HomeMy WebLinkAboutACFR - Fiscal Year 2004 05 (PDF) �R
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City
of Saratoga
Council Chamber/Civic Theater
Comprehensive Annual
Financial Report
For the Fiscal Year Ending
June 30, 2005
City of Saratoga
Comprehensive Annual Financial Report
For the year ended June 30, 2005
Table of Contents
Pale
Introductory Section
Tableof Contents.........................................................................................................................................................i
Letterof Transmittal..................................................................................................................................................v
GFOA Certificate of Achievement for Excellence in Financial Reporting........................................................ix
PrincipalOfficials of the City....................................................................................................................................x
OrganizationChart....................................................................................................................................................xi
Financial Section
IndependentAuditors' Report................................................................................................................................1
Management's Discussion and Analysis (Required Supplementary Information) .....................................3
Basic Financial Statements:
Government-Wide Financial Statements.......................................................................................................15
Statementof Net Assets..............................................................................................................................17
Statement of Activities and Changes in Net Assets................................................................................18
FundFinancial Statements...............................................................................................................................21
Governmental Funds:
BalanceSheet................................................................................................................................................24
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Assets..........................................................................26
Statement of Revenues, Expenditures and Changes in Fund Balances...............................................27
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures and Changes in Fund Balances to the Government-Wide
Statement of Activities and Changes in Net Assets.........................................................................29
Fiduciary Funds:
Statement of Fiduciary Net Assets............................................................................................................32
Index to Notes to the Basis Financial Statements........................................................................................33
Notes to the Basic Financial Statements.......................................................................................................35
City of Saratoga
Comprehensive Annual Financial Report
For the year ended June 30, 2005
Table of Contents, Continued
Page
Financial Section, Continued
Required Supplementary Information............................................................................................................57
BudgetaryInformation...............................................................................................................................58
Modified Approach for City Streets Infrastructure Capital Assets......................................................61
DefinedPension Plan..................................................................................................................................63
Supplementary Information:
Schedule of Revenues,Expenditures and Changes in Fund Balances-Budget and Actual:
LibraryExpansion Fund.............................................................................................................................67
Non-Major Governmental Funds....................................................................................................................69
CombiningBalance Sheet...........................................................................................................................71
Combining Statement of Revenues, Expenditures and Changes in Fund Balances..........................72
Schedule of Revenues,Expenditures and Changes in Fund Balances-Budget and Actual:
Local Law Enforcement Special Revenue Fund...............................................................................73
Lighting and Landscaping Assessment District Special Revenue Fund.......................................74
LibraryDebt Service Fund...................................................................................................................75
FiduciaryFunds..................................................................................................................................................77
Combining Statement of Fiduciary Net Assets-Agency Funds..........................................................78
Combining Statement of Changes in Assets and Liabilities-Agency Funds....................................79
Capital Assets Used in the Operation of Governmental Funds .................................................................81
Comparative Schedules by Source............................................................................................................82
Schedule by Function and Activity...........................................................................................................86
Schedule of Changes by Function and Activity......................................................................................84
Statistical Section (Unaudited)
Government-Wide Information:
Government-Wide Expenses by Function......................................................................................................86
Government-Wide Revenues...........................................................................................................................87
City of Saratoga
Comprehensive Annual Financial Report
For the year ended June 30, 2005
Table of Contents, Continued
Page
Statistical Section (Unaudited)
Fund Information:
General Fund Revenues-By Source-Last Ten Fiscal Years......................................................................88
General Fund Expenditures-By Function-Last Ten Fiscal Years............................................................89
Property Tax Levies and Collections-Last Ten Fiscal Years......................................................................90
General Fund Tax Revenue-Last Ten Fiscal Years.....................................................................................91
Assessed and Estimated Actual Value of Taxable Property-
LastTen Fiscal Years...................................................................................................................................92
Property Tax Rates (Per$100 of Assessed Valuation) -All Overlapping Governments-
LastTen Fiscal Years...................................................................................................................................93
Special Assessment Billings and Collections-Last Ten Fiscal Years ........................................................94
Ratio of General Obligation Bonded to Assessed Debt to Assessed Value and
Bonded Debt Per Capita-Last Ten Fiscal Years....................................................................................95
Ratio of Annual Debt Service Expenditures for General Bonded Debt to-
Total General Fund Expenditures-Last Ten Fiscal Years....................................................................96
Demographic Statistics-Last Ten Fiscal Years.............................................................................................97
Property Values,Remodeling and Construction-Last Ten Fiscal Years..................................................98
Computation of Legal Debt Margin................................................................................................................99
Computation of Direct and Overlapping Debt............................................................................................100
PrincipalTaxpayers.........................................................................................................................................101
MiscellaneousStatistics...................................................................................................................................102
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November 1,2005
Honorable Mayor and City Council,
The Comprehensive Annual Financial Report(CAFR) of the City of Saratoga for the year ended June 30,2005,is
hereby submitted as mandated by applicable statutes. These statutes require that the City of Saratoga annually
issue a report on its financial position and activity,and that an independent firm of certified public accountants
audit this report. Responsibilities for both the accuracy of the data and the completeness and fairness of the
presentation, including all disclosures, rests with the City's management. The information in this report is
intended to present the reader with a comprehensive view of the City's financial position and the results of its
operations for the fiscal year ending June 30, 2005, along with additional disclosures and financial information
designed to enable the reader to gain an understanding of the City's financial activities.
This report was prepared as prescribed in Governmental Accounting Standards Board (GAAP) Statement No.
34, Basic Financial Statements and Management's Discussions and Analysis for State and Local Governments (GASB
34).This GASB Statement requires that management provide a narrative introduction, overview, and analysis
to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A).
This letter of transmittal is designed to complement MD&A and should be read in conjunction with it.
This Comprehensive Annual Financial Report is organized into three sections:
1. Introductory Section-The introductory section,includes the table of contents,letter of transmittal,a list
of the City of Saratoga's elected officials and City administrative personnel, an organization chart, 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 30,2004.
2. Financial Section - The financial section includes the independent auditors' opinion, management's
discussion and analysis, the basic financial statements, notes to the financial statements, combining
statements of non-major funds, and required supplemental information.
3. Statistical Section-The statistical section includes both financial and non-financial data about the City.
THE REPORTING ENTITY AND ITS SERVICES
The City, incorporated in 1956, is located 40 miles south of San Francisco in the Santa Clara Valley. The City
currently covers a land area of approximately 12 square miles and contains a population of 30,850 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.
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The City provides a limited range of services including public safety, development regulation, public works,
community and recreation activities and events, and general administrative functions. The City supports
privatization and has supplemented its work force through numerous contracts with others. Contracted
services include, but are not limited to, public safety, infrastructure maintenance, engineering services, legal
services and recreation activities.The City is also committed to citizen participation in the evaluation,expansion
and enhancement of services.
Saratoga residents who wish to assist the City Council in forming government policy may do so by serving on
an advisory commission. The commissions all act in an advisory capacity to the City Council, and are
comprised of the Finance Commission, Heritage Preservation Commission, Library Commission, Parks and
Recreation Commission,Planning Commission,Public Safety Commission,and Arts and Youth Commission.
The financial reporting entity (the City) includes all the fund activity of the primary government, as well as all
of its component units. Component units are legally separated entities for which the City is fully accountable.
Blended component units, although legally separate entities, are in substance,part of the City's operations and
data from these units are combined with data of the City. Accordingly, the operations of the Landscaping and
Lighting Assessment District #1 and the agency cash flows and cash balances of the Saratoga Public Finance
Authority are reported in the City's financial statements
ECONOMIC CONDITIONS AND OUTLOOK
For the past three years the City of Saratoga has faced budget shortfalls resulting from cost increases that
outpace revenue growth and funding takeaways by the State of California. The financial structure of Saratoga
with its mostly built-out residential neighborhoods and limited commercial development means that the two
largest sources of revenue for cities—property tax and sales tax—account for a smaller proportion of revenue
than in other cities. Funds taken by the State of California in the past few years represent substantial losses to
Saratoga—$516,100 in 2003-04,$260,100 in 2004-05 and$260,100 in 2005-06.
The passage of Proposition 1A in November 2004 provided some relief to California agencies by specifying how
and when the State can take future funding. The measure also committed to repayment of the borrowed
amounts in 2006-07.
Saratoga's response to the impact of current declining economic conditions over the last few years has been to
implement the traditional course of recessionary budgeting—where budget line items are repeatedly
scrutinized to wring out any expenditures not affecting direct service provision. Corresponding actions have
been taken such as reducing employee expenses by instituting a hiring freeze and layoffs, and limiting salary
and benefit growth. In addition, the City has deferred facility maintenance, under-funded pavement
management, suspended capital equipment and furniture replacement, and halted purchasing of new
computer hardware and software. These short term budgeting strategies have produced unintended results
such as high staff turnover, deteriorating facilities, eventual degradation of our streets and roads, and greater
costs for equipment maintenance—results that undermine the City's long-term ability to function successfully.
"The New Normal" is a term used by the City to represent an end to recessionary budgeting as described above
and a return to normalized City operations around core City priorities while operating under the constraints of
a limited budget.Examples of the types of changes needed include funding for facility maintenance,addressing
employee retention issues, and beginning to once again purchase equipment. Allocation of limited resources,
such as staff time, impacted in several of the City's commissions. The Arts and the Parks & Recreation
Commission have been suspended for at least a year. The Finance Commission has been converted to an ad
hoc basis at the discretion of the Administrative Services Director. The scope of the Public Safety Commission
has been focused on traffic issues and it is now simply the Traffic Safety Commission. The number of meetings
of the Traffic Safety Commission and the Library Commission has been limited to four per year, and the
Finance Commission, Library Commission and the Traffic Safety Commission the number of commissioners
has been reduced from seven to five,to be achieved by attrition. It is anticipated that the implementation of the
New Normal may take several years.
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By focusing on redefining core city priorities, the Council set the stage for making the tradeoffs necessary to
determine which services will continue on an ongoing basis regardless of the state of the economy or state
funding cuts. These tradeoffs are both difficult and essential for the long-term viability of the City of Saratoga.
The City Council accepted the challenge of redefining core city priorities, achieving excellence in services with
fewer resources,and the unenviable responsibility for making permanent reductions in current service levels to
achieve fiscal stability. The Finance Commission was instrumental in recommending a structure for Council's
use in starting the process of defining the core priorities. Council members were ultimately asked to classify
service elements into one of the following three categories:
Class A-Core Priorities, Must Provide: Essential services that members of the community cannot provide for
themselves that they expect the City to provide, and that are critical to the maintenance of the quality of life in
Saratoga.
Class B-Should Provide:Services that make an important contribution to the quality of life in Saratoga but that
are not absolutely necessary.
Class C - Would Like to Provide: Services that enhance the quality of life in Saratoga but that make a less
important contribution than class B services.
In order for the New Normal to be successful,Saratoga residents must be viewed as partners. In that capacity
their understanding of the state of the City's finances must be accurate.
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.
The City has practiced a passive approach to investments and maintains flexibility by managing a pooled cash
system. Under the pooled cash concept, the City invests the cash of all funds with maturities planned to
coincide with cash needs. Idle cash is invested in certain eligible securities as constrained by law and further
limited by the City's investment policy. The goals of the City's investment policy are safety,liquidity and yield.
In addition, the City maintains extensive budgetary controls. The objective of these controls is to ensure
compliance with legal provisions embodied in the annual appropriated budget approved by the City Council.
Activities of the general fund, special revenue funds,capital projects funds and debt service funds are included
in the annual appropriation.
The level of budgetary control (i.e., the level at which expenditures cannot exceed the appropriated amount) is
at the fund level. The City also maintains an encumbrance accounting system as another method of
maintaining budgetary control. Encumbered amounts lapse at year-end with the exception of the Capital
Improvements Projects, which contains multiple-year projects. However, outstanding encumbrances of a
material nature are reviewed by the responsible Department and if appropriate Council is requested to take
action by Resolution to re-appropriated these funds into 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 2004-2005 audit.
Awards. The City was awarded a certificate for its early implementation of GASB #34. Additionally, the
Government Finance Officers Association (GFOA) and the California Society of Municipal Finance Officers
(CSMFO) awarded a Certificate of Achievement to the City for its Excellence in Financial Reporting on the
CAFR for the fiscal year ended June 30, 2004. In order to be awarded a Certificate of Achievement, the City
published an easily readable and efficiently organized financial report. This report satisfied both generally
accepted accounting principles and applicable legal requirements.
The Certificate of Achievement is valid for a period of one year. We believe our current CAFR continues to
meet the Certificate of Achievement program's requirements, and plan on submitting it to the GFOA to
determine its eligibility for another certificate.
Acknowledgements. This CAFR represents the culmination of numerous hours of hard work expended by
many individuals in the 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, 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
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 Michele Braucht
City Manager Administrative Services Director
viii
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Saratoga,
California
For its Comprehensive Aral
Financial Repot
for the Fiscal Year Ended
June 30;20D4
A Certificate of Achievement for Emmilencc in Financial
Reporting is prescnied by the GooemmentFinaaaae Officers
Association of the United Sm a sad Canada to
govemment units and public enV4opee refiTement
systems whose coinpreb=sive annual fmxaeW
reports(CAFRs)achieve the highest
standards in govermr accounting
and financial repo
V
~ Presi&Mt
Executive Dir+cctor
CITY OF SARATOGA
ELECTED OFFICIALS AND
ADMINISTRATIVE PERSONNEL
As of June 30, 2005
CITY COUNCIL
Kathleen King- Mayor
Norman Kline -Vice Mayor
Nick Streit
Aileen Kao
Ann Walton Smith
CITY STAFF
Dave Anderson- City Manager
Lorie Tinfow- Assistant City Manager
Cathleen Boyer - City Clerk
Michele Braucht- Administrative Services Director
John Livingston- Community Development Director
John Cherbone - Public Works Director
Joan Pisani- Recreation Director
CITY ATTORNEY
Richard S. Taylor - Shute, Mihaly &Weinberger
INDEPENDENT AUDITOR
Caporicci & Larson
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4
CAL
Caporicci&Larson
Certified 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 30,2005,which collectively comprise the City's basic financial statements as listed in the
table of contents. These financial statements are the responsibility of the City's management. Our
responsibility is to express 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 supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall 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, 2005, and the respective changes in financial position for the year
then ended in conformity with generally accepted accounting principles in the United States.
As described in Note 1 to the financial statements,the Authority adopted statement of the Governmental
Accounting Standards Board No. 40, Deposit and Investment Risk Disclosure (an amendment of GASB
Statement No. 3).
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 inquiries of management regarding the methods of measurement and
presentation of the Required Supplementary Information. However, we did not audit the information
and express no opinion on it.
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
October 6,2005
Toll Free Ph:(877)862-2200 Toll Free Fact:(866)436-0927
Oakland Orange County Sacramento San Diego
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Oakland,California 94612 Costa Mesa,California 92626 Sacramento,California 95825 San Diego,California 92111
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2
City of Saratoga
Management's Discussion and Analysis
June 30,2005
Introduction
The following provides a narrative overview and analysis of the fiscal operations during the fiscal year ended June 30,
2005 for the City of Saratoga. The Management Discussion and Analysis is to be read in conjunction with the annual
Transmittal Letter and the Basic Financial Statements.
Fiscal Year 2004-2005 Financial Highlights
• The City's total net assets were$118,900,964(reference pg#17).
• Total City revenues, including program and general revenues were $15,744,633 (reference pg #18), while total
expenses were$16,762,918(reference pg#18).
• Governmental program revenues were $6,846,053 (reference pg #18), while Governmental Program expenses
were$16,762,918(reference pg#18).
• General Fund revenues were $12,559,275 (reference pg #27), while General Fund expenditures were $11,067,661
(reference pg#27).
The Basic Financial Statements
The Basic Financial Statements are comprised of City-wide Financial Statements and Fund Financial Statements.These two
sets of financial statements provide the reader two different viewpoints of the City's financial activities and financial
position.
The Government-Wide Financial Statements provide a longer-term view of the City's activities as a whole,and comprise
the Statement of Net Assets and the Statement of Activities. The Statement of Net Assets provides information about the
financial position of the City as a whole, including all its capital assets and long-term liabilities on a full accrual basis,
similar to that used by corporations. The Statement of Activities provides information about all the City's revenues and
all its expenses, also on a full accrual basis,with the emphasis on measuring net revenues and/or expenses for each of
the City's programs. The Statement of Activities explains in detail the change in Net Assets for the fiscal year.
All of the City's activities are required to be grouped into government activities and business-type activities.The entire
amount in the Statement of Net Assets and the Statement of Activities are also required to be separated into
governmental activities or business-type activities in order to provide a summary of these two activities of the City as a
whole. In the case of the City of Saratoga,there are no business-type activities as of June 30,2005.
The Fund Financial Statements report the City's operations in more detail than the governmental-wide statements and
focus primarily on the short-term activities of the City's general fund and other major funds. The Fund Financial
Statements measure only current revenues and expenditures and fund balances; they exclude capital assets, long-term
debt,and other long-term amounts.
Major funds account for the major financial activities of the City and are presented individually,while the activities of
non-major funds are presented in summary, with subordinate schedules presenting the detail for each of these other
funds. Major funds are explained below.
The Government-Wide Financial Statements
The Statement of Net Assets and the Statement of Activities present information about the following:
Governmental activities-All of the City's basic services are considered to be governmental activities,including general
government, community development, public safety, transportation, and, cultural and leisure. These services are
supported by general City revenues such as taxes,and by specific program revenues such as developer fees.
Business-type activities-Enterprise activities are reported here;they would include activities such as water,sewer,and
utilities. Unlike governmental services, these services are supported by charges paid by user based on the amount of
service the use. The City of Saratoga does not have any business-type activities at this time.
Governmental-wide financial statements are prepared on the accrual basis, which means they measure the flow of all
economic resources of the City as a whole.
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City of Saratoga
Management's Discussion and Analysis
June 30,2005
Fund Financial Statements
Fund financial statements provide detailed information about each of the City's most significant funds, called major
funds. The concept of major funds, and the determination of which are major funds, was established by GASB
Statement 34 and replaces the concept of combining like funds and presenting them in total. Instead,each major fund is
presented individually, with all non-major funds summarized and presented only in a single column. Subordinate
schedules present the detail of these non-major funds. Major funds present the major activities of the City for the fiscal
year,and may change from year to year as a result of changes in the pattern of the City's activities.
Governmental fund financial statements are prepared on the modified accrual basis, which means they measure only
current financial resources and uses. Capital assets and other long-lived assets, along with long-term liabilities are not
presented in the governmental fund financial statements. Unlike the government-wide financial statements,
governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on
balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the
City's near-term financing requirements.
Internal Service Funds-the City has no internal service funds at June 30,2005.
Enterprise Funds-the City has no enterprise funds at June 30,2005.
Proprietary Funds-the City has no proprietary funds at June 30,2005.
Fiduciary Funds - These funds are used to account for assets held by the City in a trustee capacity or as an agent for
individuals,private organization,other governmental units,and/or other funds. The City maintains two such funds:
- Community Access Television Trust Fund - acts as a trustee for the CATV Foundation Board for investment
purposes.
- Assessment District Bonds - acts as an agent for bondholders for Village Parking Districts #3 which had it final
fiscal transaction in FY 2004-05, the Leonard Road Improvement District and the Saratoga Public Financing
Authority.
Notes to the Financial Statements
Notes to the Financial Statements provide additional information that is essential to a full understanding of the data
provided in the government-wide and fund financial statements. The notes can be found immediately following the
fund financial statements.
Required Supplementary Information
Required supplementary information follows the basic financial statements and includes a budgetary comparison
schedule that includes reconciliation between the statutory fund balance for budgetary purposes and the fund
balance for the General Fund as presented in the governmental fund financial statements.
Combining and Individual Fund Statements and Schedules
Combining and individual fund statements and schedules provide information for non-major governmental funds,and
special revenue funds.
Government-Wide Financial Analysis
Net assets may serve over time as an indicator of the City's financial position. The total City's assets increased 1% to
$118,900,964 in fiscal year 2004-05 from$117,899,126 in fiscal year 2003-04.
The most significant portion of the City's net assets $105,784,434 or 89% accounts for its investment in capital assets (e.g.,
land, buildings, general government infrastructure, equipment, etc.); less any related debt used to acquire those assets that
are still outstanding. The City uses these capital assets to provide services to the citizens:consequently,these assets are not
available for future spending.
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City of Saratoga
Management's Discussion and Analysis
June 30,2005
$6,788,804 or 6% of the City's net assets is unrestricted and may be used to meet the City's ongoing obligations to citizens
and creditors.
$6,327,726 or 5% of the City's net assets is subjected to external restrictions on how they may be used. Of these restricted net
assets, $5,321,217 is for restricted for capital projects, $539,890 is for repayment of long-term debt and$466,619 is restricted
for housing activities.
Statement of Net Assets
Governmental Activities
2005 2004
Current Assets $ 16,088,742 $ 16,011,868
Capital Assets 120,224,434 118,999,458
Total Assets 136,313,176 135,011,326
Current Liabilities 2,996,918 2,413,492
Long-term Debt 14,415,294 14,698,708
Total Liabilities 17,412,212 17,112,200
Net Assets:
Investment in capital assets,net of related debt 105,784,434 104,304,458
Restricted for Capital Projects 5,321,217 500,937
Restricted for Debt Service 539,890 701,976
Restricted for Special Projects 466,619 84,000
Unrestricted 6,788,804 12,307,755
Total Net Assets $ 118,900,964 $ 117,899,126
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City of Saratoga
Management's Discussion and Analysis
June 30,2005
Statement of Changes in Net Assets
Functions/Programs 2005 2004 Inc/(Dec)
Program Revenues
Charge for Services $ 3,299,708 $ 4,663,950 $ (1,364,242)
Operating Grants&Contributions 1,217,938 953,962 263/976
Capital Grants&Contributions 864,553 1,044,971 (180,418)
Total Program Revenues 5,382,199 6,662,883 (1,280,684)
General Revenues
Property Taxes 4,841,022 3,020,515 1,820,507
Voter Approved Indebtedness Property Taxes 1,174,484 887,385 287,099
Special Assessments 301,670 271,123 30,547
Sales Taxes 1,011,721 895,028 116,693
Local Taxes 1,143,089 1,128,441 14,648
Franchise Fees 994,798 983,620 11,178
Intergovernmental-Motor Vehicle In-Lieu Fees 281,625 1,488,954 (1,207,329)
Intergovernmental-Other Unrestricted 138,595 - 138,595
Use of Money&Property 282,823 228,883 53,940
Other Revenues 192,607 22,971 169,636
Total Revenues 10,362,434 8,926,920 1,435,514
Expenses
General and Intergovernmental Services 4,159,852 3,149,593 1,010,259
Public Safety Services 3,735,516 3,208,027 527,489
Environmental Services 378,539 513,539 (135,000)
Public Works 3,450,245 5,113,509 (1,663,264)
Community Services 1,929,480 1,535,575 393,905
Community Development Services 2,348,447 2,575,621 (227,174)
Interest on Long Term Debt(unallocated) 760,839 771,670 (10,831)
Total Expenses 16,762,918 16,867,534 (104,616)
Increase(Decrease)in Net Assets (1,018,285) (1,277,731)
Net Assets,July 1 117,899,126 118,830,902
Restatement of Capital Asset;Dept&Acc Dep 2,020,123 345,955
Net Assets,June 30 $ 118,900,964 $ 117,899,126
6
City of Saratoga
Management's Discussion and Analysis
June 30,2005
Chart of Increase or(Decrease) in Revenues by Type
Governmental Activities
All Other Revenues
Interest
Vehicle License
Other Tax
Property Tax
Grants
Chrg for svcs
($1,500,000) ($1,000,000) ($500,000) $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000
The net change in revenues for Governmental Activities was an increase of$154,830 which is equal to approximately a 1%
net increase. A brief analysis by revenue type of significant events follows:
• Increases in Revenues
o $2,248,958 Property Taxes; There are several components to the increase in property ax revenues. The
first is simply a reclass of VLF fees from Intergovernmental to Supplemental Property Taxes is the
amount of$1,440,973. The remaining increase is a combination of the property tax assessment increase
of$808,000 related to the Library GO Bond,and a growth in assessed property values in the City due to
new homes and remodels.
o $90,956 Investment Earnings; The increase in investment earnings is primarily due to a change in
methodology in the internal distribution of interest earnings. Beginning in FY 2004-05 interest earnings
are distribute at the LAIF rate to all funds that have an interest earning requirement, the remainder of
the interest earnings is no longer shared between all funds,it defaults to the General Fund.
o $142,519 Other Taxes; An increase of 116,693 in Sales Tax (Triple Flip Included); There was an
overpayment by the State of California for$23,100 related to the triple flip,a minor overall growth rate,
and some one time adjustments by the State Board of Equalization.
o $160,410 Miscellaneous; Increase due to the receipt of $51,000 for the State Mandated Cost program,
$44,000 reimbursement from the Santa Clara Valley Animal Control Joint Power Authority, $20,000
receipt for a claim settlement, and $64,000 return of deposits from Association of Bay Area
Governments for the power windup agreement.
• Decreases in Revenues
o $1,364,242 Charges for Services; The decrease between fiscal years is attributed to the City ending an
indirect cost allocation plan, creating a reduction in this category of $1,467,643. This is offset by an
equal reduction in expenditures.
o $1,207,329 Motor Vehicle in Lieu Fees; The decrease in Motor Vehicle in Lieu Fees(VLF) is the direct
result of a reclassification of VLF fees from the Intergovernmental revenue type to Property Tax, as
supplemental property tax. The receipt for FY 2004-05 was $1,440,973. This then translates to an
increase in VLF fees for FY 2004-05 due to the impact in FY 2003-04 of the deferred back-fill from the
State of California of$516,900.
7
City of Saratoga
Management's Discussion and Analysis
June 30,2005
Chart of Increase or(Decrease)in Expenditures by Function
Governmental Activities
Interest on LTD
Development Svcs
Comm Svcs
Public Works
Environm ental 8
Public Safety
General Gov't
($2,000,000) ($1,500,000) ($1,000,000) ($500,000) $0 $500,000 $1,000,000 $1,500,000
The net change in expenditures for Governmental Activities was a decrease of$104,616. A brief analysis by expenditure
function of significant events follows:
• Increases in Expenditures
o $527,489 Public Safety Services;This expenditure has increased as a direct result in increase to the City
of Saratoga from their contract with the County of Santa Clara for police services.
o $393,905 Community Services; Reflects a reclassification of $102,728 the Community Development
Block Grant program expenditures to Community Development and increase of about$116,000 in the
Parks&Open Space program expenditures.
o $1,010,259 General Governmental; Most significantly is the recording of the loss on the disposal of
assets of$824,529 due to a change of capitalization threshold and a general increase of employees salary
and benefits.
• Decreases in Expenditures
o $1,663,264 Public Works Department; Of that amount $550,000 is from the elimination of the indirect
cost allocation plan, and $2,000,000 is due to an audit adjustment to the prior year calculation of
accumulated depreciation. Refer to auditors note 5,page 50 for additional information.
o $227,174 Development Services; The decrease is the result of the elimination of the indirect cost
allocation plan, and the treatment of administrative support as a transfer from the Development Fund
to the General Fund. Other reduction is due to staff vacancies during FY 2004-05 including the
Director,Associate Planner,Code Enforcement Specialist and Office Specialist.
o $135,000 Environmental; Decreases primary due to the reclassification of prior year reporting of the
Congestion Management program in the Public Works function.
Major Funds Net Change in Fund Balance
There are five funds included in the grouping of Major Funds. They are the General Fund the Community Block Grant
Fund, the Streets and Roads Fund, the Library Expansion Fund and the Capital Improvement Program Fund. The net
impact of the fiscal year transaction is a reduction of fund balance for the Major Funds by$730,136.
8
City of Saratoga
Management's Discussion and Analysis
June 30,2005
Statement of Change in Fund Balance
Major Funds
Streets Library Capital
General CDBG and Roads Expansion Improvement
Fund Balance Beginning of Year $ 6,352,504 $ 84,000 $ 551,771 $ 1,140,644 $ 4,949,729
Total Revenues 12,559,275 102,000 841,495 6,454 568,280
Total Expenditures 11,067,661 44,767 1,983,997 380,953 1,395,438
Transfer In 1,235,478 - 898,733 - 358,002
Transfer Out (2,104,035) (15,000) (308,002) - -
Fund Balance End of Year 6,975,561 126,233 - 766,145 4,480,573
Net Change in Fund Balance $ 623,057 $ 42,233 $(551,771) $ (374,499) $ (469,156)
General Fund-As shown in the prior table,the net change in the General Fund was an increase of$623,057.
o The methodology for the distribution of interest earnings were revised,all funds mandated to participate
interest earnings continued to receive their quarterly distributions at the LAIF rate. All other interest
earnings defaulted to the General Fund,creating an excess in interest earnings of$121,200.
o The City received a one time State mandated reimbursement of$57,200 related to animal care.
o The City received a one time reimbursement from the ABAG-Electric Program of$65,000.
o A one time catch-up of 3 prior years of encroachment billings netted the General Fund$83,500.
o Salary savings from vacant positions through out the fiscal year generated a saving of$237,500.
o The contract with Santa Clara County for Public Safety services came in$61,200 less than expected.
Community Development Block Grant Fund (CDBG) - As shown in the table above, the net change in the CDBG Fund
was an increase of$42,233. This was result of a reimbursement to the Fund for Community Development Fund for staff
time charged to CDBG in excess of the annual$15,000 maximum per fiscal year.
Streets&Roads-As shown in the table above,the net change in the Streets and Roads Funds was a decrease of$551,771.
This was a result of the General Fund limiting the transfer to the Street and Roads Fund on an as needed basis,instead of
transferring the maximum amount budgeted.
Library Expansion - As shown in the table above, the net change in the Library Expansion Fund was a decrease of
$374,499. This fund was established to account for the capital expenditures of renovating and expanding the Saratoga
Library. During FY 2004-05 the final construction payment of$266,000 was made along with$108,900 of various punch-
list items.
Capital Improvement Project Fund-As shown in the table above,the net change in the Capital Improvement Fund was a
decrease of$469,156. Capital projects in the City of Saratoga does not have a distinct funding source,therefore as project
expenditures are paid the existing fund balance balances are depleted. During the FY 2004-05, the City made $300,000
contribution to the County of Santa Clara for the animal control facility and incurred$151,000 on the Deanza Trail Project.
9
City of Saratoga
Management's Discussion and Analysis
June 30,2005
General Fund Budgetary Highlights
Changes from the City's original budget to the final budget are detailed in the Required Supplementary Information
Section along with a comparison to actual activity for the year ended. Changes to the City's budget that increases or
decreased the bottom line must be approved by a resolution of the City Council. Modifications to the budget that are a
realignment of fiscal activities with no impact to the bottom line may be proposed by Department Heads and approved
by the City Manager.
As the following table shows final budget revenue estimates were less than 1% off expectations, and final budget
expenditures 7% under budget. As indicated by the final budget column Council had authorized up to $480,960 to be
used from fund balance for FY 2004-05. As shown in the column for actual financial transactions the use of fund balance
was not necessary.
General Fund Comparison Budget to Actual
Adopted Final Variance
Budget Budget Actual Final to Actual
Source of Funds:
Property Tax $ 4,743,415 $ 4,743,415 $ 4,834,577 $ 91,162
Other Taxes 1,865,425 1,865,425 1,862,434 (2,991)
License&Permit 16,950 16,950 100,459 83,509
Fines&Forfeiture 110,055 110,055 161,721 51,666
Intergovernmental-State 508,190 508,190 575,596 67,406
Franchise Fees 1,260,030 1,260,030 1,293,621 33,591
Use of Money&Property 467,074 467,074 605,857 138,783
Charges for Services 3,455,070 3,455,070 3,125,010 (330,060)
Transfer In 1,176,532 1,210,151 1,235,478 25,327
Total Source of Funds $ 13,602,741 $ 13,636,360 $ 13,794,753 $ 158,393
Use of Funds:
General and Intergovt. $ 3,419,640 $ 3,489,106 $ 3,238,277 $ (250,829)
Public Safety 2,672,097 3,725,141 3,630,146 (94,995)
Environmental Services 655,701 655,701 379,120 (276,581)
Community Services 2,094,849 2,240,738 1,830,475 (410,263)
Community Development 2,695,560 2,652,715 1,989,643 (663,072)
Transfer Out 1,376,128 1,376,128 2,104,035 727,907
Total Use of Funds $ 12,913,975 $ 14,139,529 $ 13,171,696 $ (967,833)
Capital Assets
The City of Saratoga elected to use the "Modified Approach" as defined by GASB Statement No. 34 for infrastructure
reporting in which eligible infrastructure capital assets are not required to be depreciated if the following requirements:
• The City manages the assets using an asset management system which requires that the City (1) perform an up-
to-date inventory; (2)perform condition assessments and summarized the results using a measurement scale;and
(3)estimate the annual amount to preserve the assets at the established condition assessment level.
• The City documents that the eligible infrastructure capital assets are being preserved approximately at or above
the established and disclosed condition assessment level.
10
City of Saratoga
Management's Discussion and Analysis
June 30,2005
The City policy is to achieve an average Pavement Condition Index(PCI)rating of 70 for all streets. The City achieved the
70 rating with 86% of streets are rated as Excellent to Good,13% of streets are rated as Poor,and 1% of streets are rated as
Very Poor. The City estimated and spent $2,609,648 to maintain and preserve eligible infrastructure assets. For more
detail information on Capital Assets activity, please refer to Note G in the section entitled "Notes to the Basic Financial
Statements" and"Required Supplementary Section'.
As of June 30,2005,the City had$120,224,432 invested in a variety of capital assets,as reflected in the following schedule,
which represents an increase of$1,224,975 or 1% above the prior year.
Capital Assets at Year End
Net of Depreciation
Governmental Activities
2005 2004
Land $ 11,118,028 $ 11,118,028
Building&Structures 16,649,809 16,913,932
Machinery&Equipment 262,466 568,557
Infrastructure 86,513,324 86,174,460
Construction in Progress 5,680,805 4,224,480
$ 120,224,432 $ 118,999,457
The following reconciliation summarizes the change in Capital Assets
Changes in Capital Assets
Governmental Activities
2005 2004
Beginning Balance $ 118,999,458 $ 118,724,924
Addition
Land - 6,287,189
Building and Structures - 14,418,357
Construction in Progress 1,777,491 2,087,331
Infrastructure - 88,363
Machinery&Equipment - 88,142
Retirements
Construction in Progress (321,164)
Inventory Adjustments 1,528,246 (20,786,879)
Depreciation (1,759,599) (1,907,969)
Ending Balance $ 120,224,432 $ 118,999,458
Debt Administration
The net change in outstanding debt for the City of Saratoga is a decrease of$416,040. During the fiscal year,the City did
not enter into any new debt structures.
11
City of Saratoga
Management's Discussion and Analysis
June 30,2005
Outstanding Debt at Year-End
Governmental Activities
2005 2004
2001 General Obligation Bond $ 14,440,000 $ 14,695,000
Claims Payable - 180,865
Compensated Absences 245,294 259,478
Total $ 14,685,294 $ 15,135,343
The current portions of long-term debt ($270,000 and $255,000 for 2005 and 2004, respectively) are classified as current
liabilities in the City's Statement of Net Assets.
2001 General Obligation Bond - During the fiscal year, the City made debt service payments that include a principal
reduction of$255,000 on the City's$15,000,000 2001 General Obligation Library bonds.
Claims Payable - The City is fully funded through their membership in a pooled liability assurance network with the
Association of Bay Area Governments,hence there is no potential liability.
Economic Factors
The economy of the City and its major initiatives for the coming year are discussed in detail in the accompanying
Transmittal Letter.
Request for Financial Information
This financial report is designed to provide a general overview of the City of Saratoga's finances for all of Saratoga's
residents, taxpayers, customers, investors, and creditors. This financial report seeks to demonstrate the City's
accountability for the money it receives. Questions concerning any of the information provided in this report or requests
for additional information should be addressed to the Administrative Services Department, 13777 Fruitvale Avenue,
Saratoga,California 95070.
12
BASIC FINANCIAL STATEMENTS
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GOVERNMENT-WIDE FINANCIAL STATEMENTS
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City of Saratoga
Statement of Net Assets
June 30, 2005
Primary
Government
Governmental
Activities
ASSETS
Current assets:
Cash and investments $ 12,688,397
Restricted cash and investments 2,298,174
Receivables:
Accounts 740,734
Interest 96,943
Loans 264,494
Total current assets 16,088,742
Noncurrent assets:
Capital assets:
Non-depreciable 62,040,301
Depreciable,net 58,184,133
Total capital assets 120,224,434
Total noncurrent assets 120,224,434
Total assets 136,313,176
LIABILITIES
Current liabilities:
Accounts payable 904,224
Accrued payroll 180,818
Interest payable 315,523
Deposits payable 1,326,353
Long-term debt-due within one year 270,000
Total current liabilities 2,996,918
Noncurrent liabilities:
Long-term debt-due in more than one year 14,415,294
Total noncurrent liabilities 14,415,294
Total liabilities 17,412,212
NET ASSETS
Investment in capital assets,net of related debt 105,784,434
Restricted for:
Capital projects 5,321,217
Debt service 539,890
Special projects 466,619
Total restricted 6,327,726
Unrestricted 6,788,804
Total net assets $ 118,900,964
See accompanying Notes to the Basic Financial Statements.
17
City of Saratoga
Statement of Activities and Changes in Net Assets
For the year ended June 30, 2005
Program Revenues
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Total
Primary government:
Governmental activities:
General and intergovernmental services $ 4,159,852 $ 250 $ - $ - $ 250
Public safety 3,735,516 140,891 420,642 - 561,533
Environmental services 378,539 504,142 26,325 - 530,467
Public works 3,450,245 7,906 663,971 675,723 1,347,600
Community services 1,929,480 757,014 5,000 188,830 950,844
Community development services 2,348,447 1,889,505 102,000 - 1,991,505
Interest on long-term debt(unallocated) 760,839 - - - -
Total $ 16,762,918 $ 3,299,708 $ 1,217,938 $ 864,553 $ 5,382,199
General revenues and taxes:
Taxes:
Property taxes
Sales taxes
Franchise taxes
Special assessments
Voters approved property taxes
Local taxes
Intergovernmental revenue,unrestricted
Total taxes
Investment earnings
Other revenes
Total general revenues and taxes
Change in net assets
Net assets-beginning of year,as restated(Note 13)
Net assets-end of year
See accompanying Notes to the Basic Financial Statements.
18
Net(Expense)
Revenue and
Changes in
Net Assets
Primary
Government
Governmental
Activities
$ (4,159,602)
(3,173,983)
151,928
(2,102,645)
(978,636)
(356,942)
(760,839)
(11,380,719)
4,841,022
1,011,721
994,798
301,670
1,174,484
1,143,089
420,220
9,887,004
282,823
192,607
10,362,434
(1,018,285)
119,919,249
$ 118,900,964
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FUND FINANCIAL STATEMENTS
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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.
Streets and Roads Special Revenue Fund
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, 2106, 2107, and 2107.5. The allocations must be spent for
street maintenance or repairs;a limited amount may be spent for engineering.
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, 2005
Major Funds
Community
Development Streets Capital Library
General Block Grant and Roads Improvement Expansion
ASSETS
Cash and investments $ 8,269,053 $ - $ - $ 4,419,344 $ -
Restricted cash and'investments - 119,785 94,494 - 1,072,238
Receivables:
Accounts 581,724 6,048 55,414 91,134 -
Interest 90,047 400 - - 2,029
Loans - 264,494 - - -
Total assets $ 8,940,824 $ 390,727 $ 149,908 $ 4,510,478 $ 1,074,267
LIABILITIES AND
FUND BALANCES
Liabilities:
Accounts payable $ 423,830 $ - $ 127,335 $ 29,905 $ 308,122
Accrued payroll 156,543 - 22,573 - -
Deposits payable 1,326,353 - - - -
Deferred revenue 58,537 264,494 - - -
Total liabilities 1,965,263 264,494 149,908 29,905 308,122
Fund Balances:
Reserved for:
Petty Cash 300 - - - -
Debt service - - - - -
Unreserved,designated for:
Operations 2,457,847 - - - -
Economic uncertainty 1,350,000 - - - -
Community Development Services 342,123 - - - -
Environmental Services 898,658 - - - -
MIS 128,198 - - - -
Unreserved,undesignated,reported in:
General fund 1,798,435 - - - -
Special revenue funds - 126,233 - - -
Capital projects funds - - - 4,480,573 766,145
Total fund balances 6,975,561 126,233 - 4,480,573 766,145
Total liabilities and fund balances $ 8,940,824 $ 390,727 $ 149,908 $ 4,510,478 $ 1,074,267
See accompanying Notes to the Basic Financial Statements.
24
Other Total
Governmental Governmental
Funds Funds
$ - $ 12,688,397
1,011,657 2,298,174
6,414 740,734
4,467 96,943
- 264,494
$ 1,022,538 $ 16,088,742
$ 15,032 $ 904,224
1,702 180,818
- 1,326,353
- 323,031
16,734 2,734,426
- 300
855,413 855,413
- 2,457,847
- 1,350,000
- 342,123
- 898,658
- 128,198
- 1,798,435
75,892 202,125
74,499 5,321,217
1,005,804 13,354,316
$ 1,022,538 $ 16,088,742
25
City of Saratoga
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Assets
June 30, 2005
Total Fund Balances-Total governmental funds $ 13,354,316
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 62,040,301
Depreciable capital assets,net 58,184,133
Total capital assets 120,224,434
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. (315,523)
Deferred revenues reported in Governmental Funds Balance Sheet includes balance of loans receivable. The
balance was deferred because funds were not available to pay for current-period expenditures. 323,031
Long-term liabilities were not due and payable in the current period. Therefore,they were not reported in the
Governmental Funds Balance Sheet. The long-term liabilities were adjusted as follows:
General obligation bonds (14,440,000)
Compensated absences (245,294)
Total long-term liabilities (14,685,294)
Net Assets of Governmental Activities $ 118,900,964
See accompanying Notes to the Basic Financial Statements.
26
City of Saratoga
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the year ended June 30, 2005
Major Funds
Community
Development Streets Capital Library
General Block Grant and Roads Improvement Expansion
REVENUES:
Property taxes $ 4,834,577 $ - $ - $ - $ -
Other local taxes 1,862,434 - - - -
Licenses&permits 100,459 - - - -
Fines&forfeiture 161,721 - - - -
Intergovernmental-State 575,596 - 657,668 41,558 -
Intergovernmental-Federal - 58,702 - 31,154 -
Intergovernmental-Other - - 175,921 495,568 -
Franchise fees 1,293,621 - - -Use of money and property 605,857 43,298 - - 6,454
Current service charges 3,125,010 - 7,906 - -
Total revenues 12,559,275 102,000 841,495 568,280 6,454
EXPENDITURES:
Current:
General and intergovernmental services 3,238,277 - - - -
Public safety 3,630,146 - - - -
Environmental services 379,120 - - - -
Public works - - 1,983,997 - -
Community services 1,830t475 44,767 - - -
Community development services 1,989,643 - - - -
Capital outlay - - - 1,395,438 380t953
Debt service: -
Principal - - - - -
Interest and fiscal charges - - - - -
Total expenditures 11,067,661 44,767 1,983,997 1,395,438 380,953
REVENUES OVER
(UNDER)EXPENDITURES 1,491,614 57,233 (1,142,502) (827,158) (374,499)
OTHER FINANCING SOURCES(USES):
Transfers in 1,235,478 - 898,733 358,002 -
Transfers out (2,104,035) (15,000) (308,002) - -
Total other financing sources(uses) (868,557) (15,000) 590,731 358,002 -
Net change in fund balances 623,057 42,233 (551,771) (469,156) (374,499)
FUND BALANCES:
Beginning of year,as restated(Note 13) 6,352,504 84,000 551,771 4,949,729 1,140,644
End of year $ 6,975,561 $ 126,233 $ - $ 4,480,573 $ 766,145
See accompanying Notes to the Basic Financial Statements.
27
Other Total
Governmental Goverrunental
Funds Funds
$ 1,469,272 $ 6,303,849
- 1,862,434
100,459
- 161,721
100,000 1,374,822
- 89,856
671,489
- 1,293,621
7,966 663,575
112,815 3,245,731
1,690,053 15,767,557
- 3,238,277
100,000 3,730,146
- 379,120
235,710 2,219,707
- 1,875,242
- 1,989,643
1,100 1,777,491
255,000 255,000
766,152 766,152
1,357,962 16,230,778
332,091 (463,221)
- 2,492,213
(65,176) (2,492,213)
(65,176) -
266,915 (463,221)
738,889 13,817,537
$ 1,005,804 $ 13,354,316
28
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, 2005
Net Change in Fund Balances-Total governmental funds $ (463,221)
Amounts reported for governmental activities in the Statement of Activities and Changes in Net Assets were
different because:
Governmental Funds report capital outlay as expenditures. However, in the Government-Wide Statement of
Activities and Changes in Net Assets, the cost of those assets is allocated over their estimated useful lives as
depreciation expense. This is the amount of capital assets recorded in the current period. 11777,491
Depreciation expense on capital assets is reported in the Government-Wide Statement of Activities and Changes in
Net Assets, but they do not require the use of current financial resources. Therefore, depreciation expense is not
reported as expenditures in the Governmental Funds. (1,759,599)
Loss on the disposal of capital assets is reported in the Government-Wide Statement of Activities and Changes in Net
Assets,but they do not require the use of current financial resources. Therefore,it is not reported as expenditures in
Governmental Funds (824,529)
Unearned revenues do not provide current financial resources and therefore are not reported as revenues in the
governmental funds. 58,537
Repayments of loans receivable are recognized as revenues in the governmental funds,however the full
amount of loans receivable were recognized as revenues in prior years in the Government-Wide Statement of
activities and therefore they are not recognized as revenue in the current year in the Government-Wide
Statement of Activities (81,461)
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. 14,184
Bond proceeds provided current financial resources to governmental funds,but issuing debt increased long-
term liabilities in the Government-Wide Statement of Net Assets. Repayment of bond principal was an
expenditure in governmental funds,but the repayment reduced long-term liabilities in the Government-Wide
Statement of Net Assets.
Long-term debt repayments 255,000
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. 5,313
Change in Net Assets of Governmental Activities $ (1,018,285)
See accompanying Notes to the Basic Financial Statements.
29
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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, 2005
Agency
Funds
ASSETS
Cash and investments $ 73,540
Restricted cash and investments 192,122
Interest Receivable 798
Accounts receivable 42,946
Total assets $ 309,406
LIABILITIES
Deposits payable $ 74,064
Due to assessment district bondholders 235,342
Total liabilities $ 309,406
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, 2005
Page
Note 1 - Summary of Significant Accounting Policies.......................................................................................35
A. Financial Reporting Entity..................................................................................................................35
B. Basis of Accounting/Measurement Focus.......................................................................................36
C. Cash,Cash Equivalents and Investments........................................................................................38
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.....................................................................................................................................41
J. Compensated Absences......................................................................................................................42
K. Long-Term Obligations.......................................................................................................................42
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.................................................................................................................................43
Q. Implementation of New GASB Pronouncements...........................................................................44
Note2- Cash and Investments ...............................................................................................................................44
A. Cash Deposits.......................................................................................................................................44
B. Investments ..........................................................................................................................................45
C. External Investment Pool ...................................................................................................................45
D. Risk Disclosures...................................................................................................................................46
Note3 - Loans Receivable.......................................................................................................................................47
33
City of Saratoga
Index to Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
Page
Note 4- Fund Financial Statements Interfund Transaction...........................................................................47
A. Transfers In/ ................................................................................................................................47
Note5- Capital Assets...........................................................................................................................................48
Note6- Long-Term Debt.......................................................................................................................................49
Note7- Non-City Obligations .............................................................................................................................50
Note8 - Risk Management....................................................................................................................................50
Note9 - Retirement Plans......................................................................................................................................52
Note10-Net Assets................................................................................................................................................53
A. Investment in Capital Assets,Net of Related Debt.......................................................................53
B. Restricted Net Assets ........................................................................................................................54
Note 11 -Joint Powers Agreements.....................................................................................................................54
Note 12- Commitments and Contingencies......................................................................................................54
A. Lawsuits..............................................................................................................................................54
B. Federal and State Grant Programs..................................................................................................54
Note 13 - Prior Period Adjustments.....................................................................................................................55
34
City of Saratoga
Notes to the Basic Financial Statements
For the year ended June 30, 2005
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 30,850 at June 30, 2005. 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, 2005, 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 23 employees. Major projects may be contracted out to
reduce costs.
• Community Development - Zoning administration, plan checking and advance planning
services are provided by 13 employees.
• Culture,Recreation and Community Support services are provided by a total of 11 employees.
• General Government services are provided by a total of 11 employees.
As required by GAAP, these basic financial statements present the City and its component units,
entities for which the City is considered to be financially accountable. The City Council acts as the
governing board. In addition,the City staff performs all administrative and accounting functions for these
entities and these entities provide their services entirely to the City. Blended component units, although
legally separate entities are, in substance, part of the City's operations and data from these units are
combined with data of the City. Discretely presented component units, on the other hand, are reported
in a separate column in the government-wide financial statements to emphasize their legal separateness
from the City. Each blended component unit has a June 30 year-end. The City had no discretely
presented component units.
35
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
A. Financial Reporting Entity, Continued
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. The Authority is reported as a blended component unit of the City because it
have the same Governing Board as the City.
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 installation of improvements,
including maintenance. The District is reported as a blended component unit of the City because it
have the same Governing Board as the City.
Complete financial statements for each component unit may be obtained from the City of Saratoga,
13777 Fruitvale Avenue,Saratoga,California 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 government-wide financial statements include a Statement of Net Assets and a Statement of
Activities and Changes in Net Assets. These statements present summaries of governmental activities for
the City. Fiduciary activities of the City are not included in these statements.
These statements are presented on an "economic resources" measurement focus and the accrual basis of
accounting. Accordingly, all of the City's assets and liabilities, including capital assets, as well as
infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Assets.
The Statement of Activities presents changes in net assets. Under the accrual basis of accounting,revenues
are recognized in the period in which they are earned while expenses are recognized in the period in which
the liability is incurred.
36
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
Government-Wide Financial Statements,Continued
Certain types of transactions are reported as program revenues for the City in three categories:
• Charges for services
• Operating grants and contributions
• Capital grants and contributions
Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund
activities, payables and receivables. All internal balances in the Statement of Net Assets have been
eliminated. The following interfund activities have been eliminated:
• Transfers in/out
Governmental Fund Financial Statements
Governmental fund financial statements include a Balance Sheet and a Statement of Revenues,
Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds
aggregated. An accompanying schedule is presented to reconcile and explain the differences in net assets
as presented in these statements to the net assets presented in the government-wide financial statements.
The City has presented all major funds that met the applicable criteria. The following funds are major
funds:
General Fund
The General Fund is used to account for all of the general resources of the City not specifically
levied or collected for other City funds and the related expenditures. The General Fund accounts for
all financial resources of the City which are not accounted for in another fund.
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 program.
Streets and Roads Special Revenue Fund
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, 2106, 2107, and 2107.5. The allocations
must be spent for street maintenance or repairs; a limited amount may be spent for engineering.
Library Expansion Capital Projects Fund
This fund accounts for bond proceeds from the sale of the library bonds, which was passed in March
2000,for the purpose of renovating and expanding the City library.
37
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
Governmental Fund Financial Statements,Continued
Capital Improvement Capital Projects Fund
This fund accounts for resources used for the major capital acquisition and construction activities.
All governmental funds are accounted for on a spending or current financial resources measurement focus
and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are
included on the balance sheets. The Statement of Revenues,Expenditures and Changes in Fund Balances
present increases (revenues and other financing sources) and decreases (expenditures and other
financing uses) in net current assets.
Under the modified accrual basis of accounting, revenues are recognized in the accounting period in
which they become both measurable and available to finance expenditures of the current period.
Accordingly, revenues are recorded when received in cash, except that revenues subject to accrual (up
to 7 months after year-end) are recognized when due. The primary revenue sources, which have been
treated as susceptible to accrual by the City, are property tax, sales tax, special assessments,
intergovernmental revenues, other taxes, interest revenue, rental revenue and certain charges for
services. Fines, forfeitures, licenses and permits and parking meter revenues are not susceptible to
accrual because they are usually not measurable until received in cash. Expenditures are recorded in
the accounting period in which the related fund liability is incurred.
Deferred revenues arise when potential revenues do not meet both the "measurable' and "available"
criteria for recognition in the current period. Deferred revenues also arise when the government
receives resources before it has a legal claim to them, as when grant monies are received prior to
incurring qualifying expenditures. In subsequent periods when both revenue recognition criteria are
met or when the government has a legal claim to the resources, the deferred revenue is removed from
the combined balance sheet and revenue is recognized.
Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is
provided to explain the differences created by the integrated approach of GASB Statement No. 34.
Fiduciary Fund Financial Statements
Fiduciary fund financial statements include a Statement of Net Assets. The City's fiduciary funds
represent agency funds. Agency funds do not have a measurement focus, although they do have a basis
of accounting. An accrual basis of accounting is used to record the financial transactions. Agency funds
are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations.
38
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,Continued
C. Cash, Cash Equivalents and Investments
The City pools its available cash for investment purposes. The City's cash and cash equivalents are
considered to be cash on hand, demand deposits, and short-term investments with original maturity of
three months or less from the date of acquisition. Cash and cash equivalents are combined with
investments and displayed as Cash and Investments.
Deposit and Investment Risk Disclosures - In accordance with GASB Statement No. 40, Deposit and
Investment Disclosures (Amendment of GASB No. 3), certain disclosure requirements, if applicable, for
Deposits and Investment Risks in the following areas:
➢ Interest Rate Risk
➢ Credit Risk
- Overall
- Custodial Credit Risk
- Concentrations of Credit Risk
➢ Foreign Currency Risk
Other disclosures are specified including use of certain methods to present deposits and investments,
highly sensitive investments,credit quality at year-end and other disclosures.
The City participates in an investment pool managed by the State of California titled Local Agency
Investment Fund (LAIF),which has invested a portion of the pool funds in Structured Notes and Asset-
Backed Securities. LAIF's investments are subject to credit risk with the full faith and credit of the State
of California collateralizing these investments. In addition, these Structured Notes and Asset-Backed
Securities are subject to market risk as to change in interest rates.
D. Restricted Cash and Investments
Certain restricted cash and investments are held by a fiscal agent for the redemption of bonded debt and
for acquisition and 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."
39
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
F. Interfund Transactions, Continued
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.
G. Capital Assets
Capital assets, which include land, buildings, improvements, furniture, equipment and infrastructure
assets (e.g., roads,bridges, sidewalks, and similar items), were reported in the applicable governmental
activities in the government-wide financial statements. Capital assets were recorded at historical cost or
estimated historical cost if actual cost was not available. Donated assets were valued at their fair market
value on the date of donation. City policy has set the capitalization threshold for reporting capital
assets at $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 years
Machinery and equipment 5-10 years
Infrastructure 15-50 years
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 infrastructures into its basic
financial statements.
The City defines infrastructure as the basic physical assets that allow the City to function. The City
defines infrastructure as the basic physical assets including the street system, park and recreation lands
and improvements system; storm water conveyance and drainage system,buildings combined with site
amenities such as parking and landscaping areas used by the City in the conduct of its business. Each
major infrastructure system can be divided into subsystems. For example the street system can be
subdivided into pavement, curb and gutters, sidewalks, medians, streetlights, traffic control devices
(signs, signals and pavement markings), landscaping and land. These subsystems were not delineated
in the basic financial statements. The appropriate operating department maintains information
regarding the subsystems. The City elected to use the Modified Approach as defined by GASB
Statement No. 34 for infrastructure reporting of its streets, concrete and asphalt pavements. The City
commissioned a physical assessment of the streets condition as of June 30, 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
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
G. Capital Assets, Continued
The following conditions were defined:
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's policy relative to maintaining the street assets is to achieve an average rating of 70 for all
street segments. This acceptable rating allows minor cracking and raveling of the pavement along with
minor roughness that could be noticeable to drivers traveling at the posted speeds. For all other
infrastructure systems, the City elected to use the Basic Approach as defined by GASB Statement No. 34
for infrastructure reporting. The City commissioned an appraisal of City owned infrastructure and
property as of June 30, 2001 and has completed an internal update for June 30, 2005. This appraisal
determined the original cost, which is defined as the actual cost to acquire new property in accordance
with market prices at the time of first construction/acquisition. Original costs were developed in one of
three ways: 1) historical records; 2) standard unit costs appropriate for the construction/acquisition
date; or 3) present cost indexed by a reciprocal factor of the price increase from the
construction/acquisition date to the current date. The accumulated depreciation, defined as the total
depreciation from the date of construction/acquisition to the current date on a straight line,
unrecovered cost method was computed using industry accepted life expectancies for each
infrastructure subsystem. The book value was then computed by deducting the accumulated
depreciation from the original cost.
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.
L Claims Payable
The City records a liability to reflect an actuarial estimate of ultimate uninsured losses for both general
liability claims (including property damage claims) and workers' compensation claims. The estimated
liability for workers' compensation claims and general liability claims includes "incurred but not
reported" (IBNR) claims. There is no fixed payment schedule to pay these liabilities.
41
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
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. Only the amounts which becomes due at June 30 are
reported in the fund financials statements as a liability.
K. Long-Term Obligations
In the government-wide financial statements, long-term debt and other long-term obligations are reported
as liabilities in the applicable governmental activities. Bond premiums and discounts, as well as issuance
costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds
payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as
deferred charges and amortized over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as
well as bond issuance costs, during the current period. The face amount of debt issued is reported as
other financial sources. Premiums received on debt issuance are reported as other financing sources while
discounts on debt issuance reported as other financing uses. Issuance costs,whether or not withheld from
the actual debt proceeds received,are reported as debt service expenditures.
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.
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.
City Council has designated $1,350,000 for economic uncertainty. The designation was also authorized
a draw down of$260,100 in fiscal year 2005-2006 to bridge the budget shortfall.
Community development services designation is for development services that includes zoning
administration,inspection services,and development regulation programs.
Environmental services is designated for the environmental fees collected from surcharges on garbage
bills and tipping fees at the landfills and associated grants related to integrated waste management and
storm water management.
42
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
L. Fund Balances, Continued
Management information system (MIS) is designated for the support,maintenance,replacement and
upgrade of existing computer network.
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 liens on the
property being taxed.
Revenue is recognized in the period for which the tax and assessment is levied. The County of Santa
Clara levies, bills and collects property taxes for the City, the County remits the entire amount levied
and handles all delinquencies, retaining interest and penalties. Secured and unsecured property taxes
are levied on January 1.
Secured property tax is due in two installments on November 1 and February 1, and becomes a lien on
those dates. It becomes delinquent on December 10 and April 10, respectively. Unsecured property tax
is due on July 1 and becomes delinquent on August 31.
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.
43
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Q. Implementation of New GASB Pronouncements
The City adopted new accounting standards in order to conform to the following Governmental
Accounting Standards Board Statement:
No. 40, Deposit and Investment Risk Disclosures - This Statement addresses selected issues and
amends GASB Statements No. 3, Deposits with Financial Institutions, Investments (including
Repurchase Agreements), and Reverse Repurchase Agreements. The Statement addresses common
deposit and investment risks related to credit risk, concentration of credit risk, interest rate risk,
and foreign currency risk. The Statement requires certain disclosures of investments that have fair
values that are highly sensitive to changes in interest rates.
2. CASH AND INVESTMENTS
The following is a summary of pooled cash and investments and restricted cash and investments at June 30,
2005:
Government Wide
Statement of Fiduciary
Net Assets Funds
Governmental Statement of
Activities Net Assets Total
Cash and'investments $ 12,688,397 $ 73,540 $ 12,761,937
Restricted cash and investments: 2,298,174 192,122 2,490,296
Total $ 14,986,571 $ 265,662 $ 15,252,233
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 $249,648 at June 30, 2005. Bank balances before
reconciling items were$727,094 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.
44
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
2. CASH AND INVESTMENTS, Continued
A. Cash Deposits, Continued
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.
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 statements, because the City's investments were primarily in the State of
California Local Agency Investment Fund and the fair value adjustment was immaterial.
C. External Investment Pool
The City's investments with Local Agency Investment Fund (LAIF) at June 30, 2005, 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.
45
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
2. CASH AND INVESTMENTS, Continued
C. External Investment Pool, Continued
LAIF is overseen by the Local Agency Investment Advisory Board, which consists of five members, in
accordance with State statute.
As of June 30, 2005, the City had $14,616,092 invested in LAIF which had invested 2.406% of the pool
investment funds in Structured Notes and Asset-Backed Securities. The LAIF fair value factor of
0.997747553 was used to calculate the fair value of the investments in LAIF.
D. Risk Disclosures
At June 30,2005, the City had the following deposits and investments:
Interest Rate Risk:
Investment
Maturities
(in years)
Fair Value 1 year or less
Investment type:
Demand accounts $ 249,648 $ 249,648
Petty cash 300 300
California Local Agency Investment Fund 14,616,092 14,616,092
SJNB Money Market Account 53,794 531794
Investment held by Fiscal Agents 332,399 332,399
Total $ 15,252,233 $ 15,252,233
Credit Risk:
Credit Quality Ratings
Standard
Moody's &Poor's Fair Value
Cash and Investments:
Cash deposits Not Rated $ 249,948
SJNB Money Market Account Not Rated 53,794
State Local Agency Investment Fund Not Rated 14,616,092
Investments held by Fiscal Agents Not Rated 332,399
Total Cash and Investments $ 15,252,233
Custodial Credit Risk: For an investment,custodial credit risk is the risk that,in the event of the failure of the
counterparty,the City will not be able to recover the value of its investments or collateral securities that are
in the possession of an outside party. None of the City's investments were subject to custodial credit risk.
46
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
3. LOANS RECEIVABLE
The City had the following loan receivable as of June 30,2005:
Balance Balance
July 1,2004 Additions Deletions June 30,2005
Housing Rehabilitation Loan Program $ 345,955 $ - $ (81,461) $ 264,494
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, 2005, the City had outstanding SHARP loans of$264,494. During the year ended June 30, 2005,
the City received$81,273 in repayments from all participants.
In the Governmental Fund Financial Statements, these loans have been offset by deferred revenue as they
are not expected to be repaid immediately.
In the Government-Wide Financial Statements, the amount of deferred revenue was recognized as
revenues.
4. FUND FINANCIAL STATEMENTS INTERFUND TRANSACTIONS
A. Transfers In/Out
Transfers for the year ended June 30, 2005 were as follows:
Transfers In
Special Capital
Revenue Fund Projects Fund
General Street and Capital
Transfers Out Fund Roads Improvement Total
General Fund $ 1,155,302 $ 898,733 $ 50,000 $ 2,104,035
Street and Roads - - 308,002 308,002
Community Development Block Grant 15,000 - - 15,000
Other Governmental Funds 65,176 - - 65,176
Total $ 1,235,478 $ 898,733 $ 358,002 $ 2,492,213
The above transfers resulted from the normal course of the City's operations.
47
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
5. CAPITAL ASSETS
Capital assets activity for the year ended June 30,2005,consisted of the following:
Primary Government
Balance Balance
July 1,2004 Additions Retirements Adjustments June 30,2005
Governmental Activities:
Capital assets,not being depreciated:
Land and land improvements $ 11,118,030 $ - $ - $ - $ 11,118,030
Construction in progress 4,224,479 1,777,491 (321,164) - 5,680,806
Infrastructure:
Street pavement system 45,241,465 - - - 45,241,465
Total capital assets not being depreciated 60,583,974 1,777,491 (321,164) - 62,040,301
Capital assets,being depreciated:
Buildings and structures 19,278,447 - - - 19,278,447
Machinery and equipment 2,061,857 - (503,365) - 1,558,492
Infrastructure:
Bridges 1,563,654 - - - 1,563,654
Signs and lights 762,527 - - - 762,527
Drainage system 39,855,914 - - - 39,855,914
Sidewalks 11,494,250 - - - 11,494,250
Total capital assets being depreciated 75,016,649 - (503,365) - 74,513,284
Accumulated depreciation (16,601,165) (1,759,599) - 2,031,613 (16,329,151)
Total capital assets being depreciated,net 58,415,484 (1,759,599) (503,365) 2,031,613 58,184,133
Governmental activities capital assets,net $ 118,999,458 $ 17,892 $ (824,529) $ 2,031,613 $ 120,224,434
Depreciation Expense by Function:
General Government $ 101,914
Public Safety 5,563
Public Works 1,234,652
Community Services 56,800
Community Development 360,670
Total $ 1,759,599
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.
48
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
6. LONG-TERM DEBT
A summary of the City's long-term debt transactions for the year ended June 30,2005,is presented below:
Classification
Amounts Amounts
Balance Balance Due Within Due in More
Description July 1,2004 Additions Retirements June 30,2005 One Year than One Year
General Obligation Bonds:
2001 Library Bonds $ 14,695,000 $ - $ (255,000) $ 14,440,000 $ 270,000 $ 14,170,000
Claims payable 180,865 - (180,865) - - $ -
Compensated absences 259,478 - (14,184) 245,294 - $ 245,294
Total $ 15,135,343 $ - $ (450,049) $ 14,685,294 $ 270,000 $ 14,415,294
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, 2005, the outstanding balance of the bonds was
$14,440,000.
The annual debt service requirements on these bonds are as follows:
For the Year
Ending June 30, Principal Interest Total
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 310,000 702,756 1,012,756
2010 330,000 683,556 1,013,556
2011-2015 1,965,000 3,104,705 5,069,705
2016-2020 2,350,000 2,555,030 4,905,030
2021-2025 2,970,000 1,887,967 4,857,967
2026-2030 3,840,000 1,005,114 4,845,114
2031-2032 1,830,000 97,388 1,927,388
Total $ 14,440,000 $ 12,244,684 $ 26,684,684
49
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
6. LONG-TERM DEBT, Continued
Claims Payable
At June 30, 2005, the City was fully insured and had no deductible and therefore the City did not record
any liability relating to claims.
Compensated Absences
The City's liability for vested and unpaid compensated absences (accrued vacation and sick pay) has been
accrued and amounts to$245,294 at June 30,2005.
The compensated 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 30,2005
Parking Assessment Districts#2 and#3 $ 1,244,900 $ -
Leonard Road Improvement Assessment District 101,686 45,000
Saratoga Public Financing Authority 1993 Revenue Bonds 1,600,000 205,000
The City is the collecting agent for Village Parking Assessment Districts #2 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.
8. RISK MANAGEMENT
The City participates in the following public entity risk pools:
ABAG Plan Corporation (ABAG PLAN) covers general liability claims in an amount up to $7,000,000. The
City has a deductible or uninsured liability of up to $25,000 per claim. Once the City's deductible is met
ABAG PLAN becomes responsible for payment of all claims up to the limit. During the fiscal year ended
June 30, 2005, the City contributed $120,393 for current year coverage and received no refund of prior year
excess contributions.
50
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
8. RISK MANAGEMENT,Continued
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 30,2005,the City contributed$209,860 for current year coverage.
The City's contributions to each risk pool equal the ratio of the City's payroll to the total payrolls of all
entities participating in the same layer of each program,in each program-year.
Actual surpluses or losses are shared according to a formula developed from overall loss costs and spread
to member entities on a percentage basis after a retrospective rating.
There have been no significant reductions of insurance settlements that exceeded insurance coverage for
the past three years.
The workers' compensation and general liability claims payable of $0 reported at June 30, 2005, 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 Claims and Claims
Ended Payable Changes in Claims Payable
June 30, July 1 Estimates Payments June 30
2003 $ 100,000 $ 214,052 $ (16,858) $ 297,194
2004 297,194 (32,044) (34,285) 230,865
2005 230,865 (224,897) (5,968) -
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.
51
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
8. RISK MANAGEMENT, Continued
The following represents summary audited financial information of ABAG Plan Corporation for the fiscal
year ended June 30,2004:
Total assets $ 43,172,685
Total liabilities $ 14,147,158
Fund equity $ 29,025,527
Total revenues $ 7,501,487
Total expenses $ 8,500,073
Net increase in fund equity $ (998,586)
The following represents summary audited financial information of ABAG Comp Shared Risk Pool for the
fiscal year ended June 30,2004:
Total assets $ 1,600,719
Total liabilities $ 934,268
Fund equity $ 666,451
Total revenues $ 736,559
Total expenses $ 302,982
Net increase in fund equity $ 433,577
Audited financial information for each risk pool may be obtained from ABAG at P.O. Box 2089, Oakland,
California 94604-2089.
9. RETIREMENT PLANS
Pension Plan
Plan 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.
52
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
9. RETIREMENT PLANS, Continued
Pension Plan, Continued
Funding Policy - 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 $243,844 for the year ended June 30,
2005. The City employer is required to contribute for fiscal year 2004-2005 at an actuarially determined rate
of 4.35% of annual covered payroll for miscellaneous employees.
Annual Pension Cost - For fiscal year 2004-2005, the City's annual pension cost was $151,567. 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 14.20% for
miscellaneous employees depending on age, service, and type of employment, and (c) 3.75% per year
payroll growth adjustments. Both (a) and (b) included an inflation component of 3.50%. 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 22 years for miscellaneous employees.
THREE-YEAR TREND INFORMATION FOR PERS
Annual Percentage of
Pension Cost APC Net Pension
Fiscal Year (APC) Contributed Obligation
6/30/03 $ - 100% $ -
6/30/04 - 100% -
6/30/05 151,567 100% -
10. NET ASSETS
A. Investment in Capital Assets,Net of Related Debt
As of June 30,2005,the investment in capital assets,net of related debt consisted of the following:
Capital assets,net(Note 5) $ 120,224,434
2001 General Obligation Library Bonds(Note 6) (14,440,000)
Investment in capital assets,net of related debt $ 105,784,434
53
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
10. NET ASSETS,Continued
B. Restricted Net Assets
As of June 30,2005,the restricted net assets consisted of the following:
Restricted for
Capital Debt Special
Projects Service Projects Total
Restricted cash and investments $ 5,321,217 $ 539,890 $ 466,619 $ 6,327,726
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,San Jose,California 95110.
The City is also a member of other Joint Powers Authorities (JPA) but has had no material transactions with
them. These JPA's are governed by boards consisting of representatives from their members. The boards
control the operations of each JPA, including selection of management and approval of operating budgets,
independent of any influence by its members beyond their representation on the board.
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, 2005, 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.
54
City of Saratoga
Notes to the Basic Financial Statements, Continued
For the year ended June 30, 2005
13. PRIOR PERIOD ADJUSTMENTS
Government-Wide Financial Statements
The City recorded the following prior period adjustments to correct prior year Capital Assets as part of
GASB Statement No. 34 implementation, remove claims payable since the City is fully insured with no
deductible amount and to correct some accounting errors. Accordingly, the net assets as of July 1, 2004
have been restated as follows:
Net Assets, GASB 34 Prior Period Adjustments
as Previously Capital Claims Errors Net Assets,
Reported Assets Payable Corrections as Restated
Government-Wide Activities:
Net assets $ 117,899,126 $ 2,031,613 $ 180,865 $ (192,355) $ 119,919,249
Total government-wide activities $ 117,899,126 $ 2,031,613 $ 180,865 $ (192,355) $ 119,919,249
Fund Financial Statements
The City recorded the following reclassifications to City funds to more accurately reflect certain transactions
in the prior years:
General Fund - The City determined that the prior year balance of deposits payable was incorrect and
needed to be adjusted.
Library Bond Debt Service Fund-The City recorded a prior period adjustment to correct some accounting
errors.
Library Expansion Fund - The City determined that prior year expenditures should be classified from
General Fund to Library Expansion Fund.
Prior Period
Fund Balances, Adjustment
as Previously Reclassification Fund Balances,
Reported of Funds as Restated
Major Fund:
General Fund $ 6,506,115 (153,611) $ 6,352,504
Library Bond Debt Service Fund 701,976 104 702,080
Library Expansion Fund 1,179,492 (38,848) 1,140,644
Total $ 8,387,583 $ (192,355) $ 8,195,228
55
56
REQUIRED SUPPLEMENTARY INFORMATION
57
City of Saratoga
Required Supplementary Information
For the year ended June 30, 2005
1. BUDGETARY INFORMATION
Through the budget, the City Council sets the direction of the City, allocates its resources and establishes its
priorities. The Annual Budget assures the efficient and effective uses of the City's economic resources, as well
as establishing that the highest priority objectives are accomplished.
The Annual Budget serves from July 1 to June 30, and is a vehicle that accurately and openly communicates
these priorities to the community,businesses, vendors, employees and other public agencies. Additionally,
it establishes the foundation of effective financial planning by providing resource planning, performance
measures and controls that permit the evaluation and adjustment of the City's performance. The City does
not adopt an annual budget for all capital projects funds. All capital projects funds are budgeted on the
project length basis.
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.
58
City of Saratoga
Required Supplementary Information, Continued
For the year ended June 30, 2005
1. 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,as restated $ 6,506,115 $ 6,506,115 $ 6,352,504 $ (153,611)
Resources(inflows):
Property taxes 4,743,415 4,743,415 4,834,577 91,162
Other local taxes 1,865,425 1,865,425 1,862,434 (2,991)
Licenses and permits 16,950 16,950 100,459 83,509
Fines and forfeiture 110,055 110,055 161,721 51,666
Intergovernmental-State 508,190 508,190 575,5% 67,406
Franchise fees 1,260,030 1,260,030 1,293,621 33,591
Use of money and property 467,074 467,074 605,857 138,783
Current service charges 3,455,070 3,455,070 3,125,010 (330,060)
Transfers in 1,176,532 1,210,151 1,235,478 25,327
Amount available for appropriations 20,108,856 20,142,475 20,147,257 4,782
Charges to Appropriations(outflows):
Current.
General and intergovernmental services 3,419,640 3,489,106 3,238,277 250,829
Public safety 2,672,097 3,725,141 3,630,146 94,995
Environmental services 655,701 655,701 379,120 276,581
Community services 2,094,849 2,240,738 1,830,475 410,263
Community development services 2,695,560 2,652,715 1,989,643 663,072
Transfers out 1,376,128 1,376,128 2,104,035 (727,907)
Total charges to appropriations 12,913,975 14,139,529 13,171,6% 967,833
Fund Balances-Ending $ 7,194,881 $ 6,002,946 $ 6,975,561 $ 972,615
59
City of Saratoga
Required Supplementary Information, Continued
For the year ended June 30, 2005
1. BUDGETARY INFORMATION, Continued
Budgetary Comparison Schedule, Community Development Block Grant Special Revenue Fund
Positive
(Negative)
Budgeted Amounts Actual Variance with
Original Final Amounts Final Budget
Fund Balances-Beginning,as restated $ 84,000 $ 84,000 $ 84,000 $ -
Resources(inflows):
Intergovernmental-Federal 170,406 170,406 58,702 (111,704)
Use of money and property 3,030 3,030 43,298 40,268
Amount available for appropriations 257,436 257,436 186,000 (71,436)
Charges to Appropriations(outflows):
Community services 177,078 273,903 44,767 229,136
Transfer out - 15,000 15,000 -
Total charges to appropriations 177,078 288,903 59,767 229,136
Fund Balances-Ending $ 80,358 $ (31,467) $ 126,233 $ 157,700
60
City of Saratoga
Required Supplementary Information, Continued
For the year ended June 30, 2005
1. BUDGETARY INFORMATION, Continued
Budgetary Comparison Schedule, Street and Roads Special Revenue Fund
Positive
(Negative)
Budgeted Amounts Actual Variance with
Original Final Amounts Final Budget
Fund Balances-Beginning $ 551,771 $ 551,771 $ 551,771 $ -
Resources(inflows):
Intergovernmental-State 591,445 591,445 657,668 66,223
Intergovernmental-Other - 331,674 175,921 (155,753)
Current service charges 10,000 10,000 7,906 (2,094)
Transfers in 1,716,786 1,168,186 898,733 (269,453)
Amount available for appropriations 2,870,002 2,653,076 2,291,999 (361,077)
Charges to Appropriations(outflows):
Current:
Public works 2,318,231 2,402,059 1,983,997 418,062
Transfer out - 308,002 308,002 -
Total charges to appropriations 2,318,231 2,710,061 2,291,999 418,062
Fund Balances-Ending $ 551,771 $ (56,985) $ - $ 56,985
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.
61
City of Saratoga
Required Supplementary Information, Continued
For the year ended June 30, 2005
2. MODIFIED APPROACH FOR CITY STREETS INFRASTRUCTURE CAPITAL ASSETS, Continued
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, 2005. 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 139
centerline miles of pave surfaces. The City's road system can be grouped by function class and includes
23.2 centerline miles of arterial,23.3 centerline miles of collector, and 92.6 miles as residential.
A visual survey of all pavement segments was conducted to assess the existing surface condition of each of
the individual pavement segments. Upon completion of the study, a Pavement Condition Index (PCI) was
calculated for each segment in the City's pavement network to reflect the overall pavement condition.
Rating between 0 and 100, a PCI of 0 would correspond to a badly deteriorated pavement with virtually no
remaining life. A PCI of 100 would correspond to a pavement with proper engineering design and
construction at the beginning of its life cycle.
The following conditions were defined:
Condition Ratin
Excellent 80-100
Very Good 70-79
Good 50-69
Poor 25-49
Very Poor 0-24
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, 2005, the City's street system was rated at a PCI
index of 70 on the average with the detail condition as follows:
Condition %0 of Streets
Excellent to Good 86%
Poor 13%
Very Poor 1%
62
City of Saratoga
Required Supplementary Information, Continued
For the year ended June 30, 2005
2. MODIFIED APPROACH FOR CITY STREETS INFRASTRUCTURE CAPITAL ASSETS, Continued
The City expended $2,609,648 on street maintenance for the year ended June 30, 2005. These routine
maintenance expenditures delayed deterioration. The budget required to maintain and improve the current
level of overall condition through the year 2007 is a minimum of $5,400,000. ($1,800,000 projected budget
each year for the years ending June 30,2005,2006,and 2007.)
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
Actual Funded by by Gas Total PCI
Fiscal Year Budget Expenditures General Fund Tax Fund Funded Index
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 -
2003-04 1,961,844 1,489,667 907,327 582,340 1,489,667 70
2004-05 1,800,000 2,609,648 1,478,216 1,131,432 2,609,648 70
As of June 30, 2005, approximately 14% 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$9,583,411 for all
streets with an expected annual budget of$650,000.
3. DEFINED PENSION PLAN
A schedule of funding progress for the past three actuarial valuations is presented below.
Miscellaneous Employees
Actuarial
Entry Age Unfunded Liability as
Actuarial Actuarial Actuarial Actuarial Percentage of
Valuation Asset Accrued Accrued Funded Covered Covered
Date Value Liability Liability Ratio Payroll Payroll
6/30/2002 $ 18,292,349 $ 15,889,904 $ (2,402,445) 115.1% $ 3,620,470 (66.4)%
6/30/2003 18,610,291 18,707,057 96,766 99.5% 3,814,553 2.5%
CaIPERS Risk Pool Information(See Note Below)
6/30/2004 2,460,944,656 2,746,095,668 285,151,012 89.6% 743,691,970 38.3%
In 2004, Ca1PERS established a risk pool for cities and other government entities that have less than 100
active members. Actuarial valuation was performed with other participants within the same risk pool.
Therefore, standalone information of the Schedule of the Funding Progress for the City is no longer
available.
63
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64
SUPPLEMENTAL INFORMATION
65
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66
City of Saratoga
Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual
Library Expansion Fund
For the year ended June 30, 2005
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
FUND BALANCES-BEGINNING $ 1,140,644 $ 1,140,644 $ 1,140,644 $ -
RESOURCES(INFLOWS):
Use of money and property 5,846 5,846 6,454 608
Amount available for appropriation 1,146,490 1,146,490 1,147,098 608
CHARGES TO APPROPRIATIONS(OUTFLOWS):
Current:
Capital outlay 68,065 68,065 380,953 (312,888)
Total charges to appropriations 68,065 68,065 380,953 (312,888)
FUND BALANCES-ENDING $ 1,078,425 $ 1,078,425 $ 766,145 $ (312,280)
67
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68
NON-MAJOR GOVERNMENTAL FUNDS
Special Revenue Funds
Local Law Enforcement -This fund accounts for State Supplemental Law Enforcement entitlement allocated
based on population.
Lighting and Landscaping Assessment District - This fund accounts for revenues and expenditures
associated with development of the City.
Debt Service Fund
Library Bond -Santa Clara County lease revenues are accumulated in this fund to pay annual principal and
interest payments on the 1976 and 2001 library bonds.
Capital Projects Funds
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.
Library Expansion -This fund accounts for resources used for the construction of the City's library.
69
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70
City of Saratoga
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2005
Special Revenue Debt Service Capital Projects
Lighting and Total
Landscaping Other
Local Law Assessment Library Park Governmental
Enforcement District Bond Development Funds
ASSETS
Restricted cash and investments $ - $ 91,555 $ 846,130 $ 73,972 $ 1,011,657
Accounts receivable - 791 5,623 - 6,414
Interest receivable - 280 3,660 527 4,467
Total assets $ - $ 92,626 $ 855,413 $ 74,499 $ 1,022,338
LIABILITIES AND
FUND BALANCES
Liabilities:
Accounts payable $ - $ 15,032 $ - $ - $ 15,032
Accrued payroll - 1,702 - - 1,702
Total liabilities - 16,734 - - 16,734
Fund Balances:
Reserved for:
Debt service - - 855,413 - 855,413
Unreserved,undesignated,reported in:
Special revenues funds - 75,892 - - 75,892
Capital projects funds - - - 74,499 74,499
Total fund balances - 75,892 855,413 74,499 1,005,804
Total liabilities and fund balances $ - $ 92,626 $ 855,413 $ 74,499 $ 1,022,538
71
City of Saratoga
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Nonmajor Governmental Funds
For the year ended June 30, 2005
Special Revenue Debt Service Capital Projects
Lighting and Total
Landscaping Other
Local Law Assessment Library Park Governmental
Enforcement District Bond Development Funds
REVENUES:
Property taxes $ - $ 301,052 $ 1,168,220 $ - $ 1,469,272
Intergovernmental-State 100,000 - - - 100,000
Use of money and property - 617 6,265 1,084 7,966
Current service charges - - - 112,815 112,815
Total revenues 100,000 301,669 1,174,485 113,899 1,690,053
EXPENDITURES:
Current:
Public safety 100,000 - - - 100,000
Public works - 235,710 - - 235,710
Capital outlay - - 1,100 1,100
Debt service:
Principal - - 255,000 - 255,000
Interest and fiscal charges - - 766,152 - 766,152
Total expenditures 100,000 235,710 1,021,152 1,100 1,357,962
REVENUES OVER
(UNDER)EXPENDITURES - 65,959 153,333 112,799 332,091
OTHER FINANCING SOURCES(USES):
Transfers out - (26,676) - (38,500) (65,176)
Total other financing sources(uses) - (26,676) - (38,500) (65,176)
Net change in fund balances - 39,283 153,333 74,299 266,915
FUND BALANCES:
Beginning of year - 36,609 702,080 200 738,889
End of year $ - $ 75,892 $ 855,413 $ 74,499 $ 1,005,804
72
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, 2005
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
FUND BALANCES-BEGINNING $ - $ - $ - $ -
RESOURCES(INFLOWS):
Intergovernmental-State 100,000 100,000 100,000 Use of money and property - - - -
Amount available for appropriation 100,000 100,000 100,000 -
CHARGES TO APPROPRIATIONS(OUTFLOWS):
Current:
Public safety 100,000 100,000 100,000 -
Transfers out - - - -
Total charges to appropriations 100,000 100,000 100,000 -
FUND BALANCES-ENDING $ - $ - $ - $ -
73
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, 2005
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
FUND BALANCES-BEGINNING $ 36,609 $ 36,609 $ 36,609 $ -
RESOURCES(INFLOWS):
Property taxes 302,818 302,818 301,052 (1,766)
Use of money and property 405 405 617 212
Amount available for appropriation 339,832 339,832 338,278 (1,554)
CHARGES TO APPROPRIATIONS(OUTFLOWS):
Current:
Public works 265,985 265,985 235,710 30,275
Transfer out 26,076 26,676 26,676 -
Total charges to appropriations 292,061 292,661 262,386 30,275
FUND BALANCES-ENDING $ 47,771 $ 47,171 $ 75,892 $ 28,721
74
City of Saratoga
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Library Bond Debt Service Fund
For the year ended June 30, 2005
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
FUND BALANCES-BEGINNING $ 701,976 $ 701,976 $ 702,080 $ 104
RESOURCES(INFLOWS):
Property taxes 1,022,135 1,022,135 1,168,220 146,085
Use of money and property - - 6,265 6,265
Amount available for appropriation 1,724,111 1,724,111 1,876,565 146,189
CHARGES TO APPROPRIATIONS(OUTFLOWS):
Debt service:
Principal 255,000 255,000 255,000 -
Interest and fiscal charges 767,135 767,135 766,152 983
Total charges to appropriations 1,022,135 1,022,135 1,021,152 983
FUND BALANCES-ENDING $ 701,976 $ 701,976 $ 855,413 $ 153,437
75
City of Saratoga
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Park Development Capital Project Fund
For the year ended June 30, 2005
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
FUND BALANCES-BEGINNING $ 200 $ 200 $ 200 $ -
RESOURCES(INFLOWS):
Use of money and property - - 1,084 1,084
Current service charges 82,800 82,800 112,815 30,015
Amount available for appropriation 83,000 83,000 114,099 1,084
CHARGES TO APPROPRIATIONS(OUTFLOWS):
Capital outlay - 1,000 1,100 (100)
Transfer out - 92,500 38,500 54,000
Total charges to appropriations - 93,500 39,600 53,900
FUND BALANCES-ENDING $ 83,000 $ (10,500) $ 74,499 $ 84,999
76
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.
77
City of Saratoga
Combining Statement of Fiduciary Net Assets
Agency Funds
June 30, 2005
Total
Cable T.V. Assessment Agency
Trust District Bonds Funds
ASSETS
Cash and investments $ 73,540 $ - 73,540
Restricted cash and investments - 192,122 192,122
Interest Receivable 524 274 798
Accounts receivable - 42,946 42,946
Total assets $ 74,064 $ 235,342 $ 309,406
LIABILITIES
Deposits payable $ 74,064 $ - $ 74,064
Due to assessment district bondholders - 235,342 235,342
Total liabilities $ 74,064 $ 235,342 S 309,406
78
City of Saratoga
Combining Statement of Changes in Assets and Liabilities
Agency Funds
For the year ended June 30, 2005
Balance Balance
July 1,2004 Additions Deductions June 30,2005
Cable T.V.Trust
Assets:
Cash and investments $ 87,376 $ 17,453 $ (31,289) $ 73,540
Interest Receivable - 524 - 524
Total assets $ 87,376 $ 17,977 $ (31,289) $ 74,064
Liabilities:
Deposits payable $ 87,376 $ 17,977 $ (31,289) $ 74,064
Assessment District Bonds
Assets:
Restricted cash and investments $ 364,057 $ 12,317 $ (184,252) $ 192,122
Interest Receivable - 274 - 274
Accounts receivable 42,946 - - 42,946
Total assets $ 407,003 $ 12,591 $ (184,252) $ 235,342
Liabilities:
Due to assessment district bondholders $ 407,003 $ 12,591 $ (184,252) $ 235,342
Total liabilities $ 407,003 $ 12,591 $ (184,252) $ 235,342
Total Agency Funds
Assets:
Cash and investments $ 87,376 $ 17,453 $ (31,289) $ 73,540
Restricted cash and investments 364,057 12,317 (184,252) 192,122
Interest Receivable - 798 - 798
Accounts receivable 42,946 - - 42,946
Total assets $ 494,379 $ 30,568 $ (215,541) $ 309,406
Liabilities:
Deposits payable $ 87,376 $ 17,977 $ (31,289) $ 74,064
Due to assessment district bondholders 407,003 12,591 (184,252) 235,342
Total liabilities $ 494,379 $ 30,568 $ (215,541) $ 309,406
79
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80
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
81
City of Saratoga
Capital Assets Used in the Operation of Governmental Funds
Comparative Schedules by Source
June 30, 2005 and 2004
2005 2004
GOVERNMENTAL FUNDS CAPITAL ASSETS:
Land and land improvements $ 11,118,030 $ 11,118,030
Buildings and structures 19,278,447 19,278,447
Machinery and equipment 1,558,492 2,061,856
Infrastructure 98,917,810 98,917,810
Construction in progress 5,680,806 4,224,480
Total governmental funds capital assets 136,553,585 135,600,623
Accumulated depreciation (16,329,151) (16,601,165)
Total governmental funds capital assets,net $ 120,224,434 $ 118,999,458
INVESTMENTS IN GOVERNMENTAL FUNDS
CAPITAL ASSETS BY SOURCE:
General Fund $ 109,760,885 $ 109,656,766
Special revenue funds 1,479,663 1,570,614
Capital projects funds 25,261,619 24,321,828
Donations 51,415 51,415
Accumulated depreciation (16,329,150) (16,601,165)
Total governmental funds capital assets $ 120,224,432 $ 118,999,458
82
City of Saratoga
Capital Assets Used in the Operation of Governmental Funds
Schedule by Function and Activity
June 30,2005
Land and Buildings Machinery Construction
Land and and in
Improvements Structures Equipment Infrastructure Progress Total
FUNCTION AND ACTIVITY
General and intergovernmental services:
Management services $ - $ 271,631 $ 47,837 $ - $ 42,737 $ 362,205
Administrative services - 167,585 44,004 - - 211,589
Intergovernmental services 118,184 3,096,786 67,606 - - 3,282,576
Total general and
intergovernmental services 118,184 3,536,002 159,447 - 42,737 3,856,370
Public safety:
Police services - - 27,813 - - 27,813
Code enforcement - - 37,548 - - 37,548
Total public safety - - 65,361 - - 65,361
Public works:
Streets and sidewalks 134,695 30,628 630,181 98,917,810 2,410,367 102,123,681
Parks/open space 2,529,529 92,622 439,061 - - 3,061,212
Total public works 2,664,224 123,250 1,069,242 98,917,810 2,410,367 105,184,893
Community services 6,593,157 1,312,265 227,810 - 2,276,294 10,409,526
Community development services 1,742,465 14,306,930 36,632 - 951,408 17,037,435
Total governmental funds capital assets 11,118,030 19,278,447 1,558,492 98,917,810 5,680,806 136,553,585
Accumulated depreciation - (2,621,608) (1,303,057) (12,404,486) - (16,329,151)
Total governmental funds
capital assets,net $ 11,118,030 $ 16,656,839 $ 255,435 $ 86,513,324 $ 5,680,806 $ 120,224,434
83
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, 2005
Governmental Governmental
Funds Capital Funds Capital
Assets Assets
July 1,2004 Additions Deletions June 30,2005
FUNCTION AND ACTIVITY
General and intergovernmental services:
Management services $ 417,484 $ - $ (55,279) $ 362,205
Administrative services 309,363 - (97,774) 211,589
Intergovernmental services 3,304,126 - (21,550) 3,282,576
Total general and
intergovernmental services 4,030,973 - (174,603) 3,856,370
Public safety:
Police services 70,305 - (42,492) 27,813
Code enforcement 69,412 - (31,864) 37,548
Total public safety 139,717 - (74,356) 65,361
Public works:
Streets and sidewalks 101,518,827 651,582 (46,728) 102,123,681
Parks/open space 3,101,053 - (39,841) 3,061,212
Total public works 104,619,880 651,582 (86,569) 105,184,893
Community services 10,200,581 312,413 (103,468) 10,409,526
Community development services 16,609,472 492,330 (64,367) 17,037,435
Total governmental funds capital assets 135,600,623 1,456,325 (503,363) 136,553,585
Accumulated depreciation (16,601,165) (1,759,600) 2,031,614 (16,329,151)
Total governmental funds
capital assets,net $ 118,999,458 $ (303,275) $ 1,528,251 $ 120,224,434
84
STATISTICAL SECTION
(Unaudited)
85
City of Saratoga
Government-Wide Expense - By Function
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
2003 2004 2005
❑General/Inter-Governmental ❑Public Safety ❑Environmental Services
❑Public Works ■Community Services ❑Community Development Services
■Interest on Long-Term Debt ❑Depreciation Expense Unallocated
Community Interest on Depreciation
General/Inter- Public Environmental Public Community Development Long-Term Expense
Fiscal Year Governmental Safety Services Works Services Services Debt Unallocated Totals
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
2004 3,149,593 3,208,027 513,539 5,113,509 1,535,575 2,575,621 771,670 - 16,867,534
2005 4,159,852 3,735,516 378,539 3,450,245 1,929,480 2,348,447 760,839 - 16,762,918
Note: The fiscal year ended June 30,2002 was the first year that the City implemented GAS13 Statement No.34.
Source: City of Saratoga Annual Financial Report
86
City of Saratoga
Government-Wide Revenues - By Sources
$10,000,000 -
$9,000,000 -
$8,000,000
$7,000,000 -
$6,000,000 -
$5,000,000 -
$4,000,000 -
$3,000,000
$2,000,000 -
$1,000,000
S-
2003 2004 2005
El Charges for Services ❑Operating Grants and Contributions ❑Taxes
■Motor Vehicle In-lieu Fees ❑Use of Money and Property ■Miscellaneous
❑Capital Grants and Contributions
Program Revenues
Charges Operating Capital Motor
for Grants and Grants and Vehicle Use of Money
Fiscal Year Services Contributions Contributions Taxes In-lieu Fees and Property Miscellaneous Totals
2003 $ 5,796,502 $ 1,901,933 $ - $ 7,952,843 $ 1,896,606 $ 246,671 $ 315,165 $ 18,109,720
2004 4,663,950 953,962 1,044,971 7,075,307 1,488,954 114,537 248,121 15,589,802
2005 3,299,708 1,217,938 864,553 9,466,784 281,625 282,823 331,202 15,744,633
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
87
City of Saratoga
General Fund Revenues - By Source
Last ten fiscal years
$5,000,000
$4,500,000
$4,000,000
$3,500,000
I �
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$-
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
■Property Taxes ❑Other Local Taxes ❑Intergovernmental
❑Franchise Fees ❑Use of Money and Property ❑Current Service Charges
Current
Property Other Inter- Franchise Use of Money Services
Fiscal Year Taxes Local Taxes governmental Fees and Property Charges Totals
1996 $ 1,546,162 $ 2,965,069 $ 1,152,968 $ 669,467 $ 343,295 $ 2t036t854 $ 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 2t202,826 1,392,591 772,258 457,382 2,037,182 8,526,383
1999 1,864,766 2,328,071 1,680t670 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 2t067,288 1,901,892 1,010,609 216,562 2,546,937 10,515,309
2003 3,400,228 2,138,618 1,947t205 932,808 242,228 2t602t924 11,264,011
2004 3,020,515 1,822,785 1,687,387 983,621 386,450 4,505,317 12,406,075
2005 4,834,577 1,862,434 837,777 1,293,621 605,856 3,125,010 12,559,275
Note: Year 2003 property tax receipts include one time Special Assessment.
Source: City of Saratoga Annual Financial Report
88
City of Saratoga
General Fund Expenditures - By Function
Last ten fiscal years
$4,000,000
$3,500,000
$3,000,000
I�
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 200-
❑Public Safety ❑Development Services ❑Public Works
❑Community Service&Support ❑General/Intragovernment ❑Capital Outlay
■Enviromental Services
General/
Inter- Public Enviromental Development Public Community Capital
Fiscal Year Governmental Safety Services Services Works Services Outlay Totals
1996 $ 1,819,188 $ 2,322,425 $ - $ 1,098,931 $ 1,444,155 $ 177,837 $ 154,695 $ 7,017,231
1997 279,737 2,616,973 - 1,616,532 2,697,413 349,019 280,500 7,840,174
1998 1,074,696 2,598,233 - 65,502 877,204 179,928 226,310 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 7,041,988
2002 1,943,301 3,570,910 - 111,520 1,378,334 465,241 614,171 8,083,477
2003 3,168,878 3,431,591 - 85,994 1,104,505 343,864 228,607 8,363,439
2004 3,037,062 3,172,922 488,495 2,216,151 1,208,717 1,357,048 79,358 11,559,753
2005 3,238,277 3,630,146 379,120 1,989,643 - 1,830,475 - 11,067,661
Source: City of Saratoga Annual Financial Report
Note:Year 2005 Engineering program was reclassification to Development Services;Park and Open Space program was reclassified to Community Sery
89
City of Saratoga
Property Tax Levies and Collections (General Fund)
Last ten fiscal years
$5,000,000 $8,000,000,000
$4,500,000
$7,000,000,000
$4,000,000
$6,000,000,000
$3,500,000
$5,000,000,000
$3,000,000
$4,000,000,000
$2,500,000
$3,000,000,000
$2,000,000
$1,500,000 $2,000,000,000
$1,000,000 $1,000,000,000
rn rn o 0 0 0 o o
01, 01, N N N O� O1, O CD N CD
Seriesl f Property Value
Property Tax Value of Property
Fiscal Levies and Subject to Local
Year Collections Tax Rate
1996 $ 1,546,162 $ 3,486,766,121
1997 2,142,454 3,697,799,273
1998 1,664,144 4,029,366,672
1999 1,864,766 4,432,643,052
2000 2,790,294 4,823,743,087
2001 2,065,051 5,331,749,683
2002 2,772,021 6,271,461,110
2003 3,400,228 6,489,250,969
2004 3,020,515 6,953,969,775
2005 4,834,577 7,393,857,738
Note: Year 2003 property tax receipts include one time Special Assessment.
Sources: City of Saratoga Annual Financial Report
California Municipal Statistics Inc.
90
City of Saratoga
General Fund Tax Revenue
Last ten fiscal years
$7,000,000
$6,000,000
i
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000 AL
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
❑Utility Users'Tax ■Property Tax(2)
❑Sales Tax ❑Other Taxes(1)
Fiscal Utility
Year User's Tax Property Tax(2) Sales Tax Other Taxes(1) Totals
1996 $ 729,468 $ 1,546,162 $ 896,799 $ 1,338,802 $ 4,511,231
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 4,192,837
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
2004 - 3,020,515 895,028 927,757 4,843,300
2005 - 4,834,577 803,581 1,058,853 6,697,011
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 inclusiosn 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
91
City of Saratoga
Assessed and Estimated Actual Market Value of Taxable Property
Last ten fiscal years
$8,000,000,000
$7,000,000,000
$6,000,000,000
$5,000,000,000
$4,000,000,000
$3,000,000,000
$2,000,000,000
$1,000,000,000
$-
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
■Secured Property ❑Unsecured Property
❑Nonunitary
Fiscal Secured Unsecured Total Estimated
Year Property Property Nonunitary Assessed Market
1996 $ 3,447,233,348 $ 34,271,545 $ 5,271,228 $ 3,486,776,121 $ 3,486,776,121
1997 3,660,513,753 31,869,856 5,415,664 3,697,799,273 3,697,799,273
1998 3,985,335,053 38,624,678 5,406,941 4,029,366,672 4t029t366,672
1999 4,387,050,479 40186,229 5,406,344 4,432,643,052 4,432,643,052
2000 4,784,312,421 34,417,462 5,013,204 4,823,743,087 4,823,743,087
2001 5,292,676,050 38,957,115 116,518 5,331,749,683 5,331,749,683
2002 6,227,826,411 42,904,985 729,714 6,271,461,110 6,271,461,110
2003 6,441,614,970 46,485,308 1,150,691 6,489,250,969 6,489,250,969
2004 6,912,443,373 41,386,146 140,256 6,953,969,775 6,953,969,775
2005 7,353,900,797 39,781,926 175,015 7,393,857,738 7,393,857,738
Note: The California Constitution requires properties to be assessed at full market value on the date of purchase but limits
increases in assessed valuation to 2%annually.
Source: California Municipal Statistics,Inc.
92
City of Saratoga
Property Tax Rates (Per $100 of Assessed Valuation) - All Overlapping Governments
Last ten fiscal years
1.2000
1.0000
0.8000
0.6000
0.4000
0.2000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
❑Basic County Wide Levy ■School Districts ❑Special Districts&Other
Fiscal Basic County School Special Districts
Year Wide Levy Districts and Other
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 0.0082
2000 1.0343 0.0612 0.0085
2001 1.0380 0.0685 0.0135
2002 1.0388 0.0544 0.0229
2003 1.0412 0.0917 0.0282
2004 1.0421 0.0918 0.0288
2005 1.0560 0.2865 0.0109
Source: California Municipal Statistics Inc.
93
City of Saratoga
Special Assessment Billings and Collections
Last ten fiscal years
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
11 Special Assessment
Special
Assessment
Fiscal Billings and
Year Collections
1996 $ 104,292
1997 83,101
1998 102,164
1999 55,505
2000 157,936
2001 95,973
2002 101,162
2003 574,469
2004 124,365
2005 161,814
Note: Year 2003 comprises of Lighting and Landscaping and one time speciall assessment in General Fund
Source: City of Saratoga Annual Financial Report
94
City of Saratoga
Ratio of General Obligation Bonded Debt to Assessed Value and Bonded Debt Per Capita
Last ten fiscal years
$8,000,000,000 600
$7,500,000,000
$7,000,000,000 500
$6,500,000,000
400
$6,000,000,000
$5,500,000,000 300 -
$5,000,000,000
200
$4,500,000,000
$4,000,000,000 100
$3,500,000,000
$3,000,000,000
"O cc O N d
� ON O O O GN GN O O O
ON H N
f Debt Per Capita
�Assessed Value
Fiscal Assessed Bonded Debt
Year Population Value Debt Per Capita
1996 29,579 $ 3,486,776,121 $ 490,000 17
1997 30,591 3,697,799,273 415,000 14
1998 31,097 4,029,366,672 340,000 11
1999 31,255 4,432,643,052 265,000 8
2000 31,320 4,823,743,087 185,000 6
2001 29,843 5,331,749,683 15,100,000 506
2002 30,444 6,271,461,110 15,000,000 493
2003 30,482 6,489,250,969 14,940,000 490
2004 30,300 6,953,969,775 14,755,000 487
2005 30,850 7,393,857,738 14,440,000 468
Note: Includes Library General Obligation Bonds only
Sources: County of Santa Clara Tax Rate and Information Publication
California Municipal Statistics Inc.
95
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%
2.00%
0.00% -----
1996 1997
1998 1999
2000 2001
2002 2003
2004 2005
0 Debt Service
Percent of
Total Debt Service to
Fiscal Total General Fund General Fund
Year Principal Interest Debt Service Expenditures Expenditures
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 5,021,873 1.94%
1999 75,000 18,071 93,071 5,365,807 1.73%
2000 80,000 18,783 98,783 61161,151 1.60%
2001 85,000 9,774 94,774 71041,988 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%
2004 24500 777,112 1,022,112 11,559,753 8.84%
2005 25500 763,631 1,018,631 11,067,661 9.20%
Note: Includes General Obligation Bonds
Source: City of Saratoga Finance Department
96
City of Saratoga
Demographic Statistics
Last ten fiscal years
31,500
' 1,800,000
31,000 ,
1,750,000 � -
30,500 I -- —_
1,700,000
30,000 —
1,650,000
29,500
1,600,000
29,000
1,550,000
28,500
� 1,500,000
-------------
CD
rn 1996
r N N N N o 0 19971998 1999 2000 2001 2002 2003 2004
ci N 2005
City Population ■County Population
Fiscal City County Population
Year Population Population %of County
1996 29,579 1,612,258 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%
2004 30,300 1,731,400 1.75%
2005 30,850 1,759,585 1.75%
Source: State of California Department of Finance-Population Research Unit
97
City of Saratoga
Property Values, Remodeling and Construction
Last ten fiscal years
$8,000,000,000 $90,000,000
$7,000,000,000 $80,000,000
$6,000,000,000 $70,000,000
$60,000,000
$5,000,000,000
$50,000,000
$4,000,000,000 $40,000,000
$3,000,000,000 $30,000,000
$2,000,000,000 $20,000,000
$1,000,000,000 $10,000,000
1996 1998 2000 2002 2004 1996 1998 2000 2002 2001
■Property Values ❑Residential Remodeling&Construction
$7,000,000 $500,000,000
$450,000,000
$6,000,000 $400,000,000
$5,000,000 $350,000,000
i $300,000,000
$4,000,000 $250,000,000
$3,000,000 $200,000,000
$2,000,000 $150,000,000
$100,000,000
$1,000,0000 ® ® ® $50,000,000
5_ o 0 0
1996 1997 1998 1999 2000 2001 2002 2003 20042005 ����(, 998 2000 2002 2004
■Commerical Remodeling&Construction ❑Bank Deposits
Commercial Remodeling Residential Remodeling
and Construction and Construction
Fiscal Property Number Number Bank
Year Values of Permits Value of Permits Value Deposits
1996 $ 3,486,776,121 69 $ 1,171,533 2,535 $ 66,013,893 $ 331,014,000
1997 3,697,799,273 52 843,020 1,834 44,982,977 343,982,200
1998 4,029,366,672 47 5,300,593 1,844 48,230,194 376,130,000
1999 4,432,643,052 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 1,631 68,500,341 469,940,000
2002 6,271,461,110 42 1,405,295 1,685 53,474,165 446,251,000
2003 6,489,250,969 41 987,768 1,346 82,162,747 N/A
2004 6,953,969,775 43 2,865,523 1,554 57,079,206 N/A
2005 7,393,857,738 51 3,227,345 1,427 71,439,379 N/A
Source: City of Saratoga Finance Department
Bank deposits from Findley Reports and Sheshenoff Information Services
98
City of Saratoga
Computation of Legal Debt Margin
June 30, 2005
Assessed value $ 7,393,857,738
Bonded debt limit(15%of assessed value) $ 1,109,078,661
Amount of debt subject to limit:
Total long-term debt 14,440,000
Legal debt margin $ 1,123,518,661
Source: City of Saratoga Finance Department
99
City of Saratoga
Computation of Legal Debt Margin
June 30, 2005
Amount
Percentage Applicable to
Applicable to City of
City of Saratoga Saratoga
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:
Santa Clara Valley Water District,Zone W-1 3.989% $ 149,986
Foothill-De Anza Community College District 1.8050 3,345,118
Campbell Union High School District 5.8190 5,466,078
Fremont Union High School District 3.8490 5,519,466
Los Gatos-Saratoga Joint Union High School District 41.0460 30,029,254
Campbell Union School District 7.4240 6,396,022
Cupertino Union School District 6.4220 8,106,173
Moreland School District 13.3160 9,743,219
Saratoga Union School District 85.8860 48,014,396
Saratoga Fire Protection District 97.5200 5,635,424
City of Saratoga 100.0000 14,440,000
City of Saratoga 1915 Act Bonds 100.0000 45,000
Santa Clara Valley Water District Benefit Assessment District 3.7280 7,107,805
Total Direct And Overlapping Tax And Assessment Debt $ 143,997,941
DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT:
Santa Clara County General Fund Obligations 3.728% $ 30,018,974
Santa Clara County Board of Education Certificates of Participation 3.728 670,481
Foothill-DeAnza Community College District Certificates of Participation 1.805 405,132
West Valley Community College District Certificates of Participation 11.725 2,636,953
Los Gatos-Saratoga Joint Union High School District Certificates of Participation 41.046 1,783,449
Cupertino Union School District Certificates of Participation 6.422 354,173
Saratoga Union School District Certificates of Participation 85.886 6,510,159
Midpeninsula Regional Open Space Park District General Fund Obligations 6.498 7,430,476
Total Direct And Overlapping General Fund Obligation Debt $ 49,809,797
Combined Total Debt $ 193,807,738 (1)
(1) Excludes tax and revenue anticipation notes,enterprise revenue,mortgage revenue
and tax allocation bonds and non-bonded capital lease obligations.
Ratios to Assessed Valuation:
Direct Debt ($14,440,000) 0.20%
Total Direct and Overlapping Tax and Assessment Debt 1.95%
Combined Total Debt 2.62%
STATE SCHOOL BUILDING REPAYABLE AS 6/30/2005: $0
Source:California Municipal Statistics,Inc.
100
City of Saratoga
Principal Taxpayers
June 30, 2005
Percent of Total
Assessee Use Assessed Value Assessed Value
Odd Fellows Home of California Residential Properties $ 22,325,000 0.53%
Saratoga Office Center Partners LLC Commerical Properties 13,543,440 0.26%
Quito Village Group LLC Commerical Properties 12,900,960 0.22%
Argonaut Associates LLC Commerical Properties 12,004,998 0.15%
San Jose Water Works Commerical Properties 9,900,550 0.13%
David J&Terri E.Morrison Commerical Properties 9,423,067 0.13%
Ashok Kirshnamurthi,Et.AI. Residential Properties 9,281,800 0.13%
David C.&Roxanne N.Peterschmidt Residential Properties 9,240,526 0.12%
Deloise A.Jordan Residential Properties 8,918,193 0.12%
David L.House Vacant Land 8,800,000 0.12%
Totals $ 116,338,534 1.91%
Total assessed valuation $ 7,393,857,738
Source:HDL Coren&Cone
101
City of Saratoga
Miscellaneous Statistics
June 30, 2005
Date of Incorporation 1956
Form of Government Council-Manager
Employees:
Public Safety 1
City manger's office 5
Recreation 11
Public works/maintenance 21
Community development 12
Administrative services 7
Total employees 57
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 1
Number of firefighters 6-8
Number of reserve firefighters 20
Central Fire District:
Number of stations 1
Number of firefighters 3
Number of reserve firefighters 40
Police Protection:
Number of stations 1
Number of police officers 79
Number of support personnel 6
Water Utility:
San Jose Water Company:
Number of meters 10,102
Average daily consumption 9,926 gallons
Length of water mains 177 miles
Sewer:
West Valley Sanitation District:
Number of connections 8,601
Length of sewer lines 20 miles
Cupertino Sanitation District:
Number of connections 2,118
Length of sewer lines 36 miles
Culture and Recreation:
Parks 15
Acres in parks 81 acres
Taxable Sales $ 80,358,100
Registered Voters 19,282
Population 30,850
Sources: Various City records
102