Sacramento Regional Fire / EMS Communications Center CALIFORNIA

Transcription

1 Sacramento Regional Fire / EMS Communications Center CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR END JUNE 30, 2017

2 Some people wonder all their lives if they ve made a difference. Dispatchers don t have that problem. - Revised quote by Ronald Reagan to U.S. Marines COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR END JUNE 30, 2017 CALIFORNIA Presented By Joseph Thuesen Chief Executive Director Interim Joyce Starosciak Administrative Services Manager Kylee Soares Communications Manager Interim Prepared By The Accounting Team

3 Table of Contents INTRODUCTORY SECTION Letter of Transmittal Our Agency Core Values... 1 Agency Overview... 2 Agency History... 2 Community Served... 6 Agencies Serves Board of Directors Organizational Chart Mutual Aid Responses FINANCIAL SECTION Independent Auditor s Report... 1 Management s Discussion and Analysis... 3 Basic Financial Statements Balance Sheets Statements of Revenues, Expenses, and Changes in Net Position Statements of Cash Flows Notes to Basic Financial Statements Required Supplementary Information Schedule of the Proportionate Share of the Net Pension Liability and Schedule of Contributions to Pension Plan (Unaudited) Other Postemployment Benefits Schedule of Funding Progress (Unaudited) Compliance Report Independent Auditor s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards... 33

4 STATISTICAL SECTION Table of Contents Financial Trends Net Position by Component... 1 Changes in Net Position... 2 Expenditures by Function... 3 Revenue Capacity Revenues by Function... 4 FY Budgeted Revenue Funded from Member Contributions... 5 Designated Reserves by Function... 6 Debt Capacity Debt Capacity... 7 Demographic and Economic Information Demographic and Economic Information... 8 Private Sector Principle Employers... 9 SRFECC Call Volume and Incident Growth SRFECC Customer Service Rating & Overall Compliance Rating SRFECC Staffing Summary SRFECC Capital Assets Summary... 13

5 Introductory Section

6 Sacramento Regional Fire/EMS Communications Center Systems Parkway, Sacramento, CA (916) Fax (916) December 29, 2017 Board of Directors Sacramento Regional Fire/EMS Communications Center Systems Parkway Sacramento, CA We are pleased to submit to you the Comprehensive Annual Financial Report (CAFR) of the Sacramento Regional Fire/EMS Communications Center ( SRFECC ) for your acceptance for the Fiscal Year ending June 30, California state law requires every joint powers authority to publish a complete set of audited financial statements within 12 months of the close of the fiscal year. This report is to fulfill that requirement for SRFECC for the fiscal year, which ended June 30, SRFECC financial statements have been audited by Richardson & Company, LLP, Certified Public Accountants. The goal of the independent audit is to provide the SRFECC Governing Board reasonable assurance that the financial statements are free of material misstatements. Richardson & Company have issued an unqualified (meaning clean ) opinion of the SRFECC financial statements for the fiscal year that ended June 30, The independent auditor s report is presented as the first component of the financial section of this report. Management assumes full responsibility for the complete and reliable information contained in the report. Overall, the independent audit report is based upon an internal control framework, which is designed both to protect SRFECC s assets from loss as well as to compile sufficient reliable information for the preparation of the SRFECC s financial statements in conformity with GAAP (Generally Accepted Accounting Principles). The objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements because the cost of internal control should not exceed anticipated benefits. Lastly, Management s discussion and analysis (MD&A) immediately follows the independent auditor s report and provides a narrative introduction, overview, and analysis of the basic financial statements. GAAP requires that management provide this MD&A to accompany the basic financial statements.

7 Sacramento Regional Fire/EMS Communications Center Systems Parkway, Sacramento, CA (916) Fax (916) Profile of the Joint Powers Authority The Sacramento Regional Fire/EMS Communications Center (SRFECC) was organized through a Joint Powers Agreement (JPA) pursuant to the provisions of Title I, Division 7, Chapter 5, Article 1, Sections 6500 et seq. of the California Government Code beginning on January 1, 1981, with the latest amendment on July 1, The JPA provides fire and ambulance communications management/dispatch services for four allpaid member agencies and six volunteer agencies in Sacramento County. The Center is a Secondary Public Safety Answering Point (PSAP) handling over 400,000 phone calls a year, and dispatching over 195,000 fire and medical emergency incidents. SRFECC provides fire protection and emergency medical service (EMS) dispatching for nearly all of Sacramento County and part of Placer County, covering over 1,000 square miles, and serving over 1.5 million residents. In addition to the Communications Center, which is home to the dispatch, IT, and administrative teams, SRFECC also has an off-site facility, which serves as a disaster recovery site, community training and conference facility. The Governing Board is comprised of four voting members from the all-paid/all hazard Fire Departments of the Sacramento Fire Department, the Sacramento Metropolitan Fire District, the Folsom Fire Department and the Cosumnes Fire Department of the Cosumnes Community Services District. The Board vote is weighted based upon the percentage of incidents dispatched to that department in the prior calendar year. All actions require a two-thirds vote of approval. Our Core Values define who we are, how we lead our teams, and how we do business. The evolution of the Center, based on the four Core Values, means that in all aspects of our work, whether dispatching, administrative support, training, or hiring, we will return to our Core Values. Strength of Character Strength of Character defines us as a team. We understand that nothing can be achieved without our unity. Therefore we are united; we are committed to one another and to our mission. We hire individuals who understand the value of morality, ethics, and honesty. We intentionally spend a great deal of time and energy investing in our team and future. Our team reflects our investment and our pride. Selflessness Our SRFECC family understands customer service. In order to serve, we must put others first. We must understand above all else, our priority is always to our community, to our constituents and to one another.

8 Sacramento Regional Fire/EMS Communications Center Systems Parkway, Sacramento, CA (916) Fax (916) Day Forward We learn from yesterday s mistakes, which make us smarter and stronger. We forgive ourselves and move forward. We have our eyes on the future and we understand our mission. We know each step we take, each decision we make, every singular action is onestep towards collectively becoming the Premier Agency in the United States of America. Servant Leadership Our Command Staff exists to serve. We believe our people are our strongest assets. We promise to lead with honor, humility, and compassion. We will lead with our actions and champion our teams. We will make you strong, support the mission, and never let you forget how much you are valued. SRFECC also dispatches for six Volunteer Fire Departments, as listed in the MD&A. Dispatch services for these six departments are provided through automatic aid agreements along with mutual and automatic aid for neighboring counties and communities including: the City of Roseville, the City of El Dorado Hills, the City of West Sacramento, and the Sacramento County Airport Systems. Additionally SRFECC performs back-up dispatching services for the State of California Governor s Office of Emergency Services Region IV. Financial Policies In January 2017, the SRFECC Board of Directors updated its Policy Manual to clarify and add policies for the management of the Center. Some new policies include Social Media, Credit Card usage, and an updated Technology Policy. One of the new policies that have a significant fiscal impact is policy 1.008, the process to add contracted members to the agency. This new policy has clarified the process to be incorporated into the SRFECC JPA as either a Contracted or Member Agency. Contracted members would be neither Board Members or Volunteer agency members, but another way to receive dispatch services from SRFECC. SRFECC has received formal requests to provide contract services from El Dorado Hills and Rio Vista, both outside the Sacramento County. In addition, other agencies have approached SRFECC for potential consideration to become a contract agency. These Fire Departments include Lincoln/Rocklin, South Placer, Roseville, Sacramento County Airports, and Amador County. To add these agencies requires significant capital investment in radio and station alerting costs. Moreover, additional staffing is needed to handle the call volume. SRFECC is currently in process to create a Cost Analysis study to evaluate and determine the correct financial impact of incorporating a new Contract Agency.

9 Sacramento Regional Fire/EMS Communications Center Systems Parkway, Sacramento, CA (916) Fax (916) Long Term Financial Planning The JPA Board has been working in concert with the SRFECC Dispatch Staff for the last five years in order to plan for future expenses, including liabilities in the area of health care and retirement costs. Starting in 2012, SRFECC is working diligently with the union representatives of the dispatch staff (Local 856 and Local 150), agreed to a number of memorandum of understanding (MOU) changes in order to control future medical costs for SRFECC and employees. The agreements result was that all employees hired after July 1, 2014 will receive a fixed amount of $1300 per month for medical, vision, and dental insurance. In addition, all other medical increases are capped at 5% for SRFECC coverage increase. Due to the agreement, SRFECC can expect that future budgeted costs for medical will be no more than 5%, which has contributed to reducing OPEB liability and an improved long term forecast for budgeted health costs. In essence, future medical costs will continue to decrease and eventually flatten out at the $1300 per employee. SRFECC also provides medical insurance as a benefit for our retired employee plus one, at the lesser of Kaiser or Blue Shield plan for everyone who retires from SRFECC. In 2017, SRFECC will have 19 retirees. Per the State Controllers report (see the figure below), the medical changes from 2012 have already demonstrated cost controls for agencies such as SRFECC. From the State Controller s Report for SRFECC In addition, since 2014 employees have contributed to an OPEB trust fund in order to fund the liability for retiree medical. The current outlook for that fund is healthy, given that employees

10 Sacramento Regional Fire/EMS Communications Center Systems Parkway, Sacramento, CA (916) Fax (916) contribute $100 per month each and the Governing Board has also invested $106,000 of previous remaining budgetary funds into the OPEB trust fund. Millions CERBT Trust Balance 540, Current Economic Conditions and Outlook SRFECC s primary source of funding is through member assessments of our four Governing Board Member Agencies. The budget is approved and assessments are distributed by the same weighting calculation that is used for the Board vote. SRFECC has been cautious in fiscal planning and has not increased the general budget in the last four fiscal years. In the coming year, many external factors will necessitate a budget increase. For example, in the coming budget FY18-19, the CalPERS discount rate change will require $150k in additional funding. Ever-increasing call volume has necessitated a staffing increase of 10% for the next four years. Adding 10% (four dispatchers) in the first year would affect the budget by $325k. In addition, negotiations are underway for a contract that expires in June of Any cost impacts are unknown at the time of this report. One major source of funding beyond member assessments has been OES reimbursement for deployments. In FY we received $109,000 of net revenue from the Center staff deployment to fires. Due to October and December fires of major size in Sonoma and Southern California, we are anticipating an increase in net revenue in the coming fiscal year.

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14 Our Agency Sacramento Regional Fire / EMS Communications Center We know each step we take, each decision we make, every singular action is one step towards collectively becoming the Premier Agency in the United States of America.

15 Core Values Strength of Character Strength of Character defines us as a team. We understand that nothing can be achieved without our unity. Therefore we are united; we are committed to one another and our mission. We hire individuals who understand the value of morality, ethics and honesty. We intentionally spend a great deal of time and energy investing in our team and future. Our team reflects our investment and our pride. Servant Leadership Our Command Staff exist to serve. We believe people are our strongest assets. We promise to lead with honor, humility, and compassion. We will lead with our actions and champion our teams. We will make you strong, support the mission, and never let you forget how much you are valued Selflessness Our SRFECC family understands customer service. In order to serve, we must put others first. We must understand above all else our priority is always to our community, our constituents, and to one another. Day Forward We learn from yesterday s mistakes, which make us smarter and stronger. We forgive ourselves and move forward. We have our eyes on the future and understand our mission. We know each step we take, each decision we make, every singular action is one step towards collectively becoming the Premier Agency in the United States of America. 1 Introductory Section

16 Agency Overview The Sacramento Regional Fire/EMS Communications Center (SRFECC) is a Secondary PSAP (Public Safety Answering Point) managing over 400,000 phone calls a year, and dispatching over 195,000 fire and medical emergency incidents. SRFECC provides dispatching for fire and emergency medical service (EMS) for nearly all of Sacramento County and part of Placer County, covering over 1,000 square miles and serving over 1.5 million residents. In addition to the Communications Center, which is home to dispatch, IT, and our administrative teams; SRFECC also has an off-site center, which serves as a disaster recovery site, community training and conference facility. As a PSAP, SRFECC s mission is to answer emergency service requests for both fire and medical aid when citizens have dialed calls are generally then identified by a dispatcher with a type code. The type codes used are to determine the response of the emergency units. Overall, there are over 1,500 type codes the dispatcher will use for incidents concerning issues related to the health and welfare of Sacramento and Placer County residents. SRFECC also receives both emergency and nonemergency requests to assist citizens in the community, which may include vehicle accidents, other fire types or assisting law enforcement. Agency History In the United States, the first catalyst for a nationwide emergency telephone number was in 1957, when the National Association of Fire Chiefs recommended use of a single number for reporting fires. 2 Introductory Section

17 In 1967, the President's Commission on Law Enforcement and Administration of Justice recommended that a " single number should be established" nationwide for reporting emergency situations. On February 16, 1968, State Senator Rankin Fite completed the first call made in the United States in Haleyville, Alabama. By the end of 1976, was serving about 17% of the population of the United States had not arrived in Sacramento, yet. Prior to 1976, there were 23 fire districts in Sacramento County all staffed with their own personnel and with separate phone numbers. Each fire district also had dispatchers and each dispatch center was staffed differently. Some dispatchers were firefighters who would take turns working in dispatch answering the phone; others were staffed by secretaries during the day and firefighters at night. One agency even had volunteer wives of firefighters dispatching out of their home. A few agencies had full-time dispatchers, but their duties also included a great deal of clerical work. In December of 1976, the Florin, Pacific, Fruitridge, and Sloughhouse Fire Districts consolidated their dispatch centers into one and called it Central. Central was located at Sacramento Metro Fire Station 51 on Florin Road, in the Sacramento County community of Florin. Central was staffed by one dispatcher at a time, working eight hour shifts, reducing the number of dispatch centers to 20. In 1978, the North Highlands Fire District contracted with the Citrus Heights Fire District for dispatching services, thus reducing the number of dispatch centers to 19. In January 1979, the Arcade, Arden, and Carmichael Fire Districts consolidated their Communications, Training, and Fire Prevention services. The new communications center was called Control, and was located at then Arcade Fire Station 1, which is now Sacramento Metro Fire Station 101 on Fulton Avenue in the Sacramento County community of Arden-Arcade. Control was staffed by two dispatchers working a 56 hour work week 24 hour shifts. This reduced the number of dispatch centers from 19 to Introductory Section

18 In 1980, the Elk Grove, Courtland, Walnut Grove, Rio Linda, and Elverta Fire Districts contracted with Control for dispatching and thus reduced the number of dispatch centers from 16 to 11. In January of 1981, Central merged with the Rancho Cordova, Fair Oaks, and Citrus Heights Fire Districts to form the Sacramento County Fire Communications Center (County Fire). County Fire was organized through a Joint Powers Agreement (JPA) pursuant to the provisions of Title I, Division 7, Chapter 5, Article 1, Sections 6500 et seq. of the California Government Code beginning January 1, 1981, to provide fire and medical communications management/dispatch services for its member agencies. The dispatch center for County Fire was located at then Citrus Heights Fire Station 21 (now Sacramento Metro Fire Station 21), on Greenback Lane in the community and now City of Citrus Heights. This dispatch center was staffed by two to three dispatchers working eight hour shifts. Additionally, in 1981, the Natomas Fire District contracted with the City of Sacramento for fire protection and communications. While the Wilton Fire District also contracted with Control for dispatching services. This reduced the number of fire dispatch centers in Sacramento County from 11 to six. In July 1983, Control and County Fire merged. However, they kept the name County Fire and maintained two dispatch centers the one at Citrus Heights Fire Station 21 and the one at Arcade Fire Station 1. Both dispatch centers were staffed by dispatchers working eight hour shifts. In March of 1984, the City of Folsom Fire Department contracted its dispatch services with County Fire and thus reduced the number of dispatch centers to four. In February of 1985, County Fire s two dispatch centers were moved into one building located at Systems Parkway, in the community and now City of Rancho Cordova. This reduced the number of dispatch centers from four to three. In October of 1986, the Herald Volunteer Fire District joined its dispatch services with County Fire reducing the number of dispatch centers to two. In July of 1990, the name was changed from the Sacramento County Fire Communications Center to the Sacramento Regional Fire/EMS Communications Center (SRFECC). In 1996, the Sacramento Fire Department joined the Sacramento Regional Fire/EMS Communications Center, thus reducing the dispatch centers in Sacramento County to one. In 2016, the River Delta and Isleton Fire Departments joined SRFECC, thus increasing the number of agencies to 10. Today, the Sacramento Regional Fire/EMS Communications Center is led by Interim-Chief Executive Director, Joseph Thuesen, J.D., Interim-Communications Manager Kylee Soares, and Administrative Services Manager Joyce Starosciak, working in concert in continuing towards the goal of being the premier dispatch agency in the United States 4 Introductory Section

19 SRFECC s dispatching area of operation is approximately 1,000 square miles, which extends and covers a population of over 1,500,000 people. In 2016, SRFECC dispatched emergency units over 195,000 times for the following fire departments: Sacramento Fire Department Sacramento Metro Fire District Folsom Fire Department Cosumnes Fire Department Under the Third Amended Joint Powers Agreement, SRFECC is made up of a Board of Directors comprised of one representative from each above mentioned fire departments. Each fire department has a weighted vote equal to the percentage of each department s emergency service calls to the total of all emergency service calls for all departments during the previous calendar year, who remain a member of the JPA on July 1 of each fiscal year. Dispatch services are also provided to six volunteer firefighter agencies as contract agencies. The six contract agencies are the: Courtland Fire Department Walnut Grove Volunteer Fire Department Herald Fire Department Wilton Fire Department Isleton Fire Department River Delta Fire District 5 Introductory Section

20 Community Served 6 Introductory Section

21 Sacramento County stretches from the southern delta lands between the Sacramento and San Joaquin rivers to about 10 miles north beyond the state capital, as well as east into the foothills of the Sierra Nevada Mountains, covering about 994 square miles in the California Central valley and on into gold country. It is the largest of eight counties within the greater Sacramento area. In 2016, Sacramento County had a population of 1,514,460 million compared with 1,501,335 in 2015 (U.S. Census Bureau). In February of 2015 the County had an unemployment rate of 6.4. The size of the labor force was 683,400 out of which 43,600 individuals were unemployed (State of California EDD). The median household income from 2011 to 2015 for Sacramento County was $55,987, $2,098 more than the national median household income of $53,889 (U.S. Census Bureau). Sacramento is home to the Sacramento and American Rivers. The Sacramento River is California s largest river and begins near Mount Shasta and flows to the Delta, supplying water to a large portion of the Central Valley s farms. It s the third largest river by volume in the Continental U.S. The American River is approximately 119 miles long, and is divided into its North, Middle and South forks originating in the Tahoe and El Dorado forests. Additionally, Sacramento County is home to Folsom Lake, a reservoir created in 1955 by the construction of the Folsom Dam with a surface area of 11,450 acres. An intermediate lake is located between the Folsom Dam and the Nimbus Dam along the American River, this lake is called Lake Natoma where the Sacramento State Aquatic Center is located. Due to the locality of these natural water resources, the community participates in many water activities such as boating, kayaking, fishing and rafting. Sacramento County is also home to Johnny Cash s famous Folsom Prison. Folsom State Prison is the second oldest prison in the state of California and one of the nation s first maximum security prisons built following the California Gold Rush. ( There are 10 hospitals within Sacramento County that accept transports. These hospitals include, Mercy General Hospital, Mercy Hospital Folsom, Sutter Medical Center, Methodist Hospital, Mercy San Juan Hospital, Kaiser South, Kaiser North, Veteran s Affairs Sacramento Medical Center and UC Davis Medical Center. Each of these hospitals plays a vital role in the Fire Dispatch process. In 2015, and early 2016, SRFECC was instrumental in working with the Veterans Affairs Sacramento Medical Center to accept emergency transports. This option allows Sacramento County s Veterans emergency transportation to a Veteran s hospital, which is a first of its kind in Sacramento County. 7 Introductory Section

22 Introductory Section 8

23 *information obtained from behealthysacramento.org and US Census Bureau 9 Introductory Section

24 Agencies Served Member Agencies Mike McLaughlin, Fire Chief Cosumnes Fire Department Felipe Rodriguez, Fire Chief Folsom Fire Department Walt White, Fire Chief Sacramento Fire Department Todd Harms, Fire Chief Sacramento Metro Fire District Contract Agencies David Welch, Fire Chief Courtland Fire Department James Hendricks, Fire Chief Herald Fire Department Scott Baroni, Fire Chief Isleton Fire Department Stan Simi, Fire Chief River Delta Fire District Joe Sanchez, Fire Chief Walnut Grove Volunteer Fire Department Jeff Cookson, Fire Chief Wilton Fire Department 10 Introductory Section

25 Board of Directors DEPUTY CHIEF CHRIS COSTAMAGNA CHAIRPERSON SACRAMENTO FIRE DEPARTMENT Assistant CHIEF MAURICE JOHNSON VICE CHAIRPERSON SACRAMENTO METROPOLITAN FIRE DISTRICT Fire Chief MICHAEL W. MCLAUGHLIN COSUMNES FIRE DEPARTMENT DIVISION CHIEF CHAD WILSON FOLSOM FIRE DEPARTMENT 11 Introductory Section

26 Organization Chart 12 Introductory Section

27 Mutual Aid Response SRFECC and the Fire Departments are committed to being strong neighbors for those that need additional fire resources. Thus, dispatch services are also provided through automatic and mutual aid agreements with neighboring counties and communities including the City of Roseville, the El Dorado Hills Fire Department, the City of West Sacramento, and the Sacramento County Airport Systems. Additionally SRFECC performs the back-up dispatching services for the State of California Governor s Office of Emergency Services Region IV is still pending as fire continue to ravage our State and we continue to support our neighbors throughout the state. In 2016, SRFECC was instrumental in supporting 47 out of county mutual aid operational incidents. SRFECC dispatched 672 personnel and 193 pieces of equipment to 29 counties in California, and personnel to one incident in the state of Georgia. The Center s participation in mutual aid events began in mid-may. Starting in May and until December 2016, the 47 OES Mutual Aid events required 672 personnel and 193 pieces of equipment. Equipment also included the response of a Type-Two (2) helicopter 10 times, as well as Type-1 and Type-3 Engine Strike Teams (both Local Government and OES Engines) led by Strike Team Leaders, a Type-1 Communications Support Vehicle, and many deployments of Incident Management Team members. The Sacramento area has five Type-1 OES engines and four Type-3 OES engines. A Type-3 OES engine in Yolo County often completes the Type-3 OES strike team. Being centrally located within the state, as well as having access to several major freeways and jetports makes the Sacramento area a logical and effective base for a Type-1 and a Type-3 OES strike team. In addition to the OES Engine Strike Team availability, the Sacramento Metro Fire District, Sacramento Fire Department, Folsom Fire Department, and Cosumnes Fire Department are able to complete as many 13 Introductory Section

28 as three local government strike teams. Dispatch personnel and fire personnel are trained and certified in various overhead positions and respond both as members of an Incident Management Team as well as on individual overhead requests. The agencies served by SRFECC maintain the ability to serve others outside of the Sacramento region, which keeps the Sacramento Regional Fire/EMS Communications Center busy accomplishing the goal of providing the area s first responders with premier communications support and customer service. 14 Introductory Section

29 Financial Section

30 550 Howe Avenue, Suite 210 Sacramento, California Telephone: (916) FAX: (916) INDEPENDENT AUDITOR S REPORT To the Board of Directors Sacramento Regional Fire/EMS Communications Center Sacramento, California Report on the Financial Statements We have audited the accompanying basic financial statements of the Sacramento Regional Fire/EMS Communications Center (SRFECC) as of and for the years ended June 30, 2017 and 2016 and the related notes to the financial statements, which collectively comprise SRFECC s basic financial statements as listed in the Table of Contents. Management s Responsibility for the Financial Statements 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 audits. 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, and the State Controller s Minimum Audit Requirements for California Special Districts. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit 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 entity 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 entity 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 opinion. Financial Section 1

31 To the Board of Directors Sacramento Regional Fire/EMS Communications Center Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of SRFECC as of June 30, 2017 and 2016, and the respective changes in financial position for the years then ended in accordance with accounting principles generally accepted in the United States of America as well as accounting systems prescribed by the State Controller s Office and state regulations governing special districts. Other Matters Report on Supplemental Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis, schedule of the proportionate share of the net pension liability, schedule of contributions to the pension plan, and other postemployment benefits schedule of funding progress on pages 3 to 13 and 30 to 31 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise SRFECC s basic financial statements. The introductory section and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 30, 2017 on our consideration of the SRFECC 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 SRFECC s internal control over financial reporting and compliance. November 30,

32 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2017 As management of the Sacramento Regional Fire/EMS Communications Center (SRFECC), we offer readers of the District s financial statements this narrative overview and analysis of the financial activities of the District for the fiscal year ended June 30, Agency Overview SRFECC was organized through a Joint Powers Agreement (JPA) pursuant to the provisions of Title I, Division 7, Chapter 5, Article 1, Sections 6500 et seq. of the California Government Code beginning in January 1, 1981, to provide fire and ambulance communications management/dispatch services for member agencies and volunteer agencies. The Center is a Secondary PSAP (Public Safety Answering Point) handling over 400,000 phone calls a year, and dispatching over 192,000 fire and medical emergency incidents. SRFECC provides fire protection and emergency medical service (EMS) dispatching for nearly all of Sacramento County and part of Placer County, covering over 1,000 square miles and serving over 1.5 million residents. In addition to the Communications Center, which is home to the dispatch, IT, and administrative teams, SRFECC also has an off-site facility, which serves as a disaster recovery site, community training and conference center. In Fiscal Year (FY) 2016/17, the JPA is comprised of the following member and contract agencies: Member Agencies: Sacramento Fire Department Sacramento Metro Fire District Folsom Fire Department Cosumnes Fire Department Contracted Agencies, Volunteer Fire Departments: Herald Fire Department Wilton Fire Department Courtland Fire Department Walnut Grove Volunteer Fire Department Isleton Fire Department River Delta Fire District SRFECC and the Fire Member and Volunteer Agencies are committed to being supportive partners for those requiring additional fire resources. Dispatch services are provided through automatic and mutual aid agreements with neighboring counties and communities including: the City of Roseville, the City of El Dorado Hills, the City of West Sacramento, and the Sacramento County Airport Systems. Additionally SRFECC performs back-up dispatching services for the State of California Governor s Office of Emergency Services Region IV. Governance As stated above, SRFECC was organized through a Joint Powers Agreement (JPA). The JPA agreement, third amendment, became effective July 1, Financial Section 3

33 SRFECC is governed by a Board of Directors comprised of one representative from each of its member agencies: Sacramento Fire Department Sacramento Metro Fire District Folsom Fire Department Cosumnes Fire Department Per the JPA Agreement, each member agency exercises a weighted vote equal to its pro rata share of emergency service calls dispatched in the previous calendar year. Evolution On January 1, 2014, SRFECC withdrew the majority of its funds from the Sacramento County Treasury, severing approximately 30 years of history with the County s Department of Finance and bringing in-house the accounting and financial reporting function. The accounting team evaluated in detail every transaction cycle, consulted with other governmental finance professionals, and reviewed industry best practices to design and implement a streamlined, transparent, and highly functional department better suited to our unique size, complexity, volume of transactions, and the unique business of saving lives. This report covering FY 16/17 is the third full year of Accounting separate from the Sacramento County Treasury. In FY 15/16 the Center moved its Treasury from Wells Fargo Bank to Umpqua Bank. This has led to an improved banking relationship, along with an improvement on the fees charged to SRFECC. In 16/17 the Center moved its purchasing card system to Umpqua Bank, continuing the improving relationship for banking services. Using This Annual Report This annual report consists of a series of basic financial statements. These statements are comprised of the Balance Sheets, Statements of Revenues, Expenses and Changes in Net Position, Statements of Cash Flows, and Notes to Basic Financial Statements. SRFECC resources are allocated to and accounted for in these basic financial statements as an enterprise fund type of the propriety fund group. The enterprise fund is used to account for operations that are financed and operated in a manner similar to private business enterprises, where the cost of providing communications services is funded by charges for service to our member agencies. The Balance Sheets represent the Center s assets and resources it controls that enable it to provide services, and liabilities as claims against those resources. The difference between total assets and total liabilities is reported as net position, and represents net assets available for future use. Net position is reported as either restricted or unrestricted to identify which net position is limited to a specific purpose or use. The Statements of Revenues, Expenses and Changes in Net Position track the inflow and outflow of resources. Revenues are categorized by source or type, whereas expenses are shown by function or object. The Balance Sheets and Statements of Revenues, Expenses and Changes in Net Position are reported using the accrual basis of accounting where revenues are recognized when earned, and expenses are recognized when incurred, regardless of the timing of cash flows. The Statements of Cash Flows classifies cash receipts and payments according to whether they stem from operations, non-capital financing, capital and related financing, or investing activities. A Reconciliation of Operating Loss to Net Cash Provided (Used) By Operating Activities is also presented to report the net cash provided (used) by operating activities. Financial statement notes are an important part of the basic financial statements. They provide additional information required by Generally Accepted Accounting Principles (GAAP). These notes describe Financial Section 4

34 accounting methods and policies underlying the balances in the financial statements, provide additional detail about balances, and present other important information about the Center s financial position, which does not necessarily meet the criteria reported in the financial statements. Financial Highlights The implementation of GASB 68 in FY14/15 to fully account for the liability of pensions created a new baseline for assets and liabilities. At the close of FY 15/16, the liabilities of SRFECC exceeded assets, with the net position of SRFECC at a $.3 million deficit. At the close of FY 16/17 the net position deficit has increased to $.5 million. Regarding this amount, $3.8 million was invested in capital assets and unrestricted totaled a $4.3 million deficit. This is mostly due to the ongoing cost impacts of pension liabilities and other post-employment benefits. Current assets include cash, accounts receivable, amounts due from other governments and prepaid expenses. Current assets decreased from $6.3 million at the end of FY 15/16 to $5.7 million at the close of FY 16/17. This decrease can be attributable to a decrease in cash of $.9 million offset by an increase in receivables, prepaid expenses and other assets of $.3 million. Current liabilities include accounts payable and accrued expenses, and employee related liabilities. Current liabilities increased slightly from $.25 million at the end of FY 15/16 to $.26 million at the close of FY 16/17. This is attributable to an increase in accrued compensated absences at the close on June 30, Capital assets increased from $2.6 million net on June 30, 2016 to $3.8 million net on June 30, In November 2015, SRFECC signed a contract with Tyler New World Technologies for a new Computer Aided Dispatch System. This system will be built in FY15/16 - FY17/18 and will go live during FY 17/18. The value of this asset, not being depreciated in FY 16/17 is $2.6 million. The value of assets being depreciated increased from $1.1 million in 15/16 to $1.2 million in FY 16/17 mostly due to more fixed assets especially communication and computer equipment acquired in FY Non-Current liabilities increased from $9.9 million on June 30, 2016 to $11.4 million on June 30, The reason for the increase is the ongoing liability for retirement benefits, both pension and medical. Trending this change, the net pension liability increased from $5.3 million in FY 15/16 to $6.2 million in FY 16/17. Accompanying the pension liability, Deferred Inflows decreased from $.5 million in FY 15/16 to $.3 million in FY 16/17. The OPEB annual expense increase was $.8 million and contributions from premium payments made were $.2 million, bringing the liability from $4.5 million on June 30, 2016 to $5.1 million on June 30, (See Notes D and E of the basic financial statements for additional information and disclosures on other post-employment benefits and Note F on the pension plan.) During FY 16/17, operating revenues decreased $.15 million from $8.35 million in FY 15/16 to $8.2 million. This decrease was due primarily to fewer deployments with the State of California Governor s Office of Emergency Services for Mutual Aid Fire Assistance. Dispatch and IT support is provided to assist in mutual aid fire and emergency incidents and the reimbursement for the costs, including an overhead administrative fee, provides this additional source of revenue for SRFECC, but is not a reliable source of revenue. Operating expenses increased $.2 million from $8.6 million during FY 15/16 to $8.8 million in FY 16/17. This was due mostly to employee costs of $.6 million, including full staffing, overtime, and an increase in pension costs. Costs in services and supplies were reduced by $.3 million. Depreciation expense was approximately $.01 million more in FY 16/17. Non-operating revenues include grants, interest and investment income, and other miscellaneous fees for services. Total non-operating revenues, increased from $72 thousand in FY 15/16 to $92 thousand in FY 16/17 mostly due to Staten Island Tower reimbursement and server license reimbursements. Financial Section 5

35 Operating Revenues SRFECC is primarily funded by member contributions, paid to SRFECC on a bi-annual basis, for dispatch and dispatch-related services. Per the JPA agreement, each member agency pays its pro-rata share of all capital, operating, and related costs of SRFECC. In April of each year, Command Staff presents the preliminary budget to the Board of Directors detailing its funding requirements for the upcoming fiscal year. Once approved, the member agencies are invoiced by SRFECC for their member contributions. $8,500,000 Five Year Comparative Operating Revenue $8,000,000 $7,500,000 $7,000,000 Dollars ($) $6,500,000 $6,000,000 $5,500,000 $5,000,000 FY 12/13 * FY 13/14 * FY 14/15 * FY 15/16 * FY 16/17 * Total Operating Revenues $6,296,940 $8,064,242 $8,096,115 $8,349,750 $8,186,906 *Note budgeted member contributions remained status quo at $8,003,132 for each of the fiscal years shown. The change in total revenue starting in FY13/14 is due to funding for significantly low staffing levels in prior years. Financial Section 6

36 Fiscal Year 15/16 to 16/17 Analysis: Operating Revenues FY 16/17 FY 15/16 $ Variance % Variance Charges for Services Member Assessments $ 8,003,134 $ 8,003,134 $ - 0% Reimbursements from other agencies $ 109,842 $ 272,886 $ (163,044) -60% Backbone and Secdry User Fees $ 73,930 $ 73,730 $ 200 0% Total Operating Revenues $ 8,186,906 $ 8,349,750 $ (162,844) -2% Non-Operating Revenues (Expenses) Non-Operating grants $ 902 $ 2,317 $ (1,415) -61% Interest and Investment Income $ 8,364 $ 11,669 $ (3,305) -28% Other Non-Operating Revenues $ 82,247 $ 58,357 $ 23,890 41% Total Non-Operating Revenues $ 91,513 $ 72,343 $ 19,170 26% SRFECC received additional funding in FY 15/16 of $.24 million from OES deployment reimbursements which resulted in larger revenue for SRFECC during that fiscal year. These funds are available to SRFECC for mutual aid in statewide fires, but are not a reliable source of revenue as they depend on SRFECC being called for deployment. The Non-Operating Revenues increase due to other agencies funding the Staten Island tower and server license reimbursements. Fiscal Year 14/15 to 15/16 Analysis: Operating Revenues FY 15/16 FY 14/15 $ Variance % Variance Charges for Services Member Assessments $ 8,003,134 $ 8,003,132 $ 2 0% Reimbursements from other agencies $ 272,886 $ 25,846 $ 247, % Backbone and Secdry User Fees $ 73,730 $ 67,137 $ 6,593 10% Total Operating Revenues $ 8,349,750 $ 8,096,115 $ 253,635 3% Non-Operating Re ve nues (Expe nse s) Non-Operating grants $ 2,317 $ 24,394 $ (22,077) -91% Interest and Investment Income $ 11,669 $ 16,972 $ (5,303) -31% Other Non-Operating Revenues $ 58,357 $ 36,781 $ 21,576 59% Total Non-Operating Revenues $ 72,343 $ 78,147 $ (5,804) -7% SRFECC received additional funding in FY 15/16 of $.25 million from OES deployment reimbursements which resulted in larger revenue for SRFECC during that fiscal year. These funds are available to SRFECC for mutual aid in statewide fires. These funds are the main reason for the $254 thousand increase in total operating revenues from FY 14/15 to FY 15/16. Operating Expenses Expenses are classified on the financial statements as Salaries and Employee Benefits, Post-Employment Health Benefits, Services and Supplies, and Depreciation. All of these expense classifications support the dispatch function. Financial Section 7

37 Dollars ($) 5 Year Comparative Expenses $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $ FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 Salaries and Benefits $4,748,904 $5,710,866 $5,240,866 $5,832,061 $6,350,015 Post Employment Health Benefits $864,224 $883,442 $813,404 $811,806 $786,966 Services and Supplies $1,406,534 $1,853,052 $1,453,818 $1,755,604 $1,442,241 Depreciation $193,440 $233,792 $245,354 $166,259 $177,659 Fiscal Year 15/16 to 16/17 Analysis: Operating Expenses FY 16/17 FY 15/16 $ Variance % Variance Salaries and employee benefits $ 6,350,015 $ 5,832,061 $ 517,954 9% Post retirement health benefits $ 786,966 $ 811,806 $ (24,840) -3% Services and supplies $ 1,442,241 $ 1,755,604 $ (313,363) -18% Depreciation $ 177,659 $ 166,259 $ 11,400 7% Total Operating Expenses $ 8,756,881 $ 8,565,730 $ 191,151 2% Salaries and Benefits increased primarily due to significant increases in Retirement Benefit Expenses ($.3 Million) and overtime increases of $.1 million due to constant staffing. Medical costs and post-retirement health benefits continue to remain controlled through negotiated MOU changes on medical costs for employees starting July 1, Services and Supplies decreased over the FY 15/16 to FY 16/17 due mostly to legal costs being much lower than prior year. There were also lower costs related to the new CAD system. SRFECC offers retirement health benefits to its retirees as a post-employment benefit. At the end of FY 16/17, the plan had 47 active participants and 18 retirees. With less than 200 plan members, an actuarial valuation is required on a triennial basis. An actuarial valuation for post-employment medical benefits was performed most recently on June 24, This report was prepared by Milliman, Inc. for the date ending June 30, The next report will be prepared in the FY 17/18 year for the date ending June 30, Financial Section 8

38 Fiscal Year 14/15 to 15/16 Analysis: Operating Expenses FY 15/16 FY 14/15 $ Variance % Variance Salaries and employee benefits $ 5,832,061 $ 5,240,866 $ 591,195 11% Post retirement health benefits $ 811,806 $ 813,404 $ (1,598) 0% Services and supplies $ 1,755,604 $ 1,453,818 $ 301,786 21% Depreciation $ 166,259 $ 245,354 $ (79,095) -32% Total Operating Expenses $ 8,565,730 $ 7,753,442 $ 812,288 10% Salaries and Benefits were increased mostly due to costs for full staffing, OES deployments, and pension benefits. Medical costs and post-employment health benefits continue to remain controlled through negotiated MOU changes on medical costs for employees starting July 1, Services and Supplies increased over the FY 14/15 to FY 15/16 due mostly to legal costs being much higher than expected. This is an outcome of ongoing discussion regarding potential litigation to the agency members of SRFECC. There were also costs related to the new CAD system, for example, the Metro E internet service that increased this category. SRFECC offers retirement health benefits to its retirees as a post-employment benefit. At the end of FY 15/16, the plan had 45 active participants and 15 retirees. With less than 200 plan members, an actuarial valuation is required on a triennial basis. An actuarial valuation for post-employment medical benefits was performed most recently on June 24, This report was prepared by Milliman, Inc. for the date ending June 30, OPEB Other Post-Employment Benefits SRFECC provides a retiree medical benefit for employees who retire directly from SRFECC under CalPERS. SRFECC contributes up to a cap based on the lesser amount of Kaiser or Blue Shield, Sacramento Regional non-medicare premiums for single and two-party coverage. Effective July 1, 2014 Center contributions to OPEB were capped at a maximum of 5% increase over the prior year. (Previously capped at 20% increase over the prior year.) Effective July 1, 2014, Active Employees contribute an additional $100 from each payroll period to defray the cost of future OPEB obligations. During FY 14-15, SRFECC worked with CalPERS to establish a trust for the purpose of funding future OPEB obligations. Currently the trust is funded from employee contributions. Furthermore, current year health expenses for OPEB are paid from the Center s operating budget. Other funding strategies are currently under review with the Board of Directors and management. On June 30th, 2017, $64,700 was transferred to the trust representing employee contributions. The value of the trust on June 30, 2017 was $224 thousand. Effective July 1, 2014 all new employees receive $1300 toward medical, vision, and dental benefits. Starting in FY 15/16 the CalPERS retiree amount is $1300, adopted through Board Resolution 11- Financial Section 9

39 17, and developed along with a Healthcare Reimbursement Account establishing full payment of retiree healthcare contributions for employees hired before July 1, Assets Assets represent economic resources, tangible and intangible, available to the organization for operations and future economic use. They are presented in order of liquidity, and classified as current and non-current. Fiscal Year 15/16 to 16/17 Analysis: Assets FY 16/17 FY 15/16 $ Variance % Variance Current Asse ts Cash and Cash Equivalents $ 4,380,801 $ 5,252,944 $ (872,143) -17% Accounts receivable $ 8,866 $ 4,328 $ 4, % Due from other governments $ 329,152 $ 67,270 $ 261, % Prepaid expenses and other assets $ 975,121 $ 925,751 $ 49,370 5% Total Current Assets $ 5,693,940 $ 6,250,293 $ (556,353) -9% Capital Assets Not being depreciated $ 2,612,248 $ 1,493,793 $ 1,118,455 75% Being depreciated, net $ 1,181,984 $ 1,147,458 $ 34,526 3% Total Capital Assets $ 3,794,232 $ 2,641,251 $ 1,152,981 44% Total Assets $ 9,488,172 $ 8,891,544 $ 596,628 7% The increase in assets not being depreciated is due to the capital improvement project of the CAD system that started in FY 15/16. Cash decreased mainly due to payments for the CAD system and the Motorola P25 Console upgrade Fiscal Year 14/15 to 15/16 Analysis: Assets FY 15/16 FY 14/15 $ Variance % Variance Current Assets Cash and Cash Equivalents $ 5,252,944 $ 6,804,890 $ (1,551,946) -23% Accounts receivable $ 4,328 $ 9,875 $ (5,547) -56% Due from other governments $ 67,270 $ 74,042 $ (6,772) -9% Prepaid expenses and other assets $ 925,751 $ 65,141 $ 860, % Total Current Assets $ 6,250,293 $ 6,953,948 $ (703,655) -10% Capital Assets Not being depreciated $ 1,493,793 $ 16,734 $ 1,477, % Being depreciated, net $ 1,147,458 $ 1,181,312 $ (33,854) -3% Total Capital Assets $ 2,641,251 $ 1,198,046 $ 1,443, % Total Assets $ 8,891,544 $ 8,151,994 $ 739,550 9% Financial Section 10

40 The increase in assets not being depreciated is due to the Capital Improvement project of the CAD system that started in FY 15/16. The increase in prepaid expenses is due to the five year maintenance contract associated with the CAD system. Cash decreased mainly due to payments for the CAD system. Additional information on SRFECC s capital assets is located in Note C of the basic financial statements. Liabilities Liabilities represent obligations of the Center or claims against the Center s economic resources. These are classified as current and non-current on the balance sheet, and reported in order of relative maturity. Fiscal Year 15/16 to 16/17 Analysis: Liabilities FY 16/17 FY 15/16 $ Variance % Variance Current Liabilities Accounts payable and accrued expenses $ 100,680 $ 94,134 $ 6,546 7% Accrued Salaries and Benefits $ 17,381 $ 91,147 $ (73,766) -81% Current portion of compensated absences $ 145,355 $ 61,895 $ 83, % Total Current Liabilities $ 263,416 $ 247,176 $ 16,240 7% Non Current Liabilities Compensated Absences $ 114,329 $ 146,669 $ (32,340) -22% Other post-employment benefits $ 5,125,260 $ 4,492,145 $ 633,115 14% Net Pension Liability $ 6,191,417 $ 5,278,735 $ 912,682 17% Total NonCurrent Liabilities $ 11,431,006 $ 9,917,549 $ 1,513,457 15% Total Liabilities $ 11,694,422 $ 10,164,725 $ 1,529,697 15% The increase in Other Post-Employment Benefits (OPEB) obligations are due to the actuarially determined annual required contribution (ARC) of $826,042 incurred in FY 16/17 and very little prefunding of the plan. The ARC is comprised of two parts, the normal cost which is the cost for OPEB benefits attributable to the current year of service, and the amortization payment, which is the catch-up amount for past cost to fund the unfunded actuarial accrued liability (UAAL) over the next twenty eight years. As SRFECC is currently operating under the pay-as-you-go method, the UAAL will continue to increase and negatively impact the ARC. (SRFECC has established a 115 trust and currently partially funds its OPEB program through employee contributions of $100 per month per employee. Current level of employer and employee contributions are not sufficient to fully fund the Annual Required Contribution. In June 2015, the Government Accounting Standards Board adopted GASB 74 and 75 which will replace GASB 43 and 45. The new standards, which will be effective for SRFECC for the 2018 fiscal year, are a significant change from the current standards. SRFECC s unfunded OPEB liability of $8.1 million, based on the September 1, 2015 actuarial report, will be recorded on the Center s balance sheet. However, the amounts could change by the time GASB 75 is implemented as a result of updated actuarial valuations. ). To ensure the continued financial strength of the organization and security of its OPEB benefits, SRFECC continues to work with its actuaries, financial advisors, Board of Directors and labor groups to manage future costs of other post-employment benefits. The Net Pension Liability is recognized for the third year in a row in our financial statements. This is a result of implementing GASB 68 which requires the Center to record its share of the unfunded pension liability as a liability on the balance sheet instead of just being disclosed in the footnotes. The Center s Net Pension Liability is $6.2 million. The implementation of GASB 68 resulted in the recording of a deferred outflow of resources of $2.6 million and a deferred inflow of resources of $.3 million. 11

41 Fiscal Year 14/15 to 15/16 Analysis: Liabilities FY 15/16 FY 14/15 $ Variance % Variance Current Liabilities Accounts payable and accrued expenses $ 94,134 $ 101,887 $ (7,753) -8% Accrued Salaries and Benefits $ 91,147 $ 30,846 $ 60, % Current portion of compensated absences $ 61,895 $ 80,113 $ (18,218) -23% Total Current Liabilities $ 247,176 $ 212,846 $ 34,330 16% Non Current Liabilities Compensated Absences $ 146,669 $ 171,395 $ (24,726) -14% Other post-employment benefits $ 4,492,145 $ 3,817,001 $ 675,144 25% Net Pension Liability $ 5,278,735 $ 4,536,180 $ 742,555 - Total NonCurrent Liabilities $ 9,917,549 $ 8,524,576 $ 1,392,973 16% The increase in Other Post-Employment Benefits (OPEB) obligations are due to the actuarially determined annual required contribution (ARC) of $837,213 incurred in FY 15/16 and no pre-funding of the plan. The ARC is comprised of two parts, the normal cost which is the cost for OPEB benefits attributable to the current year of service, and the amortization payment, which is the catch-up amount for past cost to fund the unfunded actuarial accrued liability (UUAL) over the next thirty years. As SRFECC is currently operating under the pay-as-you-go method, the UUAL will continue to increase and negatively impact the ARC. To ensure the continued financial strength of the organization and security of its OPEB benefits, SRFECC continues to work with its actuaries, financial advisors, Board of Directors and labor groups to manage future costs of other post-employment benefits. The Net Pension Liability is recognized for the second year in a row in our financial statements. This is a result of implementing GASB 68 which requires the Center to record its share of the unfunded pension liability as a liability on the balance sheet instead of just being disclosed in the footnotes. The Center s Net Pension Liability is $5.3 million. The implementation of GASB 68 resulted in the recording of a deferred outflow of resources of $1.4 million and a deferred inflow of resources of $.5 million. Deferred Inflows/Outflows Deferred inflows/outflows represent items where recognition of the inflows/outflow has been deferred to a future period to which they relate. Deferred Inflows/Outflows FY 16/17 FY 15/16 $ Variance % Variance Deferred Outflows Pensions $ 2,033,906 $ 1,445,341 $ 588,565 41% Deferred Inflows Pensions $ 305,197 $ 463,595 $ (158,398) -34% Deferred Inflows/Outflows FY 15/16 FY 14/15 $ Variance % Variance Deferred Outflows Pensions $ 1,445,341 $ 1,070,443 $ 374,898 35% Deferred Inflows Pensions $ 463,595 $ 972,392 $ (508,797) -52% These deferrals relate to the implementation of GASB 68 whereby certain changes in the net pension liability are deferred and amortized into expense over three to five years. Financial Section 12

42 Net Position Net position is comprised of net investment in capital assets, unrestricted and restricted net position. Fiscal Year 15/16 to 16/17 Analysis: Net Position FY 16/17 FY 15/16 $ Variance % Variance Net investment in capital assets $ 3,794,232 $ 2,641,251 $ 1,152,981 44% Unrestricted $ (4,271,773) $ (2,932,686) $ (1,339,087) 46% Total Net Position $ (477,541) $ (291,435) $ (186,106) 64% The increase in the net investment in capital assets in FY 16/17 is the result of capital asset purchases of $1.3 million, offset by $177 thousand in depreciation expense. Since the Center purchased more capital assets, the decrease in the unrestricted net position is due to some of the unrestricted net position being reclassified as net investment in capital assets, partially offset by the current year change in net position. Fiscal Year 14/15 to 15/16 Analysis: Net Position FY 15/16 FY 14/15 $ Variance % Variance Net investment in capital assets $ 2,641,251 $ 1,198,046 $ 1,443, % Unrestricted $ (2,932,686) $ (1,685,473) $ (1,247,213) 74% Total Net Position $ (291,435) $ (487,427) $ 195,992-40% The increase in the net investment in capital assets in FY 15/16 is the result of payments for the CAD system of $1,477,000 and capital asset purchases of $132 thousand, offset by $166 thousand in depreciation expense. The decrease in the unrestricted net position is due to the reclassification of amounts to net investment of capital assets, partially offset by the current year change in net position. Obtaining Additional Information These financial reports are intended to provide the Center s stakeholders with a general overview of the Center s financial condition and an accounting of the public s money. If you have questions about this report, or need more financial information, please contact SRFECC Command Staff at excellence@srfecc.ca.gov. More information about the Center s operations can also be found at Financial Section 13

43 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER BALANCE SHEETS June 30, 2017 and 2016 ASSETS AND DEFERRED OUTFLOW OF RESOURCES CURRENT ASSETS Cash and cash equivalents $ 4,380,801 $ 5,252,944 Accounts receivable 8,866 4,328 Due from other governments 329,152 67,270 Prepaid expenses and other assets 975, ,751 TOTAL CURRENT ASSETS 5,693,940 6,250,293 CAPITAL ASSETS Not being depreciated 2,612,248 1,493,793 Being depreciated, net 1,181,984 1,147,458 TOTAL CAPITAL ASSETS 3,794,232 2,641,251 TOTAL ASSETS 9,488,172 $ 8,891,544 DEFERRED OUTFLOW OF RESOURCES Pensions 2,033,906 1,445,341 TOTAL ASSETS AND DEFERRED OUTFLOW OF RESOURCES $ 11,522,078 $ 10,336,885 LIABILITIES, DEFERRED INFLOW OF RESOURCES AND NET POSITION CURRENT LIABILITIES Accounts payable and accrued expenses $ 100,680 $ 94,134 Accrued salaries and benefits 17,381 91,147 Current portion of compensated absences 145,355 61,895 TOTAL CURRENT LIABILITIES 263, ,176 NONCURRENT LIABILITIES Compensated absences 114, ,669 Other post-employment benefits 5,125,260 4,492,145 Net pension liability 6,191,417 5,278,735 TOTAL NONCURRENT LIABILITIES 11,431,006 9,917,549 TOTAL LIABILITIES 11,694,422 10,164,725 DEFERRED INFLOW OF RESOURCES Pensions 305, ,595 NET POSITION Net investment in capital assets 3,794,232 2,641,251 Unrestricted (4,271,773) (2,932,686) TOTAL NET POSITION (477,541) (291,435) TOTAL LIABILITIES, DEFERRED INFLOW OF RESOURCES AND NET POSITION $ 11,522,078 $ 10,336,885 The accompanying notes are an integral part of these financial statements. Financial Section 14

44 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION For the Years Ended June 30, 2017 and OPERATING REVENUES Charges for services Member assessments $ 8,003,134 $ 8,003,134 Reimbursements from other agencies 109, ,886 Backbone and secondary user fees 73,930 73,730 TOTAL OPERATING REVENUES 8,186,906 8,349,750 OPERATING EXPENSES Salaries and employee benefits 6,184,296 5,973,201 Pension adjustment 165,719 (141,140) Post employment health benefits 786, ,806 Services and supplies 1,442,241 1,755,604 Depreciation 177, ,259 TOTAL OPERATING EXPENSES 8,756,881 8,565,730 OPERATING (LOSS) INCOME (569,975) (215,980) NONOPERATING REVENUES (EXPENSES) Nonoperating grants 902 2,317 Interest and investment income 8,364 11,669 Other nonoperating revenue 82,247 58,357 TOTAL NONOPERATING REVENUES (EXPENSES) 91,513 72,343 CAPITAL CONTRIBUTIONS Member supplemental assessments 292, ,629 TOTAL CAPITAL CONTRIBUTIONS 292, ,629 CHANGE IN NET POSITION (186,106) 195,992 Total net position, beginning of year (291,435) (487,427) TOTAL NET POSITION, END OF YEAR $ (477,541) $ (291,435) The accompanying notes are an integral part of these financial statements. Financial Section 15

45 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER STATEMENTS OF CASH FLOWS For the Years Ended June 30, 2017 and CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers $ 8,192,050 $ 8,362,069 Cash paid to suppliers (4,910,715) (4,591,016) Cash paid to employees (2,935,143) (3,364,017) NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES 346, ,036 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Other nonoperating revenues received 82,247 58,357 Nonperating grants 902 2,317 NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES 83,149 60,674 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Member supplemental assessments received 20, ,629 Purchases of capital assets (1,330,640) (1,609,464) Payments for maintenance contract on capital assets - (761,440) NET CASH USED FOR CAPITAL AND RELATED FINANCING ACTIVITIES (1,309,848) (2,031,275) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 8,364 11,669 NET CASH PROVIDED BY INVESTING ACTIVITIES 8,364 11,669 NET CHANGE IN CASH AND CASH EQUIVALENTS (872,143) (1,551,896) Cash and cash equivalents, beginning of year 5,252,944 6,804,840 CASH AND CASH EQUIVALENTS, END OF YEAR $ 4,380,801 $ 5,252,944 RECONCILIATION OF OPERATING (LOSS) INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating (loss) income $ (569,975) $ (215,980) Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 177, ,259 Changes in assets and liabilities: Accounts receivable (4,538) 5,547 Due from other governments 9,682 6,772 Prepaid expenses and other assets (49,370) (99,170) Accounts payable and accrued expenses 6,546 (7,753) Accrued salaries and benefits (73,766) 60,301 Compensated absences 51,120 (42,944) Other post-employment benefits 633, ,144 Change in deferred outflows/inflows of resources for pensions (746,963) (883,695) Net pension liability 912, ,555 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 346,192 $ 407,036 The accompanying notes are an integral part of these financial statements. Financial Section 16

46 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2017 and 2016 NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Sacramento Regional Fire/EMS Communications Center (SRFECC) have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The most significant accounting policies of SRFECC are described below. Background: SRFECC was organized through a Joint Powers Agreement (JPA) pursuant to the provisions of Title I, Division 7, Chapter 5, Article 1, Sections 6500 et seq. of the California Government Code beginning in January 1, 1981, to provide fire and ambulance communications management/dispatch services for member agencies and volunteer agencies. The JPA member agencies are Sacramento Fire Department, Sacramento Metropolitan Fire District, Cosumnes Fire Department of the Consumes Community Services District and Folsom Fire Department. Volunteer agencies are Herald, Courtland, Walnut Grove, Wilton, Isleton, and River Delta Fire Districts. SRFECC serves approximately 1.5 million residents in an area of approximately 1,000 square miles. SRFECC's Board of Directors is comprised of one representative from each Member Agency. Each Member Agency has a weighted vote equal to the percentage of each Member Agency's total emergency service calls to the total of all emergency service calls for all Member Agencies during the previous calendar year that remain a member on July 1 of the current fiscal year. The weighted votes are recalculated on July 1 of each fiscal year. All debts, liabilities and obligations of SRFECC are not considered to be debts, liabilities and obligations of the Member Agencies. However, according to the Joint Powers Agreement, no assets may be divided or returned to Member Agencies until all outstanding obligations of SRFECC have been resolved or a paid-up contract has been adopted which removes those obligations from SRFECC. A paid-up contract may be for Member Agencies to accept responsibility for any outstanding claims. Dispositions of the remaining assets will then be made in proportion to the contributions of the remaining Member Agencies for the fiscal year of the dissolution. The Joint Powers Agreement may be terminated upon consent of 90% of the total number of votes of all Member Agencies. The Joint Powers Agreement requires SRFECC collect charges for services from its Member Agencies on a pro- rata basis sufficient to pay capital, operating and related costs for dispatch services. The rate charged to each Member Agency depends on whether the Member Agency chooses to receive Tier I, Tier II or Tier III dispatch services or requests other additional services as defined in the Joint Powers Agreement. Basis of Presentation Fund Accounting: SRFECC s resources are allocated to and accounted for in these basic financial statements as an enterprise fund type of the proprietary fund group. The enterprise fund is used to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services on a continuing basis be financed or recovered primarily through user charges, or where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other policies. Net position for the enterprise fund represents the amount available for future operations. Basis of Accounting: The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. The enterprise fund type is accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities associated with the operation of this fund are included on the balance sheet. Net position is segregated into amounts invested in capital assets, amounts restricted and amounts unrestricted. Enterprise fund type operating statements present increases (i.e., revenues) and decreases (i.e., expenses) in net total position. Financial Section 17

47 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER NOTES TO BASIC FINANCIAL STATEMENTS (Continued) June 30, 2017 and 2016 NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) SRFECC uses the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. Operating revenues and expenses consist of those revenues and expenses that result from the ongoing principle operations of SRFECC. Operating revenues consist primarily of charges for services. Non-operating revenues and expenses consist of those revenues and expenses that are related to financing and investing types of activities and result from non-exchange transactions or ancillary activities. When both restricted and unrestricted resources are available for use, it is SRFECC s policy to use restricted resources first, then unrestricted resources as they are needed. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents: For purposes of the statement of cash flows, SRFECC considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Cash and cash equivalents consist of cash on hand and deposits in financial institutions. Prepaid Expenses: Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid expenses. Capital Assets: Capital assets are recorded at historical cost. Donated capital assets are recorded at the acquisition value, which is the price that would be paid to acquire an asset with equivalent service potential in an orderly market transaction at the acquisition date. Self-constructed assets are recorded based on the amount of direct labor, material, and certain overhead charged to the asset construction. Depreciation is calculated using the straight-line method over the following estimated useful lives: Description Buildings and improvements Equipment Software Estimated Life 5-30 years 3-25 years 3 years Maintenance and repairs are charged to operations when incurred. It is SRFECC s policy to capitalize all capital assets with a cost of more than $5,000 for equipment, building and improvements. Costs of assets sold or retired (and the related amounts of accumulated depreciation) are eliminated from the balance sheet in the year of sale or retirement, and the resulting gain or loss is recognized in operations. Compensated Absences: Regular full-time employees are granted vacation, sick and holiday leave in varying amounts based upon length of service. Employees are not compensated for unused sick leave upon separation from employment, so a liability is not recorded for unused sick leave. Any accrued hours, not in excess of the maximum allowable, which are unused during the current period, are carried forward to following years. Additionally, certain employees are allowed compensated time-off in lieu of overtime compensation and/or from working on holidays. Net Position: Net position is categorized as net investment in capital assets, restricted and unrestricted. Net Investment in Capital Assets This category groups all capital assets into one component of net position. Accumulated depreciation reduces the balance in this category. Restricted Net Position This category presents external restrictions imposed by creditors, grantors, contributors, laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. SRFECC has no restricted net position. Financial Section 18

48 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER NOTES TO BASIC FINANCIAL STATEMENTS (Continued) June 30, 2017 and 2016 NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Unrestricted Net Position This category represents net position of SRFECC not restricted for any project or other purpose. 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 SRFECC s California Public Employees Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Use of Estimates: The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. New Pronouncements: In June 2015, the GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (OPEB), which replaces the requirements of GASB Statement No. 45 and requires governments that are responsible only for OPEB liabilities related to their own employees and that provide OPEB through a defined benefit OPEB plan administered through a trust that meets specified criteria to report a net OPEB liability, which is the difference between the total OPEB liability and assets accumulated in the trust and restricted to making benefit payments, on the face of the financial statements. Governments that participate in a cost-sharing OPEB plan that is administered through a trust that meets the specified criteria will report a liability equal to their proportionate share of the collective OPEB liability for all entities participating in the cost-sharing plan. Governments that do not provide OPEB through a trust that meets specified criteria will report the total OPEB liability related to their employees. This Statement also requires governments to present more extensive note disclosures and required supplementary information about their OPEB liabilities. This Statement is effective beginning the year ended June 30, 2018 and will result in a significant increase in SRFECC s liabilities. In November 2016, the GASB issued Statement No. 83, Certain Asset Retirement Obligations. This Statement addresses accounting and financial reporting for certain asset retirement obligations (ARO s), which is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability based on the guidance in this Statement. The timing and pattern of recognition of the liability and corresponding deferred outflow of resources recorded is defined in this Statement. This Statement is effective for periods beginning after June 15, In March 2017, the GASB issued Statement No. 85, Omnibus This Statement addresses practice issues that have been identified during implementation and application of certain GASB statements, including issues related to blending component units, goodwill, fair value measurements and application, pensions and other postemployment benefits. This Statement is effective for periods beginning after June 15, SRFECC is currently analyzing the impact of the required implementation of these new statements. NOTE B CASH AND CASH EQUIVALENTS At June 30, 2017 and 2016, SRFECC s cash was classified in the accompanying financial statements as follows: Petty cash $ 272 $ 84 Deposits in financial institutions 4,380,529 5,252,860 Total $ 4,380,801 $ 5,252,944 Financial Section 19

49 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER NOTES TO BASIC FINANCIAL STATEMENTS (Continued) June 30, 2017 and 2016 NOTE B CASH AND CASH EQUIVALENTS (Continued) Investment policy: California statutes authorize special districts to invest idle, surplus or reserve funds in a variety of credit instruments as provided for in the California Government Code, Section 53600, Chapter 4 - Financial Affairs. The table below identifies the investment types that are authorized for SRFECC by the California Government Code (or SRFECC s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. During the year ended June 30, 2017, SRFECC s permissible investments included the following instruments: Maximum Maximum Authorized Maximum Percentage Investment Investment Type Maturity of Portfolio in One Issuer Local Agency Bonds 5 years None None U.S. Treasury Obligations 5 years None None U.S. Agency Securities 5 years None None State of California obligations 5 years None None Bankers Acceptances 180 days 40% 30% Commercial Paper 270 days 25% 10% Negotiable Certificates of Deposits 5 years 30% None Repurchase Agreements 92 days 20% None Medium Term Corporate Notes 5 years 30% None Money Market Mutual Funds N/A 20% 10% Mortgage pass-through securities 5 years 20% None LAIF N/A None None Custodial Credit Risk: Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and SRFECC s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure public agency deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. At June 30, 2017, the carrying value of SRFECC s deposits was $4,380,529 and the balance in financial institutions was $4,423,890. Of the balance in financial institutions, $250,000 was covered by federal depository insurance and $4,173,890 was covered by the pledging financial institution with assets held in a common pool for SRFECC and other governmental agencies, but not in the name of SRFECC. Financial Section 20

50 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER NOTES TO BASIC FINANCIAL STATEMENTS (Continued) June 30, 2017 and 2016 NOTE C CAPITAL ASSETS Capital asset activity for the years ended June 30, 2017 and 2016 was as follows: Balance Balance July 1, 2016 Additions Disposals June 30, 2017 Capital assets, not being depreciated: Land $ 16,734 $ 16,734 Construction in progress 1,477,059 $ 1,118,455 2,595,514 Total capital assets, not being depreciated 1,493,793 1,118,455-2,612,248 Capital assets, being depreciated: Buildings and improvements 3,192,965 6,125 3,199,090 Furniture, fixtures and equipment 4,572, ,060 4,778,940 Total capital assets, being depreciated 7,765, ,185-7,978,030 Less accumulated depreciation for: Buildings and improvements (2,769,462) (64,634) (2,834,096) Furniture, fixtures and equipment (3,848,925) (113,025) (3,961,950) Total accumulated depreciation (6,618,387) (177,659) - (6,796,046) Total capital assets, being depreciated, net 1,147,458 34,526-1,181,984 Total capital assets, net $ 2,641,251 $ 1,152,981 $ - $ 3,794,232 Balance Balance July 1, 2015 Additions Disposals June 30, 2016 Capital assets, not being depreciated: Land $ 16,734 $ 16,734 Construction in progress $ 1,477,059 1,477,059 Total capital assets, not being depreciated 16,734 1,477,059-1,493,793 Capital assets, being depreciated: Buildings and improvements 3,181,435 11,530 3,192,965 Furniture, fixtures and equipment 4,452, ,875 4,572,880 Total capital assets, being depreciated 7,633, ,405-7,765,845 Less accumulated depreciation for: Buildings and improvements (2,698,892) (70,570) (2,769,462) Furniture, fixtures and equipment (3,753,236) (95,689) (3,848,925) Total accumulated depreciation (6,452,128) (166,259) - (6,618,387) Total capital assets, being depreciated, net 1,181,312 (33,854) 1,147,458 Total capital assets, net $ 1,198,046 $ 1,443,205 $ - $ 2,641,251 Financial Section 21

51 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER NOTES TO BASIC FINANCIAL STATEMENTS (Continued) June 30, 2017 and 2016 NOTE D LONG-TERM LIABILITIES The following is a summary of long-term liabilities activity of SRFECC for the years ended June 30, 2017 and 2016: Balance Balance Due Within June 30, 2016 Additions Repayments June 30, 2017 One Year Compensated absences $ 208,564 $ 51,120 $ 259,684 $ 145,355 Other post-employment benefits 4,492, ,042 $ (192,927) 5,125,260 Net pension liability 5,278, ,682 6,191,417 $ 9,979,444 $ 1,789,844 $ (192,927) $ 11,576,361 $ 145,355 Balance Balance Due Within June 30, 2015 Additions Repayments June 30, 2016 One Year Compensated absences $ 251,508 $ (42,944) $ 208,564 $ 61,895 Other post-employment benefits 3,817, ,213 (162,069) 4,492,145 Net pension liability 4,536, ,555 5,278,735 $ 4,068,509 $ 837,213 $ (205,013) $ 4,700,709 $ 61,895 NOTE E OTHER POST-EMPLOYMENT BENEFITS Plan Description: The Sacramento Regional Public Safety Communications Center Retiree Healthcare ( Plan ) is a single-employer defined benefit healthcare plan administered by SRFECC. The Plan provides healthcare benefits to eligible retirees and their dependents through California Public Employees Retirement System healthcare program (PEMHCA). Benefit provisions are established and may be amended through agreements and memorandums of understanding between SRFECC, its non-represented employees and the unions representing SRFECC employees. The Retiree Health Care Plan does not issue a financial report. SRFECC provides a retiree medical contribution for employees who retire directly from SRFECC under CalPERS. SRFECC contributes up to a cap based on Kaiser Sacramento region non-medicare premiums for single and 2-party coverage, which was $650 to $1,390 in Retired employees hired on or after June 1, 2014 are subject to a maximum premium of $1,300 per month. The benefit continues to surviving spouses if the retiree elects the CalPERS survivor annuity. Dental, vision, or life insurance are not available to retirees. Funding Policy: The contribution requirements of the Plan participants and SRFECC are established by, and may be amended by SRFECC pursuant to agreements with its non-represented employees and the unions representing SRFECC employees. SRFECC contributed $154,106 and $138,213 during the years ended June 30, 2017 and 2016, respectively, on a pay-as-you go basis for current benefit payments. Retired plan members and their beneficiaries pay the annual premium cost not paid by the employer. Active SRFECC employees contributed $100 per month to help defray the costs of health benefits they are to receive as retirees in fiscal year 2016 and These contributions are non-refundable to the employees and are deposited in an irrevocable trust established to fund OPEB. SRFECC participates in the California Employers Retirees Benefit Trust (CERBT), an irrevocable trust established to fund OPEB. CERBT is administered by CalPERS, and is managed by an appointed board not under the control of SRFECC s Board of Directors. This Trust is not considered a component unit by SRFECC and has been excluded from these financial statements. Separately issued financial statements for CERBT may be obtained from CalPERS at P.O. Box , Sacramento, CA

52 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER NOTES TO BASIC FINANCIAL STATEMENTS (Continued) June 30, 2017 and 2016 NOTE E OTHER POST-EMPLOYMENT BENEFITS (Continued) The following table shows the components of SRFECC s annual OPEB cost for the years ended June 30, 2017 and 2016, the amount actuarially contributed to the Plan, and changes in SRFECC s Net OPEB obligation: Annual required contribution $ 900,368 $ 900,368 Interest on net OPEB obligation 193, ,131 Amortization of net OPEB obligation (267,488) (227,286) Annual OPEB cost (expense) 826, ,213 Contributions made (192,927) (162,069) Increase in net OPEB obligation 633, ,144 Net OPEB obligation, beginning of year 4,492,145 3,817,001 Net OPEB obligation, end of year $ 5,125,260 $ 4,492,145 The OPEB obligation will be increased prospectively to the actuarial accrued liability amount. SRFECC s annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation for the last three fiscal years were as follows: Percentage of Net Fiscal Year Annual Annual Annual OPEB OPEB Ended OPEB Cost Contribution Cost Contributed Obligation June 30, 2017 $ 826,042 $ 192, % $ 5,125,260 June 30, , , % 4,492,145 June 30, , , % 3,817,001 Funded Status and Funding Progress: The funded status of the Plan as of June 30, 2015, the Plan s most recent actuarial valuation date, was as follows: Actuarial accrued liability (AAL) $ 8,216,983 Actuarial value of Plan assets (83,641) Unfunded actuarial accrued liability (UAAL) 8,133,342 Funded ratio (actuarial value of Plan assets/aal) 1.03% Covered payroll (active Plan participants) 3,803,076 UAAL as a percentage of covered payroll % Actuarial valuations of an ongoing plan involve estimates of the value of expected benefit payments and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions: Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan participants) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan participants to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. 23

53 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER NOTES TO BASIC FINANCIAL STATEMENTS (Continued) June 30, 2017 and 2016 NOTE E OTHER POST-EMPLOYMENT BENEFITS (Continued) Actuarial Methods and Assumptions: Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan participants) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan participants to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. For the June 30, 2015 actuarial valuation, the Plan s most recent actuarial valuation, the entry age normal actuarial cost method was used. The actuarial assumptions included a 4.3% investment rate of return, a 3.25% salary increase and a 3% general inflation assumption. Actual premiums were used for 2012 and Premiums were assumed to increase from 6.75% in 2016, grading down to 4.5% for 2087 and thereafter. The initial UAAL was amortized as a level percentage of projected payroll over a fixed 28-year closed period as of June 30, NOTE F PENSION PLANS Plan Descriptions: All qualified permanent and probationary employees are eligible to participate in the SRFECC s cost-sharing multiple employer defined benefit pension plans administered by the California Public Employees Retirement System (CalPERS). The Board has the following rate plans: Miscellaneous Plan PEPRA Miscellaneous Plan Benefit provisions under the Plans are established by State statute and Board resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website at Benefits Provided: CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 (52 for PEPRA Miscellaneous Plan) with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is the following: the 1957 Survivor Benefit or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees Retirement Law. The Plans provisions and benefits in effect at June 30, 2017 and 2016, are summarized as follows: PEPRA Miscellaneous Miscellaneous Plan Plan (Prior to (On or after Hire date January 1, 2013) January 1, 2013) Benefit formula (at full retirement) Benefit vesting schedule 5 years service 5 years service Benefit payments monthly for life monthly for life Retirement age Monthly benefits, as a % of eligible compensation 2.00% to 2.70% 1.0% to 2.5% Required employee contribution rates and % 6.500% Required employer contribution rates % 6.460% Required employer contribution rates % 6.647% 24

54 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER NOTES TO BASIC FINANCIAL STATEMENTS (Continued) June 30, 2017 and 2016 NOTE F PENSION PLANS (Continued) In addition to the contribution rates above, SRFECCS was also required to make payments totaling $437,244 and $402,303 toward its unfunded actuarial liability during the years ended June 30, 2017 and 2016, respectively. The Miscellaneous Plan is closed to new members that are not already CalPERS eligible participants. For members of CalPERS prior to January 1, 2013, SRFECC pays the 8% employee contribution and employees pay 7.686% of the employer contribution. Contributions: Section 20814(c) of the California Public Employees Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The SRFECC is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. The contributions recognized as part of pension expense to the Plan were $854,713 and $809,183 for the years ended June 30, 2017 and 2016, respectively. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions: As of June 30, 2017 and 2016, the SRFECC reported a net pension liability for its proportionate share of the net pension liability of $6,191,417 and $5,278,735, respectively. The SRFECC s net pension liability is measured as the proportionate share of the net pension liability. The net pension liability is measured as of June 30, 2015 and 2014, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2015 and 2014 rolled forward to June 30, 2016 and 2015 using standard update procedures. The SRFECC s proportion of the net pension liability was based on a projection of the SRFECC s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The SRFECC s proportionate share of the net pension liability for the Plan as of June 30, 2014, 2015 and 2016 was as follows: Proportion - June 30, % Proportion - June 30, % Change - Increase (Decrease) % Proportion - June 30, % Proportion - June 30, % Change - Increase (Decrease) % 25

55 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER NOTES TO BASIC FINANCIAL STATEMENTS (Continued) June 30, 2017 and 2016 NOTE F PENSION PLANS (Continued) For the year ended June 30, 2017 and 2016, the SRFECC recorded pension expense of $1,020,432 and $668,043, respectively. At June 30, 2017 and 2016, the SRFECC reported deferred outflows of resources and deferred inflows of resources related to the Plan from the following sources: Deferred Deferred Deferred Deferred Outflows of Inflows of Outflows of Inflows of Resources Resources Resources Resources Pension contributions subsequent to measurement date $ 620,500 $ 799,965 Differences between actual and expected experience 20,559 $ (4,710) 32,639 Changes in assumptions (194,502) $ (308,793) Differences between the employer's contribution and the employer's proportionate share of contributions 270,192 (105,985) 426,469 Change in employer's proportion 110, ,268 Net differences between projected and actual earnings on plan investments 1,012,322 (154,802) Total $ 2,033,906 $ (305,197) $ 1,445,341 $ (463,595) The $620,500 and $799,965 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2017 and 2016, respectively. Other amounts reported as net deferred inflows of resources related to pensions at June 30, 2017 will be recognized as pension expense as follows: Fiscal Year Ended June $ 256, , , ,203 $ 1,108,209 26

56 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER NOTES TO BASIC FINANCIAL STATEMENTS (Continued) June 30, 2017 and 2016 NOTE F PENSION PLANS (Continued) Actuarial Assumptions: The total pension liabilities in the actuarial valuations for the Plan were determined using the following actuarial assumptions: June 30, 2017 June 30, 2016 Valuation Date June 30, 2014 June 30, 2014 Measurement Date June 30, 2015 June 30, 2015 Actuarial Cost Method Entry-Age Normal Cost Method Entry-Age Normal Cost Method Actuarial Assumptions: Discount Rate 7.65% 7.65% Inflation 2.75% 2.75% Payroll Growth 3.0% 3.0% Projected Salary Increase 3.2% % (1) 3.2% % (1) Investment Rate of Return 7.65% 7.65% Mortality Derived using CalPERS Membership Data for all Funds Derived using CalPERS Membership Data for all Funds (1) Depending on entry age and service (2) Net of pension plan investment expenses, including inflation The underlying mortality assumptions and all other actuarial assumptions used in June 30, 2016 were based on the 2010 CalPERS experience study for the period from 1997 to The underlying mortality assumptions and all other actuarial assumptions used in June 30, 2015 were based on the results of a January 2014 actuarial experience study for the period 1997 to Further details of the Experience Study can be found on the CalPERS website. Discount Rate: The discount rates used to measure the total pension liability was 7.65% as of June 30, 2017 and 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 run out of assets. Therefore, the current discount rate is appropriate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate will be applied to all plans in the Public Employees Retirement Fund (PERF). The stress test results are presented in a detailed report that can be obtained from the CalPERS website. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds asset classes, expected compound returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. 27

57 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER NOTES TO BASIC FINANCIAL STATEMENTS (Continued) June 30, 2017 and 2016 NOTE F PENSION PLANS (Continued) The table below reflects the long-term expected real rate of return by asset class for each of the Plans. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These rates of return are net of administrative expenses New Real Return New Real Return Strategic Years Real Return Strategic Years Real Return Asset Class Allocation 1-10(a) Years 11+(b) Allocation 1-10(a) Years 11+(b) Global Equity 51.0% 5.25% 5.71% 51.0% 5.25% 5.71% Global Fixed Income 20.0% 0.99% 2.43% 19.0% 0.99% 2.43% Inflation Sensitive 6.0% 0.45% 3.36% 6.0% 0.45% 3.36% Private Equity 10.0% 6.83% 6.95% 10.0% 6.83% 6.95% Real Estate 10.0% 4.50% 5.13% 10.0% 4.50% 5.13% Infrastructure and Forestland 2.0% 4.50% 5.09% 2.0% 4.50% 5.09% Liquidity 1.0% (0.55)% (1.05)% 2.0% (0.55)% (1.05)% Total 100.0% 100.0% (a) An expected inflation of 2.5% used for this period. (b) An expected inflation of 3.0% used for this period. Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate: The following presents the SRFECC s proportionate share of the net pension liability for the Plan, calculated using the discount rate for the Plan, as well as what the SRFECC 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: % Decrease 6.65% 6.65% Net Pension Liability $ 8,967,691 $ 8,852,808 Current Discount Rate 7.65% 7.65% Net Pension Liability $ 6,191,417 $ 5,278,735 1% Increase 8.65% 8.65% Net Pension Liability $ 3,896,965 $ 2,327,924 Pension Plan Fiduciary Net Position: Detailed information about each pension plan s fiduciary net position is available in the separately issued CalPERS financial reports. Payable to the Pension Plan: At June 30, 2017 and 2016, the SRFECC reported payables for the outstanding amount of contributions to the pension plan of $33,737 and $31,315, respectively. 28

58 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER NOTES TO BASIC FINANCIAL STATEMENTS (Continued) June 30, 2017 and 2016 NOTE G NET POSITION Designations of unrestricted net position may be imposed by the Board of Directors to reflect future spending plans or concerns about the availability of future resources. Designations may be modified, amended or removed by Board action. The Board has made designations of net position; however, the unrestricted net position balance is negative so no amounts are available for designations. SRFECC has sufficient cash balances for designations. At June 30, 2017 SRFECC has the following designations of cash available: Designated for future economic uncertainties $ 800,000 Designated for contingencies 702,021 Designated for capital improvement projects 534,737 $ 2,036,758 NOTE H INSURANCE SRFECC is a member of the Northern California Special Districts Insurance Authority (NCSDIA). The NCSDIA is a risk-pooling self-insurance authority, created under the provisions of the California Government Code Sections 6500 et. seq. The purpose of the NCSDIA is to provide a full risk management program for California local governments. NCSDIA provides insurance through the pool up to a certain level, beyond which group purchased commercial excess insurance is obtained. SRFECC pays an annual premium to NCSDIA for general liability, property, management liability and workers compensation insurance coverage. SRFECC s annual premium is based on its pro-rata share of charges for the pooled risk, claims adjusting and legal costs, and administrative and other costs to operate the NCSDIA. SRFECC paid no material uninsured losses during the last three fiscal years and had no significant reductions in coverage during the year. SRFECC s deductible and coverage are as follows: Commercial Coverage NCSDIA Insurance Deductible General liability $1,000,000 $9,000,000 none Auto liability 1,000,000 $1,000 Crime program 1,000,000 2,500 Property damage Replacement Cost 1,000 Management liability 1,000,000 9,000,000 none Workers compensation Statutory none 29

59 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER NOTES TO BASIC FINANCIAL STATEMENTS (Continued) June 30, 2017 and 2016 NOTE I LEASE COMMITMENTS SRFECC leases its training facility under a noncancellable operating lease. The training facility lease expires in June 30, 2020, with the option to renew for two additional one year terms. Rent expense was $28,800 for the year ended June 30, As of June 30, 2017, future minimum lease payments under the noncancellable operating leases were: Fiscal year ending June 30, 2018 $ 18, , ,000 $ 54,000 In addition, SRFECC is required to pay rent in the amount of 15% of gross revenue at the facility that exceeds $50,000 in a fiscal year. NOTE J CONTINGENCIES AND COMMITMENTS Contingencies: SRFECC receives grant funding for specific purposes that are subject to review and audit by the granting agencies. Such audits could result in a request for reimbursement for expenditures disallowed under the terms and conditions of the contracts. Management is of the opinion that no material liabilities will result from such potential audits. Commitments: In November 2015, SRFECC entered into an agreement for the purchase and service of Computer Aided Dispatch Software totaling $2.8 million. At June 30, 2017, SRFECC has expended $2.7 million for this project, which has been recorded as construction in progress, prepaid expense and equipment in the amounts of $1,835,000, $761,000 and $29,000, respectively. The project will be completed in fiscal year

60 REQUIRED SUPPLEMENTARY INFORMATION

61 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2017 SCHEDULE OF THE PROPORTIONATE SHARE OF THE NET PENSION LIABILITY (UNAUDITED) Last 10 Years Proportion of the net pension liability % % % Proportionate share of the net pension liability $ 6,191,417 $ 5,278,735 $ 4,536,180 Covered - employee payroll - measurement period $ 4,123,954 $ 3,803,076 $ 3,756,360 Proportionate share of the net pension liability as a percentage of covered payroll % % % Plan fiduciary net position as a percentage of the total pension liability 69.98% 78.40% 79.82% Notes to Schedule: Change in Benefit Terms: The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30, 2013 as they have minimal cost impact. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes). Changes in assumptions: The June 30, 2015 Actuarial Valuation changed the discount rate from 7.5% (net of administrative expense) to 7.65%. Omitted years: GASB Statement No. 68 was implemented during the year ended June 30, No information was available prior to this date. SCHEDULE OF CONTRIBUTIONS TO THE PENSION PLAN (UNAUDITED) Last 10 Years Contractually required contribution (actuarially determined) $ 844,311 $ 799,965 $ 509,244 Contributions in relation to the actuarially determined contributions (844,311) (799,965) (509,244) Contribution deficiency (excess) $ - $ - $ - Covered - employee payroll - fiscal year $ 3,619,181 $ 4,123,954 $ 3,803,076 Contributions as a percentage of covered - employee payroll 23.76% 19.40% 13.39% Notes to Schedule: Valuation date: June 30, June 30, June 30, Methods and assumptions used to determine contribution rates: Entry age normal Amortization method Level percentage of payroll, closed Remaining amortization period 13 years 15 years 15 years Asset valuation method Inflation 2.75% 5-year smoothed market 2.75% 2.75% Salary increases Investment rate of return Varies by entry age and service 7.50%, net of pension plan investment expense, including inflation Omitted years: GASB Statement No. 68 was implemented during the year ended June 30, No information was available prior to this date. 31

62 SACRAMENTO REGIONAL FIRE/EMS COMMUNICATIONS CENTER REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2017 Other Postemployment Benefits Schedule of Funding Progress Unfunded UAAL as a Actuarial Actuarial Actuarial Actuarial Percentage Valuation Value of Accrued Accrued Funded Covered of Covered Date Assets Liability Liability Ratio Payroll Payroll (a) (b) (b-a) (a/b) (c) ((b-a)/c) June 30, $ 5,200,000 $ 5,200, % $ 3,010, % June 30, ,989,270 7,989, % 3,198, % June 30, 2015 $ 83,641 8,216,983 8,133, % 3,803, % 32

63 COMPLIANCE REPORT

64 550 Howe Avenue, Suite 210 Sacramento, California Telephone: (916) FAX: (916) INDEPENDENT AUDITOR S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors Sacramento Regional Fire/EMS Communication Center Sacramento, California We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the Sacramento Regional Fire/EMS Communication Center (SRFECC) as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the SRFECC s basic financial statements, and have issued our report thereon dated November 30, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the SRFECC s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the SRFECC s internal control. Accordingly, we do not express an opinion on the effectiveness of the SRFECC s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the SRFECC s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the SRFECC s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 33

65 To the Board of Directors Sacramento Regional Fire/EMS Communications Center Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the SRFECC s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the SRFECC s internal control and compliance. November 30,

66 Statistical Section

67 STATISTICAL SECTION This part of SRFECC s Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statement, note disclosures, and required supplementary information says about SRFECC's overall financial health. Content Page Financial Trends 1-3 These schedules contain trend information for assessing SRFECC's financial performance and well-being changed over time. Revenue Capacity 4-6 These schedules contain information to assess SRFECC's most significant local revenue source, member contributions. Debt Capacity 7 These schedules present information to assess the affordability of SRFECC's current level of outstanding debt and SRFECC's ability to issue additional debt in the future. Demographic and Economic Information 8-9 These schedules provide demographic and economic indicators to help the reader understand the environment within which SRFECC's financial activities take place. Operating Information These schedules contain service and infrastructure data to assist the reader in understanding how the information in SRFECC's financial report relates to the services it provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

68 Sacramento Regional Fire/EMS Communications Center Net Position By Component Last Ten Fiscal Years (Accrual Basis Of Accounting) $8,000,000 $6,000,000 $4,000,000 $2,000,000 $ $(2,000,000) $(4,000,000) $(6,000,000) Net investment in capital assets Unrestricted Total Net Position 1 Statistical Section

69 Sacramento Regional Fire/EMS Communications Center Change In Net Position Last Ten Fiscal Years (Accrual Basis Of Accounting) 2 Statistical Section

70 Sacramento Regional Fire/EMS Communications Center Expenditures By Function Last Ten Fiscal Years (Accrual Basis Of Accounting) 3 Statistical Section

71 Sacramento Regional Fire/EMS Communications Center Revenues By Function Last Ten Fiscal Years (Accrual Basis Of Accounting) $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $ Member Assessments Backbone and Secondary Users Fees Reimbursements from Other Agencies Non Operating Revenue Fiscal Year Member Contributions Reimbursements from Other Agencies Backbone and Secondary Users Fees Non- Operating Revenue Total 2008 $5,552,618 $248,023 $5,800, $5,806,220 $179,503 $5,985, $5,537,474 $53,343 $5,590, $5,636,817 $21,870 $5,658, $5,900,889 $23,476 $5,924, $6,296,940 $22,480 $6,319, $8,003,132 $61,110 $269,646 $8,333, $8,003,132 $25,846 $67,137 $78,147 $8,174, $8,003,134 $272,886 $73,730 $72,343 $8,422, $8,003,134 $109,842 $73,930 $91,513 $8,278,419 4 Statistical Section

72 Sacramento Regional Fire/EMS Communications Center Budgeted Revenue Funded from Member Contributions FY Based on Member Agency Call Volume 8% 3% 45% 44% Sacramento Metro Fire District Cosumnes Fire Department Sacramento Fire Department Folsom Fire Department Source: Sacramento Regional Fire/EMS Communications Center Financial Records 5 Statistical Section

73 Sacramento Regional Fire/EMS Communications Center Designated Reserves By Function Last Ten Fiscal Years (Accrual Basis Of Accounting) $ $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 Designated for Future Economic Uncertainties Designated for Contingency Designated for Capital Outlay Infrastructure Fiscal Year Designated for Future Economic Uncertainties Designated for Contingency Designated for Capital Outlay - Infrastructure Total 2017 $ 800,000 $ 702,021 $ 534,737 $ 2,036, $ 800,000 $ 620,251 $ 2,564,980 $ 3,985, $ 800,000 $ 620,251 $ 3,752,259 $ 5,172, $ 620,251 $ 1,878,694 $ 2,498, $ 620,251 $ 2,333,624 $ 2,953, $ 350,000 $ 3,332,159 $ 3,682, $ 350,000 $ 3,063,003 $ 3,413, $ 350,000 $ 3,138,007 $ 3,488, $ 350,000 $ 3,638,007 $ 3,988, $ 350,000 $ 2,781,902 $ 3,131,902 Statistical Section 6

74 Sacramento Regional Fire/EMS Communications Center Debt Capacity Last Ten Fiscal Years (Accrual Basis Of Accounting) *Sacramento Regional Fire EMS Communications Center Has Zero Outstanding Debt 7 Statistical Section

75 Note: All dollar estimates are in current dollars which are not adjusted for inflation. Estimates updated November 17, 2017, include new estimates for 2016 and revised estimates for , which may not be consistent with prior reported figures. A) Census Bureau midyear population estimates. Estimates for reflect County population estimates available as of March B) Per capita personal income was computed using Census Bureau midyear population estimates. Estimates for reflect County population estimates available as of March C) Unemployment rate reflects the March 2016 annual revision. Source: U.S. Department of Commerce, Bureau of Economic Analysis; California Department of Education, K- 12 Public School Enrollment for Sacramento County; and California State Employment Development Department. 8 Statistical Section

76 9 Statistical Section

77 Sacramento Regional Fire/EMS Communications Center Call Volume and Incident Growth Last Ten Fiscal Years Since 2009, SRFECC has experienced a 7.82% increase in Call Volume.* 1 Ten Year Incident Growth 410, , , , , , , , , , , , , , , ,000 90,000 70,000 50,000 30,000 10, SRFECC Incidents 160, , , , , , , , ,316 SRFECC Incoming Telephony 0 329, , , , , , , ,122 SRFECC Incidents SRFECC Incoming Telephony Source: Sacramento Regional Fire/EMS Communications Center Operation Records 1 Data are not available prior to 2009; 2017 data are TBD 10 Statistical Section

78 Sacramento Regional Fire/EMS Communications Center Customer Service Rating & Overall Compliance Rating Last Ten Fiscal Years The EMD dispatch protocols are established by the IAED Board of Fellows, which is also responsible for setting the accreditation process of the International Academy. Per Academy standards, the Quality Assurance and Improvement report requires a consistent, cumulative MPDS incident case review of at or above the stated baseline percentages. Baseline customer service should be at or above 95%, with an overall compliance score of at or above 90%. SRFECC has maintained a 99.40% customer service rating average and a 97.22% overall compliance rating; thus, exceeding both IAED standards in the past 10 years. Source: Sacramento Regional Fire/EMS Communications Center Operation Records 11 Statistical Section

79 Sacramento Regional Fire/EMS Communications Center Staffing Summary Last Ten Fiscal Years Command Staff Administrative Staff Accounting IT Dispatch Supervisor Dispatcher/Calltaker Total Source: Sacramento Regional Fire/EMS Communications Center Employment Records 12 Statistical Section

80 Sacramento Regional Fire/EMS Communications Center Capital Assets Last Ten Fiscal Years $4,000,000 $3,794,232 $3,500,000 $3,000,000 $2,500,000 $2,641,251 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 $1,020,292 $849,118 $1,052,321 $832,144 $628,863 $564,775 $892,701 $1,198, FY Land Construction in Progress Equipment Buildings and Improvements 13 Statistical Section