California Annual Financial Report June 30, 2016 City Council Peter Taylor Jon Colburn Sandy Kyles Peter Amoruso Jason Ralphs Mayor Vice Mayor Member Member Member Appointed Officials City Manager Jeffry M. Gardner Elected Officials City Clerk Gloria Stoddard City Treasurer Suzon Hatley
Table of Contents INDEPENDENT AUDITOR S REPORT... 1-2 MANAGEMENT S DISCUSSION AND ANALYSIS (unaudited) Required Supplementary Information, as prepared by management... 3-11 GOVERNMENT-WIDE FINANCIAL STATEMENTS Statement of Net Position... 12 Statement of Activities... 13 FUND FINANCIAL STATEMENTS Governmental Funds: Balance Sheet... 14 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position... 15 Statement of Revenue, Expenditures, and Change in Fund Balances... 16 Reconciliation of the Statement of Revenue, Expenditures, and Change in Fund Balances of Governmental Funds to the Statement of Activities... 17 Proprietary Funds: Statement of Net Position... 18 Statement of Revenue, Expenses, and Change in Net Position... 19 Statement of Cash Flows... 20 NOTES TO FINANCIAL STATEMENTS... 21-37 REQUIRED SUPPLEMENTARY INFORMATION Note to Budgetary Comparison Schedule... 38 Budgetary Comparison Information of Major Funds... 39-40 OTHER SUPPLEMENTARY INFORMATION Nonmajor Other Governmental Funds: Combining Balance Sheet... 41-42 Combining Statement of Revenue, Expenditures, and Change in Fund Balances... 43-44 SINGLE AUDIT REPORT... Appendix A
MARCELLO & COMPANY CERTIFIED PUBLIC ACCOUNTANTS 2701 Cottage Way, Suite 30 / Sacramento, California 95821 INDEPENDENT AUDITOR'S REPORT Honorable Mayor Members of the City Council City of Plymouth, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Plymouth, California, as of and for the year ended June 30, 2016, which collectively comprise the City s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Plymouth, as of June 30, 2016, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. 1
Honorable Mayor Members of the City Council City of Plymouth, California Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis, and the respective budgetary comparison information of the general and major funds, as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historic context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Plymouth basic financial statements. The combining nonmajor governmental funds financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our reports dated November 12, 2016 on our consideration of the internal control over financial reporting and on our tests of compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of those reports are to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting on compliance. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards in considering internal control over financial reporting and compliance. Marcello & Company Certified Public Accountants Sacramento, California November 18, 2016 2
MANAGEMENT S DISCUSSION & ANALYSIS As Prepared by Management (unaudited)
MANAGEMENT S DISCUSSION AND ANALYSIS Beginning July 1, 2003 the City of Plymouth implemented Governmental Accounting Standards Board (GASB) Statement Number 34 Basic Financial Statements and Management s Discussion and Analysis for State and Local Governments. GASB developed these standards to require annual financial reports to be more comprehensive and to assist outside users, such as financial institutions and bondholders to assess the entire finances of the government entity. Unless otherwise specified, GASB statements apply to financial reports of all state and local governments. This section of the City of Plymouth s annual financial report is required supplementary information and presents the City s discussion and analysis of its financial performance during the fiscal year ended June 30, 2016. Please read it in conjunction with the City s financial statements, which follow this section. FINANCIAL HIGHLIGHTS OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of four parts: management s discussion and analysis (this section), the basic financial statements, required supplementary information, and an optional section that presents combining statements for nonmajor governmental funds. The basic financial statements include three types of statements that present different views of the City. The first two statements are government-wide financial statements that provide both long-term and short-term information about the City s overall financial status. The remaining statements are fund financial statements that focus on individual parts of the City government, reporting the City s operations in more detail than the government-wide statements. Governmental funds statements explain how general government services such as planning, public works and public safety were financed in the short term as well as what remains for future spending. Proprietary fund statements offer both short-term and long-term financial information about the activities the government operates like businesses, such as the sewer and water systems. The financial statements also include notes that explain some of the information in the financial statements and provide more detailed information. The statements are followed by a section of required supplementary information that further explains and supports the information in the financial statements. In addition to these required elements, the City includes a section with combining statements that provide details about the City s nonmajor governmental funds, each of which are added together and presented in single columns in the basic financial statements. 3
MANAGEMENT S DISCUSSION AND ANALYSIS OVERVIEW OF THE FINANCIAL STATEMENTS (continued) Figure 1 below summarizes the major features of the City s financial statements, including the portion of the City government they cover and the types of information they contain. The remainder of this overview section of management s discussion and analysis explains the structure and contents of each of the statements. Figure 1 Major Features of the City s Government-wide and Fund Financial Statements Government-wide Governmental Fiduciary Statements Funds Funds Scope Entire City government (except fiduciary funds) The activities of the City that are not proprietary or fiduciary Instances in which the City is the trustee or agent for other s resources Required financial statements Statement of net position, and the Statement of activities Balance sheet, Statement of revenue, expenditures, and change in fund balances Statement of assets and liabilities Accounting basis and measurement focus Accrual accounting and economic resources focus Modified accrual accounting and current financial resources focus Accrual accounting and economic resources focus Type of asset/liability information All assets and liabilities, both financial and capital, and short-term and long-term Only assets expected to be used up and liabilities that are due during the year or soon thereafter; both capital assets and longterm debt are excluded All assets and liabilities, both short-term and long-term Type of inflow/outflow information All revenue and expenses during the year, regardless of when cash is received or paid Revenue for which cash is received during or soon after the end of the year; expenditures when goods or services have been received and payment is due during the year or soon thereafter All revenue and expenses during the year, regardless of when cash is received or paid, if applicable. Not applicable for agency funds 4
MANAGEMENT S DISCUSSION AND ANALYSIS Government-wide Financial Statements The government-wide financial statements report information about the City as a whole using accounting methods similar to those used by private-sector companies. The statement of net position includes all of the government s assets and liabilities. All of the current year s revenue and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two government-wide financial statements report the City s net position and how it has changed. Net position (the difference between the City s assets and liabilities) is one way to measure the City s financial health, or position. Over time, increases or decreases in the City s net position are an indicator of whether its financial health is improving or deteriorating, respectively. The government-wide financial statements of the City are divided into two categories: Government activities: Most of the City s basic services are included here, such as public safety, public works, planning, building, park/street maintenance, and general administration. Various taxes, franchise fees, service charges, and investment earnings finance most of these activities. Business-type activities: The City charges fees to customers to help cover the cost of certain services it provides. The City s sewer system, water system and internal service funds are included here. Fund Financial Statements The fund financial statements provide more detailed information about the City s most significant funds, not the City as a whole. Funds are accounting devices that the City uses to keep track of specific sources of funding and spending for particular purposes. Some funds are required by State law and by bond covenants. The City Council establishes other funds to control and manage money for particular purposes such as capital project grant funds or to show that it is properly using certain restricted taxes such as gas tax revenue. The City has three types of funds: Governmental funds: Most of the City s basic services are included in governmental funds, which focus on: (1) how cash and other financial assets that can readily be converted to cash flow in and out, and (2) the balances remaining at year-end that are available for future spending. Consequently, the governmental funds statements provide a detailed short-term view that helps the reader determine whether there are more or fewer financial resources that can be spent in the near future to finance the City s programs. Because this information does not encompass the additional long-term focus of the government-wide statements, there is additional information at the bottom of the governmental funds statement, or on the subsequent page, that explains and reconciles the relationship (or differences) between them. 5
MANAGEMENT S DISCUSSION AND ANALYSIS Fund Financial Statements (continued) Proprietary funds: Services for which the City charges customers a fee are generally reported in proprietary funds. Proprietary funds, like the government-wide statements, provide both longterm and short-term financial information. The City s enterprise funds (one type of proprietary fund) are the same as its business-type activities, but provide more detail and additional information, such as cash flows. Internal service funds (the other type of proprietary fund) report activities that provide supplies and services for the City s other programs and activities, such as the City s central services, risk management program, information technology services, human resource services, facilities management, and vehicle management. Fiduciary Funds: the City is the trustee, or fiduciary, for certain funds held on behalf of external parties. The City s fiduciary activities are reported in the Statement of Assets and Liabilities Agency Funds. These activities are excluded from the City s other financial statements because the resources of these funds are not available to support the City s own programs. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. During the 2015 2016 fiscal year, the City did not have fiduciary fund responsibilities. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the Government-wide and Fund Financial Statements. Required Supplementary Information In addition to the basic financial statements, this report also presents certain Required Supplementary Information including the City s budgetary comparison information for the General Fund and Other Major Funds. FINANCIAL ANALYSIS OF THE CITY AS A WHOLE Net Position: A condensed presentation of the City s net position shown below totals $8,279,829 as of June 30, 2016. This is an annual increase of $2,658,724. The complete Statement of Net Position can be seen on page 12. 6
MANAGEMENT S DISCUSSION AND ANALYSIS FINANCIAL ANALYSIS OF THE CITY AS A WHOLE (continued) Statement of Net Position (in thousands of dollars) Governmental Business-type Activities Activities Total Percent 2015 2016 2015 2016 2015 2016 Change Current and other assets $ 909 $ 1,195 $ 831 $ 1,253 $ 1,740 $ 2,448 28.9% Capital assets, net 1,111 1,039 6,362 8,519 7,473 9,558 21.8% Total assets 2,020 2,234 7,193 9,772 9,213 12,006 23.3% Long-term debt 10 274 3,047 3,056 3,057 3,330 8.2% Other liabilities 163 20 142 376 305 396 23.0% Total liabilities 173 294 3,189 3,432 3,362 3,726 9.8% Net Position: Net investment in capital assets 1,111 1,037 3,281 5,486 4,392 6,523 32.7% Restricted 703 521 - - 703 521-34.9% Unrestricted 33 382 723 854 756 1,236 38.8% Total net position $ 1,847 $ 1,940 $ 4,004 $ 6,340 $ 5,851 $ 8,280 29.3% The increase in net position of $2,658,724 as noted on page 13 is a combination of increases in total assets of $2,793,018 and decreases in total liabilities of $364,244. The increases and (decreases) in total assets partially comprise the following: Cash and Investments $ 334,436 Accounts Receivable 268,070 Capital Assets, net of depreciation 2,084,026 The increase in cash for the business-type activities was $106,512, while the governmental activities increased in cash by $227,924. The increase in capital assets, net of depreciation, represents the annual depreciation on capital assets of $90,953 and $2,174,979 in improvements to the Sewer Facilities. The increase in accounts receivable for governmental activities was mostly transient occupancy tax and sales tax. The increase in accounts receivable for business type activities was the sewer project grant reimbursement. 7
MANAGEMENT S DISCUSSION AND ANALYSIS FINANCIAL ANALYSIS OF THE CITY AS A WHOLE (continued) The primary increases and (decreases) in total liabilities comprise the following: Accounts Payable $ 58,132 Deposits 154,064 Other Current Liabilities 133,325 Long-term Debt 18,723 A detailed analysis of long-term debt and obligations is presented in Note 10 on pages 33 through 35 of this report. Changes in Net Position: On the following page is a current and prior fiscal year recap of the changes in net position. The complete Statement of Activities can be seen on page 13. City-wide, the change in net position went from an increase of $10,405 in fiscal year 2015 to an increase of $2,658,724 in fiscal year 2016. This is a result of total revenue increasing by $2,327,686 (or 125.7%) while total expenses decreased $320,633 (or -22.2%). Analysis of Changes in Net Position (in thousands of dollars) Percent 2015 2016 Change Program Revenue $ 1,891 $ 4,181 121.0% General Revenue 814 852 4.7% Governmental Expenditures (1,278) (1,324) 3.6% Business-type Expenses (1,417) (1,051) (25.8%) Net Increase (Decrease) $ 10 $ 2,658 The change in General revenue was primarily due to an increase in the Transient Occupancy Tax collections and Sales Tax collections. Program revenue increased as a result of the sewer grant revenue. A new sewer project was started in the current fiscal year. Government expenditures decreased as a result of efficiencies realized in the Community Development department. Business type expenditures increased as a result of increased operations cost in the sewer enterprise fund. 8
MANAGEMENT S DISCUSSION AND ANALYSIS FINANCIAL ANALYSIS OF THE CITY AS A WHOLE (continued) Statement of Activities (in thousands of dollars) Governmental Business-type Activities Activities Total 2015 2016 2015 2016 2015 2016 Program revenue: Charges for services $ 28 $ 65 $ 1,022 $ 995 $ 1,050 $ 1,060 Operating grants 105 591 30 0 135 591 Capital grants 485 0 221 2,528 706 2,528 General revenue: Property tax 178 183 0 0 178 183 Sales tax 183 184 0 0 183 184 Transient Occupancy Tax 221 252 0 0 221 252 Fees 161 182 0 0 161 182 Gas Tax 37 26 0 0 37 26 Investments 2 3 2 2 4 5 Other 8 2 22 20 30 22 Total revenue 1,408 1,488 1,297 3,545 2,705 5,033 Expenses: General government 283 278 0 0 283 278 Public safety 127 128 0 0 127 128 Community Development 13 0 0 0 13 0 Streets 637 605 0 0 637 605 Public Works 34 26 0 0 34 26 Planning/Eng/Bldg 89 194 0 0 89 194 Parks and Recreation 95 93 0 0 95 93 Other - - 0 0 0 0 Water fund - - 538 516 538 516 Wastewater fund - - 879 535 879 535 Total expenses 1,278 1,324 1,417 1,051 2,695 2,375 Increase (decrease) in Net Position $ 130 $ 164 $ (120) $ 2,494 $ 10 $ 2,658 9
MANAGEMENT S DISCUSSION AND ANALYSIS FINANCIAL ANALYSIS OF THE CITY AS A WHOLE (concluded) Net Cost of Services: The table below presents the total cost of each of the City s governmental activities as well as each activity s net cost (total cost less fees generated by the activities and intergovernmental aid). The net cost shows the financial burden that was placed on the City s taxpayers by each of these functions. The total cost of $1,323,737 was offset by charges for services ($65,935), operating grants/contributions ($590,920), and capital grants/contributions ($0), bringing the net cost of services provided down to $666,882. Planning and Building received all of the charges for services ($65,935). The increase in total cost for general government relates several factors. The increase in Planning / Engineering / Building costs resulted from additional planning and development related projects. The increase in street expenditures relates to the Highway 49 & Main Street Project. Net Cost of Governmental Activities (in thousands of dollars) Total Cost Net Cost of Services Percent of Services Percent 2015 2016 Change 2015 2016 Change General Government $ 283 $ 278 16.0% $ 250 $ 207-17.2% Public Safety 127 128 0.0% 27 24-11.1% Community Development 13-0.0% 13 - -100.0% Streets 637 605 286.1% 152 123-19.1% Public Works 34 26 25.9% 34 26-23.5% Planning/Eng/Bldg 89 194-16.0% 89 194 118.0% Parks and Recreation 95 93 17.3% 95 93 2.1% Other - - 0.0% - - 0.0% Total $1,278 $1,324 65.8% $ 660 $ 667 1.1% FINANCIAL ANALYSIS OF THE CITY S FUNDS There are no restrictions, commitments, or other limitations that would significantly affect the availability of fund resources for the future. To provide an overview of the City s funds, below is a table showing the increases and (decreases) to total assets, liabilities, revenue, and expenditures of the City fund types from fiscal year 2015 to 2016. The total revenue and expenditures do not include any other financing sources (uses). 10
MANAGEMENT S DISCUSSION AND ANALYSIS FINANCIAL ANALYSIS OF THE CITY S FUNDS (continued) Increase (Decrease) from Prior Year Assets Liabilities Revenue Expenditures General Fund $ 92,494 $ 15,040 $ 89,721 $ 94,297 Special Revenue & Capital Projects Funds 32,100 (55,290) (64,022) (47,930) Proprietary Funds 2,578,893 243,011 2,246,659 (366,970) The increase in General Fund assets is primarily cash and accounts receivable. The increase in revenue came from Sales and Transient Occupancy (TOT) Taxes. The increase in expenditures reflects additional transfers to the Promotion and Streets funds as a result of increased TOT collections. The General Fund budget is discussed below under the Budgetary Highlights. For the Special Revenue and Capital Projects Funds, the small increase assets and small decrease in liabilities were the result of activity related to the SR 49 & Main Project. The Special Revenue Fund revenue and expenditures decreased as a result of decreased activity on the SR 49 & Main Project as well. Proprietary Fund assets increased as a result of the completion of phase one of the sewer infrastructure project, and liabilities increased as a result of outstanding final payments for the construction of phase one of the sewer infrastructure project. Revenue increases and expenditure decreases resulted from the timing of sewer project expenses and the corresponding grant revenue. GENERAL FUND BUDGETARY HIGHLIGHTS Total revenue was $157,311 over budget. The revenue sources attributable to this variance were sales tax, transient occupancy tax, and staff cost reimbursements. Total expenditures were over budget by $(80,698). The primary reason was unanticipated costs in Planning/Engineering/Building. CONTACTING THE CITY S FINANCIAL MANAGEMENT The City s financial report is designed to provide its citizens, taxpayers, customers, investors, and creditors of the City of Plymouth with a general overview of the City s finances and to demonstrate the City s prudent fiscal accountability for the money with which it is entrusted. If you have questions about this report or need additional information, contact the City of Plymouth Finance Department, Post Office Box 729, Plymouth, California, 95669. As prepared by the City of Plymouth Finance Department 11
GOVERNMENT-WIDE FINANCIAL STATEMENTS
Government-wide Financial Statements Statement of Net Position June 30, 2016 Primary Government Governmental Business-type Activities Activities Total ASSETS Cash and investments $ 729,521 $ 543,036 $ 1,272,557 Receivables 337,548 594,853 932,401 Deposit - 114,744 114,744 Loans receivable 44,101-44,101 Other assets 2,315-2,315 Capital assets not being depreciated 370,790 5,891,243 6,262,033 Capital assets, net of depreciation 666,493 2,628,409 3,294,902 Total assets 2,150,768 9,772,285 11,923,053 LIABILITIES Current liabilities: Accounts payable 107,625 175,795 283,420 Deposits 83,188 12,638 95,826 Deferred revenue - 188,000 188,000 Total current liabilities 190,813 376,433 567,246 Noncurrent liabilities: Due within one year 5,694 58,095 63,789 Due after one year 10,575 2,991,443 3,002,018 Self insurance reserve 3,838 6,333 10,171 Total noncurrent liabilities 20,107 3,055,871 3,075,978 Total liabilities 210,920 3,432,304 3,643,224 NET POSITION Net investment in capital assets 1,037,283 5,485,762 6,523,045 Restricted 520,663-520,663 Unrestricted 381,902 854,219 1,236,121 Total net position $ 1,939,848 $ 6,339,981 $ 8,279,829 The accompanying notes to financial statements are an integral part of this financial statement 12
Government-wide Financial Statements Statement of Activities Year Ended June 30, 2016 Net (Expense) Revenue and Program Revenue Change in Net Position Operating Capital Functions/Programs Charges for Grants and Grants and Governmental Business-type Expenses Services Contributions Contributions Activities Activities Total Governmental Activities General government $ 278,404 $ 65,935 $ 5,000 $ - $ (207,469) $ (207,469) Public safety 127,895-103,742 - (24,153) (24,153) Streets 604,723-482,178 - (122,545) (122,545) Public works/public services 25,893 - - - (25,893) (25,893) Planning, engineer, bld official 193,912 - - - (193,912) (193,912) Parks, recreation, and pool 92,910 - - - (92,910) (92,910) Total governmental activities 1,323,737 65,935 590,920 - (666,882) (666,882) Business-type Activities Water utility 515,804 457,448 - - $ (58,356) (58,356) Sewer utility 534,745 537,968-2,528,327 2,531,550 2,531,550 Total business-type activities 1,050,549 549 995,416-2,528,327 2,473,194 2,473,194 Total primary government $ 2,374,286 $ 1,061,351 $ 590,920 $ 2,528,327 2,473,194 1,806,312 General Revenue Property taxes 183,221-183,221 Sales taxes 183,830-183,830 Transient occupancy 251,931-251,931 Franchise fees 40,726-40,726 State in-lieu fees 140,868-140,868 Gas taxes 26,164-26,164 Other revenue 2,044-2,044 Use of money & property 2,942 20,686 23,628 Totals 831,726 20,686 852,412 Change in Net Position 164,844 2,493,880 2,658,724 Net Position - beginning, restated 1,775,004 3,846,101 5,621,105 Net Position - end of year $ 1,939,848 $ 6,339,981 $ 8,279,829 The accompanying notes to financial statements are an integral part of this financial statement 13
FUND FINANCIAL STATEMENTS
Balance Sheet Governmental Funds June 30, 2016 State Other Total General Route Governmental Governmental Fund H49 Funds Funds ASSETS Cash and investments $ 381,025 $ - $ 763,583 $ 1,144,608 Receivables 156,936 77,076 7,994 242,006 Developer receivables 86,617 - - 86,617 Loans receivable - - 44,101 44,101 Total assets $ 624,578 $ 77,076 $ 815,678 $ 1,517,332 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 52,430 $ 7,762 $ 25,000 $ 85,192 Cash overdraft - 6,959 436,545 443,504 Developer deposits - 83,188-83,188 Other liabilities 20,107 - - 20,107 Total liabilities 72,537 97,909 461,545 631,991 Fund Balances: Nonspendable - - 39,101 39,101 Restricted - - 520,663 520,663 Committed - - - - Assigned - - 230,914 230,914 Unassigned 552,041 (20,833) (436,545) 94,663 Total fund balances 552,041 (20,833) 354,133 885,341 Total liabilities and fund balances $ 624,578 $ 77,076 $ 815,678 $ 1,517,332 The accompanying notes to financial statements are an integral part of this financial statement 14
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2016 Amounts reported for governmental activities in the statement of net position are different because of: Total fund balances - governmental funds (page 14) $ 885,341 Capital assets used in governmental activities are not financial resources and therefore, are not reported in the balance sheet. 1,037,283 Internal Service Funds are used by management to charge the cost of supplies and services to one fund. Those assets and liabilities are included in the statement of net position. 17,224 Net position of governmental activities (page 12) $ 1,939,848 The accompanying notes to financial statements are an integral part of this financial statement 15
Statement of Revenue, Expenditures, and Change in Fund Balances Governmental Funds Year Ended June 30, 2016 State Other Total General Route Governmental Governmental REVENUE Fund H49 Funds Funds Property taxes $ 183,221 $ - $ - $ 183,221 Other taxes 476,487 - - 476,487 Intergovernmental 140,868 413,829 203,255 757,952 Charges for services 65,935 - - 65,935 Use of money and property 2,660-282 2,942 Other revenue 1,015 942 87 2,044 Total revenue 870,186 414,771 203,624 1,488,581 EXPENDITURES Current Expenditures: General government: Non-departmental 10,522 - - 10,522 City council 10,059 - - 10,059 General administration 211,431 - - 211,431 City clerk 4,336 - - 4,336 City treasurer 3,552 - - 3,552 Finance 38,504 - - 38,504 Public safety - police - - 100,000 100,000 Public safety - fire 27,895 - - 27,895 Streets 72,877 393,713 138,134 604,724 Public works/public services 25,893 - - 25,893 Planning 108,152 - - 108,152 City engineer 36,900 - - 36,900 Building official 48,860 - - 48,860 Parks and recreation 59,176 - - 59,176 Swimming pool 33,723 - - 33,723 Cemetery 10 - - 10 Total expenditures 691,890 393,713 238,134 1,323,737 Excess of Revenue over (under) Expenditures Other financing sources (uses) Transfers in 178,296-21,058 - (34,510) 133,872 164,844 133,872 Transfers (out) (133,872) - - (133,872) Total other sources (uses) (133,872) - 133,872 - CHANGE IN FUND BALANCES 44,424 21,058 99,362 164,844 Fund Balances - beginning 507,617 (41,891) 254,771 720,497 Fund Balances - end of year $ 552,041 $ (20,833) $ 354,133 $ 885,341 The accompanying notes to financial statements are an integral part of this financial statement 16
Reconciliation of the Statement of Revenue, Expenditures, and Change in Fund Balances of Governmental Funds to the Statement of Activities Year Ended June 30, 2016 Amounts reported for governmental activities in the statement of activities are different because: Change in fund balances - governmental funds (page 16) No adjustments this year $ 164,844 - Change in net position of governmental activities (page 13) $ 164,844 The accompanying notes to financial statements are an integral part of this financial statement 17
Proprietary Funds Statement of Net Position June 30, 2016 Business-type Activities Governmental Enterprise Activities - Funds Internal Assets Water Sewer Total Service Funds Current assets: Cash and investments $ 246,144 $ 296,892 $ 543,036 $ 28,417 Customer receivables 70,005 67,424 137,429 8,925 Other receivables 993 456,431 457,424 - Due from other funds 1,262,183-1,262,183 - Prepaid expenses - - - 2,315 AWA Deposit 114,744-114,744 - Total current assets 1,694,069 820,747 2,514,816 39,657 Noncurrent assets: Capital assets not being depreciated 3,026,854 2,864,389 5,891,243 - Capital assets, net of depreciation - 2,628,409 2,628,409 25,000 Total noncurrent assets 3,026,854 5,492,798 8,519,652 25,000 Total assets 4,720,923 6,313,545 11,034,468 64,657 Liabilities Current liabilities: Accounts payable 4,852 170,943 175,795 22,433 Customer deposits 11,013 1,625 12,638 - Deferred impact fees revenue 188,000-188,000 - Due to other funds 1,262,183-1,262,183 - Total current liabilities 1,466,048 172,568 1,638,616 22,433 Noncurrent liabilities: Due within one year 42,380 15,715 58,095 - Due after one year 2,781,402 210,041 2,991,443 - Self insurance reserve 3,059 3,274 6,333 - Total noncurrent liabilities 2,826,841 229,030 3,055,871 - Total liabilities 4,292,889 401,598 4,694,487 22,433 Net Position Net investment in capital assets 210,964 5,274,798 5,485,762 25,000 Unrestricted 217,070 637,149 854,219 17,224 Total net position $ 428,034 $ 5,911,947 $ 6,339,981 $ 42,224 The accompanying notes to financial statements are an integral part of this financial statement 18
Proprietary Funds Statement of Revenue, Expenses, and Change in Net Position Year Ended June 30, 2016 Business-type Activities Governmental Enterprise Activities - Funds Internal Water Sewer Total Service Funds Operating Revenue Charge for current services $ 457,448 $ 537,968 $ 995,416 $ - Departmental charges - - - 209,163 Total revenue 457,448 537,968 995,416 209,163 Operating Expenses Personnel costs 134,205 221,239 355,444 - Operations and maintenance 258,335 211,160 469,495 207,849 Depreciation - 90,896 90,896 57 Total operating expenses 392,540 523,295 915,835 207,906 Operating Income (Loss) 64,908 14,673 79,581 1,257 Nonoperating Revenue (Expenses) Use of money and property 11,352 11,594 22,946 - Rental property repairs - (2,260) (2,260) - Grant proceeds 175,817 2,528,327 2,704,144 - Consulting - capital projects (175,817) - (175,817) - Interest expense (123,264) (11,450) (134,714) - Total nonoperating revenue (expenses) (111,912) 2,526,211 2,414,299 - Income Before Contributions/Transfers (47,004) 2,540,884 2,493,880 1,257 Impact fees - - - - Transfers in 30,000-30,000 - Transfers (out) (30,000) - (30,000) - Change in Net Position (47,004) 2,540,884 2,493,880 1,257 Net Position - beginning 633,038 3,371,063 4,004,101 49,101 Prior period adjustment - capital assets (158,000) - (158,000) (8,134) Net Position - beginning, as restated 475,038 3,371,063 3,846,101 40,967 Net Position - end of year $ 428,034 $ 5,911,947 $ 6,339,981 $ 42,224 The accompanying notes to financial statements are an integral part of this financial statement 19
Proprietary Funds Statement of Cash Flows Year Ended June 30, 2016 Business-type Activities Governmental- CASH FLOWS PROVIDED BY (USED FOR) Funds Internal Water Sewer Total Service Funds Operating Activities Receipts from customers $ 449,340 $ 543,696 $ 993,036 $ 204,763 Payments for personnel costs (131,545) (218,961) (350,506) - Payments for operations & maintenance (260,908) (110,853) (371,761) - Payments for internal services - - - (194,127) Net cash provided (used) 56,887 213,882 270,769 10,636 Capital & Related Financing Activities Interest paid on debt obligations (123,264) (11,450) (134,714) - Principal paid on debt obligations (36,570) (11,000) (47,570) - AWA deposit refund (increase) (15,983) - (15,983) - Capital grant proceeds 175,817 2,231,511 2,407,328 - Capital grant project expense (175,817) (2,248,189) (2,424,006) - Impact fees collected 30,000-30,000 - Net cash provided (used) (145,817) (39,128) (184,945) - Investing Activities Use of property and money 11,354 9,334 20,688 - Net cash provided (used) 11,354 9,334 20,688 - Net Increase (Decrease) in Cash (77,576) 184,088 106,512 10,636 Cash and investments - beginning 323,720 112,804 436,524 17,781 Cash and investments - end of year $ 246,144 $ 296,892 $ 543,036 $ 28,417 Operating Activities Analysis Operating Income (Loss) - page 19 $ 64,908 $ 14,673 $ 79,581 $ 1,257 Reconciliation adjustments: Add depreciation, a noncash expense - 90,896 90,896 57 (Increase) decrease in receivables (7,024) 5,728 (1,296) (4,400) (Increase) decrease in prepaids - - - (2,315) Increase (decrease) in payables (2,573) 100,307 97,734 16,037 Increase (decrease) in customer deposits (1,084) - (1,084) - Increase (decrease) in comp absences 2,660 2,278 4,938 - Net cash provided (used) $ 56,887 $ 213,882 $ 270,769 $ 10,636 The accompanying notes to financial statements are an integral part of this financial statement 20
Notes to Financial Statements June 30, 2016 The Notes to Financial Statements include a summary of significant accounting policies and other notes considered essential to fully disclose and fairly present the transactions and financial position of the City as follows: Note 1 - Defining the Financial Reporting Entity Note 2 - Summary of Significant Accounting Policies Note 3 - Stewardship, Compliance, and Accountability Note 4 - Cash and Investments Note 5 - Receivables Note 6 - Capital Assets Note 7 - Commitments and Contingencies Note 8 - Prior Period Adjustment Note 9 - Subsequent Events Note 10 - Defined Contribution Retirement Plan Note 11 - Accounts Payable Note 12 - Long-term Obligations Note 13 - Risk Management Note 14 - New Pronouncements Note 15 - Fund Balance Designations Section of the Balance Sheet 21
Note 1 - Defining the Financial Reporting Entity CITY OF PLYMOUTH Notes to Financial Statements June 30, 2016 The City of Plymouth (the City) was incorporated in 1917 under the laws of the State of California. Plymouth operates under a Council-Manager form of government. The City provides municipal services to its citizens including water and sewer utilities, parks and recreation, public safety, public works, community development and general administrative support. The City participates in a joint powers agency through a formally organized and separate entity agreement. The financial activities of the Public Agency Risk Sharing Authority of California (PARSAC), a public entity risk pool, are not included in the accompanying financial statements because they are administered by a governing board which is separate from and independent of the City. Note 2 - Summary of Significant Accounting Policies The City s financial statements are prepared in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements (Statements and Interpretations). The more significant accounting policies established by GAAP, and used by the City, are described below: Basis of Presentation Government-wide Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government. For the most part, the effect of internal and interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from businesstype activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct and indirect expenses of a given function or segment are offset by program revenue. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenue includes (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenue are reported instead as general revenue. Expenses reported for functional activities include allocated indirect expenses. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds (when applicable), even though the later are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Fund Financial Statements The accounting system of the City is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts that constitute its assets, liabilities, fund equity, revenue, and expenditures/expenses. Funds are organized into three major categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the City or meets the following criteria: 22
Notes to Financial Statements June 30, 2016 1. Total assets, liabilities, revenue, or expenditures/expenses of that individual governmental fund or enterprise fund are at least 10% of the corresponding total for all funds of that category or type. 2. Total assets, liabilities, revenue, or expenditures/expenses of the individual governmental fund or enterprise fund are at least 5% of the corresponding total for all governmental and enterprise funds combined. 3. The government has determined that a fund is important to the financial statement user. The funds of the financial reporting entity are described below: Governmental Fund Types - Governmental funds are the funds through which most general government functions typically are financed. The City maintains the following fund types: General Fund - the general fund accounts for all unrestricted resources except those required to be accounted for in another fund. Special Revenue Funds - special revenue funds are used to account for the proceeds of specific revenue resources (other than major capital projects) that are legally restricted to expenditures for specified purposes. Capital Projects Fund - the capital projects fund is used to account for financial resources to be used for the acquisition or construction of major capital facilities. Debt Service Funds - debt service funds are used to account for the accumulation of resources for, and the repayment of, general long-term debt obligation payments for principal, interest and related costs. Proprietary Fund Types - Proprietary funds are used to account for activities that are similar to those found in the private sector. The measurement focus is upon determination of net income and capital maintenance. The following are the City's proprietary fund types: Enterprise Funds - the enterprise funds are established to account for operations that are financed and operated in a manner similar to private business enterprises - where the intent of the City is that the operating expenses of providing goods or services (including depreciation) to the general public on a continuing basis be financed or recovered primarily through user charges/operating revenue. All revenue and expenses not meeting this definition are reported as nonoperating revenue and expenses. The water and sewer utilities are reported as enterprise funds. Internal Service Funds - the internal service funds are established to account for the financing of goods or services provided by one department or agency to other departments or agencies of the City, and to other government units on a cost reimbursement basis. As a general rule the effect of internal activity is eliminated from the government-wide financial statements. The City s Major Funds are as follows: General Fund - this fund is used to account for the general operations of the City, and is used to account for all financial resources except those required to be accounted for in another fund. State Route Highway 49 Fund - this fund is used to account for intergovernmental resources and related expenditures for the realignment of a street intersection. 23
Notes to Financial Statements June 30, 2016 Measurement Focus Measurement focus is a term used to describe which transactions are recorded within the various financial statements. Basis of accounting refers to when transactions are recorded regardless of the measurement focus applied. On the government-wide statement of net position, and the statement of activities, both governmental and business-type activities are presented using the economic resources measurement focus. The accounting objectives of the economic resources measurement focus are the determination of operating income, changes in net position (or cost recovery), financial position, and cash flows. All assets and liabilities (whether current or noncurrent) associated with their activities are reported. In the fund financial statements, the current financial resources measurement focus or the economic resources measurement focus is used, as appropriate: a. All governmental funds utilize a current financial resources measurement focus. Only current financial assets and liabilities are generally included on their balance sheets. Their operating statements present sources and uses of available spendable financial resources during a given period. These funds use net position as their measure of available spendable financial resources at the end of the period. b. The proprietary fund utilizes an economic resources measurement focus. Proprietary fund equity is classified as net position. c. Agency funds are not involved in the measurement of results of operations; therefore, measurement focus is not applicable to them. Basic of Accounting In the government-wide statement of net position, and statement of activities, both governmental and business-type activities are presented using the accrual basis of accounting. Under the accrual basis of accounting, revenue is recognized when earned, and expenses are recorded when the liability is incurred and the amount of obligation is ascertainable. Revenue, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. In the fund financial statements, governmental funds are presented on the modified accrual basis of accounting. Under this modified accrual basis of accounting, revenue is recognized when measurable and available. Measurable means knowing or being able to reasonably estimate the amount. Available means collectible within the current period or soon enough thereafter to pay current liabilities. Revenue which is susceptible to accrual includes property taxes and special assessments that are levied for and due for the fiscal year and collected within 60 days after year-end. Licenses, permits, fines, penalties, charges for services and miscellaneous revenue are recorded as governmental fund type revenue when received in cash because they are not generally measurable until actually received. Revenue from taxpayer assessed taxes, such as sales taxes, are recognized in the accounting period in which they became both measurable and available to finance expenditures of the fiscal period. Grant revenue, which is normally reimbursement of expenses under contractual agreements, is recorded as a receivable when earned rather than when susceptible to accrual. Generally, this occurs when authorized expenditures are made under the grant program or contractual agreement. Expenditures are recognized when the fund liability is incurred, if measurable, except for unmatured interest on long term-debt in the governmental funds, which is recognized when due. 24
Notes to Financial Statements June 30, 2016 The City s policy is to first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. Proprietary funds use the accrual basis of accounting which records the financial effect on an enterprise of transactions and other events and circumstances that have cash consequences for an enterprise in the periods in which those transactions, events and circumstances occur rather than only when cash is received or paid by the enterprise. Compensated Absences In compliance with GASB Statement No.16, the City has established a liability for accrued vacation in relevant funds, except that additional accruals for salary-related payments associated with the payment of compensated absences, for example, the employer s share of social security and Medicare taxes, have not been accrued as that amount is not considered significant or material to the financial statements taken as a whole. All vacation pay is accrued when earned. This liability is set up for the current employees at the current rates of pay. If vacation is not used by the employee during the term of employment, compensation is payable to the employee at the time of retirement. Such compensation is calculated at the employee s prevailing rate at the time of retirement or termination. Each fiscal year, an adjustment to the liability is made based on pay rate changes and adjustments for the current portion. The general fund is primarily responsible for the repayment of the governmental portion of compensated absences. Cash, Investments, and Cash Equivalents Cash and Cash Equivalents - for purposes of the statement of cash flows, the City considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents, which are shown on the statement of cash flows as cash and investments. Cash and Investments - the City follows the requirements of GASB Stmt No. 40 in reporting cash and investments at fair value and disclosing risks related to credit risk, concentration of credit risk and interest rate risk. Capital Assets Capital assets used in governmental fund type activities are accounted for on the statement of net assets. Public domain general capital assets (infrastructure) consisting of certain improvements other than buildings, such as roads, sidewalks and bridges are capitalized prospectively starting July 1, 2003 in accordance with GASB Stmt No. 34. City policy has set the capitalization threshold for reporting capital assets at $5,000. Capital outlay is recorded as expenditures of the general and special revenue funds, and capital assets in the government-wide financial statements to the extent the City s capitalization threshold is met. Donated assets are recorded at estimated fair value at the date of donation. Property, plant and equipment acquired for proprietary funds are capitalized in the respective fund to which it applies and are stated at their cost. Where cost could not be determined from the available records, estimated historical cost was used to record the estimated value of the assets. Depreciation is recorded on a straight-line basis over the estimated useful lives of the capital assets which range from 3 to 15 years for equipment and vehicles, and 20 to 50 years for infrastructure, buildings, and improvements. Land, art, and treasurers are not considered exhaustible, therefore are not being depreciated. In the government-wide statement of activities, no depreciation expense was recorded in governmental activities for capital assets acquired before fiscal year 2007-08 pending a complete accounting of capital assets acquisition dates and historic or estimated costs. Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 25