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Home My WebLink About102-Attachment A - CAFR.pdf C ITY OF S ARATOGA CALIFORNIA Saratoga’s Historic Villa Montalvo COMPREHENSIVE ANNUAL FINANCIAL REPORT F ISCAL Y EAR 2008/09 Saratoga, California Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2009 City Council Chuck Page ................................................................................................................. Mayor Kathleen King .................................................................................................... Vice Mayor Jill Hunter................................................................................................... Council Member Howard Miller ............................................................................................ Council Member Susie Nagpal .............................................................................................. Council Member Presented under the direction of: David Anderson, City Manager Finance & Administrative Services Department CITY OF SARATOGA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2009 i T ABLE OF C ONTENTS I NTRODUCTORY SECTION Letter of Transmittal ......................................................................................................... 1 GFOA Certificate of Achievement for Excellence in Financial Reporting ........................... 5 Principal Officers of the City ............................................................................................ 6 Organization Chart ........................................................................................................... 7 F INANCIAL S ECTION Independent Auditor’s Report ............................................................................................. 9 Management’s Discussion and Analysis (Required Supplementary Information) ............. 11 Basic Financial Statements: Government-Wide Financial Statements Statement of Net Assets ............................................................................................ 23 Statement of Activities and Changes in Net Assets ..................................................... 24 Fund Financial Statements Governmental Funds: Balance Sheet ........................................................................................................... 25 Reconciliation of the Government Funds Balance Sheet to the Government-Wide Financial Statement of Net Assets .................................. 26 Statement of Revenues, Expenditures and Changes in Fund Balances ......................... 27 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 ................................................ 28 Proprietary Funds: Statement of Net Assets ............................................................................................ 29 Statement of Revenues, Expenses, and Changes in Fund Net Assets ........................... 30 Statement of Cash Flows ........................................................................................... 31 Fiduciary Funds: Statement of Fiduciary Net Assets ............................................................................. 32 Basic Financial Statement Notes: Notes to the Basic Financial Statements ..................................................................... 33 Required Supplementary Information Budgetary Information .............................................................................................. 55 Modified Approach for City Streets Infrastructure Capital Assets ............................... 57 CITY OF SARATOGA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2009 ii T ABLE OF C ONTENTS C ONTINUED S UPPLEMENTARY I NFORMATION: Non-Major Governmental Funds Combining Balance Sheets ....................................................................................... 62 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........ 64 Schedule of Revenues, Exp and Changes in Fund Balances – Budget and Actual: Capital Improvements .......................................................................................... 66 Lighting & Landscape Assessment Districts Special Revenue Funds ..................... 67 Community Development Block Grant Special Revenue Fund ............................... 68 Library Bond Debt Service Fund .......................................................................... 69 Library Expansion Capital Project Fund ............................................................... 70 Fiduciary Funds Statement of Changes in Assets and Liabilities – Agency Funds ................................. 72 Internal Service Funds Combining Statement of Net Assets ........................................................................... 74 Combining Statement of Revenues, Expenses, and Change in Fund Balance ............... 76 Combining Statement of Cash Flows ......................................................................... 78 Capital Assets Used in the Operation of Governmental Funds Comparative Schedule by Source ............................................................................... 83 Schedule by Function and Activity ............................................................................ 84 Schedule of Changes by Function and Activity .......................................................... 86 Statistical Section (Unaudited) Net Assets by Component .......................................................................................... 88 Changes in Net Assets ............................................................................................... 89 Fund Balance of Governmental Funds ........................................................................ 90 Governmental Activities Tax Revenues by Source ..................................................... 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 .......................................................................... 97 Ratios of Outstanding Debt by Type .......................................................................... 98 Ratios of General Bonded Debt Outstanding .............................................................. 99 Direct and Overlapping Governmental Activities Debt ............................................. 100 Legal Debt Margin Information ............................................................................... 101 Demographic and Economic Statistics ..................................................................... 102 Principal Employers ............................................................................................... 103 Full-Time Equivalent City Government Employees by Function ............................... 104 Operating Indicators by Function ............................................................................. 105 Capital Asset Statistics by Function ......................................................................... 106 INTRODUCTORY SECTION C ITY OF S ARATOGA C ITY H ALL 13777 F RUITVALE A VENUE S ARATOGA, C ALIFORNIA 95070 (408) 868-1200 December 8, 2009 Honorable Mayor and City Council, The Comprehensive Annual Financial Report (CAFR) of the City of Saratoga for the year ended June 30, 2009 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, 2009, 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 prescribed in Governmental Accounting Standards Board (GAAP) Statement No. 34, Basic Financial Statements and Management’s Discussions and Analysis-for State and Local Governments. 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. This Comprehensive Annual Financial Report is organized into 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 31,679 at January 1, 2009 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 1 members. City Council members are elected at-large for staggered four-year terms. The Mayor is selected annually by 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. As a minimal service city, activities are supplemented 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 for 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 typically 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 for state takes 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 allow. 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. 2 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 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 2008/09 budget focused on maintaining a minimal service levels in anticipation of continued reductions in 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 decreasing resources, the FY 2008/09 budget process continued its focus 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 2008/09 financial audit. 3 Awards – 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, 2008. 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 for his exemplary preparation of this annual financial report, and to our supporting staff members: Ann Xu, Accountant; Julie Ingraham, Karen Caselli, and Melanie Whitaker, Accounting Technicians for all their assistance with the audit and throughout the year. 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, Dave Anderson Mary Furey City Manager Finance and Administrative Services Director 4 5 6 CITY OF SARATOGA ELECTED OFFICIALS AND ADMINISTRATIVE PERSONNEL As of June 30, 2009 CITY COUNCIL Chuck Page - Mayor Kathleen King – Vice Mayor Jill Hunter Howard Miller Susie V. Nagpal CITY STAFF Dave Anderson – City Manager Barbara Powell – Assistant City Manager Ann Sullivan – 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 AUDITORS Vavrinek, Trine, Day & Co., LLP, CPA City of Saratoga - Organization Chart CityAttorneyCity Manager Executive Assistant .60 CommunityDevelopment Department Community Development Director Administrative AnalystII 1 Human Resources Division 1 HR Manager Facilities Division 1Facility Maint.Supervisor 1 Facility Maint. Leadworker 2 Facility Maint. Workers .60 Facility Coordinator Planning Division 1 Senior Planner 2 Assistant Planners 1 Arborist 1 Office Specialist Engineering Division 1 Sr. Civil Engineer 1 Associate Engineer 1 Administrative Analyst .75 Office Specialist Parks Division 1 Manager -Parks 1 Park Maint. Leadworker 1 Park Maint. Specialist 6 Park Maint. Workers .50 Office Specialist III Finance Division 1 Accountant 3 Accounting Technicians Information Technology Division 1 IT Analyst Office of the City Clerk 1CityClerk .15 Deputy City Clerk Financeand Administrative Services Department Finance and Administrative Services Director Recreation and Facilities Department Recreation and Facilities Director PublicWorks Department Public Works Director Recreation Services Division 1 Senior Recreation Supervisor 1 Recreation Supervisor 1 Office Specialist Streets and Fleet Division 1 Manager -Streets and Fleet 1 Street Maint. Leadworker 1 Street Maint. Specialist 4 Street Maint. Workers .50 Office Specialist BuildingDivision 1 Building Official 2 Building Inspectors 1 Code Compliance Specialist 1 Plan Check Engineer 1 Office Specialist CitizenAdvisory Commissions and Citizens of Saratoga ElectedCity Council CityManager's Department Assistant City Manager/City Manager's Department Director 7 8 This page is intentionally blank. FINANCIAL SECTION 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, 2009 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, 2009, 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 accordance with Government Auditing Standards, we have also issued our report dated December 8, 2009, 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. 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 9 The required supplementary information, such as management's discussion and analysis, and the required supplementary information as listed on the table of contents, are not a required part of the basic financial statements, but 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 8, 2009 10 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2009 11 INTRODUCTION The following provides a narrative overview and analysis of the fiscal operations during the fiscal year ended June 30, 2009 for the City of Saratoga. The Management Discussion and Analysis (MD&A) is to be read in conjunction with the annual Transmittal Letter and the Basic Financial Statements. FISCAL YEAR 2008/09 FINANCIAL HIGHLIGHTS • The City's total net assets were $122,857,588, comprised of $108,817,516 for investment in capital assets, net of depreciation and related debt; $5,280,823 restricted for specific purposes; and $8,759,249 unrestricted net assets (reference pg #23). • Total City revenues were $19,169,849, which consists of program revenue of $6,335,579 and general revenues of $12,834,270 (reference pg #24). • The City’s expenses were $21,780,333 (reference pg #24). • Total Governmental Fund’s fund balances were $13,509,509, consisting of $8,228,686 in the General Fund, $3,510,980 in the Capital Improvement Funds, and $1,769,843 in the Other Governmental Funds (reference pg #25). • General Fund revenues were $15,874,201, while General Fund expenditures were $15,763,360 (reference pg #27). 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, 2009. 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. CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2009 12 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. 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, including 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 available at year-end. Financial statements are prepared on the modified accrual basis, which means they measure only current financial resources and uses. Carrying amounts for capital assets and other long-lived assets, along with long-term liabilities are not presented on the balance sheet 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. CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2009 13 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. REQUIRED SUPPLEMENTARY INFORMATION Required supplementary information other than through the MD&A follows the Notes and includes a budgetary comparison for the General Fund as presented in the governmental fund financial statements, and information on the modified approach for city streets and infrastruction capital assets. 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 decreased $2,610,484, from $125,468,072 in FY 2007/08 to $122,857,588 in FY 2008/09. The most significant portion of the City's net assets $108,817,516 or 88.6% 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. $8,759,249 or 7.1% of the City's net assets is unrestricted and may be used to meet the City's ongoing obligations to citizens and creditors. $5,280,823 or 4.3% of the City's net assets are subjected to external restrictions on how they may be used. Of these restricted net assets, $3,865,374 is restricted for capital projects, $931,361 is for repayment of long-term debt and $484,088 is restricted for housing activities and lighting and landscaping assessment districts. CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2009 Governmental Activities 2009 2008 Assets Current assets 18,182,606$ 18,463,116$ Non-current assets 71,670 85,003 Capital assets 122,102,516 123,413,151 Total Assets 140,356,792 141,961,270 Liabilities Current liabilities 4,317,341 2,859,025 Long-term debt 13,181,863 13,634,173 Total Liabilities 17,499,204 16,493,198 Net Assets Investment in capital assets, net of related debt 108,817,516 109,818,151 Restricted for Capital Project 3,865,374 4,768,478 Restricted for Debt Service 931,361 853,619 Restricted for Special Projects 484,088 318,143 Unrestricted 8,759,249 9,709,681 Total Net Assets 122,857,588$ 125,468,072$ Net Assets 14 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2009 Governmental Activities Increase Functions/Programs 2009 2008 (Decrease) Program Revenues Charges for services 5,768,277$ 6,924,234$ (1,155,957)$ Operating grants and contributions 228,534 150,564 77,970 Capital grants and contributions 338,768 1,714,758 (1,375,990) Total Program Revenues 6,335,579 8,789,556 (2,453,977) General Revenues Property taxes 8,335,805 8,099,071 236,734 Sales taxes 1,043,034 1,057,977 (14,943) Local taxes 663,053 693,950 (30,897) Franchise taxes 1,656,716 1,625,414 31,302 Motor vehicle in-lieu 116,273 148,865 (32,592) Intergovernmental revenues 473,989 840,557 (366,568) Investment earnings 397,116 1,056,891 (659,775) Other revenues 148,284 348,258 (199,974) Total General Revenues 12,834,270 13,870,983 (1,036,713) Expenses General and intergovernmental services 5,595,474 6,292,527 (697,053) Public safety 4,210,763 4,165,945 44,818 Public works 7,643,545 5,325,784 2,317,761 Community services 1,633,997 1,285,739 348,258 Community development services 1,999,754 2,032,217 (32,463) Interest on long-term debt (unallocated)696,800 713,566 (16,766) Total Expenses 21,780,333 19,815,778 1,964,555$ Increase / (Decrease) in Net Assets (2,610,484) 2,844,761 Net Assets, Beginning of Year 125,468,072 122,623,311 Net Assets, End of Year 122,857,588$ 125,468,072$ Statement of Changes in Net Assets 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 program revenues was a decrease of $2,453,977. The net change in general revenues from the prior year was a decrease of $1,036,713 for a total decrease in revenues of $3,490,690. The net change in expenses from the prior year was an increase of $1,964,554, resulting in a decrease in Net Assets of $2,610,484. 15 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2009 An analysis and graphical representation of the changes in revenues and expenditures by type of significant events follows: CHART OF REVENUE INCREASE OR (DECREASE) $- $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 FY 2007/08 FY 2008/09 Total Revenues by Category Increases in Revenues • A $236,734 increase in property tax revenue stems from the rise in property tax assessment values resulting from real estate turnover. The 2.9% increase is lower than in recent previous years due to a decrease in housing prices during FY 2008/09. Decreases in Revenues • A decrease of $1,375,990 in capital grants & contributions reflects a reduction in capital program grants and reimbursements as less street work was completed in FY 2008/09 than in the prior year. • A $366,568 decrease in Intergovernmental Revenues is the result of revenue classification changes from the prior year. • Investment Earnings show a decrease of $659,775. Interest income decreased approximately $257,000 (almost 40%) due to significant drops in the interest rates over the fiscal year, with the remainder of the decrease attributed to revenue categorization changes from the prior year. • Other Revenues represents miscellaneous refunds and reimbursements, proceeds from sales, and minor oddities. Revenues will fluctuate from year to year as these types of receipts are typically 16 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2009 unplanned and one-time occurrences. A continued emphasis on categorizing revenues into proper programs and categories has also contributed to the $199,974 decrease in receipts; however a majority of the decrease is attributed to a one time donation of $149,000 in the prior year. • A decrease of $1,155,957 in Charge for Services is a result of the severe downturn in development fees due to the struggling economy and credit crunch (about $800,000), and the similar impact on the use in recreation services for classes, camps, and excursions (about $300,000). CHART OF EXPENSE INCREASE OR (DECREASE) $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 G e n 'l & I n t e r g o v 'l P u b l i c S a f e t y P u b l i c W o r k s C o m m u n i t y S e r v i c e s C o m m u n i t y D e v e l o p m e n t I n t e r e s t o n L T D e b t FY 2007/08 FY 2008/09 Total Expenses by Category The net change in expenses for Governmental Activities was an increase of $1,964,554. Expenditures with significant events include: Increases in Expenses • A $2,317,761 increase in Public Works expenses is a result of a change in the street capitalization policy which increases the non-capital maintenance cost rather than capitalizing its cost, and from the allocation of internal service charges to Public Works functions. • The $348,258 increase in Community Services expenses is also a reflection of the CIP Policy change to expense non-capital maintenance project costs in the capital program rather than capitalize them. Decreases in Expenses • A $697,053 decrease in expenses in the General and Intergovernmental Services category from the prior year resulted from a reduction in depreciation expense and a change in the distribution of internal service charges to properly reflect this expense by category. 17 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2009 MAJOR AND OTHER GOVERNMENTAL FUNDS: CHANGE IN FUND BALANCE A summary of the changes in fund balance of the major and other government funds are presented below: Other CapitalGovernmental GeneralImprovement Funds Total Revenues 15,874,201$ 1,692,920$ 1,651,737$ Total Expenditures 15,763,360 4,021,626 1,400,443 Revenues Over (Under) Expenditures 110,841 (2,328,706) 251,294 Transfers in 153,732 1,871,137 18,560 Transfers out (1,571,727) (106,000) (365,702) Net change in fund balances (1,307,154) (563,569) (95,848) Beginning of year (as restated)9,535,840 4,074,549 1,865,691 End of year 8,228,686$ 3,510,980$ 1,769,843$ Major Funds Included in the Major Funds are the General Fund and the Capital Improvement Fund. The Other Governmental funds include twenty-four Lighting and Landscape Assessment Districts, accounted for as one fund in financials, the Community Development Block Grant Fund, the Library Bond Debt Service Fund, and the Library Expansion Capital Project Fund. The net change of the Major and Other Governmental Funds fiscal year transactions is decrease of $1,966,571. General Fund - As shown in the preceding Major Funds table, the net change in the General Fund's Fund Balance was a decrease of $1,307,154. A net loss resulted from the net of operating revenues coming in just slightly over operating expenditures, and the transfer out of $1.57 million, primarily to the Capital Improvement Program. Revenues are budgeted conservatively based upon prior year experience and specific information, while expenditures are limited to anticipated program needs at not-to-exceed projected funding levels. A large factor which contributed to the net loss was the more than $700,000 decrease in General Fund revenues from the prior year due to significant drops in development and recreation permits, fees, and service charges. Capital Improvement Project Fund - As shown in the table above, the net change in the Capital Improvement Fund has a decrease of $563,569 which is due to a significant drop from the prior year’s grant revenue stream, whereas expenditures remained relatively consistent. A net $1.8 million of transfers in to the capital program offset the operational shortfall. Other Governmental Funds - As shown in the table, there was a net decrease of $95,848 in the Other Governmental Funds. A $310,000 transfer from the Library Building Capital Improvement Fund to the capital program for an HVAC upgrade project accounted for the bulk of the decrease in fund balance. 18 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2009 GENERAL FUND – BUDGETARY HIGHLIGHTS Changes from the City's General Fund original budget to the final budget are detailed in the Required Supplementary Information Section along with a comparison to actual activity for the year ended. Changes to the City's budget that increase or decrease appropriations in a fund must be approved by a resolution of the City Council. Modifications to the budget that are a realignment of fiscal activities with no impact to the fund's bottom line may be approved by the City Manager. Adopted to Final Budget Fiscal Year Ended June 30, 2009 +=+= AdoptedCapitalBeginningBudget Final BudgetProjectBalanceAdjustmentsBudget Expenditures 16,809,264$ - 16,809,264 16,735 16,825,999$ Transfers out 253,500$ 1,090,000 1,343,500 200,000 1,543,500$ The General Fund adopted expenditure budget was $16,809,264 and increased by $16,735 to fund the West Valley Clean Water Program budget. General Fund transfers out were increased by $1,090,000 as part of the capital budget, which was adopted at a later date than the operating budget but, in fact, are beginning adopted amounts. During the year, transfers out were increased by $200,000 to fund the Comer Road Retaining Wall project. 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: • 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 $1,574,485 to maintain and preserve eligible infrastructure assets. For more detailed information on Capital Assets activity, please refer to Note 2 in the section entitled "Notes to the Basic Financial Statements" and "Required Supplementary Section". As of June 30, 2009, the City had $122,102,516 invested in a variety of capital assets, as reflected in the following schedule, which represents a decrease of $1,310,635 or slightly more than a 1% decrease from the prior year. 19 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2009 Governmental Activities 2009 2008 Land 10,585,106$ 9,887,095$ Building and structures 18,261,779 18,739,078 Machinery and equipment 470,646 470,217 Infrastructure 86,189,639 86,571,890 Construction in progress 6,595,346 7,744,871 Total Capital Assets, Net of Depreciation 122,102,516$ 123,413,151$ Capital Assets at Year End Net of Depreciation The following reconciliation summarizes the changes in Capital Assets. Balance Balance July 1, 2008AdditionsRetirementsJune 30, 2009 Land 9,887,095$ 698,011$ -$ 10,585,106$ Building and structures 23,066,577 90,181 - 23,156,758 Machinery and equipment 1,960,115 152,862 (86,837) 2,026,140 Infrastructure 102,756,597 792,632 103,549,229 Construction in progress 7,744,871 2,454,921 (3,604,446) 6,595,346 Depreciation (22,002,104) (1,894,788) 86,829 (23,810,063) Total Capital Assets, Net of Depreciation123,413,151$ 2,293,819$ (3,604,454)$ 122,102,516$ Changes in Capital Assets Major capital projects in progress during the fiscal year include the following: • Kevin Moran Park Improvements - $1,318,297 • North Campus / Prospect - $471,635 • El Quito Park Improvements - $74,305 • UPPR / DeAnza Trail - $67,918 • Prospect Road Medians - $50,520 Additional information on Capital Assets is included in Note 5 to the financial statements. DEBT ADMINISTRATION The net change in outstanding debt for the City of Saratoga is a decrease of $214,184. During the fiscal year, the City did not enter into any new debt structures. 20 CITY OF SARATOGA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2009 Governmental Activities 2009 2008 2001 General Obligation Bond 13,285,000$ 13,595,000$ Compensated absences 584,415 488,599 Total Outstanding Debt 13,869,415$ 14,083,599$ Outstanding Long-Term Obligation at Year End The current portions of long-term debt ($330,000 and $310,000 for 2009 and 2008, 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 $310,000 on the City's 2001 General Obligation $15,000,000 bond issue. Compensated absences are accrued liabilities for vested and unpaid vacation and sick pay. The compensated absences balance increased during the fiscal year by $95,816 due to an increase in unused compensated time off. Additional information on outstanding obligations can be found in Note 6 to the financial statements. ECONOMIC FACTORS In September 2006, the City received a significant increase in new property tax revenues on an annual basis due to the passage of Assembly Bill 117. This legislation effective with FY 2006/07 increases the amount of property taxes allocated to the City as a result of the TEA (Tax Equity Allocation) formula. Assembly Member Cohn sponsored the bill which resulted from a joint effort of the City of Saratoga, Santa Clara County and the three other affected cities - Cupertino, Monte Sereno and Los Altos Hills. These cities are referred to as "no/low tax cities" and will have restored a proportionate share of the property taxes which they lost to special legislation in 1989. This resulted in a permanent increase in general fund property taxes to approximately 5.45% of the 1% ad valorem tax property owners pay. The economy of the City and its major initiatives for the fiscal year are discussed in the accompanying Transmittal Letter. REQUEST FOR FINANCIAL INFORMATION This financial report is designed to provide a general overview of the City of Saratoga's finances for all of Saratoga's residents, taxpayers, customers, investors, and creditors. This financial report seeks to demonstrate the City's accountability for the money it receives. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Administrative Services Department, 13777 Fruitvale Avenue, Saratoga, California 95070. 21 This page is intentionally blank.. . 22 BASIC FINANCIAL STATEMENTS CITY OF SARATOGA STATEMENT OF NET ASSETS JUNE 30, 2009 23 Primary Government Governmental Activities ASSETS Current Assets: Cash and investments 17,168,131$ Receivables: Accounts 940,479 Interest 60,663 Loans 13,333 Total Current Assets 18,182,606 Noncurrent Assets: Loans receivable 71,670 Capital Assets: Non-depreciable 65,750,910 Depreciable, net 56,351,606 Total Capital Assets 122,102,516 Total Noncurrent Assets 122,174,186 Total Assets 140,356,792 LIABILITIES Current Liabilities: Accounts payable 2,031,299 Accrued payroll 313,239 Other payable 58,129 Interest payable 288,940 Deposits payable 854,966 Claims payable 83,216 Long-term debt - due within one year 687,552 Total Current Liabilities 4,317,341 Noncurrent Liabilities: Long-term debt - due in more than one year 13,181,863 Total liabilities 17,499,204 Net Assets Investment in capital assets, net of related debt 108,817,516 Restricted for: Capital projects funds 3,865,374 Debt service 931,361 Special projects 484,088 Total Restricted 5,280,823 Unrestricted 8,759,249 Total Net Assets 122,857,588$ The accompanying notes are an integral part of these financial statements CITY OF SARATOGA STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS JUNE 30, 2009 24 Net (Expense) Revenue and Changes in Program Revenues Net Assets Primary OperatingCapital Government Charges forGrants andGrants and Governmental Functions/Programs ExpensesServicesContributionsContributionsTotalActivities Primary Government: Governmental Activities: General and intergovernmental services5,595,474$ 133,054$ -$ -$ 133,054$ (5,462,420)$ Public safety 4,210,763 520,174 55,825 - 575,999 (3,634,764) Public works 7,643,545 2,378,472 172,709 338,768 2,889,949 (4,753,596) Community services 1,633,997 934,288 - - 934,288 (699,709) Community development services 1,999,754 1,802,289 - - 1,802,289 (197,465) Interest on long-term debt (unallocated)696,800 - - - - (696,800) Total 21,780,333$ 5,768,277$ 228,534$ 338,768$ 6,335,579$ (15,444,754)$ General Revenues: Taxes Property taxes 8,335,805 Sales taxes 1,043,034 Local taxes 663,053 Franchise taxes 1,656,716 Motor vehicle-in-lieu 116,273 Total taxes 11,814,881 Intergovernmental 473,989 Investment earnings 397,116 Other revenues 148,284 Total General Revenues 12,834,270 Change in Net Assets (2,610,484) Net Assets - Beginning of Year 125,468,072 Net Assets - End of Year 122,857,588$ The accompanying notes are an integral part of these financial statements CITY OF SARATOGA GOVERNMENTAL FUNDS - BALANCE SHEET JUNE 30, 2009 25 Other Total Capital GovernmentalGovernmental GeneralImprovementFundsFunds ASSETS Cash and investments 9,186,264$ 4,741,918$ 1,786,109$ 15,714,291$ Receivables: Accounts 486,409 426,056 18,076 930,541 Interest 55,201 - 5,462 60,663 Loans - - 85,003 85,003 Total assets 9,727,874$ 5,167,974$ 1,894,650$ 16,790,498$ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 399,754$ 1,513,030$ 39,804$ 1,952,588$ Accrued payroll 285,067 699 - 285,766 Deposits payable 756,222 98,744 - 854,966 Other payable 58,129 - - 58,129 Deferred revenue 16 44,521 85,003 129,540 Total liabilities 1,499,188 1,656,994 124,807 3,280,989 Fund Balances: Reserved for: Petty cash 1,300 - - 1,300 Debt service - - 931,361 931,361 Unreserved, designated for: Operations 2,870,140 - - 2,870,140 Economic uncertainty 1,300,000 - - 1,300,000 Construction in progress 1,200,000 - - 1,200,000 Community development services 782,380 - - 782,380 Environmental services 663,182 - - 663,182 Unreserved, undesignated, reported in: General fund 1,411,684 - - 1,411,684 Special revenue funds - - 484,088 484,088 Capital projects funds - 3,510,980 354,394 3,865,374 Total fund balances 8,228,686 3,510,980 1,769,843 13,509,509 Total liabilities and fund balances 9,727,874$ 5,167,974$ 1,894,650$ 16,790,498$ The accompanying notes are an integral part of these financial statements Major Funds CITY OF SARATOGA RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30, 2009 26 Total Fund Balances - Total Governmental Funds 13,509,509$ 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 65,750,910 Depreciable capital assets, net 55,930,835 Total Capital Assets 121,681,745 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.(288,940) Internal service funds are used by management to charge the costs of office stores, vehicle and equipment maintenance and replacement, information services and replacement, building maintenance, risk management, and workers compensation. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net assets 1,695,149 Long-term receivables were not current available resources and therefore, were offset by a deferred revenue amount equal to the net receivable in the governmental funds.129,540 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 (13,285,000) Compensated absences (584,415) Total Long-Term Liabilities (13,869,415) Net Assets of Governmental Activities 122,857,588$ The accompanying notes are an integral part of these financial statements CITY OF SARATOGA STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2009 27 OtherTotal CapitalGovernmentalGovernmental GeneralImprovementFundsFunds REVENUES: Property taxes 8,147,478$ -$ 188,078$ 8,335,556$ Special assessments 7,884 1,360,096 1,367,980 Sales taxes 1,043,034 - - 1,043,034 Other local taxes 663,053 - - 663,053 Licenses & permits 1,119,888 340,246 - 1,460,134 Fines & forfeiture 353,801 6,092 - 359,893 Intergovernmental - State 264,755 1,017,766 - 1,282,521 Intergovernmental - Other 38,457 195,936 55,702 290,095 Franchise fees 1,656,716 - - 1,656,716 Use of money and property 729,207 30,071 34,526 793,804 Other revenue 1,849,928 102,809 13,335 1,966,072 Total revenues 15,874,201 1,692,920 1,651,737 19,218,858 EXPENDITURES: Current: General and intergovernmental services 3,330,074 - - 3,330,074 Public safety 4,205,672 - - 4,205,672 Public works 4,352,644 - 347,000 4,699,644 Community services 1,424,421 - - 1,424,421 Community development services 2,450,549 - - 2,450,549 Capital outlay - 4,021,626 38,893 4,060,519 Debt service: Principal - - 310,000 310,000 Interest and fiscal charges - - 704,550 704,550 Total expenditures 15,763,360 4,021,626 1,400,443 21,185,429 REVENUES OVER (UNDER) EXPENDITURES 110,841 (2,328,706) 251,294 (1,966,571) OTHER FINANCING SOURCES (USES): Transfers in 153,732 1,871,137 18,560 2,043,429 Transfers out (1,571,727) (106,000) (365,702) (2,043,429) Total other financing sources (uses)(1,417,995) 1,765,137 (347,142) - Net change in fund balances (1,307,154) (563,569) (95,848) (1,966,571) FUND BALANCES: Beginning of year (as restated)9,535,840 1 4,074,549 1,865,691 15,476,080 End of year 8,228,686$ 3,510,980$ 1,769,843$ 13,509,509$ 1 General Fund beginning fund balance has been restated to remove the Internal Service Fund net assets. (see Note #9) The accompanying notes are an integral part of these financial statements. Major Funds CITY OF SARATOGA RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE TO THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS FOR THE YEAR ENDED JUNE 30, 2009 28 Net Change in Fund Balances - Total Governmental Funds (1,966,571)$ 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.442,316 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.(1,768,632) Internal service funds are used by management to charge the costs of office stores, vehicle and equipment maintenance and replacement, information services and replacement, building maintenance, risk management, and workers' compensation. The net revenue of the internal service funds is reported with government activities.429,280 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 Government-Wide Statement of Activities and Changes in Net Assets under the full accrual basis.31,186 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 (95,816) 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 310,000 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.7,753 Change in Net Assets of Governmental Activities (2,610,484)$ The accompanying notes are an integral part of these financial statements CITY OF SARATOGA STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2009 29 Governmental Activities - Internal Service Funds ASSETS Current assets: Cash and investments 1,453,840$ Accounts receivable 9,938 Total current assets 1,463,778 Noncurrent assets: Capital assets: Machinery and equipment 701,714 Less: accumulated depreciation (280,943) Total capital assets (net of accumulated depreciation) 420,771 Total assets 1,884,549 LIABILITIES Liabilities: Current assets: Accounts payable 78,711 Accrued payroll 27,473 Other payables 83,216 Total current liabilities 189,400 NET ASSETS Investment in capital assets 420,771 Unrestricted 1,274,378 Total net assets 1,695,149$ The accompanying notes are an integral part of these financial statements CITY OF SARATOGA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2009 30 Governmental Activities - Internal Service Funds Operating revenues: Charges for services 2,319,522$ Other operating revenues 49,539 Total operating revenues 2,369,061 Operating expenses: Cost of services 977,896 Administration 835,726 Depreciation 126,159 Total operating expenses 1,939,781 Operating income 429,280 Change in net assets 429,280 Total net assets - beginning (as restated)1,265,869 1 Total net assets - ending 1,695,149$ 1The Internal Service Funds beginning net assets have been removed from the General Fund beginning fund balance. (See Note #9) The accompanying notes are an integral part of these financial statements CITY OF SARATOGA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2009 31 Governmental Activities - Internal Service Funds Cash flows from operating activities: Receipts from customers and users 2,371,709$ Payments to suppliers (1,080,850) Payments to employees (638,106) Net cash provided (used) by operating activities 652,753 Cash flows from capital activities: Acquisition of capital assets (141,837) Net cash provided for the acquisition of capital assets (141,837) Net increase in cash and cash equivalents 510,916 Cash and cash equivalents, beginning of year 942,924 Cash and cash equivalents, ending of year 1,453,840$ Reconciliation of operating income to net cash provided by operating activities: Operating income (loss)429,280$ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation 126,159 Change in operating assets and liabilities: Decrease in accounts receivables 2,648 Increase in accounts payable 14,727 Decrease in deposits payable (5,000) Increase in claims payable 83,216 Increase in accured payroll 1,723 Net cash provided (used) by operating activities 652,753$ The accompanying notes are an integral part of these financial statements CITY OF SARATOGA STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2009 32 Agency Funds ASSETS Cash and investments 69,769$ Receivables: Accounts 14,573 Interest 261 Total assets 84,603$ LIABILITIES Deposits payable 84,603$ The accompanying notes are an integral part of these financial statements. CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS - CONTINUED JUNE 30, 2009 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 31,679 at June 30, 2009. 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, 2009, the City's staff comprised 55 full-time and two 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 one City employee. • Public Works/Maintenance - The City builds and maintains its parks, streets, curbs, gutters, and related public property with a force of 22 employees. Major projects may be contracted out to reduce costs. • Community Development - Zoning administration, plan checking and advance planning services are provided by 12 employees. • Culture, Recreation and Community Support services are provided by a total of six employees. • General Government services are provided by a total of ten 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. CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS - CONTINUED JUNE 30, 2009 34 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 collection 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. 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 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 - CONTINUED JUNE 30, 2009 35 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. 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: Proprietary Funds The City’s internal service funds are proprietary funds. In the fund financial statements, proprietary funds are presented using the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when the related goods or services are delivered. In the fund financial statements, proprietary funds are presented using the “economic resources measurement focus”. This means all assets and liabilities (whether current or noncurrent) associated with their activities are included on their balance sheets. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in total net assets. CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS - CONTINUED JUNE 30, 2009 36 Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal value. Non-operating revenues, such as subsidies, taxes, and investment earnings result from nonexchange transactions or ancillary activities. Amounts paid to acquire capital assets are capitalized as assets in the internal service funds financial statements. 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: • 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. CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS - CONTINUED JUNE 30, 2009 37 D. 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. E. 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 In June 1999, GASB issued Statement No. 34 Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments 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 infrastructure in its basic financial statements. The City defines infrastructure as the basic physical assets that allow the City to function, which 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 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, 2007. This condition assessment will be performed every 2 years. The next condition assessment is scheduled for March 2010. 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. CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS - CONTINUED JUNE 30, 2009 38 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, 2007. 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. F. 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. Interest on long-term debt is recorded in the fund statements when payment is made. G. 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. H. Compensated Absences In the government-wide financial statements, compensated absences are recorded as incurred and the related expenses and liabilities are reported. CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS - CONTINUED JUNE 30, 2009 39 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. I. 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. J. 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 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 $2,870,140. 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 $1,300,000 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. CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS - CONTINUED JUNE 30, 2009 40 K. Net Assets In the government-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." L. 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. M. 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. N. 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. O. New GASB Pronouncements GASB Statement No. 45 - In June 2004, GASB issued Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment 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 effective for the City June 30, 2009. The City has determined it does not have any CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS - CONTINUED JUNE 30, 2009 41 postemployment benefits other than pension and Statement No. 45 will not affect on the financial statements. 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 postemployment 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 effective 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. GASB Statement No. 54 - In March, 2009, GASB issued Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definition. The objective of this Statement is to enhance the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying the existing governmental fund type definitions. This Statement is not effective until June 30, 2011. The City has determined this Statement change will have no effect on the financial statements. GASB Statement No. 55 - In March, 2009, GASB issued Statement No. 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The objective of this Statement is to incorporate the hierarchy of generally accepted accounting principles (GAAP) for state and local governments into the Governmental Accounting Standard Board’s (GASB) authoritative literature. The City has determined this Statement change did not have an effect on the financial statements. GASB Statement No. 56 - In March, 2009, GASB issued Statement No. 56, Codification of Accounting and Financial Reporting Guidance Contained in the AICPA Statement of Auditing Standards. The object of this Statement is to incorporate into the Governmental Accounting Standard Board’s (GASB) authoritative literature certain accounting and financial reporting guidance presented in the American Institute of Certified Public Accounts’ Statement of Auditing Statements. The City has determined this Statement change did not have an effect on the financial statements. CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS - CONTINUED JUNE 30, 2009 42 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, 2009: Statement of Net Assets GovernmentalFiduciary Activities Fund Total Cash and investments 17,168,131$ 69,769$ 17,237,900$ The City's Cash and Investments at June 30, 2009, in more detail: Cash and cash equivalents: Petty cash 1,300$ Demand deposits 312,374 Total Cash and Cash Equivalents 313,674 Investments: Local Agency Investment Fund (LAIF)16,924,226 Total Cash and Investments 17,237,900$ A. Cash Deposits The carrying amounts of the City's cash deposits were $312,374 at June 30, 2009. Bank balances before reconciling items were $277,249 at that date due to deposits in transit and outstanding checks. The total amount was collateralized or insured with securities held by the pledging financial institutions. 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, and places the City ahead of general creditors of the institution. 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 has waived the collateral requirements for cash deposits which are fully insured to $100,000 by the Federal Deposit Insurance Corporation (FDIC). 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 - CONTINUED JUNE 30, 2009 43 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 is in compliance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investments Pools which requires the City's investments be recorded at fair value instead of cost. Under GASB 31, the carrying value of investments are adjusted to reflect their fair value at each fiscal year-end, with the effects of these adjustments included in the carrying value of the investments. C. External Investment Pool The City's investments with LAIF at June 30, 2009, 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, 2009, the City had $16,902,173 invested in LAIF which had invested 14.71 percent of the pool investment funds in Structured Notes and Asset-Backed Securities. The LAIF fair value factor of 1.001304743 was used to calculate the fair value of the investments in LAIF. CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS - CONTINUED JUNE 30, 2009 44 D. Risk Disclosures Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the term of an investment’s maturity, the greater the sensitivity to changes in market interest rates. Although the City’s investment policy allows for a broad range of investment instruments with varying terms of maturity, investments are limited to the Local Agency Investment Fund (LAIF) which is managed by the State Treasurer Office and overseen by the Pooled Money Investment Board, the State Treasurer investment committee, and a Local Agency Advisory Board. Included in LAIF’s investment portfolio are U.S. Treasuries, Federal Agency obligations, time deposits, negotiable certificates of deposits, commercial paper, corporate bonds, and security loans. Funds are available for withdrawal on demand, and are recorded on an amortized cost basis. At June 30, 2009, these investments had a weighted average maturity of 235 days. The City had the following invested in LAIF: Investment Maturities in Years Fair Less Than Value One Year State of California - Local Agency Investment Fund (LAIF)16,924,226$ 16,924,226$ Credit Risk As of June 30, 2009, 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. The City did not hold any securities held by an investment counterparty at the year ended June 30, 2009. NOTE 3 - LOANS RECEIVABLE The City had the following loans receivable as of June 30, 2009: Due Due Balance BalanceWithinMore Tha July 1, 2008AdditionsDeletionsJune 30, 2009One YearOne Year Housing Rehabilitation Loan Program 98,336$ -$ (13,333)$ 85,003$ 13,333$ 71,670$ CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS - CONTINUED JUNE 30, 2009 45 The 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. 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. NOTE 4 - FUND FINANCIAL STATEMENTS INTERFUND TRANSACTIONS Transfers In/Out Transfers for the year ended June 30, 2009 were as follows: Transfer in Transfer out Amount General Fund Community Development Block Grant 47,732$ Capital Improvement Fund 106,000 153,732 Lighting & Landscaping Assessment DistrictGeneral Fund 18,560 Capital Improvement Fund General Fund 1,553,167 Community Development Block Grant 7,970 Library Expansion 310,000 1,871,137 Total 2,043,429$ Of the transfers, $1.4 million was transferred from the General Fund to fund the projects of the Capital Improvement Plan, $310,000 from the Capital Projects Fund for the replacement of Saratoga Library HVAC system, $106,000 to the General Fund to administer the gas tax program, $100,000 from the General Fund to the Facility Project Fund, and the balance of $127,429 were various minor transfers resulted from the normal course of the City’s operations. CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS - CONTINUED JUNE 30, 2009 46 NOTE 5 - CAPITAL ASSETS Capital assets activity for the year ended June 30, 2009, consisted of the following: Primary Government Balance Balance July 1, 2008AdditionsRetirementsReclassificationsJune 30, 2009 Governmental activities: Capital assets, not being depreciated: Land and land improvements 9,887,095$ -$ -$ 698,011$ 10,585,106$ Construction in progress 7,744,871 2,454,921 (2,012,597) (1,591,849) 6,595,346 Infrastructure: Street pavement system 48,326,039 - - 244,419 48,570,458 Total capital assets, not being depreciated65,958,005 2,454,921 (2,012,597) (649,419) 65,750,910 Capital assets, being depreciated: Buildings and structures 23,066,577 - - 90,181 23,156,758 Machinery and equipment Governmental funds 1,400,238 - (86,837) 11,025 1,324,426 Internal service funds 559,877 141,837 - - 701,714 Infrastructure: Bridges 1,563,654 - - - 1,563,654 Signs and lights 1,331,389 - - 489,196 1,820,585 Drainage system 39,870,593 - - 42,228 39,912,821 Sidewalks 11,664,922 - - 16,789 11,681,711 Total capital assets, being depreciated79,457,250 141,837 (86,837) 649,419 80,161,669 Accumulated depreciation: Buildings and structures (4,327,499) (567,480) - - (4,894,979) Machinery and equipment Governmental funds (1,335,108) (26,272) 86,829 - (1,274,551) Internal service funds (154,787) (126,156) - - (280,943) Infrastructure: Bridges (916,412) (28,756) - - (945,168) Signs and lights (667,205) (56,335) - - (723,540) Drainage system (10,733,213) (797,834) - - (11,531,047) Sidewalks (3,867,880) (291,955) - - (4,159,835) Total accumulated depreciation (22,002,104) (1,894,788) 86,829 - (23,810,063) Total capital assets, being depreciated, net57,455,146 (1,752,951) (8) 649,419 56,351,606 Governmental activities capital assets, net 123,413,151$ 701,970$ (2,012,605)$ -$ 122,102,516$ Depreciation expense, including the amount related to the internal service funds, was charged in the following functions in the Statement of Activities: General Government 1,177,463$ Public Works 574,472 Community Services 15,603 Community Development 1,094 Internal Service Funds 126,156 Total Depreciation Expense 1,894,788$ CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS - CONTINUED JUNE 30, 2009 47 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 OBLIGATIONS A summary of the City's long-term obligations transactions for the year ended June 30, 2009, is presented below: Classification Balance BalanceDue WithinDue In More DescriptionJuly 1, 2008AdditionsRetirementsJune 30, 2009One YearThan One Yea r General Obligation Bonds: 2001 Library Bonds13,595,000$ -$ (310,000)$ 13,285,000$ 330,000$ 12,955,000$ Compensated absences488,599 441,457 (345,641) 584,415 357,552 226,863 Total 14,083,599$ 441,457$ (655,641)$ 13,869,415$ 687,552$ 13,181,863$ 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, 2009, the outstanding balance of the bonds was $13,285,000. CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS - CONTINUED JUNE 30, 2009 48 The annual debt service requirements on these bonds are as follows: Year EndedPrincipalInterestTotal 2010 330,000$ 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 2012 415,000 600,331 1,015,331 2015-2019 2,275,000 2,670,656 4,945,656 2020-2024 2,825,000 2,036,553 4,861,553 2025-2029 3,645,000 1,201,594 4,846,594 2030-2033 2,680,000 215,775 2,895,775 Total 13,285,000$ 9,333,760$ 22,618,760$ Compensated Absences The City's liability for vested and unpaid compensated absences (accrued vacation and sick pay) has been accrued and amounts to $584,415 at June 30, 2009. 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 $5,000,000, and provides an additional $10 million of coverage through an excess insurance policy. 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, 2009, the City contributed $161,550 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 coverage up to $150,000 and excess coverage provides an employer liability limit of $5,000,000 per occurrence, and workers’ compensation per occurrence limit to $100,000,000. The City has no deductible for these claims. During the fiscal year ended June 30, 2009, the City contributed $175,745 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. CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS - CONTINUED JUNE 30, 2009 49 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 $83,216 reported at June 30, 2009, are based on the requirements of GASB Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the basic financial statements indicates that it is probable that a liability has been incurred at the date of the basic financial statements and the amount of the loss can be reasonably estimated. Changes in the claims payable amounts were as follows: Year EndedYear Ended June 30, 2009June 30, 2008 Claims payable, beginning of year 59,908$ 38,695$ Fiscal year claims and changes in estimates 54,366 21,213 Claims payments (31,058) - Claims payable, end of year 83,216$ 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. The following represents summary audited financial information of ABAG Plan Corporation and the ABAG Workers’ Compensation Pool Insurance Authority for the fiscal year ended June 30, 2008 (most recent available): PlanComp Shared CorporationRisk Pool Total Assets 44,979,622$ 3,120,977$ Total Liabilities 17,617,173 455,765 Net Assets 27,362,449$ 2,665,212$ Total Revenues 12,259,320$ 726,118$ Total Expenses 14,980,964 221,211 Net Increase in Net Assets (2,721,644)$ 504,907$ Audited financial information for each risk pool may be obtained from ABAG at P.O. Box 2089, Oakland, California 94604-2089. CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS - CONTINUED JUNE 30, 2009 50 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. 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 $333,401 for the year ended June 30, 2009. The City employer is required to contribute for fiscal year 2008-2009 at an actuarially determined rate of 11.757 percent of annual covered payroll for miscellaneous employees. Annual Pension Cost - For fiscal year 2008-2009, the City's annual pension cost was $559,971. The required contribution was determined as part of the June 30, 2005, actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included (a) 7.75 percent (7.75%) investment rate of return (net of administrative expenses), (b) projected annual salary increases ranging from 3.25 percent to 14.45 percent for miscellaneous employees depending on age, service, and type of employment, and (c) 3.25 percent per year payroll growth adjustments. Both (a) and (b) included an inflation component of 3.00 percent. The actuarial value of CalPERS assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a three- year period. CalPERS unfunded actuarial accrued liability (or surplus) is amortized as a level percentage of projected payroll on a closed basis. The amortization period at June 30, 2005, was 20 years for miscellaneous employees for prior and current service unfunded liability. THREE-YEAR ANNUAL PENSION COSTS TREND INFORMATION FOR CALPERS Annual Net Fiscal Pension CostAPCPension Year (APC)ContributedObligation 2007 465,232$ 100%-$ 2008 538,526 100%- 2009 559,971 100%- Required Supplementary Information In 2004, CalPERS established a risk pool for cities and other government entities that have less than 100 active members. Actuarial valuations are performed with other participants within the same risk pool. Standalone information of the Schedule of the Funding Progress for the City is no longer available; therefore, the following information is the CalPERS Risk Pool Information for all entities within the pool: CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS - CONTINUED JUNE 30, 2009 51 Entry Age Unfunded UAAL NormalActuarialLiability (UAAL)Annualas a ValuationAccruedValue(ExcessFundedCoveredPercentage DateLiabilityof AssetsAssets)StatusPayrollof Payroll 6/30/20062,754,396,608$ 2,492,226,176$ 262,170,432$ 90.5%699,897,835$ 37.5% 6/30/20072,611,746,790 2,391,434,447 220,312,343 91.6%655,522,859 33.6% 6/30/20082,780,280,768 2,547,323,278 232,957,490 91.6%688,606,681 33.8% NOTE 9 - NET ASSETS / FUND BALANCES A. Restatement of Beginning Fund Balance In prior years the Internal Service Funds’ net assets were combined with the General Fund for reporting purposes in the annual report. With the expansion of additional internal service funds and to better administer the funds, the city decided to separate and display the funds individually in the annual report. As of July 1, 2008, the beginning fund balance of the General Fund was divided as follows: Fund Balance/ Fund BalanceFund Balance/Net Assets as ReportedNet Assetsas Restated June 30, 2008ReclassificationJuly 1, 2008 General Fund 10,396,616$ (860,776)$ 9,535,840$ Internal Service Funds: Liability/Risk Management - 128,690 128,690 Workers Compensation - 47,736 47,736 Office Stores - 32,616 32,616 Information Technology Services - 122,541 122,541 Vehicle & Equipment Maintenance - 13,412 13,412 Building Maintenance - 101,361 101,361 Vehicle & Equipment Replacement - 98,110 98,110 Information Technology Equipment Replacement - 316,310 316,310 Total 10,396,616$ -$ 10,396,616$ In the prior year, the Internal Service Funds’ net assets included in the General Fund did not include capital assets in its fund balance. In the current year, the capital assets of the Vehicle & Equipment Replacement and Information & Technology Equipment Replacement Funds are included in their nets assets. For the Vehicle & Equipment Replacement Fund, $341,925 of capital assets and for the Information Technology Equipment Replacement Fund, $63,168 of capital assets have been included in the Internal Service Funds Combining Statement of Revenues, Expenses, and Change in Fund Net Assets. CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS - CONTINUED JUNE 30, 2009 52 B. Investment in Capital Assets, Net of Related Debt As of June 30, 2009, the investment in capital assets, net of related debt consisted of the following: Capital Assets, Net 122,102,516$ 2001 General Obligation Library Bonds (13,285,000) Investment in Capital Assets, Net of Related Debt 108,817,516$ C. Restricted Net Assets As of June 30, 2009, the restricted net assets consisted of the following: CapitalDebtSpecial ProjectsServiceProjectsTotal Restricted Net Assets 3,865,374$ 931,361$ 484,088$ 5,280,823$ Restricted For 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 JPA's are governed by boards consisting of representatives from their members. The boards control the operations of each JPA, 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. CITY OF SARATOGA NOTES TO FINANCIAL STATEMENTS - CONTINUED JUNE 30, 2009 53 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. For Federal programs, the City did not reach the level of qualifying cost during the current fiscal year so no single audit is required; 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 - CONTINUED JUNE 30, 2009 54 C. Commitments The City had several outstanding contracts or planned construction projects as of June 30, 2009. These projects are evidenced by contractual commitments with contractors and include: OriginalCommitment Vendor commitmentRemaining G Bortolotto & Company 33,534$ 4,033$ B&B Landscapers 1,030,279 102,114 Biggs Cardosa Association 6,000 600 Callander Associates 22,118 1,672 CF Archibald Paving 494,936 205,189 Civica Software 46,790 28,074 Cotton Shires & Associates 38,000 4,014 CRW Industries 838,080 1,954 David Gates & Associates 99,612 14,092 Delta MicroImaging, Inc 120,594 107,752 Fehr & Peers 18,000 193 Field Paoli Architects 6,500 6,500 G Bortolotto & Company 55,355 1,580 Guerra Construction 237,465 70,653 List Engineering 39,000 7,301 Mark Thomas & Company 12,000 1,370 Pantechnicon, Inc 24,878 22,416 Roming Engineers 4,250 4,250 Schaaf & Wheeler 8,019 4,038 Weber Tractor Service 51,424 9,431 3,186,834$ 597,224$ As of June 30, 2009, 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. REQUIRED SUPPLEMENTARY INFORMATION CITY OF SARATOGA REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED JUNE 30, 2009 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, 2009 The following is the budget comparison schedules for General Fund. Combining Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual General Fund For The Year Ended June 30, 2009 Variance with Final Budget Budgeted Amounts ActualPositive OriginalFinalAmounts(Negative) REVENUES: Property taxes 8,122,000$ 8,122,000$ 8,147,478$ 25,478$ Special assessments - - 7,884 7,884 Sales taxes 986,000 986,000 1,043,034 57,034 Other local taxes 665,000 665,000 663,053 (1,947) Licenses & permits 1,771,715 1,771,715 1,119,888 (651,827) Fines & forfeitures 275,000 275,000 353,801 78,801 Intergovermental - state 433,200 433,200 264,755 (168,445) Intergovermental - other 47,500 47,500 38,457 (9,043) Franchise fees 1,611,000 1,611,000 1,656,716 45,716 Use of money & property 778,755 778,755 729,207 (49,548) Other revenue 2,240,694 2,240,694 1,849,928 (390,766) Total revenues 16,930,864 16,930,864 15,874,201 (1,056,663) EXPENDITURES: Current: General and intergovernmental services 3,853,489 3,853,489 3,330,074 523,415 Public safety 4,168,826 4,168,826 4,205,672 (36,846) Public works 4,530,443 4,547,178 4,352,644 194,534 Community services 1,544,926 1,544,926 1,424,421 120,505 Community development services 2,711,580 2,711,580 2,450,549 261,031 Total expenditures 16,809,264 16,825,999 15,763,360 1,062,639 REVENUES OVER (UNDER) EXPENDITURES 121,600 104,865 110,841 (5,976) OTHER FINANCING SOURCES (USES): Transfers in 153,732 153,732 153,732 - Transfers out (253,500) (1,543,500) (1,571,727) (28,227) Total other financing sources (uses)(99,768) (1,389,768) (1,417,995) (28,227) Net change in fund balances 21,832$ (1,284,903)$ (1,307,154) (22,251)$ FUND BALANCES: Beginning of year (as restated)9,535,840 1 End of year 8,228,686$ 1General Fund beginning fund balance has been restated to remove the Internal Service Fund net assets. 56 CITY OF SARATOGA REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED JUNE 30, 2009 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 paved 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, 2009 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, 2009, 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 $1,574,485 on street maintenance for the year ended June 30, 2009. 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. (Approxmiately $2,000,000 projected budget each year for the years ending June 30, 2009, 2010 and 2011.) A schedule of estimated annual amount calculated to maintain and preserve its streets at the current level compared to actual expenditures for street maintenance for the last nine years is presented below: Funded By Fiscal ActualOtherGas TaxTotalPCI YearBudgetExpendituresSourcesFundFundedIndex 2000-012,520,255$ 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 2008-092,680,504 1,574,485 1,148,650 425,835 1,574,485 70 58 CITY OF SARATOGA REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED JUNE 30, 2009 59 As of June 2009, 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 Report at the end of a five-year period (2007-2011) amounted to approximately $11,600,000 for all streets and are expected to be rehabilitated with a minimum annual budget of $1,000,000. This page is intentionally blank. 60 SUPPLEMENTARY INFORMATION NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds Lighting and Landscaping Assessment District - This fund accounts for revenues and expenditures associated with development of the City. Community Development Block Grant - This fund accounts for grant funds received from the Federal Government for the purpose of developing viable urban communities and for the City's rehabilitation loan program. Debt Service Fund Library Bond - Santa Clara County lease revenues are accumulated in this fund to pay annual principal and interest payments on the 2001 Library Bond. Capital Projects Funds Library Expansion - This fund accounts for resources used for the construction of the City's library. 61 CITY OF SARATOGA COMBINING BALANCE SHEETS NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2009 62 Debt Service Lighting andCommunity LandscapingDevelopment AssessmentBlockLibrary DistrictGrant Bond ASSETS Cash and investments 373,762$ 109,251$ 926,294$ Receivables: Accounts 806 14,458 2,812 Interest 1,212 463 2,255 Loans - 85,003 - Total assets 375,780$ 209,175$ 931,361$ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 15,864$ -$ -$ Deferred revenue - 85,003 - Total liabilities 15,864 85,003 - Fund Balances: Reserved for: Debt service - - 931,361 Unreserved, undesignated, reported in: Special revenue funds 359,916 124,172 - Capital projects funds - - - Total fund balances 359,916 124,172 931,361 Total liabilities and fund balances 375,780$ 209,175$ 931,361$ Special Revenue 63 Capital Projects Total Other LibraryGovernmental ExpansionFunds 376,802$ 1,786,109$ - 18,076 1,532 5,462 - 85,003 378,334$ 1,894,650$ 23,940$ 39,804$ - 85,003 23,940 124,807 - 931,361 - 484,088 354,394 354,394 354,394 1,769,843 378,334$ 1,894,650$ CITY OF SARATOGA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2009 64 Lighting andCommunity LandscapingDevelopment AssessmentBlock District Grant REVENUES: Property taxes 188,078$ -$ Special assessment 283,003 - Intergovernmental - Other - 55,702 Use of money and property 7,453 2,517 Other revenue - 13,334 Total revenues 478,534 71,553 EXPENDITURES: Current: Public works 347,000 - Capital outlay - - Debt service: Principal - - Interest and fiscal charges - - Total expenditures 347,000 - REVENUES OVER (UNDER) EXPENDITURES 131,534 71,553 OTHER FINANCING SOURCES (USES): Transfers in 18,560 - Transfers out - (55,702) Total other financing sources (uses)18,560 (55,702) Net change in fund balances 150,094 15,851 FUND BALANCES: Beginning of year 209,822 108,321 End of year 359,916$ 124,172$ Special Revenue 65 Capital Debt ServiceProjects Total Other Library LibraryGovernmental BondExpansionFunds -$ -$ 188,078$ 1,077,093 - 1,360,096 - - 55,702 15,198 9,358 34,526 1 - 13,335 1,092,292 9,358 1,651,737 - - 347,000 - 38,893 38,893 310,000 - 310,000 704,550 - 704,550 1,014,550 38,893 1,400,443 77,742 (29,535) 251,294 - - 18,560 - (310,000) (365,702) - (310,000) (347,142) 77,742 (339,535) (95,848) 853,619 693,929 1,865,691 931,361$ 354,394$ 1,769,843$ CITY OF SARATOGA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL CAPITAL IMPROVEMENT FOR THE YEAR ENDED JUNE 30, 2009 66 Variance with Final Budget Budgeted Amounts ActualPositive OriginalFinalAmounts(Negative) REVENUES: Licenses & permits -$ -$ 340,246$ 340,246$ Fines & forfeitures - - 6,092 6,092 Intergovermental - state 1,354,629 1,771,791 1,017,766 (754,025) Intergovermental - other - 6,014,192 195,936 (5,818,256) Use of money and property - - 30,071 30,071 Other revenue 539,000 1,521,358 102,809 (1,418,549) Total revenues 1,893,629 9,307,341 1,692,920 (7,614,421) EXPENDITURES: Current: Capital outlay 2,120,600 15,250,282 4,021,626 11,228,656 Total expenditures 2,120,600 15,250,282 4,021,626 11,228,656 REVENUES OVER (UNDER) EXPENDITURES (226,971) (5,942,941) (2,328,706) 3,614,235 OTHER FINANCING SOURCES (USES): Transfers in 332,971 1,990,280 1,871,137 (119,143) Transfers out (106,000) (106,000) (106,000) - Total other financing sources (uses)226,971 1,884,280 1,765,137 (119,143) Net change in fund balances -$ (4,058,661)$ (563,569) 3,495,092$ FUND BALANCES: Beginning of year 4,074,549 End of year 3,510,980$ CITY OF SARATOGA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL LIGHTING & LANDSCAPING ASSESSMENT DISTRICT SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2009 67 Variance with Final Budget Budgeted Amounts ActualPositive OriginalFinalAmounts(Negative) REVENUES: Property taxes 447,150$ 160,596$ 188,078$ 27,482$ Special assessments - 286,554 283,003 (3,551) Use of money and property - - 7,453 7,453 Total revenues 447,150 447,150 478,534 31,384 EXPENDITURES: Current: Public works 442,895 442,895 347,000 95,895 Total expenditures 442,895 442,895 347,000 95,895 REVENUES OVER (UNDER) EXPENDITURES 4,255 4,255 131,534 127,279 OTHER FINANCING SOURCES (USES): Transfers in - - 46,740 46,740 Transfers out - - (28,180) (28,180) Total other financing sources (uses)- - 18,560 18,560 Net change in fund balances 4,255$ 4,255$ 150,094 145,839$ FUND BALANCES: Beginning of year 209,822 End of year 359,916$ CITY OF SARATOGA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL COMMUNITY DEVELOPMENT BLOCK GRANT SPECIAL REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2009 68 Variance with Final Budget Budgeted Amounts ActualPositive OriginalFinalAmounts(Negative) REVENUES: Intergovernmental - Other 140,203$ 140,203$ 55,702$ (84,501)$ Use of money and property - - 2,517 2,517 Other revenue - - 13,334 13,334 Total revenues 140,203 140,203 71,553 (68,650) EXPENDITURES: Current: Community development services 406,520 13,000 - 13,000 Total expenditures 406,520 13,000 - 13,000 REVENUES OVER (UNDER) EXPENDITURES (266,317) 127,203 71,553 (55,650) OTHER FINANCING SOURCES (USES): Transfers in 13,000 13,000 7,970 (5,030) Transfers out (140,203) (197,512) (63,672) 133,840 Total other financing sources (uses)(127,203) (184,512) (55,702) 128,810 Net change in fund balances (393,520)$ (57,309)$ 15,851 73,160$ FUND BALANCES: Beginning of year 108,321 End of year 124,172$ CITY OF SARATOGA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL LIBRARY BOND DEBT SERVICE FUND FOR THE YEAR ENDED JUNE 30, 2009 69 Variance with Final Budget Budgeted Amounts ActualPositive OriginalFinalAmounts(Negative) REVENUES: Special assessments 1,010,000$ 1,010,000$ 1,077,093$ 67,093$ Use of money and property - 5,000 15,199 10,199 Total revenues 1,010,000 1,015,000 1,092,292 77,292 EXPENDITURES: Debt service: Principal 310,000 310,000 310,000 - Interest and fiscal charges 707,956 707,956 704,550 3,406 Total expenditures 1,017,956 1,017,956 1,014,550 3,406 REVENUES OVER (UNDER) EXPENDITURES (7,956) (2,956) 77,742 80,698 Net change in fund balances (7,956)$ (2,956)$ 77,742 80,698$ FUND BALANCES: Beginning of year 853,619 End of year 931,361$ CITY OF SARATOGA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL LIBRARY EXPANSION CAPITAL PROJECTS FUND FOR THE YEAR ENDED JUNE 30, 2009 70 Variance with Final Budget Budgeted Amounts ActualPositive OriginalFinalAmounts(Negative) REVENUES: Use of money and property 19,500$ 19,500$ 9,358$ (10,142)$ Total revenues 19,500 19,500 9,358 (10,142) EXPENDITURES: Current: Capital outlay 70,000 70,000 38,893 31,107 Total expenditures 70,000 70,000 38,893 31,107 REVENUES OVER (UNDER) EXPENDITURES (50,500) (50,500) (29,535) 20,965 OTHER FINANCING SOURCES (USES): Transfers out - (310,000) (310,000) - Total other financing sources (uses)- (310,000) (310,000) - Net change in fund balances (50,500)$ (360,500)$ (339,535) 20,965$ FUND BALANCES: Beginning of year 693,929 End of year 354,394$ FIDUCIARY FUND FINANCIAL STATEMENTS Agency Funds Cable T. V. Trust - This fund accounts for funds of the Saratoga Community Access T.V. Foundation. 71 CITY OF SARATOGA STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUND FOR THE YEAR ENDED JUNE 30, 2009 72 Balance Balance Cable T.V. Trust July 1, 2008AdditionsDeductionsJune 30, 2009 ASSETS Cash and investments 38,365$ 31,404$ -$ 69,769$ Receivables: Accounts - 14,573 - 14,573 Interest 296 261 (296) 261 Total assets 38,661$ 46,238$ (296)$ 84,603$ LIABILITIES Deposits payable 38,661$ 46,238$ (296)$ 84,603$ INTERNAL SERVICE FUNDS Liability/Risk Management Insurance Fund – Accounts for insurance premiums, self-insurance portion of claims, and administrative cost associated with settling claims. Charges made to operating departments are based on liability risk and claim occurrence history. Worker’s Compensation Self-insurance Fund – Accounts for insurance premiums, self insured portion of claims, and administrative costs associated with settling claims. Charges are made to operating departments are based on liability risk and claim occurrence history. Office Stores Fund - Photocopy equipment, postage and balk mail meter expenses are controlled at one source point and expended to the departments as goods or services are utilized. Information Technology Services Fund – Supports the delivery of technology based services and infrastructure, including desktop support, network systems, technology upgrades and initiatives, community systems, and associated information technology equipment. Vehicle & Equipment Maintenance Fund – Accounts for the cost of operating and maintaining automotive equipment used for service operations in various City departments. Building Maintenance Fund – Accounts for operating costs associated with building maintenance. Includes custodial supplies and services, maintenance, and repair, utilities, and staffing costs. Vehicle & Equipment Replacement Fund – Established to accumulate funding for the replacement of vehicles and equipment. Replacement costs are charged to departments over the asset’s life span reflective of usage. Information Technology Equipment Replacement Fund – Established to accumulate funding for the replacement of information technology equipment. Replacement costs are charged to departments over the asset’s lifespan reflective of usage. 73 CITY OF SARATOGA INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET ASSETS JUNE 30, 2009 74 Liability / Risk Workers'Office ManagementCompensationStores ASSETS Current assets: Cash and investments 304,180$ 120,654$ 42,593$ Accounts receivable 4,343 3,065 - Total current assets 308,523 123,719 42,593 Noncurrent assets: Capital assets: Machinery and equipment - - - Less: accumulated depreciation - - - Total capital assets (net of accumulated depreciation) - - - Total assets 308,523 123,719 42,593 LIABILITIES Liabilities: Current assets: Accounts payable 22,435 303 2,960 Accrued payroll - 381 - Claims payable 83,216 - - Total current liabilities 105,651 684 2,960 NET ASSETS Investment in capital assets - - - Unrestricted 202,872 123,035 39,633 Total net assets 202,872$ 123,035$ 39,633$ 75 Information InformationVehicle VehicleTechnology Technologyand EquipmentBuildingand EquipmentEquipment ServicesMaintenanceMaintenanceReplacementReplacementTotal 185,879$ 62,524$ 270,842$ 150,685$ 316,483$ 1,453,840$ - - - 2,530 - 9,938 185,879 62,524 270,842 153,215 316,483 1,463,778 - - - 611,474 90,240 701,714 - - - (235,823) (45,120) (280,943) - - - 375,651 45,120 420,771 185,879 62,524 270,842 528,866 361,603 1,884,549 4,525 3,191 44,104 - 1,193 78,711 6,517 2,678 17,897 - - 27,473 - - - - - 83,216 11,042 5,869 62,001 - 1,193 189,400 - - - 375,651 45,120 420,771 174,837 56,655 208,841 153,215 315,290 1,274,378 174,837$ 56,655$ 208,841$ 528,866$ 360,410$ 1,695,149$ CITY OF SARATOGA INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS FOR THE YEAR ENDED JUNE 30, 2009 76 Liability / Risk Workers'Office ManagementCompensationStores Operating revenues: Charges for services 286,268$ 260,920$ 60,000$ Other operating revenues 17,964 10,001 5,391 Total operating revenues 304,232 270,921 65,391 Operating expenses: Cost of services - - - Administration 230,050 195,622 58,374 Depreciation - - - Total operating expenses 230,050 195,622 58,374 Operating income 74,182 75,299 7,017 Change in net assets 74,182 75,299 7,017 Total net assets - beginning (as restated)1 128,690 47,736 32,616 Total net assets - ending 202,872$ 123,035$ 39,633$ 1The Internal Service Funds beginning net assets have been removed from the General Fund beginning fund balance. (See Note #9) The accompanying notes are an integral part of these financial statements 77 Information InformationVehicle VehicleTechnology Technologyand EquipmentBuildingand EquipmentEquipment ServicesMaintenanceMaintenanceReplacementReplacementTotal 403,946$ 250,000$ 807,083$ 200,001$ 51,304$ 2,319,522$ 30 1 604 13,569 1,979 49,539 403,976 250,001 807,687 213,570 53,283 2,369,061 - 206,758 700,207 16,628 54,303 977,896 351,680 - - - - 835,726 - - - 108,111 18,048 126,159 351,680 206,758 700,207 124,739 72,351 1,939,781 52,296 43,243 107,480 88,831 (19,068) 429,280 52,296 43,243 107,480 88,831 (19,068) 429,280 122,541 13,412 101,361 440,035 379,478 1,265,869 174,837$ 56,655$ 208,841$ 528,866$ 360,410$ 1,695,149$ CITY OF SARATOGA INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2009 78 Liability / Risk Workers'Office ManagementCompensationStores Cash flows from operating activities: Receipts from customers and users 299,889$ 267,856$ 65,391$ Payments to suppliers (116,138) (187,219) (55,851) Payments to employees (9,969) (8,043) - Net cash provided by operating activities 173,782 72,594 9,540 Cash flows from capital activities: Acquisition of capital assets - - - Net cash used for acquisition of capital assets - - - Net increase (decrease) in cash and cash equivalents 173,782 72,594 9,540 Cash and cash equivalents, beginning of year 130,398 48,060 33,053 Cash and cash equivalents, ending of year 304,180$ 120,654$ 42,593$ Reconciliation of operating income to net cash provided by operating activities: Operating income (loss)74,182$ 75,299$ 7,017$ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation - - - Change in operating assets and liabilities: Decrease (increase) in accounts receivables (4,343) (3,065) - (Decrease) increase in accounts payable 21,898 (21) 2,523 (Decrease) in deposits payable - - - Increase in claims payable 83,216 - - (Decrease) increase in accured payroll (1,171) 381 - Net cash provided (used) by operating activities 173,782$ 72,594$ 9,540$ 79 Information InformationVehicle VehicleTechnology Technologyand EquipmentBuildingand EquipmentEquipment ServicesMaintenanceMaintenanceReplacementReplacementTotal 403,976$ 262,475$ 807,799$ 211,040$ 53,283$ 2,371,709$ (167,726) (155,095) (303,883) (41,828) (53,110) (1,080,850) (185,410) (61,407) (373,277) - - (638,106) 50,840 45,973 130,639 169,212 173 652,753 - - - (141,837) - (141,837) - - - (141,837) - (141,837) 50,840 45,973 130,639 27,375 173 510,916 135,039 16,551 140,203 123,310 316,310 942,924 185,879$ 62,524$ 270,842$ 150,685$ 316,483$ 1,453,840$ 52,296$ 43,243$ 107,480$ 88,831$ (19,068)$ 429,280$ - - - 108,111 18,048 126,159 - 12,474 112 (2,530) - 2,648 (550) (9,804) 24,688 (25,200) 1,193 14,727 - - (5,000) - - (5,000) - - - - - 83,216 (906) 60 3,359 - - 1,723 50,840$ 45,973$ 130,639$ 169,212$ 173$ 652,753$ This page is intentionally blank. 80 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS 81 82 CITY OF SARATOGA CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS COMPARATIVE SCHEDULE BY SOURCE JUNE 30, 2009 AND 2008 83 2009 2008 Governmental Funds Capital Assets: Land and land improvements 10,585,106$ 9,887,095$ Buildings and structures 23,156,758 23,066,577 Machinery and equipment 1,324,426 1,400,237 Infrastructure 103,549,229 102,756,597 Construction in progress 6,595,346 7,744,871 Total Governmental Funds Capital Assets 145,210,865 144,855,377 Accumulated depreciation (23,529,120) (21,847,317) Total Governmental Funds Capital Assets, Net 121,681,745$ 123,008,060$ Investments in Governmental Funds Capital Assets by Source: General Fund 115,642,022$ 115,713,856$ Special revenue funds 1,008,688 1,023,688 Capital projects funds 28,462,807 28,020,483 Donations 97,348 97,348 Accumulated depreciation (23,529,120) (21,847,315) Total Governmental Funds Capital Assets 121,681,745$ 123,008,060$ 1 This schedule presents only the capital asset balances related to governmental funds. Accordingly the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. CITY OF SARATOGA CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE BY FUNCTION AND ACTIVITY1 JUNE 30, 2009 84 Land Buildings and Land and ImprovementsStructures Function and Activity General and intergovernmental services: Management services -$ 271,631$ Administrative services - 167,585 Intergovernmental services 118,184 3,138,641 Total General and Intergovernmental Services:118,184 3,577,857 Public safety: Police services - - Code enforcement - - Total Public Safety:- - Public works: Streets and sidewalks 725,174 30,628 Parks/open space 2,637,061 2,656,850 Total Public Works:3,362,235 2,687,478 Community services 5,362,223 2,576,524 Community development services 1,742,464 14,314,899 Total Governmental Funds Capital Assets 10,585,106 23,156,758 Accumulated depreciation - (4,894,979) Total Governmental Funds Capital Assets, Net 10,585,106$ 18,261,779$ 1 This schedule presents only the capital asset balances related to governmental funds. Accordingly the capital assets reported in internal service funds are excluded form the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. 85 Machinery Construction and in EquipmentInfrastructureProgress Total 47,838$ -$ 155,215$ 474,684$ 84,864 - - 252,449 47,560 - - 3,304,385 180,262 - 155,215 4,031,518 27,813 - - 27,813 7,548 - - 7,548 35,361 - - 35,361 524,793 103,549,229 2,170,277 107,000,101 312,538 - - 5,606,449 837,331 103,549,229 2,170,277 112,606,550 227,810 - 4,246,489 12,413,046 43,662 - 23,365 16,124,390 1,324,426 103,549,229 6,595,346 145,210,865 (1,274,551) (17,359,590) - (23,529,120) 49,875$ 86,189,639$ 6,595,346$ 121,681,745$ CITY OF SARATOGA SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY SCHEDULE BY FUNCTION AND ACTIVITY JUNE 30, 2009 86 Governmental Governmental Funds Capital Funds Capital Assets Assets July 1, 2008AdditionsDeletionsJune 30, 2009 Function and Activity General and intergovernmental services: Management services 435,145$ 39,539$ -$ 474,684$ Administrative services 252,449 - - 252,449 Intergovernmental services 3,282,576 52,881 (31,072) 3,304,385 Total General and Intergovernmental Services:3,970,170 92,420 (31,072) 4,031,518 Public safety: Police services 27,813 - - 27,813 Code enforcement 22,548 - (15,000) 7,548 Total Public Safety:50,361 - (15,000) 35,361 Public works: Streets and sidewalks 108,209,639 434,626 (1,644,164) 107,000,101 Parks/open space 5,525,292 107,532 (26,375) 5,606,449 Total Public Works:113,734,931 542,158 (1,670,539) 112,606,550 Community services 11,013,890 1,777,478 (378,322) 12,413,046 Community development services 16,086,025 42,866 (4,501) 16,124,390 Total Governmental Funds Capital Assets 144,855,377 2,454,922 (2,099,434) 145,210,865 Accumulated depreciation (21,847,317) (1,768,632) 86,829 (23,529,120) Total Governmental Funds Capital Assets, Net 123,008,060$ 686,290$ (2,012,605)$ 121,681,745$ 1 This schedule presents only the capital asset balances related to governmental funds. Accordingly the capital assets reported in internal service funds are excluded form the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. STATISTICAL SECTION 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. 88-92 Revenue Capacity These schedules contain information to help the reader assess the governments most significant local revenue source, the property tax. 93-97 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. 98-101 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. 102-103 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. 104-106 The City of Saratoga implemented GASB Statement No. 34 in fiscal year 2001/02; schedules presenting government-wide information include information beginning in that year. The City of Saratoga implemented GASB Statement No. 44 in fiscal year 2007/08; newly required schedules presenting information in the Statistical Section include the earliest available information. 87 CITY OF SARATOGA NET ASSETS BY COMPONENT LAST FIVE YEARS (ACCRUAL BASIS OF ACCOUNTING) (amounts expressed in thousands) 20052006200720082009 Primary government Governmental activities Investment in capital assets, net of related debt 105,784$ 107,100$ 108,102$ 109,818$ 108,818$ Restricted 6,328 5,370 5,928 5,940 5,281 Unrestricted 6,789 9,955 8,593 9,710 8,759 Total primary government 118,901$ 122,425$ 122,623$ 125,468$ 122,858$ Source: CAFR Fiscal Year $95,000 $100,000 $105,000 $110,000 $115,000 $120,000 $125,000 $130,000 20052006200720082009 Net Assets by Component Investment in capital assets, net of related debt Restricted Unrestricted 88 CITY OF SARATOGA CHANGES IN NET ASSETS LAST FIVE YEARS (ACCRUAL BASIS OF ACCOUNTING) (amounts expressed in thousands) 20052006200720082009 Expenses: Governmental activities: General and intergovernmental services 4,160$ 3,473$ 4,532$ 6,293$ 5,595$ Public safety 3,736 3,427 3,844 4,166 4,211 Public works 3,829 4,752 6,425 5,325 7,643 Community services 1,929 1,395 1,437 1,286 1,634 Community development services 2,349 2,226 1,993 2,032 2,000 Interest on long-term debt (unallocated)760 754 768 714 697 Total governmental activities expenses 16,763 16,027 18,999 19,816 21,780 Program revenues: Charges for services: General and intergovernmental services - 31 452 1,787 133 Public safety 141 122 - 411 520 Public works 1,988 1,890 528 1,705 2,379 Community services 757 1,008 604 911 935 Community development services 1,890 2,665 1,328 2,110 1,802 Operating grants and contributions 1,218 1,549 2,155 151 228 Capital grants and contributions 865 1,568 1,282 1,715 339 Total governmental activates program revenues6,859 8,833 6,349 8,790 6,336 Net (expense) revenue and change in net assets(9,904) (7,194) (12,650) (11,026) (15,444) General revenue and other changes in net assets Taxes: Property taxes 4,841 5,652 5,772 8,099 8,336 Sales taxes 1,011 988 995 1,058 1,043 Local taxes 1,143 1,288 1,099 694 663 Franchise taxes 995 1,040 1,187 1,625 1,657 Motor vehicle in-lieu 420 718 177 149 116 Total Taxes 8,410 9,686 9,230 11,625 11,815 Intergovernmental - - 673 841 474 Investment earnings 283 709 2,813 1,057 397 Other revenues 193 323 132 348 148 Total general revenues 8,886 10,718 12,848 13,871 12,834 Change in net assets (1,018) 3,524 198 2,845 (2,610) Net assets - beginning of year 119,919 118,901 122,425 122,623 125,468 Net assets - end of year 118,901$ 122,425$ 122,623$ 125,468$ 122,858$ Source: CAFR Fiscal Year 89 CITY OF SARATOGA FUND BALANCE OF GOVERNMENTAL FUNDS LAST FIVE YEARS (ACCRUAL BASIS OF ACCOUNTING) (amounts expressed in thousands) 20052006200720082009 General fund: Reserved -$ 1$ 64$ 1$ 1$ Unreserved 6,979 10,378 9,097 10,396 8,228 Total general fund 6,979$ 10,379$ 9,161$ 10,397$ 8,229$ All other governmental funds: Reserved Debt service funds 855$ 865$ 746$ 854$ 931$ Unreserved, reported in: Special revenue funds 201 919 844 318 484 Capital project funds 5,322 3,586 4,338 4,768 3,865 Total all other governmental funds 6,378$ 5,370$ 5,928$ 5,940$ 5,280$ Source: CAFR Fiscal Year $‐ $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 General ‐ Reserved General ‐ Unreserved Debt ServiceSpecial Revenue Capital Projects Fund Balances of Governmental Funds 2005 2006 2007 2008 2009 90 CITY OF SARATOGA GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE LAST FIVE YEARS (ACCRUAL BASIS OF ACCOUNTING) (amounts expressed in thousands) 20052006200720082009 Tax revenues: Property taxes 4,841$ 5,652$ 5,772$ 8,099$ 8,336$ Special assessments 1,476 1,369 271 1,392 1,368 Sales taxes 1,011 988 995 1,058 1,043 Local taxes 1,143 1,288 1,099 694 663 Motor vehicle in-lieu 995 1,040 1,187 1,625 1,657 Franchise taxes 420 718 177 149 116 Total tax revenues 9,886$ 11,055$ 9,501$ 13,017$ 13,183$ Source: CAFR Fiscal Year $‐ $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 Property taxes Special assessments Sales taxesLocal taxesMotor vehicle in‐ lieu Franchise taxes Tax Revenues by Source 2005 2006 2007 2008 2009 91 CITY OF SARATOGA CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST FIVE YEARS (ACCRUAL BASIS OF ACCOUNTING) (amounts expressed in thousands) 20052006200720082009 Revenues: Property taxes 4,893$ 5,652$ 4,758$ 7,877$ 8,335$ Special assessments 1,411 1,370 1,285 1,566 1,368 Sales taxes 1,011 987 995 1,058 1,043 Other local taxes 851 1,288 1,126 773 663 Licensed and permits 100 79 1,340 1,671 1,460 Fines and forfeitures 162 259 396 344 360 Intergovernmental - state 1,375 2,660 3,631 1,641 1,283 Intergovernmental - other 671 976 629 777 290 Franchise fees 1,294 1,041 1,187 1,622 1,657 Use of money any property 664 752 2,813 924 794 Other revenues 153 1,719 151 326 1,966 Current services charges 3,093 2,715 900 4,184 - Total tax revenues 15,768 19,498 19,211 22,763 19,219 Expenditures: Current: General and intergovernmental services 3,238 3,346 3,806 4,083 3,330 Public safety 3,731 3,423 3,824 4,166 4,206 Public works 2,599 3,501 5,714 4,717 4,700 Community services 1,875 1,210 1,381 1,262 1,424 Community development services 1,990 1,847 1,962 2,026 2,450 Capital outlay 1,777 2,908 2,130 4,246 4,060 Debt service: Principal 255 270 280 295 310 Interest and fiscal charges 766 760 774 721 705 Total expenditures 16,231 17,265 19,871 21,515 21,185 Excess of revenues over (under) expenditures (463) 2,233 (660) 1,247 (1,966) Other financing sources (uses): Transfers in 2,492 499 3,422 2,241 2,043 Transfers out (2,492) (499) (3,422) (2,241) (2,043) Total other financing sources (uses)- - - - - Net change in fund balances (463)$ 2,233$ (660)$ 1,247$ (1,966)$ Debt as a percentage of noncapital expenditures7.06%7.17%5.94%5.62%4.87% Source: CAFR Fiscal Year 92 CITY OF SARATOGA PROPERTY TAX RATES – DIRECT AND OVERLAPPING GOVERNMENTS LAST FIVE YEARS (ACCRUAL BASIS OF ACCOUNTING) (Property Tax Rates per $100 of Assessed Value) 20052006200720082009 General 1.00000 1.00000 1.00000 1.00000 1.00000 County Retirement Levy 0.03880 0.03880 0.03880 0.03880 0.03880 County Library 0.00240 0.00240 0.00240 0.00240 0.00240 City of Saratoga 0.01484 0.01170 0.00955 0.01130 0.01040 Campbell School District 0.05290 0.05120 0.05080 0.04750 0.05240 Cupertino Elementary School District 0.03600 0.03500 0.02890 0.03370 0.03060 Moreland Elementary School District 0.06120 0.05610 0.05560 0.05690 0.05650 Saratoga School District 0.03610 0.03560 0.03510 0.03630 0.03630 Campbell Union High School District 0.01970 0.02240 0.01980 0.02850 0.02990 Fremont Union High School District 0.02680 0.02600 0.02430 0.02410 0.03390 Los Gatos-Saratoga Joint Union High School District0.04090 0.03710 0.06510 0.03450 0.03300 Foothill-DeAnza Community College District 0.01290 0.01190 0.03460 0.01130 0.01230 West Valley-Mission Community College District - 0.01400 0.01260 0.01180 0.00320 Saratoga Fire District 0.00170 0.00520 0.00490 0.00530 0.00530 Santa Clara Valley Water District - State Water Project0.00860 0.00690 0.00700 0.00670 0.00590 Santa Clara Valley Water District - Zone W-1 0.00060 0.00090 0.00020 0.00400 0.00020 Source: California Municipal Statistics, Inc. Fiscal Year 93 CITY OF SARATOGA ASSESSED VALUE OF TAXABLE PROPERTY LAST FIVE YEARS (amounts expressed in thousands) Fiscal Year EndedResidentialCommercialIndustrial VacantOther June 30PropertyPropertyPropertyInstitutionalPropertyProperty 20057,114,095$ 166,071$ 8,746$ 33,509$ 70,276$ 35,127$ 20067,883,965 177,149 8,921 38,027 90,611 32,858 20078,467,894 187,142 9,099 45,706 107,228 39,536 20089,025,628 208,369 9,281 50,590 110,656 49,023 20099,605,309 213,951 9,467 51,052 128,898 43,240 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. $‐ $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 20052006200720082009 Total Assessed Property Unsecured Other Vacant Institutional Industrial Commercial Residential 94 Total2 TotalLess:Total Taxable 1 Direct UnsecuredAssessedTax ExemptAssessedTax PropertyPropertyReal PropertyValueRate 42,965$ 7,470,789$ (76,932)$ 7,393,857$ 1.0560 46,874 8,278,405 (133,951) 8,144,454 1.0529 39,764 8,896,369 (140,859) 8,755,510 1.0508 35,775 9,489,322 (159,369) 9,329,953 1.0525 43,933 10,095,850 (161,488) 9,934,362 1.0516 95 CITY OF SARATOGA PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND FOUR YEARS AGO JUNE 30, 2009 (amounts expressed in thousands) % of Total % of Total Taxable TaxableTaxable Taxable Assessed AssessedAssessed Assessed Taxpayer ValueRankValueValueRankValue Cupertino Village Associates, LLC 34,205$ 10.34%16,640$ 20.23% Quito Village Group, LLC 18,012 20.18% John M. & Abby J. Sobrato 17,297 30.17% Gregpenn Properties, LLC 16,970 40.17% David L. House 15,802 50.16%8,872 90.12% San Jose Water Works 13,190 60.13%9,904 40.13% Stephen L. Luczo 10,608 70.11% David J. & Terri E. Morrison 10,395 80.10%9,606 50.13% Argonaut Associates, LLV 10,304 90.10%11,427 30.15% Ashok Krishnamurthi 10,234 100.10% David C. & Roxanne N. Petterschmidt 9,173 70.12% Saratoga Office Center Partners, LLC 19,300 10.26% Deloise A. Jordan 9,020 80.12% Public Storage Props IX Inc 8,530 100.12% Assessed Value 9,934,362$ 7,393,858$ 1 Earliest information available Source: California Municipal Statistics, Inc. 2009 20051 96 CITY OF SARATOGA PROPERTY TAX LEVIES AND COLLECTIONS LAST FIVE YEARS 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%3,621 8,110,364 100.0% 20098,332,184 8,335,805 100.0%- 8,335,805 100.0% 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. Collected within the Fiscal Year of the Levy Total Collections to Date 97 CITY OF SARATOGA RATIOS OF OUTSTANDING DEBT BY TYPE LAST FIVE YEARS (amounts expressed in thousands, except per capita amounts) 20052006200720082009 Governmental activities General obligation bonds 14,440$ 14,170$ 13,890$ 13,595$ 13,285$ Total primary government 14,440$ 14,170$ 13,890$ 13,595$ 13,285$ Percentage of Personal Income1 0.00%0.00%0.00%n/an/a Per capita2 468 460 443 430 419 Source: CAFR 1Bureau of Economic Analysis - personal income information only available through 2007 San Jose-Sunnyvale-Santa Clara region 2Population information from California State Controller's Office Fiscal Year 98 CITY OF SARATOGA RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST FIVE YEARS (amounts expressed in thousands, except per capita amounts) 20052006200720082009 General obligation bonds 14,440$ 14,170$ 13,890$ 13,595$ 13,285$ Less: Amount available in debt service fund(855) (865) (747) (854) (926) Total primary government 13,585$ 13,305$ 13,143$ 12,741$ 12,359$ Percentage of actual taxable value of property 0.18%0.16%0.15%0.14%0.12% Per capita1 440 431 419 403 390 Source: CAFR 1Population information from California State Controller's Office Fiscal Year 99 CITY OF SARATOGA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT (amounts expressed in thousands) Estimated EstimatedShare of DebtPercentageOverlapping OutstandingApplicable 1 Debt Direct and Overlapping Tax and Assessment Debt: Santa Clara County 350,000$ 3.667%12,835$ Santa Clara Valley Water District, Zone W-1 1,390 3.920%54 Foothill-De Anza Community College District 482,349 1.767%8,523 West Valley Community College District 215,335 11.619%25,020 Campbell Union High School District 139,915 5.514%7,715 Fremont Union High School District 208,080 3.781%7,868 Los Gatos-Saratoga Joint Union High School District62,200 41.093%25,560 Campbell Union School District 101,400 6.861%6,957 Cupertino Union School District 124,159 6.306%7,829 Moreland School District 71,029 12.788%9,083 Saratoga Union School District 51,088 86.363%44,121 Saratoga Fire Protection District 5,249 97.631%5,125 City of Saratoga 13,285 100.000%13,285 Santa Clara Valley Water District Benefit Assessment161,485 3.667%5,922 Total Direct and Overlapping Tax and Assessment Debt 179,897 Overlapping General Fund Debt: Santa Clara County General Fund Obligations 862,655 3.667%31,634$ Santa Clara County Pension Obligations 389,175 3.667%14,271 Santa Clara County Board of Education Certificates of Participation 14,530 3.667%533 Santa Clara County Vector Control District Certificates of Participation 4,125 3.667%151 Foothill-De Anza Community College District Certificates of Participation 25,605 1.767%452 Los Gatos-Saratoga Joint Union High School District Certificates of Participation 10,665 41.093%4,383 Cupertino Union School District Certificates of Participation 1,215 6.306%77 Saratoga Union School District Certificates of Participation 6,640 86.363%5,735 Midpeninsula Open Space Park District General Fund Obligations 116,673 6.382%7,446 Total Overlapping General Fund Debt 64,682 Combined Total Debt2 244,579$ 1Percentage of overlapping agency's assessed valuation located within boundaries of the city. 2Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Source: California Municipal Statistics, Inc. 100 CITY OF SARATOGA LEGAL DEBT MARGIN INFORMATION LAST FIVE YEARS (amounts expressed in thousands) 20052006200720082009 Debt Limit 1,120,618$ 1,241,761$ 1,334,455$ 1,423,398$ 1,514,378$ Total net debt applicable to limit 13,585 13,305 13,143 12,741 12,359 Legal debt margin 1,107,033$ 1,228,456$ 1,321,312$ 1,410,657$ 1,502,019$ Total net debt applicable to the limit as a percentage of debt limit 1.21%1.07%0.98%0.90%0.82% Legal debt margin calculation Assessed value 7,393,857$ 8,144,454$ 8,755,510$ 9,329,953$ 9,934,362$ Add back: exempt real property 76,932 133,951 140,859 159,369 161,488 Total assessed value 7,470,789$ 8,278,405$ 8,896,369$ 9,489,322$ 10,095,850$ Debt limit (15% of total assessed value)1,120,618$ 1,241,761$ 1,334,455$ 1,423,398$ 1,514,378$ Debt applicable to limit: General obligation bonds 14,440$ 14,170$ 13,890$ 13,595$ 13,285$ Less: Amount available in debt service fund(855) (865) (747) (854) (926) Total net debt applicable to limit 13,585$ 13,305$ 13,143$ 12,741$ 12,359$ Legal debt margin 1,107,033$ 1,228,456$ 1,321,312$ 1,410,657$ 1,502,019$ Source: CAFR Fiscal Year 101 CITY OF SARATOGA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST FIVE YEARS PersonalPer Capita FiscalCityIncomePersonalLaborUnemployment YearPopulation1 (in millions)2 Income2 Force 3 Rate3 200530,850 89,615 51,418 12,600 2.5% 200630,835 98,252 55,754 12,700 2.1% 200731,352 105,999 59,338 12,900 2.3% 200831,592 n/a n/a 13,100 3.2% 200931,679 n/a n/a 13,300 6.0% Source:1Popluaton information from California State Controller's Office 2Bureau of Economic Analysis - San Jose-Sunnyvale-Santa Clara region 3State of California - Employment Development Department 10,000 15,000 20,000 25,000 30,000 35,000 20052006200720082009 Labor Force vs. Population Population Labor Force 102 CITY OF SARATOGA PRINCIPAL EMPLOYERS CURRENT YEAR AND FOUR YEARS AGO AT JUNE 30, 2009 Percentage Percentage of Total City of Total City Employer EmployeesRankEmploymentEmployeesRankEmployment Gene's Fine Foods 85 10.68%85 1 1.39% Safeway 65 20.52%65 2 1.06% Saratoga Country Club 65 30.52%65 3 1.06% Windermere SVP 27 40.22%27 5 0.44% Longs Drug 20 50.16%20 6 0.33% Classic Car Wash 20 60.16%20 7 0.33% Harmonie European Day Spa 20 70.16%20 8 0.33% Hinshaw, Draa & Marsh 20 80.16%20 9 0.33% Jakes of Saratoga 20 90.16% Bella Saratoga 18 100.14%20 100.33% 24 Hour Fitness 17 0.14%30 4 0.49% Total City Employment2 12,500 6,129 1 Earliest information available 2State of California - Employment Development Department Source: City of Saratoga 2009 20051 103 CITY OF SARATOGA FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION LAST FIVE FISCAL YEARS 20052006200720082009 Function General government 12.65 10.75 11.00 13.00 12.00 Public works 20.75 20.75 21.75 22.75 21.75 Community development 14.00 13.00 14.00 14.00 14.00 Parks and recreation 10.35 10.35 10.60 10.60 10.60 Total 57.75 54.85 57.35 60.35 58.35 Source: City of Saratoga Budget Document Fiscal Year ‐ 10.00 20.00 30.00 40.00 50.00 60.00 70.00 20052006200720082009 Full‐Time Equivalents Parks & Rec Comm Development Public works General gov't 104 CITY OF SARATOGA OPERATING INDICATORS BY FUNCTION LAST FIVE FISCAL YEARS 20052006200720082009 Function Public safety Part 1 crimes1 463 426 425 381 282 Total incidents 42,011 40,567 39,663 41,243 41,384 Police reports 1,767 1,659 1,767 1,941 1,949 Public Works Street resurfacing (miles)N/A5 14 N/A6 Street lights repaired 2 3 3 12 25 Potholes filled (sq. ft.)N/A5,000 5,000 7,000 10,000 Community Development Total permit valuation ($000)74,668 94,485 69,935 70,442 61,117 Parks and Recreation Classes, trips (enrollment) community events5,604 5,712 4,817 4,782 4,698 Adult Exercise (e.g. basketball, softball)272 312 285 362 515 Sports programs (e.g. basketball, softball)470 473 515 591 459 Child care programs (enrollment)200 163 159 225 171 Day/summer camps (enrollment)301 287 205 242 225 Teen/youth council (enrollment)2,506 3,798 2,221 94 419 Senior center (enrollment/attendance days)22,312 22,591 18,515 17,826 16,325 1Part 1 Crimes are the following as reported to DOJ: homicide, rape, robbery, burglary, assault, theft, auto theft, and arson. Source: City of Saratoga various records Fiscal Year 105 CITY OF SARATOGA CAPITAL ASSET STATISTICS BY FUNCTION LAST FIVE FISCAL YEARS 20052006200720082009 Function Public safety Police Station 1 1 - - - Fire Station Saratoga Fire District 1 1 1 1 1 Central Fire District 1 1 1 1 1 Public Works Street Miles - Private 13 13 13 13 13 Street Miles - Public 137 137 137 137 140 West Valley Sanitation District Number of Connections 8,601 8,621 8,651 8,651 8,683 Length of Sewer Lines 120 120 127 127 127 Cupertino Valley Sanitation District Number of Connections 2,118 2,118 2,915 2,927 2,938 Length of Sewer Lines 36 36 36 36 36.5 Parks and Recreation Parks Acreage 81 81 81 81 84 Parks 15 15 15 15 15 Source: City of Saratoga various records Fiscal Year 106