HomeMy WebLinkAbout01.14.2022 Finance Committee Agenda Packet of SARq SARATOGA CITY COUNCIL
FINANCE COMMITTEE
1956
�44IFO P January 14, 2022
3:30 P.M. REGULAR MEETING
Teleconference/Public Participation Information to Mitigate the Spread of COVID-19
This meeting will be held entirely by teleconference. All members of the Committee and staff
will only participate via the Zoom platform using the process described below. The meeting is
being conducted pursuant to recent amendments to the teleconference rules required by the
Ralph M. Brown Act allowing teleconferencing during a proclaimed state of emergency when
local officials have recommended social distancing. The purpose of the amendments is to
provide the safest environment for the public, elected officials, and staff while allowing for
continued operation of the government and public participation during the COVID-19
pandemic.
Members of the public can view and participate in the meeting by:
1. Using the Zoom website https://us02web.zoom.us/*/81786009076 or App Webinar ID:
817 8600 9076 and raising their hand to speak on an agenda item when directed by the
Mayor.
2. Calling 1.669.900.6833 or 1.408.638.0968 and pressing *9 to raise their hand to speak
on an agenda item when directed by the Mayor.
The public will not be able to participate in the meeting in person.
Members of the public can send written comments prior to the meeting by commenting online
at www.saratoga.ca.us/fc prior to the start of the meeting. These emails will be provided to the
members of the Council and will become part of the official record of the meeting.
CALL TO ORDER
ROLL CALL
ORAL COMMUNICATIONS ON NON-AGENDIZED ITEMS
Any member of the public may address the Committee about any matter not on the agenda for
this meeting for up to three (3) minutes. The law generally prohibits the Committee from
discussing or taking action on such items. The Committee may choose to place the topic on a
future agenda.
City Council Finance Committee Agenda -January 14, 2022
Page 1
AGENDA ITEMS
1. Finance Committee Minutes
Recommended Action:
Review and approve the minutes for the November 18, 2021 meeting.
Finance Committee Minutes
2. Summary Overview
• Annual Comprehensive Financial Report (ACFR)
• Single Audit
Recommended Action:
Receive verbal presentation by Chavan and Associates, LLC, the City's audit firm.
Staff Report
Attachment A- FY 2020-21 Annual Comprehensive Financial Report
Presentation - Summary Overview ACFR and Single Audit
ADJOURNMENT
CERTIFICATE OF POSTING OF THE AGENDA, DISTRIBUTION OF THE AGENDA PACKET,
COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT
I, Gina Scott, Administrative Analyst for the City of Saratoga, declare that the foregoing agenda
for the meeting of the City Council Finance Committee of the City of Saratoga was posted and
available for public review on January 11, 2022, at the City of Saratoga, 13777 Fruitvale Ave.,
Saratoga, CA 95070, and on the City's website at www.saratoga.ca.us.
Signed this 111" day of January 2022 at Saratoga, California.
Gina Scott, Administrative Analyst
In accordance with the Ralph M. Brown Act, copies of the staff reports and other materials
provided to the Committee by City staff in connection with this agenda, copies of materials
distributed to the Committee concurrently with the posting of the agenda, and materials
distributed to the Committee by staff after the posting of the agenda are available on the City
website at www.saratoga.ca.us and are available for review in the office of the City Clerk at
13777 Fruitvale Avenue, Saratoga, California.
In compliance with the Americans with Disabilities Act and the Governor's Executive Order, if
you need assistance to participate in this meeting, please contact the City Clerk at
bavrit@saratoga.ca.us or calling 408.868.1216 as soon as possible before the meeting. The City
will use its best efforts to provide reasonable accommodations to provide as much accessibility
as possible while also maintaining public safety.
[28 CFR 35.102-35.104 ADA title 11]
City Council Finance Committee Agenda -January 14, 2022
Page 2
MINUTES
SARATOGA CITY COUNCIL FINANCE COMMITTEE
REGULAR MEETING
NOVEMBER 18, 2021
CALL TO ORDER
The meeting was called to order at 3:00 p.m. via Zoom.
ROLL CALL
Present: Mayor Yan Zhao, Vice Mayor Tina Walia, Council Member Mary-Lynne Bernald
Also Present: City Manager fames Lindsay, Interim Administrative Services Director Sandra Dalida,
Interim Finance Manager Maggie Huang, Assistant City Manager Crystal Bothelio
ORAL COMMUNICATIONS ON NON-AGENDIZED ITEMS
None
AGENDA ITEMS
1. Finance Committee Minutes
Recommended Action:
Review and approve the minutes for the September 23, 2021 meeting.
WALIA/ZHAO MOVED TO APPROVE THE MINUTES FOR THE SEPTEMBER 23, 2021 MEETING.
MOTION PASSED. AYES: WALIA, ZHAO. NOES: NONE. ABSTAIN: NONE.
2. American Rescue Plan Act (ARPA) Grant Funding Budget Adjustment Update
Recommended Action:
Receive verbal update on the ARPA Grant Funding Budget adjustment.
Interim Administrative Services Director Sandra Dalida provided an update on the ARPA Grant
Funding Budget Adjustment, explaining the reasons for the delay and noting that the budget
adjustment is now scheduled for a subsequent City Council Meeting.
ADJOURNMENT
The meeting was adjourned at 3:11 p.m.
Minutes respectfully submitted:
Sandra Dalida, Interim Administrative Services Director
City of Saratoga
City Council Finance Committee Minutes - November 18, 2021
Page 1 3
*1A
SARATOGA CITY COUNCIL
FINANCE COMMITTEE
MEETING DATE: January 14,2022
DEPARTMENT: Finance &Administrative Services
PREPARED BY: Sandra Dalida, Interim Administrative Services Director
SUBJECT: Summary Overview—Annual Comprehensive Financial Report and
Single Audit
A verbal report is being presented to the Finance Committee to provide a summary overview of the
purpose and requirements associated with the Annual Comprehensive Financial Report (ACFR) and
Single Audit.
The ACFR is a set of U.S. government financial statements comprising the financial report of a state,
municipal or other governmental entity that complies with the accounting requirements enacted by the
Government Accounting Standards Board(GASB), and provides accurate and meaningful information
concerning the entity's financial condition and performance.
The Government Accounting Standards Board (GASB) creates the accounting reporting standards or
generally accepted accounting principles (GAAP) for state and local governments in the United States.
In June of 1999, the Governmental Accounting Standards Board issued Statement 34 (commonly
known as GASB 34) expanded and changed financial reporting requirements for state and local
governments in conformance with GAAP. Entities are required to engage an external certified public
accounting firm to audit financial reports using GASB requirements.
Accordingly, the City contracts with Chavan and Associates, LLP, a certified public accounting firm
licensed by the State of California, to perform the various required financial audits. As required,
Chavan and Associates, LLP, audited the City's financial statements in the ACFR as of and for the
year ended June 30, 2021 to assess and render an opinion on whether the City's financial statement
reports are presented fairly, to obtain reasonable assurance as to whether the financial statements are
free of material misstatements, and are in conformity to applicable generally accepted accounting
principles. Chavan and Associates, LLP, expressed an unmodified opinion which indicates that the
financial data of the City for the year ended June 30, 2021 is free from material misstatements
and fairly represents the financial position of the governmental activities.
The Single Audit is an organization-wide financial statement and audit of federal awards for a non-
federal entity that expends $750,000 or more in federal funds in one year. The Single Audit reviews
how a non-federal entity managed the funding to ensure the rules for receiving the federal dollars were
followed. Performing a Single Audit is required by law and includes an audit of financial statements
and federal awards.
ATTACHMENTS:
• Attachment A—FY 2020/21 Annual Comprehensive Financial Report
4
Citiqof Scarcato6ca,
Gateway to the Santa Cruz Mountains
Celebrates the opening ff the Saratga-to-the Sea Trailhead
Annual Comprehensive Financial Report
for the Fiscal Year Ended June 301, 2021
The Starting Point Trail Bridge
0� r
SARATOGA
QUARRY PARK
22000 CONGRESS SPRINGS ROAD1!A, -
Construction Kickoff
Valle View °^ Trails Mountain Views
nSit
•
jL
axlzers_� t` Forest V V4 Trail end at the Sea
This page is intentionally blank.
6
-� °j S A RA T,
1956
A OF
Saratoga, California
Annual Comprehensive Financial Report
For the Fiscal Year Ended June 30, 2021
City Council
YanZhao.....................................................................................................................Mayor
TinaWalla..........................................................................................................Vice Mayor
Mary-Lynne Bernald.................................................................................. Council Member
Kookie Fitzsimmons.................................................................................. Council Member
Rishi Kumar............................................................................................... Council Member
Presented under the direction of:
James Lindsay, City Manager
Finance & Administrative Services Department
7
This page is intentionally blank.
8
CITY OF SARATOGA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE YEAR ENDED.TUNE 30, 2021
TABLE OF CONTENTS
INTRODUCTORY SECTION
Letterof Transmittal.........................................................................................................5
GFOA Certificate of Achievement for Excellence in Financial Reporting......................... 11
Principal Officers of the City.......................................................................................... 12
OrganizationChart ......................................................................................................... 13
FINANCIAL SECTION
Independent Auditors' Report ........................................................................................... 16
Management's Discussion and Analysis (Required Supplementary Information) ............. 18
Basic Financial Statements:
Government-Wide Financial Statements
Statement of Net Position..........................................................................................32
Statement of Activities..............................................................................................33
Fund Financial Statements
Governmental Funds:
BalanceSheet ...........................................................................................................34
Reconciliation of the Government Funds Balance Sheet
to the Government-Wide Financial Statement of Net Position................................35
Statement of Revenues, Expenditures and Changes in Fund Balances .........................36
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures and Changes in Fund Balances to the Government-Wide
Statement of Activities and Changes in Net Position.............................................37
Proprietary Funds:
Statement of Net Position..........................................................................................38
Statement of Revenues, Expenses, and Changes in Fund Net Position.........................39
Statement of Cash Flows ...........................................................................................40
Fiduciary Funds:
Statement of Fiduciary Net Position ..........................................................................41
Statement of Changes in Fiduciary Net Position.........................................................42
Basic Financial Statement Notes:
Notes to the Basic Financial Statements.....................................................................43
Required Supplementary Information
Budgetary Information ..............................................................................................70
Modified Approach for City Streets Infrastructure Capital Assets...............................72
Pension Information..................................................................................................74
1 g
CITY OF SARATOGA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE YEAR ENDED.TUNE 30, 2021
TABLE OF CONTENTS CONTINUED
SUPPLEMENTARY INFORMATION:
Non-Major Governmental Funds
Combining Balance Sheets ........................................................................................78
Combining Statement of Revenues, Expenditures and Changes in Fund Balances........79
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
— Budget and Actual:
Capital Improvements..........................................................................................80
Landscape & Lighting Districts Special Revenue Funds........................................81
Library Bond Debt Service Fund..........................................................................82
Internal Service Funds
Combining Statement of Net Position ........................................................................84
Combining Statement of Revenues, Expenses, and Change in Fund Balance ...............86
Combining Statement of Cash Flows .........................................................................88
Capital Assets Used in the Operation of Governmental Funds
Comparative Schedule by Source...............................................................................93
Schedule by Function and Activity ............................................................................94
Schedule of Changes by Function and Activity ..........................................................96
Statistical Section (Unaudited)
Net Position by Component..................................................................................... 100
Changesin Net Position .......................................................................................... 102
Fund Balance of Governmental Funds...................................................................... 104
Governmental Activities Tax Revenues by Source ................................................... 106
Changes in Fund Balances of Governmental Funds .................................................. 108
Property Tax Rates - Direct and Overlapping Governments...................................... 110
Assessed Value of Taxable Property........................................................................ 112
Principal Property Taxpayers................................................................................... 113
Property Tax Levies and Collections........................................................................ 114
Ratios of Outstanding Debt by Type ........................................................................ 116
Ratios of General Bonded Debt Outstanding............................................................ 118
Legal Debt Margin Information ............................................................................... 120
Direct and Overlapping Governmental Activities Debt............................................. 122
Demographic and Economic Statistics ..................................................................... 123
PrincipalEmployers ............................................................................................... 124
Full-Time Equivalent City Government Employees by Function............................... 126
Operating Indicators by Function............................................................................. 128
Capital Asset Statistics by Function......................................................................... 130
2 10
o{ SARg10
1956
IF OR
INTRODUCTORY SECTION
3 11
This page is intentionally blank.
4 12
o� SARgT0
CITY OF SARATOGA
13777 FRUITVALE AVENUE SARATOGA, CALIFORNIA 95070 (408) 868-1200
1956 COUNCIL MEMBERS:
F O RN\P Mary-Lynne Bernald
Kookie Fitzsimmons
Rishi Kumar
hxxn1xrnated0ctober2Z1956 Tina Walia
Yan Zhao
December 8,2021
Honorable Mayor,City Council,and Citizens of the City of Saratoga,California
The Annual Comprehensive Financial Report (ACFR), formerly known as the Comprehensive Annual Financial
Report,of the City of Saratoga for the year ended June 30,2021,is hereby submitted in accordance with mandated
statutes. These statutes require that the City of Saratoga issue a report on its financial position and activity, and
that an independent firm of certified public accountants audit 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, 2021, 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). In addition, this Letter of
Transmittal is provided as a complement to the MD&A and should be read in conjunction with the MD&A.
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
30,546 as of January 1, 2021 (decline of 304 people from January 1, 2020), 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 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
5 13
seven advisory commissions,and hiring the City Manager and City Attorney. The City Manager is responsible for
implementing the policies and ordinances of the City Council 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,operations are
supplemented with service contracts. Contracted services include but are not limited to public safety; engineering
services;infrastructure maintenance;and legal services.
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 and Community Engagement Commission,Parks and Recreation Commission,
Planning Commission,Public Art Commission,Traffic Safety Commission,and Youth Commission.
The financial reporting entity(the City)includes all the fund activity of the primary government and all component
units. Component units are legally separated entities for which the City is fully accountable. The City does not
currently report any Component Units. 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, the West Valley Clean Water Program
Authority(WVCWP)and the Arrowhead Community Facilities District(CFD)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 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.
During the past two years, the novel coronavirus (COVID-19) pandemic has created economic instability and
uncertainty across the United States(U.S.). While the economic impacts have varied by state,county,and city, in
Saratoga the economic conditions were not as dire as initially presumed. Assessed property values continued to
increase, consumer sales tax held relatively stable, and personal income remained resilient. Based on the
California Employment Development Department reports,the City's unemployment rate is 5.0%,with a continued
decrease for the near-term forecast,while the County's overall unemployment rate is 7.0%.
Although the City remains optimistic and the near-term economic outlook remains positive, several factors with
yet to be determined impacts warrant monitoring.
• Impact of inflation to 6.8%in November 2021,the largest 12-month increase since June 1982.
• Impact of increased cost of consumables, based on data released by the Bureau of Labor Statistics,
Consumer Price Index shows prices rose 0.8% in November 2021 compared to October 2021, including
gas,energy,rent,food,vehicles,airline fares,and sporting goods.
• Unanticipated supply chain bottlenecks - - which impact sales tax revenue - - including port congestion
and delays in offloading shipping containers, shortage of truck drivers to transport goods, and the gap
between increased consumer demand and the production and logistic capabilities.
• Emergence of the Omicron variant and the potential for a wave of winter infections from both the Delta
and Omicron variants.
6 14
In California, economists have factored in these uncertainties and modestly reduced their 2022 forecasts for the
projected speed of the economic recovery and employment gains from a 4.9%increase to 4.7%.
Overall,the City's economic outlook remains stable in the near-term due to the resiliency of local personal income,
stable growth in assessed property value,and consistency in sales tax,development fees and permits.
Property Tax
In total,Property Tax is the City's largest revenue category,at approximately 64.2%of General Fund revenues. In
the last nine years, property tax revenue has consistently increased. Property Tax revenue is comprised of a
combination of property tax assessments. While most of property tax categories will remain stable into the coming
fiscal year, Transfer Tax and Supplemental Tax, resulting from property turnover and remodeling improvements
are likely to decline.
Franchise Fees
Franchise Fees are assessments on utility services including gas, electricity, water, cable, and solid waste for the
right to conduct business within the City of Saratoga. The assessments are determined by easement formulas or a
percentage of service costs and are a pass-through fee on the utility billings. Utilities collect the fees from
customers and subsequently remit the payments to the City. Generally,these services are considered necessities in
an urban setting, leading to minimal fluctuations in the revenue stream year-over-year. In recent years cable
revenue has increased modestly due to the ongoing growth in the use of internet services,and solid waste franchise
fee revenue has increased with the rise in service charges. Overall,Franchise Fees are expected to grow at a slow
pace into the future.
Sales Tax
In 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. However due to the
COVID-19 related closures and service restrictions for restaurants,and the State's approval to extend deadlines to
pay FY 2020/21 sales and use taxes has modestly reduced actual sales tax receipts.
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 pays for 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 recession years proved that development activity does correlate with
strong economic ebbs and flows. Hence,all types of fee-based activities are expected to slow down over the next
fiscal year.
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.
7 15
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 except for the Capital Improvement 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 approve by Resolution
the re-appropriation of these funds into the following year's budget.
Major Initiatives
The FY 2020/21 budget was designed to enhance the quality of life for all Saratoga residents by focusing on the
City Council's priorities and enhancing community enrichment. Enhancements in wildfire safety programs,
community engagement,and infrastructure maintenance were prioritized.
An ongoing major initiative in the FY 2020/21 Operating Budget is the $1 million contribution toward the City's
Tier I pension plan's Unfunded Accrued Liability (UAL), and another $41,000 to pay off the City's Tier 11 and
Tier III pension plan unfunded liabilities. These payments are intended to both proactively reduce the City's UAL
liability and mitigate pension funding impacts to City services in the future. After an initial$3.3 million payment
in FY 2014/15, the Council committed to an annual liability payment of$500,000 toward the Tier I liability
beginning in FY 2015/16,then increased that amount to$750,000 in fiscal year 2017/18,and to$1 million in fiscal
year 2018/19 after actuarial changes and less than expected investment returns continued to increase the
outstanding liability. Tier II and Tier III unfunded pension liabilities total between$0 and$40,000 each year and
are paid off in full to maintain 100% funding status. Additional financial challenges are expected in upcoming
years as the City addresses a proportional share of the Santa Clara County Sheriffs Office Public Safety required
UAL contributions through increased service costs.
In FY 2020/21,the City maintained prioritization of infrastructure, such as roads,parks, and medians. Additional
funds were also allocated for roadway safety and traffic calming, enabling the City to install a rapid flashing
beacon crosswalk at Fruitvale Avenue and Douglass Lane and radar feedback signs on Pierce Road, Quito Road,
and Austin Way.
In November 2020,the City celebrated the opening of the Saratoga-to-the-Sea Trail, 3.2 miles connecting Quarry
Park to Sanborn County Park. Completion of the Trail was an exemplary multi-agency collaboration between the
City, Santa Clara County Parks,Midpeninsula Open Space,and San Jose Water Company.
In December 2020, the City Council adopted Saratoga's first Climate Action Plan and identified strategies to
reduce carbon emissions to 42%below 1990 emission levels by 2030, exceeding the State's goal of 40%emission
reductions during that time.
8 16
Also, during FY 2020/21, accessibility improvements were completed throughout the City- - new accessible
parking at Kevin Moran Park, and improved accessibility at the entrances to the Senior Center and more than 20
new ramps installed or improved at local intersections.
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.
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 ACFR for the fiscal year ended June 30,
2020. The award acknowledged the City published an easily readable and efficiently organized financial report.
This report satisfied both generally accepted accounting principles and applicable legal requirements.
ACKNOWLEDGEMENTS
The successful completion of the ACFR represents an entire fiscal year of dedication and commitment from the
Finance & Administrative Services team, in partnership with Chavan & Associates, LLP Certified Public
Accountants. In addition, we acknowledge 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.
RcP?Mvlanagooer
ni d.
JLin Sandra Dalida
Ci Interim Administrative Services Director
9 17
This page is intentionally blank.
10 18
Governunent Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Saratoga
California
For its Comprehensive Annual
Financial Report
For the Fiscal Year Ended
June 30, 2020
Executive Director/CEO
11 19
CITY OF SARATOGA
ELECTED OFFICIALS AND
ADMINISTRATIVE PERSONNEL
As of June 30, 2021
CITY COUNCIL
Yan Zhao-Mayor
Tina Walia-Vice Mayor
Mary-Lynne Bernald
Kookie Fitzsimmons
Rishi Kumar
CITY STAFF
James Lindsay—City Manager
Crystal Bothelio—Assistant City Manager
Debbie Bretschneider—City Clerk
Mary Furey—Administrative Services Director
Debbie Pedro—Community Development Director
John Cherbone—Public Works Director
CITY ATTORNEY
Richard S. Taylor—Shute,Mihaly&Weinberger, LLP
INDEPENDENT AUDITORS
Chavan&Associates,LLP Certified Public Accountants
12 20
of SA Rq rdG
City of Saratoga - Organization Chart
�6 FY 2020/21
MULENS OF SARATOGA
IIec[ed
G7ty Ca,mcil
C,t. Adviwry City�� �y y
Comnri�rms&G,..,MFthm- 1.9 FITi
Admen- Y S-i( Pubk W d.
Dep-
1)QD8a�e1I �[
.75 Assrxa¢CS[y hr-.- 1.0 Ad-,m 1.6 Conk, 1.0 P.M.Nods .25 A..=C51y M-ger
4
Sen'ies Tremor L�]nlanem INrc[� I)sector
Fml- 1 Dni a Plate D.- z� �e 7isi-
City tfa pft Dl�e 1.0 Aml;a
19 Liamaga 0 Flames 1.0 Sr.OVALOVALwee.
1.0 Eker Asaisi� 9 Ao:o>,L nbnr 1.0 Axhcu-at 2.0Fs
1.05c Arcamtm 1.0 A-FTon.oe LOEF.-P;rrl
Tech 1.0 AA.-Iechoioan 150 n�,�mI
1.75 Acco-iog Iecls 1.0 Code 0-3pl- 1.0 PRr In=-t.
cSce
Faaldr Remals
C#ty C1uk',trEca 1.0 Feolity Adn�
1.0 City o,k
Hog Diusim SneeG 8 Flea D c s on
1.0HRM-ger 1.0Buddigg Off id LOSVeeL.Floe[
.75 HR Terhoidan 2.0 R.H.9 h-p-b-
\fanage
1.0 Pew Terhoidau 2.0 Sv-e Lmt.1-d
1.0D elnlm,e�Ass9 4.0 su -Aim1.W kas
Puhlir Ini rnsado¢OS¢e .50 Ad-Iech
1.0 Pnhtr•_..
Olua
Dnson
Padlides dfaiormaMe
1.Grrld pager Daum. PadLDn- m
1 A IT Anal}sr 1.0 Fa¢lug]iam[A4gr
1.0Sr.FacE"Aiaim. 1.0 Pads Sr La traps
1.O F..W]iaml VAnaker ]der
.0 Pad w h t.L-d
P .matise Se,ices 5.0 Pad]fay Nodes
Dhisioa .50 Ad-Tech
l.0 Ad®Analyst
13 21
This page is intentionally blank.
14 22
oj S A Rq TOC-9
1956
Fo\ N
FINANCIAL SECTION
15
23
Chovan and Associates, Ilp
Certified Public Accountants
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, 2021, 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, 2021, and the respective changes in financial
position and, where applicable, cash flows thereof for the year then ended in accordance with accounting
principles generally accepted in the United States of America.
Page 116 15105 Concord Circle,Ste.130,Morgan Hill,CA 95037
Tel:408-217-8749 • E-Fax:408-872-4159
info@cnallp.com •www.cnalip.com 24
Chovan and Associates, Ilp
Certified Public Accountants
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 December 8,
2021 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.
C �f 4 6,kp
December 8,2021
Morgan Hill,California
Page 117 15105 Concord Circle,Ste.130,Morgan Hill,CA 95037
Tel:408-217-8749 • E-Fax:408-872-4159
info@cnallp.com •www.cnalip.com 25
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
INTRODUCTION
The Management's Discussion and Analysis (MD&A) is a required section of the City's Annual
Comprehensive 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, 2021. 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
Management's Basic
Discussion&Analysis Financial Statements
I _T 1 ::1
Government-Wide Fund Notes to the
Financial Statements Financial Statements Financial Statements
FISCAL YEAR 2020/21 FINANCIAL HIGHLIGHTS
• Total net position, or the City's assets plus deferred outflow of resources ($160.6 million) less its
liabilities plus deferred inflow of resources ($24.1 million), was $136.5 million as of June 30, 2021.
This is an increase of$1.14 million over the prior fiscal year, which is primarily due to an increase in
property tax revenue,program revenue and the sale of Rule 20A credits.
• The City's Net Pension Liability was $8.2 million. This is an increase of$0.6 million over the prior
fiscal year,primarily due to changes in assumptions, investment returns and overall plan experience.
• Net Position included $117.7 million for investment in capital assets, net of depreciation and related
debt, $1.7 million restricted for specific purposes, and$17.1 million in Unrestricted Net Position.
• Total City-wide revenues of $32.2 million consisted of $25.2 million in general revenue and $7
million in program revenue. City expenses totaled$31.1 million.
• The Governmental Funds fund balances totaled $22.65 million, with $15.22 million in the General
Fund, $5.76 million in the Capital Improvement Funds, and $1.67 million in Other Governmental
Funds. This represents an increase of$1.9 million from the prior year.
• General Fund revenues totaled$26.4 million,while General Fund expenditures totaled$23.2 million.
18
26
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
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 30,2021.
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
on the services used. The City of Saratoga currently does not have any business-type activities.
19
27
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
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/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. The City reports three fiduciary funds: The West Valley Clean Water Program, the
2018 Arrowhead Community Facilities District(CFD)Bond, and the Arrowhead CFD Project. Additional
information regarding these funds can be found in Note 1 of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
Notes to the Financial Statements provide additional information that is essential to a full understanding of
the data provided in the government-wide and fund financial statements. The notes can be found
immediately following the fund financial statements.
REQUIRED SUPPLEMENTARY INFORMATION
Required supplementary information, other than presented in this MD&A, follows the Notes Section and
includes a budgetary comparison for the General Fund as presented in the Governmental Fund Financial
Statements, and information on the modified approach for city streets and infrastructure.
20
28
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
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
increased $1,142,423 from $135,347,225 in Fiscal Year 2019/20 to $136,489,648 in Fiscal Year 2020/21.
The primary reason for the increase in net position is an increase primarily due to an increase in property tax
revenue, program revenue and the sale of Rule 20A credits. The most significant portion of the City's Net
Position($117,671,447 or 86.21%)accounts for its investment in capital assets, (e.g.,land,buildings, general
government infrastructure, equipment, etc.) less any related debt used to acquire those assets that are still
outstanding. These capital assets represent infrastructure which provides services to the citizens,
consequently, these assets are not available for future spending. Of the City's Net Position, $1,727,512 or
1.27% is subject to external restrictions on how the funding may be used. The remaining balance of
$17,090,689,or 12.52%of the City's Net Position,is unrestricted and may be used to meet the City's ongoing
obligations to citizens and creditors.
Table l -Net Position
Governmental Activities
2021 2020
Assets
Current assets $ 32,409,892 $ 29,553,559
Capital assets 125,442,265 125,423,930
Total Assets 157,852,157 154,977,489
Deferred Outflow of Resources
Deferred Outflow 2,785,827 3,206,496
Total Deferred Outflow of Resources 2,785,827 3,206,496
Liabilities
Current liabilities 6,457,875 6,242,754
Long-term liabilities 15,765,407 15,666,960
Total Liabilities 22,223,282 21,909,714
Deferred Inflow of Resources
Deferred Inflow 1,925,054 927,046
Total Deferred Inflow of Resources 1,925,054 927,046
Net Position
Net investment in capital assets 117,671,447 117,086,219
Restricted for environmental services 63,182 113,182
Restricted for special assessment funds 872,945 787,734
Restricted for debt service 791,385 788,245
Unrestricted 17,090,689 16,571,845
Total Net Position $ 136,489,648 $ 135,347,225
21
29
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
As shown in the below summary of the Statement of Activities table, program revenues increased by
$735,953 from the prior fiscal year for governmental activities, and general revenues increased by
$1,256,088 from the prior year. This resulted in a total increase in revenues of $1,992,041. Expenses
increased by $2,403,786 from the prior year primarily due to pension expense adjustments related to
changes in assumptions and differences between expected and actual investment returns and plan
experience.
Table 2-Statement of Activities
Governmental Activities Increase
Functions/Programs 2021 2020 (Decrease)
Program Revenues
Charges for services $ 5,345,704 $ 4,598,974 $ 746,730
Operating grants and contributions 563,716 71,543 492,173
Capital grants and contributions 1,091,631 1,594,581 (502,950)
Total Program Revenues 7,001,051 6,265,098 735,953
General Revenues
Property taxes 16,294,043 16,056,222 237,821
Sales taxes 925,289 1,056,700 (131,411)
Local taxes 868,821 807,385 61,436
Franchise taxes 2,338,382 2,604,702 (266,320)
Intergovernmental revenues 3,105,433 2,626,904 478,529
Investment earnings 34,240 623,599 (589,359)
Other revenues 1,645,368 179,976 1,465,392
Total General Revenues 25,211,576 23,955,488 1,256,088
Expenses
General and intergovernmental services 7,287,258 7,071,357 215,901
Public safety 6,734,604 6,355,432 379,172
Public works 12,530,168 11,340,229 1,189,939
Community services 966,536 864,838 101,698
Community development services 3,262,810 2,726,768 536,042
Interest on long-term debt(unallocated) 288,828 307,794 (18,966)
Total Expenses 31,070,204 28,666,418 $ 2,403,786
Increase/(Decrease)in Net Position 1,142,423 1,554,168 (411,745)
Net Position,Beginning of Year 135,347,225 133,793,057 1,554,168
Net Position,End of Year $ 136,489,648 $ 135,347,225 $ 1,142,423
With total program and general revenues for Fiscal Year 2020/21 at $32,212,627 and total expenses at
$31,070,204,the net activity resulted in an increase in Net Position of$1,142,423.
22
30
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
An analysis and graphical representation of the changes in revenues and expenditures by type of
significant events follows:
Revenues
For Fiscal Year 2020/21, the growth in property tax revenues reflect the ongoing strength of the San
Francisco Bay Area economy. The decrease in Capital Grants revenue is due to decreased activity in the
activity for grant-funded Public Works and Community Services capital projects in FY 2020/21.
Total Revenues by Categoiy
■FY 201V20 ■FY 2020l21
$18,000;000
$16,000,000
$14,000;000
$12,000,000
$10;000;000
$8,000,000
$6;000;000
$4,000;000
$2,000,000
$-
��� Re
CIO Geri 3, ���s �&Gvo�b Gc``S� �s C��ro �� �
41 4s� 'Aw ems` Ott
pQ Gad tom"
General Revenues increased by$1,256,088 from the prior year. The most significant changes include:
• Property Tax revenue increased $237,821 over the prior year. The increase is due to the continuing
demand for housing in the region, which 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 increased $478,529 primarily due to Measure B funds which were
suspended due to legal action in prior years.
• Other revenues increased by $1,465,392 primarily because of the sale of Rule 20A credits totaling
$1,208,330 which did not occur in the prior year.
Program Revenues increased by$735,953 from the prior year. The most significant changes include:
• Capital Grants and Contributions decreased $502,950 from the prior year primarily due to significant
completion of road improvement projects that were mostly by the Federal Highway Safety
Improvement Program(HSIP)grant through Caltrans.
• Charges for Services increased by $746,730 from the prior year due to a significant increase in
building permit fees of$226,328 and encroachment fees of$262,477.
23
31
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
Expenses
Fiscal Year 2020/21 expenses increased by $2,403,786, primarily due to pension expense adjustments.
Compared to the prior year, pension expense related to GASB 68 increased by $1,395,844. The direct
impact to each program is summarized as follows:
Table 3-Pension Expense Adjustment by Program
Increase
2021 2020 (Decrease)
General and intergovernmental services 707,070 227,053 480,017
Public works 894,097 298,567 595,530
Community services 119,075 41,503 77,572
Community development services 352,542 109,815 242,727
Total Adjustment $ 2,072,784 $ 676,938 $ 1,395,846
The following summarizes the changes in total government-wide expenses by category:
Total Expenses by Categoiy
■FY 2019/20 ■FY 2020/21
$16,000;000
$14,0005 000
$12;000;000
$10;000;000
$8,000,000
$6;000;000
$470007000
$2 000.000
petit
Gov 4�b�� 4�b�r� u 5 C
Co O �n
The following analysis includes the pensions adjustment listed above:
• Public Works expenses increased by $1,189,939 primarily due to pension expense adjustments and
increased activity related to capital projects,building permits and encroachments.
• Public Safety expenses increased by$379,172 due to increases in sheriff contract costs.
• General Services expenses increased by $215,901 primarily due to increases in pension and
compensated absences costs.
• Community Services expenses increased by $101,698 primarily due to an increase to services
provider costs and pension expense.
• Community Development expenses increased by $536,042 primarily due to increases in pension and
compensated absences costs.
24
32
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
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:
Table 4-Changes in Fund Balances
Major Funds
Other
Capital Governmental
General Improvement Funds
Total Revenues $ 26,400,850 $ 4,533,492 $ 1,353,638
Total Expenditures 23,234,432 5,866,022 1,265,287
Revenues Over
(Under)Expenditures 3,166,418 (1,332,530) 88,351
Transfers in 506,050 2,960,500 -
Transfers out (2,885,500) (581,050) -
Net change in fund balances 786,968 1,046,920 88,351
Beginning of year 14,434,607 4,716,865 1,575,979
End of year $ 15,221,575 $ 5,763,785 $ 1,664,330
The General Fund and Capital Improvement Funds are listed as Major Funds in Fiscal Year 2020/21. The
Other Governmental Funds category includes thirty Landscape and Lighting Districts and Storm Drain
funds (presented as one combined fund in the financials) and the Library Bond Debt Service Fund. The
total net change from fiscal year transactions, including Major Funds and Other Governmental Funds,was
an increase of$1,922,239.
General Fund
As shown in the Major Funds table above,the net change in the General Fund's ending fund balance is an
increase of$786,968. This is primarily as a result of increased in property tax revenues of$1,246,144
and the sale of Rule 20A Credits of$1,208,330. General Fund revenue budgets are conservatively based
upon prior year experience and revenue specific information.
Expenses are budgeted at anticipated program needs at not-to-exceed projected funding levels. However,
the City has opted to commit additional funding towards the Unfunded Accrued Liability (UAL) related
to pensions. In Fiscal Year 2020/21, the City Council directed staff to make a $1,000,000 payment
towards the UAL. This payment is in excess of the required minimum contribution amount required,
thereby reducing the principal at a faster pace. As of June 30, 2021, the Net Pension Liability, or NPL, is
approximately $8.2 million. This is an increase of$0.6 million over the prior fiscal year,primarily due to
estimated investments returns vs. actual and overall plan experience.
Capital Improvement Project Fund
The net increase of$1,046,920 in the Capital Improvement Funds occurred due to General Fund transfers
to fund capital improvements, combined with a reduction in construction activity due to COVID-19.
25
33
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
Other Governmental Funds
Other Governmental Funds fund balances increased by a total of$88,351,primarily due to a reduction in
Public Works costs of$183,940 and an increase in special assessments of$157,314.
GENERAL FUND—BUDGETARY HIGHLIGHTS
Changes from the City's General Fund original budget to the final budget are detailed in the Required
Supplementary Information Section along with a comparison to actual activity for the fiscal year.
Changes to the City's budget that increase or decrease appropriations in a fund must be approved by a
resolution of the City Council. Modifications to the budget that are a realignment of fiscal activities with
no impact to the fund's bottom line may be approved by the City Manager. Significant changes from the
City's original budget to the final budget are summarized as follows:
Revenues and Transfers In
The General Fund adopted and final revenue budget is shown in the schedule below:
Table 5-Adopted to Final Budget
Fiscal Year Ended June 30,2021
General Fund Revenues and Transfers In
Adopted Budget Final
Budget Adjustments Budget
Revenues $ 22,393,540 $ 1,200,517 $ 23,594,057
Transfers in $ - $ - $ -
The budget for other revenues was increased by $1,200,517 to account for the sale of Rule 20A credits.
Actual transfers into the General Fund in Fiscal Year 2020/21 were $506,050 from the Capital
Improvement fund for unused capital project funds.
Expenses and Transfers Out
The original and finalGeneral Fund expense budget is shown in the schedule below:
Table 6-Adopted to Final Budget
Fiscal Year Ended June 30,2021
General Fund Expenditures&Transfers Out
Adopted Budget Final
Budget Adjustments Budget
Expenses $ 23,252,501 $ 939,013 $ 24,191,514
Transfers out $ 2,485,500 $ 400,000 $ 2,885,500
During the fiscal year, the original budget was increased by $939,013 to account for increased contract
costs and employee costs. Transfers out were increased by $400,000 to fund various additional capital
projects.
26
34
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
CAPITAL ASSETS
The City of Saratoga elected to use the "Modified Approach" as defined by GASB Statement No. 34 for
infrastructure reporting in which eligible infrastructure capital assets are not required to be depreciated if
the following requirements are met:
• The City manages the assets using an asset management system which requires the City(1)perform
an up-to-date inventory; (2) perform condition assessments and summarize the results using a
measurement scale; and (3) estimate the annual amount to preserve the assets at the established
condition assessment level.
• The City documents that the eligible infrastructure capital assets are being preserved approximately
at or above the established and disclosed condition assessment level.
City policy is to achieve a Pavement Condition Index (PCI) average rating of 70 for all streets, at
minimum. The City's most recent overall rating was estimated to be 66 with 48% of streets rated"Very
Good", 31%rated as "Good", 15% of streets rated"Poor," and 6% of streets rated as "Very Poor." While
the City Council continues to review infrastructure investment strategies, the City continues to make
significant investment into City streets in order to bring the average PCI rating up to the target of 70.
It was estimated in the most recent pavement study in February 2020 that the five-year (2019-2023) cost
to maintain street infrastructure would be $43,500,000. For more detailed information on Capital Assets
activity, please refer to Note 4 in the section entitled "Notes to the Basic Financial Statements" and Note
2 in the "Required Supplementary Section."
As reflected in the following schedule,the City has $125,442,265 invested in a variety of capital assets as
of June 30,2021. This represents an increase of$18,335 from the prior year.
Table 7-Capital Assets Net of Depreciation
Governmental Activities
2021 2020
Land $ 20,160,713 $ 17,754,122
Building and structures 14,335,493 14,587,928
Machinery and equipment 1,011,404 1,182,490
Infrastructure 80,840,452 80,446,695
Construction in progress 9,094,203 11,452,695
Total Capital Assets,Net of Depreciation $ 125,442,265 $ 125,423,930
27
35
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
The following reconciliation summarizes the changes in Capital Assets.
Table 8-Changes in Capital Assets
Balance Balance
June 30,2020 Additions Retirements Reclassification June 30,2021
Land $ 17,754,122 $ $ $ 2,406,591 $ 20,160,713
Building and structures 26,855,195 515,544 27,370,739
Machinery and equipment 4,146,186 123,525 - - 4,269,711
Infrastructure 111,389,586 - - 1,728,480 113,118,066
Construction in progress 11,452,695 2,292,123 - (4,650,615) 9,094,203
Depreciation (46,173,854) (2,397,313) - - (48,571,167)
Total Capital Assets,
Net of Depreciation $ 125,423,930 $ 18,335 $ - $ $ 125,442,265
Major capital projects in progress during Fiscal Year 2020/21 included the following expenditures:
• Prospect/Saratoga OBAG Improvements- $40,779
• Citywide Signal Upgrades-Phase II- $90,620
• Saratoga-to-the-Sea Trail- $975,816
• Fruitvale/Allendale Ave. Intersection Improvements - $200,860
• McFarland Ave. Curb&Gutter Repair- $307,167
• Quito Rd Bridge Replacement—ROW- $217,203
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$502,904. Total long-
term bonded debt, including premiums, decreased by $566,892. Outstanding compensated absences
increased by$63,988.
Table 9-Outstanding Long-Term Obligations
Governmental Activities
2021 2020
2011 General obligation bond $ 7,530,000 $ 8,075,000
Net original issue premuim 240,818 262,710
Compensated absences 995,428 931,440
Total Outstanding long-term obligations $ 8,766,246 $ 9,269,150
The current portion of long-term debt ($565,000 for the refunded 2011 General Obligation Bonds for
Fiscal Year 2021/22) and$21,892 of amortized net original premium are classified as a current liability in
the City's Statement of Net Position.
General Obligation Bonds
On July 14, 2011 the City refunded the 2001 General Obligation Bonds and, in their place, issued 2011
General Obligation Bonds for $11,995,000. Interest rates on the bonds range from 2.0%to 4.0%, and the
28
36
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
final payment is due August 1,2031. Principal of$545,000 and interest of$298,385 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 $63,988 due to a decrease in use of
paid time-off. An estimated current liability of$617,960 is anticipated for the next fiscal year.
Additional information on outstanding obligations can be found in Note 5 to the financial statements.
ECONOMIC FACTORS
In the U.S., economists project that reopening from COVID-19 pandemic closures will continue and the
global economic and corporate earnings growth should be above trend. However, a cautionary note
related to inflation pressures have grown, interest rates are rising, and fiscal and monetary support is
fading. Also, the recent resurgence in consumer demand has been hampered by decreases in production
and transport of many goods, and has contributed to higher-than-normal price growth of many goods and
services. Additionally, annual price inflation has exceeded 5% since June, compared to an average of
approximately 2% over the last decade. Although the Blue Chip Economic Indicators Survey indicates
this uptick in inflation should abate by next year, the possibility remains that elevated inflation could
persist and usher in instability in financial markets. Overall, in 2022 the U.S. national forecast indicates
continued strong growth, with labor market recovery at a slightly slower rate than projected in September
2021.
In California,job growth is forecast at 4.2%compared with 3.5%nationwide. Despite the ongoing global
pandemic and its disparate health and economic impacts on Californians,the State's revenues are growing
at historic rates and the State is likely to have a significant surplus at the end of FY 2021/22. However,
with the recent arrival of the Omicron variant and surge in coronavirus cases, economic projections
indicate consumers will likely temporarily reduce spending on in-person services in the first quarter of
2022, and experience a quick recovery in the second quarter.
The Greater Bay Area forecast, with its technology hub in Silicon Valley, is a driver of economic growth
in California. According to the UCLA Anderson Forecast,the region's GDP grew an average of 3.9%per
year from 2001 to 2019, compared to 2.8% per year for the entire State. In addition, real personal
income showed strong growth in 2020 and 2021,with significant asset price appreciation.
In Santa Clara County (County), which is not as reliant on the tourism and restaurant industries as other
regions, has the highest concentration of high-tech employment of any county or metropolitan area in the
U.S. During the past year, the County had the fastest growing GDP at 4.4% of large counties (Bureau of
Economic Analysis, U.S. Department of Commerce, 12/08/21 News Release). Also in 2021, the
County's assessment roll for real estate and business property value grew by $25.4 billion (4.4%).
Overall,the County's economic outlook remains optimistic for the immediate future.
The City of Saratoga, located in Santa Clara County, is primarily a residential community with limited
commercial or industrial activity within its boundaries. Saratoga is considered a desirable place to live
due to its highly rated schools, beautiful neighborhoods, fine dining, and proximity to many technology
companies. In 2021, Saratoga's assessed property values continued to increase, consumer sales tax held
relatively stable, and personal income remained resilient. The City's unemployment rate is 5%,while the
County's overall unemployment rate is 7%(California Employment Development Dept report).
29
37
CITY OF SARATOGA
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
During the past two years, Saratoga's leisure, hospitality, and other services industries were significantly
impacted from the coronavirus business restrictions. However, following the lifting of business
restrictions as COVID cases subsided, these industries experienced a strong economic recovery and job
growth- -responsible for over one-third of total nonfarm job gains in the Bay Area during recent months.
Ongoing monitoring is advisable as the onset of the Omicron variant may result in temporary challenges
for the tourism,hospitality, and other services industries.
OUTLOOK
The City of Saratoga's economic outlook remains optimistic as the primary revenue sources(property tax,
franchise fees, sales tax, and development fees) have remained stable and are expected to experience
modest growth in the coming year.
However,there are several factors with yet to be determined impacts that warrant monitoring including:
• California's overall population decline in 2020 by 182,083 or 0.46% (California Department of
Finance), attributed to the decline in international immigration, lower birth rates, and higher
deaths in part due to the pandemic.
• Potential economic impact from ongoing "domestic out-migration" and the downward pressure
on California home prices and household wealth,retail sales, and state and local tax revenue.
• Pandemic phenomenon of tech companies' exodus from the Bay Area and metropolitan cities to
locations with cheaper rent and low or no state income taxes; prominent tech companies shifting
their headquarters outside of the Bay Area; and Initialized Capital shows the Bay Area as first
choice location for tech startup headquarters has dropped from 41.6%in 2020 to 28.4%2021.
On the positive side, the record household wealth induced housing demand, historically low financing
costs, and a shortage of homes for sales will help drive continued increases in assessed value - - with
home prices projected to rise 18.6% in 2021 from 9.8% in 2020. However, the growth in assessed value
could constrain the number of qualified buyers.
The City of Saratoga is well positioned to respond to the economic impacts created by COVID-19
without compromising services or losing focus on priority initiatives. The City will continue to address
its liabilities, deferred maintenance on infrastructure and facilities, and continue to explore ways to
enhance Saratoga for the people who live,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.
30
38
SARg109
1956
�"OFOV,
BASIC FINANCIAL
STATEMENTS
31
39
CITY OF SARATOGA
STATEMENT OF NET POSITION
JUNE 30, 2021
Governmental
Activities
ASSETS
Current Assets:
Cash and investments $ 29,826,342
Restricted cash and investments 1,698,394
Receivables:
Accounts 878,079
Prepaids 7,077
Total Current Assets 32,409,892
Noncurrent Assets:
Capital Assets:
Non-depreciable 82,279,695
Depreciable,net 43,162,570
Total Capital Assets 125,442,265
Total Assets $ 157,852,157
DEFERRED OUTFLOWS OF RESOURCES
Adjustments related to pension liability $ 2,785,827
Total Deferred Outflows of Resources $ 2,785,827
LIABILITIES
Current Liabilities:
Accounts payable $ 851,262
Accrued payroll 809,482
Interest payable 119,000
Deposits payable 3,433,430
Claims payable 39,849
Long-term obligations-due within one year 1,204,852
Total Current Liabilities 6,457,875
Noncurrent Liabilities:
Net pension liabilty 8,204,013
Long-term obligations-due in more than one year 7,561,394
Total Noncurrent Liabilities 15,765,407
Total Liabilities $ 22,223,282
DEFERRED INFLOWS OF RESOURCES
Adjustments related to pension liability $ 1,925,054
Total Deferred Inflows of Resources $ 1,925,054
Net Position
Net investment in capital assets $ 117,671,447
Restricted for:
Environmental funds 63,182
Special assessment funds 872,945
Debt service 791,385
Total Restricted 1,727,512
Unrestricted 17,090,689
Total Net Position $ 136,489,648
The accompanying notes are an integral part of these financial statements
32 40
CITY OF SARATOGA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Net(Expense)
Revenue and
Changes in
Program Revenues Net Position
Primary
Operating Capital Government
Charges for Grants and Grants and Governmental
Functions/Programs Expenses Services Contributions Contributions Total Activities
Primary Government:
Governmental Activities:
General and intergovt'l services $ 7,287,258 $ 80,071 $ 406,990 $ $ 487,061 $ (6,800,197)
Public safety 6,734,604 329,715 156,726 486,441 (6,248,163)
Public works 12,530,168 2,404,143 - 1,087,288 3,491,431 (9,038,737)
Community services 966,536 136,203 - 136,203 (830,333)
Community development services 3,262,810 2,395,572 4,343 2,399,915 (862,895)
Interest on long-term debt(unall.) 288,828 - - - - (288,828)
Total $31,070,204 $ 5,345,704 $ 563,716 $ 1,091,631 $ 7,001,051 $ (24,069,153)
General Revenues:
Taxes
Property taxes $ 16,294,043
Sales taxes 925,289
Local taxes 868,821
Franchise taxes 2,338,382
Total taxes 20,426,535
hrtergovernmental(not restricted to specific programs) 2,837,573
Investment earnings 34,240
Otherrevenues 1,913,228
Total General Revenues 25,211,576
Change in Net Position 1,142,423
Net Position-Beginning of Year 135,347,225
Net Position-End of Year $136,489,648
The accompanying notes are an integral part of these financial statements
33 41
CITY OF SARATOGA
GOVERNMENTAL FUNDS-BALANCE SHEET
JUNE 30, 2021
Major Funds
Other Total
Capital Governmental Governmental
General Improvement Funds Funds
ASSETS
Cash and investments $ 19,221,671 $ 5,770,428 $ - $ 24,992,099
Restricted cash and investments - - 1,698,394 1,698,394
Receivables:
Accounts 606,498 263,278 1,184 870,960
Prepaid Items 7,077 - - 7,077
Total assets 19,835,246 6,033,706 1,699,578 27,568,530
LIABILrMS AND FUND BALANCES
Liabilities:
Accounts payable $ 458,113 $ 269,921 $ 35,248 $ 763,282
Accrued payroll and benefits 722128 - - 722,128
Deposits payable 3,433:430 - 3,433,430
Other payable - - - -
Total liabilities 4,613,671 269,921 35,248 4,918,840
Fund Balances:
Nonspendable:
Prepaid Items 7,077 - - 7,077
Restricted:
Environmental services 63,182 - - 63,182
Lighting and landscape assessments - - 872,945 872,945
Debt service - - 791,385 791,385
Committed:
Capital improvement program - 5,763,785 - 5,763,785
Hillside stability 1,000,000 - - 1,000,000
Assigned:
Future capital&efficiency 2,796,663 - - 2,796,663
Carryforwards 20,850 - - 20,850
Facility replacement 3,700,000 - - 3,700,000
Unassigned:
Working capital 1,000,000 - - 1,000,000
Fiscal stabilization 3,150,000 - - 3,150,000
LLD Closeout 1,062,604 1,062,604
Compensated absences 331,481 - - 331,481
Other unassigned 2,089,718 - - 2,089,718
Total fund balances 15,221,575 5,763,785 1,664,330 22,649,690
Total liabilities and fund balances $ 19,835,246 $ 6,033,706 $ 1,699,578 $ 27,568,530
The accompanying notes are an integral part of these financial statements
34 42
CITY OF SARATOGA
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET POSITION
JUNE 30, 2021
Total Fund Balances-Total Governmental Funds $ 22,649,690
Amounts reported for governmental activities in the statement of net position were
different because:
Capital assets used in governmental activities were not current financial resources.'Therefore,
they were not reported in the Governmental Funds Balance Sheet.The capital assets were
adjusted as follows:
Non-depreciable capital assets 82,279,695
Depreciable capital assets,net 42,712,213
Total Capital Assets 124,991,908
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. (119,000)
Internal service funds are used by management to charge the costs of office stores,
vehicle and equipment maintenance and replacement,information services and replacement,
building maintenance,risk management,and workers compensation. The assets and
liabilities of the internal service funds are included in the governmental activities in
the statement of net position 5,076,536
Deferred outflows of resources are transactions that have already taken place but are not ready
to be recognized on the financial statements as expenses
Differences between Expected and Actual Experience 422,777
Differences between Projected and Actual Investment Earnings 243,713
Change in employer's proportion 385,875
Pension Contributions Made Subsequent to Measurement Date 1,733,461
Total Deferred Outflows of Resources 2,785,826
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 (7,530,000)
Net Pension Liability (8,204,013)
Compensated absences (995,428)
Net original issue premium (240,818)
Total Long-Term Obligations (16,970,259)
Deferred inflows of resources are transactions that have already taken place but are not ready
to be recognized on the financial statements as revenues
Changes of Assumptions (58,514)
Differences between Employer's Contributions and Proportionate Share of Contributions (1,841,788)
Change in employer's proportion (24,751)
Total Deferred Inflows of Resources (1,925,053)
Net Position of Governmental Activities S 136,489,648
The accompanying notes are an integral part of these financial statements
35 43
CITY OF SARATOGA
STATEMENT OF REVENUES, EXPENDITURES,AND CHANGES
IN FUND BALANCE
FOR THE YEAR ENDED JUNE 30, 2021
Major Funds
Other Total
Capital Governmental Governmental
General Improvement Funds Funds
REVENUES:
Property taxes $ 16,277,201 $ - $ 16,842 $16,294,043
Special assessments - - 1,331,556 1,331,556
Sales taxes 925,289 - - 925,289
Other local taxes 868,821 - - 868,821
Licenses&permits 2,151,704 612,242 - 2,763,946
Fines&forfeiture 81,323 300 - 81,623
Intergovernmental-Federal 383,132 356,715 - 739,847
Intergovernmental-State 520,952 1,358,197 - 1,879,149
Intergovernmental-Other 67,515 1,806,409 - 1,873,924
Charges for services 949,392 10,952 - 960,344
Franchise fees 2,264,237 74,145 - 2,338,382
Use of money and property 211,097 - 5,240 216,337
Other revenue 1,700,187 314,532 - 2,014,719
Total revenues 26,400,850 4,533,492 1,353,638 32,287,980
EXPENDITURES:
Current:
General and intergovernmental services 5,772,353 - - 5,772,353
Public safety 6,734,604 - - 6,734,604
Public works 6,877,303 - 421,902 7,299,205
Community services 972,100 - - 972,100
Community development services 2,878,072 - - 2,878,072
Capital outlay - 5,866,022 - 5,866,022
Debt service:
Principal - - 545,000 545,000
Interest and fiscal charges - - 298,385 298,385
Total expenditures 23,234,432 5,866,022 1,265,287 30,365,741
REVENUES OVER
(UNDER)EXPENDITURES 3,166,418 (1,332,530) 88,351 1,922,239
OTHER FINANCING SOURCES(USES):
Transfers in 506,050 2,960,500 - 3,466,550
Transfers out (2,885,500) (581,050) - (3,466,550)
Total other financing sources(uses) (2,379,450) 2,379,450 - -
Net change in fund balances 786,968 1,046,920 88,351 1,922,239
FUND BALANCES:
Beginning of year 14,434,607 4,716,865 1,575,979 20,727,451
End of year $ 15,221,575 $ 5,763,785 1,664,330 $22,649,690
The accompanying notes are an integral part of these financial statements
36 44
CITY OF SARATOGA
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCE TO THE
GOVERNMENT-WIDE STATEMENT OF ACTIVITIES AND CHANGES IN NET
POSITION
FOR THE YEAR ENDED JUNE 30, 2021
Net Change in Fund Balances-Total Governmental Funds $ 1,922,239
Amounts reported for governmental activities in the Statement of Activities and Changes
in Net Position were different because:
Governmental Funds report capital outlay as expenditures.However,in the Government-Wide
Statement of Activities and Changes in Net Position,the cost of those assets was allocated over
their estimated useful lives as depreciation expense.This is the amount of capital assets
recorded in the current period. 2,292,125
Depreciation expense on capital assets was reported in the Government-Wide Statement
of Activities and Changes in Net Position,but it did not require the use of current financial
resources.Therefore,depreciation expense was not reported as expenditures in the
Governmental Funds. (2,212,841)
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. 701,221
GASB 68 Adjustments to pension expense
Change in net pension liability-current year (589,039)
Amortization of changes in deferred outflows (420,670)
Amortization of changes in deferred inflows (1,063,073)
Adjustments to pension expense as a result of GASB 68 (2,072,782)
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 (63,988)
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 545,000
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. 9,557
Change in Net Position of Governmental Activities $ 1,142,423
The accompanying notes are an integral part of these financial statements
37 45
CITY OF SARATOGA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
JUNE 30, 2021
Governmental
Activities-
Internal
Service Funds
ASSETS
Current assets:
Cash and investments $ 4,834,243
Accounts receivable 7,119
Total current assets 4,841,362
Noncurrent assets:
Capital assets:
Machinery and equipment 2,000,421
Less: accumulated depreciation (1,550,064)
Total capital assets(net of
accumulated depreciation) 450,357
Total assets $ 5,291,719
LIABILITIES
Liabilities:
Current liabilities:
Accounts payable $ 87,980
Accrued payroll and benefits 87,354
Other payables 39,849
Total current liabilities $ 215,183
NET POSITION
Net investment in capital assets $ 450,357
Unrestricted 4,626,179
Total net position $ 5,076,536
The accompanying notes are an integral part of these financial statements
38 46
CITY OF SARATOGA
STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN FUND NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Governmental
Activities-
Internal
Service Funds
Operating revenues:
Charges for services $ 3,365,004
Other operating revenues 37,818
Total operating revenues 3,402,822
Operating expenses:
Cost of services 2,517,127
Depreciation 184,474
Total operating expenses 2,701,601
Operating income(loss) 701,221
Change in net position 701,221
Total net position-beginning 4,375,315
Total net position-ending $ 5,076,536
The accompanying notes are an integral part of these financial statements
39 47
CITY OF SARATOGA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Governmental
Activities-
Internal
Service Funds
Cash flows from operating activities:
Receipts from customers and users $ 3,403,917
Payments to suppliers (1,515,072)
Payments to employees (998,274)
Net cash provided(used)by operating activities 890,571
Cash flows from capital activities:
Acquisition of capital assets (123,525)
Net cash provided for the acquisition of capital assets (123,525)
Net increase in cash and cash equivalents 767,046
Cash and cash equivalents,beginning of year 4,067,197
Cash and cash equivalents,ending of year 4,834,243
Reconciliation of operating income to net cash provided
by operating activities:
Operating income(loss) 701,221
Adjustments to reconcile operating income(loss)
to net cash provided(used)by operating activities:
Depreciation 184,474
Change in operating assets and liabilities:
Accounts receivables 1,095
Accounts payable 13,786
Accrued payroll 40,866
Claims payable (50,871)
Net cash provided(used)by operating activities $ 890,571
The accompanying notes are an integral part of these financial statements
40 48
CITY OF SARATOGA
STATEMENT OF CHANGES
IN FIDUCIARY NET POSITION
JUNE 30, 2021
West Valley
Clean Total
Water Arrowhead Custodial
Program CFD Funds
ASSETS
Cash and investments $ 670,645 $ 747,158 $ 1,417,803
Accounts receivable - 300 300
Total assets $ 670,645 $ 747,458 $ 1,418,103
LIABILITIES
Accounts payable $ 132,620 $ 1,000 $ 133,620
Total liabilities $ 132,620 S 1,000 $ 133,620
NET POSITION
Restricted for individuals,organizations
and other governments $ 538,025 $ 746,458 $ 1,284,483
Total Net Position $ 538,025 $ 746,458 $ 1,284,483
The accompanying notes are an integral part of these financial statements
41 49
CITY OF SARATOGA
STATEMENT OF CHANGES
IN FIDUCIARY NET POSITION
JUNE 30, 2021
West Valley
Clean Arrowhead Total
Water Arrowhead CFD Custodial
Program CFD District Funds
ADDITIONS
Taxes collected from community facilities districts $ - 130,980 $ $ 130,980
Assessments 683,765 - 683,765
Charges for services 297,152 - 297,152
Transfers from other custodial funds - 356,840 356,840
Early bond redemptions 569,997 569,997
Other revenue - 7,935 7,935
Interest income 3,152 219 3,371
Total additions 984,069 1,065,971 2,050,040
DEDUCTIONS
Personnel Costs 431,814 - 431,814
Professional Services 470,324 - 470,324
Fees and charges 60,614 - 60,614
Materials and Supplies 10,831 - 10,831
Rent 23,778 - 23,778
Travel and Meetings 3,019 - 3,019
Utilities 7,402 - 7,402
Transfers to other custodial funds - - 356,840 356,840
Debt service payments for community facilities districts - 613,781 - 613,781
Total deductions 1,019,891 613,781 356,840 1,990,512
Change in net position (35,822) 452,190 (356,840) 59,528
Total net position-beginning - - - -
Prior period adjustments:
Implementation of GASB 84 573,847 294,268 356,840 1,224,955
Total net position-beginning,as adjusted 573,847 294,268 356,840 1,224,955
Total net position-ending $ 538,025 $ 746,458 $ - $ 1,284,483
The accompanying notes are an integral part of these financial statements
42 50
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
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. The City is a largely residential community located in the foothills of the Santa Cruz
Mountains with a population of 31,030 as of January 1, 2020.
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, 2021,the City's staff was comprised of 60 full-
time or part-time employees, and various part-time temporary and seasonal employees. Staff is
responsible for the following City services:
• Public Safety - The City provides around-the-clock police services under a contract with the Santa
Clara County Sheriffs 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 24 employees. Major projects may be contracted out to
reduce costs.
• Community Development - Zoning administration, plan checking and advance planning services are
provided by 14 employees.
• Culture,Recreation and Community Support services are provided by a total of 4 employees.
• General Government services are provided by a total of 18 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 separation from the City.
Each blended component unit has a June 30 year-end. The City has no discretely presented component
units.
The following entity is reported as blended component unit:
Landscape &Lighting District- The Landscape &Lighting District(the District)was established in 1980
for the levy and the collection of assessments upon lots or parcels of land in the District, and for the
construction or installation of improvements and maintenance. The District is reported as a blended
component unit of the City because it has the same Governing Board as the City and the City is financial
43
51
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
responsible for the District and its operations.. 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 are comprised of 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
• Landscape and Lighting District Service Fees
Interfund services provided and used are not eliminated in the process of consolidation.
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 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 unavailable revenue and advance collections.
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 aggregated non-major
44
52
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
funds. 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 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
on their balance sheets. Proprietary fund type operating statements present increases (revenues) and
decreases(expenses)in total net position.
45
53
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
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 for services provided, on a cost
reimbursement basis, in the following areas: general liability, workers' compensation, office support,
information technology services,vehicle maintenance,building maintenance, equipment replacement, and
information technology replacement.
Fiduciary Fund Financial Statements
Fiduciary Funds Financial Statements include a Statement of Net Position and a Statement of Changes in
Net Position for Trust Funds. The City's fiduciary funds include Custodial Funds which are accounted for
on the accrual basis of accounting. The City is reporting the following Custodial Funds:
West Valley Clean Water Program. The Cities of Campbell,Monte Sereno, Saratoga and the Town of Los
Gatos, representing the West Valley Communities, joined together to create West Valley Clean Water
Program (WVCWP) in 1994. Together they work to control discharge of polluted stormwater into local
creeks and the San Francisco Bay. Their mission is to:
• Reduce pollutants in stormwater and discharges from storm drains into creeks
• Maximize the effectiveness of pollution prevention efforts and work toward repair of impaired waters
• Help the four West Valley Communities meet State Water Resources Control Board&Federal Clean
Water Act goals for clean and healthy local water bodies
In late 2017, after notification from West Valley Sanitation District that the District would no longer be
involved in or provide fiscal agent services for WVCWP after June 30, 2018, the four agencies decided to
establish the operation as a legal entity by entering into a Joint Powers Agreement, consistent with what
the agencies had already set up for the West Valley Solid Waste Management oversight activities. With
this action, the West Valley Clean Water Program is now overseen by the same Board that includes
Council representation from each of the four municipalities. The Clean Water Program's dedicated
program staff and contractors carry out the day-to-day operations. The JPA also collaborates with Santa
Clara Valley Urban Runoff Pollution Prevention Program, West Valley Sanitation District, and the Santa
Clara County Fire District in their operational activities.
With the loss of West Valley Sanitation functioning as the fiscal agent for the group, the four cities
determined one of the cities would take on this role. Effective July 1, 2018, the City of Saratoga began
performing these duties, which are limited to payroll and vendor payment functions, in addition to
financial reporting. The City does not oversee operational aspects of the WVCWP and is acting only in a
fiduciary function
Arrowhead Bond and Project Funding. The Arrowhead Community Facilities District encompasses 39
homes located along the hillside between Rolling Hills Road and Blue Hills Lane, off of Prospect Road.
Since 1951, this neighborhood has operated its own private water company (Arrowhead Cooperative
Company Inc., aka ACCI). Over the years the number of Arrowhead Cooperative residents and water
service meters have increased, to the extent that the water system infrastructure is no longer sufficient for
water and fire protection needs. The potential of the fire danger situation prompted the Arrowhead Board
to ask the City for assistance to issue a bond for the purpose of financing improvements to the water
46
54
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
system. Subsequently, on December 21, 2016, the City Council approved the formation of the Arrowhead
Community Facility District (CFD). On May 2, 2017, the CFD's 39 residential parcel owners
unanimously approved Measure L, which allowed for the assessment of a special tax levy to finance a
bond.
On October 17, 2018, the City Council authorized the issuance of the Saratoga Community Facilities
District 2016-1 (Arrowhead Project) Special Tax Bonds, Series 2018,with the issue date of December 10,
2018. Debt service on the Special Tax Bond is payable only from special taxes levied annually on taxable
properties within the CFD in the manner set forth in the Rate and Method of Apportionment (RMA)
approved by the Council in connection with the formation of the District. The 2018 Bonds will not have
any impact on the City's General Fund or Government-wide financial statements, and these special
financing district bonds are not assets or liabilities of the City for financial statement purposes.
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.
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 transfers are reported as transfers.
47
55
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
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 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 May 31, 2021. This condition assessment was performed in
2017. A Pavement Condition Index(PCI)was assigned to each street segment. The index is expressed in
a continuous scale from 0 to 100,where 0 is assigned to the least acceptable physical condition and 100 is
assigned to segments of street that have the physical characteristics of a new street.
The following conditions were defined:
Condition Rating
Very Good 70- 100
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
48
56
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
appropriate for the construction/acquisition date; or 3) present cost indexed by a reciprocal factor of the
price increase from the construction/acquisition date to the current date. The accumulated depreciation,
defined as the total depreciation from the date of construction/acquisition to the current date on a straight
line, unrecovered cost method was computed using industry accepted life expectancies for each
infrastructure subsystem. The book value was then computed by deducting the accumulated depreciation
from the original cost.
F.Interest Payable
In the government-wide financial statements, interest payable of long-term debt is recognized as an
incurred liability for governmental fund types. The City has not allocated the interest on long-term debt
to departments.
In the fund financial statements, governmental fund types do not recognize the interest payable when the
liability is incurred. Interest on long-term debt is recorded in the fund statements when payment is made.
G. Claims Payable
The City records a liability to reflect an actuarial estimate of ultimate uninsured losses for both general
liability claims (including property damage claims) and workers' compensation claims. The estimated
liability for workers' compensation claims and general liability claims includes "incurred but not
reported" (IBNR)claims. There is no fixed payment schedule to pay these liabilities.
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.
L 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.
49
57
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
J. Fund Balances
In February 2009, the Governmental Accounting Standards Board (GASB) issued Statement No. 54,
Fund Balance Reporting and Governmental Fund Type Definitions. This standard left unchanged the
total amount reported as fund balance, but substantially altered the categories and terminology used to
describe its components. Rather than focus on financial resources available for appropriation, the new
categories focus on "the extent for which the government is bound to honor constraints in the specific
purposes for which amounts in the reserve can be spent."
The components of fund balance are now categorized as follows: "non-spendable fund balance",
resources that are inherently non-spendable from the vantage point of the current period; "restricted fund
balance",resources that are subject to enforceable legal restrictions; "committed fund balance", resources
whose specified use is constrained by limitations the government entity imposes upon itself through
formal action at its highest level of decision making and remains binding unless removed in the same
manner; "assigned fund balance", resources that reflects a government's intended general use of
resources, such intent would have to be established at either the highest level of decision making, by a
body, or an official designated for that purpose; and"unassigned fund balance",net resources in excess of
what can properly be classified in one of the other four categories. Currently, the City's fund balance
reserves fall into one of the four spendable categories; restricted, committed, assigned, or unassigned fund
balance.
The City maintains three restricted fund balances constrained by external legal restrictions that can be
spent only for the stipulated purposes. Restrictions may effectively be changed or lifted only with the
consent of resource providers. These fund balances are:
• Special Assessments Fund Balance — collectively represents year-end fund balances of thirty
Landscape&Lighting and Storm Drain zones 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 hazardous
waste fees, storm drain, street sweeping, and other pollution mitigation expenses related to
integrated waste programs and storm water management. These funds are used to supplement
environmental expenditures by using$50,000 per year.
• Debt Service Fund Balance—represents funding collected for 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 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&Technology Improvements.
• Hillside Stability - funding set aside for use either in emergency repairs or high-cost and non-
routine mitigation of hillside or landslide projects.
50
58
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
In the assigned category, fund balance reflects an intended use as established by Council that is neither
restricted nor committed. 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. Carryforward 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. The General Fund is the only governmental fund
that reports a positive unassigned fund balance.
• Working Capital Reserve — Council policy is to maintain $1,000,000 to meet cash flow
requirements. As of June 30, 2021,the Working Capital Reserve balance is $1,000,000.
• Fiscal Stabilization Reserve— Council designates and annually revisits the level of undesignated
funding for use at Council direction in case of disasters, emergencies, and economic downturns.
As of June 30,2021,the Fiscal Stabilization Reserve balance is $3,150,000.
• Landscape & Lighting District (LLD) Closeout Reserve —Funds reserved to provide services to
four Landscape&Lightning Districts which were closed in FY 2020/21.
• Compensated Absences Reserve—represents reserve funding for employee payout compensation
equal to one-third of the 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 during the fiscal year.
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.
51
59
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
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.
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.New GASB Pronouncements
Implementation of New Accounting Pronouncements
GASB Statement No. 84, "Fiduciary Activities."Issued in January 2017,this statement establishes criteria
for identifying fiduciary activities for accounting and financial reporting purposes and describes four
fiduciary funds that should be reported, if applicable. The statement is effective beginning fiscal year
52
60
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
2021. Items previously reported as part of the agency fund classification of the Fiduciary Funds
statements were reviewed to evaluate if they met the new custodial funds criteria. The City did not
identify any custodial funds as non-fiduciary. The City adjusted the cumulative effect of applying the
provision of GASB Statement No. 84 as a restatement of beginning fiduciary net position totaling
$1,224,955. The restricted accounts and balances were reclassified from liabilities to fiduciary net
position in the custodial funds.
Upcoming Accountingand nd Reporting Changes
The City is currently analyzing its accounting practices to determine the potential impact on the financial
statements of the following recent GASB Statements:
GASB Statement No. 87, "Leases." Issued in June 2017, this statement establishes standards of
accounting and financial reporting for leases by lessees and lessors. It provides guidance on accounting
treatment of lease assets, lease liability, short-term leases, certain regulated leases, measurement for
leases other than short-term leases and contracts that transfer ownership, subleases, lease-leaseback
transactions, intra-entity leases, and leases between related parties. The statement will be effective
beginning fiscal year 2022.
GASB Statement No. 91, "Conduit Debt Obligations." Issued in May 2019, this statement provides a
single method of reporting conduit debt obligations by issuers and eliminates diversity in practice
associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt
obligations, and(3)related note disclosures. The statement will be effective beginning fiscal year 2023.
GASB Statement No. 92, "Omnibus 2020." Issued in January 2020, this statement was issued for clarity
and consistency by addressing practice issues identified from the implementation and application of
certain GASB statements. The statement will be effective beginning fiscal year 2022.
GASB Statement No. 93, "Replacement of Interbank Offered Rates."Issued in March 2020,this statement
is to address accounting and financial reporting implications that result from the replacement of an
interbank offered rate (IBOR) such as the London Interbank Offered Rate (LIBOR). As a result of global
reference rate reform, LIBOR is expected to cease to exist in its current form at the end of 2021. The
statement will be effective beginning fiscal year 2022.
GASB Statement No. 94, "Public-Private and Public-Public Partnerships and Availability Payment
Arrangements."Issued in March 2020,this statement is to improve financial reporting by establishing the
definitions of public-private and public-public partnership arrangements (PPPs) and available payment
arrangement (APAs) and providing uniform guidance on accounting and financial reporting for
transactions that meet those definitions. The statement will be effective beginning fiscal year 2023.
GASB Statement No. 96, "Subscription-Based Information Technology Arrangements." Issued in May
2020, the statement provides guidance on the accounting and financial reporting for subscription based
information technology arrangements (SBITAs) for governments by (1) defining a SBITA, (2)
establishing that a SBITA results in a right-to-use subscription asset-an intangible asset-and a
corresponding subscription liability, (3) providing the capitalization criteria for outlays other than
subscription payments, including implementation costs of a SBITA, and (4) requiring note disclosures
regarding a SBITA. The statement will be effective beginning fiscal year 2023.
GASB Statement No. 97, "Certain Component Unit Criteria, and Accounting and Financial Reporting for
Internal Revenue Code Section 457 Deferred Compensation Plans—an amendment of GASB Statements
53
61
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
No. 14 and No. 84, and a supersession of GASB Statement No. 32." Issued in June 2020, the statement
will result in more consistent financial reporting of defined contribution pension plans, defined
contribution OPEB plans, and other employee benefit plans (e.g., certain Section 457 plans), while
mitigating the costs associated with reporting those plans. The statement will be effective beginning fiscal
year 2022.
P.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 City of
Saratoga's California Public Employees' Retirement System (Ca1PERS) 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.
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 30,2021:
Primary Fiduciary
Government Activities Total
Cash and investments $ 29,383,610 $ 1,417,803 $ 30,801,413
Cash and investments with Fiscal Agent 442,732 - 442,732
Total Cash and Investments $ 29,826,342 $ 1,417,803 $ 31,244,145
The City's Cash and Investments at June 30, 2021, in more detail:
Cash and cash equivalents:
Petty cash $ 1,329
Demand deposits (791,666)
With Fiscal Agent 442,732
Total Cash and Cash Equivalents (347,605)
Investments:
Local Agency Investment Fund(LAIF) 31,591,750
Total Cash and Investments $ 31,244,145
A. Cash Deposits
The carrying amounts of the City's cash deposits was a deficit $791,666 at June 30, 2021. Bank balances
before reconciling items were $955,887 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
fiscal agent deposits are related to the Arrowhead bond and funding activities and are held with BNY
Mellon.
54
62
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
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.
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.
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.
55
63
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
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.
C.External Investment Pool
The City's investments with LAIF at June 30, 2021 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, 2021, the City had $31,591,750 invested in LAIF. In accordance with GASB 72, a fair
value factor of 1.00008297 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 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, 2021, these
investments had a weighted average maturity of 291 days.
56
64
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
The City had the following invested in LAIF:
Investment
Maturities
Fair Less Than
Value One Year
State of California-LAIF $ 31,591,750 $ 31,591,750
Credit Risk
As of June 30, 2021, 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 30,2021.
NOTE 3 -FUND FINANCIAL STATEMENTS INTERFUND TRANSACTIONS
Transfers In/Out
Transfers for the year ended June 30,2021 were as follows:
Transfer in Transfer out Amount
Capital Improvement Fund General Fund $ 2,885,500
Capital Improvement Fund Capital Improvement Fund 75,000
General Fund Capital Improvement Fund 506,050
Total Transfers $ 3,466,550
The Capital Improvement Funds received funds from the General Fund adopted in the Budget in the
amount of $2,885,500. Of this amount, $1,380,500 was allocated for street, sidewalk, and storm drain
repair, $795,000 for park and trail improvements, $500,000 for City facilities projects and $285,000 for
various administrative projects. An additional $75,000 was transferred between CIP projects and
$506,050 was transferred to the General Fund from closed CIP projects during the fiscal year.
57
65
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
NOTE 4-CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2021 is illustrated in the following table:
Primary Government
Balance Balance
July 1,2020 Additions Retirements Reclassifications June 30,2021
Governmental activities:
Capital assets,not being depreciated:
Land and land improvements $ 17,754,122 $ - $ - $ 2,406,591 $ 20,160,713
Construction in progress 11,452,695 2,292,123 - (4,650,615) 9,094,203
Infrastructure:
Street pavement system 52,683,239 - - 341,540 53,024,779
Total capital assets,not being depreciated 81,890,056 2,292,123 - (1,902,484) 82,279,695
Capital assets,being depreciated:
Buildings and structures 26,855,195 - - 515,544 27,370,739
Machinery and equipment
Governmental funds 2,269,290 - - - 2,269,290
Internal service funds 1,876,896 123,525 - - 2,000,421
Infrastructure:
Bridges 1,563,654 - - - 1,563,654
Signs and lights 2,463,676 - 586,300 3,049,976
Drainage system 40,140,053 - - 40,140,053
Sidewalks 14,538,964 - - 800,640 15,339,604
Total capital assets,being depreciated 89,707,728 123,525 - 1,902,484 91,733,737
Accumulated depreciation:
Buildings and structures (12,267,267) (767,979) - - (13,035,246)
Machinery and equipment
Governmental funds (1,598,105) (110,137) - - (1,708,242)
Internal service funds (1,365,591) (184,474) - - (1,550,065)
Infrastructure:
Bridges (1,197,169) (18,390) - - (1,215,559)
Signs and lights (1,495,389) (97,863) - - (1,593,252)
Drainage system (20,347,378) (802,800) - - (21,150,178)
Sidewalks (7,902,955) (415,670) - - (8,318,625)
Total accumulated depreciation (46,173,854) (2,397,313) - - (48,571,167)
Total capital assets,being depreciated,net 43,533,874 (2,273,788) - 1,902,484 43,162,570
Governmental activities capital assets,net $125,423,930 $ 18,335 $ - $ - $125,442,265
Depreciation expense was charged to the following departments:
General Government $ 1,269,425
Public Works 998,619
Community Services 102,014
Community Development 27,255
Total Depreciation Expense $ 2,397,313
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
58
66
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
"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.
NOTE 5-LONG-TERM OBLIGATIONS
A summary of the City's governmental long-term obligations for the year ended June 30, 2021, is presented
below:
Classification
Balance Balance Due Within Due In More
Description June 30,2020 Additions Retirements June 30,2021 One Year Than One Year
Government Activities:
General Obligation Bonds:
2011 Library bonds $ 8,075,000 $ - $ (545,000) $ 7,530,000 $ 565,000 $ 6,965,000
Net original issue premium 262,710 - (21,892) 240,818 21,892 218,926
Compensated absences 931,440 714,258 (650,270) 995,428 617,960 377,468
Total $ 9,269,150 $ 714,258 $ (1,217,162) $ 8,766,246 $ 1,204,852 $ 7,561,394
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 held in the Library Bond Debt Service Fund. 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
2022 $ 565,000 $ 278,260 $ 843,260
2023 580,000 258,185 838,185
2024 610,000 234,385 844,385
2025 630,000 209,585 839,585
2026 655,000 185,523 840,523
2027-2031 3,670,000 536,715 4,206,715
2032 820,000 16,400 836,400
Total $ 7,530,000 $ 1,719,053 $ 9,249,053
Compensated Absences
The City's liability for vested and unpaid compensated absences (accrued vacation and sick pay) has been
accrued and amounts to $931,440 at June 30, 2021. The compensated absences liability will generally be
liquidated through the General Fund.
59
67
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
A summary of the Fiduciary Fund long-term obligations for the year ended June 30,2021, is presented below:
Classification
Balance Balance Due Within Due In More
Description June 30,2020 Additions Retirements June 30,2021 One Year Than One Year
Fiduciary Funds:
Special Tax Bonds:
2018 Arrowhead CFD $ 2,308,929 $ - $ (486,148) $ 1,822,781 $ 25,520 $ 1,797,261
Total $ 2,308,929 $ - $ (486,148) $ 1,822,781 $ 25,520 $ 1,797,261
Arrowhead Community Facilities District Bond
The Arrowhead Community Facilities District encompasses 39 homes located along the hillside between
Rolling Hills Road and Blue Hills Lane, off of Prospect Road. Since 1951, this neighborhood has operated its
own private water company (Arrowhead Cooperative Company Inc., aka ACCI). Over the years the number of
Arrowhead Cooperative residents and water service meters have increased, to the extent that the water system
infrastructure is no longer sufficient for water and fire protection needs. The potential of the fire danger situation
prompted the Arrowhead Board to ask the City for assistance to issue a bond for the purpose of financing
improvements to the water system. Subsequently, on December 21, 2016, the City Council approved the
formation of the Arrowhead Community Facility District (CFD). On May 2, 2017, the CFD's 39 residential
parcel owners unanimously approved Measure L, which allowed for the assessment of a special tax levy to
finance a bond.
On October 17, 2018, the City Council authorized the issuance of the Saratoga Community Facilities District
2016-1 (Arrowhead Project) Special Tax Bonds, Series 2018, with the issue date of December 10, 2018. Debt
service on the Special Tax Bond is payable only from special taxes levied annually on taxable properties within
the CFD in the manner set forth in the Rate and Method of Apportionment (RMA) approved by the Council in
connection with the formation of the District. The 2018 Bonds will not have any impact on the City's General
Fund or Government-wide financial statements, and these special financing district bonds are not assets or
liabilities of the City for financial statement purposes.
Bond terms are 30 years at 6.05% interest. The payment amounts may change over time if bond holders choose
to pay off their share of the debt instead of following the bond's payment schedule. The annual debt service
requirements on these bonds are as follows:
Year Ended Principal Interest Total
2022 25,520 105,892 131,412
2023 27,064 104,301 131,365
2024 28,701 102,615 131,316
2025 30,438 100,826 131,264
2026 32,279 98,928 131,207
2027-2031 193,163 441,914 635,077
2032-2036 259,105 393,977 653,082
2037-2041 347,559 302,846 650,405
2042-2046 466,211 180,606 646,817
2047-2049 412,741 32,870 445,611
Total $ 1,822,781 $ 1,864,775 $ 3,687,556
60
68
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
NOTE 6-RISK MANAGEMENT
The City participates in the following public entity risk pool:
PLAN Workers' Compensation Shared Agency Risk Pool (SHARP) — 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, 2021, the City contributed $175,885 for current
year coverage. The City's contribution equals the ratio of the City's payroll to the total payroll 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$90,720 reported at June 30, 2021, is
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 30,2021 June 30,2020
Claims payable,beginning of year $ 90,720 $ 53,293
Fiscal year claims and changes in estimates - 37,427
Claims payments (50,871) -
Claims payable,end of year $ 39,849 $ 90,720
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.
Audited financial information for each risk pool may be obtained from Bickmore at 1750 Creekside Oaks
Dr., Ste. 200, Sacramento, California 95833.
61
69
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
NOTE 7-RETIREMENT PLANS
Defined Benefit Pension Plan
Plan Description — All Ca1PERS 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 (Ca1PERS).
Ca1PERS 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. Ca1PERS 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 Ca1PERS
website or copies of these reports may be obtained from their Executive Office located at 400 P Street,
Sacramento, California 95811.
Benefits Provided — Ca1PERS 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 benefits after 10 years of service. Death benefits include the 1959 Survivor Benefit and the
Optional Settlement 2 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, 2019,
are summarized as follows:
Miscellaneous
Tier 1 Tier 2 PEPRA
Benefit formula 2.5%@ 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 ben.as a%of eligible comp. 2.00% 2.00% 2.00%
Required employee contribution rates 7.00% 7.000% 7.25%
Required employer contribution rates 11.746% 9.442% 7.874%
Employees Covered—At June 30, 2021, the following employees were covered by the benefit terms for
the Plan:
Miscellaneous
Active 58
Transferred 41
Separated 38
Retired 121
Total 258
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 Ca1PERS. 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
62
70
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
contribute the difference between the actuarially determined rate and the contribution rate of employees.
For the year ended June 30, 2021, the employer contributions, including the UAL payment of$1,000,000,
recognized as part of pension expense for the Plan were as follows:
Miscellaneous
Contributions-employer $ 1,733,461
Contributions-employee 479,058
Total $ 2,212,519
Pension Liabilities, Pension Expenses and Deferred Ou flows/Inflows of Resources Related to Pensions -
As of June 30, 2021, 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/(Asset)
Miscellaneous $ 8,204,013
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, 2020, 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, 2019 rolled forward to June 30, 2020 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
30,2020 and 2021 was as follows:
Proportion-June 30,2020 0.07431%
Proportion-June 30,2021 0.07540%
Change- Increase/(Decrease) 0.001090/o
For the year ended June 30, 2021, the City recognized pension expense of$3,780,456. At June 30, 2021,
the City reported deferred outflows of resources and deferred inflows of resources related to pensions
from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Changes of Assumptions $ - $ 58,514
Differences between Expected and Actual Experience 422,777 -
Differences between Projected and Actual Investment Earnings 243,713 -
Differences between Employer's Contributions and
Proportionate Share of Contributions - 1,841,788
Change in Employer's Proportion 385,875 24,751
Pension Contributions Made Subsequent to Measurement Date 1,733,461 -
Total $ 2,785,826 $ 1,925,053
63
71
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
The City reported $1,733,461 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
30,2022.
Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be
recognized as pension expense as follows:
Deferred
Outflows/
Fiscal Year (Inflows)of
Ending June 30: Resources
2022 $ (504,016)
2023 (391,726)
2024 (93,839)
2025 116,893
2026 -
Thereafter -
Total $ (872,688)
Actuarial Assumptions — The total pension liabilities in the June 30, 2019 actuarial valuations were
determined using the following actuarial assumptions:
Valuation Date June 30, 2019
Measurement Date June 30, 2020
Actuarial Cost Method Entry-Age
Normal Cost
Method
Actuarial Assumptions:
Discount Rate 7.15%
Inflation 2.50%
Payroll Growth 2.75%
Projected Salary Increase (1)
Investment Rate of Return 7.15%(2)
Mortality (3)
(1) Varies by entry age and service
(2) Net of pension plan investment expenses, including inflation
(3) Derived using CalPERS' membership data for all funds
The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2019
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 7.15 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
64
72
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
of assets. Therefore, the current 7.15 percent discount rate is adequate, and the use of the municipal bond
rate calculation is not necessary. The long term expected discount rate of 7.15 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 Ca1PERS website.
According to Paragraph 30 of Statement 68, the long-term discount rate should be determined without
reduction for pension plan administrative expense. The 7.15 percent investment return assumption used in
this accounting valuation is net of administrative expenses. Administrative expenses are assumed to be
15 basis points. Using this lower discount rate has resulted in a slightly higher Total Pension Liability
and Net Pension Liability. Ca1PERS checked the materiality threshold for the difference in calculation
and did not find it to be a material difference.
In determining the long-term expected rate of return, Ca1PERS 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 single 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.
Assumed
Asset Real Return Real Return
Asset Class (a) Allocation Years 1 - 10(b) Years 11+(c)
Global Equity 50.00% 4.80% 5.98%
Fixed Income 28.00% 1.00% 2.62%
Inflation Sensitive 0.00% 0.77% 1.81%
Private Equity 8.00% 6.30% 7.23%
Real Estate 13.00% 3.75% 4.93%
Liquidity 1.00% 0.00% -0.92%
Total 100.00%
(a) In the System's CAFR, Fixed Income is included in Global Debt Securities;
Liquidity is included in Short-term Investments; Inflation Assets are included
in both Global Equity Securities and Global Debt Securities.
(b) An expected inflation of 2.0%used for this period.
(c) An expected inflation of 2.92%used for this period.
65
73
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
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:
Miscellaneous
1%Decrease 6.15%
Net Pension Liability $ 15,541,779
Current 7.15%
Net Pension Liability $ 8,204,013
1%Increase 8.15%
Net Pension Liability $ 2,141,048
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, 2021,the net investment in capital assets consisted of the following:
Capital assets,net $ 125,442,265
2011 general obligation library bonds (7,530,000)
Net original issue premium (240,818)
Net investment in capital assets $ 1 17,671,447
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.
66
74
CITY OF SARATOGA
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2021
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.
The West Valley Clean Water Program consists of the Cities of Campbell, Monte Sereno, Saratoga and
the Town of Los Gatos, and works to control discharge of polluted stormwater into local creeks and the
San Francisco Bay.
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-COMMITMENTS AND CONTINGENCIES
A.Lawsuits
The City is presently involved in certain matters of litigation that have arisen in the normal course of
conducting City business. City management believes, based upon consultation with the City Attorney,
that these cases, in the aggregate, are not expected to result in a material adverse financial impact on the
City. Additionally, City management believes that the City's insurance programs are sufficient to cover
any potential losses should an unfavorable outcome materialize.
B. Federal and State Grant Programs
The City participates in Federal and State grant programs. In qualifying years,these programs are audited
by the City's independent accountants in accordance with the provisions of the Federal Single Audit Act
Amendments of 1996 and applicable State requirements. For Federal programs,the City did not reach the
level of qualifying cost during the current fiscal year, so no 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 outstanding contracts or planned construction projects as of June 30, 2021 totaling$704,575
million. Of this amount, $138,648 million was committed to the Traffic Safety Battery Backup project,
$42,230 million was committed to Safe Routes to Schools Project, and $112,834 million was committed
to the Roadway Improvement Project. The entire total of the outstanding commitments are within the
Capital Projects Fund.
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 30,2021.
67
75
Page left intentionally blank
68
76
ok S A Rq T�C9
1956
FORN�P
REQUIRED SUPPLEMENTARY INFORMATION
69
77
CITY OF SARATOGA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2021
NOTE 1 -BUDGETARY INFORMATION
The following is the budget comparison schedule for General Fund.
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES:
Property taxes $ 14,936,000 $ 14,936,000 $ 16,277,201 $ 1,341,201
Sales taxes 750,000 750,000 925,289 175,289
Other local taxes 655,000 655,000 868,821 213,821
Licenses&permits 1,448,770 1,448,770 2,151,704 702,934
Fines&forfeitures 104,000 104,000 81,323 (22,677)
Intergovernmental-State 470,000 470,000 520,952 50,952
Intergovernmental-Other 30,000 57,687 67,515 9,828
Charges for services 875,994 875,994 949,392 73,398
Franchise fees 2,245,000 2,245,000 2,264,237 19,237
Use of money&property 557,699 522,199 211,097 (311,102)
Other revenue 321,077 1,529,407 1,700,187 170,780
Total revenues 22,393,540 23,594,057 26,400,850 2,806,793
EXPENDITURES:
Current:
General and intergovernmental services 5,755,734 6,111,532 5,772,353 339,179
Public safety 6,738,018 6,739,977 6,734,604 5,373
Public works 6,915,046 7,144,420 6,877,303 267,117
Community services 1,117,780 1,145,385 972,100 173,285
Community development services 2,725,923 3,050,200 2,878,072 172,128
Total expenditures 23,252,501 24,191,514 23,234,432 957,082
REVENUESOVER
(UNDER)EXPENDITURES (858,961) (597,457) 3,166,418 3,763,875
OTHER FINANCING SOURCES(USES):
Transfers in - - 506,050 506,050
Transfers out (2,485,500) (2,885,500) (2,885,500) -
Total other financing sources(uses) (2,485,500) (2,885,500) (2,379,450) 506,050
Net change in fund balances $ (3,344,461) $ (3,482,957) 786,968 $ 4,269,925
FUND BALANCES:
Beginning of year 14,434,607
End of year $ 15,221,575
70
78
CITY OF SARATOGA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2021
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 and five-year capital
improvements plan 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.
£ 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.
71
79
CITY OF SARATOGA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2021
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
February 21, 2020. 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 of residential.
To determine the City's street condition, a visual survey of all pavement segments is conducted to assess
the existing surface condition of each of the individual pavement segments. Upon completion of the
study, a Pavement Condition Index (PCI) is calculated for each segment in the City's pavement network
to reflect the overall pavement condition. Rating between 0 and 100, a PCI of 0 would correspond to a
badly deteriorated pavement with virtually no remaining life. A PCI of 100 would correspond to a
pavement with proper engineering design and construction at the beginning of its life cycle.
72
80
CITY OF SARATOGA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2021
The following conditions were defined:
Condition Rating
Very Good 70- 100
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 May 31, 2021, the City's street system was
rated at an estimated PCI index of 66 on average with the detail condition as follows:
Percent of
Condition Streets
Very Good 48%
Good 31%
Poor 15%
Very Poor 6%
The City's estimates of the amounts needed to maintain the following networks over the previous five
fiscal years are as follows:
Fiscal Year Ended June 30,
2017 2018 2019 2020 2021
Street Infrastructure $ 4,315,145 $ 5,363,853 $ 8,735,674 $ 7,438,484 $ 2,800,457
The City expended$2,800,457 on street maintenance and infrastructure for the year ended June 30, 2021.
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 for a minimum of
$2,000,000 be budgeted for the CIP Streets program on an annual basis. $10,296,145 is budgeted for
various street projects in the five-year CIP cycle beginning Fiscal Year 2021/22.
As of June 2021, approximately 21 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
(2019-2024)will amount to approximately$43,500,000 for all streets.
73
81
CITY OF SARATOGA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2021
NOTE 3-PENSION INFORMATION
Miscellaneous Plan
Fiscal Year Ended 2015 2016 2017 2018 2019 2020 2021
Contractually Required Contributions $ 908,980 $ 668,417 $ 617,707 $ 707,891 $ 583,629 $ 660,749 $ 719,682
Contributions in Relation to Contractually
Required Contributions 4,203,599 1,109,589 1,016,197 1,289,450 1,637,179 1,701,847 1,733,461
Contribution Deficiency(Excess) $(3,294,619) $ (441,172) $ (398,490) $ (581,559) $(1,053,550) $(1,041,098) $(1,013,779)
Covered Payroll $ 4,856,304 $ 6,335,330 $ 5,908,831 $ 5,692,653 $ 6,156,572 $ 6,590,150 $ 6,568,081
Contributions as a%of CoveredPayri 86.56% 17.51% 17.20% 22.65% 26.59% 25.82% 26.39%
Notes to Schedule:
Valuation Date: June 30,2019
Assumptions Used: Entry Age Method used for Actuarial Cost Method
Level Percentage of Payroll and Direct Rate Smoothing
3.8 Years Remaining Amortization Period
Inflation Assumed at 2.5%
Investment Rate of Returns set at 7.15%
CalPERS mortality table based on CaIPERS'experience and include 15 years of projected ongoing mortality
improvement using 90 percent of Scale MP 2016 published by the Society of Actuaries.
Miscellaneous Plan
Fiscal Year Ended 2015 2016 2017 2018 2019 2020 2021
Proportion of Net Pension
Liability(Safety and Misc) 0.11163% 0.06216% 0.07322% 0.07620% 0.07510% 0.07431% 0.07540%
Proportion of Net Pension
Liability(Misc Plan Only) 0.28104% 0.15551% 0.18238% 0.19170% 0.19202% 0.19016% 0.19450%
Proportionate Share of
Net Pension Liability $ 6,945,916 $ 4,266,268 $ 6,335,606 $ 7,556,748 $ 7,236,672 $ 7,614,972 $ 8,204,013
Covered Payroll $ 4,714,858 $ 4,856,304 $ 6,335,330 $ 5,908,831 $ 5,692,653 $ 6,156,572 $ 6,590,150
Proportionate Share ofNPL
as a%ofCovered Payroll 14732% 87.85% 100.00% 127.89% 127.12% 123.69% 124.49%
Plan's Fiduciary Net Position
as a%ofthe TPL 81.15% 90.52% 85.60% 84.66% 85.34% 85.36% 85.12%
Fiscal year 2015 was the first year of implementation,therefore only seven years are shown.
The CaIPERS discount rate was increased from 7.5%to 7.65%in fiscal year 2016 and then decreased from 7.65%
to 7.15%in fiscal year 2018.
the CalPERS mortality assumptions was adjusted in fiscal year 2019.
74
82
o{ s A Rq r�cv
1956
SUPPLEMENTARY INFORMATION
75
83
This page is intentionally blank
76
84
NONMAJOR GOVERNMENTAL FUNDS
Special Revenue Funds
Landscape & Lighting District and Storm Drain Funds — These funds account for revenues and
expenditures associated with maintaining the City's 30 Landscape, Lighting, and Storm Drain zones
which were approved by consent of property owners living along or within the boundaries of the zones.
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.
77
85
CITY OF SARATOGA
COMBINING BALANCE SHEETS
NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2021
Special
Revenue Debt Service
Lighting and Total
Landscaping Other
Assessment Library Governmental
District Bond Funds
ASSETS
Restricted cash and investments $ 908,154 $ 790,240 $ 1,698,394
Receivables:
Accounts 39 1,145 1,184
Total assets $ 908,193 $ 791,385 $ 1,699,578
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 35,248 $ - $ 35,248
Total liabilities 35,248 - 35,248
Fund Balances:
Restricted:
Lighting and landscape assessments 872,945 - 872,945
Debt service - 791,385 791,385
Total fund balances 872,945 791,385 1,664,330
Total liabilities and fund balances $ 908,193 $ 791,385 $ 1,699,578
78
86
CITY OF SARATOGA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Special Debt
Revenue Service
Lighting and Total
Landscaping Other
Assessment Library Governmental
District Bond Funds
REVENUES:
Property taxes $ 16,842 $ - $ 16,842
Special assessment 485,979 845,577 1,331,556
Use of money and property 4,292 948 5,240
Total revenues 507,113 846,525 1,353,638
EXPENDITURES:
Current:
General and ingodt services
Public works 421,902 - 421,902
Debt service:
Principal - 545,000 545,000
Interest and fiscal charges - 298,385 298,385
Total expenditures 421,902 843,385 1,265,287
REVENUES OVER
(UNDER)EXPENDITURES 85,211 3,140 88,351
OTHER FINANCING SOURCES(USES):
Transfers in - - -
Transfers out - - -
Total other financing sources(uses) - - -
Net change in fund balances 85,211 3,140 885351
FUND BALANCES:
Beginning of year 787,734 788,245 1,575,979
End of year $ 872,945 $ 791,385 $ 1,664,330
79
87
CITY OF SARATOGA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE -BUDGET AND ACTUAL
CAPITAL IMPROVEMENT
FOR THE YEAR ENDED JUNE 30, 2021
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES:
Licenses&permits $ 476,300 $ 476,300 $ 612,242 $ 135,942
Fines&forfeitures - - 300 300
Intergovermental-Federal 2,394,635 2,394,635 356,715 (2,037,920)
hntergovermental-State 1,491,711 1,641,711 1,358,197 (283,514)
hntergovermental-Other 1,430,980 1,430,980 1,806,409 375,429
Charges for services 15,000 15,000 10,952 (4,048)
Franchise Fees 80,000 80,000 74,145 (5,855)
Other revenue 265,546 265,546 314,532 48,986
Total revenues 6,154,172 6,304,172 4,533,492 (1,770,680)
EXPENDITURES:
Capital outlay 13,331,913 13,881,913 5,866,022 8,015,891
Total expenditures 13,331,913 13,881,913 5,866,022 8,015,891
REVENUES OVER
(UNDER)EXPENDITURES (7,177,741) (7,577,741) (1,332,530) 6,245,211
OTHER FINANCING SOURCES(USES):
Transfers in 2,485,500 2,960,500 2,960,500 -
Transfers out - (75,000) (581,050) (506,050)
Total other financing sources(uses) 2,485,500 2,885,500 2,379,450 (506,050)
Net change in fund balances $ (4,692,241) $ (4,692,241) 1,046,920 $ 5,739,161
FUND BALANCES:
Beginning of year 4,716,865
End of year $ 5,763,785
80
88
CITY OF SARATOGA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE -BUDGET AND ACTUAL
LANDSCAPE & LIGHTING DISTRICT SPECIAL REVENUE FUND
FOR THE YEAR ENDED JUNE 30, 2021
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES:
Property taxes $ 13,273 $ 13,273 $ 16,842 $ 3,569
Special assessments 491,464 491,464 485,979 (5,485)
Use of money and property 7,394 7,394 4,292 (3,102)
Total revenues 512,131 512,131 507,113 (5,018)
EXPENDITURES:
Current:
Public works 507,457 522,457 421,902 100,555
Total expenditures 507,457 522,457 421,902 100,555
REVENUES OVER
(UNDER)EXPENDITURES 4,674 (10,326) 85,211 95,537
Net change in fund balances $ 4,674 $ (10,326) 85,211 $ 95,537
FUND BALANCES:
Beginning of year 787,734
End of year $ 872,945
81
89
CITY OF SARATOGA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE -BUDGET AND ACTUAL
LIBRARY BOND DEBT SERVICE FUND
FOR THE YEAR ENDED JUNE 30, 2021
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES:
Special assessments $ 817,143 $ 817,143 $ 845,577 $ 28,434
Use of money and property 1,200 1,200 948 (252)
Total revenues 818,343 818,343 846,525 28,182
EXPENDITURES:
Debt service:
General and ingov't services
Principal 545,000 545,000 545,000 -
Interest and fiscal charges 299,635 299,635 298,385 1,250
Total expenditures 844,635 844,635 843,385 1,250
REVENUES OVER
(UNDER)EXPENDITURES (26,292) (26,292) 3,140 29,432
Net change in fund balances $ (26,292) $ (26,292) 3,140 $ 29,432
FUND BALANCES:
Beginning of year 788,245
End of year $ 791,385
82
90
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 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 Support 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.
83
91
CITY OF SARATOGA
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF NET POSITION
JUNE 30, 2021
Liability/ Information
Risk Workers' Office Technology
Management Compensation Support Services
ASSETS
Current assets:
Cash and investments $ 730,560 $ 229,297 $ 144,316 $ 630,601
Accounts receivable 3,257 2,710 - 1,152
Total current assets 733,817 232,007 144,316 631,753
Noncurrent assets:
Capital assets:
Machinery and equipment - - - -
Less: accumulated depreciation - - - -
Total capital assets(net of
accumulated depreciation) - - - -
Total assets $ 733,817 $ 232,007 $ 144,316 $ 631,753
LIABILITIES
Liabilities:
Current liabilities:
Accounts payable $ - $ 162 $ 150 $ 6,164
Accrued payroll and benefits 6,983 3,478 - 34,158
Claims payable 39,849 - - -
Total current liabilities $ 46,832 $ 3,640 $ 150 $ 40,322
NET POSITION
Investment in capital assets $ - $ - $ - $ -
Unrestricted 686,985 228,367 144,166 591,431
Total net position $ 686,985 $ 228,367 $ 144,166 $ 591,431
84
92
Information Building
Vehicle Vehicle Technology Furniture&
and Equipment Building and Equipment Equipment Fixtures
Maintenance Maintenance Replacement Replacement Replacement Total
$ 317,463 $ 744,928 $ 621,987 $ 735,699 $ 679,392 $ 4,834,243
- - - - - 7,119
317,463 744,928 621,987 735,699 679,392 4,841,362
- - 1,692,659 110,465 197,297 2,000,421
- - (1,370,490) (110,465) (69,109) (1,550,064)
- - 322,169 - 128,188 450,357
$ 317,463 $ 744,928 $ 944,156 $ 735,699 $ 807,580 $ 5,291,719
$ 6,265 $ 27,056 $ 42,466 $ - $ 5,717 $ 87,980
9,193 33,542 - - - 87,354
- - - - - 39,849
$ 15,458 $ 60,598 $ 42,466 $ - $ 5,717 $ 215,183
$ - $ - $ 322,169 $ - $ 128,188 $ 450,357
302,005 684,330 579,521 735,699 673,675 4,626,179
$ 302,005 $ 684,330 $ 901,690 $ 735,699 $ 801,863 $ 5,076,536
85
93
CITY OF SARATOGA
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN FUND NET POSITION
FOR THE YEAR ENDED JUNE 30, 2021
Liability/ Information
Risk Workers' Office Technology
Management Compensation Support Services
Operating revenues:
Charges for services $ 600,004 $ 200,000 $ 40,000 $ 850,000
Other operating revenues 14,293 6,019 7,761 9,745
Total operating revenues 614,297 206,019 47,761 859,745
Operating expenses:
Cost of services 431,131 229,664 39,388 650,437
Depreciation - - - -
Total operating expenses 431,131 229,664 39,388 650,437
Operating income 183,166 (23,645) 8,373 209,308
Change in net position 183,166 (23,645) 8,373 209,308
Total net position-beginning 503,819 252,012 135,793 382,123
Total net position-ending $ 686,985 $ 228,367 $ 144,166 $ 591,431
86
94
Information Building
Vehicle Vehicle Technology Furniture&
and Equipment Building and Equipment Equipment Fixtures
Maintenance Maintenance Replacement Replacement Replacement Total
$ 275,000 $ 900,000 $ 150,000 $ 150,000 $ 200,000 $ 3,365,004
- - - - - 37,818
275,000 900,000 150,000 150,000 200,000 3,402,822
273,670 836,253 8,507 17,343 30,734 2,517,127
- - 155,377 - 29,097 184,474
273,670 836,253 163,884 17,343 59,831 2,701,601
1,330 63,747 (13,884) 132,657 140,169 701,221
1,330 63,747 (13,884) 132,657 140,169 701,221
300,675 620,583 915,574 603,042 661,694 4,375,315
$ 302,005 $ 684,330 $ 901,690 $ 735,699 $ 801,863 $ 5,076,536
87
95
CITY OF SARATOGA
INTERNAL SERVICE FUNDS
COMBINING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2021
Liability/ Information
Risk Workers' Office Technology
Management Compensation Support Services
Cash flows from operating activities:
Receipts from customers and users $ 614,063 $ 205,388 $ 47,761 $ 858,998
Payments to suppliers (412,603) (190,359) (39,372) (253,100)
Payments to employees (75,205) (38,442) - (378,787)
Net cash provided by operating activities 126,255 (23,413) 8,389 227,111
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 126,255 (23,413) 8,389 227,111
Cash and cash equivalents,beginning of year 604,305 252,710 135,927 403,490
Cash and cash equivalents,ending of year $ 730,560 $ 229,297 $ 144,316 $ 630,601
Reconciliation of operating income to net cash provided
by operating activities:
Operating income(loss) $ 183,166 $ (23,645) $ 8,373 $ 209,308
Adjustments to reconcile operating income(loss)
to net cash provided(used)by operating activities:
Depreciation - - - -
Change in operating assets and liabilities:
Accounts receivables (234) (631) (747)
Accounts payable (8,841) (724) 16 2,656
Accrued payroll 3,035 1,587 15,894
Claims payable (50,871) - - -
Net cash provided(used)by operating activities $ 126,255 $ (23,413) $ 8,389 $ 227,111
88
96
Information Building
Vehicle Vehicle Technology Furniture&
and Equipment Building and Equipment Equipment Fixtures
Maintenance Maintenance Replacement Replacement Replacement Total
$ 275,000 $ 901,683 $ 151,024 $ 150,000 $ 200,000 $ 3,403,917
(171,195) (436,252) 33,959 (21,133) (25,017) (1,515,072)
(97,628) (408,212) - - - (998,274)
6,177 57,219 184,983 128,867 174,983 890,571
- - (99,304) - (24,221) (123,525)
- - (99,304) - (24,221) (123,525)
6,177 57,219 85,679 128,867 150,762 767,046
311,286 687,709 536,308 606,832 528,630 4,067,197
$ 317,463 $ 744,928 $ 621,987 $ 735,699 $ 679,392 $ 4,834,243
$ 1,330 $ 63,747 $ (13,884) $ 132,657 $ 140,169 $ 701,221
- - 155,377 - 29,097 184,474
- 1,683 1,024 - - 1,095
(649) (23,065) 42,466 (3,790) 5,717 13,786
5,496 14,854 - - - 40,866
- - - - - (50,871)
$ 6,177 $ 57,219 $ 184,983 $ 128,867 $ 174,983 $ 890,571
89
97
This page is intentionally blank
90
98
CAPITAL ASSETS
USED IN THE OPERATION
OF GOVERNMENTAL FUNDS
91
99
This page is intentionally blank
92
100
CITY OF SARATOGA
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
COMPARATIVE SCHEDULE BY SOURCE
JUNE 30, 2021 AND 2020
2021 2020
Governmental Funds Capital Assets:
Land and land improvements $ 20,160,714 $ 17,754,123
Buildings and structures 27,370,740 26,855,196
Machinery and equipment 2,269,291 2,269,289
Infrastructure 113,118,066 111,3 89,5 86
Construction in progress 9,094,200 11,452,692
Total Governmental Funds Capital Assets 172,013,011 169,720,886
Accumulated depreciation (47,021,103) (44,808,263)
Total Governmental Funds Capital Assets,Net $ 124,991,908 $ 124,912,623
Investments in Governmental Funds
Capital Assets by Source:
General Fund $ 115,212,479 $ 115,212,479
Special revenue funds 960,972 960,972
Capital projects funds 54,992,212 52,700,087
Donations 847,348 847,348
Accumulated depreciation (47,021,103) (44,808,263)
Total Governmental Funds Capital Assets $ 124,991,908 $ 124,912,623
' 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.
93
101
CITY OF SARATOGA
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE BY FUNCTION AND ACTIVITY'
JUNE 30, 2021
Land Buildings Machinery
and Land and and
Improvements Structures Equipment
Function and Activity
General and intergovernmental services:
Management services $ - $ 564,632 $ 624,241
Administrative services - 521,073 140,332
Intergovernmental services 118,184 3,138,641 22,225
Total General and Intergovernmental Services: 118,184 4,224,346 786,798
Public safety:
Police services - - 15,434
Code enforcement - - 7,548
Total Public Safety: - - 22,982
Public works:
Streets and sidewalks 835,155 62,921 315,275
Parks/open space 9,287,374 3,275,380 151,110
Total Public Works: 10,122,529 3,338,301 466,385
Community services 8,177,537 4,977,650 916,773
Community development services 1,742,464 14,830,443 76,353
Total Governmental Funds Capital Assets 20,160,714 27,370,740 2,269,291
Accumulated depreciation - (13,035,247) (1,708,242)
Total Governmental Funds Capital Assets,Net $ 20,160,714 $ 14,335,493 $ 561,049
' 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.
94
102
Construction
in
Infrastructure Progress Total
$ - $ 73,051 $ 1,261,924
- 661,405
- 3,279,050
73,051 5,202,379
- 15,434
- 7,548
- 22,982
112,990,829 8,054,492 122,258,672
- 799,581 13,513,445
112,990,829 8,854,073 135,772,117
127,237 167,076 14,366,273
- - 16,649,260
113,118,066 9,094,200 172,013,011
(32,277,614) - (47,021,103)
$ 80,840,452 $ 9,094,200 $ 124,991,908
95
103
CITY OF SARATOGA
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE OF CHANGE BY FUNCTION AND ACTIVITY
JUNE 30, 2021
Governmental Governmental
Funds Capital Funds Capital
Assets Assets
July 1,2020 Additions Deletions June 30,2021
Function and Activity
General and intergovernmental services:
Management services $ 1,261,924 $ - $ $ 1,261,924
Administrative services 661,405 - - 661,405
Intergovernmental services 3,279,050 - - 3,279,050
Total General and Intergovernmental Services: 5,202,379 - - 5,202,379
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 121,177,281 2,726,802 (1,645,411) 122,258,672
Parks/open space 12,439,853 3,544,002 (2,470,410) 13,513,445
Total Public Works: 133,617,134 6,270,804 (4,115,821) 135,772,117
Community services 14,744,677 156,390 (534,794) 14,366,273
Community development services 16,133,714 515,545 - 16,649,259
Total Governmental Funds Capital Assets 169,720,886 6,942,739 (4,650,615) 172,013,010
Accumulated depreciation (44,808,263) (2,212,839) - (47,021,102)
Total Governmental Funds Capital Assets,Net $ 124,912,623 $ 4,729,900 $ (4,650,615) $ 124,991,908
'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.
96
104
o{ SARg10
9
1956
��LIFORN�P
STATISTICAL SECTION
97
105
This page is intentionally blank
98
106
This part of the City of Saratoga's Annual Comprehensive 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. 100-109
Revenue Capacity
These schedules contain information to help the reader assess the government's
most significant local revenue source;property tax. 110-114
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. 116-122
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. 123-124
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. 126-131
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.
99
107
CITY OF SARATOGA
NET POSITION BY COMPONENT
LAST TEN YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(amounts expressed in thousands)
Fiscal Year
2012 2013 2014 2015
Primary government
Governmental activities
Net investment in capital assets $ 111,201 $ 112,353 $ 112,116 $ 112,092
Restricted 1,938 1,971 2,045 2,138
Unrestricted 12,248 13,357 15,095 6,691
Total primary government $ 125,387 $ 127,681 $ 129,256 $ 120,921
Net Position by Component
$140,000
$130,000
$120,000
$110,000
$100,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
■ Net investment in capital assets ■ Restricted ■ Unrestricted
Source:CAFR
100
108
Fiscal Year
2016 2017 2018 2019 2020 2021
$ 112,030 $ 111,241 $ 113,053 $ 115,250 $ 117,086 $ 117,671
2,242 2,375 2,596 2,718 1,689 1,727
13,837 13,438 13,693 15,825 16,572 17,091
$ 128,109 $ 127,054 $ 129,342 $ 133,793 $ 135,347 $ 136,489
101
109
CITY OF SARATOGA
CHANGES IN NET POSITION
LAST TEN YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
(amounts expressed in thousands)
Fiscal Year
2012 2013 2014 2015
Expenses:
Governmental activities:
General and intergovernmental services $ 3,486 $ 4,143 $ 4,522 $ 7,566
Public safety 4,300 4,382 4,491 4,850
Public works 9,121 6,922 7,379 6,273
Community services 1,996 1,804 1,586 1,589
Community development services 1,553 1,713 2,179 1,962
Interest on long-term debt(unallocated) 453 410 400 391
Total governmental activities expenses 20,909 19,374 20,557 22,631
Program revenues:
Charges for services:
General and intergovernmental services 140 102 120 122
Public safety 594 607 330 354
Public works 2,079 3,316 2,768 2,474
Community services 890 946 958 952
Community development services 1,923 2,184 2,220 2,234
Operating grants and contributions 1,319 75 117 107
Capital grants and contributions 2,337 599 808 785
Total governmental activates program revenues 9,282 7,829 7,321 7,028
Net(expense)revenue and change in net position (11,627) (11,545) (13,236) (15,603)
General revenue and other changes in net assets
Taxes:
Property taxes 8,457 9,153 9,737 10,669
Sales taxes 1,101 1,051 941 1,224
Local taxes 683 769 822 866
Franchise taxes 1,852 1,920 1,949 2,070
Motor vehicle in-lieu 16 16 14 13
Total Taxes 12,109 12,909 13,463 14,842
Intergovernmental 910 766 981 1,023
Investment earnings 67 51 62 67
Other revenues 118 113 305 237
Total general revenues 13,204 13,839 14,811 16,169
Change in net position 1,577 2,294 1,575 566
Net position-beginning of year 123,810 125,387 127,681 129,256
GAS13 68 adjustment - - - (8,901)
Net position-beginning of year,as adjusted 123,810 125,387 127,681 120,355
Net position-end of year $ 125,387 $ 127,681 S 129,256 $ 120,921
Source:CAFR
102
110
Fiscal Year
2016 2017 2018 2019 2020 2021
$ 5,143 $ 6,450 $ 6,010 $ 6,465 $ 7,071 $ 7,287
4,787 5,444 5,728 6,005 6,355 6,735
6,181 9,164 7,943 10,271 11,340 12,530
1,582 1,557 1,594 1,287 865 966
2,012 2,906 2,285 2,198 2,727 3,263
381 367 359 334 308 289
20,086 25,888 23,919 26,560 28,666 31,070
98 153 152 107 57 80
310 327 368 467 340 330
3,004 2,462 2,397 2,376 2,056 2,404
1,114 1,071 914 736 240 136
2,397 2,127 2,343 1,815 1,906 2,396
165 223 90 95 72 564
183 1,062 219 3,631 1,595 1,091
7,271 7,425 6,483 9,227 6,266 7,001
(12,815) (18,463) (17,436) (17,333) (22,400) (24,069)
11,549 12,264 14,124 15,250 16,056 16,294
1,189 1,185 1,125 1,207 1,056 926
898 857 960 896 807 869
2,069 2,171 2,166 2,290 2,605 2,338
12 13 16 15 25 -
15,717 16,490 18,391 19,658 20,549 20,427
718 589 802 1,223 2,602 2,838
101 124 319 698 623 34
273 205 212 205 180 1,912
16,809 17,408 19,724 21,784 23,954 25,211
3,994 (1,055) 2,288 4,451 1,554 1,142
120,921 128,109 127,054 129,342 133,793 135,347
3,193 - - - - -
124,114 128,109 127,054 129,342 133,793 135,347
$ 128,109 $ 127,054 $ 129,342 $ 133,793 $ 135,347 $ 136,489
103
111
CITY OF SARATOGA
FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
(amounts expressed in thousands)
Fiscal Year
2012 2013 2014 2015
General fund:
Nonspendable
Restricted 513 463 413 363
Committed 600 675 993 1,000
Assigned 3,161 792 2,648 2,854
Unassigned 4,655 7,989 7,782 5,589
Total general fund $ 8,929 $ 9,919 $ 11,836 $ 9,806
All other governmental funds:
Restricted
Special revenue funds $ 563 $ 622 $ 734 $ 868
Debt service 862 886 898 907
Committed
Capital project funds 3,544 3,420 3,126 3,859
Total all other governmental funds $ 4,969 S 4,928 $ 4,758 $ 5,634
Fund Balances of Governmental Funds
$9,000
$8,000 ■2012
$7,000 ■2013
$6,000 ■2014
■2015
$5,000 ■2016
$4,000 ■2017
$3,000 ■2018
■2012
$2,000
■2020
$1,000 ■2021
$- L
General- General- General- General- General- Debt Service Special Capital
Nonspendable Restricted Committed Assigned Unassigned Revenue Projects
Source:CAFR
104
112
Fiscal Year
2016 2017 2018 2019 2020 2021
$ - $ - $ - $ 7
313 263 213 163 113 63
1,000 790 1,000 1,000 1,000 1,000
2,672 3,272 3,705 5,399 5,845 6,518
6,655 6,659 8,216 8,117 7,477 7,634
$ 10,640 $ 10,984 $ 13,134 $ 14,679 $ 14,435 $ 15,222
$ 1,006 $ 1,153 $ 1,385 $ 1,622 $ 788 $ 873
923 959 998 933 788 791
4,716 5,085 3,537 3,252 4,717 5,764
$ 6,645 $ 7,197 $ 5,920 $ 5,807 $ 6,293 $ 7,428
105
113
CITY OF SARATOGA
GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE
LAST TEN YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(amounts expressed in thousands)
Fiscal Year
2012 2013 2014 2015
Tax revenues:
Property taxes $ 8,457 $ 9,153 $ 9,737 $ 10,669
Special assessments 1,243 1,185 1,207 1,220
Sales taxes 1,101 1,051 941 1,224
Local taxes 683 769 822 866
Franchise taxes 1,852 1,920 2,024 2,069
Motor vehicle in-lieu 16 16 14 13
Total tax revenues $ 13,352 $ 14,094 $ 14,745 $ 16,061
Tax Revenues by Source
$18,000
■2012
$16,000
$14,000 ■2013
$12,000 ■2014
$10,000 ■2015
$8,000 ■2016
$6,000 ■2017
$4,000 ■2018
$2,000 ■2012
$-
MMMMMMEW
Property taxes Special Sales taxes Local taxes Franchise taxes Motor vehicle ■2020
assessments in-lieu
Source:CAFR
106
114
Fiscal Year
2016 2017 2018 2019 2020 2021
$ 11,549 $ 12,264 $ 13,247 $ 14,475 $ 15,356 $ 16,294
1,222 1,270 1,333 1,205 1,174 1,332
1,189 1,185 1,125 1,207 1,057 926
898 857 960 881 807 869
2,068 2,171 2,166 2,290 2,605 2,338
12 14 16 15 25 -
$ 16,938 $ 17,761 $ 18,847 $ 20,073 $ 21,024 $ 21,759
107
115
CITY OF SARATOGA
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN YEARS
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)
(amounts expressed in thousands)
Fiscal Year
2012 2013 2014 2015
Revenues:
Property taxes $ 8,457 $ 9,153 $ 9,737 $ 10,669
Special assessments 1,243 1,185 1,207 1,220
Sales taxes 1,101 1,051 941 1,224
Other local taxes 683 769 823 866
Licenses and permits 1,728 2,177 2,023 1,613
Fines and forfeitures 234 199 196 175
Intergovernmental-federal 1,915 975 796 651
Intergovernmental-state 1,728 1,142 1,410 1,538
Intergovernmental-other 73 269 129 97
Franchise fees 1,852 1,920 1,949 2,070
Use of money any property 589 527 521 557
Other revenues 2,199 2,421 2,547 2,589
Current services charges - - - -
Total tax revenues 21,802 21,788 22,279 23,269
Expenditures:
Current:
General and intergovernmental services 3,145 3,269 3,247 6,624
Public safety 4,310 4,392 4,491 4,860
Public works 4,751 4,966 5,243 5,381
Community services 1,269 1,318 1,383 1,328
Community development services 1,888 2,047 2,182 2,087
Capital outlay 5,179 3,979 3,096 3,253
Debt service:
Principal 370 455 485 495
Interest and fiscal charges 551 414 405 395
Total expenditures 21,463 20,840 20,532 24,423
over(under)expenditures 339 948 1,747 (1,154)
Other financing sources(uses):
Transfers in 510 510 1,291 785
Transfers out (485) (485) (1,291) (785)
Total other financing sources(uses) 25 25 220 -
Netchangeinfundbalances $ 364 $ 973 $ 1,967 $ (1,154)
Debt as apercentage of noncapital expenditures 5.66% 5.15% 5.10% 4.20%
Source:CAFR
Debt as percentage of noncapital expenditures calculated by
dividing total debt service expenditures by total noncapital expenditures
108
116
Fiscal Year
2016 2017 2018 2019 2020 2021
$ 11,549 $ 12,264 $ 13,247 $ 14,475 $ 15,356 $ 16,294
1,222 1,270 1,333 1,205 1,174 1,332
1,189 1,185 1,125 1,207 1,057 925
898 857 960 896 807 869
2,216 1,908 2,677 2,360 2,042 2,764
248 171 127 127 112 82
158 954 181 3,375 1,035 740
1,182 1,053 1,253 1,777 1,819 1,879
76 222 136 241 2,082 1,874
2,068 2,171 2,166 2,290 2,605 2,338
647 651 779 1,148 916 216
2,709 2,203 2,397 2,081 1,394 2,015
- - - - - 960
24,162 24,909 26,381 31,182 30,399 32,288
4,246 4,372 4,585 5,205 5,261 5,773
5,226 5,444 5,705 6,005 6,355 6,735
5,701 6,002 6,085 6,535 6,919 7,299
1,475 1,573 1,292 1,397 962 972
2,193 2,324 2,247 2,309 2,545 2,878
2,591 3,450 4,747 7,458 7,270 5,866
500 475 485 500 525 545
385 373 362 341 321 298
22,317 24,013 25,508 29,750 30,158 30,366
1,845 896 873 1,432 241 1,922
1,768 3,580 3,397 3,397 4,817 3,467
(1,768) (3,580) (3,397) (3,397) (4,817) (3,467)
$ 1,845 $ 896 $ 873 $ 1,432 $ 241 $ 1,922
4.67% 4.23% 4.29% 3.77% 3.18% 3.00%
109
117
CITY OF SARATOGA
PROPERTY TAX RATES-DIRECT AND OVERLAPPING GOVERNMENTS
LAST TEN YEARS
(Property Tax Rates per$100 of Assessed Value)
Fiscal Year
2012 2013 2014 2015
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 0.0088 0.0080 0.0074 0.0070
Total 1.0500 1.0492 1.0486 1.0482
Campbell School District 0.0283 0.0246 0.0264 0.0235
County Bond 2008 Hospital 0.0047 0.0051 0.0035 0.0091
Co.Housing Bond 2016 - - - -
Campbell Elementary 2002 0.0266 0.0220 0.0288 0.0172
Campbell Elementary 2010 0.0003 0.0086 - 0.0145
Campbell Elementary 2016 - - - -
Campbell Union High 1999 0.0186 0.0165 0.0134 0.0130
Campbell Union High 2006 0.0156 0.0160 0.0156 0.0154
Campbell Union High 2016 - - - -
West Valley Community College District 2004 0.0137 0.0139 0.0125 0.0101
West Valley Community College District 2012 - 0.0150 0.0130 0.0019
West Valley Mission Community College District 2018 - - - -
Santa Clara Valley Water District-State Water Project 0.0063 0.0069 0.0070 0.0065
Santa Clara Valley Water District-Zone W-1 0.0001 - - -
Mid Peninsula Open Space 2014 - - - -
Total 0.1142 0.1286 0.1202 0.1112
Total Tax Rate 1.1642 1.1778 1.1688 1.1594
Source: Muniservices,LLC
110
118
Fiscal Year
2016 2017 2018 2019 2020 2021
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
0.0065 0.0060 0.0056 0.0046 0.0040 0.0046
1.0477 1.0472 1.0468 1.0458 1.0452 1.0458
0.0220 0.0294 0.0244 0.0175 0.0235 0.0220
0.0088 0.0086 0.0082 0.0072 0.0069 0.0069
- - 0.0127 0.0105 0.0100 -
0.0196 0.0258 0.0148 0.0085 0.0146 0.0139
0.0136 - 0.0158 0.0240 0.0131 0.0153
- - 0.0122 0.0172 0.0160 0.0160
0.0119 0.0126 0.0120 0.0111 0.0098 0.0097
0.0138 0.0126 0.0119 0.0108 0.0100 0.0097
- - 0.0280 0.0268 0.0238 0.0245
0.0118 0.0096 0.0096 0.0089 0.0081 0.0084
0.0114 0.0100 0.0104 0.0190 0.0105 0.0104
- - - - 0.0110 -
0.0057 0.0086 0.0062 0.0042 0.0041 0.0037
0.0008 0.0006 0.0009 0.0018 0.0016 0.0015
0.1194 0.1178 0.1671 0.1675 0.1630 0.1543
1.1671 1.1650 1.2139 1.2133 1.2082 1.2001
111
119
CITY OF SARATOGA
ASSESSED VALUE OF TAXABLE PROPERTY
LAST TEN YEARS
Fiscal Total
Year Total Less: Total Taxable Direct
Ended Residential Commercial Industrial Other Unsecured Assessed Tax Exempt Assessed Tax
June 30 Property Property Property Property Property Property Real Property Value Rate
2012 $ 9,834,082 $ 111,232 $ 9,706 $323,563 $55,535 $10,334,118 $ (230,868) $10,103,250 1.1618
2013 $10,312,597 $ 112,875 $11,455 $335,765 $62,378 $10,835,070 $ (233,895) $10,601,175 1.1778
2014 $11,158,775 $ 113,915 $11,684 $352,830 $59,684 $11,696,888 $ (238,683) $11,458,205 1.1688
2015 $11,775,973 $ 117,466 $11,737 $361,202 $ 56,354 $12,322,732 $ (242,724) $12,080,008 1.1671
2016 $12,581,463 $ 134,321 $11,143 $397,318 $50,193 $13,174,438 $ (232,693) $12,941,745 1.1640
2017 $13,227,811 $ 141,391 $10,245 $426,257 $45,838 $13,851,542 $ (232,279) $13,619,263 1.1650
2018 $14,000,116 $ 154,592 $10,449 $440,188 $39,751 $14,645,096 $ (244,172) $14,400,924 1.2139
2019 $14,899,703 $ 160,219 $10,658 $460,375 $45,669 $15,576,624 $ (233,581) $15,343,043 1.2133
2020 $15,671,996 $ 164,159 $10,872 $458,536 $48,661 $16,354,224 $ (236,668) $16,117,556 1.2082
2021 $16,412,783 $ 173,142 $11,089 $469,087 $49,306 $17,115,407 $ (295,705) $16,819,702 1.2001
Total AssessedProperty
$18,000,000
$16,000,000
$14,000,000
$12,000,000 ■Unsecured
$10,000,000 ■Other
■Industrial
$8,000,000 ■Commercial
$6,000,000 ■Residential
$4,000,000
$2,000,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source:
112
120
CITY OF SARATOGA
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
JUNE 30, 2021
2021 2012
%of Total %of Total
Taxable Taxable Taxable Taxable
Assessed Assessed Assessed Assessed
Taxpayer Value Rank Value Value Rank Value
Humboldt Fields LLC Et Al $ 47,754,359 1 0.28%
SHP Quito Village LLC $ 36,631,969 2 0.22%
San Jose Water Works $ 30,392,476 3 0.18% $ 16,592,789 4 0.16%
House David L Trustee $ 17,785,277 4 0.11%
Keller John IV Trustee&Et Al $ 15,714,200 5 0.09%
Osheanic Capital LLC $ 15,634,032 6 0.09%
CTR Partnership LP $ 15,463,200 7 0.09%
HJJ LLC $ 13,930,978 8 0.08%
Nupont Properties LLC $ 13,795,704 9 0.08%
Argonaut Associates LLC $ 12,392,663 10 0.07% $ 10,564,491 6 0.10%
Krishnamurthi Ashok Trustee&Et Al $ 8,880,000 10 0.09%
Public Storage hic $ 9,465,834 8 0.09%
Cupertino Village Asscs LLC $ 35,068,739 1 0.35%
Keller John&Michelle $ 20,459,059 2 0.20%
Quito Village Asscs LLC $ 19,143,069 3 0.19%
Gregpenn Properties LLC $ 12,800,000 5 0.13%
Sobrato John M&Abby J $ 9,993,000 7 0.10%
Comcast of California XI hic. $ 9,309,010 9 0.09%
Top Ten Total Assessed Value $ 219,494,858 1.3% $ 152,275,991 1.5%
City Total Assessed Value $ 16,819,702,567 $ 10,103,249,416
Source:Santa Clara County Assessor data,MuniServices,LLC
113
121
CITY OF SARATOGA
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN YEARS
Fiscal Year Total Tax Collected within the Collections in
Ended Levy for Fiscal Year of the Levy Subsequent Total Collections to Date
June 30 Fiscal Year Amount Percentage Years Amount Percentage
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%
2018 $ 13,247,030 $ 13,247,030 100.0% $ $ 13,247,030 100.0%
2019 $ 14,475,102 $ 14,475,102 100.0% $ $ 14,475,102 100.0%
2020 $ 15,356,471 $ 15,356,471 100.0% $ $ 15,356,471 100.0%
2021 $ 16,294,043 $ 16,294,043 100.0% $ $ 16,294,043 100.0%
Source: City of Saratoga
114
122
This page is intentionally blank
115
123
CITY OF SARATOGA
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN YEARS
(amounts expressed in thousands,except per capita amounts)
Fiscal Year
2012 2013 2014 2015
Governmental activities
General obligation bonds $ 11,995 $ 11,540 $ 11,055 $ 10,560
Net original issue premium 438 416 394 372
Total primary government $ 12,433 $ 11,956 $ 11,449 $ 10,932
Percentage of Personal Income 0.57% 0.53% 0.49% 0.47%
Per capita 409 389 371 355
Source:CAFR
'US Census Bureau,adjusted for inflation,MuniServices LLC
ZPopulation information from California State Controller's Office
116
124
Fiscal Year
2016 2017 2018 2019 2020 2021
$ 10,060 $ 9,585 $ 9,100 $ 8,600 $ 8,075 $ 7,530
350 328 306 285 263 241
$ 10,410 $ 9,913 $ 9,406 $ 8,885 $ 8,338 $ 7,771
0.45% 0.40% 0.35% 0.32% 0.29% 0.26%
344 324 299 283 269 254
117
125
CITY OF SARATOGA
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN YEARS
(amounts expressed in thousands, except per capita amounts)
Fiscal Year
2012 2013 2014 2015
General obligation bonds $ 11,995 $ 11,540 $ 11,055 $ 10,560
Net original issue premium 438 416 394 372
Less:Amount available in debt service fund (860) (885) (898) (906)
Total primary government $ 11,135 $ 10,655 $ 10,551 $ 10,026
Percentage of actual taxable
value of property 0.11% 0.10% 0.09% 0.08%
Per capita' 367 347 342 326
Source:CAFR
'Population information from California State Controller's Office
118
126
Fiscal Year
2016 2017 2018 2019 2020 2021
$ 10,060 $ 9,585 $ 9,100 $ 8,600 $ 8,075 $ 7,530
350 328 306 285 $ 263 $ 241
(923) (959) (998) (933) (788) (790)
$ 9,487 $ 8,954 $ 8,408 $ 7,405 $ 7,550 $ 6,981
0.07% 0.07% 0.06% 0.05% 0.05% 0.04%
314 293 267 236 243 229
119
127
CITY OF SARATOGA
LEGAL DEBT MARGIN INFORMATION
LAST TEN YEARS
(amounts expressed in thousands)
Fiscal Year
2012 2013 2014 2015
Debt Limit $ 1,550,118 $ 1,625,261 $ 1,754,233 $ 1,848,410
Total net debt applicable to limit 11,135 10,655 10,157 9,654
Legal debt margin $ 1,538,983 $ 1,614,606 $ 1,744,076 $ 1,838,756
Total net debt applicable to the limit
as apercentage of debt limit 0.72% 0.66% 0.58% 0.52%
Legal debt margin calculation
Assessed value $ 10,103,250 $ 10,601,175 $ 11,458,205 $ 12,080,008
Add back:exempt real property 230,868 233,895 236,683 242,724
Total assessed value $ 10,334,118 $ 10,835,070 $ 11,694,888 $ 12,322,732
Debt limit(15%of total assessed value) $ 1,550,118 $ 1,625,261 $ 1,754,233 $ 1,848,410
Debt applicable to limit:
General obligation bonds $ 11,995 $ 11,540 $ 11,055 $ 10,560
Net original issue premium 438 416 394 372
Less:Amount available in debt service fund (860) (885) (898) (906)
Total net debt applicable to limit $ 11,135 $ 10,655 $ 10,157 $ 9,654
Legal debt margin $ 1,538,983 $ 1,614,606 $ 1,744,076 $ 1,838,756
Source:CAFR
120
128
Fiscal Year
2016 2017 2018 2019 2020 2021
$ 1,976,166 $ 2,077,731 $ 2,196,764 $ 2,336,494 $ 2,453,134 $ 2,567,311
9,137 8,626 8,102 7,287 7,287 6,740
$ 1,967,029 $ 2,069,105 $ 2,188,662 $ 2,329,207 $ 2,445,847 $ 2,560,571
0.46% 0.42% 0.37% 0.31% 0.30% 0.26%
$ 12,941,745 $ 13,619,263 $ 14,400,924 $ 15,343,044 $ 16,117,556 $ 16,819,702
232,693 232,279 244,172 233,581 236,668 295,705
$ 13,174,438 $ 13,851,542 $ 14,645,096 $ 15,576,625 $ 16,354,224 $ 17,115,407
$ 1,976,166 $ 2,077,731 $ 2,196,764 $ 2,336,494 $ 2,453,134 $ 2,567,311
$ 10,060 $ 9,585 $ 9,100 $ 8,600 $ 8,075 $ 7,530
350 328 306 285 263 241
(923) (959) (998) (933) (788) (790)
$ 9,137 $ 8,626 $ 8,102 $ 7,287 $ 7,287 $ 6,740
$ 1,967,029 $ 2,069,105 $ 2,188,662 $ 2,329,207 $ 2,445,847 $ 2,560,571
121
129
CITY OF SARATOGA
DIRECT AND OVERLAPPING
GOVERNMENTAL ACTIVITIES DEBT
(amount expressed in thousands)
2020-21 Assessed Valuation $ 16,868,992 Estimated
Estimated Share of
Debt Percentage Overlapping
Outstanding Applicable] Debt
Direct and Overlapping Tax and Assessment Debt:
City of Saratoga $ 7,530 100.000% $ 7,530
City of Saratoga Community Facilities District No.2016-1 1,763 100.000% 1,763
Santa Clara County 812,685 3.062% 24,884
Foothill-De Anza Community College District 707,932 1.382% 9,784
West Valley Community College District 589,080 8.937% 52,646
Campbell Union High School District 357,945 5.472% 19,587
Fremont Union High School District 617,160 3.088% 19,058
Los Gatos-Saratoga Joint Union High School District 86,585 38.176% 33,055
Campbell Union School District 211,275 6.580% 13,902
Cupertino Union School District 284,223 5.636% 16,019
Moreland School District 127,582 12.771% 16,293
Saratoga Union School District 19,249 86.154% 16,584
Saratoga Fire Protection District 2,319 97.562% 2,262
Midpeninsula Regional Open Space District 86,400 5.012% 4,330
Santa Clara Valley Water District Benefit Assessment 57,010 3.062% 1,746
Total Overlapping Tax and Assessment Debt $ 239,443
Overlapping General Fund Debt:
Santa Clara County General Fund Obligations $ 914,958 3.062% $ 28,016
Santa Clara County Pension Obligations 341,399 3.062% 10,454
Santa Clara County Board of Education COP 2,670 3.062% 82
Santa Clara County Vector Control District COP 1,765 3.062% 54
Foothill-De Anza Community College District COP 22,085 1.382% 305
West Valley-Mission College District General Fund Obligations 49,850 8.937% 4,455
Campbell Union High School District COP 16,500 5.472% 903
Los Gatos-Saratoga Joint Union High School District COP 1,709 38.176% 652
Campbell Union High School District COP 2,180 6.580% 143
Saratoga Union School District COP 2,750 86.154% 2,369
Midpeninsula Open Space Park District General Fund Obligations 106,001 5.012% 5,313
Total Overlapping General Fund Debt 52,746
Less:Santa Clara County Supported Obligations (774)
Total Net Overlapping General Fund Debt $ 51,972
Total Direct Debt $ 7,530
Gross Total Overlapping Debt $ 284,659
Net Total Overlapping Debt $ 283,885
Gross Combined Total Debt $ 292,189
Net Combined Total Debt $ 291,415
Ratios to 2020-21 Assessed Valuation:
Direct Debt ($7,530,000) 0.04%
Total Direct and Overlapping Tax and Assessment Debt 1.42%
Gross Combined Total Debt 1.73%
Net Combined Total Debt 1.73%
'Percentage ofoverlapping agency's assessed valuation located within boundaries ofthe city.
Notes
The percentage ofoverlapping debt applicable to the city is estimated using taxable assessed property value.Applicable percentages were estimated by determining
the portion ofthe overlapping district's assessed value that is within the boundaries ofthe city divided by the district's total taxable assessed value.
Source:Avenu Insights&Analytics and California Municipal Statistics,Inc.
122
130
CITY OF SARATOGA
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN YEARS
Per Capita
Fiscal City Personal Personal Labor Unemployment
Year Population' lncome2 Income2 Force Rate
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%
2018 31,435 2,597,561 82,633 15,000 2.8%
2019 31,407 2,681,900 85,392 15,000 2.0%
2020 31,030 2,755,859 88,813 13,600 6.5%
2021 30,546 2,928,264 95,864 14,000 5.0%
Labor Force vs. Population
35,000
30,000
25,000
20,000
15,000
10,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Population -E--Labor Force
Source:Avenu Insights&Analytics
1.)Population Projections are provided by the California Department of Finance Projections.
2.)Per Capita Income Data is provided by the United States Census Data and is adjusted for inflation.
Personal Income has been restated from prior years.
3.)Unemployment and Labor Force Data are provided by the EDD's Labor Market Information Division.
123
131
CITY OF SARATOGA
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO AT JUNE 30, 2021
2021 2012
Percentage Percentage
of Total City of Total City
Employer Employees Rank Employment Employees Rank Employment
West Valley Community College 506 1 3.61%
Saratoga Union School District* 290 2 2.07%
Saratoga Retirement Community 227 3 1.62%
Our Lady of Fatima Villa 150 4 1.07%
Sub-Acute Saratoga Children's Hospital 140 5 1.00%
Saratoga High School(Los Gatos-Saratoga UHSD) 131 6 0.94%
Prospect High School(CUHSD) 126 7 0.90% -
Safeway 91 8 0.65% 65 2 0.46%
Saint Andrews Episcopal School 69 9 0.49% -
City ofSaratoga 57 10 0.41% -
Gene's Fine Foods 85 1 0.61%
Saratoga Country Club 65 3 0.46%
McDonald's 45 4 0.32%
Rokuhic. 33 5 0.24%
La Fondue 22 6 0.16%
CVS 20 7 0.14%
Classic Car Wash 20 8 0.14%
Hinshaw,Draa&Marsch 20 9 0.14%
Jakes of Saratoga 20 10 0.14%
Total Top 10 Employers 1,787 12.8% 395 2.8%
Total City Employment' 14,000 14,000
Source: Avenu Insights&Analytics
Source:2012 data from previously published ACFR
Results based on direct correspondence with city's local businesses.
*Includes all personnel,full and part time.
(1)Total City Labor Force provided by EDD Labor Force Data.
124
132
This page is intentionally blank
125
133
CITY OF SARATOGA
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION
LAST TEN FISCAL YEARS
Fiscal Year
2012 2013 2014 2015
Function
General government 10.80 10.90 13.65 13.70
Public works 21.55 20.65 20.75 20.65
Community development 12.00 11.00 12.00 12.00
Community services 9.50 9.60 9.60 9.55
Total 53.85 52.15 56.00 55.90
Full-Time Equivalents
60
50
40
30
20
10
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
■General Gov't ■Public Works ■Comm Dev. ■Comm Services
Source: City of Saratoga Budget Document
126
134
Fiscal Year
2016 2017 2018 2019 2020 2021
13.70 13.65 14.55 14.65 15.15 14.90
20.65 20.65 21.15 21.75 23.50 23.50
12.00 12.00 12.50 12.00 16.00 15.50
9.55 8.35 8.30 8.70 2.25 3.00
55.90 54.65 56.50 57.10 56.90 56.90
127
135
CITY OF SARATOGA
OPERATING INDICATORS BY FUNCTION
LAST TEN FISCAL YEARS
Fiscal Year
2012 2013 2014 2015
Function
Part 1 crimes' 287 277 408 315
Total incidents 35,664 40,141 41,228 40,695
Police reports 1,329 1,106 978 917
Public Works
Street resurfacing(miles) 6 6 4 2.5
Street lights repaired 41 29 34 39
Potholes filled(sq.ft.) 10,000 12,060 11,000 10,500
Community Development
Total permit valuation($000) 59,675 79,896 79,702 89,929
Parks and Recreation
Youth Programs 1,455 975 879 859
Adult Programs 647 1,663 2,173 1,650
Staffed Day/summer camps(enrollment) - 45 160 90
Part 1 Crimes are the following as reported to DOJ:homicide,rape,robbery,burglary,assault,theft,
auto theft,and arson.
2 Beginning in FY 2019/20,the City outsourced Recreation Services to Los Gatos-Saratoga Community
Education and Recreation(LGS).
Source:City of Saratoga various records
Note: Information for 2021 was unavailable at the time of the issuance of the ACFR and therefore prior year numbers have been
carried forward.
128
136
Fiscal Year
2016 2017 2018 2019 2020 2021
463 301 190 289 241 241
39,213 38,893 32,222 31,955 37,652 37,652
1,334 1,295 927 885 837 837
15.2 0 0 8 5 5
33 37 15 12 10 10
21,010 13,000 9,000 11,000 8,000 8,000
75,599 106,631 128,062 82,722 80,513 80,513
927 1,069 1,273 1,375 655 655
2,099 2,824 2,082 731 679 679
172 71 129 - 146 146
129
137
CITY OF SARATOGA
CAPITAL ASSET STATISTICS BY FUNCTION
LAST TEN FISCAL YEARS
Fiscal Year
2012 2013 2014 2015
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 14 14 15 15
Street Miles-Public 140 141 142 142
West Valley Sanitation District
Number of Connections 8,679 8,821 8,919 8,402
Length of Sewer Lines 127 127 127 128
Cupertino Valley Sanitation District
Number of Connections 2,959 2,961 2,963 2,963
Length of Sewer Lines 37 37 37 37
Parks and Recreation
Parks Acreage 84 84 84 84
Parks 15 15 15 15
Source:City of Saratoga various records
130
138
Fiscal Year
2016 2017 2018 2019 2020 2021
1 1 1 1 1 1
1 1 1 1 1 1
15 15 15 15 15 15
142 142 142 142 142 142
8,488 8,563 9,051 9,058 9,060 9,063
129 126 126 126 126 126
2,999 3,000 3,000 3,003 3,003 3,003
37 37 37 37 37 37
148 148 148 148 148 148
16 16 16 16 16 16
131
139
Saratoga City Council
Finance Committee
Summary Overview
Annual Comprehensive Financial Report (ACFR)
and
Single Audit
January 14, 2022
140
Annual Comprehensive Financial Report (ACFR)
What is the ACFR: a set of U.S. government financial statements
comprising the financial report of a state, municipal or other
governmental entity that complies with the accounting requirements
enacted by the Government Accounting Standards Board (GASB).
What is the purpose of the ACFR: to provide accurate and
meaningful information concerning the entity's financial condition and
performance.
Other requirements:
Requires Introductory, Financial, and Statistical sections.
Requires auditing by external certified accounting firm using GASB
requirements.
141
Single Audit
➢ Organization-wide financial statement and audit of federal
awards for anon-federal entity that expends $750,000 or
more in federal funds in one year.
Required by law to have Single Audit performed, and includes
audit of Financial Statements and Federal Awards.
Reviews how anon-federal entity managed the grant to
ensure the rules for receiving the federal dollars were
followed .
Reference Guide: Title 2 U.S. Code of Federal Regulations
(CFR) Part 200, Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards
(Uniform Guidance)
142
City of Saratoga — Current Federal Funding
Single Audit Criteria
> $750,000 in federal expenditures in a fiscal year
City of Saratoga
FY 2021/22 fed era I fund in g (actual federol expenditures confirmed of end of fiscol year)
1. American Rescue Plan Act (ARPA) / State and Local Fiscal Recovery Funds
(SLFRF)
2. Coronavirus Aid, Relief, and Economic Security (CARES) Act
3. Infrastructure Investment and Jobs Act (IIJA)
4. Metropolitan Transportation Grant Commission (U.S. Dept of
Transportation)
143