HomeMy WebLinkAbout11.29.22 Finance Committee Agenda PacketCity Council Finance Committee Agenda November 29, 2022
Page 1
SARATOGA CITY COUNCIL
FINANCE COMMITTEE
NOVEMBER 29, 2022
3:30 P.M. SPECIAL MEETING
Teleconference/Public Participation Information - Special Meeting
The Special Meeting will be held in-person and by teleconference pursuant to amendments to
the teleconference rules required by the Ralph M. Brown Act allowing teleconferencing during
a proclaimed state of emergency when a local official has recommended social distancing.
Members of the City Council and the public may participate in person at the location listed
below or via the Zoom platform using the information below.
Members of the public can view and participate in the meeting by:
1. Attending the meeting in person in the Linda Callon Conference Room located at 13777
Fruitvale Avenue, Saratoga CA 95070
2. Accessing the meeting through Zoom
* Webinar URL https://us02web.zoom.us/j/88934078423
* Webinar ID: 889 3407 8423
* Calling 1.669.900.6833 or 1.408.638.0968 and pressing *9 to raise their hand to speak on an
agenda item when directed by the Mayor
Written Communication
Members of the public can send written comments prior to the meeting by commenting
online at www.saratoga.ca.us/fc prior to the start of the meeting. These emails will be
provided to the members of the Council and will become part of the official record of the
meeting.
Public Comment
Members of the public may comment on any item for up to three (3) minutes. The amount of
time for public comment may be reduced by the Mayor.
Meeting Recording Information
In accordance with the Saratoga City Council’s Meeting Recording Policy, the City
Council Finance Committee Meetings are recorded and made available to the public
following the meeting on the City website.
City Council Finance Committee Agenda November 29, 2022
Page 2
CALL TO ORDER
ROLL CALL
AGENDA ITEMS
1. Finance Committee Minutes
Recommended Action:
Review and approve the minutes for the October 27, 2022 meeting
Finance Committee Minutes
2. Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2022
Recommended Action:
Receive report and presentation from Chavan and Associates, LLC the City’s audit firm
Recommend City Council action a) Receive and file the ACFR and b) Direct staff to prepare
and post the 2022-23 Cities Financial Transactions Report using the audited financials
Annual Comprehensive Financial Review Summary
Attachment A - Draft Management Discussion and Analysis
Attachment B - Draft Basic Financials
To be posted on November 28th:
Attachment C – Final ACFR for the fiscal year ended June 30, 2022
3. 2023-24 Capital Improvement Program (CIP) Development
Recommended Action:
Receive report – No action required
2023-24 Capital Improvement Program CIP Development
ADJOURNMENT
CERTIFICATE OF POSTING OF THE AGENDA, DISTRIBUTION OF THE AGENDA PACKET,
COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT
I, Gina Scott, Administrative Analyst for the City of Saratoga, declare that the foregoing agenda
for the meeting of the City Council Finance Committee of the City of Saratoga was posted and
available for public review on November 23, 2022, at the City of Saratoga, 13777 Fruitvale
Ave., Saratoga, CA 95070, and on the City’s website at www.saratoga.ca.us.
Signed this 23rd day of November 2022 at Saratoga, California.
Gina Scott, Administrative Analyst
In accordance with the Ralph M. Brown Act, copies of the staff reports and other materials
provided to the Committee by City staff in connection with this agenda, copies of materials
distributed to the Committee concurrently with the posting of the agenda, and materials
distributed to the Committee by staff after the posting of the agenda are available on the City
City Council Finance Committee Agenda November 29, 2022
Page 3
website at www.saratoga.ca.us and are available for review in the office of the City Clerk at
13777 Fruitvale Avenue, Saratoga, California.
In compliance with the Americans with Disabilities Act and the Governor’s Executive Order, if
you need assistance to participate in this meeting, please contact the City Clerk at
bavrit@saratoga.ca.us or call 408.868.1216 as soon as possible before the meeting. The City
will use its best efforts to provide reasonable accommodations to provide as much
accessibility as possible while also maintaining public safety.
[28 CFR 35.102-35.104 ADA title II]
City Council Finance Committee Minutes – October 27, 2022
Page 1
MINUTES
SARATOGA CITY COUNCIL FINANCE COMMITTEE
REGULAR MEETING
OCTOBER 27, 2022
CALL TO ORDER
The meeting was called to order at 3:30 p.m. via Zoom.
ROLL CALL
Present: Mayor Tina Walia, Vice Mayor Kookie Fitzsimmons
Also Present: Nick Pegueros, Administrative Services Director
Crystal Bothelio, Assistant City Manager
John Cherbone, Public Works Manager
Agnes Pabis, Finance Manager
Macedonio Nunez, Engineering Services Manager
Mary Beth Redding, Foster and Foster
Gina Scott, Administrative Analyst
ORAL COMMUNICATIONS ON NON-AGENDIZED ITEMS
None
AGENDA ITEMS
1.Finance Committee Minutes
Recommended Action:
Approve the minutes for the September 22, 2022, Finance Committee Regular Meeting.
FITZSIMMONS/WALIA MOVED TO APPROVE THE MINUTES FOR THE MAY 26, 2022 FINANCE
COMMITTEE REGULAR MEETING. MOTION PASSED BY VERBAL ROLL CALL. AYES:
FITZSIMMONS, WALIA. NOES: NONE. ABSTAIN: NONE.
2.Other Post-Employment Benefits (OPEBs) Actuarial Valuation Project Overview
Recommended Action:
Receive report – No action required
Administrative Services Director Nick Pegueros introduced the Other Post-Employment
Benefits (OPEBs) Actuarial Valuation Project Overview and staff from the actuarial firm. Mary
Beth Redding from Foster and Foster provided an overview of the services they will be
providing.
3.Single Audit Update for the fiscal year ended June 30, 2022
Recommended Action:
Receive report – No action required
3
City Council Finance Committee Minutes – October 27, 2022
Page 2
Finance Manager Agnes Pabis explained the requirements for a single audit and shared data
showing that the City of Saratoga did not meet the $750,000 Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal awards. She also shared a
copy of the letter submitted to the State Controller’s Office confirming the City exemption from
the single audit for the fiscal year ending June 30, 2022.
ADJOURNMENT
FITZSIMMONS/WALIA MOVED TO ADJOURN THE MEETING AT 4:00 PM. MOTION PASSED BY
VERBAL ROLL CALL. AYES: FITZSIMMONS, WALIA. NOES: NONE.
Minutes respectfully submitted:
Gina Scott, Administrative Analyst
City of Saratoga
4
ADMINISTRATIVE SERVICES
Memorandum
To: City Council Finance Committee
From: Nick Pegueros
Agnes Pabis
Date: November 29, 2022
Subject: Annual Comprehensive Financial Report (ACFR) Review
Recommendation:
City staff recommends that the Finance Committee:
1.Receive report from the City’s independent auditor, Chavan and Associates, on the City of
Saratoga’s ACFR for the fiscal year ended June 30, 2022; and
2.Recommend the following City Council actions at their December 7 meeting:
a.Receive and file the ACFR and related reports; and
b.Direct City staff to prepare and post the City’s Annual Financial Transactions Report
using the financial statements contained in the ACFR and in accordance with State law.
The ACFR is a set of financial statements comprising the financial report of a state, municipal or other
governmental entity that complies with the accounting requirements enacted by the Government
Accounting Standards Board (GASB) and provides accurate and meaningful information concerning
the entity’s financial condition and performance.
Entities are required to engage an external certified public accounting firm to audit financial reports
using GASB requirements. Accordingly, the City contracts with Chavan and Associates, LLP, a
certified public accounting firm licensed by the State of California, to perform the various required
financial audits. As required, Chavan and Associates, LLP, audited the City’s financial statements in
the ACFR for the year ended June 30, 2022, to assess and render an opinion on whether the City’s
financial statement reports are presented fairly, to obtain reasonable assurance as to whether the
financial statements are free of material misstatements, and conform to applicable generally accepted
accounting principles.
Chavan and Associates, LLP, expressed an unmodified opinion which indicates that the financial data
of the City for the year ended June 30, 2022, is free from material misstatements and fairly represents
the financial position of the governmental activities.
Attachment:
1. Annual Comprehensive Financial Report for the fiscal year ended June 30, 2022
5
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Management Discussion & Analysis for the fiscal year ended June 30, 2022
Attachment A
Page 1
INTRODUCTION
The Management’s Discussion and Analysis (MD&A) is a required section of the City’s Annual
Comprehensive Financial Report (ACFR), as shown in the overview below. The purpose of the MD&A is
to present discussion and analysis of the City’s financial performance during the fiscal year that ended on
June 30, 2022. This report will (1) focus on significant financial issues, (2) provide an overview of the
City’s financial activity, (3) identify changes in the City’s financial position, (4) identify any individual
fund issues or concerns, and (5) provide descriptions of significant asset and debt activity.
This information. presented in conjunction with the annual Transmittal Letter and Basic Financial
Statements is intended to provide a comprehensive understanding of the City’s operations and financial
standing.
Required Components of the Annual Financial Report
FISCAL YEAR 2021-22 FINANCIAL HIGHLIGHTS
Total net position, or the City's assets plus deferred outflow of resources ($170 million) less its
liabilities plus deferred inflow of resources ($17.56 million), was $152.45 million as of June 30, 2022.
This is an increase of $15.96 million over the prior fiscal year, which is primarily due to an increase in
tax revenues, the American Rescue Plan Act’s State and Local Fiscal Recovery Fund’s (ARPA SLFRF)
grant allocation, and program revenue.
The City’s Net Pension Liability was $0.73 million. This is a decrease of $7.48 million over the prior
fiscal year, primarily due to the most recent actuarial valuation by the California Public Employees’
Retirement System (CalPERS) which incorporated favorable investment returns for the fiscal year
ended June 30, 2020, changes in assumptions, and overall plan experience.
Net Position included $117 million as investment in capital assets, net of depreciation and related debt,
$8.9 million restricted for specific purposes, and $26.5 million in Unrestricted Net Position.
Total City-wide revenues of $39.5 million consisted of $25.3 million in general revenue and $14.2
million in program revenue. City expenses totaled $23.57 million.
The Governmental Funds fund balances totaled $31.87 million, with $15.41 million in the General
Fund, $7.13 million in the ARPA SLFRF fund, $7.55 million in the Capital Improvement Funds, and
$1.78 million in Other Governmental Funds. This represents an increase of $9.2 million from the prior
year.
Management’s
Discussion & Analysis
Government-Wide
Financial Statements
Fund
Financial Statements Notes to the
Financial Statements
Basic
Financial Statements
6
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Management Discussion & Analysis for the fiscal year ended June 30, 2022
Attachment A
Page 2
General Fund revenues totaled $26.87 million, while General Fund expenditures totaled $23.73 million.
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.
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 Position 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 development and recreation program
fees.
Business-Type Activities - This category includes
enterprise activities such as water, sewer, and utilities.
Unlike governmental services, these activities are
meant to be fully supported by charges paid by users,
based on the services used. The City of Saratoga
currently does not have any business-type activities.
Government-Wide Financial Statements provide a
longer-term view of the City's activities as a whole
and are comprised of the Statement of Net Position
and the Statement of Activities. The Statement of
Net Position provides summary level information
about the financial position of the City, 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 summary
level information about the City's revenues and
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 illustrates the change in Net
Position for the fiscal year.
City financial activities are required to be grouped
as either government activities or business-type
activities. The amounts in the Statement of Net
Position and the Statement of Activities are required
to be separated into governmental activities or
business-type activities in order to distinguish
between the two types of activities. In the case of
the City of Saratoga, there are no business-type
activities as of June 30, 2022.
Government-Wide Financial Statements
Long-term view, including capital assets and long-term
liabilities similar to corporate financial statements.
7
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Management Discussion & Analysis for the fiscal year ended June 30, 2022
Attachment A
Page 3
Fund Financial Statements
A fund represents a grouping of related accounts and
is used to maintain control over resources that are
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 funds are classified as 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 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 types: governmental funds, proprietary funds, and fiduciary 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.
Governmental Funds
•Internal service funds are an accounting device used to accumulate and allocate costs internally
among the City’s various functions. The City uses internal service funds to account for
liability/risk management, worker’s compensation, office equipment support services, information
technology services, vehicle and building maintenance, and vehicle and information technology
equipment replacement. Because internal service funds primarily benefit governmental functions,
they have been included with the governmental activities in the Government-Wide financial
statements.
Proprietary 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 reports three fiduciary funds: The West Valley Clean Water
Program, the 2018 Arrowhead Community Facilities District (CFD) Bond, and the Arrowhead
CFD Project. Additional information regarding these funds can be found in Note 1 of the financial
statements.
Fiduciary Funds
Fund Financial Statements report the City's
operations in more detail than 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
current revenues and expenditures and fund
balances; they exclude capital assets, long-term
debt, and other long-term amounts.
Major funds account for the major financial
activities of the City and are presented individually,
while the activities of non-major funds are presented
in summary with subordinate schedules presenting
the detail for each of these other funds in the
Supplementary Information section. Major funds
are explained below.
Fund Financial Statements
Near-term view, measuring current revenues,
expenditures, and fund balances.
8
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Management Discussion & Analysis for the fiscal year ended June 30, 2022
Attachment A
Page 4
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 presented in this MD&A, follows the Notes Section 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 infrastructure.
SUPPLEMENTARY INFORMATION
Combining and individual fund statements and schedules are included to provide additional information on
non-major governmental funds including special revenue, debt service, and capital project funds, as well as
proprietary internal service fund information 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.
9
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Management Discussion & Analysis for the fiscal year ended June 30, 2022
Attachment A
Page 5
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Net Position serves over time as an indicator of the City's financial position. The City's Total Net Position
increased $15,958,787 in Fiscal Year 2021-22. The primary reason for the increase in net position is an increase
primarily due to an increase in property tax revenue, program revenue, the ARPA grant, and reductions to
pension liabilities. The most significant portion of the City's Net Position ($117,017,380 or 77%) 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. Of the City’s Net Position, $8,910,134 or 6% is subject to external restrictions on how the funding
may be used. The remaining balance of $26,520,921, or 17% of the City's Net Position, is unrestricted and may
be used to meet the City's ongoing obligations to citizens and creditors.
Governmental Activities
2022 2021
Assets
Current assets 43,363,032$ 32,409,892$
Capital assets 124,201,306 125,442,265
Total Assets 167,564,338 157,852,157
Deferred Outflow of Resources
Deferred Outflow 2,442,854 2,785,827
Total Deferred Outflow of Resources 2,442,854 2,785,827
Liabilities
Current liabilities 7,660,499 6,457,875
Long-term liabilities 7,656,892 15,765,407
Total Liabilities 15,317,391 22,223,282
Deferred Inflow of Resources
Deferred Inflow 2,241,366 1,925,054
Total Deferred Inflow of Resources 2,241,366 1,925,054
Net Position
Net investment in capital assets 117,017,380 117,671,447
Restricted for environmental services - 63,182
Restricted for special assessment funds 977,234 872,945
Restricted for public works programs 7,127,589 -
Restricted for debt service 805,311 791,385
Unrestricted 26,520,921 17,090,689
Total Net Position 152,448,435$ 136,489,648$
Table 1 - Net Position
10
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Management Discussion & Analysis for the fiscal year ended June 30, 2022
Attachment A
Page 6
As shown in the below summary of the Statement of Activities table, program revenues increased by
$7,214,046 from the prior fiscal year for governmental activities, and general revenues increased by
$107,020 from the prior year. This resulted in a total increase in revenues of $7,321,066. Expenses
decreased by $7,495,298 from the prior year primarily due to pension expense adjustments related to
changes in assumptions and differences between expected and actual investment returns and plan
experience.
With total program and general revenues for Fiscal Year 2021-22 at $39,533,693 and total expenses at
$23,574,906, the net activity resulted in an increase in Net Position of $15,958,787.
Governmental Activities Increase
Functions/Programs 2022 2021 (Decrease)
Program Revenues
Charges for services 6,498,905$ 5,345,704$ 1,153,201$
Operating grants and contributions 7,381,323 563,716 6,817,607
Capital grants and contributions 334,869 1,091,631 (756,762)
Total Program Revenues 14,215,097 7,001,051 7,214,046
General Revenues
Property taxes 17,427,588 16,294,043 1,133,545
Sales taxes 1,393,853 925,289 468,564
Local taxes 1,054,587 868,821 185,766
Franchise taxes 2,496,572 2,338,382 158,190
Intergovernmental revenues 2,477,479 3,105,433 (627,954)
Investment earnings (299,911) 34,240 (334,151)
Other revenues 768,428 1,645,368 (876,940)
Total General Revenues 25,318,596 25,211,576 107,020
Expenses
General and intergovernmental services 4,381,120 7,287,258 (2,906,138)
Public safety 7,197,048 6,734,604 462,444
Public works 9,309,018 12,530,168 (3,221,150)
Community services 532,308 966,536 (434,228)
Community development services 1,881,150 3,262,810 (1,381,660)
Interest on long-term debt (unallocated)274,262 288,828 (14,566)
Total Expenses 23,574,906 31,070,204 (7,495,298)$
Increase / (Decrease) in Net Position 15,958,787 1,142,423 14,816,364
Net Position, Beginning of Year 136,489,648 135,347,225 1,142,423
Net Position, End of Year 152,448,435$ 136,489,648$ 15,958,787$
Table 2 - Statement of Activities
11
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Management Discussion & Analysis for the fiscal year ended June 30, 2022
Attachment A
Page 7
An analysis and graphical representation of the changes in revenues and expenditures by type of significant
events follows:
Revenues
For Fiscal Year 2021-22, the growth in property tax revenues reflect the ongoing strength of the San
Francisco Bay Area economy. The decrease in Capital Grants revenue is due to decreased activity in the
activity for grant-funded Public Works and Community Services capital projects in fiscal year 2021-22.
The increase in operating grants represent the ARPA SLFRF grant for loss revenue making it a operating
grant. The City subsequently allocated the full ARPA SLFRF allocation to clean water capital improvement
programs consistent with the goals and objectives of the ARPA legislation.
General Revenues increased by $107,020 from the prior year. The most significant changes include:
Property Tax revenue increased $1,133,545 over the prior year. The increase is largely due to an
increase in the City’s Excess ERAF receipts which arise from strong property tax growth and school
funding formulas set by the State of California.
Intergovernmental revenue decreased $627,954 primarily due to one-time increase Measure B funds in
previous year which were suspended due to legal action in years prior to fiscal year 2020-21.
Other revenues decreased by $867,940 primarily because of the one-time sale of Rule 20A credits
totaling $1,208,330 which occurred in the prior year.
Program Revenues increased by $7,214,046 from the prior year. The most significant changes include:
Capital Grants and Contributions increased $6,817,607 from the prior year primarily due to full receipt
of the City’s ARPA SLFRF allocation.
Charges for Services increased by $1,153,201 from the prior year due to receipt of Park In-lieu revenue
of $970,299.
12
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Management Discussion & Analysis for the fiscal year ended June 30, 2022
Attachment A
Page 8
Expenses
Fiscal year 2021-22 expenses decreased by $9,172,432, primarily due to changes in assumptions,
investment returns and overall plan experience. The fiduciary net position in the pension pools increased
by 23% which was an increase of $10,986,723 in the City’s proportionate share of the assets in the pool.
The fiduciary net position directly offsets the net pension liability and directly affects pension expense.
Readers of the financial statements are encouraged to consider that the positive decrease in pension
liabilities reported in this report does not incorporate CalPERS' negative investment losses for the year
ended June 30, 2022, of 6.1 percent.
The impact to each program is summarized as follows:
The following summarizes the changes in total government-wide expenses by category:
Increase
2022 2021 (Decrease)
General and intergovernmental services (2,310,496) 707,070 (3,017,566)
Public works (3,148,421) 894,097 (4,042,518)
Community services (432,005) 119,075 (551,080)
Community development services (1,208,726) 352,542 (1,561,268)
Total Adjustment (7,099,648)$ 2,072,784$ (9,172,432)$
Table 3 - Pension Expense Adjustment by Program
13
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Management Discussion & Analysis for the fiscal year ended June 30, 2022
Attachment A
Page 9
The following analysis removes the $10,986,723 adjustment to pension liabilities, discussed above, to
highlight the $1,194,263 operational expenditure changes increase over prior year:
Public Safety expenses increased by $432,971 due to contractual cost increases for services provided
by the Santa Clara County Sherriff’s Office.
Internal Service costs increased by $785,951, largely attributed to the liability/ risk management and
information technology funds. Liability insurance premiums increased by $122,945, approximately 40
percent, and claims liability expense increased by $205,555. Information technology expenditures
increased by $160,720.
14
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Management Discussion & Analysis for the fiscal year ended June 30, 2022
Attachment A
Page 10
MAJOR AND OTHER GOVERNMENTAL FUNDS: CHANGE IN FUND BALANCE
A summary of the changes in fund balance of the Major Funds and Other Governmental Funds is presented
below:
The General Fund, ARPA/SLFRF fund and Capital Improvement Funds are listed as Major Funds in fiscal
year 2021-22. The Other Governmental Funds category includes thirty Landscape and Lighting Districts
and Storm Drain funds (presented as one combined fund in the financials) and the Library Bond Debt
Service Fund. The total net change from fiscal year transactions, including Major Funds and Other
Governmental Funds, was an increase of $9,216,259.
General Fund
As shown in the Major Funds table above, the net change in the General Fund's ending fund balance is an
increase of $188,875. General Fund revenue budgets are conservatively based upon prior year experience
and revenue specific information. Overall, revenues increased by $473,532 whereas expenditures increased
by $1,071,625. The growth in expenditures outpaces the growth in revenues raising concern that the General
Fund’s ability to transfer funds to the Capital Improvement Program is quickly diminishing.
Expenses are budgeted at anticipated program needs at not-to-exceed projected funding levels. However,
the City has opted to commit additional funding towards the Unfunded Accrued Liability (UAL) related to
pensions. In fiscal year 2021-22, the City Council directed staff to make a $1,000,000 payment towards the
UAL. This payment is more than the required minimum contribution amount required, thereby reducing
the principal at a faster pace. As of June 30, 2022, the Net Pension Liability, or NPL, is $727,447. This is
a decrease of $7.48. million over the prior fiscal year, primarily due to estimated investments returns vs.
actual and overall plan experience.
ARPA SLFRF Fund
The ARPA SLFRF fund is a new fund to record the City’s allocation from the ARPA SLFRF and has a net
increase of $7,213,238. The revenue is an operating grant under the US Department of Treasury’s lost
revenue allowance under the SLFRF final rules. The City subsequently allocated the full ARPA SLFRF
allocation to clean water capital improvement programs consistent with the goals and objectives of the
ARPA legislation.
Other
ARPA Capital Governmental
General SLFRF Improvement Funds
Total Revenues 26,874,382$ 7,213,238$ 4,132,331$ 1,384,033$
Total Expenditures 23,725,375 - 5,396,532 1,265,818
Revenues Over
(Under) Expenditures 3,149,007 7,213,238 (1,264,201) 118,215
Transfers in - - 3,045,781 -
Transfers out (2,960,132) (85,649) - -
Net change in fund balances 188,875 7,127,589 1,781,580 118,215
Beginning of year 15,221,575 - 5,763,785 1,664,330
End of year 15,410,450$ 7,127,589$ 7,545,365$ 1,782,545$
Major Funds
Table 4 - Changes in Fund Balances
15
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Management Discussion & Analysis for the fiscal year ended June 30, 2022
Attachment A
Page 11
Capital Improvement Project Fund
The net increase of $1,781,580 in the Capital Improvement Funds occurred due to General Fund transfers
to fund capital improvements offset by current year capital expenditures.
Other Governmental Funds
Other Governmental Funds fund balances increased by a total of $118,215 as special assessments continue
to exceed publics works expenditures and debt service costs.
16
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Management Discussion & Analysis for the fiscal year ended June 30, 2022
Attachment A
Page 12
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 fiscal year. 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. Significant changes from the City’s original
budget to the final budget are summarized as follows:
Revenues and Transfers In
The General Fund adopted and final revenue budget is shown in the schedule below:
Table 5 - Adopted to Final Budget
Fiscal Year Ended June 30, 2022
The budget for other revenues decreased by $2,785,000 because the adopted budget included the first half
of ARPA SLFRF allocation as General Fund revenue. With the decision to dedicate the ARPA SLFRF to
clean water projects, the City moved the funds to the newly established ARPA SLFRF fund.
Expenses and Transfers Out
The original and final General Fund expense budget is shown in the schedule below:
Table 6 - Adopted to Final Budget
Fiscal Year Ended June 30, 2022
During the fiscal year, the original budget was increased by $42,000 to account for increased contract costs.
Transfers out were increased by $225,001 to fund various additional capital projects.
+=
Adopted Budget Final
Budget Adjustments Budget
Revenues 27,094,296$ (2,785,000)$ 24,309,296$
Transfers in -$ -$ -$
General Fund Revenues and Transfers In
+=
Adopted Budget Final
Budget Adjustments Budget
Expenses 25,032,141$ 42,000$ 25,074,141$
Transfers out 2,735,131$ 225,001$ 2,960,132$
General Fund Expenditures & Transfers Out
17
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Management Discussion & Analysis for the fiscal year ended June 30, 2022
Attachment A
Page 13
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 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.
City policy is to achieve a Pavement Condition Index (PCI) average rating of 70 for all streets, at
minimum. The City’s most recent overall rating, in 2022, was estimated to be 66 with 49% of streets rated
“Very Good”, 30% rated as “Good”, 15% of streets rated “Poor,” and 6% of streets rated as "Very Poor."
While the City Council continues to review infrastructure investment strategies, the City continues to make
significant investments into City streets in order to bring the average PCI rating up to the target of 70.
It was estimated in the most recent pavement study in February 2020 that the five-year (2019-2023) cost to
maintain the street infrastructure at its 2019 level (PCI of 67) would be $21,350,000 ($4.27 million/year).
For more detailed information on Capital Assets activity, please refer to Note 4 in the section entitled "Notes
to the Basic Financial Statements" and Note 2 in the "Required Supplementary Section."
As reflected in the following schedule, the City has $125,442,265 invested in a variety of capital assets as
of June 30, 2021. This represents an increase of $18,335 from the prior year.
2022 2021
Land 20,173,790$ 20,160,713$
Building and structures 13,639,657 14,335,493
Machinery and equipment 928,166 1,011,404
Infrastructure 80,064,084 80,840,452
Construction in progress 9,395,609 9,094,203
Total Capital Assets, Net of Depreciation 124,201,306$ 125,442,265$
Table 7 - Capital Assets Net of Depreciation
Governmental Activities
18
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Management Discussion & Analysis for the fiscal year ended June 30, 2022
Attachment A
Page 14
The following reconciliation summarizes the changes in Capital Assets.
Major capital projects in progress during fiscal year 2021-22 included the following expenditures:
Mendelsohn Lane Rehabilitation - $109,999
Saratoga Avenue Sidewalk - $68,801
Saratoga-Sunnyvale Road Pathway - $110,000
Quito Road Sidewalk Gap Closure - $142,390
Quito Road Bridge Replacement – ROW - $95,008
Orchard Irrigation and Tree Improvements - $89,052
Blue Hills Elementary Pedestrian Crossing - $57,557
Community Center Improvements - $66,266
Senior Center/ Community Center Generator and EV Charging Stations - $76,043
Additional information on Capital Assets is included in Note 4 to the financial statements.
Balance Balance
June 30, 2021 Additions Retirements Reclassification June 30, 2022
Land 20,160,713$ -$ -$ 13,077$ 20,173,790$
Building and structures 27,370,739 - - 84,543 27,455,282
Machinery and equipment 4,269,711 201,528 - - 4,471,239
Infrastructure 113,118,066 - - 600,143 113,718,209
Construction in progress 9,094,203 999,169 - (697,763) 9,395,609
Depreciation (48,571,167) (2,441,656) - - (51,012,823)
Total Capital Assets,
Net of Depreciation 125,442,265$ (1,240,959)$ -$ -$ 124,201,306$
Table 8 - Changes in Capital Assets
19
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Management Discussion & Analysis for the fiscal year ended June 30, 2022
Attachment A
Page 15
DEBT AND OTHER LONG-TERM OBLIGATION ADMINISTRATION
The net change in outstanding obligations for the City of Saratoga was a decrease of $593,884. Total long-
term bonded debt, including premiums, decreased by $586,892. Outstanding compensated absences
decreased by $6,992.
The current portion of long-term debt ($580,000 for the refunded 2011 General Obligation Bonds for fiscal
year 2021-22) and $21,892 of amortized net original premium are classified as a current liability in the
City's Statement of Net Position.
General Obligation Bonds
On July 14, 2011 the City refunded the 2001 General Obligation Bonds and, in their place, issued 2011
General Obligation Bonds for $11,995,000. Interest rates on the bonds range from 2.0% to 4.0%, and the
final payment is due August 1, 2031. Principal of $565,000 and interest of $280,852 were paid during the
fiscal year.
Compensated Absences
Compensated absences are accrued liabilities for vested and unpaid vacation and sick pay. The
compensated absences balance decreased during the fiscal year by $6,992 due to a decrease in use of paid
time-off. An estimated current liability of $641,025 is anticipated for the next fiscal year.
Additional information on outstanding obligations can be found in Note 5 of the financial statements.
2022 2021
2011 General obligation bond 6,965,000$ 7,530,000$
Net original issue premuim 218,926 240,818
Compensated absences 988,436 995,428
Total Outstanding long-term obligations 8,172,362$ 8,766,246$
Table 9 - Outstanding Long-Term Obligations
Governmental Activities
20
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Management Discussion & Analysis for the fiscal year ended June 30, 2022
Attachment A
Page 16
ECONOMIC FACTORS
The City of Saratoga is primarily a residential community with limited commercial or industrial activity
within its boundaries. Saratoga is considered a desirable place to live due to its highly rated schools,
beautiful neighborhoods, fine dining, and proximity to many technology companies. In 2021-22, Saratoga’s
assessed property values continued to increase, consumer sales tax and hotel tax recovered to near their pre-
pandemic highs, and personal income remained resilient. The following discuss the key economic factors
impacting the city’s finances.
Assessed values.
The assessed value of property in Saratoga continues to demonstrate strength. Through the Great
Recession, when many communities experienced assessed value losses, Saratoga’s remained
positive, providing stability in the City’s largest revenue source. The October 2022 preliminary
Santa Clara County Assessor’s assessed valuation working file for the fiscal year 2023-24 reports
an increase in Saratoga’s property values of 4.04 percent, outperforming the countywide valuation
increase of 3.5 percent.
Sales and transient occupancy/hotel taxes.
Unlike many of its neighbors, Saratoga’s consumption-based tax revenues (sales and hotel taxes)
center around experiences such as regional and State parks, the downtown Village, Hakone
Gardens, fine dining, vineyards, and performance venues. UCLA Anderson Forecast notes that
experience-based spending, such as dining, is growing faster than purchasing goods as consumers
return to pre-pandemic social activities. The trend works in Saratoga’s favor resulting in the City’s
rapid recovery of the consumption-based tax revenues to near pre-pandemic highs.
Employment
The City’s unemployment rate is 2%, on par with the County’s overall unemployment (California
Employment Development Department, September 2022.) UCLA Anderson Forecast’s 2022 San
Francisco Economic Outlook report highlighted that low unemployment would likely persist due
to the impacts of demographic shifts as the oldest segment of the workforce retires and younger
generations are unable to fill the vacancies created.
An additional economic indicator of note by Anderson Forecast is the level of venture capital
flowing into California and the Bay Area. Venture capital investment is largely viewed as an
investment in the future, and the location of the investment can benefit from higher employment,
housing costs, and consumer spending. For the first half of 2022, Anderson Forecast reports that of
the $118 billion in venture capital invested in California, approximately 44% occurred in the Bay
Area region.
21
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Management Discussion & Analysis for the fiscal year ended June 30, 2022
Attachment A
Page 17
OUTLOOK
Although the City remains optimistic and the near-term economic outlook remains positive, several factors
with yet to be determined impacts warrant monitoring. The factors most concerning in 2023-24 and beyond
are the impacts of inflation, the perpetual threat to local revenue sources, and effects of extreme weather events.
Any one of the three poses a risk to Saratoga’s finances; however, growing evidence suggests that two or more
will converge thereby challenging the City’s ability to balance its budget in 2023-24 and beyond.
Cost of Goods and Services.
The impacts of forty-year high inflation weighs on the current and future year budgets. Bids for
public works projects and various contract services have increased between 7 and 15 percent
compared to previous years. As costs increase, whether to maintain current service levels at the
higher cost or to reduce services to hold expenditures flat is a decision required in 2023-24.
Employee Salaries.
The 2022-23 budget includes increases in employee salaries and benefits afforded by the current
labor agreements, which expire at the end of 2022-23. Employees received a 3 percent cost-of-
living-adjustment for base salary in 2022-23, an increase below the regional inflation rate of 5.2
percent as measured in February 2022. Due to contractual obligations, the 2022-23 budget includes
approximately $450,000 in increased personnel costs. The impact of inflation on City personnel
costs in 2023-24 and beyond is subject to negotiations that commence in January 2023.
CalPERS Pension Costs.
Inflation has also sparked concerns about an economic downturn and is widely credited with
significant stock market losses in recent months, most notably in the technology sector. If the recent
stock market performance flattens at the current level or worsens, the City’s unfunded pension
liability costs will increase beginning in 2024-25.
Public Safety Contract Services.
The City contracts with the Santa Clara County Sheriff’s Office for public safety services and the
City of San Jose for animal control services total $7,555,000. As service organizations, both
agencies will experience similar inflationary pressures on employee salaries and benefits as the
City. The animal control contract expires at the end of 2022-23, and the public safety services
contract expires at the end of 2023-24. The 2022-23 budget includes the maximum increase allowed
under the current Sheriff’s contract of approximately $500,000 or 7 percent.
Revenue Loss Threats.
In 2004, the State permanently reduced the vehicle license fee (VLF) from 2 to 0.65 percent, which
reduced funding for cities and counties by approximately $4.4 billion (in 2004 dollars.) To mitigate
this impact, the State agreed to backfill the lost VLF revenues dollar-for-dollar by allocating more
property tax revenues to cities and counties. The State Department of Finance has added language
to the State’s 2022-23 budget that threatens the VLF backfill for those agencies that receive more
Educational Revenue Augmentation Fund (ERAF) dollars than required to fund schools up to their
minimum state funding levels (“Excess ERAF”). The 2022-23 budget includes $650,000 of Excess
ERAF revenue. Recent court challenges to the Excess ERAF formula threatens future growth of
this revenue source.
22
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Management Discussion & Analysis for the fiscal year ended June 30, 2022
Attachment A
Page 18
Extreme Weather Events.
2022 is the driest year in California’s 128 years of recorded history. The prolonged drought has
stressed and caused death to trees in all communities; however, Saratoga’s is significantly impacted
due to the number of trees in our community. In high wind and extraordinary wet weather events,
tree failures that block roads and paths require urgent removal to protect residents’ safety. The City
contracts for emergency tree removals, and the emergency tree removal budget has increased by
more than 60 percent in 2022-23 as the frequency of tree removals have increased and demand for
tree removal services is high.
Property and Liability Insurance Premiums.
The frequency and severity of natural disaster-related insurance claims in California have impacted
the cost of maintaining property and liability insurance. The City has experienced an increase in
premiums of $546,000 from 2018 to 2023. The rapid escalation has occurred primarily in 2021-22
and the 2022-23 budget, with the prospect of similar increases in future years.
REQUEST FOR FINANCIAL INFORMATION
This financial report is designed to provide a general overview of the City of Saratoga's finances for all of
Saratoga's residents, taxpayers, customers, investors, and creditors. This financial report seeks to
demonstrate the City's accountability for the money it receives. Questions concerning any of the
information provided in this report or requests for additional information should be addressed to the
Administrative Services Director, 13777 Fruitvale Avenue, Saratoga, California 95070.
23
CITY OF SARATOGA
STATEMENT OF NET POSITION
JUNE 30, 2022
Draft Basic Financial Statements for the fiscal year ended June 30, 2022
Attachment B
Page 1
Governmental
Activities
ASSETS
Current Assets:
Cash and investments 36,477,881$
Restricted cash and investments 1,797,979
Receivables:
Accounts 5,082,691
Prepaids 4,481
Total Current Assets 43,363,032
Noncurrent Assets:
Capital Assets:
Non-depreciable 82,704,176
Depreciable, net 41,497,130
Total Capital Assets 124,201,306
Total Assets 167,564,338$
DEFERRED OUTFLOWS OF RESOURCES
Adjustments related to pension liability 2,442,854$
Total Deferred Outflows of Resources 2,442,854$
LIABILITIES
Current Liabilities:
Accounts payable 1,474,840$
Accrued payroll 285,463
Interest payable 112,410
Deposits payable 4,349,186
Claims payable 195,683
Long-term obligations - due within one year 1,242,917
Total Current Liabilities 7,660,499
Noncurrent Liabilities:
Net pension liabilty 727,447
Long-term obligations - due in more than one year 6,929,445
Total Noncurrent Liabilities 7,656,892
Total Liabilities 15,317,391$
DEFERRED INFLOWS OF RESOURCES
Adjustments related to pension liability 1,958,998$
Unavailable revenue 282,368
Total Deferred Inflows of Resources 2,241,366$
Net Position
Net investment in capital assets 117,017,380$
Restricted for:
Special assessment funds 977,234
Public works programs 7,127,589
Debt service 805,311
Total Restricted 8,910,134
Unrestricted 26,520,921
Total Net Position 152,448,435$
24
CITY OF SARATOGA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2022
Draft Basic Financial Statements for the fiscal year ended June 30, 2022
Attachment B
Page 2
Net (Expense)
Revenue and
Changes in
Program Revenues Net Position
Primary
Operating Capital Government
Charges for Grants and Grants and Governmental
Functions/Programs Expenses Services Contributions Contributions Total Activities
Primary Government:
Governmental Activities:
General and intergovt'l services 4,381,120$ 57,937$ 6,800$ -$ 64,737$ (4,316,383)$
Public safety 7,197,048 573,133 161,285 - 734,418 (6,462,630)
Public works 9,309,018 3,280,102 7,213,238 334,869 10,828,209 1,519,191
Community services 532,308 281,526 - - 281,526 (250,782)
Community development services 1,881,150 2,306,207 - - 2,306,207 425,057
Interest on long-term debt (unall.)274,262 - - - - (274,262)
Total 23,574,906$ 6,498,905$ 7,381,323$ 334,869$ 14,215,097$ (9,359,809)$
General Revenues:
Taxes
Property taxes 17,427,588$
Sales taxes 1,393,853
Local taxes 1,054,587
Franchise taxes 2,496,572
Total taxes 22,372,600
Intergovernmental (not restricted to specific programs)2,477,479
Investment earnings (299,911)
Other revenues 768,428
Total General Revenues 25,318,596
Change in Net Position 15,958,787
Net Position - Beginning of Year 136,489,648
Net Position - End of Year 152,448,435$
25
CITY OF SARATOGA
GOVERNMENTAL FUNDS – BALANCE SHEET
JUNE 30, 2022
Draft Basic Financial Statements for the fiscal year ended June 30, 2022
Attachment B
Page 3
Other Total
ARPA Capital Governmental Governmental
General SLFRF Improvement Funds Funds
ASSETS
Cash and investments 19,909,470$ 3,520,970 7,787,341$ -$ 31,217,781$
Restricted cash and investments - - - 1,797,979 1,797,979
Receivables:
Accounts 961,990 3,606,619 488,619 6,286 5,063,514
Prepaid Items 4,481 - - - 4,481
Total assets 20,875,941$ 7,127,589$ 8,275,960$ 1,804,265$ 38,083,755$
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable 843,748$ -$ 466,104$ 21,720$ 1,331,572$
Accrued payroll and benefits 254,680 - - - 254,680
Deposits payable 4,349,186 - - - 4,349,186
Total liabilities 5,447,614 - 466,104 21,720 5,935,438
DEFERRED INFLOW OF RESOURCES
Deferred revenue 17,877 - 264,491 - 282,368
Total deferred outflow of resources 17,877 - 264,491 - 282,368
Fund Balances:
Nonspendable:
Prepaid Items 4,481 - - - 4,481
Restricted:
Lighting and landscape assessments - - - 977,234 977,234
Public works programs - 7,127,589 - - 7,127,589
Debt service - -- 805,311 805,311
Committed:
Capital improvement program - - 7,545,365 - 7,545,365
Hillside stability 1,000,000 - - - 1,000,000
Assigned:
Future capital & efficiency 3,509,000 - - - 3,509,000
Carryforwards 20,000 - - - 20,000
Facility replacement 3,700,000 - - - 3,700,000
Unassigned:
Working capital 1,000,000 - - - 1,000,000
Fiscal stabilization 3,250,000 - - - 3,250,000
Compensated absences 330,000 - - - 330,000
Other unassigned 2,596,969 - - - 2,596,969
Total fund balances 15,410,450 7,127,589 7,545,365 1,782,545 31,865,949
Total liabilities and fund balances 20,875,941$ 7,127,589$ 8,275,960$ 1,804,265$ 38,083,755$
Major Funds
26
CITY OF SARATOGA
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET POSITION
JUNE 30, 2022
Draft Basic Financial Statements for the fiscal year ended June 30, 2022
Attachment B
Page 4
Total Fund Balances - Total Governmental Funds 31,865,949$
Amounts reported for governmental activities in the statement of net position 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 82,704,176
Depreciable capital assets, net 41,028,269
Total Capital Assets 123,732,445
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.(112,410)
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 position 5,378,404
Deferred outflows of resources are transactions that have already taken place but are not ready
to be recognized on the financial statements as expenses
Differences between Expected and Actual Experience 81,575
Change in employer's proportion 604,314
Pension Contributions Made Subsequent to Measurement Date 1,756,965
Total Deferred Outflows of Resources 2,442,854
Long-term obligations 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 (6,965,000)
Net Pension Liability (727,447)
Compensated absences (988,436)
Net original issue premium (218,926)
Total Long-Term Obligations (8,899,809)
Deferred inflows of resources are transactions that have already taken place but are not ready
to be recognized on the financial statements as revenues
Changes of Assumptions -
Differences between Projected and Actual Investment Earnings (635,022)
Differences between Employer's Contributions and Proportionate Share of Contributions (1,312,975)
Change in employer's proportion (11,001)
Total Deferred Inflows of Resources (1,958,998)
Net Position of Governmental Activities 152,448,435$
27
CITY OF SARATOGA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE
FOR THE YEAR ENDED JUNE 30, 2022
Draft Basic Financial Statements for the fiscal year ended June 30, 2022
Attachment B
Page 5
Other Total
ARPA Capital Governmental Governmental
General SLFRF Improvement Funds Funds
REVENUES:
Property taxes 17,409,864$ -$ -$ 17,724$ 17,427,588$
Special assessments - - - 1,362,327 1,362,327
Sales taxes 1,393,853 - - - 1,393,853
Other local taxes 1,054,587 - - - 1,054,587
Licenses & permits 2,292,527 - 1,566,313 - 3,858,840
Fines & forfeiture 95,697 - 17,485 - 113,182
Intergovernmental - Federal - 7,213,238 37,183 - 7,250,421
Intergovernmental - State 549,667 - 1,383,412 - 1,933,079
Intergovernmental - Other 46,856 - 963,315 - 1,010,171
Charges for services 923,533 - 3,364 - 926,897
Franchise fees 2,418,837 - 77,735 - 2,496,572
Use of money and property 15,914 - -3,982 19,896
Other revenue 673,047 - 83,524 - 756,571
Total revenues 26,874,382 7,213,238 4,132,331 1,384,033 39,603,984
EXPENDITURES:
Current:
General and intergovernmental services 5,515,624 - - - 5,515,624
Public safety 7,197,048 - - - 7,197,048
Public works 7,095,948 - - 419,966 7,515,914
Community services 1,031,282 - - - 1,031,282
Community development services 2,885,473 - - - 2,885,473
Capital outlay - - 5,396,532 - 5,396,532
Debt service:
Principal - - - 565,000 565,000
Interest and fiscal charges - - - 280,852 280,852
Total expenditures 23,725,375 - 5,396,532 1,265,818 30,387,725
REVENUES OVER
(UNDER) EXPENDITURES 3,149,007 7,213,238 (1,264,201) 118,215 9,216,259
OTHER FINANCING SOURCES (USES):
Transfers in - - 3,045,781 - 3,045,781
Transfers out (2,960,132) (85,649) - - (3,045,781)
Total other financing sources (uses)(2,960,132) (85,649) 3,045,781 - -
Net change in fund balances 188,875 7,127,589 1,781,580 118,215 9,216,259
FUND BALANCES:
Beginning of year 15,221,575 - 5,763,785 1,664,330 22,649,690
End of year 15,410,450$ 7,127,589$ 7,545,365$ 1,782,545$ 31,865,949$
Major Funds
28
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
POSITION
FOR THE YEAR ENDED JUNE 30, 2022
Draft Basic Financial Statements for the fiscal year ended June 30, 2022
Attachment B
Page 6
Net Change in Fund Balances - Total Governmental Funds 9,216,259$
Amounts reported for governmental activities in the Statement of Activities and Changes
in Net Position were different because:
Governmental Funds report capital outlay as expenditures. However, in the Government-Wide
Statement of Activities and Changes in Net Position, 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.999,167
Depreciation expense on capital assets was reported in the Government-Wide Statement
of Activities and Changes in Net Position, but it did not require the use of current financial
resources. Therefore, depreciation expense was not reported as expenditures in the
Governmental Funds.(2,258,630)
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
or excess expenses of the internal service funds is reported with government activities.301,868
GASB 68 Adjustments to pension expense
Change in net pension liability - current year 7,476,566
Amortization of changes in deferred outflows (342,973)
Amortization of changes in deferred inflows (33,944)
Adjustments to pension expense as a result of GASB 68 7,099,649
Long-term compensated absences and claims payables were reported in the Government-Wide
Statement of Activities and Changes in Net Position, 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 6,992
Repayment of bond principal was an expenditure in governmental funds, but the repayment
reduced long-term liabilities in the Government-Wide Statement of Net Position.
Long-term debt repayments 565,000
Revenues resulting from the refunding of outstanding debt are not available to pay
current-period expenditures and therefore, are revenue in the funds.
Net original issue premium 21,892
Interest expense on long-term debt was reported in the Government-Wide Statement of
Activities and Changes in Net Position, 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.6,590
Change in Net Position of Governmental Activities 15,958,787$
29
CITY OF SARATOGA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
JUNE 30, 2022
Draft Basic Financial Statements for the fiscal year ended June 30, 2022
Attachment B
Page 7
Governmental
Activities -
Internal
Service Funds
ASSETS
Current assets:
Cash and investments 5,260,100$
Accounts receivable 19,177
Total current assets 5,279,277
Noncurrent assets:
Capital assets:
Machinery and equipment 2,201,949
Less: accumulated depreciation (1,733,088)
Total capital assets (net of
accumulated depreciation)468,861
Total assets 5,748,138$
LIABILITIES
Liabilities:
Current liabilities:
Accounts payable 143,268$
Accrued payroll and benefits 30,783
Other payables 195,683
Total current liabilities 369,734$
NET POSITION
Net investment in capital assets 468,861$
Unrestricted 4,909,543
Total net position 5,378,404$
30
CITY OF SARATOGA
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Basic Financial Statements for the fiscal year ended June 30, 2022
Attachment B
Page 8
Governmental
Activities -
Internal
Service Funds
Operating revenues:
Charges for services 3,560,000$
Other operating revenues 44,954
Total operating revenues 3,604,954
Operating expenses:
Cost of services 3,120,062
Depreciation 183,024
Total operating expenses 3,303,086
Operating income (loss)301,868
Change in net position 301,868
Total net position - beginning 5,076,536
Total net position - ending 5,378,404$
31
CITY OF SARATOGA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2022
Draft Basic Financial Statements for the fiscal year ended June 30, 2022
Attachment B
Page 9
Governmental
Activities -
Internal
Service Funds
Cash flows from operating activities:
Receipts from customers and users 3,592,896$
Payments to suppliers (1,846,245)
Payments to employees (1,119,266)
Net cash provided (used) by operating activities 627,385
Cash flows from capital activities:
Acquisition of capital assets (201,528)
Net cash provided for the acquisition of capital assets (201,528)
Net increase in cash and cash equivalents 425,857
Cash and cash equivalents, beginning of year 4,834,243
Cash and cash equivalents, ending of year 5,260,100
Reconciliation of operating income to net cash provided
by operating activities:
Operating income (loss)301,868
Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:
Depreciation 183,024
Change in operating assets and liabilities:
Accounts receivables (12,058)
Accounts payable 55,288
Accrued payroll (56,571)
Claims payable 155,834
Net cash provided (used) by operating activities 627,385$
32
CITY OF SARATOGA
STATEMENT OF
FIDUCIARY NET POSITION
JUNE 30, 2022
Draft Basic Financial Statements for the fiscal year ended June 30, 2022
Attachment B
Page 10
West Valley
Clean Total
Water Arrowhead Custodial
Program CFD Funds
ASSETS
Cash and investments 391,660$ 125,102$ 516,762$
Accounts receivable 283,275 300 283,575
Total assets 674,935$ 125,402$ 800,337$
LIABILITIES
Accounts payable 110,745$ 1,000$ 111,745$
Accrued payroll 5,535 - 5,535
Total liabilities 116,280$ 1,000$ 117,280$
NET POSITION
Restricted for individuals, organizations
and other governments 558,655$ 124,402$ 683,057$
Total Net Position 558,655$ 124,402$ 683,057$
33
Draft Basic Financial Statements for the fiscal year ended June 30, 2022
Attachment B
Page 11
West Valley
Clean Total
Water Arrowhead Custodial
Program CFD Funds
ADDITIONS
Taxes collected from community facilities districts -$ 113,250 113,250$
Assessments 677,943 - 677,943
Charges for services 291,267 - 291,267
Other revenue 32,788 - 32,788
Interest income 1,115 - 1,115
Total additions 1,003,113 113,250 1,116,363
DEDUCTIONS
Personnel Costs 421,973 - 421,973
Professional Services 404,458 - 404,458
Insurance 16,946 - 16,946
Fees and charges 61,191 - 61,191
Materials and Supplies 13,013 - 13,013
Rent 22,584 - 22,584
Travel and Meetings 8,797 - 8,797
Utilities 7,366 - 7,366
Grant expenses 26,155 - 26,155
Debt service payments for community facilities districts - 378,466 378,466
Total deductions 982,483 378,466 1,360,949
Change in net position 20,630 (265,216) (244,586)
Total net position - beginning 538,025 746,458 1,284,483
Prior period adjustments:
Correction to cash with fscial agent balances - (356,840) (356,840)
Total net position - beginning, as adjusted 538,025 389,618 927,643
Total net position - ending 558,655$ 124,402$ 683,057$
34
ADMINISTRATIVE SERVICES
Memorandum
To: City Council Finance Committee
From: Nick Pegueros
Date: November 29, 2022
Subject: 2023-24 Capital Improvement Program (CIP) Development
City Council’s adopted Capital Improvement Program Project Process Policy establishes a timeline for
City Council consideration of the annual CIP at their annual retreat; tentatively scheduled for February
10, 2023. City staff is preparing for the retreat using the following timeline:
December 21 CIP project submissions due
•Revisions and updates to adopted CIP project scopes, narratives, and
funding requests
•New project nominations from City staff and City Council
January 2-13 CIP Development (all departments, primarily Public Works)
•Prepare project scope and cost estimates for new project nominations
•Identify funding modifications
o Close projects with completion estimated by June 30, 2023
o Amend the City Council adopted project scope
•Prepare mid-year CIP financial update including review of funds available
for 2023-24
January 16-19 CIP binder preparation (City Manager’s Office and Finance)
January 26 Finance Committee Meeting
•CIP binder overview
•Committee provides feedback and questions for City Council’s February
10th retreat
February 10 City Council retreat
•Provide direction on CIP prioritization and development
35