HomeMy WebLinkAboutCity of Durham - Public Financial ReportCITIZENS’ FINANCIAL REPORT
Learn How Durham’s Audit Services Department is Turning Inefficiency into Opportunity
Durham By the Numbers
American Rescue Plan: Charging Forward with Durham’s Process for Allocating over $50M
Taking the Year by the Horns
FISCAL YEAR ENDED JUNE 30, 2021
CONTENTS DID YOU KNOW?
THE CITY OF DURHAM’S TOTAL DEBT OUTSTANDING DECREASED BY $75.4 MILLION
COMPARED TO THE PRIOR FISCAL YEAR
Cover Credit: Discover Durham
4Your Guide to
City Finances
10Financial
Results
16Long-Term
Debt
6
Letter from the City Manager
12
Bull Disclosure
18
Budget
8
Fiscal Sustainability
14
Durham: By the Numbers
20
Audit Services
YOUR GUIDE TO CITY FINANCES
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THE CITY PROVIDES A SIGNIFICANT AMOUNT OF FINANCIAL DETAIL IN ITS ANNUAL CERTIFIED FINANCIAL REPORT (ACFR). FOR THOSE WITHOUT AN ACCOUNTING BACKGROUND, THE ACFR CAN BE DIFFICULT TO UNDERSTAND.
The guide you are reading now, the Popular
Annual Financial Report (PAFR), is designed
for those without an accounting background
and aims to make interpreting the data easier.
This guide focuses on financial results over
the past fiscal year. Financial information
is derived from the independently audited
statements that are part of the ACFR
and includes condensed and simplified
information from the ACFR, budget, and
other reports. The PAFR is a recommended
practice of the Government Finance Officers
Association (GFOA): the authority on best
practices in governmental accounting and
financial reporting.
Durham’s ACFR has won the GFOA award
for 36 consecutive years and Durham has
received the GFOA award for Distinguished
Budget Presentation for 33 consecutive
years – proof our Finance and Budget and
Management Services Departments are
repeatedly getting things right when it
comes to financial accounting, reporting,
and planning. To earn these Certificates of
Achievement, the City must annually publish
an easily readable and efficiently organized
budget and ACFR that conform to program
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2021 Mayor & City Council
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Charlie Reece
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standards. Such reports must satisfy both
generally accepted accounting principles
(GAAP) and accepted legal requirements. In
addition, Durham has received 17 consecutive
awards for Outstanding Achievement in
Popular Annual Financial Reporting from the
GFOA. Durham is one of seven North Carolina
cities to hold all three national GFOA awards.
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Popular Annual
Financial Reporting
FOR THE 17 TH YEAR IN A ROW
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5 4
LETTER FROM THE CITY MANAGER
DEAR CITY OF DURHAM RESIDENTS,
It has been a challenging but rewarding few months as the City of Durham’s new City Manager.
Over the past year, Durham residents and small businesses have worked to adjust to the realities of the COVID-19
pandemic. Similarly, City employees have continued to provide residents with the highest level of service possible –
despite the tumult of the past year. I am so thankful for each of you doing your part during this time, residents and
employees alike.
There is so much reason for hope as we continue undertaking the programs, projects, and initiatives that make the
City of Durham such an incredible place to live. Durham residents are themselves taking the bull by the horns in
opting to get vaccinated, and returning to our thriving downtown.
How else is the City taking the bull by the horns? Among other things, we are optimistic about our prospects and
seizing on generational opportunities to aid those left behind and push forward into a prosperous future. This
optimism is strengthened by a combination of our ambition, our diversity, our grit, and our commitment to upholding
the public trust in our day-to-day municipal activities. To showcase these values, this year’s financial report includes
information on how Durham is planning to use nearly $52M in American Rescue Plan funding and how the City’s Audit
Services Department works to ensure that residents’ tax dollars are spent efficiently and effectively.
On behalf of the Mayor and the City Council, I am proud to present this year’s Citizens’ Financial Report. Durham is
a city that honors its past and is proud of its spirit. Resident engagement and action make Durham a better place.
We appreciate your interest in the City and its financial information. Your comments, questions, and concerns are
welcome and can be sent to the City Finance Department. We look forward to a bright future together and invite
you to come along with us on the journey. Let’s collectively grab the bull by the horns as we confront tomorrow’s
challenges and celebrate yesterday’s accomplishments!
Sincerely,Wanda S. Page
Wanda S. Page, City Manager
CITY OF DURHAM | 2020 FINANCIAL REPORT 1
Even a large city can turn on a
dime. This past year has certainly
proven that to be true. In March,
the City, like the nation, was hit
by the COVID-19 pandemic crisis.
Durham acted quickly to put a
Stay-at-Home Order in place, and
most of our residents and businesses have understood
the protective nature of these restrictions and taken it
seriously.
In response to the pandemic, Mayor Steve Schewel and
County Board of Commissioners Chair Wendy Jacobs
created the Durham Recovery and Renewal Task Force
to set the city and the county on the road to recovery. In
May, they appointed 15 community leaders to the task
force who, using public health data and community input,
made recommendations to the community on how to
safely, gradually, and successfully reopen. Co-chaired
by Duke Regional Hospital President Katie Galbraith
and Blue Cross and Blue Shield of N.C. Vice President
and Corporate Controller Maticia Sims, the task force
represented Durham’s rich diversity and included health
experts, business leaders, government professionals, and
community and faith leaders.
There were changes on City Council as well. On April 9,
2020, Council Member Vernetta Alston resigned from
City Council to succeed the late MaryAnn Black in the
N.C. General Assembly. On August 31, 2020, City Council
appointed Pierce Freelon to fill the Ward Three vacancy.
Council Member Freelon’s appointment runs through 2021.
And, there was a major change in City administration.
On September 30, 2020, Thomas Bonfield retired as city
manager after 12 years of service. We would like to thank
Mr. Bonfield for his tremendous vision, determination, and
leadership. It has been an absolute pleasure working with
him here at the City of Durham. He has helped make the
city a better place to live, work, and play. We wish him and
his family all the best in his retirement!
Although much has changed, many things remain
constant. The City again achieved national recognition for
its ongoing commitment to prudent financial stewardship.
In 2020, the finance website WalletHub ranked Durham as
number five on their list of Best-Run Cities in America.
How the pandemic will continue to impact the city is
currently unknown. But what better way is there to
emphasize our commitment to a full re-opening and
recovery than having the theme for this year’s financial
report be Hello, My Name Is Durham. “Hello, My Name
Is…” stickers are a type of name tag that attendees
at conventions and conferences might wear to help
promote networking opportunities or when socializing is
encouraged. Even though we were forced by the pandemic
to socially distance from one another, we want to continue
developing a deep and sustained engagement with the
Durham community.
Sincerely,
Wanda S. Page
Interim City Manager
City of Durham: MISSION STATEMENT
The City of Durham is dedicated to providing quality services
to make Durham a great place to live, work, and play.
Dear City of Durham Residents,
Wanda S. Page
The City of Durham is dedicated to providing quality services to make Durham a great place to live, work, and play.
MISSION STATEMENT6
FISCAL SUSTAINABILITY: KEEPING DURHAM’S HOUSE IN ORDER
T he City of Durham’s conservative budgeting and
prudent fund balance policies have resulted
in strong reserves while retaining ample
financial flexibility. The City consistently excels at fiscal
stewardship, earning the highest possible bond ratings
from three of the nation’s top credit rating organizations:
Standard & Poor’s, Moody’s, and Fitch. Also, the City has
won the GFOA Certificate of Achievement for Excellence
in Financial Reporting for the 36th consecutive year.
How do we know the City’s finances are in good shape?
The City is financially healthy because it delivers the
services its residents expect with the resources its
residents provide. What are the management policies
and procedures that keep our finances in good order?
Here are some of the tools the City of Durham uses:
BALANCED BUDGET
North Carolina State Statutes require that the City adopt
a balanced budget each year. A budget is balanced if
recurring revenue matches recurring expenditures, or
we spend as much as we take in year after year.
CREDIT RATINGS
Similar to a personal credit score, a municipal credit
rating provides information about our ability to pay
back debt and has a direct impact on the City’s ability
to successfully attract investors, and more importantly
to pay the lowest possible interest rate. The City has
the highest quality triple-A credit rating from three of
the nation’s top credit rating organizations, a position
currently held by only 44 cities nationwide.
DEBT
Most people don’t pay cash for major investments, like
a home, but instead responsibly use debt to spread the
cost of larger purchases over time. Like a household with
finances in good shape, the City’s general obligation
debt is well under the State of North Carolina’s statutory
limits (see pages 9 and 10).
FINANCIAL PLANNING
Durham has a track record of converting strategic
decisions into transparent action and managing its
long-term needs in a methodical manner. The City
uses budget analysis, revenue projections, long-range
growth models, and the Capital Improvement Program
to determine future needs, timing, and acquisition
of assets. These plans allow the City to work out, in
advance, the optimal method of maintaining fiscal
stewardship.
FUND BALANCE
Like a savings account, cities prepare for the unexpected
by having reserves in the form of fund balance.
These reserves provide financial flexibility to react to
economic downturns or other unforeseen circumstances
in a timely manner. There is no single number in
governmental accounting and financial reporting that
attracts more attention than the fund balance. Fund
balance maintenance is a major factor considered by
bond rating agencies when evaluating the City’s credit
worthiness. For the fiscal year ended June 30, 2021, the
City is above target with an unassigned fund balance
as a percent of budgeted expenditures of 29.8 percent
($61.9 million). We can control our circumstances by
having a surplus. This level of fund balance will help
ensure the City’s ability to operate, even in the face of
unexpected emergencies.
REGULAR REPORTING
On a quarterly basis, the Finance and Budget and
Management Services Departments present a financial
review to City Council. Having a formal mechanism
to monitor revenue and expenditures performance
at regular intervals is a key feature of stable financial
performance. The earlier revenue weakness is identified
in the fiscal year, the more effective the budget
balancing response can be.
GOVERNMENTAL REVENUE PROPERTY TAX$166.9M (46.7%)
OPERATING & CAPITAL GRANTS$62.9M (17.6%)
OTHER TAXES$92M (25.8%)CHARGES FORSERVICES$30.7M (8.6%)TOTAL REVENUE EQUALS$357.2 MILLION ALL OTHER$4.7M (1.3%)
9 8
FINANCIAL RESULTS
ANNUAL INDEPENDENT FINANCIAL AUDIT
North Carolina State Statutes require that an annual
audit be performed by an independent certified public
accountant to ensure that the City is complying with
generally accepted accounting principles (GAAP). This
annual audit relates to the City’s Annual Comprehensive
Financial Report (ACFR) and seeks to confirm that the
City’s financial statements “present fairly, in all material
respects, the respective financial position” of the City
of Durham. Please note this Citizens’ Financial Report is
not intended to be a substitute for the ACFR. For more
detailed financial information, visit the City’s website at
durhamnc.gov
GENERAL FUND
The General Fund is the City’s primary operating
fund, and accounts for the revenue and expenditures
associated with operating traditional local governmental
services such as police, fire, and parks and recreation.
For FY 2020-21, total government revenue was $357.2
million. Property tax revenue was approximately $165.9
million and provided approximately 63.5 percent of total
government revenue. Total government expenditures
were $291.3 million. Public safety accounted for
approximately $119.6 million (41.1 percent) of total
expenditures in the General Fund, down from $134.2
million (44.8 percent) in the prior year.
This fiscal year, the City exceeded its revenue budget
by $19.2 million and lowered its expenditures by $16.5
million, resulting in a positive budget variance of $35.7
million. Revenue was above budget primarily due to
additional collections for property taxes. Expenditures
were below budget primarily due to reductions in costs
in the Public Safety, Community Building, and Parks and
Recreation Departments because of personnel vacancies
and lower operating expenditures.
GOVERNMENT-WIDE FINANCIAL STATEMENTS
Government-wide financial statements are designed
to provide readers with a broad overview of the City’s
finances in a manner similar to that of a private sector
business. The statement of net position presents
information on all assets, deferred outflows of resources,
liabilities, and deferred inflows of resources, with the
difference between them reported as net position. Over
time, any increase or decrease in net position may serve
as a useful indicator of whether the financial position is
improving or deteriorating. During FY 2020-21, the City’s
net position increased by $110 million. As of June 30,
2021 its assets exceeded its liabilities by $1.60 billion as
compared to $1.55 billion in the prior year.
INTERDEPENDENCE WITH OTHER ENTITIES
The City depends on financial resources flowing from,
or associated with, both the federal government
and the State of North Carolina. Because of this
dependency, the City is subject to changes in specific
flows of intergovernmental revenues based on
modifications to federal and state laws and federal and
state appropriations. It is also subject to changes in
investment earnings and asset values associated with
U.S. Treasury securities because of actions by foreign
governments and other holders of publicly held U.S.
Treasury securities.
GOVERNMENTAL EXPENSES PARKS &RECREATION$18.7M (6.4%)
GENERAL SERVICES$23.2M (8%)
DEVELOPMENT$36.7M (12.6%)PUBLIC SAFETY$119.6M (41%)
STREETS &HIGHWAYS$32.1M (11%)
INTEREST ON LONG-TERM DEBT$6.5M (2.2%)
GENERAL GOVERNMENT$54.6M (18.7%)TOTAL EXPENDITURES EQUAL$291.4 MILLION 11 10
BULL DISCLOSURE
MAJOR THE BULL: SO, TELL ME A LITTLE BIT ABOUT WHAT YOU DO FOR THE CITY OF DURHAM. LEILA PEDERSEN: My work is focused on advancing
community-driven solutions to economic recovery in
Durham. I spend a lot of my time engaging residents
to understand how communities and industries
were impacted by the health and economic impacts
of COVID-19. In partnership with local universities,
associations, and community-based organizations I am
working to ensure that recovery funding is effectively,
efficiently, and equitably distributed.
MAJOR THE BULL: WOW, SOUNDS LIKE A UNIQUE ROLE AND THAT YOU ARE REALLY COMMITTED TO MAKE DURHAM THE BEST THAT IT CAN BE. WHAT DO YOU LOVE ABOUT DURHAM? LEILA PEDERSEN: I moved to Durham to be closer
to my family. I love Durham for its people, history,
diversity, culture, natural beauty, and food! My favorite
things to do are visit Duke Gardens, walk the Eno River
trails, eat at the Original Q Shack, and listen to live
music at Blue Note Grill.
MTB: I LOVE THE BLUE NOTE! BACK TO YOUR WORK, WHAT EXACTLY IS THE AMERICAN RESCUE PLAN (ARP) AND WHAT DOES IT HAVE TO DO WITH THE CITY? LP: The American Rescue Plan Act was signed into law
on March 11, 2021 and provides $350 billion for state
and local relief to respond to the health and economic
impacts of COVID-19. The City of Durham has been
allocated nearly $52 million, more than one-fifth of
the annual budget, and Durham County will get $62
million. Together, Durham will receive more than $110
million in federal recovery funds.
MAJOR THE BULL SITS DOWN WITH LEILA PEDERSEN IN THE CITY MANAGER’S OFFICE TO DISCUSS DURHAM’S PROCESS FOR ALLOCATING AMERICAN RESCUE PLAN FUNDS
MTB: THAT’S A LOT OF MONEY! TELL ME MORE!LP: It is! Durham has a unique opportunity to leverage
these non-recurring federal funds to help turn the
tide on the pandemic, address its economic fallout,
and lay the foundation for a strong and equitable
recovery. Aid will be targeted toward communities with
the greatest needs and investments aligned with the
priorities of people most impacted by the pandemic and
resulting economic crises. With this funding, we aim to
deliver equitable outcomes and
transformative change.
MTB: SO, HOW WILL IT BE DECIDED WHERE THE CITY SPENDS OUR NEARLY $52 MILLION? LP: Building on Durham’s legacy of civil rights,
community activism, and economic opportunity, we
started the ARP process by conducting robust community
engagement in partnership with North Carolina Central
University, Neighborhood Improvement Services, the
Office of Equity and Inclusion, and Durham County.
Together, we hosted community events focused on
identifying community needs and priorities. We also
leveraged past engagement efforts like the Racial Equity
Task Force and other ongoing initiatives to ensure
community insights are incorporated into the design of
Durham’s ARP funding process.
MTB: HOW DID FEEDBACK FROM THE COMMUNITY INFORM THE PROCESS? LP: With input from residents, we created opportunities
for community-based organizations to submit proposals
for funding and assembled review committees to rate
and rank proposals according to equity impact criteria.
Recognizing that many of the most serious impacts of
the pandemic are rooted in systemic racism, the process
aims to support projects that
meet immediate needs and
address persistent inequities.
MTB: HAVE THE PROPOSALS BEEN SUBMITTED? HOW DOES THE REVIEW COMMITTEE ACTUALLY MAKE A DECISION WHEN THEY REVIEW THE PROPOSALS? LP: Yes, proposals have already been submitted for the
first round of funding. Review committees comprised of
Durham residents will prioritize projects across four core
categories: Health & Wellness, Safe & Stable Housing,
Economic Equity, and Community Resilience. In addition
to using an ARP Scorecard, the committee has worked
with the Office of Equity and Inclusion to identify three
main goals that will ensure that the process promotes
equitable outcomes.
LEILA PEDERSEN
“THE CITY OF DURHAM HAS BEEN ALLOCATED NEARLY $52 MILLION, MORE THAN ONE-FIFTH OF THE ANNUAL BUDGET.”
13 12
MTB: WHAT ARE THE THREE GOALS? LP: The first goal is to target historically disenfranchised
communities of color. The second goal is to respond to
the needs of front line workers and COVID-impacted
people. And the third goal is to provide a “down
payment’’ towards advancing racial equity.
MTB: WHAT DO YOU MEAN BY “DOWN PAYMENT?”
LP: Under this goal, the committee will be looking to
see if proposals align with Durham’s long-term racial
equity goals. We have also committed to using an
Equity Impact Assessment Tool to support systemic
examination of how
different racial and ethnic
groups will likely be
affected by a proposed
action or decision;
minimize unanticipated
adverse consequences in a variety of contexts,
including the analysis of proposed funding decisions;
and serve as a vital tool for preventing institutional
racism while identifying new ways to remedy long-
standing inequities.
MTB: AND WHO IS ON THE REVIEW COMMITTEE? CAN I JOIN? LP: Sorry, Major! The committees are already
assembled. Review committees made up of City
employees, Durham County employees, and Durham
residents will read and rate proposals. All projects
that are reviewed by committee members will be
presented to the City Council with the committees’
recommendations. The City Council will make the final
decision about which projects receive funding.
MTB: THIS PROCESS SOUNDS LIKE A LOT OF WORK! IT’S PROBABLY BEST IF I FOCUS ON MY DAY JOB... LP: Well yes, it is a lot of work but this federal funding
provides a once-in-a-lifetime opportunity and we
must honor it by ensuring that the process is inclusive,
transparent, and equitable. While working on this over
the last six months I have been honored, humbled,
and inspired by the thoughtful and dedicated City staff
who have contributed to this process, the residents of
Durham who have organized and advocated for the
needs in their communities, and our City leaders for
helping Durham navigate these difficult and uncertain
times. Throughout history – a pandemic, economic
collapse, and racial unrest – we are reminded that
resiliency requires compassion for our neighbors and
community. An equitable recovery will require an
unprecedented investment in people and families. With
ARP funding, Durham can build a better, more resilient
future for generations to come.
MTB: BEFORE I HEAD BACK HOME TO THE MAIN PLAZA, CAN YOU TELL ME WHERE WE ARE IN THE PROCESS AS WE HEAD INTO 2022? LP: Final applications have been submitted for the
first round of funding. Once review committees have
assessed each application, we will present the full list
of proposed projects to City Council in December 2021.
Once the first round of funding is allocated, Durham
will open the process up again for another round of
proposals in the Spring/Summer of 2022. We look
forward to ongoing opportunities to engage and make
the process even more inclusive and transparent. Please
visit our website, bit.ly/ARPDurham and the City Council
calendar for updates.
2021
4TH
Durham is the
Fourth Largest
City in NC
*Figures provided by the U.S. Census Bureau and the City of Durham’s 2021 Annual Comprehensive Financial Report
72TH
Largest City
in the U.S.
2,637
City of Durham Employees
115
Durham Area in
Square Miles
293,421
2020 Population of Durham $756M
Commercial Valuations$841M
Residential Valuations5,747
Permits Issued
BUILDING PERMITS
41.85
Tons of Recyclables collected Daily147.5
Tons of Trash collected Daily
TRASH/RECYCLING
23,334
Streetlights
TRANSPORTATION 22,799
Emergency Calls966
Fires Extinguished
FIRE
787
Miles of Streets
PUBLIC WORKS$22.1M
City’s average daily water consumption (gallons)
97,682
Customers1,442
Miles of Water Mains
WATER MANAGEMENT 69
Parks10
Recreation Centers
PARKS & RECREATION
BY THE NUMBERS
“...THIS FEDERAL FUNDING PROVIDES A ONCE-IN-A-LIFETIME OPPORTUNITY AND WE MUST HONOR IT BY ENSURING THAT THE PROCESS IS INCLUSIVE, TRANSPARENT, AND EQUITABLE.”
15 14
WHAT EXACTLY IS BOND FINANCING?
Bond financing is a type of long-term borrowing that
the City uses to raise money, primarily for long-lived
infrastructure assets. The City obtains money by selling
bonds to investors. In exchange, the City promises to
repay this money, with interest, according to specified
schedules. For tax-exempt issuances, the interest the
City has to pay investors on the bonds it uses for public
infrastructure is exempt from federal and state income
taxes, which makes the City’s interest cost on the bonds
less than it otherwise would be.
Before issuing debt, a government needs to consider
many factors. Appropriate planning and understanding
help provide the most favorable results to the City while
avoiding unnecessary risks and negative consequences.
Debt issuance requires working with a number of
partners, such as the Local Government Commission,
Bond Counsel, and a Financial Advisor, each with a
specific role. The debt issuance will result in a financing
agreement that is legally binding, and it is critically
important that government officials understand the
basic terms of the agreement and what the agreement
commits them to do. Evaluating the impact of new bond
programs on future tax rates is an important element of
debt management.
LONG-TERM FINANCIAL PLANNING
The City maintains a multi-year financial plan that
provides information to clearly identify if there is a deficit
at the beginning of the budget development process.
This is a crucial component of planning for the future.
This plan projects the financial impact of achieving the
objectives in the strategic plan and helps to identify
resources needed to fund those objectives.
Durham continues with its forward-looking capital
budget, presenting a long-term Capital Improvement
Program (CIP) to City Council. The CIP is a statement
of the City’s policy regarding long-range physical
development. Figuring out how much money the City
can afford to pay and how much debt to issue are
parts of the CIP process. The process is vital to the
City because it is the principal planning tool aligning
capital needs with urban growth and development.
This program is developed for a six-year period and is
updated and revised annually. To be included in the CIP,
a project usually requires a total expenditure greater
than $100,000. Funding for general government projects
is provided through general obligation bonds (GOs),
certificates of participation (COPs), limited obligation
bonds (LOBs), General Fund revenue, grants, impact fees,
and program income.
The Finance and Budget and Management Services
Departments have traditionally presented the CIP to City
Council in a companion document to the annual budget.
Disruptions created by the pandemic this year led to
uncertainty surrounding projects and timelines, and
completion of the CIP was delayed.
CREDIT RATINGS
Durham’s credit position is excellent. The City has the
highest quality credit rating, allowing it to borrow at
lower interest rates and to save taxpayers’ money.
Credit ratings are important because they define the
universe of buyers for the debt obligations, the price
that will be paid to obtain credit, and they heavily
influence how much it costs to borrow the cash
required to support the capital program. There are
approximately 22,500 cities in the U.S. and currently
Durham is one of 44 cities nationwide to receive the
top level triple-A credit rating from all three major
national bond rating agencies, Standard & Poor’s,
Moody’s, and Fitch. This rating makes the City one of
the highest rated public entities in the country.
DEBT ADMINISTRATION
As of year-end, the City had $606.2 million in debt
(e.g., bonds, notes) outstanding compared to $681.6M
in the prior fiscal year, an 11.1% decrease.
The City is subject to State Statutes of North Carolina
that limits the net bonded debt the City may have
outstanding up to eight percent of the appraised value
of property subject to taxation. At June 30, 2021 such
statutory limit for the City was $2.99 billion providing a
debt margin of $2.7 billion.
LO
N
G
-
T
E
R
M
D
E
B
T
TOTAL $681.6M
2020
2021
OUTSTANDING DEBT
(IN MILLIONS)
TOTAL $405.7M TOTAL $200.5M
TOTAL $424.3M TOTAL $257.3M
TOTAL $606.2M
GENERAL OBLIGATION BONDS
GENERAL OBLIGATION BONDS
BOND ANTICIPATION NOTES
BOND ANTICIPATION NOTES
INSTALLMENT FINANCING
INSTALLMENT FINANCING
SECTION 108 LOAN
SECTION 108 LOAN
LIMITED OBLIGATION BONDS
LIMITED OBLIGATION BONDS
REVENUE BONDS
REVENUE BONDS
$65,870
$96,610
$53,007
$140,728 $75,174
$24,881
$49,777
$118,498
$263,000
$263,000
$10,582
$13,734
$6,345
$8,206
$6,315
$5,545
$71,977
$14,647
17 16
BUDGETED APPROPRIATIONS BY CLASS
HOW DID DURHAM BUDGET FOR FISCAL YEAR 2022?
BUDGET
A budget is a financial plan. Each year the
City adopts its annual operating budget
that allocates limited dollars to the
highest community priorities. Effective and efficient
administration is a product of many factors, but
none take on the importance of budgeting since it is
during the budgeting process that critical policy and
administrative decisions are made.
Rather than trying to manage all its money in one pool,
the City uses fund accounting to keep track of money.
The City’s budget is comprised principally of three
major parts: the General Fund, the Debt Service Fund,
and the various Enterprise Funds. The General Fund is
financed primarily by property and sales tax revenues
and supports core services, such as public safety. The
Debt Service Fund is used to account for all the financial
resources needed to pay principal and interest on the
City’s debt and to fund capital expenditures. Enterprise
Funds are used to account for operations that are
financed and operated in a manner similar to private
business enterprises, such as the Water and Sewer Fund
and the Solid Waste Disposal Fund. The total budget
for FY 2021-22 is $524.6 million compared to $502.6
million for FY 2020-21, an increase of 4.38 percent ($22
million). The budget includes a General Fund budget of
$235.6 million compared to $214.6 million for last year,
an increase of 9.8 percent (+$21 million). As displayed
on these pages, Public Safety received the largest share
of General Fund appropriations ($119.6 million or 41.0
percent), followed by general government ($54.6 million
or 18.7 percent).
The tax rate for this year’s budget increases to 55.17
cents per $100 of assessed value, a 2-cent increase over
the FY 20-21 tax rate. A tax rate of 55.17 cents per $100
assessed value generates an annual tax bill of $1,291 on
a house valued at $233,927 (the median house value for
the City of Durham, according to the Durham County
Office of Tax Administration). For the median house,
here is how the $1,291 is applied: $724 for General Fund
operations; $269 for debt and capital projects; $131 for
solid waste; $88 for transit; and $79 for housing. The
graphic to the left displays the allocation of the property
tax.
The Water and Sewer Fund budget effectively supports
both water and sewer operations, capital needs, and
increased infrastructure debt service costs. Increases for
water and sewer volume charges and service charges
were approved for FY 2021-22 to support the Capital
Improvement Program projects planned for compliance
and rehabilitation in the next several years. The total
rate increase for the average customer is approximately
3.50 percent.
For more detailed information about the City’s budget,
visit durhamnc.gov/199/Budget-Management-Services.
FY 2022
DEFINITIONS OF THE
MAJOR FUNCTIONS IN
THE GENERAL FUND
The Public Safety function includes the following departments: Emergency
Communications, Emergency
Management, Fire, and Police.
Public Services includes: Fleet
Management, General Services, Parks
and Recreation, Public Works, and
Transportation.
Administration and Support includes:
Audit Services, Budget and Management
Services, Equity and Inclusion, Finance,
Human Resources, and Technology
Solutions.
Community Building includes: City/County
Planning, Community Development,
Economic and Workforce Development,
and Neighborhood Improvement
Services.
Governance includes: City Council, City
Attorney, City Clerk, and City Manager.
MAJOR FUNCTIONS
FUNDED IN THE BUDGET
(IN MILLIONS)
$110.7 $122.6 10.7%
$55.1 $20.7 -62.4%
$21.3 $23.2 8.9%
$18.8 $8.6 -54.3%
$7.5 $56.7 656%
$1.2 $8.8 633.3%
COMMUNITYBUILDING$20.7M
PUBLIC SERVICES$56.7M
NON-ASSIGNED$8.8M
ADMINISTRATION& SUPPORT$23.2M
PUBLIC SAFETY$122.6M GOVERNANCE$8.6M
TOTAL GENERAL FUND APPROPRIATIONS EQUAL$214.6 MILLION
$214.6 $240.6 12.1%
2020-21 2021-22 % Charge
TOTAL PROPERTY TAX RATE EQUALS55.17¢ PER $100
ASSESSED VALUE
DEDICATED HOUSING 3.38¢
TRANSIT 3.75¢
SOLID WASTE 5.59¢
DEBT & CAPITAL PROJECTS 11.50¢
GENERAL FUND 30.95¢
WHERE ARE YOUR PROPERTY TAXES GOING THIS YEAR?
OPERATING(17.2%)TRANSFER OTHER FUNDS(5.1%)
TOTAL GENERAL FUND APPROPRIATIONS EQUAL$214.6 MILLION PERSONNEL SERVICES(76.9%)
OTHER(0.3%)
CAPITAL OUTLAY(0.6%)
PUBLIC SAFETY
PUBLIC SERVICES
ADMINISTRATION & SUPPORT
COMMUNITY BUILDING
GOVERNANCE
NON-ASSIGNED
TOTAL GENERAL FUND
19 18
FINDING OPPORTUNITY AROUND EVERY CORNER
GET TO KNOW DURHAM’S AUDIT SERVICES DEPARTMENT
BUT WHAT DOES THIS ACTUALLY MEAN?
YOU MIGHT THINK THE TERM
“AUDIT” IS NEGATIVE, BUT FOR
THE CITY, THE PROCESS IS NOT
NEGATIVE AT ALL!
(The Department exists to make sure Durham
continues to be a wonderful place to live, work,
and play.
(The Department’s goal is to be proactive – not to
point fingers but to help the City’s functions run
efficiently and ethically.
(The Department doesn’t audit people, it assesses
government functions to try to ensure that the
City is not at any risk and that taxpayers dollars are
being used wisely and effectively.
(The Department doesn’t just name issues, it
provides concrete roadmaps and recommendations
to assist in the process of fixing problems.
WHAT YOU
SHOULD KNOW
ABOUT
DURHAM’S
AUDIT
SERVICES
DEPARTMENT
The Department provides
assurance that internal
controls are adequate to
minimize risks and strives
to add value through
effective and meaningful
recommendations to
solve inefficiencies within
Durham’s government
services. The Department
also audits partner
organizations to determine
whether expenditures
were allowable or eligible;
and to determine whether
grant or pass-through funds
have been appropriately
utilized. In order to assist
members of management in
assessing the effectiveness
of performance measures,
the Department provides
follow-up reports and
recommendations
concerning processes
reviewed. Ultimately, the
Department and its staff
serve as an efficient
internal means of
promoting effective controls
and productive operations.
DID YOU KNOW…?
(The Audit Department performs 8-9 audits
per year.
(City Manager Wanda Page was a member of the
Audit Services Department for 15 years.
(The Audit Department is functionally independent
and reports to an independent oversight committee.
(City employees and residents can report unethical
behavior anytime online, over the phone, or in
person HERE.
( Every three years the Audit Services Department is PEER REVIEWED by other local government auditors
from cities such as Raleigh and Atlanta.
(You can read old reports online HERE.
21 20
ANNUAL AUDIT PLAN
The Audit Services Director is
required to publish an annual
audit plan to the Audit Services
Oversight Committee and
conduct the performance
audits contained within that
plan. The overall results of the
audit work will be reported at
least quarterly to the ASOC;
and, subsequently to the full
City Council. Unforeseen audit
requirements and management
requests for investigations into
matters of fraud, waste, abuse or
unethical behavior can create the
need for changes to the overall
plan. Therefore, appropriate
flexibility should be incorporated
into the annual plan. The ASOC
members or City Manager must
approve significant deviations
from the processes or audit areas
contained within the annual
audit plan.
FINDINGS
Upon the completion of audit
fieldwork, the Audit Services
Director should discuss the
proposed audit findings and
recommendations with the
auditee at a closing conference.
Audit Services will prepare a
report draft with their proposed
findings and recommendations
along with a space for
management’s responses. The
draft is then forwarded to the
appropriate manager to respond
and outline corrective actions to
be taken. The responses are due
2 weeks after the receipt of the
draft report.
FOLLOW-UP
Subsequent to the issuance of
the final report, Audit Services
staff develop a status follow-up
report to ensure that needed
actions based on the audit were
actually taken. The director
or manager of the auditee
department is responsible for
seeing that corrective action on
recommendations are made or
deficient conditions outlined
in the report are corrected in
a timely manner. If the proper
corrective action is not taken,
the Audit Services Director
is responsible on a quarterly
basis for presenting a report on
open recommendations to the
ASOC members and to senior
leadership at the City.
AUDIT REPORT
The auditee’s response will
include comments, action items,
and target dates and will be
incorporated in the final report.
The final audit report will be
submitted by the Audit Services
Director to appropriate levels
of City management. All audit
reports will be distributed to the
ASOC as they are released, or as
part of the normal distribution
of audit reports. The audit
report including management’s
response will also be reported to
the entire City Council.
HOW THEY GET THE JOB DONE
THE
PROCESS
WHO IS THE AUDIT SERVICES OVERSIGHT COMMITTEE?
In order to maintain its organizational independence,
the Audit Services Department reports functionally
to the Audit Services Oversight Committee (ASOC) at
a minimum of four times a year. The Audit Services
Department reports administratively to the City
Manager. The ASOC approves all proposed audit plans
and completed audits prepared by Audit Services staff.
( 6 TOTAL MEMBERS appointed by City Council • 2 City Council Members• 1 Alternative City Council Member • 2 residents that are CPAs• 1 resident with experience in finance
( 4 YEAR TERMS
( 2 TERM LIMIT
(Meets the 4th Monday MONTHLY
(The City Manager is a non-voting member
of the ASOC
MISSION
THE AUDIT SERVICES DEPARTMENT’S MISSION
IS TO PROVIDE AN INDEPENDENT APPRAISAL
FUNCTION WITHIN THE CITY AND TO ASSIST
THE MANAGEMENT TEAM WITH EFFECTIVELY
DISCHARGING THEIR RESPONSIBILITIES.
Germaine Brewington
“WE HOPE THAT DURHAM EMPLOYEES AND CITIZENS SEE OUR DEPARTMENT IN THE SAME WAY WE SEE OURSELVES: COLLABORATIVE, OPEN, AND INVESTED.”
Germaine Brewington, Director of Audit Services 23 22
For information about the City Finance Department, visit durhamnc.gov/456/Finance or call (919) 560-4455.
For information about City of Durham services, visit the City’s website at durhamnc.gov or call Durham One Call at (919) 560-1200.
This City of Durham Financial
Report is a publication of the
City Finance Department
101 City Hall Plaza
Durham, NC 27701