CITY OF AUBURN CALIFORNIA Comprehensive Annual Financial Report

Transcription

1 CALIFORNIA 2012 Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2012

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3 City of Auburn, California Comprehensive Annual Financial Report For the Year Ended June 30, 2012 Prepared By: Administrative Services Department Andrew Heath, Director

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5 Comprehensive Annual Financial Report For the Year Ended June 30, 2012 Table of Contents INTRODUCTORY SECTION Letter of Transmittal I-VI Government Finance Officer s Association Certificate of Achievement VII City Council and Administrative Personnel Page VIII-IX Organizational Chart X FINANCIAL SECTION Independent Auditor s Report Management s Discussion and Analysis (Required Supplementary Information - Unaudited) Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Assets Statement of Activities Fund Financial Statements: Governmental Funds: Balance Sheet Reconciliation of the Governmental Funds Balance Sheet to the Government- Wide Statement of Net Assets - Governmental Activities Statement of Revenues, Expenditures, and Changes in Fund Balances Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Government-Wide Statement of Activities - Governmental Activities Proprietary Funds: Statement of Net Assets Statement of Revenues, Expenses, and Changes in Net Assets Statement of Cash Flows Fiduciary Funds: Statement of Fiduciary Net Assets Statement of Changes in Fiduciary Net Assets Notes to Basic Financial Statements Required Supplementary Information (Unaudited): Schedule of Funding Progress - Other Postemployment Benefits (OPEB) Budgetary Comparison Schedule - General Fund Notes to Budgetary Comparison Schedule

6 Comprehensive Annual Financial Report For the Year Ended June 30, 2012 Table of Contents FINANCIAL SECTION (CONTINUED) Combining and Individual Fund Statements and Schedules: Nonmajor Governmental Funds: Combining Balance Sheet Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Special Revenue Funds: Narrative Summary Combining Balance Sheet Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Budgetary Comparison Schedules: State Gas Tax Transportation Transit HOME Housing Rehabilitation & First Time Homebuyer Small Business Loans Solid Waste Management State Law Enforcement Grant Facilities and Equipment Miscellaneous Grants Auburn Urban Development Authority Capital Projects Funds: Narrative Summary Combining Balance Sheet Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Budgetary Comparison Schedules - Auburn School Park Preserve Debt Service Funds: Narrative Summary Combining Balance Sheet Combining Statement of Revenues, Expenditures, and Changes in Funds Balances Budgetary Comparison Schedules - Auburn Urban Development Authority Fiduciary Funds: Narrative Summary Private Purpose Trust Funds: Combining Statement of Fiduciary Net Assets - Private Purpose Trust Funds Combining Statement of Changes in Fiduciary Net Assets - Private Purpose Trust Funds Agency Funds: Combining Statement of Assets and Liabilities - Agency Funds Combining Statement of Changes in Assets and Liabilities - Agency Funds Page

7 Comprehensive Annual Financial Report For the Year Ended June 30, 2012 Table of Contents STATISTICAL SECTION (UNAUDITED) Narrative Summary Financial Trend Information: Net Assets by Component - Last Ten Fiscal Years Changes in Net Assets - Last Ten Fiscal Years Fund Balances - Governmental Funds - Last Ten Fiscal Years Changes in Fund Balances - Governmental Funds - Last Ten Fiscal Years Revenue Capacity Information: Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years Property Tax Rates - All Overlapping Governments - Last Ten Fiscal Years Principal Property Taxpayers - Current Year and Six Years Ago Property Tax Levies and Collections - Last Ten Fiscal Years Debt Capacity Information: Ratios of Outstanding Debt by Type - Last Ten Fiscal Years Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years Direct and Overlapping Bonded Debt Computation of Legal Bonded Debt Margin Demographic and Economic Information: Demographic and Economic Statistics - Last Ten Fiscal Years Principal Employers Operating Information: Full-Time and Part-Time City Government Employees - Last Ten Fiscal Years Operating Indicators - Last Ten Fiscal Years Capital Asset Statistics - Last Ten Fiscal Years Page

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9 INTRODUCTORY SECTION Letter of Transmittal Government Finance Officer s Association Certificate of Achievement City Council and Administrative Personnel Organizational Chart

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17 VII

18 City Officials For the Year Ended June 30, 2012 Name Kevin Hanley Mike Holmes Dr. Bill Kirby Keith Nesbitt Bridget Powers Office Mayor Mayor Pro Tempore Council Member Council Member Council Member VIII

19 City of Auburn Comprehensive Annual Financial Report 2012 Project Team Robert Richardson, City Manager Andy Heath, Administrative Services Director Administrative Staff Mary Freitas, Senior Accounting Technician Shari Conley, Accounting Technician Special Assistance Mark D Ambrogi, Chief of Fire Valerie Harris, Chief of Police Lisa Hoffrogge, Building Official Bernie Schroeder, Public Works Director Megan Siren, Public Works Department George Williams, City Treasurer IX

20 CITY TREASURER George Williams RESIDENTS OF AUBURN CITY CLERK Joe Labrie BOARDS & COMMISSIONS Planning Commissions Economic Development Commission Historic Design Review Commission Arts Commission Telecommunications Commission MAYOR & CITY COUNCIL Kevin Hanley, Mayor Mike Holmes, Mayor Pro-Tem Keith Nesbitt Bridget Powers Dr. Bill Kirby AUBURN URBAN DEVELOPMENT AUTHORITY CITY ATTORNEY Michael Colantuono CITY MANAGER Robert Richardson GENERAL GOVERNMENT Administrative Services Director Andrew Heath PUBLIC SAFETY Police Chief John Ruffcorn Fire Chief Mark D Ambrogi CAPITAL MAINTENANCE Public Works Director Bernie Schroeder COMMUNITY SERVICES Community Development Director Will Wong X

21 FINANCIAL SECTION Independent Auditor s Report Management s Discussion and Analysis Basic Financial Statements Required Supplementary Information Combining and Individual Fund Statements and Schedules

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25 Management s Discussion and Analysis (Unaudited)

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27 Management s Discussion and Analysis Management Discussion and Analysis June 30, 2012 This section of the City of Auburn s (City) Comprehensive Annual Financial Report presents a discussion of the City s financial performance during the year ended June 30, Please read it in conjunction with the City s basic financial statements following this section. FINANCIAL HIGHLIGHTS The assets of the City exceeded liabilities at the close of the fiscal year by $51,714,466 (net assets). Of this amount, $9,492,801 (unrestricted net assets) may be used to meet ongoing obligations to citizens and creditors, and $3,559,432 is restricted for capital projects, debt service and legally segregated taxes, grants and fees. As of June 30, 2012, the City governmental funds reported combined fund balances of $5,326,212. Approximately 42.7% of the combined fund balances, $2,273,877 is available to meet the City s current and future needs (committed and unassigned fund balance). The City s investment in capital assets, net of related debt, increased by $4,794,986 compared to the prior year. The increase occurred primarily as a result of capitalizing expenditures/expenses and construction in progress for projects including the Streetscape Project, upgrades to the Vintage Oaks, Auburn Oaks and Falcons Point Sewer Lift Stations, Auburn Airport Fuel Island Project and the Palm Avenue Sidewalk; coupled with the elimination of redevelopment-related debt associated with the State of California s dissolution of all Redevelopment Agencies effective February The City, through the Auburn Urban Development Authority, expended $795,610 towards Phase II of the Streetscape Project, an extension of the highly successful undertaking of Streetscape Phase I completed in prior fiscal years. The City, through the Auburn Urban Development Authority, expended $147,884 towards the completion of renovations to the Old City Hall Building in Downtown Auburn and the Old Town Firehouse in the Old Town Historic District. An annual surplus of $58,112 was realized in the City s General Fund during the fiscal year, the first such General Fund surplus since the fiscal year ending June 30, Total General Fund Balance as of June 30, 2012 was $2,727,688. On February 1, 2012, the State of California dissolved all statewide redevelopment agencies, among them the City s Auburn Urban Development Authority (AUDA). Account balances from the AUDA Project, Low/Moderate Income Housing and Debt Service Reserve Funds were transferred to the AUDA Successor Agency and are fully accounted for in both the notes and Private Purpose Trust Funds sections of this Comprehensive Annual Financial Report. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City s basic financial statements. The City s basic financial statements comprise of three components: 1) Government-wide Financial Statements; 2) Fund Financial Statements; and 3) Notes to the Basic Financial Statements. -3-

28 Management Discussion and Analysis June 30, 2012 Government-wide Financial Statements are designed to provide readers with a broad overview of City finances, in a manner similar to a private-sector business. The Statement of Net Assets presents information on all City assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Statement of Activities presents information showing how net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods, (e.g. uncollected taxes and earned but unused annual vacation and sick leave). Both of these government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or in part a portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, transportation, community development and recreation. The business-type activities of the City include an airport and wastewater treatment operating facility. The government-wide financial statements can be found on pages of this report. Fund Financial Statements are groupings of related accounts that are used to maintain control over resources that have been segregated for specific activities or objectives. The City, like any other state and local government, uses fund accounting to ensure and demonstrate finance-related legal compliance. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental funds financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a City s near-term financing requirements. The City considers revenue to be available if they are collected within 60 days after the fiscal year end. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government s near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. -4-

29 Management Discussion and Analysis June 30, 2012 Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures and changes in fund balances for the General Fund which is considered to be a major fund. The City maintains several individual governmental funds organized according to their type (special revenue, debt service, and capital projects funds). Data from the remaining governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in the report. The governmental funds financial statements can be found on pages of this report. Proprietary funds are generally used to account for services for which the City charges customers either outside customers, or internal units of departments within the City. Proprietary funds provide the same type of information as shown in the government-wide financial statements, only in more detail. Proprietary funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses proprietary funds to account for the Auburn Airport and the Wastewater Treatment Facility. The proprietary funds financial statements can be found on pages of this report. Fiduciary funds are used to account for resources held for the benefit of the City s employees and parties outside the government. The City s other employee benefit trust fund, private purpose trust and agency funds are reported under the fiduciary funds. Since the resources of these funds are not available to support the City s own programs, they are not reflected in the government-wide financial statements. The accounting used for fiduciary funds is much like that used for proprietary funds. The fiduciary funds financial statements can be found on pages of this report. Notes to the Basic Financial Statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes can be found on pages of this report. Required Supplementary Information is presented for the City s General Fund consisting of budgetary comparison schedules. The City adopts an annual appropriated budget to demonstrate compliance with this budget. The required supplementary information can be found on pages of this report. The combining and individual fund statements and schedules for non-major governmental funds and proprietary funds are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS This analysis focuses on the net assets and changes in net assets of the City as a whole. -5-

30 Governmental Activities Management Discussion and Analysis June 30, 2012 Table 1 Net Assets June 30, Governmental Activities Business-Type Activities Total Assets: Current and other assets $ 11,193,470 $ 13,851,567 $ 10,066,870 $ 9,155,674 $ 21,260,340 $ 23,007,241 Capital assets 21,585,233 22,034,007 27,885,757 28,438,972 49,470,990 50,472,979 Total assets 32,778,703 35,885,574 37,952,627 37,594,646 70,731,330 73,480,220 Liabilities: Current and other liabilities 1,473,062 1,928, , ,046 1,739,594 2,183,028 Long-term liabilities 6,438,046 11,144,053 10,839,224 11,347,076 17,277,270 22,491,129 Total liabilities 7,911,108 13,073,035 11,105,756 11,601,122 19,016,864 24,674,157 Net Assets: Invested in capital, net of related debt Restricted net assets 21,555,502 3,000,169 17,508,894 5,089,610 17,106, ,263 16,358, ,263 38,662,233 3,559,432 33,867,247 5,648,873 Unrestricted net assets 311, ,035 9,180,877 9,075,908 9,492,801 9,289,943 Total net assets $ 24,867,595 $ 22,812,539 $ 26,846,871 $ 25,993,524 $ 51,714,466 $ 48,806,063 The City s governmental net assets amounted to $24.87 million as of June 30, 2012, an increase of approximately $2.06 million over the fiscal year ended This increase is the change in net assets reflected in the Governmental Activities column of the Changes in Net Assets, including Prior Period Adjustments, shown in Table 2. The City s net assets from governmental activities as of June 30, 2012, comprised the following: Cash and investments comprised $4.99 million in the City treasury, $804,000 of which is restricted in use. Substantially all of these amounts were held in short to medium term investments in governmental securities and corporate notes, as detailed in Note 3 to the financial statements. Current accounts and taxes receivable, in addition to amounts due from other funds comprised $969,000. Loans receivable comprised approximately $254,000, all of which represents loans provided by the City s Community Development Block Grant (CDBG) Revolving Loan Program. A net pension asset comprised $4.53 million. Capital assets of $21.6 million, net of depreciation charges, which includes City infrastructure, buildings and improvements, equipment, land improvements and related construction in progress. Current liabilities, including accounts and interest payable, deposits and unearned revenues, comprised $1.37 million. -6-

31 Management Discussion and Analysis June 30, 2012 Long-term liabilities, including a $263,000 landfill post-closure cost, comprised $6.44 million. Net assets invested in capital assets net of related debt of $21.56 million, representing the City s investment in infrastructure and other capital assets used in Governmental activities, net of amounts borrowed to finance that investment. Restricted assets totaling $3.00 million, which may be used only to construct specified capital projects, debt service, or for community development and transportation projects and public safety programs. Unrestricted net assets are part of net assets that can be used to finance day-to-day operations without constraints established by debt covenants or other legal requirements or restrictions. The City had $312,000 of unrestricted net assets as of June 30, Business-Type Activities The City s business-type net assets amounted to $26.85 million as of June 30, 2012, increasing by approximately $853 thousand since the fiscal year ended The increase in the change in net assets experienced in the business-type funds occurred primarily as a result of making debt service payments for both the Airport and Sewer operations offset by increases in capitalized assets related to Sewer Fund projects including three lift station projects and the Wastewater Treatment Facility Upgrade; and the Airport Fuel Island project. The City s net assets from Business-type activities as of June 30, 2012, comprised the following: Cash and investments comprised $9.27 million in the City Treasury, $1.69 million of which is restricted in use. Current accounts, taxes and interest receivable in addition to amounts due from other funds comprised $231,000. Deferred interest costs in the City s Sewer Fund of $567,000. Capital assets of $27.9 million, net of depreciation charges. Current liabilities, including accounts and interest payable, and deposits, comprised $265,000. Long-term liabilities comprised $10.84 million. Net assets invested in capital assets net of related debt of $17.11 million, representing the City s investment in infrastructure and other capital assets used in Business-type activities, net of amounts borrowed to finance that investment. Restricted net assets total $559,000 and are related to a debt service reserve established for the Sewer Revenue bonds. Unrestricted net assets of $9.18 million. -7-

32 Management Discussion and Analysis June 30, 2012 The following table indicates the changes in net assets: Table 2 Changes in Net Assets For the Year Ended June 30, Governmental Activities Business-Type Activities Total Program Revenues: Charges for services $ 822,079 $ 849,509 $ 5,511,143 $ 5,161,870 $ 6,333,222 $ 6,011,379 Operating grants and contributions 1,115,106 1,700,882 1, ,843 1,116,659 2,310,725 Capital grants and contributions 492, , , ,889 Total program revenues 2,429,419 3,041,280 5,512,696 5,771,713 7,942,115 8,812,993 General Revenues: Property taxes 3,177,351 3,454,566 26,177 26,184 3,203,528 3,480,750 Sales and use taxes 2,316,047 2,027, ,316,047 2,027,383 Other taxes 1,259,998 1,073, ,259,998 1,073,115 Franchise taxes 622, , , ,156 Grants and contributions - unrestricted 6,717 61, ,717 61,677 Unrestricted interest and investment earnings 59, ,108 79, , , ,987 Miscellaneous 45,704 58,905 21,460 1,050 67,164 59,955 Transfers 10,452 12,422 (10,452) (12,422) - - Extraordinary Gain 2,470, ,470,706 - Total general revenues 9,969,054 7,450, , ,691 10,086,009 7,595,023 Total revenues 12,398,473 10,491,612 5,629,651 5,916,404 18,028,124 16,408,016 Program Expenses: General government 1,678,027 1,340, ,678,027 1,340,063 Public safety 5,139,270 5,147, ,139,270 5,147,639 Transportation 2,766,145 3,254, ,766,145 3,254,955 Community development 670, , , ,511 Interest on long-term debt 360, , , ,949 Airport , , , ,423 Sewer - - 4,128,331 3,543,183 4,128,331 3,543,183 Total expenses 10,614,977 11,164,117 4,776,304 4,094,606 15,391,281 15,258,723 Change in net assets 1,783,496 (672,505) 853,347 1,821,798 2,636,843 1,149,293 Net assets at beginning of year 22,812,539 23,485,044 25,993,524 24,171,726 48,806,063 47,656,770 Prior Period Adjustment 271, ,560 - Net assets at beginning of year - restated 23,084,099 23,485,044 25,993,524 49,077,623 47,656,770 Net assets at end of year $ 24,867,595 $ 22,812,539 $ 26,846,871 $ 25,993,524 $ 51,714,466 $ 48,806,063-8-

33 Management Discussion and Analysis June 30, 2012 Governmental Activities Governmental activities net assets increased by $2.06 million during Fiscal Year The increase in net assets can be primarily attributed to the realization of a $2.47 million extraordinary gain resulting from the dissolution of the City s redevelopment program, offset by the reduction in year-over-year receipts of operating grant revenues. Governmental net assets also increased due to reductions in grant-related transportation expenditures and interest incurred on long-term debt. As Table 2 above shows, $2.43 million, or 19.6% of the City s fiscal year revenue derived from the program revenues, while $9.97 million, or 80.4%, derived from general revenues such as taxes, rents, interest and a one-time extraordinary gain. Program revenues are composed of fees and charges for service of $822,000 that include permit revenues, fees and charges used to fund expenses incurred in providing services; and $1.16 million of operating grants and contributions which include gas tax, transportation development allocations and public safety allocations and grants. Program revenues also include $492,000 in capital grants and contributions which include grants received by the City for capital infrastructure improvement. General revenues are not allocable to programs, but are used to pay for the net costs of governmental programs. Business-type Activities Business-type activities net assets combined to increase by $853 thousand during Fiscal Year The majority of the increase in net assets can be attributed to the repayment of Sewer and Airport related debt and the capitalization of assets at both the Auburn Airport and the Wastewater Treatment Facility. Net assets in the City s Airport Fund increased approximately $15,000 during Fiscal Year The increase is primarily attributable to increased collections of Auburn Airport lease revenues offset by increased costs incurred for staff, materials and capital maintenance at the Airport. Net assets in the City s Sewer Fund increased by approximately $839 thousand during Fiscal Year The increase can be attributed to $1.2 million net operating income (including charges for depreciation on capital assets), offset by interest charges incurred for the repayment of Sewer infrastructure debt. FINANCIAL ANALYSIS OF THE CITY S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The general government functions are contained in the General, Special Revenue, Debt Service, and Capital Project Funds. The focus of the City s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City s financing requirements. In particular, unrestricted fund balance (committed and unassigned) may serve as a useful measure of a government s net resources available for spending at the end of the fiscal year. -9-

34 Management Discussion and Analysis June 30, 2012 The following table presents the amount of revenue from various sources: Table 3 Revenues Classified by Source Governmental Funds For the Fiscal Years Ended June 30, Variance % Change Revenues by Source: Taxes $ 7,510,603 $ 7,162,454 $ 348, % Licenses and permits 301, ,069 (24,802) -7.61% Fines and forfeitures 74, ,169 (28,219) % Use of money and property 360, ,064 (91,949) % Intergovernmental 1,463,061 2,253,448 (790,387) % Charges for services 145, ,315 37, % Other revenues 45,704 58,905 (13,201) % Total Revenues $ 9,901,261 $ 10,464,424 $ (563,163) -5.38% (1) Collections of taxes increased by $348,000, primarily as a result of improved collections of sales tax and transient occupancy tax. (2) Collections of licenses and permits decreased by $25,000 due primarily to lower-than-anticipated collections of building permits resulting from a continued general development slowdown. (3) Collections of fines, forfeitures and penalties decreased by $28,000 due to lower collections of traffic fines and parking enforcement fines. (4) Collections of revenues related to the use of money and property decreased by $92,000 due to lower rates of return on the City s pool of investments coupled with lower cash balances in City funds. (5) Collections of intergovernmental revenues decreased by $790,000 due to the fewer grant and in-kind revenues received for capital-related purposes. (6) Collections of charges for services increased by $37,000 due to increased collections of planning, zoning, engineering and weed-abatement related fees. (7) Collections of other revenues decreased by $13,000 due to lower collections of surplus property sales in Fiscal Year as compared to Fiscal Year

35 Management Discussion and Analysis June 30, 2012 Revenues by Source Governmental Funds - Fiscal Year Taxes Licenses, fees and permits Fines, forfeitures and penalties Use of property and money Intergovernmental Charges for services Other revenues The following table presents expenditures by function: Table 4 Expenditures by Function Governmental Funds For the Fiscal Years Ended June 30, Variance % Change Expenditures by Function General government $ 1,510,220 $ 1,194,839 $ 315, % Public safety 5,267,512 5,119, , % Transportation 1,716,030 2,445,107 (729,077) % Community development 667, ,671 (210,810) % Capital outlay 1,032,454 1,779,017 (746,563) % Debt service - Principal retirement 140, ,222 (67,839) % Debt service - Interest and charges 382, ,889 (158,961) % Total Expenditures $ 10,717,388 $ 12,167,337 $ (1,449,949) % The $1.45 million net decrease in governmental fund expenditures during the fiscal year can be primarily attributed to the following: - A $729,000 decrease in transportation expenditures, predominantly experienced in the City s Transportation and Gas Tax Funds due to less-than-anticipated incurrence of costs for City street overlay projects (deferral of project to Fiscal Year ) Auburn Urban Development Authority Fund, as Phase I of the Streetscape Project was completed at the end of FY A $747,000 decrease in capital outlay expenditures due to prior year purchases of a street sweeper and transit busses coupled with decreasing expenditures related to the City s Streetscape Project. -11-

36 Management Discussion and Analysis June 30, A $463,000 increase in general government and public safety costs, combined, due to costs incurred for public safety personal and equipment, in addition to increased legal and insurance expenditures. - A $211,000 decrease in Community Development expenditures resulting from the winding down of the City s redevelopment program. - A $227,000 decrease in principal and interest paid for debt service due to the transfer of the Auburn Urban Authority tax increment financing debt as a result of the State s dissolution of all redevelopment agencies. Expenditures by Function Governmental Funds - Fiscal Year General Government Public Safety Transportation Community Development Capital Outlay Debt Service - Principal Retirement Debt Service - Interest and charges The General Fund is the main operating fund of the City, and accounts for general operations including public safety, community development, and administration. At June 30, 2012, committed and unassigned fund balance of the General Fund was $2.68 million, while fund balance totaled $2.73 million. Total fund balance increased by approximately $58,000 when compared to last year, primarily as a result of increased sales tax collections. Recognizing this minor surplus during Fiscal Year contrasts with the operating deficits realized during the fiscal years immediately preceding and during the Great Recession experienced in the national and local economies, where the City used over $2.56 million in General Fund reserves as a means to maintain consistent citywide service levels. As measures of the General Fund s ability to meet operating expenditures, it is useful to note that committed and unassigned fund balance represents 31.7% of total General Fund expenditures, while total fund balance represents 32.3% of the same amount. Enterprise Funds. The City has two Enterprise funds the Airport Fund and the Sewer Fund. The City s Enterprise funds generally account for services charged to external or internal customers through fees. -12-

37 Management Discussion and Analysis June 30, 2012 The following table presents the amount of revenue from various sources: Table 5 Revenues Classified by Source Proprietary Funds For the Fiscal Years Ended June 30, Variance % Change Revenues by Source: Operating revenues Charges for services $ 4,945,938 $ 4,681,818 $ 264, % Other operating revenues 586, , , % Non-operating revenues Taxes 26,177 26,184 (7) -0.03% Intergovernmental 1, ,843 (608,290) % Interest 79, ,879 (50,109) % Other revenues - 1,050 (1,050) N/A Total Revenues $ 5,640,103 $ 5,928,826 $ (288,723) -4.87% Business-type activities total revenues have decreased approximately $289,000 from fiscal year to fiscal year Total revenues are lower primarily due to the receipt of a grant from the Federal Aviation Administration during fiscal year , offset by increased lease revenues in the Airport Enterprise Fund and increased collection of user fees in the Sewer Enterprise Fund. Revenues by Source Business-Type Activity Funds - Fiscal Year Charges for Services Other Operating Revenues Taxes Intergovernmental Grants Interest Other Revenues -13-

38 Management Discussion and Analysis June 30, 2012 The following table presents expenses for the City s Enterprise funds: Table 6 Expenses by Type Proprietary Funds For the Fiscal Years Ended June 30, Variance % Change Expenses by Type: Operating expenses Salaries and benefits $ 391,840 $ 291,374 $ 100, % Services and supplies 2,952,042 2,477, , % Maintenance 110, ,030 (6,154) -5.26% Depreciation 835, , , % Non-operating expenses Interest and amortization 486, ,709 (1,304) -0.27% Total Expenses $ 4,776,304 $ 4,094,606 $ 681, % The $682,000 net increase in business-type activity fund expenses during the fiscal year can be primarily attributed to the following: - An increase in staff allocation costs to the City s Sewer Enterprise Fund, offsetting contractual services and supplies; and - An increase in costs incurred for sewer collection system emergency repairs. - An increase in depreciation charges associated with the upgrade to two sewer lift stations and the Wastewater Treatment Facility Upgrade Project. -14-

39 Management Discussion and Analysis June 30, 2012 Expenses by Type Business-Type Activity Funds - Fiscal Year Salaries and Benefits Services and Supplies Maintenance Depreciation Interest CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets Capital assets for the governmental and business-type activities are presented below to illustrate changes from the prior year: Table 7 Capital Assets at End of Fiscal Year Governmental Activities Business-Type Activities Land $ - $ 350,000 $ 2,874,395 $ 2,874,395 Infrastructure 6,290,872 6,285,508 22,240,076 20,280,829 Buildings and improvements 5,230,205 5,230, Equipment 6,399,741 6,379,540 1,635,752 1,619,799 Land improvements 13,141,046 8,098, Construction in progress 210,987 4,095,760 10,386,170 12,079,444 Accumulated depreciation (9,687,618) (8,405,394) (9,250,636) (8,415,495) Total $ 21,585,233 $ 22,034,007 $ 27,885,757 $ 28,438,972 The City s investment in capital assets for its governmental type activities as of June 30, 2012 totaled approximately $21.59 million (net of accumulated depreciation). The City s investment in capital assets for its business-type activities as of June 30, 2012 totaled approximately $27.89 million (net of accumulated depreciation). The investment in capital assets includes land, infrastructure, buildings and improvements, equipment and construction in progress. -15-

40 Management Discussion and Analysis June 30, 2012 Major capital asset events during the fiscal year ended June 30, 2012 include: - Auburn Airport Fuel Island Project - Falcon s Point Lift Station - Vintage Oaks Lift Station - LED Streetlight Retrofit - Auburn Urban Development Authority Streetscape Project Phase II - Renovation of the Old City Hall Building Downtown Auburn - Renovation of the Old Town Firehouse Building More detailed information about the City s capital assets is presented in Note 4 to the financial statements. Debt Administration The following schedule shows the changes in long-term debt for the fiscal year ended June 30, Table 8 Long-Term Debt Governmental Activities Business-Type Activities Pension obligation bonds $ 4,450,000 $ 4,575,000 $ - $ - Tax increment bonds - 4,387, Revenue bonds - - 7,885,298 8,036,606 Notes payable - 6,710 2,893,728 3,263,482 Due to other agencies - 26, Capital leases 29,731 38, Compensated absences 1,440,294 1,422,459 57,631 46,988 Landfill post-closure costs 263, ,197 - Postemployment benefits 254, ,881 2,567 - Total $ 6,438,046 $ 11,144,053 $ 10,839,224 $ 11,347,076 The City s total debt for its governmental activities decreased by approximately $4,706,000, primarily as a result of moving approximately $4,388,000 in debt related to the outstanding redevelopment tax allocation bonds to the Successor Agency of the dissolved Auburn Urban Development Authority. This transfer was made as a result of the State s dissolution of all redevelopment agencies effective February 1, Successor Agency financial statements regarding the former Auburn Urban Development Authority are accounted for as part of the Private Purpose Trust Funds in the City s Fiduciary Funds. The City s total debt for its business-type activities decreased by approximately $508,000 primarily as a result of making payment for debt service related to the City s Wastewater Treatment Facility Upgrade revenue bonds and on notes related to prior sewer and airport projects. Additional information on the City s long-term debt is presented in Note 7 to the financial statements. -16-

41 GENERAL FUND BUDGETARY HIGHLIGHTS Management Discussion and Analysis June 30, 2012 The City s budget is customarily presented to and adopted by the City Council prior to the beginning of the fiscal year that begins July 1 and ends on June 30. The City Council approved the budget in June Subsequent to the adoption of the annual budget, the budget was reviewed in February 2012 and necessary budget adjustments were approved by the City Council. The General Fund budget approved in June 2011 for fiscal year estimated $8.00 million in revenue sources and allocated $8.00 million in appropriations. During the first six months of the fiscal year, primarily as a result of increasing fuel prices and an expansion of the sales tax base related to the fuel industry, the City anticipated sales tax collections would likely rise. Accordingly, the General Fund budget was adjusted in February 2012, increasing projected revenues to $8.22 million and expenditures to $8.17 million. Actual collections of revenues for the fiscal year amounted to $8.49 million and actual expenditures incurred amounted to $8.43 million. At the end of the fiscal year, approximately $58,000 was added to General Fund balance, leading to an ending total fund balance in the General Fund of $2.73 million. ECONOMIC FACTORS AND NEXT YEAR S BUDGET The budget developed for fiscal year was adopted by the City Council on June 25, The General Fund budget approved by the City Council anticipates $8.60 million in revenues and $8.47 million in expenditures, with approximately $124,000 being added to General Fund reserves. The City will continue to closely monitor economic activity along with actions taken by regional and state governments that may impact the City s budget. Revenue growth rates for development-related fees and property taxes are expected to remain relatively flat, while collections of sales tax are expected to increase in the wake of rising fuel prices and a modest recovery in the retail sales citywide. The fiscal year General Fund budget also anticipates increased expenditures for deferred capital upgrades and maintenance, while at the same time mitigating the impacts of the employee cost savings plans adopted during the Great Recession. To prevent further earmarking of fund balance, the City is expected to continue reviewing citywide programs consistent with cost effectiveness and efficiency. All of the above information was considered in preparing the City s budget for Fiscal Year

42 Management Discussion and Analysis June 30, 2012 CONTACTING THE CITY S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City s finances, and to show the City s accountability for the money it receives. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to: City of Auburn Office of the Administrative Services Director 1225 Lincoln Way, Room 1 Auburn, CA (530) extension 110 Or, you may visit the City s website at for contact information. -18-

43 Basic Financial Statements Government-Wide Financial Statements

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45 Statement of Net Assets June 30, 2012 Governmental Business-Type Activities Activities Totals ASSETS Cash and investments $ 4,187,705 $ 7,577,725 $ 11,765,430 Accounts receivable (net of allowance) 12, ,377 Taxes receivable 845,554 3, ,819 Due from other governmental agencies 110, , ,825 Prepaid costs 54,960 2,016 56,976 Deferred charges 95, , ,864 Investment in JPA 296, ,952 Restricted cash and investments 804,064 1,688,630 2,492,694 Loans receivable 254, ,430 Net pension asset 4,530,973-4,530,973 Capital assets: Non-depreciable 210,987 13,260,565 13,471,552 Depreciable, net 21,374,246 14,625,192 35,999,438 Total capital assets 21,585,233 27,885,757 49,470,990 Total Assets 32,778,703 37,952,627 70,731,330 LIABILITIES Accounts payable 455, , ,361 Accrued salaries and benefits 101,615 1, ,741 Accrued interest payable 232,105 46, ,002 Due to other governmental agencies Deposits payable 81,265 13,975 95,240 Unearned revenue 601, ,306 Long-term liabilities: Due within one year 956, ,062 1,508,104 Due in more than one year 5,482,004 10,287,162 15,769,166 Total Liabilities 7,911,108 11,105,756 19,016,864 NET ASSETS Invested in capital assets, net of related debt 21,555,502 17,106,731 38,662,233 Restricted for: General government 49,330-49,330 Public safety 863, ,140 Transportation 200, ,596 Community development 572, ,049 Capital projects 1,315,054-1,315,054 Debt service - 559, ,263 Unrestricted 311,924 9,180,877 9,492,801 Total Net Assets $ 24,867,595 $ 26,846,871 $ 51,714,466 The notes to the basic financial statements are an integral part of this statement. -19-

46 Statement of Activities For the Year Ended June 30, 2012 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs: Expenses Services Contributions Contributions Governmental activities: General government $ 1,678,027 $ 548,326 $ 101,993 $ - Public safety 5,139,270 30, ,735 - Transportation 2,766, , , ,234 Community development 670,701-29,872 - Interest on long-term debt 360, Total Governmental Activities 10,614, ,079 1,115, ,234 Business-Type activities: Airport 647, , Sewer 4,128,331 4,899,585 1,553 - Total Business-Type Activities 4,776,304 5,511,143 1,553 - Total $ 15,391,281 $ 6,333,222 $ 1,116,659 $ 492,234 General revenues: Taxes: Property taxes Sales and use taxes In-lieu taxes Franchise taxes Transient occupancy taxes Other taxes Grants and contributions - unrestricted Interest and investment earnings Miscellaneous Transfers Extraordinary gain Total General Revenues, Transfers and Extraordinary Gain Change in Net Assets Net Assets - Beginning Prior period adjustment Net Assets - Beginning, Restated Net Assets - Ending The notes to the basic financial statements are an integral part of this statement. -20-

47 $ (1,027,708) $ - $ (1,027,708) (4,775,442) - (4,775,442) (1,380,745) - (1,380,745) (640,829) - (640,829) (360,834) - (360,834) (8,185,558) - (8,185,558) - (36,415) (36,415) - 772, , , ,392 (8,185,558) 736,392 (7,449,166) 3,177,351 26,177 3,203,528 2,316,047-2,316,047 1,011,481-1,011, , , , ,217 37,300-37,300 6,717-6,717 59,814 79, ,584 45,704 21,460 67,164 10,452 (10,452) - 2,470,706-2,470,706 9,969, ,955 10,086,009 1,783, ,347 2,636,843 22,812,539 25,993,524 48,806, , ,560 23,084,099 25,993,524 49,077,623 $ 24,867,595 $ 26,846,871 $ 51,714,466 The notes to the basic financial statements are an integral part of this statement. Net (Expense) Revenue and Changes in Net Assets Business- Governmental Type Activities Activities Totals -20-

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49 Basic Financial Statements Fund Financial Statements

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51 Balance Sheet Governmental Funds June 30, 2012 Other General Governmental Fund Funds Totals ASSETS Cash and investments $ 1,679,235 $ 2,508,470 $ 4,187,705 Accounts receivable (net of allowance) 12,505-12,505 Taxes receivable 762,419 83, ,554 Due from other governmental agencies 28,900 82, ,999 Due from other funds 397,001 15, ,603 Prepaid costs 52,166 2,794 54,960 Investment in JPA 296, ,952 Restricted cash and investments 72, , ,064 Loans receivable - 254, ,430 Total Assets $ 3,302,020 $ 3,677,752 $ 6,979,772 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 402,241 $ 53,586 $ 455,827 Accrued salaries and benefits 98,305 3, ,615 Deposits payable 72,842 8,423 81,265 Due to other governmental agencies Due to other funds - 412, ,603 Unearned revenue - 601, ,306 Total Liabilities 574,332 1,079,228 1,653,560 Fund Balances: Nonspendable 52,166 2,794 54,960 Restricted - 2,997,375 2,997,375 Committed 2,250,000-2,250,000 Unassigned 425,522 (401,645) 23,877 Total Fund Balances 2,727,688 2,598,524 5,326,212 Total Liabilities and Fund Balances $ 3,302,020 $ 3,677,752 $ 6,979,772 The notes to the basic financial statements are an integral part of this statement. -21-

52 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets - Governmental Activities June 30, 2012 Total Fund Balance - Total Governmental Funds $ 5,326,212 Amounts reported for governmental activities in the statement of net assets are different because Deferred charges in governmental activities are not financial resources and therefore are not reported in the funds. 95,328 Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. 21,585,233 Interest payable on long-term debt does not require the use of current financial resources and therefore, is not accrued as a liability in the governmental funds balance sheets (232,105) The net pension asset pertaining to governmental funds is not a current financial resource and therefore, is not recorded in the governmental funds balance sheets 4,530,973 Certain liabilities are not due and payable in the current period and therefore, are not reported in the governmental funds. Pension obligation bonds payable (4,450,000) Capital leases payable (29,731) Compensated absences (1,440,294) Post closure liability (263,283) Net OPEB obligation (254,738) Net Assets of Governmental Activities $ 24,867,595 The notes to the basic financial statements are an integral part of this statement. -22-

53 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2012 Other General Governmental Fund Funds Totals REVENUES Taxes $ 7,215,980 $ 294,623 $ 7,510,603 Licenses and permits 275,111 26, ,267 Fines and forfeitures 74,950-74,950 Use of money and property 320,664 39, ,115 Intergovernmental 324,515 1,138,546 1,463,061 Charges for services 119,100 26, ,561 Other revenues 29,863 15,841 45,704 Total Revenues 8,360,183 1,541,078 9,901,261 EXPENDITURES Current: General government 1,503,198 7,022 1,510,220 Public safety 5,050, ,949 5,267,512 Transportation 891, ,711 1,716,030 Community development 533, , ,861 Debt service: Principal 133,674 6, ,383 Interest and other charges 253, , ,928 Capital outlay 68, ,049 1,032,454 Total Expenditures 8,434,126 2,283,262 10,717,388 Excess of Revenues Over (Under) Expenditures (73,943) (742,184) (816,127) OTHER FINANCING SOURCES (USES) Transfers in 132,055 3, ,091 Transfers out - (124,639) (124,639) Total Other Financing Sources (Uses) 132,055 (121,603) 10,452 Extraordinary gain (loss) - (1,498,454) (1,498,454) Net Change in Fund Balances 58,112 (2,362,241) (2,304,129) Fund Balances - Beginning 2,669,576 4,689,205 7,358,781 Prior period adjustment - 271, ,560 Fund Balances - Beginning, Restated 2,669,576 4,960,765 7,630,341 Fund Balances - Ending $ 2,727,688 $ 2,598,524 $ 5,326,212 The notes to the basic financial statements are an integral part of this statement. -23-