BERKELEY HOUSING AUTHORITY ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, (Including Auditors' Report Thereon)

Transcription

1 BERKELEY HOUSING AUTHORITY ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2016 (Including Auditors' Report Thereon)

2 BERKELEY HOUSING AUTHORITY ANNUAL FINANCIAL REPORT JUNE 30, 2016 TABLE OF CONTENTS Page Independent Auditors' Report 1 Management s Discussion and Analysis 4 Enterprise Fund Financial Statements: Statement of Net Position - Proprietary Funds 10 Statement of Revenues, Expenses, and Changes in Net Position - Proprietary Funds 11 Statement of Cash Flows - Proprietary Funds 12 Notes to the Financial Statements 13 Required Supplementary Information: Schedule of Funding Progress for OPEB 32 Schedule of the Authority s Proportionate Share of Net Pension Liability 33 Schedule of the Authority s Pension Plan Contributions 34 Other Supplementary Information: Schedule of Expenditures of Federal Awards 38 Notes to Schedule of Expenditures of Federal Awards 39 Financial Data Schedule 40 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 47 Report on Compliance For Each Major Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance 49 Status of Prior Audit Findings 50 Schedule of Findings and Questioned Costs 51

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6 MANAGEMENT S DISCUSSION AND ANALYSIS As management of the Berkeley Housing Authority (the Authority), we offer readers of the Authority s financial statements this narrative, overview and analysis of the financial activities of the Authority for the fiscal year ended June 30, We encourage readers to consider the information presented here in conjunction with the Authority s financial statements as presented in this report. The Berkeley Housing Authority (the Authority) is a Public Housing Agency as defined in Section 8 of the United States Housing Act of 1937, as amended and a public body corporate and politic established pursuant to the California Housing Authorities Law, Health and Safety Code Sections The Authority was organized in 1966 under the laws of the State of California to primarily provide housing assistance to low income families and individuals. The Authority s primary sources of funding are through governmental grants received from the U.S. Department of Housing and Urban Development (HUD), and rent collections from its owned units. The following management discussion and analysis (MD&A) will discuss the results of the Authority s operations. Key financial information for the current fiscal year will be compared with those of the prior year. Financial Highlights Combined cash, cash equivalents and restricted cash balances at June 30, 2016 were $5,056,639, representing an increase of $176,983 from the prior fiscal year s balance of $4,879,656. Total assets and deferred outflows at June 30, 2016 were $20,088,585. Of this, $5,081,071 represents current assets, $14,577,455 represents non-current assets, and $430,059 represents deferred outflows. Total assets and deferred outflows for 2016 decreased by $234,075 from the 2015 balance of $20,322,660. Total liabilities and deferred inflows at June 30, 2016 were $12,041,985. Of this, $266,621 represents current liabilities, $11,302,580 represents non-current liabilities, and $472,784 represents deferred inflows. Total liabilities and deferred inflows for 2016 decreased by $112,207 from the 2015 balance of $12,154,192. As of the close of the current fiscal year, the Authority s proprietary fund s reported Unrestricted Net Position was $5,243,859, its Restricted Net Position was $109,509, and its Net Investment in Capital Assets was $2,693,232. This represents a combined Total Net Position at June 30, 2016 of $8,046,600 compared to a total Net Position at June 30, 2015 of $8,168,468. The primary source of revenue for the Authority for the fiscal year ended June 30, 2016 were grants provided by the U.S. Department of Housing and Urban Development (HUD). Grant revenues for fiscal year 2016 were $24,520,953 as compared to $25,583,925 for fiscal year Operating revenues for the current fiscal year were $24,729,103 and operating expenses were $25,077,561, which resulted in a net operating loss of $348,458 for the 2016 fiscal year versus a net operating income of $506,063 for fiscal year

7 The major program expenditure, as reflected on the Combined Statement of Revenues, Expenses, and Changes in Net Position, was for Housing Assistance Payments. For the fiscal year 2016 Housing Assistance Payments were $23,003,043 which was a decrease of $183,725 from the total housing assistance payments of $23,186,768 for fiscal year Expenditures of Federal Awards amounted to $23,962,442 for fiscal year Expenditures of Federal Awards for fiscal year 2016 decreased by $1,621,483 from the 2015 fiscal year s balance of $25,583,925. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Housing Authority s basic financial statements, which are comprised of a Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position, Statement of Cash Flows. This report also includes the Notes to the Financial Statements. Government-Wide Financial Statements The government-wide financial statements report information of the Authority as a whole, net of inter-program activity. The Statement of Net Position presents information on the Authority s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Authority is improving or deteriorating The Statement of Revenues, Expenses, and Changes in Net Position presents information showing how the Authority s net position changed during the most recent fiscal year. All changes in net position 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 only result in cash flows in future fiscal periods. The Statement of Cash Flows presents the change in the Housing Authority s cash and cash equivalents during the most recent fiscal year. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Authority uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements. Some programs are required to be established by the United States Department of Housing and Urban Development (HUD). However, the Authority also administers other programs to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using grants and other moneys. All of the funds of the Authority are classified as an enterprise housing fund as a result of GASB 34. Enterprise funds account for activities similar to those found in the private sector, where the determination of net income is necessary or useful to sound financial administration. They are reported using the full accrual method of accounting in which all assets and all liabilities associated with the operation of these funds are included on the Statement of Net Position. The focus of enterprise funds is on income measurement, which together with the maintenance of equity, is an important financial indication. 5

8 Notes to Financial Statements The accompanying Notes to the Financial Statements provide additional information that is essential to a full understanding of the data provided in the basic financial statements. Supplementary Information The Schedule of Funding Progress for OPEB, the Schedule of the Authority s Proportionate Share of Net Pension Liability, the Schedule of the Authority s Pension Plan Contributions, the Schedule of Expenditures of Federal Awards, and the Financial Data Schedule are presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, the Governmental Accounting Standards Board (GASB), and the U.S. Department of Housing and Urban Development regulations. These schedules can be found in the Supplementary Information sections of this report. Financial Analysis As we noted earlier, the Housing Authority uses funds to help it control and manage money for particular purposes. A portion of the Housing Authority s net position reflects the investment in capital assets (e.g. land, leasehold improvements, and furniture and equipment). The Housing Authority uses these capital assets to provide services to clients; consequently, these assets are not available for future spending. Economic Factors The Housing Authority is primarily dependent upon HUD for the funding of rental subsidy payments to landlords and administrative operations. Therefore, the Housing Authority is significantly affected by the federal budget. Changes in HUD grant funding affects the number of households that can be assisted, and proration of Administrative Fee impacts the ability to cover basic costs of operating these federally funded programs on an ongoing basis. The number of unit months assisted under the Housing Choice Voucher Program decreased from 21,192 for fiscal year 2015 to 20,068 for fiscal year This decrease in the number of months of housing assistance being provided for the Housing Choice Voucher Program was primarily due to the decrease of available housing units (landlords willing to rent to households with a Section 8 voucher) within the City of Berkeley. Each year for the past several years there has been a decrease in the availability of affordable housing within the City of Berkeley and neighboring jurisdictions, and this problem is expected to continue for the foreseeable future. In order to address this ongoing concern and mitigate the declining number of owners participating in the Housing Choice Voucher Program, the Berkeley Housing Authority is aggressively taking actions to enhance relationships with owners through regular dialogue; implementing a financial assistance program for damage claims; increasing Payment Standards to the maximum extent possible; partnering with the City of Berkeley to require the use of HCVs in Below Market Rate units; and constantly improving customer service. 6

9 Budgetary Highlights An agency-wide budget was prepared for the fiscal year ending June 30, The budget was primarily used as a management tool. Budgets are prepared in accordance with the accounting procedures prescribed by the applicable funding agency and revised during the year as appropriate. Comparative Statement of Net Position The following table reflects the Statement of Net Position at June 30, 2016 compared to prior year. The Authority is engaged only in Business-Type Activities. Berkeley Housing Authority Comparative Statement of Net Position June 30, 2016 Increase/ Percentage (Decrease) Change Assets and Deferred Outflows: Current and other assets $ 16,965,294 $ 17,404,548 $ (439,254) (2.5)% Capital assets 2,693,232 2,726,284 (33,052) (1.2)% Deferred outflows 430, , , % Total Assets and Deferred Outflows $ 20,088,585 $ 20,322,660 $ (234,075) (1.2)% Liabilities and Deferred Inflows: Current liabilities $ 266,621 $ 323,042 $ (56,421) (17.5)% Non-current liabilities 11,302,580 11,586,108 (283,528) (2.4)% Deferred inflows 472, , , % Total Liabilities and Deferred Inflows 12,041,985 12,154,192 (112,207) (0.9)% Net Position: Net investment in capital assets 2,693,232 2,726,284 (33,052) (1.2)% Restricted 109, ,646 (794,137) (87.9)% Unrestricted 5,243,859 4,538, , % Total Net Position $ 8,046,600 $ 8,168,468 $ (121,868) (1.5)% 7

10 Comparative Statement of Revenues, Expenses, and Changes in Net Position The following table presents the Statement of Revenues, Expenses and Changes in Net Position for the fiscal year ended June 30, 2016 compared to prior year. Berkeley Housing Authority Comparative Statement of Revenues, Expenses and Changes in Net Position Year Ended June 30, 2016 Increase/ Percentage Decrease Change Revenues: Grants $ 24,520,953 $ 25,583,925 $ (1,062,972) (4.2)% Interest 349, ,176 (235,548) (40.3)% Pension income - 66,140 (66,140) Other revenues 208, ,104 (42,954) (17.1)% Total revenues 25,078,731 26,486,345 (1,407,614) (5.3)% Expenses: Administration 2,019,423 2,033,167 (13,744) (0.7)% Tenant services - 36,437 (36,437) General 22,044 39,543 (17,499) (44.3)% Housing assistance payments 23,003,043 23,186,768 (183,725) (0.8)% Pension expense 123, ,038 Depreciation 33,051 33, % Total expenses 25,200,599 25,328,966 (128,367) (0.5)% Net Increase (Decrease) In Net Position (121,868) 1,157,379 (1,279,247) (110.5)% Beginning Net Position, as Originally stated 8,168,468 7,747, , % Prior period adjustment - (736,491) Beginning Net Position, Restated 8,168,468 7,011,089 1,157, % Ending Net Position $ 8,046,600 $ 8,168,468 $ (121,868) (1.5)% Analysis of the Authority s Overall Financial Position and Results of Operations As indicated in the above comparative statements the Authority s net position at June 30, 2016 decreased by $123,868 from the June 30, 2015 balance. 8

11 Changes in Capital Assets The following table presents the changes in capital assets (net of accumulated depreciation) at June 30, 2016 compared to the prior fiscal year. Berkeley Housing Authority Changes in Capital Assets (Net of Depreciation) June 30, Increase/ Percentage (Decrease) Change Land $ 2,579,621 $ 2,579,621 $ - -% Buildings and improvements 85, ,190 (18,944) (18.2)% Equipment 28,365 42,472 (14,107) (33.2)% Total $ 2,693,232 $ 2,726,283 $ (33,051) (1.2)% The Authority s investment in capital assets as of June 30, 2016 was $2,693,232 (net of accumulated depreciation). This investment in capital assets includes land, buildings and improvements, and furniture and equipment. The Authority s total investment in capital assets for fiscal year decreased by 1.2%. Changes in Notes Payable The following table presents the changes in notes payable at June 20, 2016 compared to the prior fiscal year. Berkeley Housing Authority Changes in Notes Payable June 30, Increase/ Percentage (Decrease) Change Notes Payable $ 300,000 $ 300,000 $ - -% At June 30, 2016 the Authority had $300,000 of long-term debt outstanding. During the fiscal year 2016 the Authority s outstanding long-term debt balance did not change from the June 30, 2015 balance. Requests for information This financial report is designed to provide citizens, taxpayers, and creditors with a general overview of the Housing Authority s finances and to show the Housing Authority s accountability for the money it receives. Questions concerning any of the information provided in this report or request for additional financial information should be addressed to the Executive Director at the Berkeley Housing Authority, 1936 University Avenue, Suite 150, Berkeley, CA

12 BERKELEY HOUSING AUTHORITY STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2016 Enterprise Fund Housing ASSETS Current Assets: Cash and investments (Note 2) $ 4,947,130 Restricted cash (Note 2) 109,509 Accounts receivable other 4,432 Deposits 20,000 Total current assets 5,081,071 Noncurrent Assets: Notes receivable 11,780,420 Interest receivable 103,803 Capital assets, net of accumulated depreciation (Note 3) 2,693,232 Total non-current assets 14,577,455 Total assets 19,658,526 DEFERRED OUTFLOWS OF RESOURCES Pension Plan (Note 8) 430,059 Total assets and deferred outflows of resources $ 20,088,585 LIABILITIES Current Liabilities: Accounts payable $ 84,223 Accounts payable other agencies 32,735 Accrued liabilities 48,156 Compensated absences - current (Note 4) 101,507 Total current liabilities 266,621 Non-current Liabilities: Compensated absences (Note 4) 65,229 Unearned revenues (Note 5) 10,169,902 Note payable (Note 6) 300,000 OPEB obligation (Note 9) 16,785 Accrued pension liability (Note 8) 750,664 Total non-current liabilities 11,302,580 Total liabilities 11,569,201 DEFERRED INFLOWS OF RESOURCES Pension Plan (Note 8) 472,784 Total liabilities and deferred inflows of resources 12,041,985 NET POSITION Net investment in capital assets 2,693,232 Restricted Net Position 109,509 Unrestricted Net Position 5,243,859 Total Net Position $ 8,046,600 See accompanying notes to the financial statements. 10

13 BERKELEY HOUSING AUTHORITY COMBINED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION- PROPRIETARY FUND TYPES FOR THE YEAR ENDED JUNE 30, 2016 Enterprise Fund Housing Operating Revenues: Grants $ 24,520,953 Other income 208,150 Total operating revenues 24,729,103 Operating Expenses: Administration 2,019,423 General 22,044 Housing assistance payments 23,003,043 Depreciation 33,051 Total operating expenditures 25,077,561 Operating income (loss) (348,458) Non-Operating Revenues (Expenses): Pension income (expense) (123,038) Interest income 349,628 Net non-operating revenue (expenses) 226,590 Change in Net Position (121,868) Beginning Net Position 8,168,468 Ending Net Position $ 8,046,600 See accompanying notes to the financial statements. 11

14 BERKELEY HOUSING AUTHORITY COMBINED STATEMENT OF CASH FLOWS - PROPRIETARY FUND TYPES FOR THE YEAR ENDED JUNE 30, 2016 Enterprise Fund Housing Cash flows from operating activities: Grants received $ 24,078,841 Other cash receipts 208,640 Cash payments to suppliers (879,974) Cash payments to landlords (23,003,043) Cash payments to employees (1,057,439) Net cash provided (used) in operating activities (652,975) Cash flows from investing activities: Interest received on investments 829,958 Net cash provided (used) by investing activities 829,958 Net increase (decrease) in cash 176,983 Cash at beginning of year 4,879,656 Cash at end of year $ 5,056,639 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $ (348,458) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation 33,051 Changes in assets and liabilities: Decrease in accounts receivable other agencies 90,320 Decrease in accounts receivable other 490 Decrease in prepaid expenses 45,097 Increase in accounts payable - vendors 73,565 Decrease in accounts payable other agencies (198,921) Decrease in accrued liabilities (4,371) Decrease unearned revenues (333,511) Decrease in OPEB liability (810) Decrease in compensated absences (9,427) Net cash provided (used) by operating activities $ (652,975) See accompanying notes to the financial statements. 12

15 BERKELEY HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the Berkeley Housing Authority (the Authority) conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to governmental entities. The following is a summary of the more significant policies. A. Definition of Reporting Entity The Berkeley Housing Authority (the Authority) was established during 1966 by a resolution of the City of Berkeley City Council to administer a federal rent subsidy program authorized under the United States Housing Act of The Authority is governed by a seven member Board of Commissioners which is appointed by the Mayor of the City of Berkeley, subject to confirmation of a majority of the members of the City Council. The members of the Board of Commissioners are appointed to either two or four year terms. The objective of the Authority is to improve the lives of low-income families, persons with disabilities and seniors in the City by providing affordable, high quality housing. It accomplishes its objectives by providing management, administrative, and educational services to its tenants and landlords to facilitate the operation of the various federal and state housing assistance programs. During the year ended June 30, 2016, the Authority did not exercise oversight responsibility over any other organizations. The financial statements present information for the activities of only the Berkeley Housing Authority. B. Government-wide and Fund Financial Statements The government-wide financial statements (i.e. the Statement of Net Position; the Statement of Revenues, Expenses, and Changes in Net Position; and the Statement of Cash Flows) report the financial information of the Authority s operations as a whole. For financial reporting purposes, the Authority reports all of its operations as a single business type activity in a single enterprise housing fund. Therefore, for the Authority the government-wide and fund financial statements are the same. These basic financial statements are presented in accordance with the standards established by the Governmental Accounting Standards Board (GASB). C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The financial statements and the Schedule of Expenditures of Federal Awards are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of when related cash flows take place. Nonexchange transactions are those in which the Authority receives value without directly giving equal value in exchange. These transactions include revenues from federal, state and local assistance programs. Revenues from these sources are recognized in the fiscal year in which all eligibility requirements have been met. 13

16 Note 1 (continued) BERKELEY HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016 The Authority applies all applicable Financial Accounting Standards Board (FASB) pronouncements issued before November 30, 1989 in accounting and reporting for its proprietary operations and it has implemented in fiscal year 2016 GASB Statement Number 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements for FASB Pronouncements after November 30, Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services in connection with a proprietary fund s principal ongoing operations. The principal operating revenues of the Authority s enterprise housing fund are rental income from its public and other owned housing units and various other miscellaneous other revenues. Operating expenses include employee services and supplies, administrative expenses, utilities, maintenance, insurance, housing assistance payments to landlords, and depreciation of its capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When the Authority incurs an expense for which both restricted and unrestricted resources may be used, it is the Authority s policy to use restricted resources first and the use unrestricted resources as needed. D. Assets, Liabilities, and Net Position 1. Cash and Cash Equivalents For purposes of the accompanying statement of cash flows all highly liquid cash and investments with a maturity of three months or less when purchased and cash restricted by federal governmental requirements are considered cash and cash equivalents. Cash and cash equivalents include amounts in demand deposits and savings accounts. All of the Authority s investments can be converted to cash in a relatively short amount of time. Therefore, all cash and investments and amounts of restricted cash are reported in the Statement of Cash Flows. 2. Restricted Assets Restricted cash, cash equivalents, and investments, represent deposits that are used for replacement reserves, security deposit payable amounts to tenants, and amounts that are required by grants from HUD to be used only to provide housing assistance for individuals and families that meet various income, age, and employment standards. 3. Receivables All receivables are reported at their gross value and are reduced by an allowance for doubtful accounts if such an amount is considered applicable. 14

17 BERKELEY HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016 Note 1 (continued 4. Inventories and prepaid assets All inventories are valued at cost using the first in/first out (FIFO) method. Inventories are recorded as expenditures when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items the financial statements. 5. Capital Assets Capital assets which include land, buildings, improvements, and furniture and equipment, are reported at historical cost. Contributed capital assets are recorded at fair value at the time received. Interest expense during any development periods are is capitalized. Maintenance, minor repairs and replacements are recorded as expenses; extraordinary replacements of property resulting in property betterments are charged to the property accounts. Depreciation is charged to operations using the straight-line method based on the estimated useful life of the related asset. The estimated useful lives of the various asset categories are as follows: Buildings 30 years Improvements 10 years Furniture and Equipment 5 years 6. Compensated Absences It is the Authority s policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All vacation pay is accrued when incurred. A portion of unused sick leave is only payable to employees who have over 20 years of services upon termination of their employment. 7. Taxes The Authority is exempt from Federal Income and California Franchise Taxes. The Authority is also exempt from property taxes but makes payments in lieu of taxes on its owned housing units. 8. Encumbrances Encumbrance accounting is not employed by the Authority. 9. Net Position Net position represents the differences between assets and liabilities. Net position consists of net investment in capital assets; restricted net position; and unrestricted net position. Net investment in capital assets, consists of capital assets, net of depreciation, reduced by the outstanding balances of borrowings used for the construction, or improvement of those assets. Net position is reported as restricted when there are limitations imposed on their use through constitutional provisions or enabling legislation or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. 15

18 BERKELEY HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016 Note 1 (continued) 10. Deferred Outflows/Inflows of Resources In addition to assets and liabilities, the Statement of Net Position includes separate sections for deferred outflows and inflows of resources. These separate sections represent a consumption or acquisition of net position that applies to future periods and will not be recognized as outflows (expenses) or inflows (revenues) until that time. E. New GASB Pronouncements During fiscal year 2016 the Authority adopted the following GASB Statements: Statement No. 72 Fair Value Measurement and Application Statement No. 73 Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB 68, and Amendments to Certain Provisions for GASB Statements 67 and 68 Statement No. 76 The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments Statement No. 79 Certain External Investment Pools and Pool Participants F. Estimates Management of the Authority has made certain estimates and assumptions relating to the reporting of assets and liabilities and revenues and expenses to prepare the financial statements. Actual results may differ from those estimates. G. Budgets and Budgetary Accounting Each year the Authority s Board of Commissioners adopts an operating budget. This budget may be revised during the year to give consideration to unanticipated revenue and expenditures primarily resulting from events unknown at the time of the adoption of the annual budget. Note 2 - CASH AND INVESTMENTS Cash and investments at June 30, 2016 are classified in the accompanying financial statements as follows: Cash and investments $ 4,947,130 Restricted cash 109,509 Total cash and investments $ 5,056,639 The total of cash and investments of $5,056,639 of cash and investments consists of $5,056,489 maintained on deposit in banks and $150 in petty cash. Of the amounts deposited into banks, $250,000 is covered by Federal Deposit insurance. The remaining $4,806,489 is required by California law to be collateralized by governmental securities with a market value of 110% of the deposit or with first trust deed mortgages with a value of 150% of the of the uninsured amount. 16

19 Note 2 (continued) BERKELEY HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016 Authorized Investments Under provisions of the Authority s investment policy, the Authority may invest in the following: U.S. Treasury Bills U.S. Treasury Notes and Bonds Certificates of Deposits at banks Securities of Government Sponsored Agencies Insured Money Market Deposit Accounts Municipal Depository Fund Super NOW accounts Mutual Funds that meet the HUD or State criteria Repurchase Agreements secured with any of the above instruments State of California Local Agency Invest Fund (LAIF) The Authority s restricted cash consists of funds held for future housing assistance payments, replacement reserves, and security deposit payable amounts received from its tenants. The balances of the restricted cash accounts are as follows: Amounts restricted for housing assistance payments $ 109,509 Total restricted cash at June 30, 2016 $ 109,509 As indicated previously management held its cash only in deposits with banks or in petty cash. All cash and cash and investments and restricted cash are considered to be liquid assets for purposes of measuring cash flows. Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of the investment. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to changes in market rates. Credit Risk Credit risk is the risk that an insurer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. 17

20 Note 2 (continued) BERKELEY HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016 Custodial Credit Risk Custodial credit risk is the risk that, in the event of a 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 custody of an outside party. As previously stated the California Government Code requires California banks and savings and loan associations to secure the Authority s deposits not covered by federal deposit insurance by pledging mortgages or government securities as collateral. The market value of the pledged securities in the collateral pool must equal 110% of the total amount deposited by public agencies. California law also allows financial institutions to secure the Authority s deposits by pledging first deed trust mortgages having a value of 150% of the secured public deposits. Such collateral must be held in the pledging bank s trust department in a separate depository in an account in the Authority s name. The Authority has executed depository agreements with the banks that it did business with as of June 30, Note 3 - CAPITAL ASSETS The following is a summary of the Authority's changes in capital assets for the fiscal year ended June 30, Balance Adjustments Balance 6/30/15 Additions And Deletions 6/30/16 Land $ 2,579,621 $ - $ - $ 2,579,621 Buildings and improvements 132, ,606 Furniture and equipment 73, ,015 Total capital assets 2,785, ,785,242 Less depreciation for: Buildings and Improvements (28,416) (18,944) - (47,360) Equipment (30,543) (14,107) - (44,650) Total accumulated Depreciation (58,959) (33,051) - (92,010) Capital assets, net $ 2,726,283 $ (33,051) $ - $ 2,693,232 18

21 Note 4 - COMPENSATED ABSENCES BERKELEY HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016 It is the Authority' policy to permit employees to accumulate earned but unused vacation leave. The Authority s policy requires that employees with 280 hours as of October 1 st, be advised to take sufficient leave to avoid exceeding 320 hours as of December 31 st. The policy further requires the Authority to direct employees with more than 320 hours of vacation to reduce the leave to no more than 320 hours by February of each year. Accumulated vacation leave beyond 320 hours is to be taken by the employee, or paid by the Authority; at the Authority s discretion. Accrued vacation leave has been valued by the Authority and has been recorded as a current liability of $96,211 and $65,229 as a non-current liability, as of June 30, It is the Authority s policy to permit employees to accumulate earned but unused sick leave. Employees cease to earn sick leave when the accumulated balance equals 200 work days. Employees resume earning leave as time is used and the balance declines. Unused sick leave is not payable to employees upon separation from the Authority unless the employee has at least 20 years of service upon separation from the Authority at which time the employee is entitled to be paid 38% of their accumulated sick leave at their normal rate of pay upon separation. At June 30, 2016, the Authority recorded $5,296 of sick leave as a current liability. Note 5 UNEARNED REVENUES During the fiscal year ended June 30, 2015 the Authority disposed of (sold) sixty-one (61) housing units that were constructed in previous fiscal years utilizing funds provided by the U.S. Department of Housing and Urban Development (HUD) and fourteen (14) housing units that were constructed in prior fiscal years utilizing funds provided by the California Department of Housing and Community Development. During the fiscal year 2014 the Authority recorded $10,503,413 of the proceeds from the sale of the HUD assisted units as unearned revenues. Each year a portion of the $10,503,413 of unearned revenues from the sale of the HUD assisted units is expected to be recognized as revenue over the next several years as the Authority complies with the stipulated disposition related requirements established by HUD. During the fiscal year 2016 $333,511 of the $10,503,413 of unearned revenues was recognized as earned, and recorded as a portion of grant revenues. 19

22 BERKELEY HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016 Note 6 NOTES PAYABLE Following is a summary changes in long-term debt for the year ended June 30, 2016: Balance Balance 6/30/15 Additions Deletions 6/30/16 Note Payable HTF Loan 300, ,000 Compensated Absences 176,163 - (9,427) 166,736 $ 476,163 $ - $ (9,427) $ 466,736 The following is a schedule of debt payment requirements to maturity for long-term obligations other than compensated absences: Year Ending Total June 30 Principal Interest Payments 2017 $ - $ - $ , ,000 $ 300,000 $ - $ 300,000 On April 3, 2013, the Authority entered into a loan agreement with the City of Berkeley for an amount not to exceed $300,000. Proceeds from the loan were used to pay for relocation costs associated with the disposition of 75 units of rental housing owned by the Authority. The loan is payable ten years from the date of the initial disbursement of the loan amount to the Authority which was April 30, Therefore, the loan is payable in full on or before April 30, The loan is a non-interest bearing loan. The outstanding balance on the loan at June 30, 2016 was $300,000. Note 7 NET POSITION In the financial statements, fund net position is reported in three categories as follows: A. Net Investment in Capital Assets Net investment in capital assets consists of the following: Capital assets, net of depreciation (Note 4) $ 2,693,232 20

23 BERKELEY HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016 Note 7 (continued) B. Restricted Net Position Net position is reported as restricted when constraints placed on the use of net position are either externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or imposed by law through constitutional provisions or enabling legislation. The Authority reported the following as restricted net position: Excess funding of housing assistance payments $ 109,509 C. Unrestricted Net Position Unrestricted net position represents the total amount of Net Position less amounts reflected as net investment in capital assets and restricted net position. The Authority s Unrestricted Net Position as of June 30, 2016 was $5,243,859. Note 8 EMPLOYEES RETIREMENT PLAN General Information about the Pension Plan Plan Descriptions The Plan is a cost-sharing multiple-employer defined benefit pension plan administered by the California Public Employees Retirement System (CalPERS). A full description of the pension plan benefit provisions, assumptions for funding purposes (not accounting purposes) and membership information is listed in the June 30, 2015 Annual Actuarial Valuation Report. This report is a publically available valuation report that can be obtained at CalPERS website under Forms and Publications. All qualified permanent and probationary employees are eligible to participate in the Authority s separate costsharing multiple employer defined benefit pension plans administered by the California Public Employees Retirement System (CalPERS). Benefit provisions under the Plans are established by State statute and Authority s 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. 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 a minimum age of 55 for new members effective in or after January 1, 2013, with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, 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. 21

24 BERKELEY HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016 Note 8 (continued) The Plans provisions and benefits in effect at June 30, 2016, are summarized as follows: Miscellaneous Plans Prior to On or After Hire Date January 1, 2013 January 1, 2013 Benefit Formula 55 2% at 62 Benefit Vesting Formula 5 years of service 5 years of service Benefit payments monthly for life monthly for life Retirement age Monthly benefits, as a % of eligible compensation 2.7% 2.0% Required employee contribution rates 9.0% 7.5% Required employer contribution rates % 5.93% Contributions Section 20814(c) of the California Public Employees Retirement Law (PERL) 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. The total plan contributions are determined through the CalPERS annual actuarial valuation process. The Plan s actuarially determined rate is based on the estimated amount necessary to pay the costs of benefits earned by employees during the year, with an additional amount to pay any unfunded accrued liability. The Authority is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the measurement period ended June 30, 2015 (the measurement date), the active employees contribution rate is 8 percent of annual pay, and the average employer s rate is percent of annual payroll. For the year ended June 30, 2016, the contributions recognized as part of pension expense for each Plan were as follows: Contributions employer $ 119,613 Contributions employee $ 94,447 22

25 Note 8 (continued) BERKELEY HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016 Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions The following table shows the Plan s proportionate share of the miscellaneous risk pool collective net pension liability over the measurement period: Net Pension Liability (Asset) Proportionate Share of Net Pension Liability Balance at 6/30/14 Valuation date $ 617, % Balance at 6/30/15 Measurement date 750, % Total net changes during $ 133, % The Authority s net pension liability of $750,664 is measured as the proportionate share of the net pension liability of $2,743,467,016 (or.02736%). The net pension liability is measured as of June 30, 2015, and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2014 rolled forward to June 30, 2015 using standard update procedures. The Authority s proportion of the net pension liability was based on a projection of the Authority s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. For the year ended June 30, 2016, the Authority recognized pension income of $123,039 based on the Plan s measurement period ended June 30, At June 30, 2016, the Authority reported deferred outflows of resources and deferred inflows of resources related to pensions from the following: Deferred Deferred Outflows of Inflows of Resources Resources Pension contributions subsequent to measurement date $ 119,613 $ 0 Differences between actual and expected experience 12,295 0 Changes in assumptions 0 (116,320) Net differences between projected and actual earnings on pension plan investments 298,151 (356,464) Adjustment due to differences in proportions 0 0 Total $ 430,059 $ (472,784) 23

26 BERKELEY HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016 Note 8 (continued) $123,039 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 (measurement period ended June 30, 2016). Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows: Measurement Deferred Period Outflows/Inflows Ended June 30 of Resources 2016 $ (81,436) (81,436) (74,005) ,538 $ (162,339) The amounts above are the net of outflows and inflows recognized in the fiscal 2015 measurement period. Actuarial Methods and Assumptions For the measurement period ending June 30, 2015 (the measurement date), the total pension liability was determined by rolling forward the June 30, 2014 total pension liability. The June 30, 2015 total pension liability was determined using the following actuarial methods and assumptions: Miscellaneous Plan Valuation Date June 30, 2014 Measurement Date June 30, 2015 Actuarial Cost Method Entry Age Normal Actuarial Assumptions: Discount Rate 7.65% Inflation 2.75% Payroll Growth 3.00% Projected Salary Increase *Varies by Entry Age and Service Investment Rate of Return 7.5% Post Retirement Benefit Increase Mortality * Net of pension plan investment and administration expenses; includes inflation 24 Contract COLA up to 2% until Purchasing Power Protection Allowance Floor on Purchasing Power Applies. 2% Thereafter Derived using CalPERS Membership Data

27 BERKELEY HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016 Note 8 (continued) Discount Rate The discount rate used to measure the total pension liability was 7.65%. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each 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 7.65 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate of 7.65 percent is 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. CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability Management (ALM) review cycle that is scheduled to be completed in February Any changes to the discount rate will require Board action and proper stakeholder outreach. For these reasons, CalPERS expects to continue using a discount rate net of administrative expenses for GASB 67 and 68 calculations through at least the fiscal year. CalPERS will continue to check the materiality of the difference in calculation until such time as we have changed our methodology. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds asset classes, expected compound returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. 25

28 BERKELEY HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016 Note 8 (continued) The table below reflects the long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These rates of return are net of administrative expenses. New Strategic Real Return Real Return Asset Class Allocation Years 1-10 (a) Years 11+ (b) Global Equity 51.0% 5.25% 5.71% Global Fixed Income 19.0%.99% 2.43% Inflation Sensitive 6.0%.45% 3.36% Private Equity 10.0% 6.83% 6.95% Real Estate 10.0% 4.50% 5.13% Infrastructure and Forestland 2.0% 4.50% 5.09% Liquidity 2.0% -.055% -1.05% Total % (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 Authority s proportionate share of the net pension liability/ (asset), calculated using the discount rate of 7.65 percent, as well as what the Authority s proportionate share of the net pension liability/ (asset) would be if it were calculated using a discount rate that is 1-percentage point lower (6.65%) or 1- percentage point higher (8.65%) than the current rate: Discount Rate - 1% (6.65%) Current Discount Rate (7.65%) Discount Rate + 1% (8.65%) Plan s Net Pension Liability/(Asset) $1,258,915 $750,664 $331,043 Pension Plan Fiduciary Net Position Detailed information about each pension plan s fiduciary net position is available in the separately issued CalPERS financial reports. E. Payable to the Pension Plan At June 30, 2016, the Authority reported a payable of $4,756 for the outstanding amount of contributions to the pension plan required for the year ended June 30,

29 BERKELEY HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016 Note 9 OTHER POST EMPLOYMENT BENEFITS (OPEB) Plan Description: Eligible retirees receive health care coverage through a plan offered by the Berkeley Housing Authority through the City of Berkeley Retirement Health Premium Assistance Plan (RHPAP). Employees who retire from the Authority are eligible for health benefits beginning on or after age 55 if they terminate service from the Authority on or after age 50 with at least 8 years of service. Retirees can select from among any of the health plans offered to active employees. A retire living outside the coverage area of the Authority s health plans can select an out-of-area health plan. Benefits are payable for the retiree s lifetime and continue for his or her covered spouse s/domestic partner s lifetime. The Authority pays the cost of the monthly premiums up to a Participant s applicable percentage of the Base Dollar Amount and subject to annual 4.5% increases as specified in the Retiree Health Premium Assistance Plans document. A Participant s applicable percentage is based on years of service with the Authority. Retirement cost sharing provisions for the retiree health plan are as follows: Benefits are payable for the retiree s lifetime and continue for his or her covered spouse s/domestic partner s lifetime. The Authority pays the cost of the monthly premiums up to a participant s applicable percentage of the Base Dollar Amount and subject to annual 4.5% increases as specified in the Retiree Health Premium Assistance Plan documents. A participant s applicable percentage is based on years of service with the Authority. The Authority is obligated to contribute toward the cost of retiree medical coverage for the retiree s lifetime or until coverage is discontinued. As of June 30, 2016, the Authority had no retirees receiving benefits and twelve employees eligible for OPEB benefits. 27

30 Note 9 (continued) BERKELEY HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016 Annual OPEB Cost and Net OPEB Obligation: For fiscal year 2016 the Authority s annual OPEB cost was $27,091. The Authority s OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the fiscal year ended June 30, 2016, were as follows: Annual required contribution $ 27,279 Interest on net OPEB obligation 1,010 Adjustment of annual required contribution (1,198) Annual OPEB cost $ 27,091 Annual OPEB cost $ 27,091 Less contributions made (27,901) Change in OPEB obligation (asset) (810) Net OPEB obligation (asset), beginning of year 17,595 Net OPEB obligation (asset), end of year $ 16,785 Net Ending OPEB Obligation (Asset) Year Ended Annual OPEB Cost Actual Employer Contribution Percentage Contributed June 30, 2014 $ 23,120 $ (26,493) 114.5% $ 16,880 June 30, 2015 $ 27,091 $ (26,376) 93.7% $ 17,595 June 30, 2016 $ 27,091 $ (27,901) 103.0% $ 16,785 Funded Status and Funding Progress: The funded status of the plan based on an actuarial valuation as of July 1, 2014, was as follow: Actuarial accrued liability (AAL) $ 203,583 Actuarial value of plan assets (128,266) Unfunded actuarial accrued liability (UAAL) $ 75,317 Funded ratio (actuarial value of plan Assets/AAL) 63.0% Annual covered payroll 1,048,012 UAAL as percentage of covered payroll 7.2% Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events in the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. 28

31 BERKELEY HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016 Note 9 (continued) For the actuarial valuation, the entry age normal cost, level percent of pay; closed group method was used. The actuarial assumptions include a 5.5% discount rate. A long-term inflation assumption of 4.5% was used in developing level percent amortization. The healthcare trend rate assumption is 4.5%. The actuarial value of assets is equal to the market value. The unfunded actuarial accrued liability is being amortized over a period of 30 years as a level percentage of projected payroll. The amortization period at June 30, 2016 is 30 years reflecting the Authority s use of an open amortization period. The schedule of funding progress, presented as required supplementary information following the Notes to the Financial Statements, will present multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the AAL for benefits. Note 10 - JOINT POWERS AGREEMENTS Property and Liability Insurance The Authority participates in a joint venture under a joint powers agreement (JPA) with the Special District Risk Management Authority (SDRMA). SDRMA was formed to provide property, liability and worker s compensation insurance coverage for member housing authorities. At June 30, 2015 there were 491 members in the Property/Liability Program and 415 members in the Workers Compensation Program. The relationship between the Authority and SDRMA is such that SRDMA is not a component unit of the Authority for financial reporting purposes. Condensed audited financial information the SDRMA for the year ended June 30, 2015 is as follows: Total assets and deferred Outflows $ 108,604,290 Total liabilities and deferred inflows (59,914,164) Total Net Position $ 48,690,126 Total revenues $ 57,317,949 Total expenses (60,953,173) Increase (decrease) in Net Position $ (3,635,224) SDRMA had $49,364,045 of unpaid claims and claim adjustment expenses outstanding at June 30, The Authority's share of year end assets, liabilities, or retained earnings has not been calculated. 29

32 Note 11 - CONTINGENT LIABILITIES BERKELEY HOUSING AUTHORITY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016 Federal Grants: The Authority has received funds from various federal, state, and local grant programs. It is possible that at some future date it may be determined that the Authority was not in compliance with applicable grant requirements. The amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time although the Authority does not expect such disallowed amounts, if any, to materially affect the financial statements. Note 12 CENTRAL OFFICE OPERATING LEASE The Authority leases space for its central office under a non-cancelable lease agreement expiring on December 31, Total rents paid under this lease agreement for the fiscal year ended June 30, 2016 was $91,074. The future minimum rental payments for this lease is as follows: Year Ending June 30, 2017 $ 93, , , , ,372 Note 13 SUBSEQUENT EVENTS $ 461,302 Management evaluated all activity of the Authority through October 18, 2016, and concluded that no subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements. 30

33 REQUIRED SUPPLEMENTARY INFORMATION (Other than the MD&A) 31

34 BERKELEY HOUSING AUTHORITY REQUIRED SUPPLEMENTARY INFORMATION AS OF JUNE 30, 2016 Schedule of Funding Progress for OPEB Unfunded UAAL as a Actuarial Actuarial Actuarial Actuarial Annual Percentage Valuation Value of Accrued Accrued Funded Covered of covered Date Assets Liability Liability Ratio Payroll Payroll July 1, 2012 $ 82,264 $ 175,903 $ 93, % $1,045, % July 1, 2014 $ 128,583 $ 203,583 $ 75, % $1,001, % Note The Authority s OPEB information prior to July 1, 2012 was included as a part of the OPEB valuation information for the City of Berkeley, CA as a whole, and the Authority s portion could not be determined individually. 32

35 BERKELEY HOUSING AUTHORITY REQUIRED SUPPLEMENTARY INFORMATION AS OF JUNE 30, 2016 Schedule of Proportionate Share of Net Pension Liability Plan Classic Last 10 Years* Plan s Plan s Proportionate Proportionate Share of the Share of the Net Pension Fiduciary Liability/ Net Position Plan s Plan s (Asset) as a as a Proportion of Proportionate Percentage Percentage the Net Share of the Plan s of its of the Plan s Pension Net Pension Covered- Covered- Total Liability/ Liability/ Employee Employee Pension (Asset) (Asset) Payroll Payroll Liability June 30, % $ 3,493,150 $ 950, % 80.60% June 30, % $ 3,633,973 $ 985, % 79.34% * Fiscal year ending June 30, 2015 was the 1 st year of implementation, therefore only two years are shown. 33

36 Schedule of Authority s Pension Plan Contributions Plan Classic Last 10 Years* BERKELEY HOUSING AUTHORITY REQUIRED SUPPLEMENTARY INFORMATION AS OF JUNE 30, 2016 Contributions Contributions in relation as a to the percentage Actuarially actuarially Contribution Covered- covereddetermined determined deficiency employee employee contributions contribution (excess) payroll payroll June 30, 2015 $ 188,167 $ 188,167 $ 0 $ 950, % June 30, 2016 $ 117,294 $ 117,294 $ 0 $ 985, % Notes to Schedule: Valuation Date: June 30, 2014 Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal cost method Amortization method Level percent of payroll Asset valuation method Actuarial value of asset Inflation 2.75% Payroll growth 3.00% Salary increase Varies by entry age and service Investment rate of return 7.50%, net of pension plan investment and administrative expense, including inflation Retirement age The probabilities of retirement are based on the 2010 CalPERS experience study for the period 1997 to 2007 Mortality The probabilities of mortality are based on the 2010 CalPERS experience study for the period 1997 to Pre-retirement and postretirement mortality rates include 5 years of projected mortality improvements using Scale AA published by the Society of Actuaries * Fiscal year ending June 30, 2015 was the 1 st year of implementation, therefore only two years are shown. 34

37 BERKELEY HOUSING AUTHORITY REQUIRED SUPPLEMENTARY INFORMATION AS OF JUNE 30, 2016 Schedule of Proportionate Share of Net Pension Liability Plan New Members Last 10 Years* Plan s Plan s Proportionate Proportionate Share of the Share of the Net Pension Fiduciary Liability/ Net Position Plan s Plan s (Asset) as a as a Proportion of Proportionate Percentage Percentage the Net Share of the Plan s of its of the Plan s Pension Net Pension Covered- Covered- Total Liability/ Liability/ Employee Employee Pension (Asset) (Asset) Payroll Payroll Liability June 30, % $ 0 $ % % June 30, % $ 106 $ 41, % % * Fiscal year ending June 30, 2015 was the 1 st year of implementation, therefore only two years are shown. 35

38 Schedule of Authority s Pension Plan Contributions Plan New Members Last 10 Years* BERKELEY HOUSING AUTHORITY REQUIRED SUPPLEMENTARY INFORMATION AS OF JUNE 30, 2016 Contributions Contributions in relation as a to the percentage Actuarially actuarially Contribution Covered- covereddetermined determined deficiency employee employee contributions contribution (excess) payroll payroll June 30, 2015 $ 0 $ 0 $ 0 $ % June 30, 2016 $ 2,319 $ 2,319 $ 0 $ 41, % Notes to Schedule: Valuation Date: June 30, 2014 Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal cost method Amortization method Level percent of payroll Asset valuation method Actuarial value of asset Inflation 2.75% Payroll growth 3.00% Salary increase Varies by entry age and service Investment rate of return 7.50%, net of pension plan investment expense, including inflation Retirement age The probabilities of retirement are based on the 2010 CalPERS experience study for the period 1997 to 2007 Mortality The probabilities of mortality are based on the 2010 CalPERS experience study for the period 1997 to Pre-retirement and postretirement mortality rates include 5 years of projected mortality improvements using Scale AA published by the Society of Actuaries * Fiscal year ending June 30, 2015 was the 1 st year of implementation, therefore only two years are shown. 36

39 OTHER SUPPLEMENTARY INFORMATION 37

40 BERKELEY HOUSING AUTHORITY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2016 Federal Grantor CFDA Number Expenditures Department of Housing and Urban Development (HUD): Direct Programs: Section 8 Moderate Rehabilitation Single Room Occupancy $ 839,750 Section 8 Housing Choice Vouchers ,122,692 Total Direct Programs 23,962,442 Total Expenditures of Federal Awards all from the U.S. Department of Housing and Urban Development (HUD) $ 23,962,442 See Notes to Schedule of Expenditures of Federal Awards. 38

41 BERKELEY HOUSING AUTHORITY NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS JUNE 30, The Schedule of Expenditures of Federal Awards presents the activities of federal award programs expended by the Berkeley Housing Authority. The Berkeley Housing Authority s reporting entity is defined in Note 1 to the financial statements. 2. The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the Berkeley Housing Authority under programs of the federal government for the year ended June 30, The information in this schedule is presented in accordance with the requirements of the Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Because the schedule presents only a selected portion of the operations of the Berkeley Housing Authority, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Berkeley Housing Authority. 3. The Schedule of Expenditures of Federal Awards is presented on the accrual basis of accounting. This is the same method of accounting as was used in the preparation of the Authority s basic financial statements. 4. The Berkeley Housing Authority did not pass-through any federal awards to subrecipients during the fiscal year

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