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CITY OF SARATOGA
C A L I F O R N I A
CELEBRATING VILLA MONTALVO’S 100TH ANNIVERSARY
FISCAL YEAR 2012/13
COMPREHENSIVE ANNUAL FINANCIAL REPORT
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Saratoga, California
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2013
City Council
Jill Hunter.................................................................................................................... Mayor
Emily Lo ............................................................................................................ Vice Mayor
Howard Miller ............................................................................................ Council Member
Chuck Page ................................................................................................ Council Member
Manny Cappello ......................................................................................... Council Member
Presented under the direction of:
Dave Anderson, City Manager
Finance & Administrative Services Department
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CITY OF SARATOGA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2013
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TABLE OF C ONTENTS
I NTRODUCTORY SECTION
Letter of Transmittal ......................................................................................................... 1
GFOA Certificate of Achievem ent for Excel lence in Financial Reporting ........................... 7
Pri ncipal Officers of the City ............................................................................................ 8
Organization Chart ........................................................................................................... 9
F INANCIAL S ECTION
Independent Au ditor s ’ Report ........................................................................................... 11
Management’s Discussion and Analysis (Required Supplementary Information) ............. 13
Basic Financial Statemen ts:
Government -Wide Financial Statements
Statement of Net Position .......................................................................................... 27
Statement of Acti vities and Changes in Net Position .................................................. 28
Fund Financial Statements
Governmental Funds:
Balance Sheet ........................................................................................................... 29
Reconciliation of the Government Funds Balance Sheet
t o the Government -Wide Financial Statement of Net Position ............................... 30
Statement of Revenues, Expenditures and Changes in Fund Balances ......................... 31
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures and Changes in Fund Balances to the Gover nment -Wide
Statement of Activities and Changes in Net Position ............................................. 32
Proprietary Funds:
Statement of Net Position .......................................................................................... 33
Statement of Revenues, Expenses, a nd Changes in Fund Net Position ......................... 34
Statement of Cash Flows ........................................................................................... 35
Basic Financial Statement Notes:
Notes to the Basic Financial Statements ..................................................................... 36
Required Supplementary Information
Budgetary Information .............................................................................................. 5 9
Modified Approach for City Streets Infrastructure Capital Assets ............................... 61
CITY OF SARATOGA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2013
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TABLE OF C ONTENTS C ONTINUED
SUPPLEMENTARY I NFORMATION :
Non -Major Governmen tal Funds
Combining Balance Sheets ....................................................................................... 6 6
Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........ 6 7
Schedule of Revenues, Exp and Changes in Fun d Balances – Budget and Actual:
Capital Improvements .......................................................................................... 6 8
Lighting & Landscape Assessment Districts Special Revenue Funds ..................... 6 9
Library Bond Debt Service Fund .......................................................................... 70
Internal Service Funds
Combining Statement of Net Position ........................................................................ 72
Combining Statement of Revenues, Expense s, and Change in Fund Balance ............... 7 4
Comb ining Statement of Cash Flows ......................................................................... 76
C apital Assets Used in the Operation of Governmental Funds
Comparative Schedule by Source ............................................................................... 81
Schedule by Function and Activity ............................................................................ 82
Schedule of Changes by Function and Activity .......................................................... 8 4
Statistical Section (Unaudited)
Net Position by Component ....................................................................................... 86
Changes in Net Position ............................................................................................ 88
Fund Balance of Governmental Funds ........................................................................ 90
Governmental Activities Tax Revenues by Source ..................................................... 92
Changes in Fund Balances of Governmental Funds .................................................... 9 4
Direct and Overlapping Government s ........................................................................ 96
Assessed Value of Taxable Property .......................................................................... 98
Principal Property Taxpayers ................................................................................... 100
Property Tax Levies and Collections ........................................................................ 101
Ratio s of Outstanding Debt by Type ........................................................................ 102
Ratios of Ge neral Bonded Debt Outstanding ............................................................ 104
Legal Debt Margin Information ............................................................................... 1 06
Direct and Overlapping Governmental Activities Debt ............................................. 1 08
Demographic and Econo mic Statistics ..................................................................... 1 09
Principal Employers ............................................................................................... 1 10
Full -Time Equivalent City Government Employees by Function ............................... 1 12
Operating Indicators by Function ............................................................................. 114
Capital Asset Statistics by Function ......................................................................... 1 16
INTRODUCTORY SECTION
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C ITY OF S ARATOGA
C ITY H ALL
13777 F RUITVALE A VENUE
S ARATOGA , C ALIFORNIA 95070
(408) 868 -1200
November 12, 2013
Honorable Mayor, City Council, and Citizens of the City of Saratoga, California
The Comprehensive Annual Financial Report (CAFR) of the City of Saratoga for the year ended June 30,
2013 is hereby submitted in accordance with mandated statutes. These statutes require the City of Saratoga to
annually issue a report on its financial position and activity, and that an independent firm of certified public
accountants audits this report. This annual report was prepared in accordance with accounting principles
generally accepted in the United States of America. City Management is responsible for both the accuracy of
the data and the completeness and fairness of the presentation, including all disclosures.
To provide a reasonable basis for making these representations, the City has established internal controls to
provide reasonable rather than absolute assurance that the financial statements will be free of material
misstatement. To the best of our knowledge and belief, the enclosed data is accurate in all material respects
and is reported in a manner designed to present fairly the financial position and results of operations of the
various funds of the City. Information contained 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, 2013, along with additional disclosures and financial information designed to enable the reader to
gain an understanding of the City’s financial activities.
The report was prepared as prescribed in Governmental Accounting Standards Board (GASB) Statement
No. 34, Basic Financial Statements and Management’s Discussions and Analysis for State and Local
Governments. To facilitate the general public’s understanding and usefulness of the City of Saratoga’s
financial statements, GASB Statement 34 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 formal letter of transmittal is designed to complement the
MD&A and should be read in conjunction with it.
The CAFR is presented in the following three sections:
1. Introductory Section – The Introductory Section, which is unaudited, includes this letter of
transmittal, the Government Finance Officers Association’s (GFOA’s) Certificate of Achievement
for Excellence in Financial Reporting to the City, a list of the City of Saratoga’s elected officials and
administrative personnel, and an organization chart.
2. Financial Section – This section includes the Independent Auditor’s Report on the financial
statements and schedules, Management’s Discussion and Analysis on fiscal operations, and the Basic
Financial Statements which include Government-Wide and Fund Financial statements, the Basic
Financial Statement Notes, and Required Supplementary Information.
3. Supplementary Information Section – The Supplementary Information section includes Non-Major
Governmental Fund statements, Internal Service Fund Statements, and Capital Asset Statements, and
the Statistical Section with selected financial and demographic information generally presented on a
multi-year basis, is unaudited.
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Unaudited sections of this document are presented to supplement the basic financial statements. While not
audited, the supplemental information is required by the Governmental Accounting Standards Board, who
considers it to be an essential part of financial reporting for operational, economic and historical context.
THE REPORTING ENTITY AND ITS SERVICES
The City of Saratoga (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 contained a
population of 30,706 at January 1, 2013, as reported by the Department of Finance. The City is a general law
city of the State of California and operates under a council-manager form of government. Policymaking and
legislative authority are vested in the City Council, which consists of a Mayor, Vice Mayor and three
additional council members. City Council members are elected at-large for staggered four-year terms. The
Mayor is selected annually by the City Council. The City Council is responsible for, among other things,
passing ordinances, adopting the budget, appointing members to the City’s seven advisory commissions and
hiring the City Manager and City Attorney. The City Manager is responsible for implementing the policies
and ordinances of the City Council, overseeing the daily operations of the City, and recommending
appointments of the City's department directors to the City Council.
The City provides a limited range of services including public safety, development regulation, public works,
community and recreation activities and events, and general administrative functions. As a minimal service
city, activities are supplemented through numerous contracts with others. Contracted services include, but
are not limited to, public safety, infrastructure maintenance, engineering services, legal services and
recreation activities. The City is also committed to citizen participation in the evaluation, expansion and
enhancement of services.
Saratoga residents who wish to assist the City Council in forming government policy may do so by serving
on an advisory commission. The commissions act in an advisory capacity to the City Council, and are
comprised of the Heritage Preservation Commission, Library Commission, Parks and Recreation
Commission, Planning Commission, Public Safety Commission, and Youth Commission.
The financial reporting entity (the City) includes all the fund activity of the primary government, as well as
all of its component units. Component units are legally separated entities for which the City is fully
accountable. The City’s Saratoga Public Financing Authority (PFA) component unit which provided
financial oversight of local bond obligations was finalized in fiscal year 2005/06. The Authority’s final
financial report was issued for fiscal year 2006/07. Blended component units, although legally separate
entities, are in substance, part of the City’s operations and data from these units are combined with data of the
City. Accordingly, the operations of the Landscaping and Lighting Assessment Districts are reported in the
City’s financial statements.
ECONOMIC CONDITIONS AND OUTLOOK
Within close proximity to many businesses associated with the high technology industry, Saratoga is viewed
as a desirable place to live and serves primarily as a residential community to the Silicon Valley. There is
limited commercial or industrial activity within city boundaries.
Due to its highly rated schools and beautiful neighborhoods nestled within the foothills at the edge of the
valley, Saratoga has grown into an affluent residential city and in general is fiscally protected by the
stability of its’ tax and development fee revenues. As is typical for California cities, the City of
Saratoga’s largest funding sources are property tax, franchise fees, sales tax, and development fees and
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permits. It should be noted however, that while development fees are a significant funding source;
expenses related to the intake of this fee-based revenue more than offsets the revenue received.
Property Tax
Effective with the 2006/07 fiscal year, the City began receiving a significant increase in property tax
revenues due to the passage of Assembly Bill 117. This legislation increased the property tax percentage
allocated to the City under the Tax Equity Allocation (TEA) formula.
Allocation inequality originally arose from the passage of Proposition 13 in 1978, which froze property
taxes at their current level for all cities across the State. This action created significant problems for cities
with low property tax rates. Subsequently, Section 98 of the California Revenue and Taxation Code was
passed establishing a minimum tax equity allocation of 7% of the 1.0% ad valorem tax to those cities
below the average rate as a condition for Counties to receive trial court funding. Impacts to ERAF
created by the shift were backfilled by the State. Because Santa Clara County determined it would
receive less from trial court funding than from the additional tax moneys flowing to the four low tax cities
(Saratoga, Cupertino, Los Altos Hills, and Monte Sereno), additional legislation was enacted which
limited the four low property tax cities in Santa Clara County to just 55% of the 7% minimum allocation.
In 2006, Assembly Bill 117 repealed the 55% limit, however the four cities were required to continue to
remit the County’s ERAF rate on these funds so that the bill would have no effect on the State Budget,
and therefore avoid the Appropriations Committee. Unfortunately, the ERAF rate the County remits to
the State is much higher at 47.7% than the four city’s ERAF rates ranging from 7.53% to 17.37 %.)
Although made partially whole, these four cities continue to be treated differently than the State’s other
TEA cities. For Saratoga, the 2006 legislative adjustments increased revenues from 3.85% to 5.46% of
the 1.0% property tax paid by residents; however it remains below the minimum 7.0%. Due to this
difference in treatment, efforts to bring the four cities up to the full tax rate continue.
Franchise Fees
Franchise Fees are assessments on a number of homeowner based utility services, including gas, electricity,
water, cable, and solid waste. These assessments are integrated into the utility agreements, to be collected
and remitted by the service companies. The assessments are determined by easement formulas or a
percentage of service costs and are a pass-through fee on their billings. With most of these services
considered necessities in an urban setting, there is little fluctuation in most of the revenues stream. Cable
revenue has increased due to growth in the use of enhanced cable services. And, over the last several years,
solid waste franchise fee revenue has increased with the rise in service charges. Both of these fees are
expected to remain fairly flat in the future.
Sales Tax
With Saratoga primarily a residential community with limited retail sources, Sales Tax is small in comparison
to other cities of similar size. In an average year, the City receives approximately $1 million in Sales Tax,
which is derived primarily from restaurants, grocery and drug stores, and gas stations. These revenue
categories have remained fairly consistent over time as they provide a good balance to meet local needs.
Revenue is not expected to grow significantly in the future as spending habits are migrating to online
purchases, nor is it expected to decrease significantly as the Sales Tax comes from basic services and goods
the community requires.
Development Fees
Development Fees revenue is derived from services related to planning reviews, planning applications,
building plan reviews, engineering reviews, building inspections, and all permits, fees and costs associated
with performing these activities. These services are regulatory to ensure compliance with all applicable laws,
and to ensure health and safety of the community. Although the entire community benefits from an enforced
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regulatory program, the service requestor initiates the development change and benefits the most from it, and
therefore should pay most if not all of the costs. While in the past, the financial strength of the Saratoga
community has insulated this revenue source from minor economic fluctuations, the last few years have
proven that development activity does correlate with the stronger economic highs and lows.
Fiscal Outlook
For Saratoga, these main funding sources are considered to be stable and reliable most of the time. In
comparison to other cities, Saratoga suffered only a minor decline in property tax and sales tax revenues with
the economic downturn of 2008. However, the backlash impact on planning fees, building permits and
interest revenues combined with this downturn created a substantial revenue reduction overall, prompting the
City’s response for reductions in staffing and operations. This economic low, known as the ‘Great
Recession’, was much more severe than normal and the impacts were considered unusual.
In the spring of 2012, signs of recovery began to emerge. Property Tax revenues began to pick up, with total
General Fund Property Tax revenues increasing by more than 8% in FY 2012/13. A trend in Transfer Tax
fee increases showcased this upturn in the housing market. While Property Tax revenues continue to grow,
there are signs that the housing market has tempered its pace, prompting conservative Property Tax revenue
projections of 3% for the following budget year and into the near future.
Franchise Fee revenue remained stable throughout the recession due to the nature of the revenue. With no
expectation for growth, minimal revenue increases are projected each year, in line with service fee increases.
FY 2012/13 Sales Tax revenue fell slightly from the prior year, but as the decrease was due to corrections in
the State’s payment estimates and allocations, it was clear the overall strength of the economy remained
strong. While encouraging, minimal actual growth is expected in future years as the City’s land use structure
consists primarily of built-out residential neighborhoods and a small number of commercial developments,
thereby limiting large Sales Tax revenue generating sources.
During the downturn, annual Development Fees dropped by more than $700,000 in two years’ time as a
result of the decreasing housing prices and credit tightening. While revenues are not yet back up to pre-
recession levels, FY 2012/13 revenues demonstrated a healthy resurgence in construction activity in
alignment with other strengthening revenues.
California’s overall economy is slowly improving, with Saratoga and the rest of the San Francisco Bay Area
cities at the forefront of this swell. Even the State’s finances appear to have stabilized. However, ongoing
reduced funding levels continue to have cities concerned that any unprotected State or County-based funding
is still at risk, even with Proposition 1A protecting cities from unrestrained State takeaways. With this
continuing fiscal uncertainty and with the anticipation of ever-increasing operating and pension costs,
Saratoga plans to continue operations at basic service levels in preparation for funding impacts as the new
normal of government emerges. The Capital Improvement Program continues to be funded through
dedicated funding sources, grant money, and residual funding from prior year operations.
FINANCIAL INFORMATION AND MAJOR INITIATIVES
Financial Controls
Management of the City is responsible for establishing and maintaining an internal control structure designed
to ensure that the assets of the City are protected from loss, theft or misuse, and to ensure that adequate
accounting data is compiled to allow for the preparation of financial statements in conformity with generally
accepted accounting principles. The internal control structure is designed to provide reasonable, but not
absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1)
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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.
For Cash Management, the City practices 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. Cash management is tracked by fund and reconciled monthly.
In addition, the City maintains extensive budgetary controls. The objective of these controls is to ensure
compliance with legal provisions embodied in the annual appropriated budget approved by the City Council.
Activities of the general fund, special revenue funds, capital projects funds and debt service funds are
included in the annual appropriation.
The level of budgetary control (i.e., the level at which expenditures cannot exceed the appropriated amount)
is at the fund level. The City also maintains an encumbrance accounting system as another method of
maintaining budgetary control. Encumbered amounts lapse at year-end with the exception of the Capital
Improvements Projects, which are multiple-year projects. On occasion, outstanding encumbrances of a
material nature are reviewed by the responsible department at year end, and if deemed critical, a
recommendation is made to the City Council to take action by Resolution to re-appropriate these funds into
the following year’s budget.
Major Initiatives
The fiscal year 2012/13 Budget was developed with a focus on attaining a sustainable operating structure
which maintained service levels under expectations of continued revenue reductions. With the ongoing
potential for takeaways due to the State’s fiscal struggles, departmental budgets were held to basic service
levels and staffing costs were lowered through salary and benefit reductions attained during the prior year’s
labor negotiations.
The Operating Budget focused on maintaining core services. A small amount of funding was provided to
encourage business development through a Chamber of Commerce subgroup which focused on promoting
the Village as a destination to increase business activity. The City also sought to improve communications
and involve citizens in City activities through enhancements to the City’s radio station control system,
improvements in the Community Events process, and Social Media Outreach tools.
With limited funding available for new Capital Projects in FY 2012/13, staff concentrated on completing
existing projects already budgeted and standard ongoing maintenance projects for storm drain and sidewalk
repairs, and traffic safety. Available City funding was used primarily to leverage grant funding for Street
projects and for two safety projects. In conjunction with promoting Saratoga businesses, funding was also
allocated for a new Business Development project to promote City businesses.
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INDEPENDENT AUDIT
The City engaged Chavan & Associates, LLP to express an opinion on the financial statements based on
their audit. The audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation. 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 City’s Annual Financial Report received an unqualified
(clean) opinion from the auditors. The independent auditors’ report is presented as the first component of
the financial section of this report.
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 A-133, Audits of States, Local Governments, and Non-Profit
Organizations. The City’s federal financial assistance program also received an unqualified (clean)
opinion from the auditors.
Awards
The Government Finance Officers Association (GFOA) of the United States and Canada awarded a
Certificate of Achievement to the City for its Excellence in Financial Reporting on the CAFR for the fiscal
year ended June 30, 2012. In order to be awarded a Certificate of Achievement, the City published an easily
readable and efficiently organized financial report. This report satisfied both generally accepted accounting
principles and applicable legal requirements.
The Certificate of Achievement is valid for a period of one year. We believe our current CAFR continues to
meet the Certificate of Achievement program’s requirements, and plan on submitting it to the GFOA to
determine its eligibility for another certificate.
ACKNOWLEDGEMENTS
This CAFR represents the culmination of numerous hours of hard work expended by many individuals in the
Finance & Administrative Services Department. In particular, we would like to express our appreciation to
Robert Edris, Sr. Accountant for his preparation of this annual financial report, and to our supporting staff
members: Glenda Cracknell, Sr. Accountant; Ann Xu, Accountant; Julie Ingraham, Karen Caselli, and Gina
Fitch, Accounting Technicians for their assistance with the audit and exemplary services throughout the year.
Furthermore, we would like to thank Chavan & Associates, LLP Certified Public Accountants for their
helpful assistance in the preparation of this report. Finally, we would like to give credit to the City Council
for their ongoing interest and support in planning, conducting and advising on the operations of the City in a
responsible and representative manner.
Respectfully submitted,
Dave Anderson Mary Furey
City Manager Finance and Administrative Services Director
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CITY OF SARATOGA
ELECTED OFFICIALS AND
ADMINISTRATIVE PERSONNEL
As of June 30, 2013
CITY COUNCIL
Jill Hunter - Mayor
Emily Lo – Vice Mayor
Howard Miller
Chuck Page
Manny Cappello
CITY STAFF
Dave Anderson – City Manager
Crystal Morrow – City Clerk
Mary Furey – Finance & Administrative Services Director
James Lindsay – Community Development Director
John Cherbone – Public Works Director
Michael Taylor – Recreation & Facilities Director
CITY ATTORNEY
Richard S. Taylor – Shute, Mihaly & Weinberger
INDEPENDENT AUDITORS
Chavan & Associates, LLP Certified Public Accountants
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City of Saratoga - Organization Chart
City AttorneyCity Manager
Community Development
Department
Community Development
Director
Facilities Division
1 Facility Maint.Supervisor
1 Facility Maint. Leadworker
2 Facility Maint. Workers
.60 Facility Coordinator
Planning Division
1 Senior Planner
2 Assistant Planners
1 Arborist
1 Office Specialist
Engineering Division
1 Sr. Civil Engineer
1 Associate Engineer
.90 Administrative Analyst
.75 Office Specialist
Parks Division
1 Manager -Parks
1 Park Maint. Leadworker
1 Park Maint. Specialist
5 Park Maint. Workers
.50 Office Specialist
Finance Division
.90 Accountant
3 Accounting Technicians
Information Technology
Division
1 IT Analyst
Finance & Administrative
Services Department
Finance & Administrative
Services Director
Recreation & Facilities
Department
Recreation & Facilities
Director
Public Works
Department
Public Works
Director
Recreation Services Division
1 Senior Recreation Supervisor
1 Recreation Supervisor
.75 Office Specialist II
1 Office Specialist III
Streets and Fleet Division
1 Manager -Streets and Fleet
1 Street Maint. Leadworker
1 Street Maint. Specialist
4 Street Maint. Workers
.50 Office Specialist
Building Division
1 Building Official
2 Building Inspectors
1 Plan Check Engineer
1 Office Specialist
Citizen Advisory
Commissions &
Committees
Citizens of Saratoga
Elected City Council
Human Resources Division
1 HR Manager
City Manager's Office
1 Administrative Analyst
.50 Executive Assistant
Office of the City Clerk
1 City Clerk
.50 Deputy City Clerk
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FINANCIAL SECTION
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Page | 11 1475 Saratoga Ave, Suite 180, San Jose, CA 95129
Tel: 408-217-8749 • E-Fax: 408-872-4159
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INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and Members of the
City Council of the City of Saratoga
Saratoga, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund,
and the aggregate remaining fund information of the City of Saratoga (the “City"), as of and for the year
ended June 30, 2013, and the related notes to the financial statements, which collectively comprise
City’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
The City’s management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the United States of America;
this includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in the United States of America, the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the City’s
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, each major fund, and the aggregate
remaining fund information of the City of Saratoga, as of June 30, 2013, and the respective changes in
financial position and, where applicable, cash flows thereof for the year then ended in accordance with
accounting principles generally accepted in the United States of America.
Page | 12 1475 Saratoga Ave, Suite 180, San Jose, CA 95129
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Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and required supplementary information, as listed in the table of contents, be presented to
supplement the basic financial statements. Such information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board who considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate
operational, economic, or historical context. We have applied certain limited procedures to the required
supplementary information in accordance with auditing standards generally accepted in the United
States of America, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with management’s responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic
financial statements. We do not express an opinion or provide any assurance on the information because
the limited procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City’s financial statements as a whole. The introductory section, combining
individual non-major fund statements and schedules, and statistical section, as listed in the table of
contents, are presented for purposes of additional analysis and are not a required part of the financial
statements. The combining individual non-major fund statements and schedules have been subjected to
the auditing procedures applied in the audit of the basic financial statements and, in our opinion, 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 do not express an opinion or provide any
assurance on them.
Other Information
As discussed in Note 1 to the financial statements, the City adopted the provisions of GASB Statement
No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net
Position, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, effective
July 1, 2012.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated October 18,
2013 on our consideration of the City’s internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts, and grant agreements and other
matters. The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the City’s internal control
over financial reporting and compliance.
October 18, 2013
San Jose, California
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013
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INTRODUCTION
The Management’s Discussion and Analysis (MD&A) is a required section of the City’s Comprehensive
Annual Financial Report (CAFR), as shown in the overview below. The purpose of the MD&A is to
presents discussion and analysis of the City’s financial performance during the fiscal year that ended on
June 30, 2013. This report will (1) focus on significant financial issues, (2) provide an overview of the
City’s financial activity, (3) identify changes in the City’s financial position, (4) identify any individual
fund issues or concerns, and (5) provide descriptions of significant asset and debt activity.
This information, presented in conjunction with the annual Transmittal Letter and Basic Financial
Statements is intended to provide a comprehensive understanding of the City’s operations and financial
standing.
Required Components of the Annual Financial Report
FISCAL YEAR 2012/13 FINANCIAL HIGHLIGHTS
Total net position increased by $2.3 million last fiscal year.
The City's assets exceeded its liabilities by $ 127.7 million; assets totaled $142.5 million and
liabilities were $ 14.8 million.
Net position is comprised of $112.4 million for investment in capital assets, net of depreciation
and related debt; $2.0 million restricted for specific purposes; and $13.4 million in unrestricted
Net position (reference pg #27).
Total City-wide revenues were $21.7 million which consists of program revenue of $7.8
million and general revenues of $13.8 million (reference pg #28).
Total City expenses were $19.4 million (reference pg #28).
Total Governmental Fund’s fund balances were $14.8 million, consisting of $9.9 million in the
General Fund, $3.4 million in the Capital Improvement Funds, and $1.5 million in the Other
Governmental Funds (reference pg #29). This represents an increase of $948 thousand from
last year.
General Fund revenues were $17.6 million, while General Fund expenditures were $15.6
million (reference pg #31).
Management’s
Discussion & Analysis
Government-Wide
Financial Statements
Fund
Financial Statements
Notes to the
Financial Statements
Basic
Financial Statements
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013
14
THE BASIC FINANCIAL STATEMENTS
The Basic Financial Statements are comprised of 1) Government-wide (City-wide) Financial Statements, and;
2) Fund Financial Statements. These two sets of financial statements provide the reader two different
perspectives of the City's financial activities and financial position.
Government-Wide Financial Statements provide a longer-term view of the City's activities as a whole, and
comprise the Statement of Net Position and the Statement of Activities. The Statement of Net Position
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 Position 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 Position and the Statement of Activities are also required to be
separated into governmental activities or business-type activities in order to distinguish between these two
types of activities of the City. In the case of the City of Saratoga, there are no business-type activities as of
June 30, 2013.
Fund Financial Statements report the City's operations in more detail than the government-wide statements
and focus primarily on the short-term activities of the City's general fund and other major funds. The Fund
Financial Statements measure only current revenues and expenditures and fund balances; they exclude capital
assets, long-term debt, and other long-term amounts.
Major funds account for the major financial activities of the City and are presented individually, while the
activities of non-major funds are presented in summary, with subordinate schedules presenting the detail for
each of these other funds. Major funds are explained below.
The Government-Wide Financial Statements
Government-wide financial statements are prepared on the accrual basis, which means they measure the flow
of all economic resources of the City as a whole. The Statement of Net Position and the Statement of
Activities present information about the following:
Governmental Activities - All of the City's basic services are considered to be governmental activities,
including general government, community development, public safety, transportation, and, culture and
leisure. These services are supported by general City revenues such as taxes, and by specific program
revenues such as development and recreation program fees.
Business-Type Activities - This category includes enterprise activities such as water, sewer, and utilities.
Unlike governmental services, these services are fully supported by charges paid by users based on the
amount of services they use. The City of Saratoga does not have any business-type activities at this time.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The City, like other local governments, uses fund
accounting to ensure and demonstrate compliance with finance-related legal requirements.
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013
15
Fund financial statements provide detailed information about each of the City's most significant funds, called
major funds. The concept of major funds, and the determination of which are major funds, was established
by GASB Statement 34 and replaces the concept of combining like funds and presenting them in total.
Instead, each major fund is presented individually, with all non-major funds summarized and presented only
in a single column. Subordinate schedules present the detail of these non-major funds. Major funds present
the major activities of the City for the fiscal year, and may change from year to year as a result of changes in
the pattern of the City's activities. The City's funds are segregated into three categories: governmental funds,
proprietary funds, and fiduciary funds.
Governmental Funds - The City's basic services are reported in governmental funds, which focus on how
money flows into and out of those funds and the balances available at year-end. Financial statements are
prepared on the modified accrual basis, which means they measure only current financial resources and uses.
Carrying amounts for capital assets and other long-lived assets, along with long-term liabilities are not
presented on the balance sheet in the governmental fund financial statements. Unlike the government-wide
financial statements, governmental fund financial statements focus on near-term inflows and outflows of
spendable resources, as well as on balances of spendable resources available at the end of the fiscal year.
Such information may be useful in evaluating the City's near-term financing requirements.
Proprietary Funds – Internal service funds are an accounting device used to accumulate and allocate costs
internally among the City’s various functions. The City uses internal service funds to account for liability
and risk management, workers compensation, office equipment support services, information technology
services, vehicle and building maintenance, and vehicle and information technology equipment
replacement. Because the internal service funds benefit the governmental functions, they have been
included with the governmental activities in the government-wide financial statements.
Fiduciary Funds – These funds account for assets held by the City in a trustee capacity or as an agent for
individuals, private organizations, other governmental units, and/or other funds. Fiduciary funds are not
reflected in the government-wide financial statements because these resources are not available to support
the City's programs. Currently the City does not have any fiduciary funds.
NOTES TO THE FINANCIAL STATEMENTS
Notes to the Financial Statements provide additional information that is essential to a full understanding of
the data provided in the government-wide and fund financial statements. The notes can be found
immediately following the fund financial statements.
REQUIRED SUPPLEMENTARY INFORMATION
Required supplementary information other than through the MD&A follows the Notes and includes a
budgetary comparison for the General Fund as presented in the governmental fund financial statements,
and information on the modified approach for city streets and infrastructure.
SUPPLEMENTARY INFORMATION
Combining and individual fund statements and schedules are included to provide additional information
on non-major governmental funds including special revenue, debt service, and capital project funds, as
well as proprietary internal service fund information and uses of capital assets. An un-audited statistical
section provides historical and current data on financial trends, revenue and debt capacity, demographic
and economic information, and operating information.
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013
16
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Net position may serve over time as an indicator of the City's financial position. The City's Total Net
Position increased $2,293,952, from $125,387,400 in fiscal year 2011/12 to $127,681,352 in fiscal year
2012/13.
The most significant portion of the City's net position ($112,353,273 or 88.0%) accounts for its investment in
capital assets, (e.g., land, buildings, general government infrastructure, equipment, etc.) less any related debt
used to acquire those assets that are still outstanding. These capital assets represent infrastructure which
provides services to the citizens, consequently, these assets are not available for future spending.
$1,970,887 or 1.5% of the City's net position is subject to external restrictions on how they may be used. Of
these restricted net position, $621,948 is restricted for lighting and landscaping assessment districts, $463,182
is restricted to environmental programs, and $885,757 is for repayment of long-term debt.
The remaining $13,357,192 or 10.5% of the City's net position are unrestricted and may be used to meet the
City's ongoing obligations to citizens and creditors.
Governmental Activities
2013 2012
Assets
Current assets 18,646,780$ 18,023,582$
Capital assets 123,893,273 123,196,676
Total Assets 142,540,053 141,220,258
Liabilities
Current liabilities 3,228,709 4,051,633
Long-term debt 11,629,992 11,781,225
Total Liabilities 14,858,701 15,832,858
Net Position
Net investment in capital assets 112,353,273 111,201,676
Restricted for environmental services 463,182 562,504
Restricted for special assessment funds 621,948 513,182
Restricted for debt service 885,757 862,415
Unrestricted 13,357,192 12,247,623
Total Net Position 127,681,352$ 125,387,400$
Net Position
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013
17
Governmental Activities Increase
Functions/Programs 2013 2012 (Decrease)
Program Revenues
Charges for services 7,154,600$ 5,625,974$ 1,528,626$
Operating grants and contributions 75,000 1,319,318 (1,244,318)
Capital grants and contributions 599,067 2,337,120 (1,738,053)
Total Program Revenues 7,828,667 9,282,412 (1,453,745)
General Revenues
Property taxes 9,152,499 8,456,687 695,812
Sales taxes 1,051,121 1,100,489 (49,368)
Local taxes 769,357 683,383 85,974
Franchise taxes 1,919,750 1,852,390 67,360
Motor vehicle in-lieu 16,402 15,830 572
Intergovernmental revenues 766,090 910,331 (144,241)
Investment earnings 50,562 66,623 (16,061)
Other revenues 112,906 118,181 (5,275)
Total General Revenues 13,838,687 13,203,914 634,773
Expenses
General and intergovernmental services 4,143,254 3,486,353 656,901
Public safety 4,381,644 4,299,853 81,791
Public works 6,921,349 9,121,435 (2,200,086)
Community services 1,804,331 1,995,948 (191,617)
Community development services 1,712,706 1,553,119 159,587
Interest on long-term debt (unallocated)410,118 452,645 (42,527)
Total Expenses 19,373,402 20,909,353 (1,535,951)
Increase / (Decrease) in Net Position 2,293,952 1,576,973 716,979
Net Position, Beginning of Year 125,387,400 123,810,427 1,576,973
Net Position, End of Year 127,681,352$ 125,387,400$ 2,293,952$
Statement of Changes in Net Position
As shown in the above Statement of Changes in Net Position schedule, the net change in program
revenues from the prior fiscal year for governmental activities is a decrease of $1,453,745. The net
change in general revenues from the prior year is an increase of $634,773, for a total decrease in revenues
of $818,972. The net change in expenses from the prior year was a decrease of $1,535,951.
With total program and general revenues for fiscal year 2012/13 at $21,667,354 and total expenses at
$19,373,402, the net activity resulted in an increase in Net Position of $2,293,952.
An analysis and graphical representation of the changes in revenues and expenditures by type of
significant events follows:
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013
18
Revenues
Although a number of revenue categories increased during FY 2012/13, the offset from large reductions
in operating and capital grant revenues resulted in a net decrease of $818,972 in total program and general
revenues.
CHART OF REVENUE INCREASE OR (DECREASE)
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
$10,000,000
FY 2011/12 FY 2012/13
Total Revenues by Category
Increases in Revenues
Program Revenues decreases were offset by a substantial increase in one category:
Charge for Services revenue increased by $1,528,626 due in part to a more than $1 million increase in
maintenance project revenues. Additional increases came from development revenues, a new solid
waste surcharge for waste management expenses, and the new VLF surcharge for street maintenance.
General Revenues increased $634,773 from the prior year. The most significant changes include:
A $695,812 increase in Property Tax revenue includes a one-time PTAF reimbursement payment of
$177,881, with the remainder from increases in secured, unsecured, and document transfer taxes,
illustrating a healthy resurgence in the housing market with property turnover and rising prices.
An increase of $85,974 in local taxes is a combination of increases in Transient Occupancy Tax
($22,779), and taxes related to the increase in construction activity: Supplemental Business License
Tax ($23,241) and Construction Tax ($40,881).
A $67,360 increase in Franchise Tax came primarily from a jump in Solid Waste Fee revenue
($45,714), but also includes increases in Water Fees ($14,116) and Cable Fees ($18,996). Gas and
Electric Fee decreases ($11,492) offset the increases.
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013
19
Decreases in Revenues
Program Revenues decreased substantially in grant revenues:
A decrease of $1,244,318 in Operating Grants is a result of two large one-time grants received in the
prior year for 1) $750,000 for the purchase of land for future use as an open space park, and 2)
$466,818 in Prop 1B grant revenue for street maintenance work.
A $1,738,053 decrease in Capital Grants and Contributions is a result of 1) a reduction in one-time
grant revenues received last year and 2) the change in grant policy to eliminate the accrual of all grant
expenditures as receivables. Only grant expenditures which are reimbursed within 75 days of year
end will be accrued, as is the standard for other types of receivables. Invoiced but unreimbursed
receivables are offset through a unearned revenue journal.
General Revenues decreased substantially in two categories:
A $144,241 decrease in Intergovernmental Revenue came from a reduction in Gas Tax revenue. The
decrease in Gas Tax is a result of AB 1465 (2012). This legislation shifted a portion of Section 2103
funds to the State Highway account to backfill for funds transferred from that account to the State’s
General Fund to pay for transportation debt service. The State’s reconciliation included adjustments
to both 2011/12 and 2012/13 fiscal year allocations, causing the large decrease.
A $49,368 decrease in Sales Tax revenues resulted from a combination of the State’s estimates which
were too high in the prior year, which subsequently resulted in a FY 2011/12 overpayment and a
reconciling reduction in FY 2012/13 payments to compensate for the overpayment. There were also
several adjustments for incorrect prior year allocations.
Expenses
The FY 2012/13 net change in expenses for Governmental Activities was a decrease of $1,535,951 which
came primarily from reductions in Public Works capital spending as illustrated in the chart below.
CHART OF EXPENSE INCREASE OR (DECREASE)
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
$10,000,000
FY 2011/12 FY 2012/13
Total Expenses by Category
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013
20
Increases in Expenses
Significant increases in expenditures from the prior year occurred in several categories:
General and intergovernmental services increased by $695,901, primarily from the $245,444 payoff
of the CalPERS side fund. Growth in labor and operational costs also contributed toward the
increase.
Public Safety increased by $81,791 as a result of an increase in the cost of the Sheriff’s law
enforcement contract.
Community Development Services increased by $159,587, consisting of staff cost increases in the
Development Services and Building and Inspection programs.
Decreases in Expenses
Notable decreases were related to a reduction in capital project expenditures:
Public Works (primarily street capital improvement projects) decreased in total by $2,200,086, and
Community Services (primarily park capital improvement projects) decreased by $191,617.
MAJOR AND OTHER GOVERNMENTAL FUNDS: CHANGE IN FUND BALANCE
A summary of the changes in fund balance of the Major Funds and Other Governmental Funds is
presented below:
Other
Capital Governmental
General Improvement Funds
Total Revenues 17,635,988$ 2,776,901$ 1,375,340$
Total Expenditures 15,567,935 3,979,272 1,292,554
Revenues Over
(Under) Expenditures 2,068,053 (1,202,371) 82,786
Transfers in 106,000 1,184,500 -
Transfers out (1,184,500) (106,000) -
Net change in fund balances 989,553 (123,871) 82,786
Beginning of year 8,929,121 3,544,205 1,424,919
End of year 9,918,674$ 3,420,334$ 1,507,705$
Major Funds
Included in the Major Funds are the General Fund and the Capital Improvement Funds. The Other
Governmental Funds include twenty-five Lighting and Landscape Assessment Districts, accounted for as
one fund in the financials and the Library Bond Debt Service Fund. The total net change from fiscal year
transactions, including Major Funds and Other Governmental Funds, was an increase of $948,468.
General Fund
As shown in the preceding Major Funds table, the net change in the General Fund's ending fund balance
is an increase of $989,553. A Net Gain is a result of the net operating revenues exceeding net operating
expenditures. A number of the General Fund revenue categories increased from the prior year for a net
revenue gain of $1,375,340, most notably property tax revenues and development related fees. The
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013
21
addition of the Measure B tax revenue to fund street maintenance activities, and a solid waste surcharge to
fund environmental programs contributed to the gain. General Fund revenues budgets are conservatively
based upon prior year experience and revenue specific information; however the strengthening of the
housing market at a fairly rapid pace and the added revenue streams resulted in a large positive variation
from budgeted revenues.
Expenditures are budgeted at anticipated program needs at not-to-exceed projected funding levels. With
the increase development activity, related expenditures increased from the prior year. Additional
increases came from salary and benefit cost increases, sheriff contract increases, and rising internal
service fund costs.
Capital Improvement Project Fund
As shown in the table above, the net change in the Capital Improvement Fund decreased by $128,871 as a
portion of the capital improvement project work completed over the course of the year utilized prior year
funding in addition to current year funding.
Other Governmental Funds
Of the net $82,786 increase in Other Governmental Funds, the collective 25 Landscaping & Lighting
funds comprise $59,444 of the total. The Library Bond debt service fund accounts for the remaining
$23,342 of the increase. Both net gains represent the excess of revenue over expenditures in th e normal
course of operations.
GENERAL FUND – BUDGETARY HIGHLIGHTS
Changes from the City's General Fund original budget to the final budget are detailed in the Required
Supplementary Information Section along with a comparison to actual activity for th e year ended.
Changes to the City's budget that increase or decrease appropriations in a fund must be approved by a
resolution of the City Council. Modifications to the budget that are a realignment of fiscal activities with
no impact to the fund's bottom line may be approved by the City Manager. Significant changes from the
City’s original budget to the final budget are summarized as follows:
Revenues and Transfers In
Adopted to Final Budget
Fiscal Year Ended June 30, 2013
+=
Adopted Budget Final
Budget Adjustments Budget
Revenues 15,821,815$ 871,794 16,693,609$
Transfers in 106,000$ - 106,000$
The General Fund adopted revenue budget was $15,821,815, and adopted transfers in was $106,000. At
mid-year, budget adjustments were made to increase expected revenues. The Sheriff’s Office provided
the City with a very large contract refund of $303,294. This refund was not budgeted as refunds may or
may not be received, and the amount is unknown at the time of budget adoption. Impacts from the upturn
in the housing market coupled with historically low interest rates contributed to an expected $250,000
increase in property taxes, and $398,500 in various planning, building, and engineering fees.
On the other hand, at mid-year Sales Tax was trending far below budget leading to a budget decrease of
$60,000. By year-end, sales tax revenues had partially recovered, and were over budget by $15,000.
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013
22
Meanwhile, historically low interest rates were continuing to fall even in the midst of the improving
economy. This led to a $10,000 decrease in budgeted interest, from $55,100 to $45,100.
Disappointingly, interest earning ended the year even lower, with $28,670 received. Another mid-year
budgeted decrease came from the notification of another cell tower lease cancellation. However, Metro
PCS continued their lease payment through the end of the fiscal year, so the budget reduction wa s not
needed after all.
The original amount of $106,000 of budgeted transfers in from Gas Tax funds to reimburse the General
Fund for engineering, administrative, and project management staff time remained the only transfer in to
the General Fund.
Expenses and Transfers Out
Adopted to Final Budget
Fiscal Year Ended June 30, 2013
+=
Adopted Budget Final
Budget Adjustments Budget
Expenditures 15,803,048$ 366,311 16,169,359$
Transfers out 735,000$ 449,500 1,184,500$
The General Fund adopted expenditure budget was $15,803,048 and adopted transfers out was $735,000.
Budget adjustments were made at the City’s mid-year review; City Council members approved:
$245,444 to pay off the remaining CalPERS Employer Side Fund liability to reduce the employer
contribution rate and generate approximately $30,000 in savings, $16,185 was appropriated to pay an
unexpected West Valley Sanitation charge for their Employer Side Fund liability, and another $75,000
was appropriated for various operational funding increases, primarily related to street and parks
maintenance. Additional budget adjustments of $30,000 for backup building inspector services and
$18,225 for the purchase and installation of a new orchard well pump were approved later in the year.
Transfers Out increased by $449,500. At mid-year, Council approved $60,000 be transferred out for the
Civic Theater Master Plan Study, while $64,500 went to fund the Community Center’s new wood floor.
Later in the year, $45,000 was transferred for Parking District #3 lot repairs, and $280,000 to fund repairs
for the Hakone Gardens Driveway damage caused by failed storm drains during a heavy winter storm.
CAPITAL ASSETS
The City of Saratoga elected to use the "Modified Approach" as defined by GASB Statement No. 34 for
infrastructure reporting in which eligible infrastructure capital assets are not required to be depreciated if
the following requirements are met:
The City manages the assets using an asset management system which requires that the City (1)
perform an up-to-date inventory; (2) perform condition assessments and summarize the results using
a measurement scale; and (3) estimate the annual amount to preserve the assets at the established
condition assessment level.
The City documents that the eligible infrastructure capital assets are being preserved approximately
at or above the established and disclosed condition assessment level.
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013
23
City policy is to achieve an average Pavement Condition Index (PCI) rating of 70 for all streets , at
minimum. The City’s overall rating was 76 with 83% of streets rated as Excellent to Very Good, 14% of
streets are rated as "Good", 3% of streets rated “Poor”, and 0% of streets are rated as "Very Poor". The
City spent $2,856,603 to maintain and preserve eligible infrastructure assets. For more detailed
information on Capital Assets activity, please refer to Note 4 in the section entitled "Notes to the Basic
Financial Statements" and Note 2 in the "Required Supplementary Section". The latest assessment study
was conducted during the fall of 2010. A road assessment study update will be conducted in the fall of
2013.
As of June 30, 2013, the City had $123,893,273 invested in a variety of capital assets as reflected in the
following schedule, which represents an increase of $696,597 or a 0.6% increase from the prior year.
Governmental Activities
2013 2012
Land 14,585,401$ 14,510,401$
Building and structures 18,203,584 16,969,831
Machinery and equipment 663,288 604,135
Infrastructure 82,825,336 83,945,356
Construction in progress 7,615,664 7,166,953
Total Capital Assets, Net of Depreciation 123,893,273$ 123,196,676$
Capital Assets at Year End
Net of Depreciation
The following reconciliation summarizes the changes in Capital Assets.
Balance Balance
July 1, 2012 Additions Retirements Reclassification June 30, 2013
Land 14,510,401$ -$ -$ 75,000$ 14,585,401$
Building and structures 23,611,590 - - 1,868,560 25,480,150
Machinery and equipment 2,422,782 104,243 (125,586) 68,887 2,470,326
Infrastructure 104,928,913 - - 97,878 105,026,791
Construction in progress 7,166,953 2,612,974 (53,938) (2,110,325) 7,615,664
Depreciation (29,443,963) (1,966,682) 125,586 - (31,285,059)
Total Capital Assets,
Net of Depreciation 123,196,676$ 750,535$ (53,938)$ -$ 123,893,273$
Changes in Capital Assets
Major capital projects in progress during fiscal year 2012/13 included the following expenditures:
Prospect Center/19548 Prospect - $113,452
Library Improvements - $118,910
Highway 9 Traffic Safety - $774,371
Highway 9 Improvement – Phase III - $429,779
Fruitvale Avenue Median - $125,954
Village Sidewalk, Curb, and Gutters - $137,193
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013
24
Hakone Gardens Driveway & Retaining Wall - $107,004
GP Safety Element Upgrade - $164,958
Additional information on Capital Assets is included in Note 4 to the financial statements.
DEBT AND OTHER LONG-TERM OBLIGATION ADMINISTRATION
The net change in outstanding obligations for the City of Saratoga is a decrease of $501,126. Total long
term bonded debt, net of premium decreased by $476,892. Outstanding compensated absences decreased
by $24,234.
Governmental Activities
2013 2012
2011 General Obligation Bond 11,540,000$ 11,995,000$
Net Original Issue Premuim 415,954 437,846
Compensated absences 621,979 646,213
Total Outstanding Debt 12,577,933$ 13,079,059$
Outstanding Long-Term Obligation at Year End
The current portion of long-term debt ($485,000 for the refunded 2001 General Obligation Bonds for
fiscal year 2013) and $21,892 of amortized net original premium, are classified as a current liability in the
City's Statement of Net Position.
General Obligation Bonds
The City refunded the 2001 General Obligation Bonds and in their place issued General Obligation Bonds
in the amount of $11,995,000 on July 14, 2011 with interest rates on the bonds ranging from 2.0% to
4.0%, with final payment due August 1, 2031. Principal of $455,000 and interest of $412,485 were paid
during the fiscal year.
Compensated absences are accrued liabilities for vested and unpaid vacation and sick pay. The
compensated absences balance decreased during the fiscal year by $24,234 due to use and payouts of
unused compensated absences to retiring, terminated, and general employee payouts. An estimated
current liability of $440,749 is expected to be used in the next fiscal year.
Additional information on outstanding obligations can be found in Note 5 to the financial statements.
ECONOMIC FACTORS
At the time the fiscal year 2012/13 budget was developed in early spring of 2012, the economy had
stabilized and the “new normal” was upon us. In this environment of economic uncertainty, stagnant
revenues, and increasing demands from the community, the Council passed an austere budget.
Conservative revenue projections were supported by decreases in labor costs and ongoing program
expenditure reductions, resulting in a sustainable but restrictive Operating Budget. The Capital
Improvement Program Budget, which is funded by residual funding, grant funding, and dedicated revenue
streams such as Gas Tax, continued to construct projects with previously committed funding. New
project funding however was impacted by the reduction in residual funding.
Fortunately, as the prior fiscal year came to a close and the budget was adopted, a number of revenues
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013
25
began to show improvement. The improvement continued over the course of the 2012/13 fiscal year:
General Fund Property Taxes increased in total by 8.29%, ( or 6.74% if the County’s one-time PTAF
reimbursement payment is not included), with increases of almost $300,000 in Secured Property Tax,
more than $63,000 in Unsecured Property Tax, and $52,000 in Transfer Tax.
Development related fee increases were driven upward with the Housing Market resurgence as
evidenced by:
Construction Tax and Supplemental Business License Tax revenue increases of 23% (based
on building permit values) – equal to more than $64,000
Combined Planning and Building revenues jumped by 14% and Development Engineering
revenues increased by 35% - equal to almost $300,000
Transient Occupancy Tax, long an indicator of economic temperament, saw a strong uptick with an
11% increase – almost $23,000
Not all revenues reacted to a strengthening economy. Interest rates continued to slide downward to ever-
new historical lows with a bleak outlook projected. Rental income also decreased, primarily from
reduced soccer field rentals. Many other revenues remained flat – however General Fund expenses
continued to increase.
Salary and Benefit costs increased by $335,000 (5.5%), primarily due to rising benefit expenses.
With new employee benefit levels reduced through the implementation of lower cost pension plans
and the capping of medical benefits, future labor cost increases will be mitigated with the turnover of
staff over time.
These labor costs also contributed to the $93,000 (2.3%) increase in Sheriff Services, in combination
with operational cost increases. Public Safety labor costs will also be mitigated as time goes on due
to the new lower cost State regulated pension plans for public safety employees.
Consultant and Contract Services grew by more than $244,000. This is in part attributable to
$58,000 in backup building inspection services, a $40,000 increase in legal fees, $65,000 in additional
street sweeping services, $22,000 in street maintenance services, and another $72,000 in park and
landscape services. While a portion of these expenses are considered one-time costs (such as the
building inspector backup and storm related costs), some will continue on and grow in future years.
Overall, FY 2012/13 revenues grew at a faster pace than expenditures (net of transfers), both in dollars
and percentage. The substantial revenue increase which occurred in FY 2012/13 helped to firm the City’s
long-term fiscal sustainability at current levels while allowing the reinstatement of some expenditure
appropriations at mid-year in response to unplanned needs, and for operational right-sizing and flexibility.
Outlook
General Fund Revenues are not expected to continue on this rapid growth trajectory. Fiscal projections
anticipate a leveling off in revenues as the initial rebound is tempered by economic hesitation. Fiscal
uncertainty remains with us in this new normal, therefore the City plans to continue to maintain
operations at core service levels in preparation of potential funding impacts. Potential revenue impacts
include State takeaways of unprotected funding and changes in State directed revenue allocations. Known
revenue impacts will come from reductions in capital funding grants, and from the elimination of road
impact fees to fund ongoing street maintenance.
Anticipated expenditure increases include rising CalPERS rates of approximately 50% over the next
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2013
26
seven years to fund the change in rate setting and assumption factors. In addition, aging infrastructure
maintenance expenses are increasing as our city ages. Even new infrastructure increases maintenance
expenses, such as the annual refinishing of the Community Center’s new wood floor, or maintenance of
new trails, and increased water bills for tree plantings and median improvements.
In a long term status-quo projection, rising expenditures are certain, while revenue growth is not. As
local governments do not have the ability to increase taxes or other revenues at a sufficient pace to
maintain increasing operations, management must consider a long term view in the decision-making
process. One of the hardest challenges the City faces is balancing community expectations against the
fiscal reality of long-term operational practicality. The City continues to focus on this challenge.
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.
BASIC FINANCIAL STATEMENTS
This page is intentionally blank
CITY OF SARATOGA
STATEMENT OF NET POSITION
JUNE 30, 2013
27
Primary Government
Governmental
Activities
ASSETS
Current Assets:
Cash and investments 17,162,776$
Receivables:
Accounts 1,474,194
Interest 9,810
Total Current Assets 18,646,780
Noncurrent Assets:
Capital Assets:
Non-depreciable 71,356,684
Depreciable, net 52,536,589
Total Capital Assets 123,893,273
Total Noncurrent Assets 123,893,273
Total Assets 142,540,053
LIABILITIES
Current Liabilities:
Accounts payable 909,533
Accrued payroll 118,480
Other payable 30,675
Interest payable 169,973
Deposits payable 1,027,607
Claims payable 24,800
Long-term obligations - due within one year 947,641
Total Current Liabilities 3,228,709
Noncurrent Liabilities:
Long-term obligations - due in more than one year 11,629,992
Total liabilities 14,858,701
Net Position
Net investment in capital assets 112,353,273
Restricted for:
Environmental funds 463,182
Special assessment funds 621,948
Debt service 885,757
Total Restricted 1,970,887
Unrestricted 13,357,192
Total Net Position 127,681,352$
The accompanying notes are an integral part of these financial statements
CITY OF SARATOGA
STATEMENT OF ACTIVITIES AND CHANGES IN NET POSITION
JUNE 30, 2013
28
Net (Expense)
Revenue and
Changes in
Program Revenues Net Position
Primary
Operating Capital Government
Charges for Grants and Grants and Governmental
Functions/Programs Expenses Services Contributions Contributions Total Activities
Primary Government:
Governmental Activities:
General and intergovtl services 4,143,254$ 101,839$ -$ -$ 101,839$ (4,041,415)$
Public safety 4,381,644 607,552 75,000 - 682,552 (3,699,092)
Public works 6,921,349 3,315,633 - 599,067 3,914,700 (3,006,649)
Community services 1,804,331 945,794 - - 945,794 (858,537)
Community development services 1,712,706 2,183,782 - - 2,183,782 471,076
Interest on long-term debt (unall.)410,118 - - - - (410,118)
Total 19,373,402$ 7,154,600$ 75,000$ 599,067$ 7,828,667$ (11,544,735)$
General Revenues:
Taxes
Property taxes 9,152,499
Sales taxes 1,051,121
Local taxes 769,357
Franchise taxes 1,919,750
Motor vehicle-in-lieu 16,402
Total taxes 12,909,129
Intergovernmental 766,090
Investment earnings 50,562
Other revenues 112,906
Total General Revenues 13,838,687
Change in Net Position 2,293,952
Net Position - Beginning of Year 125,387,400
Net Position - End of Year 127,681,352$
The accompanying notes are an integral part of these financial statements
CITY OF SARATOGA
GOVERNMENTAL FUNDS - BALANCE SHEET
JUNE 30, 2013
29
Other Total
Capital Governmental Governmental
General Improvement Funds Funds
ASSETS
Cash and investments 10,763,288$ 3,155,295$ 1,527,516$ 15,446,099$
Receivables:
Accounts 546,897 850,249 392 1,397,538
Interest 9,088 - 722 9,810
Total assets 11,319,273$ 4,005,544$ 1,528,630$ 16,853,447$
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable 341,995$ 480,748$ 20,925$ 843,668$
Accrued payroll 103,814 962 - 104,776
Deposits payable 924,107 103,500 - 1,027,607
Other payable 30,675 - - 30,675
Unearned revenue 8 - - 8
Total liabilities 1,400,599 585,210 20,925 2,006,734
Fund Balances:
Restricted:
Environmental services 463,182 - - 463,182
Special assessment funds - - 621,948 621,948
Debt service - - 885,757 885,757
Committed:
Capital improvement program - 3,420,334 - 3,420,334
Hillside stability 675,000 - - 675,000
Assigned:
Future capital & efficiency 418,714 - - 418,714
Carryforwards 73,101 - - 73,101
Facility replacement 300,000 - - 300,000
Unassigned:
Working capital 2,923,096 - - 2,923,096
Fiscal stabilization 1,500,000 - - 1,500,000
Compensated absences 207,268 - - 207,268
Development services 667,233 - - 667,233
Other unassigned 2,691,080 - - 2,691,080
Total fund balances 9,918,674 3,420,334 1,507,705 14,846,713
Total liabilities and fund balances 11,319,273$ 4,005,544$ 1,528,630$ 16,853,447$
Major Funds
The accompanying notes are an integral part of these financial statements
CITY OF SARATOGA
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET POSITION
JUNE 30, 2013
30
Total Fund Balances - Total Governmental Funds 14,846,713$
Amounts reported for governmental activities in the statement of net position were
different because:
Capital assets used in governmental activities were not current financial resources. Therefore,
they were not reported in the Governmental Funds Balance Sheet. The capital assets were
adjusted as follows:
Non-depreciable capital assets 71,356,684
Depreciable capital assets, net 52,435,617
Total Capital Assets 123,792,301
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.(169,973)
Internal service funds are used by management to charge the costs of office stores,
vehicle and equipment maintenance and replacement, information services and replacement,
building maintenance, risk management, and workers compensation. The assets and
liabilities of the internal service funds are included in the governmental activities in
the statement of net position 1,723,790
Long-term receivables were not current available resources and therefore, were offset by
a deferred revenue amount equal to the net receivable in the governmental funds.66,154
Long-term obligations were not due and payable in the current period. Therefore, they were not
reported in the Governmental Funds Balance Sheet. The long-term liabilities were adjusted
as follows:
General obligation bonds (11,540,000)
Compensated absences (621,679)
Net original issue premium (415,954)
Total Long-Term Obligations (12,577,633)
Net Position of Governmental Activities 127,681,352$
The accompanying notes are an integral part of these financial statements
CITY OF SARATOGA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGE
IN FUND BALANCE
FOR THE YEAR ENDED JUNE 30, 2013
31
Other Total
Capital Governmental Governmental
General Improvement Funds Funds
REVENUES:
Property taxes 8,959,231$ -$ 193,634$ 9,152,865$
Special assessments 7,165 1,177,890 1,185,055
Sales taxes 1,051,121 - - 1,051,121
Other local taxes 769,357 - - 769,357
Licenses & permits 1,543,277 633,197 - 2,176,474
Fines & forfeiture 180,557 18,462 - 199,019
Intergovernmental - Federal - 974,826 - 974,826
Intergovernmental - State 364,488 777,704 - 1,142,192
Intergovernmental - Other 51,999 217,401 - 269,400
Franchise fees 1,919,750 - - 1,919,750
Use of money and property 492,366 31,130 3,816 527,312
Other revenue 2,296,677 124,181 - 2,420,858
Total revenues 17,635,988 2,776,901 1,375,340 21,788,229
EXPENDITURES:
Current:
General and intergovernmental services 3,268,524 - - 3,268,524
Public safety 4,391,844 - - 4,391,844
Public works 4,542,221 - 423,644 4,965,865
Community services 1,318,493 - - 1,318,493
Community development services 2,046,853 - - 2,046,853
Capital outlay - 3,979,272 - 3,979,272
Debt service:
Principal - - 455,000 455,000
Interest and fiscal charges - - 413,910 413,910
Total expenditures 15,567,935 3,979,272 1,292,554 20,839,761
REVENUES OVER
(UNDER) EXPENDITURES 2,068,053 (1,202,371) 82,786 948,468
OTHER FINANCING SOURCES (USES):
Transfers in 106,000 1,184,500 - 1,290,500
Transfers out (1,184,500) (106,000) - (1,290,500)
Total other financing sources (uses)(1,078,500) 1,078,500 - -
Net change in fund balances 989,553 (123,871) 82,786 948,468
FUND BALANCES:
Beginning of year 8,929,121 3,544,205 1,424,919 13,898,245
End of year 9,918,674$ 3,420,334$ 1,507,705$ 14,846,713$
The accompanying notes are an integral part of these financial statements.
Major Funds
CITY OF SARATOGA
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE TO THE
GOVERNMENT-WIDE STATEMENT OF ACTIVITIES AND CHANGES IN NET
POSITION
FOR THE YEAR ENDED JUNE 30, 2013
32
Net Change in Fund Balances - Total Governmental Funds 948,468$
Amounts reported for governmental activities in the Statement of Activities and Changes
in net position were different because:
Governmental Funds report capital outlay as expenditures. However, in the Government-Wide
Statement of Activities and Changes in net position, the cost of those assets was allocated over
their estimated useful lives as depreciation expense. This is the amount of capital assets
recorded in the current period.2,578,741
Depreciation expense on capital assets was reported in the Government-Wide Statement
of Activities and Changes in net position, but it did not require the use of current financial
resources. Therefore, depreciation expense was not reported as expenditures in the
Governmental Funds.(1,916,967)
Internal service funds are used by management to charge the costs of office stores,
vehicle and equipment maintenance and replacement, information services and replacement,
building maintenance, risk management, and workers' compensation. The net revenue
or (excess expenses) of the internal service funds is reported with government activities.205,192
Certain revenues were not recorded or recorded as unearned revenue in the governmental funds
because they did not meet the revenue recognition criteria of availability. However, they were
included as revenue in the Government-Wide Statement of Activities and Changes in
Net Assess under the full accrual basis.(26,700)
Long-term compensated absences and claims payables were reported in the Government-Wide
Statement of Activities and Changes in net position, but they did not require the use of current
financial resources. Therefore, long-term compensated absences and claims payable were not
reported as expenditures in governmental funds.
Compensated absences 24,534
Repayment of bond principal was an expenditure in governmental funds, but the repayment
reduced long-term liabilities in the Government-Wide Statement of net position.
Long-term debt repayments 455,000
Revenues resulting from the refunding of outstanding debt are not available to pay
current-period expenditures and therefore, are revenue in the funds.
Net original issue premium 21,892
Interest expense on long-term debt was reported in the Government-Wide Statement of
Activities and Changes in net position, but it did not require the use of current financial
resources. Therefore, interest expense was not reported as expenditures in governmental
funds. The following amount represented the change in accrued interest from prior year.3,792
Change in Net Position of Governmental Activities 2,293,952$
The accompanying notes are an integral part of these financial statements
CITY OF SARATOGA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
JUNE 30, 2013
33
Governmental
Activities -
Internal
Service Funds
ASSETS
Current assets:
Cash and investments 1,716,677$
Accounts receivable 10,510
Total current assets 1,727,187
Noncurrent assets:
Capital assets:
Machinery and equipment 792,003
Less: accumulated depreciation (691,031)
Total capital assets (net of
accumulated depreciation) 100,972
Total assets 1,828,159
LIABILITIES
Liabilities:
Current assets:
Accounts payable 65,865
Accrued payroll 13,704
Other payables 24,800
Total current liabilities 104,369
NET POSITION
Net Investment in capital assets 100,972
Unrestricted 1,622,818
Total net position 1,723,790$
The accompanying notes are an integral part of these financial statements
CITY OF SARATOGA
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2013
34
Governmental
Activities -
Internal
Service Funds
Operating revenues:
Charges for services 2,181,236$
Other operating revenues 51,052
Total operating revenues 2,232,288
Operating expenses:
Cost of services 1,056,626
Administration 920,755
Depreciation 49,715
Total operating expenses 2,027,096
Operating income (loss)205,192
Transfers out -
Change in net position 205,192
Total net position - beginning 1,518,598
Total net position - ending 1,723,790$
The accompanying notes are an integral part of these financial statements
CITY OF SARATOGA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
JUNE 30, 2013
35
Governmental
Activities -
Internal
Service Funds
Cash flows from operating activities:
Receipts from customers and users 2,252,252$
Payments to suppliers (1,159,767)
Payments to employees (807,770)
Net cash provided (used) by operating activities 284,715
Cash flows from capital activities:
Acquisition of capital assets (84,537)
Net cash provided for the acquisition of capital assets (84,537)
Net increase in cash and cash equivalents 200,178
Cash and cash equivalents, beginning of year 1,516,499
Cash and cash equivalents, ending of year 1,716,677$
Reconciliation of operating income to net cash provided
by operating activities:
Operating income (loss)205,191$
Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:
Depreciation 49,715
Change in operating assets and liabilities:
Accounts receivables 19,964
Accounts payable 6,077
Claims payable 3,553
Accured payroll 215
Net cash provided (used) by operating activities 284,715$
The accompanying notes are an integral part of these financial statements
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
36
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of Saratoga, California, (the City) have been prepared in
conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies.
The Governmental Accounting Standards Boards (GASB) is the accepted standard setting body for
establishing governmental accounting and financial reporting principles. The more significant of the
City's accounting policies are described below.
A. Financial Reporting Entity
The City was incorporated as a municipal corporation in 1956 under the general laws of the State of
California, and had a population of 30,363 at June 30, 2013. 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, 2013, the City's staff comprised 54 full-time
and nine part-time employees, and numerous recreation seasonal employees who were responsible for the
following City provided services:
Public Safety - The City provides round-the-clock police services under a contract with the Santa
Clara County Sheriff's offices. Emergency management and Fire services are provided by a special
district. Code enforcement and inspection services are provided by City employees.
Public Works/Maintenance - The City builds and maintains its parks, streets, curbs, gutters, and
related public property with a force of 22 employees. Major projects may be contracted out to
reduce costs.
Community Development - Zoning administration, plan checking and advance planning services are
provided by 12 employees.
Culture, Recreation and Community Support services are provided by a total of 10 employees.
General Government services are provided by a total of 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.
The following entity is reported as blended component unit:
Lighting and Landscaping Assessment District - The Lighting and Landscaping Assessment District
(the District) was established in 1980, for the levy and the collection of assessments upon the several lots
or parcels of land in the District, and for the construction or installation of improvements, including
maintenance. The District is reported as a blended component unit of the City because it has the same
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
37
Governing Board as the City. The activity for the District has been included in the accompanying basic
financial statements and no separate financial statements are issued.
B. Basis of Accounting and Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a separate
accounting entity. The operations of each fund are accounted for with a separate set of self-balancing
accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as
appropriate. Governmental resources are allocated to and accounted for in individual funds based upon
the purposes for which they are to be spent and the means by which spending activities are controlled.
Government-Wide Financial Statements
The City's government-wide financial statements include a Statement of Net Position and a Statement of
Activities and Changes in Net Position. 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, deferred outflows of resources, liabilities, deferred
inflows of resources (including capital assets, as well as infrastructure assets, and long-term liabilities),
are included in the accompanying Statement of Net Position. The Statement of Activities presents changes
in net position. Under the accrual basis of accounting, revenues are recognized in the period in which
they are earned while expenses are recognized in the period in which the liability is incurred.
Certain types of transactions are reported as program revenues for the City in three categories:
Charges for services
Operating grants and contributions
Capital grants and contributions
Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund
activities, payables, and receivables. All internal balances in the Statement of Net Position have been
eliminated. The following interfund activities have been eliminated:
Transfers in/Transfers out
Internal Service Fund charges
Land and Lighting District Service Fees
Deferred Outflows/Deferred Inflows
Deferred outflows of resources is a consumption of net assets by the City that is applicable to a future
reporting period. For example, prepaid items and deferred charges.
Deferred inflows of resources is an acquisition of net assets by the City that is applicable to a future
reporting period. For example, unearned revenue and advance collections.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
38
Unearned Revenue
Unearned revenue arises when assets are received before revenue recognition criteria have been satisfied.
Grants and entitlements received before eligibility requirements are met are recorded as deferred inflows
from unearned revenue. In the governmental fund financial statements, receivables associated with non -
exchange transactions that will not be collected within the availability period have been recorded as
deferred inflows from unearned revenue.
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
position as presented in these statements to the net position 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 C ity 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.
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, deferred outflows
of resources, current liabilities, and deferred inflows of resources 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
45 days after year-end) are recognized when due. The primary revenue sources, which have been treated
as susceptible to accrual by the City, are property tax, sales tax, special assessments, intergovernmental
revenues, other taxes, interest revenue, rental revenue and certain charges for services. Fines, forfeitures,
licenses and permits and parking meter revenues are not susceptible to accrual because they are usually
not measurable until received in cash. Expenditures are recorded in the accounting period in which the
related fund liability is incurred.
Unearned revenues arise when potential revenues do not meet both the "measurable" and "available"
criteria for recognition in the current period. Unearned 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
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
39
the government has a legal claim to the resources, the unearned 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.
Proprietary Funds
The City’s internal service funds are proprietary funds. In the fund financial statements, proprietary funds
are presented using the accrual basis of accounting. Revenues are recognized when they are earned and
expenses are recognized when the related goods or services are delivered. In the fund financial
statements, proprietary funds are presented using the “economic resources measurement focus”. This
means all assets, deferred outflows of resources, liabilities (whether current or noncurrent) and deferred
inflows of resources associated with their activities are included on their balance sheets. Proprietary fund
type operating statements present increases (revenues) and decreases (expenses) in total net position.
Proprietary fund operating revenues, such as charges for services, result from exchange transactions
associated with principal activity of the fund. Exchange transactions are those in which each party
receives and gives up essentially equal value. Non-operating revenues, such as subsidies, taxes, and
investment earnings result from nonexchange transactions or ancillary activities. Amounts paid to acquire
capital assets are capitalized as assets in the internal service funds financial statements.
Internal service funds account for charges to City departments for services provided, on a cost
reimbursement basis, in the following areas: general liability, workers’ compensation, office stores,
information technology services, vehicle maintenance, building maintenance, equipment replacement, and
information technology replacement.
Fiduciary Fund Financial Statements
During fiscal year 2012/12 the City has no fiduciary responsibility as prior reported agency funds have
been transferred to other outside government agencies.
C. Cash, Cash Equivalents and Investments
The City pools its available cash for investment purposes. The City's cash and cash equivalents are
considered to be cash on hand, demand deposits, and short-term investments with original maturity of
three months or less from the date of acquisition. Cash and cash equivalents are combined with
investments and displayed as Cash and Investments.
Deposit and Investment Risk Disclosures - In accordance with GASB Statement No. 40, Deposit and
Investment Disclosures (Amendment of GASB Statement No. 3), certain disclosure requirements, if
applicable, for Deposits and Investment Risks in the following areas:
Interest Rate Risk
Credit Risk
▬ Overall
▬ Custodial Credit Risk
▬ Concentrations of Credit Risk
Foreign Currency Risk
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
40
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. Interfund Transactions
Interfund services provided and used are accounted for as revenue, expenditures or expenses, as
appropriate. Transactions that constitute reimbursements to a fund for expenditures/expenses initially
made from it that are properly applicable to another fund are recorded as expenditures/expenses in the
reimbursed fund. All other interfund transactions, except for interfund services provided and used and
reimbursements, are reported as transfers. Nonrecurring or nonroutine permanent transfers of equity are
reported as residual equity transfers. All other interfund transfers are reported as transfers.
E. Capital Assets
Capital assets, which include land, buildings, improvements, furniture, equipment and infrastructure
assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental
activities in the government-wide financial statements. Capital assets were recorded at historical cost or
estimated historical cost if actual cost was not available. Donated assets were valued at their fair market
value on the date of donation. City policy has set the capitalization threshold for reporting capital assets
at $10,000. The City has chosen the Modified Approach for reporting the streets subsystem of
infrastructure capital assets.
Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows:
Buildings and structures 40 Years
Machinery and equipment 5 to 10 Years
Infrastructure 15 to 50 Years
In June 1999, GASB issued Statement No. 34 Basic Financial Statements – and Management’s
Discussion and Analysis – for State and Local Governments which requires the inclusion of infrastructure
capital assets in local governments' basic financial statements. In accordance with Statement No. 34, the
City has included the value of all infrastructure in its basic financial statements.
The City defines infrastructure as the basic physical assets that allow the City to function, which includes
the street system, park and recreation lands and improvements system; storm water conveyance and
drainage system, buildings combined with site amenities such as parking and landscaping areas used by
the City in the conduct of its business.
Each major infrastructure system can be divided into subsystems. For example the street system can be
subdivided into pavement, curb and gutters, sidewalks, medians, streetlights, traffic control devices
(signs, signals and pavement markings), landscaping and land. These subsystems were not delineated in
the basic financial statements. The appropriate operating department maintains information regarding the
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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
41
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, 2010. This condition assessment was performed in the
fall of 2010 with the final report presented in March, 2012. A Pavement Condition Index (PCI) was
assigned to each street segment. The index is expressed in a continuous scale from 0 to 100, where 0 is
assigned to the least acceptable physical condition and 100 is assigned to segments of street that have the
physical characteristics of a new street.
The following conditions were defined:
Condition Rating
Excellent 80 - 100
Very Good 70 - 79
Good 50 - 69
Poor 25 - 49
Very Poor 0 - 24
The City's policy relative to maintaining the street assets is to achieve an average rating of 70 for all street
segments. This acceptable rating allows minor cracking and raveling of the pavement along with minor
roughness that could be noticeable to drivers traveling at the posted speeds. For all other infrastructure
systems, the City elected to use the Basic Approach as defined by GASB Statement No. 34 for
infrastructure reporting. An appraisal determined the original cost, which is defined as the actual cost to
acquire new property in accordance with market prices at the time of first construction/acquisition.
Original costs were developed in one of three ways: 1) historical records; 2) standard unit costs
appropriate for the construction/acquisition date; or 3) present cost indexed by a reciprocal factor of the
price increase from the construction/acquisition date to the current date. The accumulated depreciation,
defined as the total depreciation from the date of construction/acquisition to the current date on a straight
line, unrecovered cost method was computed using industry accepted life expectancies for each
infrastructure subsystem. The book value was then computed by deducting the accumulated depreciation
from the original cost.
F. Interest Payable
In the government-wide financial statements, interest payable of long-term debt is recognized as an
incurred liability for governmental fund types. The City has not allocated the interest on long-term debt
to departments.
In the fund financial statements, governmental fund types do not recognize the interest payable when the
liability is incurred. Interest on long-term debt is recorded in the fund statements when payment is made.
G. Claims Payable
The City records a liability to reflect an actuarial estimate of ultimate uninsured losses for both general
liability claims (including property damage claims) and workers ' compensation claims. The estimated
liability for workers' compensation claims and general liability claims includes "incurred but not
reported" (IBNR) claims. There is no fixed payment schedule to pay these liabilities.
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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
42
H. Compensated Absences
In the government-wide financial statements, compensated absences are recorded as incurred and the
related expenses and liabilities are reported.
In the fund financial statements, compensated absences are recorded as expenditures in the years paid, as
it is the City's policy to liquidate any unpaid compensated absences at June 30 from future resources,
rather than currently available financial resources. Only the amounts which become due at June 30 are
reported in the fund financial statements as a liability.
I. Long- Term Obligations
In the government-wide financial statements, long-term debt and other long-term obligations are reported
as liabilities in the applicable governmental activities. Bond premiums and discounts, as well as issuance
costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds
payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as
deferred charges and amortized over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as
well as bond issuance costs, during the current period. The face amount of debt issued is reported as
other financial sources. Premiums received on debt issuance are reported as other financing sources while
discounts on debt issuance reported as other financing uses. Issuance costs, whether or not withheld from
the actual debt proceeds received, are reported as debt service expenditures.
J. Fund Balances
In February 2009, the Governmental Accounting Standards Board (GASB) issued Statement No. 54,
Fund Balance Reporting and Governmental Fund Type Definitions. This standard left unchanged the
total amount reported as fund balance, but substantially altered the categories and terminology used to
describe its components. Rather than focus on financial resources available for appropriation, the new
categories focus on “the extent for which the government is bound to honor constraints in the specific
purposes for which amounts in the reserve can be spent”.
The components of fund balance are now categorized as follows: “non-spendable fund balance”,
resources that are inherently non-spendable from the vantage point of the current period; “restricted fund
balance”, resources that are subject to enforceable legal restrictions; “committed fund balance”, resources
whose specified use is constrained by limitations the government entity imposes upon itself through
formal action at its highest level of decision making and remains binding unless removed in the same
manner; “assigned fund balance”, resources that reflects a government’s intended general use of
resources, such intent would have to be established at either the highest level of decision making, by a
body, or an official designated for that purpose; and “unassigned fund balance”, net resources in excess of
what can properly be classified in one of the other four categories. Currently, the City’s fund balance
reserves fall into one of the four spendable categories; restricted, committed, assigned, or unassigned fund
balance.
The City maintains three restricted fund balances constrained by external legal restrictions that can be
spent only for the stipulated purposes. These fund balances are:
Special Assessments Fund Balance – collectively represents year-end fund balances of twenty-
five landscape and/or lighting assessment districts which use is restricted to the individual district.
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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
43
Environmental Services Fund Balance – represents surcharges collected on solid waste bills for
use as supplemental funding of Environmental Services program fees for household hazardous
waste fees, storm drain, street sweeping, and other pollution mitigation expenses related to
integrated waste programs and storm water management. These funds are used to supplement
environmental expenditures by using $50,000 per year; however these reserve funds were not
transferred for use in FY 2012/12 due to additional revenue available for these programs.
Debt Service Fund Balance – represents funding collected for and use in the City’s general
obligation bond debt originally issued in 2001.
The committed category, in which fund balance is constrained by limitations that the government imposes
upon itself at its highest level of decision making by formal vote, and remain binding unless removed in
the same manner, includes the following:
Capital Improvement Program (CIP) Fund Balance – represents the collective balance of funding
appropriated for specific capital improvement projects. Capital Projects are funded through direct
revenues or budgeted transfers for improvement work within the following program funds:
Streets, Park & Trail, Facility, or Administrative Improvements.
Hillside Stability - funding set aside for use either in emergency repairs or high-cost and non-
routine mitigation of hillside or landslide projects.
In the assigned category, fund balance reflects an intended use as established by Council. Use of
Assigned Fund Balance is approved by formal vote of the Council, or the City Manager who is authorized
to assign amounts to a specific purpose, either through specific action, fund balance policy, or through
budget direction and approval. This category includes the following reserves:
Future Capital & Efficiency Funding - represents General Fund funding set aside for capital
and/or efficiency projects but not yet committed for a specific improvement project.
Facility Replacement Reserve – represents accumulated funding for the future replacement, major
rehabilitation, or new construction of City-owned facilities. This funding is to be used for
funding the construction or provide for the services of related debt, but is not yet committed for a
specific improvement project.
Carryforward – represents either prior-year funds designated for one-time operational activities
not yet completed by year-end, or to carryforward prior-year funding for specific activities as
directed by Council. Carryover funds are appropriated for use in the following fiscal year.
The Unassigned Fund Balance category represents funding which may be held for specific types of uses
or stabilization purposes, but is not yet directed to be used for a specific purpose. Reserve amounts are
determined by, and align with, fund policy direction.
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NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
44
Working Capital Reserve – provides funds for cash flow. Council policy set aside $2,000,000 on
July 1, 1999, to be increased annually by an amount equal to the interest the City earned on the
equivalent amount of cash and investments. As of June 30, 2013 this fund balance has grown to
$2,923,096. This fund balance is not appropriated for use.
Fiscal Stabilization Reserve – Council policy is to maintain $1,500,000 for use by Council
direction in case of disasters, emergencies, and economic downturns.
Development Services Reserve– represents reserve funds collected for development services to
be used to support multi-year funding levels for zoning administration, inspection services, and
development regulation programs during periods where expenditures exceed revenues.
Compensated Absences Reserve – represents reserve funding for employee payout compensation
equal to the one-third of annual liability balance. This funding level is anticipated to be the
maximum potential payout in excess of budgeted salary in a fiscal year.
Other Unassigned Fund Balance – represents funding not yet appropriated or assigned for use.
Council policy is to maintain a minimum of $500,000 in unassigned funds as a buffer for
unplanned expenditures or revenue shortfalls.
Flow Assumption / Spending Order Policy – When expenditures are incurred for purposes for which both
restricted and unrestricted fund balance is available, the City considers restricted funds to be spent first.
When expenditures are incurred for which committed, assigned, or unassigned fund balances are
available, the City considers amounts to be spent first out of committed funds, then assigned funds, and
finally unassigned funds, as needed, unless the City Council has directed otherwise.
K. Net Position
In the government-wide financial statements, net position is classified in the following categories:
Net Investment in Capital Assets – 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. In addition, deferred outflows of resources and deferred inflows
of resources that are attributable to the acquisition, construction, or improvement of those
assets or related debt also are included in the net investment in capital assets component of
net position
Restricted Net Position – This amount is restricted by external creditors, grantors,
contributors, or laws or regulations of other governments.
Unrestricted Net Position – This amount is all net position that does not meet the definition of
"net investment in capital assets" or "restricted net position."
L. Use of Restricted/Unrestricted Net Position
When an expense is incurred for purposes for which both restricted and unrestricted net position are
available, the City's policy is to apply restricted net position first.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
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M. Property Tax and Special Assessments
County tax assessments include secured and unsecured property taxes and special assessments.
"Unsecured" refers to taxes on personal property. These tax assessments are secured by liens on the
property being taxed.
Revenue is recognized in the period for which the tax and assessment is levied. The County of Santa
Clara levies, bills and collects property taxes for the City, the County remits the entire amount levied and
handles all delinquencies, retaining interest and penalties. Secured and unsecured property taxes are
levied on January 1.
Secured property tax is due in two installments on November 1 and February 1, and becomes a lien on
those dates. It becomes delinquent on December 10 and April 10, respectively. Unsecured property tax is
due on July 1 and becomes delinquent on August 31.
N. Use of Estimates
The preparation of basic financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
O. Subsequent Events
Management has considered subsequent events through November 12, 2013, the date which the financial
statements were available to be issued. Management has reviewed subsequent events and transactions
that occurred after the date of the financial statements through the date through November 12, 2013. The
financial statements include all events or transactions, including estimates, required to be recognized in
accordance with generally accepted accounting principles. Management has determined that there are no
non-recognized subsequent events that require additional disclosure.
P. New GASB Pronouncements
GASB Statement No. 60 - In November, 2010, GASB issued Statement No. 60, Accounting and
Financial Reporting for Service Concession Arrangements. The objective of this Statement is to improve
financial reporting by addressing issues related to service concession arrangements, which are a type of
public-private or public-public partnership. This pronouncement is effective for periods beginning after
December 15, 2012. The City does not believe there will be a significant financial statement effect
related to this Statement.
GASB Statement No. 61 – In November, 2010, GASB issued Statement No. 61, The Financial
Reporting Entity: Omnibus—an amendment of GASB Statements No. 14 and No. 34. The objective of this
Statement is to improve financial reporting for a governmental financial reporting entity. The
requirements of Statement No. 14, The Financial Reporting Entity, and the related financial reporting
requirements of Statement No. 34, Basic Financial Statements—and Management’s Discussion and
Analysis—for State and Local Governments, were amended to better meet user needs and to address
reporting entity issues that have arisen since the issuance of those Statements. This prono uncement is
effective for periods beginning after June 15, 2013. The City does not believe there will be a significant
financial statement effect related to this Statement.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
46
GASB Statement No. 62 – In December, 2010, GASB issued Statement No. 62, Codification of
Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA
Pronouncements. The objective of this Statement is to incorporate into the GASB’s authoritative
literature certain accounting and financial reporting guidance that is included in the following
pronouncements issued on or before November 30, 1989, which does not conflict with or contradict
GASB pronouncements:
1. Financial Accounting Standards Board (FASB) Statements and Interpretations
2. Accounting Principles Board Opinions
3. Accounting Research Bulletins of the American Institute of Certified Public Accountants’
(AICPA) Committee on Accounting Procedure.
This pronouncement is effective for periods beginning after December 15, 2012. The City does not
believe there will be a significant financial statement effect related to this Statement.
Statement No. 63 - In June, 2012, GASB issued Statement No. 63, Financial Reporting of Deferred
Outflows of Resources, Deferred Inflows of Resources, and Net Position. This Statement provides
financial reporting guidance for deferred outflows of resources and deferred inflows of resources.
Concepts Statement No. 4, Elements of Financial Statements, introduced and defined those elements as a
consumption of Net Position by the government that is applicable to a future reporting period, and an
acquisition of Net Position by the government that is applicable to a future reporting period, respectively.
Previous financial reporting standards do not include guidance for reporting tho se financial statement
elements, which are distinct from assets and liabilities. Concepts Statement 4 also identifies net position
as the residual of all other elements presented in a statement of financial position. This Statement amends
the net asset reporting requirements in Statement No. 34, Basic Financial Statements-and Management’s
Discussion and Analysis-for State and Local Governments, and other pronouncements by incorporating
deferred outflows of resources and deferred inflows of resources into the definitions of the required
components of the residual measure and by renaming that measure as net position, rather than net assets.
The provisions of this Statement were effective as of July 1, 2012 and did not have a significant impact on
the City’s financial statements.
Statement No. 64 - In June, 2012, GASB issued Statement No. 64, Derivative Instruments: Application
of Hedge Accounting Termination Provisions—an amendment of GASB Statement No. 53. The objective
of this Statement is to enhance comparability and improve financial reporting by clarifying the
circumstances in which hedge accounting should continue when swap counterparty or a swap
counterparty’s credit support provider is replaced. This pronouncement is effective for financial
statements for periods beginning after June 15, 2012. The City has determined this Statement change will
not have an effect on the financial statements.
Statement No. 65 - In March, 2013, GASB issued Statement No. 65, Items Previously Reported as Assets
and Liabilities. This Statement establishes accounting and financial reporting standards that reclassify, as
deferred outflows of resources or deferred inflows of resources, certain items that were previously
reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain
items that were previously reported as assets and liabilities. This Statement amends the financial
statement element classification of certain items previously reported as assets and liabilities to be
consistent with the definitions in Concepts Statement 4. The provisions of this Statement are effective for
financial statements for periods beginning after December 15, 2012. However, the City has chosen to
implement these reporting requirements as of July 1, 2012. This statement did not have a significant
impact on the City’s financial statements.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
47
Statement No. 66 - In March, 2013, GASB issued Statement No. 66, Technical Correction – 2013 – an
amendment of GASB Statement No. 10 and No. 62. The objective of this Statement is to improve
accounting and financial reporting for a governmental financial reporting entity by resolving conflicting
guidance that resulted from the issuance of two pronouncements, Statements No. 54, Fund Balance
Reporting and Government Fund Type Definitions, and No. 62, Codification of Accounting and Financial
Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. The City
does not believe there will be a significant financial statement effect related to this Statement.
Statement No. 67 - In June, 2013, GASB issued Statement No. 67, Financial Reporting for Pension
Plans – amendment of GASB Statement No. 25. The objective of this Statement is to improve financial
reporting by state and local government pension plans. This Statement results from a comprehensive
review of the effectiveness of existing standards of accounting and financial reporting for pensions with
regards to providing decision-useful information, supporting assessments of accountability and inter-
period equity, and creating additional transparency. The City is in the process of determining the impact
this statement will have on the financial statements.
Statement No. 68 - In June, 2013, GASB issued Statement No. 68, Accounting and Financial Reporting
for Pensions – an amendment of GASB Statement No. 27. The primary objective of this Statement is to
improve accounting and financial reporting by state and local governments for pensions. It also improves
information provided by state and local government employers about financial support for pensions that is
provided by other entities. The City is in the process of determining the impact this statement will have
on the financial statements.
Statement No. 69 – In January, 2013, GASB issued Statement No. 69, Government Combinations and
Disposal of Government Operations. This Statement establishes accounting and financial reporting
standards related to government combinations and disposal of government operations. As used in this
Statement, combinations includes a variety of transactions referred to as mergers, acquisitions, and
transfers of operations. The City believes there will be no financial statement effect related to this
Statement.
Statement No. 70 – In April, 2013, GASB issued Statement No 70, Accounting and Financial Reporting
for Nonexchange Financial Guarantees. Some governments extend financial guarantees for the
obligations of another government, a not-for-profit entity, or private entity without directly receiving
equal or approximately equal value in exchange (a nonexchange transaction). The City does not
participate in nonexchange transactions and this Statement will have no financial statement effect.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
48
NOTE 2 - CASH AND INVESTMENTS
The City maintains a cash and investment pool, which includes cash balances and authorized investments
of all funds, which the City Treasurer invests to enhance interest earnings. The pooled interest earned is
allocated to the funds based on average month-end cash and investment balances in these funds. The City
has the following cash and investments at June 30, 2013:
Statement of
Net Position
Governmental
Activities
Cash and investments 17,162,776$
The City's Cash and Investments at June 30, 2013, in more detail:
Cash and cash equivalents:
Petty cash 1,450$
Demand deposits 290,297
Total Cash and Cash Equivalents 291,747
Investments:
Local Agency Investment Fund (LAIF)16,871,029
Total Cash and Investments 17,162,776$
A. Cash Deposits
The carrying amounts of the City's cash deposits were $291,747 at June 30, 2013. Bank balances before
reconciling items were $347,976 at that date due to deposits in transit and outstanding checks. The total
amount was collateralized or insured with securities held by the pledging financial institutions.
The California Government Code requires California banks and savings and loan associations to secure
the City's cash deposits by pledging securities as collateral. This Code states that collateral pledged in
this manner shall have the effect of perfecting a security interest, and places the City ahead of general
creditors of the institution.
The market value of pledged securities must equal at least 110 percent of the City's cash deposits.
California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes
that have a value of 150 percent of the City's total cash deposits. The City has waived the collateral
requirements for cash deposits which are fully insured to $250,000 by the Federal Deposit Insurance
Corporation (FDIC). Demand deposits (non-interest bearing checking accounts) have unlimited insurance
through the TAG Program. Other accounts are insured up to $250,000 per custodian within agency.
The City follows the practice of pooling cash and investments of all funds, except for funds required to be
held by fiscal agents under the provisions of bond indentures. Interest income from cash and investments
with fiscal agents is credited directly to the related fund.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
49
B. Investments
Under the provisions of the City's investment policy, and in accordance with California Government
Code, the following investments are authorized:
Securities of the U.S. Government or its agencies.
Certificates of Deposit (or Time Deposits) placed with commercial banks and/or savings
and loan companies.
Negotiable Certificates of Deposit.
California Local Agency Investment Fund.
Investment-grade obligations of State, local governments or public authorities.
Money market mutual funds.
Passbook savings account and demand deposits.
The City is in compliance with GASB Statement No. 31, Accounting and Financial Reporting for Certain
Investments and for External Investments Pools which requires the City's investments be recorded at fair
value instead of cost. Under GASB 31, the carrying value of investments are adj usted to reflect their fair
value at each fiscal year-end, with the effects of these adjustments included in the carrying value of the
investments.
C. External Investment Pool
The City's investments with LAIF at June 30, 2013, include a portion of the pool funds invested in
Structured Notes and Asset-Backed Securities. These investments include the following:
Structured Notes - debt securities (other than asset-backed securities) whose cash flow
characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or
more indices and/or that have embedded forwards or options.
Asset-Backed Securities - the bulk of which are mortgage-backed securities, entitle their
purchasers to receive a share of the cash flows from a pool of assets such as principal and
interest repayments from a pool of mortgages (such as CMO's) or credit card receivables.
LAIF is overseen by the Local Agency Investment Advisory Board, which consists of five members, in
accordance with State statute. The approved investments policy is listed on the LAIR website, located at
http://www.treasurer.ca.gov/pmia-laif/
As of June 30, 2013, the City had $16,871,029 invested in LAIF. The LAIF fair value factor of
1.000273207 was used to calculate the fair value of the investments in LAIF.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
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D. Risk Disclosures
Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Generally, the longer the term of an investment’s maturity, the greater th e sensitivity to
changes in market interest rates. Although the City’s investment policy allows for a broad range of
investment instruments with varying terms of maturity, investments are limited to the Local Agency
Investment Fund (LAIF) which is managed by the State Treasurer Office and overseen by the Pooled
Money Investment Board, the State Treasurer investment committee, and a Local Agency Advisory
Board.
Included in LAIF’s investment portfolio are U.S. Treasuries, Federal Agency obligations, time deposits,
negotiable certificates of deposits, commercial paper, corporate bonds, and security loans. Funds are
available for withdrawal on demand, and are recorded on an amortized cost basis. At June 30, 2013, these
investments had a weighted average maturity of 278 days. The City had the following invested in LAIF:
Investment
Maturities in Years
Fair Less Than
Value One Year
State of California - Local Agency Investment Fund (LAIF)16,871,029$ 16,871,029$
Credit Risk
As of June 30, 2013, the City's investments in external investment pools are unrated. The City only
invests in LAIF, therefore has no other policy relating to the credit risk of investments.
Custodial Credit Risk
For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the
City will not be able to recover the value of its investments or collateral securities that are in the
possession of an outside party. The City did not hold any securities through investment counterparties at
the year ended June 30, 2013.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
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NOTE 3 - FUND FINANCIAL STATEMENTS INTERFUND TRANSACTIONS
Transfers In/Out
Transfers for the year ended June 30, 2013 were as follows:
Transfer in Transfer out Amount
General Fund Capital Improvement Fund 106,000$
Capital Improvement Fund General Fund 1,184,500
Total 1,290,500$
The General Fund received monies from the Capital Improvement from the Gas Tax fund for general
administration of $106,000.
The Capital Improvement Fund received monies from the General Fund from the adopted budget of
$100,000 for annual facility improvement projects, $300,000 for the Saratoga to Sea Master Plan,
$475,000 for various traffic and sidewalk projects, $60,000 for the energy power backup project, $40,000
for the electric door phase 2 project, $64,500 for the JPCC wood floor upgrade, and 145,000 for various
business process improvement projects.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
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NOTE 4 - CAPITAL ASSETS
Capital assets activity for the year ended June 30, 2013, consisted of the following:
Primary Government
Balance Balance
July 1, 2012 Additions Retirements Reclassifications June 30, 2013
Governmental activities:
Capital assets, not being depreciated:
Land and land improvements 14,510,401$ -$ -$ 75,000$ 14,585,401$
Construction in progress 7,166,953 2,612,974 (53,938) (2,110,325) 7,615,664
Infrastructure:
Street pavement system 49,155,619 - - - 49,155,619
Total capital assets, not being depreciated 70,832,973 2,612,974 (53,938) (2,035,325) 71,356,684
Capital assets, being depreciated:
Buildings and structures 23,611,590 - - 1,868,560 25,480,150
Machinery and equipment
Governmental funds 1,698,723 19,705 (108,992) 68,887 1,678,323
Internal service funds 724,059 84,538 (16,594) - 792,003
Infrastructure:
Bridges 1,563,654 - - - 1,563,654
Signs and lights 1,820,585 - - 14,558 1,835,143
Drainage system 40,060,953 - - 39,100 40,100,053
Sidewalks 12,328,102 - - 44,220 12,372,322
Total capital assets, being depreciated 81,807,666 104,243 (125,586) 2,035,325 83,821,648
Accumulated depreciation:
Buildings and structures (6,641,759) (634,807) - - (7,276,566)
Machinery and equipment
Governmental funds (1,160,737) (64,262) 108,992 - (1,116,007)
Internal service funds (657,910) (49,715) 16,594 - (691,031)
Infrastructure:
Bridges (1,027,104) (25,717) - - (1,052,821)
Signs and lights (926,699) (64,952) - - (991,651)
Drainage system (13,929,761) (801,610) - - (14,731,371)
Sidewalks (5,099,993) (325,619) - - (5,425,612)
Total accumulated depreciation (29,443,963) (1,966,682) 125,586 - (31,285,059)
Total capital assets, being depreciated, net 52,363,703 (1,862,439) - 2,035,325 52,536,589
Governmental activities capital assets, net 123,196,676$ 750,535$ (53,938)$ -$ 123,893,273$
Depreciation expense, including the amount related to the internal service funds,
was charged in the following functions in the Statement of Activities:
General Government 1,299,379$
Public Works 598,972
Community Services 18,616
Community Development -
Internal Service Funds 49,715
Total Depreciation Expense 1,966,682$
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
53
In accordance with GASB Statement No. 34, the City has reported all capital assets including
infrastructure in the Government-Wide Statement of Net Position. 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 i nfrastructure systems were
reported using the Basic Approach whereby accumulated depreciation and depreciation expense have
been recorded.
NOTE 5 – LONG-TERM OBLIGATIONS
A summary of the City's long-term obligations transactions for the year ended June 30, 2013, is presented
below:
Classification
Balance Balance Due Within Due In More
Description July 1, 2012 Additions Retirements June 30, 2013 One Year Than One Year
General Obligation Bonds:
2011 Library bonds 11,995,000$ -$ (455,000)$ 11,540,000$ 485,000$ 11,055,000$
Net original issue premium 437,846 - (21,892) 415,954 21,892 394,062
Compensated absences 646,213 403,682 (428,216) 621,679 440,749 180,930
Total 13,079,059$ 403,682$ (905,108)$ 12,577,633$ 947,641$ 11,629,992$
General Obligation 2012 Library Bonds - Original Issue $11,995,000
On July 14, 2012, the City issued General Obligation Bonds Series 2012 in the amount of $11,995,000.
The bonds were issued to fully refund the General Obligation 2001 Library Bonds. The bonds are
payable from and secured by certain property taxes within the City. Interest on the bonds ranges from
2.0 percent to 4.0 percent and is payable on February 1 and August 1 of each year, commencing February
1, 2013. Principal is due annually beginning on August 1, 2013, in amounts ranging from $455,000 to
$760,000, with a final payment on August 1, 2031 of $1,610,000. The bonds maturing on or before
August 1, 2021 are not subject to redemption prior to their respective stated maturity dates. Bonds
maturing on or after August 1, 2022 are subject to redemption prior to their respective stated maturity
dates at the option of the city at the principal amount of the bonds called for redemption, together with
interest accrued thereon to the date of redemption, without premium.
The annual debt service requirements on these bonds are as follows:
Year Ended Principal Interest Total
2014 485,000$ 403,085$ 888,085$
2015 495,000 393,285 888,285
2016 500,000 383,335 883,335
2017 475,000 371,210 846,210
2018 485,000 356,811 841,811
2019-2023 2,715,000 1,492,650 4,207,650
2024-2028 3,285,000 928,608 4,213,608
2029-2032 3,100,000 254,000 3,354,000
Total 11,540,000$ 4,582,984$ 16,122,984$
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
54
Compensated Absences
The City's liability for vested and unpaid compensated absences (accrued vacation and sick pay) has been
accrued and amounts to $621,679 at June 30, 2013. The compensated absences liability will generally be
liquidated through the General Fund.
NOTE 6 - RISK MANAGEMENT
The City participates in the two following public entity risk pools:
ABAG Plan Corporation (ABAG PLAN) - covers general liability claims up to a limit of $5 million
and purchases an additional $15 million of excess insurance coverage, for a total of $20 million per
occurrence limit. 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, 2013, the City contributed $214,130 for current year coverage and
received no refund of prior year excess contributions.
ABAG Workers' Compensation Pool Insurance Authority (ABAG POOL) – covers workers'
compensation coverage up to $250,000 and excess coverage provides an employer liability limit of $5
million per occurrence, and workers’ compensation per occurrence limit to $100 million. The City has no
deductible for these claims. During the fiscal year ended June 30, 2013, the City contributed $153,620
for current year coverage. The City's contribution equals 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 $24,800 reported at June 30, 2013, are
based on the requirements of GASB Statement No. 10, which requires that a liability for claims be
reported if information prior to the issuance of the basic financial statements indicates that it is probable
that a liability has incurred at the date of the basic financial statements and the amount of the loss can be
reasonably estimated. Changes in the claims payable amounts were as follows:
The General Fund has been used in the prior years to liquidate the liability for claims and judgments.
Year Ended Year Ended
June 30, 2013 June 30, 2012
Claims payable, beginning of year 21,247$ 14,091$
Fiscal year claims and changes in estimates 24,800 21,247
Claims payments (21,247) (14,091)
Claims payable, end of year 24,800$ 21,247$
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
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
55
operating budgets, independent of any influence by member municipalities beyond their representation on
the Board.
The following represents summary audited financial information of ABAG Plan Corporation and the
ABAG Workers’ Compensation Pool Insurance Authority for the fiscal year ended June 30, 2012 (most
recent available):
Plan Comp Shared
Corporation Risk Pool
Total Assets 45,141,862$ 3,978,862$
Total Liabilities 24,677,330 791,665
Net Assets 20,464,532$ 3,187,197$
Total Revenues 9,110,482$ 557,954$
Total Expenses 15,179,160 471,897
Net Increase in Net Assets (6,068,678)$ 86,057$
Audited financial information for each risk pool may be obtained from ABAG at P.O. Box 2089,
Oakland, California 94604-2089.
NOTE 7 - RETIREMENT PLANS
Pension Plan
Plan Description - The City contributes to the California Public Employees' Retirement System
(CalPERS), a cost-sharing multiple-employer defined benefit plan. CalPERS provide retirement and
disability benefits, annual cost-of-living adjustments, and death benefits to plan members and
beneficiaries. CalPERS act as a common investment and administrative agent for participating public
entities within the State of California. Benefit provisions and all other requirements are established by
State statute and City ordinance. Copies of CalPERS' annual financial report may be obtained from their
Executive Office located at 400 P Street, Sacramento, California 95811.
Funding Policy – The City employer is required to contribute an actuarially determined rate of annual
covered payroll for its miscellaneous employees (13.031 percent until February 2013 and 11.040 percent
for the remainder of fiscal year 2012/13). Active plan members are required by State statute to contribute
7 percent of their annual covered salary. In past years, the City employer contributed this required
amount on behalf of City employees. As a result of labor negotiations during fiscal year 2011/12,
employees began to contribute the 7 percent of annual salary.
Annual Pension Cost - For fiscal year 2012/13, the City's annual pension cost was $603,323. The
required contribution was determined as part of the June 30, 2009, actuarial valuation using the entry age
normal actuarial cost method. CalPERS actuarial assumptions included (a) 7.75 percent (7.75%)
investment rate of return (net of administrative expenses), (b) projected annual salary increases ranging
from 3.55 percent to 14.45 percent for miscellaneous employees depending on age, service, and type of
employment, and (c) 3.25 percent per year payroll growth adjustments. Both (a) and (b) included an
inflation component of 3.00 percent. The actuarial value of CalPERS assets was determined using
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
56
techniques that smooth the effects of short-term volatility in the market value of investments over a three-
year period. CalPERS’ unfunded actuarial accrued liability (or surplus) is amortized as a level percentage
of projected payroll on a closed basis. The amortization period at June 30, 2008, was 30 years for
miscellaneous employees for prior and current service unfunded liability.
THREE-YEAR ANNUAL PENSION COSTS TREND INFORMATION FOR CALPERS
Annual Net
Fiscal Pension Cost APC Pension
Year (APC)Contributed Obligation
2011 579,256$ 100%-$
2012 616,323 100%-$
2013 603,323 100%-$
Required Supplementary Information
In 2004, CalPERS established a risk pool for cities and other government entities that have less than 100
active members. Actuarial valuations are performed with other participants within the same risk pool.
Stand alone information of the Schedule of the Funding Progress for the City is no longer available.
NOTE 8 - NET POSITION
A. Net Investment in Capital Assets
As of June 30, 2013, the net investment in capital assets consisted of the following:
Capital assets, net 123,893,273$
2011 general obligation library bonds (11,540,000)
Net investment in capital assets 112,353,273$
B. Restricted Net Position
As of June 30, 2013, the restricted net position consisted of the following:
Environmental Special Debt
Services Assessments Service Total
Restricted Net Position 463,182$ 621,948$ 885,757$ 1,970,887$
Restricted For
NOTE 9 - JOINT POWERS AGREEMENTS
The City is a member of several Joint Power Agreements, as follows:
The Santa Clara County Valley Transportation Authority (VTA) consists of various cities in the San
Francisco Bay area. .The Transportation 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
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
57
statements may be obtained from the Traffic Authority at 1754 Technology Drive, Suite 224, San Jose,
California 95110.
The West Valley Solid Waste Management Joint Powers Authority consists of the west valley cities of
Campbell, Los Gatos, Monte Sereno, and Saratoga. The JPA was formed to coordinate efforts in carrying
out solid waste collection and disposal activities, and in meeting the mandates of AB939, the States’
Integrated Waste Management Act.
The Silicon Valley Regional Interoperability Authority (SVRIA) consists of Silicon Valley agencies
formed to coordinate the design and implementation of an interoperable public safety communication
system.
The Santa Clara County Library System JPA consists of various member agencies as a policy making and
governing body of the County’s library system.
These JPA's are governed by boards consisting of representatives from their members. The boards
control the operations of each JPA, including selection of management and approval of operating budgets,
independent of any influence by its members beyond their representation on the board.
NOTE 10 - EXCESS EXPENDITURES OVER APPROPRIATIONS
There were no excess of expenditures over appropriations in individual funds during fiscal year 2012/13.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
A. Lawsuits
The City is presently involved in certain matters of litigation that have arisen in the no rmal course of
conducting City business. City management believes, based upon consultation with the City Attorney,
that these cases, in the aggregate, are not expected to result in a material adverse financial impact on the
City. Additionally, City management believes that the City's insurance programs are sufficient to cover
any potential losses should an unfavorable outcome materialize.
B. Federal and State Grant Programs
The City participates in Federal and State grant programs. These programs are audited by the City's
independent accountants in accordance with the provisions of the Federal Single Audit Act Amendments
of 1996 and applicable State requirements. For Federal programs, the City reached the level of qualifying
cost during the current fiscal year so a single audit was required. Expenditures which may be disallowed,
if any, by the granting agencies, cannot be determined at this time. The City expects such amounts, if
any, to be immaterial.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
58
C. Commitments
The City had several outstanding contracts or planned construction projects as of June 30, 2013. These
projects are evidenced by contractual commitments with contractors and include:
Amland Corp 33,189$ 24,400$
Biggs Cardosa Association 4,200 3,570
BKF Engineers 64,834 34,694
Chrisp Company 36,460 2,988
Cotton Shires & Associates 80,887 12,647
David L. Gates & Associates 25,279 13,363
Fehr Engineering Company 10,500 2,000
Gachina Landscape 17,940 17,940
Gradetech, Inc.975,690 252,638
Guerra Construction Group 232,346 173,788
Hillside Drilling, Inc.252,033 252,033
Labor Consultants 15,625 4,075
Lundmark Construction 19,490 7,620
Pacific Products & Services 9,000 9,000
Peelle, Technologies, Inc.117,749 107,084
Reed & Graham, Inc.33,000 33,000
Solectric Electrical 13,000 1,787
Steve Benzing Architect 4,820 1,108
Tennyson Electric 159,929 20,289
Testing Engineers 13,529 8,786
The Planning Center 249,631 236,945
2,369,131$ 1,219,754$
Vendor
Original
Commitment
Commitment
Remaining
As of June 30, 2013, in the opinion of City management, there were no additional outstanding matters
that would have a significant effect on the financial position of the funds of the City.
REQUIRED SUPPLEMENTARY INFORMATION
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CITY OF SARATOGA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2013
59
NOTE 1 - BUDGETARY INFORMATION
The following is the budget comparison schedules for General Fund.
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES:
Property taxes 8,186,642$ 8,436,600$ 8,959,231$ 522,631$
Special assessments 5,375 5,375 7,165 1,790
Sales taxes 1,095,000 1,035,000 1,051,121 16,121
Other local taxes 580,000 630,000 769,357 139,357
Licenses & permits 1,050,065 1,315,065 1,543,277 228,212
Fines & forfeitures 251,025 251,025 180,557 (70,468)
Intergovermental - state 340,863 340,863 364,488 23,625
Intergovermental - other 33,000 33,000 51,999 18,999
Franchise fees 1,819,500 1,819,500 1,919,750 100,250
Use of money & property 536,282 516,282 492,366 (23,916)
Other revenue 1,924,105 2,310,899 2,296,677 (14,222)
Total revenues 15,821,857 16,693,609 17,635,988 942,379
EXPENDITURES:
Current:
General and intergovernmental services 3,483,445 3,718,846 3,268,524 450,322
Public safety 4,400,463 4,400,463 4,391,844 8,619
Public works 4,482,355 4,563,265 4,542,221 21,044
Community services 1,396,144 1,396,144 1,318,493 77,651
Community development services 2,040,641 2,090,641 2,046,853 43,788
Total expenditures 15,803,048 16,169,359 15,567,935 601,424
REVENUES OVER
(UNDER) EXPENDITURES 18,809 524,250 2,068,053 1,543,803
OTHER FINANCING SOURCES (USES):
Transfers in 106,000 106,000 106,000 -
Transfers out (735,000) (1,184,500) (1,184,500) -
Total other financing sources (uses)(629,000) (1,078,500) (1,078,500) -
Net change in fund balances (610,191)$ (554,250)$ 989,553 1,543,803$
FUND BALANCES:
Beginning of year 8,929,121
End of year 9,918,674$
CITY OF SARATOGA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2013
60
Through the budget, the City Council sets the direction of the City, allocates its resources and establishes
its priorities. The Annual Operating and Capital Budgets assure the efficient and effective uses of the
City's economic resources, as well as establishing that the highest priority objectives are accomplished.
The annual budgets are adopted for the period of July 1 to June 30, and prepared to accurately and openly
communicate service and infrastructure priorities to the community, businesses, vendors, employees, and
other public agencies. The Annual Operating Budget is developed on a program basis for all funds with
fund level authority. It establishes the foundation of effective financial planning by pro viding resource
planning, performance measures and controls that permit the evaluation and adjustment of the City's
performance. The City adopts an annual budget for the capital projects as part of adopting the five-year
Capital Improvement Plan. The annual capital budget is adopted on a project-by-project 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 and capital budgets include proposed
expenditures and the means of financing them.
b. Public hearings are conducted to obtain taxpayer comments.
c. The budgets are legally enacted through the passage of a resolution.
d. For the Operating Budget, 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. As Capital Projects are adopted on a project basis, the City Council must approve increases or
decreases of budgeted amounts or changes in project scope. Upon project completion, immaterial
amounts are transferred to ongoing maintenance projects within the capital program. If remaining
project funds are material, the project balance is brought back to Council for approval to transfer.
f. Formal budgetary integration in the form of legally adopted budgets is employed as a
management control device for all funds. Budgets are adopted on a basis consistent with
generally accepted accounting principles. Budgeted expenditures reported are as amended by
supplemental appropriations of the City Council.
Encumbrance accounting, under which purchase orders, contracts, and other commitments for the
expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is
employed as an extension of formal budgetary integration in the General, Special Revenue, Internal
Service, and Capital funds. Unexpended and unencumbered appropriations automatically lapse at the end
of the fiscal year.
CITY OF SARATOGA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2013
61
NOTE 2 - MODIFIED APPROACH FOR CITY STREETS INFRASTRUCTURE CAPITAL
ASSETS
In accordance with GASB Statement No. 34, the City is required to account for and report infrastructure
capital assets. The City defines infrastructure as the basic physical assets that allow the City to function
and those resources utilized primarily by the public which provide 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 includes the street system, park and recreation lands and
improvements; storm water conveyance and drainage systems, and buildings combined with site
amenities such as parking and landscaping areas used by the City in the conduct of its business. Each
major infrastructure system can be divided into subsystems. For example, the street system can be
divided into concrete and asphalt pavements, concrete curb and gutters, sidewalks, medians, streetlights,
traffic control devices (signs, signals and pavement markings), landscaping and land. Subsystem detail is
not presented in these basic financial statements; however, the City maintains detailed information on
these subsystems.
The City has elected to use the "Modified Approach" as defined by GASB Statement No. 34 for
infrastructure reporting for its Streets Pavement System. Under GASB Statement No. 34, eligible
infrastructure capital assets are not required to be depreciated under the following requirements:
The City manages the eligible infrastructure capital assets using an asset management system
with characteristics of (1) an up-to-date inventory; (2) perform condition assessments and
summarize the results using a measurement scale; and (3) estimate annual amount to maintain
and preserve at the established condition assessment level.
The City documents that the eligible infrastructure capital assets are being preserved
approximately at or above the established and disclosed condition assessment level.
The City commissioned a physical assessment of the streets conditions with the final report received
March 30, 2012. The study assists the City by providing current inspection data used to evaluate current
pavement condition. This helps to maintain a City-defined desirable level of pavement performance
while optimizing the expenditure of limited fiscal resources. The entire pavement network within the
City is composed of approximately 140 centerline miles of paved surfaces. The City’s road system can be
grouped by function class and includes 23.4 centerline miles of arterial, 23.5 centerline miles of collector,
and 93.3 miles as residential.
A visual survey of all pavement segments was conducted to assess the existing surface condition of each
of the individual pavement segments. Upon completion of the study, a Pavement Condition Index (PC I)
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 assessment study was conducted during November,
2010.
CITY OF SARATOGA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2013
62
The following conditions were defined:
Condition Rating
Excellent 80 - 100
Very Good 70 - 79
Good 50 - 69
Poor 25 - 49
Very Poor 0 - 24
The City's policy is to achieve an average rating of 70 for all streets, which is a very good rating. This
rating allows minor cracking and raveling of the pavement along with minor roughness that could be
noticeable to drivers traveling at the posted speeds. As of June 30, 2013, the City's street system was
rated at a PCI index of 76 on the average with the detail condition as follows:
Percent of
Condition Streets
Excellent 8%
Very Good 75%
Good 14%
Poor 3%
Very Poor 0%
The City expended $2,417,444 on street maintenance for the year ended June 30, 2013. These routine
maintenance expenditures delayed deterioration. The budget required to maintain and improve the
current level of overall condition through the year 2017 is a minimum of $1,000,000. Approximately
$8,200,000 is the projected budget for fiscal year 2013/14.
A schedule of estimated annual amount calculated to maintain and preserve its streets at the current level
compared to actual expenditures for street maintenance for the last ten years is presented below:
Funded By
Fiscal Actual Other Gas Tax Total PCI
Year Budget Expenditures Sources Fund Funded Index
2003-04 1,961,844$ 1,489,667$ 907,327$ 582,340$ 1,489,667$ -
2004-05 1,800,000 2,609,648 1,478,216 1,131,432 2,609,648 70
2005-06 1,156,547 1,030,382 353,652 676,730 1,030,382 70
2006-07 2,026,404 1,156,889 19,899 970,818 990,717 70
2007-08 2,246,152 1,691,466 1,252,709 438,757 1,691,466 70
2008-09 2,680,504 1,574,485 1,148,650 425,835 1,574,485 70
2009-10 1,811,130 771,386 575,710 195,676 771,386 70
2010-11 4,770,782 1,847,221 1,449,686 397,535 1,847,221 76
2011-12 4,683,078 2,856,603 1,622,401 1,234,202 2,856,603 76
2012-13 4,826,265 2,417,444 1,660,028 757,416 2,417,444 76
As of June 2013, approximately 17 percent of the City's streets were rated below the average standard of
70. The City will continue to rehabilitate these segments of the streets. Total deficiencies (deferred
maintenance) identified in the Pavement Management System Report at the end of a five-year period
CITY OF SARATOGA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2013
63
(2013-2017) amounted to approximately $11,000,000 for all streets and are expected to be rehabilitated
with a minimum annual budget of $1,000,000.
64
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NONMAJOR GOVERNMENTAL FUNDS
Special Revenue Funds
Lighting and Landscape Assessment District Funds – These funds account for revenues and
expenditures associated with maintaining the City’s 25 Landscape and Lighting districts which were
approved by consent of property owners living along or within the boundaries of the Districts.
Debt Service Fund
Library Bond - Santa Clara County general obligation bond tax revenues are accumulated in this fund to
pay annual principal and interest payments on the voter approved 2001 Library Improvement Bond.
CITY OF SARATOGA
COMBINING BALANCE SHEETS
NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2013
66
Special
Revenue Debt Service
Lighting and Total
Landscaping Other
Assessment Library Governmental
District Bond Funds
ASSETS
Cash and investments 642,339$ 885,177$ 1,527,516$
Receivables:
Accounts 192 200 392
Interest 342 380 722
Total assets 642,873$ 885,757$ 1,528,630$
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable 20,925$ -$ 20,925$
Total liabilities 20,925 - 20,925
Fund Balances:
Restricted:
Special revenue funds 621,948 - 621,948
Debt service - 885,757 885,757
Total fund balances 621,948 885,757 1,507,705
Total liabilities and fund balances 642,873$ 885,757$ 1,528,630$
CITY OF SARATOGA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2013
67
Special Debt
Revenue Service
Lighting and Total
Landscaping Other
Assessment Library Governmental
District Bond Funds
REVENUES:
Property taxes 193,634$ -$ 193,634$
Special assessment 287,489 890,401 1,177,890
Use of money and property 1,965 1,851 3,816
Total revenues 483,088 892,252 1,375,340
EXPENDITURES:
Current:
General and ingov't services
Public works 423,644 - 423,644
Debt service:
Principal - 455,000 455,000
Interest and fiscal charges - 413,910 413,910
Total expenditures 423,644 868,910 1,292,554
REVENUES OVER
(UNDER) EXPENDITURES 59,444 23,342 82,786
Net change in fund balances 59,444 23,342 82,786
FUND BALANCES:
Beginning of year 562,504 862,415 1,424,919
End of year 621,948$ 885,757$ 1,507,705$
CITY OF SARATOGA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
CAPITAL IMPROVEMENT
FOR THE YEAR ENDED JUNE 30, 2013
68
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES:
Licenses & permits 425,000$ 425,000$ 633,197$ 208,197$
Fines & forfeitures - - 18,462 18,462
Intergovermental - federal 3,934,428 4,096,962 974,826 (3,122,136)
Intergovermental - state 1,018,662 853,315 777,704 (75,611)
Intergovermental - other 390,088 390,088 217,401 (172,687)
Use of money and property 35,000 35,000 31,130 (3,870)
Other revenue 323,212 401,406 124,181 (277,225)
Total revenues 6,126,390 6,201,771 2,776,901 (3,424,870)
EXPENDITURES:
Capital outlay 10,264,595 10,789,477 3,979,272 6,810,205
Total expenditures 10,264,595 10,789,477 3,979,272 6,810,205
REVENUES OVER
(UNDER) EXPENDITURES (4,138,205) (4,587,706) (1,202,371) 3,385,335
OTHER FINANCING SOURCES (USES):
Transfers in 735,000 1,184,500 1,184,500 -
Transfers out (106,000) (106,000) (106,000) -
Total other financing sources (uses)629,000 1,078,500 1,078,500 -
Net change in fund balances (3,509,205)$ (3,509,206)$ (123,871) 3,385,335$
FUND BALANCES:
Beginning of year 3,544,205
End of year 3,420,334$
CITY OF SARATOGA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
LIGHTING & LANDSCAPING ASSESSMENT DISTRICT SPECIAL REVENUE FUND
FOR THE YEAR ENDED JUNE 30, 2013
69
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES:
Property taxes 172,550$ 172,550$ 193,634$ 21,084$
Special assessments 290,539 290,539 287,489 (3,050)
Use of money and property 1,645 1,645 1,965 320
Total revenues 464,734 464,734 483,088 18,354
EXPENDITURES:
Current:
Public works 633,929 633,929 423,644 210,285
Total expenditures 633,929 633,929 423,644 210,285
REVENUES OVER
(UNDER) EXPENDITURES (169,195) (169,195) 59,444 228,639
Net change in fund balances (169,195)$ (169,195)$ 59,444 228,639$
FUND BALANCES:
Beginning of year 562,504
End of year 621,948$
CITY OF SARATOGA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
LIBRARY BOND DEBT SERVICE FUND
FOR THE YEAR ENDED JUNE 30, 2013
70
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES:
Special assessments 850,000$ 850,000$ 890,401$ 40,401$
Use of money and property 600 600 1,851 1,251
Total revenues 850,600 850,600 892,252 41,652
EXPENDITURES:
Debt service:
General and ingov't services - - - -
Principal 455,000 455,000 455,000 -
Interest and fiscal charges 414,285 414,285 413,910 375
Total expenditures 869,285 869,285 868,910 375
REVENUES OVER
(UNDER) EXPENDITURES (18,685) (18,685) 23,342 42,027
Net change in fund balances (18,685)$ (18,685)$ 23,342 42,027$
FUND BALANCES:
Beginning of year 862,415
End of year 885,757$
71
INTERNAL SERVICE FUNDS
Liability/Risk Management Insurance Fund – Accounts for insurance premiums, self-insurance portion
of claims, and administrative cost associated with settling claims. Charges made to operating departments
are based on liability risk and claim occurrence history.
Worker’s Compensation Self-insurance Fund – Accounts for insurance premiums, self insured portion
of claims, and administrative costs associated with settling claims. Charges made to operating
departments are based on liability risk and claim occurrence history.
Office Stores Fund - Photocopy equipment, postage and bulk mail meter expenses are controlled at one
source point and expended to the departments as goods or services are utilized.
Information Technology Services Fund – Supports the delivery of technology based services and
infrastructure, including desktop support, network systems, technology upgrades and initiatives,
community systems, and associated information technology equipment.
Vehicle & Equipment Maintenance Fund – Accounts for the cost of operating and maintaining
automotive equipment used for service operations in various City departments.
Building Maintenance Fund – Accounts for operating costs associated with building maintenance.
Expenses include custodial supplies and services, maintenance and repair, utilities, and staffing costs.
Vehicle & Equipment Replacement Fund – Established to accumulate funding for the replacement of
vehicles and equipment. Replacement costs are charged to program over the asset’s life span, reflective
of usage.
Information Technology Equipment Replacement Fund – Established to accumulate funding for the
replacement of information technology equipment. Replacement costs are charged to departments over
the asset’s lifespan, reflective of usage.
CITY OF SARATOGA
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF NET POSITION
JUNE 30, 2013
72
Liability /
Risk Workers'Office
Management Compensation Stores
ASSETS
Current assets:
Cash and investments 250,245$ 296,293$ 29,227$
Accounts receivable 5,667 - 27
Total current assets 255,912 296,293 29,254
Noncurrent assets:
Capital assets:
Machinery and equipment - - -
Less: accumulated depreciation - - -
Total capital assets (net of
accumulated depreciation) - - -
Total assets 255,912 296,293 29,254
LIABILITIES
Liabilities:
Current assets:
Accounts payable - 2,214 5,234
Accrued payroll 1,053 359 -
Claims payable 24,800 - -
Total current liabilities 25,853 2,573 5,234
NET POSITION
Net investment in capital assets - - -
Unrestricted 230,059 293,720 24,020
Total net position 230,059$ 293,720$ 24,020$
73
Information
Information Vehicle Vehicle Technology
Technology and Equipment Building and Equipment Equipment
Services Maintenance Maintenance Replacement Replacement Total
291,578$ 15,046$ 223,831$ 442,089$ 168,368$ 1,716,677$
153 - 4,663 - - 10,510
291,731 15,046 228,494 442,089 168,368 1,727,187
- - - 701,763 90,240 792,003
- - - (600,791) (90,240) (691,031)
- - - 100,972 - 100,972
291,731 15,046 228,494 543,061 168,368 1,828,159
6,238 3,356 36,772 - 12,051 65,865
4,208 1,263 6,821 - - 13,704
- - - - - 24,800
10,446 4,619 43,593 - 12,051 104,369
- - - 100,972 - 100,972
281,285 10,427 184,901 442,089 156,317 1,622,818
281,285$ 10,427$ 184,901$ 543,061$ 156,317$ 1,723,790$
CITY OF SARATOGA
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN FUND NET POSITION
FOR THE YEAR ENDED JUNE 30, 2013
74
Liability /
Risk Workers'Office
Management Compensation Stores
Operating revenues:
Charges for services 375,000$ 240,000$ 55,000$
Other operating revenues 28,398 4,454 12,085
Total operating revenues 403,398 244,454 67,085
Operating expenses:
Cost of services - - -
Administration 308,096 182,700 54,285
Depreciation - - -
Total operating expenses 308,096 182,700 54,285
Operating income 95,302 61,754 12,800
Change in net position 95,302 61,754 12,800
Total net position - beginning 134,757 231,966 11,220
Total net position - ending 230,059$ 293,720$ 24,020$
75
Information
Information Vehicle Vehicle Technology
Technology and Equipment Building and Equipment Equipment
Services Maintenance Maintenance Replacement Replacement Total
400,000$ 215,000$ 750,000$ 100,000$ 46,236$ 2,181,236$
258 - 5,857 - - 51,052
400,258 215,000 755,857 100,000 46,236 2,232,288
- 227,604 771,882 10,462 46,678 1,056,626
375,674 - - - - 920,755
- - - 49,715 - 49,715
375,674 227,604 771,882 60,177 46,678 2,027,096
24,584 (12,604) (16,025) 39,823 (442) 205,192
24,584 (12,604) (16,025) 39,823 (442) 205,192
256,701 23,031 200,926 503,238 156,759 1,518,598
281,285$ 10,427$ 184,901$ 543,061$ 156,317$ 1,723,790$
CITY OF SARATOGA
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2013
76
Liability /
Risk Workers'Office
Management Compensation Stores
Cash flows from operating activities:
Receipts from customers and users 428,205$ 244,454$ 67,058$
Payments to suppliers (245,965) (160,494) (52,682)
Payments to employees (58,604) (20,247) -
Net cash provided by operating activities 123,636 63,713 14,376
Cash flows from capital activities:
Acquisition of capital assets - - -
Net cash used for acquisition of capital assets - - -
Net increase (decrease) in cash and cash equivalents 123,636 63,713 14,376
Cash and cash equivalents, beginning of year 126,609 232,580 14,851
Cash and cash equivalents, ending of year 250,245$ 296,293$ 29,227$
Reconciliation of operating income to net cash provided
by operating activities:
Operating income (loss)95,302$ 61,754$ 12,800$
Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:
Depreciation - - -
Change in operating assets and liabilities:
Accounts receivables 24,807 - (27)
Accounts payable (286) 1,769 1,603
Claims payable 3,553 - -
Accured payroll 260 190 -
Net cash provided (used) by operating activities 123,636$ 63,713$ 14,376$
77
Information
Information Vehicle Vehicle Technology
Technology and Equipment Building and Equipment Equipment
Services Maintenance Maintenance Replacement Replacement Total
400,105$ 215,000$ 751,194$ 100,000$ 46,236$ 2,252,252$
(175,865) (156,714) (319,404) (10,462) (38,180) (1,159,766)
(201,264) (76,918) (450,737) - - (807,770)
22,976 (18,632) (18,947) 89,538 8,056 284,716
- - - (84,538) - (84,538)
- - - (84,538) - (84,538)
22,976 (18,632) (18,947) 5,000 8,056 200,178
268,602 33,678 242,778 437,089 160,312 1,516,499
291,578$ 15,046$ 223,831$ 442,089$ 168,368$ 1,716,677$
24,584$ (12,604)$ (16,025)$ 39,823$ (442)$ 205,192$
- - - 49,715 - 49,715
(153) - (4,663) - - 19,964
(1,569) (6,039) 2,101 - 8,498 6,077
- - - - - 3,553
114 11 (360) - - 215
22,976$ (18,632)$ (18,947)$ 89,538$ 8,056$ 284,716$
78
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79
CAPITAL ASSETS
USED IN THE OPERATION OF GOVERNMENTAL FUNDS
80
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CITY OF SARATOGA
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
COMPARATIVE SCHEDULE BY SOURCE
JUNE 30, 2013 AND 2012
81
2013 2012
Governmental Funds Capital Assets:
Land and land improvements 14,585,401$ 14,510,401$
Buildings and structures 25,480,150 23,611,590
Machinery and equipment 1,678,323 1,698,723
Infrastructure 105,026,791 104,928,913
Construction in progress 7,615,664 7,166,953
Total Governmental Funds Capital Assets 154,386,329 151,916,580
Accumulated depreciation (30,594,028) (28,786,053)
Total Governmental Funds Capital Assets, Net 123,792,301$ 123,130,527$
Investments in Governmental Funds
Capital Assets by Source:
General Fund 115,331,263$ 115,440,255$
Special revenue funds 960,972 960,972
Capital projects funds 37,246,746 34,668,005
Donations 847,348 847,348
Accumulated depreciation (30,594,028) (28,786,053)
Total Governmental Funds Capital Assets 123,792,301$ 123,130,527$
1 This schedule presents only the capital asset balances related to governmental funds. Accordingly
the capital assets reported in internal service funds are excluded from the above amounts.
Generally, the capital assets of internal service funds are included as governmental activities in the
statement of net position.
CITY OF SARATOGA
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE BY FUNCTION AND ACTIVITY1
JUNE 30, 2013
82
Land Buildings
and Land and
Improvements Structures
Function and Activity
General and intergovernmental services:
Management services -$ 564,632$
Administrative services - 521,073
Intergovernmental services 118,184 3,138,641
Total General and Intergovernmental Services:118,184 4,224,346
Public safety:
Police services - -
Code enforcement - -
Total Public Safety:- -
Public works:
Streets and sidewalks 835,154 62,921
Parks/open space 3,712,061 2,679,107
Total Public Works:4,547,215 2,742,028
Community services 8,177,538 4,198,877
Community development services 1,742,464 14,314,899
Total Governmental Funds Capital Assets 14,585,401 25,480,150
Accumulated depreciation - (7,276,566)
Total Governmental Funds Capital Assets, Net 14,585,401$ 18,203,584$
1 This schedule presents only the capital asset balances related to governmental funds. Accordingly
the capital assets reported in internal service funds are excluded form the above amounts.
Generally, the capital assets of internal service funds are included as governmental activities in the
statement of net position.
83
Machinery Construction
and in
Equipment Infrastructure Progress Total
553,507$ -$ 355,105$ 1,473,244$
140,332 - - 661,405
22,225 - - 3,279,050
716,064 - 355,105 5,413,699
29,459 - - 29,459
7,548 - - 7,548
37,007 - - 37,007
421,125 104,899,554 4,869,501 111,088,255
150,019 - 45,326 6,586,513
571,144 104,899,554 4,914,827 117,674,768
337,476 127,237 2,296,494 15,137,622
16,632 - 49,238 16,123,233
1,678,323 105,026,791 7,615,664 154,386,329
(1,116,007) (22,201,455) - (30,594,028)
562,316$ 82,825,336$ 7,615,664$ 123,792,301$
CITY OF SARATOGA
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE OF CHANGE BY FUNCTION AND ACTIVITY
JUNE 30, 2013
84
Governmental Governmental
Funds Capital Funds Capital
Assets Assets
July 1, 2012 Additions Deletions June 30, 2013
Function and Activity
General and intergovernmental services:
Management services 1,335,133$ 138,111$ -$ 1,473,244$
Administrative services 307,917 353,488 - 661,405
Intergovernmental services 3,279,050 - - 3,279,050
Total General and Intergovernmental Services:4,922,100 491,599 - 5,413,699
Public safety:
Police services 29,459 - - 29,459
Code enforcement 7,548 - - 7,548
Total Public Safety:37,007 - - 37,007
Public works:
Streets and sidewalks 109,483,820 1,640,580 (36,145) 111,088,255
Parks/open space 6,646,344 12,746 (72,577) 6,586,513
Total Public Works:116,130,164 1,653,326 (108,722) 117,674,768
Community services 14,706,057 431,565 - 15,137,622
Community development services 16,121,251 1,982 - 16,123,233
Total Governmental Funds Capital Assets 151,916,579 2,578,472 (108,722) 154,386,329
Accumulated depreciation (28,786,052) (1,916,748) 108,772 (30,594,028)
Total Governmental Funds Capital Assets, Net 123,130,527$ 661,724$ 50$ 123,792,301$
1 This schedule presents only the capital asset balances related to governmental funds. Accordingly
the capital assets reported in internal service funds are excluded form the above amounts.
Generally, the capital assets of internal service funds are included as governmental activities in the
statement of net position.
STATISTICAL SECTION
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85
This part of the City of Saratoga's comprehensive annual financial report presents detailed information as
a context for understanding what the information in the financial statements, note disclosures and required
supplementary information says about the government's overall financial health.
Contents Page
Financial Trends
These schedules contain trend information to help the reader understand how
the government's financial performance and well being have changed over time. 86-91
Revenue Capacity
These schedules contain information to help the reader assess the government’s
most significant local revenue source; property tax. 92-101
Debt Capacity
These schedules present information to help the reader assess the affordability
of the government's current levels of outstanding debt and the government's ability
to issue additional debt in the future. 102-108
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader
understand the environment within which the government's financial activities
take place. 109-110
Operating Information
These schedules contain service and infrastructure data to help the reader understand
how the information in the government's financial report relates to the services the
government provides and the activities it performs. 112-117
The City of Saratoga implemented GASB Statement No. 34 in fiscal year 2001/02; schedules presenting
government-wide information include information beginning in that year.
The City of Saratoga implemented GASB Statement No. 44 in fiscal year 2007/08; newly required
schedules presenting information in the Statistical Section include the earliest available information.
CITY OF SARATOGA
NET POSITION BY COMPONENT
LAST NINE YEARS
(ACCRUAL BASIS OF ACCOUNTING)
86
(amounts expressed in thousands)
2005 2006 2007 2008
Primary government
Governmental activities
Net investment in capital assets 105,784$ 107,100$ 108,102$ 109,818$
Restricted 6,328 5,370 5,928 5,940
Unrestricted 6,789 9,955 8,593 9,710
Total primary government 118,901$ 122,425$ 122,623$ 125,468$
Fiscal Year
$-
$50,000
$100,000
$150,000
2005 2006 2007 2008 2009 2010 2011 2012 2013
Net Positon by Component
Net investment in capital assets Restricted Unrestricted
87
2009 2010 2011 2012 2013
108,818$ 108,966$ 110,016$ 111,201$ 112,353$
5,281 5,519 5,830 1,938 1,971
8,759 8,533 7,964 12,248 13,357
122,858$ 123,018$ 123,810$ 125,387$ 127,681$
CITY OF SARATOGA
CHANGES IN NET POSITION
LAST NINE YEARS
(ACCRUAL BASIS OF ACCOUNTING)
88
(amounts expressed in thousands)
2005 2006 2007 2008
Expenses:
Governmental activities:
General and intergovernmental services 4,160$ 3,473$ 4,532$ 6,293$
Public safety 3,736 3,427 3,844 4,166
Public works 3,829 4,752 6,425 5,325
Community services 1,929 1,395 1,437 1,286
Community development services 2,349 2,226 1,993 2,032
Interest on long-term debt (unallocated)760 754 768 714
Total governmental activities expenses 16,763 16,027 18,999 19,816
Program revenues:
Charges for services:
General and intergovernmental services - 31 452 1,787
Public safety 141 122 - 411
Public works 1,988 1,890 528 1,705
Community services 757 1,008 604 911
Community development services 1,890 2,665 1,328 2,110
Operating grants and contributions 1,218 1,549 2,155 151
Capital grants and contributions 865 1,568 1,282 1,715
Total governmental activates program revenues 6,859 8,833 6,349 8,790
Net (expense) revenue and change in net assets (9,904) (7,194) (12,650) (11,026)
General revenue and other changes in net position
Taxes:
Property taxes 4,841 5,652 5,772 8,099
Sales taxes 1,011 988 995 1,058
Local taxes 1,143 1,288 1,099 694
Franchise taxes 995 1,040 1,187 1,625
Motor vehicle in-lieu 420 718 177 149
Total Taxes 8,410 9,686 9,230 11,625
Intergovernmental - - 673 841
Investment earnings 283 709 2,813 1,057
Other revenues 193 323 132 348
Total general revenues 8,886 10,718 12,848 13,871
Change in net position (1,018) 3,524 198 2,845
Net position - beginning of year 119,919 118,901 122,425 122,623
Net position - end of year 118,901$ 122,425$ 122,623$ 125,468$
Source: CAFR
Fiscal Year
89
2009 2010 2011 2012 2013
5,595$ 3,729$ 4,368$ 3,486$ 4,143$
4,211 4,339 4,457 4,300 4,382
7,643 6,535 6,645 9,121 6,922
1,634 1,711 1,846 1,996 1,804
2,000 1,751 1,839 1,553 1,713
697 677 656 453 410
21,780 18,742 19,811 20,909 19,374
133 125 171 140 102
520 425 561 594 607
2,379 2,535 2,771 2,079 3,316
935 917 1,020 890 946
1,802 1,586 1,734 1,923 2,184
228 275 401 1,319 75
339 674 1,221 2,337 599
6,336 6,537 7,879 9,282 7,829
(15,444) (12,205) (11,932) (11,627) (11,545)
8,336 8,371 8,199 8,457 9,153
1,043 955 991 1,101 1,051
663 560 632 683 769
1,657 1,664 1,821 1,852 1,920
116 101 146 16 16
11,815 11,651 11,789 12,109 12,909
474 522 773 910 766
397 101 65 67 51
148 91 97 118 113
12,834 12,365 12,724 13,204 13,839
(2,610) 160 792 1,577 2,294
125,468 122,858 123,018 123,810 125,387
122,858$ 123,018$ 123,810$ 125,387$ 127,681$
CITY OF SARATOGA
FUND BALANCE OF GOVERNMENTAL FUNDS
LAST NINE YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
90
(amounts expressed in thousands)
2005 2006 2007 2008
General fund:
Restricted 899$ 910$ 711$ 679$
Committed - - - -
Assigned 75 615 831 1,258
Unassigned 6,002 8,854 7,619 8,459
Total general fund 6,976$ 10,379$ 9,161$ 10,396$
All other governmental funds:
Restricted
Special revenue funds 202$ 919$ 844$ 318$
Debt service 856 865 746 854
Committed
Capital project funds 5,321 3,586 4,338 4,768
Total all other governmental funds 6,379$ 5,370$ 5,928$ 5,940$
Source: CAFR
Information prior to fiscal year 2011 have been updated to conform with GASB 54 requirements
Fiscal Year
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
General -
Restricted
General -
Committed
General -
Assigned
General -
Unassigned
Debt
Service
Special
Revenue
Capital
Projects
Fund Balances of Governmental Funds
2005
2006
2007
2008
2009
2010
2011
2012
2013
91
2009 2010 2011 2012 2013
613$ 563$ 513$ 513$ 463$
550 300 500 600 675
322 196 667 3,161 792
6,744 6,952 5,804 4,655 7,989
8,229$ 8,011$ 7,484$ 8,929$ 9,919$
484$ 569$ 504$ 563$ 622$
931 893 851 862 886
3,866 4,057 4,475 3,544 3,420
5,281$ 5,519$ 5,830$ 4,969$ 4,928$
CITY OF SARATOGA
GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE
LAST NINE YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
92
(amounts expressed in thousands)
2005 2006 2007 2008
Tax revenues:
Property taxes 4,841$ 5,652$ 5,772$ 8,099$
Special assessments 1,476 1,369 271 1,392
Sales taxes 1,011 988 995 1,058
Local taxes 1,143 1,288 1,099 694
Franchise taxes 995 1,040 1,187 1,625
Motor vehicle in-lieu 420 718 177 149
Total tax revenues 9,886$ 11,055$ 9,501$ 13,017$
Source: CAFR
Fiscal Year
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
Property taxes Special
assessments
Sales taxes Local taxes Franchise
taxes
Motor vehicle
in-lieu
Tax Revenues by Source
2005
2006
2007
2008
2009
2010
2011
2012
2013
93
2009 2010 2011 2012 2013
8,336$ 8,371$ 8,199$ 8,457$ 9,153$
1,368 1,247 1,255 1,243 1,185
1,043 955 991 1,101 1,051
663 560 632 683 769
1,657 1,664 1,821 1,852 1,920
116 101 146 16 16
13,183$ 12,898$ 13,044$ 13,352$ 14,094$
CITY OF SARATOGA
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST NINE YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
94
(amounts expressed in thousands)
2005 2006 2007 2008
Revenues:
Property taxes 4,893$ 5,652$ 4,758$ 7,877$
Special assessments 1,411 1,370 1,285 1,566
Sales taxes 1,011 987 995 1,058
Other local taxes 851 1,288 1,126 773
Licensed and permits 100 79 1,340 1,671
Fines and forfeitures 162 259 396 344
Intergovernmental - federal 90 - - -
Intergovernmental - state 1,375 2,660 3,631 1,641
Intergovernmental - other 671 976 629 777
Franchise fees 1,294 1,041 1,187 1,622
Use of money any property 664 752 2,813 924
Other revenues 153 1,719 151 326
Current services charges 3,093 2,715 900 4,184
Total tax revenues 15,768 19,498 19,211 22,763
Expenditures:
Current:
General and intergovernmental services 3,238 3,346 3,806 4,083
Public safety 3,731 3,423 3,824 4,166
Public works 2,599 3,501 5,714 4,717
Community services 1,875 1,210 1,381 1,262
Community development services 1,990 1,847 1,962 2,026
Capital outlay 1,777 2,908 2,130 4,246
Debt service:
Principal 255 270 280 295
Interest and fiscal charges 766 760 774 721
Total expenditures 16,231 17,265 19,871 21,515
Excess of revenues (463) 2,233 (660) 1,247
Other financing sources (uses):
Refunded bond proceeds - - - -
Payment for refunded bonds - - - -
Net original issue premium - - - -
Transfers in 2,492 499 3,422 2,241
Transfers out (2,492) (499) (3,422) (2,241)
Total other financing sources (uses)- - - -
Net change in fund balances (463)$ 2,233$ (660)$ 1,247$
Debt as a percentage of noncapital expenditures 7.06%7.17%5.94%5.62%
Source: CAFR
Fiscal Year
CITY OF SARATOGA
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST NINE YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
95
2009 2010 2011 2012 2013
8,335$ 8,371$ 8,199$ 8,457$ 9,153$
1,368 1,247 1,255 1,243 1,185
1,043 954 991 1,101 1,051
663 560 632 683 769
1,460 1,489 1,950 1,728 2,177
360 359 285 234 199
- 430 1,033 1,915 975
1,283 1,258 1,480 1,728 1,142
290 258 337 73 269
1,657 1,664 1,821 1,852 1,920
794 595 550 589 527
1,966 1,794 2,169 2,199 2,421
- - - - -
19,219 18,979 20,702 21,802 21,788
3,330 3,102 3,524 3,145 3,269
4,206 4,349 4,467 4,310 4,392
4,700 4,730 4,717 4,751 4,966
1,424 1,223 1,322 1,269 1,318
2,450 2,111 2,193 1,888 2,047
4,060 2,584 3,704 5,179 3,979
310 330 350 370 455
705 685 665 551 414
21,185 19,114 20,942 21,463 20,840
(1,966) (135) (240) 339 948
- - - 11,995 -
- - - (12,235) -
- - - 460 -
2,043 1,172 1,725 510 1,291
(2,043) (1,017) (1,700) (485) (1,291)
- 155 25 245 -
(1,966)$ 20$ (215)$ 584$ 948$
4.89%5.80%5.56%4.68%4.76%
CITY OF SARATOGA
PROPERTY TAX RATES – DIRECT AND OVERLAPPING GOVERNMENTS
LAST NINE YEARS
96
(Property Tax Rates per $100 of Assessed Value)
2005 2006 2007 2008
General 1.0000 1.0000 1.0000 1.0000
County Retirement Levy 0.0388 0.0388 0.0388 0.0388
County Library 0.0024 0.0024 0.0024 0.0024
City of Saratoga 0.0148 0.0117 0.0096 0.0113
1.0560 1.0529 1.0508 1.0525
Campbell School District 0.0529 0.0512 0.0508 0.0475
County Bond 2008 Hospital 0.0000 0.0000 0.0000 0.0000
Campbell Elementary 2002 0.0000 0.0000 0.0000 0.0000
Campbell Elementary 2010 0.0000 0.0000 0.0000 0.0000
Campbell Union High 1999 0.0198 0.0224 0.0198 0.0285
Campbell Union High 2006 0.0000 0.0000 0.0000 0.0000
Cupertino Elementary School District 0.0360 0.0350 0.0289 0.0337
Moreland Elementary School District 0.0612 0.0561 0.0556 0.0569
Saratoga School District 0.0361 0.0356 0.0351 0.0363
Campbell Union High School District 0.0197 0.0224 0.0198 0.0285
Fremont Union High School District 0.0268 0.0260 0.0243 0.0241
Los Gatos-Saratoga Joint Union High School District 0.0409 0.0371 0.0651 0.0345
Foothill-DeAnza Community College District 0.0129 0.0119 0.0346 0.0113
West Valley Community College District 2004 0.0000 0.0140 0.0126 0.0118
West Valley Community College District 2012 0.0000 0.0000 0.0000 0.0000
Saratoga Fire District 0.0017 0.0052 0.0049 0.0053
Santa Clara Valley Water District - State Water Proj 0.0086 0.0069 0.0070 0.0067
Santa Clara Valley Water District - Zone W-1 0.0006 0.0009 0.0002 0.0040
0.3172 0.3247 0.3587 0.3291
Total Tax Rate 1.3732 1.3776 1.4095 1.3816
Source: California Municipal Statistics, Inc.
Fiscal Year
97
2009 2010 2011 2012 2013
1.0000 1.0000 1.0000 1.0000 1.0000
0.0388 0.0388 0.0388 0.0388 0.0388
0.0024 0.0024 0.0024 0.0024 0.0024
0.0104 0.0094 0.0094 0.0088 0.0080
1.0516 1.0506 1.0506 1.0500 1.0492
0.0524 0.0285 0.0249 0.0283 0.0246
0.0000 0.0122 0.0095 0.0047 0.0051
0.0000 0.0267 0.0298 0.0266 0.0220
0.0000 0.0000 0.0005 0.0003 0.0086
0.0299 0.0183 0.0196 0.0186 0.0165
0.0000 0.0131 0.0131 0.0156 0.0160
0.0306 0.0000 0.0000 0.0000 0.0000
0.0565 0.0000 0.0000 0.0000 0.0000
0.0363 0.0000 0.0000 0.0000 0.0000
0.0299 0.0000 0.0000 0.0000 0.0000
0.0339 0.0000 0.0000 0.0000 0.0000
0.0330 0.0000 0.0000 0.0000 0.0000
0.0123 0.0000 0.0000 0.0000 0.0000
0.0032 0.0140 0.0139 0.0137 0.0139
0.0000 0.0000 0.0000 0.0000 0.0150
0.0053 0.0000 0.0000 0.0000 0.0000
0.0059 0.0071 0.0070 0.0063 0.0069
0.0002 0.0003 0.0002 0.0001 0.0000
0.3294 0.1202 0.1185 0.1142 0.1286
1.3810 1.1708 1.1691 1.1642 1.1778
CITY OF SARATOGA
ASSESSED VALUE OF TAXABLE PROPERTY
LAST NINE YEARS
98
(amounts expressed in thousands)
Fiscal
Year Total
Ended Residential Commercial Industrial Other Unsecured Assessed
June 30 Property Property Property Property Property Property
2005 7,114,095$ 166,071$ 8,746$ 138,912$ 42,965$ 7,470,789$
2006 7,883,965 177,149 8,921 161,496 46,874 8,278,405
2007 8,467,894 187,142 9,099 192,470 39,764 8,896,369
2008 9,025,628 208,369 9,281 210,269 35,775 9,489,322
2009 9,605,309 213,951 9,467 223,190 43,933 10,095,850
2010 9,724,687 120,769 9,656 327,898 58,210 10,241,220
2011 9,639,782 107,269 9,633 323,881 57,172 10,137,737
2012 9,834,082 111,232 9,706 323,563 55,535 10,334,118
2013 10,312,597 112,875 11,455 335,765 62,378 10,835,070
Source:Santa Clara County Assessor data, MuniServices, LLC
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013
Total Assessed Property
Unsecured
Other
Industrial
Commercial
Residential
99
Total
Less:Total Taxable Direct
Tax Exempt Assessed Tax
Real Property Value Rate
(76,932)$ 7,393,857$ 1.0560
(133,951) 8,144,454 1.0529
(140,859) 8,755,510 1.0508
(159,369) 9,329,953 1.0525
(161,488) 9,934,362 1.0516
(230,127) 10,011,093 1.0506
(230,477) 9,907,260 1.0506
(230,868) 10,103,250 1.0476
(233,895) 10,601,175 1.0492
CITY OF SARATOGA
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
JUNE 30, 2013
100
(amounts expressed in thousands)
% of Total % of Total
Taxable Taxable Taxable Taxable
Assessed Assessed Assessed Assessed
Taxpayer Value Rank Value Value Rank Value
Cupertino Village Associates, LLC 35,770$ 1 0.34%
Quito Village Group, LLC 20,400 2 0.19%
San Jose Water Works 17,106 3 0.16%9,901$ 6 0.14%
John I. and Michelle Keller 15,594 4 0.15%
Gregpenn Properties, LLC 13,056 5 0.12%
Argonaut Associates, LLV 10,776 6 0.10%
Stormin Norman LLC 10,000 7 0.09%
Public Storage Inc.9,686 8 0.09%
Coyote Properties IV LLC 9,300 9 0.09%
Summerhill Creekside LLC 9,166 10 0.09%
Saratoga Office Center Partner 22,325 1 0.32%
Di Salvo Family LLC 12,901 2 0.19%
Peterschmidt David C Roxanne N 12,005 3 0.17%
Navico Inc 11,379 4 0.16%
Sobrato Contraction Corp 10,992 5 0.16%
Morrison Terri E 9,423 7 0.14%
Krishnamurthi Ashok 9,282 8 0.13%
Jordan Deloise A Trust 8,904 9 0.13%
House David L 8,594 10 0.12%
Top Ten Total Assessed Value 150,854$ 115,706$
City Total Assessed Value 10,601,175$ 6,908,796$
2013 2004
CITY OF SARATOGA
PROPERTY TAX LEVIES AND COLLECTIONS
LAST NINE YEARS
101
Fiscal Year Total Tax Collections in
Ended Levy for Subsequent
June 30 Fiscal Year Amount Percentage Years Amount Percentage
2005 4,972,875$ 4,972,875$ 100.0%-$ 4,972,875$ 100.0%
2006 5,243,038 5,243,038 100.0%- 5,243,038 100.0%
2007 6,032,558 6,032,558 100.0%- 6,032,558 100.0%
2008 8,108,364 8,108,364 100.0%- 8,108,364 100.0%
2009 8,332,184 8,332,184 100.0%- 8,332,184 100.0%
2010 8,371,396 8,371,396 100.0%- 8,371,396 100.0%
2011 8,199,341 8,199,341 100.0%- 8,199,341 100.0%
2012 8,456,687 8,456,687 100.0%- 8,456,687 100.0%
2013 9,152,865 9,152,865 100.0%- 9,152,865 100.0%
Source: City of Saratoga
Collected within the
Fiscal Year of the Levy Total Collections to Date
CITY OF SARATOGA
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST NINE YEARS
102
(amounts expressed in thousands, except per capita amounts)
2005 2006 2007 2008
Governmental activities
General obligation bonds 14,440$ 14,170$ 13,890$ 13,595$
Net original issue premium - - - -
Total primary government 14,440$ 14,170$ 13,890$ 13,595$
Percentage of Personal Income 1 0.91%0.82%0.75%0.74%
Per capita2 468 460 443 430
Source: CAFR
1US Census Bureau, adjusted for inflation, MuniServices LLC
2Population information from California State Controller's Office
Fiscal Year
103
2009 2010 2011 2012 2013
13,285$ 12,955$ 12,605$ 11,995$ 11,540$
- - - 438 416
13,285$ 12,955$ 12,605$ 12,433$ 11,956$
0.76%0.54%0.57%0.57%0.53%
419 405 417 409 389
CITY OF SARATOGA
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST NINE YEARS
104
(amounts expressed in thousands, except per capita amounts)
2005 2006 2007 2008
General obligation bonds 14,440$ 14,170$ 13,890$ 13,595$
Net original issue premium - - - -
Less: Amount available in debt service fund (855) (865) (747) (854)
Total primary government 13,585$ 13,305$ 13,143$ 12,741$
Percentage of actual taxable
value of property 0.18%0.16%0.15%0.14%
Per capita1 440 431 419 403
Source: CAFR
1Population information from California State Controller's Office
From: Demographics & Economic Statistic
Population (State Controller's Office)30,850 30,835 31,352 31,592
Fiscal Year
105
2009 2010 2011 2012 2013
13,285$ 12,955$ 12,605$ 11,995$ 11,540$
- - - 438 416
(926) (890) (848) (860) (885)
12,359$ 12,065$ 11,757$ 11,135$ 10,655$
0.12%0.12%0.12%0.11%0.10%
390 377 389 367 347
31,679 31,997 30,195 30,363 30,706
CITY OF SARATOGA
LEGAL DEBT MARGIN INFORMATION
LAST NINE YEARS
106
(amounts expressed in thousands)
2005 2006 2007 2008
Debt Limit 1,120,618$ 1,241,761$ 1,334,455$ 1,423,398$
Total net debt applicable to limit 13,585 13,305 13,143 12,741
Legal debt margin 1,107,033$ 1,228,456$ 1,321,312$ 1,410,657$
Total net debt applicable to the limit
as a percentage of debt limit 1.21%1.07%0.98%0.90%
Legal debt margin calculation
Assessed value 7,393,857$ 8,144,454$ 8,755,510$ 9,329,953$
Add back: exempt real property 76,932 133,951 140,859 159,369
Total assessed value 7,470,789$ 8,278,405$ 8,896,369$ 9,489,322$
Debt limit (15% of total assessed value)1,120,618$ 1,241,761$ 1,334,455$ 1,423,398$
Debt applicable to limit:
General obligation bonds 14,440$ 14,170$ 13,890$ 13,595$
Net original issue premium - - - -
Less: Amount available in debt service fund (855) (865) (747) (854)
Total net debt applicable to limit 13,585$ 13,305$ 13,143$ 12,741$
Legal debt margin 1,107,033$ 1,228,456$ 1,321,312$ 1,410,657$
Source: CAFR
Fiscal Year
107
2009 2010 2011 2012 2013
1,514,378$ 1,536,183$ 1,520,660$ 1,550,118$ 1,625,261$
12,359 12,065 11,757 11,135 10,655
1,502,019$ 1,524,118$ 1,508,903$ 1,538,983$ 1,614,606$
0.82%0.79%0.77%0.72%0.66%
9,934,362$ 10,011,093$ 9,907,259$ 10,103,250$ 10,601,175$
161,488 230,127 230,477 230,868 233,895
10,095,850$ 10,241,220$ 10,137,736$ 10,334,118$ 10,835,070$
1,514,378$ 1,536,183$ 1,520,660$ 1,550,118$ 1,625,261$
13,285$ 12,955$ 12,605$ 11,995$ 11,540$
- - - 438 416
(926) (890) (848) (860) (885)
12,359$ 12,065$ 11,757$ 11,135$ 10,655$
1,502,019$ 1,524,118$ 1,508,903$ 1,538,983$ 1,614,606$
CITY OF SARATOGA
DIRECT AND OVERLAPPING
GOVERNMENTAL ACTIVITIES DEBT
108
Estimated Estimated Share
Debt Percentage of Overlapping
Outstanding Applicable1 Debt
Direct Debt:
City of Saratoga 11,540$ 100.000%11,540$
Total Direct Debt 11,540
Overlapping Tax and Assessment Debt:
Santa Clara County 850,800 3.453%29,378
Foothill-De Anza Community College District 631,564 1.654%10,446
West Valley Community College District 308,533 10.284%31,730
Campbell Union High School District 156,055 5.606%8,748
Fremont Union High School District 299,550 3.668%10,987
Los Gatos-Saratoga Joint Union High School District 46,905 39.202%18,388
Campbell Union School District 146,472 6.879%10,076
Cupertino Union School District 164,417 6.100%10,029
Moreland School District 83,200 12.968%10,789
Saratoga Union School District 42,987 85.972%36,957
Saratoga Fire Protection District 4,254 97.204%4,135
Santa Clara Valley Water District Benefit Assessment 123,100 3.453%4,251
Total Overlapping Tax and Assessment Debt 185,914
Overlapping General Fund Debt:
Santa Clara County General Fund Obligations 819,957 3.453%28,313$
Santa Clara County Pension Obligations 378,995 3.453%13,087
Santa Clara County Board of Education
Certificates of Participation 10,400 3.453%359
Santa Clara County Vector Control District
Certificates of Participation 3,455 3.453%119
Foothill-De Anza Community College District
Certificates of Participation 17,225 1.654%285
West Valley-Mission College District
General Fund Obligations 65,435 10.284%6,729
Campbell Union High School District
Certificates of Participation 11,325 5.606%635
Los Gatos-Saratoga Joint Union High School District
Certificates of Participation 8,420 39.202%3,301
Saratoga Union School District
Certificates of Participation 5,540 85.972%4,763
Midpeninsula Open Space Park District
General Fund Obligations 135,650 5.953%8,075
Total Overlapping General Fund Debt 65,666
Total Overlapping Tax & Assessement and General Fund Debt 251,580
Combined Total Debt2 263,120$
1 Percentage of overlapping agency's assessed valuation located within boundaries of the city.
2 Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation
bonds and non-bonded capital lease obligations.
Source: California Municipal Statistics, Inc.
(amount expressed in thousands)
CITY OF SARATOGA
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST NINE YEARS
109
Personal Per Capita
Fiscal City Income Personal Labor Unemployment
Year Population1 (in thousands)2 Income 2 Force 3 Rate3
2005 30,850 1,586,245$ 51,418$ 12,600 2.5%
2006 30,835 1,719,175 55,754 12,700 2.1%
2007 31,352 1,860,365 59,338 12,900 2.3%
2008 31,592 1,843,425 58,351 13,100 3.2%
2009 31,679 1,747,699 55,169 13,300 6.0%
2010 31,997 2,401,151 75,043 13,200 5.6%
2011 30,195 2,211,963 73,256 13,400 5.0%
2012 30,363 2,119,463 69,804 14,000 4.4%
2013 30,706 2,179,904 70,993 13,900 4.2%
Source:1Popluaton information from California State Controller's Office
2US Census Data, adjusted for inflation, MuniServices LLC
3EDD Labor Market Information Division, MuniServices LLC
10,000
15,000
20,000
25,000
30,000
35,000
2005 2006 2007 2008 2009 2010 2011 2012 2013
Labor Force vs. Population
Population
Labor Force
CITY OF SARATOGA
PRINCIPAL EMPLOYERS
CURRENT YEAR AND EIGHT YEARS AGO AT JUNE 30, 2013
110
Percentage Percentage
of Total City of Total City
Employer Employees Rank Employment Employees Rank Employment
West Valley Community College 765 1 5.46%
Saratoga Retirement Community 260 2 1.86%
Saratoga High School 132 3 0.94%
Sub-Acute Saratoga Hospital 120 4 0.86%
Our Lady of Fatima 101 5 0.72%
Prospect High School 100 6 0.71%
Redwood Middle School 96 7 0.69%
Gene's Fine Foods 80 8 0.57%85 1 0.67%
Safeway 65 9 0.46%65 2 0.52%
Villa Montalvo 60 10 0.43%
Saratoga Country Club 65 3 0.52%
24 Hour Fitness 30 4 0.24%
Windermere 27 5 0.21%
CVS 20 6 0.16%
Classic Car Wash 20 7 0.16%
Harmonic European Day Spa 20 8 0.16%
Hinshaw, Draa & Marsh 20 9 0.16%
Bella Saratoga 20 10 0.16%
Total City Employment2 14,000 12,600
1Earliest information available
2EDD Labor Market Information Division, MuniServices LLC
Source: City of Saratoga
2013 20051
111
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CITY OF SARATOGA
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION
LAST NINE FISCAL YEARS
112
2005 2006 2007 2008
Function
General government 12.65 10.75 11.00 13.00
Public works 20.75 20.75 21.75 22.75
Community development 14.00 13.00 14.00 14.00
Parks and recreation 10.35 10.35 10.60 10.60
Total 57.75 54.85 57.35 60.35
Source: City of Saratoga Budget Document
Fiscal Year
-
10.00
20.00
30.00
40.00
50.00
60.00
70.00
2005 2006 2007 2008 2009 2010 2011 2012 2013
Full-Time Equivalents
Parks & Rec
Comm Development
Public works
General gov't
113
2009 2010 2011 2012 2013
12.00 11.75 11.45 10.80 10.90
21.75 21.75 21.65 21.55 20.65
14.00 12.00 12.00 12.00 11.00
10.60 9.35 9.50 9.50 9.35
58.35 54.85 54.60 53.85 51.90
CITY OF SARATOGA
OPERATING INDICATORS BY FUNCTION
LAST NINE FISCAL YEARS
114
2005 2006 2007 2008
Function
Part 1 crimes1 463 426 425 381
Total incidents 42,011 40,567 39,663 41,243
Police reports 1,767 1,659 1,767 1,941
Public Works
Street resurfacing (miles)- 5 14 -
Street lights repaired 2 3 3 12
Potholes filled (sq. ft.)- 5,000 5,000 7,000
Community Development
Total permit valuation ($000)74,668 94,485 69,935 70,442
Parks and Recreation
Classes, trips (enrollment) community events 5,604 5,712 4,817 4,782
Adult Exercise (e.g. JS Dance. Jazzerxcise)272 312 285 362
Sports programs (e.g. Adult basketball, softball)470 473 515 591
Prescholl programs (enrollment)200 163 159 225
Staffed Day/summer camps (enrollment)301 287 205 242
Teen/youth council (enrollment)2,506 3,798 2,221 94
Senior center (enrollment/attendance days)22,312 22,591 18,515 17,826
1Part 1 Crimes are the following as reported to DOJ: homicide, rape, robbery, burglary, assault, theft,
auto theft, and arson.
Source: City of Saratoga various records
Fiscal Year
115
2009 2010 2011 2012 2013
282 173 373 287 277
41,384 39,942 41,642 35,664 40,141
1,949 1,273 1,549 1,329 1,106
6 3 - 6 -
25 24 25 41 29
10,000 10,000 11,000 10,000 12,060
61,117 44,658 50,936 59,675 79,896
4,698 4,366 6,135 5,479 5,365
515 545 661 647 1,663
459 423 - - -
171 161 142 132 188
225 331 326 - 45
419 2,110 1,323 787 605
16,325 16,533 14,640 15,221 12,269
CITY OF SARATOGA
CAPITAL ASSET STATISTICS BY FUNCTION
LAST NINE FISCAL YEARS
116
2005 2006 2007 2008
Function
Public safety
Police Station 1 1 - -
Fire Station
Saratoga Fire District 1 1 1 1
Central Fire District 1 1 1 1
Public Works
Street Miles - Private 13 13 13 13
Street Miles - Public 137 137 137 137
West Valley Sanitation District
Number of Connections 8,601 8,621 8,651 8,651
Length of Sewer Lines 120 120 127 127
Cupertino Valley Sanitation District
Number of Connections 2,118 2,118 2,915 2,927
Length of Sewer Lines 36 36 36 36
Parks and Recreation
Parks Acreage 81 81 81 81
Parks 15 15 15 15
Source: City of Saratoga various records
Fiscal Year
117
2009 2010 2011 2012 2013
- - - - -
1 1 1 1 1
1 1 1 1 1
14 14 14 14 14
140 140 140 140 141
8,683 8,687 8,664 8,679 8,821
127 127 127 127 127
2,938 2,949 2,954 2,959 2,961
37 37 37 37 37
84 84 84 84 84
15 15 15 15 15
118
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