HomeMy WebLinkAboutACFR - Fiscal Year 2016 17
The community celebrates Saratoga’s 60th anniversary as a city.
Comprehensive Annual Financial Report
For Fiscal Year Ended June 30, 2017
Cover photos courtesey of Maria Guldner
Saratoga, California
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2017
City Council
Emily Lo ..................................................................................................................... Mayor
Mary-Lynne Bernald .......................................................................................... Vice Mayor
Rishi Kumar ............................................................................................... Council Member
Howard Miller ............................................................................................ Council Member
Manny Cappello ......................................................................................... Council Member
Presented under the direction of:
James Lindsay, City Manager
Finance & Administrative Services Department
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CITY OF SARATOGA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2017
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T ABLE OF C ONTENTS
I NTRODUCTORY SECTION
Letter of Transmittal ......................................................................................................... 9
GFOA Certifi cate of Achievement for Excel lence in Financial Reporting ......................... 15
Pri ncipal Officers of the City .......................................................................................... 16
Organization Chart ......................................................................................................... 17
F INANCIAL S ECTION
Independent Au ditor s ’ Report ........................................................................................... 20
Management’s Discussion and Analysis (Required Supplementary Information) ............. 22
Basic Financial Statements:
Government -Wide Financial Statements
Statement of Net Position .......................................................................................... 40
Statement of Acti vities and Changes in Net Position .................................................. 41
Fund Financial Statements
Governmental Funds:
Balance Sheet ........................................................................................................... 42
Reconciliation of the Government Funds Bal ance Sheet
to the Government -Wide Financial Statement of Net Position ............................... 43
Statement of Revenues, Expenditures and Changes in Fund Balances ......................... 4 4
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures and Changes in Fund Ba lances to the Government -Wide
Statement of Activities and Changes in Net Position ............................................. 4 5
Proprietary Funds:
Statement of Net Position .......................................................................................... 4 6
Statement of Revenues, Expenses, a nd Changes in Fund Net Position ......................... 47
Statement of Cash Flows ........................................................................................... 48
Basic Financia l Statement Notes:
Notes to the Basic Financial Statements ..................................................................... 50
Required Supplementary Information
Budgetary Information .............................................................................................. 8 4
Modified Approach for City Streets Infrastructure Capital Assets ............................... 8 6
Pension Information .................................................................................................. 8 8
CITY OF SARATOGA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2017
6
T ABLE OF C ONTENTS C ONTINUED
S UPPLEMENTARY I NFORMATION :
Non -Major Governmental Funds
Combining Balance Sheets ....................................................................................... 9 2
Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........ 9 3
Schedule of Revenues, Exp enditures and Changes in Fun d Balances – Budget and Actual:
Capit al Improvements .......................................................................................... 94
Lighting & Landscape Assessment Districts Special Revenue Funds ..................... 95
Library Bond Debt Service Fund .......................................................................... 96
Internal Service Funds
Combining Statement of Net Position ........................................................................ 98
Combining Statement of Revenues, Expense s, and Change in Fund Balance ............. 100
Comb ining Statement of Cash Flows ....................................................................... 102
Capital Assets Used in the Operation of Governmental Funds
Comparative Schedule by Source ............................................................................. 107
Schedule by Function and Activity .......................................................................... 108
Schedule of Changes by Function and Activity ........................................................ 109
Statistical Sec tion (Unaudited)
Net Position by Component ..................................................................................... 114
Changes in Net Position .......................................................................................... 116
Fund Balance of Governmental Funds ...................................................................... 118
Governmental Activities Tax Revenues by Source ................................................... 1 20
Changes in Fund Balances of Governmental Funds .................................................. 1 22
Property Tax Rates - Direct and Ov erlapping Government s ...................................... 1 24
Assessed Value of Taxable Property ........................................................................ 1 26
Principal Property Taxpayers ................................................................................... 1 27
Property Tax Levies and Collections ........................................................................ 1 28
Ratio s of Outstanding Debt by Type ........................................................................ 130
Ratios of Ge neral Bonded Debt Outstanding ............................................................ 132
Legal Debt Margin Informati on ............................................................................... 1 34
Direct and Overlapping Governmental Activities Debt ............................................. 1 36
Demographic and Economic Statistics ..................................................................... 1 38
Principal Employers ............................................................................................... 1 40
Full -Time Equivalent City Government Employees by Function ............................... 1 38
Operating Indicators by Function ............................................................................. 1 40
Capital Asset Statisti cs by Function ......................................................................... 1 42
7
INTRODUCTORY SECTION
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9
C ITY OF S ARATOGA
C ITY H ALL
13777 F RUITVALE A VENUE
S ARATOGA , C ALIFORNIA 95070
(408) 868 -1200
December 20, 2017
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,
2017 is hereby submitted in accordance with mandated statutes. These statutes require the City of Saratoga to
issue a report on its financial position and activity and that an independent firm of certified public accountants
audits the 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 reported in a manner designed to present fairly the financial position and results of operations of the
City’s various funds. This report intends 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, 2017, 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 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). The design of this formal letter of transmittal is to complement the MD&A and
should be read in conjunction with it.
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 contains a
population of 30,569 as of January 1, 2017, as reported by the California Department of Finance. The City is
a general law city of the State of California and operates under a council-manager form of government.
Policymaking and legislative authority are vested in the City Council, which consists of a Mayor, Vice
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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 six 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, and overseeing the daily operations of the
City.
The City provides a 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, 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, Traffic 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
Saratoga is viewed as a desirable place to live in the Silicon Valley due to its highly rated schools,
beautiful neighborhoods nestled in the foothills at the western edge of the valley, and close proximity to
many businesses associated with the high technology industry. Saratoga is predominantly a residential
community with limited commercial or industrial activity within City boundaries.
In general, the City is fiscally protected by the stability of its tax 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 permits. It should be noted, however, that while development fees are a significant
funding source, expense related to the intake of this fee-based revenue more than offset the revenue
received.
Property Tax
Property tax assessments represent the largest source of revenue for the City. Historically, the City, along
with the neighboring cities of Cupertino, Los Altos Hills, and Monte Sereno, has received less than the
minimum 7% allocation that is allowed under State law due to special legislation enacted 30 years ago.
Throughout the years, the Cities have launched collaborative lobbying efforts to introduce and pass
legislation that would treat the four Cities as equal to the other no/low tax Cities, and receive the
minimum 7% of the property tax collected in the respective Cities. SB 107, enacted in September 2015,
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restored the 7% minimum property tax allocation to the Cities phased in over 5 years in increments of
20%.
Franchise Fees
Franchise Fees are assessments on a number of 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 utility billings. With most of these services considered necessities in an
urban setting, there is little fluctuation in the revenue stream. Cable revenue has increased due to growth in
the use of internet services. 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 revenue 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. Although
spending habits are migrating towards online purchases, revenue is anticipated to remain steady from sales
tax resulting from the basic goods and services the community requires.
Development Fees
Development fee 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 regulatory services ensure compliance with all applicable laws, and
the health and safety of the community. Although the entire community benefits from an enforced regulatory
program, the service requestor initiates the development change and benefits the most from it. Therefore, the
service requestor should pay most, if not all, of the costs. While the financial strength of the Saratoga
community has insulated this revenue source from minor economic fluctuations in the past, the last few years
have proven that development activity does strongly correlate with economic ebbs and flows.
Fiscal Outlook
For Saratoga, these main funding sources continue to be stable and reliable. The City’s property and sales tax
performances have weathered the storm of the “Great Recession” caused by the economic downturn of 2008
with only a small revenue decline overall. For the past four fiscal years, Saratoga’s revenue has increased at a
steady pace through a recovery being led by the Silicon Valley’s strong housing and labor markets.
General fund property tax revenues increased more than 6% in fiscal year 2016/17 as the region’s assessed
value of properties continues to exceed expectations. While property tax revenue continues 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.
Fiscal year 2016/17 sales tax revenue was flat from the prior year. While the overall strength of the economy
remained strong in the region, minimal actual revenue 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.
As a result of increasing housing prices, turnover, and remodeling activity, development fee revenues have
returned to pre-recession levels. However, in fiscal year 2016/17, a slowdown in construction activity led to
revenues decreasing from the prior year. In addition, $100,000 of development fees continues to be directed
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to fund long-term planning services.
Although California’s economy has fully recovered from the “Great Recession,” economists expect that
another downturn in employment and real estate values is inevitable. The City has placed a long-term
emphasis on developing careful and thoughtful budget and fiscal policies to ensure financial stability in
present and future years.
FINANCIAL INFORMATION AND MAJOR INITIATIVES
Financial Controls
City Management is responsible for establishing and maintaining an internal control structure designed to
ensure that the assets of the City are protected from loss, theft, or misuse, and to ensure that adequate
accounting data is compiled to allow for the preparation of financial statements in conformity with generally
accepted accounting principles. The internal control structure is designed to provide reasonable, but not
absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1)
the cost of a control should not exceed benefits likely to be derived, and (2) the valuation of costs and benefits
requires estimates and judgments by management.
As a recipient of federal, state and local financial assistance, the City is also responsible for guaranteeing that
an adequate internal control structure is in place to ensure and document compliance with applicable laws and
regulations related to these programs. This internal control structure is subject to periodic evaluation by City
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, the responsible department at year-
end reviews outstanding encumbrances of a material nature, 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 2016/17 budget was designed to enhance the quality of life for all Saratoga residents by
focusing on the City Council’s priorities, including improving local roads, restoring funding for a Code
Compliance Officer, creating a Public Information Office, and enhancing community enrichment. The
Budget continued to address the City’s Unfunded Accrued Liability (UAL) by making an additional
$381,815 payment over the minimum required by CalPERS to reduce the outstanding liability even further.
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Because of the recession, the City deferred maintenance of infrastructure, such as paving of local roads.
Consequently, the conditions of the roadways deteriorated. In 2016, the City Council increased dedicated
funding for roadway improvements to $1.3 million and increased the minimum funding goal to $2 million in
anticipation of additional funding becoming available through State legislation and County revenue measures.
This is consistent with the Council’s strategic goal of maintaining the City’s infrastructure in a safe,
sustainable, and cost-effective manner.
In 2011, the City vacated the Code Compliance officer position. Code compliance duties were then
distributed among Community Development Department staff. As the economy improved, the demand for
planning and building services increased, resulting in less staff time available to address code compliance
issues. The City entered into an agreement for code compliance services to respond to complaints, conduct
inspections, and enforce regulations. Oversight of general code compliance was temporarily transferred to
the City Manager’s Office. Upon further review and discussion, the City Council authorized restoring
funding for the Code Compliance Officer position.
Another City Council strategic goal is to increase community engagement by providing residents with access
to timely, useful, and important information. Improving communication channels allows residents to feel
more integrated into the community and increases opportunities for resident feedback on City activities. The
City Council authorized the creation of the Public Information Office to enhance communication and
engagement with the mission of increasing interest and participation in City services, projects, and activities.
The Public Information Office maintains the City’s website, social media accounts, Median Banner Program,
newsletters, and videos.
Continuing the focus on enhancing community enrichment, the fiscal year 2016/17 Capital Improvement
Plan (CIP) Budget includes funding for 10 new projects. Some funded projects include roadway and
infrastructure improvements to residential streets, storm drains, and retaining walls. Park & trail
improvements at city parks include Koi Pond improvements at Hakone Gardens and additional trail
improvements to Quarry Park. Facility improvements include ADA upgrades to the Senior and Community
Center restrooms. A citywide transportation needs assessment was also funded to determine the
transportation needs and destination patterns of all Saratoga residents, including the senior population.
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 unmodified
(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.
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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, 2016. 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
Anthony McFarlane, Finance Manager for his preparation of this annual financial report, and to our
supporting staff members: Ann Xu, Accountant; Julie Ingraham, Karen Caselli, and Gina Scott, 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,
James Lindsay Mary Furey
City Manager Finance and Administrative Services Director
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Government Finance Officers Association
Certificate of
Achievem ent
for Excellence in
Financial
Reporting
Presented to
City of Saratoga California
For its Comprehensive Annual
Financial Report
For the Fiscal Year Ended
June 30, 2016
Executive Director/CEO
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CITY OF SARATOGA
ELECTED OFFICIALS AND
ADMINISTRATIVE PERSONNEL
As of June 30, 2017
CITY COUNCIL
Emily Lo - Mayor
Mary-Lynne Bernald – Vice-Mayor
Rishi Kumar
Howard Miller
Manny Cappello
CITY STAFF
James Lindsay – City Manager
Crystal Bothelio – City Clerk/Asst to the City Manager
Mary Furey – Administrative Services Director
Erwin Ordonez – 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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FY 2016/17
City of Saratoga - Organization Chart
City AttorneyCity Manager
Community Development
Department
Community Development
Director
Facilities Division
1 Facility Maint.Manager
1 Facility Maint. Leadworker
1 Facility Maint. Workers
.60 Facility Coordinator
Planning Division
1 Senior Planner
2 Planners
1 Senior Arboristr
1 Office Specialist
Engineering Division
1 Sr. Civil Engineer
1 Engineer
.90 Administrative Analyst
.75 Office Specialist
Parks Division
1 Manager -Parks
2 Park Maint. Leadworker
8 Park Maint. Workers
.50 Office Specialist
Finance Services Division
1 Finance Manager
.90 Accountant
3 Accounting Technicians
Information Technology
Division
1 IT Administrator
1 IT Technician
Finance & Administrative
Services Department
Finance & Administrative
Services Director
Recreation & Facilities
Department
Recreation & Facilities
Director
Public Works
Department
Public Works Director
Recreation Services Division
1.90 Recreation Supervisor
.75 Recreation Coordinators
1 Office Specialist
Streets and Fleet Division
1 Manager -Streets and Fleet
2 Street Maint. Leadworker
7 Street Maint. Workers
.50 Office Specialist
Building Division
1 Sr. Building Inspector
2 Building Inspectors
1 Plan Check Engineer
1 Permit Technician
1 Office Specialist
Citizen Advisory Commissions
& Committees
Citizens of Saratoga
Elected City Council
Human Resources Division
1 HR Manager
.75 HR Technician
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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INDEPENDENT AUDITORS’ 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, 2017, 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, 2017, 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.
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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 other 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 Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated November 7,
2017 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.
November 7, 2017
San Jose, California
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2017
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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
present discussion and analysis of the City’s financial performance during the fiscal year that ended on
June 30, 2017. 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 2016/17 FINANCIAL HIGHLIGHTS
Total net position decreased by $1.05 million over last fiscal. A significant portion of this
decrease is related to the net $1.56 million GASB 68 adjustment to pension expense.
The City’s Net Pension Liability is $6.34 million. An increase of $2.01 million over last fiscal
year.
The City's assets plus deferred outflow of resources exceeds its liabilities plus deferred inflow
of resources by almost $ 127.05 million, with total assets plus deferred outflow of resources of
$149.33 million less liabilities plus deferred inflow of resources of $ 22.28 million.
Net Position is comprised of $111.24 million for investment in capital assets, net of
depreciation and related debt; $2.38 million restricted for specific purposes; and $13.44 million
in unrestricted Net Position (reference pg. #40).
Total City-wide revenues of $24.83 million consisting of $17.40 million in general revenue and
$7.43 million in program revenue (reference pg. #41).
City expenses total $25.89 million (reference pg. #41).
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, 2017
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The Governmental Fund’s fund balances total $18.18 million, with $10.99 million in the
General Fund, $5.10 million in the Capital Improvement Funds, and $2.11 million in the Other
Governmental Funds. This represents an increase of $0.90 million from last year (reference pg.
#42).
General Fund revenues total $21.11 million, while General Fund expenditures total $19.20
million (reference pg. #44).
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
are comprised of the Statement of Net Position and the Statement of Activities. The Statement of Net Position
provides summary level information about the financial position of the City, including all its capital assets
and long-term liabilities on a full accrual basis, similar to that used by corporations. The Statement of
Activities provides summary level information about the City's revenues and expenses, also on a full accrual
basis, with the emphasis on measuring net revenues and/or expenses for each of the City's programs. The
Statement of Activities illustrates the change in Net Position for the fiscal year.
City financial activities are required to be grouped as either government activities or business-type activities.
The amounts in the Statement of Net Position and the Statement of Activities are required to be separated into
governmental activities or business-type activities in order to distinguish between the two types of activities.
In the case of the City of Saratoga, there are no business-type activities as of June 30, 2017.
Fund Financial Statements report the City's operations in more detail than Government-Wide statements and
focus primarily on the short-term activities of the City's general fund and other major funds. The Fund
Financial Statements measure current revenues and expenditures and fund balances; they exclude capital
assets, long-term debt, and other long-term amounts.
Major funds account for the major financial activities of the City and are presented individually, while the
activities of non-major funds are presented in summary, with subordinate schedules presenting the detail for
each of these other funds in the Supplementary Information section. Major funds are explained below.
The Government-Wide Financial Statements
Government-Wide financial statements are prepared on the accrual basis, which means they measure the flow
of all economic resources of the City as a whole. The Statement of Net Position and the Statement of
Activities present information about the following:
Governmental Activities - All of the City's basic services are considered to be governmental activities,
including general government, community development, public safety, transportation, and, culture and
leisure. These services are supported by general City revenues such as taxes, and by specific program
revenues such as development and recreation program fees.
Business-Type Activities - This category includes enterprise activities such as water, sewer, and utilities.
Unlike governmental services, these activities are meant to be fully supported by charges paid by users, based
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2017
24
on the services used. The City of Saratoga does not have any business-type activities at this time.
Fund Financial Statements
A fund represents a grouping of related accounts and is used to maintain control over resources that are
segregated for specific activities or objectives. The City, like other local governments, uses fund
accounting to ensure and demonstrate compliance with finance-related legal requirements.
Fund financial statements provide detailed information about each of the City's most significant funds, called
major funds. The concept of major funds, and the determination of which funds are classified as major funds,
was established by GASB Statement 34 and replaces the concept of combining like funds and presenting
them in total. Instead, each major fund is presented individually, with all non-major funds summarized and
presented in a single column. Subordinate schedules present the detail of these non-major funds. Major
funds present the major activities of the City for the fiscal year, and may change from year to year as a result
of changes in the pattern of the City's activities. The City's funds are segregated into three types:
governmental funds, proprietary funds, and fiduciary funds.
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
insurance and risk management, worker’s compensation, office equipment support services, information
technology services, vehicle and building maintenance, and vehicle and information technology
equipment replacement. Because internal service funds primarily benefit governmental functions, they
have been included with the governmental activities in the Government-Wide financial statements.
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.
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2017
25
REQUIRED SUPPLEMENTARY INFORMATION
Required supplementary information, other than presented in this MD&A, follows the Notes Section and
includes a budgetary comparison for the General Fund as presented in the Governmental Fund financial
statements, and information on the modified approach for city streets and infrastructure.
SUPPLEMENTARY INFORMATION
Combining and individual fund statements and schedules are included to provide additional information
on non-major governmental funds including special revenue, debt service, and capital project funds, as
well as proprietary internal service fund information and uses of capital assets. An un -audited statistical
section provides historical and current data on financial trends, revenue and debt capacity, demographic
and economic information, and operating information.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Net Position serves over time as an indicator of the City's financial position. The City's Total Net Position
decreased ($1,054,924) from $128,109,118 in fiscal year 2015/16 to $127,054,194 in fiscal year 2016/17.
The primary reason for the decrease in net position is due to the GASB 68 adjustment to pension expense.
Pension expense increased $2,069,338 to record the increase in the City’s Net Pension Liability and $525,067
to record the increase in Deferred Inflows of Resources. The increase in Deferred Outflow of Resources
decreased pension expense by ($1,033,752.) Combined, the GASB 68 adjustment resulted in a net increase to
pension expense of $1,560,653.
The most significant portion of the City's Net Position ($111,240,629 or 87.6%) accounts for its investment in
capital assets, (e.g., land, buildings, general government infrastructure, equipment, etc.) less any related debt
used to acquire those assets that are still outstanding. These capital assets represent infrastructure which
provides services to the citizens, consequently, these assets are not available for future spending.
$2,375,373 or 1.9%, of the City's Net Position is subject to external restrictions on how the funding may be
used. Within the restricted Net Position total, $1,152,869 is for lighting and landscaping assessment districts,
$959,322 is for repayment of long-term debt, and $263,182 is for environmental services.
The remaining balance of $13,438,191, or 10.5% of the City's Net Position, is unrestricted and may be used
to meet the City's ongoing obligations to citizens and creditors.
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2017
26
Governmental Activities
2017 2016
Assets
Current assets 25,253,696$ 23,518,788$
Capital assets 121,154,015 122,440,335
Total Assets 146,407,711 145,959,123
Deferred Outflow of Resources
Deferred Outflow 2,931,316 1,896,625
Total Deferred Outflow of Resources 2,931,316 1,896,625
Liabilities
Current liabilities 4,977,344 4,489,830
Long-term liabilities 15,921,773 14,326,643
Total Liabilities 20,899,117 18,816,473
Deferred Inflow of Resources
Deferred Inflow 1,385,717 930,158
Total Deferred Inflow of Resources 1,385,717 930,158
Net Position
Net investment in capital assets 111,240,629 112,030,057
Restricted for environmental services 263,182 313,182
Restricted for special assessment funds 1,152,869 1,005,791
Restricted for debt service 959,322 922,952
Unrestricted 13,438,191 13,837,137
Total Net Position 127,054,194$ 128,109,117$
Net Position
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2017
27
Governmental Activities Increase
Functions/Programs 2017 2016 (Decrease)
Program Revenues
Charges for services 6,143,525$ 6,922,602$ (779,077)$
Operating grants and contributions 223,319 165,278 58,041
Capital grants and contributions 1,062,479 182,888 879,591
Total Program Revenues 7,429,323 7,270,768 158,555
General Revenues
Property taxes 12,263,575 11,549,213 714,362
Sales taxes 1,185,035 1,189,398 (4,363)
Local taxes 857,050 897,761 (40,711)
Franchise taxes 2,170,870 2,068,401 102,469
Motor vehicle in-lieu 13,538 12,427 1,111
Intergovernmental revenues 588,719 717,926 (129,207)
Investment earnings 124,679 101,233 23,446
Other revenues 200,597 273,121 (72,524)
Total General Revenues 17,404,063 16,809,480 594,583
Expenses
General and intergovernmental services 6,449,934 5,143,155 1,306,779
Public safety 5,443,759 4,786,568 657,191
Public works 9,164,282 6,180,812 2,983,470
Community services 1,557,673 1,582,337 (24,664)
Community development services 2,905,718 2,011,787 893,931
Interest on long-term debt (unallocated)366,948 380,844 (13,896)
Total Expenses 25,888,313 20,085,503 5,802,811$
Increase / (Decrease) in Net Position (1,054,924) 3,994,745 (5,049,669)
Net Position, Beginning of Year 128,109,118 120,921,347 7,187,771
Prior Period Adjustment - GASB 68 - 3,193,024 -
Net Poistion, Beginning of Year, As Adjsuted 128,109,118 124,114,371 7,187,771
Net Position, End of Year 127,054,194$ 128,109,116$ (1,054,922)$
Statement of Changes in Net Position
As shown in the above Statement of Changes in Net Position schedule, program revenues increased by
$158,555 from the prior fiscal year for governmental activities. General revenues increased by $594,583
from the prior year. This resulted in a total increase in revenues of $753,408. Expenses increased by
$5,802,811 from the prior year.
With total program and general revenues for fiscal year 2016/17 at $24,833,386 and total expenses at
$25,888,313, the net activity resulted in a decrease in Net Position of ($1,054,924.) A significant increase
in expenses is due to adjustments related to pension expense and capital outlay activity.
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, 2017
28
Revenues
For fiscal year 2016/17, the growth in property tax revenues reflect the ongoing strength of the San
Francisco Bay Area economy. The increase in Capital Grant revenue offset the decrease in Charges for
Services revenue, as there was a significant increase in activity for grant-funded Public Works and
Community Services capital projects.
CHART OF REVENUE INCREASE OR (DECREASE)
Increase in Revenues
General Revenues increased $594,853 from the prior year. The most significant changes include:
Property Tax revenue increased $714,362 as demand for housing in the region has resulted in higher
assessed valuations of property within the City upon turnover, plus the incremental TEA increase in
the property tax allocation percentage.
Intergovernmental revenue decreased ($129,207) due to reduced Gas Tax revenues of $94,558 and
state mandated cost reimbursements of $34,649.
Program Revenues increased $158,555 overall as the increase in Capital Grants & Contributions was
offset by a decrease in Charges for Services:
Capital Grants & Contributions increased $879,591 from the prior year, due to a significant increase
in grant reimbursed capital project activity. Grant revenues from Public Works increased $703,407
and Community Services increased $176,184. Specific projects include Hwy 9 Safety Improvements
and the Senior Center Restroom ADA Upgrade.
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2017
29
Charges for Services decreased ($779,077) from the prior year due to reduced activity in Community
Development and Public Works. Community Development revenues decreased $260,087 due to a
slowdown in construction activity that resulted in decreased permit and plan check activity. Public
Works revenues decreased $549,910 due to the lack of subdivision development activity as occurred
in Fiscal Year 2015/16.
Expenses
Fiscal year 2016/17 expenses increased $5,802,811. Compared to the prior year, the GASB 68 pension
expense adjustment increased expenses by $3,129,268. Capital Outlay activity adjustments increased
expenses by $1,513,955. Operational expenses increased by $1,028,924. Operating expenses were
consistent with the plan developed in the Fiscal Year 2016/17 Operating and Capital Improvement Plan
Budget.
CHART OF EXPENSE INCREASE OR (DECREASE)
Increases in Expenses
The GASB 68 adjustment increased pension expense in all categories by $1,560,653 and was $3,129,268
higher than the prior year adjustment reduction of ($1,568,615.)
Capital Outlay expense of $4,882,533, including depreciation of $2,086,475, was $1,513,955 higher than
the prior year expense of $3,368,578.
Public Works increased $1,295,219
General Services increased $359,228
Expenses from operations in all categories increased $1,028,924
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2017
30
Public Works increased $337,249 primarily due to cost of living adjustments in salaries and benefits
of $32,814, street and tree maintenance costs related to winter storm clean-up resulting in a Federal
Disaster Declaration in February 2017 of $152,486, and a reallocation of costs from capital projects to
the general fund for part-time engineer salaries of $120,662 and traffic engineering contract costs of
$54,836
Public Safety increased $217,905 primarily due to increases in sheriff contract costs of $203,435, and
animal control services, $14,412.
General Services increased $197,640 primarily due to increases in legal services of $87,638, election
costs of $43,445, Public Information Office costs of $32,432, community events grants of $19,602,
and cost of living adjustments in salaries and benefits of $9,586.
Community Services increased $144,926 primarily due to cost of living adjustments in salaries and
benefits $5,593 plus additional expenses related to administrating sports field rentals of $115,500 as
administration of sports field rentals was a function of Public Works in prior years. Building
maintenance and facility replacement costs increased $46,560.
Community Development increased $131,204 primarily due to cost of living adjustments in salaries
and benefits and filling of vacant positions of $180,162 offset by a reduction in supplies and services
of ($49,549.)
Decreases in Expenses
There were no significant decreases in expense from the prior year:
MAJOR AND OTHER GOVERNMENTAL FUNDS: CHANGE IN FUND BALANCE
A summary of the changes in fund balance of the Major Funds and Other Governmental Funds is
presented below:
Other
Capital Governmental
General Improvement Funds
Total Revenues 21,112,412$ 2,254,293$ 1,542,512$
Total Expenditures 19,203,460 3,450,314 1,359,064
Revenues Over
(Under) Expenditures 1,908,952 (1,196,021) 183,448
Transfers in 55,384 1,834,590 -
Transfers out (1,620,648) (269,326) -
Net change in fund balances 343,688 369,243 183,448
Beginning of year 10,640,623 4,716,064 1,928,743
End of year 10,984,311$ 5,085,307$ 2,112,191$
Major Funds
Included in the Major Funds are the General Fund and the Capital Improvement Funds. The Other
Governmental Funds include twenty-eight 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 $896,379.
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2017
31
General Fund
As shown in the Major Funds table on the previous page, the net change in the General Fund's ending
fund balance is an increase of $343,688. A Net Increase is a result of the net operating revenues
exceeding net operating expenditures.
General Fund revenue, most notably property tax revenue, increased from the prior year for a net revenue
gain of $329,818. General Fund Revenue budgets are conservatively based upon prior year experience
and revenue specific information. The year ended ahead of budget due to the strength of the housing
market.
Expenses are budgeted at anticipated program needs at not-to-exceed projected funding levels. However,
the City has opted to commit additional funding towards the Unfunded Accrued Liability, or UAL, related
to pensions. In fiscal year 2014/15, the City Council directed staff to make annual $500,000 payments
towards the UAL beginning in fiscal year 2015/16. This payment is excess of the required minimum
contribution amount required, thereby reducing the UAL. As of June 30, 2017, the Net Pension Liability,
or NPL, is approximately $6.3 million.
Capital Improvement Project Fund
As shown in the table on the previous page, the net change in the Capital Improvement Fund increased by
$369,243 as revenue and funding transfers for new Capital Improvement Projects exceeded expenses for
the year.
Other Governmental Funds
Of the net $183,448 increase in Other Governmental Funds, the collective 28 Landscaping & Lighting
funds comprise $147,078 of the total. The Library Bond debt service fund accounts for the remaining
$36,370 of the increase. Both net gains represent a small excess of revenue over expenditures in the
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 the year ended.
Changes to the City's budget that increase or decrease appropriations in a fund must be approved by a
resolution of the City Council. Modifications to the budget that are a realignment of fiscal activities with
no impact to the fund's bottom line may be approved by the City Manager. Significant changes from the
City’s original budget to the final budget are summarized as follows:
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2017
32
Revenues and Transfers In
The General Fund adopted revenue budget was $20,223,886 as shown in the first column in the schedule
below:
Adopted to Final Budget
Fiscal Year Ended June 30, 2017
+=
Adopted Budget Final
Budget Adjustments Budget
Revenues 20,223,886$ - 20,223,886$
There were no adjustments to the revenue budget during the fiscal year.
Expenses and Transfers Out
The General Fund expense budget was adopted at $19,709,395 and adopted transfers out at $1,410,648, as
shown in the first column in the schedule below:
Adopted to Final Budget
Fiscal Year Ended June 30, 2017
+=
Adopted Budget Final
Budget Adjustments Budget
Expenses 19,709,395$ 263,856 19,973,251$
Transfers out 1,410,648$ 210,000 1,620,648$
During the fiscal year, adjustments to the expense budget of $263,856 were allocated as follows;
$100,000 for temporary building inspection services, $70,770 for a one-time payment for field rentals,
$35,000 for additional traffic consultant services, $30,000 for additional tree maintenance services and,
$28,086 for carryover items from fiscal year 2015/16. Transfers out were increased by $210,000 to fund
repairs for a retaining wall that was failing.
The original budgeted amount of $1,410,648 for transfers from the General Fund to the Capital
Improvement funds were allocated as follows; $1,095,000 for street, sidewalk, and storm drain repair,
$75,000 for park and trail improvements, $190,648 for various facility improvements, and $50,000 for
various administrative projects.
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2017
33
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 policy is to achieve a Pavement Condition Index (PCI) average rating of 70 for all streets, at
minimum. The City’s overall rating was 71 with 0% of streets rated as Excellent, 81% of streets rated as
“Very Good” to "Good," 16% of streets rated “Poor,” and 3% of streets rated as "Very Poor." With the
overall rating below target, the City has begun the process to review infrastructure investment strategies.
Overall, the City spent $2,772,821 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 2015.
As reflected in the following schedule, the City has $121,154,015 invested in a variety of capital assets as
of June 30, 2017. This represents a decrease of ($1,286,320) or a -1.05% decrease from the prior year.
Governmental Activities
2017 2016
Land 15,591,925$ 15,591,925$
Building and structures 15,919,233 16,624,254
Machinery and equipment 1,039,184 1,076,503
Infrastructure 80,453,463 81,651,698
Construction in progress 8,150,210 7,495,955
Total Capital Assets, Net of Depreciation 121,154,015$ 122,440,335$
Capital Assets at Year End
Net of Depreciation
The following reconciliation summarizes the changes in Capital Assets.
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2017
34
Balance Balance
July 1, 2016 Additions Retirements Reclassification June 30, 2017
Land 15,591,925$ -$ -$ -$ 15,591,925$
Building and structures 25,986,754 - - - 25,986,754
Machinery and equipment 3,028,109 145,899 - - 3,174,008
Infrastructure 107,491,011 - - - 107,491,011
Construction in progress 7,495,955 1,610,129 - (955,873) 8,150,211
Depreciation (37,153,419) (2,086,475) - - (39,239,894)
Total Capital Assets,
Net of Depreciation 122,440,335$ (330,447)$ -$ (955,873)$ 121,154,015$
Changes in Capital Assets
Major capital projects in progress during fiscal year 2016/17 included the following expenditures:
Highway 9 Improvements - $847,078
Senior Center ADA Improvements - $178,229
Prospect Median Improvements - $177,496
Village Sidewalk Improvements - $68,243
Electric Vehicle (EV) Fast-Charge Station - $66,700
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 $515,951. Total long
term bonded debt, net of premium decreased by $496,892. Outstanding compensated absences increased
$41,524.
Governmental Activities
2017 2016
2011 General obligation bond 9,585,000$ 10,060,000$
Net original issue premuim 328,386 350,278
Compensated absences 671,965 630,441
Total Outstanding long-term obligations 10,585,351$ 11,040,719$
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 2017/18) and $21,892 of amortized net original premium, are classified as a current liability in
the City's Statement of Net Position.
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2017
35
General Obligation Bonds
The City refunded the 2001 General Obligation Bonds and in their place issued 2011 General Obligation
Bonds for $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 $475,000 and interest of $383,335 were paid during the
fiscal year.
Compensated Absences
Compensated absences are accrued liabilities for vested and unpaid vacation and sick pay. The
compensated absences balance increased during the fiscal year by $41,524 due to a decrease in use and
payouts of unused compensated absences to retiring, separated, and general employees. An estimated
current liability of $492,292 is anticipated for the next fiscal year.
Additional information on outstanding obligations can be found in Note 5 to the financial statements.
GASB 68 ADJUSTMENTS TO PENSION EXPENSE
CalPERS provided a GASB 68 accounting valuation report with the City’s proportionate share of the
plan’s net pension liability. The liabilities were actuarially determined with a valuation date of June 30,
2015. These amounts were rolled forward along with the changes in net pension liability recognized
during the measurement period between June 30, 2015 and June 30, 2016. With the provided liability and
asset information, the total pension liability, net pension liability, and pension expense were developed
for the measurement date of June 30, 2016. The City is responsible for determining the difference
between the actual and allocated contributions, changes in proportion and the appropriate treatment of any
contributions made during the measurement period and subsequent to the measurement date.
DEFERRED OUTFLOW OF RESOURCES
Deferred outflow of resources related to pensions increased by a net of $1,034,692 because of differences
between projected and actual earnings, differences between actual contribution and proportionate share,
changes in proportions, and increased amortization and pension contributions made subsequent to the
measurement date as reported by CalPERS.
2017 2016
Reclassify pension contribution 1,016,197$ 996,855$
Difference between projected and actual earnings 970,904 862,977
Difference between employer's contribution and proportionate share 897,830 -
Change in employer's proportion 29,040 -
Differences between expected and actual experience 15,200 35,586
Prepaid 2,146 1,207
Total Deferred outflow of resources 2,931,317$ 1,896,625$
Deferred Outflow of Resources at Year End
An adjustment to pension expense to record contributions made subsequent to the measurement date
resulted in a reduction of ($1,033,752.)
Additional information on pension disclosures can be found in Note 7 of the Financial Statements.
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2017
36
DEFERRED INFLOW OF RESOURCES
Deferred inflow of resources increased by $455,559 as result of changes in assumptions, differences
between projected and actual earnings, difference between employer’s contribution and proportionate
shares, and changes in proportionate share during the measurement period as reported by CalPERS.
2017 2016
Change of assumptions 186,545$ 336,681$
Difference between projected and actual earnings 1,031,759
Difference between employer's contribution and proportionate share 790,652 (507,792)
Change in proportionate share 408,518 -
Unearned 2 69,510
Total deferred inflow of resources 1,385,717$ 930,158$
Deferred Inflow of Resources at Year End
An adjustment to pension expense to record the proportionate share of activity in the pension plan during
the measurement period and subsequent to the measurement date amounted to a net increase of $525,067.
Additional information on pension disclosures can be found in Note 7 of the Financial Statements.
NET PENSION LIABILITY
The City’s net pension liability increased by $2,069,338 from the prior year.
2017 2016
Net Pension Liability 6,335,606$ 4,266,268$
Total net pension liability 6,335,606$ 4,266,268$
Net Pension Liability at Year End
The net increase to pension expense to record the City’s proportionate share of changes in Net Pension
Liability and related ratios for the measurement period ending June 30, 201 6 in accordance with GASB
68 is $1,560,653.
Additional information on pension disclosures can be found in Note 7 of the Financial Statements.
ECONOMIC FACTORS
The following economic indicators from fiscal year 2016/17 were taken into account when developing the
budget for fiscal year 2017/18.
Taxable assessed value of property was $12.9 billion, an increase of 7.1% from the previous fiscal
year.
The unemployment rate for the City was 2.9% versus 2.7% from the previous year. This compares
favorably with the county rate of 4.2% and the state rate of 5.5%.
Per capita income was $74,123, an increase of 1.5% from the previous year.
CITY OF SARATOGA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2017
37
General Fund revenues available for appropriation in fiscal year 2017/18 are $20.8 million, an increase of
$.5 million over the final 2016/17 budget amount of $20.2 million. Property taxes, benefiting from the
increase in assessed valuation and an additional increase in the City’s allocation percentage lead this
increase. This increase in revenues will be used to improve local roads, fund a Deputy City Manager
position, and continued enhancement of community enrichment efforts.
General Fund expenses available for appropriation in fiscal year 2017/18 are $20.4 million, an increase of
$400,000 over the final budget amount of $20 million. Increases are anticipated in salaries and benefits
due to the addition of a Deputy City Manager position, and cost-of-living adjustments. Increases will also
be seen in contract services related to public safety. The budget will continue to address the city’s
standing policy of reducing long-term liabilities related to pension obligations by increasing the UAL
payment by an additional $250,000 and building reserves to weather future downturns in the economy.
As for the City’s capital budget, the focus continues to be on improving local roads. A total of $2.7
million is allocated for street repair and resurfacing and sidewalks, curbs and storm drains. For the City’s
parks and trails: $100,000 is allocated to improve the infrastructure of the City’s parks, trails, grounds,
and medians; $100,000 is allocated for Koi Pond Improvements at Hakone Gardens; and $250,000 is
allocated toward the Saratoga-to-the-Sea Trail.
OUTLOOK
The City maintains a strong financial position. With restoration of the Code Compliance Officer, service s
have been restored to pre-recessionary levels. The lessons learned from the “Great Recession” have led to
a focus on long-term financial planning that will help the City through the next economic downturn with
hopefully little impact to service levels. In the meantime, the City will continue to address its liabilities,
like the UAL, deferred maintenance on infrastructure and facilities, as well as, exploring ways in which
the City can refine Saratoga and make it an even better place for the people who li ve, work, and visit the
community.
REQUEST FOR FINANCIAL INFORMATION
This financial report is designed to provide a general overview of the City of Saratoga's finances for all of
Saratoga's residents, taxpayers, customers, investors, and creditors. This financial report seeks to
demonstrate the City's accountability for the money it receives. Questions concerning any of the
information provided in this report or requests for additional information should be addressed to the
Administrative Services Department, 13777 Fruitvale Avenue, Saratoga, California 95070.
38
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39
BASIC FINANCIAL STATEMENTS
CITY OF SARATOGA
STATEMENT OF NET POSITION
JUNE 30, 2017
40
Primary Government
Governmental
Activities
ASSETS
Current Assets:
Cash and investments 20,694,096$
Restricted cash and investments 2,137,865
Receivables:
Accounts 2,421,735
Total Current Assets 25,253,696
Noncurrent Assets:
Capital Assets:
Non-depreciable 75,361,974
Depreciable, net 45,792,042
Total Capital Assets 121,154,015
Total Noncurrent Assets 121,154,015
Total Assets 146,407,711
DEFERRED OUTFLOW OF RESOURCES
Contribution and adjustments related to pension liability 2,929,170
Prepaid 2,146
Total Deferred Outflow of Resources 2,931,316
LIABILITIES
Current Liabilities:
Accounts payable 1,092,161$
Accrued payroll 190,791
Interest payable 151,703
Deposits payable 2,204,767
Claims payable 41,003
Long-term obligations - due within one year 999,184
Total Current Liabilities 4,977,344
Noncurrent Liabilities:
Net pension liabilty 6,335,606
Long-term obligations - due in more than one year 9,586,167
Total Noncurrent Liabilities 15,921,773
Total Liabilities 20,899,117
DEFERRED INFLOW OF RESOURCES
Adjustments related to pension liability 1,385,715
Deferred revenue 2
Total Deferred Inflow of Resources 1,385,717
Net Position
Net investment in capital assets 111,240,629
Restricted for:
Environmental funds 263,182
Special assessment funds 1,152,869
Debt service 959,322
Total Restricted 2,375,373
Unrestricted 13,438,191
Total Net Position 127,054,194$
The accompanying notes are an integral part of these financial statements
CITY OF SARATOGA
STATEMENT OF ACTIVITIES AND CHANGES IN NET POSITION
FOR THE FISCAL YEAR ENDED JUNE 30, 2017
41
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 6,449,934$ 157,673$ -$ -$ 157,673$ (6,292,261)$
Public safety 5,443,759 326,585 129,324 - 455,909 (4,987,850)
Public works 9,164,282 2,462,050 93,995 884,250 3,440,295 (5,723,987)
Community services 1,557,673 1,070,561 - 178,229 1,248,790 (308,883)
Community development services 2,905,718 2,126,656 - - 2,126,656 (779,062)
Interest on long-term debt (unall.)366,948 - - - - (366,948)
Total 25,888,313$ 6,143,525$ 223,319$ 1,062,479$ 7,429,323$ (18,458,990)$
General Revenues:
Taxes
Property taxes 12,263,575$
Sales taxes 1,185,035
Local taxes 857,050
Franchise taxes 2,170,870
Motor vehicle-in-lieu 13,538
Total taxes 16,490,068
Intergovernmental 588,719
Investment earnings 124,679
Other revenues 200,597
Total General Revenues 17,404,063
Change in Net Position (1,054,924)
Net Position - Beginning of Year 128,109,118
Prior Period Adjustment -
Net Position - Beginning of Year as Adjusted 128,109,118
Net Position - End of Year 127,054,194$
The accompanying notes are an integral part of these financial statements
CITY OF SARATOGA
GOVERNMENTAL FUNDS – BALANCE SHEET
JUNE 30, 2017
42
Other Total
Capital Governmental Governmental
General Improvement Funds Funds
ASSETS
Cash and investments 13,576,828$ 3,729,314$ -$ 17,306,142$
Restricted cash and investments 2,137,865 2,137,865
Receivables:
Accounts 611,265 1,805,244 3,809 2,420,318
Interest - - - -
Total assets 14,188,093$ 5,534,558$ 2,141,674$ 21,864,325$
DEFERRED OUTFLOW OF RESOURCES
Prepaid Items 2,146 - - 2,146
Total deferred outflow of resources 2,146$ -$ -$ 2,146$
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable 545,842$ 449,020$ 29,483$ 1,024,345$
Accrued payroll 157,584 231 - 157,815
Deposits payable 2,204,767 - - 2,204,767
Other payable 297,735 - - 297,735
Total liabilities 3,205,928 449,251 29,483 3,684,661
DEFERRED INFLOW OF RESOURCES
Deferred Revenue - - - -
Total deferred outflow of resources -$ -$ -$ -$
Fund Balances:
Restricted:
Environmental services 263,182 - - 263,182
Special assessment funds - - 1,152,869 1,152,869
Debt service - - 959,322 959,322
Committed:
Capital improvement program - 5,085,307 - 5,085,307
Hillside stability 790,000 - - 790,000
Assigned:
Future capital & efficiency 1,564,589 - - 1,564,589
Carryforwards 7,242 - - 7,242
Facility replacement 1,700,000 - - 1,700,000
Unassigned:
Working capital 1,000,000 - - 1,000,000
Fiscal stabilization 2,500,000 - - 2,500,000
Compensated absences 209,937 - - 209,937
Development services 719,562 - - 719,562
Other unassigned 2,229,800 - - 2,229,800
Total fund balances 10,984,311 5,085,307 2,112,191 18,181,810
Total liabilities and fund balances 14,190,239$ 5,534,558$ 2,141,674$ 21,866,471$
The accompanying notes are an integral part of these financial statements
Major Funds
CITY OF SARATOGA
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET POSITION
JUNE 30, 2017
43
Total Fund Balances - Total Governmental Funds 18,181,810$
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 75,361,974
Depreciable capital assets, net 45,431,727
Total Capital Assets 120,793,701
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.(151,703)
Internal service funds are used by management to charge the costs of office stores,
vehicle and equipment maintenance and replacement, information services and replacement,
building maintenance, risk management, and workers compensation. The assets and
liabilities of the internal service funds are included in the governmental activities in
the statement of net assets 3,607,889
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.(2)
Deferred outflow of resources are transactions that have already taken place but are not ready
to be recognized on the financial statements as expenses
Reclassify FY 2016/17 pension contribution 1,016,197
Adjustment due to difference between expected and actual experiences 15,200
Differences between projected and actual investment earnings 970,904
Differences between employer's contributions and proportionate share 897,830
Change in employer's proportion 29,040
2,929,170
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 (9,585,000)
Net Pension Liability (6,335,606)
Compensated absences (671,965)
Net original issue premium (328,386)
Total Long-Term Obligations (16,920,958)
Deferred inflow of resources are transactions that have already taken place but are not ready
to be recognized on the financial statements as revenues
Adjustment due to change in assumptions (186,545)
Differences between employer's contributions and proportionate share (790,652)
Change in employer's proportion (408,518)
(1,385,715)
Net Position of Governmental Activities 127,054,194$
CITY OF SARATOGA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE
FOR THE YEAR ENDED JUNE 30, 2017
44
Other Total
Capital Governmental Governmental
General Improvement Funds Funds
REVENUES:
Property taxes 12,003,942$ -$ 259,633$ 12,263,575$
Special assessments - - 1,270,373 1,270,373
Sales taxes 1,185,035 - - 1,185,035
Other local taxes 857,050 - - 857,050
Licenses & permits 1,455,455 452,200 - 1,907,655
Fines & forfeiture 161,398 9,776 - 171,174
Intergovernmental - Federal 93,995 860,305 - 954,300
Intergovernmental - State 446,244 607,010 - 1,053,254
Intergovernmental - Other 44,241 178,229 - 222,470
Franchise fees 2,170,870 - - 2,170,870
Use of money and property 596,963 41,301 12,505 650,769
Other revenue 2,097,219 105,472 1 2,202,693
Total revenues 21,112,412 2,254,293 1,542,512 24,909,218
EXPENDITURES:
Current:
General and intergovernmental services 4,372,235 - - 4,372,235
Public safety 5,443,759 - - 5,443,759
Public works 5,490,258 - 511,179 6,001,437
Community services 1,573,144 - - 1,573,144
Community development services 2,324,064 - - 2,324,064
Capital outlay - 3,450,314 - 3,450,314
Debt service:
Principal - - 475,000 475,000
Interest and fiscal charges - - 372,885 372,885
Total expenditures 19,203,460 3,450,314 1,359,064 24,012,838
REVENUES OVER
(UNDER) EXPENDITURES 1,908,952 (1,196,021) 183,448 896,380
OTHER FINANCING SOURCES (USES):
Transfers in 55,384 1,834,590 - 1,889,974
Transfers out (1,620,648) (269,326) - (1,889,974)
Total other financing sources (uses)(1,565,264) 1,565,264 - -
Net change in fund balances 343,688 369,243 183,448 896,380
FUND BALANCES:
Beginning of year 10,640,623 4,716,064 1,928,743 17,285,430
End of year 10,984,311$ 5,085,307$ 2,112,191 18,181,810$
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 FISCAL YEAR ENDED JUNE 30, 2017
45
Net Change in Fund Balances - Total Governmental Funds 896,380$
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.654,256
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.(1,989,726)
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.483,510
GASB 68 Adjustments to pension expense
Reclassify 2017 pension contribution to deferred outflows 1,016,197
Change in net pension liability - current year (2,069,338)
Amortization of changes in deferred outflows 17,555
Amortization of changes in deferred inflows (525,067)
Adjustments to pension expense as a result of GASB 68 (1,560,653)
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 (41,524)
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 475,000
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.5,938
Change in Net Position of Governmental Activities (1,054,924)$
The accompanying notes are an integral part of these financial statements
CITY OF SARATOGA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
JUNE 30, 2017
46
Governmental
Activities -
Internal
Service Funds
ASSETS
Current assets:
Cash and investments 3,387,954$
Accounts receivable 1,416
Total current assets 3,389,370
Noncurrent assets:
Capital assets:
Machinery and equipment 1,219,313
Less: accumulated depreciation (858,999)
Total capital assets (net of
accumulated depreciation) 360,314
Total assets 3,749,684
LIABILITIES
Liabilities:
Current liabilities:
Accounts payable 67,816$
Accrued payroll 32,976
Other payables 41,003
Total current liabilities 141,795
NET POSITION
Net investment in capital assets 360,314
Unrestricted 3,247,575
Total net position 3,607,889$
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 FISCAL YEAR ENDED JUNE 30, 2017
47
Governmental
Activities -
Internal
Service Funds
Operating revenues:
Charges for services 2,750,000$
Other operating revenues 73,003
Total operating revenues 2,823,003
Operating expenses:
Cost of services 2,242,746
Administration -
Depreciation 96,749
Total operating expenses 2,339,495
Operating income (loss)483,508
Transfers in -
Change in net position 483,508
Total net position - beginning 3,124,381
Total net position - ending 3,607,889$
The accompanying notes are an integral part of these financial statements
CITY OF SARATOGA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2017
48
Governmental
Activities -
Internal
Service Funds
Cash flows from operating activities:
Receipts from customers and users 2,823,820$
Payments to suppliers (1,363,955)
Payments to employees (878,251)
Net cash provided (used) by operating activities 581,614
Cash flows from capital activities:
Acquisition of capital assets (145,900)
Net cash provided for the acquisition of capital assets (145,900)
Net increase in cash and cash equivalents 435,714
Cash and cash equivalents, beginning of year 2,952,240
Cash and cash equivalents, ending of year 3,387,954$
Reconciliation of operating income to net cash provided
by operating activities:
Operating income (loss)483,508$
Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:
Depreciation 96,749
Other receipts 2
Change in operating assets and liabilities:
Accounts receivables 817
Accounts payable 9,607
Claims payable (17,960)
Accrued payroll 8,891
Net cash provided (used) by operating activities 581,614$
The accompanying notes are an integral part of these financial statements
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
49
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 30,569 at June 30, 2017. The City is a largely residential community
located in the foothills of the Santa Cruz Mountains.
The City operates under the Council-Manager form of government, with five-elected Council members
served by a full-time City Manager and staff. At June 30, 2017, the City's staff was comprised of 57 full-
time or part-time employees, and numerous part-time temporary and seasonal employees. Staff is
responsible for the following City 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 21 employees. Major projects may be contracted out to
reduce costs.
Community Development - Zoning administration, plan checking and advance planning services are
provided by 12 employees.
Culture, Recreation and Community Support services are provided by a total of 10 employees.
General Government services are provided by a total of 14 employees.
As required by GAAP, these basic financial statements present the City and its component units, entities
for which the City is considered to be financially accountable. The City Council acts as the governing
board. In addition, the City staff performs all administrative and accounting functions for these entities
and these entities provide their services entirely to the City. Blended component units, although legally
separate entities are, in substance, part of the City's 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, 2017
50
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 and liabilities, including capital assets, as well as
infrastructure assets, long-term liabilities, and deferred inflows and outflows of resources 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 inter-fund
activities, payables, and receivables. All internal balances in the Statement of Net Position have been
eliminated. The following inter-fund activities have been eliminated:
Transfers in/Transfers out
Internal Service Fund charges
Land and Lighting District Service Fees
Deferred Outflow of Resources and Deferred Inflow of Resources
Deferred outflow of resources is a consumption of net position by the City that is applicable to a future
reporting period, such as prepaid items and deferred charges.
Deferred inflow of resources is an acquisition of net position by the City that is applicable to a future
reporting period, such as unearned revenue and advance collections.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
51
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 City not specifically levied or
collected for other City funds and the related expenditures. The General Fund accounts for all financial
resources of the City which are not accounted for in another fund.
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
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 and liabilities (whether current or noncurrent) associated with their activities are included
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
52
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 non-exchange 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 fo r 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 2016/17 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
Other disclosures are specified including use of certain methods to present deposits and investments,
highly sensitive investments, credit quality at year-end and other disclosures.
The City participates in an investment pool managed by the State of California titled Local Agency
Investment Fund (LAIF), which has invested a portion of the pool funds in Structured Notes and Asset
Backed Securities. LAIF's investments are subject to credit risk with the full faith and credit of the State
of California collateralizing these investments. In addition, these Structured Notes and Asset-Backed
Securities are subject to market risk as to change in interest rates.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
53
D. Inter-fund Transactions
Inter-fund 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 inter-fund transactions, except for inter-fund services provided and used and
reimbursements, are reported as transfers. Nonrecurring or non -routine permanent transfers of equity are
reported as residual equity transfers. All other inter-fund transfers are reported as transfers.
E. Capital Assets
Capital assets, including 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 capital assets, donated works of art and similar
items, and capital assets received in service concession agreement are reported at acquisition value. 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 assets in its basic financial statements.
The City defines infrastructure as the basic physical assets that allow the City to function, which includes
the street system, park and recreation lands and improvements system; storm water conveyance and
drainage system, buildings combined with site amenities such as parking and landscaping areas used by
the City in the conduct of its business.
Each major infrastructure system can be divided into subsystems. For example, the street system can be
subdivided into pavement, curb and gutters, sidewalks, medians, streetlights, traffic control devices
(signs, signals and pavement markings), landscaping and land. These subsystems were not delineated in
the basic financial statements. The appropriate operating department maintains information regarding the
subsystems. The City elected to use the Modified Approach as defined by GASB Statement No. 34 for
infrastructure reporting of its streets, concrete and asphalt pavements. The City commissioned a physical
assessment of the streets condition as of June 30, 2013. This condition assessment was performed in the
fall of 2013 with the final report presented in March, 2014. 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.
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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 "i ncurred but not
reported" (IBNR) claims. There is no fixed payment schedule to pay these liabilities.
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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.
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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.
Environmental Services Fund Balance – represents surcharges collected on solid waste bills for
use as supplemental funding of Environmental Services program fees for household hazar dous
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.
Debt Service Fund Balance – represents funding collected for and use in the City’s general
obligation bond debt.
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 on a resolution of the City Council, and
remains 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 official 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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Working Capital Reserve – Council policy is to maintain $1,000,000 to meet cash flow
requirements. As of June 30, 2017, the Working Capital Reserve balance is $1,000,000.
Fiscal Stabilization Reserve – Council policy is to maintain $2,500,000 for use by Council
direction in case of disasters, emergencies, and economic downturns. As of June 30, 2017, the
Fiscal Stabilization Reserve balance is $2,500,000.
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
"invested in capital assets, net of related debt" 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 positions are
available, the City's policy is to apply restricted net position first.
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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 reviewed subsequent events and transactions that occurred after the date of the financial
statements through the date of issuance. 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
A. Implemented New Accounting Pronouncements
GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That
Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB
Statements No. 67 and No. 68. Issue date: 06/15. Effective date: the requirements of this Statement
take effect in fiscal years beginning after June 15, 2015—except those provisions that address
employers and governmental non-employer contributing entities for pensions that are not within the
scope of Statement 68, which are effective for fiscal years beginning after June 15, 2016. The
objective of this Statement is to improve the usefulness of information about pensions included in the
general purpose external financial reports of state and local governments for making decisions and
assessing accountability. This Statement results from a comprehensive review of the effectiveness of
existing standards of accounting and financial reporting for all postemployment benefits with regard
to providing decision-useful information, supporting assessments of accountability and inter-period
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equity, and creating additional transparency. This Statement also clarifies the application of certain
provisions of Statements 67 and 68 with regard to the following issues:
Information that is required to be presented as notes to the 10-year schedules of required
supplementary information about investment-related factors that significantly affect trends in the
amounts reported
Accounting and financial reporting for separately financed specific liabilities of individual
employers and non-employer contributing entities for defined benefit pensions
Timing of employer recognition of revenue for the support of non -employer contributing entities
not in a special funding situation.
The implementation of this statement did not have a significant impact on the City of Saratoga’s
financial statements and did not result in any prior period restatement of adjustments.
GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than
Pension Plans. Issue date: 06/15. Effective date: the requirements of this Statement take effect in
fiscal years beginning after June 15, 2016. The objective of this Statement is to improve the
usefulness of information about postemployment benefits other than pensions (other postemployment
benefits or OPEB) included in the general purpose external financial reports of state and local
governmental OPEB plans for making decisions and assessing accountability. This Statement
replaces Statements No. 43, Financial Reporting for Postemployment Benefit Plans Other Than
Pension Plans, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent
Multiple-Employer Plans. It also includes requirements for defined contribution OPEB plans that
replace the requirements for those OPEB plans in Statement No. 25, Financial Reporting for Defined
Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, as amended, Statement
43, and Statement No. 50, Pension Disclosures.
The scope of this Statement includes OPEB plans—defined benefit and defined contribution—
administered through trusts that meet the following criteria:
Contributions from employers and non-employer contributing entities to the OPEB plan and
earnings on those contributions are irrevocable.
OPEB plan assets are dedicated to providing OPEB to plan members in accordance with the
benefit terms.
OPEB plan assets are legally protected from the creditors of employers, non-employer
contributing entities, and the OPEB plan administrator. If the plan is a defined benefit OPEB
plan, plan assets also are legally protected from creditors of the plan members.
The implementation of this statement did not have a significant impact on the City of Saratoga’s
financial statements and did not result in any prior period restatement of adjustments.
GASB Statement No. 77, Tax Abatement Disclosures Issue date: 08/15. Effective date: the
requirements of this Statement take effect in reporting periods beginning after December 15, 2015.
This Statement requires governments that enter into tax abatement agreements to disclose the
following information about the agreements:
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Brief descriptive information, such as the tax being abated, which tax abatements are provided,
eligibility criteria, the mechanism by which taxes are abated, provisions for recapturing abated
taxes, and the types of commitments made by tax abatement recipients
The gross dollar amount of taxes abated during the period
Commitments made by a government, other than to abate taxes, as part of a tax abatement
agreement.
The implementation of this statement did not have a significant impact on the City of Saratoga’s
financial statements and did not result in any prior period restatements or adjustments.
GASB Statement No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit
Pension Plans. Issue date: 12/15. Effective date: The requirements of this Statement take effect in
fiscal years beginning after December 15, 2015. Earlier application is encouraged. The objective of
this Statement is to address a practice issue regarding the scope and applicability of GASB Statement
No. 68, Accounting and Financial Reporting for Pensions. This issue is associated with pensions
provided through certain multiple-employer defined benefit pension plans and to state or local
governmental employers whose employees are provided with such pensions.
Prior to the issuance of this GASB 78, the requirements of GASB 68 applied to the financial
statements of all state and local governmental employers whose employees are provided with
pensions through pension plans that are administered through trusts that meet the criteria in paragraph
4 of that statement.
GASB 78 amends the scope and applicability of GASB 68 to exclude pensions provided to
employees of state or local governmental employers through a cost-sharing multiple-employer
defined benefit pension plan that (1) is not a state or local governmental pension plan, (2) is used to
provide defined benefit pensions both to employees of state or local governmental employers and to
employees of employers that are not state or local governmental employers, and (3) has no
predominant state or local governmental employer (either individually or collectively with other state
or local governmental employers that provide pensions through the pension plan). This Statement
establishes requirements for recognition and measurement of pension expense, expenditures, and
liabilities; note disclosures; and required supplementary information for pensions that have the
characteristics described above.
The implementation of this statement did not have a significant impact on the City of Saratoga’s
financial statements and did not result in any prior period restatements or adjustments.
GASB Statement No. 80, Blending Requirements for Certain Component Units – An Amendment
of GASB Statement No. 14. Issue date: 01/16. Effective date: The requirements of this Statement
take effect in fiscal years beginning after June 15, 2016. This Statement amends the blending
requirements for the financial statement presentation of component units of all state and local
governments. The additional criterion requires blending of a component unit incorporated as a not -
for-profit corporation in which the primary government is the sole corporate member. The additional
criterion does not apply to component units included in the financial reporting entity pursuant to the
provisions of Statement No. 39, Determining Whether Certain Organizations Are Component Units.
The implementation of this statement did not have a significant impact on the City of Saratoga’s
financial statements and did not result in any prior period restatements or adjustments.
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B. Upcoming Accounting and Reporting Changes
GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other
Than Pensions. Issue date: 06/15. Effective date: The requirements of this Statement will take effect
for financial statements starting with the fiscal year that ends June 30, 2017. The primary objective of
this Statement is to improve accounting and financial reporting by state and local governments fo r
postemployment benefits other than pensions (other postemployment benefits or OPEB). It also
improves information provided by state and local governmental employers about financial support for
OPEB that is provided by other entities. This Statement replaces the requirements of Statements No.
45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than
Pensions, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-
Employer Plans, for OPEB. Statement No. 74, Financial Reporting for Postemployment Benefit Plans
Other Than Pension Plans, establishes new accounting and financial reporting requirements for
OPEB plans.
The scope of this Statement addresses accounting and financial reporting for OPEB that is provided to
the employees of state and local governmental employers. This Statement establishes standards for
recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources,
and expense/expenditures. For defined benefit OPEB, this Statement identifies the methods and
assumptions that are required to be used to project benefit payments, discount projected benefit
payments to their actuarial present value, and attribute that present value to periods of employee
service. Note disclosure and required supplementary information requirements about defined benefit
OPEB also are addressed.
In addition, this Statement details the recognition and disclosure requirements for employers with
payables to defined benefit OPEB plans that are administered through trusts that meet the specified
criteria and for employers whose employees are provided with defined contribution OPEB. This
Statement also addresses certain circumstances in which a non-employer entity provides financial
support for OPEB of employees of another entity.
In this Statement, distinctions are made regarding the particular requirements depending upon
whether the OPEB plans through which the benefits are provided are administered through trusts that
meet the following criteria:
Contributions from employers and non-employer contributing entities to the OPEB plan and
earnings on those contributions are irrevocable.
OPEB plan assets are dedicated to providing OPEB to plan members in accordance with the
benefit terms.
OPEB plan assets are legally protected from the creditors of employers, non-employer
contributing entities, the OPEB plan administrator, and the plan members.
The City of Saratoga doesn’t believe this statement will have a significant impact on the City of
Saratoga’s financial statements.
GASB Statement No. 81, Irrevocable Split-Interest Agreements. Issue date: 03/16. Effective date:
The requirements of this Statement will take effect for financial statements starting with the fiscal
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year that ends December 31, 2017, and should be applied retroactively. Earlier application is
encouraged.
The objective of this Statement is to improve accounting and financial reporting for irrevocable split -
interest agreements by providing recognition and measurement guidance for situations in which a
government is a beneficiary of the agreement.
Split-interest agreements are a type of giving agreement used by donors to provide resources to two
or more beneficiaries, including governments. Split-interest agreements can be created through
trusts—or other legally enforceable agreements with characteristics that are equivalent to split-interest
agreements—in which a donor transfers resources to an intermediary to hold and administer for the
benefit of a government and at least one other beneficiary. Examples of these types of agreements
include charitable lead trusts, charitable remainder trusts, and life-interests in real estate.
This Statement requires that a government that receives resources pursuant to an irrevocable spli t-
interest agreement recognize assets, liabilities, and deferred inflows of resources at the inception of
the agreement. Furthermore, this Statement requires that a government recognize assets representing
its beneficial interests in irrevocable split-interest agreements that are administered by a third party, if
the government controls the present service capacity of the beneficial interests. This Statement
requires that a government recognize revenue when the resources become applicable to the reporting
period.
The City of Saratoga doesn’t believe this statement will have a significant impact on the City of
Saratoga’s financial statements.
GASB Statement No. 82, Pension Issues - an amendment of GASB Statements No. 67, No. 68, and
No. 73 Issue date: 03/16. Effective date: The requirements of this Statement will take effect for
financial statements starting with the fiscal year that ends June 30, 2017, except for the requirements
of this statement for the selection of assumptions in a circumstance in which an employer’s pension
liability is measured as of a date other than the employer’s most recent fiscal year-end. In that
circumstance, the requirements for the selection of assumptions are effective for that employer in the
first reporting period in which the measurement date of the pension liability is on or after June 15,
2017. Earlier application is encouraged.
The objective of this Statement is to address certain issues that have been raised with respect to
Statements No. 67, Financial Reporting for Pension Plans, No. 68, Accounting and Financial
Reporting for Pensions, and No. 73, Accounting and Financial Reporting for Pensions and Related
Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions
of GASB Statements 67 and 68. Specifically, this Statement addresses issues regarding (1) the
presentation of payroll-related measures in required supplementary information, (2) the selection of
assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice
for financial reporting purposes, and (3) the classification of payments made by employers to satisfy
employee (plan member) contribution requirements.
The City of Saratoga doesn’t believe this statement will have a significant impact on the City of
Saratoga’s financial statements.
GASB Statement No. 83, Certain Asset Retirement Obligations. Issue date: 11/16. Effective date:
The requirements of this Statement will take effect for financial statements for periods beginning after
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December 15, 2018. Earlier application is encouraged. This Statement addresses accounting and
financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable
liability associated with the retirement of a tangible capital asset. A government that has legal
obligations to perform future asset retirement activities related to its tangible capital assets should
recognize a liability based on the guidance in this Statement. Earlier application is encouraged.
The City of Saratoga doesn’t believe this statement will have a significant impact on the City of
Saratoga’s financial statements.
GASB Statement No. 84, Fiduciary Activities Issue date: 01/16. Effective date: The requirements of
this Statement will take effect for financial statements for periods beginning after December 15, 2018.
Earlier application is encouraged. The objective of this Statement is to improve guidance regarding
the identification of fiduciary activities for accounting and financial reporting purposes and how those
activities should be reported.
This Statement establishes criteria for identifying fiduciary activities of all state and local
governments. The focus of the criteria generally is on (1) whether a government is controlling the
assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists.
Separate criteria are included to identify fiduciary component units and postemployment benefit
arrangements that are fiduciary activities.
The City of Saratoga doesn’t believe this statement will have a significant impact on the City of
Saratoga’s financial statements.
GASB Statement No. 85, Omnibus 2017. Issue date: 03/17. Effective date: The requirements of this
Statement will take effect for fiscal years beginning after June 15, 2017. The objective of this
Statement is to address practice issues that have been identified during implementation and
application of certain GASB Statements. This Statement addresses a variety of topics including issues
related to blending components, goodwill, fair value measurement and application, and post-
employment benefits (pensions and other post-employment benefits [OPEB]). Specifically, this
Statement will address the following topics:
Blending a component unit in circumstances in which the primary government is a business-type
activity that reports in a single column for financial statement presentation.
Reporting amounts previously reported as goodwill or “negative” goodwill
Classifying real estate held by insurance entities
Measuring certain money market investments and participating interest-earning investment
contracts at amortized cost
Timing of the measurement of pension or OPEB liabilities and expenditures recognized in
financial statements prepared using the current financial resources measurement focus
Recognizing on-behalf payments for pensions or OPEB in employer financial statements
Presenting payroll-related measures in required supplementary information for purposes of
reporting by OPEB plans and employers that provide OPEB
Classifying employer-paid member contributions for OPEB
Simplifying certain aspects of the alternative measurement method for OPEB
Accounting and financial reporting for OPEB provided through certain multiple-employer
defined benefit OPEB plans
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The requirement of this Statement will enhance consistency in the application of accounting and
financial reporting requirements. Consistent reporting will improve the usefulness of information for
users of state and local government financial statements
The City of Saratoga is currently evaluating the impact of this Statement on the City of Saratoga’s
financial statements.
GASB Statement No. 86, Certain Debt Extinguishment Issues. Issue date: 05/17. Effective date:
The requirements of this Statement will take effect for fiscal years beginning after June 15, 2017. The
primary objective of this Statement is to improve consistency in accounting and financial reporting
for in-substance defeasance of debt by providing guidance for transactions in which cash and other
monetary assets acquired with only existing resources—resources other than the proceeds of
refunding debt—are placed in an irrevocable trust for the sole purpose of extinguishing debt. This
Statement also improves accounting and financial reporting for prepaid insurance on debt that is
extinguished and notes to financial statements for debt that is defeased in substance. Earlier
application is encouraged.
The City of Saratoga doesn’t believe this Statement will have a significant impact on the City of
Saratoga’s financial statements.
GASB Statement No. 87, Leases. Issue date: 06/17. Effective date: The requirements of this
Statement will take effect for financial statements for periods beginning after December 15, 2019.
The primary objective of this Statement is to increase the usefulness of governments’ financial
statement by requiring recognition of certain lease assets and liabilities for leases that previously were
classified as operating leases and recognized as inflows of resources or outflows of resources based
on the payment provisions of the contract. It establishes a single model for lease accounting based on
the foundational principle that leases are financings of the right to use an underlying asset. Under this
Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset,
and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby
enhancing the relevance and consistency of information about governments’ leasing activities. Earlier
application is encouraged.
The City of Saratoga is currently evaluating the impact of this Statement on the City of Saratoga’s
financial statements and ensuring the required data will be available for disclosure.
Q. Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related
to pensions, and pension expense, information about the fiduciary net position of the Local
Government of Example’s California Public Employees’ Retiremen t System (CalPERS) plans
(Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the
same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of
employee contributions) are recognized when due and payable in accordance with the benefit terms.
Investments are reported at fair value
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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, 2017:
Statement of
Net Position
Governmental
Activities
Cash and investments 22,831,961$
The City's Cash and Investments at June 30, 2017, in more detail:
Cash and cash equivalents:
Petty cash 1,300$
Demand deposits 545,001
Total Cash and Cash Equivalents 546,301
Investments:
Local Agency Investment Fund (LAIF)22,285,660
Total Cash and Investments 22,831,961$
A. Cash Deposits
The carrying amounts of the City's cash deposits were $186,757 at June 30, 2017. Bank balances before
reconciling items were $439,293 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). 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, 2017
66
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.
Investments are recorded at fair value in accordance with GASB Statement No. 72, Fair Value
Measurement and Application. Accordingly, the change in fair value of investments is recognized as an
increase or decrease to investment assets and investment income. This statement changed the definition of
fair value and is effective for periods beginning after June 15, 2015.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction. In determining this amount, three valuation techniques are available:
Market approach - This approach uses prices generated for identical or similar assets or liabilities.
The most common example is an investment in a public security traded in an active exchange
such as the NYSE.
Cost approach - This technique determines the amount required to replace the current asset. This
approach may be ideal for valuing donations of capital assets or historical treasures.
Income approach - This approach converts future amounts (such as cash flows) into a current
discounted amount.
Each of these valuation techniques requires inputs to calculate a fair value. Observable inputs have been
maximized in fair value measures, and unobservable inputs have been minimized.
GASB 72 established a hierarchy of inputs to the valuation techniques above. This hierarchy has three
levels:
Level 1 inputs are quoted prices in active markets for identical assets or liabilities.
Level 2 inputs are quoted market prices for similar assets or liabilities, quoted prices for identical
or similar assets or liabilities in markets that are not active, or other than quoted prices that are
not observable
Level 3 inputs are unobservable inputs, such as a property valuation or an appraisal.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
67
C. External Investment Pool
The City's investments with LAIF at June 30, 2017, 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 LAIF website, located at
http://www.treasurer.ca.gov/pmia-laif/
As of June 30, 2017, the City had $22,285,660 invested in LAIF. In accordance with GASB 72, a fair
value factor of 0.998940671 was used to calculate the fair value of the investments in LAIF. GASB
Statement No. 72, Fair Measure Value and Application requires investments held primarily for the
purpose of income or profit, and has a present service capacity based solely on its ability to generate cash
or to be sold to generate cash are to be measured at their fair value.
D. Risk Disclosures
Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Generally, the longer the term of an investment’s maturity, the greater the sensitivity to
changes in market interest rates. Although the City’s investment policy allows for a broad range of
investment instruments with varying terms of maturity, investments are limited to the Local Agency
Investment Fund (LAIF) which is managed by the State Treasurer Office and overseen by the Pooled
Money Investment Board, the State Treasurer investment committee, and a Local Agency Advisory
Board.
Included in LAIF’s investment portfolio are U.S. Treasuries, Federal Agency obligations, time deposits,
negotiable certificates of deposits, commercial paper, corporate bonds, and security loans. Funds are
available for withdrawal on demand, and are recorded on an amortized cost basis. At June 30, 2017, these
investments had a weighted average maturity of 194 days. The City had the following invested in LAIF:
Investment
Maturities in Years
Fair Less Than
Value One Year
State of California - Local Agency Investment Fund (LAIF)22,285,660$ 22,285,660$
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
68
Credit Risk
As of June 30, 2017, 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, 2017.
NOTE 3 - FUND FINANCIAL STATEMENTS INTERFUND TRANSACTIONS
Transfers In/Out
Transfers for the year ended June 30, 2017 were as follows:
Transfer in Transfer out Amount
Capital Improvement Fund General Fund 1,620,648$
1,620,648
Capital Improvement Fund Capital Improvement Fund 213,942
General Fund Capital Improvement Fund 55,384
269,326
Total 1,889,974$
The Capital Improvement Funds received monies from the General Fund adopted in the Budget in the
amount of $1,620,648. $1,088,760 was allocated for street, sidewalk, and storm drain repair, $295,000 for
park and trail improvements, $53,896 for various facility improvements, and $400,000 for various
administrative projects. $213,942 was transferred between CIP projects and $55,384 was transferred to
the General Fund from closed CIP projects during the fiscal year.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
69
NOTE 4 - CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2017 is illustrated in the following table:
Primary Government
Balance Balance
July 1, 2016 Additions Retirements Reclassifications June 30, 2017
Governmental activities:
Capital assets, not being depreciated:
Land and land improvements 15,591,925$ -$ -$ -$ 15,591,925$
Construction in progress 7,495,955$ 1,610,129$ -$ (955,873.25)$ 8,150,210$
Infrastructure:
Street pavement system 51,619,838$ -$ -$ -$ 51,619,838$
Total capital assets, not being depreciated 74,707,718$ 1,610,129$ -$ (955,873.25)$ 75,361,974$
Capital assets, being depreciated:
Buildings and structures 25,986,754$ -$ -$ -$ 25,986,754$
Machinery and equipment
Governmental funds 1,954,697$ -$ -$ -$ 1,954,697$
Internal service funds 1,073,414$ 145,899$ -$ -$ 1,219,313$
Infrastructure:
Bridges 1,563,654$ -$ -$ -$ 1,563,654$
Signs and lights 1,835,143$ -$ -$ -$ 1,835,143$
Drainage system 40,100,053$ -$ -$ -$ 40,100,053$
Sidewalks 12,372,322$ -$ -$ -$ 12,372,322$
Total capital assets, being depreciated 84,886,037$ 145,899$ -$ -$ 85,031,936$
Accumulated depreciation:
Buildings and structures (9,362,499)$ (705,022)$ -$ -$ (10,067,521)$
Machinery and equipment
Governmental funds (1,189,358)$ (86,469)$ -$ -$ (1,275,827)$
Internal service funds (762,249)$ (96,749)$ -$ -$ (858,999)$
Infrastructure:
Bridges (1,119,878)$ (19,883)$ -$ -$ (1,139,760)$
Signs and lights (1,183,254)$ (62,040)$ -$ -$ (1,245,294)$
Drainage system (17,137,374)$ (802,001)$ -$ -$ (17,939,375)$
Sidewalks (6,398,807)$ (314,311)$ -$ -$ (6,713,118)$
Total accumulated depreciation (37,153,420)$ (2,086,475)$ -$ -$ (39,239,895)$
Total capital assets, being depreciated, net 47,732,617$ (1,940,576)$ -$ -$ 45,792,041$
Governmental activities capital assets, net 122,440,335$ (330,447)$ -$ (955,873.25)$ 121,154,015$
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 infrastructure systems were
reported using the Basic Approach whereby accumulated depreciation and depreciation expense have
been recorded.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
70
NOTE 5 – LONG-TERM OBLIGATIONS
A summary of the City's long-term obligations transactions for the year ended June 30, 2017, is presented
below:
Classification
Balance Balance Due Within Due In More
Description July 1, 2016 Additions Retirements June 30, 2017 One Year Than One Year
General Obligation Bonds:
2011 Library bonds 10,060,000 - (475,000) 9,585,000 485,000 9,100,000
Net original issue premium 350,278 - (21,892) 328,386 21,892 306,494
Compensated absences 630,441 41,524 - 671,965 492,292 179,673
Total 11,040,719$ 41,524$ (496,892)$ 10,585,351$ 999,184$ 9,586,167$
General Obligation 2011 Library Bonds - Original Issue $11,995,000
On July 14, 2011, the City issued General Obligation Bonds Series 2011 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, 2012. Principal is due annually beginning on August 1, 2012, in amounts ranging from $455,000 to
$790,000, with a final payment on August 1, 2031 of $820,000. The bonds maturing on or before August
1, 2021 are not subject to redemption prior to their respective stated maturity dates. Bonds maturing on or
after August 1, 2022 are subject to redemption prior to their respective stated maturity dates at the option
of the city at the principal amount of the bonds called for redemption, together with interest accrued
thereon to the date of redemption, without premium.
The annual debt service requirements on these bonds are as follows:
Year Ended Principal Interest Total
2018 485,000$ 356,810$ 841,810$
2019 500,000 339,535 839,535
2020 525,000 319,035 844,035
2021 545,000 297,635 842,635
2022 565,000 278,260 843,260
2023-2027 3,160,000 1,049,750 4,209,750
2028-2032 3,805,000 391,043 4,196,043
Total 9,585,000$ 3,032,068$ 12,617,068$
Compensated Absences
The City's liability for vested and unpaid compensated absences (accrued vacation and sick pay) has been
accrued and amounts to $671,965 at June 30, 2017. The compensated absences liability will generally be
liquidated through the General Fund.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
71
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, 2017, the City contributed $166,255 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, 2017, the City contributed $153,163
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 $41,003 reported at June 30, 2017, are
based on the requirements of GASB Statement No. 10, which requires that a liability for claims be
reported if information prior to the issuance of the basic financial statements indicates that it is probable
that a liability has incurred at the date of the basic financial statements and the amount of the loss can be
reasonably estimated. Changes in the claims payable amounts were as follows:
The General Fund has been used in the prior years to liquidate the liability for claims and judgments.
Year Ended Year Ended
June 30, 2017 June 30, 2016
Claims payable, beginning of year 58,963$ 134,254$
Fiscal year claims and changes in estimates (17,960) (75,291)
Claims payments - -
Claims payable, end of year 41,003$ 58,963$
Each risk pool is governed by a board consisting of representatives from member municipalities. The
board controls the operations of each risk pool, including selection of management and approval of
operating budgets, independent of any influence by member municipalities beyond their representation on
the Board.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
72
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, 2016 (most
recent available):
Plan Comp Shared
Corporation Risk Pool
Total Assets 49,656,263$ 5,070,105$
Total Liabilities 20,980,127 994,564
Net Position 28,676,136$ 4,075,541$
Total Revenues 10,484,703$ 808,809$
Total Expenses 6,062,245 499,207
Net Increase in Net Position 4,422,458$ 309,602$
Audited financial information for each risk pool may be obtained from ABAG at 375 Beale St., San
Francisco, California 94105.
NOTE 7 - RETIREMENT PLANS
Defined Benefit Pension Plan
Plan Description – All CalPERS qualified employees are eligible to participate in the City’s
Miscellaneous Employee Pension Plan (the Plan), a cost-sharing multiple-employer defined benefit
pension plan administered by the California Public Employees’ Retirement System (CalPERS).
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. CalPERS issues publicly available reports that include a full description of the pension plans
regarding benefit provisions, assumptions and membership information that can be found on the CalPERS
website or copies of these reports may be obtained from their Executive Office located at 400 P Street,
Sacramento, California 95811.
Benefits Provided – CalPERS provides service retirement and disability benefits, annual cost-of-living
adjustments, and death benefits to plan members who must be public employees and beneficiaries.
Benefits are based on years of credited service, equal to one year of full time employment. Members with
five years of total service are eligible to retire at age 55. All members are eligible for non-duty disability
death benefits after 10 years of service. The death benefit is one of the following: the Basic Death
Benefit, the 1959 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living
adjustments for the Plan are applied as specified by the Public Employee’s Retirement Law. The Plan’s
provisions and benefits in effect at June 30, 2017, are summarized as follows:
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
73
New Employees
Tier 1 Tier 2 PEPRA
Hire date Before May 12, 2012 Hired on or after
May 12, 2012
Hired on or after
January 1, 2013
Benefit formula 2% @ 55 2% @ 60 2% @ 62
Benefit vesting schedule 5 Years 5 Years 5 Years
Benefit payments Monthly for Life Monthly for Life Monthly for Life
Retirement age 55 60 62
Monthly benefits as a % of eligible compensation 2.0%2.0%2.0%
Required employee contribution rates 8%7%6.50%
Required employer contribution rates 15.58%8.77%6.70%
Classic Employees
Employees Covered – At June 30, 2017, the following employees were covered by the benefit terms for
the Plan:
Miscellaneous
Inactive employees receiving benefits 114
Inactive employees entitiled to but not receiving benefits 82
Active members 58
Total 254
Contributions – Section 20814(c) of California Public Employees’ Retirement Law requires that the
employer contribution rates for all public employers are determined on an annual basis by an actuary and
shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the
Plan are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined
rate is the estimated amount necessary to finance the costs of benefits earned by employees during the
year, with an additional amount to finance any unfunded accrued liability. The City is required to
contribute the difference between the actuarially determined rate and the contribution rate of employees.
For the year ended June 30, 2017, the contributions, including the UAL payment of $500 thousand,
recognized as part of pension expense for the Plan were as follows:
Miscellaneous
Contributions - employer $ 1,016,197
Contributions - employee 408,673
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
74
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
As of June 30, 2017, the City reported net pension liabilities for its proportionate share of the net pension
liability of the Plan as follows:
Proportionate Share
of Net Pension
Liability
Miscellaneous Plan $ 6,335,606
Total Net Pension Liability $ 6,335,606
The City’s net pension liability for the Plan is measured as the proportionate share of the Plan’s net
pension liability. The net pension liability of the Plan is measured at June 30, 2016, and the total pension
liability for the plan used to calculate the net pension liability was determined by an actuarial valuation as
of June 30, 2015 rolled forward to June 30, 2016 using standard update procedures. The City’s
proportion of the net pension liability was based on a projection of the City’s long -term share of the
contributions to the pension plan relative to the projected contributions of all participating employers,
actuarially determined. The City’s proportionate share of the net pension liability for the Plan as of June
30, 2015 and 2016 was as follows:
Miscellaneous
Proportion - June 30, 2015 0.1555%
Proportion - June 30, 2016 0.1824%
Change 0.0269%
For the year ended June 30, 2017, the City recognized pension expense of $2,576,849. At June 30, 2017,
the City reported deferred outflows of resources and deferred inflows of resources related to pensions
from the following sources:
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
1,016,197$ -$
15,200 -
Changes of assumptions - 186,545
investment earnings 970,904
897,830 790,652
29,040 408,518
2,929,171$ 1,385,715$
Pension contributions subsequent to measurement date
Differences between projected and actual
Change in employer's proportion
Total
Differences between employer's contribution and
and proportionate share of contributions
Differences between expected and actual experience
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
75
The City reported $1,016,197 as deferred outflows of resources related to contributions subsequent to the
measurement date that will be recognized as a reduction of the net pension liability in the year ended June
30, 2017.
The City reported $15,200 as deferred outflows of resources related to the difference between expected
and actual experience subsequent to the measurement date that will be recognized as a reduction of the
net pension liability in the year ended June 30, 2017.
The City reported $970,904 as deferred outflow of resources related to the differenc es between projected
and actual investment earnings subsequent to the measurement date that will be recognized as a reduction
of the net pension liability in the year ended June 30, 2017.
The City reported $186,545 as deferred inflows of resources related to changes of assumptions
subsequent to the measurement date that will be recognized as a reduction of the net pension liability in
the year ended June 30, 2017.
Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be
recognized as pension expense as follows;
For the differences between employer’s contribution and proportionate share of contributions.
Measurement Periods
Ended June 30:
Deferred
Outflows
2018 (103,638)$
2019 288,318
2020 (77,502)
2021 -
2022 -
Total 107,178$
For the change in employer’s proportion
Measurement Periods
Ended June 30:
Deferred
Inflows
2018 (197,759)$
2019 (181,501)
2020 (219)
2021 -
2022 -
Total (379,479)$
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
76
Actuarial Assumptions – The total pension liabilities in the June 30, 2016 actuarial valuations were
determined using the following actuarial assumptions:
Miscellaneous
Valuation Date June 30, 2015
Measurement Date June 30, 2016
Actuarial Cost Method Entry-Age Normal
Cost Method
Actuarial Assumptions:
Discount Rate 7.65%
Inflation 2.75%
Payroll Growth 3.00%
Projected Salary Increase Varies (1)
Mortality (2)
(2) Derived using CalPERS' membership data for all funds
(1) Depending on age, service and type of employment
The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2016
valuation were based on the results of a January 2014 actuarial experience study for the period 1997 to
2011. Further details of the Experience Study can be found on the CalPERS website.
Discount Rate – The discount rate used to measure the total pension liability was 7.65 percent for the
Plan. To determine whether the municipal bond rate should be used in the calculation of a discount rate
for the Plan, CalPERS stress tested plans that would most likely result in a discount rate that would be
different from the actuarially assumed discount rate. Based on the testing, none of the tested plans ran out
of assets. Therefore, the current 7.65 percent discount rate is adequate and the use of the municipal bond
rate calculation is not necessary. The long term expected discount rate of 7.65 percent will be applied to
all plan in the Public Employees’ Retirement Fund (PERF). The stress test results are presented in the
detailed report called “GASB Crossover Testing Report” that can be obtained from the CalPERS website.
According to Paragraph 30 of Statement 68, the long-term discount rate should be determined without
reduction for pension plan administrative expense. The 7.65 percent investment return assumption used in
this accounting valuation is net of administrative expenses. Administrative expenses are assumed to be
15 basis points. An investment return excluding administrative expenses would have been 7.65 percent.
Using this lower discount rate has resulted in a slightly higher Total Pension Liability and Net Pension
Liability. CalPERS checked the materiality threshold for the difference in calculation and did not find it
to be a material difference.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
77
CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability
Management (ALM) review cycle that is scheduled to be completed in February 2018. Any changes to
the discount rate will require Board action and proper stake holder outreach. For these reason, CalPERS
expects to continue using a discount rate net of administrative expenses for GASB 67 and GASB 68
calculations through at least fiscal year 2017/2018. CalPERS will continue to check the materiality of the
difference in calculation until such time as we have changed our methodology. The long-term expected
rate of return on pension plan investments was determined using a building-block method in which best-
estimate ranges of expected future real rates of return (expected returns, net of pension plan investment
expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both short-term and
long-term market return expectations as well as the expected pension fund cash flows. Using historical
returns of all the funds’ asset classes, expected compound returns were calculated over the short-term
(first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected
nominal returns for both short-term and long-term, the present value of benefits was calculated for each
fund. The expected rate of return was set by calculating the single equivalent expected return that arrived
at the same present value of benefits for cash flows as the one calculated using both short -term and long-
term returns. The expected rate of return was then set equivalent to the singl e equivalent rate calculated
above and rounded down to the nearest one quarter of one percent.
The table below reflects the long-term expected real rate of return by asset class. The rate of return was
calculated using the capital market assumptions applied to determine the discount rate and asset
allocation. These rates of return are net of administrative expenses.
New
Strategic Real Return Real Return
Asset Class Allocation Years 1 - 10 (a)Years 11+ (b)
Global Equity 47.00%5.25%5.71%
Global Fixed Income 19.00%0.99%2.43%
Inflation Sensitive 6.00%0.45%3.36%
Private Equity 12.00%6.83%6.95%
Real Estate 11.00%4.50%5.13%
Infrastructure and Forestland 3.00%4.50%5.09%
Liquidity 2.00%-0.55%-1.05%
Total 100.00%
(b) An expected inflation of 3.0% used for this period.
(a) An expected inflation of 2.5% used for this period.
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate –
The following presents the City’s proportionate share of the net pension liability for the Plan, calculated
using the discount rate for the Plan, as well as what the City’s proportionate share of the net pension
liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-
percentage point higher than the current rate:
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
78
Miscellaneous
1% Decrease 6.65%
Net Pension Liability $ 12,259,343
Current Discount Rate 7.65%
Net Pension Liability $ 6,335,606
1% Increase 8.65%
Net Pension Liability $ 1,439,931
Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s fiduciary net
position is available in the separately issued CalPERS financial reports.
NOTE 8 - NET POSITION
A. Net Investment in Capital Assets
As of June 30, 2017, the net investment in capital assets consisted of the following:
Capital assets, net 121,154,015$
2011 general obligation library bonds (9,585,000)
Net original issue premium (328,386)
Net investment in capital assets 111,240,629$
B. Restricted Net Position
As of June 30, 2017, the restricted net position consisted of the following:
Environmental Special Debt
Services Assessments Service Total
Restricted Net Position 263,182$ 1,152,869$ 959,322$ 2,375,373$
Restricted For
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
79
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
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.
The Silicon Valley Clean Energy Authority (SVCEA) consists of various Silicon Valley agencies formed
to address climate change by reducing energy related greenhouse gas emissions and securing energy
supply and price stability, energy efficiencies and local economic benefits.
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 was no excess of expenditures over appropriations in individual funds during fiscal year 2016/17.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
A. Lawsuits
The City is presently involved in certain matters of litigation that have arisen in the normal course of
conducting City business. City management believes, based upon consultation with the City Attorney,
that these cases, in the aggregate, are not expected to result in a material adverse financial impact on the
City. Additionally, City management believes that the City's insurance programs are sufficient to cover
any potential losses should an unfavorable outcome materialize.
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
80
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 Aud it 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.
C. Commitments
The City had several outstanding contracts or planned construction projects as of June 30, 2017. These
projects are evidenced by contractual commitments with contractors and include:
Guerra Construction Group 1,203,867$ 29,600$
Bellecci & Associates 152,849 46,694
BKF Engineers 33,203 9,089
Peele Technologies 252,160 25,230
Mike Brown Electric Co.32,159 32,159
NBS - Government Finance Group 28,500 21,125
Cotton Shires & Associates 75,724 44,679
Gradetech, Inc 146,000 146,000
Brian's Welding 5,859 5,859
BP-PAK, Inc 154,787 6,947
Engineered Soil Repairs, Inc 84,120 15,044
CivicPlus 55,868 27,934
Metro Design Group 15,000 2,163
Enviroscience, Inc 9,985 999
Union Pacific Railroad 10,000 4,933
Labor Consultants 6,545 6,545
TJKM 3,845 3,793
City of Cupertino 67,127 16,940
Musson Theatrical, Inc 40,604 4,060
Flint Trading, Inc 9,500 9,500
W-Trans 5,000 4,545
Silicon Constellations, Inc 30,812 30,812
PCA Global 1,500 1,500
Zeiger Engineers, Inc 8,300 554
2,433,315$ 496,703$
Vendor
Original
Commitment
Commitment
Remaining
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2017
81
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 as of June 30, 2017.
NOTE 12 – TAX ABATEMENT DISCLOSURES
A. Williamson Act
The City enters into property tax abatement agreements with local property owners under the California
Land Conservation Act of 1965, commonly referred to as the Williamson Act. Under the Act, local
entities may lower property tax assessments on private parcels that have been restricted to agricultural or
open space land use.
For the fiscal year ended June 30, 2017, the City abated property taxes totaling $9,045 under this
program. There were no agreements that exceeded 10 percent of the total amount abated.
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REQUIRED SUPPLEMENTARY INFORMATION
CITY OF SARATOGA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2017
84
NOTE 1 - BUDGETARY INFORMATION
The following is the budget comparison schedules for General Fund.
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES:
Property taxes 11,331,350$ 11,331,350$ 12,003,942$ 672,592$
Sales taxes 1,125,000 1,125,000 1,185,035 60,035
Other local taxes 920,000 920,000 857,050 (62,950)
Licenses & permits 1,470,180 1,470,180 1,455,455 (14,725)
Fines & forfeitures 144,525 144,525 161,398 16,873
Intergovernmental - Fed - - 93,995 93,995
Intergovernmental - State 402,000 402,000 446,244 44,244
Intergovernmental - Other 35,000 35,000 44,241 9,241
Franchise fees 2,075,000 2,075,000 2,170,870 95,870
Use of money & property 552,714 552,714 596,963 44,249
Other revenue 2,168,117 2,168,117 2,097,219 (70,898)
Total revenues 20,223,886 20,223,886 21,112,412 888,526
EXPENDITURES:
Current:
General and intergovernmental services 4,724,422 4,752,508 4,372,235 380,273
Public safety 5,451,665 5,451,665 5,443,759 7,906
Public works 5,427,362 5,492,362 5,490,258 2,104
Community services 1,609,452 1,680,222 1,573,144 107,078
Community development services 2,496,494 2,596,494 2,324,064 272,430
Capital outlay - - - -
Total expenditures 19,709,395 19,973,251 19,203,460 769,791
REVENUES OVER
(UNDER) EXPENDITURES 514,491 250,635 1,908,952 1,658,317
OTHER FINANCING SOURCES (USES):
Transfers in - - 55,384 55,384
Transfers out (1,410,648) (1,620,648) (1,620,648) -
Total other financing sources (uses)(1,410,648) (1,620,648) (1,565,264) 55,384
Net change in fund balances (896,157)$ (1,370,013)$ 343,688 1,713,701$
FUND BALANCES:
Beginning of year 10,640,623
End of year 10,984,311$
CITY OF SARATOGA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2017
85
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 providing 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, 2017
86
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 April
15, 2017. 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 141.1 centerline miles of paved surfaces. The City’s road system can
be grouped by function class and includes 24.2 centerline miles of arterial, 23.2 centerline miles of
collector, and 93.7 miles as residential.
A visual survey of all pavement segments was conducted to assess the existing surface condition of each
of the individual pavement segments. Upon completion of the study, a Pavement Condition Index (PCI)
was calculated for each segment in the City's pavement network to reflect the overall pavement condition.
Rating between 0 and 100, a PCI of 0 would correspond to a badly deteriorated pavement with virtually
no remaining life. A PCI of 100 would correspond to a pavement with proper engineeri ng design and
construction at the beginning of its life cycle. The assessment study was conducted during the fall of
2016.
CITY OF SARATOGA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2017
87
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, 2017, the City's street system was
rated at a PCI index of 71 on average with the detail condition as follows:
Percent of
Condition Streets
Very Good 61%
Good 21%
Poor 11%
Very Poor 8%
The City expended $2,772,821 on street maintenance for the year ended June 30, 2017. These projects
include resurfacing, safety improvements, sidewalks, curbs and gutters, storm drain improvements,
beautification projects, and various other routine maintenance projects help to delay deterioration and
beautify the City’s roadway system. Council has established a goal requiring a minimum of $2,000,000
be budgeted for the CIP Streets program on an annual basis. $12,343,172 is budgeted for various projects
in the five-year CIP cycle for fiscal year 2017/18.
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
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
2013/14 11,191,684 2,079,413 1,651,156 428,256 2,079,413 69
2014/15 10,799,852 2,261,620 1,275,681 985,939 2,261,620 69
2015/16 11,176,888 1,397,415 1,001,104 396,311 1,397,415 69
2016/17 12,006,796 2,772,821 1,927,723 845,098 2,772,821 71
CITY OF SARATOGA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2017
88
As of June 2017, approximately 19 percent of the City's streets were rated below the average standard of
“Good.” 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
(2017-2021) will amount to approximately $21,700,000 for all streets and are expected to be rehabilitated
with a minimum annual budget of $1,000,000.
NOTE 3 – PENSION INFORMATION
Schedule of Proportionate Share of Net Pension Liability
Last Three Fiscal Years
2017 2016 2015
City's Proportion of Net Pension Liability 0.18238%0.15551%0.28104%
City's Proportionate Share of Net Pension Liability 6,335,606$ 4,266,268$ 6,945,916$
City's Covered Employee Payroll 5,908,831$ 6,335,330$ 4,856,304$
City's Proportionate Share of NPL as a % of Covered Employee Payroll 107.22%67.34%143.03%
Plan's Fiduciary Net Position as a % of the TPL 72.69%78.40%83.03%
** Fiscal year 2015 was the first year of implementation, therefore only two years are shown.
Schedule of Contributions - Pension Plans
Last Three Fiscal Years
2017 2016 2015
Contractually Required Contributions (Actuarially Determined)1,016,197$ 3,904,479$ 548,895$
Contributions in Relation to Actuarially Determined Contributions 1,016,197 3,904,479 548,895
Contribution Deficiency (Excess)- - -
Covered Employee Payroll 5,908,831$ 6,335,330$ 4,856,304$
Contributions as a Percentage of Covered Payroll 17.20%61.63%11.30%
Notes to Schedule:
Valuation Date:June 30, 2015
Assumptions Used:Entry Age Method used for Actuarial Cost Method
Level Percentage of Payroll (Closed) Used Amortization Method
3.7 Years Remaining Amortization Period
Inflation Assumed at 2.75%
Investment Rate of Returns set at 7.65%
CalPERS mortality table using 20 years of membership data for all funds
** Fiscal year 2015 was the first year of implementation, therefore only two years are shown.
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SUPPLEMENTARY INFORMATION
91
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 28 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 refunded 2011 Library Improvement Bond.
CITY OF SARATOGA
COMBINING BALANCE SHEETS
NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2017
92
Special
Revenue Debt Service
Lighting and Total
Landscaping Other
Assessment Library Governmental
District Bond Funds
ASSETS
Cash and investments 1,181,286$ 956,579$ 2,137,865$
Receivables:
Accounts 1,066 2,743 3,809
Interest - - -
Total assets 1,182,352$ 959,322$ 2,141,674$
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable 29,483$ -$ 29,483$
Total liabilities 29,483 - 29,483
Fund Balances:
Restricted:
Special revenue funds 1,152,869 - 1,152,869
Debt service - 959,322 959,322
Total fund balances 1,152,869 959,322 2,112,191
Total liabilities and fund balances 1,182,352$ 959,322$ 2,141,674$
CITY OF SARATOGA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2017
93
Special Debt
Revenue Service
Lighting and Total
Landscaping Other
Assessment Library Governmental
District Bond Funds
REVENUES:
Property taxes 259,633$ -$ 259,633$
Special assessment 390,596 879,777 1,270,373
Use of money and property 8,028 4,477 12,505
Other revenue 1 1 2
Total revenues 658,258 884,255 1,542,513
EXPENDITURES:
Current:
General and ingov't services
Public works 511,179 - 511,179
Debt service:
Principal - 475,000 475,000
Interest and fiscal charges - 372,885 372,885
Total expenditures 511,179 847,885 1,359,064
REVENUES OVER
(UNDER) EXPENDITURES 147,078.55 36,370 183,449
OTHER FINANCING SOURCES (USES):
Transfers in - - -
Transfers out - - -
Total other financing sources (uses)- - -
Net change in fund balances 147,079 36,370 183,448
FUND BALANCES:
Beginning of year 1,005,791 922,952 1,928,743
End of year 1,152,869$ 959,322$ 2,112,191$
CITY OF SARATOGA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
CAPITAL IMPROVEMENT
FOR THE YEAR ENDED JUNE 30, 2017
94
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES:
Licenses & permits 451,300$ 451,300$ 452,200$ 900$
Fines & forfeitures - - 9,776 9,776
Intergovermental - federal 6,394,489 6,394,489 860,305 (5,534,184)
Intergovermental - state 662,814 662,814 607,010 (55,804)
Intergovermental - other 921,964 1,075,243 178,229 (897,014)
Use of money and property 35,000 35,000 41,301 6,301
Other revenue 242,869 292,553 105,472 (187,081)
Total revenues 8,708,436 8,911,399 2,254,293 (6,657,106)
EXPENDITURES:
Capital outlay 14,682,682 15,095,645 3,450,314 11,645,331
Total expenditures 14,682,682 15,095,645 3,450,314 11,645,331
REVENUES OVER
(UNDER) EXPENDITURES (5,974,246) (6,184,246) (1,196,021) 4,988,225
OTHER FINANCING SOURCES (USES):
Transfers in 1,552,792 1,762,792 1,834,590 71,798
Transfers out (142,144) (142,144) (269,326) (127,182)
Total other financing sources (uses)1,410,648 1,620,648 1,565,264 (55,384)
Net change in fund balances (4,563,598)$ (4,563,598)$ 369,243 4,932,841$
FUND BALANCES:
Beginning of year 4,716,064
End of year 5,085,307$
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, 2017
95
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES:
Property taxes 228,560$ 228,560$ 259,633$ 31,073$
Special assessments 394,173 394,173 390,596 (3,577)
Use of money and property 2,278 2,278 8,028 5,750
Other revenue - - - -
Total revenues 625,011 625,011 658,257 33,246
EXPENDITURES:
Current:
Public works 714,930 714,930 511,179 203,751
Total expenditures 714,930 714,930 511,179 203,751
REVENUES OVER
(UNDER) EXPENDITURES (89,919) (89,919) 147,078 236,997
OTHER FINANCING SOURCES (USES):
Transfers in - - - -
Transfers out - - - -
Total other financing sources (uses)- - - -
Net change in fund balances (89,919)$ (89,919)$ 147,078 236,997$
FUND BALANCES:
Beginning of year 1,005,791
End of year 1,152,869$
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, 2017
96
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES:
Special assessments 800,000$ 800,000$ 879,777$ 79,777$
Use of money and property 1,300 1,300 4,478 3,178
Total revenues 801,300 801,300 884,255 82,955
EXPENDITURES:
Debt service:
General and ingov't services
Principal 475,000 475,000 475,000 -
Interest and fiscal charges 372,960 372,960 372,885 75
Total expenditures 847,960 847,960 847,885 75
REVENUES OVER
(UNDER) EXPENDITURES (46,660) (46,660) 36,370 83,030
Net change in fund balances (46,660)$ (46,660)$ 36,370 83,030$
FUND BALANCES:
Beginning of year 922,952
End of year 959,322$
97
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.
Facility Furniture, Fixtures & Equipment Replacement Fund – Established to accumulate funding for
the replacement furniture, fixtures and equipment within city facilities. Replacement costs are charged to
programs based on that program’s share of asset use over the asset’s lifespan, reflective of usage.
CITY OF SARATOGA
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF NET POSITION
JUNE 30, 2017
98
Liability /Information
Risk Workers'Office Technology
Management Compensation Stores Services
ASSETS
Current assets:
Cash and investments 550,458$ 295,825$ 111,023$ 320,601$
Accounts receivable -$ -$ -$ 605$
Total current assets 550,458$ 295,825$ 111,023$ 321,206$
Noncurrent assets:
Capital assets:
Machinery and equipment -$ -$ -$ -$
Less: accumulated depreciation -$ -$ -$ -$
Total capital assets (net of
accumulated depreciation) -$ -$ -$ -$
Total assets 550,458$ 295,825$ 111,023$ 321,206$
LIABILITIES
Liabilities:
Current liabilities:
Accounts payable 2,049$ 635$ 1,218$ 3,357$
Accrued payroll 2,927$ 1,138$ -$ 9,777$
Claims payable 41,003$ -$ -$ -$
Total current liabilities 45,979$ 1,773$ 1,218$ 13,134$
NET POSITION
Investment in capital assets -$ -$ -$ -$
Unrestricted 504,479$ 294,052$ 109,805$ 308,072$
Total net position 504,479$ 294,052$ 109,805$ 308,072$
99
Information Building
Vehicle Vehicle Technology Furniture &
and Equipment Building and Equipment Equipment Fixtures
Maintenance Maintenance Replacement Replacement Replacement Total
201,266$ 489,527$ 601,284$ 317,854$ 500,116$ 3,387,954$
-$ 811$ -$ -$ -$ 1,416$
201,266$ 490,338$ 601,284$ 317,854$ 500,116$ 3,389,370$
-$ -$ 1,108,848$ 110,465$ -$ 1,219,313$
-$ -$ (754,601)$ (104,398)$ -$ (858,999)$
-$ -$ 354,247$ 6,067$ -$ 360,314$
201,266$ 490,338$ 955,531$ 323,921$ 500,116$ 3,749,684$
21,045$ 19,912$ 15,297$ 2,556$ 1,747$ 67,816$
3,312$ 15,822$ -$ -$ -$ 32,976$
-$ -$ -$ -$ -$ 41,003$
24,357$ 35,734$ 15,297$ 2,556$ 1,747$ 141,795$
-$ -$ 354,247$ 6,067$ -$ 360,314$
176,909$ 454,604$ 585,987$ 315,298$ 498,369$ 3,247,575$
176,909$ 454,604$ 940,234$ 321,365$ 498,369$ 3,607,889$
CITY OF SARATOGA
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN FUND NET POSITION
FOR THE YEAR ENDED JUNE 30, 2017
100
Liability /Information
Risk Workers'Office Technology
Management Compensation Stores Services
Operating revenues:
Charges for services 350,000$ 175,000$ 50,000$ 525,000$
Other operating revenues 42,698 4,954 9,868 6,057
Total operating revenues 392,698.00 179,954 59,868 531,057
Operating expenses:
Cost of services 264,705 190,303 46,235 497,208
Administration - - - -
Depreciation - - - -
Total operating expenses 264,705 190,303 46,235 497,208
Operating income 127,993 (10,349) 13,633 33,849
Transfers in - - - -
Change in net position 127,993 (10,349) 13,633 33,849
Total net position - beginning 376,486 304,401 96,172 274,223
Total net position - ending 504,479$ 294,052$ 109,805$ 308,072$
101
Information Building
Vehicle Vehicle Technology Furniture &
and Equipment Building and Equipment Equipment Fixtures
Maintenance Maintenance Replacement Replacement Replacement Total
275,000$ 925,000$ 125,000$ 125,000$ 200,000$ 2,750,000$
1 9,424 1 - - 73,003
275,001 934,424 125,001 125,000 200,000 2,823,003
264,042 850,535 4,824 84,041 40,853 2,242,746
- - - - - -
- - 92,704 4,045 - 96,749
264,042 850,535 97,528 88,086 40,853 2,339,495
10,959 83,889.00 27,473 36,914 159,147 483,508
- - - - - -
10,959 83,889 27,473 36,914 159,147 483,508
165,950 370,715 912,761 284,451 339,222 3,124,381
176,909$ 454,604$ 940,234$ 321,365$ 498,369$ 3,607,889$
CITY OF SARATOGA
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2017
102
Liability /Information
Risk Workers'Office Technology
Management Compensation Stores Services
Cash flows from operating activities:
Receipts from customers and users 393,227$ 180,356$ 59,868$ 530,967$
Payments to suppliers (201,038) (161,124) (45,928) (239,348)
Payments to employees (79,618) (28,094) - (257,903)
Net cash provided by operating activities 112,571 (8,862) 13,940 33,716
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 112,571 (8,862) 13,940 33,716
Cash and cash equivalents, beginning of year 437,887 304,687 97,083 286,885
Cash and cash equivalents, ending of year 550,458$ 295,825$ 111,023$ 320,601$
Reconciliation of operating income to net cash provided
by operating activities:
Operating income (loss)127,993$ (10,349)$ 13,633$ 33,849$
Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:
Depreciation - - - -
Other receipts - - - -
Change in operating assets and liabilities:
Accounts receivables 529 402 - (90)
Accounts payable 1,506 635 307 (1,338)
Claims payable (17,960) - - -
Accrued payroll 503.00 450 - 1,295
Net cash provided (used) by operating activities 112,571$ (8,862)$ 13,940$ 33,716$
103
Information Building
Vehicle Vehicle Technology Furniture &
and Equipment Building and Equipment Equipment Fixtures
Maintenance Maintenance Replacement Replacement Replacement Total
275,001$ 934,400$ 125,000$ 125,001$ 200,000$ 2,823,820$
(159,550) (425,077) (4,601) (88,183) (39,106) (1,363,955)
(86,008) (426,628) - - - (878,251)
29,443 82,695 120,399 36,818 160,894 581,614
- - (145,900) - - (145,900)
- - (145,900) - - (145,900)
29,443 82,695 (25,501) 36,818 160,894 435,714
171,823 406,832 626,785 281,036 339,222 2,952,240
201,266$ 489,527$ 601,284$ 317,854$ 500,116$ 3,387,954$
10,959$ 83,889$ 27,473$ 36,914$ 159,147$ 483,508$
- - 92,704 4,045 - 96,749
- - 2 - - 2
- (24) - - - 817
17,707 (7,036) 220 (4,141) 1,747 9,607
- - - - - (17,960)
777 5,866 - - - 8,891
29,443$ 82,695$ 120,399$ 36,818$ 160,894$ 581,614$
104
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105
CAPITAL ASSETS
USED IN THE OPERATION OF GOVERNMENTAL FUNDS
106
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CITY OF SARATOGA
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
COMPARATIVE SCHEDULE BY SOURCE
JUNE 30, 2017 AND 2016
107
2017 2016
Governmental Funds Capital Assets:
Land and land improvements 15,591,925$ 15,591,925$
Buildings and structures 25,986,754 25,986,754
Machinery and equipment 1,954,696 1,954,696
Infrastructure 107,491,009 107,491,009
Construction in progress 8,150,210 7,495,955
Total Governmental Funds Capital Assets 159,174,594 158,520,339
Accumulated depreciation (38,380,896) (36,391,170)
Total Governmental Funds Capital Assets, Net 120,793,698$ 122,129,168$
Investments in Governmental Funds
Capital Assets by Source:
General Fund 115,212,479$ 115,212,479$
Special revenue funds 960,970 960,970
Capital projects funds 42,153,797 41,499,541
Donations 847,348 847,348
Accumulated depreciation (38,380,896) (36,391,170)
Total Governmental Funds Capital Assets 120,793,698$ 122,129,168$
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, 2017
108
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 835,155 62,921
Parks/open space 4,718,585 2,971,928
Total Public Works:5,553,740 3,034,848
Community services 8,177,537 4,412,660
Community development services 1,742,464 14,314,899
Total Governmental Funds Capital Assets 15,591,925 25,986,754
Accumulated depreciation - (10,067,521)
Total Governmental Funds Capital Assets, Net 15,591,925$ 15,919,233$
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.
109
Machinery Construction
and in
Equipment Infrastructure Progress Total
624,241$ -$ 8,283$ 1,197,156$
140,332 - - 661,405
22,225 - - 3,279,050
786,798 - 8,283 5,137,611
15,434 - - 15,434
7,548 - - 7,548
22,982 - - 22,982
315,275 107,363,771 5,441,065 114,018,186
151,110 - 2,355,624 10,197,246
466,385 107,363,771 7,796,689 124,215,433
661,899 127,237 317,621 13,696,955
16,632 - 27,617 16,101,612
1,954,696 107,491,009 8,150,210 159,174,594
(1,275,827) (27,037,548) - (38,380,896)
678,869$ 80,453,461$ 8,150,210$ 120,793,698$
CITY OF SARATOGA
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE OF CHANGE BY FUNCTION AND ACTIVITY
JUNE 30, 2017
110
Governmental Governmental
Funds Capital Funds Capital
Assets Assets
July 1, 2016 Additions Deletions June 30, 2017
Function and Activity
General and intergovernmental services:
Management services 1,663,095$ -$ (465,939)$ 1,197,156$
Administrative services 661,405 - - 661,405$
Intergovernmental services 3,279,050 - - 3,279,050$
Total General and Intergovernmental Services:5,603,550 - (465,939) 5,137,611$
Public safety:
Police services 15,434 - - 15,434$
Code enforcement 7,548 - - 7,548$
Total Public Safety:22,982 - - 22,982$
Public works:
Streets and sidewalks 112,933,216 1,084,971 - 114,018,187$
Parks/open space 7,841,623 2,355,624 - 10,197,247$
Total Public Works:120,774,838 3,440,595 - 124,215,433$
Community services 15,972,063 - (2,275,107) 13,696,956$
Community development services 16,146,904 - (45,293) 16,101,611$
Total Governmental Funds Capital Assets 158,520,338 3,440,595 (2,786,339) 159,174,594$
Accumulated depreciation (36,391,170) (1,989,726) - (38,380,896)$
Total Governmental Funds Capital Assets, Net 122,129,168$ 1,450,869$ (2,786,339)$ 120,793,698$
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.
111
STATISTICAL SECTION
112
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113
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. 114-119
Revenue Capacity
These schedules contain information to help the reader assess the government’s
most significant local revenue source; property tax. 120-129
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. 130-136
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. 137-138
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. 139-145
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 TEN YEARS
(ACCRUAL BASIS OF ACCOUNTING)
114
(amounts expressed in thousands)
2008 2009 2010 2011
Primary government
Governmental activities
Net investment in capital assets 109,818$ 108,818$ 108,966$ 110,016$
Restricted 5,940 5,281 5,519 5,830
Unrestricted 9,710 8,759 8,533 7,964
Total primary government 125,468$ 122,858$ 123,018$ 123,810$
Source: CAFR
Fiscal Year
$95,000
$100,000
$105,000
$110,000
$115,000
$120,000
$125,000
$130,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Net Position by Component
Net investment in capital assets Restricted Unrestricted
115
2012 2013 2014 2015 2016 2017
111,201$ 112,353$ 112,116$ 112,092$ 112,030$ 111,241$
1,938 1,971 2,045 2,138 2,242 2,375
12,248 13,357 15,095 6,691 13,837 13,438
125,387$ 127,681$ 129,256$ 120,921$ 128,109$ 127,054$
CITY OF SARATOGA
CHANGES IN NET POSITION
LAST TEN YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
116
(amounts expressed in thousands)
2008 2009 2010 2011
Expenses:
Governmental activities:
General and intergovernmental services 6,293$ 5,595$ 3,729$ 4,368$
Public safety 4,166 4,211 4,339 4,457
Public works 5,325 7,643 6,535 6,645
Community services 1,286 1,634 1,711 1,846
Community development services 2,032 2,000 1,751 1,839
Interest on long-term debt (unallocated)714 697 677 656
Total governmental activities expenses 19,816 21,780 18,742 19,811
Program revenues:
Charges for services:
General and intergovernmental services 1,787 133 125 171
Public safety 411 520 425 561
Public works 1,705 2,379 2,535 2,771
Community services 911 935 917 1,020
Community development services 2,110 1,802 1,586 1,734
Operating grants and contributions 151 228 275 401
Capital grants and contributions 1,715 339 674 1,221
Total governmental activates program revenues 8,790 6,336 6,537 7,879
Net (expense) revenue and change in net assets (11,026) (15,444) (12,205) (11,932)
General revenue and other changes in net assets
Taxes:
Property taxes 8,099 8,336 8,371 8,199
Sales taxes 1,058 1,043 955 991
Local taxes 694 663 560 632
Franchise taxes 1,625 1,657 1,664 1,821
Motor vehicle in-lieu 149 116 101 146
Total Taxes 11,625 11,815 11,651 11,789
Intergovernmental 841 474 522 773
Investment earnings 1,057 397 101 65
Other revenues 348 148 91 97
Total general revenues 13,871 12,834 12,365 12,724
Change in net position 2,845 (2,610) 160 792
Net position - beginning of year 122,623 125,468 122,858 123,018
GASB 68 adjustment - - - -
Net position - beginning of year, as adjusted 122,623 125,468 122,858 123,018
Net position - end of year 125,468$ 122,858$ 123,018$ 123,810$
Source: CAFR
Fiscal Year
117
2012 2013 2014 2015 2016 2017
3,486$ 4,143$ 4,522$ 7,566$ 5,143$ 6,450$
4,300 4,382 4,491 4,850 4,787 5,444
9,121 6,922 7,379 6,273 6,181 9,164
1,996 1,804 1,586 1,589 1,582 1,557
1,553 1,713 2,179 1,962 2,012 2,906
453 410 400 391 381 367
20,909 19,374 20,557 22,631 20,086 25,888
140 102 120 122 98 153
594 607 330 354 310 327
2,079 3,316 2,768 2,474 3,004 2,462
890 946 958 952 1,114 1,071
1,923 2,184 2,220 2,234 2,397 2,127
1,319 75 117 107 165 223
2,337 599 808 785 183 1,062
9,282 7,829 7,321 7,028 7,271 7,425
(11,627) (11,545) (13,236) (15,603) (12,815) (18,463)
8,457 9,153 9,737 10,669 11,549 12,264
1,101 1,051 941 1,224 1,189 1,185
683 769 822 866 898 857
1,852 1,920 1,949 2,070 2,069 2,171
16 16 14 13 12 13
12,109 12,909 13,463 14,842 15,717 16,490
910 766 981 1,023 718 589
67 51 62 67 101 124
118 113 305 237 273 205
13,204 13,839 14,811 16,169 16,809 17,408
1,577 2,294 1,575 566 3,994 (1,055)
123,810 125,387 127,681 129,256 120,921 128,108
- - - (8,901) 3,193 -
123,810 125,387 127,681 120,355 124,114 128,108
125,387$ 127,681$ 129,256$ 120,921$ 128,108$ 127,054$
CITY OF SARATOGA
FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
118
(amounts expressed in thousands)
2008 2009 2010 2011
General fund:
Restricted 679$ 613$ 563$ 513$
Committed - 550 300 500
Assigned 1,258 322 196 667
Unassigned 8,459 6,744 6,952 5,804
Total general fund 10,396$ 8,229$ 8,011$ 7,484$
All other governmental funds:
Restricted
Special revenue funds 318$ 484$ 569$ 504$
Debt service 854 931 893 851
Committed
Capital project funds 4,768 3,866 4,057 4,475
Total all other governmental funds 5,940$ 5,281$ 5,519$ 5,830$
Source: CAFR
Balances 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
$9,000
General -
Restricted
General -
Committed
General -
Assigned
General -
Unassigned
Debt
Service
Special
Revenue
Capital
Projects
Fund Balances of Governmental Funds
2008
2009
2010
2011
2012
2013
2014
2012
2016
2017
119
2012 2013 2014 2015 2016 2017
513$ 463$ 413$ 363$ 313$ 263$
600 675 993 1,000 1,000 790
3,161 792 2,648 2,854 2,672 3,272
4,655 7,989 7,782 5,589 6,655 6,659
8,929$ 9,919$ 11,836$ 9,806$ 10,640$ 10,984$
563$ 622$ 734$ 868$ 1,006$ 1,153$
862 886 898 907 923 959
3,544 3,420 3,126 3,859 4,716 5,085
4,969$ 4,928$ 4,758$ 5,634$ 6,645$ 7,197$
CITY OF SARATOGA
GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE
LAST TEN YEARS
(ACCRUAL BASIS OF ACCOUNTING)
120
(amounts expressed in thousands)
2008 2009 2010 2011
Tax revenues:
Property taxes 8,099$ 8,336$ 8,371$ 8,199$
Special assessments 1,392 1,368 1,247 1,255
Sales taxes 1,058 1,043 955 991
Local taxes 694 663 560 632
Franchise taxes 1,625 1,657 1,664 1,821
Motor vehicle in-lieu 149 116 101 146
Total tax revenues 13,017$ 13,183$ 12,898$ 13,044$
Source: CAFR
Fiscal Year
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
Property
taxes
Special
assessments
Sales taxes Local taxes Franchise
taxes
Motor vehicle
in-lieu
Tax Revenues by Source
2008
2009
2010
2011
2012
2013
2014
2012
2016
2017
121
2012 2013 2014 2015 2016 2017
8,457$ 9,153$ 9,737$ 10,669$ 11,549$ 12,264$
1,243 1,185 1,207 1,220 1,222 1,270
1,101 1,051 941 1,224 1,189 1,185
683 769 822 866 898 857
1,852 1,920 2,024 2,069 2,068 2,171
16 16 14 13 12 14
13,352$ 14,094$ 14,745$ 16,061$ 16,938$ 17,761$
CITY OF SARATOGA
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
122
(amounts expressed in thousands)
2008 2009 2010 2011
Revenues:
Property taxes 7,877$ 8,335$ 8,371$ 8,199$
Special assessments 1,566 1,368 1,247 1,255
Sales taxes 1,058 1,043 954 991
Other local taxes 773 663 560 632
Licenses and permits 1,671 1,460 1,489 1,950
Fines and forfeitures 344 360 359 285
Intergovernmental - federal - - 430 1,033
Intergovernmental - state 1,641 1,283 1,258 1,480
Intergovernmental - other 777 290 258 337
Franchise fees 1,622 1,657 1,664 1,821
Use of money any property 924 794 595 550
Other revenues 326 1,966 1,794 2,169
Current services charges 4,184 - - -
Total tax revenues 22,763 19,219 18,979 20,702
Expenditures:
Current:
General and intergovernmental services 4,083 3,330 3,102 3,524
Public safety 4,166 4,206 4,349 4,467
Public works 4,717 4,700 4,730 4,717
Community services 1,262 1,424 1,223 1,322
Community development services 2,026 2,450 2,111 2,193
Capital outlay 4,246 4,060 2,584 3,704
Debt service:
Principal 295 310 330 350
Interest and fiscal charges 721 705 685 665
Total expenditures 21,515 21,185 19,114 20,942
Excess of revenues 1,248 (1,966) (135) (240)
Other financing sources (uses):
Transfers in 2,241 2,043 1,172 1,725
Transfers out (2,241) (2,043) (1,017) (1,700)
Total other financing sources (uses)- - 155 25
Net change in fund balances 1,248$ (1,967)$ 20$ (215)$
Debt as a percentage of noncapital expenditures 5.63%4.89%5.80%5.56%
Source: CAFR
Fiscal Year
CITY OF SARATOGA
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
123
2012 2013 2014 2015 2016 2017
8,457$ 9,153$ 9,737$ 10,669$ 11,549$ 12,264$
1,243 1,185 1,207 1,220 1,222 1,270
1,101 1,051 941 1,224 1,189 1,185
683 769 823 866 898 857
1,728 2,177 2,023 1,613 2,216 1,908
234 199 196 175 248 171
1,915 975 796 651 158 954
1,728 1,142 1,410 1,538 1,182 1,053
73 269 129 97 76 222
1,852 1,920 1,949 2,070 2,068 2,171
589 527 521 557 647 651
2,199 2,421 2,547 2,589 2,709 2,203
- - - - - -
21,802 21,788 22,279 23,269 24,162 24,909
3,145 3,269 3,247 6,624 4,246 4,372
4,310 4,392 4,491 4,860 5,226 5,444
4,751 4,966 5,243 5,381 5,701 6,002
1,269 1,318 1,383 1,328 1,475 1,573
1,888 2,047 2,182 2,087 2,193 2,324
5,179 3,979 3,096 3,253 2,591 3,450
370 455 485 495 500 475
551 414 405 395 385 373
21,463 20,840 20,532 24,423 22,317 24,013
339 948 1,747 (1,154) 1,845 896
510 1,291 785 1,768 3,580 3,580
(485) (1,291) (785) (1,768) (3,580) (3,580)
25 220 - - - -
364$ 1,168$ 1,747$ (1,154)$ 1,845$ 896$
4.68%4.76%4.58%3.92%4.21%3.63%
CITY OF SARATOGA
PROPERTY TAX RATES – DIRECT AND OVERLAPPING GOVERNMENTS
LAST TEN YEARS
124
(Property Tax Rates per $100 of Assessed Value)
2008 2009 2010 2011
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 0.0113 0.0104 0.0094 0.0094
1.0525 1.0516 1.0506 1.0506
Campbell School District 0.0475 0.0524 0.0285 0.0249
County Bond 2008 Hospital 0.0000 0.0000 0.0122 0.0095
Campbell Elementary 2002 0.0000 0.0000 0.0267 0.0298
Campbell Elementary 2010 0.0000 0.0000 0.0000 0.0005
Campbell Union High 1999 0.0285 0.0299 0.0183 0.0196
Campbell Union High 2006 0.0000 0.0000 0.0131 0.0131
Cupertino Elementary School District 0.0337 0.0306 0.0000 0.0000
Moreland Elementary School District 0.0569 0.0565 0.0000 0.0000
Saratoga School District 0.0363 0.0363 0.0000 0.0000
Campbell Union High School District 0.0285 0.0299 0.0000 0.0000
Fremont Union High School District 0.0241 0.0339 0.0000 0.0000
Los Gatos-Saratoga Joint Union High School District 0.0345 0.0330 0.0000 0.0000
Foothill-DeAnza Community College District 0.0113 0.0123 0.0000 0.0000
West Valley Community College District 2004 0.0118 0.0032 0.0140 0.0139
West Valley Community College District 2012 0.0000 0.0000 0.0000 0.0000
Mid Peninsula Open Space 2014 0.0000 0.0000 0.0000 0.0000
Saratoga Fire District 0.0053 0.0053 0.0000 0.0000
Santa Clara Valley Water District - State Water Project 0.0067 0.0059 0.0071 0.0070
Santa Clara Valley Water District - Zone W-1 0.0040 0.0002 0.0003 0.0002
0.3291 0.3294 0.1202 0.1185
Total Tax Rate 1.3816 1.3810 1.1708 1.1691
Source: Muniservices, LLC
Fiscal Year
125
2012 2013 2014 2015 2016 2017
1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
0.0388 0.0388 0.0388 0.0388 0.0388 0.0388
0.0024 0.0024 0.0024 0.0024 0.0024 0.0024
0.0088 0.0080 0.0074 0.0070 0.0065 0.0060
1.0500 1.0492 1.0486 1.0482 1.0477 1.0472
0.0283 0.0246 0.0264 0.0235 0.0220 0.0294
0.0047 0.0051 0.0035 0.0091 0.0088 0.0086
0.0266 0.0220 0.0288 0.0172 0.0196 0.0258
0.0003 0.0086 0.0000 0.0145 0.0136 0.0000
0.0186 0.0165 0.0134 0.0130 0.0119 0.0126
0.0156 0.0160 0.0156 0.0154 0.0138 0.0126
0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
0.0137 0.0139 0.0125 0.0101 0.0118 0.0096
0.0000 0.0150 0.0130 0.0019 0.0114 0.0100
0.0000 0.0000 0.0000 0.0008 0.0008 0.0006
0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
0.0063 0.0069 0.0070 0.0057 0.0057 0.0086
0.0001 0.0000 0.0000 0.0000 0.0000 0.0000
0.1142 0.1286 0.1202 0.1112 0.1194 0.1178
1.1642 1.1778 1.1688 1.1594 1.1671 1.1650
CITY OF SARATOGA
ASSESSED VALUE OF TAXABLE PROPERTY
LAST TEN YEARS
126
(amounts expressed in thousands)
Fiscal
Year Total
Ended Residential Commercial Industrial Other Unsecured Assessed
June 30 Property Property Property Property Property Property
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
2014 11,158,775 113,915 11,684 352,830 59,684 11,696,888
2015 11,775,973 117,466 11,737 361,202 56,354 12,322,732
2016 12,581,463 134,321 11,143 397,318 50,193 13,174,438
2017 13,227,811 141,391 10,245 426,257 45,838 13,851,542
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
$14,000,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Total Assessed Property
Unsecured
Other
Industrial
Commercial
Residential
127
Total
Less:Total Taxable Direct
Tax Exempt Assessed Tax
Real Property Value Rate
(159,369) 9,329,953 1.0525
(161,488) 9,934,362 1.0516
(230,127) 10,011,093 1.0506
(230,477) 9,907,260 1.0506
(230,868) 10,103,250 1.0476
(233,895) 10,601,175 1.0492
(238,683) 11,458,205 1.0486
(242,724) 12,080,008 1.0482
(232,693) 12,941,745 1.0477
(232,279) 13,619,263 1.1650
CITY OF SARATOGA
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
JUNE 30, 2017
128
(amounts expressed in thousands)
% of Total % of Total
Taxable Taxable Taxable Taxable
Assessed Assessed Assessed Assessed
Taxpayer Value Rank Value Value Rank Value
SHP Saratoga II LLC 71,088$ 1 0.52%
San Jose Water Works 21,929 2 0.16%11,460 6 0.12%
House Trustee 17,162 3 0.13%15,127 5
Keller Trustee 14,923 4 0.11%
Argonaut Associates, LLC 13,740 5 0.10%10,102 9 0.11%
Stormin Norman, LLC 13,107 6 0.10%
HJJ, LLC 12,870 7 0.09%
Paramount Venture LLC 12,000 8 0.09%
Coyote Properties IV, LLC 11,457 9 0.08%
Krishnamurthi Trustee 11,000 10 0.08%10,034 10 0.11%
Cupertino Village Ass LLC 33,535 1 0.36%
Sobrato Trustee 19,175 2 0.21%
Quito Village Group, LLC 17,658 3 0.19%
Gregpenn Properties, LLC 15,288 4 0.16%
Luczo Trustee 10,478 7 0.11%
Morrison Trustee 10,184 8 0.11%
Top Ten Total Assessed Value 199,276$ 153,041$
City Total Assessed Value 13,619,263$ 9,272,766$
Source: Santa Clara County Assessor data, MuniServices, LLC
2017 2008
CITY OF SARATOGA
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN YEARS
129
Fiscal Year Total Tax Collections in
Ended Levy for Subsequent
June 30 Fiscal Year Amount Percentage Years Amount Percentage
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%
2014 9,737,144 9,737,144 100.0%- 9,737,144 100.0%
2015 10,669,281 10,669,281 100.0%- 10,669,281 100.0%
2016 11,549,213 11,549,213 100.0%- 11,549,213 100.0%
2017 12,263,575 12,263,575 100.0%- 12,263,575 100.0%
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 TEN YEARS
130
(amounts expressed in thousands, except per capita amounts)
2008 2009 2010 2011
Governmental activities
General obligation bonds 13,595$ 13,285$ 12,955$ 12,605$
Net original issue premium - - - -
Total primary government 13,595$ 13,285$ 12,955$ 12,605$
Percentage of Personal Income 1 0.74%0.76%0.54%0.57%
Per capita 2 430 419 405 417
Source: CAFR
1US Census Bureau, adjusted for inflation, MuniServices LLC
2Population information from California State Controller's Office
Fiscal Year
131
2012 2013 2014 2015 2016 2017
11,995$ 11,540$ 11,055$ 10,560$ 10,060$ 9,585$
438 416 394 372 350 328
12,433$ 11,956$ 11,449$ 10,932$ 10,410$ 9,913$
0.57%0.53%0.49%0.47%0.45%0.40%
409 389 371 355 344 324
CITY OF SARATOGA
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN YEARS
132
(amounts expressed in thousands, except per capita amounts)
2008 2009 2010 2011
General obligation bonds 13,595$ 13,285$ 12,955$ 12,605$
Net original issue premium - - - -
Less: Amount available in debt service fund (854) (926) (890) (848)
Total primary government 12,741$ 12,359$ 12,065$ 11,757$
Percentage of actual taxable
value of property 0.14%0.12%0.12%0.12%
Per capita1 403 390 377 389
Source: CAFR
1Population information from California State Controller's Office
Fiscal Year
133
2012 2013 2014 2015 2016 2017
11,995$ 11,540$ 11,055$ 10,560$ 10,060$ 9,585$
438 416 394 372 350 328
(860) (885) (898) (906) (923) (959)
11,573$ 11,071$ 10,551$ 10,026$ 9,487$ 8,954$
0.11%0.10%0.09%0.08%0.07%0.07%
381 361 342 326 314 293
CITY OF SARATOGA
LEGAL DEBT MARGIN INFORMATION
LAST TEN YEARS
134
(amounts expressed in thousands)
2008 2009 2010 2011
Debt Limit 1,423,398$ 1,514,378$ 1,536,183$ 1,520,660$
Total net debt applicable to limit 12,741 12,359 12,065 11,757
Legal debt margin 1,410,657$ 1,502,019$ 1,524,118$ 1,508,903$
Total net debt applicable to the limit
as a percentage of debt limit 0.90%0.82%0.79%0.77%
Legal debt margin calculation
Assessed value 9,329,953$ 9,934,362$ 10,011,093$ 9,907,259$
Add back: exempt real property 159,369 161,488 230,127 230,477
Total assessed value 9,489,322$ 10,095,850$ 10,241,220$ 10,137,736$
Debt limit (15% of total assessed value)1,423,398$ 1,514,378$ 1,536,183$ 1,520,660$
Debt applicable to limit:
General obligation bonds 13,595$ 13,285$ 12,955$ 12,605$
Net original issue premium - - - -
Less: Amount available in debt service fund (854) (926) (890) (848)
Total net debt applicable to limit 12,741$ 12,359$ 12,065$ 11,757$
Legal debt margin 1,410,657$ 1,502,019$ 1,524,118$ 1,508,903$
Source: CAFR
Fiscal Year
135
2012 2013 2014 2015 2016 2017
1,550,118$ 1,625,261$ 1,754,233$ 1,848,410$ 1,976,166$ 2,077,731$
11,135 10,655 10,157 9,654 9,137 8,626
1,538,983$ 1,614,606$ 1,744,076$ 1,838,756$ 1,967,029$ 2,069,105$
0.72%0.66%0.58%0.52%0.46%0.42%
10,103,250$ 10,601,175$ 11,458,205$ 12,080,008$ 12,941,745$ 13,619,263$
230,868 233,895 236,683 242,724 232,693 232,279
10,334,118$ 10,835,070$ 11,694,888$ 12,322,732$ 13,174,438$ 13,851,542$
1,550,118$ 1,625,261$ 1,754,233$ 1,848,410$ 1,976,166$ 2,077,731$
11,995$ 11,540$ 11,055$ 10,560$ 10,060$ 9,585$
438 416 394 372 350 328
(860) (885) (898) (906) (923) (959)
11,135$ 10,655$ 10,157$ 9,654$ 9,137$ 8,626$
1,538,983$ 1,614,606$ 1,744,076$ 1,838,756$ 1,967,029$ 2,069,105$
CITY OF SARATOGA
DIRECT AND OVERLAPPING
GOVERNMENTAL ACTIVITIES DEBT
136
(amount expressed in thousands)
Estimated
Estimated Share of
Debt Percentage Overlapping
Outstanding Applicable1 Debt
Direct Debt:
City of Saratoga 9,585$ 100.000%9,585$
Total Direct Debt 9,585
Overlapping Tax and Assessment Debt:
Santa Clara County 784,845 3.264%25,617
Foothill-De Anza Community College District 649,079 1.510%9,801
West Valley Community College District 407,296 9.496%38,677
Campbell Union High School District 215,895 5.565%12,015
Fremont Union High School District 364,345 3.365%12,260
Los Gatos-Saratoga Joint Union High School District 114,990 38.642%44,434
Campbell Union School District 181,299 6.747%12,232
Cupertino Union School District 281,214 5.738%16,136
Moreland School District 111,312 13.039%14,514
Saratoga Union School District 30,006 86.512%25,959
Saratoga Fire Protection District 3,165 97.584%3,089
Midpeninsula Regional Open Space District 44,225 5.585%2,470
Santa Clara Valley Water District Benefit Assessment 90,945 3.264%2,968
Total Overlapping Tax and Assessment Debt 220,172
Overlapping General Fund Debt:
Santa Clara County General Fund Obligations 634,190$ 3.264%20,700$
Santa Clara County Pension Obligations 362,471 3.264%11,831
Santa Clara County Board of Education
Certificates of Participation 5,690 3.264%186
Santa Clara County Vector Control District
Certificates of Participation 2,685 3.264%88
Foothill-De Anza Community College District
Certificates of Participation 30,831 1.510%466
West Valley-Mission College District
General Fund Obligations 63,715 9.496%6,050
Campbell Union High School District
Certificates of Participation 15,165 5.565%844
Los Gatos-Saratoga Joint Union High School District
Certificates of Participation 5,495 38.642%2,123
Campbell Union High School District
Certificates of Participation 3,090 6.747%208
Saratoga Union School District
Certificates of Participation 4,260 86.512%3,685
Midpeninsula Open Space Park District
General Fund Obligations 112,144 5.585%6,263
Total Overlapping General Fund Debt 52,444
Total Overlapping Tax & Assessment and General Fund Debt 272,616
Combined Total Debt2 282,201$
1Percentage of overlapping agency's assessed valuation located within boundaries of the city.
2Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation
bonds and non-bonded capital lease obligations.
Source: Muniservices, LLC
CITY OF SARATOGA
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN YEARS
137
Personal Per Capita
Fiscal City Income Personal Labor Unemployment
Year Population1 (in thousands)2 Income2 Force3 Rate 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%
2014 30,887 2,243,458 72,634 14,200 3.4%
2015 30,799 2,248,481 73,005 15,100 2.7%
2016 30,219 2,239,926 74,123 14,700 2.9%
2017 30,569 2,374,919 77,690 14,600 2.7%
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
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Labor Force vs. Population
Population
Labor Force
CITY OF SARATOGA
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO AT JUNE 30, 2017
138
Percentage Percentage
of Total City of Total City
Employer Employees Rank Employment Employees Rank Employment
West Valley Community College 408 1 2.79%-
Saratoga Retirement Community 290 2 1.99%-
Saratoga Union School District 240 3 1.64%-
Sub-Acute Saratoga Hospital 146 4 1.00%-
Saratoga High School 124 5 0.85%-
Our Lady Fatima Villa 107 6 0.73%-
Prospect High School 100 7 0.68%-
Safeway 85 8 0.58%65 2 0.50%
City of Saratoga 68 9 0.47%-
Gene's Fine Foods 60 10 0.41%85 1 0.65%
Saratoga Country Club 65 3 0.50%
24 Hour Fitness 20 4 0.15%
Longs Drugs 20 5 0.15%
Classic Car Wash 20 6 0.15%
Harmonie European Day Spa 20 7 0.15%
Hinshaw, Draa & Marsh 20 8 0.15%
Jakes of Saratoga 20 9 0.15%
Bella Saratoga 18 10 0.14%
Total City Employment1 14,600 13,100
1EDD Labor Market Information Division, MuniServices LLC
2017 20081
139
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CITY OF SARATOGA
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION
LAST TEN FISCAL YEARS
140
2008 2009 2010 2011
Function
General government 13.00 12.00 11.75 11.45
Public works 22.75 21.75 21.75 21.65
Community development 14.00 14.00 12.00 12.00
Parks and recreation 10.60 10.60 9.35 9.50
Total 60.35 58.35 54.85 54.60
Source: City of Saratoga Budget Document
Fiscal Year
-
10
20
30
40
50
60
70
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Full-Time Equivalents
Parks & Rec
Comm Development
Public works
General gov't
141
2012 2013 2014 2015 2016 2017
10.80 10.90 13.65 13.70 13.70 13.65
21.55 20.65 20.75 20.65 20.65 20.65
12.00 11.00 12.00 12.00 12.00 12.00
9.50 9.60 9.60 9.55 9.55 8.35
53.85 52.15 56.00 55.90 55.90 54.65
CITY OF SARATOGA
OPERATING INDICATORS BY FUNCTION
LAST TEN FISCAL YEARS
142
2008 2009 2010 2011
Function
Part 1 crimes1 381 282 173 373
Total incidents 41,243 41,384 39,942 41,642
Police reports 1,941 1,949 1,273 1,549
Public Works
Street resurfacing (miles)- 6 3 -
Street lights repaired 12 25 24 25
Potholes filled (sq. ft.)7,000 10,000 10,000 11,000
Community Development
Total permit valuation ($000)70,442 61,117 44,658 50,936
Parks and Recreation
Classes, trips (enrollment) community events 4,782 4,698 4,366 6,135
Adult Exercise (e.g. JS Dance. Jazzerxcise)362 515 545 661
Sports programs (e.g. Adult basketball, softball)591 459 423 -
Preschool programs (enrollment)225 171 161 142
Staffed Day/summer camps (enrollment)242 225 331 326
Teen/youth council (enrollment)94 419 2,110 1,323
Senior center (enrollment/attendance days)17,826 16,325 16,533 14,640
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
143
2012 2013 2014 2015 2016 2017
287 277 408 315 463 301
35,664 40,141 41,228 40,695 39,213 38,893
1,329 1,106 978 917 1,334 1,295
6 6.2 4.3 2.5 15.2 0
41 29 34 39 33 37
10,000 12,060 11,000 10,500 21,010 13,000
59,675 79,896 79,702 89,929 75,599 106,631
5,479 5,365 6,235 8,390 5,898 5,081
647 1,663 2,173 1,650 2,099 2,824
- - - - - -
132 188 274 186 180 221
- 45 160 90 172 71
787 605 673 747 848 1,049
15,221 12,269 12,941 10,786 10,063 24,336
CITY OF SARATOGA
CAPITAL ASSET STATISTICS BY FUNCTION
LAST TEN FISCAL YEARS
144
2008 2009 2010 2011
Function
Public safety
Police Station - - - -
Fire Station
Saratoga Fire District 1 1 1 1
Central Fire District 1 1 1 1
Public Works
Street Miles - Private 13 14 14 14
Street Miles - Public 137 140 140 140
West Valley Sanitation District
Number of Connections 8,651 8,683 8,687 8,664
Length of Sewer Lines 127 127 127 127
Cupertino Valley Sanitation District
Number of Connections 2,927 2,938 2,949 2,954
Length of Sewer Lines 36 37 37 37
Parks and Recreation
Parks Acreage 81 84 84 84
Parks 15 15 15 15
Source: City of Saratoga various records
Fiscal Year
145
2012 2013 2014 2015 2016 2017
- - - - - -
1 1 1 1 1 1
1 1 1 1 1 1
14 14 14.5 14.5 14.5 14.5
140 141 142 142 142 142
8,679 8,821 8,919 8,402 8,488 8,563
127 127 127 128 129 126
2,959 2,961 2,963 2,963 2,963 2,963
37 37 37 37 37 37
84 84 84 84 148 148
15 15 15 15 16 16