HomeMy WebLinkAbout102-CAFR Document.pdf CITY OF SARATOGA
CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FISCAL YEAR 2007/08
SARATOGA, CALIFORNIA
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2008
City Council
Ann Waltonsmith..........................................................................................................Mayor
Chuck Page............................................................................................................Vice-Mayor
Kathleen King..............................................................................................Council Member
Jill Hunter.....................................................................................................Council Member
Aileen Kao....................................................................................................Council Member
Prepared under the direction of :
David Anderson, City Manager
Finance & Administrative Services Department
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CITY OF SARATOGA
TABLE OF CONTENTS
JUNE 30, 2008
iii
INTRODUCTORY SECTION
Principal Officials of the City
Letter of Transmittal 3
GFOA Certificate of Achievement for Excellence in Financial Reporting 7
Organization Chart 8
FINANCIAL SECTION
Independent Auditors' Report 11
Management's Discussion and Analysis 13
Basic Financial Statements
Government-Wide Financial Statements
Statement of Net Assets 26
Statement of Activities and Changes in Net Assets 27
Fund Financial Statements
Governmental Funds - Balance Sheet 28
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net
Assets 29
Statement of Revenues, Expenditures, and Changes in Fund Balance 30
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures,
and
Changes in Fund Balances to the Government-Wide Statement of Activities and
Changes in Net Assets 31
Fiduciary Funds - Statement of Net Assets 32
Notes to Financial Statements 33
REQUIRED SUPPLEMENTARY INFORMATION
Budgetary Information 55
Modified Approach for City Streets Infrastructure Capital Assets 57
SUPPLEMENTARY INFORMATION
Non-Major Governmental Funds 61
Combining Balance Sheet 62
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 64
Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and
Actual:
Streets and Roads Special Revenue Fund 66
Lighting and Landscaping Assessment City Special Revenue Fund 67
Community Development Block Grant Special Revenue Fund 68
Library Bond Debt Service Fund 69
Park Development Capital Projects Fund 70
Library Expansion Capital Projects Fund 71
Fiduciary Funds 73
Combining Statement of Fiduciary Net Assets – Agency Funds 74
Combining Statement of Changes in Assets and Liabilities – Agency Funds 75
Capital Assets Used in the Operation of Governmental Funds 77
Comparative Schedules by Source 79
Schedule by Function and Activity 80
Schedule of Changes by Function and Activity 82
CITY OF SARATOGA
TABLE OF CONTENTS
JUNE 30, 2008
iv
Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and
Actual
Capital Improvement Capital Projects Fund 83
STATISTICAL SECTION
Statistical Section – (Unaudited)
Net Assets by Component 88
Changes in Net Assets 89
Governmental Activities Tax Revenues by Source (Modified Accrual) 90
Fund Balances of Governmental Funds 91
Changes in Fund Balances of Governmental Funds 92
Direct and Overlapping Government 93
Assessed Value and Estimated Actual Value of Taxable Property 94
Principal Property Taxpayers 96
Property Tax Levies and Collections 98
Ratios of Outstanding Debt by Type 99
Ratios of General Bonded Debt Outstanding 100
Direct and Overlapping Governmental Activities Debt 101
Legal Debt Margin Information 102
Demographic and Economic Statistics 103
Principal Employers 104
Full-Time Equivalent City Government Employees by Function 106
Operating Indicators by Function 107
Capital Asset Statistics by Function 108
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INTRODUCTORY SECTION
CITY OF SARATOGA
ELECTED OFFICIALS AND
ADMINISTRATIVE PERSONNEL
As of June 30, 2008
CITY COUNCIL *
Ann Waltonsmith - Mayor
Chuck Page - Vice Mayor
Kathleen King
Jill Hunter
Aileen Kao
CITY STAFF
Dave Anderson – City Manager
Barbara Powell – Assistant City Manager
Cathleen Boyer – City Clerk
Mary Furey – Finance & Administrative Services Director
John Livingstone – Community Development Director
John Cherbone – Public Works Director
Michael Taylor – Recreation & Facilities Director
CITY ATTORNEY
Richard S. Taylor – Shute, Mihaly & Weinberger
INDEPENDENT AUDITOR
Vavrinek, Trine, Day & Co., LLP, CPA
* Council reorganization was completed on December 4, 2007
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C ITY OF S ARATOGA
C ITY H ALL
13777 F RUITVALE A VENUE
S ARATOGA, C ALIFORNIA 95070
(408) 868-1200
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December 19, 2008
Honorable Mayor and City Council,
The Comprehensive Annual Financial Report (CAFR) of the City of Saratoga for the year ended June 30,
2008, is hereby submitted as mandated by applicable statutes. These statutes require that the City of Saratoga
annually issue a report on its financial position and activity, and that an independent firm of certified public
accountants audit this report. Responsibilities for both the accuracy of the data and the completeness and
fairness of the presentation, including all disclosures, rests with the City's management. The information in
this report is intended to present the reader with a comprehensive view of the City's financial position and the
results of its operations for the fiscal year ending June 30, 2008, along with additional disclosures and
financial information designed to enable the reader to gain an understanding of the City's financial activities.
This report was prepared as described in Government Accounting Standards Board (GASB) Statement No.
34, Basic Financial Statements and Management's Discussions and Analysis-for State and Local
Governments (GASB 34). This GASB Statement 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
MD&A and should be read in conjunction with it.
The Comprehensive Annual Financial Report is organized in three sections:
1. Introductory Section - The introductory section, includes the table of contents, letter of transmittal, a
list of the City of Saratoga's elected officials and City administrative personnel, an organization chart
and the Government Finance Officers Association's (GFOA's) of the United States and Canada
Certificate of Achievement for Excellence in Financial Reporting to the City of Saratoga for its
CAFR for the fiscal year ending June 30, 2008.
2. Financial Section - The financial section includes the independent auditors' opinion,
management's discussion and analysis, the basic financial statements, notes to the financial
statements, combining statements of non-major funds, and required supplemental information.
3. Statistical Section - The statistical section includes both financial and non-financial data about the
City. This information has been updated in accordance with the new GASB 44.
THE REPORTING ENTITY AND ITS SERVICES
The City, incorporated in 1956, is located 40 miles south of San Francisco in the Santa Clara Valley. The
City currently covers a land area of approximately 12 square miles and contains a population of 31,592 as
reported by the Department of Finance. The City is a general law city of the State of California and
operates under a council-manager form of government. Policymaking and legislative authority are vested
in the City Council, which consists of a Mayor, Vice Mayor and three additional council members. City
Council members are elected at-large for staggered four-year terms. The Mayor is selected annually by
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the City Council. The City Council is responsible for, among other things, passing ordinances, adopting
the budget, appointing members to the City's seven advisory commissions, and hiring the City Manager
and City Attorney. The City Manager is responsible for implementing the policies and ordinances of the
City Council, overseeing the daily operations of the City, and recommending appointments of the City's
department directors to the City Council.
The City provides a limited range of services including public safety, development regulation, public works,
community and recreation activities and events, and general administrative functions. The City supports
privatization and has supplemented its work force through numerous contracts with others. Contracted
services include, but are not limited to, public safety, infrastructure maintenance, engineering services, legal
services, and recreation activities. The City is also committed to citizen participation in the evaluation,
expansion, and enhancement of services.
Saratoga residents who wish to assist the City Council in forming government policy may do so by
serving on an advisory commission. The commissions all act in an advisory capacity to the City Council,
and are comprised of the Heritage Preservation Commission, Library Commission, Parks and Recreation
Commission, Planning Commission, Public Safety Commission, and Youth Commission.
The financial reporting entity (the City) includes all the fund activity of the primary government, as well
as all of its component units. Component units are legally separated entities for which the City is fully
accountable. The City's Saratoga Public Financing Authority (PFA) component unit which provided
financial oversight of local bond obligations was finalized in FY 2005/06. The Authority's final financial
report was issued in FY 2006/07. Blended component units, although legally separate entities, are in
substance, part of the City's operations and data from these units are combined with data of the City.
Accordingly, the operations of the Landscaping and Lighting Assessment Districts are reported in the
City's financial statements.
ECONOMIC CONDITIONS AND OUTLOOK
The financial structure of Saratoga with its mostly built-out residential neighborhoods and limited
commercial development means that the two largest sources of revenue for cities—property tax and sales
tax—account for a smaller proportion of revenue than in other cities with minimal growth expected in
future years. In addition, while proposition 1A protects the city from further ongoing unrestrained state
takes of tax revenues, the potential exists under the state's current budget crisis. The city may see
shortfalls of unprotected State or County based funding or temporary borrowings of property tax revenues
permitted under Proposition 1A. With this in mind the city continues to restrict operations to minimal
services and prepare for funding impacts. Capital improvements will continue to be funded with
development fees, residual funding, and grant moneys as funding level allows.
On a positive note the City began receiving a significant increase in property tax revenues due to the
passage of Assembly Bill 117. This legislation, effective with the 2006/07 fiscal year, increased the
property tax percentage allocated to the City as a result of the Tax Equity Allocation (TEA) formula.
Assembly Member Cohn sponsored the bill which resulted from a joint effort of the City of Saratoga,
Santa Clara County and 3 other affected cities – Cupertino, Monte Sereno and Los Altos Hills. While the
TEA legislation restored the cities to the full "low tax" level of 7%, the State required the cities to
continue to remit the County's ERAF rate on these funds so that the bill would have no effect on the State
budget. The ERAF rate the County remits is 47.7%, compared to the City of Saratoga's rate of 17.14%,
resulting in a significant impact to the revenues received.
Financial Information and Major Initiatives
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 and to ensure that
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adequate accounting data is compiled to allow for the preparation of financial statements in conformity
with generally accepted accounting principles. The internal control structure is designed to provide
reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance
recognizes that: (1) the cost of a control should not exceed 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 local financial assistance, the City is also responsible for guaranteeing that
an adequate internal control structure is in place to ensure and document compliance with applicable laws and
regulations related to these programs. This internal control structure is subject to periodic evaluation by the
City's management.
The City has practiced a passive approach to investments and maintains flexibility by managing a pooled
cash system. Under the pooled cash concept, the City invests the cash of all funds with maturities
planned to coincide with cash needs. Idle cash is invested in certain eligible securities as constrained by
law and further limited by the City's investment policy. The goals of the City's investment policy are
safety, liquidity and yield.
In addition, the City maintains extensive budgetary controls. The objective of these controls is to ensure
compliance with legal provisions embodied in the annual appropriated budget approved by the City Council.
Activities of the general fund, special revenue funds, capital projects funds and debt service funds are
included in the annual appropriation.
The level of budgetary control (i.e., the level at which expenditures cannot exceed the appropriated amount)
is at the fund level. The City also maintains an encumbrance accounting system as another method of
maintaining budgetary control. Encumbered amounts lapse at year-end with the exception of the Capital
Improvements Projects, which are multiple-year projects. However, outstanding encumbrances of a material
nature are reviewed by the responsible department and in some cases a recommendation is made to the City
Council to take action by Resolution to re-appropriate these funds into the following year's budget.
The FY 2007/08 budget focused on maintaining the status quo level of services in anticipation of a leveling
of the City's base revenue sources with the weakening economy. Departmental budgets were held or reduced
to non-expansive levels. The City also prepared for a significant take by the State due to the publicity of the
State's struggle with their budget. With the anticipation of decreasing resources, the FY 2007/08 budget
process focused on operational efficiencies to streamline services, aligning fees with services provided to the
public, and strengthening the organization's tracking and communication of City operations.
OTHER INFORMATION
Independent Audit – California law requires cities to prepare an annual audit by an independent certified
public accountant. In addition to meeting the requirements set forth in statutes, the audit was also designed to
meet the requirements of the federal Single Audit Act of 1984, as amended, and the related U.S. Office of
Management and Budget's Circular. Generally accepted auditing standards set forth in the General
Accounting Office's Government Auditing Standards were used by the auditors in conducting the
engagement. The auditor's unqualified report is included in the financial section of this report. Vavrinek,
Trine, Day & Co., LLP Certified Public Accountants performed the City's Fiscal Year 2007/08 financial audit.
Awards – The City was awarded a certificate for its early implementation of GASB 34. Additionally, the
Government Finance Officers Association (GFOA) of the United States and Canada awarded a Certificate
of Achievement to the City for its Excellence in Financial Reporting on the CAFR for the fiscal year
ended June 30, 2007. In order to be awarded a Certificate of Achievement, the City published an easily
readable and efficiently organized financial report. This report satisfied both generally accepted
accounting principles and applicable legal requirements.
The Certificate of Achievement is valid for a period of one year. We believe our current CAFR continues
to meet the Certificate of Achievement program's requirements, and plan on submitting it to the GFOA to
determine its eligibility for another certificate.
Acknowledgements – This CAFR represents the culmination of numerous hours of hard work expended by
many individuals in the Finance & Administrative Services Department. In particular, we would like to
express our appreciation to Robert Edris, Sr. Accountant, Ann Xu, Accountant, Julie Ingraham, Karen Caselli,
and Melanie Whitaker, Accounting Technicians. Furthermore, we would like to thank Vavrinek, Trine, Day
& Co. CPA's for their helpful assistance in the preparation of this report. Finally, we would like to give credit
to the City Council for their ongoing interest and support in planning, conducting and advising on the
operations of the City in a responsible and progressive manner.
Respectfully submitted,
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Dave Anderson Mary Furey
City Manager Finance and Administrative Services Director
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FINANCIAL STATEMENTS
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5000 Hopyard Road, Suite 335 Pleasanton, CA 94588 Tel: 925.734.6600 Fax: 925.734.6611 www.vtdcpa.com
FRESNO • LAGUNA HILLS • PLEASANTON • RANCHO CUCAMONGA • PALO ALTO
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INDEPENDENT AUDITORS' REPORT
The Honorable Mayor and Members of the
City Council of the City of Saratoga
Saratoga, California
We have audited the accompanying financial statements of the governmental activities, each major fund,
and the aggregate remaining fund information of the City of Saratoga (the City) as of and for the year
ended June 30, 2008, which collectively comprise the City's basic financial statements as listed in the
table of contents. These financial statements are the responsibility of the City's management. 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 Governmental 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 of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, each major fund, and the aggregate remaining
fund information of the City of Saratoga, as of June 30, 2008, and the respective changes in financial
position and cash flows, where applicable, thereof for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, each major fund, and the aggregate remaining
fund information of the City of Saratoga, as of June 30, 2008, and the respective changes in financial
position, thereof and the respective budgetary comparison for the General Fund and each major Special
Revenue fund for the year then ended in conformity with accounting principles generally accepted in the
United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated December
23, 2008, on our consideration of the City'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 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 internal
control over financial reporting or on compliance. That report is an integral part of an audit performed in
accordance with Government Auditing Standards and should be considered in conjunction with this report
in considering the results of our audit.
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The required supplementary information, such as management's discussion and analysis, and the required
supplementary information as listed on the table of contents, is not a required part of the basic financial
statements, but is supplementary information required by the accounting principles generally accepted in
the United States of America. We have applied certain limited procedures, which consisted principally of
inquiries of management regarding the methods of measurement and presentation of the required
supplementary information. However, we did not audit the information and express no opinion.
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, and combining individual non-
major fund statements and schedules, and statistical section listed in the table of contents, are presented
for purposes of additional analysis and is not a required part of the basic financial statements. The
combining, individual non-major fund statements and schedules, have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken 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 express no opinion on it.
Pleasanton, California
December 23, 2008
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
13
INTRODUCTION
The following provides a narrative overview and analysis of the fiscal operations during the fiscal year
ended June 30, 2008 for the City of Saratoga. The Management Discussion and Analysis is to be read in
conjunction with the annual Transmittal Letter and the Basic Financial Statements.
FISCAL YEAR 2007/08 FINANCIAL HIGHLIGHTS
• The City's total net assets were $125,468,072 (reference pg #17).
• Total City revenues, including program and general revenues were $22,660,539 while total expenses
were $19,815,778 (reference pg #18).
• Governmental program revenues were $7,397,944, while Governmental program expenses were
$19,815,778 (reference pg #18).
• General Fund revenues were $18,823,155, while General Fund expenditures were $16,561,663
(reference pg #21).
THE BASIC FINANCIAL STATEMENTS
The Basic Financial Statements are comprised of 1) Government-wide (City-wide) Financial Statements,
and; 2) Fund Financial Statements. These two sets of financial statements provide the reader two
different perspectives of the City's financial activities and financial position.
Government-Wide Financial Statements provide a longer-term view of the City's activities as a whole,
and comprise the Statement of Net Assets and the Statement of Activities. The Statement of Net Assets
provides information about the financial position of the City as a whole, including all its capital assets and
long-term liabilities on a full accrual basis, similar to that used by corporations. The Statement of
Activities provides information about all the City's revenues and all its expenses, also on a full accrual
basis, with the emphasis on measuring net revenues and/or expenses for each of the City's programs. The
Statement of Activities explains in detail the change in Net Assets for the fiscal year.
All of the City's activities are required to be grouped into government activities and business-type
activities. The entire amount in the Statement of Net Assets and the Statement of Activities are also
required to be separated into governmental activities or business-type activities in order to provide a
summary of these two activities of the City as a whole. In the case of the City of Saratoga, there are no
business-type activities as of June 30, 2008.
Fund Financial Statements report the City's operations in more detail than the government-wide
statements and focus primarily on the short-term activities of the City's general fund and other major
funds. The Fund Financial Statements measure only current revenues and expenditures and fund
balances; they exclude capital assets, long-term debt, and other long-term amounts.
Major funds account for the major financial activities of the City and are presented individually, while the
activities of non-major funds are presented in summary, with subordinate schedules presenting the detail
for each of these other funds. Major funds are explained below.
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
14
The Government -Wide Financial Statements
Government-wide financial statements are prepared on the accrual basis, which means they measure the
flow of all economic resources of the City as a whole. The Statement of Net Assets and the Statement of
Activities present information about the following:
Governmental Activities - All of the City's basic services are considered to be governmental activities,
4including general government, community development, public safety, transportation, and, culture and
leisure. These services are supported by general City revenues such as taxes, and by specific program
revenues such as developer and recreation program fees.
Business-Type Activities - This category includes enterprise activities such as water, sewer, and utilities.
Unlike governmental services, these services are fully supported by charges paid by users based on the
amount of services they use. The City of Saratoga does not have any business-type activities at this time.
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 local governments, uses fund
accounting to ensure and demonstrate compliance with finance-related legal requirements.
Fund financial statements provide detailed information about each of the City's most significant funds,
called major funds. The concept of major funds, and the determination of which are major funds, was
established by GASB Statement 34 and replaces the concept of combining like funds and presenting them
in total. Instead, each major fund is presented individually, with all non-major funds summarized and
presented only in a single column. Subordinate schedules present the detail of these non-major funds.
Major funds present the major activities of the City for the fiscal year, and may change from year to year
as a result of changes in the pattern of the City's activities. The City's funds are segregated into three
categories: governmental funds, proprietary funds, and fiduciary funds.
Governmental Funds - The City's basic services are reported in governmental funds, which focus on how
money flows into and out of those funds and the balances left at year-end that are available for spending.
Financial statements are prepared on the modified accrual basis, which means they measure only current
financial resources and uses. Capital assets and other long-lived assets, along with long-term liabilities
are not presented in the governmental fund financial statements. Unlike the government-wide financial
statements, governmental fund financial statements focus on 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 the City's near-term financing requirements.
Fiduciary Funds – These funds account for assets held by the City in a trustee capacity or as an agent for
individuals, private organizations, other governmental units, and/or other funds. Fiduciary funds are not
reflected in the government-wide financial statements because these resources are not available to support
the City's programs. The City maintains one such fund, the Community Access Television Fund, which
acts as trustee for the CATV Foundation Board for investment purposes.
Notes to the Financial Statements
Notes to the Financial Statements provide additional information that is essential to a full understanding
of the data provided in the government-wide and fund financial statements. The notes can be found
immediately following the fund financial statements.
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
15
REQUIRED SUPPLEMENTARY INFORMATION
Required supplementary information follows the basic financial statements and includes a budgetary
comparison schedule that includes reconciliation between the statutory fund balance for budgetary
purposes and the fund balance for the General Fund as presented in the governmental fund financial
statements.
SUPPLEMENTARY INFORMATION
Combining and individual fund statements and schedules are included to provide information for non-
major governmental funds, special revenue funds, fiduciary funds, and uses of capital assets. An un-
audited statistical section provides historical and current data on financial trends, revenue and debt
capacity, demographic and economic information, and operating information.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Net assets may serve over time as an indicator of the City's financial position. The City's Total Net
Assets increased $2,844,761, from $122,623,311 in FY 2006/07 to $125,468,072 in FY 2007/08.
The most significant portion of the City's net assets $109,818,151 or 87.6% accounts for its investment in
capital assets, (e.g., land, buildings, general government infrastructure, equipment, etc.;) less any related
debt used to acquire those assets that are still outstanding. These capital assets represent infrastructure
which provides services to the citizens, consequently, these assets are not available for future spending.
$9,709,681 or 7.6% of the City's net assets is unrestricted and may be used to meet the City's ongoing
obligations to citizens and creditors.
$5,940,240 or 4.8% of the City's net assets are subjected to external restrictions on how they may be used.
Of these restricted net assets, $4,768,478 is restricted for capital projects, $853,619 is for repayment of
long-term debt and $318,143 is restricted for housing activities.
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
16
NET ASSETS
2008 2007
Assets
Current assets 18,463,116$ 17,551,165$
Non-current assets 85,003 98,336
Capital assets 123,413,151 121,992,246
Total Assets 141,961,270 139,641,747
Liabilities
Current liabilities 2,859,025 3,083,213
Long-term debt 13,634,173 13,920,327
Total Liabilities 16,493,198 17,003,540
Net Assets
Investment in capital assets, net of related debt 109,818,151 108,102,246
Restricted for Capital Projects 4,768,478 4,337,666
Restricted for Debt Service 853,619 746,557
Restricted for Special Projects 318,143 844,003
Unrestricted 9,709,681 8,607,837
Total Net Assets 125,468,072$ 122,638,309$
Governmental Activities
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
17
STATEMENT OF CHANGES IN NET ASSETS
Increase
Functions/Programs 2008 2007(Decrease)
Program Revenues
Charges for services 5,532,622$ 2,641,316$ 2,891,306$
Operating grants and contributions 150,564 2,154,998 (2,004,434)
Capital grants and contributions 1,714,758 1,282,454 432,304
Total Program Revenues 7,397,944 6,078,768 1,319,176
General Revenues
Property taxes 8,378,168 5,772,084 2,606,084
Voter approved debt 1,112,515 270,823 841,692
Sales taxes 1,057,977 994,680 63,297
Local taxes 693,950 1,099,174 (405,224)
Franchise fees 1,625,414 1,187,010 438,404
Motor vehicle in-lieu 148,865 176,771 (27,906)
Intergovernmental revenues 840,557 673,626 166,931
Investment earnings 1,056,891 2,812,875 (1,755,984)
Other revenues 348,258 131,951 216,307
Total General Revenues 15,262,595 13,118,994 2,143,601
Expenses
General and intergovernmental services 6,292,527 4,532,488 1,760,039
Public safety services 4,165,945 3,844,330 321,615
Environmental services 441,875 487,243 (45,368)
Public works 4,883,909 5,938,148 (1,054,239)
Community services 1,285,739 1,436,964 (151,225)
Community development services 2,032,217 1,992,790 39,427
Interest on long-term debt (Unallocated)713,566 767,983 (54,417)
Total Expenses 19,815,778 18,999,946$ 815,832$
Increase in Net Assets 2,844,761
Net Assets, Beginning of Year 122,623,311
Net Assets, End of Year 125,468,072$
Governmental Activities
As shown in the above Statement of Changes in Net Assets schedule, the net change in revenues from the
prior fiscal year for governmental activities from general revenues was an increase of: $2,143,601. The
net change in program revenues from the prior year was an increase of $1,319,176 for a total increase in
revenues of $3,462,777. The net change in expenses from the prior year was $815,529, resulting in an
increase in Net Assets of $2,844,761.
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
18
An analysis and graphical representation of the changes in revenues and expenditures by type of
significant events follows:
CHART OF REVENUE INCREASE OR (DECREASE)
Total Revenues by Cateogory
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
Charge for
Services
Op Grants
& Contrib
Capital
Grants &
Contrib
Property
Taxes
Voter
Approved
Debt
Sales TaxesLocal
Taxes
Franchise
Fees
Motor
Vehicle in
Lieu
Intergovt'l
Revenues
Investment
Earnings
Other
Revenues
FY 2007/08 FY 2006/07
Increases in Revenues
• An increase of $2,891,306 in the Charge for Services is primarily due to the initial increase resulting
from establishing citywide Internal Service Funds which charge prorated fees back to departments for
services and expenses.
• An increase of $2,606,084 in Property Tax revenues is due in part to the continuing rise in property
tax assessment values resulting from real estate turnover. Additional revenues are comprised of a
categorization shift in the financial report allocation from the prior fiscal year.
• Voter Approved Debt revenues reflect actual property assessment receipts for the City's 2001 G.O.
Library Improvement Bond. The $841,692 increase is attributed to a report categorization change
from the prior year.
• An increase of $216,307 in Other Revenues is again a result of changes in revenue categorization.
Other Revenues includes miscellaneous reimbursements, rebates, publication sales, and fines.
Decreases in Revenues
• The decrease of $2,004,434 in Operating Grants reflects a change in revenue reporting categorization
from the prior year. As of FY 2007/08, operating grants are restricted to reflect funding received for
use in the annual operating budget, and for this year include the State's annual SLESF/COPS grant,
and CDBG grants for operating budget expenses.
• The decrease of $1,755,984 in investment earnings from the prior year is again primarily a change in
revenue reporting categorization. FY 2007/08 category of investment earnings are restricted solely to
interest earned from the City's excess cash flow invested in LAIF. Interest rate declines contributed
to an 8% drop in the amount of interest earned from the prior fiscal year.
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
19
• Local Taxes reflect a decrease of $405,224. In FY 2007/08, Local Taxes are limited to Business
License Tax, Transient Occupancy Tax, and Construction Tax. The decrease in this report reflects a
change in the categorization of revenue from the prior year.
CHART OF EXPENDITURE INCREASE OR (DECREASE)
Total Expenditure by Category
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
General and
Intergov'tl
Services
Public Safety
Services
Environmt'l
Services
Public WorksCommunity
Services
Community
Development
Interest on
Long Term
Debt
FY 2007/08 FY 2006/07
The net change in expenditures for Governmental Activities was an increase of $887,034. Expenditures
with significant events include:
Increases in Expenditures
• A $1,760,039 increase in General and Intergovernmental Services from the prior year is primarily
from the establishment of Internal Service Funds and their resulting service charges to departments.
• Public Safety Services increased $321,615 is primarily due to an increase in officer service levels. A
School/Neighborhood Resource Officer was added in FY 2007/08.
Decreases in Expenditures
• Public Works expenditures decreased by $1,054,239 due to changes in financial structures from the
prior year. All capital improvements are now classified within the Capital Projects Funds instead of
within the Public Works Operating Budget.
MAJOR FUNDS: CHANGE IN FUND BALANCE
Included in the Major Funds are the General Fund, the Capital Improvement Funds and the Other
Governmental Funds. The Other Governmental funds include twenty-five Lighting and Landscape
Assessment Districts, the Community Development Block Grant Funds, the Library Bond Debt Service
Fund, and the Library Building Capital Improvement Fund. The net change of the Major Funds fiscal
year transactions is a net increase of $1,865,861.
General Fund - As shown in the following Major Funds table, the net change in the General Fund's Fund
Balance was an increase of $1,235,337. A net operating gain resulted from increases in various tax and
service revenues, and expenditures coming in less than budget.
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
20
Revenues are budgeted conservatively based upon the prior year experience and specific information,
while expenditures are limited at anticipated program needs at not-to-exceed projected revenue levels.
Revenues increased by $2,690,935 from the prior year primarily due to increases in property taxes and the
establishment of the Internal Service Fund charges.
MAJOR FUNDS
Other
CapitalGovernmental
GeneralImprovementFunds
Fund Balance, Beginning of Year 9,161,279$ 3,444,025$ 2,484,198$
Total Revenues 18,823,155 2,261,688 1,677,545
Total Expenditures (16,561,663) (3,523,306) (1,430,243)
Transfer In 171,564 2,033,696 35,554
Transfer Out (1,197,719) (141,554) (901,541)
Fund Balance, End of Year 10,396,616$ 4,074,549$ 1,865,513$
Net Change in Fund Balance 1,235,337$ 630,524$ (618,685)$
Capital Improvement Project Fund - As shown in the table above, the net change in the Capital
Improvement Fund was an increase of $630,524. The Capital Improvement Project Fund received
numerous significant grants and donations, including a $505,064 Proposition 1B street resurfacing grant,
$358,364 in STP street surfacing grant, $168,768 in a Safe Route to Schools grant for street
improvements, $620,096 in several VTA grants, $150,285 in donations for rehabilitating a community
facility, and various smaller grants for improvement projects. As a result, revenues increased by
$1,973,208 from the prior year. As expected with increased grant funding, expenditures also increase by
$1,432,353, leaving a resulting net operating increase of $630,524.
Other Governmental Funds - As shown in the table, there was a net decrease of $618,507 in this group
of funds. The Community Development Block Grant (CDBG) and the Lighting District Funds accounted
for the bulk of the decrease in fund balance. Total revenues decreased by $1,113,527, in large part from
categorization changes from the prior year, but also from a decrease in intergovernmental revenues and
investment earnings. Expenditures also reflect a decrease due to categorization changes, most notably in
the budgetary change of Public Works expenditures.
GOVERNMENTAL FUNDS – BUDGETARY HIGHLIGHTS
Changes from the City's General Fund original budget to the final budget are detailed in the Required
Supplementary Information Section along with a comparison to actual activity for the year ended.
Changes to the City's budget that increase or decrease appropriations in a fund must be approved by a
resolution of the City Council. Modifications to the budget that are a realignment of fiscal activities with
no impact to the fund's bottom line may be approved by the City Manager.
The following tables compare total Governmental Funds budget amounts to actuals. With respect to
transfers, the table below shows a significant variance between budget and actuals. This variance was due
to the closing of inactive funds per the Council's approval to correctly align the financial structure
effective with the FY 2007/08 budget. The original and adjusted budget amounts include transfers
approved in relation to the City's operating/capital budgeted operations, while actual transfers include
transfers to close funds.
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
21
OriginalAdjustedFiscal Year
BudgetBudgetActualsVariance
Transfers in 2,194,170$ 3,160,491$ 2,240,814$ (919,677)$
Transfers out 992,057$ 1,627,736$ 2,240,814$ 613,078$
This second table shows the adopted and adjusted budget in comparison to actuals. For FY 2007/08
actual revenues, excluding intergovernmental, were more than estimated due to the City's policy of
budgeting revenues conservatively. As a result of changes in the Capital Improvement Plan budgeting
process, budgeted expenditures include carryforward Capital Improvement Plan (CIP) project balances in
order to incorporate total appropriations into project funds. This resulted in an increase in budgeted
expenditures for FY 2007/08 only. As a result, actual CIP expenditures are much lower than budgeted.
BUDGET TO ACTUALS
FISCAL YEAR JUNE 30, 2008
Adjusted
Budget
AdoptedAdjusted to Actual
BudgetBudgetActualVariance
Source of Funds
Property taxes 8,960,555$ 8,963,755$ 9,443,435$ 479,680$
Other local taxes 1,720,900 1,720,900 1,831,227 110,327
Franchise fees 1,604,335 1,604,335 1,621,518 17,183
Motor vehicle in-lieu 235,400 235,400 148,865 (86,535)
Intergovernmental 9,549,857 9,658,857 2,269,890 (7,388,967)
Investment earnings 885,883 865,883 923,780 57,897
Other revenue 450,744 450,744 669,575 218,831
Charge for services 5,722,026 5,793,026 5,854,276 61,250
Transfers in 2,179,170 3,145,491 2,240,814 (904,677)
Total Source of Funds 31,308,870$ 32,438,391$ 25,003,380$ (7,435,011)$
Use of Funds
General and intergovernmental 5,781,773$ 5,370,153$ 4,082,504$ 1,287,649$
Public safety 3,964,467 3,964,467 4,165,945 (201,478)
Environmental services 465,035 505,035 440,683 64,352
Public works 4,817,610 4,835,810 4,276,332 559,478
Community services 2,250,508 2,250,508 1,262,415 988,093
Community development 2,507,673 2,507,673 2,025,433 482,240
Capital outlay 13,751,501 13,751,501 4,245,959 9,505,542
Debt service 1,021,106 1,021,106 1,015,941 5,165
Transfers out 1,792,258 1,627,736 2,240,814 (613,078)
Total Use of Funds 36,351,931$ 35,833,989$ 23,756,026$ 12,077,963$
CAPITAL ASSETS
The City of Saratoga elected to use the "Modified Approach" as defined by GASB Statement No. 34 for
infrastructure reporting in which eligible infrastructure capital assets are not required to be depreciated if
the following requirements are met:
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
22
• The City manages the assets using an asset management system which requires that the City (1)
perform an up-to-date inventory; (2) perform condition assessments and summarize the results using
a measurement scale; and (3) estimate the annual amount to preserve the assets at the established
condition assessment level.
• The City documents that the eligible infrastructure capital assets are being preserved approximately
at or above the established and disclosed condition assessment level.
The City policy is to achieve an average Pavement Condition Index (PCI) rating of 70 for all streets. The
City achieved the 70 rating with 86% of streets rated as Excellent to Good, 13% of streets are rated as
"Poor", and 1% of streets are rated as "Very Poor". The City spent $1,691,466 to maintain and preserve
eligible infrastructure assets. For more detailed information on Capital Assets activity, please refer to
Note F in the section entitled "Notes to the Basic Financial Statements" and "Required Supplementary
Section".
As of June 30, 2008, the City had $123,413,151 invested in a variety of capital assets, as reflected in the
following schedule, which represents an increase of $1,420,905 or slightly more than a 1% increase from
the prior year.
CAPITAL ASSETS AT YEAR END
NET OF DEPRECIATION
`
2008 2007
Land 9,887,095$ 9,887,095$
Buildings and structures 18,739,078 19,229,732
Machinery and equipment 470,217 445,910
Infrastructure 86,571,890 87,631,191
Construction in progress 7,744,871 4,798,318
123,413,151$ 121,992,246$
Governmental Activities
The following reconciliation summarizes the changes in Capital Assets:
CHANGES IN CAPITAL ASSETS
2008 2007
Beginning Balance 121,992,246$ 121,270,370$
Addition:
Building and structures - 2,564,228
Construction in progress 3,338,920 2,220,878
Infrastructure 517,473 3,446,423
Machinery and equipment - 408,694
Retirements:
Construction in progress (392,364) (5,943,381)
Depreciation (2,043,124) (1,974,966)
Ending Balance 123,413,151$ 121,992,246$
Governmental Activities
Additional information on Capital Assets is included in note 5 to the financial statements.
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
23
DEBT ADMINISTRATION
The net change in outstanding debt for the City of Saratoga is a decrease of $271,154. During the fiscal
year, the City did not enter into any new debt structures.
OUTSTANDING DEBT AT YEAR END
2008 2007
2001 General Obligation Bond 13,595,000$ 13,890,000$
Compensated absences 488,599 464,753
Total Outstanding Debt 14,083,599$ 14,354,753$
Governmental Activities
The current portions of long-term debt ($310,000 and $295,000 for 2008 and 2007, respectively), are
classified as current liabilities in the City's Statement of Net Assets.
2001 General Obligation Bond - During the fiscal year, the City made debt service payments that include
a principal reduction of $295,000 on the City's 2001 General Obligation $15,000,000 bond issue.
Claims Payable - The City is a member of a pooled liability assurance network with the Association of
Bay Area Governments. This JPA provides coverage for claims against the City, and any known
liabilities at year end are included in the financial statements. Additional information on Outstanding
Debt can be found in Note 6 to the financial statements.
ECONOMIC FACTORS
In September 2006, the City received a significant increase in new property tax revenues on an annual
basis due to the passage of Assembly Bill 117. This legislation effective with FY 2006/07 increases the
amount of property taxes allocated to the City as a result of the TEA (Tax Equity Allocation) formula.
Assembly Member Cohn sponsored the bill which resulted from a joint effort of the City of Saratoga,
Santa Clara County and the 3 other affected cities - Cupertino, Monte Sereno and Los Altos Hills. These
cities are referred to as "no/low tax cities" and will have restored a proportionate share of the property
taxes which they lost to special legislation in 1989. This resulted in a permanent increase in general fund
property taxes to approximately 5.45% of the 1% ad valorem tax property owners pay.
The economy of the City and its major initiatives for the fiscal year are discussed in the accompanying
Transmittal Letter.
REQUEST FOR FINANCIAL INFORMATION
This financial report is designed to provide a general overview of the City of Saratoga's finances for all of
Saratoga's residents, taxpayers, customers, investors, and creditors. This financial report seeks to
demonstrate the City's accountability for the money it receives. Questions concerning any of the
information provided in this report or requests for additional information should be addressed to the
Administrative Services Department, 13777 Fruitvale Avenue, Saratoga, California 95070.
24
25
BASIC FINANCIAL STATEMENTS
CITY OF SARATOGA
STATEMENT OF NET ASSETS
JUNE 30, 2008
The accompanying notes are an integral part of these financial statements.
26
Primary Government
Governmental
Activities
ASSETS
Current Assets:
Cash and investments 15,698,155$
Restricted cash and investments 1,901,682
Receivables:
Accounts 714,799
Interest 125,543
Loans 13,333
Prepaid items 9,604
Total Current Assets 18,463,116
Noncurrent Assets:
Loans receivable 85,003
Capital Assets:
Non-depreciable 63,265,798
Depreciable, net 60,147,353
Total Capital Assets 123,413,151
Total Noncurrent Assets 123,498,154
Total Assets 141,961,270
LIABILITIES
Current Liabilities:
Accounts payable 800,269
Accrued payroll 288,166
Other payable 216,727
Interest payable 296,690
Deposits payable 718,914
Unearned revenue 28,925
Claims payable 59,908
Long-term debt - due within one year 449,426
Total Current Liabilities 2,859,025
Noncurrent Liabilities:
Long-term debt - due in more than one year 13,634,173
Total Liabilities 16,493,198
NET ASSETS
Investment in capital assets, net of related debt 109,818,151
Restricted for:
Capital projects 4,768,478
Debt service 853,619
Special projects 318,143
Total Restricted 5,940,240
Unrestricted 9,709,681
Total Net Assets 125,468,072$
CITY OF SARATOGA
STATEMENT OF ACTIVITIES AND CHANGES
IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2008
The accompanying notes are an integral part of these financial statements.
27
Net (Expense)
Revenue and
Changes in
Net Assets
Primary
OperatingCapital Government
Charges for Grants andGrants and Governmental
Functions/Programs ExpensesServicesContributionsContributionsTotalActivities
Primary Government:
Governmental Activities:
General and intergovernmental services6,292,527$ 1,787,186$ -$ -$ 1,787,186$ (4,505,341)$
Public safety 4,165,945 410,822 100,000 - 510,822 (3,655,123)
Environmental services 441,875 - - - - (441,875)
Public works 4,883,909 313,410 - - 313,410 (4,570,499)
Community services 1,285,739 910,795 50,564 - 961,359 (324,380)
Community development services 2,032,217 2,110,409 - 1,714,758 3,825,167 1,792,950
Interest on long-term debt (unallocated)713,566 - - - - (713,566)
Total 19,815,778$ 5,532,622$ 150,564$ 1,714,758$ 7,397,944$ (12,417,834)
General Revenues:
Taxes:
Property taxes 8,099,071
Special assessments 279,097
Voter approved property tax 1,112,515
Sales taxes 1,057,977
Local taxes 693,950
Franchise taxes 1,625,414
Motor vehicle in-lieu 148,865
Total taxes 13,016,889
Intergovernmental 840,557
Investment earnings 1,056,891
Other revenues 348,258
Total General Revenues 15,262,595
Change in Net Assets 2,844,761
Net Assets - Beginning of Year 122,623,311
Net Assets - End of Year 125,468,072$
Program Revenues
CITY OF SARATOGA
GOVERNMENTAL FUNDS
BALANCE SHEET
JUNE 30, 2008
The accompanying notes are an integral part of these financial statements.
28
Other Total
Capital Governmental Governmenta l
GeneralImprovementFunds Funds
ASSETS
Cash and investments 11,316,622$ 4,381,533$ -$ 15,698,155$
Restricted cash and investments 53,167 - 1,848,515 1,901,682
Receivables:
Accounts 456,121 229,575 29,103 714,799
Interest 115,338 - 10,205 125,543
Loans - - 98,336 98,336
Prepaid items 8,054 1,550 - 9,604
Total Assets 11,949,302$ 4,612,658$ 1,986,159$ 18,548,119$
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable 424,417$ 353,720$ 22,132$ 800,269$
Accrued payroll 288,166 - - 288,166
Deposits payable 718,914 - - 718,914
Other payable 32,338 184,389 - 216,727
Deferred revenue 28,943 - 98,336 127,279
Claims payable 59,908 - - 59,908
Total Liabilities 1,552,686 538,109 120,468 2,211,263
Fund Balances:
Reserved for:
Petty cash 1,300 - - 1,300
Debt service - - 853,619 853,619
Unreserved, designated for:
Operations 2,808,164 - - 2,808,164
Economic uncertainty 1,500,000 - - 1,500,000
Construction in progress 1,200,000 - - 1,200,000
Community development services 782,380 - - 782,380
Environmental services 679,917 - - 679,917
Unreserved, undesignated, reported in:
General Fund 3,424,855 - - 3,424,855
Special revenue funds - - 318,143 318,143
Capital projects funds - 4,074,549 693,929 4,768,478
Total Fund Balances 10,396,616 4,074,549 1,865,691 16,336,856
Total Liabilities and Fund Balances 11,949,302$ 4,612,658$ 1,986,159$ 18,548,119$
Major Funds
CITY OF SARATOGA
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET ASSETS
JUNE 30, 2008
The accompanying notes are an integral part of these financial statements.
29
Total Fund Balances - Total Governmental Funds 16,336,856$
Amounts reported for governmental activities in the statement of net assets were
different because:
Capital assets used in governmental activities were not current financial resources. Therefore,
they were not reported in the Governmental Funds Balance Sheet. The capital assets were
adjusted as follows:
Non-depreciable capital assets 63,265,798
Depreciable capital assets, net 60,147,353
Total Capital Assets 123,413,151
Interest payable on long-term debt did not require current financial resources. Therefore,
interest payable was not reported as a liability in Governmental Funds Balance Sheet.(296,690)
Long-term r eceivables were not current available resources and therefore, were offset by
a deferred revenue amount equal to the net receivable in the governmental funds.98,354
Long-term liabilities were not due and payable in the current period. Therefore, they were not
reported in the Governmental Funds Balance Sheet. The long-term liabilities were adjusted
as follows:
General obligation bonds (13,595,000)
Compensated absences (488,599)
Total Long-Term Liabilities (14,083,599)
Net Assets of Governmental Activities 125,468,072$
CITY OF SARATOGA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2008
The accompanying notes are an integral part of these financial statements.
30
Other Tota l
Capital Governmenta l Governmenta l
Genera l ImprovementFunds Funds
REVENUES:
Property taxes 7,922,815$ -$ 1,520,620$ 9,443,435$
Other local taxes 1,831,227 - - 1,831,227
Licenses & permits 1,670,769 - - 1,670,769
Fines & forfeiture 343,744 - - 343,744
Intergovernmental - State 321,908 1,272,272 47,247 1,641,427
Intergovernmental - Other 69,834 656,930 50,564 777,328
Franchise fees 1,621,518 - - 1,621,518
Use of money and property 878,932 - 44,848 923,780
Other revenue 163,261 148,126 14,444 325,831
Current service charges 3,999,147 184,360 - 4,183,507
Total Revenues 18,823,155 2,261,688 1,677,723 22,762,566
EXPENDITURES:
Current:
General and intergovernmental services4,082,504 - - 4,082,504
Public safety 4,165,945 - - 4,165,945
Environmental services 440,683 - - 440,683
Public works 3,869,812 - 406,520 4,276,332
Community services 1,254,633 - 7,782 1,262,415
Community development services 2,025,433 - - 2,025,433
Capital outlay 722,653 3,523,306 - 4,245,959
Debt service:
Principal - - 295,000 295,000
Interest and fiscal charges - - 720,941 720,941
Total Expenditures 16,561,663 3,523,306 1,430,243 21,515,212
REVENUES OVER
(UNDER) EXPENDITURES 2,261,492 (1,261,618) 247,480 1,247,354
OTHER FINANCING SOURCES (USES):
Transfers in 171,564 2,033,696 35,554 2,240,814
Transfers out (1,197,719) (141,554) (901,541) (2,240,814)
Total Other Financing Sources (Uses)(1,026,155) 1,892,142 (865,987) -
Net Change in Fund Balances 1,235,337 630,524 (618,507) 1,247,354
FUND BALANCES:
Beginning of year 9,161,279 3,444,025 2,484,198 15,089,502
End of year 10,396,616$ 4,074,549$ 1,865,691$ 16,336,856$
Major Funds
CITY OF SARATOGA
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
TO THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES AND
CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2008
The accompanying notes are an integral part of these financial statements.
31
Net Change in Fund Balances - Total Governmental Funds 1,247,354$
Amounts reported for governmental activities in the Statement of Activities and Changes
in Net Assets were different because:
Governmental Funds report capital outlay as expenditures. However, in the Government-Wide
Statement of Activities and Changes in Net Assets, the cost of those assets was allocated over
their estimated useful lives as depreciation expense. This is the amount of capital assets
recorded in the current period. 3,464,029
Depreciation expense on capital assets was reported in the Government-Wide Statement
of Activities and Changes in Net Assets, but it did not require the use of current financial
resources. Therefore, depreciation expense was not reported as expenditures in the
Governmental Funds. (2,043,124)
Certain revenues were recorded as deferred revenue in the governmental funds because they
did not meet the revenue recognition criteria of availability. However, they were included as
revenue in the Governmental-Wide Statement of Activities and Changes in Net Assets under
the full accrual basis. (102,027)
Long-term compensated absences and claims payables were reported in the Government-Wide
Statement of Activities and Changes in Net Assets, but they did not require the use of current
financial resources. Therefore, long-term compensated absences and claims payable were not
reported as expenditures in governmental funds.
Compensated absences (23,846)
Repayment of bond principal was an expenditure in governmental funds, but the repayment
reduced long-term liabilities in the Government-Wide Statement of Net Assets.
Long-term debt repayments 295,000
Interest expense on long-term debt was reported in the Government-Wide Statement of
Activities and Changes in Net Assets, but it did not require the use of current financial
resources. Therefore, interest expense was not reported as expenditures in governmental
funds. The following amount represented the change in accrued interest from prior year.7,375
Change in Net Assets of Governmental Activities 2,844,761$
CITY OF SARATOGA
FIDUCIARY FUNDS
STATEMENT OF NET ASSETS
JUNE 30, 2008
The accompanying notes are an integral part of these financial statements.
32
Agency
Funds
ASSETS
Cash and investments 38,365$
Interest receivable 296
Total Assets 38,661$
LIABILITIES
Deposits payable 38,661$
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
33
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of Saratoga, California, (the City) have been prepared in
conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies.
The Governmental Accounting Standards Boards (GASB) is the accepted standard setting body for
establishing governmental accounting and financial reporting principles. The more significant of the
City's accounting policies are described below.
A. Financial Reporting Entity
The City was incorporated as a municipal corporation in 1956 under the general laws of the State of
California, and had a population of 31,592 at June 30, 2008. The City is a largely residential community
located in the foothills of the Santa Cruz Mountains.
The City operated under the Council-Manager form of government, with five-elected Council members
served by a full-time City Manager and staff. At June 30, 2008, the City's staff comprised 54 full-time
and 2 part-time employees, and numerous recreation seasonal employees who were responsible for the
following City provided services:
• Public Safety - The City provides round-the-clock police services under a contract with the County
Sheriff's offices. Emergency management and Fire services are provided by special district. Code
enforcement and inspection services are provided by 1 City employee.
• Public Works/Maintenance - The City builds and maintains its parks, streets, curbs, gutters, and
related public property with a force of 24 employees. Major projects may be contracted out to
reduce costs.
• Community Development - Zoning administration, plan checking and advance planning services are
provided by 16 employees.
• Culture, Recreation and Community Support services are provided by a total of 6 employees.
• General Government services are provided by a total of 10 employees.
As required by GAAP, these basic financial statements present the City and its component units, entities
for which the City is considered to be financially accountable. The City Council acts as the governing
board. In addition, the City staff performs all administrative and accounting functions for these entities
and these entities provide their services entirely to the City. Blended component units, although legally
separate entities are, in substance, part of the City's operations and data from these units are combined
with data of the City. Discretely presented component units, on the other hand, are reported in a separate
column in the government-wide financial statements to emphasize their legal separateness from the City.
Each blended component unit has a June 30 year-end. The City had no discretely presented component
units.
The following entity is reported as blended component unit:
Lighting and Landscaping Assessment District - The Lighting and Landscaping Assessment District
(the District) was established in 1980, for the levy and the collections of assessments upon the several lots
or parcels of land in the District, and for the construction or installation of improvements, including
maintenance. The District is reported as a blended component unit of the City because it has the same
Governing Board as the City. The activity for the District has been included in the accompanying basic
financial statements and no separate financial statements are issued.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
34
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus
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, liabilities, fund equity, revenues, and expenditures or expenses, as
appropriate. Governmental resources are allocated to and accounted for in individual funds based upon
the purposes for which they are to be spent and the means by which spending activities are controlled.
Government-Wide Financial Statements
The City's government-wide financial statements include a Statement of Net Assets and a Statement of
Activities and Changes in Net Assets. These statements present summaries of governmental activities for
the City. Fiduciary activities of the City are not included in these statements.
These statements are presented on an "economic resources" measurement focus and the accrual basis of
accounting. Accordingly, all of the City's assets and liabilities, including capital assets, as well as
infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Assets.
The Statement of Activities presents changes in net assets. Under the accrual basis of accounting,
revenues are recognized in the period in which they are earned while expenses are recognized in the
period in which the liability is incurred.
Certain types of transactions are reported as program revenues for the City in three categories:
• Charges for services
• Operating grants and contributions
• Capital grants and contributions
Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund
activities, payables, and receivables. All internal balances in the Statement of Net Assets have been
eliminated. The following interfund activities have been eliminated:
• Transfers in/Transfers out
Governmental Fund Financial Statements
Governmental fund financial statements include a Balance Sheet and a Statement of Revenues,
Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds
aggregated. An accompanying schedule is presented to reconcile and explain the differences in net assets
as presented in these statements to the net assets presented in the government-wide financial statements.
The City has presented all major funds that met the applicable criteria. The following funds are major
funds:
General Fund
The General Fund is used to account for all of the general resources of the City not specifically levied or
collected for other City funds and the related expenditures. The General Fund accounts for all financial
resources of the City which are not accounted for in another fund.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
35
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
Capital Improvement Capital Projects Fund
This fund accounts for resources used for the major capital acquisition and construction activities.
All governmental funds are accounted for on a spending or "current financial resources" measurement
focus and the modified accrual basis of accounting. Accordingly, only current assets and current
liabilities are included on the balance sheets. The Statement of Revenues, Expenditures and Changes in
Fund Balances present increases (revenues and other financing sources) and decreases (expenditures and
other financing uses) in net current assets.
Under the modified accrual basis of accounting, revenues are recognized in the accounting period in
which they become both measurable and available to finance expenditures of the current period.
Accordingly, revenues are recorded when received in cash, except that revenues subject to accrual (up to
60 days after year-end) are recognized when due. The primary revenue sources, which have been treated
as susceptible to accrual by the City, are property tax, sales tax, special assessments, intergovernmental
revenues, other taxes, interest revenue, rental revenue and certain charges for services. Fines, forfeitures,
licenses and permits and parking meter revenues are not susceptible to accrual because they are usually
not measurable until received in cash. Expenditures are recorded in the accounting period in which the
related fund liability is incurred.
Deferred revenues arise when potential revenues do not meet both the "measurable" and "available"
criteria for recognition in the current period. Deferred revenues also arise when the government receives
resources before it has a legal claim to them, as when grant monies are received prior to incurring
qualifying expenditures. In subsequent periods when both revenue recognition criteria are met or when
the government has a legal claim to the resources, the deferred revenue is removed from the combined
balance sheet and revenue is recognized.
Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is
provided to explain the differences created by the integrated approach of GASB Statement No. 34.
Fiduciary Fund Financial Statements
Fiduciary fund financial statements include a Statement of Net Assets. The City's fiduciary funds
represent agency funds. Agency funds do not have a measurement focus, although they do have a basis of
accounting. An accrual basis of accounting is used to record the financial transactions. Agency funds are
custodial in nature (assets equal liabilities) and do not involve measurement of results of operations.
C. Cash, Cash Equivalents and Investments
The City pools its available cash for investment purposes. The City's cash and cash equivalents are
considered to be cash on hand, demand deposits, and short-term investments with original maturity of
three months or less from the date of acquisition. Cash and cash equivalents are combined with
investments and displayed as Cash and Investments.
Deposit and Investment Risk Disclosures - In accordance with GASB Statement No. 40, Deposit and
Investment Disclosures (Amendment of GASB Statement No. 3), certain disclosure requirements, if
applicable, for Deposits and Investment Risks in the following areas:
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
36
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
C. Cash, Cash Equivalents and Investments, Continued
• Interest Rate Risk
• Credit Risk
o Overall
o Custodial Credit Risk
o Concentrations of Credit Risk
• Foreign Currency Risk
Other disclosures are specified including use of certain methods to present deposits and investments,
highly sensitive investments, credit quality at year-end and other disclosures.
The City participates in an investment pool managed by the State of California titled Local Agency
Investment Fund (LAIF), which has invested a portion of the pool funds in Structured Notes and Asset
Backed Securities. LAIF's investments are subject to credit risk with the full faith and credit of the State
of California collateralizing these investments. In addition, these Structured Notes and Asset-Backed
Securities are subject to market risk as to change in interest rates.
D. Restricted Cash and Investments
Certain restricted cash and investments are held by a fiscal agent for the redemption of bonded debt and
for acquisition and constitution of capital and special projects.
E. Interfund Transactions
Interfund services provided and used are accounted for as revenue, expenditures or expenses, as
appropriate. Transactions that constitute reimbursements to a fund for expenditures/expenses initially
made from it that are properly applicable to another fund are recorded as expenditures/expenses in the
reimbursed fund. All other interfund transactions, except for interfund services provided and used and
reimbursements, are reported as transfers. Nonrecurring or nonroutine permanent transfers of equity are
reported as residual equity transfers. All other interfund transfers are reported as transfers.
F. Capital Assets
Capital assets, which include land, buildings, improvements, furniture, equipment and infrastructure
assets (e.g., roads, bridges, sidewalks, and similar items), were reported in the applicable governmental
activities in the government-wide financial statements. Capital assets were recorded at historical cost or
estimated historical cost if actual cost was not available. Donated assets were valued at their fair market
value on the date of donation. City policy has set the capitalization threshold for reporting capital assets
at $10,000. The City has chosen the Modified Approach for reporting the streets subsystem of
infrastructure capital assets. Depreciation is recorded on a straight-line basis over the useful lives of the
assets as follows:
Buildings and structures 40 years
Machinery and equipment 5 to 10 years
Infrastructure 15 to 50 years
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
37
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
F. Capital Assets, Continued
In June 1999, GASB issued Statement No. 34 which requires the inclusion of infrastructure capital assets
in local governments' basic financial statements. In accordance with Statement No. 34, the City has
included the value of all infrastructures into its basic financial statements.
The City defines infrastructure as the basic physical assets that allow the City to function. The City
defines infrastructure as the basic physical assets including the street system, park and recreation lands
and improvements system; storm water conveyance and drainage system, buildings combined with site
amenities such as parking and landscaping areas used by the City in the conduct of its business. Each
major infrastructure system can be divided into subsystems. For example the street system can be
subdivided into pavement, curb and gutters, sidewalks, medians, streetlights, traffic control devices (signs,
signals and pavement markings), landscaping and land. These subsystems were not delineated in the
basic financial statements. The appropriate operating department maintains information regarding the
subsystems. The City elected to use the Modified Approach as defined by GASB Statement No. 34 for
infrastructure reporting of its streets, concrete and asphalt pavements. The City commissioned a physical
assessment of the streets condition as of June 30, 2005. This condition assessment will be performed
every 2 years. The next condition assessment is scheduled for March 2009. A Pavement Condition Index
(PCI) was assigned to each street segment. The index is expressed in a continuous scale from 0 to 100,
where 0 is assigned to the least acceptable physical condition and 100 is assigned to segments of street
that have the physical characteristics of a new street.
The following conditions were defined:
Condition Rating
Excellent 80 - 100
Very Good 70 - 79
Good 50 - 69
Poor 25 - 49
Very Poor 0 - 24
The City's policy relative to maintaining the street assets is to achieve an average rating of 70 for all street
segments. This acceptable rating allows minor cracking and raveling of the pavement along with minor
roughness that could be noticeable to drivers traveling at the posted speeds. For all other infrastructure
systems, the City elected to use the Basic Approach as defined by GASB Statement No. 34 for
infrastructure reporting. The City commissioned an appraisal of City owned infrastructure and property
as of June 30, 2001, and has completed an internal update for June 30, 2005. This appraisal determined
the original cost, which is defined as the actual cost to acquire new property in accordance with market
prices at the time of first construction/acquisition. Original costs were developed in one of three ways: 1)
historical records; 2) standard unit costs appropriate for the construction/acquisition date; or 3) present
cost indexed by a reciprocal factor of the price increase from the construction/acquisition date to the
current date. The accumulated depreciation, defined as the total depreciation from the date of
construction/acquisition to the current date on a straight line, unrecovered cost method was computed
using industry accepted life expectancies for each infrastructure subsystem. The book value was then
computed by deducting the accumulated depreciation from the original cost.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
38
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
G. Interest Payable
In the government-wide financial statements, interest payable of long-term debt is recognized as an
incurred liability for governmental fund types. The City has not allocated the interest on long-term debt
to departments.
In the fund financial statements, governmental fund types do not recognize the interest payable when the
liability is incurred.
H. Claims Payable
The City records a liability to reflect an actuarial estimate of ultimate uninsured losses for both general
liability claims (including property damage claims) and workers' compensation claims. The estimated
liability for workers' compensation claims and general liability claims includes "incurred but not
reported" (IBNR) claims. There is no fixed payment schedule to pay these liabilities.
I. Compensated Absences
In the government-wide financial statements, compensated absences are recorded as incurred and the
related expenses and liabilities are reported.
In the fund financial statements, compensated absences are recorded as expenditures in the years paid, as
it is the City's policy to liquidate any unpaid compensated absences at June 30 from future resources,
rather than currently available financial resources. Only the amounts which become due at June 30 are
reported in the fund financials statements as a liability.
J. Long- Term Obligations
In the government-wide financial statements, long-term debt and other long-term obligations are reported
as liabilities in the applicable governmental activities. Bond premiums and discounts, as well as issuance
costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds
payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as
deferred charges and amortized over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as
well as bond issuance costs, during the current period. The face amount of debt issued is reported as
other financial sources. Premiums received on debt issuance are reported as other financing sources while
discounts on debt issuance reported as other financing uses. Issuance costs, whether or not withheld from
the actual debt proceeds received, are reported as debt service expenditures.
K. Fund Balances
In the fund financial statements, governmental funds report reservations of fund balances for amounts that
are not available for appropriation or are legally restricted by outside parties for use for a specific purpose.
Designations of fund balances represent tentative management plans that are subject to change.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
39
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
K. Fund Balances, Continued
City Council has designated an amount for operations, which it has defined as being equal to the greater
of one-quarter of the total budgeted General Fund appropriations for the current budget year or
$2,808,164. The designation is increased annually by an amount equal to the interest the City earned on
an equivalent amount of cash and investments.
City Council has designated $1,500,000 for economic uncertainty.
CIP designation is for future Capital Improvement Projects.
Community development services designation is for development services that includes zoning
administration, inspection services, and development regulation programs.
Environmental services is designated for the environmental fees collected from surcharges on garbage
bills and tipping fees at the landfills and associated grants related to integrated waste management and
storm water management.
Equipment Replacement is designated for the maintenance and replacement of the City's tools,
equipments, and vehicles.
Information technology is designated for the support, maintenance, replacement and upgrade of existing
computer network.
Facility Improvement is designated for the maintenance and improvement of City's facilities.
L. Net Assets
In the governmental-wide financial statements, net assets are classified in the following categories:
• Invested in Capital Assets, Net of Related Debt - This amount consists of capital assets
net of accumulated depreciation and reduced by outstanding debt that attributed to the
acquisition, construction, or improvement of the assets.
• Restricted Net Assets - This amount is restricted by external creditors, grantors,
contributors, or laws or regulations of other governments.
• Unrestricted Net Assets - This amount is all net assets that do not meet the definition of
"invested in capital assets, net of related debt" or "restricted net assets."
M. Use of Restricted/Unrestricted Net Assets
When an expense is incurred for purposes for which both restricted and unrestricted net assets are
available, the City's policy is to apply restricted net assets first.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
40
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
N. Property Tax and Special Assessments
County tax assessments included secured and unsecured property taxes, and special assessments.
"Unsecured" refers to taxes on personal property. These tax assessments are secured by liens on the
property being taxed.
Revenue is recognized in the period for which the tax and assessment is levied. The County of Santa
Clara levies, bills and collects property taxes for the City, the County remits the entire amount levied and
handles all delinquencies, retaining interest and penalties. Secured and unsecured property taxes are
levied on January 1.
Secured property tax is due in two installments on November 1 and February 1, and becomes a lien on
those dates. It becomes delinquent on December 10 and April 10, respectively. Unsecured property tax is
due on July 1 and becomes delinquent on August 31.
O. Use of Estimates
The preparation of basic financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
P. New GASB Pronouncements
GASB Statement No. 45 - In June 2004, GASB issued Statement No. 45, Accounting and Financial
Reporting by Employers for Post employment Benefits Other Than Pensions. This Statement establishes
standards for the measurement, recognition, and display of other post employment benefits
expense/expenditures and related liabilities (assets), note disclosures, and, if applicable, required
supplementary information (RSI) in the financial reports of State and local governmental employers. This
Statement is not effective for the City until June 30, 2009. The City has not determined its effect on the
financial statements.
GASB Statement No. 48 - In September 2006, GASB issued Statement No. 48, Sales and Pledges of
Receivables and Future Revenues and Intra-Entity Transfers of Assets and Future Revenues. This
Statement addresses accounting and financial reporting standards for transactions where governments
exchange an interest in their expected cash flows from collecting specific receivables or specific future
revenues for immediate cash payments. This Statement establishes criteria and reporting standards
regarding the exchange as either a sale or collateralized borrowing, resulting in a liability. The City has
implemented with no effect on the financial statements.
GASB Statement No. 49 - In November 2006, GASB issued Statement No. 49, Accounting and
Financial Reporting for Pollution Remediation Obligations. This Statement addresses accounting and
financial reporting standards for pollution (including contamination) remediation obligations, which are
obligations to address the current or potential detrimental effects of existing pollution by participating in
pollution remediation activities such as site assessments and cleanups. This Statement is not effective for
the City until June 30, 2009. The City has not determined its effect on the financial statements.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
41
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
P. New GASB Pronouncements, Continued
GASB Statement No. 50 - In May 2008, GASB issued Statement No. 50, Pension Disclosures-an
amendment of GASB Statements No. 25 and No. 27. This Statement more closely aligns the financial
reporting requirements for pensions with those for other post employment benefits (OPEB) and, in doing
so, enhances information disclosed in notes to financial statements or presented as required
supplementary information (RSI) by pension plans and by employers that provide pension benefits. The
City has implemented with no significant effect on the financial statements.
GASB Statement No. 51 - In June 2008, GASB issued Statement No. 51, Accounting and Financial
Reporting for Intangible Assets. This Statement establishes accounting and financial reporting standards
for many different types of assets that may be considered intangible assets, including easements, water
rights, timber rights, patents, trademarks, and computer software. This Statement is not effective until
June 30, 2010. The City has not determined its effect on the financial statements.
GASB Statement No. 52 - In November 2007, GASB issued Statement No. 52, Land and Other Real
Estate Held as Investments by Endowments. This Statement establishes consistent standards for the
reporting of land and other real estate held as investments by essentially similar entities. This Statement
is not effective until June 30, 2009. The City has not determined its effect on the financial statements.
GASB Statement No. 53 - In June 2008, GASB issued Statement No. 53, Accounting and Financial
Reporting for Derivative Instruments. This Statement addresses the recognition, measurement, and
disclosure of information regarding derivative instruments entered into by State and local governments.
This Statement is not effective until June 30, 2010. The City has not determined its effect on the financial
statements.
NOTE 2 - CASH AND INVESTMENTS
The City maintains a cash and investment pool, which includes cash balances and authorized investments
of all funds, which the City Treasurer invests to enhance interest earnings. The pooled interest earned is
allocated to the funds based on average month-end cash and investment balances in these funds. The City
has the following cash and investments at June 30, 2008:
GovernmentalFiduciary
Activities Funds Total
Cash and investments 15,698,155$ 38,365$ 15,736,520$
Restricted cash and investments 1,901,682 - 1,901,682
Total 17,599,837$ 38,365$ 17,638,202$
Statement of Net Assets
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
42
NOTE 2 - CASH AND INVESTMENTS, Continued
The City's Cash and Investments at June 30, 2008, in more detail:
Cash and cash equivalents:
Petty cash 1,300$
Demand deposit 296,801
Total Cash and Cash Equivalents 298,101
Investments:
Local Agency Investment Fund (LAIF)17,340,076
Total Cash and Investments excluding fiscal agent 17,638,177
Cash and investments with fiscal agents 25
Total Cash and Investments including fiscal agents 17,638,202$
A. Cash Deposits
The carrying amounts of the City's cash deposits were $296,801 at June 30, 2008. Bank balances before
reconciling items were $352,906 at that date. The total amount of which was collateralized or insured
with securities held by the pledging financial institutions in the City's name is discussed below.
The California Government Code requires California banks and savings and loan associations to secure
the City's cash deposits by pledging securities as collateral. This Code states that collateral pledged in
this manner shall have the effect of perfecting a security interest in such collateral superior to those of a
general creditor. Thus, collateral for cash deposits is considered to be held in the City's name.
The market value of pledged securities must equal at least 110 percent of the City's cash deposits.
California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes
that have a value of 150 percent of the City's total cash deposits. The City may waive collateral
requirements for cash deposits which are fully insured up to $100,000 by the Federal Deposit Insurance
Corporation (FDIC). The City, however, has not waived the collateralization requirements.
The City follows the practice of pooling cash and investments of all funds, except for funds required to be
held by fiscal agents under the provisions of bond indentures. Interest income from cash and investments
with fiscal agents is credited directly to the related fund.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
43
NOTE 2 - CASH AND INVESTMENTS, Continued
B. Investments
Under the provisions of the City's investment policy, and in accordance with California Government Code,
the following investments are authorized:
• Securities of the U.S. Government or its agencies.
• Certificates of Deposit (or Time Deposits) placed with commercial banks and/or savings
and loan companies.
• Negotiable Certificates of Deposit.
• California Local Agency Investment Fund.
• Investment-grade obligations of State, local governments or public authorities.
• Money market mutual funds.
• Passbook savings account and demand deposits.
The City has complied with the provisions of GASB Statement No. 31, Accounting and Financial
Reporting for Certain Investments and for External Investments Pools. The City's investments are
recorded at fair value.
C. External Investment Pool
The City's investments with LAIF at June 30, 2008, include a portion of the pool funds invested in
Structured Notes and Asset-Backed Securities. These investments include the following:
• Structured Notes - debt securities (other than asset-backed securities) whose cash flow
characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or
more indices and/or that have embedded forwards or options.
• Asset-Backed Securities - the bulk of which are mortgage-backed securities, entitle their
purchasers to receive a share of the cash flows from a pool of assets such as principal and
interest repayments from a pool of mortgages (such as CMO's) or credit card receivables.
LAIF is overseen by the Local Agency Investment Advisory Board, which consists of five members, in
accordance with State statute.
As of June 30, 2008, the City had $17,340,076 invested in LAIF which had invested 2.29 percent of the
pool investment funds in Structured Notes and Asset-Backed Securities. The LAIF fair value factor of
0.99950219 was used to calculate the fair value of the investments in LAIF.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
44
NOTE 2 - CASH AND INVESTMENTS, Continued
D. Risk Disclosures
Interest Rate Risk
The City's investment policy does not limit investment maturities as a means of managing its exposure to
fair value losses arising from increasing interest rates. At June 30, 2008, the City had the following:
Investment
Maturities in Years
Fair Less Than
Value One Year
State of California - Local Agency Investment Fund (LAIF)17,340,076$ 17,340,076$
Credit Risk
As of June 30, 2008, the City's investments in external investment pools are unrated.
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 its investments or collateral securities that are in the
possession of an outside party. Of the City's investments, $25 of securities is held by the investment's
counterparty, the trustee for the bonds, not in the name of the City as of June 30, 2008.
NOTE 3 - LOANS RECEIVABLE
The City had the following loans receivable as of June 30, 2008:
Balance BalanceDue withinDue more
July 1, 2007AdditionsDeletionsJune 30, 2008One YearThan 1 Year
Housing Rehabilitation
Loan Program 112,780$ -$ (14,444)$ 98,336$ 13,333$ 85,003$
T
he City administers a housing rehabilitation program called the Saratoga Housing Assistance and
Rehabilitation Program (SHARP) using Housing and Community Development Act funds. Under the
SHARP, individuals with incomes below a certain level and corporations building rental housing for low
and-moderate income tenants are eligible to receive low interest loans, secured by deeds of trust, for
construction work on their properties. Federal funds received by the City are deposited with a
commercial bank. Upon approval of loans, the bank disburses the funds, arranges for and collects
repayments.
At June 30, 2008, the City had outstanding SHARP loans of $98,336.
In the Governmental Fund Financial Statements, these loans have been offset by deferred revenue as they
are not expected to be repaid immediately.
In the Government-Wide Financial Statements, the amount of deferred revenue was recognized as
revenues.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
45
NOTE 4 - FUND FINANCIAL STATEMENTS INTERFUND TRANSACTIONS
Transfers In/Out
Transfers for the year ended June 30, 2008, were as follows:
Other
GeneralCapitalGovernmental
Transfers Out FundImprovementFundsTotal
General Fund -$ 1,197,719$ -$ 1,197,719$
Capital Improvement 141,554 - - 141,554
Other Governmental Funds 30,010 835,977 35,554 901,541
Total 171,564$ 2,033,696$ 35,554$ 2,240,814$
Transfers In
The above transfers resulted from the normal course of the City's operations.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
46
NOTE 5 - CAPITAL ASSETS
Capital assets activity for the year ended June 30, 2008, consisted of the following:
Balance Balance
July 1, 2007AdditionsRetirementsReclassificationJune 30, 2008
Governmental Activities:
Capital assets, not being depreciated:
Land 9,887,095$ -$ -$ -$ 9,887,095$
Construction in process 4,798,318 3,338,917 - (392,364) 7,744,871
Infrastructure:
Street pavement system 45,241,465 - - 3,084,574 48,326,039
Total Capital Assets, not
being depreciated 59,926,878 3,338,917 - 2,692,210 65,958,005
Capital assets, being depreciated:
Buildings and structures 23,066,577 - - - 23,066,577
Machinery and equipment 1,835,003 125,112 - - 1,960,115
Infrastructure:
Bridges 1,563,654 - - - 1,563,654
Signs and lights 1,124,376 - - 207,013 1,331,389
Drainage system 39,855,914 - - 14,679 39,870,593
Sidewalks 14,578,824 - - (2,913,902) 11,664,922
Total capital assets,
being depreciated 82,024,348 125,112 - (2,692,210) 79,457,250
Accumulated depreciation:
Buildings and structures (3,836,846) (490,653) - - (4,327,499)
Machinery and equipment (1,389,093) (100,802) - - (1,489,895)
Infrastructure:
Bridges (917,175) 763 - - (916,412)
Signs and lights (640,165) (27,040) - - (667,205)
Drainage system (9,686,922) (1,046,291) - - (10,733,213)
Sidewalks (3,488,779) (379,101) - - (3,867,880)
Total accumulated depreciation(19,958,980) (2,043,124) - - (22,002,104)
Total capital assets,
being depreciated, net 62,065,368 (1,918,012) - (2,692,210) 57,455,146
Governmental Activities
Capital Assets, Net 121,992,246$ 1,420,905$ -$ -$ 123,413,151$
Primary Government
Depreciation Expense by Function:
General Government 1,420,223$
Public Works 599,231
Community Services 21,655
Community Development 2,015
Total Depreciation Expense 2,043,124$
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
47
NOTE 5 - CAPITAL ASSETS, Continued
In accordance with GASB Statement No. 34, the City has reported all capital assets including
infrastructure in the Government-Wide Statement of Net Assets. The City elected to use the "Modified
Approach" as defined by GASB Statement No. 34 for infrastructure reporting for its pavement system.
As a result, no accumulated depreciation or depreciation expense has been recorded for this system. A
more detailed discussion of the "Modified Approach" is presented in the Required Supplementary
Information section of this report. All other capital assets including other infrastructure systems were
reported using the Basic Approach whereby accumulated depreciation and depreciation expense have
been recorded.
NOTE 6 – LONG-TERM DEBT
A summary of the City's long-term debt transactions for the year ended June 30, 2008, is presented below:
Balance BalanceDue WithinDue In More
DescriptionJuly 1, 2007AdditionsRetirementsJune 30, 2008One Yearthan One Year
General Obligation Bonds:
2001 Library Bonds13,890,000$ -$ (295,000)$ 13,595,000$ 310,000$ 13,285,000$
Compensated absences464,753 23,846 - 488,599 139,426 349,173
Total 14,354,753$ 23,846$ (295,000)$ 14,083,599$ 449,426$ 13,634,173$
Classification
General Obligation 2001 Library Bonds - Original Issue $15,000,000
On May 1, 2001, the City issued General Obligation Bonds Series 2001 in the amount of $15,000,000.
The proceeds of the bonds were used to improve, renovate, and expand the Saratoga Community Library.
The bonds are payable from and secured by certain property taxes within the City. Interest on the bonds
ranges from 5 percent to 6 percent and is payable on February 1 and August 1 of each year, commencing
February 1, 2002. Principal is due annually beginning on August 1, 2002, in amounts ranging from
$60,000 to $940,000. The bonds mature on August 1, 2031, and are subject to redemption prior to
maturity at redemption prices ranging from 100 percent to 101 percent of par. The bonds may be called
for redemption beginning on or after August 1, 2011, at the option of the City. At June 30, 2008, the
outstanding balance of the bonds was $13,595,000.
The annual debt service requirements on these bonds are as follows:
Year Ended PrincipalInterestTotal
2009 310,000$ 702,756$ 1,012,756$
2010 330,000 683,556 1,013,556
2011 350,000 663,156 1,013,156
2012 370,000 641,556 1,011,556
2013 395,000 620,581 1,015,581
2014-2018 2,205,000 2,782,656 4,987,656
2019-2023 2,685,000 2,176,806 4,861,806
2024-2028 3,465,000 1,387,841 4,852,841
2029-2033 3,485,000 377,606 3,862,606
Total 13,595,000$ 10,036,516$ 23,631,516$
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
48
6. LONG-TERM DEBT, Continued
Compensated Absences
The City's liability for vested and unpaid compensated absences (accrued vacation and sick pay) has been
accrued and amounts to $488,599 at June 30, 2008. The compensated absences liability will generally be
liquidated through the General Fund.
NOTE 7 - RISK MANAGEMENT
The City participates in the following public entity risk pools:
ABAG Plan Corporation (ABAG PLAN) covers general liability claims in an amount up to $7,000,000.
The City has a deductible or uninsured liability of up to $25,000 per claim. Once the City's deductible is
met ABAG PLAN becomes responsible for payment of all claims up to the limit. During the fiscal year
ended June 30, 2008, the City contributed $130,951 for current year coverage and received no refund of
prior year excess contributions.
The ABAG Workers' Compensation Pool Insurance Authority (ABAG POOL) covers workers'
compensation claims up to the statutory limit. The City has no deductible for these claims. During the
fiscal year ended June 30, 2008, the City contributed $189,811 for current year coverage.
The City's contributions to each risk pool equal the ratio of the City's payroll to the total payrolls of all
entities participating in the same layer of each program, in each program year. Actual surpluses or losses
are shared according to a formula developed from overall loss costs and spread to member entities on a
percentage basis after a retrospective rating. There have been no significant reductions of insurance
settlements that exceeded insurance coverage for the past three years.
The workers' compensation and general liability claims payable of $59,908 reported at June 30, 2008, are
based on the requirements of GASB Statement No. 10, which requires that a liability for claims be
reported if information prior to the issuance of the basic financial statements indicates that it is probable
that a liability has been incurred at the date of the basic financial statements and the amount of the loss
can be reasonably estimated. Changes in the claims liability amounts were as follows:
Fiscal Year
Claims and
Claims PayableChanges inClaimsClaims Payable
Year Ended July 1, 2007EstimatesPaymentsJune 30, 2008
2006 -$ 92,957$ -$ 92,957$
2007 92,957$ -$ (54,262)$ 38,695$
2008 38,695$ 21,213$ -$ 59,908$
The General Fund has been used in the prior years to liquidate the liability for claims and judgments.
Each risk pool is governed by a board consisting of representatives from member municipalities. The
board controls the operations of each risk pool, including selection of management and approval of
operating budgets, independent of any influence by member municipalities beyond their representation on
the Board.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
49
NOTE 7 - RISK MANAGEMENT, Continued
The following represents summary audited financial information of ABAG Plan Corporation for the fiscal
year ended June 30, 2007 (most recent available):
Total Assets 43,306,059$
Total Liabilities 20,606,784$
Net Assets 22,699,275$
Total Revenues 8,368,584$
Total Expenses 9,211,526$
Net Decrease in Net Assets (377,217)$
The following represents summary audited financial information of ABAG Comp Shared Risk Pool for
the fiscal year ended June 30, 2008:
Total Assets 5,531,065$
Total Liabilities 3,443,668$
Net Assets 2,087,397$
Total Revenues 17,528,967$
Total Expenses 17,171,720$
Net Increase in Net Assets 357,247$
Audited financial information for each risk pool may be obtained from ABAG at P.O. Box 2089, Oakland,
California 94604-2089.
NOTE 8 - RETIREMENT PLANS
Pension Plan
Plan Description - The City contributes to the California Public Employees' Retirement System
(CalPERS), a cost-sharing multiple-employer defined benefit plan. CalPERS provide retirement and
disability benefits, annual cost-of-living adjustments, and death benefits to plan members and
beneficiaries. CalPERS act as a common investment and administrative agent for participating public
entities within the State of California. Benefit provisions and all other requirements are established by
State statute and City ordinance. Copies of CalPERS' annual financial report may be obtained from their
Executive Office located at 400 P Street, Sacramento, California 95811.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
50
NOTE 8 - RETIREMENT PLANS, Continued
Funding Policy - Active plan members are required by State statute to contribute for miscellaneous
employees 7 percent (7%) of their annual covered salary. The City employer makes the contributions
required of City employees on their behalf and for their account, which amounted to $358,139 for the
year ended June 30, 2008. The City employer is required to contribute for fiscal year 2007/08 at an
actuarially determined rate of 11.73 percent of annual covered payroll for miscellaneous employees.
Annual Pension Cost - For fiscal year 2007/08, the City's annual pension cost was $538,526. The
required contribution was determined as part of the June 30, 2005, actuarial valuation using the entry age
normal actuarial cost method. The actuarial assumptions included (a) 12 percent (12%) investment rate of
return (net of administrative expenses), (b) projected annual salary increases ranging from 3.25 percent to
14.45 percent for miscellaneous employees depending on age, service, and type of employment, and (c)
3.25 percent per year payroll growth adjustments. Both (a) and (b) included an inflation component of
3.00 percent. The actuarial value of CalPERS assets was determined using techniques that smooth the
effects of short-term volatility in the market value of investments over a three-year period. CalPERS
unfunded actuarial accrued liability (or surplus) is amortized as a level percentage of projected payroll on
a closed basis. The amortization period at June 30, 2005, was 20 years for miscellaneous employees for
prior and current service unfunded liability.
Three-Year Annual Pension Costs Trend Information for CalPERS
Annual
Pension CostAPCNet Pension
Fiscal Year (APC)ContributedObligation
2006 397,304$ 100%-$
2007 465,232 100%-
2008 538,526 100%-
NOTE 9 - NET ASSETS
A. Investment in Capital Assets, Net of Related Debt
As of June 30, 2008, the investment in capital assets, net of related debt consisted of the following:
Capital assets, net 123,413,151$
2001 General Obligation Library Bonds (13,595,000)
Investment in Capital Assets, Net of Related Debt 109,818,151$
B. Restricted Net Assets
As of June 30, 2008, the restricted net assets consisted of the following:
CapitalDebtSpecial
ProjectsServiceProjectsTotal
Restricted net assets 4,768,478$ 853,619$ 318,143$ 5,940,240$
Restricted For
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
51
NOTE 10 - JOINT POWERS AGREEMENTS
The City is a member of the Santa Clara County Traffic Authority (Traffic Authority), which consists of
various cities in the San Francisco Bay area.
The Traffic Authority was formed in 1985, by a joint exercise of powers agreement between the County
of Santa Clara and the cities of Santa Clara County for the purpose of financing highway capital
improvements within the County to serve transportation needs. Financial statements may be obtained
from the Traffic Authority at 1754 Technology Drive, Suite 224, San Jose, California 95110.
The City is also a member of other Joint Powers Authorities (JPA) but has had no material transactions
with them. These JP A's are governed by boards consisting of representatives from their members. The
boards control the operations of each JP A, including selection of management and approval of operating
budgets, independent of any influence by its members beyond their representation on the board.
NOTE 11 - EXCESS EXPENDITURES OVER APPROPRIATIONS
There were no excess of expenditures over appropriations in individual funds during the fiscal year 2008-
2009.
NOTE 12 - COMMITMENTS AND CONTINGENCIES
A. Lawsuits
The City is presently involved in certain matters of litigation that have arisen in the normal course of
conducting City business. City management believes, based upon consultation with the City Attorney,
that these cases, in the aggregate, are not expected to result in a material adverse financial impact on the
City. Additionally, City management believes that the City's insurance programs are sufficient to cover
any potential losses should an unfavorable outcome materialize.
B. Federal and State Grant Programs
The City participates in Federal and State grant programs. These programs are audited by the City's
independent accountants in accordance with the provisions of the Federal Single Audit Act Amendments
of 1996 and applicable State requirements. No cost disallowance is expected as a result of these audits;
however, these programs are subject to further examination by the grantors. Expenditures which may be
disallowed, if any, by the granting agencies, cannot be determined at this time. The City expects such
amounts, if any, to be immaterial.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
52
NOTE 12 - COMMITMENTS AND CONTINGENCIES, Continued
C. Commitments
The City had several outstanding contracts or planned construction projects as of June 30, 2008. These
projects are evidenced by contractual commitments with contractors and include:
OriginalCommitment
Vendor CommitmentRemaining
George Bianci Construction 598,747$ 57,811$
Town of Los Gatos 90,000 49,200
G, Bartolotto& Co 773,667 84,573
Schaaf & Wheeler Corporation 6,000 2,019
Colony Landscape Maintenance 195,000 8,645
Solectric Electric Contractors 14,100 4,020
Cal-West Lighting & Signal 9,600 9,600
MPA Design, Inc 68,000 13,656
Furlo & Furlo 30,000 22,242
Metro PCS 11,473 11,473
CRW Industries 838,080 299,456
2,634,667$ 562,695$
As of June 30, 2008, in the opinion of City management, there were no additional outstanding matters
that would have a significant effect on the financial position of the funds of the City.
53
REQUIRED SUPPLEMENTARY INFORMATION
54
CITY OF SARATOGA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2008
55
NOTE 1 - BUDGETARY INFORMATION
Through the budget, the City Council sets the direction of the City, allocates its resources and establishes
its priorities. The Annual Budget assures the efficient and effective uses of the City's economic resources,
as well as establishing that the highest priority objectives are accomplished.
The Annual Budget serves from July 1 to June 30, and is a vehicle that accurately and openly
communicates these priorities to the community, businesses, vendors, employees, and other public
agencies. Additionally, it establishes the foundation of effective financial planning by providing resource
planning, performance measures and controls that permit the evaluation and adjustment of the City's
performance. The City does not adopt an annual budget for the Capital Improvement Capital Projects
Fund. The Capital Improvement Capital Projects Fund is budgeted on the project length basis. The City
adopts an annual budget for Park Development and Library Expansion Capital Projects funds.
The City follows these procedures in establishing the budgetary data reflected in the basic financial
statements:
a. The City Manager submits to the City Council a proposed operating budget for the fiscal year
commencing the following July 1. The operating budget includes proposed expenditures and the
means of financing them.
b. Public hearings are conducted to obtain taxpayer comments.
c. The budget is legally enacted through passage of a resolution.
d. The City Manager may authorize transfers of budget amounts within a fund. However, any
revisions that increase the total budgeted expenditures of any fund must be approved by the City
Council. Expenditures may not legally exceed budgeted appropriations at the fund level without
City Council approval.
e. Formal budgetary integration in the form of legally adopted budgets is employed as a
management control device for all funds except the agency funds. Budgets are adopted on a basis
consistent with generally accepted accounting principles. Budgeted expenditures reported are as
amended by supplemental appropriations of the City Council.
Encumbrance accounting, under which purchase orders, contracts, and other commitments for the
expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is
employed as an extension of formal budgetary integration in the General, special revenue and capital
projects funds. Unexpended and unencumbered appropriations of these governmental funds
automatically lapse at the end of the fiscal year.
CITY OF SARATOGA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2008
56
NOTE 1 - BUDGETARY INFORMATION, Continued
The following are the budget comparison schedules for General Fund.
Budget Comparison Schedule, General Fund
Variance with
Final Budget
ActualPositive
OriginalFinalAmounts(Negative)
FUND BALANCES - BEGINNING 5,348,374$ 6,284,272$ 9,161,279$ 2,877,007$
RESOURCES (INFLOWS):
Property taxes 7,503,000 7,503,000 7,922,815 419,815
Other local taxes 1,483,100 1,483,100 1,831,227 348,127
Licenses & permits 1,416,740 1,416,740 1,670,769 254,029
Fines & forfeiture 230,000 230,000 343,744 113,744
Intergovernmental - State 364,000 400,000 321,908 (78,092)
Intergovernmental -Other 25,544 25,544 69,834 44,290
Franchise fees 1,599,335 1,599,335 1,621,518 22,183
Use of money and property 782,350 782,350 878,932 96,582
Other revenue 43,200 83,800 163,261 79,461
Charges for services 4,879,719 4,934,719 3,999,147 (935,572)
Transfer in 195,761 618,330 171,564 (446,766)
Amount available for appropriation 23,871,123 25,361,190 28,155,998 2,794,808
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Current:
General and intergovernmental services5,017,735 5,171,225 4,082,504 1,088,721
Public safety 4,160,259 4,160,259 4,165,945 (5,686)
Environmental services 465,035 465,035 440,683 24,352
Public works 3,929,652 3,944,652 3,869,812 74,840
Community services 1,394,828 1,394,828 1,254,633 140,195
Community development services 2,298,881 2,298,881 2,025,433 273,448
Capital outlay 888,311 888,311 722,653 165,658
Transfer out 400,000 1,050,321 1,197,719 (147,398)
Total charges to appropriations 13,536,966 19,373,512 17,759,382 1,614,130
FUND BALANCES - ENDING 10,334,157$ 5,987,678$ 10,396,616$ 4,408,938$
Budgeted Amounts
CITY OF SARATOGA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2008
57
NOTE 2 - MODIFIED APPROACH FOR CITY STREETS INFRASTRUCTURE CAPITAL
ASSETS
In accordance with GASB Statement No. 34, the City is required to account for and report infrastructure
capital assets. The City defines infrastructure as the basic physical assets that allow the City to function
and those resources utilized primarily by the public and provides future economic benefits for a minimum
of two years. Infrastructure can be defined as assets that are immovable and of value only to the
government. Major infrastructure system includes the street system, park and recreation lands and
improvements system; storm water conveyance and drainage system, buildings combined with site
amenities such as parking and landscaping areas used by the City in the conduct of its business. Each
major infrastructure system can be divided into subsystems. For example, the street system can be
divided into concrete and asphalt pavements, concrete curb and gutters, sidewalks, medians, streetlights,
traffic control devices (signs, signals and pavement markings), landscaping and land. Subsystem detail is
not presented in these basic financial statements; however, the City maintains detailed information on
these subsystems.
The City has elected to use the "Modified Approach" as defined by GASB Statement No. 34 for
infrastructure reporting for its Streets Pavement System. Under GASB Statement No. 34, eligible
infrastructure capital assets are not required to be depreciated under the following requirements:
• The City manages the eligible infrastructure capital assets using an asset management
system with characteristics of (1) an up-to-date inventory; (2) perform condition
assessments and summarize the results using a measurement scale; and (3) estimate
annual amount to maintain and preserve at the established condition assessment level.
• The City documents that the eligible infrastructure capital assets are being preserved
approximately at or above the established and disclosed condition assessment level.
The City commissioned a physical assessment of the streets conditions as of June 30, 2007. The study
assists the City by providing current inspection data used to evaluate current pavement condition. This
helps to maintain a City-defined desirable level of pavement performance while optimizing the
expenditure of limited fiscal resources. The entire pavement network within the City is composed of
approximately 140 centerline miles of pave surfaces. The City's road system can be grouped by function
class and includes 23.4 centerline miles of arterial, 23.3 centerline miles of collector, and 93.3 miles as
residential.
A visual survey of all pavement segments was conducted to assess the existing surface condition of each
of the individual pavement segments. Upon completion of the study, a Pavement Condition Index (PCI)
was calculated for each segment in the City's pavement network to reflect the overall pavement condition.
Rating between 0 and 100, a PCI of 0 would correspond to a badly deteriorated pavement with virtually
no remaining life. A PCI of 100 would correspond to a pavement with proper engineering design and
construction at the beginning of its life cycle.
CITY OF SARATOGA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2008
58
NOTE 2 - MODIFIED APPROACH FOR CITY STREETS INFRASTRUCTURE CAPITAL
ASSETS, Continued
The following conditions were defined:
Condition Rating
Excellent 80 - 100
Very Good 70 - 79
Good 50 - 69
Poor 25 - 49
Very Poor 0 - 24
The City's policy is to achieve an average rating of 70 for all streets, which is a very good rating. This
rating allows minor cracking and raveling of the pavement along with minor roughness that could be
noticeable to drivers traveling at the posted speeds. As of June 30, 2008, the City's street system was
rated at a PCI index of 70 on the average with the detail condition as follows:
Percent of
Condition Streets
Excellent to Good 86%
Poor 13%
Very Poor 1%
The City expended $1,691,466 on street maintenance for the year ended June 30, 2008. These routine
maintenance expenditures delayed deterioration. The budget required to maintain and improve the
current level of overall condition through the year 2011 is a minimum of $6,000,000. ($2,000,000
projected budget each year for the years ending June 30, 2009, 2010 and 2011.)
A schedule of estimated annual amount calculated to maintain and preserve its streets at the current level
compared to actual expenditures for street maintenance for the last five years is presented below:
Fiscal ActualGeneralGas TaxTotalPCI
YearBudgetExpendituresFundFundFundedIndex
2000-012,520,255$ 801,160$ 205,309$ 595,851$ 801,160$ -
2001-023,529,420 2,214,717 1,631,855 582,862 2,214,717 -
2002-032,207,922 1,553,674 974,514 579,160 1,553,674 -
2003-041,961,844 1,489,667 907,327 582,340 1,489,667 70
2004-051,800,000 2,609,648 1,478,216 1,131,432 2,609,648 70
2005-061,156,547 1,030,382 353,652 676,730 1,030,382 70
2006-072,026,404 1,156,889 19,899 970,818 990,717 70
2007-082,246,152 1,691,466 1,252,709 438,757 1,691,466 70
Funded By
As of August 2008, approximately 40 percent of the City's streets were rated below the average standard
of 70. The City will continue to rehabilitate these segments of the streets. Total deficiencies (deferred
maintenance) identified in the Pavement Management System at the end of a five-year period (2007-2011)
amounted to approximately $11,600,000 for all streets with an expected annual budget of $1,000,000.
59
SUPPLEMENTARY INFORMATION
60
NON-MAJOR GOVERNMENTAL FUNDS
61
Special Revenue Funds
Streets and Roads - This fund, closed in FY 2007/08, accounted for revenues and expenditures received
from the Federal Government, under I.S.T.E.A. and State, Street and Highway Code Sections 2105, 2106,
2107, and 2107.5. The allocations are to be spent for street maintenance or repairs; a limited amount may
be spent for engineering.
Lighting and Landscaping Assessment District - This fund accounts for revenues and expenditures
associated with development of the City.
Community Development Block Grant - This fund accounts for grant funds received from the Federal
Government for the purpose of developing viable urban communities and for the City's rehabilitation loan
program.
Debt Service Fund
Library Bond - Santa Clara County lease revenues are accumulated in this fund to pay annual principal
and interest payments on the 2001 Library Bond.
Capital Projects Funds
Park Development - This fund, closed in FY 2007/08, accounted for resources used for the acquisition
and construction of major capital facilities by the City, primarily the acquisition and construction of
various City parks.
Library Expansion - This fund accounts for resources used for the construction of the City's library.
CITY OF SARATOGA
COMBINING BALANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS
JUNE 30, 2008
62
Lighting andCommunity
LandscapingDevelopment
StreetsAssessmentBlock
and RoadsDistrictGrant
ASSETS
Restricted cash and investments -$ 228,689$ 83,454$
Receivables:
Accounts - 963 24,040
Interest - 2,302 827
Loans - - 98,336
Total Assets -$ 231,954$ 206,657$
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable -$ 22,132$ -$
Deferred Revenue - - 98,336
Total Liabilities - 22,132 98,336
Fund Balances:
Reserved for:
Debt service - - -
Unreserved, undesignated, reported in:
Special revenues funds - 209,822 108,321
Capital projects funds - - -
Total Fund Balances - 209,822 108,321
Total Liabilities and Fund Balances -$ 231,954$ 206,657$
Special Revenue
63
Debt Service
Total
Other
LibraryParkLibraryGovernmental
BondDevelopmentExpansionFunds
845,505$ -$ 690,867$ 1,848,515$
4,100 - - 29,103
4,014 - 3,062 10,205
- - - 98,336
853,619$ -$ 693,929$ 1,986,159$
-$ -$ -$ 22,132$
- - - 98,336
- - - 120,468
853,619 - - 853,619
- - - 318,143
- - 693,929 693,929
853,619 - 693,929 1,865,691
853,619$ -$ 693,929$ 1,986,159$
Capital Projects
CITY OF SARATOGA
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
NON-MAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2008
64
Lighting andCommunity
LandscapingDevelopment
StreetsAssessmentBlock
and RoadsDistrictGrant
REVENUES:
Property taxes -$ 453,173$ -$
Intergovernmental - State - 2,180 -
Intergovernmental - Other - - 50,564
Use of money and property - 12,913 4,288
Other - - 14,444
Total Revenues - 468,266 69,296
EXPENDITURES:
Current:
Public works - 406,520 -
Community services - - -
Debt service:
Principal - - -
Interest and fiscal charges - - -
Total Expenditures - 406,520 -
REVENUES OVER (UNDER) EXPENDITURES - 61,746 69,296
OTHER FINANCING SOURCES (USES):
Transfers in - - -
Transfers out (438,337) (168,000) (50,564)
Total Other Financing Sources (Uses)(438,337) (168,000) (50,564)
Net Change in Fund Balances (438,337) (106,254) 18,732
FUND BALANCES:
Beginning of year 438,337 316,076 89,589
End of year -$ 209,822$ 108,321$
Special Revenue
65
Debt Service
Total
Other
LibraryParkLibraryGovernmental
BondDevelopmentExpansionFunds
1,067,447$ -$ -$ 1,520,620$
45,067 - - 47,247
- - - 50,564
10,489 - 17,158 44,848
- - - 14,444
1,123,003 - 17,158 1,677,723
- - - 406,520
- - 7,782 7,782
295,000 - - 295,000
720,941 - - 720,941
1,015,941 - 7,782 1,430,243
107,062 - 9,376 247,480
- 35,554 - 35,554
- (244,640) - (901,541)
- (209,086) - (865,987)
107,062 (209,086) 9,376 (618,507)
746,557 209,086 684,553 2,484,198
853,619$ -$ 693,929$ 1,865,691$
Capital Projects
CITY OF SARATOGA
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES – BUDGET AND ACTUAL
STREETS AND ROADS SPECIAL REVENUE FUND
FOR THE YEAR ENDED JUNE 30, 2008
66
Variance with
Final Budget
ActualPositive
OriginalFinalAmounts(Negative)
FUND BALANCES - BEGINNING (1,067,200)$ (848,000)$ 438,337$ 1,286,337$
Amount Available for Appropriation (1,067,200) (848,000) 438,337 1,286,337
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Current:
Transfers out - - 438,337 (438,337)
Total Charges to Appropriations - - 438,337 (438,337)
FUND BALANCES - ENDING (1,067,200)$ (848,000)$ -$ 848,000$
Budgeted Amounts
CITY OF SARATOGA
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES – BUDGET AND ACTUAL
LIGHTING AND LANDSCAPING ASSESSMENT DISTRICT
SPECIAL REVENUE FUND
FOR THE YEAR ENDED JUNE 30, 2008
67
Variance with
Final Budget
ActualPositive
OriginalFinalAmounts(Negative)
FUND BALANCES - BEGINNING (5,054)$ 48,353$ 316,076$ 267,723$
RESOURCES (INFLOWS):
Property taxes 441,649 444,849 453,173 8,324
Intergovernmental - State - - 2,180 2,180
Use of money and property - - 12,913 12,913
Amount Available for Appropriation 436,595 493,202 784,342 291,140
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Current:
Public works 527,362 530,562 406,520 124,042
Transfer out - 120,000 168,000 (48,000)
Total Charges to Appropriations 527,362 650,562 574,520 76,042
FUND BALANCES - ENDING (90,767)$ (157,360)$ 209,822$ 367,182$
Budgeted Amounts
CITY OF SARATOGA
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES – BUDGET AND ACTUAL
COMMUNITY DEVELOPMENT BLOCK GRANT SPECIAL REVENUE FUND
FOR THE YEAR ENDED JUNE 30, 2008
68
Variance with
Final Budget
ActualPositive
OriginalFinalAmounts(Negative)
FUND BALANCES - BEGINNING 96,618$ 131,915$ 89,589$ (42,326)$
RESOURCES (INFLOWS):
Use of money and property - - 4,288 4,288
Other - - 14,444 14,444
Transfer in 208,399 208,399 50,564 (157,835)
Amount Available for Appropriation 305,017 340,314 158,885 (181,429)
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Current:
Transfer out 516,787 516,787 50,564 466,223
Total Charges to Appropriations 516,787 516,787 50,564 466,223
FUND BALANCES - ENDING (211,770)$ (176,473)$ 108,321$ 284,794$
Budgeted Amounts
CITY OF SARATOGA
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES – BUDGET AND ACTUAL
LIBRARY BOND DEBT SERVICE FUND
FOR THE YEAR ENDED JUNE 30, 2008
69
Variance with
Final Budget
ActualPositive
OriginalFinalAmounts(Negative)
FUND BALANCES - BEGINNING 633,000$ 721,913$ 746,557$ 24,644$
RESOURCES (INFLOWS):
Property taxes 1,015,906 1,015,906 1,067,447 51,541
Intergovernmental - State - - 45,067 45,067
Use of money and property - - 10,489 10,489
Amount Available for Appropriation 1,648,906 1,737,819 1,869,560 131,741
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Debt service:
Principal 295,000 295,000 295,000 -
Interest and fiscal charges 726,106 726,106 720,941 5,165
Total Charges to Appropriations 1,021,106 1,021,106 1,015,941 5,165
FUND BALANCES - ENDING 627,800$ 716,713$ 853,619$ 136,906$
Budgeted Amounts
CITY OF SARATOGA
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES – BUDGET AND ACTUAL
PARK DEVELOPMENT CAPITAL PROJECTS FUND
FOR THE YEAR ENDED JUNE 30, 2008
70
Variance with
Final Budget
ActualPositive
OriginalFinalAmounts(Negative)
FUND BALANCES - BEGINNING 72,200$ 198,699$ 209,086$ 10,387$
RESOURCES (INFLOWS):
Transfer in - - 35,554 35,554
Amount Available for Appropriation 72,200 198,699 244,640 45,941
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Transfer out 190,280 190,280 244,640 (54,360)
Total Charges to Appropriations 190,280 190,280 244,640 (54,360)
FUND BALANCES - ENDING (118,080)$ 8,419$ -$ (8,419)$
Budgeted Amounts
CITY OF SARATOGA
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES – BUDGET AND ACTUAL
LIBRARY EXPANSION CAPITAL PROJECTS FUND
FOR THE YEAR ENDED JUNE 30, 2008
71
Variance with
Final Budget
ActualPositive
OriginalFinalAmounts(Negative)
FUND BALANCES - BEGINNING 785,400$ 683,921$ 684,553$ 632$
RESOURCES (INFLOWS):
Use of money and property 15,000 15,000 17,158 2,158
Amount Available for Appropriation 800,400 698,921 701,711 2,790
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Current:
Community services 57,000 57,000 7,782 49,218
Total Charges to Appropriations 57,000 57,000 7,782 49,218
FUND BALANCES - ENDING 743,400$ 641,921$ 693,929$ 52,008$
Budgeted Amounts
72
FIDUCIARY FUND FINANCIAL STATEMENTS
73
Agency Funds
Cable T. V. Trust - This fund accounts for funds of the Saratoga Community Access T.V. Foundation.
Assessment Districts Bonds - This fund accumulates the monies for payment of bonds for Village
Parking Districts No. 2 and No. 3, the Leonard Road Improvement District and the Saratoga Public
Financing Authority which is financed by assessments placed on the County tax roll.
CITY OF SARATOGA
COMBINING STATEMENT OF FIDUCIARY NET ASSETS
AGENCY FUNDS
JUNE 30, 2008
74
Total
Cable T.V.AssessmentAgency
TrustDistrict BondsFunds
ASSETS
Cash and investments 38,365$ -$ 38,365$
Interest receivable 296 - 296
Total Assets 38,661$ -$ 38,661$
LIABILITIES
Deposits payable 38,661$ -$ 38,661$
CITY OF SARATOGA
COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
AGENCY FUNDS
FOR THE YEAR ENDED JUNE 30, 2008
75
Balance Balance
July 1, 2007AdditionsDeductionsJune 30, 2008
Cable T.V. Trust
Assets:
Cash and investments 63,882$ 4,483$ (30,000)$ 38,365$
Accounts receivable 152 - (152) -
Interest receivable 829 296 (829) 296
Total Assets 64,863$ 4,779$ (30,981)$ 38,661$
Liabilities:
Deposits payable 64,863$ 4,779$ (30,981)$ 38,661$
Assessment District Bonds
Assets:
Cash and investments 1,230$ -$ (1,230)$ -$
Liabilities:
Deposits payables 1,230$ -$ (1,230)$ -$
Total Agency Funds
Assets:
Cash and investments 65,112$ 4,483$ (31,230)$ 38,365$
Accounts receivable 152 - (152) -
Interest receivable 829 296 (829) 296
Total Assets 66,093$ 4,779$ (32,211)$ 38,661$
Liabilities:
Deposits payable 66,093$ 4,779$ (32,211)$ 38,661$
76
CAPITAL ASSETS
USED IN THE OPERATION OF GOVERNMENTAL FUNDS
77
78
CITY OF SARATOGA
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
COMPARATIVE SCHEDULES BY SOURCE
JUNE 30, 2008 AND 2007
79
2008 2007
GOVERNMENTAL FUNDS CAPITAL ASSETS:
Land and land improvements 9,887,095$ 9,887,095$
Buildings and structures 23,066,577 23,066,577
Machinery and equipment 1,960,112 1,835,003
Infrastructure 102,756,600 102,364,233
Construction in progress 7,744,871 4,798,318
Total Governmental Funds Capital Assets 145,415,255 141,951,226
Accumulated depreciation (22,002,104) (19,958,980)
Total Governmental Funds Capital Assets, Net 123,413,151$ 121,992,246$
INVESTMENTS IN GOVERNMENTAL FUNDS
CAPITAL ASSETS BY SOURCE:
General Fund 116,778,672$ 116,056,016$
Special revenue funds 1,418,730 1,418,730
Capital projects funds 27,120,505 24,379,132
Donations 97,348 97,348
Accumulated depreciation (22,002,104) (19,958,980)
Total Governmental Funds Capital Assets 123,413,151$ 121,992,246$
CITY OF SARATOGA
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE BY FUNCTION AND ACTIVITY
JUNE 30, 2008
80
Land andBuildingsMachinery
Land and and
ImprovementsStructuresEquipment
FUNCTION AND ACTIVITY
General and intergovernmental services:
Management services -$ 271,631$ 47,837$
Administrative services - 167,585 577,807
Intergovernmental services 118,184 3,096,786 67,606
Total General and Intergovernmental Services 118,184 3,536,002 693,250
Public safety:
Police services - - 27,813
Code enforcement - - 22,548
Total Public Safety - - 50,361
Public works:
Streets and sidewalks 134,695 30,628 606,118
Parks/open space 2,529,529 2,656,850 338,913
Total Public Works 2,664,224 2,687,478 945,031
Community services 5,362,223 2,543,198 227,811
Community development services 1,742,464 14,299,899 43,662
Total Governmental Funds Capital Assets 9,887,095 23,066,577 1,960,115
Accumulated depreciation - (4,327,499) (1,489,895)
Total Governmental Funds
Capital Assets, Net 9,887,095$ 18,739,078$ 470,220$
81
Construction
in
InfrastructureProgressTotal
-$ 115,676$ 435,144$
- - 745,392
- - 3,282,576
- 115,676 4,463,112
- - 27,813
- - 22,548
- - 50,361
102,756,597 4,748,536 108,276,574
- - 5,525,292
102,756,597 4,748,536 113,801,866
- 2,880,659 11,013,891
- - 16,086,025
102,756,597 7,744,871 145,415,255
(16,184,710) - (22,002,104)
86,571,887$ 7,744,871$ 123,413,151$
CITY OF SARATOGA
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY
FOR THE YEAR ENDED JUNE 30, 2008
82
Governmental Governmental
Funds Capital Funds Capital
Assets Assets
July 1, 2007AdditionsDeletionsJune 30, 2008
FUNCTION AND ACTIVITY
General and intergovernmental services:
Management services 362,205$ 72,940$ -$ 435,145$
Administrative services 620,283 125,109 - 745,392
Intergovernmental services 641,808 2,640,768 - 3,282,576
Total General and
Intergovernmental Services 1,624,296 2,838,817 - 4,463,113
Public safety:
Police services 27,813 - - 27,813
Code enforcement 22,548 - - 22,548
Total Public Safety 50,361 - - 50,361
Public works:
Streets and sidewalks 107,489,974 2,494,604 (1,708,004) 108,276,574
Parks/open space 5,105,402 419,890 - 5,525,292
Total Public Works 112,595,376 2,914,494 (1,708,004) 113,801,866
Community services 10,768,300 1,163,741 (918,151) 11,013,890
Community development services 16,912,893 - (826,868) 16,086,025
Total Governmental Funds Capital Assets141,951,226 6,917,052 (3,453,023) 145,415,255
Accumulated depreciation (19,958,980) (2,043,124) - (22,002,104)
Total Governmental Funds
Capital Assets, Net 121,992,246$ 4,873,928$ (3,453,023)$ 123,413,151$
CITY OF SARATOGA
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES – BUDGET AND ACTUAL
CAPITAL IMPROVEMENT CAPITAL PROJECTS FUND
FOR THE YEAR ENDED JUNE 30, 2008
83
Variance with
Final Budget
ActualPositive
OriginalFinalAmounts(Negative)
FUND BALANCES - BEGINNING 3,444,025$ 3,444,025$ 3,444,025$ -$
RESOURCES (INFLOWS):
Intergovernmental - State 2,354,301 2,354,301 1,272,272 (1,082,029)
Intergovernmental - Other 6,747,957 6,707,957 656,930 (6,051,027)
Other revenue 30,000 179,000 332,486 153,486
Transfer in 1,641,262 1,641,262 2,033,696 392,434
Amount Available for Appropriation 14,217,545 14,326,545 7,739,409 (6,587,136)
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Capital outlay 14,091,003 14,690,003 3,523,306 11,166,697
Transfer out 20,000 141,000 141,554 (554)
Total Charges to Appropriations 14,111,003 14,831,003 3,664,860 11,166,143
FUND BALANCES - ENDING 106,542$ (504,458)$ 4,074,549$ 4,579,007$
Budgeted Amounts
84
85
STATISTICAL SECTION
86
STATISTICAL SECTION (UNAUDITED)
87
This part of the City of Saratoga's comprehensive annual financial report presents detailed information as
a context for understanding what the information in the financial statements, note disclosures and required
supplementary information says about the government' overall financial health.
Contents Page
Financial Trends
These schedules contain trend information to help the reader understand how
the government's financial performance and well being have changed over time. 76-80
Revenue Capacity
These schedules contain information to help the reader assess the governments
most significant local revenue source, the property tax. 81-87
Debt Capacity
These schedules present information to help the reader assess the afford ability
of the government's current levels of outstanding debt and the government's ability
to issue additional debt in the future. 88-90
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader
understand the environment within which the government's financial activities take place. 91-93
Operating Information
These schedules contain service and infrastructure data to help the reader understand
how the information in the government's financial report relates to the services the
government provides and the activities it performs. 94-96
CITY OF SARATOGA
NET ASSETS BY COMPONENT
LAST FOUR FISCAL YEARS (Accrual Basis of Accounting)
(amounts expressed in thousands)
88
2005200620072008
Primary government
Governmental activities
Investment in capital assets,
net of related debt 105,784$ 107,100$ 108,102$ 109,818$
Restricted 6,328 5,370 5,928 5,940
Unrestricted 6,789 9,955 8,593 9,710
Total primary government 118,901$ 122,425$ 122,623$ 125,468$
Fiscal Year
Source: CAFR
CITY OF SARATOGA
CHANGES IN NET ASSETS
LAST FOUR FISCAL YEARS (Accrual Basis of Accounting)
(amounts expressed in thousands)
89
2005200620072008
Expenses:
Governmental activities:
General and intergovernmental services 4,160$ 3,473$ 4,532$ 6,293$
Public safety 3,736 3,427 3,844 4,166
Environmental services 379 465 487 441
Public works 3,450 4,287 5,938 4,884
Community services 1,929 1,395 1,437 1,286
Community development services 2,349 2,226 1,993 2,032
Interest on long-term debt (unallocated)760 754 768 714
Total governmental activities expenses 16,763 16,027 18,999 19,816
Program revenues:
Charges for services:
General and intergovernmental services - 31 452 1,787
Public safety 141 122 - 411
Environmental services 504 509 - -
Public works 8 12 257 313
Community services 757 1,008 604 911
Community development services 1,890 2,665 1,328 2,110
Operating grants and contributions 1,218 1,549 2,155 151
Capital grants and contributions 865 1,568 1,282 1,715
Total governmental activates program revenues5,383 7,464 6,078 7,398
Net (expense) revenue and change in net assets(11,380) (8,563) (12,921) (12,418)
General revenue and other changes in net assets
Taxes:
Property taxes 4,841 5,652 5,772 8,099
Special assessments 302 348 - 279
Voter approved property taxes 1,174 1,021 271 1,113
Sales taxes 1,011 988 995 1,058
Local taxes 1,143 1,288 1,099 694
Franchise taxes 995 1,040 1,187 1,625
Motor vehicle in-lieu 420 718 177 149
Total Taxes 9,886 11,055 9,501 13,017
Intergovernmental - - 673 841
Investment earnings 283 709 2,813 1,057
Other revenues 193 323 132 348
Total general revenues 10,362 12,087 13,119 15,263
Change in net assets (1,018) 3,524 198 2,845
Net assets - beginning of year 119,919 118,901 122,425 122,623
Net assets - end of year 118,901$ 122,425$ 122,623$ 125,468$
Fiscal Year
Source: CAFR
CITY OF SARATOGA
GOVERNMENTAL ACTIVITIES
TAX REVENUES BY SOURCE
LAST FOUR FISCAL YEARS (Accrual Basis of Accounting)
(amounts expressed in thousands)
90
2005200620072008
Tax revenues:
Property taxes 4,841$ 5,652$ 5,772$ 8,099$
Special assessments 302 348 - 279
Voter approved property taxes 1,174 1,021 271 1,113
Sales taxes 1,011 988 995 1,058
Local taxes 1,143 1,288 1,099 694
Motor vehicle in-lieu 995 1,040 1,187 1,625
Franchise taxes 420 718 177 149
Total tax revenues 9,886$ 11,055$ 9,501$ 13,017$
Fiscal Year
Source: CAFR
CITY OF SARATOGA
FUND BALANCES OF GOVERNMENTAL FUNDS
LAST FOUR FISCAL YEARS (Modified Accrual Basis of Accounting)
(amounts expressed in thousands)
91
2005200620072008
General fund:
Reserved -$ 1$ 64$ 1$
Unreserved 6,979 10,378 9,097 10,395
Total general fund 6,979$ 10,379$ 9,161$ 10,396$
All other governmental funds:
Reserved
Debt service funds 855$ 865$ 746$ 854$
Unreserved, reported in:
Special revenue funds 201 919 844 318
Capital project funds 5,322 3,586 4,338 4,768
Total all other governmental funds 6,378$ 5,370$ 5,928$ 5,940$
Fiscal Year
Source: CAFR
CITY OF SARATOGA
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST FOUR FISCAL YEARS (Modified Accrual Basis of Accounting)
(amounts expressed in thousands)
92
2005200620072008
Revenues:
Property taxes 6,304$ 7,022$ 6,043$ 9,443$
Other local taxes 1,862 2,275 2,121 1,831
Licensed and permits 100 79 1,340 1,671
Fines and forfeitures 162 259 396 344
Intergovernmental - state 1,375 2,660 3,631 1,641
Intergovernmental - federal 90 - - -
Intergovernmental - other 671 976 629 777
Franchise fees 1,294 1,041 1,187 1,622
Use of money any property 664 752 2,813 924
Other revenues 153 1,719 151 326
Current services charges 3,093 2,715 900 4,184
Total tax revenues 15,768 19,498 19,211 22,763
Expenditures:
Current:
General and intergovernmental services 3,238 3,346 3,806 4,083
Public safety 3,731 3,423 3,824 4,166
Environmental services 379 462 444 441
Public works 2,220 3,039 5,270 4,276
Community services 1,875 1,210 1,381 1,262
Community development services 1,990 1,847 1,962 2,026
Capital outlay 1,777 2,908 2,130 4,246
Debt service:
Principal 255 270 280 295
Interest and fiscal charges 766 760 774 721
Total expenditures 16,231 17,265 19,871 21,516
Excess of revenues
over (under) expenditures (463) 2,233 (660) 1,247
Other financing sources (uses):
Transfers in 2,492 499 3,422 2,241
Transfers out (2,492) (499) (3,422) (2,241)
Total other financing sources (uses)- - - -
Net change in fund balances (463)$ 2,233$ (660)$ 1,247$
Debt as a percentage of noncapital expenditures7.06%7.17%5.94%5.62%
Fiscal Year
CITY OF SARATOGA
PROPERTY TAX RATES
DIRECT AND OVERLAPPING GOVERNMENTS
LAST FOUR FISCAL YEARS
93
2005200620072008
General 1.00000 1.00000 1.00000 1.00000
County Retirement 0.03880 0.03880 0.03880 0.03880
County Library 0.00240 0.00240 0.00240 0.00240
City of Saratoga 0.01484 0.01170 0.00955 0.01130
Campbell School District 0.05290 0.05120 0.05080 0.04750
Cupertino Elementary School District 0.03600 0.03500 0.02890 0.03370
Moreland Elementary School District 0.06120 0.05610 0.05560 0.05690
Saratoga School District 0.03610 0.03560 0.03510 0.03630
Campbell Union High School District 0.01970 0.02240 0.01980 0.02850
Fremont Union High School District 0.02680 0.02600 0.02430 0.02410
Los Gatos-Saratoga Joint Union High School District0.04090 0.03710 0.06510 0.03450
Foothill-DeAnza Community College District 0.01290 0.01190 0.03460 0.01130
West Valley-Mission Community College District - 0.01400 0.01260 0.01180
Saratoga Fire District 0.00170 0.00520 0.00490 0.00530
Santa Clara Valley Water District - State Water Project0.00860 0.00690 0.00700 0.00670
Santa Clara Valley Water District - Zone W-1 0.00060 0.00090 0.00020 0.00400
Fiscal Year
Source: California Municipal Statistics, Inc.
CITY OF SARATOGA
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE
OF TAXABLE PROPERTY
LAST FOUR FISCAL YEARS
(amounts expressed in thousands)
94
Fiscal
Year
EndedResidentialCommercialIndustrial VacantOtherUnsecured
June 30PropertyPropertyPropertyInstitutionalPropertyPropertyProperty
20057,114,095$ 166,071$ 8,746$ 33,509$ 70,276$ 35,127$ 42,965$
20067,883,965 177,149 8,921 38,027 90,611 32,858 46,874
20078,467,894 187,142 9,099 45,706 107,228 39,536 39,764
20089,025,628 208,369 9,281 50,590 110,656 49,023 35,775
Source:1 HdL Coren & Cone, Santa Clara County Assessor 2007/08 Combined Tax Rolls
Other property includes: Irrigated, Dry Farm, Recreational Government, and Miscellaneous
2 California Municipal Statistics, Inc.
95
Total2
TotalLess:Total Taxable1 Direct
AssessedTax ExemptAssessedTax
PropertyReal PropertyValueRate
7,470,789$ (76,932)$ 7,393,857$ 1.0560
8,278,405 (133,951) 8,144,454 1.0529
8,896,369 (140,859) 8,755,510 1.0508
9,489,322 (159,369) 9,329,953 1.0525
CITY OF SARATOGA
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND FOUR YEARS AGO
JUNE 30, 2008
(amounts expressed in thousands)
96
% of Total
Taxable Taxable
Assessed Assessed
Taxpayer ValueRankValue
Cupertino Village Associates, LLC 33,535$ 10.36%
Quito Village Group, LLC 17,658 20.19%
John M. & Abby J. Sobrato 16,958 30.18%
Gregpenn Properties, LLC 15,288 40.16%
David L. House 15,134 50.16%
San Jose Water Works 11,460 60.12%
David J. & Terri E. Morrison 10,192 70.11%
Argonaut Associates, LLV 10,102 80.11%
Ashok Krishnamurthi 10,034 90.11%
David C. & Roxanne N. Petterschmidt 9,812 100.11%
Saratoga Office Center Partners, LLC
Deloise A. Jordan
Public Storage Props IX Inc
Assessed Value 9,329,953$
1 Earliest information available
Source: HdL Coren & Cone, Santa Clara County Assessor 2008 Combined Tax Rolls
2008
97
% of Total
Taxable Taxable
Assessed Assessed
ValueRankValue
16,640$ 20.23%
8,872 90.12%
9,904 40.13%
9,606 50.13%
11,427 30.15%
9,173 70.12%
19,300 10.26%
9,020 80.12%
8,530 100.12%
7,393,858$
20051
CITY OF SARATOGA
PROPERTY TAX LEVIES AND COLLECTIONS
LAST FOUR FISCAL YEARS
98
Fiscal YearTotal Tax Collections in
EndedLevy for Subsequent
June 30Fiscal YearAmountPercentageYearsAmountPercentage
20054,972,875$ 4,839,668$ 97.3%133,207$ 4,972,875$ 100.0%
20065,243,038 5,112,766 97.5%130,272 5,243,038 100.0%
20076,032,558 6,040,230 100.1%(7,672) 6,032,558 100.0%
20088,108,364 8,106,743 100.0%- 8,106,743 100.0%
Collected within the
Fiscal Year of the Levy Total Collections to Date
Source: City of Saratoga
Note: Information on this schedule is not provided from the County of Santa Clara. An estimate has
been used for the total tax levy for the fiscal year based upon collections of prior year property taxes in
the next fiscal year.
CITY OF SARATOGA
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST FOUR FISCAL YEARS
(amounts expressed in thousands)
99
2005200620072008
Governmental activities
General obligation bonds 14,440$ 14,170$ 13,890$ 13,595$
Total primary government 14,440$ 14,170$ 13,890$ 13,595$
Percentage of Personal Income 1 0.00%0.00%N/AN/A
Per capita2 468 460 443 430
Fiscal Year
Source: CAFR
Note: 1Bureau of Economic Analysis - personal income information only available through 2006.
San Jose-Sunnyvale-Santa Clara region.
2Population information from California State Controller's Office.
CITY OF SARATOGA
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST FOUR FISCAL YEARS
(amounts expressed in thousands, except per capita amount)
100
2005200620072008
General obligation bonds 14,440$ 14,170$ 13,890$ 13,595$
Less: Amount available in debt service fund(855) (865) (747) (854)
Total primary government 13,585$ 13,305$ 13,143$ 12,741$
Percentage of actual taxable
value of property 0.18%0.16%0.15%0.14%
Per capita1 440 431 419 403
Fiscal Year
Source: CAFR
1Population information from California State Controller's Office.
CITY OF SARATOGA
DIRECT AND OVERLOAPPING GOVERNMENTAL ACTIVITIES DEBT
JUNE 30, 2008
(amounts expressed in thousands)
101
Estimated
EstimatedShare of
DebtPercentageOverlapping
OutstandingApplicable 1 Debt
Direct and Overlapping Tax and Assessment Debt:
Foothill-De Anza Community College District 484,814$ 1.811%8,780$
West Valley Community College District 86,325 11.676%10,079
Campbell Union High School District 143,980 5.510%7,933
Fremont Union High School District 132,000 3.852%5,085
Los Gatos-Saratoga Joint Union High School District65,100 41.077%26,741
Campbell Union School District 104,347 6.897%7,197
Cupertino Union School District 128,130 6.439%8,250
Moreland School District 72,492 12.777%9,262
Saratoga Union School District 52,537 86.250%45,313
Saratoga Fire Protection District 5,419 97.615%5,290
City of Saratoga 13,595 100.000%13,595
Santa Clara Valley Water District Benefit Assessment165,020 3.680%6,073
Total Direct and Overlapping Tax and Assessment Debt 153,598
Overlapping General Fund Debt:
Santa Clara County General Fund Obligations 895,655 3.680%32,960$
Santa Clara County Pension Obligations 389,485 3.680%14,333
Santa Clara County Board of Education
Certificates of Participation 15,445 3.680%568
Santa Clara County Vector Control District
Certificates of Participation 4,275 3.680%157
Foothill-De Anza Community College District
Certificates of Participation 27,685 1.811%501
Los Gatos-Saratoga Joint Union High School District
Certificates of Participation 3,795 41.077%1,559
Cupertino Union School District
Certificates of Participation 2,375 6.439%153
Saratoga Union School District
Certificates of Participation 6,890 86.250%5,943
Midpeninsula Open Space Park District
General Fund Obligations 104,840 6.490%6,804
Total Overlapping General Fund Debt 62,978
Combined Total Debt 2 216,576$ 1 Percentage of overlapping agencies assessed valuation located within boundaries of the City.
2 Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and tax allocation bonds and non-bonded
capital lease obligations.
Source: California Municipal Statistics, Inc.
CITY OF SARATOGA
LEGAL DEBT MARGIN INFORMATION
LAST FOUR FISCAL YEARS
(amounts expressed in thousands)
102
2005200620072008
Debt Limit 1,120,618$ 1,241,761$ 1,334,455$ 1,423,398$
Total net debt applicable to limit 13,585 13,305 13,143 12,741
Legal debt margin 1,107,033$ 1,228,456$ 1,321,312$ 1,410,657$
Total net debt applicable to the limit
as a percentage of debt limit 1.21%1.07%0.98%0.90%
Legal debt margin calculation
Assessed value 7,393,857$ 8,144,454$ 8,755,510$ 9,329,953$
Add back: exempt real property 76,932 133,951 140,859 159,369
Total assessed value 7,470,789$ 8,278,405$ 8,896,369$ 9,489,322$
Debt limit (15% of total assessed value)1,120,618$ 1,241,761$ 1,334,455$ 1,423,398$
Debt applicable to limit:
General obligation bonds 14,440$ 14,170$ 13,890$ 13,595$
Less: Amount available in debt service fund(855) (865) (747) (854)
Total net debt applicable to limit 13,585 13,305 13,143 12,741
Legal debt margin 1,107,033$ 1,228,456$ 1,321,312$ 1,410,657$
Fiscal Year
Source: CAFR
CITY OF SARATOGA
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST FOUR FISCAL YEARS
103
PersonalPer Capita
FiscalCityIncomePersonalLaborUnemployment
YearPopulation1 (in millions)2 Income3 Force 4 Rate4
2005 30,850 224,702$ 50,373$ 12,600 2.5%
2006 30,835 240,484 N/A 12,700 2.1%
2007 31,352 N/A N/A 12,900 2.3%
2008 31,592 N/A 73,848 13,100 3.2%
Source:
1 State of California Controllers Office
2 Bureau of Economic Analysis – San Jose, Sunnyvale, Santa Clara region
3 Claritas Inc.
4 State of California Employment Development Department
CITY OF SARATOGA
PRINCIPAL EMPLOYERS
LAST FOUR FISCAL YEARS
104
Percentage Percentage
of Total City of Total City
Employer EmployeesRankEmploymentEmployeesRankEmployment
Gene's Fine Foods 85 1 1.39%85 1 1.39%
Safeway 65 2 1.06%65 2 1.06%
Saratoga Country Club 65 3 1.06%65 3 1.06%
24 Hour Fitness 20 4 0.33%30 4 0.49%
Longs Drug 20 5 0.33%20 6 0.33%
Classic Car Wash 20 6 0.33%20 7 0.33%
Harmonie European Day Spa20 7 0.33%20 8 0.33%
Hinshaw, Draa & Marsh 20 8 0.33%20 9 0.33%
Jakes of Saratoga 20 9 0.33%
Bella Saratoga 18 100.29%20 100.33%
Windemere SVP 27 5 0.44%
Total City Employment2 6,129 6,129
2008 2007
Source: City of Saratoga
1 Earliest information available
2 Current information unavailable
105
Percentage Percentage
of Total City of Total City
EmployeesRankEmploymentEmployeesRankEmployment
85 11.39%85 11.39%
65 21.06%65 21.06%
65 31.06%65 31.06%
30 40.49%30 40.49%
20 60.33%20 60.33%
20 70.33%20 70.33%
20 80.33%20 80.33%
20 90.33%20 90.33%
20 100.33%20 100.33%
27 50.44%27 50.44%
6,129 6,129
2006 20051
CITY OF SARATOGA
FULL-TIME EQUIVALENT CITY GOVERNMENT
EMPOLYEES BY FUNCTION
LAST FOUR FISCAL YEARS
106
2005200620072008
Function
General government 12.65 10.75 11.00 13.00
Public works 20.80 20.75 21.75 22.75
Community development 13.00 13.00 14.00 14.00
Parks and recreation 10.30 10.35 10.60 10.60
Total 56.75 54.85 57.35 60.35
Fiscal Year
Source: City of Saratoga Budget Document
CITY OF SARATOGA
OPERATING INDICATORS BY FUNCTION
LAST FOUR FISCAL YEARS
107
2005200620072008
Function
Public safety
Part 1 crimes1 463 426 425 381
Total incidents 42,011 40,567 39,663 41,243
Police reports 1,767 1,659 1,767 1,941
Public Works
Street resurfacing (miles)N/A 5 14 N/A
Street lights repaired 2 3 3 12
Potholes filled (sq. ft.)N/A5,000 5,000 7,000
Community Development
Total permit valuation ($000)74,668 94,485 69,935 70,442
Parks and Recreation
Classes, trips (enrollment) community events5,192 5,260 4,606 4,740
Sports programs (e.g. basketball, softball)470 473 515 591
Child care programs (enrollment)200 163 159 225
Day/summer camps (enrollment)301 287 205 242
Teen/youth council (enrollment)2,506 3,798 2,221 94
Dance program (four quarters)412 452 211 42
Senior center (enrollment/attendance days)22,312 22,591 18,515 17,826
Fiscal Year
Source: City of Saratoga various records
1 Part 1 Crimes are the following as reported to DOJ: homicide, rape, robbery, burglary, assault, theft,
auto theft, and arson.
CITY OF SARATOGA
OPERATING INDICATORS BY FUNCTION
LAST FOUR FISCAL YEARS
108
2005200620072008
Function
Public safety
Police Station 1 1 - -
Fire Station
Saratoga Fire District 1 1 1 1
Central Fire District 1 1 1 1
Public Works
Street Miles - Private 13 13 13 13
Street Miles - Public 137 137 137 137
West Valley Sanitation District
Number of Connections 8,601 8,621 8,651 8,651
Length of Sewer Lines 120 120 127 127
Cupertino Valley Sanitation District
Number of Connections 2,118 2,118 2,915 2,927
Length of Sewer Lines 36 36 36 36
Parks and Recreation
Parks Acreage 81 81 81 81
Parks 15 15 15 15
Fiscal Year
Source: City of Saratoga various records