224 224 224
Michigan
COMPONENT UNITS – STATE UNIVERSITIES
The State has 13 legally separate public universities, 10 of which
are included in this report as component units and 3 of which are
excluded. Included are the 10 universities whose governing boards
are appointed by the Governor and for which the State is legally
accountable, as prescribed by the Governmental Accounting
Standards Board Statement No. 14, The Financial Reporting Entity,
as amended by GASB Statement No. 61. Excluded are those 3 that
have governing boards whose members are elected by the voters
and, therefore, considered separate special purpose governments.
The 3 that are excluded are the largest public universities: Michigan
State University, University of Michigan, and Wayne State
University. Also excluded are the public community colleges, for
which local units of government are legally accountable.
The information presented in this report for the 10 universities is
based upon their separately issued financial statements for the fiscal
year ended on J une 30, 2014. The universities include Western
Michigan University presented as a major component unit and the
following non-major component units: Central Michigan University,
Eastern Michigan University, Ferris State University, Grand Valley
State University, Lake Superior State University, Michigan
Technological University, Northern Michigan University, Oakland
University, and Saginaw Valley State University.
2014 Comprehensive Annual Financi al Report
225 225 225 225
COMBINING STATEMENT OF NET POSITION
NON-MAJOR COMPONENT UNITS
STATE UNIVERSITIES
J UNE 30, 2014
(In Thousands)
GRAND
CENTRAL EASTERN FERRIS VALLEY
MICHIGAN MICHIGAN STATE STATE
UNIVERSITY UNIVERSITY UNIVERSITY UNIVERSITY
ASSETS
Current Assets:
Cash $ 43,431 $ 13,632 $ 56,740 $ 34,215
Amounts due from component units - - - -
Amounts due from primary government 52,517 17,084 8,530 57,244
Amounts due from federal government 946 1,628 106 2,510
Amounts due from local units - - - -
Inventories 6,910 847 904 2,353
Investments - 56,634 42,444 26,093
Other current assets 24,531 13,737 11,204 15,152
Total Current Assets 128,334 103,562 119,928 137,567
Restricted Assets:
Cash and cash equivalents - - 1,444 4,763
Investments - 9,119 21,262 -
Mortgages and loans receivable 6,225 - 18,537 -
Mortgages and loans receivable - 9,130 - 8,808
Investments 337,779 34,658 70,348 215,537
Capital Assets:
Land and other non-depreciable assets 13,574 11,654 6,597 69,703
Buildings, equipment, and other depreciable assets 810,682 767,888 423,921 835,775
Less accumulated depreciation (371,034) (316,569) (177,987) (271,436)
Infrastructure - - - -
Construction in progress 20,835 2,073 18,592 36,228
Total capital assets 474,057 465,046 271,123 670,269
Other noncurrent assets 436 13,460 757 22,235
Total Assets $ 946,830 $ 634,974 $ 503,400 $ 1,059,179
DEFERRED OUTFLOWS OF RESOURCES $ 8,120 $ - $ 808 $ 5,518
LIABILITIES
Current Liabilities:
Accounts payable and other liabilities $ 67,658 $ 38,041 $ 19,118 $ 72,031
Amounts due to primary government 430 221 - 53
Bonds and notes payable 24,064 2,475 4,996 12,910
Interest payable 1,218 2,404 1,197 1,466
Unearned revenue 12,998 6,607 8,237 12,400
Current portion of other long-term obligations 137 400 325 5,494
Total Current Liabilities 106,503 50,147 33,873 104,353
Unearned revenue 50 - 815 4,447
Bonds and notes payable 128,323 234,875 94,933 259,800
Noncurrent portion of other long-term obligations 21,260 52,140 33,329 28,257
Total Liabilities $ 256,136 $ 337,162 $ 162,950 $ 396,857
DEFERRED INFLOWS OF RESOURCES $ - $ 13,460 $ - $ -
NET POSITION
Net investment in capital assets $ 322,478 $ 184,803 $ 162,014 $ 388,131
Restricted For:
Education 19,020 - 9,687 9,701
Construction and debt service 9,043 146 - 27,823
Other purposes 19 34,690 - -
Funds Held as Permanent Investments:
Expendable 26,734 - 14,298 41,232
Nonexpendable 43,429 42,130 21,262 52,299
Unrestricted 278,091 22,583 133,996 148,652
Total Net Position $ 698,815 $ 284,352 $ 341,257 $ 667,839
Michigan
226 226 226 226
LAKE SAGINAW
SUPERIOR MICHIGAN NORTHERN VALLEY
STATE TECHNOLOGICAL MICHIGAN OAKLAND STATE
UNIVERSITY UNIVERSITY UNIVERSITY UNIVERSITY UNIVERSITY
$ 2,055 $ 8,475 $ 17,592 $ 28,509 $ 50,599 $ 255,247
- - 4 - - 4
2,244 8,542 19,203 19,180 16,955 201,500
277 2,472 124 2,350 864 11,277
- - 11 5 - 16
431 1,491 1,319 914 1,456 16,625
11,867 - - - 2 137,040
1,468 8,758 7,530 12,140 7,209 101,729
18,342 29,738 45,783 63,099 77,085 723,437
- 3,975 - 29,117 - 39,300
- 113,831 - 58,594 - 202,806
- - - 1,467 - 26,229
2,328 11,865 6,584 - 19 38,735
19,278 14,404 112,662 156,848 78,013 1,039,525
2,717 15,835 7,304 4,625 2,506 134,513
146,278 406,740 384,857 463,386 447,482 4,687,009
(102,023) (178,096) (166,913) (218,865) (165,352) (1,968,274)
- - - 60,268 - 60,268
- 1,607 29,392 141,229 20,727 270,684
46,973 246,085 254,640 450,643 305,364 3,184,200
752 17,395 2,806 6,882 6,842 71,563
$ 87,672 $ 437,293 $ 422,475 $ 766,649 $ 467,323 $ 5,325,795
$ - $ - $ 3,527 $ 12,463 $ 1,277 $ 31,713
$ 1,860 $ 8,994 $ 21,911 $ 43,145 $ 21,580 $ 294,338
189 447 240 600 - 2,180
1,245 2,520 4,736 6,413 6,325 65,683
92 819 - 2,536 - 9,731
1,067 3,250 3,977 14,585 9,511 72,631
657 6,293 1,518 1,049 100 15,973
5,110 22,323 32,382 68,328 37,516 460,536
- - - 115 1,491 6,918
20,320 79,298 96,869 228,510 115,310 1,258,239
2,077 6,646 10,166 18,439 4,132 176,446
$ 27,507 $ 108,268 $ 139,417 $ 315,391 $ 158,449 $ 1,902,139
$ - $ - $ - $ 4,881 $ - $ 18,341
$ 25,754 $ 164,400 $ 154,802 $ 236,419 $ 181,041 $ 1,819,844
17,936 39,551 2,861 27,233 16,724 142,713
1,568 - 633 - 283 39,497
3,019 - - - 1,600 39,328
- 36,714 24,588 17,557 - 161,123
6,226 72,488 4,846 23,430 50,325 316,435
5,662 15,873 98,854 154,199 60,177 918,088
$ 60,165 $ 329,025 $ 286,585 $ 458,839 $ 310,151 $ 3,437,028
TOTALS
Michigan
227 227 227 227
COMBINING STATEMENT OF ACTIVITIES
NON-MAJOR COMPONENT UNITS - STATE UNIVERSITIES
FISCAL YEAR ENDED J UNE 30, 2014
(In Thousands)
NET
(EXPENSE)
FUNCTIONS/PROGRAMS CONTRIBUTIONS CONTRIBUTIONS REVENUE
Central Michigan University $ 477,420 $ 335,125 $ 37,159 $ 1,955 $ (103,181)
Eastern Michigan University 349,301 217,523 23,328 925 (107,524)
Ferris State University 235,987 158,125 7,960 - (69,902)
Grand Valley State University 414,826 302,288 34,714 12,007 (65,816)
Lake Superior State University 49,664 25,743 13,403 646 (9,872)
Michigan Technological University 230,838 114,968 67,152 5,152 (43,565)
Northern Michigan University 166,855 96,256 10,211 20,208 (40,181)
Oakland University 286,978 198,798 32,173 216 (55,791)
Saginaw Valley State University 141,229 98,401 9,678 - (33,150)
Total $ 2,353,098 $ 1,547,228 $ 235,778 $ 41,110 $ (528,983)
Michigan
PROGRAM REVENUES
OPERATING CAPITAL
EXPENSES SERVICES
CHARGES FOR GRANTS/ GRANTS/
228 228 228 228
$ 21,598 $ 73,993 $ 27,347 $ 19,756 $ 679,059 $ 698,815
4,333 69,381 39,116 5,306 279,046 284,352
10,400 46,085 33,813 20,397 320,861 341,257
8,184 57,824 39,393 39,585 628,254 667,839
935 12,222 - 3,285 56,880 60,165
7,342 43,786 180 7,743 321,283 329,025
8,390 42,011 13,542 23,762 262,823 286,585
16,839 56,421 22,082 39,551 419,288 458,839
7,373 25,991 20,051 20,265 289,886 310,151
$ 85,394 $ 427,713 $ 195,523 $ 179,648 $ 3,257,380 $ 3,437,028
Michigan
BEGINNING NET POSITION
GENERAL REVENUES
INTEREST AND
INVESTMENT
PAYMENTS
FROM
NET POSITION
OF YEAR
END
OTHER
CHANGE IN
NET POSITION
OF YEAR STATE OF
MICHIGAN
EARNINGS
(LOSS) RESTATED
229 229 229 229
Michigan
2014 Comprehensive Annual Financi al Report
230 230 230 230
Michigan
STATISTICAL SECTION
2014 Comprehensive Annual Financi al Report
231 231 231 231
Michigan
2014 Comprehensive Annual Financi al Report
232 232 232 232
Michigan
Index
STATISTICAL SECTION
This part of the State of Michigan’s comprehensive annual financial report presents detailed information as a context for
understanding what the information in the financial statements, note disclosures, and required supplementary information says
about the State’s overall financial health.
CONTENTS: Page
Financial Trends
These schedules contain trend information to help the reader understand how the State’s financial
performance and well-being have changed over time.
Net Position by Component ...................................................................................................................................... 234
Changes in Net Position ........................................................................................................................................... 236
Fund Balances – Governmental Funds .................................................................................................................... 240
Changes in Fund Balances – Governmental Funds ................................................................................................. 242
Revenue Capacity
These schedules contain information to help the reader assess the State’s most significant revenue
sources: personal income and sales taxes.
Personal Income by Industry .................................................................................................................................... 244
Taxable Sales by Industry ........................................................................................................................................ 246
Personal Income Tax Filers and Liability by Income Level ....................................................................................... 248
Sales Tax Payers by Industry ................................................................................................................................... 249
Debt Capacity
These schedules present information to help the reader assess the affordability of the State’s current
levels of outstanding debt and the State’s ability to issue additional debt in the future. The State has
no statutory limit on the amount of general obligation debt that may be authorized.
Ratios of Outstanding Debt by Type ......................................................................................................................... 250
Ratios of Net General Obligation Bonded Debt Outstanding .................................................................................... 253
Debt Service Coverage – Comprehensive Transportation Fund Related Bonds ...................................................... 254
Debt Service Coverage – State Trunkline Fund Related Bonds ............................................................................... 256
Debt Service Coverage – State Building Authority ................................................................................................... 258
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand the
environment within which the State’s financial activities take place.
Demographic and Economic Indicators .................................................................................................................... 260
Operating Information
These schedules contain information about the State’s operations and resources to help the reader
understand how the information in the State’s financial report relates to the services the State provides
and the activities it performs.
Classified Employees by Function ............................................................................................................................ 262
Operating Indicators by Function .............................................................................................................................. 264
Capital Assets by Function ....................................................................................................................................... 268
SOURCES:
Unless otherwise noted, the information in these schedules is derived from the financial statements presented in the
comprehensive annual financial reports for the relevant years.
2014 Comprehensive Annual Financi al Report
233 233 233 233
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(In Thousands)
(Accrual Basis of Accounting)
Governmental activities
Net investment in capital assets $ 15,245,452 $ 15,827,600 $ 15,739,094 $ 15,909,317
Restricted 2,086,764 2,064,965 2,292,779 2,599,760
Unrestricted (932,221) (1,313,574) (1,337,824) (1,868,935)
Total governmental activities net position $ 16,399,994 $ 16,578,992 $ 16,694,049 $ 16,640,142
Business-type activities
Net investment in capital assets $ 582 $ 412 $ 367 $ 807
Restricted 894,513 621,982 358,712 72,672
Unrestricted 6,891 7,827 4,798 (121,773)
Total business-type activities net position $ 901,986 $ 630,220 $ 363,877 $ (48,294)
Primary government
Net investment in capital assets $ 15,246,033 $ 15,828,012 $ 15,739,461 $ 15,910,124
Restricted 2,981,277 2,686,947 2,651,490 2,672,432
Unrestricted (925,330) (1,305,747) (1,333,025) (1,990,708)
Total primary government net position $ 17,301,980 $ 17,209,212 $ 17,057,926 $ 16,591,848
Reconciliation of net position
Beginning net position $ 17,166,569 $ 17,301,980 $ 17,209,212 $ 17,057,926
Restatement of beginning net position 75,489 188,188 - (54,373)
Beginning net position - restated 17,242,058 17,490,168 17,209,212 17,003,554
Statement of Activities - changes in net position 59,922 (692,181) (575,518) (495,759)
Change in reporting entity - 411,225 424,232 84,053
Ending net position $ 17,301,980 $ 17,209,212 $ 17,057,926 $ 16,591,848
2008 2007
Michigan
2006 2005
234 234 234 234
$ 16,313,696 $ 16,859,070 $ 17,782,073 $ 18,198,345 $ 19,649,694 $ 20,279,584
2,577,249 2,691,477 3,552,062 3,394,212 3,773,962 3,824,871
(3,928,376) (4,860,007) (5,325,636) (5,349,668) (5,192,624) (5,876,457)
$ 14,962,570 $ 14,690,540 $ 16,008,499 $ 16,242,889 $ 18,231,031 $ 18,227,998
$ 735 $ 603 $ 578 $ 355 $ 813 $ 606
137,064 145,056 131,453 1,276,713 1,843,965 2,442,471
(2,425,221) (3,163,457) (2,911,176) 5,926 5,538 5,834
$ (2,287,423) $ (3,017,798) $ (2,779,145) $ 1,282,994 $ 1,850,316 $ 2,448,910
$ 16,314,431 $ 16,859,673 $ 17,782,652 $ 18,198,700 $ 19,650,507 $ 20,280,190
2,714,313 2,836,533 3,683,515 4,670,926 5,617,926 6,267,342
(6,353,597) (8,023,463) (8,236,812) (5,343,743) (5,187,086) (5,870,623)
$ 12,675,147 $ 11,672,743 $ 13,229,354 $ 17,525,883 $ 20,081,347 $ 20,676,909
$ 16,591,848 $ 12,675,147 $ 11,672,743 $ 13,229,354 $ 17,525,883 $ 20,081,347
(176,594) - (5,377) (2,954) 6,459 (36,068)
16,415,254 12,675,147 11,667,366 13,226,400 17,532,342 20,045,279
(3,757,816) (1,002,404) 1,561,989 4,299,483 2,549,005 631,630
17,709 - - - - -
$ 12,675,147 $ 11,672,743 $ 13,229,354 $ 17,525,883 $ 20,081,347 $ 20,676,909
Michigan
2013 2012 2011 2014 2009 2010
235 235 235 235
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(In Thousands)
(Accrual Basis of Accounting)
Expenses
Governmental activities:
General government $ 1,877,410 $ 2,289,294 $ 2,205,613 $ 1,671,584
Education 14,531,388 14,695,186 14,660,163 15,080,883
Human services 4,154,811 4,384,311 4,453,497 4,699,046
Public safety and corrections 2,320,406 2,541,630 2,583,916 2,895,133
Conservation, environment,
recreation, and agriculture 652,326 688,407 596,972 572,755
Labor, commerce, and regulatory 936,467 951,519 963,444 995,714
Health services 10,179,705 9,963,373 10,832,862 11,622,966
Transportation 3,106,993 3,133,137 3,191,784 3,235,394
Tax credits (Note 16) 815,300 834,000 883,400 931,600
Intergovernmental-revenue sharing 1,112,931 1,103,625 1,071,104 1,076,445
Interest on long-term debt 287,519 293,128 304,702 318,654
Total governmental activities 39,975,258 40,877,610 41,747,457 43,100,174
Business-type activities:
Liquor Purchase Revolving Fund 557,377 582,982 602,280 621,991
State Lottery Fund 1,447,285 1,584,186 1,654,823 1,636,858
Attorney Discipline System 3,856 4,122 4,282 4,976
Michigan Unemployment
Compensation Funds 1,892,486 1,990,197 2,012,082 2,403,043
Total business-type activities 3,901,003 4,161,487 4,273,467 4,666,868
Total primary government expenses $ 43,876,261 $ 45,039,097 $ 46,020,924 $ 47,767,042
Program Revenues
Governmental activities:
Charges for services:
General government $ 983,124 $ 1,087,877 $ 1,195,965 $ 737,401
Education 4,858 9,306 10,377 6,616
Human services 53,400 56,367 59,285 57,963
Public safety and corrections 155,683 160,829 164,345 168,789
Conservation, environment,
recreation, and agriculture 269,035 251,591 185,978 282,008
Labor, commerce, and regulatory 238,229 262,021 312,983 304,145
Health services 72,062 72,564 72,338 79,683
Transportation 201,598 84,280 79,459 72,651
Operating grants and contributions 11,792,127 11,623,141 12,295,825 12,956,983
Capital grants and contributions 805,580 779,269 627,057 719,518
Total governmental activities program revenues $ 14,575,696 $ 14,387,246 $ 15,003,612 $ 15,385,756
Business-type activities:
Charges for services:
Liquor Purchase Revolving Fund $ 688,928 $ 718,085 $ 742,959 $ 768,085
State Lottery Fund 2,082,229 2,232,204 2,363,001 2,351,082
Attorney Discipline System 4,588 4,631 4,782 4,885
Michigan Unemployment
Compensation Funds 1,646,311 1,727,761 1,765,871 1,998,292
Operating grants and contributions 54,148 53,932 55,783 44,262
Total business-type activities program revenues 4,476,205 4,736,614 4,932,397 5,166,606
Total primary government program revenues $ 19,051,901 $ 19,123,860 $ 19,936,008 $ 20,552,362
Net (Expenses)/Revenues
Governmental activities $ (25,399,562) $ (26,490,364) $ (26,743,845) $ (27,714,418)
Business-type activities 575,202 575,127 658,929 499,738
Total primary government net expenses $ (24,824,360) $ (25,915,237) $ (26,084,916) $ (27,214,680)
Michigan
2005 2007 2008 2006
236 236 236 236
$ 1,753,403 $ 1,752,504 $ 2,286,436 $ 2,491,270 $ 2,093,352 $ 2,455,999
15,251,821 14,989,964 15,269,638 14,601,171 14,617,662 14,941,366
5,410,078 6,136,852 6,423,345 5,953,946 5,931,424 5,508,011
2,994,466 2,859,301 2,863,890 2,816,575 2,663,440 2,638,272
617,768 577,952 575,118 657,527 593,446 714,019
1,187,368 1,261,908 1,178,970 956,357 965,696 956,256
12,334,951 13,250,231 13,917,219 13,722,762 13,853,422 15,036,289
3,244,824 2,947,845 2,460,553 2,840,961 2,914,884 3,309,442
963,500 1,351,500 1,271,900 1,226,300 689,900 676,500
1,040,031 994,196 1,091,527 1,032,243 1,077,514 1,120,593
350,421 362,626 217,014 196,040 178,561 174,522
45,148,632 46,484,880 47,555,610 46,495,152 45,579,303 47,531,269
633,093 634,925 660,861 696,723 742,611 779,276
1,710,718 1,676,994 1,631,489 1,654,234 1,758,718 1,868,607
5,026 4,733 4,941 4,818 4,846 4,798
6,215,392 6,803,393 4,350,158 2,991,500 2,188,132 1,246,507
8,564,229 9,120,044 6,647,450 5,347,275 4,694,307 3,899,188
$ 53,712,861 $ 55,604,924 $ 54,203,060 $ 51,842,428 $ 50,273,610 $ 51,430,457
$ 768,411 $ 775,018 $ 790,054 $ 844,661 $ 678,845 $ 688,044
5,790 5,320 5,491 15,688 7,206 9,388
46,903 38,797 34,810 69,219 38,648 85,213
157,751 168,141 166,034 158,707 164,019 161,447
254,128 360,261 266,062 269,307 271,119 299,073
306,657 313,368 316,941 548,543 750,517 754,054
84,647 72,036 90,558 59,850 69,009 67,298
69,685 75,466 92,045 91,690 96,842 96,727
16,755,408 19,150,043 19,608,970 17,373,332 17,194,905 17,981,852
921,847 964,605 1,061,715 845,873 867,155 850,174
$ 19,371,229 $ 21,923,056 $ 22,432,679 $ 20,276,870 $ 20,138,265 $ 20,993,270
$ 781,896 $ 780,265 $ 812,140 $ 856,717 $ 912,112 $ 957,054
2,398,995 2,379,975 2,357,417 2,430,281 2,491,131 2,608,920
4,943 4,977 5,114 5,166 4,887 4,867
3,922,144 6,012,375 4,441,664 3,529,515 2,776,790 1,809,854
104,154 79,966 172,038 251,786 21,710 59,881
7,212,131 9,257,558 7,788,373 7,073,466 6,206,631 5,440,576
$ 26,583,360 $ 31,180,614 $ 30,221,052 $ 27,350,336 $ 26,344,896 $ 26,433,845
$ (25,777,403) $ (24,561,824) $ (25,122,932) $ (26,218,282) $ (25,441,038) $ (26,538,000)
(1,352,097) 137,514 1,140,924 1,726,190 1,512,324 1,541,388
$ (27,129,501) $ (24,424,311) $ (23,982,008) $ (24,492,092) $ (23,928,714) $ (24,996,612)
Michigan
2010 2014 2009 2013 2012 2011
237 237 237 237
CHANGES IN NET POSITION
LAST TEN FISCAL YEARS (Continued)
(In Thousands)
(Accrual Basis of Accounting)
General Revenues and Other Changes in Net Position
Governmental activities:
Taxes:
General:
Sales and use $ 2,663,226 $ 2,665,614 $ 2,635,341 $ 2,701,052
Personal income 5,036,282 5,123,885 5,321,169 6,229,339
Single business, Michigan business,
and corporate income 1,934,003 1,926,884 1,771,854 1,715,861
Tobacco products 712,218 690,234 678,826 652,609
Beer, wine, and liquor 117,990 119,429 123,592 126,040
Insurance company 250,966 218,104 223,753 223,398
Quality assurance assessment 509,857 676,923 832,562 1,026,698
Penalties and interest 173,290 146,807 155,789 167,297
Other 444,732 337,920 334,097 320,484
Restricted For Educational Purposes:
Sales and use 5,283,583 5,240,334 5,230,217 5,424,253
Personal income 2,019,932 2,069,435 2,142,251 2,174,393
Michigan business - - - 341,000
Corporate income - - - -
Education, property, and real estate transfers 2,236,159 2,320,578 2,336,474 2,266,377
Tobacco products 471,734 466,985 449,912 427,303
Beer, wine, and liquor 33,169 34,212 35,730 37,120
Casino Gaming Wagering 97,609 104,069 106,681 112,067
Other 151,918 154,173 154,917 101,666
Restricted For Transportation Purposes:
Sales and use 56,924 66,405 67,678 82,114
Gasoline and diesel fuel 1,068,565 1,054,766 1,016,957 992,502
Motor vehicle weight 863,367 867,663 874,287 854,736
Other 6,719 5,974 6,339 5,675
Unrestricted investment and interest earnings 14,141 9,991 12,097 7,595
Miscellaneous 681,837 1,281,229 1,378,751 739,602
Contributions to permanent fund principal 41,033 35,153 26,165 57,937
Transfers 859,260 864,406 943,460 927,763
Total governmental activities $ 25,728,514 $ 26,481,174 $ 26,858,903 $ 27,714,884
Business-type activities:
Taxes 12,194 12,654 13,133 13,663
Investment earnings 2,784 4,861 5,055 2,192
Miscellaneous 50 - - -
Transfers (859,260) (864,406) (943,460) (927,763)
Total business-type activities (844,232) (846,892) (925,273) (911,909)
Total primary government $ 24,884,282 $ 25,634,282 $ 25,933,630 $ 26,802,975
Changes in Net Position
Governmental activities $ 328,952 $ (9,190) $ 115,057 $ 466
Business-type activities (269,030) (271,766) (266,343) (412,171)
Total primary government $ 59,922 $ (280,956) $ (151,286) $ (411,705)
NOTES: In years prior to fiscal year 2012 a portion of the Michigan Business Tax was restricted for educational purposes.
Tax law changes enacted during fiscal year 2012 eliminated that restriction.
Beginning in fiscal year 2012, a portion of the Corporate Income Tax was restricted for educational purposes.
2007 2008
Michigan
2005 2006
238 238 238 238
$ 2,439,220 $ 2,651,757 $ 2,784,245 $ 2,735,674 $ 2,620,176 $ 2,993,426
4,639,740 4,931,508 5,822,443 6,119,213 6,946,947 6,078,008
1,372,597 1,107,589 1,456,727 1,283,584 825,044 528,174
631,339 612,414 593,462 586,108 587,598 578,154
126,475 126,269 128,574 133,276 139,728 143,105
261,006 257,359 271,198 290,383 302,015 362,287
858,512 845,612 884,412 955,029 974,563 971,377
145,675 135,939 132,724 163,496 172,049 117,734
244,166 239,425 239,306 412,904 503,413 514,504
4,848,489 5,006,696 5,399,478 5,515,083 5,668,592 5,872,729
1,855,533 1,756,587 1,999,556 2,121,630 2,479,897 2,276,581
669,341 604,395 611,433 - - -
- - - 10,703 34,568 34,566
2,163,883 2,047,056 2,015,369 1,939,493 1,908,481 2,033,711
410,590 392,113 377,288 371,774 373,296 357,389
37,717 37,476 39,165 41,065 44,069 45,722
108,080 101,816 114,017 115,753 110,667 106,903
55,764 74,083 66,231 59,568 56,503 65,172
82,887 76,778 90,025 98,101 212,970 102,026
970,794 956,999 959,479 940,099 953,108 958,745
839,648 841,840 859,783 875,952 906,633 940,637
5,591 5,188 5,621 5,027 5,034 5,052
4,911 1,464 696 710 1,204 990
568,855 495,556 648,297 659,801 628,204 517,297
30,091 101,587 28,773 20,359 22,847 23,865
905,523 882,287 917,966 1,000,841 945,115 942,883
$ 24,276,425 $ 24,289,795 $ 26,446,268 $ 26,455,626 $ 27,422,722 $ 26,571,035
14,093 14,107 14,855 15,737 - -
763 276 191 139 112 87
3,636 16 649 3,320,915 - 3
(905,523) (882,287) (917,966) (1,000,841) (945,115) (942,883)
(887,031) (867,889) (902,271) 2,335,949 (945,003) (942,793)
$ 23,389,393 $ 23,421,906 $ 25,543,997 $ 28,791,575 $ 26,477,719 $ 25,628,241
$ (1,500,979) $ (272,029) $ 1,323,336 $ 237,344 $ 1,981,683 $ 33,035
(2,239,129) (730,375) 238,653 4,062,139 567,322 598,595
$ (3,740,107) $ (1,002,404) $ 1,561,989 $ 4,299,483 $ 2,549,005 $ 631,630
Michigan
2011 2010 2013 2012 2009 2014
239 239 239 239
FUND BALANCES, GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(In Thousands)
(Modified Accrual Basis of Accounting)
General Fund
Nonspendable $ - $ - $ - $ -
Restricted - - - -
Committed - - - -
Assigned - - - -
Unassigned - - - -
Total general fund $ - $ - $ - $ -
All Other Governmental Funds
Nonspendable $ - $ - $ - $ -
Restricted - - - -
Committed - - - -
Unassigned - - - -
Total all other governmental funds $ - $ - $ - $ -
General Fund
Reserved $ 1,232,856 $ 1,066,757 $ 722,948 $ 833,104
Unreserved 220,537 2,482 259,080 457,870
Total general fund $ 1,453,393 $ 1,069,240 $ 982,028 $ 1,290,974
All Other Governmental Funds
Reserved $ 1,759,462 $ 1,657,248 $ 1,945,448 $ 1,968,781
Unreserved, reported in:
Special revenue funds 303,226 779,910 689,356 483,130
Debt service funds 194,586 189,851 208,868 220,517
Capital projects funds (349,643) (87,918) (239,869) (238,718)
Permanent funds 43,259 43,791 41,361 54,791
Total all other governmental funds $ 1,950,891 $ 2,582,883 $ 2,645,164 $ 2,488,501
Reconciliation of governmental fund balances
Beginning fund balances $ 3,330,844 $ 3,404,284 $ 3,652,123 $ 3,627,192
Restatement of beginning fund balances - - - -
Beginning fund balances - restated 3,330,844 3,404,284 3,652,123 3,627,192
Excess of revenues and other sources over
(under) expenditures and other uses 73,440 336,067 35,653 131,789
Change in accounting entity - (88,228) (60,583) 20,494
Ending fund balances $ 3,404,284 $ 3,652,123 $ 3,627,192 $ 3,779,475
NOTE: Beginning in fiscal year 2011, the fund balance categories were reclassified as a result of implementing
Governmental Accounting Standards Board Statement No. 54. Fund balance has not been restated for
prior years.
Michigan
2005 2006 2007 2008
240 240 240 240
$ - $ - $ 267,289 $ 237,955 $ 221,614 $ 189,095
- - 351,551 364,497 376,977 383,025
- - 463,685 805,402 933,666 998,674
- - 67,021 68,583 137,947 206,875
- - 553,746 979,205 1,186,647 306,382
$ - $ - $ 1,703,292 $ 2,455,642 $ 2,856,852 $ 2,084,052
$ - $ - $ 929,077 $ 951,453 $ 968,433 $ 992,581
- - 2,269,086 2,086,927 2,200,564 2,250,773
- - 137,910 196,931 322,056 547,466
- - (41,126) (144,804) (13,216) (106,128)
$ - $ - $ 3,294,948 $ 3,090,508 $ 3,477,837 $ 3,684,691
$ 794,464 $ 828,553 $ - $ - $ - $ -
177,244 187,220 - - - -
$ 971,708 $ 1,015,773 $ - $ - $ - $ -
$ 1,941,203 $ 2,048,256 $ - $ - $ - $ -
605,513 379,140 - - - -
207,916 222,322 - - - -
(182,786) (161,980) - - - -
40,473 75,486 - - - -
$ 2,612,318 $ 2,563,224 $ - $ - $ - $ -
$ 3,779,475 $ 3,584,026 $ 3,578,997 $ 4,998,240 $ 5,546,150 $ 6,334,689
- - - (15,602) - -
3,779,475 3,584,026 3,578,997 4,982,638 5,546,150 6,334,689
(220,414) (5,029) 1,419,243 563,512 788,538 (565,945)
24,965 - - - - -
$ 3,584,026 $ 3,578,997 $ 4,998,240 $ 5,546,150 $ 6,334,689 $ 5,768,743
2009 2010
Michigan
2011 2012 2013 2014
241 241 241 241
CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(In Thousands)
(Modified Accrual Basis of Accounting)
Revenues
Taxes $ 23,936,964 $ 24,198,924 $ 24,370,884 $ 26,075,135
From federal agencies 11,974,006 12,160,022 12,655,930 13,432,638
From local agencies 262,875 124,101 139,429 126,550
From services 264,956 269,593 284,370 291,380
From licenses and permits 423,501 437,560 444,841 441,407
Special Medicaid reimbursements 467,970 93,621 102,670 115,797
Miscellaneous 1,475,377 1,948,214 2,271,059 1,667,798
Total revenues 38,805,648 39,232,034 40,269,182 42,150,705
Expenditures
General government 1,307,448 1,631,483 1,590,733 1,553,671
Education 14,557,032 14,758,992 14,664,715 15,094,266
Human services 4,122,779 4,341,774 4,447,992 4,609,481
Public safety and corrections 2,287,452 2,455,145 2,467,512 2,617,048
Conservation, environment,
recreation, and agriculture 614,939 642,815 568,398 597,267
Labor, commerce, and regulatory 924,876 952,921 957,023 966,091
Health services 10,126,544 9,958,104 10,741,285 11,588,207
Transportation 2,167,888 2,082,847 2,178,923 2,338,907
Tax credits 815,300 834,000 883,400 931,600
Capital outlay 1,274,247 1,462,405 1,376,891 1,234,427
Intergovernmental - revenue sharing 1,112,931 1,103,625 1,071,104 1,076,445
Debt service:
Bond principal retirement 354,711 773,826 238,789 228,261
Bond interest and fiscal charges 276,216 294,093 295,878 285,333
Capital lease payments 49,530 49,183 46,074 50,176
Total expenditures 39,991,894 41,341,213 41,528,716 43,171,179
Excess of revenues over (under) expenditures (1,186,245) (2,109,179) (1,259,534) (1,020,474)
Other Financing Sources (Uses)
Bonds and notes issued 365,164 963,105 485,115 121,500
Refunding bonds issued 1,528,539 1,494,050 - 208,780
Premium on bond issuance 97,857 46,234 18,662 16,811
Discount on bond issuance - (496,444) - -
Payment to refunded bond escrow agent (1,609,886) (563,776) (240,280) (223,319)
Capital lease acquisitions 6,778 34,059 20,906 110,838
Proceeds from sale of capital assets 10,643 13,974 5,347 30,505
Transfers from other funds 2,924,083 2,736,772 2,826,854 2,697,131
Transfers to other funds (2,063,492) (1,870,956) (1,882,002) (1,789,489)
Total other financing sources (uses) 1,259,686 2,357,018 1,234,604 1,172,757
Net change in fund balances $ 73,440 $ 247,839 $ (24,930) $ 152,283
Debt service as a percentage of
noncapital expenditures 2% 3% 1% 1%
Michigan
2005 2006 2007 2008
242 242 242 242
$ 23,348,354 $ 23,174,824 $ 24,691,957 $ 24,769,943 $ 25,239,420 $ 25,335,788
17,377,416 19,832,846 20,401,399 17,830,166 17,800,913 18,524,648
118,190 106,172 102,979 102,776 109,771 100,372
288,877 300,992 321,799 314,059 322,553 326,560
454,981 458,303 464,756 481,994 501,581 511,416
135,667 123,205 155,059 186,194 134,353 133,909
1,524,220 1,575,643 1,523,221 1,896,663 1,721,838 1,714,576
43,247,704 45,571,986 47,661,170 45,581,795 45,830,430 46,647,268
1,587,314 1,464,412 1,857,989 1,937,876 1,870,041 2,066,169
15,249,946 15,051,983 15,297,255 14,636,439 14,652,527 14,973,104
5,334,263 6,042,987 6,346,672 5,886,563 5,925,320 5,537,228
2,591,858 2,573,093 2,549,993 2,567,504 2,604,520 2,669,883
557,602 546,510 516,098 582,955 571,371 681,072
1,145,954 1,223,197 1,143,962 923,059 961,279 961,934
12,450,287 13,218,598 13,905,003 13,698,746 13,862,531 15,063,455
2,195,721 2,279,890 2,069,572 2,149,628 2,362,335 2,611,213
963,500 1,351,500 1,271,900 1,226,300 689,900 676,500
1,279,372 1,322,304 1,169,458 1,045,060 1,013,461 1,113,770
1,040,031 994,196 1,091,527 1,032,243 1,077,514 1,120,593
215,380 247,532 231,577 342,241 404,396 452,631
341,194 316,163 311,955 346,861 339,908 317,873
50,107 50,982 56,146 56,327 58,990 63,028
45,002,530 46,683,346 47,819,108 46,431,804 46,394,092 48,308,452
(1,754,825) (1,111,361) (157,938) (850,008) (563,662) (1,661,184)
601,500 177,480 474,278 360,260 377,326 85,295
775,640 142,190 543,367 163,035 508,109 295,085
10,748 10,569 12,216 22,071 38,495 47,579
(4,263) - (150) (1,339) (14) -
(777,179) (150,488) (549,296) (172,223) (537,743) (299,121)
41,205 39,101 172,111 34,567 18,285 18,846
3,027 1,895 1,797 3,160 4,148 3,466
2,603,766 2,834,719 2,616,900 2,956,635 3,115,335 3,354,150
(1,695,068) (1,949,134) (1,694,043) (1,952,646) (2,171,741) (2,410,062)
1,559,376 1,106,331 1,577,181 1,413,520 1,352,200 1,095,238
$ (195,449) $ (5,029) $ 1,419,243 $ 563,512 $ 788,538 $ (565,945)
1% 1% 1% 2% 2% 2%
2013 2014
Michigan
2009 2010 2011 2012
243 243 243 243
PERSONAL INCOME BY INDUSTRY
LAST TEN FISCAL YEARS
(In Millions)
2005 2006
Farm earnings $ 1,080 $ 1,087 $ 1,067
Forestry, fishing, and related activities 315 295 359
Mining 717 791 930
Utilities 2,163 2,234 2,482
Construction 15,211 15,286 15,256
Manufacturing 52,015 50,968 50,243
Wholesale trade 11,876 12,394 12,837
Retail trade 16,373 16,461 16,396
Transportation and warehousing 7,001 7,264 7,201
Information 4,898 4,803 4,714
Finance and insurance 11,417 12,047 12,168
Real estate and rental and leasing 3,485 3,353 3,064
Professional, scientific, and technical services 22,095 22,845 23,744
Management of companies and enterprises 7,271 7,289 6,997
Administrative and waste services 10,506 11,441 11,888
Educational services 2,249 2,323 2,472
Health care and social assistance 24,414 25,735 27,413
Arts, entertainment, and recreation 2,296 2,224 2,299
Accommodation and food services 6,104 6,190 6,256
Other services, except public administration 8,517 8,802 9,172
Government and government enterprises 36,830 38,256 38,931
Total earnings by place of work 246,831 252,084 255,888
Total earnings by place of work 246,831 252,084 255,888
less: Contributions for government social insurance 28,073 28,945 29,754
plus: Adjustment for residence 1,341 1,435 1,559
Net earnings by place of residence 220,099 224,574 227,693
Net earnings by place of residence 220,099 224,574 227,693
plus: Dividends, interest, and rent 51,782 53,625 55,468
plus: Personal current transfer receipts 48,798 51,530 54,807
Total Personal Income $ 320,678 $ 329,730 $ 337,968
Statutory Tax Rate (blended rate) 3.98% 3.90% 3.90%
NOTES: Earnings presented are blended averages. Due to the use of averages
and blended amounts, the totals may not equal the sum of the industry
amounts presented.
Earnings includes wages and salaries, supplements to wages and
proprietors' income.
Industries categorized using the North American Industry Classification System.
Fiscal year 2013 is the most recent year for which data is available.
SOURCES: U.S. Bureau of Economic Analysis, U.S. Department of Commerce.
Office of Revenue and Tax Analysis, Michigan Department of Treasury.
Michigan
2004
244 244 244 244
2007 2008 2009 2010 2011 2012 2013
$ 1,174 $ 1,761 $ 1,350 $ 1,641 $ 2,639 $ 2,184 $ 2,188
330 305 342 394 383 452 437
799 1,119 789 765 1,040 1,052 1,067
2,611 2,734 2,720 2,724 2,723 2,707 2,771
13,762 12,418 10,717 10,100 10,569 11,557 12,469
49,087 45,999 37,700 36,656 40,071 43,382 45,045
13,160 13,324 12,379 12,181 13,148 13,910 14,445
16,425 16,127 15,565 15,547 15,858 16,149 16,446
7,426 7,201 6,612 6,623 7,287 7,719 8,040
4,851 4,714 4,666 4,431 4,480 4,566 4,737
12,488 12,136 12,038 12,318 11,545 12,357 13,351
2,771 2,661 2,644 2,713 2,957 3,703 4,207
24,395 25,293 23,088 22,216 23,820 25,298 26,492
7,043 6,790 6,079 5,890 6,612 6,920 7,184
11,672 11,496 10,506 10,588 11,564 12,310 12,632
2,614 2,714 2,855 2,916 2,924 3,083 3,151
28,555 29,944 31,024 31,826 32,443 33,224 33,637
2,164 2,226 2,085 2,050 1,930 1,952 2,089
6,608 6,589 6,308 6,342 6,689 7,213 7,380
9,172 8,818 8,691 8,778 8,988 9,509 9,864
39,767 40,784 41,199 42,412 41,656 40,832 40,685
256,870 255,150 239,356 239,108 249,323 260,076 268,318
256,870 255,150 239,356 239,108 249,323 260,076 268,318
30,191 30,239 28,739 28,527 27,141 27,520 31,179
1,653 1,630 1,568 1,610 1,797 1,918 2,042
228,333 226,542 212,185 212,191 223,979 234,473 239,180
228,333 226,542 212,185 212,191 223,979 234,473 239,180
58,530 61,245 54,707 50,461 57,427 61,039 64,405
59,667 65,551 74,818 80,437 80,729 81,281 83,126
$ 346,530 $ 353,337 $ 341,710 $ 343,088 $ 362,135 $ 376,793 $ 386,711
3.90% 4.35% 4.35% 4.35% 4.35% 4.35% 4.25%
Michigan
245 245 245 245
TAXABLE SALES BY INDUSTRY
LAST TEN FISCAL YEARS
(In Millions)
2004 2005 2006 2007
Farming $ 77.2 $ 78.9 $ 78.5 $ 73.6
Agricultural 275.3 277.5 270.7 250.3
Mining 159.9 181.0 192.5 183.4
Construction 768.8 788.3 782.3 706.4
Manufacturing 3,315.5 3,577.2 3,424.2 3,283.3
Transportation and utilities 9,369.3 10,359.4 11,715.5 12,091.0
Wholesale trade 3,127.9 3,270.5 3,400.5 2,881.0
Retail trade 83,135.4 84,719.4 83,382.5 83,464.8
Finance, insurance, and real estate 472.3 460.8 435.6 333.3
Services 7,686.8 7,121.3 6,215.0 6,483.1
State and local government 162.0 184.3 197.7 202.6
Other classifications 951.9 1,021.3 806.4 1,091.1
Total $ 109,502.2 $ 112,040.0 $ 110,901.4 $ 111,043.7
Direct Sales Tax Rate 6% 6% 6% 6%
NOTES: Taxable sales were imputed from fiscal year sales tax cash collections by industry.
Industries categorized by using the Standard Industrial Classification.
Fiscal year 2013 is the most recent year for which data is available.
SOURCE: Michigan Department of Treasury.
Michigan
246 246 246 246
2008 2009 2010 2011 2012 2013
$ 70.4 $ 57.1 $ 56.1 $ 58.5 $ 61.7 $ 69.4
240.4 226.6 211.8 216.2 238.1 254.3
180.2 118.8 116.2 145.7 156.1 136.2
695.9 565.0 497.3 534.1 601.6 617.9
3,331.8 2,608.5 2,645.7 2,738.4 3,131.6 3,514.0
12,650.3 12,708.7 12,041.1 12,860.4 12,412.4 12,763.8
3,031.4 2,516.5 2,426.9 2,861.1 2,727.9 2,652.0
86,572.7 78,680.5 80,195.7 85,484.6 90,639.0 94,582.1
323.9 356.8 193.0 254.6 263.4 355.8
6,426.7 5,696.8 5,405.8 5,831.0 6,092.7 6,223.3
166.7 154.6 240.0 93.3 178.5 187.3
943.9 1,802.9 1,007.5 1,048.7 1,290.4 1,255.7
$ 114,634.3 $ 105,492.7 $ 105,036.9 $ 112,126.5 $ 117,793.5 $ 122,611.9
6% 6% 6% 6% 6% 6%
Michigan
247 247 247 247
PERSONAL INCOME TAX FILERS AND LIABILITY BY INCOME LEVEL
TAX YEARS 2003 AND 2012
Number Percentage Percentage Number Percentage Percentage
of Filers of Total (In Millions) of Total of Filers of Total (In Millions) of Total
$50,000 and under 2,930,459 67.1% $ 650 12.4% 2,903,305 64.3% $ 672 9.6%
$50,001 - $100,000 1,023,715 23.4% 2,053 39.2% 996,144 22.1% 2,122 30.3%
$100,001 - $250,000 363,748 8.3% 1,609 30.7% 523,246 11.6% 2,452 35.1%
$250,001 - $1,000,000 45,506 1.0% 598 11.4% 79,076 1.8% 1,097 15.7%
$1,000,001 and higher 6,567 0.2% 322 6.2% 13,000 0.3% 651 9.3%
Total 4,369,995 100.0% $ 5,233 100.0% 4,514,771 100.0% $ 6,995 100.0%
NOTES: Due to confidentiality issues, the names of the ten largest revenue payers are not available. These categories are
intended to provide alternative information regarding the sources of the State's personal income tax revenue.
Tax year 2012 is the most recent year for which data is available.
Tax year 2003 personal income tax amount refers to tax amount net of nonrefundable credits, and net of Home
Heating Credits (HHC), Homestead Property Tax Credits (HPTC), Farmland Preservation, and Adoption Credits.
Tax year 2012 personal income tax amount refers to tax amount net of nonrefundable credits, and net of HHC, HPTC,
Michigan Earned Income Tax, Farmland Preservation, and Historic Preservation Credits.
SOURCE: Michigan Department of Treasury.
Michigan
Personal
Tax Year 2003 Tax Year 2012
Income (AGI) Group
Adjusted Gross Income Tax Income Tax
Personal
248 248 248 248
SALES TAX PAYERS BY INDUSTRY
FISCAL YEARS 2004 AND 2013
Number Percentage Percentage Number Percentage Percentage
of Filers of Total (In Millions) of Total of Filers of Total (In Millions) of Total
Farming 1,007 0.94% $ 4.5 0.07% 581 0.61% $ 3.7 0.05%
Agricultural 2,341 2.19% 16.5 0.26% 1,634 1.72% 14.3 0.21%
Mining 249 0.23% 10.5 0.16% 239 0.25% 9.4 0.14%
Construction 2,048 1.91% 44.5 0.69% 2,190 2.30% 36.1 0.52%
Manufacturing 4,928 4.60% 193.5 3.02% 6,008 6.31% 187.9 2.72%
Transportation
and utilities 1,172 1.09% 433.0 6.76% 1,290 1.35% 592.3 8.57%
Wholesale trade 2,169 2.03% 187.3 2.93% 1,864 1.96% 163.7 2.37%
Retail trade 65,630 61.29% 4,945.1 77.23% 54,580 57.33% 5,438.3 78.64%
Finance, insurance,
and real estate 401 0.37% 37.3 0.58% 432 0.45% 15.8 0.23%
Services 24,541 22.92% 484.6 7.57% 24,572 25.81% 365.6 5.29%
State and local
government 340 0.32% 9.1 0.14% 362 0.38% 10.7 0.15%
Other classifications 2,247 2.10% 37.1 0.58% 1,451 1.52% 77.4 1.12%
Total 107,073 100.00% $ 6,402.9 100.00% 95,203 100.00% $ 6,915.2 100.00%
NOTES: Due to confidentiality issues, the names of the ten largest revenue payers are not available. These categories are
intended to provide alternative information regarding the sources of the State's sales tax revenue.
Fiscal year 2013 is the most recent year for which data is available.
Industries categorized using the Standard Industrial Classification.
SOURCE: Michigan Department of Treasury.
Michigan
Tax
Liability Liability
2004 2013
Tax
249 249 249 249
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(In Millions)
FISCAL
YEAR
2005 $ 1,645 $ 15 $ 1,652
2006 1,794 14 1,889
2007 1,488 13 2,328
2008 1,487 13 2,257
2009 1,673 12 2,474
2010 1,680 12 2,369
2011 1,889 11 2,261
2012 2,018 10 2,226
2013 2,048 9 2,105
2014 1,942 9 1,960
NOTES: Article 9, Section 15 of the State Constitution allows for
long-term borrowing by the State for specific purposes in
amounts as may be provided by acts of the Legislature
adopted by a vote of two-thirds of the members in each
house, and approved by a majority of the bodies people
voting at a general election. The debts of public bodies
corporate and politic created by law are not general
obligation debts and liabilities of the State of Michigan.
Details regarding the State's debt can be found in the
bonds and notes payable note of the financial statements.
U.S. Census Bureau, Population Division.
Department of Technology, Management and Budget.
U.S. Department of Commerce, Bureau of Economic
Analysis.
Department of Treasury.
REVENUE
BONDS
TRANSPORTATION
BONDS
GOVERNMENTAL ACTIVITIES
Michigan
STATE PARK
REVENUE
SOURCES:
BONDS
GENERAL
OBLIGATION
250 250 250 250
PERCENTAGE
OF PERSONAL
INCOME
$ 2,615 $ 406 $ 6,333 1.91% $ 630
3,449 252 7,398 2.18% 737
3,366 248 7,443 2.14% 744
3,375 320 7,452 2.10% 789
2,969 330 7,458 2.20% 753
3,008 345 7,414 2.14% 751
3,175 407 7,743 2.11% 784
3,103 416 7,773 2.04% 787
3,182 407 7,751 2.01% 783
3,106 394 7,411 Unavailable Unavailable
AUTHORITY
LEASES BONDS
CAPITAL
ACTIVITIES
GOVERNMENTAL
Michigan
CAPITA
TOTAL
PRIMARY
GOVERNMENT
PER
STATE
BUILDING
251 251 251 251
Michigan
2014 Comprehensive Annual Financi al Report
252 252 252 252
RATIOS OF NET GENERAL OBLIGATION BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
(In Millions)
OF PERSONAL
FISCAL YEAR INCOME
2005 $ 1,645 $ 1 $ 1,644 0.50% $ 164
2006 1,794 1 1,793 0.53% 179
2007 1,487 1 1,486 0.43% 149
2008 1,487 1 1,486 0.42% 149
2009 1,673 1 1,672 0.49% 169
2010 1,680 1 1,678 0.48% 170
2011 1,889 1 1,888 0.51% 191
2012 2,018 1 2,017 0.53% 204
2013 2,048 1 2,046 0.53% 207
2014 1,942 2 1,941 Unavailable Unavailable
SOURCES: U.S. Census Bureau, Population Division.
Department of Technology, Management and Budget.
U.S. Department of Commerce, Bureau of Economic Analysis.
Department of Treasury.
Michigan
CAPITA
GENERAL
OBLIGATION
BONDS
PERCENTAGE
PER
LESS DEBT
NET BONDED
BONDS
GENERAL
OBLIGATION SERVICE
FUNDS
253 253 253 253
DEBT SERVICE COVERAGE
COMPREHENSIVE TRANSPORTATION FUND RELATED BONDS
LAST TEN FISCAL YEARS
(In Millions)
Constitutionally Restricted
Transportation Fund Revenues:
Motor Fuel Taxes $ 1,069.1 $ 1,055.3 $ 1,027.8 $ 989.3
Registration Taxes 863.4 867.7 871.7 855.0
Miscellaneous Fees 37.3 36.0 35.7 36.2
Total 1,969.8 1,959.0 1,935.3 1,880.6
Less Deductions 125.4 149.5 137.9 138.3
Remaining Balance 1,844.4 1,809.5 1,797.4 1,742.3
Portion of Balance Credited to Comprehensive
Transportation Fund (excluding interest) 167.3 165.4 164.7 159.9
Motor Vehicle Related Sales Tax Revenues $ 1,115.4 $ 1,111.2 $ 1,117.5 $ 1,249.0
Allocation to Comprehensive Transportation Fund 56.9 66.4 67.7 82.1
Constitutionally Restricted Revenues Credited to
Comprehensive Transportation Fund $ 224.3 $ 231.8 $ 232.4 $ 242.0
Plus Other Revenues (primarily interest) 5.0 0.5 5.9 1.4
Money Available for Debt Service $ 229.3 $ 232.3 $ 238.3 $ 243.5
Debt Service:
Principal $ 15.6 $ 19.1 $ 20.2 $ 21.3
Interest 13.4 12.0 12.9 12.0
Actual Annual Debt Service (1) 28.9 31.1 33.2 33.3
Debt Service Coverage 7.9 x 7.5 x 7.2 x 7.3 x
NOTE: (1) The table above does not include debt service on refunded bonds.
SOURCE: Michigan Department of Transportation.
Michigan
2005 2008 2007 2006
254 254 254 254
$ 964.0 $ 962.1 $ 957.7 $ 945.9 $ 950.9 $ 958.8
839.7 842.1 859.7 876.1 906.5 940.6
33.0 33.8 34.2 35.0 36.1 37.4
1,836.7 1,837.9 1,851.5 1,857.0 1,893.5 1,936.8
137.2 138.1 137.4 138.0 133.2 135.3
1,699.5 1,699.9 1,714.1 1,719.0 1,760.4 1,801.5
155.3 155.2 156.7 157.0 161.4 165.5
$ 1,188.3 $ 1,182.5 $ 1,290.7 $ 1,406.5 $ 1,476.3 $ 1,462.7
82.9 76.8 90.0 98.1 103.0 102.0
$ 238.2 $ 232.0 $ 246.7 $ 255.1 $ 264.4 $ 267.5
0.9 1.2 1.0 0.6 1.1 1.1
$ 239.1 $ 233.2 $ 247.8 $ 255.8 $ 265.4 $ 268.6
$ 7.5 $ 10.1 $ 10.2 $ 14.0 $ 13.9 $ 14.5
10.4 10.5 10.0 9.3 8.6 7.9
17.9 20.6 20.1 23.4 22.4 22.4
13.3 x 11.3 x 12.3 x 10.9 x 11.8 x 12.0 x
Michigan
2014 2013 2009 2010 2011 2012
255 255 255 255
DEBT SERVICE COVERAGE
STATE TRUNKLINE FUND RELATED BONDS
LAST TEN FISCAL YEARS
(In Millions)
2005 2006 2007 2008
Constitutionally Restricted
Transportation Fund Revenues:
Motor Fuel Taxes $ 1,069.1 $ 1,055.3 $ 1,027.8 $ 989.3
Registration Taxes 863.4 867.7 871.7 855.0
Miscellaneous Fees 37.3 36.0 35.7 36.2
Total 1,969.8 1,959.0 1,935.3 1,880.6
Less Deductions:
Critical Bridge Debt Service 2.2 2.5 2.8 2.8
Legally Dedicated State Trunkline Fund Debt Service 43.0 43.0 43.0 43.0
Collection Costs 44.5 57.1 46.2 48.1
Waterways/Recreational Improvement Fund 18.4 18.0 17.6 16.9
Comprehensive Transportation Fund (excluding interest) 167.3 165.4 164.7 159.9
Local Program Fund 33.0 33.0 33.0 33.0
Critical Bridge Fund 17.2 28.9 28.3 27.5
Economic Development Fund 40.3 40.3 40.3 40.3
Total Deductions 366.0 388.2 375.9 371.5
Constitutionally Restricted Revenues
Available for Distribution 1,603.8 1,570.8 1,559.4 1,509.1
Plus Other Revenues (primarily interest) 7.0 8.9 8.2 9.0
Total Money Available for Distribution 1,610.8 1,579.7 1,567.5 1,518.0
Distributions to:
Cities and Villages 348.7 344.8 342.8 332.1
County Road Commissions 611.6 603.3 599.7 580.9
State Trunkline Fund 650.5 631.5 625.0 605.0
Money Available for Debt Service:
State Trunkline Fund 650.5 631.5 625.0 605.0
Legally Dedicated State Trunkline Fund Debt Service 43.0 43.0 43.0 43.0
Economic Development Fund 40.3 40.3 40.3 40.3
Local Program Fund 33.0 33.0 33.0 33.0
Critical Bridge Fund 2.2 2.5 2.8 2.8
Miscellaneous (1) - - - 40.5
Total Available for Debt Service 769.0 750.3 744.1 764.6
Debt Service:
Principal $ 25.0 $ 19.9 $ 20.0 $ 43.5
Interest 49.5 74.7 84.8 91.5
Actual Annual Debt Service (2) 74.5 94.6 104.8 135.0
Debt Service Coverage 10.3 x 7.9 x 7.1 x 5.7 x
NOTES:
(1) Beginning fiscal year 2008, miscellaneous revenues were available for debt service.
(2) The table above excludes amounts related to refunded bonds and federally funded debt.
SOURCE: Michigan Department of Transportation.
Michigan
256 256 256 256
2009 2010 2011 2012 2013 2014
$ 964.0 $ 962.1 $ 957.7 $ 945.9 $ 950.9 $ 958.8
839.7 842.1 859.7 876.1 906.5 940.6
33.0 33.8 34.2 35.0 36.1 37.4
1,836.7 1,838.0 1,851.5 1,857.0 1,893.5 1,936.8
2.8 3.3 3.3 3.3 3.0 2.4
43.0 43.0 43.0 43.0 43.0 43.0
47.8 47.9 47.8 48.6 43.9 46.4
16.6 16.7 16.5 16.4 16.4 16.5
155.3 155.2 156.7 157.0 161.4 165.5
33.0 33.0 33.0 33.0 33.0 33.0
27.0 27.2 26.9 26.8 26.8 26.9
40.3 40.3 40.3 40.3 40.3 40.3
365.7 366.6 367.4 368.4 367.8 374.1
1,471.0 1,471.4 1,484.1 1,488.6 1,525.7 1,562.8
2.3 2.2 0.6 1.2 1.1 1.1
1,473.3 1,473.6 1,484.7 1,489.8 1,526.8 1,563.8
322.4 322.4 324.6 326.0 334.2 342.3
563.7 563.8 568.4 569.3 584.5 598.9
587.2 587.4 591.7 592.5 607.7 622.6
587.2 587.4 591.7 592.5 607.7 622.6
43.0 43.0 43.0 43.0 43.0 43.0
40.3 40.3 40.3 40.3 40.3 40.3
33.0 33.0 33.0 33.0 33.0 33.0
2.8 3.3 3.3 3.3 3.0 2.4
27.1 36.4 39.5 35.4 133.0 35.7
733.3 743.4 750.7 747.4 860.1 777.0
$ 45.6 $ 79.2 $ 82.6 $ 86.3 $ 88.5 $ 106.5
90.1 80.9 77.5 75.6 73.2 59.8
135.7 160.1 160.1 161.9 161.8 166.3
5.4 x 4.6 x 4.7 x 4.6 x 5.3 x 4.7 x
Michigan
257 257 257 257
DEBT SERVICE COVERAGE
STATE BUILDING AUTHORITY
LAST TEN FISCAL YEARS
(In Millions)
Revenue - Lease and Rental Payments $ 246.9 $ 255.5 $ 213.2 $ 219.4
Less: Operating Expenses 3.2 9.9 0.8 0.8
Net Available Revenue 243.7 245.6 212.4 218.6
Debt Service:
Principal 119.9 82.1 83.6 87.1
Interest 128.7 140.8 117.5 123.4
Actual Annual Debt Service (1) 248.6 222.9 201.1 210.5
Debt Service Coverage 1.0 x 1.1 x 1.1 x 1.0 x
NOTE:
(1) The table above excludes amounts related to refunded bonds.
2008
Michigan
2007 2006 2005
258 258 258 258
$ 230.4 $ 230.1 $ 233.1 $ 234.3 $ 234.4 $ 231.0
1.1 1.6 1.4 1.6 1.3 1.1
229.3 228.5 231.7 232.7 233.1 229.9
100.5 96.1 128.9 96.2 126.6 102.2
122.2 120.0 122.5 121.0 124.8 118.5
222.7 216.1 251.4 217.2 251.4 220.6
1.0 x 1.1 x 0.9 x 1.1 x 0.9 x 1.0 x
2009 2010 2011
Michigan
2014 2013 2012
259 259 259 259
DEMOGRAPHIC AND ECONOMIC INDICATORS
LAST TEN CALENDAR YEARS
Population (a)
(in thousands)
Michigan 10,055 10,051 10,036 10,001
United States 292,805 295,517 298,380 301,231
Total Personal Income (b)
(in billions)
Michigan $ 323.0 $ 331.2 $ 339.7 $ 348.6
United States $ 10,043.3 $ 10,605.6 $ 11,376.4 $ 11,990.1
Per Capita Income (b)
Michigan $ 32,119 $ 32,952 $ 33,851 $ 34,853
United States $ 34,300 $ 35,888 $ 38,127 $ 39,804
Unemployment Rate (c)
Michigan 7.1% 6.8% 6.9% 7.1%
United States 5.5% 5.1% 4.6% 4.6%
Michigan estimated wage and salary employees (c)
(in thousands)
Goods Producing:
Mining and Logging 8.2 8.4 8.0 7.7
Construction 191.8 189.5 178.4 166.7
Manufacturing 698.3 677.5 648.2 617.3
Total Goods Producing 898.3 875.4 834.6 791.7
Service-Providing:
Private Service-Providing
Trade, Transportation, and Utilities:
Wholesale Trade 170.5 170.7 170.6 169.0
Retail Trade 513.6 506.0 496.0 489.7
Transportation and Utilities 125.7 128.3 128.4 128.3
Information 65.7 64.9 63.9 62.9
Financial Activities:
Finance and Insurance 159.6 159.9 158.9 156.2
Real Estate and Rental and Leasing 56.1 56.1 54.9 53.3
Professional and Business Services:
Professional, Scientific, and Technical Services 245.5 247.7 246.2 246.2
Management of Companies and Enterprises 70.7 67.9 64.9 60.0
Administrative, Support Services,
and Waste Management 270.1 277.5 275.1 274.5
Educational and Health Services:
Educational Services 70.6 74.8 76.1 78.7
Health Care and Social Assistance 490.3 501.0 507.2 518.0
Leisure and Hospitality:
Accommodation and Food Services 348.2 350.2 352.3 351.5
Other 54.9 55.4 54.5 55.5
Other Services 179.6 179.6 177.5 176.6
Total Private Service-Providing 2,821.0 2,840.2 2,826.6 2,820.4
Government 679.7 674.1 665.3 655.7
Total Service-Providing 3,500.7 3,514.3 3,491.9 3,476.1
Total Wage and Salary Employment
4,399.0 4,389.7 4,326.5 4,267.8
NOTES: Calendar year 2013 is the most recent year for which data is available.
Wage and Salary Employment based on North American Industry Classification System.
Components in Wage and Salary Employment may not total due to truncation.
SOURCES:
(a) U.S. Census Bureau, Population Division.
(b) U.S. Department of Commerce, Bureau of Economic Analysis.
(c) Michigan Department of Licensing and Regulatory Affairs
and U.S. Department of Labor, Bureau of Labor Statistics.
Michigan
2005 2004 2006 2007
260 260 260 260
9,947 9,902 9,876 9,875 9,883 9,896
304,094 306,772 309,326 311,583 313,874 316,129
$ 354.1 $ 338.5 $ 346.5 $ 367.0 $ 381.3 $ 386.5
$ 12,429.2 $ 12,080.2 $ 12,417.7 $ 13,189.9 $ 13,873.2 $ 14,151.4
$ 35,594 $ 34,190 $ 35,082 $ 37,163 $ 38,585 $ 39,055
$ 40,873 $ 39,379 $ 40,144 $ 42,332 $ 44,200 $ 44,765
8.3% 13.5% 12.7% 10.4% 9.1% 8.8%
5.8% 9.3% 9.6% 8.9% 8.1% 7.4%
7.9 6.9 7.1 7.4 7.8 8.0
153.5 127.6 121.6 125.3 128.2 132.4
572.0 463.1 473.9 509.7 537.6 555.1
733.3 597.6 602.6 642.4 673.6 695.4
167.8 152.9 150.7 155.0 159.5 163.6
478.1 451.4 446.5 448.6 449.3 455.2
124.5 112.9 113.5 118.2 121.5 125.1
60.2 56.3 54.8 53.2 53.3 55.3
149.9 142.6 139.8 144.2 148.3 152.4
52.0 48.8 48.3 48.9 48.2 49.6
243.9 220.9 222.6 235.0 247.9 260.2
56.9 51.1 51.0 53.6 55.3 57.7
262.8 229.5 242.4 265.7 277.7 284.0
80.5 79.2 77.3 73.5 73.3 74.1
526.9 530.1 534.5 548.2 559.0 563.4
345.6 330.8 329.0 332.8 341.9 350.3
54.3 50.9 48.6 47.7 46.9 47.2
175.6 168.8 166.3 167.3 169.3 171.5
2,778.8 2,626.2 2,625.1 2,691.9 2,751.2 2,809.5
650.0 646.8 635.6 617.4 608.5 599.6
3,428.8 3,272.9 3,260.7 3,309.3 3,359.7 3,409.1
4,162.1 3,870.5 3,863.3 3,951.8 4,033.3 4,104.5
2013 2009 2010 2011 2012
Michigan
2008
261 261 261 261
CLASSIFIED EMPLOYEES BY FUNCTION
LAST TEN FISCAL YEARS
2005 2006 2007 2008
General Government 7,138 7,144 7,264 7,347
Education 352 367 369 380
Human services 9,953 9,778 9,759 9,582
Public safety and corrections 20,175 20,060 19,948 19,451
Conservation, environment,
recreation, and agriculture 3,729 3,662 3,586 3,439
Labor, commerce, and regulatory 3,994 4,128 3,967 3,781
Health services 4,424 4,241 4,225 3,964
Transportation 2,849 2,880 2,895 2,854
Total 52,614 52,259 52,013 50,799
NOTES: This report reflects classified employees who are full-time, part-time,
permanent intermittent, limited term, seasonal, non-career, or on worker's
compensation in primary positions only, except for the following non career
appointments: student assistant, transportation aide, and state worker.
Each fiscal year in this schedule also includes approximately 2,000 classified
employees for the business type activities and discretely presented component
unit authorities. Although the expenses for the business type activities and
component unit authorities are reported separately in the government-wide
financial statements, the employee counts were combined in this schedule to
ensure consistency with the Civil Service Commission reports and for
administrative efficiency.
This schedule includes average employee counts. Employees who job share
are divided in half. For this reason, totals may not equal the sum of the
employee counts per function.
SOURCE: Michigan Civil Service Commission, Annual Work Force Report.
Michigan
262 262 262 262
2009 2010 2011 2012 2013 2014
7,328 6,995 6,645 7,026 7,273 7,377
405 445 446 476 518 518
10,168 10,414 10,365 11,052 11,772 11,388
19,310 18,388 17,508 16,689 16,561 16,154
3,466 3,359 3,041 3,049 3,033 3,050
4,056 4,298 3,727 3,756 2,899 2,817
4,075 3,873 3,448 3,003 3,113 3,128
2,892 2,844 2,639 2,632 2,570 2,573
51,699 50,615 47,818 47,683 47,739 47,003
Michigan
263 263 263 263
OPERATING INDICATORS BY FUNCTION
LAST TEN FISCAL YEARS
2005 2006 2007 2008
General government
Tax forms processed (7) 8,059,355 8,259,132 8,245,905 8,335,760
Passenger, commercial, and
recreational vehicle registrations 8,879,158 8,732,938 8,785,222 8,570,421
Driver licenses issued 1,913,530 1,724,108 1,875,932 1,915,459
Education
K-12 students 1,708,584 1,697,936 1,678,579 1,648,585
Public university students 250,030 253,020 253,576 254,231
Community college students 131,150 133,359 139,219 146,234
Human services
Food assistance program recipients (1) 1,047,594 1,133,793 1,204,409 1,262,951
Family independence program recipients (1) 212,252 217,318 237,102 210,181
Day care recipients (1) 118,939 114,758 106,062 97,856
Children in foster care 18,745 18,414 18,943 18,016
State disability assistance recipients (1) 10,560 10,591 11,015 10,427
Finalized adoptions (yearly total) (2) 2,910 2,621 2,638 2,899
J uvenile justice youth served 1,871 1,655 1,512 1,371
Open child support cases with support
orders established 777,188 764,500 754,511 755,004
Public safety and corrections
Inmates, parolees, and probationers (as of 9/30) 119,845 120,337 123,032 126,100
State police patrol miles driven 16,879,418 17,632,736 14,916,802 17,071,748
Criminal offender DNA samples entered into
federal indexing database (calendar year) 23,099 41,888 30,519 25,263
National Guard members (as of 9/30) 11,125 11,768 11,862 11,991
Veteran homes average daily census 909 902 896 891
Conservation, environment, recreation and agriculture
Hunting and/or fishing license holders (3) 2,004,577 1,950,676 1,981,382 1,964,480
Camping nights in State parks 1,005,437 956,030 929,753 891,607
Population impacted by water purification projects 3,994,970 (4) 1,046,379 (4) 490,298 (4) 1,331,867
Underground storage tank releases closed 265 320 233 159
Scrap tires collected (passenger tire equivalent) 5,942,164 6,081,447 3,736,086 3,772,376
Labor, commerce, and regulatory
Processed applications for new
and renewal occupational licenses 152,659 164,153 198,430 151,230
Building related permits issued 40,662 33,031 26,942 24,025
Building related safety inspections conducted 41,303 45,921 42,931 35,759
Occupational safety and health enforcement
inspections conducted 4,492 5,102 5,001 5,032
Alleged occupational safety and health violations
identified 17,621 17,311 16,712 15,781
Financial and insurance service providers chartered 281,668 297,662 323,791 334,685
Health services
Medicaid recipients (1) 1,424,831 1,490,384 1,524,299 1,536,853
Women, Infants, and Children Food
and Nutrition Program recipients (1) 226,601 229,770 232,280 239,145
Children's special health care services recipients (1) 30,232 30,449 30,898 31,452
Mentally ill/developmental
disability service recipients (1) 200,424 207,407 213,257 219,238
Substance abuse service recipients 69,808 71,175 69,564 70,978
NOTES:
(1) Monthly average.
(2) Total adoptions were completed by the Department of Human Services (DHS) and private agencies under contract with DHS.
(3) The licensing season runs April 1 through March 31. Amounts reported under fiscal year 2014 are for the licensing year
ending March 31, 2014.
(4) The increase in fiscal year 2005 resulted from a project benefiting users of the Detroit Water and Sewage Department.
(5) Amount estimated.
(6) Enhanced driver licenses were sold starting in fiscal year 2009.
(7) Numbers for fiscal years 2005 through 2008 are on a calendar year basis. Effective fiscal year 2009, the numbers are on
a fiscal year basis.
SOURCES: Various State departments.
Michigan
264 264 264 264
2009 2010 2011 2012 2013 2014
8,320,921 8,078,164 8,521,664 8,539,957 8,360,575 8,432,444
8,506,838 8,459,499 8,479,747 8,435,868 8,496,407 8,543,342
1,910,604 (6) 1,791,417 1,901,673 1,969,253 1,956,686 1,705,117
1,614,975 1,592,598 1,565,324 1,550,111 1,533,442 1,522,119
257,148 262,615 264,903 264,913 263,817 262,735
157,225 177,277 176,370 164,827 154,118 143,829
1,462,710 1,776,368 1,928,478 1,828,384 1,775,646 1,680,721
202,693 224,651 227,490 154,941 129,185 89,957
83,137 63,643 54,049 50,028 43,246 35,501
16,115 15,261 14,043 13,504 13,902 13,209
10,528 10,628 10,094 8,713 7,845 6,723
3,087 2,612 2,506 2,554 2,361 Unavailable
1,047 988 951 801 790 729
763,919 764,388 772,687 774,463 771,108 760,284 (5)
125,854 125,231 117,152 112,049 108,738 106,966
15,138,587 16,148,708 15,045,772 17,633,319 18,852,703 21,249,946
19,029 20,911 16,475 16,098 21,283 15,808 (5)
11,817 11,900 11,504 11,156 10,901 10,537
875 852 798 690 665 649
1,951,579 1,934,765 1,912,262 1,851,287 1,919,692 1,947,508
894,410 916,289 899,311 987,189 1,021,712 1,001,245 (5)
359,015 370,662 725,931 463,457 691,102 677,175
203 231 171 184 285 488
5,517,872 1,121,596 220,508 161,704 399,921 182,891 (5)
150,118 155,035 147,791 125,603 135,734 341,132
19,604 20,078 18,182 19,221 17,783 17,066
41,623 48,614 46,510 49,614 58,223 56,098
5,071 5,202 5,343 5,394 5,267 5,231
14,006 14,221 14,333 13,744 12,741 10,693
328,182 331,410 349,269 390,005 225,927 255,121
1,622,758 1,823,178 1,899,107 1,875,544 1,854,880 1,842,957
242,453 256,229 252,123 255,954 254,126 251,713
30,008 31,818 31,587 29,958 31,083 33,550
228,258 228,215 231,091 242,884 251,019 Unavailable
73,334 71,382 70,069 70,145 70,664 70,850 (5)
Michigan
265 265 265 265
OPERATING INDICATORS BY FUNCTION - (Continued)
LAST TEN FISCAL YEARS
2005 2006 2007 2008
Transportation
Annual vehicle miles of travel on
State Trunkline roads (12) 52,600,000,000 51,500,000,000 52,000,000,000 51,500,000,000
Miles of intercity bus travel receiving State funding 1,090,708 1,086,793 1,081,038 1,087,543
Miles of local bus travel receiving State funding 99,890,100 102,760,387 105,068,260 113,567,301
Railroad crossing maintenance/safety inspections 2,898 2,531 2,679 2,586
Tax credits
Taxpayers claiming refundable credits (9) (11) 1,497,900 1,525,500 1,581,700 2,322,600
Intergovernmental-revenue sharing
Township grants 1,241 1,241 1,241 1,241
City grants 274 274 274 274
Village grants 259 259 259 259
County grants (10) - - - 1
Liquor Purchase Revolving Fund
Annual retail liquor licenses issued 15,964 15,942 15,838 15,763
Liquor sales volume (cases) 6,110,122 6,293,797 6,464,739 6,611,415
Beer sales volume (barrels) 6,721,468 6,647,438 6,588,385 6,601,138
Wine sales volume (liters) 66,022,306 68,139,758 71,385,503 72,797,847
Pre-mixed spirit drink sales volume (liters) 1,065,146 871,900 1,008,073 811,286
State Lottery Fund
Retailers 11,076 10,880 10,973 10,969
Winners greater than $600 44,692 52,124 49,585 44,962
Millionaire prizewinners 21 17 42 37
Michigan Unemployment Compensation Funds
Individuals receiving benefits (calendar year) 547,376 569,721 547,950 633,558
NOTES:
(8) Amount estimated.
(9) Tax credits are reported based on the tax year. Credits claimed during tax year 2013, for example, are reported above in
fiscal year 2013.
(10) County grants were suspended beginning in fiscal year 2005. Instead, each county expends from its revenue sharing
reserve fund created by State statute in 2004. Each fiscal year, counties are allowed only to expend from the fund the
amount the Department of Treasury certifies them to spend. Once a county has exhausted its revenue sharing reserve fund,
the county will return to revenue sharing.
(11) Amount estimated and rounded to nearest hundred.
(12) Amount estimated and rounded to nearest one hundred million on a calendar-year basis.
SOURCES: Various State departments.
Michigan
266 266 266 266
2009 2010 2011 2012 2013 2014
48,700,000,000 48,700,000,000 49,800,000,000 48,700,000,000 49,400,000,000 50,000,000,000
1,080,543 1,080,444 1,086,022 1,094,911 1,110,733 1,112,793
112,642,720 108,426,363 105,267,567 104,317,459 101,203,565 108,188,216
1,932 1,454 2,563 2,644 1,970 1,624
2,566,100 2,454,200 2,363,800 1,899,300 1,854,300 Unavailable
1,240 1,240 1,240 1,240 1,240 1,240
275 277 277 277 277 277
258 256 256 256 256 256
7 20 36 50 62 63
15,771 15,898 15,870 15,961 16,026 15,989
6,734,253 6,877,873 7,117,299 7,373,714 7,532,846 7,709,480
6,465,495 6,448,197 6,250,673 6,318,295 6,206,452 6,221,433
73,200,249 79,440,328 81,504,221 84,253,865 88,096,394 92,044,380
787,948 983,029 954,712 1,076,369 1,058,511 1,074,364
10,680 10,797 10,746 10,879 10,848 10,684
53,986 60,543 48,567 44,904 52,365 56,735
40 39 28 31 36 39
913,568 825,858 636,493 527,507 449,388 375,000 (8)
Michigan
267 267 267 267
CAPITAL ASSETS BY FUNCTION
LAST TEN FISCAL YEARS
2005 2006 2007 2008
General Government:
Buildings Unavailable 281 280 296
Vehicles Unavailable 747 754 756
Education
Buildings Unavailable 27 27 27
Vehicles Unavailable 28 21 21
Human services
Buildings Unavailable 208 208 210
Vehicles Unavailable 838 844 931
Public safety and corrections
Buildings Unavailable 1,390 1,390 1,403
Vehicles Unavailable 3,401 3,548 3,605
Conservation, environment,
recreation, and agriculture
Buildings 229 249 300 314
Vehicles Unavailable 3,452 3,763 3,832
Environmental quality
air-monitoring instruments 170 188 194 195
Environmental quality
lab/analyzing equipment 127 131 153 147
Natural resources acres of land 4,557,246 4,562,444 4,566,708 4,574,274
Harbors 16 16 16 16
Hatcheries 6 6 6 6
State park & recreation areas 97 97 98 98
Labor, commerce, and regulatory
Buildings Unavailable 160 164 158
Vehicles Unavailable 482 482 509
Health services
Buildings Unavailable 239 239 241
Vehicles Unavailable 272 276 287
Transportation
Buildings Unavailable 437 437 439
Vehicles 1,448 1,841 1,872 1,777
Highway lane miles (calendar year) 27,557 27,521 27,514 27,478
Heavy equipment owned 2,117 2,162 2,184 2,164
NOTES: For years prior to 2006, capital assets information was not available by function.
Building and vehicle counts include both owned and leased assets with the exception of
transportation vehicles for years prior to fiscal year 2006. Transportation vehicle counts
for fiscal years prior to fiscal year 2006 include only owned vehicles.
Acres of land are on a tax year basis rather than a fiscal year basis.
Building counts for 2005 in the Conservation, environment, recreation, and agriculture
function represent only those buildings owned by the Department of Natural Resources.
SOURCES: Michigan Departments of Technology, Management and Budget, Natural Resources,
Environmental Quality, and Transportation.
Michigan
268 268 268 268
2009 2010 2011 2012 2013 2014
279 261 247 239 240 240
772 812 762 783 927 974
27 27 27 27 27 28
23 23 24 28 27 29
207 193 188 177 216 202
926 930 997 1,104 1,338 1,457
1,393 1,389 1,386 1,255 1,254 1,254
3,542 3,568 3,448 3,433 3,547 3,700
326 340 339 335 325 327
3,850 3,912 3,829 3,853 3,985 4,053
198 202 202 202 231 229
147 144 150 156 159 143
4,582,771 4,588,442 4,586,891 4,586,922 4,595,866 4,592,910
17 17 18 19 19 19
6 6 6 6 6 6
98 98 99 101 101 102
154 173 166 112 45 45
510 492 490 585 484 495
241 241 241 243 243 241
290 305 300 213 208 225
436 436 435 374 373 373
1,764 1,770 1,729 1,707 1,692 1,682
27,438 27,432 27,439 27,437 27,424 27,459
2,173 2,184 2,211 2,150 2,150 2,156
Michigan
269 269 269 269
Michigan
2014 Comprehensive Annual Financi al Report
270 270 270 270
Michigan
OTHER INFORMATION
2014 Comprehensive Annual Financi al Report
271 271 271 271
COMBINED SCHEDULE OF REVENUE AND OTHER FINANCING SOURCES
GENERAL AND SPECIAL REVENUE FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
SPECIAL
GENERAL REVENUE
SOURCE FUND FUNDS
TAXES
Sales $ 7,362,620 $ 1,910,694 $ 5,451,925
Personal income 8,696,554 6,338,838 2,357,716
Single business, Michigan business,
corporate income 419,554 419,554 -
Use 1,639,442 1,093,295 546,148
State education (property) 1,804,238 - 1,804,238
Real estate transfer 233,416 - 233,416
Tobacco products 940,337 580,954 359,383
Beer and wine 51,249 51,249 -
Liquor 138,543 92,591 45,952
Horse race wagering 4,253 4,253 -
Casino gaming wagering 106,903 - 106,903
Telephone and telegraph company 47,953 47,953 -
Commercial mobile radio service 28,412 28,412 -
Insurance company 362,397 362,397 -
Health insurance claims assessment 271,861 271,861 -
Motor vehicle registration 943,548 2,992 940,556
Gasoline 820,982 - 820,982
Diesel fuel 138,082 - 138,082
Gas and oil severance 62,225 62,225 -
Industrial facilities 33,459 - 33,459
Convention hotel accommodation 22,240 22,240 -
Airport parking 22,433 22,433 -
Quality assurance assessment 975,786 975,786 -
Penalties and interest 115,439 115,439 -
Other 88,807 57,137 31,670
25,330,732 12,460,302 12,870,429
FROM FEDERAL AGENCIES
Department of Health and Human Services 11,866,988 11,866,039 949
Department of Education 1,292,232 148,358 1,143,874
Department of Agriculture 3,423,066 2,944,326 478,740
Department of Labor 165,128 25,048 140,080
Department of Housing and Urban Development 12,988 12,988 -
Department of Energy 11,329 11,329 -
Department of Transportation 149,948 26,009 123,939
Department of Interior 36,447 30,177 6,270
Department of Defense 60,884 60,884 -
Department of J ustice 36,686 36,686 -
Environmental Protection Agency 48,874 48,459 415
Other 155,098 154,393 704
17,259,668 15,364,698 1,894,970
FROM LOCAL AGENCIES
Counties 65,717 65,717 -
Cities, villages, and townships 7,133 7,133 -
School districts 4,633 4,633 -
Other 12,162 12,162 -
89,644 89,644 -
SPECIAL MEDICAID REIMBURSEMENTS 133,909 133,909 -
133,909 133,909 -
TOTAL
Michigan
272 272 272 272
SPECIAL
GENERAL REVENUE
SOURCE TOTAL FUND FUNDS
FROM SERVICES
Charges for providing vehicle and driver services $ 135,745 $ 131,960 $ 3,785
Revenue for patient, ward, and inmate care 32,646 32,646 -
Other 153,879 153,873 6
322,271 318,480 3,791
FROM LICENSES AND PERMITS
Liquor retailer, manufacturer, and wholesaler
licenses 16,541 16,541 -
Motor vehicle operator and chauffeur licenses 44,819 44,160 659
Examination fees - financial institutions and
insurance industry 36,341 36,341 -
Concession and privilege fees - State parks 864 - 864
Motor vehicle related 35,513 2,582 32,931
Hunting, fishing, and trapping licenses 58,440 - 58,440
Public utility assessment fees 27,388 27,388 -
Regulatory licenses and permits 75,834 66,966 8,868
Auto repair facility and mechanic licenses and fees 3,552 3,552 -
Corporation franchise fees 22,622 22,622 -
Recreation user fees and permits 82,344 1,932 80,412
Other 90,338 88,561 1,776
494,595 310,644 183,951
MISCELLANEOUS
Income from investments 20,557 1,555 19,002
Tobacco settlement proceeds 192,192 - 192,192
Various fines, fees, and assessments 78,560 44,497 34,063
Court fines, fees, and assessments 253,260 242,256 11,004
Oil and gas royalties, fees, assignments, and rentals 15,724 11,263 4,461
Environmental pollution settlements 6,444 1,834 4,611
Child support 13,431 13,431 -
Unemployment obligation assessment 455,736 - 455,736
Other 522,269 375,573 146,695
1,558,174 690,409 867,765
Total Revenues 45,188,992 29,368,085 15,820,906
OTHER FINANCING SOURCES
Proceeds from bond issues and bond anticipation notes 97,651 97,651 -
Capital lease acquisitions 18,371 18,371 -
Proceeds from sale of capital assets 1,626 1,626 -
Transfers From Other Funds:
From Liquor Purchase Revolving Fund 177,848 177,848 -
From State Lottery Fund 740,769 6,621 734,148
From other funds 722,584 49,769 672,816
Total Other Financing Sources 1,758,849 351,885 1,406,964
Total Revenue and Other Financing
Sources (GAAP Basis) $ 46,947,840 $ 29,719,970 $ 17,227,870
Michigan
273 273 273 273
SCHEDULE OF REVENUE AND OTHER FINANCING SOURCES
GENERAL FUND
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
GENERAL RESTRICTED
SOURCE PURPOSE REVENUES
TAXES
Sales $ 1,910,694 $ 770,175 $ 1,140,519
Personal income 6,338,838 5,527,257 811,582
Single business, Michigan business,
and corporate income 419,554 137,357 282,197
Use 1,093,295 1,091,440 1,854
Tobacco products 580,954 192,887 388,067
Beer and wine 51,249 51,249 -
Liquor 92,591 46,414 46,177
Horse race wagering 4,253 - 4,253
Telephone and telegraph company 47,953 47,953 -
Commercial mobile radio service 28,412 - 28,412
Insurance company 362,397 362,208 189
Health insurance claims assessment 271,861 - 271,861
Motor vehicle registration 2,992 - 2,992
Gas and oil severance 62,225 60,986 1,240
Convention hotel accommodation 22,240 - 22,240
Airport parking 22,433 - 22,433
Quality assurance assessment 975,786 - 975,786
Penalties and interest 115,439 103,499 11,941
Other 57,137 1,930 55,207
12,460,302 8,393,353 4,066,949
FROM FEDERAL AGENCIES
Department of Health and Human Services 11,866,039 18,912 11,847,127
Department of Education 148,358 2,123 146,235
Department of Agriculture 2,944,326 2,095 2,942,231
Department of Labor 25,048 906 24,142
Department of Housing and Urban Development 12,988 143 12,845
Department of Energy 11,329 120 11,209
Department of Transportation 26,009 1,367 24,642
Department of Interior 30,177 662 29,515
Department of Defense 60,884 56 60,828
Department of J ustice 36,686 298 36,388
Environmental Protection Agency 48,459 2,197 46,262
Other 154,393 1,991 152,403
15,364,698 30,870 15,333,828
FROM LOCAL AGENCIES
Counties 65,717 - 65,717
Cities, villages, and townships 7,133 - 7,133
School districts 4,633 - 4,633
Other 12,162 99 12,062
89,644 99 89,545
SPECIAL MEDICAID REIMBURSEMENTS 133,909 - 133,909
133,909 - 133,909
TOTAL
Michigan
274 274 274 274
GENERAL RESTRICTED
SOURCE TOTAL PURPOSE REVENUES
FROM SERVICES
Charges for providing vehicle and driver services $ 131,960 $ 341 $ 131,619
Revenue for patient, ward, and inmate care 32,646 - 32,646
Other 153,873 6,872 147,001
318,480 7,214 311,266
FROM LICENSES AND PERMITS
Liquor retailer, manufacturer, and wholesaler
licenses 16,541 1,374 15,166
Motor vehicle operator and chauffeur licenses 44,160 137 44,023
Examination fees - financial institutions and
insurance industry 36,341 - 36,341
Motor vehicle related 2,582 13 2,568
Public utility assessment fees 27,388 - 27,388
Regulatory licenses and permits 66,966 11,620 55,346
Auto repair facility and mechanic licenses and fees 3,552 3 3,549
Corporation franchise fees 22,622 29 22,592
Recreation user fees and permits 1,932 337 1,595
Other 88,561 845 87,716
310,644 14,359 296,285
MISCELLANEOUS
Income from investments 1,555 291 1,264
Various fines, fees, and assessments 44,497 712 43,785
Court fines, fees, and assessments 242,256 82,514 159,742
Oil and gas royalties, fees, assignments, and rentals 11,263 - 11,263
Environmental pollution settlements 1,834 - 1,834
Child support 13,431 - 13,431
Other 375,573 77,414 298,160
690,409 160,931 529,478
Total Revenues 29,368,085 8,606,827 20,761,259
OTHER FINANCING SOURCES
Proceeds from bond issues
and bond anticipation notes 97,651 - 97,651
Capital lease acquisitions 18,371 - 18,371
Proceeds from sale of capital assets 1,626 - 1,626
Transfers From Other Funds:
From Liquor Purchase Revolving Fund 177,848 176,841 1,007
From State Lottery Fund 6,621 2,923 3,697
From other funds 49,769 - 49,769
Total Other Financing Sources 351,885 179,764 172,121
Total Revenue and Other Financing
Sources (GAAP Basis) 29,719,970 8,786,591 20,933,380
BUDGETARY BASIS ADJUSTMENTS
Capital lease acquisitions (18,371) - (18,371)
Total Revenue and Other Financing Sources
(Budgetary Basis) $ 29,701,599 $ 8,786,591 $ 20,915,008
Michigan
275 275 275 275
SOURCE AND DISPOSITION OF GENERAL FUND AUTHORIZATIONS
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
LESS: TIMING
DIFFERENCES*
RESTRICTED
CURRENT BUDGETARY UNEXPENDED RESTRICTED REVENUE
LEGISLATIVE TRANSFERS BUDGETARY FROM REVENUE NOT
BRANCH AND DEPARTMENT APPROPRIATION IN/OUT ADJ USTMENT PRIOR YEAR ADDITIONS AUTHORIZED/USED
Legislative Branch $ 136,221 $ - $ 271 $ 11,485 $ 8,127 $ -
J udicial Branch 184,758 - - 19,333 73,417 (11,385)
Executive Branch:
Agriculture and Rural Development 40,580 - - 8,393 33,545 (7,573)
Attorney General 34,481 - - 11,161 47,842 (8,061)
Civil Rights 12,338 - - 1 1,977 -
Colleges and Universities Grants 1,268,654 - - 205 92,300 -
Community Health 2,992,783 - - 128,694 12,591,186 (121,685)
Corrections 1,972,725 - - 64,316 39,493 (32,161)
Education 220,794 - 10 4,981 182,643 (1,968)
Environmental Quality 29,155 - - 140,644 268,386 (138,251)
Executive Office 5,540 - - 17 - -
Human Services 992,197 - - 31,085 4,545,390 (5,521)
Insurance and Financial Services 11,000 - - 29,822 64,432 (40,768)
Licensing and Regulatory Affairs 25,005 - - 104,791 236,321 (101,592)
Military and Veterans Affairs 56,903 - - 14,847 105,996 (2,763)
Natural Resources 26,787 - - 16,246 53,546 (7,850)
State 15,871 - - 38,612 194,446 (33,258)
State Police 356,784 - - 32,127 229,814 (26,375)
Technology, Management and Budget 691,365 - - 588,974 582,602 (488,862)
Transportation 336,600 - - 11,218 - -
Treasury 500,645 - - 176,766 2,474,573 (83,880)
Intrafund expenditure reimbursements - - - - - -
TOTAL $ 9,911,186 $ - $ 281 $ 1,433,717 $ 21,826,037 $ (1,111,953)
* Timing differences are subtracted from Gross Spending Authority in order to show an annualized Budget that is comparable to the current
year's Actual uses. Timing differences consist of unused authorizations for multi-year projects (capital outlay and work projects)
and restricted revenue not authorized/used, which includes revenues that by statute, are restricted for use to a particular program or
activity. Generally, the expenditure of the restricted revenue is subject to annual legislative appropriation. However, the restricted revenue
may also be used in subsequent years to finance expenditures in multi-year appropriations and for encumbrances carried forward.
For budgetary purposes, encumbrance authorization are considered use of spending authority in the year the State incurs an obligation.
NOTE: This schedule was prepared on the Statutory/Budgetary basis.
Restricted revenue balances authorized in the Variances category represent restricted revenue carry-overs that could have been used in
the current period but were not.
Michigan
276 276 276 276
"BUDGET" "ACTUAL"
LESS: TIMING RESTRICTED
GROSS DIFFERENCES* ENCUMBERED REVENUE
SPENDING MULTI-YEAR AS PRESENTED EXPENDED/ BALANCES BALANCES
AUTHORITY PROJ ECTS IN STATEMENTS TRANSFERRED FORWARD AUTHORIZED LAPSES OVEREXPENDED
$ 156,104 $ (12,527) $ 143,577 $ 142,066 $ 1,130 $ 80 $ 300 $ -
266,123 (4,243) 261,880 252,508 6,126 - 3,247 -
74,945 (291) 74,654 71,534 2,765 - 354 -
85,423 (1,066) 84,357 83,727 489 - 142 -
14,316 - 14,316 14,118 7 - 191 -
1,361,159 (30) 1,361,129 1,360,307 550 - 272 -
15,590,978 (3,431) 15,587,547 15,376,525 25,251 - 190,691 (4,920)
2,044,373 (9,431) 2,034,942 1,962,759 60,165 573 11,445 -
406,460 - 406,460 401,222 1,101 267 3,870 -
299,934 (6,000) 293,934 293,926 6 - 2 -
5,557 - 5,557 5,075 - - 481 -
5,563,152 (948) 5,562,204 5,532,572 16,301 - 13,332 -
64,487 - 64,487 64,487 - - - -
264,526 (237) 264,289 257,366 1,738 400 4,785 -
174,983 (9,595) 165,388 158,362 5,928 - 1,097 -
88,728 (3,997) 84,731 80,042 4,607 - 81 -
215,671 (2,033) 213,638 209,782 2,440 91 1,325 -
592,350 (2,424) 589,926 586,879 2,619 - 428 -
1,374,078 (67,103) 1,306,975 1,282,528 16,810 376 7,261 -
347,818 (59,103) 288,715 226,040 62,674 - - -
3,068,104 (27,769) 3,040,335 2,978,332 14,843 25,719 21,440 -
- - (911,029) (911,029) - - - -
$ 32,059,268 $ (210,230) $ 30,938,009 $ 30,429,128 $ 225,551 $ 27,507 $ 260,744 $ (4,920)
Prior Year encumbrances (124,489) (124,489)
Amount reported on
Budgetary Comparison Schedule $ 30,813,521 $ 30,304,640 $ 225,551 $ 27,507 $ 260,744 $ (4,920)
Michigan
"VARIANCES"
277 277 277 277
SOURCE AND DISPOSITION OF
GENERAL FUND/GENERAL PURPOSE AUTHORIZATIONS
APPROPRIATION YEAR 2014
FISCAL YEAR ENDED SEPTEMBER 30, 2014
(In Thousands)
CURRENT BUDGETARY
LEGISLATIVE TRANSFERS BUDGETARY
APPROPRIATION* IN/OUT ADJ USTMENT
Legislative Branch $ 136,221 $ - $ 271
J udicial Branch 184,758 - -
Executive Branch:
Agriculture and Rural Development 40,580 - -
Attorney General 34,481 - -
Civil Rights 12,338 - -
Colleges and Universities Grants 1,268,654 - -
Community Health 2,992,783 - -
Corrections 1,972,725 - -
Education 220,794 - 10
Environmental Quality 29,155 - -
Executive Office 5,540 - -
Human Services 992,197 - -
Insurance and Financial Services 11,000 - -
Licensing and Regulatory Affairs 25,005 - -
Military and Veterans Affairs 56,903 - -
Natural Resources 26,787 - -
State 15,871 - -
State Police 356,784 - -
Technology, Management and Budget 691,365 - -
Transportation 336,600 - -
Treasury 500,645 - -
TOTAL $ 9,911,186 $ - $ 281
* The amounts in the "Current Legislative Appropriation" column include certain appropriations that
do not appear as line-item appropriations in the budget bills. These appropriations are authorized
in narrative "boilerplate" language in the budget bills. "Boilerplate" appropriations include interfund
borrowing, interest on general obligation notes and bonds, and certain interfund transfers.
"Boilerplate" appropriations accounted for $342.8 million of the "Current Legislative Appropriation"
for the Appropriation Year 2014.
BRANCH AND DEPARTMENT
Michigan
278 278 278 278
"ACTUAL"
MULTI-YEAR
GROSS ENCUMBERED PROJ ECT
SPENDING EXPENDED/ BALANCES BALANCES
AUTHORITY TRANSFERRED FORWARD FORWARD LAPSES
$ 136,492 $ 126,349 $ 748 $ 9,121 $ 274 $ -
184,758 173,245 5,530 2,742 3,243 -
40,580 37,556 2,680 - 344 -
34,481 33,030 488 837 127 -
12,338 12,140 7 - 190 -
1,268,654 1,267,833 550 1 271 -
2,992,783 2,783,704 20,199 3,133 190,667 (4,920)
1,972,725 1,913,949 40,078 8,396 10,303 -
220,804 216,412 555 - 3,837 -
29,155 29,149 6 - - -
5,540 5,059 - - 481 -
992,197 964,225 14,870 231 12,871 -
11,000 11,000 - - - -
25,005 21,727 1,550 237 1,491 -
56,903 42,013 5,173 9,117 600 -
26,787 23,965 1,531 1,290 1 -
15,871 13,851 10 1,051 959 -
356,784 352,599 1,425 2,424 337 -
691,365 624,897 11,926 48,935 5,607 -
336,600 223,562 53,935 59,103 - -
500,645 470,334 2,833 19,295 8,183 -
$ 9,911,467 $ 9,346,598 $ 164,094 $ 165,911 $ 239,784 $ (4,920)
Michigan
"VARIANCES"
OVEREXPENDED
279 279 279 279
REVENUE, BOND PROCEEDS, AND CAPITAL LEASE ACQUISITIONS
GENERAL AND SPECIAL REVENUE FUNDS
LAST TEN YEARS
SEPTEMBER 30, 2014
(In Thousands)
SOURCE
TAXES:
Sales $ 6,599,138 $ 6,638,110 $ 6,552,240 $ 6,773,276
Personal Income (net of tax credits) 6,108,924 6,226,304 6,442,678 7,226,049
Amount reported as tax credits 815,300 834,000 883,400 931,600
Single Business, Michigan Business,
and Corporate Income 1,907,190 1,886,168 1,786,213 2,482,035
Use 1,402,399 1,413,758 1,380,375 1,377,077
State Education (Property) 1,914,629 2,003,527 2,080,977 2,079,703
Real Estate Transfer 313,548 297,680 237,483 169,835
Tobacco Products 1,179,871 1,169,005 1,129,226 1,073,650
Beer, Wine, and Liquor 150,888 155,184 159,109 162,104
Casino Gaming Wagering 145,811 155,461 159,363 129,684
Insurance Company 249,524 219,538 223,754 223,198
Health Insurance Claims Assessment - - - -
Motor Vehicle and Fuel 1,935,732 1,926,069 1,902,811 1,847,540
Quality Assurance Assessment 509,857 676,923 827,776 1,023,766
Penalties and Interest 142,703 140,581 158,218 160,939
Other 554,732 450,642 440,925 409,333
TOTAL TAXES 23,930,245 24,192,949 24,364,549 26,069,791
FEDERAL AGENCIES 10,890,093 11,060,621 11,452,444 12,283,854
LOCAL AGENCIES 107,250 105,566 117,653 114,856
SPECIAL MEDICAID REIMBURSEMENTS 467,970 93,621 102,670 115,797
SERVICES 264,541 269,040 283,907 290,934
LICENSES AND PERMITS 407,862 419,753 427,915 435,108
MISCELLANEOUS 1,292,600 1,764,227 1,835,865 1,401,128
TOTAL REVENUE 37,360,562 37,905,776 38,585,002 40,711,468
PROCEEDS FROM BOND ISSUES
AND BOND ANTICIPATION NOTES 182,441 234,738 18,662 26,215
CAPITAL LEASE ACQUISITIONS 6,778 34,059 20,906 110,374
PROCEEDS FROM SALE OF CAPITAL ASSETS 3,037 1,339 2,478 27,381
TOTAL REVENUE, BOND PROCEEDS,
CAPITAL LEASE ACQUISITIONS, AND
PROCEEDS FROM SALE OF CAPITAL ASSETS $ 37,552,817 $ 38,175,912 $ 38,627,048 $ 40,875,439
NOTES: (1) Effective J anuary 1, 2008, the State replaced the single business tax with the Michigan business tax. Effective
J anuary 1, 2012, the State replaced the Michigan business tax with the Corporate income tax.
(2) Legislation established the Health Insurance Claims Assessment, effective J anuary 1, 2012.
2008
Michigan
2005 2006 2007
280 280 280 280
$ 6,089,106 $ 6,176,843 $ 6,710,882 $ 6,955,198 $ 7,050,204 $ 7,362,620
5,856,753 5,531,348 6,417,078 6,921,033 8,271,838 8,020,054
963,500 1,351,500 1,271,900 1,226,300 689,900 676,500
2,285,237 1,853,557 2,098,407 1,321,782 721,602 419,554
1,283,685 1,573,667 1,548,914 1,428,284 1,300,590 1,639,442
2,040,647 1,930,480 1,845,086 1,789,672 1,771,083 1,804,238
125,294 121,632 123,254 150,106 202,323 233,416
1,041,541 1,006,527 968,512 963,181 957,485 940,337
164,068 164,071 167,487 175,181 182,878 189,792
121,363 101,816 114,017 115,753 110,667 106,903
261,002 257,511 271,257 290,385 301,883 362,397
- - - 176,419 270,489 271,861
1,806,694 1,807,185 1,820,367 1,825,091 1,860,582 1,902,612
859,482 840,254 882,600 959,267 969,767 975,786
150,334 137,793 139,251 167,882 171,092 115,439
293,955 315,218 307,324 299,383 292,011 309,781
23,342,662 23,169,402 24,686,336 24,764,916 25,124,393 25,330,732
16,040,813 18,351,960 18,972,659 16,612,723 16,598,202 17,259,668
102,040 89,633 85,674 85,394 87,578 89,644
135,667 123,205 155,059 186,194 134,353 133,909
288,373 300,362 320,469 310,275 318,403 322,271
450,009 452,620 448,012 464,072 484,059 494,595
1,362,184 1,293,772 1,387,068 1,716,779 1,594,097 1,558,174
41,721,749 43,780,955 46,055,277 44,140,354 44,341,085 45,188,992
144,225 60,583 211,001 270,001 200,000 97,651
41,205 39,101 171,094 34,567 17,224 18,371
2,209 1,576 1,742 2,848 3,064 1,626
$ 41,909,387 $ 43,882,215 $ 46,439,114 $ 44,447,770 $ 44,561,373 $ 45,306,640
2009 2014 2010
Michigan
2012 2013 2011
281 281 281 281
SCHEDULE OF EXPENDITURES BY FUNCTION
GENERAL AND SPECIAL REVENUE FUNDS - STATE FUNDS
LAST TEN YEARS
SEPTEMBER 30, 2014
(In Thousands)
Current:
General government $ 1,303,020 $ 1,628,520 $ 1,580,973 $ 1,546,624
Education 14,488,870 14,710,682 14,572,261 15,029,489
Human services 4,122,779 4,341,774 4,447,992 4,609,481
Public safety and corrections 2,284,674 2,453,297 2,465,362 2,614,768
Conservation, environment,
recreation, and agriculture 597,928 626,802 552,992 580,246
Labor, commerce, and regulatory 924,876 952,921 957,023 966,091
Health services 10,126,544 9,958,104 10,741,285 11,588,207
Transportation 1,195,941 1,182,924 1,183,513 1,162,196
Tax credits 815,300 834,000 883,400 931,600
Capital outlay 47,403 58,365 42,290 31,978
Intergovernmental - revenue sharing 1,112,931 1,103,625 1,071,104 1,076,445
Debt service:
Bond interest and fiscal charges - 174 - -
Capital lease payments 49,370 49,032 45,997 50,086
Total Expenditures $ 37,069,635 $ 37,900,220 $ 38,544,191 $ 40,187,211
Michigan
2006 2005 2008 2007
282 282 282 282
$ 1,582,399 $ 1,463,926 $ 1,856,935 $ 1,935,857 $ 1,868,138 $ 2,064,016
15,195,462 14,995,595 15,216,151 14,540,137 14,604,622 14,909,901
5,334,263 6,042,987 6,346,672 5,886,563 5,925,320 5,537,228
2,589,942 2,571,390 2,547,868 2,564,921 2,601,307 2,666,541
539,796 528,387 501,050 563,310 545,565 656,061
1,145,954 1,223,197 1,143,962 923,059 961,279 961,934
12,450,287 13,218,598 13,905,003 13,698,746 13,862,531 15,063,455
1,137,584 1,154,659 1,149,640 1,180,615 1,395,444 1,532,228
963,500 1,351,500 1,271,900 1,226,300 689,900 676,500
38,429 38,136 21,659 26,765 35,676 70,695
1,040,031 994,196 1,091,527 1,032,243 1,077,514 1,120,593
- - - - - -
49,936 50,811 55,803 55,867 58,357 62,237
$ 42,067,585 $ 43,633,381 $ 45,108,168 $ 43,634,383 $ 43,625,653 $ 45,321,388
Michigan
2014 2013 2012 2011 2010 2009
283 283 283 283
Michigan
INDEX OF FUNDS AND COMPONENT UNITS
Page
21
st
Century J obs Trust Fund ..................................................................................... 164
Advance Financing Funds .......................................................................................... 179
Attorney Discipline System ......................................................................................... 192
Bottle Deposits Fund .................................................................................................. 147
Central Michigan University ........................................................................................ 226
Child Support Collection Fund .................................................................................... 215
Children’s Trust Fund ................................................................................................. 165
Combined Comprehensive Transportation Bond and Interest Redemption Fund ...... 172
Combined Comprehensive Transportation Bond Proceeds Fund .............................. 178
Combined Recreation Bond Fund .............................................................................. 179
Combined State Trunkline Bond and Interest Redemption Fund ............................... 172
Combined State Trunkline Bond Proceeds Fund ....................................................... 178
Comprehensive Transportation Fund ......................................................................... 140
Correctional Industries Revolving Fund ...................................................................... 196
Eastern Michigan University ....................................................................................... 226
Environmental Quality Deposits Fund ........................................................................ 215
Escheats Fund ........................................................................................................... 212
Farm Produce Insurance Authority ............................................................................. 220
Ferris State University ................................................................................................ 226
Forest Development Fund .......................................................................................... 147
General Fund ............................................................................................................. 38
Gifts, Bequests, and Deposits Investment Fund ........................................................ 212
Grand Valley State University .................................................................................... 226
Homeowner Construction Lien Recovery Fund .......................................................... 154
Hospital Patients’ Trust Fund ..................................................................................... 212
Information Technology Fund ..................................................................................... 196
Insurance Carrier Deposits Fund................................................................................ 215
J udges’ Other Postemployment Benefits Fund .......................................................... 206
J udges’ Pension Benefits Fund .................................................................................. 205
Lake Superior State University ................................................................................... 227
Land Bank Fast Track Authority ................................................................................. 220
Legislative Other Postemployment Benefits Fund ...................................................... 204
Legislative Pension Benefits Fund ............................................................................. 204
Liquor Purchase Revolving Fund ............................................................................... 192
Mackinac Bridge Authority .......................................................................................... 220
Mackinac Island State Park Commission ................................................................... 220
Michigan Conservation and Recreation Legacy Fund ................................................ 146
Michigan Early Childhood Investment Corporation .................................................... 221
Michigan Economic Development Corporation .......................................................... 221
Michigan Education Savings Program........................................................................ 212
Michigan Education Trust ........................................................................................... 221
Michigan Employment Security Act – Administration Fund ........................................ 154
Michigan Finance Authority ........................................................................................ 54
Michigan Game and Fish Protection Trust Fund ........................................................ 146
Michigan Merit Award Trust Fund............................................................................... 164
Michigan Natural Resources Trust Fund .................................................................... 186
2014 Comprehensive Annual Financi al Report
284 284 284 284
Michigan
INDEX OF FUNDS AND COMPONENT UNITS (Continued)
Page
Michigan Nongame Fish and Wildlife Trust Fund ....................................................... 147
Michigan Settlement Administration Authority ............................................................ 164
Michigan State Housing Development Authority ........................................................ 54
Michigan State Parks Endowment Fund .................................................................... 186
Michigan Strategic Fund ............................................................................................. 54
Michigan Technological University ............................................................................. 227
Michigan Transportation Fund .................................................................................... 140
Michigan Unemployment Compensation Funds ......................................................... 44
Michigan Veterans’ Trust Fund .................................................................................. 186
Military Family Relief Fund ......................................................................................... 165
Miscellaneous Special Revenue Funds ...................................................................... 165
Motor Transport Fund ................................................................................................. 197
Northern Michigan University ..................................................................................... 227
Oakland University ..................................................................................................... 227
Office Services Revolving Fund ................................................................................. 197
Public School Employees’ Other Postemployment Benefits Fund ............................. 205
Public School Employees’ Pension Benefits Fund ..................................................... 205
Recreation and Environmental Protection Bond Redemption Fund ........................... 172
Risk Management Fund ............................................................................................. 197
Safety Education and Training Fund .......................................................................... 154
Saginaw Valley State University ................................................................................. 227
School Aid Fund ......................................................................................................... 38
School Loan Bond Redemption Fund ........................................................................ 173
Second Injury Fund .................................................................................................... 154
Self-Insurers’ Security Fund ....................................................................................... 154
Silicosis, Dust Disease, and Logging Industry Compensation Fund .......................... 155
State Aeronautics Fund .............................................................................................. 178
State Bar of Michigan ................................................................................................. 221
State Building Authority .............................................................................................. 173 & 179
State Casino Gaming Fund ........................................................................................ 155
State Construction Code Fund ................................................................................... 155
State Employees’ Other Postemployment Benefits Fund ........................................... 205
State Employees’ Pension Benefits Fund .................................................................. 205
State Lottery Fund ...................................................................................................... 44
State of Michigan Deferred Compensation Funds ...................................................... 204
State of Michigan Defined Contribution Retirement Fund .......................................... 206
State Police Other Postemployment Benefits Fund.................................................... 205
State Police Pension Benefits Fund ........................................................................... 204
State Sponsored Group Insurance Fund .................................................................... 196
State Trunkline Fund .................................................................................................. 178
Social Welfare Fund ................................................................................................... 215
Transportation Related Trust Funds ........................................................................... 179
Utility Consumer Representation Fund ....................................................................... 155
Unemployment Obligation Trust Fund ........................................................................ 155
Western Michigan University ...................................................................................... 55
2014 Comprehensive Annual Financi al Report
285 285 285 285
ACKNOWLEDGMENTS
The State of Michigan Comprehensive Annual Financial Report is prepared by the Office of Financial
Management, Accounting and Financial Reporting Division. Staff of the division for the fiscal year 2014 report
included:
Management:
Lora J . Mikula, CPA, Director
Lisa S. Craft, CPA, Manager
Shawna M. Hessling, Manager
Daniel T. J aroche, CPA, Manager
Staff:
Cindy S. Bloomer
Eric M. Bolyard
Derek R. Childs, CPA
Lorraine C. Couchman
Matthew L. Engels
J ane E. Hallitt
Chelsea W. Holmberg
Anna C. Lewis
J ohn L. MacIntosh III
Angela K. McNulty
Alicia L. Paape
Kathleen R. Pietila
Tina L. Ray
Susan K. Ruff
Anthony J . Thelen
Special thanks are also extended to the State’s CFO Council; the Financial Management Users Group; financial
management personnel throughout Michigan State Government; and the staff of the Office of the Auditor
General. Preparation of this report would not have been possible without the efforts of these individuals.
286 286 286 286
Michigan
2014 Comprehensive Annual Financi al Report
Fiscal Year Ended September 30, 2014
Governor Rick Snyder, CPA
Prepared by the State Budget Offce
doc_182794806.pdf