Financial Ratio Database

City of Norfolk

Financial Ratios Database as of June 30, 2024

The following financial metrics evaluate the City’s financial resiliency across several key categories for Fiscal Year 2024.  Each metric is assessed and color-coded to reflect the associated level of risk: green indicates low risk, yellow indicates moderate risk, and red indicates high risk.

Accompanying each metric is commentary highlighting year-over-year changes based on the City’s financial data.  While some areas show room for improvement, these indicators do not signify financial distress or hardship.  Rather, this analysis is intended to track the City’s ongoing performance and support informed decision-making as the City continues its efforts toward achieving long-term financial sustainability and strength.

Notes:

1. Outstanding debt includes all outstanding General Governmental General Obligation debt.  Outstanding debt includes some self-supporting debt; therefore, this calculation does not align with the City’s debt management policies.
2. Assumes a 6.75% discount rate.

Sources:

1. The City’s financial metrics (Debt as a Percent of Assessed Value, Unassigned General Fund Reserves, General Fund Reserves, Revenue Trends, Liquidity, Long-Term Liability Burden, and the four Pension metrics) are obtained from the City’s FY 2024 Annual Comprehensive Financial Report.
2. The Poverty Line and Median Family Income metrics are obtained from the American Community Survey, under the U.S. Census Bureau.  The Regional Price Parity index is obtained from the Bureau of Economic Analysis.

• Debt as a Percent of Assessed Value – Measures the City’s debt burden relative to its tax base.  In general, a higher debt to assessed value percentage indicates a higher debt burden on the City and a lower debt to assessed value percentage indicates a lower debt burden on the City.  The City uses this ratio to determine affordability of future debt plans.
  • Relative to FY 2023, the City’s outstanding debt decreased as a result of the paying down the principal balance and no new issuance of debt in FY 2024.  Additionally, the City’s FY 2024 assessed value increased 6.9% over FY 2023 further reducing the ratio.  This ratio remains within the low-risk category.
• Unassigned General Fund Reserves – Measures the City’s current Unassigned General Fund Reserve that could be used to stabilize City revenues during periods of uncertainty relative to General Fund disbursements.  In general, the greater the unassigned reserve percentage, the more financial flexibility the City will have in periods of economic downturn or uncertainty.
  • Relative to FY 2023 levels, FY 2024 Unassigned General Fund Reserve levels declined from 11.7% (low risk) to 10.6% (moderate risk) despite an increase in the dollar amount of the unassigned fund balance.   The ratio declined because General Fund disbursements (expenditures plus transfers out) grew by nearly 37% in FY 2024 while unassigned fund balance grew by 25% over the same time period.
• General Fund Reserves – Measures total available General Fund reserves, including the Unassigned General Fund Reserves previously referenced, the Risk Management Reserve, the Economic Downturn Reserve, and the Inclusive Development Opportunity Reserve, as a percentage of General Fund disbursements.  These reserves can also be used to assist the City during periods of revenue uncertainty.   Like Unassigned General Fund Reserve, the higher these reserve levels are as a percentage of General Fund disbursements, the more financial flexibility the City has.
  • Relative to FY 2023, the City showed a substantial decrease in total available General Fund Balance in FY 2024; however, this percentage is still within the low-risk category.  The decline is primarily attributable to a planned spend-down of assigned fund balance for one-time, strategic uses, consistent with the City's long-term financial planning objectives.
• Liquidity – Measures the City’s Governmental cash relative to total Governmental Fund revenues.  In general, a higher liquidity percentage indicates more flexibility for the City to respond to unexpected expenditures as they have adequate cash on hand to fund expenditures.
  • Relative to FY 2023, the FY 2024 Liquidity ratio was consistent reflecting cash and Governmental revenues growing at a similar pace.
• Long-Term Liability Burden – Measures the City’s total existing General Fund supported General Obligation debt and pension liability against the City’s aggregate personal income.  In general, a higher long-term liability burden indicates more pressure on the City’s tax base to afford outstanding liabilities while a lower long-term liability burden indicates less pressure on the tax base.
  • The City’s long-term liabilities ratio decreased in FY 2024, relative to FY 2023, due to lower amounts of debt outstanding (described under “Debt as a Percent of Assessed Value” above) and strong pension funded ratios.
• Carrying Cost – Measures the City’s annual fixed costs for its long-term liabilities including debt service, pension costs, and OPEB contributions, against its total Governmental Fund revenues.  In general, a higher carrying cost ratio indicates a higher share of the City’s annual revenues going toward these fixed payments and a lower share of revenues available for other City priorities.
  • The City’s carrying cost ratio increased slightly from FY 2023 to FY 2024 to a level of 21.5% (high risk category).  The increased carrying costs were concentrated in the City’s debt service obligations and pension costs, which increased 7% and 11%, respectively.
• Pension Obligation – Measures the City’s existing net pension liabilities across all of its pension systems, relative to its annual revenues.  In general, a higher pension obligation liability burden indicates more pressure on the City’s annual budget while a lower long-term liability burden indicates less pressure on the tax base.
  • Relative to FY 2023, FY 2024 the City’s Pension Obligation ratio decreased (improved).  The improvement of this ratio was caused by the increased funding of the City’s pensions systems, reducing its total net pension liability.
• Pension Funding (Total) – Measures the health of the Norfolk Employees’ Retirement System (NERS) and the three Virginia Retirement System (VRS) plans the City offers through a funded ratio, with 80% typically view as financially strong.  
  • The City saw increased funding across each of its four pension systems in FY 2024 with a total funded ratio of 86.0%.
• Pension Funding (NERS Only) – Measures the health of the NERS through a funded ratio, with 80% typically view as financially strong.
  • Compared to FY 2023, FY 2024 pension funding for NERS only (excluding VRS) increased to 81.3% which is above the 80% threshold to stay financially strong.
• Pension Cost – Measures how much the City’s annual pension cost comprises of the City’s annual revenue.  In general, a lower percentage indicates a lower impact of pension costs on the City’s total annual revenues, leaving additional revenues for other City uses.
  • Relative to FY 2023, the FY 2024 Pension Cost ratio was relatively consistent, maintaining moderate risk.
• Poverty Line – Shows what percentage of the City population lives below the poverty line.
  • Norfolk’s poverty rate remained high at 17.3% in FY 2024, similar to FY 2023. While the City has seen some fluctuations, rates have not improved significantly. In response, Norfolk continues to implement a comprehensive strategy focused on housing stability, financial literacy, workforce development, and expanded access to essential services to reduce poverty and increase economic mobility.
• Adjusted Median Household Income – Measures the City’s adjusted median household income in comparison to the United States.
  • Relative to FY 2023, FY 2024 Household Income compared to the United States stayed consistent.  The City’s ratio was 83.7% which falls into the moderate risk category.

The metrics are intended to reflect the following:

For additional information or questions, please reach out to the City’s Department of Finance at FinancialRatiosDatabase@norfolk.gov.