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ACFR - Fiscal Year 2002 03 (PDF)
18bg 2003 SARAIOGA LIBRARY City of Saratoga, California City of Saratoga Comprehensive Annual Financial Report For the year ended June 30, 2003 Table of Contents Page Introductory Section Tableof Contents..................................................................................................................................... i _ Letter of Transmittal............................................................................................................................... v GFOA Certificate of Achievement for Excellence in Financial Reporting.............. ix CSMF,O Certificate of Award in Outstanding Financial Reporting................................................. x Certificateof Recognition........................................................................................................ ............xi Principal Officials of the City.................................................................................................. ...........xii OrganizationChart..............................................................................................................................xiii Financial Section Independent Auditors' Report............................................................................................................ 1 Management's Discussion and Analysis .......................................................................................... 3 Basic Financial Statements: Government-Wide Financial Statements.................................................................................. .15 Statementof Net Assets........................................................................................................... 17 Statement of Activities and Changes in Net Assets ............................................................ 18 Fund Financial Statements .......................................................................................................... 21 - Governmental Funds: BalanceSheet.......................................................................................................................... 24 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets...................................................... 27 Statement of Revenues, Expenditures and Changes in Fund Balances.......................... 28 _ 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....................... ... 30 ........................................................................................... Fiduciary Funds: - Statement of Fiduciary Net Assets................. 32 i City of Saratoga Comprehensive Annual Financial Report For the year ended June 30, 2003 Table of Contents, Continued Page Financial Section, Continued Index to Notes to the Basis Financial Statements ................................................................... 33 Notes to the Basic Financial Statements ...................................................................................35 Required Supplementary Information......................................................................................59 BudgetaryInformation............................................................................................................ 60 _ Modified Approach for City Streets Infrastructure Capital Assets................................... 63 DefinedPension Plan............................................................................................................... 65 Supplementary Information: Non-Major Governmental Funds............................................................................................... 69 - CombiningBalance Sheet........................................................................................................ 70 Combining Statement of Revenues, Expenditures and Changes in Fund Balances....... 72 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: Library Expansion Capital Projects Fund................................................................. 74 _ Local Law Enforcement Special Revenue Fund....................................................... 75 Traffic Safety Special Revenue Fund ......................................................................... 76 Streets and Roads Special Revenue Fund................................................................. 77 - Lighting and Landscaping Assessment District Special Revenue Fund.............. 78 Development Services Special Revenue Fund......................................................... 79 _.- Environmental Programs Special Revenue Fund.................................................... 80 Recreation Special Revenue Fund.............................................................................. 81 Library Debt Service Fund .......................................................................................... 82 - Park Development Capital Projects Fund............................................................__ 83 FiduciaryFunds ............................................................................................................................. 85 -. Combining Statement of Fiduciary Net Assets- Agency Funds....................................... 86 Combining Statement of Changes in Assets and Liabilities - Agency Funds................. 87 Capital Assets Used in the Operation of Governmental Funds...........................................89 Comparative Schedules by Source......................................................................................... 91 Schedule by Function and Activity........................................................................................ 92 Schedule of Changes by Function and Activity................................................................... 94 - City of Saratoga Comprehensive Annual Financial Report For the year ended June 30, 2003 - Table of Contents, Continued Page Statistical Section (Unaudited) Government-Wide Information: Government-Wide Expenses by Function ....................... .. 96 Government-Wide Revenues........................................................................................................ 97 Fund Information: General Fund Expenditures - By Function - Last Ten Fiscal Years........................................ 98 _ General Fund Revenues - By Source -Last Ten Fiscal Years................................................... 99 Property Tax Levies and Collections - Last Ten Fiscal Years................................................. 100 General Fund Tax Revenue - Last Ten Fiscal Years................................................................ 101 - Assessed and Estimated Actual Value of Taxable Property- LastTen Fiscal Years............................................................................................................... 102 Property Tax Rates (Per $100 of Assessed Valuation) - All Overlapping Governments - LastTen Fiscal Years.............................................................................................................. 103 Special Assessment Billings and Collections - Last Ten Fiscal Years.................................... 104 Ratio of General. Obligation Bonded to Assessed Debt to Assessed Value and Bonded Debt Per Capita- Last Ten Fiscal Years..........................................................I.... 105 Ratio of Annual Debt Service Expenditures for General Bonded Debt to - - Total General Fund Expenditures- Last Ten Fiscal Years................ .... 106 Demographic Statistics - Last Ten Fiscal Years........................................................................ 107 Property Values, Remodeling and Construction- Last Ten Fiscal Years............................ 108 Computation of Legal Debt Margin............................................................................................ 109 Computation of Direct and Overlapping Debt......................................................................... 110 Principal Taxpayers................................................ .......... 111 ............................................................ MiscellaneousStatistics ................................................................................................................ 112 _ - _ _ _ _ _ _ _ - _ - _ _ _ - _ iv G' � �'ZW 0 §&j�UOO (Cr � 13777 FRUITVALE AVENUE • SARAT(.)GA, CALIFORNIA 95070 • (408) -$68-1200 c;O NCIL NIENIBE1: Incorporated October 22, 1056 Stan Bogosiao Kathleen King November 11,2003 Norman Kline Nick Streit Ann waltonsmith To the Honorable Mayor and City Council of the City of Saratoga - Saratoga, CA 95070 The Comprehensive Annual Financial Report (CAFR) of the City of Saratoga for the year ended June 30, 2003, 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. To the best of our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a manner that presents fairly the financial - position and results of operations of the various funds, account groups and component units of the City of Saratoga. All disclosures necessary to enable the reader to gain an understanding of the City of Saratoga's activities have been included. The CAFR is presented in the following three sections: 1. Introductory Section - The introductory section, which is unaudited, includes this letter of transmittal, a list of the City of Saratoga's elected officials and administrative personnel, an organization chart, the Government Finance Officers Association's (GFOA's) of the United States Certificate of Achievement for Excellence in Financial Reporting and the California Society of Municipal Finance Officer's (CSMFO) Certificate of Award for Financial. Reporting to the City of Saratoga for its CAFR for the fiscal year ending June 30,2002. 2. Financial Section - The basic financial statements include management's discussion and _ analysis, government-wide financial statements, fund financial statements, notes to the basic financial statements, and required supplementary information as well as the auditors' report on the financial statements and schedules. 3. Statistical Section - Includes selected financial and demographic information, which is generally presented on a multi-year basis and is unaudited. REPORTING ENTITY -- 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. Blended component units, although legally separate entities, are in substance, V Printed on recyclea paper. 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 District #1 and the agency cash flows and cash balances of the Saratoga Public Finance Authority are reported in the City's financial statements. GOVERNMENTAL STRUCTURE AND RELATED INFORMATION 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 30,444 as reported by the State of California Department of Finance. The City is a general law city of ` the State of California and operates under a council-manager form of government. Policymaking and legislative authority are vested in the City Council, which consists of a Mayor, Vice Mayor and three additional council members. City Council members are elected at-large for staggered four-year _ terms. The Mayor is selected annually by the City Council. The City Council is responsible for, among other things, passing ordinances, adopting the budget, appointing members to the City's _ seven advisory commissions and hiring the City Manager and City Attorney. The City Manager is responsible for implementing the policies and ordinances of the City Council, overseeing the daily operations of the City, and recommending appointments of the City's department directors to the City Council. The City provides a limited range of services including public safety, development regulation, public _ works, community and recreation activities and events, and general administrative functions. The City supports privatization and has supplemented its work force through numerous contracts with others. Contracted services include, but are not limited to, public safety, infrastructure _ maintenance, engineering services, legal services and recreation activities. The City is also committed to citizen participation in the evaluation, expansion and enhancement of services. Saratoga residents who wish to assist the City Council in forming government policy may do so by serving on an advisory conunission. The commissions all act in an advisory capacity to the City Council, and are comprised of the Finance Commission, Heritage Preservation Commission, Library Commission, Parks and Recreation Commission, Planning Commission, Public Safety Commission, and Arts and Youth Commission. ECONOMIC CONDITIONS AND OUTLOOK Within a close proximity to many businesses associated with the high technology industry,Saratoga is viewed as a desirable place to live and serves primarily as a residential community to the Silicon Valley. There is limited commercial or industrial activity occurring within the City's boundaries. Due to the community's residential character, the main measure of the City's economic condition is based on the stability of property taxes,motor vehicle license fees, sales tax,franchise fees, as well as the fluctuations in service charges which affects development taxes, permits and fees. Saratoga's tax base continued to grow in spite of the slowdown of the economy. This past fiscal year saw an increase in the assessed valuations of real property by 3.47% from 2002 to 2003, although significantly lower than the 17.61% increase experienced from 2001 to 2002. Additional support from the City's passing of the 2001 Library General Obligation Bond, which allowed the City to realize additional tax equity allocation (TEA) revenues, plus other one-time revenues were _ Vi used to offset the :recessionary decline of sales tax, business license fees and reduced interest _ earnings. This past year, the City was able to again dedicate ample reserves from the "good. times" to _ purchase the City's .North Campus property for$4.5 million. In 2002, the City was able to dedicate reserves towards the implementation of a 5-year capital improvement program (CIP) budget ($13 million) and towards the improvement of Congress Springs Park. Saratoga continues to support policies and practices intended to maintain the City's financial integrity. For example, the City continues to develop an annual budget that is fully supported by its - current stream of revenues. Additionally, a minimum$2.3 million General Fund operating reserve is maintained and a $100,000 contingency appropriation; as well as a$1.5 million economic uncertainty .reserve. The budget is built upon a conservative set of assumptions for annual revenues and does not assume that any potential one-time revenue sources will materialize if not yet committed or guaranteed to the City. 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 are 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. 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 fund level. The City also maintains an encumbrance accounting system as another method of maintaining budgetary control. Encumbered amounts of the operating budget lapse at year-end with the exception of the CIP, which contains multiple-year capital improvement projects. However, outstanding encumbrances of a material nature are typically reappropriated. as part of the following year's budget. vii 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. Caporicci& Larson,CPA's,performed the City's fiscal year 2002-2003 audit. Awards. The City was awarded a certificate for its early implementation of GASB #34. Additionally, the Government Finance Officers Association (GFOA) awarded a Certificate of Achievement to the City for its Excellence in Financial Reporting on the CAFR for the fiscal year ended June 30, 2002. 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. Acknowledgernents. This CAFR represents the culmination of numerous hours of hard work expended by many individuals in the Accounting Division of the Administrative Services Department. In particular, we would like to express our appreciation to Vivian Gong, Accounting Supervisor and our staff members Jaye Tkach, Julie Ingraham, and Karen Caselli. Furthermore, we would like to thank Caporicci & Larson, CPA's for their helpful and timely assistance in the preparation of this report. Finally, we would like to give credit to the City Council and the Finance — Advisory Commission 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 Jesse Baloca City Manager Administrative Services Director viii Certificate of Achievement for Excellence in Financial Reporting Presented to City of Saratoga, California For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2002 A Certificate of Achievement for ExceIIence in Financial _ Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports(CAFRs) achieve the highest standards in government accounting and financial reporting. C'r `+r/r I`%CiGGtr^'f Q/t1C OG FNE W�uNIRO ST4 1E5'\N\ Ito EANpp� f o a\CORip 9ATION/y President - Executive Director ix v N � � O J V � • r.a O y • � G O �.lell ajCon V �*Ali For, x S{ e o L _ �.4 Y 9'?C t\ p o j ) cz cz CIZ Ct Cz ct 4� Q� p 0 v onct • � o 4,J U YI CITY OF SARATOGA ELECTED OFFICIALS AND _ ADMINISTRATIVE PERSONNEL As of June 30, 2003 CITY COUNCIL Nick Streit - Mayor Ann Waltonsmith- Vice Mayor Stan Bogosian Kathleen King Norman Kline CITY STAFF Dave Anderson - City Manager Lorie Tinfow --Assistant City Manager Cathleen Boyer-City Clerk Jesse Baloca - Administrative Services Director Tom Sullivan - Community Development Director John Cherbone - Public Works Director Joan Pisani -Recreation Director CITY ATTORNEY Richard S. Taylor -Shute, Mihaly &Weinberger INDEPENDENT AUDITOR 4 Caporicci & Larson xii _ City of Saratoga Organizational Chart For the Fiscal Year Ended June 30, 2003 City Council City Attorney City Manager Community Assistant City Public Works Administrative Recreation Director Development Manager Director Services Director Director Fachhr Vat-:enanc ce CrSenorgec•edilo•. neer S_er1.G.lcinlN drive Iechwilwy -- rr Icrk- Hu Id n O'tic al - } -- I'P ,si;:r t'N^ snr L11 FTE'I „v srr G.-iord n:1tc, F:u.lit, "lI Fn r't:a el L1 inie"arr e ! r, nnn .r:ve flan heck!_xammert rrke 4?ocranfion Sunor i C, •. Ami^I-;rit vr.Ana,ra. c'crkr k,115;1, islanl .� �liti1 II nynerr - i:;irTFI i)FTEi ! 3� r,f_,Uie G ftecr �_en I'rr��rarr li_ilclnri Ins:iector O(ri..e;F4eaH W Pam•;NIa nlrn n�_� �1c�tuntr I 1 ua,],I t;xci niolrr [3 "I rTFi I FTE _ Fa(;hty r__,:A(I'dtnr 1'an"er pf(Ica,;;p��i i I ::1.6 FTEI A 11 FTF) I'_�,hd:t nlena,nre �.y F I EI rarfv' rkr' fJfhce 5uecmi st C:7'rl'�1�nilY ler•,�iCe �HJn,m PI-,I M,e - _ rill=.r E7 FTE. y f'r(Ir Pd-aMir,len:=nr.e Ph:)Iv.c?'Ifaly Office., Pa`,P.1a nlenanrN J Office Specla Ist iLih:ed l erm3 '��inrke• ili.FIFTFI _ Otti;rr" xr:isi Ist Office Slier_la I•_t Jana-cm.-Gird en Total FTE 60.75 Regular 59.75 Limited 1.0 xiii - i' f�. •1 xis G1 Caporicci &Larson Certijied Public Accountants 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, California (City), as of and for the year ended June 30, 2003, which collectively comprise the C'ity'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 an opinion on these financial statements based on our audit. - We conducted our audit in accordance with generally accepted auditing standards in 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 support-Ing 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 basic financial statement presentation.. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities, each major fund., and the aggregate remaining fund information of the City as of June 30, 2003, and the respective changes in financial position for the year then ended in conformity with generally accepted accounting principles in the United States. The accompanying; Required Supplementary Information, such as management's discussion _ and analysis, budgetary comparison information and other information as listed in the table of contents are not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied ._- certain limited procedures, which consisted principally of inquires 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 on it. 'loll Frcc F11:(877)862-2200 Toll Frcc Fax:(866).i36-O92? -"" Oakland Orange County Sacramento San Diego 181)(:rm(i Auc.Juice 1165 4184DAim:ic Acrnue "( tmpws Commwi,Rd.Suile 200 60C"'8 strut Sui(c 1900 Oakl:md,(.Ailornia9t612 Costa.%Iesa,Ceilfomu92626 tiacramcmo.(:alitornia95825 SanDit!o,CulIDMi,1J2101 The Honorable Mayor and Members of the City Council of the City of Saratoga Saratoga, California _ Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying supplementary information is presented for purpose of additional analysis and is not a required part of the basic financial statements. The supplementary information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are 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 them. Oakland,California September 11, 2003 _ 2 MANAGEMENT'S DISCUSSION AND ANALYSIS The City of Saratoga provides this Management Discussion and Analysis, a format prescribed by the provisions of Government Accounting Standards Board Statement 34 (GASB 34). 'This narrative overview and analysis of the City of Saratoga's financial activities is for the fiscal year _ ending June 30, 2003. Please consider this information in conjunction with the accompanying Transmittal Letter and Basic Financial Statements. FINANCIAL HIGHLIGHTS During ongoing conditions of the economic recession, the City experienced a slight decline in revenues overall with major revenue categories increasing slightly and maintaining stability. Overall, fiscal year '2003 revenues declined by $504k or 2.7% from 2002. Financial highlights of the year include the following: 1. The City's net assets increased by over $445k or 0.4% over the prior year. The City does not have any business-type assets. 2. The results of activities produced an increase to nets assets by $445k in fiscal year 2003 and $1.2 million in fiscal year 2002. Change in net assets primarily reflect the exchange of current assets for the purchase of capital assets such as the North Campus property, construction in progress such as the Library Expansion project and payments that reduce the obligation on long-term debt. 3. The change in 2003 revenue activity from 2002 primarily reflects the following major highlights: --- v $229k in one-time capital grants received in 2003 to support the funding of the Quito Road Bridge capital improvement project; Y $471k collected as a special assessment for prior year improvements to Vessing Road; Increases of $172k or 4.2% in property tax, $89k or 4.9% in motor vehicle license fees and $127k in local tax collections; One-time shortfall in planning fees that reflect a change in accounting 1practice where deposits are recognized after project completion instead of cash receipt;, Reduction in interest earnings by $632k; and w Y Decline of sales tax, franchise fees, and miscellaneous reimbursements by $556k. 3 4. The cost of all City programs increased by $284k or 1.6%. Although 2003 revenues have declined compared to 2002 operations continue to be supported by current revenues. Changes to City program expenses consist of the following major highlights: _ Increase to general and intergovernmental services primarily reflect elimination of $971k in direct of cost allocations between programs within the same general fund _ and $183k increase in legal fees; Increase of employee expenses that reflect 4% cost of living adjustment, and _ significant increases to various health benefits and the cost of workers compensation insurance. Savings that reflect the consolidation of two positions into one in the City Manager's Office and the implementation of a hiring freeze for two vacant positions; Reduced debt service reflects a full years payment on the newer 2001 library general - obligation bond as compared to the 2002 amount, which included the final interest payment on the completed 1976 library bond and the first interest only payment on the 2001 library bonds; and An additional $37k in depreciation expense to reflect prior year asset additions. 5. The General Fund (the primary operating fund) reflected on a current financial resource basis, reports a decrease in fund balance by $1.77 million or 25.3% that primarily reflects the _ $3.5 million dedication of surplus reserves towards the purchase of the City's North Campus property and$1.73 million increase in operations. FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the City of Saratoga's basic financial statements. The City's basic financial statements include three components: 1) Government-Wide Financial Statements, 2) Fund Financial Statements, and 3) Notes to the Basic Financial Statements. This report also contains additional required supplementary information - (budgetary schedules) and other supplementary information (combining financial statement) in addition to the basic financial statements themselves. These components are described below: _ Basic Financial Statements The Government-Wide Financial Statements present the financial picture of the City from the _ economic resources measurement focus using the accrual basis of accounting. They typically present governmental activities. These statements include all assets of the City (including infrastructure) as well as all liabilities (including long-term debt). Additionally, certain _ eliminations have occurred as prescribed by the statement in regards to interfund activity, payables and receivables. The Fund Financial Statements include statements for two categories of activities - governmental and fiduciary. The governmental activities are prepared using the current financial resources measurement focus and modified accrual basis of accounting. The fiduciary activities are agency 4 funds, which only report a balance sheet and do not have a measurement focus. Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is provided to explain the differences created by the integrated approach. Government-Wide Financial Statements The Statement of Net Assets and the Statement of Activities and Changes in Net Assets report information about the City as a whole and about its activities. These statements include all assets and liabilities of the, City using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All. of the current year's revenues and expenses are taken into account regardless of when cash is received or paid. These two statements report the City's net assets and changes in them. Net assets are the _ difference between assets and liabilities, which is one way to measure the City's financial health, or financial position. Over time, increases or decreases in the City's net assets are one indicator of whether its financial health is improving or deteriorating. Other factors to consider are changes in the City's property tax base and the condition of the City's roads. Governtnetital activities report most of the City's basic service activities that include general government services, law enforcement, public works and parks, recreation services, and community development services. Property and sales tax, franchise fees, user fees and licenses, state and federal grants, and interest income finance these activities. Fund Financial Statements The fund financial statements provide detailed information about the major funds - not:the City as a whole. Some funds are required to be established. by State law and by bond covenants. However, management establishes many other funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants, and other money. -.- Governmental Funds consist of most of the City's basic services, which focuses o:rt how money flows into and out of those funds and the balances Ieft at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the City's programs. The differences of results in the Governmental :Fund financial statements to those in the Government-wide financial statements are explained in a reconciliation schedule following each Governmental Fund financial statement. Fiduciary Funds involves the City's role as a trustee or fiduciary for certain funds held can behalf of other organizations or districts. These funds are used to account for assets held by the City and. are purely custodial in nature, where assets equal liabilities therefore, related results of operations are not measured or reported. These activities are excluded from the City's other financial statements because the City cannot use these assets to finance its own operations. In addition, the City is 5 responsible for ensuring that the assets reported in these funds are used for their intended purpose. Notes to the Basic Financial Statements provide additional information that is essential to a full understanding of the data provided in the government-wide and the fund financial statements. The notes can be found immediately following the fund financial statements. _ Required Supplementary Information follows the basic financial statements and includes a budgetary comparison schedule that includes a reconciliation between the statutory fund balance _ for budgetary purposes and the fund balance for the General Fund as presented in the governmental fund financial statements. GOVERNMENT-WIDE FINANCIAL ANALYSIS As mentioned earlier, the City of Saratoga has prepared the fiscal year ending June 30, 2003 financials in a format prescribed by the provisions of Government Accounting Standards Board Statement 34 (GASB 34). For comparative purposes, the government-wide financial analysis for the City is presented for both fiscal years 2003 and 2002. Statement of Net Assets _ The City's Net Assets comparing 2003 to 2002 is as follows: Statement of Net Assets (in Thousands) Governmental Activities _ 2003 2002 Current Assets $ 16,974 $ 29,659 _ Capital Assets 118,725 106,105 Total Assets 135,699 135,764 Current Liabilities 1,847 2,098 Long-term Debt 15,021 15,085 Total Liabilities 16,868 17,183 Net Assets: Invested in Capital Assets, net of debt 103,785 91,105 Restricted (restated) 8,310 18,240 Unrestricted 6,736 9,041 Total Net Assets $ 118,831 $ 118,386 The City's net assets totaled $118.8 million at fiscal year end 2003, as compared to $118.4 million (restated) in 2002. Although there was very little change in assets overall, significant reallocation occurred between current and capital assets of approximately $12.6 million. The reallocation _ primarily reflects (1) the purchase of the North Campus property reserves, (2) the Library Expansion projection construction costs, and (3) progress of the City's adopted 5-year Capital Improvement Program. _ 6 _ 'The largest portion of the City's net assets $103.8 million or 87.3% reflects its investments in capital - assets such as land, buildings, equipment and infrastructure (roads, bridges, and other immovable assets), less any related debt used to acquire those assets that is still outstanding. 'The assets are used to provide services to residents; consequentially, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 'The portion of the City's restricted net assets, $8.3 million or 7.0%, represents resources that are _ subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets, $6.7 million, may be used to meet the City's ongoing obligations to residents and creditors. Internally imposed designations of resources are not presented as restricted net assets. Statement of Changes in Net Assets - 'The City's Change in Net Assets for fiscal years ended June 30, 2003 and 2002 is as follows: Changes in Net Assets --- (in Thousands) Governmental Activities _ 2003 2002 Program Revenues: Charges for services $ 5,767 $ 5,972 Operating grants and contributions 1,703 1,902 Capital grants and contributions 229 - _ Total Program Revenues 7,699 7,874_ General Revenues: Property taxes 4,216 4,044 Sales taxes 1,028 1,067 Special asssessments 471 - Franchise taxes 933 1,011 Local taxes 1,304 1,177 Motor vehicle in-lieu fees 1,897 1,808 Investment earnings 247 879 Miscellaneous 315 754_ Total General Revenues 10,411 10,740 Total Revenues 18,110 18,614 Expenses: - General and intergovernmental services 3,218 2,005 Public safety 3,513 3,653 Environmental services 648 650 Public works 3,875 4,477 Community services 1,976 2,121 Community development services 2,086 2,026 Interest on long-term debt (unallocated) 783 920 Depreciation expenses (unallocated) 1,566 1,529 Total expenses 17,665 17,381 Increase (decrease) in net assets $ 445 $ 1,233 As mentioned earlier, the City's change in net assets was $445k for the fiscal year. Most of the City's general service programs are supported by General Revenues that represent $10.4 million or 57.5% of total citywide revenues. Although one-time assessments and taxes partially offset the _ overall general revenue decline of $329k or 3% (allowing the City to maintain a balanced budget), the City's use of reserves coupled with the impact of reduced interest rates has had a significant negative impact on investment earnings and miscellaneous rebates. _ The City continues to experience growth and stability with its a current mix of major revenues (property tax, sales tax, motor vehicle license fees), which comprise 68.6% of the total general revenues. The increase of property taxes of approximately $172k primarily reflects a 6.5% growth in assessed valuations from 2002 to 2003, County Tax Equity Allocation, and reduced property tax proceeds required for the City's General Obligation Library Bond debt service payments. Sales tax continued to decline during the year reflecting the depressed local economy while motor vehicle license fees grew by 4.9%. _ Charges for service revenues represent 31.8% of total revenues and is used to support programs related to intergovernmental indirect services, public safety, environmental services, public works, recreation and community services, and community development services. The total cost of all City programs totals $17.7 million and is an increase of $284k or 1.6% over the prior year. The following chart represents the distribution of all City programs expenses: Environmental Interest _ Public Works 4% 4% Depreciation 22% y� 9% General Public Safety 20% Community Community Development Services 1 2% 11% — GENERAL FUND 13UDGETARY HIGHLIGHTS Changes from the City's original budget to the final budget is detailed in the Required Supplementary Information Section along with a comparison to actual activity for the year ended June 30, 2003. A highlight of significant changes from the City's original budget to the final budget is summarized as follows: Revenues and Transfers In During the City's mid-year review process, revenue projections were revised to reflect: The addition of $499k in special assessment billings for prior year improvements made on Vessing Road; $590k reduction in vehicle license fee backfill and $23k in booking fees that reflect the State Governor's January 2003 budget proposal; y A continual decline of 10% in retail activity and sales tax revenues; and An increase of $289k in construction tax and business license fee revenue to reflect a specific housing development project; and y $325k transfers in from two 5-year capital improvement projects that reflect savings from a change in project scope and a cancellation resulting from the unavailability of grant fungi is. Expenses and Transfers During the City's fiscal year, amendments to the original budget were revised to primarily - reflect: Implementation of a hiring freeze on two vacant positions and consolidation of two City Manager Office positions into one for an approximate $90k in reduced costs; and $489k in transfers to support prior year initiated capital projects to the new CIP fund; and $3.5 million in transfers from undesignated reserves to the 5-year CIP to assist with. the $4.5 million purchase of the North Campus Property. CAPITAL ASSETS As of June 30, 2003, the City had$118.7 million invested in a variety of capital assets, as reflected in the following schedule, which represents an increase of $12.6 million or 11.9% above the prior year. Capital Assets at Year-end (Net of Depreciation - In Thousands) Governmental Activities 2003 2002 Land $ 4,831 $ 4,831 Buildings and Structures 2,975 3,088 Machinery and Equipment 747 791 Infrastructure 87,248 88,407 Construction in Progress 22,924 8,988 Total $ 118,725 $ 106,105 9 The following reconciliation summarizes the change in Capital Assets, which primarily reflect the purchase of the North Campus property at$4.5 million, the added Library Expansion construction costs, and the continued progress of the City's adopted 5-year Capital Improvement Program. _ Changes in Capital Assets (in Thousands) Governmental Activities 2003 2002 Beginning Balance $ 106,105 $ 99,666 _. Additions: CIP 13,936 7,585 Infrastructure - 9 Machinerery and Equipment 251 379 — Retirements: Inventory Adjustments - (1,073) Depreciation (1,567) _ (461) Ending Balance $ 118,725 $ 106,105 CASH MANAGEMENT To 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. DEBT ADMINISTRATION Oustanding Debt, at year-end _ (In Thousands) Governmental Activities 2003 2002 _ 2001 General Obligation Bond $ 14,940 $ 15,000 Claims Payable 247 50 — Compensated Absences 262 316 Total $ 15,449 $ 15,366 The current portions of long-term debt ($428k and $281k thousand for 2003 and 2002, respectively) are classified as current liabilities in the City's Statement of Net Assets. During the year, the City made debt service payments that include the first principal reduction of $60k on the City's$15 million 2001 General Obligation Library bonds. The change in compensated absences primarily reflects the changes in payable annual leave balances for City employees. Further information on the City's outstanding debt can be found in _ the notes to the financial statements. 10 _. ECONOMIC OUTLOOK AND MAJOR INITIATIVES As the economic recession begins to show signs of recovery in the Bay Area/Silicon Valley region of Northern California, the City maintains is ability to manage a balanced budget. Although the - City maintains a balanced budget, its clear that the rising cost of operations and the spending of undesignated funds has had the greatest impact to the net of operations of $445k gained in 2003, as compared to $1.2 million gained in 2002. In addition to the rising cost of operations, the negative impact to the net of operations is also attributed to the following: 1) reduction to undesignated fund balance, which primarily reflects the City's continued progress on the 5-year CIP and the purchase of the North Campus property and 2) declining interest rates from 2.67% to -1.697%, from June 2002 to June 2003. Both have resulted in a dramatic reduction to interest earnings and the level of support provided to general revenues, which was 2.4% in 2003, as compared to 8.3% in 2002 and 1.2.6% in 2001. As of the end of the fiscal year 2003, the economy has showed signs of recovery. However, the existing threat of losing local revenues remains a question. The City's primary focus for the new fiscal year is to maintain a balanced budget, to exercise caution with the spending of undesignated fund balance and to remain flexible to adjust operations in response to possible revenue cuts by the State. Major initiatives for the fiscal year 2003-2004 is as follows: y Maintain preparedness for future economic and City operational threats by closely continuing to monitor current revenues and expenditures and by maintaining General Fund Reserves in the amount of $1.5 million for economic uncertainty and $2.3 million for operations; y Preserve the commitment of capital improvement reserves for projects related to public - safety, infrastructure, parks and trails, and facilities; and Preserve remaining reserves, and to limit the increase in operating cost to the growth of - major revenues. 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. .�i .A I2 _ W 14 x, t4� 16 City of Saratoga Statement of Net Assists June 30, 2003 Primary Government Governmental Activities ASSETS Current assets: Cash and investments $ 15,306,515 Restricted cash anti investments 171,485 Receivables: _ Accounts 628,727 Interest 70,443 Loam, 394,217 Total current assets 16,973,187 Noncurrent assets: Capital assets: - Non-depreciable 72,937,632 Depreciable,net 45,787,292 Total capital assets 11.8,724,924 Total noncurrent assets 11.8,724,924 Total assets 135,698,311 LIABILITIES Current liabilities: Accounts payable 483,201 -•- Accrued.payroll 158,139 Interest payable 325,940 Deposits payable 7,298 _.. Deferred revenues 194,211 Claims payable 50,000 Long-term debt-due within one year 427,995 Total current liabilities 1,846,788 Noncurrent liabilities: Long-term debt-due in more than one year 15,020,621 Total noncurrent liabilities 15,020,621 Total liabilities 16,867,409 NET ASSETS Investment in capital assets,nel:of related debt 103,784,924 Restricted for: Capital projects 7,175,488 Debt service 836,:349 Special projects 298,291. Total restricted 8,310,128 Unrestricted 6,73 5,850 Total net assets 5 118,830,902 See accompanying Notes to the Basic Financial Statements. 17 City of Saratoga T Statement of Activities and Changes in Net Assets For the year ended June 30, 2003 Progrun Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Total Primary government: Governmental activities: General and intergovernmental services S 3,218,231 fi 1,93-1,880 $ - S $ 1,931,880 Public safety 3,512,550 273,469 219,055 492,524 Environmental services 647,935 547,647 16,478 564,125 Public works 3,874,717 180,571 1,296,553 229,645 1,706,769 Community services 1,975,659 1,035,480 1(1,000 - 1,045,480 Community development services 2,086,160 1,796,650 161,007 - 1,957,657 Interest on long-term debt(unallocated) 782,506 - - - - Depreciation expense(unallocated) 1,566,931 - - - - _ Total $ 17,664,689 $ 5,765,697 $ 1,703,093 $ 229,645 $ 7,698,435 General revenues and taxes: Taxes: Property taxes Sales taxes Special assessments Franchise taxes Local taxes Total taxes Motor vehicle in-lieu fees Investment earnings Miscellaneous Total general revenues and taxes Change in net assets Net assets-beginning of year,as restated Net assets-end of year See accompanying Notes to the Basic Financial Statements. 18 _ Net(Expanse) Revenue and Changes in Net Assets Primary Governnuvnt Governmental Aci:ivities _._ $ (1,286,351) (3,020,026) (83,810) -•- (2,167,948) (930,179) (128,503) (782,506) (1,566,931) (9,966,254) _._ 4,2-16,425 1,028,329 •171,021 --- 932,807 1,304,261 7,952,843 1,896,606 246,671 315,165 1.0,411,285 ,145,031 1-18,385,871 $ 118,830,902 19 f-• f i 20 Y •f 22 GOVERNMENTAL FUND FINANCIAL STATEMENTS 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. Community Development Block Grant Special Revenue Fund 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. Library Expansion Capital Projects Fund This fund accounts for resources used for the construction of the City's library. Capital Improvement Capital Projects Fund This fund accounts for resources used for the major capital acquisition and construction activities. Other Governmental ]Funds Other Governmental Funds is the aggregate of all the nonmajor governmental funds. 23 City of Saratoga Balance Sheet Governmental Funds } June 30,2003 Major Funds Community Development Library Capital General Black Grant Fxpansion Improvement ASSETS Cash and investments $ 4,905,643 $ 93,076 $ 1,263,282 $ 5,70-1,240 Restricted cash and investments 22,272 13,897 337,316 - Receivables: Accounts 4-19,565 18,205 - - I n truest 68,962 - 1,481 - Loans - 394,217 - - M Advances to other funds 67,111 - - - Total assets $ 5,483,553 $ 519,395 $ 1,602,079 $ 5,701,240 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 127,488 $ - $ 57,254 $ 85,526 Accrued payroll 102,237 877 - 620 Deposits payable - - - Deferred revenue - 394,217 - Advances from other funds - 67,111 - Claims payable 50,000 - - - Totalliabilities 279,725 462,205 57,254 86,146 Fund Balances: Reserved for: Encumbrances 75,180 - 461,739 Petty cash 300 - - Advances to other funds 67,111 - Debt service - - - Unreserved,designated for: Unrealized investment gain 45,881 - 958 Operations 2,367,296 - - Economic uncertainty 1,500,000 - - PERS 139,668 - - MIS 128,198 - - Unreserved,undesignated,reported in: General fund 880,194 - - Special revenues funds - 57,190 - - Capital projects funds - - 1,543,867 5,153,355 Total fund balances 5,203,828 57390 1,544,825 5,6"15,094 Total liabilities and fund balances $ 5,483,553 $ 519,395 $ 1,602,079 $ 5,701,240 See.accompanying Notes to the Basic Financial Statements. 24 Other 'total Governmental Governmental Funds Funds 3,543,274 5 15,506,515 - 373,485 _ 190,957 628,727 - 70,443 394,217 -- 67,111 $ 3,734,231 $ 17,040,498 212,913 $ 483,201 54,40.1 158,137 7,298 7,298 - 394,2-17 67,111 - 50,000 274,634 1,159,964 700,235 1,237,154 - 300 - 67,111 836,349 836,349 - 46,839 2,367,296 ...-.. 1,500,000 139,668 128,198 - 880,194 1,907,444 1,964,634 15,569 6,712,791 3,459,597 15,880,514 $ 3,734,23-1 $ 17,040,498 25 k `.r 26 City of Saratoga Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets June 30, 2003 Total Fund Balances-Total governmental funds $ 15,880,534 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 72,937,632 -- Depreciable capital assets,net 45,787,292 Total capital assets 118,724 924 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. (325,940) Long-terra liabilities were not due and payable in the current period. Therefore, they were not reported in the Governmental Funds Balance Sheet. The long-terra liabilities were adjusted as follows: General obligation bonds (14,940,000) Claims payable: (247,194) Compensated absences (261,422) Total long-term liabilities (15,448,616) Net Assets of Governmental Activities S 118,830,902 See accompanying Notes to the Basic Financial Statements. 27 City of Saratoga Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the year ended June 30, 2003 Major Funds Community Development Library Capital General Block Grant Expansion Improvement REVENUES: T Property taxes $ 2,929,207 $ $ - $ - Special assessments 471,021 - - Other local taxes 2,138,618 - - Intergovernmental-Slate 1,944,629 26,406 Intergovernmental-Federal 21576 93,596 - _ Intergovernmental-other - - - 4,400 Franchise fees 932,808 - - Use of money and property 242,228 67,410 13,802 55,174 Current service charges 671,044 - - - Reimbursement of interfund cost allocations 1,931,880 - - - Total revenues 11,264,071 161,006 13,802 85,980 _ EXPENDITURES: Current: General and intergovernmental services 3,168,878 - - - Public safety 3,431,59"1 - - - Environmental services - - - - Public works 1,104,505 - - Community services 343,864 94,520 - Community development services 85,994 - - - Capital outlay 228,607 1,502 7,766,471 6,167,716 Debt service: Principal - - - - _ Interest and fiscal charges - - - Total expenditures 8,363,439 96,022 7,766,471 6,167,716 REVENUES OVER(UNDER)EXPENDITURES 2,900,572 64,984 (7,752,669) (6,081,736) OTHER FINANCING SOURCES(USES): Transfers in 339,679 111,000 6,271,297 'I ransfers out (5,006,101) - (339,679) Total other financing sources(uses) (4,666,422) 111,000 5,933,618 Net change in fund balances (1,765,850) 175,984 (7,752,669) (148,118) FUND BALANCES: Beginning of year,as restated 6,969,678 (118,794) 9,297,494 5,763,212 End of vear $ 5,203,828 $ 57,190 $ 1,544,825 $ 5,615,094 _ See accompanying Notes to the Basic Financial Statements. 28 Other Total _ Governmental Governmental Funds Funds - $ 1,250,094 S el,179,301 103,448 374,469 - 2,138,618 1,098,82-1 3,069,856 451,545 547,7TI7 82,800 87,200 - 932,808 303,775 682,389 3,294,438 3,965,482 - -1,931,880 6,584,92"1 18,109,720 - 3,168,878 80,316 3,511,907 644,343 644,343 2,729,837 3,834,342 1,506,538 1,944,922 1,982,227 2,068,221 22,143 14,186,439 60,000 60,000 783,756 783,756 7,809,160 30,202,908 (1,224,239) (11,093,088) 1,294,523 8,018,499 (2,672,7-19) (8,018,499) (1,378,196) - (2,602,435) (12,093,088) 6,062,032 27,973,622 S 3,459,597 $ 15,880,534 29 City of Saratoga Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Assets For the year ended June 30, 2003 Net Change in Fund Balances-Total governmental funds $ (12,093,088) Amounts reported for governmental activities in the.Statement of Activities and Changes in Net Assets were different because: Governmental funds reported 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 by which capital outlays exceeded depreciation in the current period. Capital outlay 14,186,439 Depreciation expense (1,566,931) 12,619,508 Long-term claims payable: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 were not reported as expenditures in governmental funds. (197,194) Long-term compensated absences 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 were not reported as expenditures in governmental funds. 54,555 _. Bond proceeds provided current financial resources to governmental funds, but issuing debt increased long-term liabilities in the Government-Wide Statement of Net Assets. Repavment 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 60,000 _ 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. 1,250 Change in Net Assets of Governmental Activities $ 445,031 See accompanying Notes to the Basic Financial Statements. 30 �` FIDUCIARY FUND FINANCIAL STATEMENTS Agency Funds Agency Funds is the aggregate of all the agency funds. 31 City of Saratoga Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2003 Agency Funds ASSETS Cash and investments $ 786,30"1 Restricted cash and investments 330,109 Accounts receivable 42,946 Total assets $ 1,159,356 LIABILITIES _ Accounts payable $ 1,2"14 Deposits payable 750,265 Due to assessment district bondholders 407,877 _ Total liabilities $ 1,159,356 See accompanying Notes to the Basic Financial Statements, 32 City of Saratoga Index to Notes to the Basic Financial Statements For the year ended June 30, 2003 Pale Note 1 - Summary cif Significant Accounting Policies....................................................................35 - A. Financial Reporting Entity ...............................................................................................35 B. Basis of Accounting/Measurement Focus.....................................................................36 C. Cash,Cash Equivalents and Investments......................................................................39 D. Restricted Cash and Investments....................................................................................39 E. Prepaid Items .....................................................................................................................39 F. Interfund Transactions.......................................................................................................39 G. Capital Assets......................................................................................................................40 H. Interest Payable..................................................................................................................41 I. Claims Payable...................................................................................................................42 J. Compensated Absences....................................................................................................42 K. Long-Term Obligations..................... L. Fund Balances ................................................................................................ ...........42 M. Net Assets...........................................................................................................................43 N. Use of Restricted/Unrestricted Net Assets....................................................................43 O. Property Tax and Special Assessments............................................................. ............43 P. Uses of ]Estimates......................... .. Note 2 - Cash and Investments............................................................................................................44 A. Cash Deposits........................................................................................................ ............44 B. Investments ........................................................................................................... ............45 C. Credit Risks .........................................................................................................................46 D. Summary of Cash and Investments................................................................... ............47 E. Summary of Cash and Investments to Maturity.............................................. ............48 Note3 - Loans Receivable .-... .............................................................................................. ............49 33 City of Saratoga - Index to Notes to the Basic Financial Statements, Continued For the year ended June 30,2003 - Page Note 4- Interfund Transactions .........................................................................................................49 A. Long-Term Advances........................................................................................................49 B. Transfers..............................................................................................................................50 - Note5 -- Capital Assets .........................................................................................................................51 Note6- Long-Term Debt.....................................................................................................................52 Note7- Non-City Obligations ...........................................................................................................53 Note 8 - Reserved and Designated Fund Balances.........................................................................54 Note9 - Risk Management..................................................................................................................54 Note 10 - Retirement Plans..................................................................................................................56 -. Note 11 - Joint Powers Agreements...................................................................................................57 - Note 12 - Commitments and Contingencies ....................................................................................58 A. Lawsuits..............................................................................................................................58 B. Federal and State Grant Programs..................................................................................58 Note 13 - Prior Period Adjustments...................................................................................................58 34 _ City of Saratoga - Notes to the Basic Financial Statements For the year ended June 30, 2003 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The basic financial statements of the City of Saratoga, California, (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 30,482 at June 30, 2003. 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, 2003, the City's staff comprised 59 full time 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. Fire services are provided by special district. Emergency management, code enforcement and inspection services are provided. by 1 City employee. Public Works/Maintenance - The City builds and maintains its parks, streets, curbs, gutters and related public property with a force of 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 10 employees. General Government services are provided by a total of 14 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 35 City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30,2003 _ 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued A. Financial Reporting Entity, Continued operations and data from these units are combined with data of the City. Discretely presented component units, on the other hand, are reported in a separate column in the government- wide financial statements to emphasize their legal separateness from the City. Each blended component unit has a June 30 year-end. The City had no discretely presented component units. The following entities are reported as blended component units: — Saratoga Public Financing Authority - The Saratoga Public Financing Authority (Authority) is a joint powers authority organized by the City of Saratoga (City) and the City of Saratoga — Parking Authority (Parking Authority) on June 16, 1993, under the laws of the State of California. The Authority was organized to provide financial assistance to the City and — Districts for public improvements for the City and the purchase by the Authority of Local Obligations within the meaning of the Act. Lighting and Landscaping Assessment District - The Lighting and Landscaping Assessment District (District) was established in 1980 for the levy and the collections of assessments upon the several lots or parcels of land in the District, and for the construction or — instalIation of improvements, including maintenance or servicing, or both. Complete financial statements for each component unit may be obtained from the City of Saratoga, 13777 Fruitvale Avenue, Saratoga,CA 95070. 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 goveriunent-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. 36 ` City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued B. Basis of Accounting and Measurement Focus, Continued 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 iin 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: • Due to/from other funds Advances to/ other funds • Transfers in/out The City applies all applicable GASB pronouncements (including all NCGA Statements and Interpretations currently in effect) as well as the following pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements: Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board (APB) Opinions, and Accounting Research Bulletins (A.RB) of the committee on Accounting Procedure. 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. 37 City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 _ 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued ` B. Basis of Accounting and Measurenietit Focus, Cotztitcued 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 (generally 60 days after year-end) are recognized when due. The ` primary revenue sources, which have been treated as susceptible to accrual by the City, are property tax, sales tax, special assessments, intergovernmental revenues, other taxes, interest revenue, rental revenue and certain charges for services. Fines, forfeitures, licenses and permits _ and parking meter revenues are not susceptible to accrual because they are usually not measurable until received in cash. Expenditures are recorded in the accounting period in which the related fund liability is incurred. Deferred revenues arise when potential revenues do not meet both the "measurable" and "available" criteria for recognition in the current period. Deferred revenues also arise when ` the government receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures. In subsequent periods when both _ revenue recognition criteria are met or when the government has a legal claim to the resources, the deferred revenue is removed from the combined balance sheet and revenue is recognized. Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is provided to explain the differences created by the integrated approach of GASB Statement No. 34. -` Fiduciary Fund Financial Statements Fiduciary fund financial statements include a Statement of Net Assets. The City's fiduciary funds represent agency funds. Agency funds are custodial in nature (assets equal liabilities) _ and do not involve measurement of results of operations. 38 City of Saratoga - Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued C. Cash, Cash Equivalents and Inz.7estments 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. In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are - stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available. - The City participates in an investment pool managed by the State of California titled Local Agency Investment Fund (LAIF), which has invested a portion of the pool funds in Structured Notes and Asset-Backed Securities. LAIF's investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these Structured Notes and Asset-Backed Securities are subject to market risk as to change in interest rates. D. Restricted Cash and Investments Certain restricted- cash and investments are held by a fiscal agent for the redemption of bonded debt and for acquisition and construction of capital projects. E. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. F. Interfund Transactions Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the noncurrent portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Advances between funds, are reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation.and are not expendable available financial resources. 39 City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 _ 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued G. Ca p i to i Assets Capital assets, which includes 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 $1,000. 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 vears Machinery and equipment 5-10 years Infrastructure 20-50 years _ The City has not allocated the depreciation expense to departments. In June 1999, the Governmental Accounting Standards Board (GASB) issued Statement No. 34 which requires the inclusion of infrastructure capital assets in local governments' basic financial _ statements. In accordance with Statement No. 34, the City has included the value of all infrastructure into its basic financial statements. The City defines infrastructure as the basic physical assets that allow the City to function. The City defines infrastructure as the basic physical assets including the street system, park and recreation lands and improvements system; storm water conveyance and drainage system, buildings combined with site amenities such as parking and landscaping areas used by the City in the conduct of its business. Each major infrastructure system can be divided into subsystems. For example the street system can be subdivided into pavement, curb and gutters, ` sidewalks, medians, streetlights, traffic control devices (signs, signals and pavement markings), landscaping and land. These subsystems were not delineated in the basic financial statements. _ The appropriate operating department maintains information regarding the subsystems. The City elected to use the Modified Approach as defined by GASB Statement No. 34 for infrastructure reporting of its streets, concrete and asphalt pavements. The City commissioned a physical assessment of the streets condition as of June 30, 2001. This condition assessment will be performed every 3 years. 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. ` 40 F City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 1. SUMMARY OF !SIGNIFICANT ACCOUNTING POIJICIES, Continued G. Capital Assets, Continued "- The following conditions were defined: Condition Ratite Excellent 86-100 Very Good 71-85 _-- Good 56470 Fair 41-55 Poor 26-40 Very Poor 11-25 Substandard 0-10 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, 2003. 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 ithen computed by deducting the accumulated depreciation from the original cost. H. Interest Payable In the government-wide financial statements, interest payable of long-term debt is recognized as the liability is incurred 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. 41 City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 _ 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued - I. 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 r "incurred but not reported" (IBNR) claims. There is no fixed payment schedule to pay these liabilities. J. Compensated Absences In the government-wide financial statements, compensated absences are recorded as incurred and the related expenses and liabilities are reported. In the fund financial statements, compensated absences are recorded as expenditures in the years paid, as it is the City's policy to liquidate any unpaid compensated absences at June 30 from future resources,rather than currently available financial resources. - K. Long-Terns 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. - L. 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. 42 - City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 1. SUMMARY OF;SIGNIFICANT ACCOUNTING POLICIES, Continued L. Fund Balances, Continued - City Council has designated an amount for operations, which it has defined as being equal to the greater of one-quarter of the total budgeted General Fund appropriations for the current budget year or $2,000,000. The designation is increased annually by an amount equal to the interest the City earned on an equivalent amount of cash and investments. M. Net Assets In the governmental-wide financial statements,net assets are classified in the following categories: Invested in Capital Assets, Net of Related Debt- This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that attributed to the acquisition, construction, or improvement of the assets. • Restricted Net Assets - This amount is restricted by external creditors, grantors, contributors, or laws or regulations of other governments. • Unrestricted Net Assets - This amount is all net assets that do not meet the definition of "invested in capital assets,net of related debt" or "restricted net assets." N. 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. O. 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 Iiens 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 Iien 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. 43 City of Saratoga ` Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 _ 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued P. 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. 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. A. Cash Deposits _ The carrying amounts of the City's cash deposits were $127,403 at June 30, 2003. Bank balances — before reconciling items were $734,088 at that date. The total amount of which was collateralized or insured with securities held by the pledging financial institutions in the City's name is discussed below. ` The California Government Code requires California banks and savings and loan associations to — secure the City's cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City's name. The market value of pledged securities must equal at least 110% 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% of the City's total cash deposits. The City may waive collateral requirements for cash deposits which are fully insured up to $100,000 by the Federal Deposit Insurance Corporation. The City, however, has not waived the collateralization requirements. _ The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the period-end cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund. 44 City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 2. CASH AND INITESTMENTS, Continued B. Investments Under the provisions of the City's investment policy, and in accordance with California Government Code, the following investments are authorized: ♦ Securities of the U.S. Government or its agencies. ♦ Certificates of Deposit (or Time Deposits) placed with commercial banks and/or savings - and loan companies. ♦ Negotiable Certificates of Deposit. ♦ California Local Agency Investment Fund. ♦ Investment-grade obligations of state, local governments or public authorities. ♦ Money market mutual funds. ♦ Passbook savings account and demand deposits. The City has complied with the provisions of GASB Statement No. 31, Accounting; and Financial Reporting for Certain Investments and for External Investments Pools. No current adjustments have been made to the accompanying basic financial statemnents, because the City's investments were primarily in the State of California Local Agency Investment Fund and the fair value adjustment was immaterial. The City's investments with Local Agency Investment: Fund (LAIF) at June 30, 2003, 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 CMOs) or credit card receivables. LAIF is overseen by the Local Agency Investment Advisory Board, which consists of five members, in accordance with State statute. 45 City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 2. CASH AND INVESTMENTS, Continued _ B. Investments, Continued As of June 30, 2003, the City had $16,165,413 invested in LAIF as cash and investments and $337,316 invested in LAIF as restricted cash and investments, which had invested 2.327% of the _ pool investment funds in Structured Notes and Asset-Backed Securities. The LAIF fair value factor of 1.002846280 was used to calculate the fair value of the invest1-1lents in LAIF. The fair value of the City's position in the LAIF pool is the same as the value of the pool shares. C. Credit Risk Governmental Accounting Standards Board Statement No. 3 requires that deposits and _ investments be classified by credit risk. Classifications of deposits and investments by credit risk are as follows: _ Deposits Category 1 - Insured or collateralized with securities held by the entity or by its agent in the entity's name. Category 2 - Collateralized with securities held by the pledging financial institution's trust department or agent in the entity's name. _ Category 3 - Deposits which are uninsured or uncollateralized. Investments Category 1 - Insured or registered or securities held by the entity or its agent in the entity's name. Category 2 - Uninsured and unregistered, with securities held by the counterparty's trust _ department or agent in the entity's name. Category 3 - Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent,but not in the entity's name. 46 City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 2. CASH AND INVESTMENTS, Continued C. Credit Risk, Continued - Investnur-its Not _Subject to Categorization - Investments in the California Local Agency Investment Fund (LAIF) are not categorized, as GASB No. 3 does not require categorization - of investment pools managed by another government. Certain fiscal agent investments are not categorized because the underlying assets are open-ended mutual funds. Guaranteed investment contracts are not categorized because they are direct contractual investments and are not securities. All such investments are not required to be categorized under interpretive guidelines issuedd by the GASB. D. Summary of(:ash and Investments The following is a summary of pooled cash and investments and restricted cash and investments at June 30,2003: Government- Wide Statement of Fiduciajy Net Assets _ Funds Governmental Statement of Activities Net Assets Total Pooled cash and investments $ 15,506,515 $ 786,301 $ 16,292,816 Restricted cash and investments 373,485 330,109 703,594 Toted $ 15,880,000 $ 1,116,410 S 16,996,410 47 City of Saratoga - Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 — 2. CASH AND INVESTMENTS, Continued — D. Summary of Cash and Investments, Continued Deposits and investments were categorized as follows at June 30, 2003: Not Required Category to be Fair 1 Categorized Value City Treasury: Demand Deposits: — Cash deposit S 127,403 $ - $ 127,403 Investments: Local agency investment fund - 16,165,413 16,165,413 Total investments - 16,165,413 16,165,413 Total deposits and investments 127,403 16,165,413 16,292,816 — Cash and Investments with Fiscal Agents: — Cash deposits 36,169 - 36,169 Money market mutual funds - 170,109 170,109 Guaranteed investment contract - 160,000 160,000 — I.ocaI agency investment fund - 337,316 337,316 Total cash and investments with fiscal agents 36,169 667,425 703,594 — Total $ 163,572 S 16,832,838 $ 16,996,410 At June 30, 2003, the City had no category 2 or 3 deposits or investments. E. Summary of Cash and Investments to Maturity — Pooled cash and investments grouped by maturity date at June 30,2003, are shown below: — Maturity Fair Value Current to one year $ 16,292,816 ` 48 — City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 3. LOANS RECEIVABLE The City had the following loan receivable as of June 30, 2003: Balance Balance July 1,2002 Additions Deletions Tune 30, 2003 - I lousing Rehabilitation Loan Program $ 455,561 $ - $ (61,344) $ 394,217 - 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. --- At June 30, 2003, the City had outstanding SHARP loans of $394,217. During the year ended. June 30, 2003, the City received $61,344 in repayments from all participants. 4. INTERFUND TRANSACTIONS Fund Financial Statements A. Long-Term Advances At June 30, 2003, the City had the following long-term advances: Advances From Other Funds Community Development _._ Block Grant Special Advances To Other Funds Revenue Fund General Fund $ 67,111 - The advances were used for cash flow purposes and will be repaid as cash becomes available within the Community Development Block Grant Special Revenue Fund. However, there are no set dates for repayment. 49 City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 4. INTERFUND TRANSACTIONS, Continued B. Transfers Transfers for the year ended June 30, 2003 were as follows: Transfers Out Capital Improvements Other General Capital Governmental Transfers In Fund Projects Fund Funds Total General Fund $ - $ 339,679 $ - $ 339,679 Special Revenue Fund: Community Development Block Grant 111,000 - - 111,000 — Capital Projects Fund: Capital Improvements 3,600,578 - 2,672,719 6,273,297 Other Governmental Funds 1,294,523 - - 1,294,523 Total $ 5,006,101 $ 339,679 $ 2,672,719 $ 8,018,499 The above transfers resulted from the normal course of the City's operation. 50 " City of Saratoga - Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 5. CAPITAL ASSE'r5 Capital assets activity for the year ended June 30, 2003, consisted of the following: - Primary Government Balance Balance July 1,2002 Additions Retirements June 30,2003 Governmental Activities: Capital assets,not b ng depreciated: Iand and land improvements S 4,830,840 $ - $ - $ 4,830,840 Construction in progress 8,988,339 13,935,688 - 22,924,027 Infrastructure: Street payment system 45,182,765 - - 45,182,765 Total capital assets, not being depreciated 59,001,944 13,935,688 - 72,937,632 Capital assets,being;depreciated: --- Buildings and structures 4,851,752 8,337 - 4,860,089 Machinery and equipment 1,731,302 242,414 - 1,973,716 Infrastructure: Bridges 1,563,654 - - 1,563,654 Signs and lights 762,527 - - 762,527 Drainage systern 39,844,721 - - 39,844,721 Sidewalks 11,475,780 - - 11,475,7 80 Totals capital assets - being depreciated 60,229,736 250,751 - 60,480,487 Accumulated depreciation (13,126,264) (1,566,931) - (14,693,195) Totals capital assets, being depreciated,net 47,103,472 (1,316,180) - 45,787,292 Governmental activities capital assets,net $ 106,105,416 $ 12,619,508 $ - $ 118,724,924 - Depreciation expense for the depreciable capital assets was $1,566,931 in 2003. 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. 51 City of Saratoga _ Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 6. LONG-TERM DEBT — A summary of the City's long-term debt transactions for the year ended June 30, 2003, is presented below: Classification Amounts Amounts — Balance Balance Due Within Due in More Description July 1,2002 Additions Retirements June 30,2003 One Year than One Year — General Obligation Bonds: 2001 Library Bonds $ 15,000,000 S - $ (60,000) $ 14,940,000 $ 245,000 S 14,695,000 Claims payable 50,000 197,194 - 247,194 - 247,194 — Compensated absences 3-15,977 - (54,555) 261,422 182,995 78,427 Total S 15,365,977 $ 197,194 $ (114,555) $ 15,448,616 $ 427,995 $ 15,020,621 — 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% to 6% 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, 2032 and are subject to redemption prior to maturity at redemption prices ranging from 100% to 101% 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, 2003, the outstanding balance of the bonds was $14,940,000. The annual debt service requirements on these bonds are as follows: For the Year — Ending June 30, Principal Interest Total 2004 $ 245,000 $ 776,131 S 1,021,131 2005 255,000 763,631 1,018,631 2006 270,000 750,506 1,020,506 2007 280,000 736,756 1,016,756 — 2008 295,000 720,906 1,015,906 2009-2013 1,755,000 3,311,605 5,066,605 2014-2018 2,205,000 2,782,655 4,987,655 2019-2023 2,685,000 2,176,807 4,861,807 2024-2028 3,465,000 1,387,842 4,852,842 2029-2032 3,485,000 377,607 3,862,607 Total $ 14,940,000 $ 13,784,446 $ 28,724,446 52 City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 6. LONG-TERM DEBT, Continued Claims Payable At June 30, 2003, the claims payable has been accrued. See Note 10 Risk Management for more information. The total amount of the long-term claims payable was $247,194 at June 30, 2003. The claims payable liability will generally be liquidated through the General Fund. Compensated Absences The City's liability for vested and unpaid compensated absences (accrued vacation and sick -- pay) has been accrued and amounts to $261,422 at June 30, 2003. The compensates[absences liability will generally be liquidated through the General Fund. 7. NON-CITY OBLIGATIONS The following bonds bearing the City's name were issued to finance redevelopment projects; however, neither the faith and credit nor the general taxing power of the City has -been pledged to the payment of the bonds. Furthermore, the City :has no obligation for the payment of the bonds in the case of default. Therefore, the following obligations are not included in the _ accompanying basic financial statements. Original Outstanding at Amount June 30,2003 Parking Assessment Districts#2 and#3 $ 1,244,900 $ 305,000 Leonard Road Improvement Assessment District 10-1,686 65,000 - Saraitoga Public Financing Authority 1993 Revenue Bonds 1,600,000 520,000 The City is the collecting agent for Village Parking Assessment Districts 42 and #3 and the Leonard Road Improvement District, but is not obligated for the repayment of debt issued by these Districts. As a result, these Districts have not been included in the basic financial statements of the City. 53 City of Saratoga _. Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 _ 8. RESERVED AND DESIGNATED FUND BALANCES Fund balances at June 30, 2003, have been reserved and designated for the following purposes: Special Debt Capital General Revenue Service Projects Fund Funds Fund Funds Total Reserved for: _ Encumbrances $ 75,180 $ 700,235 $ - $ 461,739 $ 1,23,7,1.54 Petty cash 300 - - - 300 Advances to other funds 67,111 - - - 67,111 — Debt service - - 836,349 - 836,349 Total reserved 142,591 700,235 836,349 461,739 2,140,914 _ Designated for: Unrealized investment gain 45,881 - - 958 46,839 Operations 2,367,296 - - - 2,367,296 _ Economic uncertainty 1,500,000 - - - 1,500,000 PERS 139,668 - - - 139,668 NITS 128,198 - - - 128,198 Total designated 4,18.1,043 - - 958 4,182,001 _ Unreserved,Undesignated 880,194 1,964,634 - 6,712,791 9,557,619 Total fund balances $ 5,203,828 $ 2,664,869 $ 836,349 $ 7,175,488 $ 15,880,534 _ 9. RISK MANAGEMENT The City participates in the following public entity risk pools: _ ABAG Plan Corporation (ABAG PLAN) covers general liability claims in an amount up to $7,000,000. The City has a deductible or uninsured liability of up to $25,000 per claim. Once the Citv's deductible is met ABAG PLAN becomes responsible for payment of all claims up to the limit. During the fiscal year ended June 30, 2003, the City contributed $96,326 for current year coverage and received no refund of prior year excess contributions. F The ABAG Workers' Compensation Pool Insurance Authority (ABAG POOL) covers workers' — compensation claims up to the statutory limit. The City has no deductible for these claims. During the fiscal year ended June 30, 2003, the City contributed $395,375 for current year coverage. _ 54 ` City of Saratoga - Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 9. RISK MANAGEMENT, Continued The City's contributions to each risk pool equal the: ratio of the City's payroll. to the total payrolls of all entities participating in the same layer of each program, in each program-year. Actual surpluses or losses are shared according to a formula developed from overall loss costs and spread to member entities on a percentage basis after a retrospective rating. There have been no significant reductions of insurance settlements that exceeded insurance _ coverage for the past three years. The workers' compensation and general liability claims payable of $297,194 reported at - June 30, 2003, are based on the requirements of GASB Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the basic financial statements indicates that it is probable that a liability has been incurred at the date of the basic - financial statements and the amount of the loss can be reasonably estimated. Changes in the claims liability amounts were as follows: Fiscal Year Year Claims CIaims and Claims - Ended Payable Changes in Claims Payable June 30, July 1 Estimates Payments June 30 2001 $ 100,000 $ 15,279 $ (15,279) $ 100,000 2002. 100,000 32,061 (32,061) 100,000 2003. 100,000 214,052 (16,858) 297,194 Claims liability is presented on the Statement of Net Assets as follows at June 30,2003: Current portion of claims payable $ 50,000 Long-term debt-due in more than one year 247,194 Total $ 297,194 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. 55 City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30, 2003 9. RISK MANAGEMENT, Continued — The following represents summary audited financial information of ABAG for the fiscal year _ ended June 30, 2002: Total assets $ 38,375,940 Total liabilities $ 16,014,502 Fund equity $ 22,361,438 — Total revenues $ 8,294,625 Total expenses $ 3,856,567 Net increase in fund equity 5 4,438,058 Audited financial information for each risk pool may be obtained from ABAG at P. O. Box 2089,Oakland, California 94604-2089. 10. RETIREMENT PLANS — Pension Plan PIan Description - The City contributes to the California Public Employees Retirement System (PERS), an agent multiple-employer public employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. PERS acts 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 PERS' annual financial report may be obtained from their Executive Office located at 400 P Street, Sacramento, California 95814. — Funding Polici - Active plan members are required by state statute to contribute for miscellaneous employees 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 $265,427 for the year ended June 30, 2003. The City employer is required to contribute for fiscal year 2002-2003 at an actuarially determined rate of 0% of annual covered payroll for miscellaneous employees. 56 F City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30,2003 10. RETIREMENT PLANS, Continued Annual Pension Cost - For fiscal year 2002-2003, the City's annual pension cost of $267,321 for PERS was equal to the City's required and actual contributions. The required contribution was determined as part of the June 30,, 2002 actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included (a) 8.25% investment rate of return (net of administrative expenses), (b) projected annual salary increases ranging from 3.75% to 14.2% for miscellaneous employees depending on age, service, and type of employment, and (c) 2% per year cost-of-living adjustments. Both (a) _._ and (b) included an inflation component of 3.5%. The actuarial value of PERS assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a three-year period. PERS unfunded actuarial accrued liability (or surplus) is amortized as a level percentage of projected payroll on a closed basis. The amortization period at June 30,2002,was 20 years for miscellaneous employees. Y- THREE-YEAR TREND INFORMATION FOR PERS Annual Percentage of Pension Cost 1kPC Net Pension Fiscal Year (APC) Contributed Obligation 6/30/01 $ 18KO80 100% $ 0 6/30/02 241,114 100% 0 6/30/03 267,321 100% 0 11. 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, Sari 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. 57 City of Saratoga Notes to the Basic Financial Statements, Continued For the year ended June 30,2003 _ 12. COMMITMENTS AND CONTINGENCIES ` A. Lawsuits The City is presently involved in certain matters of litigation that have arisen in the normal course of conducting City business. City management believes, based upon consultation with _ the City Attorney, that these cases, in the aggregate, are not expected to result in a material adverse financial impact on the City. Additionally, City management believes that the City's insurance programs are sufficient to cover any potential losses should an unfavorable outcome — materialize. B. Federal and State Grant Programs ` The City participates in Federal and State grant programs. These programs are audited by the City's independent accountants in accordance with the provisions of the Federal Single Audit Act Amendments of 1996 and applicable State requirements. No cost disallowance is expected as a result of these audits; however, these programs are subject to further examination by the grantors. Expenditures which may be disallowed, if any, by the granting agencies cannot be determined at this time. The City expects such amounts, if any, to be immaterial. As of June 30, 2003, 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. 13. PRIOR PERIOD ADJUSTMENTS _ Fund Financial Statements The City recorded the following adjustments to more accurately reflect the transactions in the prior years: Conznninity Developrent Block Grant - The City determined certain amounts payable to other governments was not included in the prior years. Fund Balances, as Previously Prior Period Fund Balances, _ Reported Adjustments as Restated Major Fund: _ Community Development Block Grant $ 76,430 $ (195,224) $ (118,794) Total major fund $ 76,430 $ (195,224) $ (118,794) 58 City of Saratoga Required Supplementary Information For the year ended June 30, 2003 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 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, contacts, 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. Encumbrances outstanding at year-end are reported as a reservation of fund balances. They do not constitute expenditures or estimated liabilities. 60 City of Saratoga Required Supplementary Information, Continued For the year ended June 30, 2003 I. BUDGETARY INFORMATION, Continued The followings are the budget comparison schedules for General Fund and all major special revenue funds. Budget Comparison Schedule, General Fund Positive (Negative) Budgeted Amounts Actual Variance with Original Final. Amounts Final Budget Fund Balances-Beginning $ 6,669,676 $ 6,969,678 $ 6,969,678 $ - Resources(inflows): Property taxes 2,869,665 2,869,665 2,T9,207 59,542 Special assessments - 499,237 471,021. (28,216) _-_ Other local taxes 1,977,290 2,011,923 2,138,618 126,695 Intergovernmental-State 1,763,305 1,193,357 1,944,629 731,272 Intergovernmental-Federal - 2,576 2,576 - Franchise fees 954,190 %9,982 932,808 (37,174) Use of money and]property 414,800 360,441 242,228 (118,213) Current service charges 828,620 786,424 671,044 (115,380) Reimbursement of interfund cost allocations 1,970,294 1,942,294 1,931,880 (10,414) Transfers in - 325,000 339,679 14,679 - Amount available for appropriations 17,447,840 17,930,577 18,573,368 642,791 Charges to Appropriations(outflows): Current: General and intergovernmental services 3,052,315 3,041,168 3,168,878 (127,710) Public safety 3,675,103 3,651,957 3,431,591 ��.0,366 Public works 1,516,489 1,591,765 1,104,505 487,260 Community serv�ices 550,260 548,720 343,864 204,856 -- Community development services 119,212 121,712 85,994 35,718 Capital outlay 191,610 373,038 228,607 144,431 Transfers out 1,542,389 5,419,237 5,006,101 4-13,136 Total charges to appropriations 10,647,378 14,747,597 13,369,540 1,378,057 Fund Balances-Ending $ 6,800,462 $ 3,182,980 $ 5,203,828 $ 2,020,848 61 City of Saratoga Required Supplementary Information, Continued For the year ended June 30, 2003 1. BUDGETARY INFORMATION, Continued Budgetary Comparison Schedule, Community Development Block Grant Fund Positive (Negative) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund Balances-Beginning,as restated $ 535,378 $ 76,429 $ (118,794) $ (195,223) Resources(inflows): Intergovernmental-Federal 175,046 175,046 93,5% (81,450) Use of money and property 2,076 2,076 67,410 65,334 Transfers in - "111,000 111,000 - Amount available for appropriations 712,500 364,551 153,212 (21.1,339) Charges to Appropriations(outflows): Community services 216,000 216,000 94,520 121,480 Capital outlay 4-1,059 - 1,502 (1,502) Transfers out 355,441 42,559 - 42,559 Total charges to appropriations 612,500 258,559 96,022 162,537 Fund Balances-Ending $ 100,000 $ 105,992 $ 57,190 $ (48,802) 62 "` City of Saratoga " Required Supplementary Information, Continued For the year ended June 30, 2003 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, 2001. 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 135.2 centerline miles of pave surfaces. The City's road system can be grouped by function class and includes 19.3 centerline miles of arterial, 23.3 centerline miles of collector, and 92.6 miles as residential. 63 City of Saratoga - Required Supplementary Information, Continued For the year ended June 30, 2003 2. MODIFIED APPROACH FOR CITY STREETS INFRASTRUCTURE CAPITAL ASSETS, - Continued 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. The following conditions were defined: F Condition Rating Excellent 86-100 Very Good 71-85 Good 56-70 - Fair 41-55 Poor 26-40 Very Poor 11-25 Substandard 0-10 The City Policy is to achieve an average rating of 70 for all streets, which is a 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, 2003, the City's _ street system was rated at a PCI index of 70 on the average with the detail condition as follows: Condition of Streets Excellent to Good 78% Fair 13% - Poor to Substandard 9% The City expended $1,553,674 on street maintenance for the year ended June 30, 2003. These - routine maintenance expenditures delayed deterioration. The budget required to maintain and improve the current level of overall condition through the year 2006 is a minimum of - $4,500,000. ($1,500,000 projected budget each year for the years ending June 30, 2004, 2005" and 2006.) 64 - City of Saratoga Required Supplementary Information, Continued For the year ended June 30, 2003 2. MODIFIED APPROACH FOR CITY STREETS INFRASTRUCTURE CAPITAL ASSETS, Continued A schedule estimated annual amount calculated to maintain and preserve its streets at the current level compared to actual expenditures for street maintenance for the last: five years is presented below: Funded by Actual Funded by Gas Tax Total _- fiscal Year Budget Expenditures General Fund Fund Funded 1998-99 $ 2,135,689 $ 2,137,370 $ 1,542,568 $ 594,802 $ 2,137,370 1999-00 1,846,839 1,686,129 1,095,289 590,840 1,686,129 2000-01 2,520,255 801,160 205,309 595,851 801,160 2001-02 3,529,420 2,214,717 1,631,855 582,862 2,214,717 2002-03 2,207,922 1,553,674 '974,514 579,160 1,553,674 As of June 30, 2003, approximately 22% 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 amounted to approximately $9,200,000 for all streets. 3. DEFINED PENSION PLAN A schedule of funding progress for the year ended June 30, 2003 including the past three actuarial valuations is presented below. Miscellaneous Employees Unfunded Actuarial Entry Age Overfunded Liability as Actuarial Actuarial Actuarial Actuarial Percentage of Valuation Asset Accrued Accrued Funded Covered Covered Date* Value Liability Liability_ Ratio Payroll _ :Payroll 6/30/2000 $ 18,956,430 $ 13,716,661 $ 5,239,769 138.2% $ 2,569,891 :203.9% 6/30/2001 19,419,749 14,742,788 4,676,�61 131.7% 3,035,996 154.0% 6/30/2002 18,292,349 15,889,904 2,402,445 115.1% 3,620,470 66.4% * Latest information available. 65 - �C 2 - z` .� - 2 \ 6 © ^ ? �- z _ 66 68 NON-MAJOR GOVERNMENTAL FUNDS Special Revenue Funds Local Law Enforcement - This fund accounts for State Supplemental Law Enforcement entitlement allocated based on population. Traffic Safety - This fund accounts for vehicle code fine and forfeiture revenues and related public safety expenditures. Streets and Road's - This fund accounts for revenues and expenditures received from the Federal. Government, under I.S.T.E.A. and State, Street and Highway Code Sections 2105, 2-106, 2107, and 2107.5. The allocations rnust be spent for street maintenance or repairs; a limited amount may be spent for engineering. Lighting and Landscaping Assessment District - This fund accounts for revenues and expenditures associated with development of the City. Development Services - This fund accounts for revenues and expenditures associated with development _-- of the Citv. Environmental Programs - This fund accounts for environmental fees accumulated to offset the cost of environmental programs budgeted in the General Fund. Recreation - This fund accounts for the City's recreation program revenues and related program. expenditures. Debt Service Fund Library - Santa Clara County lease revenues are accumulated in this fund to pay annual principal and _.. interest payments on the 1976 and 2001 library bonds. _.- Capita] Projects Fund Park Development - This fund accounts for resources used for the acquisition and construction of major capital facilities by the City, primarily the acquisition and construction of various City parks. 69 City of Saratoga Combining Balance Sheet Nonmajor Governmental Funds June 30, 2003 Special Revenue Lighting and Landscaping Local Law Traffic Streets Assessment Enforcement Safety and Roads District ASSETS Cash and investments $ 175,261 $ 218,040 $ 90,559 $ 77,651 Accounts receivable - 26,859 26,802 624 Total assets $ 175,261 $ 244,899 $ "1-17,36"1 $ 78,275 LIABILITIES AND — FUND BALANCES Liabilities: Accounts payable $ - $ 8,317 $ -100,1 10 $ 9,903 Accrued payroll 1,349 - 12,767 1,183 Deposits payable - - - - _ Total liabilities 1,349 8,3"17 112,877 11,086 Fund Balances: Reserved for: Encumbrances - - 668,432 - Debt service - - - - Unreserved,undesignated,reported in: Special revenues funds 173,912 236,582 (663,948) 67,189 Capital projects funds - - - - _ Total fund balances 173,912 236,582 4,484 67,189 Total liabilities and fund balances $ 175,261 $ 244,899 $ 117,361 $ 78,275 70 Debt Capital Special Revenue Service Projects Total Other Development Environmental Park Governmental "- Services Programs Recreation Library- Development Funds - $ -1,315,832 $ 782,787 $ 36,034 $ 831,541 $ '15,569 $ 3,543,274 66,842 64,836 186 4,808 - -190,957 $ 1,382,674 $ 847,623 $ 36,220 $ 836,349 $ 15,569 $ 3,734,231 $ 34,233 $ 49,282 $ 11,088 $ - $ - $ 212,933 21.,519 1,839 15,746 - 54,403 - - 7,298 - - 7,298 55,752 51,121 34,132 - 274,634 - -14,921 16,882 - - 700,235 - - - 836,349 - 836,349 1,326,922 781,581 (1.4,794) - - 1,907,444 - - - - 15,569 15,569 _-_ L326,922 796,502 2,088 836,349 -15,569 3,459,5)97 $ 1,382,674 $ 847,623 $ 36,220 $ 836,349 $ 15,569 $ 3,734,231 71 City of Saratoga Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nomnajor Governmental Funds For the year ended June 30, 2003 Special Revenue - Lighting and Landscaping Local Law Traffic Streets Assessment - Enforcement Safety and Roads District REVENUES: - Property taxes $ - $ $ - $ 124,065 Special assessments - - 103,448 - Intergovernmental-State 100,000 - 982,343 - Intergovermnental-Federal - - 451,545 - Intergovernmental-other - - - - _ Use of money and property 6,371 5,283 61,503 2,241 Current service charges - 136,057 180,571 - Total revenues 106,371 141,340 1,675,962 229,754 EXPENDITURES: Current: Public safety 65,781 14,535 - Environmental services - - 54,139 - Public works - - 2,442,576 287,261 Community services - - - - Development services - - - Capital outlay - - 6,225 - Debt service: Principal - - - -Interest and fiscal charges - - - - Total expenditures 65,781 14,535 2,502 940 287,261 REVENUES OVER(UNDER)EXPENDITURES 40,590 126,805 (826,978) (57,507) OTHER FINANCING SOURCES (USES): ` Transfers in - - 715,998 - Transfers out - - (2,006,000) - Total other financing sources(uses) - - (1,290,002) - Net change in fund balances 40,590 126,805 (2,116,980) (57,507) - FUND BALANCES: Beginning of year 133,322 109,777 2,121,464 124,696 Land of year $ 173,912 $ 236,582 $ 4,484 $ 67,189 72 Debt Capital Special Revenue Service Projects - Total Other Development Environmental Park Governmental Services Programs Recreation Library Development Funds - $ $ - $ - $ 1,1.26,029 $ - $ 1,250,094 - - - - 103,448 16,478 - - - 1,098,821 _._ - _ _ - 451,545 - - - 82,800 82,800 55,755 26,670 -145,952 - - 303,775 1,662,995 520,976 793,839 - 3,294,438 1,718,750 564,124 939,791 1,126,029 82,800 6,584,921 - - - - 80,316 590,204 - - 644,343 - - - 2,729,837 - - 1,506,538 - '1,506,538 1,982,227 - - - 1,982,227 6,228 - 9,690 - - 22,143 - - 60,000 - 60,000 - 783,756 783,756 1,988,455 590,204 -1,5-16,228 843,756 7,809,160 _._ (269,705) (26,080) (576,437) 282,273 82,800 (1,224,239) 578,525 - 1,294,523 (120,000) - - (546,719) (2,672,719) _._ (120,000) - 578,525 (546,719) (1,378,196) (389,705) (26,080) 2,088 282,273 (463,919) (2,602,435) -1,716,627 822,582 - 554,070 479,488 6,062,032 $ 1,326,922 $ 796,502 $ 2,088 $ 836,349 $ 15,569 $ 3,459,597 73 City of Saratoga Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Library Expansion Capital Projects Fund For the year ended June 30, 2003 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) FUND BALANCES-BEGINNING $ 9,254,359 $ 9,254,359 $ 9,297,494 $ 43,135 RESOURCES(INFLOWS): Use of money and property - - 13,802 13,802 Amount available for appropriation 9,254,359 9,254,359 9,311,296 56,937 CHARGES TO APPROPRIATIONS (OUTFLOWS): Capital outlay 7,957,470 8,874,359 7,766,47-1 1,107,888 -- Total charges to appropriations 7,957,470 8,874,359 7,766,471 1,107,888 FUND BALANCES-ENDING $ 1,296,889 $ 380,000 $ 1,544,825 $ 1,164,825 74 City of Saratoga Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Local Law Enforcement Special Revenue Fund - For the year ended June 30, 2003 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) FUND BALANCES-BEGINNING $ 137,114 $ 133,322 $ 133,322 $ - RESOURCES(INFLOWS): Intergovernmental-State "100,000 100,000 100,000 - Use of money and property 6,855 6,855 6,371 (484) Amount available for appropriation 243,969 240,177 239,693 (484) CHARGES TO APPROPRIATIONS(OUTFLOWS): Current: Public.safety 65,493 65,493 65,781 (288) Total charges to appropriations 65,493 65,493 65,781. (288) FUND BALANCES-ENDING $ 178,476 $ 174,684 $ 173,912 $ (772) 75 City of Saratoga Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Traffic Safety Special Revenue Fund For the year ended June 30, 2003 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) _ FUND BALANCES-BEGINNING $ - $ 109,777 $ 109,777 $ - RESOURCES(INFLOWS): _ Use of money and property - - 5,283 5,283 Current service charges 129,100 129,100 136,057 6,957 Amount available for appropriation 129,100 238,877 251,117 12,240 CHARGES TO APPROPRIATIONS(OUTFLOWS): Current: Public safety 31,698 33,448 14,535 18,913 Total charges to appropriations 31,698 33,448 14,535 18,913 FUND BALANCES-ENDING $ 97,402 $ 205,429 $ 236,582 $ 3.1,153 76 City of Saratoga Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Streets and Roads Special Revenue Fund For the year ended June 30, 2003 Variance with Final Budget -- Budgeted Amounts Actual Positive Original Final .Amounts (Negative) FUND BALANCES-BEGINNING $ 2,228,603 $ 2,121,464 $ 2,121,464 $ RESOURCES (INFLOWS): Intergovernmental-State 1,274,912 1,004,662 982,343 (22,319) Intergovernmental-Federal 252,705 252,705 45-1,545 -198,840 Use of money and property - 44,000 61,503 17,503 Current service charges 67,333 72,333 180,571 108,238 Transfers in 1,268,360 1,719,53"1 715,998 ("1,003,533) Amount available for appropriation 5,091,913 5,214,695 4,513,424 (701,271) CHARGES TO APPROPRIATIONS(OUTFLOWS): Cu rren t: Environmental services 33,761 33,761 54,139 (20,378) Public works 3,048,152 3,174,934• 2,442,576 732,358 Capital outlay - 6,225 (6,225) Transfers out - 2,006,000 2,006,000 - Total charges to appropriations 3,081,913 5,214,695 4,508,940 705,755 FUND BALANCES-ENDING $ 2,010,000 $ - $ 4,484 $ 4,484 77 City of Saratoga Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Lighting and Landscaping Assessment District Special Revenue Fund For the year ended June 30, 2003 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) FUND BALANCES-BEGINNING $ 96,2"15 $ 124,696 $ 124,696 $ - RESOURCES (INFLOWS): Properly taxes 89,404 89,404 124,065 34,661 Special assessments 10-1,189 101,189 -103,448 2,259 Use of money and property 4,8"10 4,810 2,241 (2,569) Amount available for appropriation 291,618 320,099 354,450 34,35"1 CHARGES TO APPROPRIATIONS(OUTFLOWS): Current: Public works 254,838 288,338 287,261 1,077 �- Total charges to appropriations 254,838 288,338 287,261 1,077 FUND BALANCES-ENDING $ 36,780 $ 3-1,76"1 5 67,189 $ 35,428 78 City of Saratoga Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Development Services Special Revenue Fund - For the year ended June 30, 2003 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) FUND BALANCES-BEGINNING $ 1,697,858 $ 1,7"16,627 $ 1,716,627 $ - RESOURCES (INFLOWS): Use of money and property 84,890 30,000 55,755 25,755 Current service charges 1,298,350 1,284,440 -1,662,995 378,555 Amount available for appropriation 3,081,098 3,031,067 3,435,377 404,310 CHARGES TO APPROPRIATIONS(OUTFLOWS): Current: Development services 1,972,677 1,985,796 1,982,227 3,569 Capital outlay 8,500 8,500 6,228 2,272 l.'ransfers out - '120,000 -120,000 - Total charges to appropriations 1,981,177 2,1"14,296 2,108,455 5,841 FUND BALANCES-ENDING $ 1,099,92"1 $ 916,771 $ 1,326,922 $ 410,151 79 City of Saratoga Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Environmental Programs Special Revenue Fund For the year ended June 30, 2003 Variance with Final Budget Budgeted ,Amounts Actual Positive Original Final Amounts (Negative) FUND BALANCES-BEGINNING $ 487,886 $ 822,582 $ 822,582 $ - RESOURCES(INFLOWS): _ Intergovernmental-State 30,000 23,444 16,478 (6,966) Use of money and property 24,394 20,000 26,670 6,670 Current service charges 535,000 544,008 520,976 (23,032) Amount available for appropriation -1,077,280 "1,410,034 -1,386,706 (23,328) CHARGES TO APPROPRIATIONS(OUTFLOWS): Current: Environmental services 708,667 744,859 590,204 154,655 Total charges to appropriations 708,667 744,859 590,204 154,655 FUND BALANCES-ENDING $ 368,613 $ 665,175 $ 796,502 $ 131,327 80 City of Saratoga Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Recreation Special Revenue Fund - For the year ended June 30, 2003 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) FUND BALANCES-BEGINNING $ - $ - $ $ - RESOURCES (INFLOWS): Use of money and property 150,000 150,000 145,952 (4,048) Current service charges 776,000 8-16,000 793,839 (22,161) Transfers in 630,978 625,978 578,525 (47,453) Amount available for,appropriation 1,556,978 -1,591,978 1,518,3-16 (73,662) CHARGES TO APPROPRIATIONS(OUTFLOWS): Current: Community services 1,531,978 1,567,978 1,506,538 61,440 Capital outlay 25,000 25,000 9,690 15,310 Total charges to appropriations 1,556,978 1,592,978 1,5-16,228 76,750 FUND BALANCES-ENDING $ - $ (1,000) $ 2,089 $ 3,088 81 City of Saratoga Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Library Debt Service Fund For the year ended June 30, 2003 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) FUND BALANCES-BEGINNING $ 16,505 $ 554,076 $ 554,076 $ - RESOURCES (INFLOWS): _ Property taxes 1,4"12,260 1,412,260 1,126,029 (286,231) Amount available for appropriation 1,428,765 1,966,336 "1,680,"105 (286,231) CHARGES TO APPROPRIATIONS(OUTFLOWS): Debt service: Principal 60,000 60,000 60,000 - Interest and fiscal charges 785,760 735,760 783,756 2,004 Total charges to appropriations 845,760 845,760 843,756 2,004 FUND BALANCES-ENDING $ 583,005 $ 1,120,576 $ 836,349 $ (284,227) 82 City of Saratoga Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Park Development Capital Projects Fund For the year ended June 30,2003 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) FUND BALANCES-BEGINNING $ 479,488 $ 479,488 $ 479,488 $ - RESOURCES(INFLOWS): Current service charges 103,500 103,500 82,800 (20,700) Amount available for appropriation 582,988 582,988 562,288 (20,700) CHARGES TO APPROPRIATIONS (OUTFLOWS): Transfers out 546,719 546,719 546,719 - _._ Total charges to appropriations 546,719 546,719 546,719 - FUND BALANCES-ENDING $ 36,269 $ 36,269 $ 15,569 $ (20,700) 83 yD Al �- 84 FIDUCIARY FUND FINANCIAL STATEMENTS Agency Funds -- Cable T.V. Trust -This fund accounts for funds of the Saratoga Community Access T.V. Foundation. _ Assessment Districts Bonds - This fund accumulates the monies for payment of bonds for Village Parking Districts #2 and #3, the Leonard Road Improvement District and the Saratoga Public Financing Authority which are financed by assessments placed on the County tax roll. Deposits - This fund accounts for deposits paid to the City which are subject to refund or held solely in custodial capacity. 85 City of Saratoga Combining Statement of Fiduciary Net Assets Agency Funds _ June 30, 2003 Total Cable'[W. Assessment Agency Trust District Bonds Deposits Funds ASSETS _ Crash and investments $ 167,428 $ 34,822 $ 584,051 $ 786,301 Restricted cash and investments - 330,109 - 330,109 Accounts receivable - 42,946 - 42,946 _ Total assets $ 167,428 $ 407,877 $ 584,051 $ 1,159,356 LIABILITIES Accounts payable $ - $ - $ 1,214 $ 1,214 Deposits payable 167,428 - 582,837 750,265 Payable to bondholders - 407,877 - 407,877 Total liabilities $ 167,428 $ 407,877 $ 584,05"1 $ 1,159,356 _ 86 City of Saratoga Combining Statement of Changes in Assets and Liabilities Agency Funds For the year ended June 30, 2003 Balance Balance Jule 1,2002 Additions Deductions June 30,2003 Cable T.V.Trust Assets: Cash and investments $ 120,133 $ 66,525 $ (19,230) $ 167,428 Liabilities: Deposits payable $ 120,133 $ 66,525 $ (19,230) $ 167,428 Assessment District Bonds Assets: Cash and investments $ -17,880 $ 29,658 $ (12,7"16) $ 34,822 Restricted cash and investments 325,228 4,88"1 330,109 _ Accounts receivable. 42,946 - 42,946 Total assets $ 386,054 $ 34,539 $ (12,716) $ 407,877 Liabilities: Accounts payable $ 10 $ 3,573 $ (3,583) $ - Due to assessment district bondholders 386,044 34,539 (12,706) 407,877 _ Total liabilities $ 386,054 $ 38,112. $ (16,289) $ 407,877 Deposits Assets: Cash and investments $ 596,951 $ 197,900 $ (210,800) $ 584,051 Liabilities: Accounts payable $ 2,000 $ 105,238 $ (106,024) $ -1,214 Deposits payable 594,951 19"11950 (204,064.) 582,837 Total liabilities $ 596,95"1 $ 297,188 $ (310,088) $ 584,051 Total Agency Funds Assets: Cash and investments $ 734,964 $ 294,083 $ (242,746) $ 786,301 Restricted crash and investments 325,228 4,881 - 330,109 Accounts receivable 42,946 - - 42,946 Total assets $ 1,103,138 $ 298,964 $ (242,746) $ 1,159,356 Liabilities: Accounts payable $ 2,010 $ 108,811 $ (109,607) $ 1,214 Due to assessment district bondholders 386,044 34,539 (12,706) 407,877 Deposits payable 715,084 258,475 (223,294) 750,265 Total liabilities $ 1,103,138 $ 401,825 $ (345,607) $ 1,159,356 87 • :f_y ..f t„ 88 .q.e 90 City of Saratoga Capital Assets Used in the Operation of Governmental Funds Comparative Schedules by Source June 30, 2003 and 2002 2003 2002 GOVERNMENTAL FUNDS CAPITAL ASSETS: Land and land improvements $ 4,830,840 $ 4,830,840 Buildings and structures 4,860,089 4,851,752 IVlachinery and equipment 1,973,716 1,731,302 Infrastructure. 98,829,447 98,829,447 Construction in progress 22,924,027 8,988,339 Total governmental funds capital assets 133,418,119 1-19,231,680 Accumulated depreciation (14,693,195) (13,126,264) Total governmental funds capital assets,net $ 118,724,924 $ 106,105,416 INVESTMENTS IN GOVERNMENTAL FUNDS CAPITAI.ASSETS BY SOURCE: (leneraI Fund $ 109,584,004 $ '109,355,397 Special revenue funds 1,553,469 1,529,826 Capital projects funds 22,229,231 8,295,042 Donations 51,415 51,4-15 Accumulated depreciation (14,693,195) (13,126,264) Total governmental funds capital assets $ 118,724,924 $ -106,105,416 91 City of Saratoga Capital Assets Used in the Operation of Governmental Funds Schedule by Function and Activity June 30, 2003 Land and band Buildings Machinery ' Improvements and Structures and Equipment Infrastructure FUNCTION AND ACTIVITY _ General and intergovernmental services: Management services $ - $ 240,458 $ 97,387 $ - Administrative services - 167,586 141,777 Intergovernmental services 118,184 3,096,786 79,8"18 - Total general and _ intergovernmental services 118,184 3,504,830 3-18,982 - Public safety: Police services - - 70,306 Code enforcement - - 69,412 'total public safety - - 139,718 - Public works: Streets and sidewalks 134,696 30,628 677,702 98,829,447 Parks/open space 2,529,529 92,622 468,094 - Total public works 2,664,225 123,250 1,145,796 98,829,447 Community services 305,967 -1,232,009 272,381 - Community development services -1,742,464 - 96,839 - Total governmental funds capital assets 4,830,840 4,860,089 1,973,716 98,829,447 - Accumulated depreciation - (1,885,005) (1,226,321) (11,581,869) Total governmental funds capital assets,net $ 4,830,840 $ 2,975,084 $ 747,395 $ 87,247,578 92 _ Construction in Progress 'Total $ 3-1,172 $ 369,017 - 309,363 - 3,294,788 31,172 3,973,168 - 70,306 - - 69,4-12 139,718 971,203 -100,643,676 - 3,090,245 97-1,203 103,733,92-1 7,545,847 9,356,204 - '14,375,805 -16,215,108 22,924,027 1 S3,418,1 19 - (14,693,195) $ 22,924,027 $ 118,724,924 93 City of Saratoga Capital Assets Used in the Operation of Governmental Funds Schedule of Changes by Function and Activity For the year ended June 30, 2003 Governmental Governmental Funds Capital Funds Capital Assets Assets July-1,2002 Additions Deletions June 30,2003 FUNCTION AND ACTIVITY General and intergovernmental services: _ Management services $ 303,708 $ 65,309 $ - $ 369,017 Administrative services 309,363 - - 309,363 Intergovernmental services 3,294,788 - - 3,294,788 Total general and intergovernmental services 3,907,859 65,309 - 3,973,168 Public safety: Police services 70,306 - - 70,306 Code enforcement 57,796 11,616 - 69,412 Total public safety 128,102 11,616 - 139,7"18 Public works: Streets and sidewalks 100,060,646 583,030 - 100,643,676 Parks/open space 3,089,073 1,172 - 3,090,245 Total public works 103,149,719 584,202 - 103,733,921 Community services 3,680,998 5,675,206 - 9,356,204 Community development services 8,365,002 7,850,106 - 16,215,108 Total governmental funds capital assets "1-19,231,680 14,186,439 - 133,4"18,119 Accumulated depreciation (13,126,264) (1,566,931) - (14,693,195) _ Total governmental funds capital assets,net $ 106,105,416 $ 12,619,508 $ - $ 118,724,924 94 _ City of Saratoga Government-Wide Expense - By Function $4,500,000 $4,000,000 ,53,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 — $1,000,000 - $500,000 - 2002 2003 ❑General/Inter-Governmental ■Public Safety ❑Environmental Services 0PuNic Works ■Community Services OConununity Development Services _ O Interest on Long-Tenn Debt O Depreciation Expense Community Interest on General/Inter- Public Environmental Public Community Development Long-Term Depreciation Fiscal Year Governmental Safety Services Works Services Services Debt Expense Total — 2002 $ 2,005,244 $ 3,653,114 $ 650,184 $ 4,476,568 $ 2,120,523 $ 2,025,887 $ 919,625 $ 1,529,505 $17,380,650 2003 3,218,231 3,512,550 647,935 3,874,717 1,975,659 2,086,160 782,506 1,566,931 -17,664,689 Note: The fiscal year ended June 30,2002 was the first year that the City implemented GASB Statement No.34. Source City of.Saratoga Annual Financial Report 96 _ City of Saratoga Government-Wide Revenues - By Sources $8,000,000 i $7,000,000 s $6,000,000 $5,000,000 $'4,0110,000 i $3,000,000 $2,O00,000 S 1,000,000 2002 2003 _ ❑Charges for Services ■Operating Grants and Contributions ■Capital Grants and Contributions ❑Taxes ■Motor Vehicle In-lieu Fees ❑Investment Earnings ■Miscellaneous J Program Revenues General Revenues Charges Operating Capital Motor for Grants and Grants and Vehicle Investment Fiscal Year Services Contributions Contributions Taxes In-lieu Fees Earnings Miscellaneous Total 2002 $ 5,972,829 $ 1,901,648 $ - $ 7,298,947 $ 1,807,802 $ 878,734 $ 754-,252 $ 18,614,212 2003 5,796,502 1,901,933 - 7,952,843 1,896,606 246,671 315,165 18,109,720 Note: The fiscal year ended June 30,2002 was the first year that the City implemented GASB Statement No.34. Source: City of Saratoga Annual Financial Report 97 City of Saratoga General Fund Revenues - By Source Last ten fiscal years $3,500,000 $3,000,000 r $2,500,000 $2,000,000 I $1,500,000 $1,000,000 i l $500,000 1994 1995 1996 1997 1998 1999 2()O0 2001 2002 2003 ■Property Taxes ❑Other Local Taxes ❑tntergovernmental ❑Franchise Fees 0 Use of Money and Property ❑Current Service Charges Current Properly Other Inter- Franchise Use of Money Services Fiscal Year 'faxes Local Taxes governmental Fees and Property Charges Total 1994 $ 1,045,975 $ 2,338,826 $ 1,029,463 $ 758,611 $ 183,061 $ 1,587,425 $ 6,943,361 1995 1,221,096 2,434,070 1,064,052 707,822 272,425 1,996,874 7,696,339 1996 1,546,162 2,965,069 1,152,968 669,467 343,295 2,036,854 8,713,815 1997 2,142,454 2,424,825 1,301,443 685,083 665,966 2,552,050 9,771,821 1998 1,664,144 2,202,826 1,392,591 772,258 457,382 2,037,182 8,526,383 _- 1999 1,864,766 2,328,071 1,680,670 777,560 472,198 1,705,692 8,828,957 2000 2,790,294 2,718,358 1,623,583 886,618 630,833 2,005,183 10,654,869 2001 2,065,051 2,938,209 -1,725,765 876,652 930,430 '1,962,122 10,498,229 2002 2,772,021 2,067,288 1,901,892 1,010,609 2-16,562 2,546,937 10,515,309 2003 3,400,228 2,138,618 1,947,205 932,808 242,228 2,602,924 -1-1,264,011 Note: Year 2003 property tax receipts include one time Special Assessment. Source: City of Saratoga Annual Financial Report ` 98 City of Saratoga General Fund Expenditures - By Function Last ten fiscal years $4,000,000 $3,500,000 - $3,000,000 - - $2,500,000 $2,000,000 _ $1,500,000 ------ 1 $1,000,000 $500,000 - 1994 1995 t996 1997 1998 1999 2000 2001 2002 2003 ■Public Safety ❑Environmental Services ❑Public Works ❑Community Service&Support 0 General/Intragovernment ❑Capital Outlay General/ Inter- Public Development Public Community Capital Fiscal Year governmental Safety Services Works Services Outlay Total 1994 $ 1,515,.310 $ 2,119,313 $ 801,058 $ 1,258,065 $ 209,890 $ 240,882 $ 6,144,5-18 1995 -1,698,219 2,411,207 907,232 2,587,008 234,788 531,607 8,370,061 1996 1,819,188 2,322,425 1,098,931 1,444,155 -177,837 154,695 7,017,23-1 1997 279,737 2,616,973 1,616,532 2,69-7,413 349,019 280,500 7,840,174 1998 1,074,696 2,598,233 65,502 87-7,204 179,928 226,310 5,021,873 1999 1,754,995 2,581,940 30,947 712,822 72,880 212,223 5,365,807 2000 1,404,.530 2,761,741 -129,849 1,113,870 -172,549 578,612 6,161,151 2001 1,574,597 3,062,160 140,883 1,349,838 262,696 651,814 7,04.1,988 2002 1,943,301 3,570,910 -1-1-1,520 1,376,334 465,241 614,171 8,083,477 2003 3,168,878 3,431,59-1 85,994 1,104,505 343,864 228,607 8,363,439 Source: City of Saratoga Annual Financial Report 99 City of Saratoga Property Tax Levies and Collections (General Fund) Last ten fiscal years $4,000,000 $7,000,000,000 $3,500,000 $6,000,000,000 $3,000,000 $5,000,000,000 $2,500,000 $4,000,000,000 $2,000,000 _ $3,000,000,000 $1,500,000 1 $2,000,000,000 $1,000,000 _ $500,000 $1,000,000,000 M N o M M � O N --+►--Tax Levi Property Value — Property Tax Value of Property Fiscal Levies and Subject to Local Year Collections Tax Rate _ -1994 $ 1,045,975 $ 3,181,662,768 1995 1,221,096 3,289,435,553 1996 1,546,162 3,398,224,679 — '1997 2,142,454 3,697,796,46-1 1998 1,664,144 4,029,381,944 '1999 1,864,766 4,432,656,4-16 — 2000 2,790,294 4,823,743,087 2004 2,065,051 5,331,749,683 2002 2,772,021 6,271,461,110 2003 3,400,228 6,489,250,969 Note: Year 2003 property tax receipts include one time Special Assessment. Sources: City of Saratoga Annual Financial Report California Municipal Statistics Inc. R 100 City of Saratoga General Fund Tax Revenue Last ten fiscal years $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,0()0,O00 $ 411 ' 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 [ Utility Users'Tax ■Property'Fa((}) ❑ ❑Sales Tax Other Faxes 1 Fiscal Utility Year User's Tax Property Tax(2) Sales Tax Other Taxes(1) Total 1994 $ 715,239 $ 1,045,975 $ 958,436 S. 665,151 $ 3,384,801 -1995 725,373 1,221,096 872,134 836,563 3,655,166 1996 729,468 1,546,162 896,799 1,338,802 4,5-11,231 1997 312,464 2,142,454 966,900 1,145,461 4,567,279 1998 - 1,664,144 1,057,677 1,145,149 3,866,970 1999 - 1,864,766 979,192 1,348,879 4,1.92,837 2000 - 2,790,294 1,071,122 1,647,236 5,508,652 2001 - 2,065,051 1,255,726 1,682,483 5,003,260 2002 - 2,772,021 1,066,607 1,000,681 4,839,309 2003 - 3,400,228 1,028,329 1,110,289 5,538,846 Notes: (1)Other Taxes include:Transient Occupancy Tax,Real Property Transfer Tax,Construction Tax,Business License Tax. 2002 Statement of Revenues,Expenditures,&Changes in Fund Balance classifies Business License:as a fee associated with activity. For comparative purposes,the inclusion of 2002 Business Licenses would total$1,276,043. (2)Property Tax levy's are remitted in full by Santa Clara County which handles delinquencies and retains all interest and penalties. _. Year 2000 property tax receipts include settlement proceeds,Year 2003 property tax receipts include one time Special Assessment. Source: City of Saratoga Finance Department 101 City of Saratoga Assessed and Estimated Actual Market Value of Taxable Property Last ten fiscal years ~ $7,000,000,000 $6,000,000,000 $5,000,000,000 - $4,000,000,000 $3,000,000,000 i $2,000,000,000 $1,000,000,000 $- 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 13Secured Property ■Unsecured Property Fiscal Secured Unsecured 'Total Estimated Year Property Property Assessed Market 1994 $ 3,153,176,308 $ 28,486,460 $ 3,181,662,768 $ 3,181,662,768 1995 3,26-1,741,964 27,693,589 3,289,435,553 3,289,435,553 1996 3,363,964,334 34,260,345 3,398,224,679 3,398,224,679 _ 1997 3,660,513,753 37,282,708 3,697,796,46"1 3,697,796,461 1998 3,990,741,994 38,639,950 4,029,381,944 4,029,381,944 1999 4,392,456,823 40,199,593 4,432,656,416 4,432,656,416 _. 2000 4,789,325,625 34,417,462 4,823,743,087 4,823,743,087 2001 5,292,676,050 39,073,633 5,331,749,683 5,331,749,683 2002 6,227,826,411 43,634,699 6,271,461,110 6,271,461,110 — 2003 6,441,614,970 47,635,999 6,489,250,969 6,489,250,969 Note: The California Constitution requires properties to be assessed at full market value on the date or purchase but limits — increases in assessed valuation to 2%annually. Source: California Municipal Statistics,Inc. _ 102 City of Saratoga Property Tax Rates (Per $100 of Assessed Valuation) - All Overlapping Governments Last ten fiscal years 1.2000 _ 1.0000 0,8000 ,r 0.6000 .E' >1 0.4000 i 0.2000 low 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 ❑Basic County Wide Levy ■School Districts ❑Special Districts&Other ] i J Fiscal Basic County School Special Districts -- Year Wide Levy Districts and Other 1994 1.0305 - 0.0165 -1995 1.0332 0.0903 0.0180 1996 1.0338 0.1170 0.0147 -1997 1.0365 0.0743 0.0102 1998 1.0412 0.0415 0.0098 1999 1.0405 0.0647 0.0032 2000 1.0343 0.0612 0.0035 2001 1.0380 0.0685 0.0135 2002 1.0388 0.0544 0.0229 2003 1.0412 0.0917 0.02132 Source: California Municipal Statistics Inc. 103 City of Saratoga Special Assessment Billings and Collections Last ten fiscal years $600,000 $500,000 $400,000 $300,000 $200,000 W0,000 Ft , . s =` Y, I.r: OL 1994 1995 1996 1997 "1998 1999 2000 2001 2002 2003 ©Special Assessment _. Special Assessment Fiscal Billings and Year Collections 1994 $ 111,010 1995 88,623 1996 104,292 "1997 83,101 1998 102,164 1999 55,505 2000 157,936 _ 2001 95,973 2002 101,162 2003 574,469 Note: Year 2003 comprises of Lighting and Landscaping and one time special assessment in General Fund Source: City of Saratoga Annual Financial Report "l04 _ City of Saratoga Ratio of General Obligation Bonded Debt to Assessed Value and Bonded Debt Per Capita Last ten fiscal years i $7,000,000,000 _ _ 600 1 $6,000,000,000 500 $5,000,000,000 400 $4,000,000,000 300 $3,000,000,0()0 200 $2,000,000,000 $1,000,000,000 100 I �O OO O N ON � o o � ON O o r-+ e-+ f•I N ON O, O O —t—Assessed Net Bonded Debt Per Capita Net Bonded Fiscal Assessed Bonded Debt --- Year Population Value Debt Per Capita 1994 28,709 $ 3,181,662,768 $ 615,000 2-1 1995 29,576 3,289,435,553 555,000 19 1996 29,579 3,398,224,679 490,000 -17 1997 30,591 3,697,796,461 415,000 14 -1998 31,097 4,029,381,944 340,000 11 1999 31,255 4,432,656,416 265,000 8 2000 3-1,320 4,823,743,087 '185,000 6 2001 29,843 5,331,749,683 -1°5,100,000 506 2002 30,444 6,271,461,110 15,000,000 493 2003 30,482 6,489,250,969 -14,940,000 490 Note: Includes Library General Obligation Bonds only Sources: County of Santa Clara Tax hate and Information Publication California Municipal Statistics Inc. 105 City of Saratoga Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Fund Expenditures - Last ten fiscal years 12.00% 10.00% 8.00% 6.00% 4.00%O I 2.00% 1 :9 0.00% a Ee ik1 1994 1995 1996 1997 1998 1999 2000 � 2001 2002 2003 017eUt Service% Percent of Total Debt Service to Fiscal Total General Fund General Fund Year Principal Interest Debt Service Expenditures Expenditures _. 1994 $ 55,000 $ 36,590 $ 91,590 $ 6,144,518 1,49% -1995 60,000 33,644 93,644 8,370,06-1 1:12% 1996 65,000 30,307 95,307 7,017,231 "1.36% _ 1997 75,000 26,700 -101,700 7,840,174 1.30% '1998 75,000 22,178 97,178 5,02-1,873 1.94% 1999 75,000 18,071 93,071 5,365,807 1.73% 2000 80,000 18,783 98,783 6,16-I,151 1.60% 2001 85,000 9,774 94,774 7,041,988 1.35% _ 2002 99,973 592,462 692,435 8,083,477 8.57% 2003 60,000 783,756 843,756 8,363,439 10.09% Note: Includes General Obligation Bonds Source: City of Saratoga Finance Department _ 106 City of Saratoga Demographic Statistics Cast ten fiscal years 32,000 1,750,000 31,000 1,700,000 30,000 1,650,000 29,000 1,600,000 28,000 1,550,000 27,000 i a 1,500,000 rn o ON cr, CD r, r N CD O O ON o O NO N r N N CD p N N ©City Population] ■County Population Santa Clara City Fiscal City County Population Year Population Population %of County 1999_ 28,709 1,587,768 -1.81% 1995 29,576 1,607,673 1.84°% -1996 29,579 1,6-12,258 -1.83% - 1997 30,591 1,653,061 -1.85% 1998 31,097 1,689,908 1.84% 1999 31,255 1,715,374 1.82% 2000 31,320 1,736,722 1.80% 2001 29,843 1,682,585 1.77% 2002 30,444 1,719,565 1.77% 2003, 30,482 1,729,917 1.76% Source: State of California Department of Finance-Population Research Unit 107 City of Saratoga Property Values, Remodeling and Construction Last ten fiscal years F $7,000,000,000 $7,000,000 `66,000,000,000 $6,000,000 - $5,000,000,000 $5,00(ww $4,000,000,000 $4,000,000 $3,000,000,000 $3,0oo,moo 52,000,000,000 $2,000,000 $1,000,000,000 $1,000,00() 1994 1996 1998 2000 2002 1994 1996 1998 2000 2002 IN Property Valucs ❑Residential Remodeling&Construction $7,000,000 $500,000,00[1 $450,000,000 t S6,000,000 $400,000,000 S5,000,000 $350,000,000 $4,000,000 $300,000,000 $250,000,000 $3,000,000 $200,000,000 $2,000,000 $150,000,000 $100,000,000 $1,000,01)0 $50,000,000 xr a 1994 1996 1998 2000 2002 1994 1996 1998 2000 2002 17 Commerical Remodeling&Construction 0 Bank Deposits Commercial Remodeling Residential Remodeling and Construction and Construction Fiscal Property Number Number Bank Year Values of Permits Value of Permits Value Deposits 1994 $ 3,-181,662,768 94 $ 1,509,805 2,653 $ 23,020,867 $ 304,441,000 1995 3,289,224,679 57 1,147,719 3,194 35,922,169 304,179,000 1996 3,398,224,679 69 1,171,533 2,535 66,013,893 331,014,000 1997 3,697,796,461 52 843,020 1,834 44,982,977 343,982,200 _ 1998 4,029,381,944 47 5,300,593 1,844 48,230,194 376,130,000 1999 4,432,656,4-16 66 6,383,068 1,916 66,218,156 391,733,000 2000 4,823,743,087 57 4,362,875 1,960 65,901,107 446,758,000 _ 2001 5,331,749,683 61 1,438,538 1,63-1 68,500,341 469,940,000 2002 6,271,461,1-10 42 1,405,295 1,685 53,474,165 446,251,000 2003 6,489,250,969 4-1 987,768 -1,346 82,162,747 N/A — Source: City of Saratoga Finance Department Bank deposits from Findley Reports and Sheshenoff Information Services 108 City of Saratoga Computation of Legal Debt Margin June 30, 2003 Assessed value $ 6,489,250,969 Bonded debt limit(15%of assessed value) $ 973,387,645 Amount of debt subject to limit: 'rotal long-term debt 14,940,000 Legal debt margin $ 988,327,645 Source: City of Saratoga Finance Department 109 CiltV of Saratoga Computation of Direct and Overlapping Debt June 30, 2003 Percentage Applicable Amount Applicable to to City of Saratoga City of Saratoga DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Santa Clara County Flood Control and Water Conservation District,Zone NC-1 11.988% $ 25,774 Santa Clara County Flood Control and Water Conservation District,Zone W-1 3.7300 262,592 _ Foothill-De Anza Community College District 1.7410 1,777,375 Campbell Union High School District 5.8740 3,134,808 Fremont Union High School District 3.5450 4,779,546 Los Gatos Joint Union I ligh School District 40.7520 29,954,758 Campbell Union School District 7.2840 4,643,427 Cupertino Union School District 6.2950 7,861,168 _ Moreland School District 13.2710 6,178,887 Saratoga Union School District 85,7630 44,768,494 Saratoga Fire Protection District 97.5360 5,763,146 _ City of Saratoga 100.0000 14,940,000 City of Saratoga 1915 Act Bonds 100.0000 360,000 Total Gross Direct And Overlapping Tax And Assessment Debt 124,469,975 _ Less: Santa Clara County FC and WCD,'Lone NC-1(100% self-supporting) (25,774) Total Net Direct And Overlapping Tax And Assessment Debt $ 124,444,201 DIRECT AND OVERLAPPING GENEItAL FUND OBLIGATION DEBT: Santa Clara County General Fund Obligations 3.56% S 21,609,595 Santa Clara County Board of Education Certificates of Participation 3.563 677,683 _ Foothill-DeAnza Community College:District Certificates of Participation 1.71 451,782 West Valley Community College District Certificates of Participation 10.911 2,701,564 Los Gatos-Saratoga Joint Union High School District Certificates of Participation 40.752 1,907,194 Cupertino Union School District Certificates of Participation 6.295 463,627 Moreland School District Certificates of Participation 13.271 771,045 Saratoga Union School District Certificates of Participation 86.145 6,891,600 Midpeninsula Regional Open Space Park District General Fund Obligations 6.251 6,758,280 Santa Clara Valley Water District Certificates of Participation 3.563 7,256,762 Santa Clara County Central Fire District Certificates of Participation 14.489 19,515 _ Total Direct And Overlapping General Fund Obligation Debt $ 49,508,647 Gross Combined Total Debt $ 173,978,622 Net Combined Total Debt 173,952,848 {7) (1) Excludes tax and revenue anticipation notes,revenue,mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. _ Ratios to Assessed Valuation: Direct Debt ($14,900,000) 0.21'. _ Total Gross Direct and Overlapping Tax and Assessment Debt 1.92% Total Net Direct and Overlapping,rax and Assessment Debt 1.92% Gross Combined Total Debt 2.68% Net Combined Total Debt 2.68% Source:California Municipal Statistics,inc. "I 10 City of Saratoga Principal Taxpayers June 30, 2003 Percent of Total Assessee Use Assessed Value Assessed Value Saratoga Office Center Partners LLC Office Building $ 28,000,033 0.43% - Navico Corporation Residential Properties 21,635,160 0.34% San Jose Water Works Water Company 1.4,002,453 0.22% Michael T.and Salvatore P. LaBarbera Shopping Center 12,648,000 0.20% Sobrato Construction Corporation Vacant 1.1,730,000 0.18% 1 layfield House LLC Residential Properties 10,761,805 0.17% John and Karen Chapman Single Family Residence 10,415,700 0.16% David J.and Terri F. Morrison Office Building 9,238,305 0.14% William Band Marilin I.Bean Single Family Residence 9,224,514 0.111% T Argonaut Associates,LLC Commercial 8,585,519 0.13% David L. House. Single Family Residence 8,425,516 0.13% S.and M.alini Srinivasan Single Family Residence 8,248,800 0.13% _ Public Storage Props IX, Inc. Warehousing 8,209,133 0.13% Howell&McNeil Development, LLC Single Family Residence 8,181,000 0.13% Paul L.and Helga A. I lulme Single Family Residence 7,466,572 0.12% - Classics at Azule Crossing, LP Residential Properties 7,367,340 0.11% Edward and Deloise A.Jordan Single Family Residence 5,939,406 0.09% Stephen J. Luczo Single Family Residence 5,170,788 0.08% - Peter and June Cartwright Single Family Residence 5,155,480 0.08% James S.and Lynda J.Morley Single Family Residence 5,020,348 0.08% Total $ 205,425,872 3.19% Total assessed valuation $ 6,441,614,970 Source:California Municipal Statistics,Inc. 111 City of Saratoga Miscellaneous Statistics June 30, 2003 - Date of Incorporation — Form of Government Council-Manager Employees: Public Safety 1 City manger's office 5 Recreation 10 _ Public works/ maintenance 22 Community development 12 Administrative services 9 Total employees 59 Area -12,25 square miles Miles of Streets 150 137 public/13 private — Length of Storm Drains 45 miles Fire Protection: Saratoga Fire District: Number of stations I Number of firefighters 24 Number of reserve firefighters 15-20 Central Fire District: Number of stations 2 Number of firefighters -I8 — Number of reserve firefighters 40 Police Protection: Number of stations -1 —' Number of police officers 76 Number of support personnel 6 Water Utility: — San Jose Water Company: Number of meters 10,121 Average daily consumption 792 gallons per household Length of water mains 133 miles Length of storm drains 45 miles Sewer: West Valley Sanitation District: Number of connections 8,549 Length of sewer lines -123 miles — Cu pertino Sanitation District: Number of connections 2,100 Length of sewer lines 36 miles -- Culture and Recreation: Parks -15 Acres in parks 81 acres Taxable Sales $ 1()2,832,9o0 Registered Voters 18,835 Population 30,482 Sources: Various City records 112