CITY OF CLEVELAND, OHIO

CITYOFCLEVELAND,OHIO

COMPREHENSIVEANNUALFINANCIALREPORT

FortheFiscalYearEndedDecember31,2020

CITY OF CLEVELAND

Comprehensive Annual Financial Report

For the year ended December 31, 2020

Issued by the

Department of Finance

James E. Gentile, CPA

Acting Director

Lesly Camargo, CPA

Acting City Controller

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CITY OF CLEVELAND, OHIO

TABLE OF CONTENTS

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED DECEMBER 31, 2020

Page

Introductory Section

Transmittal Letter ........................................................................................................................................... 7-25

City Officials .................................................................................................................................................. 27

City Council ................................................................................................................................................... 28

Certificate of Achievement for Excellence in Financial Reporting ................................................................ 29

Administrative Organization Chart ................................................................................................................ 30

Financial Highlights ....................................................................................................................................... 31

Financial Section

Independent Auditors’ Report ........................................................................................................................ 35-37

Management’s Discussion and Analysis ........................................................................................................ 39-56

Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position ....................................................................................................................... 58-59

Statement of Activities ............................................................................................................................ 60-61

Fund Financial Statements:

Balance Sheet - Governmental Funds ..................................................................................................... 62

Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds .............. 63

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances

of Governmental Funds to the Statement of Activities ....................................................................... 64

Statement of Revenues, Expenditures and Changes in Fund Balances (Budget and Actual) -

General Fund ....................................................................................................................................... 65

Statement of Net Position - Proprietary Funds ....................................................................................... 66-67

Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds ................... 68

Statement of Cash Flows - Proprietary Funds ......................................................................................... 69-70

Statement of Fiduciary Net Position – Custodial Funds ........................................................................ 71

Statement of Changes in Fiduciary Net Position – Custodial Funds ...................................................... 72

Notes to Financial Statements .................................................................................................................... 73-132

Required Supplementary Information:

Schedule of the City’s Proportionate Share of the Net Pension Liability

Ohio Public Employees Retirement System ………………………………………………………….... 134

Schedule of Contributions – Net Pension Liability - Ohio Public Employees Retirement System……... . 135

Schedule of the City’s Proportionate Share of the Net Pension Liability

Ohio Police and Fire Pension Fund…………………………………………………………………….. 136

Schedule of Contributions – Net Pension Liability - Ohio Police and Fire Pension Fund……………… . 137

Schedule of the City’s Proportionate Share of the Net OPEB Liability

Ohio Public Employees Retirement System ………………………………………….... ....................... 138

Schedule of Contributions – Net OPEB Liability – Ohio Public Employees Retirement System……… .. 139

Schedule of the City’s Proportionate Share of the Net OPEB Liability

Ohio Police and Fire Pension Fund…………………………………………………………………….. 140

Schedule of Contributions – Net OPEB Liability – Ohio Police and Fire Pension Fund………………… 141

Supplementary Information:

Combining and Individual Fund Financial Statements and Schedules:

General Fund:

Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

(Non-GAAP Budgetary Basis) - General Fund-Legal Appropriation Level ................................... 144-151

Nonmajor Governmental Funds:

Nonmajor Governmental Funds. ......................................................................................................... 153-155

Combining Balance Sheet - Nonmajor Governmental Funds ............................................................ 156-163

Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor

Governmental Funds ....................................................................................................................... 164-171

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Page

Combining Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and

Actual (Non-GAAP Budgetary Basis) - Budgeted Special Revenue Funds - Legal

Appropriation Level ..................................................................................................................... 172-175

Combining Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and

Actual (Non-GAAP Budgetary Basis) - Budgeted Debt Service Funds - Legal

Appropriation Level ..................................................................................................................... 176-179

Nonmajor Enterprise Funds:

Nonmajor Enterprise Funds ................................................................................................................. 181

Combining Statement of Net Position - Nonmajor Enterprise Funds .................................................. 182-185

Combining Statement of Revenues, Expenses and Changes in Fund Net Position -

Nonmajor Enterprise Funds ............................................................................................................. 186-187

Combining Statement of Cash Flows - Nonmajor Enterprise Funds ................................................... 188-191

Internal Service Funds:

Internal Service Funds ......................................................................................................................... 193

Combining Statement of Net Position - All Internal Service Funds .................................................... 194-197

Combining Statement of Revenues, Expenses and Changes in Fund Net Position -

All Internal Service Funds ............................................................................................................... 198-199

Combining Statement of Cash Flows - All Internal Service Funds ..................................................... 200-203

Custodial Funds:

Custodial Funds ................................................................................................................................... 205

Combining Statement of Fiduciary Net Position - Custodial Funds ................................................... 206

Combining Statement of Changes in Fiduciary Net Position - Custodial Funds ................................. 207

Capital Assets Used in the Operation of Governmental Funds:

Schedule by Type ................................................................................................................................ 210

Schedule by Function and Activity ..................................................................................................... 211

Schedule of Changes by Function and Activity .................................................................................. 212

Statistical Section

Table of Contents ................................................................................................................................ S2

Net Position by Component - Last Ten Years ..................................................................................... S3

Changes in Net Position – Last Ten Years .......................................................................................... S4

Fund Balances, Governmental Funds – Last Ten Years ...................................................................... S5

Changes in Fund Balances, Governmental Funds – Last Ten Years ................................................... S6

Assessed Valuation and Estimated Actual Values of Taxable Property –

Last Ten Years ................................................................................................................................. S7

Property Tax Rates – Direct and Overlapping Governments – Last Ten Years .................................. S8

Property Tax Levies and Collections – Last Ten Years ...................................................................... S9

Principal Taxpayers – Real Estate Tax, 2020 and 2011 ...................................................................... S10

Income Tax Revenue Base and Collections – Last Ten Years ............................................................ S11

Ratio of Outstanding Debt to Total Personal Income and Debt Per Capita –

Last Ten Years ................................................................................................................................. S12

Ratio of General Obligation Bonded Debt to Assessed Value and Bonded Debt

Per Capita – Last Ten Years ............................................................................................................ S13

Computation of Direct and Overlapping Governmental Activities Debt ............................................ S14

Legal Debt Margin – Last Ten Years .................................................................................................. S15

Pledged Revenue Coverage, Airport Revenue Bonds – Last Ten Years ............................................. S16

Pledged Revenue Coverage, Power System Revenue Bonds – Last Ten Years .................................. S17

Pledged Revenue Coverage, Water System Revenue Bonds – Last Ten Years .................................. S18

Pledged Revenue Coverage, Water Pollution Control Revenue Bonds –

Last Five Years ................................................................................................................................ S19

Principal Employers, 2020 and 2011 ................................................................................................... S20

Demographic and Economic Statistics – Last Ten Years .................................................................... S21

Full-Time Equivalent City Government Employees by Function/Program –

Last Ten Years ................................................................................................................................. S22

Operating Indicators by Function/Program – Last Ten Years ............................................................. S23

Capital Assets Statistics by Function/Program – Last Ten Years ....................................................... S24

Schedule of Statistics – General Fund ................................................................................................. S25

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INTRODUCTORY

SECTION

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June 24, 2021

Honorable Mayor Frank G. Jackson

City of Cleveland Council and

Citizens of the City of Cleveland, Ohio

Introduction

We are pleased to submit the Comprehensive Annual Financial Report of the City of Cleveland (the City) for the year

ended December 31, 2020. This report, prepared by the Department of Finance, includes the basic financial statements

that summarize the various operations and cash flows related to the City’s 2020 activities. Our intention is to provide a

clear, comprehensive and materially accurate overview of the City’s financial position at the close of last year. The

enclosed information has been designed to allow the reader to gain an understanding of the City’s finances, including

financial trends, financial instruments and fund performances. The City has complete responsibility for all information

contained in this report.

This report consists of management’s representations concerning the finances of the City. Consequently, management

assumes full responsibility for the completeness and reliability of all of the information presented in this report. To

provide a reasonable basis for making these representations, management of the City has established a comprehensive

internal control framework that is designed both to protect the City’s assets from loss, theft, or misuse and to compile

sufficient, reliable information for the preparation of the City’s financial statements in conformity with generally

accepted accounting principles (GAAP) in the United States of America. Because the cost of internal controls should not

outweigh their benefits, this comprehensive framework of internal controls has been designed to provide reasonable,

rather than absolute, assurance that the financial statements will be free of material misstatement. As management, we

assert that to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.

The City’s financial statements have been audited by Clark, Schaefer, Hackett & Co. The goal of the independent audit

is to provide reasonable assurance that the financial statements of the City for the year ended December 31, 2020, are

free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the

amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates

made by management; and evaluating the overall financial statement presentation. Clark, Schaefer, Hackett & Co.

concluded, based upon its audit, that there was a reasonable basis for rendering an unmodified opinion that the City’s

financial statements for the year ended December 31, 2020, are fairly presented in conformity with GAAP. The

Independent Auditors’ Report is presented as the first component of the financial section of this report.

The independent audit of the financial statements of the City was part of a broader, federally mandated “Single Audit”

designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements

require the independent auditor to report not only on the fair presentation of the financial statements, but also on the

audited government’s internal controls and compliance with legal requirements, with special emphasis on internal

controls and legal requirements involving the administration of federal awards. These reports are available in the City’s

separately issued Single Audit Report.

GAAP requires that management provide a narrative introduction, overview and analysis to accompany the basic

financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is

designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found

immediately following the Independent Auditors’ Report.

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Structure of this Comprehensive Annual Financial Report

This Comprehensive Annual Financial Report is designed to assist the reader in understanding the City’s finances. This

Comprehensive Annual Financial Report 0consists of the following sections:

 The Introductory Section, which includes this letter of transmittal and contains information pertinent to the

City’s management and organization.

 The Financial Section contains the Independent Auditors’ Report, MD&A, Basic Financial Statements,

Required Supplementary Information and various other statements and schedules pertaining to the City’s funds

and activities.

 The Statistical Section contains numerous tables of financial and demographic information. Much of this

information is shown with comparative data for the ten-year period from 2011 through 2020.

References throughout this report to Note 1, Note 2, etc., are to the Notes to Financial Statements included in the

Financial Section of this Comprehensive Annual Financial Report.

Profile of the Government

The City

The City is a municipal corporation and political subdivision of the State of Ohio. It is located on the southern shore of

Lake Erie and is the county seat of Cuyahoga County.

The City is included in the Cleveland-Elyria, OH Metropolitan Statistical Area (MSA), comprised of Cuyahoga, Lake,

Lorain, Geauga and Medina counties. This MSA is the 34

th

largest of 384 Metropolitan Areas in the United States and

the 2

nd

largest MSA in the State of Ohio.

The City is located in the northeast part of the state, approximately 150 miles north-east of Columbus. Bordering Lake

Erie, the City is home to world-renowned medical facilities, professional sports venues, a casino, Severance Hall,

numerous lakefront parks, the Port of Cleveland, the Rock and Roll Hall of Fame and operates the nation’s tenth largest

water system. Interstate highways I-71, I-480, I-77 and I-90 serve as some of the City’s major transportation arteries. The

City is rich in educational and medical facilities, including Cleveland State University, Case Western Reserve

University, the Cleveland Clinic and University Hospitals of Cleveland.

City Government

The City operates under and is governed by, the Charter which was first adopted by the voters in 1913 and has been and

may be further amended by the voters from time to time. The City is also subject to certain general State laws that are

applicable to all cities in the State. In addition, under Article XVIII, Section 3 of the Ohio Constitution, the City may

exercise all powers of local self-government and may exercise police powers to the extent not in conflict with applicable

general State laws. The Charter provides for a mayor-council form of government.

The City’s chief executive and administrative officer is the Mayor, elected by the voters for a four-year term. Frank G.

Jackson was elected as Mayor of the City in November 2005 and began his first term on January 2, 2006. In November

2017, he was re-elected to a fourth term, which will make him the City’s longest serving Mayor. Prior to assuming

office as Mayor, Mr. Jackson served as a Ward 5 City Council member for 16 years and in 2002 was elected by the then

21-member City Council (Council) to serve as Council President. Under the Charter, the Mayor may veto any

legislation passed by Council, but a veto may be overridden by a two-thirds vote of all members of the Council.

Legislative authority is currently vested in a 17-member Council. Council members serve four year terms and are

elected from wards. The present terms of the Mayor and Council members expire on December 31, 2021. The Council

fixes compensation of City officials and employees and enacts ordinances and resolutions relating to City services, tax

levies, appropriating and borrowing money, licensing and regulating businesses and trades and other municipal

functions. The presiding officer is the President of Council, elected by the Council members. Kevin J. Kelley was

elected as President of Council in November 2013 and re-elected in November 2017. The Clerk of Council is appointed

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by Council. The Charter establishes certain administrative departments; the Council may establish divisions within

departments or additional departments. The Mayor appoints all of the directors of the City’s 12 departments.

The Director of Finance and City Controller believe that, to the best of their knowledge, the data contained in this report

present fairly the financial position and results of operations of the various funds of the City. All necessary disclosures

are included in this report to enable the reader to understand the City’s financial activities.

Financial Reporting Entity

The City has applied guidelines established by Governmental Accounting Standards Board (GASB) Statement No. 61,

The Financial Reporting Entity: Omnibus an Amendment of GASB Statements No. 14 and No. 34. Provisions outlined in

this statement define the operational, functional and organizational units for which the City, acting as Primary

Government, is required to include as part of its reporting entity. The inclusion of a component unit as part of the City’s

reporting entity requires the appointment of a voting majority of the component unit’s board and either (1) the City’s

ability to impose its will over the component unit or (2) the possibility that the component unit will provide a financial

benefit to or impose a financial burden on the City.

Under these provisions, the City’s financial reporting entity acts as a single rather than multi-component unit. The

provisions permit the entity to include all funds, agencies, boards and commissions that, by definition, comprise

components within the primary government itself. For the City, these components include police and fire protection

services, waste collection, parks and recreation, health, select social services and general administrative services.

Primary enterprise activities owned and operated by the City include a water system, electric distribution system and two

airports.

In accordance with GASB Statement No. 61, the Cuyahoga Metropolitan Housing Authority, Cleveland-Cuyahoga Port

Authority and Cleveland Municipal School District are defined as related organizations and Gateway Economic

Development Corporation of Greater Cleveland is defined as a jointly governed organization. None of these

organizations are included within the City’s reporting entity.

The City has included the Public Health Department Blended Component Unit as part of its reporting entity.

Internal Control

Management of the City is responsible for establishing and maintaining an internal control structure designed to ensure

that the assets of the City are protected from loss, theft or misuse. The internal control structure ensures that accounting

data is compiled to allow for the preparation of financial statements in conformity with GAAP. The internal control

structure is designed to provide reasonable assurances that these objectives are met. The concept of reasonable assurance

recognizes that (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs

and benefits requires estimates and judgments by management.

As a recipient of federal, state and county financial assistance, the City is also responsible for maintaining a rigorous

internal control structure that ensures full compliance with applicable laws and regulations related to those programs.

This internal control structure is subject to periodic evaluation by management, external auditors and the internal audit

staff of the City. The City is required to undergo an annual audit in conformity with the provisions of the U.S. Office of

Management and Budget’s Uniform Administration Requirements, Cost Principles and Audit Requirements for Federal

Awards (Uniform Guidance). The information related to the Uniform Guidance, including the schedule of federal

awards expenditures, findings and recommendations and auditor’s reports on the internal control structure and

compliance with applicable laws and regulations are included in a separate report.

Accounting and Financial Reporting

The City’s accounting system is organized and operated on a fund basis. A fund is defined as an independent fiscal and

accounting entity with a self-balancing set of accounts. The types of funds to be used are determined by GAAP and the

number of individual funds established is determined by sound financial administration. Each fund is a separate

accounting entity with its own self-balancing set of accounts, assets, deferred outflows of resources, liabilities, deferred

inflows of resources and fund balance. The City’s governmental funds include the General Fund, Public Health Fund,

Special Revenue Funds, Debt Service Funds and Capital Projects Funds. The City’s proprietary funds are its Enterprise

Funds that provide services to the general public, including utilities and airport service and Internal Service Funds that

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provide services to City departments, divisions and other governments. The City also maintains Fiduciary Funds to

account for assets held by the City in an agent capacity for individuals, private organizations and other governments.

Except for budgetary purposes, the basis of accounting used by the City conforms to GAAP as applicable to

governmental units. All governmental funds are accounted for using a current financial resources (current assets,

deferred outflows of resources, current liabilities and deferred inflows of resources) measurement focus. The modified

accrual basis of accounting is utilized for governmental funds. Revenues are recognized when they are susceptible to

accrual (both measurable and available). Expenditures are recognized when the related liability is incurred, except for

interest on long-term debt which is recorded when due.

The measurement focus of the City’s proprietary funds is on the flow of total economic resources (all assets, deferred

outflows of resources, liabilities and deferred inflows of resources). The accrual basis of accounting (revenues are

recognized when earned and expenses when incurred) is utilized for the Enterprise and Internal Service Funds.

The City’s basis of accounting for budgetary purposes differs from GAAP in that revenues are recognized when

received, rather than when susceptible to accrual (measurable and available) and encumbrances and pre-encumbrances

are included as expenditures rather than included in fund balances.

Budgeting Procedures

Detailed provisions regulating the City’s budget, tax levies and appropriations are set forth in the Ohio Revised Code and

the City Charter. The Mayor is required to submit the appropriation budget, called “The Mayor’s Estimate” to City

Council by February 1 of each year. The Council may adopt a temporary appropriation measure for the first three

months of the year, but must adopt a permanent appropriation measure for the fiscal year by April 1. The Cuyahoga

County Fiscal Officer must certify that the City’s appropriation measure does not exceed the amounts set forth in the

County Budget Commission’s Certificate of Estimated Resources.

In November of 2016, GASB Statement No. 83, Certain Asset Retirement Obligations, was issued. This Statement is

effective for the reporting periods beginning after June 15, 2019. The objective of this Statement is to provide financial

statement users with information about asset retirement obligations (ARO) that were not addressed in GASB standards

by establishing uniform accounting and financial reporting requirements for these obligations. As required, the City has

implemented GASB Statement No. 83 as of December 31, 2020.

In January of 2017, GASB Statement No. 84, Fiduciary Activities, was issued. This Statement is effective for reporting

periods beginning after December 15, 2019. The objective of this Statement is to enhance the consistency and

comparability of fiduciary activity reporting by state and local governments. This Statement also is intended to improve

the usefulness of fiduciary activity information primarily for assessing the accountability of governments in their roles as

fiduciaries. As required, the City has implemented GASB Statement No. 84 as of December 31, 2020.

In March of 2018, GASB Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and

Direct Placements, was issued. This Statement is effective for reporting periods beginning after June 15, 2019. The

objective of this Statement is to improve consistency in the information that is disclosed in notes to government financial

statements related to debt, including direct borrowings and direct placements, and to provide financial statement users

with additional essential information about debt. As required, the City has implemented GASB Statement No. 88 as of

December 31, 2020.

In August of 2018, GASB Statement No. 90, Majority Equity Interests an amendment of GASB Statements No. 14 and

No. 61, was issued. This Statement is effective for reporting periods beginning after December 15, 2019. The objective

of this Statement is to improve consistency in the measurement and comparability of the financial statement presentation

of majority interests in legally separate organizations and to improve the relevance of financial statement information for

certain component units. The City has determined that GASB Statement No. 90 has no impact on its financial statements

as of December 31, 2020.

The City maintains budgetary control on a non-GAAP basis at the character level (personnel and related expenditures

and other expenditures) within each division. Lower levels within each character are accounted for and reported

internally. Lower levels are referred to as the program level. Estimated expenditure amounts must be pre-encumbered

and subsequently encumbered prior to the release of purchase orders to vendors or finalization of other contracts. Pre-

encumbrances and encumbrances that would exceed the available character level appropriation are not approved or

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recorded until the Council authorizes additional appropriations or transfers. Unencumbered appropriations lapse at the

end of each calendar year. As an additional control over expenditures, the City Charter requires that all contracts in

excess of $50,000 shall first be authorized and directed by ordinance of Council.

Budget-to-actual comparisons are provided in this report for each individual governmental fund for which an

appropriated annual budget has been adopted. For the General Fund, this comparison is shown on page 65 as part of the

basic financial statements. For other governmental funds with appropriated annual budgets, this comparison is presented

in the supplementary information subsection of this report along with more detailed information regarding the General

Fund, which starts on page 144.

Factors Affecting Financial Condition

Local Economy

The information presented in the financial statements is perhaps best understood when it is considered from the broader

perspective of the specific environment within which the City operates.

The City’s economic condition draws strength and stability from its evolving role as the focal point of a growing,

changing and substantial regional economy. The City is located at the center of one of the nation’s heaviest population

concentrations. The Cleveland Metropolitan area is a significant local market, housing 2.1 million people. The City also

provides superior links to the global markets. The Cleveland-Cuyahoga Port Authority handles the largest amount of

overseas cargo on Lake Erie and includes a Foreign Trade Zone. The City is also well-served with extensive highways

and Cleveland Hopkins International Airport is serviced by all major airlines. The re-emergence of downtown Cleveland

as a vibrant center for national and regional entertainment and major cultural activities signals a turning point in the

City’s overall fortunes and is paving the way for further economic expansion that will be significantly more

entrepreneurial in scope.

Major Industries, Economic Conditions and Employment

The City, as well as most large urban municipalities across the nation, has faced significant economic challenges in

recent years. Like all manufacturing cities across the country, the City has tried to combat the declining industry base

with more professional and service industry opportunities. The City’s budget basis income tax collections decreased

7.2% in 2020 as a result of the COVID-19 pandemic.

While the City’s economy has shifted more toward education and health care services, its manufacturing base has

assumed a smaller, yet still vital role. Competitive pressures in manufacturing have limited job creation, but the

competitive position of the City based industrial companies has improved.

For 2020, the U.S. Bureau of Labor Statistics (BLS) indicates that the Cleveland area employment base continues to

become more diversified. The following table summarizes the percentage of nonfarm employment in the Cleveland area

by major industry.

Industry

Percent of

Workforce



Education and health services 19.17

%

Trade, transportation and utilities 18.16



Professional and business services 14.38



Government 12.82



Manufacturing 11.82



Leisure and hospitality 7.99



Financial activities 6.53



Mining, logging and construction 4.10



Information 1.25



Other Services

3.78



100.00

%

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Current Projects and 2020 Accomplishments

The 2020 budget focused on continuing the City’s commitment to improve the quality of life of its citizens by

strengthening its neighborhoods, fostering a favorable business climate and providing superior services.

The City achieved the following 2020 programmatic goals and projects:

Department of Community Development

 The Department continued implementing neighborhood strategies to reduce blight and promote recovery from

the economic downturn by making or supporting investments throughout Cleveland. Investments include, but

are not limited to demolition, housing renovation, home repair, land reutilization, development of new

affordable housing, storefront façade improvements, addressing homelessness and needed public services. All

approaches are consistent with the CityWide plan to deploy sustainable and green principles.

 The U.S. Department of Housing and Urban Development (HUD) approved its priorities to focus our resources

to address Affordable Housing, Homelessness, Non-Homeless Persons with Special Needs, Stabilizing

Neighborhood Housing Markets, Non-Housing Community Development and Public Housing.

 All housing projects that receive City financial assistance, including tax abatement, are required to meet the

City's Green Building Standards (GBS). The GBS incorporates national standards such as Leadership in

Energy & Environmental Design (LEED) and Enterprise Community Partners' Green Community Standards.

 Eleven affordable multi-family and scatter site projects with 232 units were completed in 2020. Included in

these projects were Emerald X, a 60 unit permanent supportive housing project and Aspen Place, containing 41

units. In addition 14 vacant homes in the City were renovated by Habitat for Humanity.

 The commercial revitalization team completed 35 Storefront Renovation Program projects in 2020 which

included 11 comprehensive building rehabilitations, 24 neighborhood business signs and seven downtown

projects.

 The Department addressed lead hazards in 125 units through the Lead Hazard Reduction Grant.

 Under the Community Engagement Healthy Homes Initiative (HHI) Program, specialists assess neighborhood

housing issues and help residents and landlords understand and remove environmental hazards and bring homes

to housing code compliance. In addition, the program supports the Department’s Exterior Paint Program by

helping residents and landlords apply for and complete the paint program.

Department of Building and Housing

 Inspected, condemned and razed over 779 structures.

 Initiated 1,015 court cases against negligent property owners.

 Issued 3,789 violation notices.

 Issued construction permits valued at $873,031,083 in new construction.

 Boarded and secured 1,134 vacant structures.

 Issued 628 condemnation violations.

Department of Economic Development

 The Department continued to access $10,000,000 in funding from JobsOhio for the environmental assessment

and remediation of the Opportunity Corridor. The grants will help to create “shovel-ready” industrial

development sites on land that is adjacent to the Opportunity Corridor, a $300 million investment connecting

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Cleveland’s University Circle to the I-490 Interchange. Almost 200 acres have been assessed and are positioned

to begin remediation. The Opportunity Corridor will be home to the new Cleveland Police Headquarters and to

a mixed-use housing and grocery development at E. 105

th

St. and Cedar Avenue.

 The Neighborhood Retail Assistance Program provided $250,000 of assistance for seven projects that leveraged

over $3,100,000 of total project investment. Vacant storefronts are being replaced by restaurants, cafés and

locally-owned retail shops. These small businesses will create 23 new jobs. A few of the loan recipients include

Taps & Tails, Sauce the City, and Lily’s Floral.

 Under the Vacant Property Initiative (VPI) Program, the City provided approximately $1,400,000 in assistance

to six borrowers. The total project cost for these borrowers is approximately $75,000,000 and will create almost

275 new jobs. The borrowers included Cleveland Kitchen, 75 Public Square and Fathom SEO.

 Sherwin Williams and Cross-Country Mortgage announced their intent to grow their headquarters in Downtown

Cleveland. Sherwin Williams announced its intent to build a $300,000,000 headquarters building on Public

Square, where it will employ over 3,000 workers. Cross-Country Mortgage will invest over $50,000,000 in a

new campus on Superior Avenue, bringing 700 workers into the City.

 The Mayor’s Neighborhood Transformation Initiative began in the Glenville neighborhood. As a result of the

efforts, the first of 26 new homes are under construction, and 40 senior residents have received assistance with

stabilizing and improving their homes. The Glenville CircleNorth mixed-use building opened in the fall of

2019 with 67 residential units, a retail incubator with seven small businesses and a co-working space with

enhanced programming to support start-up businesses. In 2020, investment continued into the Buckeye

community, as well as continued investment in home renovation and commercial storefront.

Department of Public Health (CDPH)

 The Division of Environment investigated 4,030 citizen nuisance complaints and issued 191 tickets. Clean

Cleveland inspections were suspended in 2020. Staff were routinely reassigned to support CDPH’s COVID-19

response efforts including initial interviews and/or contact tracing.

 The Division of Health program, MomsFirst, served over 1,054 parents in 2020, conducted 270 home visits and

made a total of 3,578 phone/virtual visits.

 Over 356,000 condoms were distributed through Community Solutions to non-profit and social service agencies

in the surrounding Cleveland area. CDPH Health Clinics conducted 1,183 HIV tests in 2020.

 221 childhood immunization, 59 HPV, 19 Hepatitis A vaccinations and 355 flu shots were administered in

2020. Over 3,100 patients were seen in the health centers.

 Vital statistics issued 30,449 birth certificates and 32,805 death certificates.

 The Division of Air Quality completed 89 asbestos inspections and reviewed 581 asbestos projects, issued 497

City air permits, renewed 48 Ohio EPA permits and issued 29 new Ohio EPA permits. The Division took 40

enforcement actions during the year.

 As part of the Department's responsibility to provide disease surveillance and emergency preparedness,

epidemiologists investigated two Legionella, nine influenza and more than 26 COVID-19 outbreaks;

participated in over eight functional and real world experiences exercises i.e. COVID-19 surveillance and Point

of Dispensing (PODs) activations.

Department of Aging

 Provided core services to 7,124 unduplicated clients including both older adults and adults with disabilities.

 Secured approximately $669,000 in grants to support programs for seniors and adults with disabilities.

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 119 home repair jobs were completed in the 2

nd

year of the Age Friendly Home Investment Program for older

adults and adults with disabilities.

 Utilized the City’s Code Red Communication system to provide 46 different informational recorded calls to

Cleveland seniors during the COVID-19 pandemic. 761,865 connections were made by live answer or

voicemail and provided education and information to older adult residents.

 35,000 masks to protect against COVID-19 were delivered to older adults and adults with disabilities by Aging

staff.

 21 Neighborhood Senior Walks were held, at least one in each ward, to provide opportunities for older adults to

get active and to get access to health information including information about COVID-19.

The Office of Equal Opportunity (OEO)

 Under Codified Ordinance No. 123.08, OEO is the Citywide Prevailing Wage Coordinator. Since 2011, OEO

has established itself as a convener and facilitator of standardized policies and procedures related to prevailing

wage. The Prevailing Wage Coordinators informally report to the Director of OEO ensuring standardization in

practices, policies and procedures. Additionally, the implementation of Labor Compliance Tracker (LCP)

software has enhanced standardization and effectiveness through technology. As such the OEO, through the

Director, will continue the role of convener and facilitator.

 OEO continues utilizing two compliance software systems, Business to Government Now (B2GNow) and LCP

Tracker. Adoption of these technologies meets the Mayoral goal of efficiency through technology.

 Since 2013, OEO has maintained a registry of certified contractors. While there are many contractors listed in

B2GNow, there are approximately 600 certified contractors listed in the system. The certification team

continues to provide in-depth consultation to applicants, assisting them with certification and engaging

contractors with doing business with the City. Additionally, the certification team provides business

development and outreach to contractors through one-on-one meetings and sharing information regarding

networking opportunities.

 As noted in 2019, OEO worked with Cleveland City Council to amend Section 187.14 of the Codified

Ordinances of Cleveland, Ohio, 1976 (amended by Ordinance No. 532-13 and passed May 13, 2013) of the

Small Contract Rotation Programs.

o In 2020, OEO launched learning opportunities for the City’s very small contractors. Along with our

partners in the Division of Purchasing and Supplies and the Department of Public Works, the program

was officially launched. Despite COVID-19, small contractors were able to attend nine classes on

various topics impacting contractors, along with networking sessions with their peers. For the pilot

program, contractors in the trades of electrical, flooring, painting and HVAC will be placed in a

rotation as the City renovates its recreation centers.

Department of Public Works

 The Division of Recreation served 41,000 nutritious meals in 2020.

 Several Managers from the Division of Recreation completed a Leadership Training Course designed to

enhance various leadership skills that can be conveyed to staff. The course was conducted by Dr. Dennis

Kowalski owner and professor at Leadership and Learning Consultation, LLC.

 Managers in the Division of Recreation completed a training course for the upcoming Certified Park and

Recreation Professional exam.

 The City of Cleveland Division of Recreation applied for a major grant to help supplement design cost

associated with the 2020 $400,000 GO Bond sale to renovate the pond and deck at Camp Forbes. These

improvements will stop the pond from leaking and provide aeration for future aquatic life.

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 The Division of Recreation received a $9,000 grant from Ohio Department of Natural Resources (ODNR)

through the Boating and Education program for new kayaks, safety vests and storage equipment at Camp

Forbes.

 The Division of Recreation received a land and water conservation fund grant to replace the playground, safety

surface and amenities at Estabrook Recreation Center.

 The Bureau of Cultural Arts developed a partnership with TV-20 to tape arts programming during the COVID-

19 pandemic allowing both youth and adults to continue to explore their artistic nature.

 The Bureau of Cultural Arts developed a virtual Showagon for the community to enjoy, as well as a virtual

playwriting program where youth developed a play virtually with the help of instructors.

 The Bureau of Cultural Arts developed a Grab and Go Arts, as well as Curbside Clay Pick-up where project

instructions and materials were supplied to the community.

 In 2020, Highland Park Golf Course generated the most revenue from golf rounds in over a decade.

 The Division of Recreation sent staff door-to-door informing the community about COVID-19 facts and safety

precautions.

 The Division of Park Maintenance performed 1,374 interments in 2020.

 The restoration of the archway and gate houses at Woodland Cemetery were completed.

 The Division of Park Maintenance, Greenhouse Section, grew, planted and cared for 6,000 annual flowers in

Downtown City-owned flower beds and planters.

 The Division of Park Maintenance provided 87,041 service visits to 25,291 vacant properties.

 The Division of Park Maintenance performed 539 illegal dumpsite clean-ups.

 The Division of Park Maintenance completed 22 Playground Enhance projects and 38 Baseball Field Enhance

projects.

 The Division of Park Maintenance took over landscape maintenance of the Shoreway from the Ohio

Department of Transportation.

 3,885 trees were trimmed.

 976 trees were removed by in-house crews.

 667 trees were removed by contractor (this covered Jan-Oct only).

 1,924 trees were planted.

 The Division of Waste Collection processed 266,793 tons of solid waste and 1,278 tons of recyclable material

in 2020.

 The Division of Motor Vehicle Maintenance (MVM), purchased 63 new vehicles, which include 50 police

vehicles, 6 fire trucks, 4 EMS ambulances and 3 Chevy Bolt electric vehicles. Also two additional charging

stations were installed at Willard garage for electric vehicles, with plans to install additional charging stations at

various locations in Cleveland.

 New LED lighting was installed at various MVM repair garages.

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 The MVM training department presented 27 in-house training classes, 1 off-site training with AC DELCO at

TRI-C West, off-site recruitment at Cuyahoga Valley Career Center, outside training classes with Grapple

Truck for Waste operators, 26 in-house and on-road classes for CDL training and testing, Automotive

Technician testing for the Civil Service department and in-house safety training for Public Employment Risk

Reduction Program (PERPP) / Health and Safety for MVM employees.

 The Division of Streets resurfaced 406,698 square yards of curb-to-curb projects.

 The Division of Traffic Engineering painted 345 miles of lane lines in 2020.

Department of Public Safety

 The CPD worked closely with the Cuyahoga County Prosecutor’s Office to develop an electronic grand jury

packet submission process. All detectives were trained and the program was fully implemented in 2020.

 The CPD converted to an electronic forfeiture packet process in 2020. This is a more efficient, streamlined

process while also providing a much improved tracking system.

 The CPD implemented a Real Time Crime Center (RTCC). The RTCC will be the cornerstone of all active

crime solving activities. Detectives have already utilized the assets RTCC can provide, resulting in the

apprehension of several violent criminals.

 The CPD completed the electronic duty pilot program in 2020. The pilot program was so successful CPD

actualized electronic duty reports Division-wide for basic patrol.

 Gunshot detecting technology was installed in the 4

th

District Mount Pleasant community and adjoining

neighborhoods. This technology is able to detect the sound of gun fire immediately, alerting police for a quicker

response. With this capability officers have a greater chance of catching the offender and providing medical

assistance to victims of gun violence.

 In 2020, CFD went through the process of lowering their Insurance Services Offices (ISO) Rating, which scores

fire departments on various criteria for a composite rating from 1-10 with 1 being the top rating. Through the

dedication of all members, CFD hopes to reach the “Gold Standard” of an ISO Rating of 1 in 2021.

 CFD met the challenge of the Pandemic through enhanced Personal Protective Equipment and Protocols

implemented to protect members and citizens while still providing excellent service to the community.

Cleveland Fire Paramedics and EMT’s have been administering COVID-19 vaccines and will continue to assist

in those efforts moving forward in 2021.

 2020 saw several improvements to Cleveland Fire Stations including new roofs at Stations 10, 11 and 23; new

air conditioning units at Stations 1 and 4; facilities to accommodate female firefighters at Stations 11 and 1.

 CFD received several new apparatuses in 2020, which included six fire vehicles. Additionally, CFD has been

awarded a $900,000 Port Security Grant toward the purchase of a new Fire Boat.

 In 2020, the Cleveland Fire Investigation Unit (FIU) added two members and underwent extensive training with

the Ohio State Fire Marshal’s Office on identifying the cause and origin of suspicious fires.

 The Fire Training Academy (FTA) saw numerous renovations in 2020, including a refurbished Training Tower

and Burn Room.

 FTA Staff researched, built and validated a Firefighter Mile Course to conduct physical ability testing for the

next cadet class and increase diversity within CFD. A class of 80 new Cadets is expected in 2021.

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 In 2020, the Fire Prevention Bureau (FPB) increased State certification levels of Fire Inspectors, rebuilt

permitting workflow to increase accountability and efficiency and made permitting information available to

contractors and the public in real-time to ensure Fire Codes are being followed and enforced.

 Two new positions of Community Engagement/ Diversity were established in 2020.

 Fire Dispatch implemented new dispatching software and replaced all fire apparatus mobile data computers to

provide important information to responding companies.

 CFD implemented a “Red Team” program to reduce paper usage for internal forms and communications and

have been scanning Personnel and Medical Files for electronic storage.

 The Division of Emergency Medical Service (EMS) was significantly impacted by the coronavirus

pandemic. Early in 2020, in preparation to ensure the safety of all personnel as well as the community we serve,

EMS collaborated with and received guidance from the CDPH and hospital partners on the 2019 Novel

Coronavirus and enhanced guidance for infection control. From the initial 9-1-1 call, callers were screened

about exposure to the coronavirus and information was provided to the responding EMT’s/Paramedics. The

Cleveland EMS COVID-19 Playbook was developed to provide medical, administrative and operational

guidelines on managing the coronavirus.

 As an integral part of managing the coronavirus and mitigating the community impact, EMS provided support

to the CDPH during their planning and implementation of providing the coronavirus vaccine to the community.

 EMS graduated the first EMT Certification training class. The EMT Certification training program was the first

initial certification training program provided by EMS, allowing the Division to hire non-certified persons,

provide the EMT training, then after completion of the EMT Academy, the EMT’s provide pre-hospital medical

care to the community.

 EMS logistics section replaced/replenished over 430 First Aid Kits and 95 naloxone kits utilized by the CPD to

provide life-saving first aid. The training of First Aid, CPR, choking, AED training was continued by the

Division of Police.

 EMS continues to partner with our local hospital systems to identify opportunities to establish programs to meet

the increasing medical needs of the community. The collaborative efforts include the agreement of the four

hospital systems to have the emergency departments remain open to EMS traffic at all times. This ensures that

patients are able to remain within their hospital network unless a specific medical or traumatic emergency

dictates otherwise.

 The Department of Public Safety continued its partnership with the MetroHealth System to provide Public

Safety Medical Director services, which include Medical Director oversight for the EMS, CFD and CPD. The

partnership expanded in 2018 with the addition of the EMS Fellowship, which provides training to the fellow in

EMS Operations, Communications, Event Medicine, Disaster Medicine, Special Operations, Quality

Improvement, Education, Critical Care Transport and EMS Administration. In 2020, Dr. Jennifer DeMarco

graduated from the Fellowship program and another EMS Fellow, Dr. Eric Frantz, will start in 2021.

 The City continued their agreement with the Cuyahoga County Sheriff assuming all jail duties for the City of

Cleveland. All City jail facilities have been closed and all arrests within the City of Cleveland are booked,

processed and housed at the Cuyahoga County jail.

 The Office of Professional Standards and the Civilian Police Review Board are working closely with the DOJ

and the monitoring team to ensure that citizen complaints involving sworn and civilian employees of the

Division of Police are thoroughly investigated and resolved. New operating manuals for the Office of

Professional Standards and the Civilian Police Review Board have been drafted and staffing levels have been

increased to ensure complaints are investigated timely and resolved fairly and impartially. These changes have

been implemented to build trust and accountability.

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 The Division of Animal Care and Control (ACC) continued to provide service to residents and care for

impounded animals while operating under COVID-19 restrictions.

 ACC began listing all impounded animals online to better serve owners virtually.

 ACC worked with residents by returning animals in the field and offering citations in lieu of impoundment

when appropriate.

 ACC made all adoptions and owner reclaims by appointment only to limit capacity in the building and saw an

increase in live outcomes, with a 93% Live Release Rate for dogs in 2020.

 ACC’s CITY DOGS volunteer program continued to support quality enrichment for the dogs in our care.

 ACC’s new non-profit partner, Friends of CITY DOGS Cleveland, had a successful year of fundraising despite

COVID-19 restrictions and supported medical and enrichment needs for dogs in the kennel.

 ACC also continued their partnership with Cleveland Municipal Court to provide a program for individuals who

have committed animal-related offenses. The Animal Related Offenses Class (A ROC) program’s goal is to

help educate and create more responsible pet owners. The class is taught by two Animal Control Officers.

Department of Public Utilities

 The Division of Water services not only the City, but also 69 direct service communities, seven master meter

communities and three emergency standby communities. They provide water to approximately 432,000 city and

suburban accounts in the Cleveland metropolitan area. Of these 432,000 accounts, approximately 118,000

accounts were located within the City, accounting for 22.5% of the Division’s metered sales revenue. The

Division provides billing and payment services for the Northeast Ohio Regional Sewer District (NEORSD) and

other communities. The major capital projects included suburban water main renewals, improvements of

sedimentation basins at the Nottingham Water Treatment Plant, plant enhancement programs and back-up

generators.

 The Division of Cleveland Public Power (CPP) provided approximately 74,000 residential, business and

governmental customers in the City with reliable and affordable power in 2020. CPP sold approximately 1.528

billion Kilowatt hours (KWh) of electricity. In addition, they completed a software upgrade to transfer their

accounts receivable module from Banner Financial Systems to Oracle’s Customer Care & Billing (CC&B). The

primary purpose of the upgrade was to achieve increased efficiencies within the Department of Public Utilities

due to existing use of CC&B for both the Divisions of Water and Water Pollution Control. The major capital

projects included the Southern Transmission Line construction, roof replacement at the Lake Road facility and

auto transformers.

 The Division of Water Pollution Control maintains the local sanitary and storm water collection system within

the City. The system is comprised of 1,444 miles of sewer lines, more than 44,000 catch basins and 12 pump/lift

stations. In 2020, the Division’s sewers transported 1,559,730 cubic feet (Mcf) of water. The major capital

outlays were for rehabilitation of the East 185th and Marcella Road sewer lines, motor vehicles and additional

sewer re-linings and installations.

Department of Port Control

 During 2020, Cleveland Hopkins International Airport (CLE) enplaned 2,059,668 passengers and had aircraft

landed weight of 3,514,736,000 pounds.

 During 2020, CLE concessions developer Fraport (formerly AIRMAL) opened two new retailers; TUMI on

Concourse C and Cleveland Mask on Concourse A.

 In 2020 in-terminal Concessions sales decreased by 64%, $20,026,026 compared to $55,838,253 in 2019.

Airport Concessions Disadvantaged Business Enterprise (ACDBE) sales accounted for 54.3%, up from 50.9%

in 2019.

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 During 2020, CLE substantially completed the North Airfield Improvements Phase III Project. The project

included work on Taxiways Alpha & Romeo, along with substantial storm water improvements.

 During 2020, CLE substantially completed the Storm Sewer Pumps Replacement Project. The project included

roadway improvements to the Terminal Upper Road.

 During 2020, CLE substantially completed the Main Terminal Boiler Replacement Project. The project replaced

six terminal boilers that were 49 years old. The new boilers replaced the aging infrastructure and will be

significantly more energy efficient.

Department of Law

 Drafted approximately 320 contracts.

 Reviewed approximately 1,005 contracts for legal form and correctness.

 Prepared and processed 397 requests for legislation for introduction to City Council.

 Obtained 273 search warrants for Housing Court enforcement actions.

 Assisted Department of Building & Housing to obtain legal authorization for 376 demolitions of unsafe

structures in the City.

 Prosecuted 1,002 criminal complaints in Housing Court for failing to comply with Building & Housing

administrative orders at sites with code violations found at properties.

 Processed 483 claims for property damage and other losses.

 Represented the City in 41 liquor permit hearings and processed 113 liquor permit requests.

 The City’s web-based records-request-system (GOVQA) processed 27,010 requests.

 Responded to 124 subpoenas for City records.

 Represented the City in 685 civil cases pending in various state and federal courts.

 Processed 1,042 citizen complaints in the Prosecutors’ office.

 Issued 10,014 misdemeanor charges, of which 1,198 were domestic-violence misdemeanor charges.

 Issued 4,625 felony charges, of which 500 were domestic-violence felony charges.

 Addressed 1,173 operating vehicle impaired (OVI) charges.

 Addressed 22,347 traffic offense charges.

Mayor’s Office of Prevention, Intervention and Opportunity for Youth and Young Adults (PIOYYA)

 Began phase 2 of the Toxic Stress/Trauma Management project, designed to transform the City’s 22 recreation

centers into trauma-informed neighborhood resource and recreation centers. As part of this project, a director

was hired to manage and provide guidance to the social-work trained trauma-informed care coaches to connect

patrons of the centers to community-based resources and support services. Through this initiative hundreds of

individuals received support and/or connections to resources/services.

 Developed and implemented a professional development program to prepare Division of Recreation leadership

staff to obtain the Certified Park and Recreation Professional (CPRP) certification, which is the national

standard for all parks and recreation professionals who want to be at the forefront of their profession.

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 Began phase 1 of the development of standards and clear performance indicators for our Neighborhood

Resource and Recreation Centers as a part of our effort to improve the quality of each center and ensure

consistency relative to quality across all centers.

Office of Capital Projects

 Plan, design, manage and construct street and bridge capital improvement projects and develop funding

strategies through the pursuit of grants and loans from various sources by completing construction on several

projects including;

o West 19th Place (Duck Island) (Carnegie to Smith)

o Fulton Phase 2 (Lorain to Detroit)

o East 116th Resurfacing from Miles to Union

o East 100th Street (Euclid to Chester)

o East 55th Street (Harvard to Broadway)

o Lakeside Ave (East 26th Street to East 40th Street)

o Hamilton Ave (East 40th Street to East 55th Street)

o Safe Route to Schools Improvement

 In conjunction with the City's resurfacing program:

o 1,317 American with Disability Act (ADA) ramps were installed.

o 82 required inspections and inventory of bridges were completed.

o The Office of Capital Projects inspected 1,752 roads, bridges, subdivisions and utility cut projects in

the public right of way to ensure quality control.

 Further the City's neighborhood revitalization efforts through the implementation, construction and/or

rehabilitation of City facilities and infrastructure in accordance with the Mayor's Capital Improvement Plan by

completing the design or construction of several projects including construction of roof repairs or replacement

at two recreation centers, three public safety facilities and mechanical improvements at two recreation centers.

Other public facility improvements included:

o Halloran Ice Rink

o Music Hall Interior improvements

o Fire Station Female Facilities PH I

o Fire Training Tower Repairs

o Oleatha Wilson Park

o Glenview - MLK Park

o Mark Tromba Park

o Walter A Burkes Playground

o Three baseball fields, four basketball/tennis courts and three playgrounds were resurfaced.

 Provided the City departments and other entities with assistance on real estate matters by:

o Managing the Towpath Trail Project, including the ribbon cutting ceremony for Stage Three (Steelyard

to Literary), Construction of Stage Four (Literary to Canal Basin) and Stage One (Harvard to

Steelyard), funding and design of a Stage Four trailhead improvement project at Canal Basin Park.

o Continued oversight of right-of-way and real estate matters for roads and bridge reconstruction

projects; handled real estate transactions needed for various public works and private development

projects; negotiated and completed leases or lease renewals with various entities; oversaw and

coordinated real estate matters for the Cleveland Metropolitan School District's master facilities plan,

the Cleveland Public Library facilities master plan, NEORSD Project Clean Lake infrastructure

projects, NEORSD storm water management projects and various projects with the Cleveland

Metroparks and City's Department of Public Utilities.

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Office of Sustainability

 Hosted Mayor Jackson’s 12

th

Annual Sustainable Cleveland Summit, held virtually due to COVID-19.

 Continued implementation of the Cleveland Climate Action Plan, which includes 107 actions throughout six

focus areas.

 Continued implementation of the Cleveland Tree Plan, including a focus on policy, governance of the

Cleveland Tree Coalition and making progress on community-wide tree goals.

 Continued sustainability outreach through social media channels, e-newsletters, monthly meetings and targeted

campaigns.

 Secured or managed the following grants:

o $80,000 from the U.S. Forest Service to plant more than 150 trees in the Bellaire-Puritas and St. Clair-

Superior neighborhoods;

o $40,000 from the National Recreation and Parks Association to support community engagement efforts

around Cleveland’s 10-Minute walk goal to ensure that all Cleveland residents live within a half mile

(or 10-minute walk) of a clean, safe, programmed park;

o $475,000 from the Robert Wood Johnson Foundation to launch Circular Cleveland, a two-year

initiative in partnership with Cleveland Neighborhood Progress to support a more local circular

economy in Cleveland;

o $150,000 from Partners for Places, Cleveland Foundation, Gund Foundation, and the United Black

Fund to support the City’s 100% clean electricity goal, with a focus on reducing energy burdens and

improving quality of life for residents;

o Technical assistance grant from the US Green Building Council to support Cleveland’s LEED for

Cities and Communities certification; and

o Technical assistance from the Carbon Disclosure Project (CDP) for sustainable financing training.

 Managed and reported on utility and energy data for all City facilities. Since 2010, the City’s energy

consumption is down 2% on a weather normalized basis and City buildings are using 11% less energy per square

foot, saving approximately $4 million per year in utility costs.

 Installed two dedicated Fleet Electric Vehicle Charging stations at the Willard Garage/City Hall and partnered

with various City departments to purchase and roll-out three Electric Vehicles (EVs) for dedicated City fleet use.

 Supported the addition of 15 more miles of bike infrastructure, including trails, bike lanes and sharrows.

 Completed the 2019-2020 Youth Sustainability Leadership Program.

 Purchased 20 water bottle filling stations for use in City facilities.

 Continued to support community choice municipal electricity aggregation with Northeast Ohio Public Energy

Council (NOPEC) which resulted in cost savings, rate stability and 100% renewable energy for residents and

small businesses; Recognized by the U.S. Environmental Protection Agency (EPA) as a Green Power

Community (GPC) for meeting or exceeding EPA’s GPC usage requirements.

 Continued to be featured in the CDP annual ‘A’ Listing of Cities for reporting and disclosure on the City’s

Climate Action planning, mitigation and adaption.

 Completed a City-wide natural gas supply procurement for all municipal accounts.



Featured in the American Council for an Energy-Efficient Economy (ACEEE) 2020 City Clean energy

scorecard, ranking #29 out of 100 major US Cities.

 Supported the Northeast Ohio Areawide Coordinating Agency (NOACA) 2020 Commuter Choice Challenge and

encouraged employee participation in the Gohio Commute online tracking platform.

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2021 Budget

The City passed a balanced budget for fiscal year 2021 on March 15, 2021. During 2020, the City experienced

significant budgetary challenges due to the COVID-19 impact and social unrest. The COVID-19 pandemic has had far

reaching consequences beyond the spread of the disease itself and the efforts to quarantine. As a result of the pandemic

our local economy has been severely adversely impacted by employee layoffs and business shut downs during 2020. As

a result of the shutdown, our income and other taxes were significantly below our projections for 2020 by almost $60

million. This significant revenue shortfall was offset with federal funds for COVID-19 relief of $60 million in the

General Fund. With the receipt of this federal funding, accompanied by our cost cutting measures, we did not have any

reductions in workforce while still maintaining the same level of service. With the pandemic continuing into 2021,

projected revenues and expenses are at reduced levels. Specifically revenues that are continuing to decline include

income tax, admission tax, hotel tax, parking tax and licenses and permits. Declines in expenses are mainly attributed to

not budgeting some of our non-critical vacant positions. Though 2021 is not structurally balanced where annual revenues

are equal to or greater than annual appropriations, we have a balanced budget as a result of using our beginning balance.

The estimate of receipts and expenditures for all General Fund departments and divisions, per the 2021 budget are as

follows:

 Total revenues and other financing sources are projected to be $636 million. The City’s income tax is the largest

source of revenue. It is generated by a 2.5% rate on wages for Cleveland residents and non-residents; the City is

anticipating to collect $424 million in the General Fund in income tax for 2021.

 Total expenditures and other financing uses are estimated to increase from $651.2 million to $659.3 million.

This modest increase is predominantly due to the hiring freeze in the preceding year, as well as the ratification

of some collective bargaining agreements.

Long-Term financial planning:

Despite the impacts of 2020, the City is positioned for the future and will continue to make investments that create

increased service to the citizens of Cleveland. The City has allocated $5 million from the General Fund to be used for the

2021 streets re-surfacing program, $5 million for the demolition program, $5 million to economic development to

support programming for recovery and growth of Cleveland’s small business community from the impact of COVID-19

and $5 million to community development for emergency rental and utility assistance.

During 2021, the Division of Police anticipates three classes, totaling 180 cadets. The Division of Fire anticipates two

classes, totaling 100 cadets. And the Division of Emergency Medical Service anticipates two classes, totaling 40 cadets.

Additionally, we have created a new division in the Department of Public Health, the Division of Health, Equity and

Social Justice. The role of this new division is to focus specifically on finding solutions to inequities and disparities

caused by institutional racism. The pandemic highlighted the inequities that people face when finding jobs, accumulating

wealth, accessing health care and obtaining a positive outcome.

Business Incentives and creating Economic Development

Note 20 – Tax Abatements are a requirement in the City’s Comprehensive Annual Financial Report, based upon GASB

Statement No. 77, Tax Abatement Disclosures. This footnote disclosure focuses on lost tax dollars and the costs to

government entities. The following will reveal the benefits derived from offering business tax incentives.

Department of Economic Development

The City uses tax increment financing (TIF) authorized by the Ohio Revised Code (ORC) Chapter 5709 as a tool to

support development in the City. TIFs are often used to support financing to close project funding gaps, without which

the project would not be able to move forward. Most TIFs authorized by the City are Non-School TIFs, providing that

the Cleveland Metropolitan School District receives its share of the tax revenues generated by the development,

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approximately 60% of the total taxes. TIFs are analyzed by the Department staff to ensure that the project meets a but-

for test, confirming that the development would not proceed without the incentive, as well as to determine that the City

receives an adequate return on its investment in the form of other taxes, job creation and retention or policy goals.

TIFs authorized within the last ten years have leveraged over $2.0 billion in investment in the City. As a result of these

projects, thousands of jobs have been created, adding millions of dollars to the City in total payroll and income tax

revenue generated annually. In addition, TIF projects have resulted in the development of 1,387 hotel rooms in the City,

helping to support the City’s tourist and convention industries and generating bed and sales tax revenues.

An example of a successful use of TIF to support a redevelopment project is the relocation of Cross-Country Mortgage

to Superior Avenue in Cleveland. They are proposing to redevelop a mixed-use campus including their corporate

headquarters, with a mix of historic rehabilitation of multiple buildings and new construction. CCM proposes to invest

approximately $37,500,000 in the development of its headquarters and an additional $18,000,000 in a multi-family

development around the project site. This project will lead to the location of 700 jobs in the heart of the City within five

years of the project being completed.

Department of Community Development

The Community Reinvestment Area (CRA) Program is a direct incentive tax exemption program benefiting property

owners who renovate existing or construct new residential buildings to encourage revitalization of the existing housing

stock and the development of new structures. This program permits municipalities or counties to designate areas where

housing investment has been discouraged.

The tax abatement process starts with the applicant completing an application with supporting documentation of the

completed construction/rehabilitation work.

The City of Cleveland reviews the application to ensure the applicant meets program requirements and if the application

is in compliance with the program requirements, the City will approve and grant the tax abatement. The City notifies and

provides a copy of the instrument granting the tax exemption to the Cleveland Metropolitan School District (CMSD).

The City forwards the application to the Cuyahoga County Fiscal Officer office for further processing. The Cuyahoga

County Appraisal Department, under the County Fiscal Officer, assigns taxable values to new construction or remodeled

residential property.

The Tax Abatement program is an important and useful tool: for developers, as an attractive incentive for promoting

home sales; for homebuyers, by making homeownership more affordable; and for the City of Cleveland, helping to make

it a City of choice.

Monitoring Incentives:

The City of Cleveland (Department of Community Development) is required by statute to file online annually, by March

31st, all CRA tax abatement information with the State of Ohio.

The City of Cleveland pursuant to various sections (5709 and 3735) under the Ohio Revised Code, established a Housing

Council. This Housing Council consists of seven members: two are appointed by the Mayor, one member is appointed

by the Planning Commission, two members are appointed by City Council and two are appointed by the other members

of the Housing Council. They serve three year terms. Their purpose is to look at the property conditions of the residential

properties that have been granted CRA incentives.

Tax Abatement is available to both homeowners and developers. Work must be completed under a permit issued by the

City of Cleveland Department of Building and Housing on property located in the City of Cleveland only. During Tax

Year 2017, the length or term of abatement for existing abatements would vary from 10 to 15 years depending on the

type of project. For tax abatements processed after August 8, 2017, pursuant to Ordinance # 244-17, passed May 22,

2017 and effective May 24, 2017, the term for all projects eligible for CRA tax abatement is 15 years, except for the 10-

year extension available for certain conversions of historic apartment buildings into condominiums.

24

The Residential Property Tax Abatement Program aims to:

 Stimulate community revitalization

 Retain City residents and attract new residents

 Attract homeowners

 Reduce development costs for homeownership and rental projects

Residents and developers seeking tax abatement for residential projects must meet Cleveland Green Building Standards

(GBS).

The GBS is designed to save homeowners money on utilities and support local green jobs, while also improving the

health of the community and reducing our collective contribution to climate change. The GBS also creates direct benefits

for developers and builders, including cost savings from efficient operation, a marketing advantage, and public

recognition for high performance homes. Tax abatement has contributed to the development of 24,323 units of housing

dating back to 1994. Since 2010 (the first year of the GBS) 4,730 GBS units were completed. In 2019, a total of 784

units met the GBS.

 Single family – 88 new constructions, 71 rehabs

 Multi-family – 461 new constructions, 164 rehabs

Major Initiatives

As the City plans ahead to achieve increased municipal efficiencies and enhanced infrastructure coordination, the Mayor

has launched the following initiatives:

 Art in Everything! a Cleveland Initiative –

Mayor Frank G. Jackson's Art in Everything Initiative invites

residents of the City of Cleveland, as well as visitors, an opportunity to experience the rich artistic and cultural

diversity of our City. The Art in Everything program includes but is not limited to: Annual Holiday and Cultural

Parades, Cultural Heritage Month Celebrations, Beats & Eats, Food Truck Friday, Annual Children's Christmas

play, Art Exhibits, Youth Performances of music and spoken word and the Mayor's Holiday Gala & Food

Basket Give-Away.

 Form Based Zoning a New Approach to Zoning –

The goal is an entirely new zoning code that embodies the

Mayor's mantra of Health, Sustainability and Equity. This new approach to zoning is called Form-Based Code.

The Cleveland Form-Based Code will be piloted in a few geographies to start - the City Planning Commission

has identified sections of the Detroit Shoreway and Cudell neighborhoods as the first areas for implementation

of this tool. Additional target areas will include the Opportunity Corridor and Hough area.

 Thrive 105-93 –

With grant funds from the US Department of Transportation (USDOT) Tiger program and its

own matching contribution, the City of Cleveland set out to define a collective vision for the neighborhoods

connected by the #10 bus route.

This plan seeks to unite the aspirations of each community into a coordinated

playbook that each can follow, work towards and benefit from. The plan identifies ways in which communities

along route #10 can work together to attract new investment and foster a renewed spirit of entrepreneurship all

while emphasizing their neighborhood's unique citizens, attributes, and history. The City is currently

implementing the initiative and has obtained resources from State, Local and Federal sources to begin its

construction and implementation.

 Vision for the Valley –

The Vision for the Valley initiative symbolizes Mayor Frank Jackson's vision for "One

Cleveland," linking east to west at the point where both sides of the City come together making Cleveland a

seamless and more sustainable City.

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27

CITY OF CLEVELAND, OHIO

City Officials

Frank G. Jackson, Mayor

EXECUTIVE STAFF

Sharon Dumas .............................................................................................................................................................. Interim Chief of Staff

Darnell Brown ........................................................................................................................................................... Chief Operating Officer

Valarie J. McCall ........................................................................................ Chief of Communications, Government & International Affairs

Monyka Price, Ph.D. ......................................................................................................................................................... Chief of Education

Jason Woods ............................................................................................................................................................... Chief of Sustainability

Edward W. Rybka ........................................................................................................................................ Chief of Regional Development

Tracy Martin-Thompson………………………………….Chief of Prevention, Intervention and Opportunity for Youth and Young Adults

Barbara Langhenry ............................................................................................................................................ Director, Department of Law

Karrie D. Howard ................................................................................................................................ Director, Department of Public Safety

ADMINISTRATION

Mary McNamara ............................................................................................................................................ Director, Department of Aging

Ayonna Blue Donald ............................................................................................................. Director, Department of Building and Housing

Freddy L. Collier, Jr. ............................................................................................................................. Director, City Planning Commission

Michael Spreng .................................................................................................................................. . Secretary, Civil Service Commission

Michiel Wackers. ............................................................................................................ Director, Department of Community Development

Grady Stevenson, Jr. .......................................................................................................................... Director, Community Relations Board

David Ebersole .................................................................................................................. Director, Department of Economic Development

James Gentile ................................................................................................................................. Interim Director, Department of Finance

Nycole West .............................................................................................................................. Director, Department of Human Resources

Matthew L. Spronz .................................................................................................................... Director, Mayor’s Office of Capital Projects

Michael Curry. ....................................................................................................................... Interim Director, Office of Equal Opportunity

Sabra T. Pierce-Scott…. ........................................................... Director, Mayor’s Office of Quality Control and Performance Management

Robert Kennedy. .................................................................................................................................. Director, Department of Port Control

Brian Kimball ........................................................................................................................ Acting Director, Department of Public Health

Martin J. Keane. ............................................................................................................................... Director, Department of Public Utilities

Michael Cox ....................................................................................................................................... Director, Department of Public Works

28

CITY OF CLEVELAND, OHIO

City Council

Kevin J. Kelley .............................................................................................................. President of Council / Ward 13

Blaine A. Griffin ..................................................................................................................... Majority Leader / Ward 6

Jasmin Santana ....................................................................................................................... Majority Whip / Ward 14

Patricia J. Britt ................................................................................................................... City Clerk, Clerk of Council

Joseph T. Jones ............................................................................................................................................ Ward 1

Kevin L. Bishop ........................................................................................................................................... Ward 2

Kerry McCormack ....................................................................................................................................... Ward 3

Marion Anita Gardner, Interim. ................................................................................................................... Ward 4

Delores L. Gray ................................................................................................................................................... Ward 5

Basheer S. Jones .................................................................................................................................................. Ward 7

Michael D. Polensek .................................................................................................................................... Ward 8

Kevin Conwell ............................................................................................................................................. Ward 9

Anthony T. Hairston .................................................................................................................................... Ward 10

Brian Mooney .............................................................................................................................................. Ward 11

Anthony Brancatelli ..................................................................................................................................... Ward 12

Jenny Spencer ............................................................................................................................................. Ward 15

Brian Kazy .................................................................................................................................................. Ward 16

Charles Slife ............................................................................................................................................... Ward 17

Government Finance Officers Association

Certificate of

Achievement

for Excellence

in Financial

Reporting

Presented to

City of Cleveland

Ohio

For its Comprehensive Annual

Financial Report

For the Fiscal Year Ended

December 31, 2019

Executive Director/CEO

29

30

CITY OF CLEVELAND, OHIO

FINANCIAL HIGHLIGHTS

(Amounts in Thousands)

For General General General

Year Fund Fund Fund Income

Ended Fund Balance** Revenues* Expenditures* Taxes***

2016 81,722 526,199 555,470 354,151

2017 134,860 615,244 595,844 437,676

2018 186,909 642,595 634,937 464,803

2019 203,892 685,652 685,734 496,973

2020 214,554 650,167 651,252 461,362

* Budget Basis - General Fund revenues and expenditures include other financing sources (uses).

** GAAP Basis.

*** Budget Basis - Income Taxes includes General Fund and Restricted Income Tax Fund.

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

220,000

240,000

2016 2017 2018 2019 2020

General Fund - Fund Balance**

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2016 2017 2018 2019 2020

General Fund - Revenues*

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2016 2017 2018 2019 2020

General Fund - Expenditures*

300,000

340,000

380,000

420,000

460,000

500,000

540,000

2016 2017 2018 2019 2020

Income Taxes***

31

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33

FINANCIAL

SECTION

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INDEPENDENT AUDITORS’ REPORT

To the Honorable Frank G. Jackson, Mayor, Members of Council and the Audit Committee

City of Cleveland, Ohio:

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type

activities, each major fund, and the aggregate remaining fund information of the City of Cleveland, Ohio

(the “City”)

as of and for the year ended December 31, 2020, and the related notes to the financial

statements, which collectively comprise the City’s basic financial statements as listed in the table of

contents.

Management’s Responsibility 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.

Auditors’ Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. 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 Government 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 auditors’ 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.

35

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the

respective financial position of the governmental activities, the business-type activities, each major fund,

and the aggregate remaining fund information of the City of Cleveland, Ohio, as of December 31, 2020,

and the respective changes in financial position and, where applicable, cash flows thereof and the

respective budgetary comparison for the General Fund for the year then ended in accordance with

accounting principles generally accepted in the United States of America.

Change in Accounting Principle

During the year ended December 31, 2020, the City adopted Governmental Accounting Standards Board

(GASB) Statement No. 84, Fiduciary Activities. As a result of the implementation of GASB Statement No.

84, the City restated net position at January 1, 2020 for the change in accounting principle (See Note 21).

Our opinion is not modified with respect to this matter.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s

discussion and analysis and schedules of net pension and OPEB liabilities and pension and OPEB

contributions, 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 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.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively

comprise the City’s basic financial statements. The introductory section, combining and individual

nonmajor fund financial statements, and statistical section are presented for purposes of additional

analysis and are not a required part of the basic financial statements.

The combining and individual nonmajor fund financial statements and schedules and capital assets

schedules 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

36

generally accepted in the United States of America. In our opinion, the information is fairly stated, in all

material respects, in relation to the basic financial statements as a whole.

The introductory and statistical 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 Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated June 24, 2021

on our consideration of the City of Cleveland’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 solely 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 the

effectiveness of the City’s internal control over financial reporting or on compliance. That report is an

integral part of an audit performed in accordance with Government Auditing Standards in considering the

City of Cleveland’s internal control over financial reporting and compliance.

Clark, Schaefer, Hackett & Co.

Cincinnati, Ohio

June 24, 2021

37

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39

CITYOFCLEVELAND,OHIO

MANAGEMENT’SDISCUSSIONANDANALYSIS

As management of the City of Cleveland (the City) we offer readers of the City’s financial statements this narrative overview

and analysis of the financial activities of the City for the year ended December 31, 2020. Please read this information in

conjunction with the City’s financial statements and footnotes that begin on page 58.

FINANCIAL HIGHLIGHTS

 The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at

December 31, 2020 by approximately $2.557 billion (net position).

 Of the approximately $2.557 billion of net position, governmental activities accounted for approximately $230.0 million

of net position, while business-type activities net position accounted for approximately $2.327 billion.

 The City’s net position increased by $24.2 million as compared to 2019. The governmental activities net position

decreased by $23.3 million and the business-type activities net position increased by $47.5 million.

 At the end of the current year, unassigned fund balance for the General Fund was $121.9 million, which represents the

amount available for spending at the City’s discretion. The unassigned fund balance equals 21.3% of the total General

Fund expenditures and other financing uses.

 In 2020, the City’s total long-term debt and other long-term debt-related obligations, excluding premiums, accreted

interest and discounts decreased by $88.9 million. The decrease is due to payments made on debt of $160.0 million offset

by new debt issues for General Obligation bonds of $60.7 million and Subordinate Lien Income Tax bonds of $69.8

million.

OVERVIEW OF THE FINANCIAL STATEMENTS

This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic

financial statements are comprised of five components: (1) government-wide financial statements, (2) fund financial

statements, (3) General Fund budget and actual statement, (4) notes to the financial statements and (5) required supplementary

information. This report also contains other supplementary information in addition to the basic financial statements.

Government-wide financial statements. The government-wide financial statements are designed to provide readers with a

broad overview of the City’s finances, in a manner similar to a private sector business.

The statement of net position presents financial information on all of the City’s assets, liabilities and deferred

inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position

may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

The statement of activities presents information showing how the City’s net position changed during the most recent 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 the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in

cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

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

principally include: General Government; Public Works; Public Safety; Community Development; Building and Housing;

Public Health and Economic Development. The business-type activities of the City principally include: water; sewer;

electricity; and airport facilities.

The government-wide financial statements can be found on pages 58-61 of this report.

40

Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have

been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to

ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into

three categories: governmental funds, proprietary funds and fiduciary funds.

Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental

activities in the government-wide financial statements. However, unlike the government-wide financial statements,

governmental fund financial statements focus on the near-term inflows and outflows of spendable resources, as well as on

balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a

government’s near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to

compare the information presented for governmental funds with similar information presented for governmental activities in

the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City’s

near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues,

expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds

and governmental activities.

The City presents 29 individual governmental funds on a modified accrual basis. Information is presented separately in the

governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund

balances for the General Fund and the Public Health Fund, which are considered to be major funds. Data from the other 27

governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor

governmental funds is provided in the form of combining statements elsewhere in this report.

The City adopts an annually appropriated budget for its General Fund, Enterprise and Internal Service Funds. The City adopts

an annually appropriated budget for some of its Special Revenue and Debt Service Funds. The General Fund budgetary

comparison has been provided as a separate financial statement to demonstrate compliance with its budget.

The basic governmental fund financial statements can be found on pages 62-65 of this report.

Proprietary funds. The City maintains two different types of proprietary funds. The first type is Enterprise Funds. They are

used to report the same functions presented as business-type activities in the government-wide financial statements. The City

uses Enterprise Funds to account for its water, electric, airport, sewer, public auditorium, markets, parking lots, cemeteries and

golf course operations. The second type of proprietary fund the City uses is Internal Service Funds to account for its motor

vehicle maintenance, printing and reproduction, postal services, utilities administration, sinking fund administration,

municipal income tax administration, telephone exchange, radio communications operations, workers’ compensation reserve,

health self-insurance fund and prescription self-insurance fund. Internal Service Funds are an accounting device used to

accumulate and allocate costs internally throughout the City’s various functions. Because most of the internal services

predominantly benefit governmental rather than business-type functions, they have been included within the governmental

activities in the government-wide financial statements, except for the Utilities Administration Fund which has been classified

as a business-type activity.

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The

proprietary fund financial statements provide separate information for the Division of Water, Cleveland Public Power, Water

Pollution Control and Department of Port Control Funds, which are considered to be major funds of the City. Conversely,

Internal Service Funds are combined into a single, aggregated presentation in the proprietary fund financial statements.

Individual fund data for the nonmajor Enterprise and Internal Service Funds is provided in the form of combining statements

elsewhere in this report.

The basic proprietary fund financial statements can be found on pages 66-70 of this report.

Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government.

Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not

available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary

funds. All of the City’s fiduciary funds are Custodial Funds.

The basic fiduciary fund financial statement can be found on pages 71-72 of this report.

41

Notes to the financial statements. The notes provide additional information that is essential to achieve a full understanding

of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found

on pages 73-132 of this report.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

Information regarding the government-wide net position of the City is provided below:

2020 2019 2020 2019 2020 2019

Assets:

Current and other assets 1,092,901$ 1,058,523$ 1,214,566$ 1,222,713$ 2,307,467$ 2,281,236$

Capital assets

1,269,062

1,252,272 3,034,227 3,032,996 4,303,289 4,285,268

Total assets 2,361,963 2,310,795 4,248,793 4,255,709 6,610,756 6,566,504

Deferred outflows of resources 209,078 338,567 109,814 131,067 318,892 469,634

Liabilities:

Net pension liability 734,725 929,193 158,395 224,015 893,120 1,153,208

Net OPEB liability 234,375 221,047 110,111 105,347 344,486 326,394

Long-term obligations 977,639 969,070 1,454,074 1,539,753 2,431,713 2,508,823

Other liabilities

159,545

161,408 251,200 234,350 410,745 395,758

Total liabilities 2,106,284 2,280,718 1,973,780 2,103,465 4,080,064 4,384,183

Deferred inflows of resources 234,751 115,294 57,627 3,617 292,378 118,911

Net position:

Net investment in capital assets 722,806 722,633 1,724,704 1,633,097 2,447,510 2,355,730

Restricted 209,288 208,522 184,926 207,837 394,214 416,359

Unrestricted

(702,088)

(677,805) 417,570 438,760 (284,518) (239,045)

Total net position

230,006$

253,350$ 2,327,200$ 2,279,694$ 2,557,206$ 2,533,044$

(Amounts in Thousands)

Summary Statements of Net Position

as of December 31, 2020 and 2019

Governmental Business-Type

Acti vities

Acti vities Total

The net pension liability is reported by the City at December 31, 2020 and is reported pursuant to Government Accounting

Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions — an amendment of GASB

Statement No. 27. GASB Statement No. 75 significantly revises accounting for costs and liabilities related to OPEB. For

reasons discussed below, many end users of this financial statement will gain a clearer understanding of the City’s actual

financial condition by adding deferred inflows of resources related to pension and OPEB, the net pension liability and the net

OPEB liability to the reported net position and subtracting deferred outflows of resources related to pension and OPEB.

GASB standards are national and apply to all government financial reports prepared in accordance with generally accepted

accounting principles. Prior accounting for pensions (GASB Statement No. 27) and postemployment benefits (GASB

Statement No. 45) focused on a funding approach. This approach limited pension and OPEB costs to contributions annually

required by law, which may or may not be sufficient to fully fund each plan’s net pension liability or net OPEB liability.

42

GASB Statement No. 68 and GASB Statement No. 75 take an earnings approach to pension and OPEB accounting; however,

the nature of Ohio’s statewide pension/OPEB plans and state law governing those systems requires additional explanation in

order to properly understand the information presented in these statements.

GASB Statement No. 68 and GASB Statement No. 75 require the net pension liability and the net OPEB liability to equal the

City’s proportionate share of each plan’s collective:

1. Present value of estimated future pension/OPEB benefits attributable to active and inactive employees’ past service

2. Minus plan assets available to pay these benefits

GASB notes that pension and OPEB obligations, whether funded or unfunded, are part of the employment exchange that is,

the employee is trading his or her labor in exchange for wages, benefits, and the promise of a future pension and other

postemployment benefits. GASB noted that the unfunded portion of this promise is a present obligation of the government,

part of a bargained-for benefit to the employee, and should accordingly be reported by the government as a liability since they

received the benefit of the exchange. However, the City is not responsible for certain key factors affecting the balance of

these liabilities. In Ohio, the employee shares the obligation of funding pension benefits with the employer. Both employer

and employee contribution rates are capped by State Statute. A change in these caps requires action of both Houses of the

General Assembly and approval of the Governor. Benefit provisions are also determined by State Statute. The ORC permits,

but does not require the retirement systems to provide healthcare to eligible benefit recipients. The retirement systems may

allocate a portion of the employer contributions to provide for these OPEB benefits.

The employee enters the employment exchange with the knowledge that the employer’s promise is limited not by contract but

by law. The employer enters the exchange also knowing that there is a specific, legal limit to its contribution to the retirement

system. In Ohio, there is no legal means to enforce the unfunded liabilities of the pension/OPEB plans against the public

employer. State law operates to mitigate/lessen the moral obligation of the public employer to the employee, because all

parties enter the employment exchange with notice as to the law. The retirement system is responsible for the administration

of the pension and OPEB plans.

Most long-term liabilities have set repayment schedules or, in the case of compensated absences (i.e. sick and vacation leave),

are satisfied through paid time-off or termination payments. There is no repayment schedule for the net pension liability or

the net OPEB liability. As explained above, changes in benefits, contribution rates, and return on investments affect the

balance of these liabilities, but are outside the control of the City. In the event that contributions, investment returns, and

other changes are insufficient to keep up with required payments, State Statute does not assign/identify the responsible party

for the unfunded portion. Due to the unique nature of how the net pension liability and the net OPEB liability are satisfied,

these liabilities are separately identified within the long-term liability section of the statement of net position.

In accordance with GASB Statement No. 68 and GASB Statement No. 75, the City’s statements prepared on an accrual basis

of accounting include an annual pension expense and an annual OPEB expense for their proportionate share of each plan’s

change in net pension liability and net OPEB liability, respectively, not accounted for as deferred inflows/outflows of

resources.

As a result of implementing GASB Statement No. 75, the City is reporting a net OPEB liability and deferred inflows/outflows

of resources related to OPEB on the accrual basis of accounting.

As noted earlier, net position may serve, over time, as a useful indicator of a government’s financial position. The City’s

assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by approximately $2.557

billion at the close of the most recent fiscal year. This represents an increase of 1.0% in 2020. Of the net position from

governmental activities, $722.8 million represents its investment in capital assets (e.g., land, land improvements, buildings,

infrastructure, furniture, fixtures, equipment and vehicles), net of accumulated depreciation, less any related, still-outstanding

debt issued to acquire, construct or improve those assets. The City uses these capital assets to provide services to citizens;

consequently, these assets are not available for future spending. Although the City’s investment in capital assets is reported

net of related debt, it should be noted that the resources needed to repay this debt must be provided from other resources, since

the capital assets themselves cannot be used to liquidate these liabilities. Another significant portion of net position, $209.3

million, represents resources that are subject to external restrictions on how they may be used.

In 2020, the total assets and deferred outflows of resources from governmental activities decreased by $78.3 million. This

decrease is primarily attributed to a decrease in deferred outflow of resources of $129.5 million offset by an increase in cash

and cash equivalents of $44.3 million. The decrease in deferred outflow of resources is related to investment returns

43

exceeding expectations for pension. The increase in cash and cash equivalents largely relates to an increase in the Workers’

Compensation Reserve Fund.

Also in 2020, the total liabilities and deferred inflows of resources from governmental activities decreased by $55.0 million.

This was caused primarily due to a decrease in the pension liability offset by an increase in deferred inflows of resources

related to pension. The decrease in pension liability is due to investment returns for pension exceeding expectations.

Of the business-type net position, $1.725 billion represents its investment in capital assets, net of accumulated depreciation,

less any related, still-outstanding debt issued to acquire, construct or improve those assets. These capital assets are used to

provide services to their customers. Consequently, these assets are not available for future spending. Although the City’s

investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must

be provided from other resources, since the capital assets themselves cannot be used to liquidate these liabilities. An

additional $184.9 million of net position is subject to external restrictions on their use. The remaining balance of $417.6

million is unrestricted and may be used to meet the City’s ongoing obligations to customers and creditors.

In 2020, business-type total assets and deferred outflows of resources decreased by $28.2 million. This decrease is primarily

attributed to a decrease in deferred outflows of resources related to pension of $43.9 million.

Business-type total liabilities and deferred inflows of resources decreased by $75.7 million mainly due to a decrease in long-

term obligations due in more than one year of $79.5 million. Pension liability also decreased by $65.6 million. It was offset

by an increase in deferred inflows of resources related to pension of $32.5 million and OPEB of $16.9 million. Due to other

governments also increased by $13.8 million.

44

Information regarding government-wide changes in net position is provided below:

2020 2019 2020 2019 2020 2019

Revenues:

Program revenues:

Charges for services 69,935$ 79,061$ 660,085$ 724,592$ 730,020$ 803,653$

Op erating grants and contributions 139,544 80,294 4,138 6,329 143,682 86,623

Capital grants and contributions 12,582 23,279 88,280 77,512 100,862 100,791

General revenues:

Income taxes 458,943 487,077 458,943 487,077

Property taxes 57,955 58,252 57,955 58,252

Other taxes 16,349 44,633 16,349 44,633

Unrestricted shared revenues 15,556 20,894 15,556 20,894

State local government funds 25,936 26,658 25,936 26,658

Unrestricted investment earnings 3,827 14,997 11 26 3,838 15,023

Other 13,022

20,210 65 625 13,087 20,835

Total revenues 813,649

855,355 752,579 809,084 1,566,228 1,664,439

Exp enses:

General Government 160,148 191,388 160,148 191,388

Public Works 156,576 172,526 156,576 172,526

Public Safety 397,692 75,355 397,692 75,355

Community Development 33,643 31,523 33,643 31,523

Building and Housing 15,320 16,974 15,320 16,974

Public Health 18,321 21,269 18,321 21,269

Economic Development 20,454 28,428 20,454 28,428

Interest on debt 27,198 27,059 27,198 27,059

Water 300,180 316,588 300,180 316,588

Sewer 29,358 31,318 29,358 31,318

Electricity 199,950 220,883 199,950 220,883

Airport facilities 168,310 187,779

168,310 187,779

Nonmajor activities

14,916 17,834 14,916 17,834

Total expenses

829,352

564,522 712,714 774,402 1,542,066 1,338,924

Changes in net position before transfers (15,703) 290,833 39,865 34,682 24,162 325,515

Transfers (7,641)

(7,112) 7,641 7,112 - -

Changes in net position (23,344) 283,721 47,506 41,794 24,162 325,515

Beginning net position 253,350

(30,371) 2,279,694 2,237,900 2,533,044 2,207,529

Ending net position 230,006$ 253,350$ 2,327,200$ 2,279,694$ 2,557,206$ 2,533,044$

(Amounts in Thousands)

Changes in Net Position

For the Years Ended December 31, 2020 and 2019

Governmental Business-Type

Activities

Activities Total

45

Governmental activities decreased the City’s net position by $23.3 million as compared to a $283.7 million increase in 2019.

The decrease is primarily attributed to an increase in expenses for Public Safety of $322.3 million due to changes in

assumption in the Ohio Police and Fire OPEB Plan in 2019. This was offset by an increase in revenues for operating grants

and contributions of $59.3 million and a decrease in revenues for other taxes of $28.3 million. The increase in revenues for

operating grants and contributions is related to the CARES grant received from the federal government. The decrease in

revenues for other taxes is related to the significant decreases in admission, parking and hotel taxes due to the COVID-19

pandemic.

Business-type activities increased the City’s net position by $47.5 million in 2020 compared to a $41.8 million increase in

2019. The change from the prior year is mainly attributed to a decrease of $16.4 million in expenses for Division of Water and

$19.5 million for Division of Port Control. The decrease in expenses for Division of Water is due to a decrease in

maintenance expenses from fewer repairs of water meters, hydrants, connectors and valves. The decrease in expenses for

Division of Port Control is related to a decrease in operating expenses such as utilities, professional fees, training, supplies,

salary, wages and benefits due to the COVID-19 pandemic. This was offset by a decrease of $45.3 million in charges for

services for Division of Port Control due to the decline in air travel. Expenses for the Division of Cleveland Public Power also

decreased by $20.9 million mainly due to decreases in pension expense and telecommunication costs.

46

Operating grants and

contributions

17.2%

Property taxes

7.1%

Income taxes

56.3%

State local government

funds

3.2%

Other

6.0%

Charges for services

8.6%

Capital grants and

contributions

1.6%

Revenues by Source - Governmental

Activities

Other includes other taxes, shared revenues, unrestricted investment earnings and other general revenues.

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

General

Government

Public Works Public Safety Community

Development

Building and

Housing

Public Health Economic

Development

Interest on

debt

Expenses and Program Revenues -

Governmental Activities

(Amounts in Thousands)

Expenses

Program revenues

47

Operating grants and

contributions

0.6%

Charges for services

87.7%

Capital grants and

contributions

11.7%

Revenues by Source - Business-type

Activities

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Water Electricity Airport facilities Sewer Nonmajor activities

Expenses and Program Revenues -

Business-type Activities

(Amounts in Thousands)

Expenses Program revenues

48

Business-type activities are principally accounted for in the City’s Enterprise Funds. The City operates four major Enterprise

Funds encompassing two airports, a water system, sewer system and an electric distribution system. The City also operates

other Enterprise Funds consisting of cemeteries, a public auditorium, municipal parking lots and public market facilities. The

City owns two golf courses, with one being managed and operated by an outside entity. The operating results of the City’s

Major Enterprise Funds are discussed below.

Division of Water: The Division operates a major public water supply system, the tenth largest in the United States that

serves not only the City, but also sixty-nine direct service, seven master meter and three emergency standby suburban

municipalities in the Cleveland Metropolitan Area. They provide water to approximately 432,000 city and suburban accounts

in the Cleveland Metropolitan Area. Operating revenue in 2020 increased to $327.3 million from $320.2 million in 2019. The

rise is primarily attributed to an increase in metered service revenue of $8.2 million as a result of a rate increase for the City

and suburbs. This was offset by a decrease in ancillary revenue. Operating expenses, exclusive of depreciation, decreased

approximately 7.2% to $201.8 million compared to $217.4 million in 2019.

Division of Cleveland Public Power: The Division supplies electrical service to approximately 74,000 customers in the City.

The Division is responsible for supplying, transmitting and distributing electricity and providing related electrical services to

customers within its service area. The Division’s 2020 operating revenue decreased by 8.3% to $186.8 million from $203.8

million in 2019. Purchased power expense decreased by 9.0% to $122.1 million in 2020 from $134.2 million in 2019.

Operating expenses, exclusive of depreciation and purchased power decreased 16.8% to $44.0 million in 2020 compared to

$52.9 million in 2019.

Division of Water Pollution Control: The Division was created for the purpose of supplying sewer services to customers

within the Cleveland metropolitan area. The Division currently has approximately 117,077 customer accounts in the City, of

which 95.9% are residential and 4.1% commercial. The Division’s 2020 operating revenue decreased by 8.7% to $29.4

million from $32.2 million in 2019. The decline is primarily attributed to a 6.8% decrease in metered consumption. Operating

expenses, exclusive of depreciation, decreased 4.9% to $23.2 million in 2020 compared to $24.4 million in 2019.

Department of Port Control: The City’s Department of Port Control includes the Divisions of Cleveland Hopkins

International Airport and Burke Lakefront Airport. During 2020, 29 passenger airlines provided scheduled airline service at

Cleveland Hopkins International Airport. Burke Lakefront Airport, a federally certified commercial and general aviation

reliever airport, provides the majority of its services to air taxi operators serving the City’s downtown business activities. The

Divisions’ change in net position for 2020 was $9.2 million. Landing fee revenue decreased due to a decrease in landed

weight. Total operating expenses for 2020 decreased primarily due to reduction in operating expenses such as utilities,

professional fees, training, supplies, salaries wages and benefits. Non-Operating revenues decreased due to a decrease in

passenger facility charges and investment income, offset by an increase in bond amortization expense. The decrease in non-

operating expenses is attributed to decreased interest expense related to lower interest paid and fewer capital expenses.

FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS

As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows

and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular,

unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of

the fiscal year.

As of the end of the current year, the City’s governmental funds reported combined ending fund balances of $706.7 million,

an increase of $8.9 million and approximately 1.3% in comparison with the prior year. The components of the governmental

fund balances include an unassigned balance of $121.9 million, which indicates the amount available for spending at the

City’s discretion. An additional $422.4 million of fund balance is available for expenditures that are legally restricted for a

particular purpose. The non-spendable portion of fund balance has $8.2 million of funds that are not in a spendable form, such

as pre-paid expenditures. An additional $69.5 million is committed to fund specific purposes and cannot be reassigned

without legislative approval. The remaining assigned balance of $84.6 million represents funds that the City intends to use for

a specific purpose.

The General Fund is the chief operating fund of the City. At the end of the current year, the unassigned fund balance of the

General Fund was $121.9 million and the total fund balance was $214.6 million. As a measure of the General Fund’s

liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures and

transfers out. Unassigned fund balance represents 21.3% of total General Fund expenditures and other financing uses, while

total fund balance represents approximately 37.6% of that same amount.

49

A two-year comparison of General Fund activity is shown below. The revenues, expenditures and changes in fund balance

shown in these comparisons are presented on the modified accrual basis of accounting applicable to governmental funds.

2020 2019

Revenues:

Income taxes 414,844$ 432,704$

Property taxes 38,373 37,905

State local government funds 25,616 26,304

Other taxes 16,349 44,739

Other s hared revenues 14,981 17,796

Licenses and permits 16,041 19,490

Charges for s ervices 33,764 32,796

Fines , forfeits and s ettlements 6,587 10,909

Investment earnings 1,925 6,140

Grants 585 707

Miscellaneous 12,799 18,783

Total revenues 581,86

4

648,273

Expenditures:

General Government 89,855 102,500

Public Works 75,235 80,187

Public Safety 306,881 340,573

Community Development 1,300 289

Building and Housing 12,506 12,270

Economic Development 2,063 1,698

Other 9,032 8,255

Capital outlay 17,898

18,989

Total expenditures 514,770 564,761

Excess (deficiency) of revenues

over (under) expenditures 67,094 83,512

Other financing sources (uses):

Trans fers out (56,441) (66,529)

Sale of City assets 9

Net change in fund balance 10,662 16,983

Fund balance at beginning of year 203,892 186,909

Fund balance at end of year 214,554$ 203,892$

Gener al Fund

Statement of Revenues , Expenditures and Changes in Fund Balance Information - GAAP Basis

2020 and 2019

(Amounts in Thousands)

The City also presents Public Health as a major governmental fund. It includes all public health related activity of the City,

including operations and Public Health Department related grant activity. The Public Health’s change in fund balance

increased by $648,000 in 2020 due to increased transfers in from the General Fund.

50

Analysis of General Fund Revenues

General Fund revenues and other financing sources totaled $581.9 million in 2020, a decrease of approximately $66.4 million

from 2019. A discussion of each of the major types of General Fund revenues follows.

Municipal Income Taxes

Ohio law authorizes a municipal income tax, both on corporate income (net profits from the operation of a business or

profession) and employee wages, salaries and other compensation at a rate of up to 1% without voter authorization and at a rate

above 1% with voter authorization. In 2016, the voters in the City approved increases of one-half of one percent to the rate of

the income tax, bringing it to the current 2.5% rate. By the terms of the 1981 voter approval, as amended in 1985, one-ninth of

the receipts of the total 2.5% tax (the Restricted Income Tax) must be used only for capital improvements, debt service or

obligations issued for capital improvements or the payment of past deficits. The remaining eight-ninths of the municipal income

tax is recorded in the General Fund and is pledged to and may also be used for, debt service on General Obligation Bonds of the

City, to the extent required and certain other obligations of the City.

The income tax is also imposed on gross salaries and wages earned in the City by non-residents of the City and on salaries,

wages, and other compensation of City residents earned within or outside the City. The income tax liability of a City resident

employed outside the City is reduced by a credit equal to 100% of the tax paid to the municipality in which the City resident is

employed. The tax on business profits is imposed on the part of profits attributable to business conducted within the City. In

2020, approximately 93% of the total income taxes paid to the City were derived from non-residents employed in the City and

business profits.

In 2020, income tax revenue decreased by $17.9 million, primarily due to the decrease in income tax collection and an increase

in the unemployment rate in 2020 as a result of the COVID-19 pandemic.

Property Taxes

Taxes collected from real property in one calendar year are levied in the preceding calendar year on assessed values as of

January 1 of that preceding year. Public utility real and tangible personal property taxes collected in one calendar year are levied

in the proceeding calendar year on assessed values determined as of December 31 of the second year preceding the tax

collection year.

The “assessed valuation” of real property is fixed at 35% of true value and is determined pursuant to rules of the State Tax

Commissioner. An exception is that real property devoted exclusively to agricultural use is to be assessed at not more than 35%

of its current agricultural use value. Real property devoted exclusively to forestry or timber growing is taxed at 50% of the local

tax rate multiplied by the assessed value.

The assessed values of taxable property in the city for the past two years were as follows:

Tax Public Utility Total

Collection Real Tangible Assessed

Year

Property Personal Valuation

(Amounts in Thousands)

2020 $ 4,664,325 $ 468,023 $ 5,132,348

2019 $ 4,826,299 $ 436,992 $ 5,263,291

Property tax revenue increased by approximately $468,000 in 2020 from 2019 levels.

State Local Government Funds, Other Taxes and Other Shared Revenues

State Local Government Funds, Other Taxes and Other Shared Revenues include taxes levied and collected by the State of

Ohio or counties and partially redistributed to the City and other political subdivisions. Other Taxes and Other Shared

Revenues include state income, sales, admission, motor vehicle, parking, hotel, commercial activity, corporate franchise,

casino, homestead and rollback, public utility, estate and cigarette taxes as well as liquor fees. State Local Government Funds

revenue decreased by $688,000 or 2.6% in 2020 due to mandatory non-essential business shutdowns to control the spread of

COVID-19. Other Taxes decreased by $28.4 million or 63.5% from 2019 levels primarily as a result of the mandatory

business shutdowns as well as decreased traveling during the pandemic. Other Shared Revenues decreased by $2.8 million or

15.8% from 2019 levels.

51

The State Local Government Funds (LGF) are major sources of non-tax General Fund revenue. Through these funds, Ohio

subdivisions share in a portion of the State’s collection of the sales tax, use tax, personal income tax, corporate franchise tax

and public utilities excise tax. The percentages of the five taxes supporting these funds have varied over the years. At times,

the dollar amount in the funds has been capped at specified levels.

Pursuant to statutory law in Ohio, State LGF revenues are divided into county and municipal portions. The county portion,

the larger of the two, is distributed to each of the State’s 88 counties and is allocated based upon a statutory formula utilizing

county population and county municipal property values. Once received by a county, the funds can either be distributed to all

subdivisions using the statutory formula or the county and its subdivisions may agree upon an alternate method for allocating

the funds. Cuyahoga County and its recipient communities have chosen the latter method which is comprised of a base

allocation and an excess allocation. The excess allocation takes into account such factors as assessed value per capita, per

capita income, population density and the number of individuals receiving public assistance. The municipal portion of the

LGF is distributed directly by the State to those municipalities that collect an income tax. A municipality receives its share of

the funds based upon its percentage of total municipal income taxes collected throughout the state in a given year.

Analysis of General Fund Expenditures

General Fund expenditures and other financing uses totaled $571.2 million in 2020, a decrease of 9.5% from 2019. The

amount of expenditures and other uses by function on a GAAP basis, including the increases (decreases) over the prior year,

are shown in the following table:

Expenditures and Other

Financing Uses

Actual 2020 % of Total Actual 2019

% of

Total

Increase

(Decrease)

% Change

(Amounts in Thousands)

Current:

General Government $89,855 15.73 $102,500 16.24 $(12,645) (12.34)

Public Works 75,235 13.17 80,187 12.70 (4,952) (6.18)

Public Safety 306,881 53.73 340,573 53.95 (33,692) (9.89)

Community Development 1,300 0.23 289 0.05 1,011 349.83

Building and Housing 12,506 2.19 12,270 1.94 236 1.92

Economic Development 2,063 0.36 1,698 0.27 365 21.50

Other 9,032 1.58 8,255 1.31 777 9.41

Capital Outlay 17,898 3.13 18,989 3.00 (1,091) (5.75)

Transfers Out 56,441 9.88 66,529 10.54 (10,088) (15.16)

Total Expenditures and Other

Financing Uses

$571,211

$631,290

$(60,079)

The total expenditures and other financing uses decreased by $60.1 million. The decrease was primarily caused by decreases

in Public Safety, General Government, transfers out and Public Works expenditures. The decrease relates to the City being

awarded the CARES Act federal funds. The expenditures were reported in other governmental funds.

Proprietary Funds. The City’s proprietary fund financial statements provide the same type of information found in the

government-wide financial statements, but in more detail.

The unrestricted net position of the Division of Water, Water Pollution and Control, Cleveland Public Power and the

Department of Port Control Funds amounted to $309.5 million, $28.0 million, ($1.1) million and $95.5 million, respectively,

at December 31, 2020. The change in net position for each of the respective funds amounted to an increase of $40.1 million,

an increase of $4.5 million, a decrease of $4.2 million and an increase of $9.2 million during 2020. Other factors concerning

the finances of the City’s proprietary funds have already been addressed in the discussion of the City’s business-type

activities.

52

Major Functional Expense Categories. A discussion of the City’s major functional expense categories follows:

Employees and Labor Relations

As of December 31, 2020 and 2019, the City had approximately 7,159 and 7,401 full-time employees, respectively. Of the

7,159 full-time employees, approximately 5,887 full-time employees are represented by 39 collective bargaining units. The

largest collective bargaining units, together with the approximate number of employees represented by such units, include the

American Federation of State, County and Municipal Employees, Local 100 – 1,405 members; Cleveland Police Patrolmen’s

Association (CPPA) – 1268 members; the Association of Cleveland Firefighters – 700 members; Municipal Foreman and

Laborers Union, Local 1099 – 521 members; and Local 507 – 301 members.

There have been no significant labor disputes or work stoppages in the City within the last 37 years.

The Council, by ordinance, establishes schedules of salaries, wages and other economic benefits for City employees.

Generally, the terms of these ordinances have been the product of negotiations with representatives of the employees or

bargaining units and increases in economic benefits have normally been provided on an annual basis.

Chapter 4117 of the ORC (the Collective Bargaining Law), establishes procedures for and regulates public employer-

employee collective bargaining and labor relations for the City and other state and local governmental units in Ohio. The

Collective Bargaining Law creates a three-member State Employment Relations Board (the SERB), which administers and

enforces the Collective Bargaining Law. Among other things, the Collective Bargaining Law: (i) creates rights and

obligations of public employers, public employees and public employee organizations with respect to labor relations; (ii)

defines the employees it covers; (iii) establishes methods for (a) the recognition of employees and organizations as exclusive

representatives for collective bargaining and (b) the determination of bargaining units; (iv) establishes matters for which

collective bargaining is either required, prohibited or optional; (v) establishes procedures for bargaining and the resolution of

disputes, including negotiation, mediation and fact finding; and (vi) permits all covered employees to strike, except certain

enumerated classes of employees, such as police and fire personnel.

Over the past two years, the total salaries and wages paid to the City’s employees from all funds were as follows:

Year Amount Paid

(Amounts in Thousands)

2020 496,000$

2019 494,000$

In 2020, there was an increase in salaries and wages payable of 0.4% from the prior year due to retroactive salary payments.

GENERAL FUND BUDGETARY ANALYSIS

In 2020, the principal differences between the original and final budgeted expenditures included a $7.1 million increase in

capital outlay due to the costs associated with vehicles, equipment, demolition and other capital expenditures.

The major differences between the final amended budget and the actual total revenues were decreases of $8.6 million in other

taxes, $4 million in fines, forfeits, and settlements, $3.7 million in licenses and permits, $3 million in other shared revenue,

$2.6 million in investment earnings and $2.6 million in charges for services. Miscellaneous revenues increased $1.4 million.

The decrease in other taxes was primarily attributed to lower admissions tax, parking tax and hotel tax collections due to

mandatory non-essential business shutdowns. Licenses and Permits decreased mainly due to a decline in building permits and

certificates of occupancy. The decrease in investment earnings resulted from lower interest rates and miscellaneous revenue

increased due to the City’s receipt of the Workers’ Compensation refund.

The major differences between the final amended budget and the actual total expenditures were decreases of $15.9 million in

General Government and $16.5 million in Public Safety both due to anticipated additional staffing and the positions not being

filled due to Covid-19.

53

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital assets: The City’s capital assets for its governmental and business-type activities as of December 31, 2020, amounts

to $4.303 billion (net of accumulated depreciation). This capital assets balance includes land; land improvements; utility plant;

buildings, structures and improvements; furniture, fixtures, equipment and vehicles; infrastructure; and construction in

progress. The total increase in the City’s capital assets for the current fiscal year was 0.4% (a 1.3% increase for governmental

activities and a .04% increase for business-type activities). A Summary of the City’s capital assets at December 31, 2020 is as

follows:

Capital Assets, Net of Accumulated Depreciation

Governmental Business-Type

Activities Activities Total

(Amounts in Thousands)

Land $71,192 $191,913 $263,105

Land Improvements 66,672 64,372 131,044

Utility plant 1,681,177 1,681,177

Buildings, structures and improvements 337,117 298,467 635,584

Furniture, fixtures, equipment, and vehicles 78,783 196,764 275,547

Infrastructure 419,568 228,830 648,398

Construction in progress 295,730 372,704 668,434

Total

$1,269,062 $3,034,227 $4,303,289

Additions to construction in progress during the current fiscal year affecting the City’s capital assets included the following:

 The Division of Cleveland Public Power’s main additions to construction in progress during 2020 included Southern

Transmission Line, Auto transformers, roof replacements, and general engineering services.

 The Division of Water incurred a net increase of $20.2 million in capital spending for construction in progress related

to water main renewals, the plant enhancement program, Nottingham sedimentation basins, and enhancements to the

Crown Plant water system and back-up generators.

 The Department of Port Control had a net decrease of $3.0 million in construction in progress related to completed

projects in 2020. Major project spending in 2020 for construction in progress included the Primary Road Fire and

Domestic Waterline Improvements and the CLE Ground Transportation Center Upgrades Project.

 The Division of Water Pollution Control’s principal spending for construction in progress in 2020 included sewer

installations, East 85

th

Street rehabilitation, professional services, and replacement of the pump station on East 37

th

Street.

 Construction in progress spending for Governmental Activities had a net increase of $33.1 million in 2020. Major

projects included improvements to various recreational centers, including roof repair or replacement, the LED

Lighting Project, infrastructure improvements, and the development of the new police headquarters building.

The primary sources for financing the City’s Capital Improvement Projects are general obligation bond proceeds, certificates

of participation proceeds, urban renewal bond proceeds, revenue bond proceeds, proceeds from capital leases, interest earned

on funds during the construction period, restricted income taxes and funds from the State Issue 2 and Local Transportation

Improvement Programs. The City has three primary goals relating to its Capital Improvements: (1) preservation and

revitalization of the City’s neighborhoods, (2) economic development and job creation and (3) providing cost-effective, basic

54

City services to Cleveland residents and the business community. Additional information on the City’s capital assets,

including commitments made for future capital expenditures, can be found in Note 14 – Capital Assets.

Long-term debt and certain other obligations: At the end of the current fiscal year, the City had total long-term debt and

certain other obligations outstanding of $2.119 billion as shown below. General Obligation Bonds are typically issued for

general governmental activities and are backed by the full faith and credit of the City. Revenue bonds are typically recorded

in the applicable Enterprise Fund and are supported by the revenues generated by the respective Enterprise Fund. The

remainder of the City’s debt represents bonds or notes secured solely by specified revenue sources.

The activity in the City’s debt obligations outstanding during the year ended December 31, 2020 is summarized below

(excluding unamortized discounts, premiums and accreted interest).

Balance Debt Balance

January 1, Debt Refunded Debt December 31,

2020

Issued or Defeased Retired 2020

Governmental Activities:

General Obligation Bonds 292,810$ 60,685$ (17,340)$ (25,170)$ 310,985$

Subordinated Income Tax Refunding Bonds 24,730 (4,465) 20,265

Subordinate Lien Income Tax Bonds 327,260 69,820 (44,545) (12,685) 339,850

Non-Tax Revenue Bonds 49,078 2,050 (4,056) 47,072

Annual Appropriation Bonds 8,820 (345) 8,475

Certificates of Participation 77,715 (7,815) 69,900

Capital Lease Obligations 488 (488) -

Note/Loans Payable

1,266

(79)

1,187

Total Governmental Activities

782,167

132,555 (61,885) (55,103) 797,734

Business –Type Activities:

Revenue Bonds 1,352,593 268,810 (276,545) (96,245) 1,248,613

Loans Payable

72,750

8,127

(8,623)

72,254

Total Business –Type Activities

1,425,343

276,937 (276,545) (104,868) 1,320,867

Total

2,207,510$

409,492$ (338,430)$ (159,971)$ 2,118,601$

(Amounts in Thousands )

Funds used to meet the debt service requirements of the City’s General Obligation Bonds are from certain ad valorem taxes,

restricted income taxes and interest earnings. Ad valorem taxes, the primary source of funds, amounted to $20.0 million in

2020 which represents approximately 52.5% of the debt service requirements on the General Obligation Bonds. These taxes

were derived from a levy of $4.35 per $1,000 of assessed property. The remaining 47.5% of debt service requirements is

retired from a portion of the City’s restricted income tax proceeds, homestead and rollback reimbursement from the State,

premium generated through the issuance of bonds, interest earnings and other miscellaneous revenue sources generated within

the Debt Service Funds.

The City issues its General Obligation Bonds within the context of its Capital Improvement Program. Programs which have

benefited due to the issuance of general obligation debt include, but are not limited to, public facilities improvements, bridge

and roadway improvements, recreation facilities, cemeteries and urban redevelopment. The City’s Enterprise Funds

implement their own individual Capital Improvement Programs and issue revenue bond and note debt necessary to fund their

programs.

55

The City’s bond ratings for governmental and revenue bonds are as follows as of December 31, 2020:

Moody's

Inves tors S & P Fi tch

Service

Global Ratings

General Obligation Bonds A1 AA+ A+

Subordinate Lien Income Tax Bonds A1 AA N/A

Non-tax Revenue Bonds A2 AA- N/A

Stadium Certificates of Participation A3 A+ N/A

Waterworks Improvement Revenue Bonds Aa2 AA+ N/A

Second Lien Water Revenue Bonds Aa3 AA N/A

Public Power System Revenue Bonds A3 A- N/A

Airport System Revenue Bonds** A2 A- A-

Parking Facility Refunding Revenue Bonds (Ins ured Ratings )* A2 AA N/A

Water Pollution Control Revenue Bonds Aa3 A+ N/A

*

Parking Facilities' bonds only carry an insured rating.

**

On November 5, 2020, S&P Global lowered its rating on the City's General Airport Revenue Bonds to A-(negative

outlook) from A. This downgrade was the result of the impacts on the airline industry from the COVID-19 pandemic.

The ratio of net general bonded debt to assessed valuation and the amount of bonded debt per capita are useful indicators of

the City’s debt position to management, citizens and investors. Net general bonded debt is total general bonded debt

supported by taxes less amounts available in the Debt Service Fund. This data at December 31, 2020 was:

Net General Bonded Debt: $323,543,000

Ratio of Net Bonded Debt to Assessed Valuation: 6.30%

Net General Bonded Debt Per Capita: $815.35

The ORC provides that the net debt of a municipal corporation, whether or not approved by the electors, shall not exceed

10.50% of the assessed value of all property in the municipal corporation as listed and assessed for taxation. In addition, the

unvoted net debt of municipal corporations cannot exceed 5.50% of total assessed value of property. The City’s total debt

limit (10.50%) is $538,896,584 and unvoted debt limit (5.50%) is $282,279,163. At December 31, 2020, the City had

capacity under the indirect debt limitation calculation per the ORC to issue approximately $150 million in additional unvoted

debt. These debt limitations are not expected to affect the financing of any currently planned facilities or services.

In addition, the City has entered into various derivative or hedging agreements. Derivative instruments are contracts, the

value of which depends on, or derives from, the value of an underlying asset, index or rate. The most common types of

derivatives used by governments are interest rate swaps and interest rate locks. A detailed description of each outstanding

derivative, including its terms, objectives, risks and fair value, can be found in Note 5 – Debt and Other Long-Term

Obligations.

The City reports a deferred outflow of resource and a liability in the amount of the fair value of the interest rate swaps, which

reflect the prevailing interest rate environment at December 31, 2020 and an investment loss or gain as appropriate, based on

the change in fair value. The specific terms and conditions of each swap have been provided by the respective counterparty

for each swap and confirmed by the City’s financial advisor.

Additional information on the City’s long-term debt can be found in Note 5 – Debt and Other Long-Term Obligations.

56

FACTORS EXPECTED TO IMPACT THE CITY’S FUTURE FINANCIAL POSITION OR

RESULTS OF OPERATIONS

The United States and the State of Ohio declared a state of emergency in March 2020, due to the COVID-19 pandemic. The

financial impact of the pandemic and the ensuing emergency measures will impact subsequent periods of the City. To date,

however, the City has realized a decrease in income tax, licenses and permit fees, casino revenues, fines and forfeitures as well

as other revenues as the result of the stay at home order. Local businesses have shut down permanently and there has been an

increase in unemployment. Although, the impact on the City’s future operating revenues, expenses, and any recovery from

emergency funding cannot be estimated, the City continues to monitor revenues and expenses frequently to maintain City

operations.

Other Impacting Factors

 On March 1, 2021, the City entered into a Second Amended and Restated Continuing Covenants Agreement with

Wells Fargo Municipal Capital Strategies, LLC with regard to the $69,900,000 2010B Stadium Certificates of

Participation.

 On March 11, 2021 the American Rescue Plan Act of 2021 (ARPA) was signed into law. The City anticipates that it

will receive $512.0 million over the course of two years.

 On March 22, 2021, City Council approved legislation authorizing the issuance not to exceed $58,500,000 of General

Obligation Bonds.

 Also on March 22, 2021, City Council approved legislation authorizing the issuance not to exceed $65,000,000 of

Subordinate Lien Income Tax Bonds.

 City Council also approved on March 22, 2021, legislation in an amount not to exceed $16,000,000 for the issuance

of Economic and Community Development Bonds (Core City Fund).

 Effective May 3, 2021, the City entered into an agreement with U.S. Bank National Association under which the

bank became the purchaser of the City’s outstanding $19,160,000 Taxable Economic and Community Development

Refunding Revenue Bonds, Series 2013A (Core City Fund).

NEED ADDITIONAL INFORMATION

This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the City’s

finances. Questions concerning any of the information provided in this report or requests for additional information should be

addressed to the Office of the Finance Director, City Hall, Room 104, 601 Lakeside Avenue, Cleveland, Ohio 44114.

57

BASIC FINANCIAL

STATEMENTS

CITY OF CLEVELAND, OHI

O

STATEMENT OF NET POSITION

DECEMBER 31, 2020

Governmental Business-T

yp

e

Activities

Activities Total

ASSETS

Cash and cash equivalents

745,562$ 665,740$ 1,411,302$

Investments

223 223

Receivables:

Taxes

147,007 147,007

Accounts

6,923 232,380 239,303

Recoverable costs of purchased power

653 653

Grants

12,290 12,290

Loans

114,376 114,376

Unbilled revenue

23,515 23,515

Accrued interest

12 12

Assessments

59,472 59,472

Less: Allowance for doubtful accounts

(47,095)

(32,081) (79,176)

Receivables, net

292,985

224,467 517,452

Internal balances

1,461 (1,461) -

Due from other governments

47,759 8,398 56,157

Inventory of supplies

1,371 20,782 22,153

Prepaid expenses and other assets

3,540 4,297 7,837

Restricted assets:

Cash and cash equivalents

291,272 291,272

Accrued interest receivable

5 5

Accrued passenger facility charge

1,066 1,066

Total restricted assets

-

292,343 292,343

Capital assets:

Land and construction in progress

366,922 564,617 931,539

Other capital assets, net of accumulated depreciation

902,140

2,469,610 3,371,750

Total capital assets

1,269,062

3,034,227 4,303,289

Total assets

2,361,963

4,248,793 6,610,756

DEFERRED OUTFLOWS OF RESOURCES

Loss on refunding 13,038 65,837 78,875

Pension 122,280 26,361 148,641

OPEB

73,760

17,616 91,376

Total deferred outflows of resources

209,078

109,814 318,892

The notes to financial statements are an integral part of this statement

.

(Amounts in Thousands)

58

CITY OF CLEVELAND, OHIO

STATEMENT OF NET POSITION

DECEMBER 31, 2020

Governmenta

l

Business-T

yp

e

Activities

Activities Tota

l

LIABILITIES

Accounts payable

26,882$ 39,942$ 66,824$

Accrued wages and benefits

35,591 9,601 45,192

Claims payable

11,508 11,508

Due to other governments

76,238 167,884 244,122

Accrued interest payable

5,069 21,601 26,670

Unearned revenue

4,257 4,257

Liabilities payable from restricted assets

12,172 12,172

Long-term obligations:

Due within one year

97,714 97,620 195,334

Due in more than one year

879,925 1,356,454 2,236,379

Net pension liability

734,725 158,395 893,120

Net OPEB liability

234,375

110,111 344,486

Total liabilities

2,106,284

1,973,780 4,080,064

DEFERRED INFLOWS OF RESOURCES

Property tax 55,366 55,366

Special assessment - TIF 13,458 13,458

Excess recoverable cost of purchased power 4,614 4,614

Derivative instruments-interest rate swaps 4 4

Pension 110,927 35,795 146,722

OPEB

55,000

17,214 72,214

Total deferred inflows of resources

234,751

57,627 292,378

NET POSITION

Net investment in capital assets

722,806 1,724,704 2,447,510

Restricted for:

Capital

79,811 286 80,097

Debt service

42,103 165,920 208,023

Loans

30,857 30,857

Other purposes

56,517 18,720 75,237

Unrestricted

(702,088)

417,570 (284,518)

Total net position

230,006$

2,327,200$ 2,557,206$

(Amounts in Thousands)

59

Operating Capital

Charges for Grants and Grants and

Ex

p

enses Services Contributions Contributions

160,148$ 13,105$ 9,649$ 115$

156,576 18,452 22,350 12,173

397,692 15,853 51,911

33,643 1,167 30,668

15,320 18,827 2,390

18,321 2,389 7,983

20,454 142 14,593 294

27,198

829,352

69,935 139,544 12,582

300,180 327,272 3,085 7,816

29,358 29,392 222 3,967

199,950 192,583 188 2,134

168,310 103,088 575 74,313

3,060 595

2,051 929 3

60

6,005 3,875 13 50

2,493 1,677 38

1,247

674 14

712,714

660,085 4,138 88,280

Total 1,542,066$

730,020$ 143,682$ 100,862$

Transfers

General revenues:

Income taxes

Economic Development

Total governmental activities

Interest on debt

Westside Market

Sewer

Net position at beginning of year

Net position at end of year

Property taxes

Other taxes

Unrestricted shared revenues

State local government funds

Unrestricted investment earnings

Other

Total general revenues and transfers

Change in net position

Functions/Programs:

Building and Housing

Community Development

Public Safety

Public Works

General Government

Governmental activities:

The notes to financial statements are an integral part of this statement.

CITY OF CLEVELAND, OHIO

STATEMENT OF ACTIVITIES

December 31, 2020

(Amounts in Thousands)

Cemeteries

Golf Courses

Total business-type activities

Business-type activities:

Airport facilities

Program Revenue

s

Municipal Parking Lots

Eastside Market

Public Auditorium

Nonmajor activities:

Public Health

Electricity

Water

60

Governmenta

l

Business-Type

Activities Activities Total

(137,279)$ $ (137,279)$

(103,601) (103,601)

(329,928) (329,928)

(1,808) (1,808)

5,897 5,897

(7,949) (7,949)

(5,425) (5,425)

(27,198)

(607,291)

- (607,291)

37,993 37,993

4,223 4,223

(5,045) (5,045)

9,666 9,666

(2,465) (2,465)

(1,119) (1,119)

(60) (60)

(2,067) (2,067)

(778) (778)

(559) (559)

-

39,789

(607,291)

39,789 (567,502)

458,943 458,943

57,955 57,955

16,349 16,349

15,556 15,556

25,936 25,936

3,827 11 3,838

13,022 65 13,087

(7,641)

7,641 -

583,947

7,717 591,664

(23,344) 47,506 24,162

253,350

2,279,694 2,533,044

230,006$

2,327,200$ 2,557,206$

Net (Expense) Revenue and

Changes in Net Positon

61

CITY OF CLEVELAND, OHIO

BALANCE SHEET-GOVERNMENTAL FUNDS

Other Total

Public Governmental Governmental

General

Health Funds Funds

ASSETS

203,399$ 2,174$ 456,301$ 661,874$

Investments 223 223

Receivables:

Taxes 112,487 34,520 147,007

Accounts 6,910 6,910

Grants 114 897 11,279 12,290

Loans 50 114,326 114,376

Accrued interest 3 9 12

Assessments 51,266 8,206 59,472

(47,095)

Receivables, net

123,735

897 168,340 292,972

Due from other funds 2,637 1,415 13,912 17,964

Due from other governments 22,689 3 25,067 47,759

Prepaid expenditures and other assets

2,919

32 130 3,081

TOTAL ASSETS

355,379$

4,521$ 663,973$ 1,023,873$

LIABILITIES

Accounts payable 5,438$ 513$ 17,673$ 23,624$

Accrued wages and benefits 32,431 456 1,888 34,775

Due to other governments 487 1 75,101 75,589

Unearned revenue 64 870 3,323 4,257

Due to other funds

3,420

165 17,197 20,782

Total liabilities

41,840

2,005 115,182 159,027

DEFERRED INFLOWS OF RESOURCES

Deferred inflow

98,985

3 59,190 158,178

Total deferred inflows of resources

98,985

3 59,190 158,178

FUND BALANCES

Nonspendable 8,082 32 128 8,242

Restricted 1,897 420,543 422,440

Committed 584 68,930 69,514

Assigned 84,600 84,600

Unassigned

121,872

Total fund balances

214,554

2,513 489,601 706,668

TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES

355,379$

4,521$ 663,973$

1,265,793

89,354

(958,112)

39,301

Pension (707,889)

OPEB

(205,109)

230,006$

Other long-term assets are not available to pay for current-period

expenditures and, therefore, are deferred in the funds.

due and payable in the current period and therefore are not reported

service funds are included in the governmental activities in the statement of net position.

service fund capital assets) are not financial resources and,

therefore, are not reported in the funds.

DECEMBER 31, 2020

(Amounts in Thousands)

Less: Allowance for doubtful accounts

Cash and cash equivalents

The assets, liabilities and deferred outflows/inflows of resources of most of the internal

of net position are different because:

Capital assets used in governmental activities (excluding internal

AND FUND BALANCES

Amounts reported for governmental activities in the statement

The notes to financial statements are an integral part of this statement.

Long-term liabilities, including bonds and claims payable, are not

The net pension liability and net OPEB liability are not due and payable in the current period;

resources are not reported in governmental funds:

Net position of governmental activities

(excluding internal service) therefore the liabilities and related deferred inflows/outflows of

in the funds.

62

Other Total

Publi

c

Governmenta

l

Governmenta

l

Genera

l

Health Funds Funds

REVENUES:

Income taxes 414,844$ $ 51,855$ 466,699$

Property taxes 38,373 19,991 58,364

State local government funds 25,616 25,616

Other taxes 16,349 16,349

Other shared revenues 14,981 38,072 53,053

Licenses and permits 16,041 1,206 873 18,120

Charges for services 33,764 1,183 1,958 36,905

Fines, forfeits and settlements 6,587 1,599 8,186

Investment earnings 1,925 8 1,738 3,671

Grants

585 6,937 105,219 112,741

Contributions

377 377

Miscellaneous

12,799

644 3,401 16,844

Total revenues

581,864

9,978 225,083 816,925

EXPENDITURES:

Current:

General Government 89,855 20,828 110,683

Public Works 75,235 29,476 104,711

Public Safety 306,881 47,848 354,729

Community Development 1,300 29,629 30,929

Building and Housing 12,506 1,640 14,146

Public Health 17,019 17,019

Economic Development 2,063 17,783 19,846

Other 9,032 9,032

Capital outlay 17,898 102,417 120,315

Debt service:

Principal retirement

55,103 55,103

Interes

t

31,353

General Government 1,088

1,088

Other

1,088 1,088

Total expenditures

514,770

17,019 338,253 870,042

EXCESS (DEFICIENCY) OF REVENUES

OVER (UNDER) EXPENDITURES

67,094

(7,041) (113,170) (53,117)

OTHER FINANCING SOURCES (USES):

Transfers in 7,689 94,256 101,945

Transfers out (56,441) (51,156) (107,597)

Issuance of bonds 132,555 132,555

Premium on bonds 5,200 5,200

Payment to refund bonds (70,109) (70,109)

Sale of City assets

9

Total other financing sources (uses)

(56,432)

7,689 110,746 62,003

NET CHANGE IN FUND BALANCES 10,662 648 (2,424) 8,886

FUND BALANCES AT BEGINNING OF YEAR

203,892

1,865

492,025

697,782

FUND BALANCES AT END OF YEAR

214,554$

2,513$ 489,601$ 706,668$

CITY OF CLEVELAND, OHIO

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES-GOVERNMENTAL FUNDS

FOR THE YEAR ENDED DECEMBER 31, 2020

(Amounts in Thousands)

The notes to financial statements are an integral part of this statement.

63

Amounts reported for governmental activities in the statement of activities (pages 62 and 63)

are different because:

Net change in fund balances - total governmental funds (page 63) 8,886$

statement of activities, the cost of those assets is allocated over their estimated

useful lives and reported as depreciation expense. This is the amount by which

capital outlays exceeded depreciation in the current period. 18,986

Revenues in the statement of activities that do not provide current financial resources

are not reported as revenues in the funds. (4,070)

The issuance of long-term debt (e.g., bonds, leases) provides current financial

resources to governmental funds, while the repayment of the principal of long-term

debt consumes the current financial resources of governmental funds. Neither

transaction, however, has any effect on net position. Also, governmental funds

report the effect of premiums, discounts, and similar items when

debt is first issued, whereas these amounts are deferred and amortized in the

statement of activities. This amount is the net effect of these differences,

including accrued interest, in the treatment of long-term debt and related items. (6,842)

Some expenses reported in the statement of activities do not require the use of

current financial resources and, therefore, are not reported as expenditures in

governmental funds. (1,438)

Contractually required contributions are reported as expenditures in the governmental

funds; however, the statement of net position reports these amounts as deferred

outflows of resources, except for amounts reported as deferred inflows/outflows of

resources, changes in the net pension/OPEB liabilities are reported as pension/OPEB

expense in the statement of activities:

Pension (41,661)

OPEB (28,316)

The net revenue of certain activities of internal service funds is reported with

governmental activities.

31,111

Change in net position of governmental activities (pages 60 and 61)

(23,344)$

The notes to financial statements are an integral part of this statement.

Governmental funds report capital outlays as expenditures; however, in the

FOR THE YEAR ENDED DECEMBER 31, 2020

(Amounts in Thousands)

CITY OF CLEVELAND, OHIO

RECONCILIATION OF THE STATEMENT OF REVENUES,

EXPENDITURES AND CHANGES IN FUND BALANCES OF

GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES

64

IN FUND BALANCES (BUDGET AND ACTUAL) - GENERAL FUND

Variance-

Ori

g

ina

l

Fina

l

Positive

Bud

g

e

t

Bud

g

e

t

Actual*

(

Ne

g

ative

)

REVENUES:

Income taxes 444,330$ 411,000$ 410,100$ (900)$

Property taxes 38,749 38,749 38,373 (376)

State local government funds 26,289 26,289 25,504 (785)

Other taxes 40,830 26,491 17,939 (8,552)

Other shared revenues 13,728 13,728 10,689 (3,039)

Licenses and permits 19,658 19,658 15,956 (3,702)

Charges for services 36,164 36,164 33,575 (2,589)

Fines, forfeits and settlements 10,917 10,917 6,934 (3,983)

Investment earnings 4,300 4,300 1,715 (2,585)

Grants

417 60,417 60,005 (412)

Miscellaneous

28,017

28,017 29,368 1,351

Total revenues

663,399 675,730 650,158 (25,572)

EXPENDITURES:

Current:

General Government 119,113 125,525 109,576 15,949

Public Works 81,333 80,533 75,217 5,316

Public Safety 377,751 372,634 356,117 16,517

Community Development 2,208 2,013 1,872 141

Building and Housing 13,959 13,709 12,543 1,166

Public Health 10,506 10,456 9,277 1,179

Economic Development 2,083 2,083 1,656 427

Other 21,795 21,795 21,107 688

Capital outlay 6,825

13,962 13,962

-

Total expenditures

635,573

642,710 601,327 41,383

EXCESS (DEFICIENCY) OF REVENUES

OVER (UNDER) EXPENDITURES

27,826 33,020 48,831 15,811

OTHER FINANCING SOURCES (USES):

Transfers in 8,140

-

Transfers out (39,496) (52,359) (49,925) 2,434

Sale of City assets 4,200

9 9

-

Total other financing sources (uses)

(27,156)

(52,350) (49,916) 2,434

EXCESS (DEFICIENCY) OF REVENUES AND OTHER FINANCIN

G

SOURCES OVER (UNDER) EXPENDITURES AND OTHE

R

FINANCING USES 670 (19,330) (1,085) 18,245

DECERTIFICATION OF PRIOR YEAR ENCUMBRANCES

AND PRE-ENCUMBRANCE

S

798

NET CHANGE IN FUND BALANCE 670 (19,330) (287) 19,043

FUND BALANCE AT BEGINNING OF YEAR 43,802

43,802 43,802 -

FUND BALANCE AT END OF YEAR 44,472$ 24,472$ 43,515$ 19,043$

* On budgetary basis of accounting (see Note 2 - Summary of Significant Accounting Policies, "D" Budgetary Procedures).

The notes to financial statements are an integral part of this statement.

CITY OF CLEVELAND, OHIO

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

FOR THE YEAR ENDED DECEMBER 31, 2020

(Amounts in Thousands)

65

Governmenta

l

Water Cleveland De

p

artment Nonma

j

o

r

Total Activities -

Division o

f

Pollutio

n

Public of Port Enter

p

ris

e

Enter

p

ris

e

Interna

l

Water Contro

l

Powe

r

Contro

l

Funds Funds Service Funds

ASSETS

Current assets:

Cash and cash equivalents

406,212$ 78,511$ 61,033$ 111,822$ 7,113$ 664,691$ 84,737$

Restricted cash and cash equivalents

5,234 1,538 996 4,404 12,172 -

Receivables:

Accounts

70,243 135,961 22,274 3,799 103 232,380 13

Recoverable costs of purchased power

653 653

Unbilled revenue

10,929 1,947 7,519 3,120 23,515

Less: Allowance for doubtful accounts

(17,182)

(2,870) (10,015) (1,954)

(60)

(32,081)

Receivables, net

63,990 135,038 20,431 4,965 43 224,467 13

Due from other funds

2,656 29 2,268 2 19 4,974 4,379

Due from other governments

538 7,860 8,398 -

Inventory of supplies

8,660 701 8,675 2,741 5 20,782 1,371

Prepaid expenses and other assets

3,046

65 381 684 29

4,205

551

Total current assets

489,798

216,420 93,784 132,478

7,209

939,689 91,051

Noncurrent assets:

Restricted assets:

Cash and cash e

q

uivalents

34,944 2,651 4,066 223,668 13,771 279,100

Accrued interest receivable

1 4 5

Accrued passenger facility charges

1,066

Total restricted assets

34,945

2,651 4,066 224,738

13,771

280,171 -

Capital assets:

Land

5,731 295 5,574 166,882 13,431 191,913 663

Land improvements

17,666 188 1,723 94,931 15,481 129,989 179

Utility plant

2,026,345 215,167 623,613 2,865,125 -

Buildings, structures and improvements

265,740 11,475 23,536 375,034 119,949 795,734 4,483

Furniture, fixtures, equipment and vehicles

618,828 16,610 91,814 125,984 6,498 859,734 21,701

Infrastructure

1,018,128 1,018,128 -

Construction in progress

182,218 22,315 43,167 113,139 11,865 372,704 -

Less: Accumulated depreciation

(1,388,120)

(135,804) (439,402) (1,148,783)

(87,567)

(3,199,676) (23,181)

Total capital assets, net

1,728,408

130,246 350,025 745,315 79,657 3,033,651 3,845

Total noncurrent assets

1,763,353

132,897 354,091 970,053 93,428 3,313,822 3,845

Total assets

2,253,151

349,317 447,875 1,102,531 100,637 4,253,511 94,896

DEFERRED OUTFLOWS OF RESOURCES

Loss on refunding

23,699 23,932 18,064 142 65,837

Pension

13,465 1,632 4,012 5,123 699 24,931 3,852

OPEB

8,863

1,076 2,667 3,399 451 16,456 2,856

Total deferred outflows of resources

46,027

2,708 30,611 26,586 1,292 107,224 6,708

Business T

yp

e Activities - Enter

p

rise Fund

s

CITY OF CLEVELAND, OHIO

STATEMENT OF NET POSITION - PROPRIETARY FUNDS

DECEMBER 31, 2020

(Amounts in Thousands)

66

Governmental

Water Cleveland De

p

artment Nonma

j

or Total Activities -

Division of Pollution Public of Port Enter

p

rise Enter

p

rise Internal

Water

Control Power Control Funds Funds Service Funds

LIABILITIES

Current liabilities:

Accounts payable

16,482$ 1,319$ 12,013$ 10,188$ 343$ 40,345$ 3,315$

Accrued wages and benefits

9,599 1,211 3,089 4,164 410 18,473 13,604

Claims payable

- 11,508

Due to other funds

1,791 2,707 554 1,255 123 6,430 105

Due to other governments

163,107 4,516 261 167,884 648

Accrued interest payable

8,801 188 856 11,638 118 21,601

Current payable from restricted assets

5,234 1,538 996 4,404 12,172 -

Current portion of long-term obligations

30,400

1,020 9,030 44,250 3,730 88,430

Total current liabilities

72,307

171,090 26,538 80,415 4,985 355,335 29,180

Noncurrent liabilities:

Accrued wages and benefits

1,710 180 491 710 78 3,169 876

Construction loans payable

50,678 12,991 63,669

Accreted interest payable

26,331 26,331

Revenue bonds payable 446,779 33,522 191,008 584,664 4,009

1,259,982

Net pension liability 78,470 9,849 26,253 30,925 4,399

149,896 22,863

Net OPEB liability 53,900 6,715 17,316 22,219 2,905

103,055 17,568

Othe

r

1,056 1,056

Total noncurrent liabilities

631,537

63,257 262,455 638,518 11,391 1,607,158 41,307

Total liabilities

703,844

234,347 288,993 718,933 16,376 1,962,493 70,487

DEFERRED INFLOWS OF RESOURCES

Excess recoverable costs of purchased powe

r

4,614 4,614

Derivative instruments-interest rate swaps

4

Pension

18,055 2,191 5,434 6,924 962 33,566 5,769

OPEB

8,629

1,047 2,597 3,309 461 16,043 2,862

Total deferred inflows of resources

26,684

3,238 12,645 10,233 1,427 54,227 8,631

NET POSITION

Net investment in capital assets

1,228,048 83,751 175,109 162,024 75,196 1,724,128 3,845

Restricted for capital projects

68 18 179 21 286

Restricted for debt service

31,078 2,672 2,663 123,710 5,797 165,920

Restricted for passenger facility charges

18,720 18,720

Unrestricted

309,456

27,999 (1,103)

95,476

3,133 434,961

18,641

Total net position

1,568,650$

114,440$ 176,848$ 399,951$ 84,126$ 2,344,015 22,486$

Adjustment to reflect the consolidation

of internal service fund activities related

to enterprise funds (16,815)

NET POSITION OF BUSINESS-TYPE ACTIVITIES

2,327,200$

The notes to financial statements are an integral part of this statement.

Business-Type Activities - Enterprise Funds

CITY OF CLEVELAND, OHIO

STATEMENT OF NET POSITION - PROPRIETARY FUNDS

DECEMBER 31, 2020

(Amounts in Thousands)

67

Governmenta

l

Water Cleveland Department Nonmajor Total Activities -

Division of Pollution Public of Port Enterprise Enterprise Internal

Water

Control Power Control Funds Funds Service Funds

OPERATING REVENUES:

Charges for services

327,261$

29,392$ 186,792$ 103,088$ 7,750$ 654,283$ 200,026$

Total operating revenue

327,261

29,392 186,792 103,088 7,750 654,283 200,026

Operations 136,502 13,636 26,392 76,260

10,960 263,750 168,891

Maintenance 65,340 9,516 17,608 4,374

65 96,903 3,156

Purchased power 122,115

122,115

Depreciation

73,098

4,721 22,375 60,666 3,333 164,193 550

Total operating expenses

274,940

27,873 188,490 141,300 14,358 646,961 172,597

OPERATING INCOME (LOSS) 52,321

1,519 (1,698) (38,212) (6,608) 7,322 27,429

Investment income (loss) 3,055 223 168 1,338

104 4,888 167

Interest expense (21,569) (1,199) (9,554) (22,417)

(614) (55,353)

Passenger facility charges 8,230

8,230

Gain (loss) on disposal of capital assets (147) (2) 65

(84)

Other revenues (expenses)

6,393

288 6,862 (52) 14 13,505

Total non-operating

revenues (expenses)

(12,268)

(690) (2,524) (12,836) (496) (28,814) 167

40,053 829 (4,222) (51,048) (7,104) (21,492) 27,596

Capital contributions 3,678 60,282

2,786 66,746 115

Transfers in

4,855 4,855 797

Change in net position

40,053 4,507 (4,222) 9,234 537 50,109 28,508

1,528,597

109,933 181,070 390,717 83,589

(6,022)

1,568,650$

114,440$ 176,848$ 399,951$ 84,126$ 22,486$

(2,603)

47,506$

The notes to financial statements are an integral part of this statement.

CITY OF CLEVELAND, OHIO

STATEMENT OF REVENUES, EXPENSES AND CHANGES

FOR THE YEAR ENDED DECEMBER 31, 2020

(Amounts in Thousands)

BUSINESS-TYPE ACTIVITIES

Adjustment to reflect consolidation of

internal service fund activities related

to enterprise funds

NET POSITION AT END OF YEAR

CHANGE IN NET POSITION OF

Business-Type Activities - Enterprise Funds

NON-OPERATING REVENUES (EXPENSES):

NET POSITION AT BEGINNING OF YEAR

INCOME (LOSS) BEFORE CONTRIBUTIONS

AND TRANSFERS

68

Governmental

Water Cleveland Department Nonmajor Total Activities -

Division of Pollution Public of Port Enterprise Enterprise Internal

Water

Control Power Control Funds Funds Service Funds

297,193$ 27,255$ 187,637$ 112,098$ 7,817$ 632,000$ 190,600$

(100,148) (11,175) (16,930) (45,582) (6,742) (180,577) (128,218)

(83,756) (9,628) (16,965) (32,626) (4,098) (147,073) (28,165)

(120,859) (120,859)

Cash received on behalf of other communities 401,522 401,522

(401,987) (401,987)

21,178

492 (4,550)

17,120

operating activities 134,467

6,479 28,333 33,890

(3,023)

200,146 34,217

Cash received through transfers

from other funds 4,855 4,855 797

Cash received for royalties

14 14

Cash received from electric excise tax

5,791 5,791

Net cash provided by (used for) noncapita

l

financing activities

-

- 5,791 - 4,869 10,660 797

FINANCING ACTIVITIES:

Cash receipts for passenger facility charges 9,587 9,587

Proceeds from sale of revenue bonds,

loans and notes 206,344 8,127 97,499 311,970

Acquisition and construction of capital assets (86,796) (19,657) (17,242) (35,685) (617) (159,997) (134)

Principal paid on long-term debt (146,001) (802) (3,740) (41,585) (3,540) (195,668)

Interest paid on long-term debt (19,797) (1,718) (6,142) (21,699) (608) (49,964)

Cash paid to escrow agent for refunding (114,735) (99,223) (213,958)

Capital grant proceeds

3,391 61,315 64,706

Net cash provided by (used for) capital

and related financing activitie

s

(160,985) (10,659) (28,848) (28,067) (4,765) (233,324) (134)

Interest received on investment

s

3,123 265 172 1,576 112 5,248 167

Net cash provided by (used for

)

investing activitie

s

3,123 265 172 1,576 112 5,248 167

(23,395) (3,915) 5,448 7,399 (2,807) (17,270) 35,047

469,785

86,615 60,647 332,495 23,691 973,233 49,690

446,390$

82,700$ 66,095$ 339,894$ 20,884$ 955,963$ 84,737$

(Continued)

CASH AND CASH EQUIVALENTS

BEGINNING OF YEA

R

AND CASH EQUIVALENTS

CASH FLOWS FROM CAPITAL AND RELATED

Agency activity on behalf of other sewer authorities

Cash payments for purchased power

CASH FLOWS FROM NONCAPITAL

Cash payments to employees for services

Cash payments to suppliers for goods or services

Cash received from customers

AT END OF YEAR

FINANCING ACTIVITIES:

CASH FLOWS FROM INVESTING ACTIVITIES:

NET INCREASE (DECREASE) IN CASH

CASH AND CASH EQUIVALENTS AT

Other

Net cash provided by (used for)

CASH FLOWS FROM OPERATING ACTIVITIES:

Business-Type Activities - Enterprise Funds

CITY OF CLEVELAND, OHIO

STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS

FOR THE YEAR ENDED DECEMBER 31, 2020

(Amounts in Thousands)

69

Governmental

Water Cleveland Department Nonmajor Total Activities -

Division of Pollution Public of Port Enterprise Enterprise Internal

Water

Control Power Control Funds Funds Service Funds

RECONCILIATION OF OPERATING

INCOME (LOSS) TO NET CASH PROVIDED

BY (USED FOR) OPERATING ACTIVITIES:

Operating income (loss)

52,321$ 1,519$ (1,698)$ (38,212)$ (6,608)$ 7,322$ 27,429$

Adjustment to reconcile operating income

(loss) to net cash provided by (used for)

operating activities:

Depreciation

73,098 4,721 22,375 60,666 3,333 164,193 550

Receivables, net

(5,314) (14,460) (2,770) 6,260 112 (16,172) (13)

Prepaid expenses and other assets

51 4 8 (54) 9 12

Due from other funds

14 11 802 12 (7) 832 (1,017)

Inventory of supplies

1,566 (42) 551 (67) 2,008 (238)

(Increase) Decrease in Deferred Outflows of Resources:

Pension

21,971 2,489 6,610 8,552 1,245 40,867 7,623

OPEB

(4,303) (537) (1,297) (1,602) (227) (7,966) (1,398)

Increase (Decrease) in Liabilities:

Accounts payable

98 (498) 1,095 653 (526) 822 670

Accrued wages and benefits

826 62 482 436 15 1,821 1,422

Net pension liability

(32,889) (3,991) (9,899) (12,613) (1,757) (61,149) (10,858)

Net OPEB liability

2,389 290 719 916 125 4,439 787

Claims payable

- 2,042

Due to other funds

(167) 19 424 (470) (57) (251) 60

Due to other governments

13,898 (71) 16 13,843 (970)

Accrued expenses and other liabilities (3) (17) (1,136) (1,156)

Increase (Decrease) in Deferred Inflows of Resources:

Excess purchased power costs 4,614

4,614

Pension

16,323 1,981 4,899 6,231 859 30,293 5,314

OPEB

8,486

1,030 2,554 3,253 454 15,777 2,802

Total adjustments

82,146 4,960 30,031 72,102 3,585 192,824 6,788

NET CASH PROVIDED BY (USED FOR)

OPERATING ACTIVITIES

134,467$

6,479$ 28,333$ 33,890$ (3,023)$ 200,146$ 34,217$

Contributions of capital assets $ $ $ $ 2,786$ 2,786$ 115$

Accounts payable related to capital assets 5,234 1,538 996 4,404 12,172

Capital assets added from accounts payable 70 70 13

(Concluded)

The notes to financial statements are an integral part of this statement.

SCHEDULE OF NONCASH CAPITAL AND RELATED

FINANCING ACTIVITIES:

Business-Type Activities - Enterprise Funds

CITY OF CLEVELAND, OHIO

STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS

FOR THE YEAR ENDED DECEMBER 31, 2020

(Amounts in Thousands)

(Increase) Decrease in Assets:

70

Total

Assets

Cash and cash equivalents 14,955$

Taxes receivable 17,727

Accounts receivable 1,872

Due from other governments 1,409

Total assets 35,963

Liabilities

Accounts payable 3,474

Due to others 1,753

Due to other governments 24,668

Total liabilities 29,895

Net Position

Restricted 6,068

Total net position 6,068

$

The notes to financial statements are an integral part of this statement.

CITY OF CLEVELAND, OHIO

STATEMENT OF FIDUCIARY NET POSITION

CUSTODIAL FUNDS

FOR THE YEAR ENDED DECEMBER 31, 2020

(Amounts in Thousands)

71

Total

Additions

Fire escrow proceeds 546$

Law enforcement trust funds 504

Governmental, trust and custodial funds 15

Income tax collected for other governments 129,604

Fines collected for other governments 17,079

Investment incom

e

1

Total additions 147,749

Deductions

Special assessments 136

Governmental, trust and custodial funds 231

Law enforcement trust funds 401

Payments of income tax to other governments 129,604

Payments of fines to other governments 17,079

Othe

r

23

Total deductions 147,474

Change in net position

275

Net position, beginning of year (as restated)

5,793

Net position, end of year

6,068$

(Amounts in Thousands)

CITY OF CLEVELAND, OHIO

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

CUSTODIAL FUNDS

FOR THE YEAR ENDED DECEMBER 31, 2020

72

73

CITY OF CLEVELAND, OHIO

NOTES TO FINANCIAL STATEMENTS

NOTE 1 – DESCRIPTION OF CITY OPERATIONS AND REPORTING ENTITY

The City: The City of Cleveland, Ohio (the City) operates under an elected Mayor/Council (17 Council members)

administrative/legislative form of government.

Reporting Entity: The accompanying financial statements as of December 31, 2020 and for the year then ended

have been prepared in conformity with accounting principles generally accepted in the United States of America

(GAAP) applicable to local 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 (GASB

Codification).

In evaluating how to define the governmental reporting entity, the City complies with the provisions of GASB

Statement No. 61, under which the financial statements include all the organizations, activities, functions and

component units for which the City (primary government) is financially accountable. Financial accountability is

defined as the appointment of a voting majority of the component unit’s board and either (1) the City’s ability to

impose its will over the component unit or (2) the possibility that the component unit will provide a financial benefit

to or impose a financial burden on the City.

On this basis, the City’s financial reporting entity has no component units but includes in its financial statements the

financial activities of all departments, agencies, boards and commissions that are part of the primary government,

including police and fire protection, waste collection, parks and recreation, health, certain social services and general

administrative services. In addition, the City owns and operates several enterprise activities, the principal ones

consisting of a water system, a sewer system, an electric distribution system and two airports.

The following entities are related organizations of the City of Cleveland; however, the City’s accountability does not

extend beyond its appointing authority:

Cuyahoga Metropolitan Housing Authority – Created under the Ohio Revised Code, the Cuyahoga

Metropolitan Housing Authority provides public housing services. The five-member board consists of

two appointed by the Mayor of the City of Cleveland, two appointed by Cleveland City Council and

one appointed by the Mayor of the City of East Cleveland with approval from its City Council.

Cleveland-Cuyahoga County Port Authority – Created under the Ohio Revised Code, the Cleveland-

Cuyahoga County Port Authority conducts port operations and economic development activities. The

eight-member Board of Directors consists of two appointed by the Cuyahoga County Executive and six

appointed by the City of Cleveland.

Cleveland Metropolitan School District (Schools) – In September of 1998, the Mayor of the City of

Cleveland was given appointing authority for the Schools. As approved by the State Legislature, the

Ohio Revised Code provides for the Mayor to appoint a Chief Executive Officer who must be

approved by the Board of Education (the Board). The Board is comprised of nine-members. The

members of the Board are appointed by the Mayor from a pool of candidates presented to the Mayor

by an independent nominating panel. In November 2002, the voters of Cleveland elected to maintain

the current governance structure.

The following entity is a jointly governed organization of the City; however, the City has no ongoing financial

interest or responsibility:

Gateway Economic Development Corporation of Greater Cleveland (Gateway) – Gateway is responsible

for the operations of a sports complex and related economic development. The five-member board

consists of two members appointed by the City, two members appointed by Cuyahoga County and one

joint appointment confirmed by both the City and Cuyahoga County.

74

The following entity is a blended component unit of the City:

Public Health Department - Beginning 2019, the Auditor of the State of Ohio determined that the City’s

Public Health Department was a legally separate entity. It is being reported as a blended component

unit. Previously the City reported the Public Health Department activity in the General Fund and

Special Revenue Funds. The City’s Public Health Department is managed by the City’s Director of

Public Health, which is appointed by the Mayor. The City’s Public Health Department is governed and

budgeted just like all other Departments of the City. Since the City’s Public Health Department

provides services entirely and only to the City, it is reported as a blended component unit. It is included

as a major fund in the governmental statements.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant Accounting Policies:

The following is a summary of the more significant policies followed during the preparation of the accompanying

financial statements.

A. Government-Wide and Fund Financial Statements

GASB Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – for

State and Local Governments, established requirements and a reporting model for the annual financial

reports of state and local governments. GASB Statement No. 34 was developed to make annual reports

easier to understand and more useful to the people who use governmental financial information to make

decisions. Financial information of the City is presented in the following format:

Basic Financial Statements:

1. Government-wide financial statements consist of a statement of net position and a statement of

activities. These statements report all of the assets, deferred outflows of resources, liabilities,

deferred inflows of resources, revenues, expenses, gains and losses of the City. Governmental

activities are reported separately from business-type activities. Governmental activities are

normally supported by taxes and intergovernmental revenues whereas business-type activities are

normally supported by fees and charges for services and are usually intended by management to be

financially self-sustaining. Fiduciary funds of the City are not included in these government-wide

financial statements.

Interfund receivables and payables, bonds and notes issued and held by the City as investments

within governmental and business-type activities have been eliminated in the government-wide

statement of net position. Related interest amounts are eliminated in the government-wide

statement of activities. These eliminations minimize the duplicating effect on assets and liabilities

within the governmental and business-type activities total column.

Internal Service Fund balances, whether positive or negative, have been eliminated against the

expenses and program revenues shown as governmental activities in the statement of activities,

except for the Utilities Administration Fund which is shown in the business-type activities column.

The statement of activities presents a comparison between direct expenses and program revenues

for the different business-type activities of the City and for each function of the City’s

governmental activities.

Direct expenses are those that are specifically associated with a program or function and, therefore,

are clearly identifiable to a particular function. Program revenue includes (a) charges paid by the

recipients of goods or services offered by the programs and (b) grants and contributions, including

special assessments that are restricted to meeting the operational or capital requirements of a

particular program. Revenues that are not classified as program revenues, including all taxes, are

presented as general revenues. General revenues are considered unrestricted in nature.

75

Program revenues and expenses previously reported as “Other” program revenues and expenses in

governmental activities on the statement of activities are now classified as General Government

program revenues and expenses as appropriate.

Business-type activities on the government-wide statement of activities summarizes other

Enterprise Funds as Nonmajor activities. These include Public Auditorium, West Side Market,

East Side Market, Municipal Parking Lots, Cemeteries and Golf Courses.

2. Fund financial statements consist of a series of statements focusing on information about the City’s

major governmental and enterprise funds. Separate statements are presented for the governmental,

proprietary and fiduciary funds.

The City’s major Governmental Funds are the General and Public Health Funds. Of the City’s

business-type activities, the Division of Water Fund, Division of Water Pollution Control Fund,

Cleveland Public Power Fund and Department of Port Control Fund are considered major

Enterprise Funds.

The General Fund is the primary operating fund of the City. It is used to account for all financial

resources, except those required to be accounted for in other funds. Its revenues consist primarily

of income and property taxes, investment earnings, other taxes, other shared revenues, charges for

services, licenses and permits, fines, forfeits and settlements.

General Fund expenditures represent costs of General Government; Public Works (including waste

collection); Public Safety (including police and fire); Building and Housing; Community

Development; and Economic Development. General Fund resources are also transferred annually

to support other services which are accounted for in other separate funds.

Public Health Fund is for all public health activity for the City including operating and grant

activity.

The Division of Water Fund is a segment of the Department of Public Utilities of the City. The

Division of Water was created for the purpose of supplying water services to customers within the

Cleveland Metropolitan Area.

The Cleveland Public Power Fund is a segment of the Department of Public Utilities of the City.

The Cleveland Public Power Fund was established by the City to provide electrical services to

customers within the City.

The Division of Water Pollution Control Fund is a segment of the Department of Public Utilities of

the City. The Division of Water Pollution Control was created for the purpose of supplying sewer

services to customers within the Cleveland metropolitan area.

The Department of Port Control Fund was established to account for the operations of the City’s

airport facilities.

While not considered major funds, the City maintains Internal Service Funds that are used to

account for the financing of goods or services provided by one department or division to another

department, division or other government on a cost-reimbursement basis.

Also maintained by the City are fiduciary funds, such as Custodial Funds that are used to account

for assets held by the City as an agent for individuals, private organizations or other governments.

3. The City’s General Fund budget and actual statement is presented as part of the basic financial

statements.

4. Notes to Financial Statements provide information that is essential to a user’s understanding of the

basic financial statements.

5. The Required Supplementary Information is essential to a user’s understanding of the City’s

pension and other post-employment liabilities and contributions made to fund it.

76

B. Financial Reporting Presentation

The accounts of the City are organized on the basis of funds, each of which is considered a separate

accounting entity. The operations of each fund are accounted for with a separate set of self-balancing

accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources,

fund balance (equity), revenues and expenditures (expenses). The fund types and classifications that the

City reports are as follows:

GOVERNMENTAL FUNDS

1. General Fund – The General Fund is used to account for and report all financial resources not

accounted for and reported in another fund.

2. Special Revenue Funds – Special Revenue Funds are used to account for and report the proceeds

of specific revenue sources that are restricted or committed to expenditures of specified purposes

other than debt service or capital projects. The term proceeds of specific revenue sources

establishes that one or more specific restricted or committed revenues should be the foundation for

a special revenue fund.

3. Debt Service Funds – Debt Service Funds are used to account for and report financial resources

that are restricted, committed or assigned to expenditure for principal and interest. Debt Service

Funds should be used to report resources if legally mandated (i.e. debt payable from property

taxes). Financial resources that are being accumulated for principal and interest maturing in future

years also should be reported in debt service funds.

4. Capital Project Funds – Capital Project Funds are used to account for and report financial

resources that are restricted or committed to expenditures for capital outlays, including the

acquisition or construction of capital facilities and other capital assets. Capital Project Funds

exclude those types of capital-related outflows financed by proprietary funds or for assets that will

be held in trust for individuals, private organizations, or other governments.

PROPRIETARY FUNDS

1. Enterprise Funds – The Enterprise Funds are used to account for operations that are financed and

operated in a manner similar to private business enterprises, where the intent of the governing

body is that the costs of providing goods or services to the general public on a continuing basis be

financed or recovered primarily through user charges.

2. Internal Service Funds – The Internal Service Funds are used to account for the financing of

goods or services provided by one department or division to other departments or divisions or to

other governments on a cost-reimbursement basis. The City’s most significant Internal Service

Funds are used to account for Motor Vehicle Maintenance, Municipal Income Tax Administration,

Workers’ Compensation Reserve, Health Self Insurance Fund and Prescription Self Insurance

Fund.

FIDUCIARY FUNDS

1.

Custodial Funds – Custodial Funds are used to account for assets held by the City for individuals,

private organizations, or other governments. The City’s more significant Custodial Funds are used

to account for Municipal Court and income tax collections for other municipalities.

Fiduciary funds are not included in the government-wide statements.

C. Measurement Focus and Basis of Accounting

Except for budgetary purposes, the basis of accounting used by the City conforms to GAAP as applicable

to governmental units. The accounting and financial reporting treatment applied to a fund is determined by

its measurement focus.

The government-wide, proprietary and fiduciary fund financial statements are reported using the economic

resources measurement focus. The government-wide, proprietary and fiduciary fund financial statements

77

are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are

recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Non-

exchange transactions, in which the City gives (or receives) value without directly receiving (or giving)

equal value in exchange, include income taxes, property taxes, grants, unrestricted shared revenue and

donations. On an accrual basis, revenue from income taxes is recognized in the period in which the

taxpayer’s liability occurs and revenue from property taxes is recognized in the fiscal year for which the

taxes are levied. On an accrual basis, revenue in the form of unrestricted shared revenue is recognized

when the provider government recognizes its liability to the City. Revenue from grants and donations is

recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility

requirements include: (1) timing requirements which specify the year when the resources are required to be

used or the year when use is first permitted; (2) matching requirements, in which the City must provide

local resources to be used for a specified purpose; and (3) expenditure requirements, in which the resources

are provided to the City on a cost-reimbursement basis.

Governmental fund financial statements are reported using the current financial resources measurement

focus and the modified accrual basis of accounting. Under this method, revenues are recognized when 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. The City generally

considers all revenues reported in the governmental funds to be available if the revenues are collected

within sixty days after year end. Expenditures are generally recorded when the related fund liability is

incurred, except for principal and interest on general long-term debt, claims and judgments and

compensated absences, which are recognized as expenditures only when payment is due. General capital

asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt

are reported as other financing sources.

In applying the susceptible-to-accrual concept under the modified accrual basis, the following revenue

sources are deemed both measurable and available (i.e., collectible within the current year or within sixty

days after year end and available to pay obligations of the current period): income taxes, investment

earnings and other shared revenues. Reimbursements due for federal or state funded projects are accrued as

revenue at the time the expenditures are made or, when received in advance, recorded as unearned revenue

until expenditures are made. Property taxes and special assessments, though measurable, are not available

to finance current period obligations. Therefore, property tax receivables are recorded and deferred until

they become available. Other revenues, including licenses, fees, fines and forfeits and charges for services

are recorded as revenue when received in cash because they are generally not measurable until actually

received.

Proprietary fund operating revenues, such as charges for services, result from exchange transactions

associated with the principal activity of the fund. Exchange transactions are those in which each party

receives and gives up essentially equal values. Operating expenses are necessary costs incurred to provide

the goods or services that are the primary activity of the fund. Non-operating revenues, such as investment

income and passenger facility charges, result from non-exchange transactions or ancillary activities.

When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted

resources first, then unrestricted resources as they are needed. The City uses unrestricted resources that are

committed first, assigned second and unassigned last.

D. Budgetary Procedures

The City is required by State law to adopt annual budgets for the General Fund, certain Special Revenue

Funds (including the Division of Streets, Restricted Income Tax, Rainy Day Reserve, Schools Recreation

and Cultural Activities and Cleveland Stadium Operations Funds), Debt Service Funds (except for

Cleveland Stadium Debt Service Fund) and Proprietary Operating Funds. Modifications to the original

budget are approved by City Council throughout the year. The City maintains budgetary control by not

permitting expenditures to exceed appropriations for personnel costs (including benefits) and other costs

(including debt service and capital outlay), within a division of the City, without the approval of City

Council. Adjustments to the budget can only be made within a division and then within each category.

Further legislation is needed in order to move budget amounts from “personnel” to “other” or vice versa, or

between divisions. City Council adopted four appropriation amendments during 2020 which reallocated

appropriations and increased the budget by 2.96% from the original budget. Unencumbered appropriations

for annually budgeted funds lapse at year end.

78

The City’s budgetary process does not include annual budgeting for certain Special Revenue Funds,

including the Public Health Fund, certain Debt Service Funds and Capital Project Funds. Appropriations in

these funds remain open and carry over to succeeding years (i.e., multi-year) until the related expenditures

are made or until they are modified or canceled. Appropriations for these funds are controlled on a project

basis.

The City’s budgetary process accounts for certain transactions on a basis other than GAAP. The major

differences between the budget basis and the GAAP basis are that:

 Revenues are recorded when received in cash (budget) as opposed to when susceptible to accrual

(GAAP).

 Expenditures are recorded when paid in cash (budget) as opposed to when the liability is incurred

(GAAP).

 Encumbrances and pre-encumbrances are recorded as the equivalent of expenditures (budget) as

opposed to being included in fund balances (GAAP).

A reconciliation of the General Fund’s results of operations for 2020 reported on the budget basis versus

the GAAP basis is as follows:

(Amounts in Thousands)

Excess (deficiency) of Revenues and Other Financing Sources over (under)

Expenditures and Other Financing Uses (Budget Basis) (1,085)$

Adjustments:

Revenue Accruals (68,294)

Expenditure and other financing sources (uses) Accruals 45,410

Encumbrances and Pre-Encumbrances 34,631

Net Change in Fund Balance 10,662$

E. Other Significant Accounting Policies

Cash and Cash Equivalents: Cash resources of certain individual funds are combined to form a pool of

cash and investments which is managed by the City Treasurer. Investments in the Pooled Cash and

Segregated Accounts, consists of obligations of the U.S. Treasury, agencies and instrumentalities; State

Treasurer Asset Reserve Fund (STAR Ohio); commercial paper; U.S. Government Money Market Mutual

Funds; guaranteed investment contracts; manuscript debt; bonds and other State of Ohio obligations;

certificates of deposit; and repurchase transactions are carried at fair value (see Note 4 – Pooled And

Segregated Cash And Investments) based on quoted market values, where applicable. Interest earned on

pooled cash and investments is distributed to the appropriate funds utilizing a formula based on the month-

end balance of cash and investments of each fund. Cash equivalents are defined as highly liquid

investments with a maturity of three months or less at the time they are purchased by the City.

Investments: The City follows the provisions of GASB Statement No. 72, Fair Value Measurement and

Application, which requires governmental entities to record their investments at fair value within the fair

value hierarchy. The hierarchy is based on the valuation inputs used to measure fair value of the assets.

Level 1 inputs are quoted prices in an active market for identical assets. Level 2 inputs are significant other

observable inputs valued by pricing sources used by the City’s investment managers. Level 3 inputs are

significant unobservable inputs.

The City has invested funds in STAR Ohio during 2020. STAR Ohio is an investment pool managed by

the State Treasurer’s Office, which allows governments within the State to pool their funds for investment

purposes. STAR Ohio is not registered with the U.S. Securities and Exchange Commission (SEC) as an

investment company, but has adopted GASB Statement No. 79, Certain External Investment Pools and

Pool Participants, for the purpose of measuring the value of shares in STAR Ohio. The City measures

their investment in STAR Ohio at the net asset value (NAV) per share provided by STAR Ohio. The NAV

per share is calculated on an amortized cost basis that provides a NAV share that approximates fair value.

79

Unbilled Revenue: Unbilled revenues are estimates for services rendered but not billed to customers at

year end.

Recoverable Costs of Purchased Power: The City passes through certain power costs to the customer as

Energy Adjustment Charges. The power costs related to recoverable costs of purchased power will be

billed to customers in future billing periods.

Inventory of Supplies: Utility funds’ inventory is valued at average cost. All other enterprise and internal

service funds’ inventory is valued at cost using the first in/first out method. Inventory generally consists of

construction materials, utility plant supplies and parts inventory not yet placed into service. Inventory costs

are charged to operations when consumed. Inventory purchased by governmental funds are treated as

expenditures when acquired.

Prepaid Expenses and Other Assets: Payments made to vendors for services that benefit future periods are

recorded as prepayments in both government-wide and fund financial statements. A current asset for the

prepaid amount is recorded at the time of purchase and the expenditure is reported in the year in which

services are consumed.

Restricted Assets: Issuance of debt and amounts set aside for payment of Enterprise Fund revenue bonds

and construction loans are classified as restricted assets since their use is limited by applicable bond

indentures. Passenger facility charges are restricted for capital expenditures or related debt. Construction

loans are restricted to fund approved capital projects.

Capital Assets: Capital assets, which include property, plant, equipment and infrastructure assets (e.g.,

roads, bridges, sidewalks and similar items), are reported in the applicable governmental or business-type

activities columns in the government-wide financial statements to the extent the City’s capitalization

threshold is met. The City defines capital assets as assets with an estimated useful life in excess of one year

and an individual cost of more than $5,000 for land, furniture, fixtures, equipment and vehicles; and

$10,000 for all other assets or projects. Assets are recorded at historical cost or estimated historical cost, if

historical cost is not available. Contributed capital assets are recorded at their acquisition value on the date

contributed.

As permitted under the implementation provisions of GASB Statement No. 34, the historical cost of

infrastructure assets acquired, significantly reconstructed or that received significant improvements prior to

January 1, 1980 have not been included as part of governmental capital assets in the government-wide

financial statements.

Capital assets in the proprietary funds are capitalized in the fund in which they are utilized. The valuation

basis for proprietary fund capital assets are the same as those used for the general capital assets. Interest

incurred during the construction phase of capital assets of business-type activities is included as part of the

capitalized value of the assets constructed. Capitalized interest is amortized on the straight-line basis over

the estimated useful lives of such assets. The City applies guidance provided by the GASB. This guidance

requires capitalization of the interest cost of the borrowings less interest earned on investment of the bond

proceeds from the date of the borrowing until the assets constructed from the bond proceeds are ready for

their intended use. This guidance is applied to Waterworks Improvement Revenue Bonds, Public Power

System Revenue Bonds, Water Pollution Control Revenue Bonds and Airport System Revenue Bonds.

Costs for maintenance and repairs are expensed when incurred. However, costs for repairs and upgrading

that materially add to the value or life of an asset and meet the above criteria are capitalized

The City depreciates capital assets on a straight-line basis using the following estimated useful lives:

Assets Years

Land improvements 15-100

Utility plant 5-100

Buildings, structures and improvements 5-60

Furniture, fixtures, equipment and vehicles 3-60

Infrastructure 3-50

80

Compensated Absences: The City accrues for compensated absences such as vacation, sick leave and

compensatory time using the termination payment method specified under GASB Statement No. 16,

Accounting for Compensated Absences. In the government-wide and proprietary funds financial

statements, the entire amount of unpaid compensated absences is reported as a liability. A liability for

compensated absences is accrued in the governmental funds only if the amount is currently due and payable

at year end. These amounts are recorded as accrued wages and benefits in the fund from which the

employees who have accumulated leave are paid. The remaining portion of the liability is not reported in

the governmental funds.

Normally, all vacation time is to be taken in the year available. The City allows employees to carryover

vacation time from one year to the next. Sick days not taken may be accumulated until retirement. An

employee is paid one-third of accumulated sick leave upon retirement, calculated at the average of the

highest three years of pay, with the balance being forfeited.

Uniformed police and fire employees are eligible to defer earned vacation time and overtime, with the

appropriate approvals, until retirement. Once deferred, the employee cannot use deferred time as vacation.

Deferred vacation is paid to the employee upon retirement, calculated using their current hourly rate at the

date of retirement. Deferred overtime is paid once a year upon request up to the amount budgeted for the

year for such purpose. If requests exceed the budgeted amounts, the requests are to be paid on a pro-rata

basis.

Long-Term Obligations: In the government-wide financial statements and proprietary fund types in the

fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the

applicable governmental activities, business-type activities and proprietary fund type statements of net

position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the

effective interest method. Losses on refundings are deferred and amortized over the life of the new debt, or

the life of the refunded debt, whichever is shorter. Bonds payable are reported net of the applicable

unamortized bond premium or discount.

In the governmental fund financial statements, bond premiums and discounts are reported as other

financing sources and uses during the period in which they are incurred. The face amount of debt issued is

reported as other financing sources. Premiums received on debt issuances are reported as other financing

sources while discounts are reported as other financing uses. Issuance costs, whether or not withheld from

the actual debt proceeds received, are reported as expenditures.

Swap Agreements: The City may enter into interest rate swap agreements to modify interest rates on

outstanding debt. The City has accordingly recorded the fair value of each swap in the government-wide

financial statements. As further described in Note 5 – Debt And Other Long-Term Obligations, the City has

two swap agreements outstanding at December 31, 2020, one for its Subordinated Income Tax Variable

Rate Refunding Bonds and one on the Parking Facilities Refunding Revenue Bonds.

Grants Revenues: Grants and assistance awards made on the basis of entitlement programs are recorded as

grant receivables and revenues when entitlement occurs. Reimbursement-type grants are recorded as grant

receivables and revenues when the related expenditures (expenses) are incurred. The City accounts for

loans receivable related to the Economic Development Funds, Urban Development Action Funds,

Community Development Block Grants, Neighborhood Development Investment Funds and Supplemental

Empowerment Zone as restricted or committed fund balance in the fund financial statements as applicable

to the extent that these loans do not have to be repaid to the Federal government. The loan proceeds are

earmarked for future reprogramming under federal guidelines and are not available to fund current

operating expenditures of the City.

Encumbrances and Pre-Encumbrances: Encumbrance accounting, under which purchase orders,

requisitions, contracts and other commitments for expenditures are recorded as encumbrances or pre-

encumbrances to reserve the applicable portion of the appropriation.

Interfund Transactions: During the course of normal operations, the City has numerous transactions

between funds, including the allocation of centralized expenses and transfers of resources to provide

services, construct assets and service debt. Such transactions are generally reflected as transfers or direct

expenses of the fund that is ultimately charged for such costs.

81

Statement of Cash Flows: The City utilizes the direct method of reporting cash flows from operating

activities in the Statement of Cash Flows as defined by the GASB Statement No. 9, Reporting Cash Flows

of Proprietary and Nonexpendable Trust Funds and Governmental Entities that use Proprietary Fund

Accounting. In the statement of cash flows, cash receipts and cash payments are classified according to

operating, noncapital financing, capital and related financing and investing activities.

Deferred Outflows/Inflows of Resources: In addition to assets, the statement of financial position will

sometimes report a separate section for deferred outflows of resources. This separate financial statement

element, deferred outflows of resources, represents a consumption of net position that applies to a future

period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. In

addition to liabilities, the statement of financial position will sometimes report a separate section for

deferred inflows of resources. This separate financial statement element, deferred inflows of resources,

represents an acquisition of net position that applies to a future period(s) and so will not be recognized as

an inflow of resources (revenue) until that time.

Net Pensions/OPEB Liabilities: For purposes of measuring the net pension/OPEB liabilities, deferred

outflows of resources and deferred inflows of resources related to pensions/OPEB and pension/OPEB

expenses, information about the fiduciary net position of the pension/OPEB plans and additions

to/deductions from their fiduciary net positon have been determined on the same basis as they are reported

by the pension/OPEB systems. For this purpose, benefit payments (including refunds of employee

contributions) are recognized when due and payable in accordance with the benefit terms. The

pension/OPEB systems report investments at fair value.

F. Accounting Pronouncements

In November of 2016, GASB Statement No. 83, Certain Asset Retirement Obligations, was issued. This

Statement is effective for the reporting periods beginning after June 15, 2019. The objective of this

Statement is to provide financial statement users with information about asset retirement obligations (ARO)

that were not addressed in GASB standards by establishing uniform accounting and financial reporting

requirements for these obligations. As required, the City has implemented GASB Statement No. 83 as of

December 31, 2020.

In January of 2017, GASB Statement No. 84, Fiduciary Activities, was issued. This Statement is effective

for reporting periods beginning after December 15, 2019. The objective of this Statement is to enhance the

consistency and comparability of fiduciary activity reporting by state and local governments. This Statement

also is intended to improve the usefulness of fiduciary activity information primarily for assessing the

accountability of governments in their roles as fiduciaries. As required, the City has implemented GASB

Statement No. 84 as of December 31, 2020.

In March of 2018, GASB Statement No. 88, Certain Disclosures Related to Debt, including Direct

Borrowings and Direct Placements, was issued. This Statement is effective for reporting periods beginning

after June 15, 2019. The objective of this Statement is to improve consistency in the information that is

disclosed in notes to government financial statements related to debt, including direct borrowings and direct

placements, and to provide financial statement users with additional essential information about debt. As

required, the City has implemented GASB Statement No. 88 as of December 31, 2020.

In August of 2018, GASB Statement No. 90, Majority Equity Interests an amendment of GASB Statements

No. 14 and No. 61, was issued. This Statement is effective for reporting periods beginning after December

15, 2019. The objective of this Statement is to improve consistency in the measurement and comparability of

the financial statement presentation of majority interests in legally separate organizations and to improve the

relevance of financial statement information for certain component units. The City has determined that

GASB Statement No. 90 has no impact on its financial statements as of December 31, 2020.

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NOTE 3 – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS

A. Explanation of certain differences between the governmental fund balance sheet and the government-

wide statement of net position.

The governmental fund balance sheet includes a reconciliation between fund balance – total

governmental funds and net position – governmental activities as reported in the government–wide

statement of net position. One element of that reconciliation explains that long-term liabilities, including

bonds payable, are not due and payable in the current period and therefore are not reported in the funds.

The details of this $958.1 million difference are as follows:

(Amounts in Thousands)

Bonds and notes payable (797,734)$

Other payable (16,000)

Unamortized bond premium/discount (54,631)

Accrued interest payable (5,069)

Claims and adjustments (13,342)

Loss on refunding 13,038

Comp ensated absences (84,374)

Net adjustment to fund balance - total governmental funds

to arrive at net position - governmental activities (958,112)$

Another element of that reconciliation states that net pension/OPEB liabilities are not due and payable

in the current period; therefore, the liabilities and the related deferred outflows of resources and deferred

inflows of resources are not reported in the governmental funds. The details of differences are as

follows:

(Amounts in Thousands)

Deferred outflows of resources - pension 119,858$

Deferred inflows of resources - pension (107,386)

Net pens ion liability (720,361)

Net adjusment to fund balance - total governmental funds

to arrive at net position - governmental activities

(707,889)$

(Amounts in Thousands)

Deferred outflows of resources - OPEB 72,064$

Deferred inflows of resources - OPEB (53,310)

Net OPEB liability (223,863)

Net adjusment to fund balance - total governmental funds

to arrive at net position - governmental activities

(205,109)$

83

B. Explanation of certain differences between the governmental fund statement of revenues, expenditures

and changes in fund balances and the government-wide statement of activities.

The governmental fund statement of revenues, expenditures and changes in fund balances includes a

reconciliation between net changes in fund balances – total governmental funds and changes in net

position of governmental activities as reported in the government-wide statement of activities. One

element of that reconciliation explains that governmental funds report capital outlays as expenditures.

However, in the statement of activities the cost of those assets is allocated over their estimated useful

lives and reported as depreciation expense. The details of this $19.0 million difference are as follows:

(Amounts in Thousands)

Capital outlay 88,468$

Depreciation expense (68,208)

Capital asset disposal

(1,274)

Net adjustment to changes in fund balances - total governmental

f

unds to arrive at change in net position of governmental activities

18,986$

Another element of that reconciliation states that revenues in the statement of activities that do not

provide current financial resources are not reported as revenues in the fund statements. The details of

this $4.1 million difference are as follows:

(Amounts in Thousands)

Revers al of prior year deferred inflows of resources (93,424)$

Current year deferred inflows of resources

89,354

Net adjustment to changes in fund balances -

total governmental funds to arrive at change in net position

of governmental activities

(4,070)$

Another element of that reconciliation states that the issuance of long-term debt (e.g., bonds, leases)

provides current financial resources to governmental funds, while the repayment of the principal of

long-term debt consumes the financial resources of governmental funds. Neither transaction, however,

has any effect on net position. Also, governmental funds report the effect of premiums, discounts and

similar items when debt is first issued, whereas these amounts are deferred and amortized in the

statement of activities. The net effect of these differences, including accrued interest and in the

treatment of long-term debt is $6.8 million which is detailed as follows:

(Amounts in Thousands)

Debt issued or incurred:

Issuance of general obligation bonds and other obligations (132,555)$

Accrued interest 5,701

Premium on debt (5,200)

Principal repayments:

General obligation debt and other obligations 54,615

Payment on capital lease 488

Refunding of general obligation bonds and other obligations 70,109

Net adjustment to changes in fund balances - total

governmental funds to arrive at change in net position of

governmental activities

(6,842)$

84

Another element of that reconciliation states that some expenses reported in the statement of activities

do not require the use of current financial resources and therefore are not reported as expenditures in

governmental funds. The details of this $1.4 million difference are as follows:

(Amounts in Thousands)

Compensated absences (6,649)$

Claims judgements

5,211

Net adjustment to changes in fund balances - total

governmental funds to arrive at change in net position of

governmental activities

(1,438)$

NOTE 4 – POOLED AND SEGREGATED CASH AND INVESTMENTS

Monies for the Debt Service Funds, certain Capital Project Funds, certain Custodial Funds, Department of Port

Control, Division of Water, Division of Water Pollution Control, Division of Cleveland Public Power, Division of

Municipal Parking Lots, Cemeteries, Golf Courses, Public Auditorium and certain Special Revenue Funds are

deposited or invested in individual segregated bank accounts.

Monies of all other funds of the City, including the accounts of the General Fund, Public Health Fund, other Special

Revenue Funds, other Capital Project Funds, other Enterprise Funds, Internal Service Funds and other fiduciary

funds are maintained or invested in a common group of bank accounts. Collectively these common bank accounts

and investments represent the Pooled Cash Account (PCA). Each fund whose monies are included in the PCA has

equity therein.

Certain funds have made disbursements from the PCA in excess of their individual equities in the PCA. Such

amounts have been classified as due to other funds and due from other funds between the Restricted Income Tax

Special Revenue Fund and the respective funds that have made disbursements in excess of their individual equities

in the PCA.

The City has restrictive arrangements for certain segregated monies held in the banks’ trust departments in which the

City must act in conjunction with a trust officer in order to make investments. The City’s role is that of investment

manager and the trust officer’s role is that of purchasing agent. For other segregated monies, the City acts alone in

placing investments with the banks. Amounts held in escrow are designated for a special purpose and are entrusted

to a third party to fulfill certain legal provisions.

Deposits: Ohio law requires that deposits be placed in eligible banks located in Ohio. The City’s policy is to place

deposits only with major commercial banks having offices within the City of Cleveland. Any public depository in

which the City places deposits must pledge as collateral eligible securities of aggregate market value equal to the

excess of deposits not insured by the Federal Deposit Insurance Corporation. Further, City ordinance requires such

collateral amounts to exceed deposits by 10%. Collateral that may be pledged is limited to obligations of the

following entities: the United States and its agencies, the State of Ohio, the Ohio Student Loan Commission and any

legally constituted taxing subdivision within the State of Ohio. The City also requires that non-pooled securities

pledged be held by either the Federal Reserve Bank or other trust institution, as designated by the City, as trustee.

This collateral is held in joint custody with the financial institution pledging the collateral and cannot be sold or

released without written consent from the City.

Monthly, the City determines that the collateral has a market value adequate to cover the deposits and that it has

been segregated either physically or in book entry form. At year end, the carrying amount of the City’s deposits

including certificates of deposit was $95,500,000 and the actual bank balance totaled $128,353,000. The difference

represents outstanding warrants payable and normal reconciling items. Based on the criteria described in GASB

Statement No. 3, Deposits with Financial Institutions, Investments (Including Repurchase Agreements) and Reverse

Repurchase Agreements and GASB Statement No. 40, Deposit and Investment Risk Disclosures – an Amendment of

GASB Statement No. 3, $128,353,000 of the bank balance was insured or collateralized with securities held by the

City or by its agent in the City’s name.

Custodial credit risk for deposits is the risk that in the event of bank failure, the City will not be able to recover

deposits or collateral for securities that are in possession of an outside party. At year end, the City’s deposits were

85

fully insured or collateralized. All deposits are collateralized with eligible securities pledged and deposited either

with the City or with a qualified trustee by the financial institution as security for repayment of all public monies

deposited in the financial institution whose market value at all times is equal to at least 110% of the carrying value

of the deposits being secured.

Investments: The City’s investment policies are governed by State Statutes and City ordinances which authorize the

City to invest in obligations of the U.S. Treasury, agencies and instrumentalities; State Treasurer Asset Reserve

Fund (STAR Ohio); commercial paper; U.S. Government Money Market Mutual Funds; guaranteed investment

contracts; manuscript debt; bonds and other State of Ohio obligations; certificates of deposit; and repurchase

transactions. Such repurchase transactions must be purchased from financial institutions as previously discussed in

“Deposits” or registered broker/dealers. Repurchase transactions are not to exceed a period of one year and

confirmation of securities pledged must be obtained. Generally, investments are recorded in segregated accounts by

way of book entry through the bank’s commercial or trust department and are kept at the Federal Reserve Bank in

the depository institution’s separate custodial account for the City, apart from the assets of the depository institution.

Ohio statute prohibits the use of reverse repurchase agreements.

Investment securities are exposed to various risks such as interest rate, market and credit. Fair values of securities

fluctuate based on the magnitude of changing market conditions; therefore, significant changes in market conditions

could materially affect portfolio value.

The following is a summary of the fair value hierarchy of the fair value of investments of the City (excluding STAR

Ohio and money market mutual funds) as of December 31, 2020:

Fair

Type of Investment Value Level 1 Level 2

U.S. Treasury Notes 223$ 223$ $

Commercial Pap er 31,950 31,950

Manuscript Debt 4,852 4,852

Other 3,064

3,064

Total Investment

s

40,089$ 223$ 39,866$

Fair Value Measurements Using

(Amounts in Thousands)

Interest Rate Risk: In accordance with its investment policy, the City limits its exposure to fair value losses caused

by rising interest rates, investing primarily in short-term investments maturing within five years from the date of

purchase. The intent is to avoid the need to sell securities prior to maturity.

Custodial Credit Risk: For an investment, custodial credit risk is the risk that, in the event of the failure of the

counterparty, the City will not be able to recover the value of the investments or collateral securities that are in the

possession of an outside party. The City does not have an investment policy dealing with investment custodial risk

beyond the requirement in the State Statute.

Credit Risk: The City’s investments as of December 31, 2020 include U.S. Treasury Notes, STAR Ohio,

commercial paper, money market mutual funds, manuscript debt and other investments. The City maintains the

highest ratings for its investments. Investments in the Dreyfus Government Cash Management Mutual Fund, First

American Government Obligations Fund, Federated Government Obligations Fund, Government Obligations Fund,

Morgan Stanley Government Institutional Mutual Funds and STAR Ohio carry a rating of AAAm, which is the

highest money market fund rating given by S&P Global. Ohio law requires that STAR Ohio maintain the highest

rating provided by at least one nationally recognized standard rating service. Investments in U.S. Bank N.A. Open

Commercial Paper carries a S&P Global rating of A-1+. The City has no investment policy that would further limit

its investment choices.

86

The City’s investments shown in the following table include those which are classified as cash equivalents in

accordance with the provisions of GASB Statement No. 9:

Investment Maturities

Less than 5 Years

Type of Investment

Value Cost One Year or More

U.S. Treasury Notes 223$ 223$ 223$ $

STAR Ohio 891,537 891,537 891,537

Commercial Paper 31,950 31,950 31,950

Money Market Mutual Funds 690,626 690,626 690,626

Manuscript Debt 4,852 4,852 4,852

Other 3,064

3,064 3,064

Total Investments 1,622,252

1,622,252 1,617,400 4,852

Total Deposits 95,500

95,500 95,500

Total Deposits and Investments 1,717,752$

1,717,752$ 1,712,900$ 4,852$

(Amounts in Thousands)

STAR Ohio is an investment pool created pursuant to Ohio statutes and managed by the Treasurer of the State of

Ohio. The fair value of the City’s position in STAR Ohio is equal to the value of the shares the City owns in the

investment pool. Investment type “Other” consist of deposits into collective cash escrow pools managed by either

Bank of New York, Huntington or U.S. Bank, as trustees.

Concentration of Credit Risk: The City places a limitation on the amount it may invest in any one issuer to help

minimize the concentration of credit risk. As of December 31, 2020, the investments in U.S. Treasury Notes, STAR

Ohio, commercial paper, money market mutual funds, manuscript debt and other are approximately 0.01%, 54.96%,

1.97%, 42.57%, 0.30%, and 0.19%, respectively, of the City’s total investments.

87

Reconciliation to Financial Statements: Total cash and investments are reported as follows:

(Amounts in Thousands)

Government-Wide Financial Statements

Unrestricted:

Cash and cash equivalents 1,411,302$

Investments 223

Restricted:

Cash and cash equivalents 291,272

Total 1,702,797$

Fund Financial Statements

Balance Sheet – Governmental Funds:

Unrestricted:

Cash and cash equivalents 661,874$

Investments 223

662,097

Statement of Net Position – Proprietary Funds:

Enterprise Funds:

Unrestricted:

Cash and cash equivalents 664,691

Restricted:

Cash and cash equivalents 291,272

Internal S ervice Funds:

Unrestricted:

Cash and cash equivalents 84,737

Subtotal 1,040,700

Statement of Fiduciary Net Position – Custodial Funds:

Unrestricted:

Cash and cash equivalents 14,955

Total 1,717,752$

88

NOTE 5 – DEBT AND OTHER LONG-TERM OBLIGATIONS

A summary of the changes in long-term debt and other long-term obligations of the City during the year ended December 31,

2020 are as follows:

Balance Balance Due Within

January 1, 2020

Addi ti ons (Reductions)

December 31, 2020

One Year

Governmental Long-Term Obligations and Notes

General Obligation Bonds due through 2048, 2.00% to 5.5% 292,810$ 60,685$ (42,510)$ 310,985$ 24,660$

Other Obligations:

Subordinated Income Tax Refunding

Bonds due through 2024, 5.00% 24,730 (4,465) 20,265 4,690

Subordinate Lien Income Tax Bonds

due through 2046, 1.82% to 6.34% 327,260 69,820 (57,230) 339,850 11,520

Non-Tax Revenue Bonds:

Stadium due through 2020, 5.00% 1,550 (1,550)

-

Taxable Economic and Community Dev. (Core City Bonds)

due through 2026, 2.75% to 3.75% 22,340 (1,330) 21,010 3,725

Taxable Economic and Community Dev. (Core City Bonds)

due through 2033, .65% to 1.91% - Direct Placement 20,110 2,050 (950) 21,210 1,165

Lower Euclid Ave. TIF 2003A due through 2032,

2.00% to 4.00% 5,078 (226) 4,852 234

Annual Appropriation Bonds - Flats East Bank due through

2035, 5.75% to 6.00% 8,820 (345) 8,475 365

Certificates of Participation 2010A--Stadium due

through 2020, 4.75% 7,815 (7,815)

-

Certificates of Participation 2010B-Stadium due through

2028,0.69% to 1.93% -Direct Placement 69,900 69,900 8,035

West 150th Street Improvement Loan - Direct Borrowing 664 (64) 600 63

Ohio Water Development Authority and Public Works

Commission Loans due through 2028, 2.40% -Direct Borrowing 602 (15) 587 15

Capital Lease Obligations, due through 2020, 1.39% 488 (488)

-

Cleveland Browns Stadium 18,000 (2,000) 16,000 2,000

Accrued wages and benefits 44,153 46,235 (39,984) 50,404 31,857

Net pension liability:

Ohio Public Employees Retirement System 323,963 (94,036) 229,927

Ohio Police and Fire Pension Fund 605,230 (100,432) 504,798

Net OPEB liability:

Ohio Public Employees Retirement System 153,526 6,831 160,357

Ohio Police and Fire Pension Fund 67,521 6,497 74,018

Police and fire overtime 41,553 12,343 (10,397) 43,499 4,875

Fire deferred vacation 2,160

128 (259) 2,029 168

Estimated claims p ayable

18,588

5,252 (10,498) 13,342 4,342

2,056,861 209,841 (374,594) 1,892,108 97,714

Unamortized (discount)/premium - net

62,446

5,200 (13,015) 54,631

Total Governmental Activities, Net

2,119,307$

215,041$ (387,609)$ 1,946,739$ 97,714$

(Amounts in Thousands)

89

Balance Balance Due Within

January 1, 2020 Additions (Reductions) December 31, 2020 One Year

(Amounts in Thousands)

Busine ss-Type Activit ie s (Ente rprise Funds)

Airport System Revenue Bonds:

Series 2006A due through 2021, 5.25% 22,535$ $ (10,055)$ 12,480$ 12,480$

Series 2007B due through 2027, 5.0% 5,205 (765) 4,440 805

Series 2011A due through 2024, 4.00% to 5.00% 26,175 (8,575) 17,600 7,575

Series 2014B due through 2020, Variable Rate,

Direct Placement 1,790 (1,790) -

Series 2016A due through 2031, 5.00% 102,215 (3,295) 98,920 3,405

Series 2016B due through 2024, 5.00% 36,235 36,235

Series 2018A due through 2048, 5.00% 87,940 (8,680) 79,260 8,965

Series 2018B due through 2048, 3.50% to 5.00% 21,745 21,745

Series 2019A due through 2033, 2.18% to 2.98% 301,665 (2,940) 298,725 4,830

Series 2019B due through 2027, 5.00% 34,605 (5,485) 29,120 4,985

Series 2019C due through 2024, 5.00% 5,405 5,405 1,205

645,515 - (41,585) 603,930 44,250

Public Power System Revenue Bonds:

Series 2008 due through 2038, 4.00% to 5.40% 27,903 27,903

Series 2008 Accreted Interest Payable 23,563 2,768 26,331

Series 2014 due through 2038, 5.50% 76,885 (76,885) -

Series 2016 due through 2024, 5.00% 32,605 (9,185) 23,420 5,410

Series 2018 due through 2038, 5.00% 46,245 (1,065) 45,180 3,620

Series 2020A due through 2038, 4.00% to 5.00% 63,110 63,110

Series 2020B due through 2038, 2.01% to 2.996% 20,470 20,470

207,201 86,348 (87,135) 206,414 9,030

Water Revenue Bonds:

Series G 1993 due through 2021, 5.50% 24,325 (24,325) -

Series X 2012 due through 2022, 3.63% to 4.00% 27,575 (26,290) 1,285

Series Y 2015 due through 2028, 4.00% to 5.00% 116,205 (77,305) 38,900 5,015

Series AA 2015 due through 2033, Variable Rate,

Direct Placement 90,800 (90,800) -

Series BB 2017 due through 2032, 5.00% 15,715 15,715

Series CC 2017 due through 2028, 5.00% 48,950 (6,070) 42,880

Series DD 2019 due through 2033, 2.00% to 5.00% 97,160 (8,385) 88,775 12,700

Series EE 2020 due through 2042, 1.27% to 3.21% 15,815 15,815 95

Series FF 2020 due through 2033, 5.00% 70,270 70,270

Series GG 2020 due through 2037, 0.39% to 2.28% 99,145 99,145 185

Series A Sec. Lien 2012 due through 2022, 4.00% to 5.00% 18,335 (6,745) 11,590 4,205

Series B Sub. Lien 2017 due through 2027, 5.00% 42,495 42,495

481,560 185,230 (239,920) 426,870 22,200

Water Pollution Control Revenue Bonds:

Series 2016 due through 2045, 4.00% to 5.00% 30,680 (610) 30,070 635

Ohio Water Development Authority and Public Works

Commission loans due through 2050, 0.00% to 3.00%,

Direct Borrowings 72,750 8,127 (8,623) 72,254 8,585

Parking Facilities Refunding Revenue Bonds:

Series 2006 due through 2022, 5.25% 11,200 (3,540) 7,660 3,730

Public Power System Other (See Note 7) 1,681 24 (399) 1,306 250

Accrued Wages and Benefits 11,921 13,577 (11,350) 14,148 8,732

Net pension liability:

Ohio Public Employees Retirement System 224,015 (65,620) 158,395

Net OPEB liability:

Ohio Public Employees Retirement System 105,347 4,764 110,111

Estimated claims payable 87 711 (590) 208 208

1,791,957 298,781 (459,372) 1,631,366 97,620

Unamortized (discount)/premium - net 77,158 36,116 (22,060) 91,214

Total Business-Type Activities, Net $1,869,115 $334,897 ($481,432) $1,722,580 $97,620

Total Debt and Other Long-Term Obligations $3,988,422 $549,938 ($869,041) $3,669,319 $195,334

(Concluded)



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Internal Service Funds predominantly serve the governmental funds, except the Utilities Administration Fund, which

serves only business-type activity funds. Long-term liabilities for all Internal Service Funds, except the Utilities

Administration Fund, are included as part of the totals for governmental activities in the government-wide statement

of net position. At December 31, 2020, $1,921,000, $14,364,000 and $10,512,000 of the Internal Service Funds,

except for Utilities Administration Fund, compensated absences, net pension and net OPEB liabilities, respectively,

were included in the governmental activities. Long-term liabilities for the Utilities Administration Fund are

included as part of the totals for business-type activities in the government-wide statements. At December 31, 2020,

$1,505,000, $8,499,000 and $7,056,000 of the Utilities Administration Fund compensated absences, net pension and

net OPEB liabilities, respectively, were included in business-type activities

The Subordinated Income Tax Refunding Bonds were issued initially to fund the City’s obligation for the

employer’s accrued liability to the Police and Firemen’s Disability and Pension Fund of the State of Ohio. All other

bonds were issued to fund capital related activities.

The accrued wages and benefits liability will be paid from the fund from which the employees’ salaries are paid.

The estimated claims payable liability will be paid from the fund that incurred the liability or from Judgment Bond

proceeds.

A detailed summary of principal due for General Obligation Bonds and business-type activities debt by purpose is as

follows for 2020:

Original Balance Balance

Issue January 1, December 31,

Amount

2020 Additions (Reductions) 2020

(Amounts in Thousands)

Governmental Activities Obligations:

General Obligation Bonds

Public Facilities 69,955$ 36,830$ 14,565$ (8,930)$ 42,465$

Bridges and Roadways 161,060 115,180 22,385 (14,065) 123,500

Parks & Recreation 57,495 32,015 21,985 (2,910) 51,090

Neighborhood Development 1,750 1,750 1,750

Refunding Bonds 214,655

108,785 (16,605) 92,180

Total Governmental Activities 504,915$

292,810$ 60,685$ (42,510)$ 310,985$

Business-Type Activities Obligations:

Revenue Bonds / Notes

Airports 789,105$ 643,725$ $ (39,795)$ 603,930$

Airports Direct Placement 9,070 1,790 (1,790) -

Public Power 277,638 183,638 83,580 (87,135) 180,083

Waterworks 861,470 390,760 185,230 (149,120) 426,870

Waterworks Direct Placement 90,800 90,800 (90,800) -

Parking Facilities 57,520 11,200 (3,540) 7,660

Water Pollution Control 32,390 30,680 (610) 30,070

Loans

Waterworks (Direct Borrowings) 152,767 67,309 (8,431) 58,878

Water Pollution Control (Direct Borrowings) 16,319

5,441 8,127 (192) 13,376

Total Business-Type Activities 2,287,079$

1,425,343$ 276,937$ (381,413)$ 1,320,867$

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The following is a summary of the City’s future debt service requirements as of December 31, 2020:

Year Endin g

December 31

Principal Inte re s t Principal In te re s t Principal Inte re s t

2021 24,660$ 12,863$ 15$ 14$ 16,210$ 15,422$

2022 23,655 11,830 15 14 18,300 14,724

2023 24,175 10,805 16 13 19,975 13,851

2024 21,900 9,681 16 13 20,605 12,902

2025 17,930 8,665 17 13 20,070 12,056

2026-2030 78,585 31,585 508 35 125,135 45,852

2031-2035 55,965 17,925 72,985 21,226

2036-2040 37,890 8,783 45,755 9,321

2041-2045 22,055 2,694 20,060 2,140

2046-2048 4,170

188 1,020 41

310,985$

115,019$ 587$ 102$ 360,115$ 147,535$

Non-Tax

Revenue Bonds

Year Endin g

December 31

Principal Inte re s t Principal In te re s t Principal Inte re s t

2021 3,959$ 829$ 1,165$ 816$ 365$ 508$

2022 4,090 713 1,240 773 385 487

2023 4,203 601 1,295 727 410 463

2024 4,343 463 1,350 679 435 439

2025 2,956 313 1,425 628 460 413

2026-2030 4,434 529 8,200 2,285 2,745 1,616

2031-2035 1,877 79 6,535 588 3,675 688

2036-2040

2041-2045

2046-2048

25,862$

3,527$ 21,210$ 6,496$ 8,475$ 4,614$

Note/Loans Certificates

Payable of Participation Governmental

Year Endin g

December 31

Principal Inte re s t Principal In te re s t Principal Inte re s t

2021 63$ 14$ 8,035$ 2,097$ 54,472$ 32,563$

2022 63 8,275 1,856 56,023 30,397

2023 63 8,520 1,608 58,657 28,068

2024 64 8,780 1,352 57,493 25,529

2025 63 9,040 1,089 51,961 23,177

2026-2030 284 27,250 1,606 247,141 83,508

2031-2035 141,037 40,506

2036-2040 83,645 18,104

2041-2045 42,115 4,834

2046-2048

5,190 229

600$

14$ 69,900$ 9,608$ 797,734$ 286,915$

(Amounts in Thousands)

(Direct Placement)

Revenue Bonds

Activities Total

Construction Loan

(Direct Borrowing)

Appropriation Bonds

Non -Tax

Governmental Activities

(Direct Borrowing) In com e Tax Bon ds

(Direct Placement)

City Annual

Obligation Bonds

Subordinate LienGeneral

(Amounts in Thousands)

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Business-Type Activities

Construction Loans

Ye ar Ending

December 31

Principal In tere st Principal Inte re st

2021 79,845$ 48,032$ 8,585$ 1,894$

2022 93,555 43,865 8,851 1,655

2023 90,660 39,332 9,127 1,409

2024 95,340 34,914 8,997 1,153

2025 96,962 34,600 8,856 909

2026-2030 455,522 121,404 17,465 2,409

2031-2035 216,798 62,146 3,614 1,323

2036-2040 83,186 31,046 2,791 977

2041-2045 27,510 5,486 3,155 612

2046-2050

9,235

708 3,191 200

1,248,613$

421,533$ 74,632$ 12,541$

Ye ar Ending

December 31

Principal In tere st

2021 88,430$ 49,926$

2022 102,406 45,520

2023 99,787 40,741

2024 104,337 36,067

2025 105,818 35,509

2026-2030 472,987 123,813

2031-2035 220,412 63,469

2036-2040 85,977 32,023

2041-2045 30,665 6,098

2046-2050

12,426

908

1,323,245$

434,074$

(Amounts in Thousands)

Business-T

y

pe

(Direct Borrowing)

Activities Total

Revenue Bonds

(Amounts in Thousands)

The schedule of minimum principal and interest payments for construction loans above includes the amortization for

a loan provided to the Division of Water Pollution Control by the Ohio Water Development Authority (OWDA) in

2019. This amortization is based upon the full amount expected to be financed, regardless of whether the City has

received all the loan proceeds. At December 31, 2020, the amount financed on the loan, which is reflected in the

amortization schedule, exceeds the actual loan balance shown on the schedule of long-term debt outstanding and

changes in long-term debt obligations by $2,378,000. OWDA loans and Ohio Public Works Commission are direct

borrowings.

OWDA completed an interest rate buy-down in 2015 which resulted in interest rate savings on the current loans.

Market rate loans with interest rates higher than 4.0% saw a reduction in rates to 4.0% while rates over 3.0% on

OWDA loans were reduced to 3.0%. The buy-down commenced retroactively to the January 1, 2016 payment.

General Obligation Bonds

General Obligation Bonds: General Obligation Bonds are backed by the full faith and credit of the City. Such

bonds are payable from ad valorem property taxes levied within the limitations provided by law, irrespective of

whether such bonds are secured by other receipts of the City in addition to such ad valorem property taxes.

On February 26, 2020, the City issued $69,820,000 Subordinate Lien Income Tax Refunding Bonds, Series 2020A

(Federally Taxable). A portion of these bonds were used to refund $17,340,000 of outstanding Various Purpose and

Refunding General Obligation Bonds, also an additional portion of $44,545,000 was used to refund outstanding

2014-2015 Subordinate Lien Income Tax Bonds for debt service savings.

Effective July 30, 2020, the City issued $60,685,000 Various Purpose General Obligation Bonds Series 2020A. The

proceeds of these bonds will be used to provide funds for public facilities improvements, parks and recreation

improvements, road and bridge improvements and for neighborhood development projects.

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Under the direct debt limitation imposed by the Ohio Revised Code, the City had the capacity to issue $282,279,163

of additional unvoted debt at December 31, 2020.

Other Governmental Obligations

Subordinated Income Tax Variable Rate Refunding Bonds: Effective June 1, 1994, the City issued $74,700,000 of

Subordinated Income Tax Variable Rate Refunding Bonds, Series 1994. The proceeds were used to fund the City’s

obligation for the employer’s accrued liability to the Ohio Police and Fire Pension Fund (the Fund). The principal

use of the proceeds was the current refunding of the City’s obligation to the Fund for the employer’s accrued

liability in the amount of $104,686,400, which was payable in semi-annual installments of $2,696,243 through May

15, 2035. Pursuant to Section 742.30 (C) of the Ohio Revised Code, the City and the Fund entered into an agreement

that permitted the City to make a one-time payment to the Fund to extinguish the City’s obligation. The payment

amount of $70,493,204 was calculated by applying a 35% discount factor to the $104,686,400 accrued liability plus

adding accrued interest of $2,447,044.

On November 18, 2015, the City issued $28,975,000 Subordinate Lien Unrestricted Income Tax Refunding Bonds,

Series 2015 (Police & Fire Pension Payment). The City issued these bonds in order to refund $30,310,000 of the

outstanding Series 2008 Subordinate Lien Unrestricted Income Tax Bonds (Police & Fire Pension). Proceeds of the

Series 2015 Bonds in the amount of $33,492,387 were placed in an irrevocable escrow account to pay the principal

and interest on the refunded bonds on the call date. As a result, the refunded bonds were defeased and the liability

for those bonds was removed from long-term debt. The City completed the refunding in order to achieve debt

service savings of $1,867,000 and an economic gain (the difference between the present values of the old and new

debt service) of $1,809,000 or 5.97%.

The Series 2015 Bonds are unvoted special obligations secured by a pledge of and a lien on the unrestricted

municipal income taxes of the City, to the extent that such income taxes are not needed to pay debt service on the

City’s currently outstanding unvoted General Obligation Bonds or unvoted General Obligation Bonds issued in the

future.

Interest Rate Swap Transaction:

Terms: On February 7, 2003, the City sold an option to JPMorgan Chase Bank (JPM) that gives JPM the right to

execute an interest rate swap at its discretion at any time until the option expires on May 15, 2024 on a declining

notional amount equal to the outstanding principal amount of the City’s Subordinated Income Tax Variable Rate

Refunding Bonds, Series 1994. The swaption is now associated with portions of the Series 2015 Bonds. Under the

swap agreement, the City will be the fixed rate receiver, receiving the fixed rate of 4.88% and JPM will be the

floating rate receiver, receiving interest on what would have been the outstanding notional amount of the original

1994 Bonds of $20,200,000 at December 31, 2020, at a rate equal to the weekly Securities Industry and Financial

Markets Association (SIFMA) index. If the option is exercised, the stated termination date under the swap

agreement with JPM will be May 15, 2024. The obligation of the City under the swap agreement to make periodic

floating rate payments (but not any termination payment) is secured by a subordinate pledge of the income tax

receipts, subordinate to the pledge of the income tax receipts made under the “General Bond Ordinance” securing

the City’s General Obligation Bonds. The payment of any termination payment is subordinate to the payment of

debt service on the Subordinate Lien Unrestricted Income Tax Bonds, Series 2015, and the periodic floating rate

payments under the swap agreement.

Objective: The City entered into the swaption in order to potentially capture in the future the savings which could

be derived from converting these bonds back to a variable rate if or when the option is exercised. In exchange for

selling the option to JPM, the City received a premium payment of $1,700,000.

Basis Risk: There is no basis risk for the City associated with this transaction with the exception of the risk inherent

in all variable rate debt. If the option is exercised, the City will receive a fixed rate of 4.88% which is 12 basis

points less than the fixed rate being paid on the Series 2015 Bonds. This transaction would leave the City paying the

weekly SIFMA rate plus 12 basis points.

Counterparty Risk: The City selected JPM as a counterparty partly due to its credit strength. Over the long-term, it

is possible that the credit strength of JPM could change and this event could trigger a termination payment on the

part of the City.

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Termination Risk: The swap agreement may be terminated prior to its stated termination date under certain

circumstances. Upon termination, a payment may be owed by the City to JPM, or by JPM to the City, depending

upon the prevailing economic circumstances at the time of the termination.

Fair Value: The fair value of the swaption at December 31, 2020 as reported by JPM was approximately $306

which would be payable by the City.

Subordinated Lien Income Tax Bonds: Effective February 26, 2020, the City issued $69,820,000 Subordinate Lien

Income Tax Refunding Bonds, Series 2020A (Federally Taxable). The proceeds of these bonds were used to refund

$44,545,000 of various outstanding Subordinate Lien Income Tax Bonds (Series 2014A-1, Series 2014 B-3, Series

2015 A-2 and Series 2015 A-3) and $17,340,000 of outstanding Series 2012 Various Purpose and Refunding

General Obligation Bonds. Proceeds in the amount of $69,202,375 along with $907,187 from the debt service fund,

were placed in an irrevocable escrow account to pay the principal and interest on the refunded bonds on the call

date. As a result, the refunded bonds were considered to be defeased and the liability for those bonds has been

removed from long-term debt. This refunding resulted in debt service savings of $10.26 million and an economic

gain (the difference between the present values of the old and new debt service) of $8.50 million or 13.7%.

These bonds are special obligations of the City and are not general obligation debt and are not secured by a pledge

of the full faith and credit of the City. The bonds are payable from the City’s municipal income tax revenues to the

extent those revenues are not needed to pay debt service charges on the City’s unvoted general obligation debt or

unvoted general obligation debt issued in the future. It is the City’s intention to continue paying the debt service on

the Subordinate Lien Income Tax Bonds from the Restricted Income Tax collections to the extent that funds are

available from that portion of income tax receipts. The portion of the debt service not covered by the Restricted

Income Tax, if any, will be paid from the unrestricted General Fund portion of income tax receipts.

Non-Tax Revenue Bonds – Stadium: On September 4, 2014, the City issued $7,745,000 Non-Tax Revenue

Refunding Bonds, Series 2014 for the Cleveland Stadium Project. These bonds refunded $8,275,000 of the

outstanding 2004 Non-Tax Revenue Refunding Bonds (Cleveland Stadium Project). Net proceeds of the Series

2014 Bonds in the amount of $8,478,644 were placed in an irrevocable escrow account to pay the principal and

interest on the refunded bonds on December 1, 2014. As a result, the refunded bonds were defeased and the liability

for the Series 2004 Bonds was removed from long-term debt. The City completed the refunding in order to achieve

debt service savings of $854,000 and an economic gain (the difference between the present values of the old and

new debt service) of $842,000 or 10.2%. The Series 2014 Bonds were paid off on December 1, 2020. These bonds

did not represent a general obligation debt or pledge of the full faith and credit or taxing power of the City and were

payable solely from non-tax revenues of the City.

Non-Tax Revenue Bonds – Economic Development Bonds Series 2003A and Series 2003B (Lower Euclid Avenue

Project): In November 2003, the City issued $7,200,000 Economic Development Revenue Bonds, Series 2003A and

$1,000,000 Economic Development Revenue Bonds, Series 2003B-1 for the Lower Euclid Avenue Project. In

November 2004, the final $1,000,000 Economic Development Revenue Bonds, Series 2003B-2 were issued. The

proceeds of these bonds were made available to the owners of certain properties on Euclid Avenue for the

construction and renovation of commercial restaurant and retail facilities and the construction of a parking garage.

These Tax Increment Financing (TIF) Bonds are secured by a pledge of (a) service payments in lieu of taxes

received by the City from the owners of certain properties located within a tax increment financing district, (b) loan

payments payable to the City and (c) by a pledge of certain non-tax revenues of the City, subject to the prior pledge

by the City of such non-tax revenues to secure other obligations of the City. Only the Series 2003A Bonds remain

outstanding.

Non-Tax Revenue Bonds – Taxable Economic and Community Development Revenue Bonds (Core City):

On October 9, 2020, the City issued $2,050,000 of Taxable Economic and Community Development Bonds, Series

2020 (Core City Fund) through a private placement with Zions Bancorporation, N.A. These bonds were issued to

provide funds for eligible projects including the acquisition, construction, equipping or improvement of multi-unit

housing and commercial development and for the preparation or remediation of sites for these purposes. The

principal and interest on these bonds are to be paid from the non-tax revenues of the City and net project revenues.

Events of default are those set forth in the indenture and include, but are not limited to, failure to pay principal of or

interest on the bonds and failure to perform pursuant to certain covenants and provisions under the indenture. Upon

an event of default and subject to certain provisions of the indenture, the Trustee may pursue any available remedy

to enforce the payment of principal or interest on the bonds or the observance and performance of any other

covenant, agreement or obligation under the Indenture or any other instrument providing security, directly or

95

indirectly, for the bonds. There is no right to accelerate the payment of principal or interest on the bonds under the

indenture.

Effective April 9, 2015, the City issued $15,280,000 Taxable Economic and Community Development Revenue

Bonds, Series 2015 (Core City Fund). Similar to the 2020 Bonds, the proceeds of these bonds will be used to

provide funds for eligible projects, including, but not limited to, the acquisition, construction, equipping or

improvement of multi-unit housing and commercial development and the preparation or remediation of sites for

these purposes. The principal and interest on these bonds are to be paid from non-tax revenues of the City and net

project revenues.

On September 4, 2014, the City issued $12,365,000 Taxable Economic and Community Development Refunding

Revenue Bonds, Series 2014 (Core City Fund). The City issued these bonds in order to refund $11,845,000 of the

outstanding Taxable Economic and Community Development Bonds, Series 2004. Net proceeds of the Series 2014

Bonds in the amount of $12,156,019 were deposited into an irrevocable escrow account to pay the principal and

interest on the refunded bonds on December 1, 2014. As a result, the refunded bonds were defeased and the liability

for the Series 2004 Core City Bonds was removed from long-term debt. This refunding resulted in $1,248,000 of

debt service savings and an economic gain of $1,219,000 or 10.3%. The Series 2014 Bonds were issued as fixed

rate securities and are special obligations of the City, payable from non-tax revenues and net project revenues.

Effective July 24, 2008, the City issued $28,160,000 Taxable Economic and Community Development Refunding

Revenue Bonds, Series 2008 (Core City Fund). The proceeds of these bonds were used to refund the outstanding

$26,900,000 Series 2003 Taxable Economic and Community Development Revenue Bonds, to fund a bond reserve

fund and to pay the costs of issuing the bonds. The Series 2003 Bonds were refunded in order to address increased

interest rates incurred on the bonds due to the collapse of the auction rate securities market. The Series 2008 Bonds,

which were special obligations of the City, were issued as variable rate demand obligations secured by a letter of

credit provided by Citizens Bank. Upon the expiration of the letter of credit in 2011, the City obtained a new letter

of credit for the Series 2008 Bonds from PNC Bank. At the expiration of the PNC Bank letter of credit, the City

elected to refund the outstanding $25,360,000 Series 2008 Bonds with $25,360,000 Taxable Economic and

Community Development Bonds, Series 2013A, effective May 30, 2013. The bonds remained variable rate bonds

and were privately placed with KeyBank National Association for a period of five years. Events of default under the

agreement with the bank include, but are not limited to, 1) failure to pay principal of or interest on the Series 2013A

Bonds or parity debt or general obligation debt payable from the City’s general fund or failure to pay other

obligations under the agreement; 2) failure to perform pursuant to certain covenants and provisions under the

indenture; 3) certain representations and warranties under the agreement prove untrue in a material respect; 4)

occurrence of bankruptcy and insolvency events; and 5) ratings downgrades of parity or general obligation debt of

the City below certain levels. Upon an event of default, the Bonds shall bear interest at a default rate and the bank

may cause a special mandatory redemption of the 2013A Bonds in accordance with the terms of the supplemental

indenture and agreement. Under the agreement with the bank, no party has a right to accelerate the principal or

interest on the 2013A Bonds. However, certain fees and expenses set forth in the agreement can be declared

immediately due and payable under certain circumstances. In May 2018, the City entered into a new three year

direct placement on the Series 2013A Bonds with PNC Bank, National Association upon the expiration of the old

direct placement. The Bonds are payable from the City’s non-tax revenues and net project revenues.

Annual Appropriation Bonds – Flats East Bank: On December 21, 2010, the City issued $11,000,000 City Annual

Appropriation Bonds through the Cleveland-Cuyahoga County Port Authority. The proceeds of the bonds were used

to provide funds for land purchase and public improvements in the area of the Flats East Development Project. The

bonds are special obligations of the Port Authority payable from appropriation payments made by the City under a

cooperative agreement. The City’s obligation to make payments is subject to and dependent upon annual

appropriations being made by the City. The City intends to make these debt service payments from the Restricted

Income Tax collections.

Certificates of Participation (COPS) - Stadium: In June 1997, Certificates of Participation (COPS) in the amount of

$139,345,000 were issued to assist in the construction of an open-air stadium for the play of professional football

and other events. The City makes lease payments subject to annual appropriation by City Council and certification

by the Director of Finance as to the availability of funds from those appropriations. These obligations do not

constitute a debt or pledge of the full faith and credit of the City.

Effective April 22, 2010, the City issued $63,225,000 COPS, Series 2010A and $69,900,000 COPS, Series 2010B to

refund all of the outstanding $108,390,000 COPS, Series 2007. Proceeds of the COPS, Series 2010, were used to

currently refund the COPS, Series 2007, on the day of closing, to fund a required debt service reserve fund deposit

in the amount of $8,324,045, to make a termination payment on the existing hedge agreement with UBS in

96

the amount of $17,322,000 and to pay costs of issuing the COPS. The final payment on the Series 2010A COPS was

made November 15, 2020. The COPS, Series 2010B, were purchased by Wells Fargo Bank, National Association,

as floating rate obligations for a period of three years, the interest on which is reset weekly based on the SIFMA

index plus a spread. As a result of this refunding, the City achieved an economic gain (the difference between the

present values of the old and new debt service) of approximately $3,461,000 or 3.19%.

Effective March 21, 2013, the City completed a conversion and remarketing of the COPS, Series 2010B. This was

done in order to change the index rate being charged on the bonds as well as to extend the interest rate period until

March 2018. The COPS, Series 2010B, were again purchased by Wells Fargo Bank, National Association.

Effective March 1, 2018, the City entered into an amended and restated Continuing Covenants Agreement with

Wells Fargo Municipal Capital Strategies, LLC on the 2010B Stadium COPS. The agreement extended to March

2021 the period of time during which Wells Fargo Municipal Capital Strategies, LLC will be the owner of the COPS

as a direct placement.

Events of default under the agreement with the bank include, but are not limited to, 1) failure to pay principal of or

interest on the Series 2010B COPS or parity debt or general obligation debt payable from the City’s general fund or

failure to pay other obligations under the agreement; 2) failure to perform pursuant to certain covenants and

provisions under the indenture; 3) certain representations and warranties under the agreement prove untrue in a

material respect; 4) occurrence of bankruptcy and insolvency events; and 5) ratings downgrades of parity or general

obligation debt of the City below certain levels. Upon an event of default, the 2010B COPS shall bear interest at a

default rate and the bank may cause a special mandatory redemption of the 2010B COPS in accordance with the

terms of the supplemental indenture and agreement. Under the agreement with the bank, no party has a right to

accelerate the principal or interest on the 2010B COPS. However, certain fees and expenses set forth in the

agreement can be declared immediately due and payable under certain circumstances.

Capital Lease Arrangements: The City has entered into various agreements to lease equipment. Such agreements

are treated as lease purchases (Capital Leases) and are classified as long-term lease obligations in the financial

statements. The lease contracts contain annual one-year renewal options that can be exercised by the City if

sufficient funds are appropriated by City Council. Upon the exercise of each annual one-year renewal option and

satisfaction of the lease obligations related thereto, title to the equipment will pass to the City.

On June 20, 2013, the City entered into a $6,535,000 vehicle lease agreement with Huntington Public Capital

Corporation. These funds were used to purchase a variety of vehicles including police cars, EMS ambulances and

waste collection equipment. Payments on the equipment lease were made over a period of seven years from

issuance from the Restricted Income Tax Fund. The final lease payment was made in June 2020.

The assets recorded by the City under Capital Leases were as follows as of December 31, 2020:

Governmental

Activities

(Amounts in Thousands)

Furniture, fixtures and equipment 42,178$

Less – accumulated depreciation

(36,626)

Net book value

5,552$

West 150

th

Street Improvement Loan (SIB): The Ohio Public Works Commission (OPWC) approved a loan to the

City to finance a portion of the West 150

th

Street Improvement project. OPWC committed up to $1,949,332 at a 0%

interest rate for 20 years. The City and the City of Brook Park have an agreement to share the debt service

requirements of the OPWC loan. The City of Brook Park will pay 100% of the annual debt service requirements

and the City will reimburse the City of Brook Park 65% of the annual debt service requirement. The SIB is a direct

borrowing.

Cleveland Browns Stadium Obligation: Pursuant to an agreement entered into in 2014 between the City and

Cleveland Browns Stadium Company LLC (Browns), the City has agreed to pay the Browns $2,000,000 per year on

or before June 1 for fifteen years. This period of time coincides with the years remaining on the lease. These

payments are to offset the capital improvements made by the Browns. The Browns may use this annual payment as

they deem appropriate, including for operations and maintenance expenses. This payment is subject to annual

appropriation by the City.

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Ohio Water Development Authority Loan: This loan is payable from Economic Development revenues secured by

a separate loan agreement, a promissory note and loan guarantee, as well as other departmental resources. This loan

is a direct borrowing.

Lines of Credit: The City has no unused lines of credit.

Pledged Collateral: The City has no assets pledged as collateral for debt.

Accrued Wages and Benefits: Accrued wages and benefits, included in long-term obligations, consist of the non-

current portion of vacation and sick pay benefits earned by employees of the City. The City accrues vacation and

sick pay benefits when earned and future compensation is likely.

Police and Fire Overtime and Deferred Vacation Pay: Uniformed employees of the Police and Fire Divisions

accumulate overtime compensation in accordance with the union contracts and the requirements of the Fair Labor

Standards Act. In addition, uniformed employees may defer earned vacation time, with the appropriate approvals,

until retirement. The liabilities for overtime and deferred vacation time, at current pay rates including their related

fringe benefits and converted to straight time hours, at December 31, 2020, follow:

Division Hours Dollars Hours Dollars

Police 1,045 39,056$ $

Fire 117

4,443 51 2,029

Total

1,162

43,499$ 51 2,029$

Overtime

Deferred Vacation

(Amounts in Thousands)

Business-Type (Enterprise Fund) Obligations

Airport System Revenue Bonds: These bonds are secured by the pledge of airport revenues and moneys in the

special funds which include, among others, the bond service fund, bond service reserve fund, the renewal and

replacement fund and the airport development fund, as defined in the revenue bond indenture. Further, the City has

assigned to the trustee all its interests in and rights to the airline use agreements under the revenue bond indenture.

On October 1, 2019, the City issued $341,675,000 Airport System Revenue Bonds Series 2019 A-C. The

$301,665,000 Series 2019A Taxable Bonds were issued to advance refund the $235,150,000 Series 2012A Bonds

and to currently refund the outstanding $52,050,000 of Series 2013A Bonds. Bond proceeds in the amount of

$248,355,650 along with 43,694,402 released from the debt service reserve fund and $2,965,914 released from the

Series 2012A Bond Fund, were placed in an irrevocable escrow account for the payment of the principal and interest

on the Series 2012A Bonds. The $34,605,000 Series 2019B AMT Bonds currently refunded the variable rate

$20,100,000 Series 2009D Bonds and the $18,170,000 Series 2014A Bonds. Finally, the $5,405,000 Series 2019C

Non-AMT Bonds currently refunded the outstanding variable rate $5,975,000 Series 2008D Bonds. As a result of

this refunding, the City achieved an economic gain (the difference between the present values of the old and new

debt service) of $22,494,000 of net present value debt service savings or 6.8% while also eliminating all of Port

Control’s remaining variable rate bonds and terminating its letters of credit and direct placements on those bonds.

Public Power System Revenue Bonds: These bonds are payable from the net revenues derived from the Public

Power System and are secured by a pledge of and lien on such net revenues.

On February 19, 2020, Public Power System Revenue Bonds, Series 2020, were issued in the amount of

$83,580,000. The $63,110,000 Series 2020A Tax-Exempt Bonds were issued to advance refund $65,325,000 of

outstanding Series 2014 Public Power System Refunding Revenue Bonds. The $20,470,000 Federally Taxable

Series 2020B Bonds were issued to advance refund $11,560,000 of outstanding Series 2014 Public Power System

Refunding Revenue Bonds and $6,510,000 of the outstanding Series 2016 Public Power System Refunding Revenue

Bonds. Bond proceeds in the amount of $97,525,417, along with $1,697,178 from the debt service fund, were placed

in an irrevocable escrow account to pay the principal and interest on the refunded bonds when due. As a result of

this refunding, the City realized an economic gain (the difference between the present values of the old and new debt

service) of $11,897,000 or 14.3%.

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Waterworks Improvement Revenue Bonds: These bonds are payable from the revenues derived from operation of

the Waterworks System after the payment of all operating and maintenance expenses (net revenue) and from monies

and investments on deposit in the Revenue Fund, the Debt Service Fund, the Debt Service Reserve Fund, the

Contingency Fund and the Additions and Improvements Fund.

On June 6, 2020, the City issued $15,815,000 Federally Taxable Water Revenue Bonds, Series EE, 2020 to advance

refund $14,565,000 of the outstanding Water Revenue Bonds, Series X, 2012. Net bond proceeds in the amount of

$15,677,657, along with $303,438 from the Series X debt service fund, were placed in an irrevocable escrow

account to pay the principal and interest on the refunded bonds when due. As a result of this refunding, the Division

of Water realized an economic gain (the difference between the present values of the old and new debt service) of

$2.7 million or 18.7%.

Effective June 11, 2020, the City issued $70,270,000 of tax-exempt Water Revenue Bonds, Series FF, to currently

refund all of the outstanding variable rate $90,800,000 Series AA, 2015, Bonds (direct placing). The Series AA

Bonds were refunded in order to eliminate the risks associated with potential fluctuations in variable interest rates.

The Series FF Bonds refunded the last remaining variable rate bonds issued by Water.

The City issued $99,145,000 Water Revenue Bonds, Series GG, 2020 (Federally Taxable) on August 13, 2020.

These bonds advance refunded $11,725,000 of Water Revenue Bonds, Series X, 2012, that did not produce savings

at the time of the refunding earlier in the year. The GG Bonds also advance refunded $76,060,000 of Water

Revenue Bonds, Series Y, 2015. Net bond proceeds in the amount of $98,460,704, along with $293,728 from the

Series X and Series Y debt service funds, were placed in an irrevocable escrow account to pay the principal and

interest on the refunded bonds when due. As a result of this refunding, the City achieved another $8.34 million of

net present value debt service savings for the Division of Water or 9.5%.

Effective April 25, 2019, Water Revenue Bonds, Series DD, 2019, were issued in the amount of $97,160,000. The

bonds were issued to currently refund $24,575,000 of outstanding Series T Bonds, $54,935,000 of Series U Bonds,

$26,495,000 of Series V Bonds and $1,230,000 of Series W Bonds. As part of this bond deal, the City also

terminated all interest rate swaps entered into with Morgan Stanley and JP Morgan and made a termination payment

of $7,328,000 on the Series U and Series V swaps from the proceeds of the bonds. In addition, the Division used

cash on hand in the amount of $570,500 to terminate the swaps associated with the Series AA Bonds. Through this

refunding, the City was able to eliminate the risk associated with most of the Division’s variable rate debt by

refunding them with fixed rate bonds and by terminating all existing swaps. Additionally, the Division achieved

present value debt service savings of $995,000.

In conjunction with the issuance of the Water Revenue Bonds, Second Lien Series A 2012, the City established a

Subordinate Bonds indenture for the Division of Water. Bonds issued under this indenture are special obligations of

the City payable solely from and secured solely by a pledge of and lien on the Subordinate Pledged Revenues and

the Subordinate Pledged funds. The Subordinate Pledged Revenues generally consist of the net revenues of the

Division which remain after the payment of all operating expenses and the deposit of all funds required to be made

on behalf of the Senior Lien bonds. Bonds issued under this indenture are subordinate to those issued as senior lien

bonds under the Division of Water’s Amended and Restated Indenture.

Interest Rate Swap Transactions:

In conjunction with the issuance of the Water Revenue Bonds, Series DD, described above, the City terminated in

2019 all the Division’s swaps with JPMorgan Chase Bank, N.A. and Morgan Stanley Capital Services Inc., which

were associated with the Series U, Series V and Series AA Bonds. Bond proceeds in the amount of $7,328,000 and

cash on hand of $570,000 were used to make termination payments to the counterparties.

Water Pollution Control Revenue Bonds: On April 14, 2016, the City issued $32,390,000 Water Pollution Control

Revenue Bonds, Series 2016 (Green Bonds). This was the first series of revenue bonds issued by the Division, with

the bonds being issued under and secured by a newly created Master Trust Agreement. The proceeds of these bonds

were used to pay capital costs relating to the acquisition, construction and improvement of the system along with

funding the debt service reserve requirement and paying the costs of issuing the bonds.

In conjunction with the issuance of the Series 2016 Water Pollution Control Revenue Bonds, the City entered into a

Master Trust Agreement for the Series 2016 Bonds and any future series of revenue bonds. Under the terms of the

Trust Agreement, the Bonds are special obligations payable solely from and secured by a pledge of and lien on the

net revenues of the Division and the Special Funds. The Special Funds include the construction fund, the debt

service fund, the debt service reserve fund, the rate stabilization fund, the contingency fund and the balance subfund.

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Ohio Water Development Authority and Ohio Public Works Commission Loans: These loans are payable from

net revenues derived from the Waterworks and Water Pollution Control Systems. These obligations do not have a

lien on revenues of the Divisions. OWDA and OPWC loans are direct borrowings.

Parking Facilities Refunding Revenue Bonds: These bonds are payable from net revenues generated from certain

parking facilities and other operating revenues of the Division of Parking Facilities, including parking meter

revenue. In addition, the City has pledged other non-tax revenue to meet debt service requirements. The City has

pledged and assigned to the trustee a first lien on pledged revenues consisting of fines and penalties collected as a

result of the violation of municipal parking ordinances and fines, waivers and costs relating to citations for

misdemeanor offenses and the special funds as defined within the bond indenture.

Effective October 6, 2011, the City completed the sale of the City-owned Gateway North Parking Garage to Rock

Ohio Caesars Gateway LLC. The garage is now used by the purchaser in conjunction with a casino constructed in

the Higbee Building adjacent to the garage. The net proceeds of the sale of the garage received by the City totaled

$20,915,504. Of this amount, $19,578,288 was placed into an irrevocable escrow fund, along with $1,967,425

released from the debt service reserve fund as a result of the transaction, to be used to pay the principal and interest

as it comes due on $16,145,000 Parking Facilities Refunding Revenue Bonds, Series 2006. As a result, these bonds

were considered to be defeased and the liability for the bonds was removed from long-term debt. In addition,

$480,000 of the sale proceeds was used to terminate the portion of an existing basis swap which was associated with

the bonds being defeased. Sale proceeds were also utilized to pay costs of the transaction. As a result of this

transaction, the City expects to save approximately $600,000 annually through 2022.

Effective August 15, 2006, the City issued $57,520,000 of Parking Facilities Refunding Revenue Bonds, Series

2006. The bonds were issued to currently refund $56,300,000 of the outstanding Parking Facilities Refunding

Revenue Bonds, Series 1996. In addition, proceeds were also used to fund a portion of a payment owed by the City

upon early termination under an interest rate swaption agreement entered into in 2003. At the time of the issuance of

the Series 2006 Bonds, the City entered into a basis swap agreement with UBS, AG (UBS) which is described

below.

On April 16, 2013, the City entered into a novation agreement with UBS and PNC Bank, National Association

(PNC) under which the basis swap was transferred from UBS to PNC effective March 15, 2013. All of the terms of

the original basis swap remain the same. The City agreed to transfer the swap to PNC based upon UBS’ mandate to

downsize its swap portfolio.

Interest Rate Swap Transaction:

Terms: Simultaneously with the issuance of the City’s $57,520,000 Parking Facilities Refunding Revenue Bonds,

Series 2006 on August 15, 2006, the City entered into a floating-to-floating rate basis swap agreement with a

notional amount equal to the total declining balance of the Series 2006 Bonds. UBS was the counterparty on the

transaction. As stated above, the basis swap was transferred to PNC Bank, National Association in 2013. Under the

swap agreement for the Series 2006 Bonds, the City is a floating rate payor, paying a floating rate based on the

SIFMA index. The counterparty is also a floating rate payor, paying the City 67% of one month LIBOR. The City

also received an upfront payment in the amount of $1,606,000. Net payments are exchanged semi-annually each

March 15 and September 15. The obligation of the City to make periodic payments (but not any termination

payment) is secured by a pledge of and lien on the parking revenues and additional pledged revenues as defined in

the trust indenture securing the Parking Facilities Refunding Revenue Bonds, Series 2006, on parity with the pledge

and lien securing the payment of debt service on the bonds.

Objective: The City entered into the swap in order to maximize the savings associated with the refunding of the

bonds and to reduce the City’s risk exposure. The actual overall savings to be realized by the City will depend upon

the net payments received under the swap agreement.

Basis Risk: By entering into a swap based upon the 30 day LIBOR rate of interest, the City has undertaken basis risk

associated with a change in tax rates and structure. While the average relationship between the SIFMA (tax-exempt)

and LIBOR (taxable) interest rates has been 67%, this relationship may not always apply. Since late 2008, this

relationship has been significantly higher or lower for various periods of time due to disruptions in the financial

markets. The payments received from the counterparty may be less than the amount owed to the counterparty,

resulting in a net increase in debt service. From 2013 to early 2016, the SIFMA/LIBOR relationship was

significantly lower than 67%. In this case, payments received from the counterparty were greater than the amount

owed to the counterparty which resulted in a net decrease in debt service. In addition, a reduction in federal income

tax rates, such as the one that was approved in late 2017, might increase the percentage relationship between

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SIFMA and LIBOR and increase the cost of the financing. In 2020, payments owed to the counterparty exceeded

payments received from the counterparty by approximately $20,000.

Counterparty Risk: The City selected a highly rated counterparty in order to minimize this risk. However, over the

long-term it is possible that the credit strength of PNC could change and this event could trigger a termination

payment on part of the City.

Termination Risk: The swap agreement may be terminated prior to its stated termination date under certain

circumstances. Upon termination, a payment may be owed by the City to PNC or by PNC to the City, depending

upon the prevailing economic circumstances at the time of the termination. The City obtained insurance to mitigate

much of the risk associated with termination due to the event of a downgrade of the City’s bond rating. An amount

due by the City to PNC upon early termination of the agreement is insured by FSA (now Assured Guaranty

Municipal Corp.) up to a maximum amount of $8,000,000.

Fair Value: The fair value of the swap at December 31, 2020 as reported by PNC totaled $4,000, which would be

payable by the City.

Debt Covenants: The Enterprise Funds’ bond agreements have certain restrictive covenants and principally require

that bond reserve funds be maintained for most series of bonds and that fees charged to customers be in sufficient

amounts, as defined, to satisfy the obligations under the indenture agreements. In addition, special provisions exist

regarding covenant violations, redemption of principal and maintenance of properties in good condition.

Defeasance of Debt

The City has defeased certain debt by placing cash or the proceeds of new bonds in irrevocable trusts to provide for

all future debt service payments on the old bonds. Accordingly, the trust account assets and defeased bonds are not

recorded in the City’s financial statements.

The aggregate amount of defeased debt outstanding at December 31, 2020 is as follows:

Bond Issue Bond Issue

Parking Facilities Bonds: Subordinate Lien Income Tax Bonds:

Series 2006 3,625$ Series 2013A 12,745$

Water Revenue Bonds:

Series 2014A 15,040

Series X, 2012

43,125$ Series 2014B 19,475

Second Lien Series A, 2012

45,850 Series 2015A 77,615

Series Y, 2015

76,060

Airport Revenue Bonds:

General Obligation Bonds:

Series 2012A

235,150$ Series 2012 17,340$

(Amounts in Thousands)

Airport Special Facilities Revenue Bonds

Airport Special Facilities Revenue Bonds, Series 1998, totaling $75,120,000, were issued in 1998 to finance the

design and construction of certain airport facilities leased to Continental Airlines, including a new regional jet

concourse. Because principal and interest on these bonds are unconditionally guaranteed by Continental Airlines

(now United Continental Holdings, Inc.) and paid directly by Continental Airlines, these bonds do not constitute a

debt, liability or general obligation of the City or a pledge of the City’s revenues. As such, no liabilities relating to

these bonds are included in the accompanying financial statements.

Pledges of Future Revenues

The City has pledged future airport revenues to repay $603,930,000 in various Airport System Revenue Bonds

issued in various years since 2006. Proceeds from the bonds provided financing for airport operations. The bonds

are payable from airport net revenues and are payable through 2048. Annual principal and interest payments on the

bonds are expected to require less than 67% of net revenues. The total principal and interest remaining to be paid on

the various Airport System Revenue Bonds is $758,499,000. Principal and interest funded in the current year and

total net revenues (including other available funds) were $66,589,000 and $96,766,000 respectively.

101

The City has pledged future power system revenues, net of specified operating expenses, to repay $180,083,000 in

various Public Power System Revenue Bonds issued in various years since 2008. Proceeds from the bonds provided

financing for Public Power System improvements. The bonds are payable from Public Power System net revenues

and are payable through 2038. Annual principal and interest payments on the bonds are expected to require less

than 65% of net revenues. The total principal and interest remaining to be paid on the various Public Power System

Revenue Bonds is $312,804,000. Principal and interest paid for the current year and total net revenues were

$9,882,000 and $24,428,000 respectively.

The City has pledged future water system revenues, net of specified operating expenses, to repay $426,870,000 in

various Senior Lien Water Revenue Bonds and Subordinate Lien Bonds issued in various years since 2012.

Proceeds from the bonds provided financing for Water System improvements. The bonds are payable from Water

System net revenues and are payable through 2042. Annual principal and interest payments on the bonds are

expected to require less than 35% of net revenues. The total principal and interest remaining to be paid on the

various Senior and Subordinate Lien Water Revenue Bonds is $537,247,000. Amounts deposited for principal and

interest in the current year on the Senior Lien Bonds and total net revenues were $32,568,000 and $140,452,000

respectively.

The City has pledged future water pollution control revenues to repay $30,070,000 in Water Pollution Control

Revenue Bonds issued in 2016. Proceeds from the bonds are being used to pay capital costs relating to the

acquisition, construction and improvement of the system. The bonds are payable from water pollution control net

revenues and are payable through 2045. Annual principal and interest payments on the bonds are expected to

require less than 28% of net revenues. The total principal and interest remaining to be paid on the Water Pollution

Control Revenue Bonds is $53,327,000. Principal and interest funded in the current year and total net revenues

(including other available funds) were $2,132,000 and $7,718,000 respectively.

The City has pledged future revenues from certain parking facilities, net of specified operating expenses and other

operating revenues to repay $7,660,000 of Parking Facilities Refunding Revenue Bonds issued in 2006. Proceeds

from the bonds initially issued provided financing for the construction of parking facilities. The bonds are payable

from parking facilities net revenues and are payable through 2022. Annual principal and interest payments on the

bonds are expected to require the full amount of net operating revenues. The total principal and interest remaining

to be paid on the Parking Facilities Refunding Revenue Bonds is $8,268,000. Principal and interest paid for the

current year (including net swap payments) and total net revenues were $4,148,000 and $71,000 respectively.

In 2020, no additional pledged revenue was required to meet the debt service on the Parking Facilities Refunding

Revenue Bonds. The trust indenture requires, among other things, that the Division will fix parking rates and will

charge and collect fees for the use of the parking facilities and will restrict operating expenses. As of December 31,

2020, the Division of Parking Facilities was in compliance with the terms and requirements of the trust indenture.

Derivative Instruments

Derivative instruments are contracts, the value of which depends on, or derives from, the value of an underlying

asset, index or rate. The most common types of derivatives used by governments are interest rate swaps and interest

rate locks. The City has entered into various derivative or hedging agreements since 1999. A detailed description of

each outstanding derivative, including its terms, objectives, risks and fair value, can be found in the section

discussing the bonds to which the derivative relates.

The derivative instruments are classified as Level 2 inputs of the fair value hierarchy and are considered to be

significant other observable inputs. The derivative instruments are calculated using the zero-coupon discounting

method which takes into consideration the prevailing interest rate environment, the specific terms and conditions of

a given transaction and assumes that the current forward rate implied by the yield curve are the market’s best

estimate of future spot interest rates. The income approach is then used to obtain the fair value of the swaps, where

future amounts are converted to a single current (discounted) amount, using a rate of return that takes into account

the relative risk of nonperformance associated with the cash flows and time value of money.

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The table below presents the fair value balances and notional amounts of the City’s derivative instruments

outstanding at December 31, 2020, classified by type and the changes in fair value of these derivatives during fiscal

year 2020 as reported in the 2020 financial statements. The fair values of the interest rate swaps, which reflect the

prevailing interest rate environment at December 31, 2020 and the specific terms and conditions of each swap, have

been provided by the respective counterparty for each swap and confirmed by the City’s financial advisor.

Classification Amount Classification Amount Notional

Investment Derivatives:

Governmental Activities:

Fixed to floating interest rate swap

2003 Subordinated Income Tax Swaption Investment Revenue -$ Debt -$ 20,200$

Business-Type Activities:

Floating to floating interest rate swap

2006 Parking Basis Swap Investment Revenue 10 Debt (4) 7,660

Changes in Fair Value

(Amounts in Thousands)

Fair Value at December 31, 2020

The table below presents the objective and significant terms of the City’s derivative instruments at December 31,

2020, along with the credit rating of each swap counterparty.

Notional Effective Maturity Counterparty

Bonds Type Objective Amount Date Date Terms Credit Rating

Subordinated Receive Fixed Hedge of changes in fair 20,200,000$ 2/7/2003 5/15/2024 If option is exercised, Aa2/A+/AA

Income Tax Bonds Interes t Rate Swaption value of Series 1994 Receive 4.88%, pay

Subordinated Income Tax Bonds SIFMA

2006 Parking Bon ds Basis Swap - Pay Exchange floating rate 7,660,000$ 8/15/2006 9/15/2022 Pay SIFMA, receive A2/A/A+

Floating/Receive Floating payments on Series 2006 67% of LIBOR

Parking System Bonds

NOTE 6 – RISK MANAGEMENT

Self Insurance: The City is exposed to various risks of loss related to torts; thefts of, damage to and destruction of

assets; errors and omissions; injuries to employees; and natural disasters. The City does not carry commercial

insurance for such risks, except for certain proprietary funds and the football stadium. In accordance with GASB

Statement No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues, claims

liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably

estimated. Liabilities include an amount for claims that have been incurred but not reported (IBNRs). Claims that

meet this criteria are reported as liabilities of either governmental or business-type activities in the government-wide

statement of net position. In the fund financial statements, claims liabilities that relate to proprietary funds are

reported. The current portion of claims is reported as a fund liability in governmental funds; however, the long-term

portion of claims liabilities is not reported.

The result of the process to estimate the claims liability is not an exact amount as it depends on many complex

factors, such as inflation, changes in legal doctrines and damage awards. Accordingly, claims are re-evaluated

periodically to consider the effects of inflation, recent claim settlement trends (including frequency and amount of

pay-outs) and other economic and social factors. The estimate of the claims liability also includes amounts for

incremental claim adjustment expenses related to specific claims and other claim adjustment expenses, regardless of

whether allocated to specific claims. Estimated recoveries, for example from salvage or subrogation, are another

component of the claims liability estimate.

Changes in the estimated claims payable for all funds during the years ended December 31, 2020 and 2019 were as

follows:

2020 2019

Estimated claims payable, January 1 18,675$ 11,178$

Current year claims (including IBNRs) and changes

in estimates 5,963 16,328

Claim payments (11,088)

(8,831)

Estimated claims payable, December 31 13,550$

18,675$

(

Amounts in Thousands

)

103

The estimated claims liabilities are based on the estimated cost of settling claims (including incremental claim

adjustment expenses) through a case-by-case review of all outstanding claims and by using historical experience.

Claims payable are included as accounts payable on the modified accrual financial statements and are reclassed to

long-term obligations as due within one year or due in more than one year on the statement of net position.

Insurance: Certain proprietary funds carry insurance to cover particular liability risks and property protection.

Otherwise, the City is generally self-insured. No material losses, including incurred but not reported losses,

occurred in 2020. There was no significant decrease in any insurance coverage in 2020. In addition, there were no

insurance settlements in excess of insurance coverage during the past four years.

The City provides the choice of two separate health insurance plans to its employees. The operating funds are

charged a monthly rate per employee by type of coverage.

Expenses for claims are recorded on a current basis. Claims are accrued based upon an actuarially estimated claims

liability IBNR. These estimates are based on past experience and current claims outstanding. Actual claims may

differ from the estimates. This claims liability is recorded in the Internal Service Fund and the government-wide

statements as claims payable.

Changes in the estimated claims payable for the Health and Prescription Self Insurance Funds during the year ended

December 31, 2020 and 2019 were as follows:

2020 2019

Estimated claims pay able, January 1 9,466$ 9,701$

Current year claims (including IBNRs) and changes

in estimates 100,788 97,099

Claim payments (98,746)

(97,334)

Estimated claims pay able, December 31 11,508$

9,466$

(Amounts in Thousands)

In January of 2003, the City exercised the option of retrospective rating as the premium rating mechanism for its

workers’ compensation program. The total estimated claims liability outstanding at December 31, 2020 was

$15,650,000. Of this amount, $6,013,000 was recorded as a fund liability within each respective fund. The

remaining $9,637,000 is due in future years and is recorded as a liability in the Workers’ Compensation Reserve

Internal Service Fund. This liability is funded by charging the appropriate funds their proportionate share of this

liability and recording the associated due to or due from as appropriate.

NOTE 7 – CONTINGENCIES

General Contingencies: Various claims and lawsuits are pending against the City. In accordance with GASB

Statement No. 10, those claims which are considered “probable” are accrued (see Note 6 – Risk Management),

while those claims that are considered “reasonably possible” are disclosed but not accrued.

As of December 31, 2020, the City had $16,171,000 in claims for which an unfavorable outcome is deemed to be

reasonably possible.

These estimates were based on a case-by-case review of outstanding claims by the City’s in-house legal department.

Contingent Liabilities: The City is a member of American Municipal Power (AMP) and has participated in the

AMP Generating Station (AMPGS) Project. This project intended to develop a pulverized coal power plant in

Meigs County, Ohio. The City’s share was 80,000 kilowatts of a total 771,281 kilowatts, giving the City a 10.37%

share. The AMPGS Project required participants to sign “take or pay” contracts with AMP. As such, the

participants are obligated to pay any costs incurred for the project. In November 2009, the participants voted to

terminate the AMPGS Project due to projected escalating costs. These costs were therefore deemed impaired and

participants were obligated to pay costs already incurred. In prior years, payment of these costs was not required

due to AMP’s pursuit of legal action to collect them from Bechtel Corporation (Bechtel). As a result of a March 31,

2014 legal ruling, the AMP Board of Trustees on April 15, 2014 and the AMPGS participants on April 16, 2014

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approved the collection of the impaired costs and provided the participants with an estimate of their liability. The

City’s estimated share at March 31, 2014 of the impaired costs is $13,813,694. The City received a credit of

$6,447,719 related to their participation in the AMP Fremont Energy Center (AFEC) Project and another credit of

$3,617,994, related to the AMPGS costs deemed to have future benefit for the project participants, classified as

Plant Held for Future Use (PHFU), leaving a net impaired cost estimate of $3,747,981. Because payment is now

probable and reasonably estimable, the City is reporting a payable to AMP in its business-type activities and in its

electric enterprise fund for these impaired costs. AMP financed these costs on its revolving line of credit. Any

additional costs (including line-of-credit interest and legal fees) or amounts received related to the project will

impact the City’s liability. These amounts will be recorded as they become estimable.

In late 2016, AMP reached a settlement in the Bechtel litigation. On December 8, 2016, at the AMPGS Participants

meeting, options for the allocation of the settlement funds were approved. The AMPGS Participants and the AMP

Board of Trustees voted to allocate the settlement among the participants and the AMP General Fund based on each

participant’s original project share in kW including the AMP General Fund’s project share. Since March 31, 2014,

the City has made payments of $2,505,814 to AMP toward its net impaired cost estimate. Also since March 31,

2014, the City’s allocation of additional costs incurred by the project is $168,966 and interest expense incurred on

AMP’s line-of-credit of $288,646. As part of the Bechtel Settlement, the City received a credit of $394,149 against

its stranded cost liability, resulting in a net impaired cost estimate at December 31, 2020, of $1,305,630.

The City does have a potential PHFU liability of $4,073,013 resulting in a net total potential liability of $5,378,643,

assuming the assets making up the PHFU (principally the land comprising the Meigs County site) has no value and

also assuming the City’s credit balance would earn zero interest. Stranded costs as well as PHFU costs are subject

to change, including future borrowing costs on the AMP line of credit. Activities include negative items such as

property taxes as well as positive items like revenue from leases or sale of all or a portion of the Meigs County site

property.

The City intends to recover these costs and repay AMP over the next 9 years through a power cost adjustment, thus

this incurred cost has been capitalized and reported as a regulated asset, as allowed by GASB Statement No. 65,

Items Previously Reported as Assets and Liabilities. The City intends to recover 50% of these costs from the

customers through the Energy Adjustment Charge passed along to customer’s monthly bills.

Cleveland Public Power (CPP) has an additional claim that could result in a material adverse effect on the CPP fund.

This amount is indeterminable at this time.

Contingencies Under Grant Programs: The City participates in a number of federally assisted Investment Act

Grant Programs, principal of which are Community Development Block Grants, the Healthy Start Initiative, Federal

HOME Program, Youth Opportunity Area Grant, Workforce Innovation and Opportunity Act (WIOA) Grant,

Empowerment Zone and Federal Aviation Administration Airport Improvement Grant Programs. These programs

are subject to financial and compliance audits by the grantors or their representatives.

In addition to the federally assisted Investment Act Grant Programs, the City also received CARES Act funds in

2020. These federal funds are subject to financial and compliance audits by the grantor or their representative and

are subject to availability.

NOTE 8 – INTERFUND TRANSACTIONS AND BALANCES

Interfund Transactions: During the course of normal operations, the City records numerous transactions between

funds including expenditures and transfers of resources to provide services, subsidize operations and service debt.

The City has the following types of transactions among funds:

Nonreciprocal interfund transfers – Flows of assets between funds without equivalent flows of assets in return and

without a requirement for repayment. This includes transfers to subsidize various funds.

105

For the year ended December 31, 2020, transfers consisted of the following:

Transfers In

Other Total

Transfers Out Public Govern- Govern- Internal

Health mental mental Enterprise Service

Total Fund Funds Funds Funds Funds

Governmental Funds:

General

56,441$ 7,689$ 43,100$ 50,789$ 4,855$ 797$

Other Governmental

51,156

51,156 51,156

Total Governmental Funds 107,597

7,689 94,256 101,945 4,855 797

Total 107,597$

7,689$ 94,256$ 101,945$ 4,855$ 797$

(Amounts in Thousands)

Interfund Balances: Interfund balances at December 31, 2020 represent charges for services or reimbursable

expenses. These remaining balances resulted from the time lag between the dates that (1) interfund goods or services

are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting records and (3)

payments between funds are made. All are expected to be paid within one year.

Reciprocal interfund services provided and used – Purchases and sales of goods and services between funds for a

price approximating their external exchange value.

Interfund receivable and payable balances as of December 31, 2020 are as follows:

Division De

p

artment

Other Total Division of Water Cleveland of

Public Govern- Govern- of Polution Public Port Other Total Internal

General Health mental mental Water Control Power Control Enter

p

rise Enter

p

rise Service

Due To Total Fund Fund Funds Funds Fund Fund Fund Fund Funds Funds Funds

Governmental Funds:

General 3,420$ $ $ 33$ 33$ $ 1$ 1,031$ 2$ 13$ 1,047$ 2,340$

Public Health 165

90 90 8 8 67

Other Governmental

17,197

1,643 1,325 13,760 16,728 81 10 1 92 377

Total Governmental 20,782$

Enterprise Funds:

Division of Water

1,791$

6

24 1,132 1

1,157

628

Division of Water Polution

Control

2,707

119

2,542 9

2,551

37

Cleveland Public Power

554

10

33

511

Department of Port

Control

1,255

962

3 19

22

271

Other Enterprise

123

15 15 53 53 55

Total Enterprise 6,430$

Internal Service Funds 105

1 1 1 6 4 11 93

Total Due To/Due From 27,317$

2,637$ 1,415$ 13,912$ 17,964$ 2,656$ 29$ 2,268$ 2$ 19$ 4,974$ 4,379$

Due From

(Amounts in Thousands)

NOTE 9 – INCOME TAXES

During 2020, the City income tax rate remained at 2.5% and the credit provided to City residents for income taxes

paid to other municipalities remained at 100% with a maximum credit limited to 2.5%. A portion of the City

income tax is restricted in its use to capital expenditures and debt service and is included in the Restricted Income

Tax Special Revenue Fund. All other income tax proceeds are included in the General Fund.

Employers within the City are required to withhold income taxes on employee compensation and remit withholdings

to the City at least quarterly. Corporations and other individual taxpayers are required to pay their estimated tax

quarterly and file a declaration annually.

106

NOTE 10 – PROPERTY TAXES

Property taxes include amounts levied against all real and public utility property located in the City. The 2019 levy

for collection in 2020 was based upon an assessed valuation of approximately $5.1 billion. Ohio law prohibits

taxation of property from all taxing authorities in excess of 10 mills of assessed value without a vote of the people.

Under current procedures, the City’s share is 4.4 mills, of which 4.35 mills is dedicated to debt service and .05 mills

is dedicated to the payment of fire pension obligations. A revaluation of all property is required to be completed no

less than every six years, with a statistical update every third year. The last update was completed in 2018. Assessed

values are established by the Cuyahoga County (County) Fiscal Officer. The County Treasurer collects property

taxes on behalf of all taxing districts in the County including the City.

Real property taxes, excluding public utility property, are assessed at 35% of appraised market value. Pertinent real

property tax dates are:

 Collection Dates January 28 and July 15 of the current year

 Lien Date January 1 of the year preceding the collection year

 Levy Date October 1 of the year preceding the collection year

An electric company’s taxable utility production equipment is assessed at 25% of true value, while all of its other

taxable property is assessed at 88% of true value. Pertinent public utility tangible personal property tax dates are:

 Collection Dates January 28 and July 15 of the current year

 Lien Date January 1 of the year preceding the collection year

 Levy Date October 1 of the year preceding the collection year

NOTE 11 – DEFERRED INFLOWS / DEFERRED OUTFLOWS OF RESOURCES

In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of

resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net

position that applies to a future period(s) and so will not be recognized as an outflow of resources

(expense/expenditure) until then.

In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of

resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net

position that applies to future period(s) and so will not be recognized as an inflow of resources (revenue) until that

time.

On the modified accrual basis of accounting, the City has recorded certain receivables relating to property taxes and

unavailable revenue. Unavailable revenues and property taxes levied to finance 2020 operations have been reported

as deferred inflows of resources in the governmental fund balance sheet for the following:

Public Other

Health Governmental

General

Funds Funds Totals

Income taxes receivable

21,120$

$

2,638$ 23,758$

Property taxes receivable

51,671 26,918 78,589

Special assessments receivable

10,593 21,599 32,192

Local government receivable 9,268

9,268

Homestead rollback

3,024 1,576 4,600

Emergency medical service receivable

160 160

Motor vehicle taxes receivable

1,528 1,528

Municipal gas tax receivable

1,046 1,046

State gasoline tax receivable

3,466 3,466

Due from other governments

2,499 3 419 2,921

Accounts receivable

650

Total deferred inflows of resources

98,985$

3$ 59,190$ 158,178$

(Amounts in Thousands)

Governmental Type Funds

107

NOTE 12 – DEFINED BENEFIT PENSION PLANS

Net Pension Liability: The net pension liability reported on the statement of net position represents a liability to

employees for pensions. Pensions are a component of exchange transactions between an employer and its employees

of salaries and benefits for employee services. Pensions are provided to an employee on a deferred-payment basis as

part of the total compensation package offered by an employer for employee services each financial period. The

obligation to sacrifice resources for pensions is a present obligation because it was created as a result of employment

exchanges that already have occurred.

The net pension liability represents the City’s proportionate share of each pension plan’s collective actuarial present

value of projected benefit payments attributable to past periods of service, net of each pension plan’s fiduciary net

position. The net pension liability calculation is dependent on critical long-term variables, including estimated

average life expectancies, earnings on investments, cost of living adjustments (COLA) and others. While these

estimates use the best information available, unknowable future events require adjusting this estimate annually.

The ORC limits the City’s obligation for this liability to annually required payments. The City cannot control

benefit terms or the manner in which pensions are financed; however, the City does receive the benefit of

employees’ services in exchange for compensation including pension.

GASB Statement No. 68 assumes the liability is solely the obligation of the employer, because (1) they benefit from

employee services; and (2) State Statute requires all funding to come from these employers. All contributions to

date have come solely from these employers (which also includes costs paid in the form of withholdings from

employees). State Statute requires the pension plans to amortize unfunded liabilities within 30 years. If the

amortization period exceeds 30 years, each pension plan’s board must propose corrective action to the State

legislature. Any resulting legislative change to benefits or funding could significantly affect the net pension

liability. Resulting adjustments to the net pension liability would be effective when the changes are legally

enforceable.

The proportionate share of each plan’s unfunded benefits is presented as a long-term net pension liability on the

accrual basis of accounting. Any liability for the contractually-required pension contribution outstanding at the end

of the year is included in accrued wages and benefits on both the accrual and modified accrual bases of accounting.

Ohio Public Employees Retirement System (OPERS): City employees, other than full-time police and firefighters,

participate in OPERS. OPERS administers three separate pension plans. The Traditional Pension Plan is a cost-

sharing, multiple-employer defined benefit pension plan. The Member-Directed Plan is a defined contribution plan

and the Combined Plan is a cost-sharing, multiple-employer defined benefit pension plan with defined contribution

features. While members (e.g. City employees) may elect the Member-Directed Plan and the Combined Plan,

substantially all employee members are in OPERS’ Traditional Plan; therefore, the following disclosure focuses on

the Traditional Pension Plan.

OPERS provides retirement, disability, survivor and death benefits and annual COLA to members of the Traditional

Plan. Authority to establish and amend benefits is provided by Chapter 145 of the ORC. OPERS issues a stand-

alone financial report that includes financial statements, required supplementary information and detailed

information about OPERS’ fiduciary net position that may be obtained by visiting

https://www.opers.org/financial/reports.shtml, by writing to OPERS, 277 East Town Street, Columbus, Ohio 43215-

4642, or by calling 800-222-7377.

108

Senate Bill (SB) 343 was enacted into law with an effective date of January 7, 2013. In the legislation, members

were categorized into three groups with varying provisions of the law applicable to each group. The following table

provides age and service requirements for retirement and the retirement formula applied to final average salary

(FAS) for the three member groups under the traditional plan as per the reduced benefits adopted by SB 343 (see

OPERS Comprehensive Annual Financial Report referenced above for additional information):

Group A

Group B

Group C

Eligible to retire prior to 20 years of service credit prior to Members not in other Groups

January 7, 2013 or five years January 7, 2013 or eligible to retire and members hired on or after

after January 7, 2013 ten years after January 7, 2013 January 7, 2013

State and Local State and Local

State and Local

Age and Service Requirements:

Age 60 with 60 months of service

credit

Age 60 with 60 months of service

credit

Age 57 with 25 years of service

credit

or Age 55 with 25 years of service

credit

or Age 55 with 25 years of service

credit

or Age 62 with 5 years of service

credit

Formula:

2.2% of FAS multiplied by years of 2.2% of FAS multiplied by years of 2.2% of FAS multiplied by years of

service for the first 30 years and

2.5%

service for the first 30 years and

2.5%

service for the first 35 years and

2.5%

for service years in excess of 30 for service years in excess of 30 for service years in excess of 35

FAS represents the average of the three highest years of earnings over a member’s career for Groups A and B.

Group C is based on the average of the five highest years of earnings over a member’s career. Members who retire

before meeting the age and years of service credit requirement for unreduced benefits receive a percentage reduction

in the benefit amount.

When a benefit recipient has received benefits for 12 months, an annual COLA is provided. This COLA is

calculated on the base retirement benefit at the date of retirement and is not compounded. For those retiring prior to

January 7, 2013, the COLA will continue to be a 3.0% simple annual COLA. For those retiring subsequent to

January 7, 2013, beginning in calendar year 2019, the COLA will be based on the average percentage increase in the

Consumer Price Index (CPI), capped at 3.0%.

Funding Policy: The ORC provides statutory authority for member and employer contributions. For 2020, member

contribution rates were 10.0% of salary and employer contribution rates were 14.0%.

Employer contribution rates are actuarially determined and are expressed as a percentage of covered payroll. The

City’s contractually required contribution was $42,095,000 for 2020. All required payments have been made.

Ohio Police & Fire Pension Fund (OP&F): City full-time police and firefighters participate in OP&F, a cost-

sharing, multiple-employer defined benefit pension plan administered by OP&F. OP&F provides retirement and

disability pension benefits, annual COLA and death benefits to plan members and beneficiaries. Benefit provisions

are established by the Ohio State Legislature and are codified in Chapter 742 of the ORC. OP&F issues a publicly

available financial report that includes financial information and required supplementary information and detailed

information about OP&F fiduciary net position. The report that may be obtained by visiting the OP&F website at

www.op-f.org or by writing to the OP&F Pension Fund, 140 East Town Street, Columbus, Ohio 43215-5164.

Upon attaining a qualifying age with sufficient years of service, a member of OP&F may retire and receive a

lifetime monthly pension. OP&F offers four types of service retirement: normal, service commuted, age/service

commuted and actuarially reduced. Each type has different eligibility guidelines and is calculated using the

member’s average annual salary. The following discussion of the pension formula relates to normal service

retirement.

For members hired after July 1, 2013, the minimum retirement age is 52 for normal service retirement with at least

25 years of service credit. For members hired on or before July 1, 2013, the minimum retirement age is 48 for

normal service retirement with at least 25 years of service credit.

109

The annual pension benefit for normal service retirement is equal to a percentage of the allowable average annual

salary. The percentage equals 2.5% for each of the first 20 years of service credit, 2.0% for each of the next five

years of service credit and 1.5% for each year of service credit in excess of 25 years. The maximum pension of

72.0% of the allowable average annual salary is paid after 33 years of service credit.

Under normal service retirement, retired members who are at least 55 years old and have been receiving OP&F

benefits for at least one year may be eligible for a COLA. The age 55 provision for receiving a COLA does not

apply to those who are receiving a permanent and total disability benefit and statutory survivors.

Members retiring under normal service retirement, with less than 15 years of service credit on July 1, 2013, will

receive a COLA equal to either 3.0% or the percent increase, if any, in the CPI over the 12-month period ending on

September 30 of the immediately preceding year, whichever is less. The COLA amount for members with at least 15

years of service credit as of July 1, 2013 is equal to 3.0% of their base pension or disability benefit.

Funding Policy: The ORC provides statutory authority for member and employer contributions as follows:

Police Firefighters

2020 S tatutory Maximum Contribution Rates

Employer 19.50 % 24.00 %

Employee 12.25 12.25

2020 Actual Contribution Rates

Employ er:

Pension 19.00 23.50

Post-employment Health Care Benefits 0.50 0.50

Total Employer 19.50 % 24.00 %

Employee 12.25 % 12.25 %

Employer contribution rates are expressed as a percentage of covered payroll. The City’s contractually required

contribution to OP&F was $38,921,000 for 2020. All required payments have been made.

Pension Liabilities, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources

Related to Pensions: The net pension liability for OPERS was measured as of December 31, 2019 and the total

pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date.

OP&F’s total pension liability was measured as of December 31, 2019 and was determined by rolling forward the

total pension liability as of January 1, 2019 to December 31, 2019. The City's proportion of the net pension liability

was based on the City's share of contributions to the pension plan relative to the contributions of all participating

entities. Following is information related to the proportionate share and pension expense:

OPERS OP&F Total

(Amounts in Thousands)

Proportionate Share of the Net

Pension Liability 388,322$ 504,798$ 893,120$

Proportion of the Net Pension

Liability 1.985574% 7.493444%

Change in Proportion (0.023422)% 0.078806%

Pension Expense 69,476$ 65,234$ 134,710$

110

At December 31, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to

pensions from the following sources:

OPERS OP&F Total

(Amounts in Thousands)

Deferred Outflows of Resources

Differences between expected and actual

experience $ 19,108$ 19,108$

Change in assumptions 21,351 12,391 33,742

Change in City's proportionate share and difference

in employer contributions 1,069 13,706 14,775

Contributions subsequent to the measurement date 42,095 38,921 81,016

Total Deferred Outflows of Resources

64,515$ 84,126$ 148,641$

Deferred Inflows of Resources

Differences between expected and actual

experience 5,873$ 26,034$ 31,907$

Net difference between projected and actual

earnings on pension plan investments 78,742 24,386 103,128

Change in City's proportionate share and difference

in employer contributions 3,029 8,658 11,687

Total Deferred Inflows of Resources

87,644$ 59,078$ 146,722$

The $81,016,000 reported as deferred outflows of resources related to pension resulting from City contributions

subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending

December 31, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources

related to pension will be recognized in pension expense as follows:

OPERS OP&F Total

(Amounts in Thousands)

Year Ending December 31:

2021 (9,671)$ (4,520)$ (14,191)$

2022 (26,319) 2,337 (23,982)

2023 2,984 11,550 14,534

2024 (31,506) (21,318) (52,824)

2025 (210) (1,922) (2,132)

Thereafter (502) (502)

Total (65,224)$ (13,873)$ (79,097)$

Actuarial Assumptions – OPERS: Actuarial valuations of an ongoing plan involve estimates of the values of

reported amounts and assumptions about the probability of occurrence of events far into the future. Examples

include assumptions about future employment, mortality and cost trends. Actuarially determined amounts are

subject to continual review or modification as actual results are compared with past expectations and new estimates

are made about the future.

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by

the employers and plan members) and include the types of benefits provided at the time of each valuation. The total

pension liability in the December 31, 2019, actuarial valuation was determined using the following actuarial

assumptions, applied to all periods included in the measurement:

Valuation Date December 31, 2019

Wage Inflation 3.25%

Future Salary Increases, including inflation 3.25 to 10.75%

COLA or Ad Hoc COLA 3.25%, simple

Pre 1/7/2013 retirees: 3%, simple

Post 1/7/2013 retirees: 1.4%, simple

through 2020, then 2.15%, simple

Investment Rate of Return 7.2%

Actuarial Cost Method Individual Entr

y

A

g

e

Mortality Tables RP-2014

111

Pre-retirement mortality rates are based on the RP-2014 Employees Mortality Table for males and females, adjusted

for mortality improvement back to the observation period base year of 2006. The base year for males and females

was then established to be 2015 and 2010, respectively. Post-retirement mortality rates are based on the RP-2014

Healthy Annuitant Mortality Table for males and females, adjusted for mortality improvement back to the

observation period base year of 2006. The base year for males and females was then established to be 2015 and

2010, respectively. Post-retirement mortality rates for disabled retirees are based on the RP-2014 Disabled Mortality

Table for males and females, adjusted for mortality improvement back to the observation period base year of 2006.

The base year for males and females was then established to be 2015 and 2010, respectively. Mortality rates for a

particular calendar year are determined by applying the MP-2015 Mortality Improvement Scale to all of the above

described tables.

The most recent experience study was completed for the five year period ended December 31, 2015.

The long-term rate of return on defined benefit investment assets was determined using a building-block method in

which best-estimate ranges of expected future real rates of return are developed for each major asset class. These

ranges are combined to produce the long-term expected real rate of return by weighting the expected future real rates

of return by the target asset allocation percentage, adjusted for inflation.

During 2019, OPERS managed investments in three investment portfolios: the Defined Benefit Portfolio, the Health

Care Portfolio and the Defined Contribution Portfolio. The Defined Benefit Portfolio contains the investment assets

for the Traditional Pension Plan, the defined benefit component of the Combined Plan and the annuitized accounts

of the Member-Directed Plan. Within the Defined Benefit Portfolio, contributions into the plans are all recorded at

the same time and benefit payments all occur on the first of the month. Accordingly, the money-weighted rate of

return is considered to be the same for all plans within the Defined Benefit Portfolio. The annual money-weighted

rate of return expressing investment performance, net of investment expenses and adjusted for the changing amounts

actually invested, for the Defined Benefit Portfolio was 17.2% for 2019.

The allocation of investment assets with the Defined Benefit Portfolio is approved by the Board as outlined in the

annual investment plan. Plan assets are managed on a total return basis with a long-term objective of achieving and

maintaining a fully funded status for the benefits provided through the defined benefit pension plans. The table

below displays the Board-approved asset allocation policy for 2019 and the long-term expected real rates of return:

Target

Asset Class Allocation

Fixed Income 25.00 % 1.83 %

Domestic Equities 19.00 5.75

Real Estate 10.00 5.20

Private Equity 12.00 10.70

International Equities 21.00 7.66

Other Investments 13.00 4.98

Total 100.00 % 5.61 %

(Arithmetic)

Weighted Average

Long-Term Expected

Real Rate of Return

Discount Rate: The discount rate used to measure the total pension liability was 7.2%. The projection of cash flows

used to determine the discount rate assumed that contributions from plan members and those of the contributing

employers are made at the contractually required rates, as actuarially determined. Based on those assumptions, the

pension plan’s fiduciary net position was projected to be available to make all projected future benefits payments of

current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to

all periods of projected benefit payments to determine the total pension liability.

112

Sensitivity of the City’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate: The

following table presents the City’s proportionate share of the net pension liability calculated using the current period

discount rate assumption of 7.2%, as well as what the City’s proportionate share of the net pension liability would be

if it were calculated using a discount rate that is one-percentage-point lower (6.2%) or one-percentage-point higher

(8.2%) than the current rate:

1% Decrease Current Discount Rate 1% Increase

6.2% 7.2% 8.2%

(Amounts in Thousands)

Cit

y

's

p

ro

p

ortionate share

of the net pension liability 578,126$ 388,322$ 230,881$

Actuarial Assumptions – OP&F: OP&F’s total pension liability as of December 31, 2019 is based on the results of

an actuarial valuation date of January 1, 2019 and rolled-forward using generally accepted actuarial procedures. The

total pension liability is determined by OP&F’s actuaries in accordance with GASB Statement No. 67, Financial

Reporting for Pension Plans – An Amendment of GASB Statement No. 25, as part of their annual valuation.

Actuarial valuations of an ongoing plan involve estimates of reported amounts and assumptions about probability of

occurrence of events far into the future. Examples include assumptions about future employment mortality, salary

increases, disabilities, retirements and employment terminations. Actuarially determined amounts are subject to

continual review and potential modifications, as actual results are compared with past expectations and new

estimates are made about the future.

Key methods and assumptions used in calculating the total pension liability in the latest actuarial valuation, prepared

as of January 1, 2019, are presented below:

Valuation Date January 1, 2019

Actuarial Cost Method Entry Age Normal

Investment Rate of Return 8.00%

Projected Salary Increases 3.75%-10.50%

Payroll Increases 3.25%

Inflation Assumptions 2.75%

Cost of Living Adjustments 2.20% and 3.00%

The most recent experience study was completed December 31, 2016.

Health Mortality: Mortality for non-disabled participants is based on the RP-2014 Total Employee and Healthy

Annuitant Mortality Tables rolled back to 2006, adjusted according to the rates in the following table and projected

with the Conduent Modified 2016 Improvement Scale. Rates for surviving beneficiaries are adjusted by 120.0%.

Age

67 or les s 77 % 68 %

68-77 105 87

78 and up 115 120

Police Fire

Disabled Mortality: Mortality for disabled retirees is based on the RP-2014 Disabled Morality Tables rolled back to

2006, adjusted according to the rates in the following table, and projected with the Conduent Modified 2016

Improvement Scale.

Age

59 or les s 35 % 35 %

60-69 60 45

70-79 75 70

80 and up 100 90

Police Fire

113

The long-term expected rate of return on pension plan investments was determined using a building-block approach

and assumes a time horizon, as defined in the Statement of Investment Policy. A forecasted rate of inflation serves

as the baseline for the return expectation. Various real return premiums over the baseline inflation rate have been

established for each asset class. The long-term expected nominal rate of return has been determined by calculating a

weighted averaged of the expected real return premiums for each asset class, adding the projected inflation rate and

adding the expected return from rebalancing uncorrelated asset classes.

Best estimates of the long-term expected geometric real rates of return for each major asset class included in

OP&F’s target asset allocation as of December 31, 2019 are summarized below:

Target

Asset Class Allocation

Cash and Cash Equivalents % 1.00 %

Domestic Equity 16 5.40

Non-US Equity 16 5.80

Private Markets 8 8.00

Core Fixed Income * 23 2.70

High Yield Fixed Income 7 4.70

Private Credit 5 5.50

U.S. Inflation Linked Bonds * 17 2.50

Master Limited Partnerships 8 6.60

Real Assets 8 7.40

Private Real Estate 12 6.40

Total 120 %

* levered 2x

Long-Term Expected

Real Rate of Return

OP&F’s Board of Trustees has incorporated the risk parity concept into OP&F’s asset liability valuation with the

goal of reducing equity risk exposure, which reduces overall Total Portfolio risk without sacrificing return and

creating a more risk-balanced portfolio based on their relationship between asset classes and economic

environments. From the notional portfolio perspective above, the Total Portfolio may be levered up to 1.2 times due

to the application of leverage in certain fixed income asset classes.

Discount Rate: The total pension liability was calculated using the discount rate of 8.0%. The projection of cash

flows used to determine the discount rate assumed the contributions from employers and from the members would

be computed based on contribution requirements as stipulated by State Statute. Projected inflows from investment

earnings were calculated using the long-term assumed investment rate of return 8.0%. Based on those assumptions,

the plan’s fiduciary net position was projected to be available to make all future benefit payments of current plan

members. Therefore, a long-term expected rate of return on pension plan investments was applied to all periods of

projected benefits to determine the total pension liability.

Sensitivity of the City's Proportionate Share of the Net Pension Liability to Changes in the Discount Rate: Net

pension liability is sensitive to changes in the discount rate and to illustrate the potential impact the following table

presents the net pension liability calculated using the discount rate of 8.0%, as well as what the net pension liability

would be if it were calculated using a discount rate that is one percentage point lower (7.0%), or one percentage

point higher (9.0%) than the current rate.

Current

1% Decrease Discount Rate 1% Increase

7.0% 8.0% 9.0%

(Amounts in Thousands)

City's proportionate share

of the net pension liability 699,633$ 504,798$ 341,839$

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NOTE 13 – DEFINED BENEFIT OPEB PLANS

Net OPEB Liability: The net OPEB liability reported on the statement of net position represents a liability to

employees for OPEB. OPEB is a component of exchange transactions between an employer and its employees of

salaries and benefits for employee services. OPEB is provided to an employee on a deferred-payment basis as part

of the total compensation package offered by an employer for employee services each financial period. The

obligation to sacrifice resources for OPEB is a present obligation because it was created as a result of employment

exchanges that already have occurred.

The net OPEB liability represents the City’s proportionate share of each OPEB plan’s collective actuarial present

value of projected benefit payments attributable to past periods of service, net of each OPEB plan’s fiduciary net

position. The net OPEB liability calculation is dependent on critical long-term variables, including estimated

average life expectancies, earnings on investments, cost of living adjustments and others. While these estimates use

the best information available, unknowable future events require adjusting these estimates annually.

The ORC limits the City’s obligation for this liability to annually required payments. The City cannot control

benefit terms or the manner in which OPEB is financed; however, the City does receive the benefit of employees’

services in exchange for compensation including OPEB.

GASB Statement No. 75 assumes the liability is solely the obligation of the employer, because they benefit from

employee services. OPEB contributions come from these employers and health care plan enrollees which pay a

portion of the health care costs in the form of a monthly premium. The ORC permits, but does not require, the

retirement systems to provide healthcare to eligible benefit recipients. Any change to benefits or funding could

significantly affect the net OPEB liability. Resulting adjustments to the net OPEB liability would be effective when

the changes are legally enforceable. The retirement systems may allocate a portion of the employer contributions to

provide for these OPEB benefits.

The proportionate share of each plan’s unfunded benefits is presented as a long-term net OPEB liability on the

accrual basis of accounting. Any liability for the contractually-required OPEB contribution outstanding at the end of

the year is included in accrued wages and benefits on both the accrual and modified accrual bases of accounting.

Plan Description – OPERS: OPERS administers three separate pension plans: the Traditional Pension Plan, a cost-

sharing, multiple-employer defined benefit pension plan; the Member-Directed Plan, a defined contribution plan;

and the Combined Plan, a cost-sharing, multiple-employer defined benefit pension plan that has elements of both a

defined benefit and defined contribution plan.

OPERS maintains a cost-sharing, multiple-employer defined benefit post-employment health care trust, which funds

multiple health care plans including medical coverage, prescription drug coverage and deposits to a Health

Reimbursement Arrangement to qualifying benefit recipients of both the Traditional Pension and the Combined

Plans. This trust is also used to fund health care for Member-Directed Plan participants, in the form of a Retiree

Medical Account (RMA). At retirement or refund, Member Directed Plan participants may be eligible for

reimbursement of qualified medical expenses from their vested RMA balance.

In order to qualify for postemployment health care coverage, age and service retirees under the Traditional Pension

and Combined Plans must have twenty or more years of qualifying Ohio service credit. Health care coverage for

disability benefit recipients and qualified survivor benefit recipients is available. The health care coverage provided

by OPERS meets the definition of OPEB as described in GASB Statement No. 75. See OPERS’ Comprehensive

Annual Financial Report referenced below for additional information.

The ORC permits, but does not require, OPERS to provide health care to its eligible benefit recipients. Authority to

establish and amend health care coverage is provided to the Board in Chapter 145 of the ORC.

Disclosures for the health care plan are presented separately in the OPERS financial report. Interested parties may

obtain a copy by visiting https://www.opers.org/financial/reports.shtml, by writing to OPERS, 277 East Town

Street, Columbus, Ohio 43215-4642, or by calling 800-222-7377.

Funding Policy: The ORC provides the statutory authority requiring public employers to fund postemployment

health care through their contributions to OPERS. When funding is approved by the OPERS Board, a portion of

each employer’s contribution to OPERS is set aside to fund OPERS health care plans.

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Employer contribution rates are expressed as a percentage of the earnable salary of active members. In 2020, state

and local employers contributed at a rate of 14.0% of earnable salary. This is the maximum employer contribution

rates permitted by the ORC. Active member contributions do not fund health care.

Each year, the Board determines the portion of the employer contribution rate that will be set aside to fund health

care plans. The portion of employer contributions allocated to health care for members in the Traditional Pension

Plan and Combined Plan was 0.0% for both plans. The Board is also authorized to establish rules for the retiree or

their surviving beneficiaries to pay a portion of the health care provided. Payment amounts vary depending on the

number of covered dependents and the coverage selected. The employer contribution as a percentage of covered

payroll deposited into the RMA for participants in the Member-Directed Plan for 2019 was 4.0%.

For the year ended December 31, 2020, OPERS did not allocate any employer contributions to the OPEB plan.

Plan Description – OP&F: The City contributes to the OP&F sponsored healthcare program, a cost-sharing,

multiple-employer defined post-employment healthcare plan administered by a third-party provider. This program

is not guaranteed and is subject to change at any time upon action of the Board of Trustees. OP&F provides health

care benefits including coverage for medical, prescription drug, dental, vision and Medicare Part B Premium to

retirees, qualifying benefit recipients and their eligible dependents.

OP&F provides access to postretirement health care coverage for any person who receives or is eligible to receive a

monthly service, disability, or statutory survivor benefit or is a spouse or eligible dependent child of such person.

The health care coverage provided by OP&F meets the definition of OPEB as described in GASB Statement No. 75.

The ORC allows, but does not mandate, OP&F to provide OPEB benefits. Authority for the OP&F Board of

Trustees to provide health care coverage to eligible participants and to establish and amend benefits is codified in

Chapter 742 of the ORC.

OP&F issues a publicly available financial report that includes financial information and required supplementary

information for the plan. The report may be obtained by writing to OP&F, 140 East Town Street, Columbus, Ohio

43215-5164. The report is also available on the OP&F’s website at www.op-f.org.

Funding Policy: The ORC provides for contribution requirements of the participating employers and of plan

members to the OP&F defined benefit pension plan. Participating employers are required to contribute to the

pension plan at rates expressed as percentages of the payroll of active pension plan members, currently 19.5% and

24.0% of covered payroll for police and fire employer units, respectively. The ORC states that the employer

contribution may not exceed 19.5% of covered payroll for police employer units and 24.0% of covered payroll for

fire employer units. Active members do not make contributions to the OPEB Plan.

OP&F maintains funds for health care in two separate accounts. There is one account for health care benefits and

one account for Medicare Part B reimbursements. A separate health care trust accrual account is maintained for

health care benefits under IRS Code Section 115 trust. An Internal Revenue Code 401(h) account is maintained for

Medicare Part B reimbursements.

The Board of Trustees is authorized to allocate a portion of the total employer contributions made into the pension

plan to the Section 115 trust and the Section 401(h) account as the employer contribution for retiree health care

benefits. For 2019, the portion of employer contributions allocated to health care was 0.5% of covered payroll. The

amount of employer contributions allocated to the health care plan each year is subject to the Trustees’ primary

responsibility to ensure that pension benefits are adequately funded and is limited by the provisions of Sections 115

and 401(h).

The OP&F Board of Trustees is also authorized to establish requirements for contributions to the health care plan by

retirees and their eligible dependents or their surviving beneficiaries. Payment amounts vary depending on the

number of covered dependents and the coverage selected.

The City’s contractually required contribution to OP&F was $961,000 for 2020. All required payments have been

made.

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OPEB Liabilities, OPEB Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to

OPEB: The net OPEB liability and total OPEB liability for OPERS were determined by an actuarial valuation as of

December 31, 2018, rolled forward to the measurement date as of December 31, 2019, by incorporating the expected

value of health care cost accruals, the actual health care payment and interest accruals during the year. OP&F’s total

OPEB liability was measured as of December 31, 2019 and was determined by rolling forward the total OPEB

liability as of January 1, 2019, to December 31, 2019. The City's proportion of the net OPEB liability was based on

the City's share of contributions to the retirement plan relative to the contributions of all participating entities.

Following is information related to the proportionate share and OPEB expense:

Proportion of the Net OPEB Liability:

Current Measurement Date 1.958141 % 7.493444 %

Prior Measurement Date 1.985567 7.414638

Change in Proportionate Share (0.027426) % 0.078806 %

Total

Proportionate Share of the Net

OPEB Liability 270,468$ 74,018$ 344,486$

OPEB Expense 17,778$ 10,538$ 28,316$

OPERS OP&F

(Amounts in Thousands)

At December 31, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to

OPEB from the following sources:

OPERS OP&F Total

Deferred Outflows of Resources

Differences between expected and actual

economic experience 7$ $ 7$

Changes in assumptions 42,815 43,274 86,089

Changes in proportion and differences

between City contributions and

proportionate share of contributions 203 4,116 4,319

Contributions subsequent to the

measurement date 961 961

Total Deferred Outflows of Resources

43,025$ 48,351$ 91,376$

Deferred Inflows of Resources

Differences between expected and actual

economic experience 24,736$ 7,960$ 32,696$

Changes of assumptions 15,774 15,774

Net difference between projected and

actual earnings on OPEB plan investments 13,772 3,406 17,178

Changes in proportion and differences

between City contributions and proportionate

share of contributions 3,381 3,185 6,566

Total Deferred Inflows of Resources

41,889$ 30,325$ 72,214$

(Amounts in Thousands)

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The $961,000 reported as deferred outflows of resources related to OPEB resulting from City contributions

subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in 2021. Other

amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be

recognized in OPEB expense as follows:

OPERS OP&F Total

Year Ending December 31:

2021 4,724$ 2,984$ 7,708$

2022 2,284 2,984 5,268

2023 11 3,683 3,694

2024 (5,883) 2,581 (3,302)

2025 3,096 3,096

Thereafter 1,737 1,737

Total 1,136$ 17,065$ 18,201$

(Amounts in Thousands)

Actuarial Assumptions – OPERS: Actuarial valuations of an ongoing plan involve estimates of the values of

reported amounts and assumptions about the probability of occurrence of events far into the future. Examples

include assumptions about future employment, mortality and cost trends. Actuarially determined amounts are

subject to continual review or modification as actual results are compared with past expectations and new estimates

are made about the future.

Projections of benefits for financial reporting purposes are based on the substantive plan and include the types of

coverage provided at the time of each valuation and the historical pattern of sharing of costs between OPERS and

plan members. The total OPEB liability was determined by an actuarial valuation as of December 31, 2018, rolled

forward to the measurement date as of December 31, 2019. The actuarial valuation used the following actuarial

assumptions applied to all prior periods included in the measurement in accordance with the requirements of GASB

Statement No. 74, Financial Reporting for Postemployment Benefits Plans Other Than Pension Plans:

Wage Inflation 3.25%

Projected Salary Increases,

including wage inflation 3.25% to 10.75%

Single Discount Rate:

Current Measurement Date 3.16%

Prior Measurement Date 3.96%

Investment Rate of Return 6.00%

Municipal Bond Rate:

Current Measurement Date 2.75%

Prior Measurement Date 3.71%

Health Care Cos t Trend Rate:

Current Measurement Date 10.50%, initial

3.50%, ultimate in 2030

Prior Measurement Date 10.00%, initial

3.25%, ultimate in 2029

Actuarial Cost Method Individual Entry Age