For the Fiscal Year Ended June 30, 2024 Popular Annual Financial Report 2 Popular Annual Financial Report FY 2024 Message from the City Manager This is the Chesapeake Popular Annual Financial Report (PAFR), representing the fiscal year ending June 30, 2024. We are proud to produce this report to present budgetary and financial information in ways that are user friendly to the community, increasing transparency and accessibility. This year, we have chosen to highlight aspects of the City government that tell the story of us as The City That Cares. The City That Cares initiative began in 2003 under the guidance of then-City Manager, Dr. Clarence V. Cuffee. It was intended to demonstrate the City’s value of customer service and give employees a sense of pride and ownership in their work. Since I became City Manager in 2019, we added the element of stewardship to the CARES philosophy. A key part of this is financial stewardship, which is the responsible management of resources to achieve our goals. You can read more about CARES on page 5. This report highlights a variety of financial information, as well as other details about the City and its government. The City ended FY 2024 with an overall net position of $2.6 billion, an increase of $161.5 million or 6.8% from the prior year. The increase in net position is attributable to the excess of revenues over expenses in governmental and business type activities. On June 30, 2024, the City’s unassigned fund balance in the General Fund was $97.6 million or 12.4% of FY 2024 general fund revenue, and our credit rating was maintained at the highest levels from the three top rating agencies. Additionally, the Chesapeake Transportation System received an upgrade in its credit rating from BBB+ to A-. As we move through fiscal year 2025, the City will continue to operate in a fiscally responsible and sustainable manner. Our top priority is working to implement the City Council’s priorities in support of making Chesapeake an exceptional place to live, learn, work, farm, and play. Chris Price, City Manger page 2 Chesapeake’s fiscal year runs from July 1 through June 30. The financial information in this document covers the period from July 1, 2023 through June 30, 2024. The Popular Annual Financial Report (PAFR) is a summary document. As such, not all of the financial information complies with the requirements of Generally Accepted Accounting Principles (GAAP). The data in the PAFR includes both short-term financial information such as revenues and expenditures for the reporting period, as well as longer-term financial measures such as net position. To view the GAAP-compliant Annual Comprehensive Financial Report (ACFR), please visit the City’s website at Chesapeake Public Schools receive substantial funding from the City of Chesapeake. In FY 2024, the contribution totaled $297.8 million. The Schools are a separate legal entity whose operations are under the oversight of the elected School Board, which appoints the Superintendent of Schools. The financial reports of the Schools are included in the City’s annual financial audit but are not included in this PAFR. PAFR FY 2024 3 Table of Contents Chesapeake City Government Chesapeake operates under the Council-Manager form of government, with a City Council composed of eight Council Members and a Mayor, all of whom are elected at-large. The Council selects a Vice Mayor from among the Council Members and appoints a City Manager to serve as the City’s Chief Executive Officer. The City Manager is responsible for the day-to-day administration of the City, overseeing twenty departments. Council also appoints the City Attorney, City Clerk, Real Estate Assessor, Internal Auditor, and members of various boards and commissions. The Sheriff, Treasurer, Clerk of the Circuit Court, Commonwealth’s Attorney, Commissioner of Revenue, and School Board are elected by the citizens. Chesapeake City Government City Council Members Annual Statistics General Fund Revenues Revenues and Expenditures Trend General Fund Expenditures Fund Accounting 101 Types of City-Supported Spending Separate Funds Fund Chart City’s Credit Ratings & Debt Two Types of Municipal Bonds Debt Measures Chesapeake’s Net Position Capital Project Expenditures Service Spotlights CARE-ing K-9 Workers Volunteer Program Government Finance Awards Chesapeake City Council Mayor Rick W. West Vice Mayor John M. de Triquet C. Jeff Bunn Robert C. Ike, Jr. Amanda L. Newins Daniel W. Whitaker Dr. Ella Ward S.Z. “Debbie” Ritter 03 Don J. Carey, III Chesapeake’s Funding Cycle 04 05 06 07 08 09 10 12 13 14 15 11 As of June 30, 2024 Les Smith, Jr. Patricia Y. “Pat” King, MD New Members as of January 1, 2025 Chesapeake’s Strategic Plan About Chesapeake CARES Standards History of CARES page 34 City Council’s Vision Chesapeake will be economically strong, culturally diverse, and environmentally responsible, with a quality of life that defines our city as an exceptional place to live, learn, work, farm, and play. As the City continues to grow, it will be a progressive and well-connected community of treasured rural areas, vibrant residential neighborhoods, and thriving commercial and industrial centers. Moving forward, we will build on our strengths to create an unparalleled city that meets our full potential. Desired Outcomes What is a Strategic Anchor? A Strategic Anchor is a principle used to inform and evaluate the City’s decisions. They are based on the City’s vision, values, and philosophy. What is a Desired Outcome? Desired Outcomes are high level, desired results that guide the City’s overall direction. They are adopted by City Council. Chesapeake’s Strategic Plan Strategic Anchors Organizational Mission page 4PAFR FY 2024 5 About Chesapeake History of CARES “The City That Cares” initiative began in 2003 under the guidance of then-City Manager, Dr. Clarence V. Cuffee. It was intended to demonstrate the City’s value of customer service and give employees a sense of pride and ownership in their work. Over time, it evolved from the intended two to three-year campaign to become synonymous with the City of Chesapeake in more and deeper ways than ever conceived in 2003. In 2016, then-City Manager Jim Baker re-invigorated the “City That Cares” idea and assigned meanings to each of the letters of “C.A.R.E.” to help set standards for employees. Customer service was embedded in training programs, recognition programs were overhauled, and the standards were incorporated into the annual employee evaluations, further cementing staff and leadership’s commitment to high quality customer service. More recently, under City Manager Chris Price, “C.A.R.E.” became “C.A.R.E.S.,” with the introduction of “Stewardship” and a reframing of the other tenants. This, along with the interweaving of the CARES concept into the City’s overall strategic plan and an increased focus on CARES training, has helped CARES morph from a project or program to a lasting culture. C A R E S c ourteousness A ttentiveness R esponsiveness E mpowerment Stewardship Chesapeake was formed in 1963 by the merger of Norfolk County and the City of South Norfolk. Today, it is Virginia’s second largest city by both land area and population. The City of Chesapeake’s workforce is comprised of approximately 4,000 employees, across 35 departments, delivering a broad range of services to the community. The City’s ideal location in the center of Hampton Roads provides proximity to ports, military facilities, and educational centers, as well as a large and skilled employee pool. This, coupled with a high quality of life, makes Chesapeake attractive to businesses of all sizes and types, and an equally attractive place to live, work, and raise a family. Chesapeake is The City That Cares. We are Virginia’s second largest City, but we purposefully retain our small town feel and our connection to our community. We serve our community and our teammates through: CARES Standards: How we serve Dr. Clarence V. Cuffee Courteousness: Communicating with respect and authenticity to help others feel welcomed, appreciated, heard, and understood Attentiveness: Identifying and anticipating the needs of others Responsiveness: Acting upon the needs of others and providing timely follow-up Empowerment: Possessing the knowledge, resourcefulness, and integrity to address the needs of others and be accountable for outcomes Stewardship: Committing to public service and our City, and to caring for our community, our team, ourselves, and our resources page 56 Chesapeake CARE-ing Annual Statistics Public computer uses by library patrons 90,638 Tons of solid waste collected 137,026 Individuals helped at the Chesapeake Cares Resource Center 439 Police calls for service 124,710 Fire calls for service 37,497 Individuals served in mental health programs 2,994 Citizen requests received and dispatched by the Customer Contact Center 253,411 Fire and Life Safety inspections conducted 5,061 Lunches served at the Chesapeake Cares Resource Center 4,500 Volunteer hours 328,500 All numbers are for the fiscal year 2024 reporting period except for volunteer hours, which are for calendar year 2023. page 6PAFR FY 2024 7 Chesapeake’s Funding Cycle Strategic Planning Forms the Foundation City Council has designated three Strategic Anchors and five Desired Outcomes as part of their Strategic Planning Process (see page 4). Alignment to these Anchors and Outcomes is considered when making decisions, evaluating projects, and shaping the City’s future. The Anchors and Outcomes form the underpinning for development of the Budget and the determination for how resources will be allocated in both the short and long term. These tenets also form the basis for the ongoing evaluation of programs and initiatives. Winter Sprin g Fall Budget Development Sets the Plan The City’s spending plan, or Budget, is proposed by the City Manager and approved by City Council. The Operating Budget covers day-to-day expenditures, while the Capital Budget contains assets exceeding $100,000, with a life span of more than one year (ex: roads, bridges, technology). Citizen input into the Budget development process is welcome, as seen in the calendar below. Financial Reporting Tracks the Progress The City’s Annual Comprehensive Financial Report (ACFR), which is published and presented to City Council each December, reports on the organization’s financial performance for the fiscal year ended the previous June. This report, which includes independently- audited financial statements, provides information on how the City performed relative to its annual budget. The Popular Annual Financial Report (PAFR) provides a snapshot of select financial and other information of interest to the public in a clear, easy-to- follow format. Drawing from the ACFR, the PAFR presents City financial highlights in more easily-understood terms. For the Fiscal Year Ended June 30, 2024 Popular Annual Financial Report Fiscal Year 2026 Budget Calendar May 13, 2025 Operating and Capital Budgets Presented & Posted Online for Review April 22, 2025 March 25, 2025 0 0 0 ADOPTED OPERATING BUDGET FY 2025 0 0 0 ADOPTED CAPITAL IMPROVEMENT PROGRAM FY 2025-2029 For the Fiscal Year Ended June 30, 2024 Annual Comprehensive Financial Report Public Hearing on Operating and Capital Budgets - Opportunity for Citizen Comment Council Considers Approval of Operating and Capital Budgets page 78 General Fund Revenues $785.7 Million Property Taxes - $457.5 Million Taxes on real property, public service corporations, and personal property. Intergovernmental Revenues - $112.1 Million Funds received from the Commonwealth of Virginia, federal government, and transfers from Chesapeake Public Schools. Other Local Taxes - $166.9 Million Sales and use taxes, business license taxes, restaurant food tax, tobacco tax, and lodging tax, among others. Licenses, Permits, Fees - $12.3 Million Motor vehicle licenses, animal licenses, permit fees, and inspection fees, among others. Miscellaneous - $22.5 Million Fines and forfeitures, investment income, revenues from the use of property, recovered costs, and other miscellaneous local revenue. Charges for Services - $14.4 Million Recreation fees, emergency medical service fees, and plan review fees, among others. The General Fund includes the majority of City services and includes those services funded from tax revenues. Totals and percentages are rounded to allow for clear, simple reading. The decrease in expenditures in FY 2021 was caused by the receipt of federal stimulus funds (Coronavirus Aid, Relief, and Economic Security Act), which were used to reimburse personnel costs related to qualifying services. There were also increases in FY 2022 and FY 2023 attributable to adoption of the pay plan and inflationary impacts. Trend Analysis Fiscal Years 2018 to 2024 General Fund Revenue Trend (Millions) General Fund Expenditure Trend (Millions) Property Taxes 58% Other Local Taxes 21% Intergovernmental 14% Miscellaneous 3% Charges for Services 2% Licenses, Permits, Fees 2% 2018 2019 2020 2021 2022 2023 2024 Information on pages 8 and 9 come from Schedule D in the ACFR, page 32. For simplification, other financing sources and uses are not included in these displays. page 8PAFR FY 2024 9 General Fund Expenditures The City’s Budget team prepares revenue estimates for a complex organization with a high level of accuracy. For FY 2024, actual revenues came in 6.4% above projections. Conservative revenue forecasting is part of responsible budgeting and reduces the risk of a shortfall. What happens to that $131.1 million? Like a household budget, these funds are directed to savings and priorities. For the City, 12% (per City Council Policy) of the additional revenue goes to the City’s savings account. The City also uses these funds to pay for strategic economic development initiatives and high-priority capital projects (road resurfacing, roof replacement, replacement of Public Safety and other community facilities). A portion of these funds is also shared with the schools, allowing them to fund major capital maintenance or acquire school facilities, grounds, equipment, and systems. The ability to direct these funds towards these community needs contributes to the long-term financial health of the City and delivers value to the residents by helping maintain a low tax rate. $654.6 Million Education Education - $292.4 Million Funds transferred from the City to Chesapeake Public Schools. Public Safety Public Safety - $126.4 Million Police Department, Fire Department, and Emergency Management. General Government - $139.7 Million City Council, Council appointees and their departments, financial departments, libraries, development and permits, among others. 45% General Government 21% 19% Capital Outlay Capital Outlay- $2.6 Million Funds used to purchase long-term assets that are not accounted for in the capital budget. 1% Public Works 12% Parks and Recreation 2% Public Works - $77.9 Million Engineering, traffic, streets & bridges maintenance, drainage, waste collection, and funding for Hampton Roads Transit. Parks and Recreation - $15.6 Million Community Centers, maintenance, parks, and recreation and arts programs. Why is there a difference of $131.1 million between revenues and expenditures? The $131.1 million difference is made up of both additional revenue collected and expenditure savings. page 9Next >