Agenda Packet 12-10-18 Meeting - REVISED

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Management’s Discussion and Analysis The management of the City of Eugene, Oregon (City) presents this narrative overview to facilitate both a short and a long- term analysis of the financial activities of the City for the fiscal year ended June 30, 2018. This Management’s Discussion and Analysis (MD&A) is based on currently known facts, decisions, and conditions that existed as of the date of the independent auditor’s report. Additional information outside the scope of this analysis can be found in the Letter of Transmittal. Financial Highlights  The City’s total assets and deferred outflows of resources at June 30, 2018 decreased $15.5 million from $1.14 billion to $1.13 billion. The decrease was largely due to a $38.8 million decrease in deferred outflows related to pensions offset by an increase of $23.3 million in capital and other assets.  The City’s total liabilities and deferred inflows of resources at June 30, 2018 decreased $10.0 million from $331.4 million to $321.4 million. The decrease was attributable to decreases in noncurrent liabilities of $18.7 million in net pension liability and a decrease of $5.9 million in bonds payable offset by an increase of $14.7 million in net OPEB liability.  The net position of the City (assets and deferred outflows of resources less liabilities and deferred inflows of resources) at June 30, 2018 decreased $5.4 million from $811.4 million to $806.0 million. The City’s unrestricted portion of net position is a negative $15.3 million.  At June 30, 2018, the General Fund’s fund balance was $65.0 million, an increase of $4.6 million from the previous year. Of the General Fund’s fund balance $11.4 million is unassigned.  In FY18, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 75 Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. The statement requires that the value of the City’s liability related to Other Post-Employment Benefits (OPEB) be recorded in the financial statements. In past years the OPEB unfunded liability was simply reported as Required Supplementary Information. The effect of this implementation is shown as an adjustment to beginning net position in the amount of $15.0 million. The accounting change does not have any impact on the City’s budget or funding for OPEB. Overview of the Financial Statements The following discussion and analysis is intended to serve as an introduction to the City’s basic financial statements and other required supplementary information. The City’s basic financial statements comprise three components: 1. Government-wide financial statements 2. Fund financial statements 3. Notes to the basic financial statements Government-wide financial statements. The government-wide financial statements are designed to provide readers a broad overview of the City’s finances, in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the City’s assets and deferred outflows of resources and liabilities and deferred inflows of resources, with the difference between the two reported as net position. The Statement of Activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in a future fiscal period. Examples of such items include earned, but uncollected property taxes, and earned, but unused compensated absences. Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all, or a significant portion of, their costs through user fees and charges (business-type activities). The governmental activities of the City include the following:  Central services  Fire and emergency medical services  Library, recreation, and cultural services  Planning and development  Police  Public works 17 December 10, 2018, Meeting - Item 2D