Reporting Entity The basic financial statements of the Metropolitan Government of Nashville and Davidson County, Tennessee (the “Government”), as of and for the year ended June 30, 2025,include the operations of the following component units: the Nashville District Management Corporation, the Gulch Business Improvement District, Inc., the Hospital Authority, the Metropolitan Development and Housing Agency, the Electric Power Board, the Metropolitan Transit Authority, the Emergency Communications District, the Metropolitan Nashville Airport Authority and the Convention Center Authority. The expenditures of federal awards of these component units totaled $226,295,838 and are not included in the accompanying schedule of expenditures of federal awards for the year ended June 30, 2025. These component units are separately audited and reported on in accordance with the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), when applicable, and their expenditures are not included in the schedules of expenditures of federal and state awards of the Government for the year ended June 30, 2025.Noncash Federal Programs The Government is the recipient of federal awards that do not result in cash receipts or disbursements, including distribution of U.S. Department of Agriculture (USDA) Food Commodities (ALN 10.565), which are valued based on a USDA price list obtained from the Tennessee Department of Health. Distributions under such programs are included in the accompanying schedules of expenditures of federal and state awards. Federal Financial Assistance Without ALNs Federal awards which have no assigned ALN have been included in the last section of each appropriate federal agency section, where applicable. Pass-Through Awards Funds received by the Government and redistributed to a component unit of the Government or received directly by the component unit in the Government’s name are reported in the component unit’s financial statements and are not included in the Government’s schedules of expenditures of federal and state awards. Funds received by an agency of the Government and redistributed to another agency of the Government are reported in the receiving department’s accounts to avoid duplication of the aggregate level of awards expended by the Government. Accordingly, pass-through funds are included once. The Uniform Guidance defines a cluster of programs as a grouping of closely related programs that share common compliance requirements. According to this definition, similar programs deemed to be a cluster of programs are tested accordingly. In compliance with Tennessee state law, the accompanying schedule of expenditures of state awards is included with this report. Such schedule presents all state funded financial awards, as defined by the State Comptroller of the Treasury’s Office, and is prepared and presented in a manner consistent with the schedule of expenditures of federal awards.
The expenditures presented in the accompanying schedules of expenditures of federal and state awards were developed from agency records and federal and state financial reports which have been reconciled to the central accounting records of the Government. Governmental funds are reported using a modified accrual basis of accounting. Proprietary funds are reported using the accrual basis of accounting. These central records serve as the primary source of information in the preparation of the Government’s basic financial statements. Federal and state revenues and expenditures are included in the general fund, special revenue funds, capital projects funds, and enterprise funds in the Government’s basic financial statements. Because the schedules of expenditures of federal and state awards present only a selected portion of the Government’s operations, they are not intended to and do not present the financial position or changes in financial position of the Government.
The State of Tennessee’s portion of joint programs with the Government are included in the accompanying schedule of expenditures of state awards, except in those cases where the state’s portion is combined with the federal portion and cannot be separately identified. In such cases, the state’s portion is included in the accompanying schedule of expenditures of federal awards. The Government’s portion of such joint awards is not included.
Included in the Government’s Cost Allocation Plan are central service costs allowable under OMB cost principles. These costs may be “allocated” among programs of the Government in a consistent manner. The amount presented in the Cost Allocation Plan as “allocated” to each department is not actually charged as expenditure to that department, but is accounted for in the central service area’s budget. The amount is used to calculate indirect costs associated with programs funded by external sources that allow the inclusion of indirect costs (certain grants, user fees, etc.). Many of the Government’s federal and state funded programs allow indirect costs to be charged and include them as a line item in the grant budget. However, if the grant budget does not specifically provide for indirect costs to be charged, none of the indirect costs are reported as costs to the grantor nor are the costs included or presented in the schedules of expenditures of federal and state awards. The Government has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.
The federal and state grants received by the Government are subject to audit and adjustment. If any expenditures are disallowed by the grantor agencies as a result of such an audit, the grantor agencies could make claim for reimbursement, which would become a liability of the Government. During May 2010, Nashville and Davidson County experienced significant flooding and was declared a federal disaster area by President Barack Obama. The federal disaster declaration enables the reimbursement of certain flood-related costs to the Government through the Federal Emergency Management Agency (FEMA) of the U.S. Department of Homeland Security. Flood-related costs included in the accompanying schedule of expenditures of federal awards totaled $407,189 which includes amounts expended in prior years that were approved as eligible expenditures by FEMA in fiscal year 2025.These expenditures have been included in the accompanying schedule of federal expendituresunder ALN 97.036. Flood-related amounts receivable under ALN 97.036 totaled $6,906,318 at June 30, 2025. Such flood-related costs are subject to review, approval and adjustment by FEMA and the Office Inspector General, which is on-going. The Government continues to work with FEMA on various appeals and adjustments to the FEMA project worksheets and related grant agreements.
At June 30, 2025, there were outstanding balances of $7,042,367 and $27,677,491 on loans obtained through the Clean Water State Revolving Loan Fund (ALN 66.458) and the Drinking Water State Revolving Loan Fund (ALN 66.468), respectively. Principal payments on the Clean Water State Revolving Loan Fund and the Drinking Water State Revolving Loan Fund during fiscal year 2025 totaled $366,252 and $237,804, respectively.